Glatfelter Corporation (NYSE: GLT), a leading global supplier of
engineered materials, today reported financial results for the
fourth quarter, highlighting the first full year of operational and
financial performance with benefits from the Company's Turnaround
Strategy in the face of challenging market conditions.
“Our Q4 performance demonstrates that we are effectively
addressing the continued challenges across our business,” said
Thomas Fahnemann, President and CEO of Glatfelter. “Our Spunlace
segment had a particularly strong quarter, delivering improvements
in volume and profitability compared to the prior quarter. The team
has done an exceptional job strengthening the Spunlace business,
generating approximately $9 million improvement in Adjusted EBITDA
in twelve months. Also, the underlying fundamentals of our
Composite Fibers business are substantially improving compared to
the prior year and we are now successfully sustaining the gains we
made in Q3 with EBITDA margins approaching 10% in the second half
of the year.”
“Market and competitive challenges persisted and were most
pronounced in our Airlaid business. This segment’s performance in
Q4 was negatively impacted by a planned extensive maintenance
shutdown and continued pressure seen in feminine hygiene and
European tabletop categories. We expect the volume pressure to
persist in the first half of 2024 as we strive to achieve pricing
levels that adequately cover inflation while balancing volume
expectations. To counteract the anticipated volume softness, we are
directing our innovation turnaround initiatives to broadening our
product portfolio, improving mix and closely monitoring cost
structure. We expect these actions to enhance our asset utilization
in the second half of 2024.”
“Overall, Glatfelter is in a stronger position today compared to
a year ago due to the efforts of our entire global team who remain
committed to delivering improved performance and additional
turnaround benefits. Our performance in 2023 was highlighted by
several meaningful accomplishments where we eliminated costs from
the business, refinanced the Company’s debt, restructured the
leadership team and optimized our portfolio. We also made
significant progress closing the price-cost gap and implementing
operational improvements that are enabling us to deliver margin
improvements. While these actions are improving our financial
performance, we expect the full realization of benefits from our
Turnaround Strategy when the market substantially recovers. We
remain encouraged by the work that lies ahead, knowing the strategy
is working and therefore, we are cautiously optimistic about our
full year guidance despite the challenging business
environment.”
On February 7, 2024, Berry Global and Glatfelter announced that
they entered into definitive agreements for Berry to spin-off and
merge the majority of its Health, Hygiene and Specialties Global
Nonwovens and Films business (HHNF) with Glatfelter, to create a
leading, publicly-traded company in the specialty materials
industry. The boards of directors of Berry Global and Glatfelter
unanimously approved the transaction. "The uniting of our
organizations creates a premier nonwovens supplier and a global
leader in specialty materials, with the talent, technologies,
scale, and footprint to deliver commercial and operational
excellence, and a wide range of solutions for our customers. Our
combined company is scaled to accelerate innovation and leverage
our intellectual property over a large, worldwide commercial
platform and is well positioned to deliver substantial shareholder
value,” said Thomas Fahnemann, President and CEO of Glatfelter.
|
|
Three months ended December 31, |
Dollars in thousands |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Net sales |
|
$ |
320,382 |
|
|
$ |
373,903 |
|
Net loss from continuing
operations |
|
|
(8,610 |
) |
|
|
(34,113 |
) |
Adjusted loss from continuing
operations (1) |
|
|
(1,995 |
) |
|
|
(6,974 |
) |
EPS from continuing
operations |
|
|
(0.19 |
) |
|
|
(0.76 |
) |
Adjusted EPS (1) |
|
|
(0.04 |
) |
|
|
(0.16 |
) |
Adjusted EBITDA (1) |
|
|
25,093 |
|
|
|
22,294 |
|
(1) |
Adjusted EBITDA, adjusted loss from continuing operations and
adjusted EPS are non-GAAP financial measures. See “Reconciliation
of GAAP Financial information to Non-GAAP Financial information”
later in this earnings release for further information. |
|
|
Storm Damage to Spunlace Facility in
Tennessee
On December 9, 2023, Glatfelter was impacted by a series of
tornados in Tennessee. The storm damaged a portion of one of the
Company’s leased Spunlace converting and warehousing facilities.
Under the terms of the lease arrangement, the Company is
responsible for building repairs and is working with its insurers
to facilitate the needed repairs at the site. As only a portion of
the facility was damaged, production was able to resume in early
2024 in the undamaged areas within the facility. The costs of the
repairs are expected to be fully covered by the Company's
insurance. The insurance policy includes a $5 million deductible,
which has been expensed in the fourth quarter and has been
reflected as an adjustment to the Company's fourth quarter adjusted
earnings.
