UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, ~~2022~~2023


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

4350 Congress Street, Suite 600

Charlotte, North Carolina 28209

(Address of principal executive offices)

(704) 885-2555

(Registrant's telephone number, including area code)

Commission file

number

Exact name of registrant as

specified in its charter

IRS Employer

Identification No.

State or other jurisdiction of

incorporation or organization

1-03560

Glatfelter Corporation

23-0628360

Pennsylvania

(N/A)

Former name or former address, if changed since last report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

GLT

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒☐

Accelerated filer

☐☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒.

Common Stock outstanding on July ~~29, 2022~~28, 2023 totaled ~~44,774,912~~45,045,910 shares.

GLATFELTER CORPORATION AND SUBSIDIARIES

REPORT ON FORM 10-Q

For the Quarterly Period Ended

June 30, ~~2022~~2023

Table of Contents


PART I - FINANCIAL INFORMATION	PART I - FINANCIAL INFORMATION			Page	PART I - FINANCIAL INFORMATION			Page
Item 1	Item 1	Financial Statements		2	Item 1	Financial Statements		2
						Condensed Consolidated Statements of Income for the three months and six months ended June 30, 2023 and 2022 (unaudited)		2
		Condensed Consolidated Statements of Income for the three months and six months ended June 30, 2022 and 2021 (unaudited)		2		Condensed Consolidated Statements of Comprehensive Income for the three months and six months ended June 30, 2023 and 2022 (unaudited)		3
		Condensed Consolidated Statements of Comprehensive Income for the three months and six months ended June 30, 2022 and 2021 (unaudited)		3		Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 (unaudited)		4
		Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (unaudited)		4		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited)		5
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)		5		Statements of Shareholders’ Equity for the three months and six months ended June 30, 2023 and 2022 (unaudited)		6
		Statements of Shareholders’ Equity for the three months and six months ended June 30, 2022 and 2021 (unaudited)		6		Notes to Condensed Consolidated Financial Statements (unaudited)		7
		Notes to Condensed Consolidated Financial Statements (unaudited)		7		1	Organization	7
		1	Organization	7		2	Accounting Policies	7
		2	Accounting Policies	7		3	Revenue	7
		3	Acquisition	7		4	Closure of Ober-Schmitten, Germany Facility	8
		4	Revenue	10		5	Gains on Disposition of Plant, Equipment and Timberlands	9
		5	Gains on Disposition of Plant, Equipment and Timberlands	11		6	Goodwill and Other Asset Impairment	9
		6	Goodwill and Other Asset Impairment	11		7	Discontinued Operations	10
		7	Discontinued Operations	12		8	Earnings Per Share	10
		8	Earnings Per Share	12		9	Accumulated Other Comprehensive Income	12
		9	Accumulated Other Comprehensive Income	13		10	Share-based Compensation	14
		10	Stock-based Compensation	15		11	Retirement Plans and Other Post-Retirement Benefits	15
		11	Retirement Plans and Other Post-Retirement Benefits	16		12	Income Taxes	15
		12	Income Taxes	16		13	Inventories	16
		13	Inventories	17		14	Goodwill and Other Intangible Assets	17
		14	Goodwill and Other Intangible Assets	17		15	Leases	17
		15	Leases	19		16	Long-term Debt	19
		16	Long-term Debt	20		17	Fair Value of Financial Instruments	22
		17	Fair Value of Financial Instruments	21		18	Financial Derivatives and Hedging Activities	22
		18	Financial Derivatives and Hedging Activities	21		19	Commitments, Contingencies and Legal Proceedings	25
		19	Commitments, Contingencies and Legal Proceedings	24		20	Segment Information	27
		20	Segment Information	26
Item 2	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3	Item 3	Quantitative and Qualitative Disclosures About Market Risks		42	Item 3	Quantitative and Qualitative Disclosures About Market Risks		47
Item 4	Item 4	Controls and Procedures		43	Item 4	Controls and Procedures		48
PART II – OTHER INFORMATION	PART II – OTHER INFORMATION			44	PART II – OTHER INFORMATION			49
Item 1A		Risk Factors		44

Item 1B					Item 1B	Legal Proceedings		49
Item 6	Item 6	Exhibits		45	Item 6	Exhibits		49
		SIGNATURES		46		SIGNATURES		50

PART I

Item 1 – Financial Statements

GLATFELTER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

Three months ended June 30, Six months ended June 30,
In thousands, except per share 2022 2021 2022 2021

Net sales $ 363,963 $ 244,911 $ 745,643 $ 470,585
Costs of products sold 326,566 209,357 676,581 395,735
Gross profit 37,397 35,554 69,062 74,850
Selling, general and administrative expenses 28,400 28,984 61,566 51,811
Goodwill and other asset impairment charges — — 117,349 —
Loss (gains) on dispositions of plant, equipment and timberlands, net 73 (1,553) (2,888) (2,403)
Operating income (loss) 8,924 8,123 (106,965) 25,442
Non-operating income (expense)
Interest expense (7,672) (1,772) (15,534) (3,303)
Interest income 38 11 55 31
Other, net (455) (849) (1,795) (1,073)
Total non-operating expense (8,089) (2,610) (17,274) (4,345)
Income (loss) from continuing operations before income taxes 835 5,513 (124,239) 21,097
Income tax provision (benefit) 3,295 4,021 (13,489) 11,211
Income (loss) from continuing operations (2,460) 1,492 (110,750) 9,886

Discontinued operations:
Income (loss) before income taxes 408 (82) 371 (82)
Income tax provision — — — —
Loss from discontinued operations 408 (82) 371 (82)
Net income (loss) $ (2,052) $ 1,410 $ (110,379) $ 9,804

Basic earnings per share
Income (loss) from continuing operations $ (0.05) $ 0.03 $ (2.47) $ 0.22
Income from discontinued operations 0.01 — 0.01 —
Basic earnings (loss) per share $ (0.04) $ 0.03 $ (2.46) $ 0.22

Diluted earnings per share
Income (loss) from continuing operations $ (0.05) $ 0.03 $ (2.47) $ 0.22
Income from discontinued operations 0.01 — 0.01 —
Diluted earnings (loss) per share $ (0.04) $ 0.03 $ (2.46) $ 0.22

Weighted average shares outstanding
Basic 44,841 44,563 44,775 44,507
Diluted 44,841 44,872 44,775 44,865


	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
Gains (losses) 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

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 2 -

GLATFELTER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
In thousands	In thousands	2022		2021		2022		2021		In thousands	2023		2022		2023		2022
Net income (loss)		$	(2,052)	$	1,410	$	(110,379)	$	9,804
Net loss										Net loss	$	(36,940)	$	(2,052)	$	(50,524)	$	(110,379)

Foreign currency translation adjustments	Foreign currency translation adjustments	(28,675)		3,846		(39,590)		(9,347)		Foreign currency translation adjustments	2,820		(28,675)		9,483		(39,590)
Net change in:	Net change in:									Net change in:
Deferred gains (losses) on derivatives, net of taxes of $(2,029), $114, $(2,629) and $(1,187), respectively		8,534		(316)		8,177		2,945
Unrecognized retirement obligations, net of taxes of $(49), $(14), $(101) and $(87), respectively		152		150		304		242
Deferred gains (losses) on derivatives, net of taxes of $96, $(2,029), $149 and $(2,629), respectively										Deferred gains (losses) on derivatives, net of taxes of $96, $(2,029), $149 and $(2,629), respectively	(11)		8,534		146		8,177
Unrecognized retirement obligations, net of taxes of $(3), $(49), $(4) and $(101), respectively										Unrecognized retirement obligations, net of taxes of $(3), $(49), $(4) and $(101), respectively	18		152		670		304
Other comprehensive income (loss)	Other comprehensive income (loss)	(19,989)		3,680		(31,109)		(6,160)		Other comprehensive income (loss)	2,827		(19,989)		10,299		(31,109)
Comprehensive income (loss)		$	(22,041)	$	5,090	$	(141,488)	$	3,644
Comprehensive loss										Comprehensive loss	$	(34,113)	$	(22,041)	$	(40,225)	$	(141,488)

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 3 -

GLATFELTER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


In thousands	In thousands	June 30, 2022		December 31, 2021		In thousands	June 30, 2023		December 31, 2022
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	71,476	$	138,436	Cash and cash equivalents	$	53,864	$	110,660
Accounts receivable, net	Accounts receivable, net	209,455		170,212		Accounts receivable, net	189,628		195,665
Inventories	Inventories	307,612		279,520		Inventories	314,673		309,436
Prepaid expenses and other current assets	Prepaid expenses and other current assets	46,083		48,398		Prepaid expenses and other current assets	56,329		63,723
Total current assets	Total current assets	634,626		636,566		Total current assets	614,494		679,484

Plant, equipment and timberlands, net	Plant, equipment and timberlands, net	690,228		758,812		Plant, equipment and timberlands, net	670,347		675,811
Goodwill	Goodwill	168,288		236,165		Goodwill	106,495		105,195
Intangible assets, net	Intangible assets, net	110,096		156,304		Intangible assets, net	106,043		108,670
Other assets	Other assets	94,052		92,760		Other assets	79,184		78,193
Total assets	Total assets	$	1,697,290	$	1,880,607	Total assets	$	1,576,563	$	1,647,353

Liabilities and Shareholders' Equity	Liabilities and Shareholders' Equity					Liabilities and Shareholders' Equity
Current portion of long-term debt	Current portion of long-term debt	$	22,117	$	26,437	Current portion of long-term debt	$	2,963	$	40,435
Short-term debt	Short-term debt	10,610		22,843		Short-term debt	7,238		11,422
Accounts payable	Accounts payable	208,181		214,015		Accounts payable	161,148		217,625
Dividends payable		6,269		6,237

Environmental liabilities	Environmental liabilities	2,200		2,200		Environmental liabilities	2,000		2,200
Other current liabilities	Other current liabilities	78,143		99,438		Other current liabilities	89,539		88,724
Total current liabilities	Total current liabilities	327,520		371,170		Total current liabilities	262,888		360,406

Long-term debt	Long-term debt	779,026		738,075		Long-term debt	853,025		793,252
Deferred income taxes	Deferred income taxes	63,025		87,285		Deferred income taxes	56,621		54,388
Other long-term liabilities	Other long-term liabilities	137,797		141,315		Other long-term liabilities	125,191		121,303
Total liabilities	Total liabilities	1,307,368		1,337,845		Total liabilities	1,297,725		1,329,349

Commitments and contingencies	Commitments and contingencies	—		—		Commitments and contingencies

Shareholders’ equity	Shareholders’ equity					Shareholders’ equity
Common stock	Common stock	544		544		Common stock	544		544
Capital in excess of par value	Capital in excess of par value	62,555		64,779		Capital in excess of par value	57,945		60,663
Retained earnings	Retained earnings	582,687		705,600		Retained earnings	448,339		498,863
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(111,413)		(80,304)		Accumulated other comprehensive loss	(87,596)		(97,895)
		534,373		690,619			419,232		462,175
Less cost of common stock in treasury	Less cost of common stock in treasury	(144,451)		(147,857)		Less cost of common stock in treasury	(140,394)		(144,171)
Total shareholders’ equity	Total shareholders’ equity	389,922		542,762		Total shareholders’ equity	278,838		318,004
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	1,697,290	$	1,880,607	Total liabilities and shareholders’ equity	$	1,576,563	$	1,647,353

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 4 -

GLATFELTER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


		Six months ended June 30,					Six months ended June 30,
In thousands	In thousands	2022		2021		In thousands	2023		2022
Operating activities	Operating activities					Operating activities
Net income (loss)		$	(110,379)	$	9,804
Net loss						Net loss	$	(50,524)	$	(110,379)
Loss (income) from discontinued operations, net of taxes	Loss (income) from discontinued operations, net of taxes	(371)		82		Loss (income) from discontinued operations, net of taxes	711		(371)
Adjustments to reconcile to net cash provided (used) by continuing operations:
Adjustments to reconcile to net cash used by continuing operations:						Adjustments to reconcile to net cash used by continuing operations:
Depreciation, depletion and amortization	Depreciation, depletion and amortization	34,936		28,466		Depreciation, depletion and amortization	31,701		34,936
Amortization of debt issue costs and original issue discount	Amortization of debt issue costs and original issue discount	963		309		Amortization of debt issue costs and original issue discount	3,281		963

Pension settlement charge						Pension settlement charge	633		—
Goodwill and other asset impairment charges	Goodwill and other asset impairment charges	117,349		—		Goodwill and other asset impairment charges	—		117,349
Inventory and accounts receivable charges		3,948		—
Russia/Ukraine conflict charges						Russia/Ukraine conflict charges	—		3,948
Deferred income tax expense (benefit)	Deferred income tax expense (benefit)	(22,186)		616		Deferred income tax expense (benefit)	959		(22,186)
Gains on dispositions of plant, equipment and timberlands, net	Gains on dispositions of plant, equipment and timberlands, net	(2,888)		(2,403)		Gains on dispositions of plant, equipment and timberlands, net	(665)		(2,888)
Share-based compensation	Share-based compensation	2,419		2,537		Share-based compensation	1,307		2,419
Change in operating assets and liabilities:	Change in operating assets and liabilities:					Change in operating assets and liabilities:
Accounts receivable	Accounts receivable	(52,936)		(11,533)		Accounts receivable	4,180		(52,936)
Inventories	Inventories	(45,148)		(21,870)		Inventories	(1,656)		(45,148)
Prepaid and other current assets	Prepaid and other current assets	3,472		3,377		Prepaid and other current assets	7,418		3,472
Accounts payable	Accounts payable	9,516		(4,542)		Accounts payable	(58,129)		9,516
Accruals and other current liabilities	Accruals and other current liabilities	(16,910)		(5,841)		Accruals and other current liabilities	3,633		(16,910)
Other	Other	(1,320)		2,363		Other	4,130		(1,320)
Net cash provided (used) by operating activities from continuing operations		(79,535)		1,365
Net cash used by operating activities from continuing operations						Net cash used by operating activities from continuing operations	(53,021)		(79,535)
Investing activities	Investing activities					Investing activities
Expenditures for purchases of plant, equipment and timberlands	Expenditures for purchases of plant, equipment and timberlands	(22,697)		(11,211)		Expenditures for purchases of plant, equipment and timberlands	(17,458)		(22,697)
Proceeds from disposals of plant, equipment and timberlands, net	Proceeds from disposals of plant, equipment and timberlands, net	3,173		2,510		Proceeds from disposals of plant, equipment and timberlands, net	735		3,173
Acquisition, net of cash acquired	Acquisition, net of cash acquired	1,413		(172,331)		Acquisition, net of cash acquired	—		1,413
Other	Other	(25)		(104)		Other	—		(25)
Net cash used by investing activities from continuing operations	Net cash used by investing activities from continuing operations	(18,136)		(181,136)		Net cash used by investing activities from continuing operations	(16,723)		(18,136)
Financing activities	Financing activities					Financing activities

Proceeds from term loans		—		11,725
Proceeds from term loan						Proceeds from term loan	262,273		—
Repayment of term loans	Repayment of term loans	(23,793)		(12,159)		Repayment of term loans	(226,451)		(23,793)

Net borrowings under revolving credit facility		72,176		178,077
Net borrowings (repayments) under revolving credit facility						Net borrowings (repayments) under revolving credit facility	(14,988)		72,176
Payments of borrowing costs	Payments of borrowing costs	(1,102)		(35)		Payments of borrowing costs	(10,071)		(1,102)
Payments of dividends	Payments of dividends	(12,498)		(11,991)		Payments of dividends	—		(12,498)

Payments related to share-based compensation awards and other	Payments related to share-based compensation awards and other	(1,237)		(479)		Payments related to share-based compensation awards and other	(248)		(1,237)
Net cash provided by financing activities from continuing operations	Net cash provided by financing activities from continuing operations	33,546		165,138		Net cash provided by financing activities from continuing operations	10,515		33,546
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(3,587)		(1,432)		Effect of exchange rate changes on cash	1,096		(3,587)
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	(67,712)		(16,065)		Net decrease in cash, cash equivalents and restricted cash	(58,133)		(67,712)
Decrease in cash, cash equivalents and restricted cash from discontinued operations	Decrease in cash, cash equivalents and restricted cash from discontinued operations	(231)		(238)		Decrease in cash, cash equivalents and restricted cash from discontinued operations	(428)		(231)
Cash, cash equivalents and restricted cash at the beginning of period	Cash, cash equivalents and restricted cash at the beginning of period	148,814		111,665		Cash, cash equivalents and restricted cash at the beginning of period	119,162		148,814
Cash, cash equivalents and restricted cash at the end of period	Cash, cash equivalents and restricted cash at the end of period	80,871		95,362		Cash, cash equivalents and restricted cash at the end of period	60,601		80,871
Less: restricted cash in Prepaid expenses and other current assets	Less: restricted cash in Prepaid expenses and other current assets	(2,000)		(2,000)		Less: restricted cash in Prepaid expenses and other current assets	(3,600)		(2,000)
Less: restricted cash in Other assets	Less: restricted cash in Other assets	(7,395)		(9,197)		Less: restricted cash in Other assets	(3,137)		(7,395)
Cash and cash equivalents at the end of period	Cash and cash equivalents at the end of period	$	71,476	$	84,165	Cash and cash equivalents at the end of period	$	53,864	$	71,476

Supplemental cash flow information	Supplemental cash flow information					Supplemental cash flow information
Cash paid for:	Cash paid for:					Cash paid for:
Interest	Interest	$	15,879	$	2,920	Interest	$	27,001	$	15,879
Income taxes, net	Income taxes, net	14,699		7,098		Income taxes, net	4,109		14,699

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 5 -

GLATFELTER CORPORATION AND SUBSIDIARIES

STATEMENTS OF SHAREHOLDERS’ EQUITY

(unaudited)


In thousands	In thousands	Common stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders’ Equity		In thousands	Common stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders’ Equity
Balance at April 1, 2023														Balance at April 1, 2023	$	544	$	59,256	$	485,279	$	(90,423)	$	(142,069)	$	312,587
Net loss														Net loss					(36,940)						(36,940)
Other comprehensive income														Other comprehensive income							2,827				2,827
Comprehensive loss														Comprehensive loss											(34,113)

Share-based compensation expense														Share-based compensation expense			376								376
Delivery of treasury shares:														Delivery of treasury shares:
RSUs and PSAs														RSUs and PSAs			(1,687)						1,675		(12)
Balance at June 30, 2023														Balance at June 30, 2023	$	544	$	57,945	$	448,339	$	(87,596)	$	(140,394)	$	278,838

