Glatfelter Corporation (NYSE: GLT), a leading global supplier of
engineered materials, today reported financial results for the
second quarter of 2023 and provided an update on the Company's
Turnaround Strategy to improve operational and financial
performance and combat the impacts of market weakness and continued
customer destocking.
“Our second quarter results fell below expectations as our
business faced volume losses due to the ongoing industry-wide
weakness in our markets, combined with several impactful
operational events. Despite these challenges, we aggressively
pursued our Turnaround Strategy by delivering $7 million of
benefits, further emphasizing the importance of this work and its
earnings potential. Had it not been for the continued macroeconomic
and operational challenges impacting our bottom line, our second
quarter results would have been in-line with the first quarter of
2023, which reinforces our stable business fundamentals,” said
Thomas Fahnemann, President and CEO of Glatfelter.
|
|
Three months ended June 30, |
Dollars in thousands |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Net sales |
|
$ |
357,005 |
|
|
$ |
363,963 |
|
Net loss from continuing
operations |
|
|
(36,631 |
) |
|
|
(2,460 |
) |
Adjusted loss from continuing
operations (1) |
|
|
(20,450 |
) |
|
|
(1,596 |
) |
EPS from continuing
operations |
|
|
(0.82 |
) |
|
|
(0.05 |
) |
Adjusted EPS (1) |
|
|
(0.45 |
) |
|
|
(0.04 |
) |
Adjusted EBITDA (1) |
|
|
17,252 |
|
|
|
27,219 |
|
(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.
Mr. Fahnemann continued, “The operational impacts during the
second quarter included fires in our Fort Smith and Asheville
facilities, along with increased expense from foreign exchange
effects, customer financing, and other items. More materially, as
we progressed the closure of our Ober-Schmitten site, we incurred
losses from further deterioration of the site’s operations due to
increased employee absenteeism and turnover, coupled with customers
seeking alternative suppliers following the announcement of the
closure. As a result of Ober-Schmitten’s performance and market
weakness, we are lowering our annual guidance for Adjusted EBITDA
to be in the range of $100 million to $110 million for 2023.”
“While we experienced this second quarter set-back in our
overall financial performance, we remain confident in our ability
to deliver further benefits from the Turnaround Strategy by
adapting actions to address the near-term market realities. The
team remains focused on the plan’s six key initiatives including
optimizing price-cost gap, reducing unproductive fixed costs,
further improving Spunlace results, addressing the product
portfolio, managing working capital, and increasing operational
productivity. We still have significant work ahead of us, knowing
that it will take time to truly achieve sustainable profitability,”
concluded Mr. Fahnemann.
Portfolio Optimization – Closure of Ober-Schmitten,
German Facility
As part of the detailed portfolio review and as previously
announced, Glatfelter is in the process of finalizing plans to
close its Ober-Schmitten, Germany, facility due to the ongoing
financial underperformance of the electrical and glassine specialty
papers manufactured at the site. The Ober-Schmitten facility
recorded a ~$4 million operating loss during the second quarter,
providing further validation that the closure is in the best
long-term interest of the Company. Pending the completion of
negotiations with the Ober-Schmitten Economic Committee and Works
Council, the Company expects to cease operations at the site during
the third quarter with some final finishing, shipping, wind-down
and decommissioning to follow.