Fourth Quarter Results
The following table sets forth a reconciliation of results on a
GAAP basis to an adjusted earnings basis, a non-GAAP measure:
|
|
Three months ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
In
thousands, except per share |
|
Amount |
|
EPS |
|
Amount |
|
EPS |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(8,666 |
) |
|
$ |
(0.19 |
) |
|
$ |
(34,333 |
) |
|
$ |
(0.76 |
) |
Exclude: Loss from
discontinued operations, net of tax |
|
|
56 |
|
|
|
— |
|
|
|
220 |
|
|
|
— |
|
Loss from continuing operations |
|
|
(8,610 |
) |
|
|
(0.19 |
) |
|
|
(34,113 |
) |
|
|
(0.76 |
) |
Adjustments (pre-tax): |
|
|
|
|
|
|
|
|
Goodwill and other asset impairment charges (1) |
|
|
— |
|
|
|
|
|
30,666 |
|
|
|
Turnaround strategy costs (2) |
|
|
1,724 |
|
|
|
|
|
8,038 |
|
|
|
Russia/Ukraine conflict charges (3) |
|
|
(1,441 |
) |
|
|
|
|
(741 |
) |
|
|
Strategic initiatives (4) |
|
|
1,091 |
|
|
|
|
|
938 |
|
|
|
Tornado insurance deductible costs (5) |
|
|
5,000 |
|
|
|
|
|
— |
|
|
|
CEO transition costs (6) |
|
|
— |
|
|
|
|
|
239 |
|
|
|
Corporate headquarters relocation |
|
|
— |
|
|
|
|
|
8 |
|
|
|
COVID-19 ERC recovery (7) |
|
|
— |
|
|
|
|
|
(7,344 |
) |
|
|
Total adjustments (pre-tax) |
|
|
6,374 |
|
|
|
|
|
31,804 |
|
|
|
Income taxes (8) |
|
|
35 |
|
|
|
|
|
(4,792 |
) |
|
|
Other tax adjustments (9) |
|
|
206 |
|
|
|
|
|
127 |
|
|
|
Total after-tax adjustments |
|
|
6,615 |
|
|
|
0.16 |
|
|
|
27,139 |
|
|
|
0.60 |
|
Adjusted loss from continuing operations |
|
$ |
(1,995 |
) |
|
$ |
(0.04 |
) |
|
$ |
(6,974 |
) |
|
$ |
(0.16 |
) |
(1) |
Reflects goodwill impairment charge of $20.3 million and other
asset impairment charges of $10.4 million. |
(2) |
For 2023, reflects employee
separation costs of $1.8 million less related forfeitures of
share-based compensation of $0.1 million. For 2022, reflects
professional services fees (primarily consulting) of $4.7 million
and employee separation costs of $3.3 million. |
(3) |
For 2023, primarily reflects
reductions in reserves related to accounts receivable of $1.3
million and inventory of $0.1 million. For 2022, reflects
reductions in inventory reserves for items disposed of during the
period. |
(4) |
For 2023, reflects primarily
professional services fees related to acquisitions or dispositions
(including transaction advisory, legal and other consultant costs)
of $0.5 million and a loss on the sale of our Costa Rica operations
of $0.6 million. For 2022, reflects primarily professional services
fees related to acquisitions or dispositions (including transaction
advisory, legal and other consultant costs). |
(5) |
Reflects the deductible on an
insured loss to a leased Spunlace facility in Tennessee resulting
from tornadoes in December 2023. |
(6) |
Primarily reflects costs related
to consulting services provided by the former CEO. |
(7) |
Reflects the benefit recognized
from employee retention credits claimed under the CARES Act of 2020
and the subsequent related amendments, partially offset by
professional services fees directly related to claiming this
benefit. |
(8) |
Tax effect on adjustments
calculated based on the incremental effective tax rate of the
jurisdiction in which each adjustment originated. For items
originating in the U.S., no tax effect is recognized due to the
previously established valuation allowance on the net deferred tax
assets. |
(9) |
Tax effect of applying certain
provisions of the CARES Act of 2020. |
|
|
A description of each of the adjustments presented above is
included later in this release.
Airlaid Materials
|
|
Three months ended December 31, |
Dollars
in thousands |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
Tons shipped (metric) |
|
|
37,293 |
|
|
|
39,186 |
|
|
|
(1,893 |
) |
|
(4.8 |
)% |
Net sales |
|
$ |
127,514 |
|
|
$ |
153,991 |
|
|
$ |
(26,477 |
) |
|
(17.2 |
)% |
Operating income |
|
|
8,371 |
|
|
|
14,091 |
|
|
|
(5,720 |
) |
|
(40.6 |
)% |
EBITDA |
|
|
15,959 |
|
|
|
21,633 |
|
|
|
(5,674 |
) |
|
(26.2 |
)% |
EBITDA % |
|
|
12.5 |
% |
|
|
14.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Airlaid Materials’ fourth quarter net sales decreased $26.5
million in the year-over-year comparison mainly driven by lower
selling prices from cost pass-through arrangements and lower energy
surcharges in Europe as both raw materials and energy input costs
declined compared to last year. Shipments were 4.8% lower driven by
declines in the tabletop categories mainly due to European market
weakness and competition from lower cost alternate substrates as
customers managed input costs. Currency translation was favorable
by $3.2 million.
Airlaid Materials’ fourth quarter EBITDA of $16.0 million was
$5.7 million lower when compared to the fourth quarter of 2022.