Balance at April 1, 2022	Balance at April 1, 2022	$	544	$	61,873	$	591,012	$	(91,424)	$	(145,272)	$	416,733	Balance at April 1, 2022	$	544	$	61,873	$	591,012	$	(91,424)	$	(145,272)	$	416,733
Net loss	Net loss					(2,052)						(2,052)		Net loss					(2,052)						(2,052)
Other comprehensive loss	Other comprehensive loss							(19,989)				(19,989)		Other comprehensive loss							(19,989)				(19,989)
Comprehensive loss	Comprehensive loss											(22,041)		Comprehensive loss											(22,041)
Cash dividends declared ($0.14 per share)	Cash dividends declared ($0.14 per share)					(6,273)						(6,273)		Cash dividends declared ($0.14 per share)					(6,273)						(6,273)
Share-based compensation expense	Share-based compensation expense			1,510								1,510		Share-based compensation expense			1,510								1,510
Delivery of treasury shares:	Delivery of treasury shares:													Delivery of treasury shares:
RSUs and PSAs	RSUs and PSAs			(828)						821		(7)		RSUs and PSAs			(828)						821		(7)
Balance at June 30, 2022	Balance at June 30, 2022	$	544	$	62,555	$	582,687	$	(111,413)	$	(144,451)	$	389,922	Balance at June 30, 2022	$	544	$	62,555	$	582,687	$	(111,413)	$	(144,451)	$	389,922

Balance at April 1, 2021		$	544	$	62,576	$	725,756	$	(68,493)	$	(149,322)	$	571,061
Net income						1,410						1,410
Balance at January 1, 2023														Balance at January 1, 2023	$	544	$	60,663	$	498,863	$	(97,895)	$	(144,171)	$	318,004
Net loss														Net loss					(50,524)						(50,524)
Other comprehensive income	Other comprehensive income							3,680				3,680		Other comprehensive income							10,299				10,299
Comprehensive income												5,090
Cash dividends declared ($0.14 per share)						(6,232)						(6,232)
Comprehensive loss														Comprehensive loss											(40,225)

Share-based compensation expense	Share-based compensation expense			1,329								1,329		Share-based compensation expense			1,307								1,307
Delivery of treasury shares:	Delivery of treasury shares:													Delivery of treasury shares:
RSUs and PSAs	RSUs and PSAs			(1,109)						1,106		(3)		RSUs and PSAs			(4,025)						3,777		(248)

Balance at June 30, 2021		$	544	$	62,796	$	720,934	$	(64,813)	$	(148,216)	$	571,245
Balance at June 30, 2023														Balance at June 30, 2023	$	544	$	57,945	$	448,339	$	(87,596)	$	(140,394)	$	278,838

Balance at January 1, 2022	Balance at January 1, 2022	$	544	$	64,779	$	705,600	$	(80,304)	$	(147,857)	$	542,762	Balance at January 1, 2022	$	544	$	64,779	$	705,600	$	(80,304)	$	(147,857)	$	542,762
Net loss	Net loss					(110,379)						(110,379)		Net loss					(110,379)						(110,379)
Other comprehensive loss	Other comprehensive loss							(31,109)				(31,109)		Other comprehensive loss							(31,109)				(31,109)
Comprehensive loss	Comprehensive loss											(141,488)		Comprehensive loss											(141,488)
Cash dividends declared ($0.14 per share)						(12,534)						(12,534)
Cash dividends declared (0.14 per share)														Cash dividends declared (0.14 per share)					(12,534)						(12,534)
Share-based compensation expense	Share-based compensation expense			2,419								2,419		Share-based compensation expense			2,419								2,419
Delivery of treasury shares:	Delivery of treasury shares:													Delivery of treasury shares:
RSUs and PSAs	RSUs and PSAs			(4,643)						3,406		(1,237)		RSUs and PSAs			(4,643)						3,406		(1,237)
Balance at June 30, 2022	Balance at June 30, 2022	$	544	$	62,555	$	582,687	$	(111,413)	$	(144,451)	$	389,922	Balance at June 30, 2022	$	544	$	62,555	$	582,687	$	(111,413)	$	(144,451)	$	389,922

Balance at January 1, 2021		$	544	$	63,261	$	723,365	$	(58,653)	$	(150,585)	$	577,932
Net income						9,804						9,804
Other comprehensive loss								(6,160)				(6,160)
Comprehensive income												3,644
Cash dividends declared ($0.275 per share)						(12,235)						(12,235)
Share-based compensation expense				2,537								2,537
Delivery of treasury shares:
RSUs and PSAs				(3,002)						2,369		(633)

Balance at June 30, 2021		$	544	$	62,796	$	720,934	$	(64,813)	$	(148,216)	$	571,245

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 6 -

GLATFELTER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.ORGANIZATION

Glatfelter Corporation and subsidiaries ("Glatfelter") is a leading global supplier of engineered materials with a strong focus on innovation and sustainability. Glatfelter'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 2021~~our 2022 net sales were ~~$1.1 billion with~~$1.5 billion. At 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 16sixteen 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. The terms “we,” “us,” “our,” “the Company,” or “Glatfelter,” refer to Glatfelter Corporation and subsidiaries unless the context indicates otherwise.

2. ACCOUNTING POLICIES

Basis of Presentation The unaudited condensed consolidated financial statements (“financial statements”) include the accounts of Glatfelter and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

We prepared these financial statements in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles” or “GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. In our opinion, the financial statements reflect all normal, recurring adjustments needed to present fairly our results for the interim periods. When preparing these financial statements, we have assumed you have read the audited consolidated financial statements included in our ~~2021~~2022 Annual Report on Form 10-K.

Discontinued Operations The results of operations and cash flows of our former Specialty Papers business have been classified as discontinued operations for all periods presented in the condensed consolidated statements of income.

Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingencies as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Management believes the estimates and assumptions used in the preparation of these financial statements are reasonable, based upon currently available facts and known circumstances, but recognizes actual results may differ from those estimates and assumptions.

~~Inventories~~ ~~Our inventories are stated at the lower of cost or net realizable value. Raw materials, in-process and finished goods inventories are valued principally using the average-cost method.~~

3.~~ACQUISITION~~

~~On May 13, 2021, we completed the acquisition of~~ ~~all the outstanding equity interests in Georgia-Pacific Mt. Holly LLC,~~ ~~Georgia-Pacific's U.S. nonwovens business ("Mount Holly") for $170.9 million. Mount Holly’s results are reported prospectively from the acquisition date as part of our Airlaid Materials segment.~~

On October 29, 2021, we completed the acquisition of PMM Holding (Luxembourg) AG, the owner of all of the equity interest in Jacob Holm, a global leading manufacturer of premium quality spunlace nonwoven fabrics for critical

~~- 7 -~~

~~cleaning, high-performance materials, personal care, hygiene and medical applications, for approximately $304.0 million for all outstanding shares and the extinguishment of Jacob Holm’s debt.~~

For the quarter ended June 30, 2022, we adjusted the preliminary purchase price allocation related to the Jacob Holm acquisition by reducing preacquistion compensation incentive accruals by approximately $0.5 million, and reducing goodwill by the same amount, based on incentive payouts made during the quarter.

~~The following table sets forth information related to the consideration exchanged for each acquisition.~~

In thousands Mount Holly Jacob Holm Total
Total consideration $ 170,919 $ 303,952 $ 474,871
Less: Debt repaid — (148,000) (148,000)
Cash consideration $ 170,919 $ 155,952 $ 326,871

The preliminary purchase price allocations set forth in the following table are based on all information available to us at the present time and is subject to change. With respect to the Mount Holly acquisition, the purchase price allocation is complete. However, the Jacob Holm purchase price allocation is preliminary as we are in the process of finalizing our analysis of certain matters, primarily related to the assessment of potential tax liabilities associated with the acquired entities. In the event new information becomes available, the measurement of the amount of goodwill reflected may be affected.

In thousands Mount Holly Jacob Holm Total
Assets
Cash and cash equivalents $ — $ 11,426 $ 11,426
Accounts receivable 11,599 30,271 41,870
Inventory 7,031 45,340 52,371
Prepaid and other current assets 11 6,727 6,738
Plant, equipment and timberlands 100,498 158,612 259,110
Intangible assets 20,000 70,240 90,240
Goodwill 35,793 48,355 84,148
Other assets 8,041 26,929 34,970
Total assets 182,973 397,900 580,873
Liabilities
Short-term debt 0 14,081 14,081
Accounts payable 2,321 25,264 27,585
Other current liabilities 1,868 21,263 23,131
Other long-term liabilities 7,865 33,340 41,205
Total liabilities 12,054 93,948 106,002
Total preliminary purchase price $ 170,919 $ 303,952 $ 474,871

The preliminary purchase price allocations set forth in the table above are based on all information available to us at the present time and is subject to change. In the event new information becomes available, the measurement of the amount of goodwill reflected may be affected. For purposes of allocating the total purchase price, assets acquired and liabilities assumed are recorded at their estimated fair market values. The allocations set forth above are based on management’s estimate of the fair value using valuation techniques such as discounted cash flow models, appraisals and similar methodologies.

The following table sets forth information related to amounts of net sales and operating income (loss) of the acquired businesses included in our results of operations in the three and six months ended 2022:

~~- 8 -~~

Three months ended June 30, Six months ended June 30,
In thousands 2022 2022
Mount Holly
Net sales $ 26,300 $ 53,604
Operating income 1,911 4,635
Jacob Holm
Net sales 96,917 193,304
Operating loss (1,808) (3,380)

~~The following table summarizes annual unaudited pro forma financial information as if the acquisition occurred as of January 1, 2021:~~

(unaudited) Three months ended June 30, Six months ended June 30,
In thousands, except per share 2021 2021
Pro forma
Net sales $ 347,895 $ 690,448
Income (loss) from continuing operations (10,546) 12,892

The pro forma financial information set forth above for the three and six months ended June 30, 2021 includes $3.7 million and $4.3 million, respectively, of one-time costs directly related to the Mount Holly transaction. Such costs are presented under the caption “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of income.

~~- 9 -~~

4.REVENUE

The following tables set forth disaggregated information pertaining to our net sales:

Three months ended June 30, Six months ended June 30,
In thousands 2022 2021 2022 2021
Revenue by product category
Composite Fibers
Food & beverage $ 74,465 $ 73,535 $ 149,688 $ 150,488
Wallcovering 9,902 24,182 25,733 46,811
Technical specialties 18,603 24,708 41,739 48,203
Composite laminates 11,570 10,549 22,867 20,358
Metallized 8,798 8,624 19,140 16,987
123,338 141,598 259,167 282,847
Airlaid Materials
Feminine hygiene 56,943 47,184 116,255 94,825
Specialty wipes 37,908 21,371 75,003 37,287
Tabletop 26,771 17,188 57,518 24,051
Food pads 3,475 2,440 6,951 4,797
Home care 5,513 6,339 11,798 10,262
Adult incontinence 6,260 5,083 12,989 9,761
Other 6,838 3,708 12,658 6,755
143,708 103,313 293,172 187,738
Spunlace
Consumer wipes 39,549 — 85,706 —
Critical cleaning 27,783 — 52,061 —
Health care 15,434 — 29,039 —
Hygiene 6,233 — 12,146 —
High performance 4,018 — 8,130 —
Beauty care 3,900 — 6,222 —
96,917 — 193,304 —
Total $ 363,963 $ 244,911 $ 745,643 $ 470,585
Revenue by geography
Composite Fibers
Europe, Middle East and Africa $ 59,868 $ 85,796 $ 133,472 $ 172,741
Americas 42,077 35,369 80,053 67,210
Asia Pacific 21,393 20,433 45,642 42,896
123,338 141,598 259,167 282,847
Airlaid Materials
Europe, Middle East and Africa 63,355 49,552 126,491 94,624
Americas 77,608 52,031 158,521 89,516
Asia Pacific 2,745 1,730 8,160 3,598
143,708 103,313 293,172 187,738
Spunlace
Europe, Middle East and Africa 30,245 — 60,070 —
Americas 54,985 — 110,469 —
Asia Pacific 11,687 — 22,765 —
96,917 — 193,304 —
Total $ 363,963 $ 244,911 $ 745,643 $ 470,585


	Three months ended June 30,				Six months ended June 30,
In thousands	2023		2022		2023		2022
Revenue by product category

Airlaid Materials
Feminine hygiene	$	51,882	$	56,943	$	110,127	$	116,255
Specialty wipes	45,535		37,908		90,329		75,003
Tabletop	31,778		26,771		62,193		57,518
Food pads	3,361		3,475		6,901		6,951
Home care	6,781		5,513		14,140		11,798
Adult incontinence	7,063		6,260		14,422		12,989

- 7 -


Other	6,111		6,838		13,840		12,658
	152,511		143,708		311,952		293,172
Composite Fibers
Food & beverage	70,755		74,465		149,699		149,688
Wallcovering	19,570		9,902		35,727		25,733
Technical specialties	20,542		18,603		41,995		41,739
Composite laminates	8,818		11,570		17,801		22,867
Metallized	6,040		8,798		13,094		19,140

	125,725		123,338		258,316		259,167
Spunlace
Consumer wipes	34,759		39,549		72,868		85,706
Critical cleaning	17,584		27,783		46,733		52,061
Health care	16,808		15,434		27,183		29,039
Hygiene	5,034		6,233		10,694		12,146
High performance	4,608		4,018		7,817		8,130
Beauty care	627		3,900		848		6,222

	79,420		96,917		166,143		193,304

Inter-segment sales elimination	(651)		—		(1,198)		—
Total	$	357,005	$	363,963	$	735,213	$	745,643

Revenue by geography

Airlaid Materials
Americas	$	85,492	$	77,608	$	175,329	$	158,521
Europe, Middle East and Africa	63,519		63,355		129,510		126,491
Asia Pacific	3,500		2,745		7,113		8,160
	152,511		143,708		311,952		293,172
Composite Fibers
Americas	32,416		42,077		66,628		80,053
Europe, Middle East and Africa	72,680		59,868		146,530		133,472
Asia Pacific	20,629		21,393		45,158		45,642
	125,725		123,338		258,316		259,167
Spunlace
Americas	50,001		54,985		103,153		110,469
Europe, Middle East and Africa	23,289		30,245		48,352		60,070
Asia Pacific	6,130		11,687		14,638		22,765
	79,420		96,917		166,143		193,304

Inter-segment sales elimination	(651)		—		(1,198)		—
Total	$	357,005	$	363,963	$	735,213	$	745,643

- 108 -

4.CLOSURE OF OBER-SCHMITTEN, GERMANY FACILITY

In the second quarter of 2023, we announced our plans to close Composite Fibers’ Ober-Schmitten, Germany facility as part of the Company’s turnaround strategy that aimed at improving financial performance of the Company’s overall business. Pending the completion of negotiations with the Ober-Schmitten Economic Committee and Works Council (“Works Council”), we expect to cease operations at the site during the third quarter of 2023 with some final finishing, shipping wind-down and decommissioning to follow. In connection with the planned closure, we recognized the following costs which are included in our condensed consolidated statements of income:


	Three months ended June 30,		Six months ended June 30,
In thousands	2023		2023
Severance and benefit continuation	10,368		10,368
Other costs	424		373

Total	$	10,792	$	10,741

The Company now estimates that it will incur approximately $10.4 million of cash expenses in connection with employee severance and benefit costs associated with the termination of the employees at the Facility and has recognized an expense for this amount included in “Cost of Goods Sold” in its condensed consolidated financial statements for the three and six months ended June 30, 2023. This estimate is based on the Company’s estimate of the cost of the current proposed compromise of interest and social plan made to the Works Council. As negotiations between the Company and the Works Council have not been finalized, the total amount of severance and benefit continuation costs that will ultimately be recognized is subject to change until such time as negotiations with the local works council are concluded. The accrued and unpaid severance and benefit continuation totaled approximately $10.4 million as of June 30, 2023.

The Company has also recognized other shutdown related costs at the Facility, related to potential contract termination costs, site closure costs, and other associated costs, and the Company expects that it will continue to incur other shutdown related costs. The Company has recognized such other costs of approximately $0.4 million, which are predominately non-cash expenses and included in “Selling, general & administrative expenses” in its condensed consolidated financial statements for the three and six months ended June 30, 2023. The Company is currently unable to make a good faith determination of an estimate of the amount or range of the amounts of the charges expected to be recorded in connection with other major types of cost associated with the closure (such as contract termination costs and other associated costs) or the amount or range of amounts of such charges that will result in future cash expenditures.

5.GAINS ON DISPOSITION OF PLANT, EQUIPMENT AND TIMBERLANDS

The following table sets forth sales of timberlands and other assets completed during the first six months of ~~2022~~2023 and ~~2021:~~2022:


Dollars in thousands	Dollars in thousands	Acres	Proceeds		Gain (loss)		Dollars in thousands	Acres	Proceeds		Gain (loss)
2023							2023
Timberlands							Timberlands	216	$	630	$	617
Other							Other	n/a	105		48
Total							Total		$	735	$	665

2022	2022						2022
Timberlands	Timberlands	790	$	3,130	$	2,962	Timberlands	790	$	3,130	$	2,962
Other	Other	n/a	43		(74)		Other	n/a	43		(74)
Total	Total		$	3,173	$	2,888	Total		$	3,173	$	2,888

2021
Timberlands		936	$	2,510	$	2,403
Other		n/a	—		—
Total			$	2,510	$	2,403

6.GOODWILL AND OTHER ASSET IMPAIRMENT

No impairment charges were recognized during the first six months of 2023.

- 9 -

During the first quarter of 2022, in connection with an assessment of potential impairment of long-lived and indefinite lived intangible assets stemming from the compounding impacts resulting from the Russia/Ukraine military conflict and related sanctions, we recorded a $117.3 million non-cash asset impairment charge related to Composite Fibers' Dresden facility and an impairment of Composite Fibers' goodwill. Dresden is a single-line facility that produces wallcover base paper, the majority of which is sold into the Russian and Ukrainian markets. As a direct result of the economic impacts from the conflict, and the disruptions in the underlying financial systems and ~~prohibition of the~~restrictions on our ability to export ~~of sanctioned~~ wallcover base paper to Russia due to related sanctions, management ~~expects~~expected a significant reduction in wallcover revenues and associated cash flows for the foreseeable future. In addition, the conflict ~~is expected to significantly impact energy prices and~~ also ~~impact~~impacted other Composite Fibers products that are also subject to export sanctions into ~~Russia.~~this region, and continued to significantly impact energy prices. Accordingly, a charge was recorded to reduce the carrying value of the Dresden fixed assets and intangible assets (technological know-how, customer relationships, and an indefinite-lived trade name), along with Composite Fibers’ goodwill to fair value.

The following table summarizes the impairment ~~charge~~charges recorded during the six months ended June 30, 2023 and 2022, respectively, in the accompanying condensed consolidated statements of income under the caption “Goodwill and other asset impairment charges:”


~~In thousands~~	~~Six months ended June 30,~~
~~Machinery and equipment~~	$	~~27,619~~
~~Technological know-how~~	~~18,443~~
~~Customer relationships~~	~~11,695~~
~~Tradename~~	~~3,530~~
~~Goodwill~~	~~56,062~~
~~Total~~	$	~~117,349~~


In thousands	2023		2022
Plant, property and equipment	$	—	$	27,619
Technological know-how	—		18,443
Customer relationships	—		11,695
Tradename	—		3,530
Goodwill	—		56,062
Total	$	—	$	117,349

The fair value of the underlying assets was estimated using discounted cash flow models, independent appraisals and similar methods, all of which are Level 3 fair value classification.

