Glatfelter Corporation (NYSE: GLT), a leading global supplier of
engineered materials, today reported financial results for the
third quarter of 2023 and provided an update on the Company's
Turnaround Strategy to improve operational and financial
performance despite challenging market conditions.
“Our performance improved in the third quarter as we moved past
last quarter's one-time operational issues, further reflecting the
team’s continued commitment to driving efficiencies across the
business as part of our Turnaround Strategy,” said Thomas
Fahnemann, President and CEO of Glatfelter. “We generated
sequential EBITDA gains in our Composite Fibers segment through
improved operations and the divestiture of the Ober-Schmitten
business. Performance in the Airlaid segment also increased as we
delivered sequential volume growth, stronger production and
benefits from cost-out actions. In Spunlace, earnings were stable
sequentially as volume weakness was fully offset by operational
improvements and prudent cost control. These outcomes meaningfully
contributed to us generating Adjusted EBITDA of $25.5 million
during the quarter, with our enterprise EBITDA margin reaching the
highest level of the past eight quarters.”
Mr. Fahnemann continued, “While I am pleased with the progress
of the Turnaround Strategy and the resulting earnings improvement,
we cannot ignore the intense pressure from current market
conditions that is weighing on the overall industry and our
business, especially in Europe. As a result, we are lowering our
guidance for 2023 Adjusted EBITDA by $10 million.”
“Despite the ongoing market headwinds, I am confident we are
implementing the appropriate strategic actions focused on the
overall cost to serve our customers without compromising the value
and quality of our products. We remain focused on further improving
our productivity, investing in critical initiatives, including
innovation, and effectively positioning the Company to capture
volume growth when the markets begin to improve,” concluded Mr.
Fahnemann.
|
|
Three months ended September 30, |
Dollars in thousands |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Net sales |
|
$ |
329,921 |
|
|
$ |
371,780 |
|
Net loss from continuing
operations |
|
|
(19,680 |
) |
|
|
(49,254 |
) |
Adjusted loss from continuing
operations (1) |
|
|
(10,372 |
) |
|
|
(4,306 |
) |
EPS from continuing
operations |
|
|
(0.43 |
) |
|
|
(1.10 |
) |
Adjusted EPS (1) |
|
|
(0.23 |
) |
|
|
(0.10 |
) |
Adjusted EBITDA (1) |
|
|
25,467 |
|
|
|
26,329 |
|
(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.
Portfolio Optimization – Sale of Ober-Schmitten, German
Facility and Costa Rica fiber supply operation
As part of the Turnaround Strategy's detailed portfolio review
and as previously announced, the Company completed the sale of
Ober-Schmitten operations within the Composite Fibers segment to IS
Holdings (a Turkish family-owned and operated investment holding
company) and recorded a loss on the sale of $17.8 million. An
operating loss of $2 million in the quarter, and $8 million for the
year, from the Ober-Schmitten operations is recorded in the
Composite Fibers results.
In addition, on October 2, 2023, the Company completed the sale
of its fiber supply operation in Costa Rica to Southeastern Fibers
Corporation for a loss on sale of $0.5 million. This operation
incurred losses during the year of $0.2 million, also included in
the Composite Fibers results. As previously stated, we will
continuously review our operations to identify non-core facilities
and distribution for rationalization to better position our
portfolio for growth.