Selling price decreases for pass-through contracts, lower energy
surcharges, and select spot price reductions were a combined $17.2
million, and were mostly offset by lower raw material and energy
costs of $15.5 million. In addition this quarter, our Gatineau site
took an extended annual maintenance shutdown, typically taken every
five years, which unfavorably impacted results by approximately
$1.3 million. Lower shipments primarily in the tabletop category
lowered results by $1.0 million. Operations were unfavorable by
$2.0 million due to the extended Gatineau downtime and the rest
from higher wage inflation and operational spending. Currency and
related hedging negatively impacted earnings by $0.9 million.
Composite Fibers
|
|
Three months ended December 31, |
Dollars
in thousands |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
|
|
|
|
|
|
|
|
Tons shipped (metric) |
|
|
22,770 |
|
|
|
25,677 |
|
|
|
(2,907 |
) |
|
(11.3 |
)% |
Net sales |
|
$ |
115,486 |
|
|
$ |
136,427 |
|
|
$ |
(20,941 |
) |
|
(15.3 |
)% |
Operating income |
|
|
7,054 |
|
|
|
4,843 |
|
|
|
2,211 |
|
|
45.7 |
% |
EBITDA |
|
|
10,959 |
|
|
|
9,198 |
|
|
|
1,761 |
|
|
19.1 |
% |
EBITDA % |
|
|
9.5 |
% |
|
|
6.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composite Fibers’ net sales were $20.9 million lower in the
fourth quarter of 2023, compared to the year-ago quarter due to
lower selling prices of $8.2 million, and overall shipments were
down 11.3%, or when adjusting for the sale of Ober-Schmitten in the
third quarter 2023, were down 6.7%. Currency translation was
favorable by $3.4 million.
Composite Fibers had EBITDA for the fourth quarter of $11.0
million compared with $9.2 million EBITDA in the fourth quarter of
2022. Price-cost gap continued to trend positive this quarter as
the decrease in input prices paid for raw materials, energy,
freight, and packaging were more favorable than selling price
declines, resulting in earnings improvement of $1.3 million.
Shipments were lower primarily in the wallcover category and
negatively impacted income by $0.5 million. Operations were
favorable by $1.3 million, mainly driven by higher inclined wire
production to meet customer demand. The sale of the Ober-Schmitten
site in the third quarter positively impacted year-over-year
results by $1.2 million. The impact of currency and related hedging
negatively impacted earnings by $1.5 million.
Spunlace
|
|
Three months ended December 31, |
Dollars
in thousands |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
|
|
|
|
|
|
|
|
Tons shipped (metric) |
|
|
15,571 |
|
|
|
14,957 |
|
|
|
614 |
|
|
4.1 |
% |
Net sales |
|
$ |
77,982 |
|
|
$ |
83,485 |
|
|
$ |
(5,503 |
) |
|
(6.6 |
)% |
Operating income (loss) |
|
|
2,322 |
|
|
|
(1,238 |
) |
|
|
3,560 |
|
|
287.6 |
% |
EBITDA |
|
|
5,710 |
|
|
|
1,799 |
|
|
|
3,911 |
|
|
217.4 |
% |
EBITDA % |
|
|
7.3 |
% |
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spunlace's net sales were $5.5 million lower in the fourth
quarter of 2023 compared to the year-ago quarter, mainly driven by
lower selling prices of $7.1 million due to cost pass-through
arrangements, which were partially offset by higher year over year
shipments of 4.1% and favorable currency translation of $0.6
million.
Spunlace EBITDA was higher by $3.9 million compared to the same
period last year. Lower selling prices and energy surcharges were
unfavorable by $7.1 million but were more than fully offset by
lower raw material and energy costs of $9.0 million, reversing the
earnings impact from the negative price-cost gap experienced
throughout 2022. Volume impact was flat as higher shipments in the
hygiene and wipes category were offset by an unfavorable mix as a
result of lower Sontara shipments. Operations were favorable by
$1.9 million from higher production, improved operations and lower
overall spending from headcount actions taken in 2022. Currency
positively impacted earnings by $0.1 million.
Other Financial Information
The amount of operating expense not allocated to a reporting
segment in the Segment Financial Information totaled $13.3 million
in the fourth quarter of 2023 compared with $40.6 million in the
same period a year ago. Excluding the items identified to present
“adjusted earnings,” unallocated expenses for the fourth quarter of
2023 decreased $1.9 million compared to the fourth quarter of 2022.
Excluding a customer claim and associated costs related to a
supplier's raw material defect that was identified by Glatfelter of
$3.1 million in Q4 2022 and $0.3 million in Q4 2023, corporate
costs were $0.9 million higher compared to the prior year, mainly
driven by higher incentive accruals.
In the fourth quarter of 2023, our U.S. GAAP pre-tax loss from
continuing operations totaled $15.0 million and we recorded an
income tax benefit of $6.4 million, which primarily related to the
tax provision for foreign jurisdictions, reserves for uncertain tax
positions, and valuation allowances for domestic and foreign
jurisdiction losses for which no tax benefit could be recognized.
The comparable amounts in the same quarter of 2022 were a pre-tax
loss of $35.8 million and an income tax provision of $1.7
million.