~~- 11 -~~

7.DISCONTINUED OPERATIONS

For the three and six months ended June 30, 2023, we recognized a loss in discontinued operations of $0.3 million and $0.7 million, respectively, primarily related to an insurance claim and legal costs. For both the three and six months ended June 30 2022, we recognized income of $0.4 million which primarily represents the successful appeal of a sales and use tax audit partially offset by legal costs. ~~For 2021, the $0.1 million loss is primarily related to legal costs.~~

The following table sets forth a summary of cash flows from discontinued operations which is included in the condensed consolidated statements of cash flows:


		Six months ended June 30,					Six months ended June 30,
In thousands	In thousands	2022		2021		In thousands	2023		2022
Net cash used by operating activities	Net cash used by operating activities	$	(231)	$	(238)	Net cash used by operating activities	$	(428)	$	(231)
Net cash used by investing activities	Net cash used by investing activities	—		—		Net cash used by investing activities	—		—
Net cash provided by financing activities	Net cash provided by financing activities	—		—		Net cash provided by financing activities	—		—
Change in cash and cash equivalents from discontinued operations	Change in cash and cash equivalents from discontinued operations	$	(231)	$	(238)	Change in cash and cash equivalents from discontinued operations	$	(428)	$	(231)

8.EARNINGS PER SHARE

The following table sets forth the details of basic and diluted earnings per share (“EPS”) from continuing operations:

Three months ended June 30, Six months ended June 30,
In thousands, except per share 2022 2021 2022 2021
Income (loss) from continuing operations $ (2,460) $ 1,492 $ (110,750) $ 9,886

Weighted average common shares outstanding used in basic EPS 44,841 44,563 44,775 44,507
Common shares issuable upon exercise of dilutive stock options
and PSAs / RSUs
— 309 — 358
Weighted average common shares outstanding and common share
equivalents used in diluted EPS
44,841 44,872 44,775 44,865

Earnings (loss) per share from continuing operations
Basic $ (0.05) $ 0.03 $ (2.47) $ 0.22
Diluted (0.05) 0.03 (2.47) 0.22

- 10 -


	Three months ended June 30,				Six months ended June 30,
In thousands, except per share	2023		2022		2023		2022
Loss from continuing operations	$	(36,631)	$	(2,460)	$	(49,813)	$	(110,750)

Weighted average common shares outstanding used in basic EPS	45,041		44,841		44,999		44,775
Common shares issuable upon exercise of dilutive stock options and PSAs / RSUs	—		—		—		—
Weighted average common shares outstanding and common share equivalents used in diluted EPS	45,041		44,841		44,999		44,775

Loss per share from continuing operations
Basic	$	(0.82)	$	(0.05)	$	(1.11)	$	(2.47)
Diluted	(0.82)		(0.05)		(1.11)		(2.47)

The following table sets forth potential common shares outstanding that were not included in the computation of diluted EPS for the periods indicated, because their effect would be anti-dilutive:


		Three months ended June 30,		Six months ended June 30,			Three months ended June 30,		Six months ended June 30,
In thousands	In thousands	2022	2021	2022	2021	In thousands	2023	2022	2023	2022
Potential common shares	Potential common shares	934	1,082	934	1,082	Potential common shares	618	934	618	934

- 1211 -

9.ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table sets forth details of the changes in accumulated other comprehensive income (losses) for the three months and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022.


In thousands	In thousands	Currency translation adjustments		Unrealized gain (loss) on derivatives		Change in pensions		Change in other postretirement defined benefit plans		Total		In thousands	Currency translation adjustments		Unrealized gain (loss) on derivatives		Change in pensions		Change in other postretirement defined benefit plans		Total

Balance at April 1, 2023												Balance at April 1, 2023	$	(99,579)	$	11,333	$	(2,587)	$	410	$	(90,423)
Other comprehensive income before reclassifications (net of tax)												Other comprehensive income before reclassifications (net of tax)	2,820		57		—		—		2,877
Amounts reclassified from accumulated other comprehensive income (net of tax)												Amounts reclassified from accumulated other comprehensive income (net of tax)	—		(68)		25		(7)		(50)
Net current period other comprehensive income (loss)												Net current period other comprehensive income (loss)	2,820		(11)		25		(7)		2,827
Balance at June 30, 2023												Balance at June 30, 2023	$	(96,759)	$	11,322	$	(2,562)	$	403	$	(87,596)

Balance at April 1, 2022	Balance at April 1, 2022	$	(80,672)	$	1,631	$	(11,356)	$	(1,027)	$	(91,424)	Balance at April 1, 2022	$	(80,672)	$	1,631	$	(11,356)	$	(1,027)	$	(91,424)
Other comprehensive income (loss) before reclassifications (net of tax)	Other comprehensive income (loss) before reclassifications (net of tax)	(28,675)		9,760		—		—		(18,915)		Other comprehensive income (loss) before reclassifications (net of tax)	(28,675)		9,760		—		—		(18,915)
Amounts reclassified from accumulated other comprehensive income (net of tax)	Amounts reclassified from accumulated other comprehensive income (net of tax)	—		(1,226)		126		26		(1,074)		Amounts reclassified from accumulated other comprehensive income (net of tax)	—		(1,226)		126		26		(1,074)
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	(28,675)		8,534		126		26		(19,989)		Net current period other comprehensive income (loss)	(28,675)		8,534		126		26		(19,989)
Balance at June 30, 2022	Balance at June 30, 2022	$	(109,347)	$	10,165	$	(11,230)	$	(1,001)	$	(111,413)	Balance at June 30, 2022	$	(109,347)	$	10,165	$	(11,230)	$	(1,001)	$	(111,413)

Balance at April 1, 2021		$	(55,718)	$	765	$	(12,706)	$	(834)	$	(68,493)
Other comprehensive income (loss) before reclassifications (net of tax)		3,846		(341)		—		—		3,505
Balance at January 1, 2023												Balance at January 1, 2023	$	(106,242)	$	11,176	$	(3,247)	$	418	$	(97,895)
Other comprehensive income before reclassifications (net of tax)												Other comprehensive income before reclassifications (net of tax)	9,483		1,613		—		—		11,096
Amounts reclassified from accumulated other comprehensive income (net of tax)	Amounts reclassified from accumulated other comprehensive income (net of tax)	—		25		197		(47)		175		Amounts reclassified from accumulated other comprehensive income (net of tax)	—		(1,467)		685		(15)		(797)
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	3,846		(316)		197		(47)		3,680		Net current period other comprehensive income (loss)	9,483		146		685		(15)		10,299
Balance at June 30, 2021		$	(51,872)	$	449	$	(12,509)	$	(881)	$	(64,813)
Balance at June 30, 2023												Balance at June 30, 2023	$	(96,759)	$	11,322	$	(2,562)	$	403	$	(87,596)

Balance at January 1, 2022	Balance at January 1, 2022	$	(69,757)	$	1,988	$	(11,482)	$	(1,053)	$	(80,304)	Balance at January 1, 2022	$	(69,757)	$	1,988	$	(11,482)	$	(1,053)	$	(80,304)
Other comprehensive income (loss) before reclassifications (net of tax)	Other comprehensive income (loss) before reclassifications (net of tax)	(39,590)		10,143		—		—		(29,447)		Other comprehensive income (loss) before reclassifications (net of tax)	(39,590)		10,143		—		—		(29,447)
Amounts reclassified from accumulated other comprehensive income (net of tax)	Amounts reclassified from accumulated other comprehensive income (net of tax)	—		(1,966)		252		52		(1,662)		Amounts reclassified from accumulated other comprehensive income (net of tax)	—		(1,966)		252		52		(1,662)
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	(39,590)		8,177		252		52		(31,109)		Net current period other comprehensive income (loss)	(39,590)		8,177		252		52		(31,109)
Balance at June 30, 2022	Balance at June 30, 2022	$	(109,347)	$	10,165	$	(11,230)	$	(1,001)	$	(111,413)	Balance at June 30, 2022	$	(109,347)	$	10,165	$	(11,230)	$	(1,001)	$	(111,413)

Balance at January 1, 2021		$	(42,525)	$	(2,496)	$	(12,844)	$	(788)	$	(58,653)
Other comprehensive income (loss) before reclassifications (net of tax)		(9,347)		2,933		—		—		(6,414)
Amounts reclassified from accumulated other comprehensive income (net of tax)		—		12		335		(93)		254
Net current period other comprehensive income (loss)		(9,347)		2,945		335		(93)		(6,160)
Balance at June 30, 2021		$	(51,872)	$	449	$	(12,509)	$	(881)	$	(64,813)

- 1312 -

Reclassifications out of accumulated other comprehensive income and into the condensed consolidated statements of income were as follows:


		Three months ended June 30,				Six months ended June 30,						Three months ended June 30,				Six months ended June 30,
In thousands	In thousands	2022		2021		2022		2021			In thousands	2023		2022		2023		2022
Description	Description									Line Item in Statements of Income	Description									Line Item in Statements of Income
Cash flow hedges (Note 18)	Cash flow hedges (Note 18)										Cash flow hedges (Note 18)
Loss (gains) on cash flow hedges		$	(1,697)	$	33	$	(2,769)	$	57	Costs of products sold
Gains on cash flow hedges											Gains on cash flow hedges	$	(400)	$	(1,697)	$	(1,318)	$	(2,769)	Costs of products sold
Tax expense (benefit)	Tax expense (benefit)	480		(22)		792		(73)		Income tax provision	Tax expense (benefit)	332		480		(149)		792		Income tax provision
Net of tax	Net of tax	(1,217)		11		(1,977)		(16)			Net of tax	(68)		(1,217)		(1,467)		(1,977)

Loss (gains) on interest rate swaps		(9)		22		11		43		Interest expense
Tax benefit		—		(8)		—		(15)		Income tax provision
Loss (gain) on interest rate swaps											Loss (gain) on interest rate swaps	—		(9)		—		11		Interest expense
Tax expense											Tax expense	—		—		—		—		Income tax provision
Net of tax	Net of tax	(9)		14		11		28			Net of tax	—		(9)		—		11
Total cash flow hedges	Total cash flow hedges	(1,226)		25		(1,966)		12			Total cash flow hedges	(68)		(1,226)		(1,467)		(1,966)

Retirement plan obligations (Note 11)	Retirement plan obligations (Note 11)										Retirement plan obligations (Note 11)
Amortization of deferred benefit pension plans	Amortization of deferred benefit pension plans										Amortization of deferred benefit pension plans
Prior service costs	Prior service costs	11		12		22		24		Other, net	Prior service costs	6		11		12		22		Other, net
Actuarial losses	Actuarial losses	164		199		331		398		Other, net	Actuarial losses	21		164		43		331		Other, net
Pension settlement											Pension settlement	—		—		633		—		Other, net
		175		211		353		422				27		175		688		353
Tax benefit	Tax benefit	(49)		(14)		(101)		(87)		Income tax provision	Tax benefit	(2)		(49)		(3)		(101)		Income tax provision
Net of tax	Net of tax	126		197		252		335			Net of tax	25		126		685		252
Amortization of deferred benefit other plans	Amortization of deferred benefit other plans										Amortization of deferred benefit other plans
Prior service costs (credits)		26		(59)		52		(117)		Other, net
Actuarial losses		—		12		—		24		Other, net
Prior service costs											Prior service costs	5		26		10		52		Other, net
Actuarial gain											Actuarial gain	(12)		—		(25)		—		Other, net
		26		(47)		52		(93)				(7)		26		(15)		52
Tax expense	Tax expense	—		—		—		—		Income tax provision	Tax expense	—		—		—		—		Income tax provision
Net of tax	Net of tax	26		(47)		52		(93)			Net of tax	(7)		26		(15)		52
Total reclassifications, net of tax	Total reclassifications, net of tax	$	(1,074)	$	175	$	(1,662)	$	254		Total reclassifications, net of tax	$	(50)	$	(1,074)	$	(797)	$	(1,662)

- 1413 -

10.~~STOCK-BASED~~SHARE-BASED COMPENSATION

On May 5, ~~2022, upon~~2023 (the “Effective Date”), the Board and ~~shareholder approval,~~shareholders approved an amendment and restatement of the Glatfelter Corporation 2022 Long-Term Incentive Plan ~~became effective~~(the “Equity Plan”) to increase the number of shares available for grant under the Equity Plan (as amended and ~~is a successor plan to~~restated, the ~~P. H. Glatfelter Amended and Restated Long-Term Incentive Plan~~“Amended Plan”) (collectively, the “LTIP”). The LTIP ~~continues~~is a long-term incentive plan, pursuant to ~~provide for~~which awards may be granted to full-time or part-time employees, officers, non-employee directors, and consultants of the ~~issuance~~Company or any subsidiary or affiliate of ~~Glatfelter common~~the Company, including stock ~~to eligible participants in the form of~~options, stock-only stock appreciation rights (“SOSARs”), restricted stock awards, restricted stock units ~~restricted stock~~(“RSUs”), performance share awards ~~non-qualified stock options, performance shares, incentive stock options~~(“PSAs”), and ~~performance units. Furthermore, the LTIP increases~~other share-based awards. The Amended Plan was adopted primarily to increase the number of shares ~~previously~~of Company common stock reserved for equity-based awards by 675,000 shares (in addition to any shares that remained available for ~~issuance by 1,400,000 shares.~~awards under the Equity Plan as of the Effective Date and any shares subject to outstanding awards granted under the Equity Plan as of the Effective Date). As of June 30, ~~2022,~~2023, there were ~~2,670,523~~2,386,035 shares of common stock available for future issuance under the LTIP.

Pursuant to terms of the LTIP, we have issued to eligible participants ~~restricted stock units (“RSUs”), performance share awards (“PSAs”)~~RSUs, PSAs and ~~stock-only stock appreciation rights.~~SOSARs.

Restricted Stock Units and Performance Share Awards

In the first six months of 2023 and 2022, we ~~issued awards to employees of~~granted RSUs and PSAs to employees under our LTIP. In both 2023 and 2022, ~~40%~~50% of fair value of the awards granted were RSUs, which vest based on the passage of time, generally over a graded three-year period or, in certain instances, the RSUs were cliff vesting after one or three years. ~~In addition, some awards vest over one year or less depending upon the retirement eligibility of the grantees in the LTIP.~~ The remaining ~~60%~~50% of the fair value of the awards granted in 2023 and 2022 were PSAs. The PSAs awarded ~~in 2022~~ vest based on either the achievement of cumulative financial performance targets covering a two-year period or based on the three-year total shareholder return relative to a broad market index. The performance measures include a minimum, target and maximum performance level providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial performance.

For RSUs, the grant date fair value of the awards, or the closing price per common share on the date of the award, is used to determine the amount of expense to be recognized over the applicable service period. For PSAs, the grant date fair value is estimated using a lattice model. The significant inputs include the stock price, volatility, dividend yield, and risk-free rate of return. Settlement of RSUs and PSAs will be made in shares of our common stock currently held in treasury.

The following table summarizes RSU and PSA activity during periods indicated:


Units	Units	2022	2021	Units	2023	2022
Balance at January 1,	Balance at January 1,	1,111,382	1,071,652	Balance at January 1,	1,650,152	1,111,382
Granted	Granted	718,668	352,763	Granted	1,354,102	718,668
Forfeited	Forfeited	(215,656)	(98,012)	Forfeited	(445,742)	(215,656)
Shares delivered	Shares delivered	(305,739)	(196,637)	Shares delivered	(313,569)	(305,739)
Balance at June 30,	Balance at June 30,	1,308,655	1,129,766	Balance at June 30,	2,244,943	1,308,655

The amount granted in 2023 and 2022 includes 698,741 and ~~2021 includes~~ 341,429, ~~and 162,480,~~ respectively, of PSAs exclusive of reinvested dividends.

The following table sets forth aggregate RSU and PSA compensation expense included in continuing operations for the periods indicated:


		June 30,					June 30,
In thousands	In thousands	2022		2021		In thousands	2023		2022
Three months ended	Three months ended	$	1,509	$	1,329	Three months ended	$	376	$	1,509
Six months ended	Six months ended	$	2,418	$	2,537	Six months ended	$	1,307	$	2,418

Stock-Only Stock Appreciation Rights ~~(“SOSARs”)~~Under terms of the SOSAR, a recipient receives the right to a payment in the form of shares of common stock equal to the difference, if any, in the fair market value of 1one share of common stock at the time of exercising the SOSAR and the exercise price. All SOSARs are vested and have a term of ten years. No SOSARs ~~were~~have been awarded since 2016.

The following table sets forth information related to outstanding SOSARs:

- 1514 -


		2022			2021				2023			2022
		Shares	Wtd Avg Exercise Price		Shares	Wtd Avg Exercise Price			Shares	Wtd Avg Exercise Price		Shares	Wtd Avg Exercise Price
Outstanding at January 1,	Outstanding at January 1,	1,079,113	$	20.42	1,082,413	$	20.40	Outstanding at January 1,	769,544	$	21.34	1,079,113	$	20.42
Granted	Granted	—	—		—	—		Granted	—	—		—	—
Exercised	Exercised	—	—		—	—		Exercised	—	—		—	—
Canceled / forfeited	Canceled / forfeited	(145,440)	15.61		—	—		Canceled / forfeited	(151,487)	18.36		(145,440)	15.61
Outstanding at June 30,	Outstanding at June 30,	933,673	$	21.17	1,082,413	$	20.40	Outstanding at June 30,	618,057	$	22.07	933,673	$	21.17

11.RETIREMENT PLANS AND OTHER POST-RETIREMENT BENEFITS

The following tables provide information with respect to the net periodic costs of our pension and post-retirement medical benefit plans included in continuing operations.


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
In thousands	In thousands	2022		2021		2022		2021		In thousands	2023		2022		2023		2022
Pension Benefits	Pension Benefits									Pension Benefits
Service cost	Service cost	$	—	$	—	$	—	$	—	Service cost	$	—	$	—	$	—	$	—
Interest cost	Interest cost	179		273		414		523		Interest cost	362		179		773		414
Amortization of prior service cost	Amortization of prior service cost	11		12		22		24		Amortization of prior service cost	6		11		12		22
Amortization of actuarial loss	Amortization of actuarial loss	164		199		331		398		Amortization of actuarial loss	21		164		43		331
Pension settlement charge										Pension settlement charge	—		—		633		—
Total net periodic benefit expense	Total net periodic benefit expense	$	354	$	484	$	767	$	945	Total net periodic benefit expense	$	389	$	354	$	1,461	$	767

Other Benefits	Other Benefits									Other Benefits
Service cost	Service cost	$	—	$	7	$	—	$	14	Service cost	$	2	$	—	$	5	$	—
Interest cost	Interest cost	32		32		65		64		Interest cost	45		32		89		65
Amortization of prior service cost (credit)		26		(59)		52		(117)
Amortization of actuarial loss		—		12		—		24
Total net periodic benefit expense (income)		$	58	$	(8)	$	117	$	(15)
Amortization of prior service cost										Amortization of prior service cost	5		26		10		52
Amortization of actuarial gain										Amortization of actuarial gain	(12)		—		(25)		—
Total net periodic benefit expense										Total net periodic benefit expense	$	40	$	58	$	79	$	117

During the six months ended June 30, 2023, we made a $5.8 million lump-sum payment to our former CEO under the terms of his non-qualified pension plan. In accordance with pension settlement accounting, we recorded a $0.6 million settlement charge reflecting the recognition of amounts previously included in accumulated other comprehensive income.

