Glatfelter Reports Third Quarter 2024 Results
2024 Third Quarter Highlights:
Generated net sales of ~$332 million and a GAAP net loss from continuing operations of $20.0 million
Delivered Adjusted EBITDA of $24.6 million, compared to $25.5 million in Q3 2023
Spunlace generated $4.8 million EBITDA despite hurricane downtime, a $2.5 million increase over Q3 '23
Airlaid Materials achieved EBITDA of $18.0 million, a $0.7 million decrease from Q3 '23
Composite Fibers delivered EBITDA of $10.1 million, a $1.1 million decrease from Q3 '23, due to new sanctions
CHARLOTTE, N.C., Oct. 30, 2024 (GLOBE NEWSWIRE) -- Glatfelter Corporation (NYSE:GLT), a leading global supplier of engineered materials, today announced its financial results for the third quarter ended September 30, 2024. This disclosure marks the Company's final earnings release prior to completing its merger with the majority of Berry Global's Health, Hygiene and Specialties segment to include its Global Nonwovens and Films business ("HHNF") to create Magnera, a global leader in the specialty materials industry. As previously disclosed, the transaction has met all closing conditions, including the support of Glatfelter shareholders, and is expected to close on November 4, 2024.
Commenting on Glatfelter's third quarter performance, Thomas Fahnemann, President and CEO of Glatfelter said, "Despite ongoing external pressures, Glatfelter's solid third quarter results demonstrated continued resilience and progress in its core business segments. While we faced new headwinds in Composite Fibers during the third quarter from additional sanctions in wallcover, the underlying operational performance of the segment continued to improve. In Airlaid, we were able to leverage stronger order patterns in feminine hygiene and tabletop categories that supported the recovery of our European business from earlier in 2024, thereby driving sequential improvements in EBITDA of $2.9 million. In Spunlace, we delivered $4.8 million EBITDA despite impact from Hurricane Helene at our Asheville facility. Fortunately, all employees remained safe during this unprecedented natural disaster."
Mr. Fahnemann added, "As we close the legacy Glatfelter chapter and prepare for a new future under Magnera, I want to recognize the efforts of our employees. Together we have overcome significant challenges and succeeded in turning around this business. We are now well positioned for continued growth and innovation with a platform to leverage Glatfelter's heritage and expertise to contribute to the success of Magnera. It's been a pleasure and a privilege to serve as CEO during this critical time and I want to thank all Glatfelter stakeholders for their trust and support."
Three months ended September 30,
Dollars in thousands
2024
2023
Net sales
$
332,101
$
329,921
Net loss from continuing operations
(20,002
)
(19,680
)
Adjusted loss from continuing operations (1)
(11,805
)
(10,372
)
EPS from continuing operations
(0.44
)
(0.43
)
Adjusted EPS (1)
(0.26
)
(0.23
)
Adjusted EBITDA (1)
24,585
25,467
(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.
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,
2024
2023
In thousands, except per share
Amount
EPS
Amount
EPS
Net loss
$
(15,247
)
$
(0.33
)
$
(19,863
)
$
(0.43
)
Exclude: (Income) loss from discontinued operations, net of tax (1)
(4,755
)
(0.11
)
183
—
Loss from continuing operations
(20,002
)
(0.44
)
(19,680
)
(0.43
)
Adjustments (pre-tax):
Strategic initiatives (2)
8,020
488
Turnaround strategy costs (3)
—
372
Ober-Schmitten divestiture (4)
—
8,055
CEO transition costs (5)
—
(54
)
Timberland sales and related costs
—
(688
)
Total adjustments (pre-tax)
8,020
8,173
Income taxes (6)
(77
)
928
Other tax adjustments (7)
254
207
Total after-tax adjustments
8,197
0.18
9,308
0.21
Adjusted loss from continuing operations
$
(11,805
)
$
(0.26
)
$
(10,372
)
$
(0.23
)
(1) In Q3 2024, we recognized a $6.5 million gain, less applicable legal fees, related to the settlement of a legal dispute with a manufacturer for equipment supplied and installed at our former Specialty Papers business.(2) For 2024, primarily reflects consulting and legal fees associated with the pending Berry HHNF merger of $6.9 million, and personnel retention, to offset the risk of potential employee departures due to the pending transaction, of $0.7 million, and a contract settlement of $0.4 million. For 2023, primarily reflects professional fees (tax and IT) of $0.4 million and other costs of $0.1 million. (3) Reflects employee separation costs of $0.4 million.(4) 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.(5) Reflects a reduction in expected benefit costs of $0.1 million related to the former CEO's separation. (6) 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.(7) 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
2024
2023
Change
Tons shipped (metric)
39,069
40,076
(1,007
)
(2.5
)%
Net sales
$
138,306
$
147,014
$
(8,708
)
(5.9
)%
Operating income
10,343
11,196
(853
)
(7.6
)%
EBITDA
17,999
18,749
(750
)
(4.0
)%
EBITDA %
13.0
%
12.8
%
Airlaid Materials' third quarter net sales decreased $8.7 million in the year-over-year comparison mainly driven by lower selling prices from cost pass-through arrangements as raw materials input costs declined compared to last year. Shipments were 2.5% lower mainly driven by declines in the hygiene categories primarily due to pricing actions taken in 2023 to retain margins. Currency translation was favorable by $0.6 million.