Third 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 September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
In
thousands, except per share |
|
Amount |
|
EPS |
|
Amount |
|
EPS |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(19,863 |
) |
|
$ |
(0.43 |
) |
|
$ |
(49,496 |
) |
|
$ |
(1.11 |
) |
Exclude: Loss from
discontinued operations, net of tax |
|
|
183 |
|
|
|
— |
|
|
|
242 |
|
|
|
0.01 |
|
Loss from continuing operations |
|
|
(19,680 |
) |
|
|
(0.43 |
) |
|
|
(49,254 |
) |
|
|
(1.10 |
) |
Adjustments (pre-tax): |
|
|
|
|
|
|
|
|
Goodwill and other asset impairment charges |
|
|
— |
|
|
|
|
|
42,541 |
|
|
|
Turnaround strategy costs (1) |
|
|
372 |
|
|
|
|
|
— |
|
|
|
Strategic initiatives (2) |
|
|
488 |
|
|
|
|
|
2,199 |
|
|
|
Ober-Schmitten divestiture (3) |
|
|
8,055 |
|
|
|
|
|
— |
|
|
|
CEO transition costs (4) |
|
|
(54 |
) |
|
|
|
|
1,489 |
|
|
|
Corporate headquarters relocation |
|
|
— |
|
|
|
|
|
120 |
|
|
|
Timberland sales and related costs |
|
|
(688 |
) |
|
|
|
|
— |
|
|
|
Total adjustments (pre-tax) |
|
|
8,173 |
|
|
|
|
|
46,349 |
|
|
|
Income taxes (5) |
|
|
928 |
|
|
|
|
|
(1,527 |
) |
|
|
Other tax adjustments (6) |
|
|
207 |
|
|
|
|
|
126 |
|
|
|
Total after-tax adjustments |
|
|
9,308 |
|
|
|
0.21 |
|
|
|
44,948 |
|
|
|
1.00 |
|
Adjusted loss from continuing operations |
|
$ |
(10,372 |
) |
|
$ |
(0.23 |
) |
|
$ |
(4,306 |
) |
|
$ |
(0.10 |
) |
(1) Reflects employee separation costs of $0.4 million.(2) For
2023, primarily reflects professional fees (tax and IT) of $0.4
million and other costs of $0.1 million. For 2022, primarily
reflects professional services fees (including legal, audit,
valuation specialists and consulting) of $1.6 million, employee
separation and other costs of $0.6 million, all of which are
directly related to acquisitions. (3) Reflects loss on sale of
$17.8 million partially offset by a benefit of $10.3 million
related to the reversal of employee separation expenses recorded in
Q2 2023 in anticipation of the closure of the facility, and legal
fees of $0.5 million.(4) For 2023, reflects a reduction in expected
benefit costs of $0.1 million related to the former CEO's
separation. For 2022, reflects cash severance and transition
related costs of $4.6 million partially offset by a $3.1 million
non-cash benefit related to the forfeiture of stock-based
compensation awards.(5) 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. (6) 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 September 30, |
|
Dollars
in thousands |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Tons shipped (metric) |
|
|
40,076 |
|
|
|
41,925 |
|
|
|
(1,849 |
) |
|
(4.4) |
% |
Net sales |
|
$ |
147,014 |
|
|
$ |
154,351 |
|
|
$ |
(7,337 |
) |
|
(4.8) |
% |
Operating income |
|
|
11,196 |
|
|
|
16,553 |
|
|
|
(5,357 |
) |
|
(32.4) |
% |
EBITDA |
|
|
18,749 |
|
|
|
23,953 |
|
|
|
(5,204 |
) |
|
(21.7) |
% |
EBITDA % |
|
|
12.8 |
% |
|
|
15.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Airlaid Materials’ third quarter net sales decreased $7.3
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 4.4% lower mainly in
feminine hygiene and table top categories driven by residual
inventory destocking, European market weakness and potential
competition from alternate substrates to manage input costs.
Currency translation was favorable by $4.8 million.
Airlaid Materials’ third quarter EBITDA of $18.7 million was
$5.2 million lower when compared to the third quarter of 2022.
Selling price decreases for pass-through contracts, lower energy
surcharges, and select spot price reductions of $4.9 million were
only partially offset by lower raw material and energy costs of
$2.7 million. Shipments were lower primarily in the feminine
hygiene and table top categories lowering results by $2.0 million.
Operations were unfavorable by $1.8 million mainly due to lower
production and higher operational spending. Currency and related
hedging positively impacted earnings by $0.7 million.
Composite Fibers
|
|
Three months ended September 30, |
Dollars
in thousands |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
|
|
|
|
|
|
|
|
Tons shipped (metric) |
|
|
22,188 |
|
|
|
24,958 |
|
|
|
(2,770 |
) |
|
(11.1 |
)% |
Net sales |
|
$ |
109,715 |
|
|
$ |
128,269 |
|
|
$ |
(18,554 |
) |
|
(14.5 |
)% |
Operating income |
|
|
7,268 |
|
|
|
6,636 |
|
|
|
632 |
|
|
9.5 |
% |
EBITDA |
|
|
11,166 |
|
|
|
10,597 |
|
|
|
569 |
|
|
5.4 |
% |
EBITDA % |
|
|
10.2 |
% |
|
|
8.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composite Fibers’ revenue was $18.6 million lower in the third
quarter of 2023, compared to the year-ago quarter due to lower
selling prices of $2.1 million, the sale of Ober-Schmitten
mid-quarter this year, and overall shipments down 11.1%. Currency
translation was favorable by $6.3 million.