12.INCOME TAXES

Income taxes are recognized for the amount of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our condensed consolidated financial statements or tax returns. The effects of income taxes are measured based on enacted tax laws and rates.

For the six months ended June 30, ~~2022,~~2023, we had a pretax loss from continuing operations of $124.2 million and income tax benefit of $13.5 million. The income tax benefit includes $19.2 million of deferred tax benefit associated with the asset impairment charge and related bad debt and inventory reserves (refer to Note 6). Absent these charges, the Company had pre-tax loss of $2.9$39.7 million and income tax expense of ~~$5.7 million, which~~$10.1 million. The effective income tax rate for the six months ended June 30, 2023 was unfavorably impacted by the jurisdictional mix of pretax results among the Company and its subsidiaries ~~primarily by the pretax~~and losses ~~in the U.S.~~ which generated no tax ~~benefit.~~benefit in domestic and certain foreign jurisdictions.

For the six months ended June 30, ~~2022,~~2023, we recorded an increase in ~~our federal~~the valuation allowance of ~~$4.5~~$11.4 million for U.S. federal and certain foreign jurisdictions against our net deferred tax assets. In assessing the need for a valuation allowance, management considers all available positive and negative evidence in its analysis. Based on this analysis, we recorded a valuation allowance for the portion of deferred tax assets where the weight of the evidence indicated it is more likely than not that the deferred assets will not be realized.

- 15 -

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had ~~$56.8~~$60.5 million and ~~$55.7~~$56.5 million, respectively, of gross unrecognized tax benefits. As of June 30, ~~2022,~~2023, if such benefits were to be recognized, approximately ~~$53.0~~$57.4 million would be recorded as a component of income tax expense, thereby affecting our effective tax rate.

The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Management performs a comprehensive review of its global tax positions on a

~~- 16 -~~

quarterly basis and accrues amounts for uncertain tax positions. Based on these reviews and the result of discussions and resolutions of matters with ~~certain~~ tax authorities and the closure of tax years subject to tax audit, reserves are adjusted as necessary. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are determined or resolved or as ~~such~~ statutes are closed. Due to potential ~~for~~ resolution of federal, state and foreign examinations, and the lapse of various statutes of limitation, it is reasonably possible our gross unrecognized tax benefits ~~balance~~ may decrease within the next twelve months by a range of zero to ~~$1.7~~$8.5 million. We recognize interest and penalties related to uncertain tax positions as income tax expense.

The following table summarizes information included in continuing operations related to interest on uncertain tax positions:


		Six months ended June 30,					Six months ended June 30,
In millions	In millions	2022		2021		In millions	2023		2022
Interest expense	Interest expense	$	0.8	$	0.4	Interest expense	$	1.0	$	0.8


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Accrued interest payable	Accrued interest payable	$	4.7	$	3.9	Accrued interest payable	$	5.8	$	4.8
Accrued penalties	Accrued penalties	3.0		3.0		Accrued penalties	3.0		3.0

13.INVENTORIES

Inventories, net of reserves, were as follows:


In thousands	In thousands	June 30, 2022		December 31, 2021		In thousands	June 30, 2023		December 31, 2022
Raw materials	Raw materials	$	100,129	$	87,448	Raw materials	$	98,538	$	109,166
In-process and finished	In-process and finished	153,224		139,058		In-process and finished	152,664		142,331
Supplies	Supplies	54,259		53,014		Supplies	63,471		57,939
Total	Total	$	307,612	$	279,520	Total	$	314,673	$	309,436

- 16 -

14.GOODWILL AND OTHER INTANGIBLE ASSETS

The following table sets forth changes in the amounts of goodwill and other intangible assets recorded by each of our segments during the periods indicated:

~~- 17 -~~

In thousands December 31,
2021 Impairment Purchase price allocation adjustment Translation June 30,
2022
Goodwill
Composite Fibers $ 78,438 $ (56,062) $ — $ (1,968) $ 20,408
Airlaid Materials 109,486 — — (6,105) 103,381
Spunlace 48,241 — (500) (3,242) 44,499
Total $ 236,165 $ (56,062) $ (500) $ (11,315) $ 168,288
Other Intangible Assets December 31,
2021 Impairment Amortization Translation June 30,
2022
Composite Fibers
Tradename - non-amortizing $ 3,601 $ (3,530) $ — $ (71) $ —

Technology and related 38,614 (37,823) — (791) —
Accumulated amortization (19,224) 19,380 (424) 268 —
Net 19,390 (18,443) (424) (523) —

Customer relationships and related 34,739 (34,046) — (693) —
Accumulated amortization (22,104) 22,351 (587) 340 —
Net 12,635 (11,695) (587) (353) —

Airlaid Materials
Tradename 4,485 — — (1,133) 3,352
Accumulated amortization (603) — (88) 63 (628)
Net 3,882 — (88) (1,070) 2,724

Technology and related 17,825 — — (756) 17,069
Accumulated amortization (4,552) — (587) 387 (4,752)
Net 13,273 — (587) (369) 12,317

Customer relationships and related 44,585 — (2,038) 42,547
Accumulated amortization (10,512) — (1,864) 895 (11,481)
Net 34,073 — (1,864) (1,143) 31,066
Spunlace
Products and Tradenames 27,623 — (1,638) 25,985
Accumulated amortization (253) — (801) 343 (711)
Net 27,370 — (801) (1,295) 25,274
Technology and related 14,547 — (862) 13,685
Accumulated amortization (202) — (676) 335 (543)
Net 14,345 — (676) (527) 13,142
Customer relationships and related 28,003 — (1,660) 26,343
Accumulated amortization (268) — (846) 344 (770)
Net 27,735 — (846) (1,316) 25,573
Total intangibles 214,022 (75,399) — (9,642) 128,981
Total accumulated amortization (57,718) 41,731 (5,873) 2,975 (18,885)
Net intangibles $ 156,304 $ (33,668) $ (5,873) $ (6,667) $ 110,096

~~- 18 -~~


In thousands	December 31, 2022		Purchase price allocation adjustment		Translation		June 30, 2023
Goodwill
Airlaid Materials	$	105,195	$	—	$	1,300	$	106,495


Total	$	105,195	$	—	$	1,300	$	106,495
Other Intangible Assets	December 31, 2022		Amortization		Translation		June 30, 2023
Airlaid Materials
Tradename	$	3,442	$	—	$	64	$	3,506
Accumulated amortization	(739)		(87)		(14)		(840)
Net	2,703		(87)		50		2,666

Technology and related	17,512		—		317		17,829
Accumulated amortization	(5,437)		(580)		(113)		(6,130)
Net	12,075		(580)		204		11,699

Customer relationships and related	43,152		—		434		43,586
Accumulated amortization	(13,571)		(1,853)		(187)		(15,611)
Net	29,581		(1,853)		247		27,975

Spunlace
Products and Tradenames	27,290		—		678		27,968
Accumulated amortization	(1,759)		(731)		20		(2,470)
Net	25,531		(731)		698		25,498

Technology and related	14,372		—		357		14,729
Accumulated amortization	(1,455)		(603)		(191)		(2,249)
Net	12,917		(603)		166		12,480

Customer relationships and related	27,666		—		687		28,353
Accumulated amortization	(1,803)		(778)		(47)		(2,628)
Net	25,863		(778)		640		25,725

Total intangibles	133,434		—		2,537		135,971
Total accumulated amortization	(24,764)		(4,632)		(532)		(29,928)
Net intangibles	$	108,670	$	(4,632)	$	2,005	$	106,043

15.LEASES

We enter into a variety of arrangements in which we are the lessee for the use of automobiles, forklifts and other production equipment, production facilities, warehouses, office space and land. We determine if an arrangement contains a lease at inception. All our lease arrangements are operating leases and are recorded in the condensed consolidated balance sheet under the caption “Other assets” and the lease obligation is under “Other current liabilities” and “Other long-term liabilities.” We do not have any finance leases.

Operating lease right of use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. ROU assets also include any initial direct

- 17 -

costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. We use our incremental borrowing rate based on information available at the commencement date in determining the lease liabilities as our leases generally do not provide an implicit rate. For purposes of recording the lease arrangement, the term of lease may include options to extend or terminate when we are reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.

The following table sets forth information related to our leases as of the periods indicated.

Dollars in thousands June 30,
2022 December 31,
2021
Right of use asset $ 26,275 $ 27,186
Weighted average discount rate 2.97 % 3.31 %
Weighted average remaining maturity (years)
21.2 26.0


Dollars in thousands	June 30, 2023			December 31, 2022
Right of use asset	$	27,812		$	25,420
Weighted average discount rate	3.64		%	3.14		%
Weighted average remaining maturity (years)	18.6			21.2

The following table sets forth operating lease expense for the periods indicated:


		Six months ended June 30,					June 30,
In thousands	In thousands	2022		2021		In thousands	2023		2022
Three months ended	Three months ended	$	1,499	$	1,452	Three months ended	$	1,568	$	1,499
Six months ended	Six months ended	$	2,920	$	2,799	Six months ended	$	3,393	$	2,920

The following table sets forth required remaining future minimum lease payments during the years indicated:


In thousands	In thousands			In thousands
2022		$	2,988
2023	2023	3,606		2023	$	3,374
2024	2024	2,742		2024	5,586
2025	2025	2,350		2025	4,645
2026	2026	2,270		2026	2,679
2027				2027	2,211
Thereafter	Thereafter	22,416		Thereafter	20,147

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16.LONG-TERM DEBT

Long-term debt is summarized as follows:


In thousands	In thousands	June 30, 2022		December 31, 2021		In thousands	June 30, 2023		December 31, 2022
Revolving credit facility, due Sep 2026	Revolving credit facility, due Sep 2026	$	81,161	$	10,000	Revolving credit facility, due Sep 2026	$	105,534	$	118,685
4.750% Senior Notes, due Oct 2029	4.750% Senior Notes, due Oct 2029	500,000		500,000		4.750% Senior Notes, due Oct 2029	500,000		500,000
11.25% Term loan, due Mar 2029						11.25% Term loan, due Mar 2029	266,374		—
Term loan, due Feb 2024	Term loan, due Feb 2024	194,237		218,026		Term loan, due Feb 2024	—		193,588
2.40% Term Loan, due Jun 2022		—		809
2.05% Term Loan, due Mar 2023	2.05% Term Loan, due Mar 2023	4,158		7,556		2.05% Term Loan, due Mar 2023	—		1,423
1.30% Term Loan, due Jun 2023	1.30% Term Loan, due Jun 2023	1,484		2,427		1.30% Term Loan, due Jun 2023	—		762
1.55% Term Loan, due Sep 2025	1.55% Term Loan, due Sep 2025	4,137		5,204		1.55% Term Loan, due Sep 2025	—		3,594
1.10% Term Loan, due Mar 2024	1.10% Term Loan, due Mar 2024	6,610		9,267		1.10% Term Loan, due Mar 2024	2,963		4,848
0.57% Term Loan, due Jul 2023	0.57% Term Loan, due Jul 2023	20,774		22,652		0.57% Term Loan, due Jul 2023	—		21,332
Total long-term debt	Total long-term debt	812,561		775,941		Total long-term debt	874,871		844,232
Less current portion	Less current portion	(22,117)		(26,437)		Less current portion	(2,963)		(40,435)
Unamortized deferred issuance costs	Unamortized deferred issuance costs	(11,418)		(11,429)		Unamortized deferred issuance costs	(18,883)		(10,545)
Long-term debt, net of current portion	Long-term debt, net of current portion	$	779,026	$	738,075	Long-term debt, net of current portion	$	853,025	$	793,252

On September 2, 2021, we entered into a restatement agreement as part of a Fourth Amended and Restated ~~$400~~$400.0 million Revolving Credit Facility and a €220.0 million Term Loan (collectively, the “Credit Agreement”) ~~which matures September 6, 2026 and February 8, 2024, respectively.~~.

On ~~May 9, 2022,~~March 30, 2023, we entered into an amendment to the Credit ~~Agreement.~~Agreement which reduced the Revolving Credit Facility to $250.0 million and had us fully extinguish the €220.0 million Term Loan. The amendment: i) ~~increases~~modifies the ~~permitted maximum~~“leverage ratio” to be the ratio of consolidated ~~total net~~senior secured debt to consolidated adjusted EBITDA ~~(“leverage ratio”)~~; ii) increases the maximum interest rate borrowing margin to be applied to the applicable index by 25275 basis points; and iii) pledges as collateral substantially all domestic and Canadian assets to secure obligations owed under the Credit ~~Agreement.~~Agreement, as well as, on a second lien basis, the European assets that secure the AG Loan (as defined below). As amended, we are obligated to maintain a ~~maximum~~leverage ratio ~~of consolidated total net debt to consolidated adjusted EBITDA of 6.75~~under 4.25 to 1.0 ~~until~~through the quarter ended December 31, ~~2023, after which the maximum leverage ratio steps~~2024, stepping down to 4.0 to ~~1.0.~~1.0 at March 31, 2025, and 3.50 to 1.0 at March 31, 2026.

Borrowing rates for the Revolving Loans are determined at our option at the time of each borrowing. For all U.S. Dollar denominated Revolving Loan borrowings, the borrowing rate is either, (a) the bank’s base rate which is equal to the greater of i) the prime rate; ii) the overnight bank funding rate plus 50 basis points; or iii) the daily Simple Secured Overnight Financing Rate (“SOFR”) rate plus 100 basis points plus an applicable spread over either i), ii) or iii) ranging from 250 basis points to 400 basis points based on the Company’s leverage ratio; or (b) the daily Term SOFR-rate plus an applicable margin ranging from 350 basis points to 500 basis points based on the Company’s leverage ratio. For non-U.S. Dollar denominated borrowings, interest is based on the Euro-rate or EURIBOR-rate plus an applicable margin ranging from 350 basis points to 500 basis points based on the Company’s leverage ratio.

The Credit Agreement contains a number of customary covenants for financings of this type that, among other things, restrict our ability to dispose of or create liens on assets, incur additional indebtedness, limits certain intercompany financing arrangements, make acquisitions and engage in mergers or consolidations. The Credit Agreement also contains covenants requiring a minimum debt coverage ratio.

Revolving Loans borrowings are available in U.S. Dollars, Euros, British Pound Sterling, and Canadian Dollars.

All remaining principal outstanding and accrued interest ~~coverage ratio~~under the Revolving Credit Facility will be due and provisions limiting our ability to, among other things, (i) incur debt and guaranty obligations, (ii) incur liens, (iii) make loans, advances, investments and acquisitions, (iv) merge or liquidate, (v) sell or transfer assets, (vi) incur additional indebtednesspayable on September 2, 2026.

As of June 30, ~~2022,~~2023, the leverage ratio, as calculated in accordance with the definition in our Credit Agreement, was ~~5.3x~~. 3.4x. A breach of these requirements would give rise to certain remedies under the Revolving Credit ~~Agreement,~~Facility, among which ~~are~~is the termination of the ~~agreement~~agreement.

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On March 30, 2023, we entered into a €250.0 million Term Loan with certain affiliates of Angelo, Gordon & Co., L.P. (“AG Loan”). The net proceeds from the AG Loan were used to extinguish the €220.0 million Term Loan, to repay a portion of outstanding revolving borrowings under the Revolving Credit Facility, for working capital and general corporate purposes and to pay estimated fees and expenses.

The AG Loan will mature on March 23, 2029. Interest on the ~~repayment~~AG Loan accrues at the rate of 11.25% per annum and is payable quarterly in arrears on March 31, June 30, September 30, and December 31 each year, commencing on June 30, 2023.

The AG Loan is prepayable, in whole or in part, at any time at the prepayable premium specified in the Term Loan Agreement. Prior to September 30, 2024, we may prepay some or all of the ~~outstanding borrowings plus accrued~~AG Loan at a "make-whole" premium as specified.

Under the terms of the AG Loan, we have pledged as collateral substantially all assets of our subsidiaries in Germany, Luxembourg, United Kingdom, Malta and ~~unpaid interest~~Switzerland, as well as, on a second lien basis, the domestic and Canadian assets that secure the Revolving Credit Facility.

All covenants contained in the AG Loan agreement are substantially consistent with the Credit Agreement.

On October 25, 2021, we issued $500.0 million aggregate principal amount of 4.750% senior notes due 2029 (the “Notes”). The Notes are guaranteed on a senior unsecured basis, jointly and severally, by each of our existing and future domestic restricted subsidiaries that guarantees our obligations under the Credit Agreement, and/or certain other indebtedness.

The Notes were issued pursuant to an indenture dated as of October 25, 2021 (the “Base Indenture”), as supplemented by the supplemental indenture dated as of October 25, 2021 (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”) among the Company, certain subsidiaries of the Company party thereto, as guarantors, and Wilmington Trust, National Association, as trustee.

The net proceeds from the offering of the Notes, together with cash on hand, were used to pay the purchase price of the Jacob Holm acquisition, to repay certain indebtedness of Jacob Holm, to repay outstanding revolving borrowings under the Revolving Credit Facility, and to pay estimated fees and expenses.

The Notes will mature on November 15, 2029. Interest on the Notes accrues at the rate of 4.750% per annum and is payable semi-annually in arrears on May 15 and November 15 of each year, commencing on May 15, 2022.

The Notes are redeemable, in whole or in part, at any time at the redemption prices specified in the Indenture. Prior to November 15, 2024, we may redeem some or all of the Notes at a "make-whole" premium as specified in the Indenture.

The Notes contain various covenants customary to indebtedness of this nature, including limitations on i) the amount of indebtedness that may be incurred; ii) certain restricted payments including common stock dividends; iii) distributions from certain subsidiaries; iv) sales of assets; v) transactions amongst subsidiaries; and vi) incurrence of liens on assets. In addition, the Notes contain cross default provisions that could result in all such notes becoming due and payable in the event of a failure to repay debt outstanding under the Credit Agreement at maturity or a default under the Credit Agreement that accelerates the debt outstanding thereunder. As of March 31, 2023, we met all of the requirements of our debt covenants.

Glatfelter Gernsbach GmbH (“Gernsbach”), a wholly-owned subsidiary of ours, entered into a series of borrowing agreements with IKB Deutsche Industriebank AG, Düsseldorf (“IKB”). Each of the borrowings require quarterly repayments of principal and interest and provide for representations, warranties and covenants customary for financings of these types. The financial covenants of these borrowings are calculated by reference to the Credit Agreement. These borrowings were fully extinguished on March 14, 2023.