Second 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 June 30, |
|
|
2023 |
|
2022 |
In
thousands, except per share |
|
Amount |
|
EPS |
|
Amount |
|
EPS |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(36,940 |
) |
|
$ |
(0.83 |
) |
|
$ |
(2,052 |
) |
|
$ |
(0.04 |
) |
Exclude: Loss (income) from
discontinued operations, net |
|
|
309 |
|
|
|
0.01 |
|
|
|
(408 |
) |
|
|
(0.01 |
) |
Loss from continuing operations |
|
|
(36,631 |
) |
|
|
(0.82 |
) |
|
|
(2,460 |
) |
|
|
(0.05 |
) |
Adjustments (pre-tax): |
|
|
|
|
|
|
|
|
Turnaround strategy costs (1) |
|
|
2,199 |
|
|
|
|
|
— |
|
|
|
Strategic initiatives (2) |
|
|
889 |
|
|
|
|
|
653 |
|
|
|
Ober-Schmitten closure costs (3) |
|
|
10,793 |
|
|
|
|
|
— |
|
|
|
Corporate headquarters relocation |
|
|
— |
|
|
|
|
|
135 |
|
|
|
COVID-19 ERC recovery (4) |
|
|
(233 |
) |
|
|
|
|
— |
|
|
|
Total adjustments (pre-tax) |
|
|
13,648 |
|
|
|
|
|
788 |
|
|
|
Income taxes (5) |
|
|
(58 |
) |
|
|
|
|
(20 |
) |
|
|
Other tax adjustments (6) |
|
|
2,591 |
|
|
|
|
|
96 |
|
|
|
Total after-tax adjustments |
|
|
16,181 |
|
|
|
0.36 |
|
|
|
864 |
|
|
|
0.01 |
|
Adjusted loss from continuing operations |
|
$ |
(20,450 |
) |
|
$ |
(0.45 |
) |
|
$ |
(1,596 |
) |
|
$ |
(0.04 |
) |
(1) |
Reflects professional services fees of $1.5 million and employee
separation costs of $0.7 million. |
(2) |
For 2023, primarily reflects integration activities including the
write-off of construction in process asset deemed unusable of $0.5
million, consulting and legal fees of $0.3 million, and other costs
of $0.1 million. For 2022, primarily reflects professional services
fees (including legal, audit, valuation specialists and consulting)
of $0.5 million, employee separation and other costs of $0.4
million, all of which are directly related to acquisitions. |
(3) |
Reflects employee separation costs of $10.4 million and
professional services fees and other costs of $0.4 million in
connection with the closure of the Ober-Schmitten facility. |
(4) |
Reflects $0.2 million of interest income on employee retention
credits claimed under the CARES Act of 2020 and the subsequent
related amendments. |
(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.
The amount in 2023 also includes $2.4 million of deferred tax
expense resulting from valuation allowance for Ober-Schmitten
facility. |
A description of each of the adjustments presented above is
included later in this release.
Airlaid Materials
|
|
Three months ended June 30, |
Dollars
in thousands |
|
2023 |
|
2022 |
|
Change |
|
|
|
|
|
|
|
|
|
Tons shipped (metric) |
|
|
39,246 |
|
|
|
40,681 |
|
|
|
(1,435 |
) |
|
(3.5 |
)% |
Net sales |
|
$ |
152,511 |
|
|
$ |
143,708 |
|
|
$ |
8,803 |
|
|
6.1 |
% |
Operating income |
|
|
9,726 |
|
|
|
11,944 |
|
|
|
(2,218 |
) |
|
(18.6 |
)% |
EBITDA |
|
|
17,363 |
|
|
|
19,486 |
|
|
|
(2,123 |
) |
|
(10.9 |
)% |
EBITDA % |
|
|
11.4 |
% |
|
|
13.6 |
% |
|
|
|
|
Airlaid Materials’ second quarter net sales increased $8.8
million in the year-over-year comparison mainly driven by higher
selling prices from cost pass-through arrangements and pricing
actions to recover significant inflation in raw materials and
energy. Shipments were 3.5% lower mainly due to the feminine
hygiene category where customers were destocking and closely
managing inventory levels. Currency translation was favorable by
$1.6 million.
Airlaid Materials’ second quarter EBITDA of $17.4 million was
$2.1 million lower when compared to the second quarter of 2022.
Shipments were lower primarily in the feminine hygiene category
with some offset in wipes and tabletop categories, lowering results
by $1.1 million. Selling price increases and energy surcharges of
$11.7 million fully offset the higher raw material and energy costs
of $11.5 million. Operations were unfavorable by $2.1 million
primarily due to a fire in Fort Smith. The impact of currency and
related hedging positively impacted earnings by $0.9 million.