Balance Sheet and Other Information
Cash and cash equivalents totaled $50.3 million and $110.7
million as of December 31, 2023 and December 31, 2022,
respectively. Total debt was $860.3 million and $845.1 million as
of December 31, 2023 and December 31, 2022, respectively. Net
debt was $810.1 million as of December 31, 2023 compared with
$734.4 million at the end of 2022. Leverage as calculated in
accordance with the financial covenants of our bank credit
agreement was in compliance at 3.4 times at December 31,
2023.
Capital expenditures during the years ended December 31,
2023 and 2022 totaled $33.8 million and $37.7 million,
respectively. Cash used by operating activities for the years ended
December 31, 2023 and 2022 was $25.6 million and $40.8
million, respectively. Adjusted free cash flow for the year ended
December 31, 2023 was a use of $40.3 million compared with a
use of $70.0 million for the same period in 2022. The negative
adjusted free cash flow is primarily driven by negative working
capital use, which improved during the year ended 2023 as compared
to 2022. (Refer to the calculation of this measure provided in the
tables at the end of this release).
Conference Call
As previously announced, the Company will hold a conference call
today at 11:00 a.m. (Eastern) to discuss its fourth quarter
results. The Company will make available on its Investor Relations
website this quarter’s earnings release and an accompanying
financial presentation that includes additional financial
information to be discussed on the conference call including the
Company’s outlook pertaining to financial performance. Information
related to the conference call is as follows:
|
What: |
Q4 2023 Glatfelter Earnings Conference Call |
|
When: |
Thursday, February 22, 2024,
11:00 a.m. (ET) |
|
Participant Dial-in
Number: |
(323) 794-2423 |
|
|
(800) 289-0438 |
|
Conference ID: |
7036559 |
|
Webcast registry: |
Q4 2023 Glatfelter Earnings
Webcast |
|
OR access via our
website: |
Glatfelter Webcasts and
Presentations |
|
|
|
|
Replay will be
available, via the webcast link, approximately 2 hours after the
conclusion of our earnings call. |
|
|
Interested persons who wish to hear the live webcast should go
to the website prior to the starting time to register and ensure
any necessary audio software is installed.
|
Glatfelter Corporation and subsidiaries |
Consolidated Statements of Income |
(unaudited) |
|
|
|
Three months ended December 31, |
|
Year ended December 31, |
In thousands, except per share |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
320,382 |
|
|
$ |
373,903 |
|
|
$ |
1,385,516 |
|
|
$ |
1,491,326 |
|
Costs of products sold |
|
|
289,509 |
|
|
|
331,547 |
|
|
|
1,255,809 |
|
|
|
1,342,524 |
|
Gross profit |
|
|
30,873 |
|
|
|
42,356 |
|
|
|
129,707 |
|
|
|
148,802 |
|
Selling, general and
administrative expenses |
|
|
25,643 |
|
|
|
34,545 |
|
|
|
109,741 |
|
|
|
125,001 |
|
Goodwill and other asset
impairment charges |
|
|
— |
|
|
|
30,666 |
|
|
|
— |
|
|
|
190,556 |
|
Loss on sale of Ober-Schmitten
and other non-strategic operation |
|
|
560 |
|
|
|
— |
|
|
|
18,365 |
|
|
|
— |
|
Loss (gains) on dispositions
of plant, equipment and timberlands, net |
|
|
239 |
|
|
|
64 |
|
|
|
(1,111 |
) |
|
|
(2,804 |
) |
Operating income (loss) |
|
|
4,431 |
|
|
|
(22,919 |
) |
|
|
2,712 |
|
|
|
(163,951 |
) |
Non-operating income
(expense) |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(17,498 |
) |
|
|
(9,534 |
) |
|
|
(64,739 |
) |
|
|
(33,207 |
) |
Interest income |
|
|
327 |
|
|
|
261 |
|
|
|
1,486 |
|
|
|
408 |
|
Other, net |
|
|
(2,280 |
) |
|
|
(3,627 |
) |
|
|
(10,551 |
) |
|
|
(7,642 |
) |
Total non-operating expense |
|
|
(19,451 |
) |
|
|
(12,900 |
) |
|
|
(73,804 |
) |
|
|
(40,441 |
) |
Loss from continuing operations before income taxes |
|
|
(15,020 |
) |
|
|
(35,819 |
) |
|
|
(71,092 |
) |
|
|
(204,392 |
) |
Income tax provision (benefit) |
|
|
(6,410 |
) |
|
|
(1,706 |
) |
|
|
7,011 |
|
|
|
(10,275 |
) |
Loss from continuing operations |
|
|
(8,610 |
) |
|
|
(34,113 |
) |
|
|
(78,103 |
) |
|
|
(194,117 |
) |
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(56 |
) |
|
|
(220 |
) |
|
|
(950 |
) |
|
|
(91 |
) |
Income tax provision |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss from discontinued operations |
|
|
(56 |
) |
|
|
(220 |
) |
|
|
(950 |
) |
|
|
(91 |
) |
Net loss |
|
$ |
(8,666 |
) |
|
$ |
(34,333 |
) |
|
$ |
(79,053 |
) |
|
$ |
(194,208 |
) |
|
|
|
|
|
|
|
|
|
Basic earnings per
share |
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
$ |
(0.19 |
) |
|
$ |
(0.76 |
) |
|
$ |
(1.73 |
) |
|
$ |
(4.33 |
) |