In 2021, Gernsbach also entered into two fixed-rate non-amortizing term loans with certain financial institutions. Similar to the IKB loans discussed above, the financial covenants of these borrowings are calculated by reference to the Credit Agreement. On February 28, 2023, one of these term loans for €20.0 million was fully extinguished. The remaining term loan has a principal balance of $3.0 million and matures in March 2024.

Aggregated unamortized deferred debt issuance costs incurred in connection with all of our outstanding debt totaled $18.9 million at June 30, 2023. The deferred costs are being amortized on a straight-line basis over the life of the

- 20 -

underlying instruments. Amortization expense related to deferred debt issuance costs totaled $3.1 million and $1.9 million in 2023 and 2022, respectively.

The following schedule sets forth the amortization of our term loan agreements together with the maturity of our other long-term debt during the indicated year.


In thousands
2023	$	1,976
2024	987
2025	—
2026	105,534
2027	—
Thereafter	766,374

Glatfelter Corporation guarantees all debt obligations of its subsidiaries. All such obligations are recorded in these ~~condensed~~ consolidated financial statements.

~~Letters~~As of June 30, 2023 and December 31, 2022, we had $5.3 million and $4.7 million, respectively, of letters of credit issued to us by certain financial ~~institutions totaled $6.7 million as of June 30, 2022 and December 31, 2021.~~institutions. The letters of credit, which reduce amounts available under our Revolving Credit Facility, ~~primarily~~ provide financial assurances for the performance of long-term monitoring activities associated with the Fox River environmental matter and for the benefit of certain state workers compensation insurance agencies in conjunction with our self-insurance ~~program and for performance of certain remediation activity related to the Fox River matter.~~program. We bear the credit risk on this amount to the extent that we do not comply with the provisions of certain agreements. No amounts are outstanding under the letters of credit.

- 2021 -

17.FAIR VALUE OF FINANCIAL INSTRUMENTS

The amounts reported on the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximate their respective fair value. The following table sets forth carrying value and fair value of long-term debt:

June 30, 2022 December 31, 2021
In thousands
Carrying
Value
Fair Value
Carrying
Value
Fair Value
Variable rate debt $ 81,161 $ 81,161 $ 10,000 $ 10,000
4.750% Senior Notes, due Oct. 2029 500,000 348,750 500,000 516,875
Term loan, due Feb. 2024 194,237 194,237 218,026 218,026
2.40% Term Loan — — 809 813
2.05% Term Loan 4,158 4,162 7,556 7,616
1.30% Term Loan 1,484 1,477 2,427 2,433
1.55% Term Loan 4,137 4,047 5,204 5,234
1.10% Term Loan 6,610 6,514 9,267 9,252
0.57% Term Loan 20,774 20,484 22,652 22,657
Total $ 812,561 $ 660,832 $ 775,941 $ 792,906


	June 30, 2023				December 31, 2022
In thousands	Carrying Value		Fair Value		Carrying Value		Fair Value
Revolving credit facility, due Sep 2026	$	105,534	$	105,534	$	118,685	$	118,685
4.750% Senior Notes, due Oct 2029	500,000		328,125		500,000		301,250
11.25% Term loan, due Mar 2029	266,374		269,277		—		—
Term loan, due Feb 2024	—		—		193,588		188,998
2.05% Term Loan, due Mar 2023	—		—		1,423		1,418
1.30% Term Loan, Jun 2023	—		—		762		754
1.55% Term Loan, due Sep 2025	—		—		3,594		3,430
1.10% Term Loan, due Mar 2024	2,963		2,900		4,848		4,721
0.57% Term Loan, due Jul 2023	—		—		21,332		20,932
Total	$	874,871	$	705,836	$	844,232	$	640,188

The values set forth above are based on observable inputs and other relevant market data (Level 2). The fair value of financial derivatives is set forth below in Note 18.

18.FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES

As part of our overall risk management practices, we enter into financial derivatives primarily designed to either i) hedge foreign currency risks associated with forecasted transactions (“cash flow hedges”); ii) mitigate the impact that changes in currency exchange rates have on intercompany financing transactions and foreign currency denominated receivables and payables (“foreign currency hedges”); or iii) convert variable-interest-rate debt to fixed rates.

Derivatives Designated as Hedging Instruments - Cash Flow Hedges We use currency forward contracts as cash flow hedges to manage our exposure to fluctuations in the currency exchange rates on certain forecasted production costs. Currency forward contracts involve fixing the exchange for delivery of a specified amount of foreign currency on a specified date. As of June 30, ~~2022,~~2023, the maturity of currency forward contracts ranged from one month to 18 months.

We designate certain currency forward contracts as cash flow hedges of forecasted raw material purchases, certain production costs or capital expenditures with exposure to changes in foreign currency exchange rates. Changes in the fair value of derivatives designated and that qualify as cash flow hedges of foreign exchange risk is deferred as a component of accumulated other comprehensive income in the accompanying condensed consolidated balance sheets. With respect to hedges of forecasted raw material purchases or production costs, the amount deferred is subsequently reclassified into costs of products sold in the period that, inventory produced using the hedged transaction, affects earnings. For hedged capital expenditures, deferred gains or losses are reclassified and included in the historical cost of the capital asset and subsequently affect earnings as depreciation is recognized.

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We had the following outstanding derivatives that were used to hedge foreign exchange risks associated with forecasted transactions and designated as hedging instruments:


In thousands	In thousands	June 30, 2022	December 31, 2021	In thousands	June 30, 2023	December 31, 2022
Derivative	Derivative			Derivative
Sell/Buy - sell notional	Sell/Buy - sell notional			Sell/Buy - sell notional
Euro / British Pound	Euro / British Pound	22,083	18,823	Euro / British Pound	13,504	18,961

U.S. Dollar / British Pound	U.S. Dollar / British Pound	27,221	16,205	U.S. Dollar / British Pound	27,780	34,501
U.S. Dollar / Euro	U.S. Dollar / Euro	3,402	658	U.S. Dollar / Euro	1	824


Sell/Buy - buy notional	Sell/Buy - buy notional			Sell/Buy - buy notional
Euro / Philippine Peso	Euro / Philippine Peso	965,540	896,291	Euro / Philippine Peso	1,130,029	1,030,114
British Pound / Philippine Peso	British Pound / Philippine Peso	1,303,213	1,121,183	British Pound / Philippine Peso	808,909	1,144,839
Euro / U.S. Dollar	Euro / U.S. Dollar	107,614	108,467	Euro / U.S. Dollar	91,934	78,435
U.S. Dollar / Canadian Dollar	U.S. Dollar / Canadian Dollar	36,493	36,904	U.S. Dollar / Canadian Dollar	31,192	36,423

On June 15, 2022, we terminated a €180 million notional value floating-to-fixed interest rate swap agreement with certain financial institutions that was entered into in October 2019 and was to mature in December 2022. During the life of the swap, we paid a fixed interest rate of the applicable margin plus 0.0395% on €180 million of the underlying variable rate term loan. We received the greater of 0.00% or ~~EURIBOR.~~the EURIBOR-rate. At termination, we recognized a deferred gain of $0.4 million that ~~will be~~was amortized into interest expense through December 2022.

Derivatives Designated as Hedging Instruments – Net Investment Hedge The €220 million Term Loan discussed in Note 16 – “Long-Term Debt” iswas designated as a net investment hedge of our Euro functional currency foreign ~~subsidiaries.~~subsidiaries and was extinguished on March 30, 2023 in conjunction with the amendment of the Credit Facility. During the first six months of ~~2022~~2023 and ~~2021,~~2022, we recognized a pre-tax loss of $3.7 million and a pre-tax gain of $15.7 ~~million and $7.8~~ million, respectively, on the remeasurement of the term loan from changes in currency exchange rates. Such amounts are recorded as a component of Other Comprehensive Income (Loss).

On ~~March 3,~~September 6, 2022, we terminated a $150.0 million cross currency swap agreement with certain financial institutions that was entered into ~~cross-currency swaps with an aggregate notional value of $150.0 million.~~in March 2022 and was to mature in May 2025. Pursuant to the terms of the ~~swaps,~~swap, we agreed to receive 4.750% interest denominated in U.S. dollars and we agreed to pay 3.06% interest denominated in euros. ~~Interest is paid semi-annually on May 15 and November 15 and the swaps mature on May 15, 2025.~~ We designated the cross-currency ~~swaps~~swap as a hedge of our net investment in certain euro functional currency subsidiaries. We collected cash proceeds of approximately $15.2 million upon termination. The gain associated with the swap remains in accumulated other comprehensive loss.

Derivatives Not Designated as Hedging Instruments - Foreign Currency HedgesWe also entered into forward foreign exchange contracts to mitigate the impact changes in currency exchange rates have on balance sheet monetary assets and liabilities. None of these contracts are designated as hedges for financial accounting purposes and, accordingly, changes in value of the foreign exchange forward contracts and in the offsetting underlying on-balance-sheet transactions are reflected in the accompanying condensed consolidated statements of income under the caption “Other, net.”

The following sets forth derivatives used to mitigate the impact changes in currency exchange rates have on balance sheet monetary assets and liabilities:

- 2223 -


In thousands	In thousands	June 30, 2022	December 31, 2021	In thousands	June 30, 2023	December 31, 2022
Derivative	Derivative			Derivative
Sell/Buy - sell notional	Sell/Buy - sell notional			Sell/Buy - sell notional
U.S. Dollar / British Pound	U.S. Dollar / British Pound	29,450	26,600	U.S. Dollar / British Pound	22,400	28,600

British Pound / Euro	British Pound / Euro	2,800	3,400	British Pound / Euro	3,000	2,800
U.S. Dollar / Swiss Franc	U.S. Dollar / Swiss Franc	7,960	2,180	U.S. Dollar / Swiss Franc	11,700	—
British Pound / Swiss Franc	British Pound / Swiss Franc	2,290	1,025	British Pound / Swiss Franc	1,900	2,535
Euro / Swiss Franc	Euro / Swiss Franc	6,520	2,750	Euro / Swiss Franc	6,800	—
Euro / U.S. Dollar	Euro / U.S. Dollar	6,400	11,000	Euro / U.S. Dollar	9,700	9,630

Sell/Buy - buy notional	Sell/Buy - buy notional			Sell/Buy - buy notional
Euro / U.S. Dollar	Euro / U.S. Dollar	2,700	20,900	Euro / U.S. Dollar	1,750	2,900
British Pound / Euro	British Pound / Euro	15,300	5,300	British Pound / Euro	6,400	15,950
Swiss Franc / Euro				Swiss Franc / Euro	—	2,250
Swiss Franc / U.S. Dollar				Swiss Franc / U.S. Dollar	—	930
Chinese Yuan / U.S. Dollar				Chinese Yuan / U.S. Dollar	2,680	4,400

These contracts have maturities of one month from the date originally entered into.

Fair Value Measurements The following table summarizes the fair values of derivative instruments for the period indicated and the line items in the accompanying condensed consolidated balance sheets where the instruments are recorded:


In thousands	In thousands	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021		In thousands	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Balance sheet caption	Balance sheet caption	Prepaid Expenses and Other Current Assets				Other Current Liabilities				Balance sheet caption	Prepaid Expenses and Other Current Assets				Other Current Liabilities
Designated as hedging:	Designated as hedging:									Designated as hedging:
Forward foreign currency exchange contracts	Forward foreign currency exchange contracts	$	7,151	$	3,197	$	2,037	$	288	Forward foreign currency exchange contracts	$	1,039	$	1,795	$	1,131	$	2,368
Interest rate swap		—		—		—		44


Not designated as hedging:	Not designated as hedging:									Not designated as hedging:
Forward foreign currency exchange contracts	Forward foreign currency exchange contracts	$	822	701		$	1,124	$	116	Forward foreign currency exchange contracts	$	896	797		$	353	$	317

The amounts set forth in the table above represent the net asset or liability giving effect to rights of offset with each counterparty. The effect of netting the amounts presented above did not have a material effect on our consolidated financial position.

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The fair values of the foreign exchange forward contracts are considered to be Level 2. Foreign currency forward contracts are valued using foreign currency forward and interest rate curves. The fair value of each contract is determined by comparing the contract rate to the forward rate and discounting to present value. Contracts in a gain position are recorded in the condensed consolidated balance sheets under the caption “Prepaid expenses and other current assets” and the value of contracts in a loss position is recorded under the caption “Other current liabilities.”

The following table summarizes the amount of income or (loss) from derivative instruments recognized in our results of operations for the periods indicated and the line items in the accompanying condensed consolidated statements of income where the results are recorded:

- 2324 -


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
In thousands	In thousands	2022		2021		2022		2021		In thousands	2023		2022		2023		2022
Designated as hedging:	Designated as hedging:									Designated as hedging:
Forward foreign currency exchange contracts:	Forward foreign currency exchange contracts:									Forward foreign currency exchange contracts:
Cost of products sold	Cost of products sold	$	(1,697)	$	(33)	$	(2,769)	$	(57)	Cost of products sold	$	(400)	$	(1,697)	$	(1,318)	$	(2,769)
Interest expense	Interest expense	(9)		22		11		43		Interest expense	—		(9)		—		11

Not designated as hedging:	Not designated as hedging:									Not designated as hedging:
Forward foreign currency exchange contracts:	Forward foreign currency exchange contracts:									Forward foreign currency exchange contracts:
Other – net	Other – net	$	1,289	$	433	$	1,729	$	703	Other – net	$	16	$	1,289	$	(218)	$	1,729

The impact of activity not designated as hedging was substantially all offset by the remeasurement of the underlying on-balance-sheet item.

A rollforward of fair value amounts recorded as a component of accumulated other comprehensive income (loss), before taxes, is as follows:


In thousands	In thousands	2022		2021		In thousands	2023		2022
Balance at January 1,	Balance at January 1,	$	2,889	$	(3,460)	Balance at January 1,	$	242	$	2,889
Deferred gains on cash flow hedges	Deferred gains on cash flow hedges	6,565		4,117		Deferred gains on cash flow hedges	1,315		6,565
Reclassified to earnings	Reclassified to earnings	(2,758)		14		Reclassified to earnings	(1,318)		(2,758)
Balance at June 30,	Balance at June 30,	$	6,696	$	671	Balance at June 30,	$	239	$	6,696

We expect substantially all of the amounts recorded as a component of accumulated other comprehensive income will be recorded in results of operations within the next 12 to 18 months and the amount ultimately recognized will vary depending on actual market rates.

Credit risk related to derivative activity arises in the event the counterparty fails to meet its obligations to us. This exposure is generally limited to the amounts, if any, by which the counterparty’s obligations exceed our obligation to them. Our policy is to enter into contracts only with financial institutions which meet certain minimum credit ratings.

19.COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS

Fox River - Neenah, Wisconsin

Background We have previously reported that we face liabilities associated with environmental claims arising out of the presence of polychlorinated biphenyls (“PCBs”) in sediments in the lower Fox River, on which our former Neenah facility was located, and in the Bay of Green Bay, Wisconsin (collectively, the “Site”). Since the early 1990s, the United States, the State of Wisconsin and two Indian tribes (collectively, the “Governments”) have pursued a cleanup of a 39-mile stretch of river from Little Lake Butte des Morts into Green Bay and natural resource damages (“NRDs”). The United States originally notified several entities that they were potentially responsible parties (“PRPs”); however, after giving effect to settlements reached with the Governments, the remaining PRPs exposed to continuing obligations to implement the remainder of the cleanup consist of us, Georgia-Pacific Consumer Products, L.P. (“Georgia-Pacific”) and NCR Corporation. The United States Environmental Protection Agency (“EPA”) has divided the Site into 5five “operable units”, including the most upstream portion of the Site on which our facility was located (“OU1”) and four downstream reaches of the river and bay (“OU2-5”).

Over the past several years, we and certain other PRPs completed all remedial actions pursuant to applicable consent decrees or a Unilateral Administrative Order. In January 2019, we reached an agreement with the United States, the State of Wisconsin, and Georgia-Pacific to resolve all remaining claims among those parties. Under the Glatfelter consent decree, we are primarily responsible for long-term monitoring and maintenance in OU2-OU4a and for reimbursement of government oversight costs paid after October 2018. Finally, we remain responsible for our obligation to continue long-term monitoring and maintenance under our OU1 consent decree.

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Cost estimates Our remaining obligations under the OU1 consent decree consist of long-term monitoring and maintenance. Furthermore, we are primarily responsible for long-term monitoring and maintenance in OU2-OU4a over a period of at least 30 years. The monitoring activities consist of, among others, testing fish tissue, sampling water quality and sediment, and inspections of the engineered caps. In 2018, we entered into a fixed-price, 30-year agreement with a third party for the performance of all of our monitoring and maintenance obligations in OU1 through OU4a with limited

~~- 24 -~~

exceptions, such as, for extraordinary amounts of cap maintenance or replacement. Our obligation under this agreement is included in our total reserve for the Site. We are obligated to make the regular payments under that fixed-price contract until the remaining amount due is less than the OU1 escrow account balance. We are permitted to pay for this contract using the remaining balance of the escrow account established by us and WTM I Company (“WTM I”) another PRP, under the OU1 consent decree during any period that the balance in the escrow account exceeds the amount due under our fixed-price contract. As of June 30, ~~2022,~~2023, the balance in the escrow is less than amounts due under the fixed-price contract by approximately ~~$1.3~~$1.1 million. Our obligation to pay this difference is secured by a letter of credit.

At June 30, ~~2022,~~2023, the escrow account balance totaled ~~$8.7~~$8.9 million which is included in the condensed consolidated balance sheet under the caption “Other assets.”

Under the consent decree, we are responsible for reimbursement of government oversight costs paid from October 2018 and later over approximately the next 30 years. We anticipate that oversight costs will decline as activities at the site have transitioned from remediation to long-term monitoring and maintenance.

Reserves for the Site Our reserve for past and future government oversight costs and long-term monitoring and maintenance totaled ~~$14.8~~$14.2 million at June 30, ~~2022,~~2023, of which ~~$2.2~~$2.0 million is recorded in the accompanying June 30, ~~2022~~2023 condensed consolidated balance sheet under the caption “Environmental liabilities” and the remaining ~~$12.6~~$12.2 million is recorded under the caption “Other long-term liabilities.”

Range of Reasonably Possible Outcomes Based on our analysis of all available information, including but not limited to decisions of the courts, official documents such as records of decision, discussions with legal counsel, cost estimates for future monitoring and maintenance and other post-remediation costs to be performed at the Site, we do not believe that our costs associated with the Fox River matter could exceed the aggregate amounts accrued by a material amount.