Composite Fibers
|
|
Three months ended June 30, |
Dollars
in thousands |
|
2023 |
|
2022 |
|
Change |
|
|
|
|
|
|
|
|
|
Tons shipped (metric) |
|
|
24,966 |
|
|
|
24,246 |
|
|
|
720 |
|
|
3.0 |
% |
Net sales |
|
$ |
125,725 |
|
|
$ |
123,338 |
|
|
$ |
2,387 |
|
|
1.9 |
% |
Operating income (loss) |
|
|
898 |
|
|
|
5,779 |
|
|
|
(4,881 |
) |
|
(84.5 |
)% |
EBITDA |
|
|
4,795 |
|
|
|
10,575 |
|
|
|
(5,780 |
) |
|
(54.7 |
)% |
EBITDA % |
|
|
3.8 |
% |
|
|
8.6 |
% |
|
|
|
|
Composite Fibers’ revenue was $2.4 million higher in the second
quarter of 2023, compared to the year-ago quarter due to higher
selling prices of $5.5 million, partly offset by unfavorable mix.
Shipments were up 3.0% on strong wallcover sales which was mostly
offset by lower food and beverage, composite laminates and
metallized products shipments. Currency translation was favorable
by $1.4 million.
Composite Fibers had EBITDA for the second quarter of $4.8
million compared with $10.6 million EBITDA in the second quarter of
2022. Higher selling prices and energy surcharges more than offset
the continued inflation in energy and raw material and were a net
favorable benefit to results of $1.7 million. The strong wallcover
shipments were more than offset by lower shipments of higher margin
food and beverage and composite laminates categories that
negatively impacted income by $1.1 million. Operations were
unfavorable by $5.9 million mainly driven by lower production
volume to match customer demand and manage inventory levels.
Ober-Schmitten site negatively impacted year-over-year results by
$4.3 million. The impact of currency and related hedging negatively
impacted earnings by $0.5 million.
Spunlace
|
|
Three months ended June 30, |
Dollars
in thousands |
|
2023 |
|
2022 |
|
Change |
|
|
|
|
|
|
|
|
|
Tons shipped (metric) |
|
|
15,191 |
|
|
|
19,358 |
|
|
|
(4,167 |
) |
|
(21.5 |
)% |
Net sales |
|
$ |
79,420 |
|
|
$ |
96,917 |
|
|
$ |
(17,497 |
) |
|
(18.1 |
)% |
Operating loss |
|
|
(1,314 |
) |
|
|
(1,808 |
) |
|
|
494 |
|
|
27.3 |
% |
EBITDA |
|
|
2,162 |
|
|
|
1,137 |
|
|
|
1,025 |
|
|
90.1 |
% |
EBITDA % |
|
|
2.7 |
% |
|
|
1.2 |
% |
|
|
|
|
Spunlace revenue was $17.5 million lower in the second quarter
of 2023, compared to the year-ago quarter as lower shipments of
21.5% were partially offset by higher selling prices of $2.1
million and favorable currency translation of $0.5 million.
Spunlace EBITDA almost doubled in the second quarter of this
year to $2.2 million. Higher selling prices and energy surcharges
were favorable by $2.1 million and raw material and energy costs
were slightly favorable compared to last year by $0.4 million.
Volume was unfavorable by $1.7 million driven by lower shipments in
all categories. Operations were favorable by $0.2 million from
headcount actions taken in 2022, improved converting and lower
spending, but were mostly offset by the unfavorable impact from
lower production to manage inventory and the fire in Asheville.
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 $19.8 million
in the second quarter of 2023 compared with $7.0 million in the
same period a year ago. Excluding the items identified to present
“adjusted earnings,” unallocated expenses for the second quarter of
2023 decreased $0.3 million compared to the second quarter of
2022.
In the second quarter of 2023, our U.S. GAAP pre-tax loss from
continuing operations totaled $30.2 million and we recorded an
income tax expense 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
income of $0.8 million and an income tax provision of $3.3
million.
Balance Sheet and Other Information
Cash and cash equivalents totaled $53.9 million and $110.7
million as of June 30, 2023 and December 31, 2022,
respectively. Total debt was $863.2 million and $845.1 million as
of June 30, 2023 and December 31, 2022, respectively. Net debt
was $809.4 million as of June 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 3.4 times at June 30, 2023.