Loss from discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
(0.02 |
) |
|
|
— |
|
Basic loss per share |
|
$ |
(0.19 |
) |
|
$ |
(0.76 |
) |
|
$ |
(1.75 |
) |
|
$ |
(4.33 |
) |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
$ |
(0.19 |
) |
|
$ |
(0.76 |
) |
|
$ |
(1.73 |
) |
|
$ |
(4.33 |
) |
Loss from discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
(0.02 |
) |
|
|
— |
|
Diluted loss per share |
|
$ |
(0.19 |
) |
|
$ |
(0.76 |
) |
|
$ |
(1.75 |
) |
|
$ |
(4.33 |
) |
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
45,134 |
|
|
|
44,884 |
|
|
|
45,058 |
|
|
|
44,828 |
|
Diluted |
|
|
45,134 |
|
|
|
44,884 |
|
|
|
45,058 |
|
|
|
44,828 |
|
Selected Financial Information |
(unaudited) |
|
|
Three months ended December 31, |
|
Year ended December 31, |
In thousands, except per share |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net
Sales |
|
|
|
|
|
|
|
Airlaid Material |
$ |
127,514 |
|
|
$ |
153,991 |
|
|
$ |
586,480 |
|
|
$ |
601,514 |
|
Composite Fibers |
|
115,486 |
|
|
|
136,427 |
|
|
|
483,517 |
|
|
|
523,863 |
|
Spunlace |
|
77,982 |
|
|
|
83,485 |
|
|
|
317,916 |
|
|
|
365,949 |
|
Inter-segment sales
elimination |
|
(600 |
) |
|
|
— |
|
|
|
(2,397 |
) |
|
|
— |
|
Total |
$ |
320,382 |
|
|
$ |
373,903 |
|
|
$ |
1,385,516 |
|
|
$ |
1,491,326 |
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
|
|
|
|
|
Airlaid Material |
$ |
8,371 |
|
|
$ |
14,091 |
|
|
$ |
43,207 |
|
|
$ |
54,809 |
|
Composite Fibers |
|
7,054 |
|
|
|
4,843 |
|
|
|
21,347 |
|
|
|
16,923 |
|
Spunlace |
|
2,322 |
|
|
|
(1,238 |
) |
|
|
(2,068 |
) |
|
|
(9,289 |
) |
Other and unallocated |
|
(13,316 |
) |
|
|
(40,615 |
) |
|
|
(59,774 |
) |
|
|
(226,394 |
) |
Total |
$ |
4,431 |
|
|
$ |
(22,919 |
) |
|
$ |
2,712 |
|
|
$ |
(163,951 |
) |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
|
|
|
|
|
Airlaid Material |
$ |
7,588 |
|
|
$ |
7,542 |
|
|
$ |
30,464 |
|
|
$ |
30,113 |
|
Composite Fibers |
|
3,905 |
|
|
|
4,355 |
|
|
|
15,665 |
|
|
|
19,631 |
|
Spunlace |
|
3,388 |
|
|
|
3,037 |
|
|
|
13,245 |
|
|
|
11,850 |
|
Other and unallocated |
|
972 |
|
|
|
1,308 |
|
|
|
3,873 |
|
|
|
5,130 |
|
Total |
$ |
15,853 |
|
|
$ |
16,242 |
|
|
$ |
63,247 |
|
|
$ |
66,724 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
|
|
|
|
|
Airlaid Material |
$ |
2,846 |
|
|
$ |
2,235 |
|
|
$ |
9,885 |
|
|
$ |
9,692 |
|
Composite Fibers |
|
3,934 |
|
|
|
3,010 |
|
|
|
12,286 |
|
|
|
15,730 |
|
Spunlace |
|
1,566 |
|
|
|
1,462 |
|
|
|
9,047 |
|
|
|
6,689 |
|
Other and unallocated |
|
195 |
|
|
|
949 |
|
|
|
2,552 |
|
|
|
5,629 |
|
Total |
$ |
8,541 |
|
|
$ |
7,656 |
|
|
$ |
33,770 |
|
|
$ |
37,740 |
|
|
|
|
|
|
|
|
|
Tons shipped
(metric) |
|
|
|
|
|
|
|
Airlaid Material |
|
37,293 |
|
|
|
39,186 |
|
|
|
156,442 |
|
|
|
164,844 |
|
Composite Fibers |
|
22,770 |
|
|
|
25,677 |
|
|
|
94,742 |
|
|
|
103,092 |
|
Spunlace |
|
15,571 |
|
|
|
14,957 |
|
|
|
61,618 |
|
|
|
72,725 |
|
Inter-segment sales
elimination |
|
(333 |
) |
|
|
— |
|
|
|
(1,258 |
) |
|
|
— |
|
Total |
|
75,301 |
|
|
|
79,820 |
|
|
|
311,544 |
|
|
|
340,661 |
|
Selected Financial Information |
(unaudited) |
|
|
|
Year ended December 31, |
In thousands |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Cash Flow
Data |
|
|
|
|
Cash from continuing
operations provided (used) by: |
|
|
|
|
Operating activities |
|
$ |
(25,616 |
) |
|
$ |
(40,820 |
) |
Investing activities |
|
|
(37,101 |
) |
|
|
(33,098 |
) |
Financing activities |
|
|
(949 |
) |
|
|
46,919 |
|
|
|
|
|
|
Depreciation, depletion and
amortization |
|
|
63,247 |
|
|
|
66,724 |
|
Capital expenditures |
|
|
(33,770 |
) |
|
|
(37,740 |
) |
|
|
December 31, 2023 |
|
December 31, 2022 |
Balance Sheet
Data |
|
|
|
|
Cash and cash equivalents |
|
$ |
50,265 |
|
|
$ |
110,660 |
|
Total assets |
|
|
1,563,796 |
|
|
|
1,647,353 |
|
Total debt |
|
|
860,318 |
|
|
|
845,109 |
|
Shareholders’ equity |
|
|
256,854 |
|
|
|
318,004 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Financial
Information to Non-GAAP Financial
Information
This press release includes a measure of earnings before the
effects of certain specifically identified items, which is referred
to as adjusted earnings and Adjusted EBITDA, both non-GAAP
measures. The Company uses non-GAAP adjusted earnings and Adjusted
EBITDA to supplement the understanding of its consolidated
financial statements presented in accordance with GAAP. Non-GAAP
adjusted earnings is meant to present the financial performance of
the Company’s core operations, which consist of the production and
sale of engineered materials. EBITDA is a measure used by
management to assess our operating performance and is calculated
using income (loss) from continuing operations and excludes