- 2526 -

20.SEGMENT INFORMATION

The following tables set forth financial and other information by segment for the period indicated:


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
Dollars in thousands	Dollars in thousands	2022		2021		2022		2021		Dollars in thousands	2023		2022		2023		2022
Net Sales	Net Sales									Net Sales
Airlaid Material										Airlaid Material	$	152,511	$	143,708	$	311,952	$	293,172
Composite Fibers	Composite Fibers	$	123,338	$	141,598	$	259,167	$	282,847	Composite Fibers	125,725		123,338		258,316		259,167
Airlaid Material		143,708		103,313		293,172		187,738
Spunlace	Spunlace	96,917		—		193,304		—		Spunlace	79,420		96,917		166,143		193,304
Inter-segment sales elimination										Inter-segment sales elimination	(651)		—		(1,198)		—
Total	Total	$	363,963	$	244,911	$	745,643	$	470,585	Total	$	357,005	$	363,963	$	735,213	$	745,643

Operating income (loss)	Operating income (loss)									Operating income (loss)
Airlaid Material										Airlaid Material	$	9,726	$	11,944	$	23,640	$	24,165
Composite Fibers	Composite Fibers	$	5,779	$	11,063	$	5,444	$	27,128	Composite Fibers	898		5,779		7,025		5,444
Airlaid Material		11,944		8,431		24,165		15,628
Spunlace	Spunlace	(1,808)		—		(3,380)		—		Spunlace	(1,314)		(1,808)		(3,337)		(3,380)
Other and unallocated	Other and unallocated	(6,991)		(11,371)		(133,194)		(17,314)		Other and unallocated	(19,795)		(6,991)		(31,700)		(133,194)
Total	Total	$	8,924	$	8,123	$	(106,965)	$	25,442	Total	$	(10,485)	$	8,924	$	(4,372)	$	(106,965)

Depreciation and amortization	Depreciation and amortization									Depreciation and amortization
Airlaid Material										Airlaid Material	$	7,637	$	7,542	$	15,323	$	15,171
Composite Fibers	Composite Fibers	$	4,796	$	7,000	$	11,315	$	13,981	Composite Fibers	3,897		4,796		7,862		11,315
Airlaid Material		7,542		6,767		15,171		12,615
Spunlace	Spunlace	2,945		—		5,859		—		Spunlace	3,476		2,945		6,568		5,859
Other and unallocated	Other and unallocated	1,169		966		2,591		1,870		Other and unallocated	960		1,169		1,948		2,591
Total	Total	$	16,452	$	14,733	$	34,936	$	28,466	Total	$	15,970	$	16,452	$	31,701	$	34,936

Capital expenditures	Capital expenditures									Capital expenditures
Airlaid Material										Airlaid Material	$	2,332	$	2,064	$	4,414	$	5,532
Composite Fibers	Composite Fibers	$	4,131	$	2,882	$	10,258	$	5,655	Composite Fibers	2,110		4,131		5,773		10,258
Airlaid Material		2,064		1,297		5,532		3,036
Spunlace	Spunlace	1,801		—		3,886		—		Spunlace	2,509		1,801		5,210		3,886
Other and unallocated	Other and unallocated	2,353		1,653		3,021		2,520		Other and unallocated	1,007		2,353		2,061		3,021
Total	Total	10,349		5,832		$	22,697	$	11,211	Total	$	7,958	$	10,349	$	17,458	$	22,697

Tons shipped (metric)	Tons shipped (metric)									Tons shipped (metric)
Airlaid Material										Airlaid Material	39,246		40,681		79,073		83,733
Composite Fibers	Composite Fibers	24,246		34,471		52,457		68,611		Composite Fibers	24,966		24,246		49,784		52,457
Airlaid Material		40,681		34,315		83,733		63,179
Spunlace	Spunlace	19,358		—		40,094		—		Spunlace	15,191		19,358		31,611		40,094

Total	Total	84,285		68,786		176,284		131,790		Total	79,403		84,285		160,468		176,284

Segments Results of individual operating segments are presented based on our management accounting practices and management structure. There is no comprehensive, authoritative body of guidance for management accounting equivalent to accounting principles generally accepted in the United States of America; therefore, the financial results of individual segments are not necessarily comparable with similar information for any other company. The management accounting process uses assumptions and allocations to measure performance of the segments. Methodologies are refined from time to time as management accounting practices are enhanced and businesses change. The costs incurred by support areas not directly aligned with the segment are allocated primarily based on an estimated utilization of support area services or are included in “Other and Unallocated” in the table set forth above.

- 27 -

~~- 26 -~~

and the extent of cash flow generated from these core operations. Such amounts are presented under the caption “Other and Unallocated.” In the evaluation of operating segments results, management does not use any measures of total assets. This presentation is aligned with the management and operating structure of our company. It is also on this basis that the Company’s performance is evaluated internally and by the Company’s Board of Directors.

- 2728 -

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information in the unaudited condensed consolidated financial statements and notes thereto included herein and Glatfelter’s Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our ~~2021~~2022 Annual Report on Form 10-K ("~~2021~~2022 Form 10-K").

Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding industry prospects and future consolidated financial position or results of operations, made in this Report on Form 10-Q are forward looking. We use words such as “anticipates”, “believes”, “expects”, “future”, “intends” and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from such expectations. The following discussion includes forward-looking statements all of which are inherently difficult to predict. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from our expectations. Accordingly, we identify the following important factors, among others, which could cause our results to differ from any results that might be projected, forecasted or estimated in any such forward-looking statements:

i.risks related to the military conflict between Russia and Ukraine and its impact on our production, sales, supply chain, cost of energy, and availability of energy due to ~~potential~~ natural gas supply issues into Europe from the Nord Stream 1 pipeline;

ii.risks associated with the impact of the COVID-19 pandemic, including global and regional economic conditions, changes in demand for our products, interruptions in our global supply chain, ability to continue production by our facilities, credit conditions of our customers or suppliers, or potential legal actions that could arise due to our operations during the pandemic;

iii.disruptions of our global supply chain, including the availability of key raw materials and transportation for the delivery of critical inputs and of products to customers, and the increase in the costs of transporting materials and products;

iv.risks associated with our ability to increase selling prices quickly or sufficiently enough to recover rapid cost inflation in our raw materials, energy, freight and other ~~costs;~~costs, and the potential reduction or loss of sales due to price increases;

v.variations in demand for our products, including the impact of unplanned market-related downtime, variations in product pricing, or product substitution;

vi.the impact of competition, changes in industry production capacity, including the construction of new facilities or new machines, the closing of facilities and incremental changes due to capital expenditures or productivity increases;

vii.risks associated with our international operations, including local economic and political environments and fluctuations in currency exchange rates;

viii.our ability to develop new, high value-added products;

ix.changes in the price or availability of raw materials we use, particularly woodpulp, pulp substitutes, synthetic pulp, other specialty fibers and abaca fiber;

x.changes in energy-related prices and commodity raw materials with an energy component;

xi.the impact of unplanned production interruption at our facilities or at any of our key suppliers;

xii.disruptions in production and/or increased costs due to labor disputes;

xiii.the gain or loss of significant customers and/or on-going viability of such customers;

xiv.the impact of war and terrorism;

xv.the impact of unfavorable outcomes of audits by various state, federal or international tax authorities or changes in pre-tax income and its impact on the valuation of deferred taxes;

xvi.enactment of adverse state, federal or foreign tax or other legislation or changes in government legislation, policy or regulation; and

xvii.our ability to finance, consummate and integrate acquisitions, including our acquisitions of Mount Holly and Jacob Holm.

Introduction We manufacture a wide array of engineered materials and manage our company along three operating segments:

•Airlaid Materials with sales of airlaid nonwoven fabric-like materials used in feminine hygiene products, adult incontinence products, tabletop, specialty wipes, home care products and other airlaid applications;

- 29 -

•Composite Fibers with sales of single-serve tea and coffee filtration papers, wallcovering base materials, composite laminate papers, technical specialties including substrates for electrical applications, and metallized products;

•~~Airlaid Materials~~ ~~with sales of airlaid nonwoven fabric-like materials used in feminine hygiene products, adult incontinence products, tabletop, specialty wipes, home care products and other airlaid applications;~~ and

~~- 28 -~~

•Spunlace with sales of premium quality spunlace nonwovens for critical cleaning, high-performance materials, personal care, hygiene and medical applications.

The former Specialty Papers business’ results of operations and financial condition are reported as discontinued operations. Following is a discussion and analysis primarily of the financial results of operations and financial condition of our continuing operations.

~~Acquisition~~ As discussed in Item 1 - Financial Statements and Supplementary Data, Note 3 “Acquisitions,” we completed our acquisitions of Georgia-Pacific's U.S. nonwovens business (“Mount Holly”) on May 13, 2021 for $170.9 million and the acquisition of all outstanding equity of PMM Holdings (Luxembourg) AG ("Jacob Holm") on October 29, 2021 for $304.0 million. Refer to Note 3 - “~~Acquisitions"”for additional information about these transactions.~~

RESULTS OF OPERATIONS

Six months ended June 30, ~~2022~~2023 versus the six months ended June 30, ~~2021~~2022

Overview For the first six months of ~~2022,~~2023, we reported a loss from continuing operations of $49.8 million, or $1.11 per share compared with a loss of $110.8 million or $2.47 per ~~share compared with income of $9.9 million and $0.22 per diluted~~ share in the year earlier period. The following table sets forth summarized consolidated results of operations:

Six months ended June 30,
In thousands, except per share 2022 2021
Net sales $ 745,643 $ 470,585
Gross profit 69,062 74,850
Operating income (loss) (106,965) 25,442
Continuing operations
Income (loss) (110,750) 9,886
Earnings per share (2.47) 0.22
Net income (loss) (110,379) 9,804
Earnings per share (2.46) 0.22


	Six months ended June 30,
In thousands, except per share	2023		2022
Net sales	$	735,213	$	745,643
Gross profit	54,347		69,062
Operating loss	(4,372)		(106,965)
Continuing operations
Loss	(49,813)		(110,750)
Loss per share	(1.11)		(2.47)
Net loss	(50,524)		(110,379)
Loss per share	(1.13)		(2.46)

The reported results are in accordance with generally accepted accounting principles in the United States (“GAAP”) and reflect the impact of a number of significant items including ~~a goodwill and other asset impairment charge related to our Dresden operations and Composite Fibers segment,~~debt refinancing, turnaround strategy costs, strategic initiatives, ~~corporate headquarters relocation~~CEO transition costs, and cost optimization, among others. On an adjusted earnings basis, a non-GAAP measure, we had a loss from continuing operations of $7.8 million, or $0.17 per share for the first six months of 2022, compared with income of $16.5 million, or $0.37 per diluted share, a year ago.

Our operating results for the first six months of ~~2022~~2023 reflect: i) the impact of ~~Russia/Ukraine military conflict which commenced on February 24, 2022~~market softness and customer destocking resulting in lower sales volumes and sales, as well as, lower production, ii) higher interest expense stemming from the ~~compounding impacts, including sanctions on the sale of certain products into Russia, adversely impacted sales, prices paid for energy, production and collection of receivables and resulted~~debt refinancing in the ~~recording~~first quarter of ~~a $117.3 million asset impairment charge; ii)~~2023, iii) costs incurred related to the ~~completion~~planned closure of ~~two significant acquisitions in 2021, which collectively added $246.9 million of net sales; iii) the adverse impact of significant inflationary pressures, particularly energy costs, which outpaced~~ our ~~efforts to realize higher selling prices;~~Ober-Schmitten, Germany facility and ~~iv) interest expense increased reflecting the acquisition financing.~~our turnaround strategy.

In addition to the results reported in accordance with GAAP, we evaluate our performance using financial metrics not calculated in accordance with GAAP, including adjusted earnings and adjusted earnings before interest expense, interest income, income taxes, depreciation and amortization and share-based compensation (“Adjusted EBITDA”). On an adjusted earnings basis, a non-GAAP measure, we had an adjusted loss from continuing operations of $26.3 million, or $0.58 per ~~share.~~share for the first six months of 2023, compared with a loss of $7.8 million, or $0.17 per share, a year ago. Our Adjusted EBITDA, also a non-GAAP measure, was $42.0 million for the six months ended June 30, 2023 as compared to $50.2 million for the same period in 2022. We disclose this information to allow investors to evaluate our performance exclusive of certain items that impact the comparability of results from period to period and we believe it is helpful in understanding underlying operating trends and cash flow generation.

Adjusted earnings consists of net income determined in accordance with GAAP adjusted to exclude the impact of the following:

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.

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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, related integrations, and charges incurred to step-up acquired inventory to fair-value.

~~- 29 -~~Ober-Schmitten closure costs. These adjustments reflect 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. These adjustments reflect 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.

~~Goodwill and other asset impairment charges.~~COVID-19 ERC recovery. This adjustment ~~represents a non-cash charge recorded to reduce~~reflects the ~~carrying amount of certain long-lived assets, intangible assets~~benefit recognized from employee retention credits claimed under the Coronavirus Aid, Relief, and ~~goodwill of our Dresden facility~~Economic Security Act (“CARES”) Act and the ~~Composite Fibers reporting segment. The impairment was~~Taxpayer Certainty and Disaster Tax Relief Act of 2020 and professional services fees directly ~~related to the adverse impact of the Russia/Ukraine military conflict on our projected revenue and EBITDA.~~

~~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.~~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.

~~Coronavirus Aid, Relief, and Economic Security (CARES) Act 2020.~~ This adjustment reflects taxes recorded in connection with passage of the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) related to provisions that modified the “net operating loss” provisions of previous law to allow certain losses to be carried back five years.

These adjustments are each unique and not considered to be on-going in nature. The transactions are irregular in timing and amount and may significantly impact our operating performance. As such, these items may not be indicative of our past or future performance and therefore are excluded for comparability purposes.

Adjusted earnings and adjusted earnings per share are considered measures not calculated in accordance with GAAP, and therefore are non-GAAP measures. The non-GAAP financial information should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with GAAP.

The following table sets forth the reconciliation of net ~~income~~loss to adjusted ~~earnings~~loss from continuing operations for the ~~period~~periods indicated:

Six months ended June 30,
2022 2021
In thousands, except per share Amount EPS Amount EPS
Net income (loss) $ (110,379) $ (2.46) $ 9,804 $ 0.22
Exclude: Loss (income) from discontinued operations, net of tax (371) (0.01) 82 —
Income (loss) from continuing operations (110,750) (2.47) 9,886 0.22
Adjustments (pre-tax):

Goodwill and other asset impairment charges (1)
117,349 —
Russia/Ukraine conflict charges (2)
3,948 —
Strategic initiatives (3)
2,488 8,434
Corporate headquarters relocation 223 361
Cost optimization actions (4)
941 —
Timberland sales and related costs (2,962) (2,403)
Total adjustments (pre-tax) 121,987 6,392
Income taxes (5)
(19,167) 31
CARES Act of 2020 tax provision (6)
175 183
Total after-tax adjustments 102,995 2.30 6,606 0.15
Adjusted earnings (loss) from continuing operations $ (7,755) $ (0.17) $ 16,492 $ 0.37

- 31 -


	Six months ended June 30,
	2023				2022
In thousands, except per share	Amount		EPS		Amount		EPS
Net loss	$	(50,524)	$	(1.13)	$	(110,379)	$	(2.46)
Exclude: Loss (income) from discontinued operations, net of tax	711		0.02		(371)		(0.01)
Loss from continuing operations	(49,813)		(1.11)		(110,750)		(2.47)
Adjustments (pre-tax):
Goodwill and other asset impairment charges (1)	—				117,349
Turnaround strategy costs (2)	6,682				—
Russia/Ukraine conflict charges (3)	—				3,948
Strategic initiatives (4)	1,670				2,488
Ober-Schmitten closure costs(5)	10,742				—
Debt refinancing (6)	1,883				—
CEO transition costs (7)	633				—
Corporate headquarters relocation	—				223
Cost optimization actions (8)	—				941
COVID-19 ERC recovery (9)	(233)				—
Timberland sales and related costs	(617)				(2,962)
Total adjustments (pre-tax)	20,760				121,987
Income taxes (10)	(61)				(19,167)
Other tax adjustments (11)	2,798				175
Total after-tax adjustments	23,497		0.52		102,995		2.30
Adjusted loss from continuing operations	$	(26,316)	$	(0.58)	$	(7,755)	$	(0.17)

(1)Reflects goodwill impairment charge of $56.1 million and other asset impairment charges of $61.3 ~~million. Refer to Note 6,~~ ~~Goodwill and Other Asset Impairment,~~ ~~for details of this item.~~million recognized in Q1 2022.

(2)Reflects employee separation costs of $4.0 million and $2.7 million in professional fees.

(3)Reflects bad debt expense charges of $2.9 million and inventory reserves charges of $1.0 ~~million. Refer to Note 6,~~ ~~Goodwill and Other Asset Impairment,~~ ~~for details of this item.~~million recognized in Q1 2022.

~~(3)~~(4)For ~~2022,~~2023, primarily reflects integration activities including consulting and legal fees of $0.7 million, the write-off of construction in process asset deemed unusable of $0.5 million, employee separation costs of $0.1 million, and other costs of $0.4 million. For 2022, reflects professional, ~~services~~consulting and legal fees ~~(including legal, audit, valuation specialists and consulting)~~ of $1.7 million, employee separation and other costs of $0.8 million, ~~and other costs,~~ all of which are directly related to acquisitions. ~~For 2021, primarily reflects~~

~~- 30 -~~

(5)

Reflects employee separation costs of $10.4 million and professional services fees ~~related to acquisitions (including legal, audit and valuation specialists) of $7.1 million, employee separation~~ and other costs of ~~$0.6~~$0.3 million ~~inventory valuation step-up~~in connection with the closure of the Ober-Schmitten facility.

(6)Reflects $1.8 million write-off of deferred debt issuance costs in connection with the Company’s debt refinancing in Q1 2023, and $0.1 million in early repayment penalties and write-off of ~~$0.5 million and other costs, all of which are directly~~unamortized financing fees on the IKB loans.

(7)Reflects pension settlement charge related to ~~acquisitions.~~former CEO's separation.

~~(4)~~(8)Primarily reflects employee separation costs of $0.4 million, equipment write-down of $0.4 million and other costs of $0.1 million directly associated with closure of a synthetic fiber production facility in the ~~U.K..~~U.K. recognized in Q1 2022.

~~(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. No tax effects were recognized on the goodwill impairment as there were no related deferred taxes.

~~(6)~~(9)Reflects ~~the tax effect~~$0.2 million of ~~applying certain provisions of~~interest income on employee retention credits claimed under the CARES Act of ~~2020.~~2020 and the subsequent related amendments.