Capital expenditures during the six months ended June 30,
2023 and 2022 totaled $17.5 million and $22.7 million,
respectively. Operating cash flow for the six months ended
June 30, 2023 and 2022 was a use of $53.0 million and $79.5
million, respectively. Adjusted free cash flow for the six months
ended June 30, 2023 was a use of $58.4 million compared with a
use of $95.0 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 first six 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 second 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: |
Q2 2023 Glatfelter Earnings
Conference Call |
When: |
Thursday, August 3, 2023,
11:00 a.m. (ET) |
Participant Dial-in
Number: |
(323) 794-2551 |
|
(800) 239-9838 |
Conference ID: |
1078717 |
Webcast registry: |
Q2 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 ended June 30, |
|
Six months ended June 30, |
In thousands, except per share |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
357,005 |
|
|
$ |
363,963 |
|
|
$ |
735,213 |
|
|
$ |
745,643 |
|
Costs of products sold |
|
338,872 |
|
|
|
326,566 |
|
|
|
680,866 |
|
|
|
676,581 |
|
Gross profit |
|
18,133 |
|
|
|
37,397 |
|
|
|
54,347 |
|
|
|
69,062 |
|
Selling, general and
administrative expenses |
|
28,639 |
|
|
|
28,400 |
|
|
|
59,384 |
|
|
|
61,566 |
|
Goodwill and other asset
impairment charges |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
117,349 |
|
Loss (gains) on dispositions
of plant, equipment and timberlands, net |
|
(21 |
) |
|
|
73 |
|
|
|
(665 |
) |
|
|
(2,888 |
) |
Operating income (loss) |
|
(10,485 |
) |
|
|
8,924 |
|
|
|
(4,372 |
) |
|
|
(106,965 |
) |
Non-operating income
(expense) |
|
|
|
|
|
|
|
Interest expense |
|
(17,261 |
) |
|
|
(7,672 |
) |
|
|
(29,855 |
) |
|
|
(15,534 |
) |
Interest income |
|
559 |
|
|
|
38 |
|
|
|
830 |
|
|
|
55 |
|
Other, net |
|
(3,045 |
) |
|
|
(455 |
) |
|
|
(6,323 |
) |
|
|
(1,795 |
) |
Total non-operating expense |
|
(19,747 |
) |
|
|
(8,089 |
) |
|
|
(35,348 |
) |
|
|
(17,274 |
) |
Income (loss) from continuing operations before income taxes |
|
(30,232 |
) |
|
|
835 |
|
|
|
(39,720 |
) |
|
|
(124,239 |
) |
Income tax provision (benefit) |
|
6,399 |
|
|
|
3,295 |
|
|
|
10,093 |
|
|
|
(13,489 |
) |
Loss from continuing operations |
|
(36,631 |
) |
|
|
(2,460 |
) |
|
|
(49,813 |
) |
|
|
(110,750 |
) |
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
(309 |
) |
|
|
408 |
|
|
|
(711 |
) |
|
|
371 |
|
Income tax provision |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Income (loss) from discontinued operations |
|
(309 |
) |
|
|
408 |
|
|
|
(711 |
) |
|
|
371 |
|
Net loss |
$ |
(36,940 |
) |
|
$ |
(2,052 |
) |
|
$ |
(50,524 |
) |
|
$ |
(110,379 |
) |
|
|
|
|
|
|
|
|
Basic earnings per
share |
|
|
|
|
|
|
|
Loss from continuing operations |
$ |
(0.82 |
) |
|
$ |
(0.05 |
) |
|
$ |
(1.11 |
) |
|
$ |
(2.47 |
) |
Income (loss) from discontinued operations |
|
(0.01 |
) |
|
|
0.01 |
|
|
|
(0.02 |
) |
|
|
0.01 |
|
Basic loss per share |
$ |
(0.83 |
) |
|
$ |
(0.04 |
) |
|
$ |
(1.13 |
) |
|
$ |
(2.46 |
) |
|
|
|
|
|
|
|
|
Diluted earnings per
share |
|
|
|
|
|
|
|
Loss from continuing operations |
$ |
(0.82 |
) |
|
$ |
(0.05 |
) |
|
$ |
(1.11 |
) |
|
$ |
(2.47 |
) |
Income (loss) from discontinued operations |
|
(0.01 |
) |
|
|
0.01 |
|
|
|
(0.02 |
) |
|
|
0.01 |
|
Diluted loss per share |
$ |
(0.83 |
) |
|
$ |
(0.04 |
) |
|
$ |
(1.13 |
) |
|