Composite Fibers had EBITDA for the third quarter of $11.2
million compared with $10.6 million EBITDA in the third quarter of
2022. The significant negative price-cost gap experienced last year
turned positive in 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 $4.7 million. Lower shipments combined with
unfavorable mix from declines in food and beverage and composite
laminates negatively impacted income by $2.6 million. Operations
were favorable by $0.5 million mainly driven by benefits from the
Turnaround Strategy, partially offset by lower production.
Ober-Schmitten site negatively impacted year-over-year results by
$1.7 million. The impact of currency and related hedging negatively
impacted earnings by $0.3 million.
Spunlace
|
|
Three months ended September 30, |
Dollars
in thousands |
|
|
2023 |
|
|
|
2022 |
|
|
Change |
|
|
|
|
|
|
|
|
|
Tons shipped (metric) |
|
|
14,436 |
|
|
|
17,674 |
|
|
|
(3,238 |
) |
|
(18.3 |
)% |
Net sales |
|
$ |
73,791 |
|
|
$ |
89,160 |
|
|
$ |
(15,369 |
) |
|
(17.2 |
)% |
Operating loss |
|
|
(1,053 |
) |
|
|
(4,671 |
) |
|
|
3,618 |
|
|
77.5 |
% |
EBITDA |
|
|
2,236 |
|
|
|
(1,717 |
) |
|
|
3,953 |
|
|
230.2 |
% |
EBITDA % |
|
|
3.0 |
% |
|
(1.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spunlace revenue was $15.4 million lower in the third quarter of
2023, compared to the year-ago quarter mainly driven by lower
shipments of 18.3% and lower selling prices of $0.6 million, which
were partially offset by favorable currency translation of $1.3
million.
Spunlace EBITDA was higher by $4.0 million compared to the same
period last year. Lower selling prices and energy surcharges were
unfavorable by $0.6 million but were more than fully offset by
lower raw material and energy costs of $4.7 million, reversing the
earnings impact from the negative price-cost gap experienced
throughout 2022. Volume was unfavorable by $1.6 million driven by
lower shipments in most categories. Operations were favorable by
$1.0 million from headcount actions taken in 2022, which resulted
in lower overall spending and other cost improvements as a result
of the turnaround strategy. Currency positively impacted earnings
by $0.4 million.
Other Financial Information
The amount of operating expense not allocated to a reporting
segment in the Segment Financial Information totaled $14.8 million
in the third quarter of 2023 compared with $52.6 million in the
same period a year ago. Excluding the items identified to present
“adjusted earnings,” unallocated expenses for the third quarter of
2023 increased $0.4 million compared to the third quarter of
2022.
In the third quarter of 2023, our U.S. GAAP pre-tax loss from
continuing operations totaled $16.4 million and we recorded an
income tax expense of $3.3 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 $44.3 million and an income tax provision of $4.9
million.
Balance Sheet and Other Information
Cash and cash equivalents totaled $52.7 million and $110.7
million as of September 30, 2023 and December 31, 2022,
respectively. Total debt was $855.3 million and $845.1 million as
of September 30, 2023 and December 31, 2022, respectively. Net
debt was $802.6 million as of September 30, 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 3.1 times at September 30,
2023.