~~Segment Financial Performance~~

Six months ended June 30,
Dollars in thousands 2022 2021
Net Sales
Composite Fibers $ 259,167 $ 282,847
Airlaid Material 293,172 187,738
Spunlace 193,304 —
Total $ 745,643 $ 470,585
Operating income (loss)
Composite Fibers $ 5,444 $ 27,128
Airlaid Material 24,165 15,628
Spunlace (3,380) —
Other and unallocated (133,194) (17,314)
Total $ (106,965) $ 25,442
Depreciation and amortization
Composite Fibers $ 11,315 $ 13,981
Airlaid Material 15,171 12,615
Spunlace 5,859 —
Other and unallocated 2,591 1,870
Total $ 34,936 $ 28,466
Capital expenditures
Composite Fibers $ 10,258 $ 5,655
Airlaid Material 5,532 3,036
Spunlace 3,886 —
Other and unallocated 3,021 2,520
Total $ 22,697 $ 11,211
Tons shipped (metric)
Composite Fibers 52,457 68,611
Airlaid Material 83,733 63,179
Spunlace 40,094 —
Total 176,284 $ 131,790

~~Segments~~ Results of individual operating segments are presented based on our management accounting practices and management structure. There is no comprehensive, authoritative body of guidance for management accounting equivalent to accounting principles generally accepted in the United States of America; therefore, the financial results of individual segments are not necessarily comparable with similar information for any other company. The management accounting process uses assumptions and allocations to measure performance of the segments. Methodologies are refined from time to time as management accounting practices are enhanced and businesses change. The costs incurred by support areas not

~~- 31 -~~

~~directly aligned with the segment are allocated primarily based on an estimated utilization of support area services or are included in “Other and Unallocated” in the table set forth above.~~

Management evaluates results of operations of the operating segments before certain corporate level costs and the effects of certain gains or losses not considered to be related to the core business operations. Management believes that this is a more meaningful representation of the operating performance of its core businesses, the profitability of the segments and the extent of cash flow generated from these core operations. Such amounts are presented under the caption “Other and Unallocated.” In the evaluation of operating segments results, management does not use any measures of total assets. This presentation is aligned with the management and operating structure of our company. It is also on this basis that the Company’s performance is evaluated internally and by the Company’s Board of Directors.

~~Sales and Costs of Products Sold~~

Six months ended June 30,
In thousands 2022 2021 Change
Net sales $ 745,643 $ 470,585 $ 275,058
Costs of products sold 676,581 395,735 280,846
Gross profit $ 69,062 $ 74,850 $ (5,788)
Gross profit as a percent of Net sales 9.3 % 15.9 %

~~The following table sets forth the contribution to consolidated net sales by each segment:~~

Six months ended June 30,
Percent of Total 2022 2021
Segment
Composite Fibers 34.8 % 60.1 %
Airlaid Materials 39.3 39.9
Spunlace 25.9 —
Total 100.0 % 100.0 %

~~Net sales~~ totaled $745.6 million and $470.6 million in the first six months of 2022 and 2021, respectively. Net sales for Composite Fibers and Airlaid Materials (including Mount Holly) decreased by 2.0% and increased by 63.7%, respectively, on a constant currency basis. The Spunlace segment, formed in connection with the Jacob Holm acquisition, had net sales of approximately $193.3 million in the first six months of 2022.

Composite Fibers’ net sales decreased $23.7 million or 8.4% in the first six months of 2022, compared to the year-ago quarter. Wallcover shipments were below prior year by 49% due to lower shipments to customers in Russia and Ukraine, resulting from the continuation of the military conflict in this region and prohibition of the export of sanctioned wallcover base paper and tea filter products to Russia. Lower shipments were partially offset by higher selling prices of $32.0 million. Currency translation was unfavorable $18.0 million.

Composite Fibers had operating income of $5.4 million in the first six months of 2022 compared with $27.1 million in the year-ago period. Higher selling prices and energy surcharges of $32.0 million fell $14.0 million short of recovering continued inflation in energy and raw material. Lower shipments and market related downtime, primarily in our Dresden facility, negatively impacted results by $12.2 million. The impact of currency and related hedging positively impacted earnings by $4.5 million. The primary drivers of the change in Composite Fibers’ operating income are summarized in the following chart (presented in millions):

~~- 32 -~~

Airlaid Materials’ net sales increased $105.4 million in the year-over-year comparison driven by higher shipments in all major product categories and higher selling prices from cost-pass-through arrangements with customers. Shipments were 32.5% higher driven by strong growth in the tabletop, wipes, and hygiene product categories, including the benefit from a full six months of Mount Holly in 2022. Currency translation was $14.1 million unfavorable.

Airlaid Materials’ operating income, for the first six months of 2022, of $24.2 million was $8.5 million higher than the same period in 2021. Higher shipments and product mix positively impacted results by $11.9 million. Selling price increases of $36.4 million was $2.4 million short of offsetting the higher raw material prices and energy inflation costs. Operations were favorable $1.6 million driven by higher production, which offset other general inflationary pressures. The impact of currency and related hedging negatively impacted earnings by $2.5 million. The primary drivers are summarized in the following chart (presented in millions):

Spunlace net sales for the first six months were approximately $193.3 million. An operating loss of $3.4 million was mainly driven by higher raw material and energy costs only partially offset by higher selling prices and energy surcharges.

~~Asset Impairment~~ During the first quarter of 2022, in connection with an assessment of potential impairment of long-lived and indefinite-lived intangible assets stemming from the compounding impacts resulting from the Russia/Ukraine military conflict and related sanctions, we recorded a $117.3 million non-cash asset impairment charge related to Composite Fibers' Dresden facility and an impairment of Composite Fibers' goodwill. Dresden is a single-line facility that produces wallcover base paper, the majority of which is directly sold into the Russian and Ukrainian markets. As a direct

~~- 33 -~~

result of the economic impacts from the conflict, including disruptions in the underlying financial systems and prohibition of the export of sanctioned wallcover base paper to Russia, management expects a significant reduction in wallcover revenues and associated cash flows for the foreseeable future. In addition, the conflict is expected to significantly impact energy prices and also impact other Composite Fibers products that are subject to export sanctions into Russia. During the year ended December 31, 2021, we had total net sales of wallcover and other products to customers in Russia and Ukraine totaling approximately $95 million. We do not expect significant sales to customers in this region for the foreseeable future as a result of the military conflict, its impact on Ukrainian customers, and the economic sanctions on sales of certain products to customers in Russia. Accordingly, a charge was recorded to reduce the carrying value of the Dresden fixed assets and intangible assets (technological know-how, customer relationships, and an indefinite-lived trade name), along with Composite Fiber's goodwill to fair value.

In addition, as a result of economic sanctions and disruptions to the financial markets, certain customers are not able to satisfy outstanding accounts receivables. As such, during the first quarter of 2022, we recognized bad debt expense of approximately $2.9 million directly related to Russian and Ukrainian customers which is included in “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of income for the six months ended June 30, 2022. At June 30, 2022, we had accounts receivable, net of reserves, from customers in this region totaling approximately $2.6 million which we expect to collect in normal course. However, if circumstances change such that some customers are unable to satisfy their obligations, we may be required to recognize additional bad debt expense in future periods. Furthermore, during the first quarter of 2022, we increased inventory reserves by approximately $1.0 million, primarily related to wallcover products. The charge related to inventory reserves is included in “Cost of products sold” in the accompanying condensed consolidated statements of income for the six months ended June 30, 2022. Substantially all other products which we will no longer be able to export to Russia due to sanctions can be sold to existing customers outside the Russia/Ukraine region.

~~Other and Unallocated~~ The amount of operating expense not allocated to a reporting segment in the Segment Financial Information totaled $133.2 million in the first six months of 2022 compared with $17.3 million in the same period a year ago. Excluding the items identified to present “adjusted earnings,” unallocated expenses for the first six months of 2022 decreased $0.3 million compared to the same period in 2021.

~~Income taxes~~ In the first six months of 2022, our loss from continuing operations totaled $124.2 million and we recorded an income tax benefit of $13.5 million. On adjusted pre-tax loss of $2.3 million, income tax provision was $5.5 million in the first six months of 2022, which primarily related to reserves for uncertain tax positions and valuation allowances for losses for which no tax benefit could be recognized. The comparable amounts in the first six months of 2021 were adjusted pre-tax income of $27.5 million and income tax expense of $11.0 million, respectively.

~~Foreign Currency~~ We own and operate facilities in Canada, Germany, France, the United Kingdom, Spain, and the Philippines. The functional currency of our Canadian operations is the U.S. dollar. However, in Germany, France and Spain, it is the euro, in the UK, it is the British pound sterling, and in the Philippines the functional currency is the peso. On an annual basis, our euro denominated net sales exceeds euro expenses by an estimated €150 million. For the first six months of 2022, the average currency exchange rate was 1.09 dollar/euro compared with 1.20 in the same period of 2021. With respect to the British pound sterling, Canadian dollar, and Philippine peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the euro. As a result, we are exposed to changes in currency exchange rates and such changes could be significant. The translation of the results from international operations into U.S. dollars is subject to changes in foreign currency exchange rates.

The table below summarizes the translation impact on reported results that changes in currency exchange rates had on our non-U.S. based operations from the conversion of these operation’s results for the first six months of 2022.


~~In thousands~~	~~Six months ended June 30,~~
	Favorable (unfavorable)
~~Net sales~~	$	~~(32,135)~~
~~Costs of products sold~~	~~31,774~~
~~SG&A expenses~~	~~2,010~~
~~Income taxes and other~~	~~241~~
~~Net loss~~	$	~~1,890~~

~~- 34 -~~

The above table only presents the financial reporting impact of foreign currency translations assuming currency exchange rates in 2022 were the same as 2021. It does not present the impact of certain competitive advantages or disadvantages of operating or competing in multi-currency markets.

~~Three months ended June 30, 2022 versus the three months ended June 30, 2021~~

~~Overview~~ For the second quarter of 2022, we reported loss from continuing operations of $2.5 million, or $0.05 per share compared with income of $1.5 million and $0.03 per diluted share in the year earlier period. The following table sets forth summarized consolidated results of operations:

Three months ended June 30,
In thousands, except per share 2022 2021
Net sales $ 363,963 $ 244,911
Gross profit 37,397 35,554
Operating income 8,924 8,123
Continuing operations:
Income (loss) (2,460) 1,492
Earnings per share (0.05) 0.03
Net income (loss) (2,052) 1,410
Earnings per share (0.05) 0.03

The reported results are in accordance with generally accepted accounting principles in the United States (“GAAP”) and reflect the impact of significant items including strategic initiatives and corporate headquarters relocation costs, among others. On an adjusted earnings basis, a non-GAAP measure, we had a loss from continuing operations of $1.6 million, or $0.04 per share for the second quarter of 2022, compared with income of $8.0 million, or $0.18 per diluted share, a year ago.

Our second quarter of 2022 operating results reflect: i) the continuation of the compounding impacts of the Russia/Ukraine military conflict commencing on February 24, 2022 including the adverse impact of the prohibition of the export of sanctioned products into Russia; ii) the completion of two significant acquisitions in 2021, which collectively added $123.2 million of net sales; iii) the adverse impact of significant inflationary pressures, particularly energy costs, which outpaced our efforts to realize higher selling prices; and iv) interest expense increased reflecting the acquisition financing.

~~The following table sets forth the reconciliation of net income to adjusted earnings for the period indicated:~~

Three months ended June 30,
2022 2021
In thousands, except per share Amount EPS Amount EPS
Net income (loss) $ (2,052) $ (0.04) $ 1,410 $ 0.03
Exclude: Income from discontinued operations, net of tax (408) (0.01) 82 —
Income (loss) from continuing operations (2,460) (0.05) 1,492 0.03
Adjustments (pre-tax):

Strategic initiatives (1)
653 7,831
Corporate headquarters relocation 135 206
Timberland sales and related costs — (1,553)
Total adjustments (pre-tax) 788 6,484
Income taxes (2)
(20) (50)
CARES Act of 2020 tax provision (3)
96 90
Total after-tax adjustments 864 0.01 6,524 0.15
Adjusted earnings (loss) from continuing operations $ (1,596) $ (0.04) $ 8,016 $ 0.18

~~(1)~~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 and other costs, all of which are directly related to acquisitions. For 2021, reflects professional services fees related to acquisitions (including transaction advisory, legal, audit and valuation specialists) of $6.5 million, employee separation and other costs of $0.6 million, inventory valuation step-up costs of $0.5 million and other costs all of which are directly related to acquisitions.

~~(2)~~(10)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.

~~(3)~~(11)~~Reflects the tax~~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.

The following table sets forth the reconciliation of net loss to adjusted EBITDA for the periods indicated:

- 3532 -


Adjusted EBITDA	Six months ended June 30,
In thousands	2023		2022

Net loss	$	(50,524)	$	(110,379)
Exclude: Loss (income) from discontinued operations, net of tax	711		(371)
Add back: Taxes on continuing operations	10,093		(13,489)
Depreciation and amortization	31,701		34,936
Interest expense, net	29,025		15,479
EBITDA	21,006		(73,824)
Adjustments:
Goodwill and other asset impairment charges	—		117,349
Turnaround strategy costs	7,196		—
Russia/Ukraine conflict charges	—		3,948
Strategic initiatives	1,670		2,488
Ober-Schmitten closure costs	10,742		—
Debt refinancing	59		—
CEO transition costs	633		—
Corporate headquarters relocation	—		223
Share-based compensation	1,307		2,419
Cost optimization actions, excluding accelerated depreciation	—		589
COVID-19 ERC recovery	41		—
Timberland sales and related costs	(617)		(2,962)
Adjusted EBITDA	$	42,037	$	50,230

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. The adjustments include, among others, goodwill and other asset impairment charges, the costs of strategic initiatives, turnaround strategy costs, Ober-Schmitten closure costs, CEO transition costs, and share-based compensation expense, as well as the elimination of gains from sales of timberlands, among others. Adjusted EBITDA is a performance measure that excludes costs that we do not consider to be indicative of our ongoing operating performance.

- 33 -

Segment Financial Performance


		Three months ended June 30,			Six months ended June 30,
Dollars in thousands	Dollars in thousands		2022			2021		Dollars in thousands	2023		2022
Net sales
Net Sales								Net Sales
Airlaid Material								Airlaid Material	$	311,952	$	293,172
Composite Fibers	Composite Fibers		$	123,338		$	141,598	Composite Fibers	258,316		259,167
Airlaid Material			143,708			103,313
Spunlace	Spunlace		96,917			—		Spunlace	166,143		193,304
Inter-segment sales elimination								Inter-segment sales elimination	(1,198)		—
Total	Total		$	363,963		$	244,911	Total	$	735,213	$	745,643

Operating income (loss)	Operating income (loss)							Operating income (loss)
Airlaid Material								Airlaid Material	$	23,640	$	24,165
Composite Fibers	Composite Fibers		$	5,779		$	11,063	Composite Fibers	7,025		5,444
Airlaid Material			11,944			8,431
Spunlace	Spunlace		(1,808)			—		Spunlace	(3,337)		(3,380)
Other and unallocated	Other and unallocated		(6,991)			(11,371)		Other and unallocated	(31,700)		(133,194)
Total	Total		$	8,924		$	8,123	Total	$	(4,372)	$	(106,965)

Depreciation and amortization	Depreciation and amortization							Depreciation and amortization
Airlaid Material								Airlaid Material	$	15,323	$	15,171
Composite Fibers	Composite Fibers		$	4,796		$	7,000	Composite Fibers	7,862		11,315
Airlaid Material			7,542			6,767
Spunlace	Spunlace		2,945			—		Spunlace	6,568		5,859
Other and unallocated	Other and unallocated		1,169			966		Other and unallocated	1,948		2,591
Total	Total		$	16,452		$	14,733	Total	$	31,701	$	34,936

Capital expenditures	Capital expenditures							Capital expenditures
Airlaid Material								Airlaid Material	$	4,414	$	5,532
Composite Fibers	Composite Fibers		$	4,131		$	2,882	Composite Fibers	5,773		10,258
Airlaid Material			2,064			1,297
Spunlace	Spunlace		1,801			—		Spunlace	5,210		3,886
Other and unallocated	Other and unallocated		2,353			1,653		Other and unallocated	2,061		3,021
Total	Total		$	10,349		$	5,832	Total	$	17,458	$	22,697

Tons shipped (metric)	Tons shipped (metric)							Tons shipped (metric)
Airlaid Material								Airlaid Material	79,073		83,733
Composite Fibers	Composite Fibers		24,246			34,471		Composite Fibers	49,784		52,457
Airlaid Material			40,681			34,315
Spunlace	Spunlace		19,358			—		Spunlace	31,611		40,094
Total	Total		84,285			$	68,786	Total	160,468		$	176,284

~~- 36 -~~

- 34 -

presentation is aligned with the management and operating structure of our company. It is also on this basis that the Company’s performance is evaluated internally and by the Company’s Board of Directors.

Sales and Costs of Products Sold


		Three months ended June 30,									Six months ended June 30,
In thousands	In thousands	2022			2021			Change		In thousands	2023			2022			Change
Net sales	Net sales	$	363,963		$	244,911		$	119,052	Net sales	$	735,213		$	745,643		$	(10,430)
Costs of products sold	Costs of products sold	326,566			209,357			117,209		Costs of products sold	680,866			676,581			4,285
Gross profit	Gross profit	$	37,397		$	35,554		$	1,843	Gross profit	$	54,347		$	69,062		$	(14,715)
Gross profit as a percent of Net sales	Gross profit as a percent of Net sales	10.3		%	14.5		%			Gross profit as a percent of Net sales	7.4		%	9.3		%

The following table sets forth the contribution to consolidated net sales by each segment:


		Three months ended June 30,					Six months ended June 30,
Percent of Total	Percent of Total	2022		2021		Percent of Total	2023		2022
Segment	Segment					Segment
Airlaid Materials						Airlaid Materials	42.4	%	34.8	%
Composite Fibers	Composite Fibers	33.9	%	57.8	%	Composite Fibers	35.1		39.3
Airlaid Materials		39.5		42.2
Spunlace	Spunlace	26.6		—		Spunlace	22.5		25.9
Total	Total	100.0	%	100.0	%	Total	100.0	%	100.0	%

Net sales totaled ~~$364.0~~$735.2 million and ~~$244.9~~$745.6 million in the ~~second quarter~~first six months of ~~2022~~2023 and ~~2021,~~2022, respectively. Net sales for Airlaid Materials and Composite Fibers ~~and Airlaid Materials (including Mount Holly) decreased by 4.4% and~~ increased by ~~47.7%~~8.9% and 2.0%, respectively, on a constant currency basis. The Spunlace ~~segment, formed in connection with the Jacob Holm acquisition, had~~segment'’s net sales ~~of approximately $96.9~~decreased by 8.6% on a constant currency basis.

Airlaid Materials’ net sales increased $18.8 million in the ~~second quarter~~year-over-year comparison mainly driven by higher selling prices from cost-pass-through arrangements with customers and pricing actions to recover significant inflation in raw materials and energy. Shipments were 5.6% lower mainly due to feminine hygiene and tabletop categories and currency translation was unfavorable by $1.8 million.