interest expense, interest income, income taxes, and depreciation
and amortization. Adjusted EBITDA is calculated using EBITDA and
further excludes certain items management considers to be unrelated
to the Company’s core operations. Management and the Company’s
Board of Directors use non-GAAP adjusted earnings and Adjusted
EBITDA to evaluate the performance of the Company’s fundamental
business in relation to prior periods and established business
plans. For purposes of determining adjusted earnings and Adjusted
EBITDA, the following items are excluded:
- Goodwill and other asset impairment charges. This adjustment
represents non-cash charges recorded to reduce the carrying amount
of certain long-lived assets of our Dresden, Germany facility and
goodwill of our Composite Fibers and Spunlace reporting
segments.
- Turnaround Strategy costs. This adjustment reflects costs
incurred in connection with the Company's Turnaround Strategy
initiated in 2022 under its new chief executive officer to drive
operational and financial improvement. These costs are primarily
related to professional services fees and employee separation
costs.
- Russia/Ukraine conflict charges. This adjustment reflects
reductions in reserves related to accounts receivable and inventory
previously recorded related to the military conflict.
- Strategic initiatives. These adjustments primarily reflect
professional and legal fees incurred directly related to evaluating
and executing certain strategic initiatives including costs
associated with acquisitions and related integrations.
- Tornado insurance deductible costs. This adjustment reflects
the deductible on an insured loss to a leased Spunlace facility in
Tennessee resulting from tornadoes in December 2023.
- Debt refinancing costs. Represents charges to write-off
unamortized debt issuance costs in connection with the
extinguishment of the Company’s €220.0 million Term Loan and IKB
loans, as well as the amendment to the Company's credit facility.
These costs also include an early repayment penalty related to the
extinguishment of the IKB loans.
- Ober-Schmitten divestiture costs. This adjustment reflects the
loss on sale of the Ober-Schmitten, Germany operations and
professional and other costs directly associated with the sale, and
previously anticipated closure, of the facility.
- CEO transition costs. This adjustment reflects costs related to
consulting services provided by the former CEO.
- Corporate headquarters relocation. This adjustment reflects
costs incurred in connection with the strategic relocation of the
Company’s corporate headquarters to Charlotte, NC. The costs are
primarily related to employee relocation costs and exit costs at
the former corporate headquarters.
- Cost optimization actions. These adjustments reflect charges
incurred in connection with initiatives to optimize the cost
structure of the Company, improve efficiencies or other objectives.
Such actions may include asset rationalization, headcount
reductions, or similar actions. These adjustments, which have
occurred at various times in the past, are irregular in timing and
relate to specific identified programs to reduce or optimize the
cost structure of a particular operating segment or a corporate
function.
- COVID-19 ERC recovery. This adjustment reflects the benefit
recognized from employee retention credits claimed under the
Coronavirus Aid, Relief, and Economic Security Act (“CARES”) Act
and the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and
professional services fees directly associated with claiming this
benefit.
- Timberland sales and related costs. These adjustments exclude
gains from the sales of timberlands as these items are not
considered to be part of our core business, ongoing results of
operations or cash flows. These adjustments are irregular in timing
and amount and may benefit our operating results.
Unlike net income determined in accordance with GAAP, non-GAAP
adjusted earnings and Adjusted EBITDA do not reflect all charges
and gains recorded by the Company for the applicable period and,
therefore, does not present a complete picture of the Company’s
results of operations for the respective period. However, non-GAAP
adjusted earnings and Adjusted EBITDA provide a measure of how the
Company’s core operations are performing, which management believes
is useful to investors because it allows comparison of such
operations from period to period. Non-GAAP adjusted earnings and
Adjusted EBITDA should not be considered in isolation from, or as a
substitute for, measures of financial performance prepared in
accordance with GAAP.