$ |
(2.46 |
) |
|
|
|
|
|
|
|
|
Weighted average
shares outstanding |
|
|
|
|
|
|
|
Basic |
|
45,041 |
|
|
|
44,841 |
|
|
|
44,999 |
|
|
|
44,775 |
|
Diluted |
|
45,041 |
|
|
|
44,841 |
|
|
|
44,999 |
|
|
|
44,775 |
|
Segment Financial
Information(unaudited) |
|
|
Three months ended June 30, |
|
Six months ended June 30, |
In thousands, except per share |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net
Sales |
|
|
|
|
|
|
|
Airlaid Material |
$ |
152,511 |
|
|
$ |
143,708 |
|
|
$ |
311,952 |
|
|
$ |
293,172 |
|
Composite Fibers |
|
125,725 |
|
|
|
123,338 |
|
|
|
258,316 |
|
|
|
259,167 |
|
Spunlace |
|
79,420 |
|
|
|
96,917 |
|
|
|
166,143 |
|
|
|
193,304 |
|
Inter-segment sales
elimination |
|
(651 |
) |
|
|
— |
|
|
|
(1,198 |
) |
|
|
— |
|
Total |
$ |
357,005 |
|
|
$ |
363,963 |
|
|
$ |
735,213 |
|
|
$ |
745,643 |
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
|
|
|
|
|
Airlaid Material |
$ |
9,726 |
|
|
$ |
11,944 |
|
|
$ |
23,640 |
|
|
$ |
24,165 |
|
Composite Fibers |
|
898 |
|
|
|
5,779 |
|
|
|
7,025 |
|
|
|
5,444 |
|
Spunlace |
|
(1,314 |
) |
|
|
(1,808 |
) |
|
|
(3,337 |
) |
|
|
(3,380 |
) |
Other and unallocated |
|
(19,795 |
) |
|
|
(6,991 |
) |
|
|
(31,700 |
) |
|
|
(133,194 |
) |
Total |
$ |
(10,485 |
) |
|
$ |
8,924 |
|
|
$ |
(4,372 |
) |
|
$ |
(106,965 |
) |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
|
|
|
|
|
Airlaid Material |
$ |
7,637 |
|
|
$ |
7,542 |
|
|
$ |
15,323 |
|
|
$ |
15,171 |
|
Composite Fibers |
|
3,897 |
|
|
|
4,796 |
|
|
|
7,862 |
|
|
|
11,315 |
|
Spunlace |
|
3,476 |
|
|
|
2,945 |
|
|
|
6,568 |
|
|
|
5,859 |
|
Other and unallocated |
|
960 |
|
|
|
1,169 |
|
|
|
1,948 |
|
|
|
2,591 |
|
Total |
$ |
15,970 |
|
|
$ |
16,452 |
|
|
$ |
31,701 |
|
|
$ |
34,936 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
|
|
|
|
|
Airlaid Material |
$ |
2,332 |
|
|
$ |
2,064 |
|
|
$ |
4,414 |
|
|
$ |
5,532 |
|
Composite Fibers |
|
2,110 |
|
|
|
4,131 |
|
|
|
5,773 |
|
|
|
10,258 |
|
Spunlace |
|
2,509 |
|
|
|
1,801 |
|
|
|
5,210 |
|
|
|
3,886 |
|
Other and unallocated |
|
1,007 |
|
|
|
2,353 |
|
|
|
2,061 |
|
|
|
3,021 |
|
Total |
$ |
7,958 |
|
|
$ |
10,349 |
|
|
$ |
17,458 |
|
|
$ |
22,697 |
|
|
|
|
|
|
|
|
|
Tons shipped
(metric) |
|
|
|
|
|
|
|
Airlaid Material |
|
39,246 |
|
|
|
40,681 |
|
|
|
79,073 |
|
|
|
83,733 |
|
Composite Fibers |
|
24,966 |
|
|
|
24,246 |
|
|
|
49,784 |
|
|
|
52,457 |
|
Spunlace |
|
15,191 |
|
|
|
19,358 |
|
|
|
31,611 |
|
|
|
40,094 |
|
Total |
|
79,403 |
|
|
|
84,285 |
|
|
|
160,468 |
|
|
|
176,284 |
|
Selected Financial
Information(unaudited) |
|
|
|
Six months ended June 30, |
In
thousands |
|
2023 |
|
2022 |
|
|
|
|
|
Cash Flow
Data |
|
|
|
|
Cash from continuing
operations provided (used) by: |
|
|
|
|
Operating activities |
|
$ |
(53,021 |
) |
|
$ |
(79,535 |
) |
Investing activities |
|
|
(16,723 |
) |
|
|
(18,136 |
) |
Financing activities |
|
|
10,515 |
|
|
|
33,546 |
|
|
|
|
|
|
Depreciation, depletion and
amortization |
|
|
31,701 |
|
|
|
34,936 |
|
Capital expenditures |
|
|
(17,458 |
) |
|
|
(22,697 |
) |
|
June 30, 2023 |
|
December 31, 2022 |
Balance Sheet
Data |
|
|
|
Cash and cash equivalents |
$ |
53,864 |
|
|
$ |
110,660 |
|
Total assets |
|
1,576,563 |
|
|
|
1,647,353 |
|
Total debt |
|
863,226 |
|
|
|
845,109 |
|
Shareholders’ equity |
|
278,838 |
|
|
|
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
reporting segment.