Capital expenditures during the nine months ended
September 30, 2023 and 2022 totaled $25.2 million and $30.1
million, respectively. Operating cash flow for the nine months
ended September 30, 2023 and 2022 was a use of $42.0 million
and $64.4 million, respectively. Adjusted free cash flow for the
nine months ended September 30, 2023 was a use of $50.9
million compared with a use of $88.1 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 first nine
months of 2023 as compared to the same period in 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 third 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: |
Q3 2023 Glatfelter Earnings Conference Call |
|
When: |
Thursday, November 2, 2023,
11:00 a.m. (ET) |
|
Participant Dial-in
Number: |
(323) 794-2551 |
|
|
(800) 239-9838 |
|
Conference ID: |
8249255 |
|
Webcast registry: |
Q3 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
subsidiariesConsolidated Statements of
Income(unaudited) |
|
|
Three months endedSeptember 30, |
|
Nine months ended September 30, |
In thousands, except per share |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
329,921 |
|
|
$ |
371,780 |
|
|
$ |
1,065,134 |
|
|
$ |
1,117,423 |
|
Costs of products sold |
|
285,434 |
|
|
|
334,396 |
|
|
|
966,300 |
|
|
|
1,010,977 |
|
Gross profit |
|
44,487 |
|
|
|
37,384 |
|
|
|
98,834 |
|
|
|
106,446 |
|
Selling, general and
administrative expenses |
|
24,714 |
|
|
|
28,890 |
|
|
|
84,098 |
|
|
|
90,456 |
|
Goodwill and other asset
impairment charges |
|
— |
|
|
|
42,541 |
|
|
|
— |
|
|
|
159,890 |
|
Loss on sale of
Ober-Schmitten |
|
17,805 |
|
|
|
— |
|
|
|
17,805 |
|
|
|
— |
|
Loss (gains) on dispositions
of plant, equipment and timberlands, net |
|
(685 |
) |
|
|
20 |
|
|
|
(1,350 |
) |
|
|
(2,868 |
) |
Operating income (loss) |
|
2,653 |
|
|
|
(34,067 |
) |
|
|
(1,719 |
) |
|
|
(141,032 |
) |
Non-operating income
(expense) |
|
|
|
|
|
|
|
Interest expense |
|
(17,386 |
) |
|
|
(8,139 |
) |
|
|
(47,241 |
) |
|
|
(23,673 |
) |
Interest income |
|
329 |
|
|
|
92 |
|
|
|
1,159 |
|
|
|
147 |
|
Other, net |
|
(1,948 |
) |
|
|
(2,220 |
) |
|
|
(8,271 |
) |
|
|
(4,015 |
) |
Total non-operating expense |
|
(19,005 |
) |
|
|
(10,267 |
) |
|
|
(54,353 |
) |
|
|
(27,541 |
) |
Loss from continuing operations before income taxes |
|
(16,352 |
) |
|
|
(44,334 |
) |
|
|
(56,072 |
) |
|
|
(168,573 |
) |
Income tax provision (benefit) |
|
3,328 |
|
|
|
4,920 |
|
|
|
13,421 |
|
|
|
(8,569 |
) |
Loss from continuing operations |
|
(19,680 |
) |
|
|
(49,254 |
) |
|
|
(69,493 |
) |
|
|
(160,004 |
) |
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
(183 |
) |
|
|
(242 |
) |
|
|
(894 |
) |
|
|
129 |
|
Income tax provision |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Income (loss) from discontinued operations |
|
(183 |
) |
|
|
(242 |
) |
|
|
(894 |
) |
|
|
129 |
|
Net loss |
$ |
(19,863 |
) |
|
$ |
(49,496 |
) |
|
$ |
(70,387 |
) |
|
$ |
(159,875 |
) |
|
|
|
|
|
|
|
|
Basic earnings per
share |
|
|
|
|
|
|
|
Loss from continuing operations |
$ |
(0.43 |
) |
|
$ |
(1.10 |
) |
|
$ |
(1.54 |
) |
|
$ |
(3.57 |
) |
Loss from discontinued operations |