Adjusted EBITDA % is the calculation of Adjusted EBITDA divided
by net sales.
Although the Company provides guidance for Adjusted EBITDA, it
is not able to provide guidance for net income, the most directly
comparable GAAP measure. Certain elements of the composition of net
income, including income tax expense, are not predictable, making
it impractical for us to provide guidance on net income or to
reconcile our Adjusted EBITDA guidance to net income without
unreasonable efforts. For the same reasons, the Company is unable
to address the probable significance of the unavailable information
regarding net income, which could be material to future
results.
Calculation of Adjusted Free Cash FlowIn
thousands |
|
Year ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Cash used by operations |
|
$ |
(25,616 |
) |
|
$ |
(40,820 |
) |
Capital expenditures |
|
|
(33,770 |
) |
|
|
(37,740 |
) |
Free cash flow |
|
|
(59,386 |
) |
|
|
(78,560 |
) |
Adjustments: |
|
|
|
|
Turnaround strategy costs |
|
|
12,906 |
|
|
|
1,100 |
|
Strategic initiatives |
|
|
2,059 |
|
|
|
1,427 |
|
Ober-Schmitten divestiture |
|
|
2,712 |
|
|
|
— |
|
Cost optimization actions |
|
|
271 |
|
|
|
1,292 |
|
Restructuring charge - metallized operations |
|
|
39 |
|
|
|
— |
|
CEO transition costs |
|
|
8,731 |
|
|
|
718 |
|
Corporate headquarters relocation |
|
|
— |
|
|
|
(303 |
) |
Fox River environmental matter |
|
|
851 |
|
|
|
1,780 |
|
COVID-19 ERC recovery |
|
|
(7,623 |
) |
|
|
— |
|
Tax payments (refunds) on adjustments to adjusted earnings |
|
|
(887 |
) |
|
|
2,506 |
|
Adjusted free cash flow |
|
$ |
(40,327 |
) |
|
$ |
(70,040 |
) |
Net DebtIn thousands |
|
December 31, 2023 |
|
December 31, 2022 |
|
|
|
|
|
Short-term debt |
|
$ |
6,150 |
|
|
$ |
11,422 |
|
Current portion of long-term
debt |
|
|
1,005 |
|
|
|
40,435 |
|
Long-term debt, net of current
portion |
|
|
853,163 |
|
|
|
793,252 |
|
Total |
|
|
860,318 |
|
|
|
845,109 |
|
Less: Cash |
|
|
(50,265 |
) |
|
|
(110,660 |
) |
Net Debt |
|
$ |
810,053 |
|
|
$ |
734,449 |
|
Adjusted
EBITDA |
|
Three months ended December 31, |
|
Year ended December 31, |
In thousands |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(8,666 |
) |
|
$ |
(34,333 |
) |
|
$ |
(79,053 |
) |
|
$ |
(194,208 |
) |
Exclude: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax |
|
|
56 |
|
|
|
220 |
|
|
|
950 |
|
|
|
91 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes on continuing operations |
|
|
(6,410 |
) |
|
|
(1,706 |
) |
|
|
7,011 |
|
|
|
(10,275 |
) |
Depreciation and amortization |
|
|
15,853 |
|
|
|
16,242 |
|
|
|
63,247 |
|
|
|
66,724 |
|
Interest expense, net |
|
|
17,171 |
|
|
|
9,273 |
|
|
|
63,253 |
|
|
|
32,799 |
|
EBITDA |
|
|
18,004 |
|
|
|
(10,304 |
) |
|
|
55,408 |
|
|
|
(104,869 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
Goodwill and other asset impairment |
|
|
— |
|
|
|
30,666 |
|
|
|
— |
|
|
|
190,556 |
|
Turnaround strategy costs |
|
|
1,847 |
|
|
|
8,038 |
|
|
|
9,413 |
|
|
|
8,038 |
|
Russia/Ukraine conflict charges |
|
|
(1,441 |
) |
|
|
(741 |
) |
|
|
(1,441 |
) |
|
|
3,207 |
|
Strategic initiatives |
|
|
1,091 |
|
|
|
938 |
|
|
|
3,249 |
|
|
|
5,625 |
|
Ober-Schmitten divestiture |
|
|
— |
|
|
|
— |
|
|
|
18,797 |
|
|
|
— |
|
Tornado insurance deductible costs |
|
|
5,000 |
|
|
|
— |
|
|
|
5,000 |
|
|
|
— |
|
Debt refinancing |
|
|
— |
|
|
|
— |
|
|
|
59 |
|
|
|
— |
|
CEO transition costs |
|
|
— |
|
|
|
239 |
|
|
|
579 |
|
|
|
4,831 |
|
Corporate headquarters relocation |
|
|
— |
|
|
|
8 |
|
|
|
— |
|
|
|
351 |
|
Share-based compensation |
|
|
592 |
|
|
|
794 |
|
|
|
2,797 |
|
|
|
831 |
|
Cost optimization actions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
589 |
|
COVID-19 ERC recovery |
|
|
— |
|
|
|
(7,344 |
) |
|
|
41 |
|
|
|
(7,344 |
) |
Timberland sales and related costs |
|
|
— |
|
|
|
— |
|
|
|
(1,305 |
) |
|
|
(2,962 |
) |
Adjusted EBITDA |
|
$ |
25,093 |
|
|
$ |
22,294 |
|
|
$ |
92,597 |
|
|
$ |
98,853 |
|
Reconciliation of
Operating Profit to EBITDA by
Segment(1) |
|
Three months ended December 31, |
In thousands |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Airlaid
Materials |
|
|
|
|
Operating profit |
|
$ |
8,371 |
|
|
$ |
14,091 |
|
Add back: Depreciation & amortization |
|
|
7,588 |
|
|
|
7,542 |
|
EBITDA |
|
$ |
15,959 |
|
|
$ |
21,633 |
|
|
|
|
|
|