- 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 represents a non-cash charge recorded to reduce the
carrying amount of accounts receivable and inventory directly
related to the Russia/Ukraine 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.
- Ober-Schmitten closure costs. This
adjustment reflects employee separation costs and professional and
other costs directly associated with the closure of the
Ober-Schmitten, Germany facility.
- 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.
- CEO transition costs. This adjustment
reflects a non-cash pension settlement charge associated with the
separation of our former CEO 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.
- 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 the 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 |
|
Six months ended June 30, |
|
2023 |
|
2022 |
|
|
|
|
|
Cash from operations |
|
$ |
(53,021 |
) |
|
$ |
(79,535 |
) |
Capital expenditures |
|
|
(17,458 |
) |
|
|
(22,697 |
) |
Free cash flow |
|
|
(70,479 |
) |
|
|
(102,232 |
) |
Adjustments: |
|
|
|
|
Turnaround strategy costs |
|
|
9,585 |
|
|
|
— |
|
Strategic initiatives |
|
|
1,334 |
|
|
|
2,509 |
|
Ober-Schmitten closure costs |
|
|
443 |
|
|
|
— |
|
Cost optimization actions |
|
|
80 |
|
|
|
1,130 |
|
Restructuring charge - metallized operations |
|
|
39 |
|
|
|
— |
|
CEO transition costs |
|
|
7,648 |
|
|
|
— |
|
Corporate headquarters relocation |
|
|
— |
|
|
|
(430 |
) |
Fox River environmental matter |
|
|
362 |
|
|
|
1,440 |
|
COVID-19 ERC recovery |
|
|
(6,589 |
) |
|
|
— |
|
Tax payments (refunds) on adjustments to adjusted earnings |
|
|
(862 |
) |
|
|
2,547 |
|
Adjusted free cash flow |
|
$ |
(58,439 |
) |
|
$ |
(95,036 |
) |
Net DebtIn thousands |
|
June 30, 2023 |
|
December 31, 2022 |
|
|
|
|
|
Short-term debt |
|
$ |
7,238 |
|
|
$ |
11,422 |
|
Current portion of long-term
debt |
|
|
2,963 |
|
|
|
40,435 |
|
Long-term debt, net of current
portion |
|
|
853,025 |
|
|
|
793,252 |
|
Total |
|
|
863,226 |
|
|
|
845,109 |
|
Less: Cash |
|
|
(53,864 |
) |
|
|
(110,660 |
) |
Net Debt |
|
$ |
809,362 |
|
|
$ |
734,449 |
|
Adjusted
EBITDA |
|
Three months ended June 30, |
|
Six months ended June 30, |
In
thousands |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(36,940 |
) |
|
$ |
(2,052 |
) |
|
$ |
(50,524 |
) |
|
$ |
(110,379 |
) |
Exclude: Loss from
discontinued operations, net of tax |
|
|
309 |
|
|
|
(408 |
) |
|
|
711 |
|
|
|
(371 |
) |
Add back: Taxes on
continuing operations |
|
|
6,399 |
|
|
|
3,295 |
|
|
|
10,093 |
|
|
|
(13,489 |
) |
Depreciation and amortization |
|
|
15,970 |
|
|
|
16,452 |
|
|
|
31,701 |
|
|
|
34,936 |
|
Interest expense, net |
|
|
16,702 |
|
|
|
7,634 |
|
|
|
29,025 |
|
|
|
15,479 |
|
EBITDA |
|
|
2,440 |
|
|
|
24,921 |
|
|
|
21,006 |
|
|
|
