~ Transaction closing and transition to Magnera scheduled for November 4th ~
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
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 | ||||||
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 | ) | ||||
(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 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 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 | ||||||||||||
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