Airlaid Materials' third quarter EBITDA of $18.0 million was $0.8 million lower when compared to the third quarter of 2023. Selling price decreases for pass-through contracts and lower energy surcharges were a combined $7.8 million, but were mostly offset by lower raw material and energy costs of $6.4 million. Lower shipments primarily in hygiene categories negatively impacted results by approximately $0.7 million. Operations were favorable by $0.9 million. Currency and related hedging positively impacted earnings by $0.5 million.
Composite Fibers
Three months ended September 30,
Dollars in thousands
2024
2023
Change
Tons shipped (metric)
22,862
22,188
674
3.0
%
Net sales
$
113,689
$
109,715
$
3,974
3.6
%
Operating income
6,292
7,268
(976
)
(13.4
)%
EBITDA
10,102
11,166
(1,064
)
(9.5
)%
EBITDA %
8.9
%
10.2
%
Composite Fibers' net sales were $4.0 million lower in the third quarter of 2024, compared to the year-ago quarter. Shipments were higher 3.0% largely driven by the composite laminates, food and beverage and metallized categories but were partially offset by lower wallcover shipments as a result of additional sanctions impacting sales to our Eastern European customers. Currency translation was favorable by $0.7 million.
Composite Fibers had EBITDA for the third quarter of $10.1 million compared with $11.2 million EBITDA in the third quarter of 2023. Price-cost gap was unfavorable for the quarter by $3.5 million as input costs were higher year over year and selling prices were lower due to a lag in pass-through to our floating customers. Higher shipments in inclined wire categories despite weaker wallcover shipments and the absence of the Ober-Schmitten business combined improved income by $1.7 million. Operations were favorable by $0.5 million, mainly driven by higher inclined wire production. The impact of currency and related hedging positively impacted earnings by $0.2 million.
Spunlace
Three months ended September 30,
Dollars in thousands
2024
2023
Change
Tons shipped (metric)
14,699
14,436
263
1.8
%
Net sales
$
80,443
$
73,791
$
6,652
9.0
%
Operating income (loss)
1,324
(1,053
)
2,377
225.7
%
EBITDA
4,771
2,236
2,535
113.4
%
EBITDA %
5.9
%
3.0
%
Spunlace's net sales were $6.7 million higher in the third quarter of 2024 compared to the year-ago quarter, mainly driven by higher Sontara sales that has higher average selling price compared to the hygiene and wipes categories. Currency translation was slightly favorable by $0.2 million.
Spunlace EBITDA was higher by $2.5 million compared to the same period last year. Lower selling prices and energy surcharges were more than offset by lower raw material and energy costs, resulting in earnings improvement of $0.6 million. Higher shipments and favorable mix driven by higher Sontara sales improved operating income by approximately $0.8 million. Overall, operations were favorable by $1.0 million driven by higher Sontara production to meet customer demand and more than offset the unfavorable impact from idle time in Asheville site due to the hurricane. Currency positively impacted earnings by $0.1 million.
In September 2024, our Asheville facility was impacted by Hurricane Helene. Fortunately, our facility avoided property damage, however, performance was impacted for four days in Q3. Due to lack of access to water, the facility remained idle through the month of October; however we anticipate operations and shipments will resume in early November.
Other Financial Information
The amount of operating expense not allocated to a reporting segment in the Segment Financial Information totaled $15.0 million in the third quarter of 2024 compared with $14.8 million in the same period a year ago. Excluding the items identified to present "adjusted earnings," unallocated expenses for the third quarter of 2024 increased $0.4 million compared to the third quarter of 2023.
In the third quarter of 2024, our U.S. GAAP pre-tax loss from continuing operations totaled $18.5 million and we recorded an income tax provision of $1.5 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 2023 were a pre-tax loss of $16.4 million and an income tax provision of $3.3 million.
Balance Sheet and Other Information
Cash and cash equivalents totaled $41.6 million and $50.3 million as of September 30, 2024 and December 31, 2023, respectively. Total debt was $887.6 million and $860.3 million as of September 30, 2024 and December 31, 2023, respectively. Net debt was $846.0 million as of September 30, 2024 compared with $810.1 million at the end of 2023. Leverage as calculated in accordance with the financial covenants of our bank credit agreement was in compliance at 3.8 times at September 30, 2024.
Capital expenditures during the nine months ended September 30, 2024 and 2023 totaled $21.7 million and $25.2 million, respectively. Cash used by operating activities for the nine months ended September 30, 2024 and 2023 was $8.4 million and $42.0 million, respectively. Adjusted free cash flow for the nine months ended September 30, 2024 was a use of $15.0 million compared with a use of $50.9 million for the same period in 2023. (Net debt and adjusted free cash flow are non-GAAP financial measures. See "Reconciliations of GAAP Financial Information to Non-GAAP Financial Information" later in this earnings release for further information).
Glatfelter Corporation and subsidiariesConsolidated Statements of Operations(unaudited)
Three months ended September 30,
Nine months ended September 30,
In thousands, except per share
2024
2023
2024
2023
Net sales
$
332,101
$
329,921
$
988,800
$
1,065,134
Costs of products sold
296,620
285,434
882,022
966,300
Gross profit
35,481
44,487
106,778
98,834
Selling, general and administrative expenses
32,511
24,714
97,988