(73,824 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
Goodwill and other asset |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
117,349 |
|
Turnaround strategy costs |
|
|
2,713 |
|
|
|
— |
|
|
|
7,196 |
|
|
|
— |
|
Russia/Ukraine conflict charges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,948 |
|
Strategic initiatives |
|
|
889 |
|
|
|
653 |
|
|
|
1,670 |
|
|
|
2,488 |
|
Ober-Schmitten closure costs |
|
|
10,793 |
|
|
|
— |
|
|
|
10,742 |
|
|
|
— |
|
Debt refinancing |
|
|
— |
|
|
|
— |
|
|
|
59 |
|
|
|
— |
|
CEO transition costs |
|
|
— |
|
|
|
— |
|
|
|
633 |
|
|
|
— |
|
Corporate headquarters relocation |
|
|
— |
|
|
|
135 |
|
|
|
— |
|
|
|
223 |
|
Share-based compensation |
|
|
376 |
|
|
|
1,510 |
|
|
|
1,307 |
|
|
|
2,419 |
|
Cost optimization actions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
589 |
|
COVID-19 ERC recovery |
|
|
41 |
|
|
|
— |
|
|
|
41 |
|
|
|
— |
|
Timberland sales and related costs |
|
|
— |
|
|
|
— |
|
|
|
(617 |
) |
|
|
(2,962 |
) |
Adjusted EBITDA |
|
$ |
17,252 |
|
|
$ |
27,219 |
|
|
$ |
42,037 |
|
|
$ |
50,230 |
|
Reconciliation of
Operating Profit to EBITDA by
Segment(1) |
|
Three months ended June 30, |
In
thousands |
|
2023 |
|
2022 |
|
|
|
|
|
Airlaid
Materials |
|
|
|
|
Operating profit |
|
$ |
9,726 |
|
|
$ |
11,944 |
|
Add back: Depreciation & amortization |
|
|
7,637 |
|
|
|
7,542 |
|
EBITDA |
|
$ |
17,363 |
|
|
$ |
19,486 |
|
|
|
|
|
|
Composite
Fibers |
|
|
|
|
Operating profit |
|
$ |
898 |
|
|
$ |
5,779 |
|
Add back: Depreciation & amortization |
|
|
3,897 |
|
|
|
4,796 |
|
EBITDA |
|
$ |
4,795 |
|
|
$ |
10,575 |
|
|
|
|
|
|
Spunlace |
|
|
|
|
Operating profit |
|
$ |
(1,314 |
) |
|
$ |
(1,808 |
) |
Add back: Depreciation & amortization |
|
|
3,476 |
|
|
|
2,945 |
|
EBITDA |
|
$ |
2,162 |
|
|
$ |
1,137 |
|
(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 June 30, |
In
thousands |
|
2023 |
|
2022 |
|
|
|
|
|
Other and unallocated operating loss |
|
$ |
(19,795 |
) |
|
$ |
(6,991 |
) |
Adjustments: |
|
|
|
|
Turnaround strategy costs |
|
|
2,199 |
|
|
|
— |
|
Strategic initiatives |
|
|
889 |
|
|
|
653 |
|
Ober-Schmitten closure costs |
|
|
10,793 |
|
|
|
— |
|
Corporate headquarters relocation |
|
|
— |
|
|
|
135 |
|
COVID-19 incremental expense |
|
|
41 |
|
|
|
— |
|
Adjusted corporate unallocated expenses |
|
$ |
(5,873 |
) |
|
$ |
(6,203 |
) |
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 December 31, 2022, we employed approximately
3,250 employees worldwide. Glatfelter’s operations utilize a
variety of manufacturing technologies including airlaid, wetlaid
and spunlace with sixteen 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 |
Grafico Azioni Glatfelter (NYSE:GLT)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Glatfelter (NYSE:GLT)
Storico
Da Giu 2023 a Giu 2024