Composite
Fibers |
|
|
|
|
Operating profit |
|
$ |
7,054 |
|
|
$ |
4,843 |
|
Add back: Depreciation & amortization |
|
|
3,905 |
|
|
|
4,355 |
|
EBITDA |
|
$ |
10,959 |
|
|
$ |
9,198 |
|
|
|
|
|
|
Spunlace |
|
|
|
|
Operating profit (loss) |
|
$ |
2,322 |
|
|
$ |
(1,238 |
) |
Add back: Depreciation & amortization |
|
|
3,388 |
|
|
|
3,037 |
|
EBITDA |
|
$ |
5,710 |
|
|
$ |
1,799 |
|
(1) |
For our segment results, segment EBITDA is reconciled to segment
operating profit, which is the most comprehensive financial measure
for our segments. |
Adjusted Corporate
Unallocated Expenses |
|
Three months ended December 31, |
In thousands |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Other and unallocated
operating loss |
|
$ |
(13,316 |
) |
|
$ |
(40,615 |
) |
Adjustments: |
|
|
|
|
Goodwill and other asset impairment charges |
|
|
— |
|
|
|
30,666 |
|
Turnaround strategy costs |
|
|
1,724 |
|
|
|
8,038 |
|
Russia/Ukraine conflict charges |
|
|
(1,441 |
) |
|
|
(741 |
) |
Strategic initiatives |
|
|
1,091 |
|
|
|
938 |
|
Tornado insurance deductible costs |
|
|
5,000 |
|
|
|
— |
|
CEO transition costs |
|
|
— |
|
|
|
239 |
|
Corporate headquarters relocation |
|
|
— |
|
|
|
8 |
|
COVID-19 ERC recovery |
|
|
— |
|
|
|
(7,344 |
) |
Adjusted corporate unallocated expenses |
|
$ |
(6,942 |
) |
|
$ |
(8,811 |
) |
|
Caution Concerning Forward-Looking
Statements
Any statements included in this press release that pertain to
future financial and business matters are “forward-looking
statements” within the meaning of the safe harbor provisions of the
United States Private Securities Litigation Reform Act of 1995. The
Company uses words such as “anticipates”, “believes”, “expects”,
“future”, “intends”, “plans”, “targets”, and similar expressions to
identify forward-looking statements. Any such statements are based
on the Company’s current expectations and are subject to numerous
risks, uncertainties and other unpredictable or uncontrollable
factors that could cause future results to differ materially from
those expressed in the forward-looking statements. The risks,
uncertainties and other unpredictable or uncontrollable factors are
described in the Company’s filings with the U.S. Securities and
Exchange Commission (“SEC”) in the Risk Factors section and under
the heading “Forward-Looking Statements” in the Company’s most
recently filed Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q, which are available on the SEC’s website at www.sec.gov.
In light of these risks, uncertainties and other factors, the
forward-looking matters discussed in this press release may not
occur and readers are cautioned not to place undue reliance on
these forward-looking statements. The forward-looking statements
speak only as of the date of this press release and the Company
undertakes no obligation, and does not intend, to update these
forward-looking statements to reflect events or circumstances
occurring after the date of this press release.
About Glatfelter
Glatfelter is a leading global supplier of engineered materials
with a strong focus on innovation and sustainability. The Company’s
high quality, technology-driven, innovative, and customizable
nonwovens solutions can be found in products that are Enhancing
Everyday Life®. These include personal care and hygiene products,
food and beverage filtration, critical cleaning products, medical
and personal protection, packaging products, as well as home
improvement and industrial applications. Headquartered in
Charlotte, NC, the Company’s 2023 net sales were $1.4 billion. As
of December 31, 2023, we employed approximately 2,920
employees worldwide. Glatfelter’s operations utilize a variety of
manufacturing technologies including airlaid, wetlaid and spunlace
with fifteen manufacturing sites located in the United States,
Canada, Germany, the United Kingdom, France, Spain, and the
Philippines. The Company has sales offices in all major geographies
serving customers under the Glatfelter and Sontara® brands.
Additional information about Glatfelter may be found at
www.glatfelter.com.
Contacts: |
|
Investors: |
Media: |
Ramesh Shettigar |
Eileen L. Beck |
(717) 225-2746 |
(717) 225-2793 |
ramesh.shettigar@glatfelter.com |
eileen.beck@glatfelter.com |
Glatfelter (NYSE:GLT)
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