|
— |
|
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
— |
|
Basic loss per share |
$ |
(0.43 |
) |
|
$ |
(1.11 |
) |
|
$ |
(1.56 |
) |
|
$ |
(3.57 |
) |
|
|
|
|
|
|
|
|
Diluted earnings per
share |
|
|
|
|
|
|
|
Loss from continuing operations |
$ |
(0.43 |
) |
|
$ |
(1.10 |
) |
|
$ |
(1.54 |
) |
|
$ |
(3.57 |
) |
Loss from discontinued operations |
|
— |
|
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
— |
|
Diluted loss per share |
$ |
(0.43 |
) |
|
$ |
(1.11 |
) |
|
$ |
(1.56 |
) |
|
$ |
(3.57 |
) |
|
|
|
|
|
|
|
|
Weighted average
shares outstanding |
|
|
|
|
|
|
|
Basic |
|
45,099 |
|
|
|
44,877 |
|
|
|
45,033 |
|
|
|
44,809 |
|
Diluted |
|
45,099 |
|
|
|
44,877 |
|
|
|
45,033 |
|
|
|
44,809 |
|
Segment Financial Information(unaudited) |
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
In thousands, except per share |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net
Sales |
|
|
|
|
|
|
|
Airlaid Material |
$ |
147,014 |
|
|
$ |
154,351 |
|
|
$ |
458,966 |
|
|
$ |
447,523 |
|
Composite Fibers |
|
109,715 |
|
|
|
128,269 |
|
|
|
368,031 |
|
|
|
387,436 |
|
Spunlace |
|
73,791 |
|
|
|
89,160 |
|
|
|
239,934 |
|
|
|
282,464 |
|
Inter-segment sales
elimination |
|
(599 |
) |
|
|
— |
|
|
|
(1,797 |
) |
|
|
— |
|
Total |
$ |
329,921 |
|
|
$ |
371,780 |
|
|
$ |
1,065,134 |
|
|
$ |
1,117,423 |
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
|
|
|
|
|
Airlaid Material |
$ |
11,196 |
|
|
$ |
16,553 |
|
|
$ |
34,836 |
|
|
$ |
40,718 |
|
Composite Fibers |
|
7,268 |
|
|
|
6,636 |
|
|
|
14,293 |
|
|
|
12,080 |
|
Spunlace |
|
(1,053 |
) |
|
|
(4,671 |
) |
|
|
(4,390 |
) |
|
|
(8,051 |
) |
Other and unallocated |
|
(14,758 |
) |
|
|
(52,585 |
) |
|
|
(46,458 |
) |
|
|
(185,779 |
) |
Total |
$ |
2,653 |
|
|
$ |
(34,067 |
) |
|
$ |
(1,719 |
) |
|
$ |
(141,032 |
) |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
|
|
|
|
|
Airlaid Material |
$ |
7,553 |
|
|
$ |
7,400 |
|
|
$ |
22,876 |
|
|
$ |
22,571 |
|
Composite Fibers |
|
3,898 |
|
|
|
3,961 |
|
|
|
11,760 |
|
|
|
15,276 |
|
Spunlace |
|
3,289 |
|
|
|
2,954 |
|
|
|
9,857 |
|
|
|
8,813 |
|
Other and unallocated |
|
953 |
|
|
|
1,231 |
|
|
|
2,901 |
|
|
|
3,822 |
|
Total |
$ |
15,693 |
|
|
$ |
15,546 |
|
|
$ |
47,394 |
|
|
$ |
50,482 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
|
|
|
|
|
Airlaid Material |
$ |
2,625 |
|
|
$ |
1,925 |
|
|
$ |
7,039 |
|
|
$ |
7,457 |
|
Composite Fibers |
|
2,579 |
|
|
|
2,462 |
|
|
|
8,352 |
|
|
|
12,720 |
|
Spunlace |
|
2,271 |
|
|
|
1,341 |
|
|
|
7,481 |
|
|
|
5,227 |
|
Other and unallocated |
|
296 |
|
|
|
1,659 |
|
|
|
2,357 |
|
|
|
4,680 |
|
Total |
$ |
7,771 |
|
|
$ |
7,387 |
|
|
$ |
25,229 |
|
|
$ |
30,084 |
|
|
|
|
|
|
|
|
|
Tons shipped
(metric) |
|
|
|
|
|
|
|
Airlaid Material |
|
40,076 |
|
|
|
41,925 |
|
|
|
119,149 |
|
|
|
125,658 |
|
Composite Fibers |
|
22,188 |
|
|
|
24,958 |
|
|
|
71,972 |
|
|
|
77,415 |
|
Spunlace |
|
14,436 |
|
|
|
17,674 |
|
|
|
46,047 |
|
|
|
57,768 |
|
Inter-segment sales
elimination |
|
(328 |
) |
|
|
— |
|
|
|
(925 |
) |
|
|
— |
|
Total |
|
76,372 |
|
|
|
84,557 |
|
|
|
236,243 |
|
|
|
260,841 |
|
Selected Financial Information(unaudited) |
|
|
|
Nine months ended September 30, |
In thousands |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Cash Flow
Data |
|
|
|
|
Cash from continuing
operations provided (used) by: |
|
|
|
|
Operating activities |
|
$ |
(41,955 |
) |
|
$ |
(64,353 |
) |
Investing activities |
|
|
(28,694 |
) |
|
|
(25,502 |
) |
Financing activities |
|
|
10,987 |
|
|
|
52,084 |
|
|
|
|
|
|
Depreciation, depletion and
amortization |
|
|
47,394 |
|
|
|
50,482 |
|
Capital expenditures |
|
|
(25,229 |
) |
|
|
(30,084 |
) |
|
September 30, 2023 |
|
December 31, 2022 |
Balance Sheet
Data |
|
|
|
Cash and cash equivalents |
$ |
52,741 |
|
|
$ |
110,660 |
|
Total assets |
|
1,532,912 |
|
|
|
1,647,353 |
|
Total debt |
|
855,345 |
|
|
|
845,109 |
|
Shareholders’ equity |
|
253,698 |
|
|
|
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.
- 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.
- 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 a costs associated with the separation of our former CEO,
including a non-cash pension settlement charge related to a
lump-sum distribution made in Q1 2023 under the terms of his
non-qualified pension plan agreement.
- 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.
- 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 |
|
Nine months ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Cash from operations |
|
$ |
(41,955 |
) |
|
$ |
(64,353 |
) |
Capital expenditures |
|
|
(25,229 |
) |
|
|
(30,084 |
) |
Free cash flow |
|
|
(67,184 |
) |
|
|
(94,437 |
) |
Adjustments: |
|
|
|
|
Turnaround strategy costs |
|
|
12,773 |
|
|
|
— |
|
Strategic initiatives |
|
|
1,420 |
|
|
|
1,204 |
|
Ober-Schmitten divestiture |
|
|
570 |
|
|
|
— |
|
Cost optimization actions |
|
|
179 |
|
|
|
1,134 |
|
Restructuring charge - metallized operations |
|
|
39 |
|
|
|
— |
|
CEO transition costs |
|
|
8,198 |
|
|
|
317 |
|
Corporate headquarters relocation |
|
|
— |
|
|
|
(311 |
) |
Fox River environmental matter |
|
|
525 |
|
|
|
1,440 |
|
COVID-19 ERC recovery |
|
|
(6,586 |
) |
|
|
— |
|
Tax payments (refunds) on adjustments to adjusted earnings |
|
|
(861 |
) |
|
|
2,599 |
|
Adjusted free cash flow |
|
$ |
(50,927 |
) |
|
$ |
(88,054 |
) |
Net DebtIn thousands |
|
September 30, 2023 |
|
December 31, 2022 |
|
|
|
|
|
Short-term debt |
|
$ |
5,555 |
|
|
$ |
11,422 |
|
Current portion of long-term
debt |
|
|
1,926 |
|
|
|
40,435 |
|
Long-term debt, net of current
portion |
|
|
847,864 |
|
|
|
793,252 |
|
Total |
|
|
855,345 |
|
|
|
845,109 |
|
Less: Cash |
|
|
(52,741 |
) |
|
|
(110,660 |
) |
Net Debt |
|
$ |
802,604 |
|
|
$ |
734,449 |
|
Adjusted
EBITDA |
|
Three months ended September 30, |
|
Nine months ended September 30, |
In thousands |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(19,863 |
) |
|
$ |
(49,496 |
) |
|
$ |
(70,387 |
) |
|
$ |
(159,875 |
) |
Exclude: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax |
|
|
183 |
|
|
|
242 |
|
|
|
894 |
|
|
|
(129 |
) |
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes on continuing operations |
|
|
3,328 |
|
|
|
4,920 |
|
|
|
13,421 |
|
|
|
(8,569 |
) |
Depreciation and amortization |
|
|
15,693 |
|
|
|
15,546 |
|
|
|
47,394 |
|
|
|
50,482 |
|
Interest expense, net |
|
|
17,057 |
|
|
|
8,047 |
|
|
|
46,082 |
|
|
|
23,526 |
|
EBITDA |
|
|
16,398 |
|
|
|
(20,741 |
) |
|
|
37,404 |
|
|
|
(94,565 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
Goodwill and other asset |
|
|
— |
|
|
|
42,541 |
|
|
|
— |
|
|
|
159,890 |
|
Turnaround strategy costs |
|
|
370 |
|
|
|
— |
|
|
|
7,566 |
|
|
|
— |
|
Russia/Ukraine conflict charges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,948 |
|
Strategic initiatives |
|
|
488 |
|
|
|
2,199 |
|
|
|
2,158 |
|
|
|
4,687 |
|
Ober-Schmitten divestiture |
|
|
8,055 |
|
|
|
— |
|
|
|
18,797 |
|
|
|
— |
|
Debt refinancing |
|
|
— |
|
|
|
— |
|
|
|
59 |
|
|
|
— |
|
CEO transition costs |
|
|
(54 |
) |
|
|
4,592 |
|
|
|
579 |
|
|
|
4,592 |
|
Corporate headquarters relocation |
|
|
— |
|
|
|
120 |
|
|
|
— |
|
|
|
343 |
|
Share-based compensation |
|
|
898 |
|
|
|
(2,382 |
) |
|
|
2,205 |
|
|
|
37 |
|
Cost optimization actions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
589 |
|
COVID-19 ERC recovery |
|
|
— |
|
|
|
— |
|
|
|
41 |
|
|
|
— |
|
Timberland sales and related costs |
|
|
(688 |
) |
|
|
— |
|
|
|
(1,305 |
) |
|
|
(2,962 |
) |
Adjusted EBITDA |
|
$ |
25,467 |
|
|
$ |
26,329 |
|
|
$ |
67,504 |
|
|
$ |
76,559 |
|
Reconciliation of
Operating Profit to EBITDA by
Segment(1) |
|
Three months ended September 30, |
In thousands |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Airlaid
Materials |
|
|
|
|
Operating profit |
|
$ |
11,196 |
|
|
$ |
16,553 |
|
Add back: Depreciation & amortization |
|
|
7,553 |
|
|
|
7,400 |
|
EBITDA |
|
$ |
18,749 |
|
|
$ |
23,953 |
|
|
|
|
|
|
Composite
Fibers |
|
|
|
|
Operating profit |
|
$ |
7,268 |
|
|
$ |
6,636 |
|
Add back: Depreciation & amortization |
|
|
3,898 |
|
|
|
3,961 |
|
EBITDA |
|
$ |
11,166 |
|
|
$ |
10,597 |
|
|
|
|
|
|
Spunlace |
|
|
|
|
Operating profit |
|
$ |
(1,053 |
) |
|
$ |
(4,671 |
) |
Add back: Depreciation & amortization |
|
|
3,289 |
|
|
|
2,954 |
|
EBITDA |
|
$ |
2,236 |
|
|
$ |
(1,717 |
) |
(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 September 30, |
In thousands |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Other and unallocated
operating loss |
|
$ |
(14,758 |
) |
|
$ |
(52,585 |
) |
Adjustments: |
|
|
|
|
Goodwill and other asset impairment charges |
|
|
— |
|
|
|
42,541 |
|
Turnaround strategy costs |
|
|
372 |
|
|
|
— |
|
Strategic initiatives |
|
|
488 |
|
|
|
2,199 |
|
Ober-Schmitten divestiture |
|
|
8,055 |
|
|
|
— |
|
CEO transition costs |
|
|
(54 |
) |
|
|
1,489 |
|
Corporate headquarters relocation |
|
|
— |
|
|
|
120 |
|
Timberland sales and related costs |
|
|
(688 |
) |
|
|
— |
|
Adjusted corporate unallocated expenses |
|
$ |
(6,585 |
) |
|
$ |
(6,236 |
) |
|
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 2022 net sales were $1.5 billion. As
of September 30, 2023, we employed approximately 2,980
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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Glatfelter (NYSE:GLT)
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