Airlaid Materials’ first six months operating income of $23.6 million was $0.5 million lower when compared to the first six months of 2022. Lower shipments lowered r

~~Composite Fibers’~~esults by $1.2 million. Selling price increases and energy surcharges of $32.2 million more than offset higher raw material and energy costs of $29.5 million. In the first six months of 2023, primary raw material input costs increased $28 million, or 19%, and energy costs increased $1 million, or 7%, compared to the first six months of 2022. The increase in primary raw material input costs was approximately in-line with broader market indices, and energy prices were less volatile with the government legislation in Europe capping energy prices. We expect prices for both energy and raw materials to steadily decline in 2023. As of June 30, 2023, Airlaid Materials had approximately 74% of its net sales ~~decreased $18.3~~with contracts with pass-through provisions. Operations were unfavorable by $3.6 million ~~or 12.9%~~mainly driven by lower production to manage customer demand as some customers slowed ordering patterns to manage inventory levels built up at the end of 2022 to avoid anticipated energy and supply chain disruptions in the ~~second quarter~~beginning of ~~2022,~~2023. The impact of currency and related hedging positively impacted earnings by $1.7 million. The primary drivers of the change in Airlaid Materials’ operating income are summarized in the following chart (presented in millions):

- 35 -

Composite Fibers’ net sales was $0.9 million lower in the first six months of 2023, compared to the year-ago ~~quarter. Higher~~period as lower shipment of 5.1% and unfavorable currency translation of $4.6 million was partially offset by higher selling prices of $14.4 million were more than offset by lower shipments of 29.7%. Wallcover shipments were below prior year by 62% due to lower shipments to customers in Russia and Ukraine, resulting from the continuation of the geopolitical conflict in this region and prohibition of the export of sanctioned wallcover and tea filter products into Russia. Currency translation was unfavorable $12.0$17.5 million.

Composite Fibers had operating income for the ~~second quarter~~first six months of ~~$5.8~~$7.0 million compared with ~~$11.1 million~~ operating income of $5.4 million in the ~~second quarter~~first six months of ~~2021. Lower shipments and market-related downtime, primarily in our Dresden facility, negatively impacted results by $6.4 million.~~2022. Higher selling prices ~~and~~and energy surcharges ~~of $14.4 million fell $2.5 million short of fully recovering~~more than offset the continued inflation in energy, raw material, and freight and was a net favorable benefit to results of ~~$16.9~~$5.2 million. In the first six months of 2023, energy costs increased $2.7 million, or 7%, and primary raw material input costs increased $9.6 million, or 10%, compared to the first six months of 2022. The increase in primary raw material input costs was approximately in-line with broader market indices, and energy prices were less volatile with the government legislation in Europe capping energy prices. We expect prices for both energy and raw materials to steadily decline in 2023. As of June 30, 2023, Composite Fibers had approximately 46% of its net sales with contracts with pass-through provisions. Operations was unfavorable by $0.9 million mainly driven by lower production volume to match customer demand and manage inventory levels, largely offset by cost savings from headcount reduction actions taken related to the turnaround strategy, lower energy consumption due to lower production volume and lower depreciation expense due to the Dresden and Ober-Schmitten asset impairments in 2022. The Ober-Schmitten site negatively impacted year-over-year results by $5.5 million. The impact of currency and related hedging positively impacted earnings by ~~$3.6 million mainly driven by weakening of the British Pound.~~$0.1 million. The primary drivers of the change in Composite Fibers’ operating income are summarized in the following chart (presented in millions):

Spunlace’s net sales was $27.2 million lower in the first six months of 2023, compared to the year-ago period as lower shipment of 21.2% and unfavorable currency translation of $0.9 million was partially offset by higher selling prices of $14.1 million.

- 3736 -

~~Airlaid Materials’ net sales increased $40.4~~Spunlace had an operating loss of $3.3 million in the ~~year-over-year comparison driven by the Mount Holly acquisition, higher shipments in all major product categories, and higher selling prices from cost-pass-through arrangements~~first six months of this year compared with ~~customers. Shipments were 18.6% higher driven by strong growth~~an operating loss of $3.4 million in the ~~wipes, tabletop, and hygiene product categories. Currency translation was $8.9 million unfavorable.~~

~~Airlaid Materials’ second quarter operating income~~first six months of ~~$11.9 million was $3.5 million higher when compared to the second quarter of 2021.~~2022. Higher ~~shipments positively impacted results by $3.9 million. Selling price increases~~selling prices and energy surcharges ~~of $18.0 million fully~~were partially offset ~~the~~by higher raw material and energy costs which improved results by $0.8 million. Operations were slightly favorable by $0.3 million as higher production was mostly offset by general inflationary pressures. The impact of currency and related hedging negatively impactedfavorably impacting earnings by ~~$1.5~~$5.7 million. In the first six months of 2023, primary raw material input costs increased $10.0 million, ~~due~~or 10%, and energy costs decreased $1.4 million, or 9%, compared to ~~a weakening Euro.~~the first six months of 2022. The increase in primary raw material input costs was approximately in-line with broader market indices and energy prices were less volatile with the government legislation in Europe capping energy prices. We expect prices for both energy and raw materials to decline in 2023. Volume was unfavorable by $3.8 million driven by lower shipments in almost all categories. As of June 30, 2023, Spunlace had approximately 37% of its net sales with contracts with pass-through provisions. The primary drivers of the change in Spunlace’s operating income are summarized in the following chart (presented in millions):

Asset Impairment During the first quarter of 2022, in connection with an assessment of potential impairment of long-lived and indefinite-lived intangible assets stemming from the compounding impacts resulting from the Russia/Ukraine military conflict and related sanctions, we recorded a $117.3 million non-cash asset impairment charge related to Composite Fibers' Dresden facility and an impairment of Composite Fibers' goodwill. Dresden is a single-line facility that produces wallcover base paper, the majority of which is directly sold into the Russian and Ukrainian markets.

~~Spunlace net sales for~~In addition, as a result of economic sanctions and disruptions to the ~~second~~financial markets, certain customers were not able to satisfy outstanding accounts receivables. As such, during the first quarter ~~were~~of 2022, we recognized bad debt expense of approximately ~~$96.9 million. An operating loss~~$2.9 million directly related to Russian and Ukrainian customers which is included in “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of ~~$1.8~~income. Furthermore, during the first quarter of 2022, we increased inventory reserves by approximately $1.0 million, ~~was mainly driven by higher raw material and energy costs only partially offset by higher selling prices and energy surcharges.~~primarily related to wallcover products. The charge related to inventory reserves is included in “Cost of products sold” in the accompanying condensed consolidated statements of income.

Other andUnallocated The amount of net operating ~~expense~~expenses not allocated to ~~a reporting~~an operating segment, and reported as “Other and Unallocated” in ~~the~~our table of Segment Financial ~~Information~~Performance, totaled ~~$7.0~~$31.7 million in the ~~second quarter~~first six months of ~~2022~~2023 compared with ~~$11.4~~$133.2 million in the same period a year ago. Excluding the items identified to present “adjusted earnings,” unallocated expenses for the ~~second quarter~~first six months of ~~2022~~2023 increased ~~$1.3~~$1.9 million compared to the ~~second quarter of 2021.~~same period in 2022 mainly driven by higher professional services costs, travel expenses and wage inflation.

~~- 38 -~~

Income ~~taxes~~Taxes InFor the ~~second quarter of 2022, our income from continuing operations totaled $0.8 million and~~six months ended June 30, 2023, we recorded ana $10.1 million income tax provision on a pretax loss of ~~$3.3 million. On adjusted pre-tax income of $1.6~~$39.7 million ~~the~~from continuing operations. The comparable amounts for 2022 were $13.5 million income tax ~~expense was $3.2 million~~benefit on a pre-tax loss of $124.2 million. The income tax provision in both periods reflects valuation allowances recorded for the operating losses in the ~~second quarter of 2022, which primarily related to reserves for uncertain tax positions~~U.S. and ~~valuation allowances for losses~~certain foreign jurisdictions for which no income tax benefit ~~could be recognized.~~was recorded. The ~~comparable amounts in the same quarter of 2021 were adjusted pre-tax income of $12.0 million and~~ income tax ~~expense of $4.0 million, respectively.~~benefit in 2022 also includes deferred tax benefits associated with the asset impairment charges and related bad debt and inventory reserves.

- 37 -

months of 2023, the average currency exchange rate was 1.08 dollar/euro compared with 1.09 in the same period of 2022. With respect to the British pound sterling, Canadian dollar, and Philippine peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the euro. As a result, we are exposed to changes in currency exchange rates and such changes could be significant. The translation of the results from international operations into U.S. dollars is subject to changes in foreign currency exchange rates.


In thousands	Six months ended June 30,
	Favorable (unfavorable)
Net sales	$	(7,316)
Costs of products sold	8,540
SG&A expenses	449
Income taxes and other	41
Net loss	$	1,714

The above table only presents the financial reporting impact of foreign currency translations assuming currency exchange rates in 2023 were the same as 2022. It does not present the impact of certain competitive advantages or disadvantages of operating or competing in multi-currency markets.

Three months ended June 30, 2023 versus the three months ended June 30, 2022

Overview For the second quarter of 2023, we reported a loss from continuing operations of $36.6 million, or $0.82 per share compared with a loss of $2.5 million or $0.05 per share in the same period in 2022. The following table sets forth summarized consolidated results of operations:


	Three months ended June 30,
In thousands, except per share	2023		2022
Net sales	$	357,005	$	363,963
Gross profit	18,133		37,397
Operating income (loss)	(10,485)		8,924
Continuing operations
Loss	(36,631)		(2,460)
Loss per share	(0.82)		(0.05)
Net loss	(36,940)		(2,052)
Loss per share	(0.83)		(0.04)

The reported results are in accordance with generally accepted accounting principles in the United States (“GAAP”) and reflect the impact of a number of significant items including debt refinancing, turnaround strategy costs, strategic initiatives, CEO transition costs, and cost optimization, among others. Our operating results for the three months ended June 30, 2023 reflect: i) the impact of market softness and customer destocking resulting in lower sales volumes and sales, as well as, lower production, ii) higher interest expense stemming from the debt refinancing in the first quarter of 2023, iii) costs incurred related to the planned closure of our Ober-Schmitten, Germany facility and our turnaround strategy.

In addition to the results reported in accordance with GAAP, we evaluate our performance using financial metrics not calculated in accordance with GAAP, including adjusted earnings and adjusted earnings before interest expense, interest income, income taxes, depreciation and amortization and share-based compensation (“Adjusted EBITDA”). On an adjusted earnings basis, a non-GAAP measure, we had an adjusted loss from continuing operations of $20.5 million, or $(0.45) per share for the second quarter of 2023, compared with a loss of $1.6 million, or $(0.04) per share, a year ago. Our Adjusted EBITDA, also a non-GAAP measure, was $17.3 million for the three months ended June 30, 2023 as compared to $27.2 million for the same period in 2022. We disclose this information to allow investors to evaluate our performance exclusive of certain items that impact the comparability of results from period to period and we believe it is helpful in understanding underlying operating trends and cash flow generation.

- 38 -

The following table sets forth the reconciliation of net loss to adjusted loss from continuing operations for the periods indicated:


	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 of tax	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.

The following table sets forth the reconciliation of net loss to adjusted EBITDA for the periods indicated:

- 39 -


Adjusted EBITDA	Three months ended June 30,
In thousands	2023		2022

Net loss	$	(36,940)	$	(2,052)
Exclude: Loss (income) from discontinued operations, net of tax	309		(408)
Add back: Taxes on continuing operations	6,399		3,295
Depreciation and amortization	15,970		16,452
Interest expense, net	16,702		7,634
EBITDA	2,440		24,921
Adjustments:

Turnaround strategy costs	2,713		—

Strategic initiatives	889		653
Ober-Schmitten closure costs	10,793		—


Corporate headquarters relocation	—		135
Share-based compensation	376		1,510

COVID-19 ERC recovery	41		—

Adjusted EBITDA	$	17,252	$	27,219

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. The adjustments include, among others, Ober-Schmitten closure costs, turnaround strategy costs, strategic initiative costs, corporate headquarters relocation expenses, and share-based compensation expense. Adjusted EBITDA is a performance measure that excludes costs that we do not consider to be indicative of our ongoing operating performance.

- 40 -

Segment Financial Performance


	Three months ended June 30,
Dollars in thousands	2023		2022
Net Sales
Airlaid Material	$	152,511	$	143,708
Composite Fibers	125,725		123,338
Spunlace	79,420		96,917
Inter-segment sales elimination	(651)		—
Total	$	357,005	$	363,963

Operating income (loss)
Airlaid Material	$	9,726	$	11,944
Composite Fibers	898		5,779
Spunlace	(1,314)		(1,808)
Other and unallocated	(19,795)		(6,991)
Total	$	(10,485)	$	8,924

Depreciation and amortization
Airlaid Material	$	7,637	$	7,542
Composite Fibers	3,897		4,796
Spunlace	3,476		2,945
Other and unallocated	960		1,169
Total	$	15,970	$	16,452

Capital expenditures
Airlaid Material	$	2,332	$	2,064
Composite Fibers	2,110		4,131
Spunlace	2,509		1,801
Other and unallocated	1,007		2,353
Total	$	7,958	$	10,349

Tons shipped (metric)
Airlaid Material	39,246		40,681
Composite Fibers	24,966		24,246
Spunlace	15,191		19,358
Total	79,403		$	84,285

- 41 -

Sales and Costs of Products Sold


	Three months ended June 30,
In thousands	2023			2022			Change
Net sales	$	357,005		$	363,963		$	(6,958)
Costs of products sold	338,872			326,566			12,306
Gross profit	$	18,133		$	37,397		$	(19,264)
Gross profit as a percent of Net sales	5.1		%	10.3		%

The following table sets forth the contribution to consolidated net sales by each segment:


	Three months ended June 30,
Percent of Total	2023		2022
Segment
Airlaid Materials	42.6	%	33.9	%
Composite Fibers	35.2		39.5
Spunlace	22.2		26.6
Total	100.0	%	100.0	%

Net sales totaled $357.0 million and $364.0 million in the three months ended June 30, 2023 and 2022, respectively. Net sales for Airlaid Materials and Composite Fibers increased by 8.9% and 2.0%, respectively, on a constant currency basis. The Spunlace segment'’s net sales decreased by 8.6% on a constant currency basis.

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 feminine hygiene customers were destocking inventory and closely managing inventory levels. Currency translation was favorable by $1.6 million.

Airlaid Materials’ second quarter operating income of $9.7 million was $2.2 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 offset the higher raw material and energy costs of $11.5 million. In the three months ended June 30, 2023, primary raw material input costs increased $11.0 million, or 16%, and energy costs was in-line with the second quarter of 2022. The increase in primary raw material input costs was approximately in-line with broader market indices and energy prices were less volatile with the government legislation in Europe capping energy prices. We expect prices for both energy and raw materials to steadily decline in 2023. As of June 30, 2023, Airlaid Materials had approximately 74% of its net sales with contracts with pass-through provisions. Operations were unfavorable by $2.1 million primarily due to a fire at our Fort Smith, Arkansas facility in June and wage inflation. The impact of currency and related hedging positively impacted earnings by $0.9 million. The primary drivers of the change in Airlaid Materials’ operating income are summarized in the following chart (presented in millions):

- 42 -

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 substantially offset by lower food and beverage, composite laminates and metallized products shipments. Currency translation was favorable by $1.4 million.

Composite Fibers had operating income for the second quarter of $0.9 million compared with operating income of $5.8 million in the second quarter of 2022. Higher selling prices and energy surcharges more than offset the continued inflation in energy and raw materials and was 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. In the second quarter of 2023, energy costs increased $1.6 million, or 11%, and primary raw material input costs increased $2.2 million, or 5%, compared to the second quarter of 2022. The increase in primary raw material input costs was approximately in-line with broader market indices, however, and energy prices were less volatile with the government legislation in Europe capping energy prices. We expect prices for both energy and raw materials to steadily decline in 2023. As of June 30, 2023, freight inflation reported as part of raw material, energy and other inflation decreased as global supply chain disruptions experienced in 2022 significantly improved in 2023. As of June 30, 2023, Composite Fibers had approximately 46% of its net sales with contracts with pass-through provisions. During the three months ended June 30, 2023, operations was unfavorable compared to the second quarter of 2022 by $5.0 million mainly driven by lower production volume to match customer demand and manage inventory levels. The Ober-Schmitten site negatively impacted year-over-year results by $4.2 million. The impact of currency and related hedging negatively impacted earnings by $0.5 million. The primary drivers of the change in Composite Fibers’ operating income are summarized in the following chart (presented in millions):

- 43 -

Spunlace’s 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 had an operating loss of $1.3 million in the second quarter of this year compared with an operating loss of $1.8 million in the second quarter of 2022.In the second quarter of 2023, primary raw material input costs were in-line with Q2 2022 and energy costs decreased $0.6 million, or 8%, compared to the second quarter of 2022. The increase in primary raw material input costs was approximately in-line with broader market indices and energy prices were less volatile with the government legislation in Europe capping energy prices. We expect prices for both energy and raw materials to decline in 2023. Volume was unfavorable $1.7 million driven by lower shipments in all categories. As of June 30, 2023, Spunlace had approximately 37% of its net sales with contracts with pass-through provisions. Operations was unfavorable by $0.4 million mainly driven by lower production to manage inventory and a fire at our Asheville, North Carolina facility partially offset by lower costs due to the headcount actions taken in 2022, improved converting and lower spending. The impact of currency positively impacted earnings by $0.1 million. The primary drivers of the change in Spunlace’s operating income are summarized in the following chart (presented in millions):

Other and Unallocated The amount of net operating expenses not allocated to an operating segment, and reported as “Other and Unallocated” in our table of Segment Financial Performance, totaled $19.8 million in the first three months 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 same period in 2022.

Income taxes For the three months ended June 30, 2023, we recorded a $6.4 million income tax provision on a pretax loss of $30.2 million from continuing operations. The comparable amounts for 2022 were $3.3 million income tax provision on pre-tax income of $0.8 million. The income tax provision in both periods reflects valuation allowances recorded for the operating losses in the U.S. and certain foreign jurisdictions for which no income tax benefit was recorded.

Foreign Currency We own and operate facilities in Canada, Germany, France, the United Kingdom, Spain, and the Philippines. The functional currency of our Canadian operations is the U.S. dollar. However, in Germany, France and Spain, it is the euro, in the UK, it is the British pound sterling, and in the Philippines the functional currency is the peso. On an annual basis, our euro denominated net sales exceeds euro expenses by an estimated €190 million. For the three months ended June 30, ~~2022,~~2023, the average currency exchange rate was ~~1.07~~1.09 dollar/euro compared with ~~1.19~~1.07 in the same period of ~~2021.~~2022. With respect to the British pound sterling, Canadian dollar, and Philippine peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the euro. As a result, we are exposed to changes in currency exchange rates and such changes could be significant. The translation of the results from international operations into U.S. dollars is subject to changes in foreign currency exchange rates.

- 44 -


In thousands	Three months ended June 30, ~~2022~~
	Favorable (unfavorable)
Net sales	$	~~(20,875)~~2,874
Costs of products sold	~~21,553~~(2,237)
SG&A expenses	~~1,384~~(240)
Income taxes and other	~~190~~(11)
Net loss	$	~~2,252~~386

The above table only presents the financial reporting impact of foreign currency translations assuming currency exchange rates in ~~2022~~2023 were the same as ~~2021.~~2022. It does not present the impact of certain competitive advantages or disadvantages of operating or competing in multi-currency markets.

LIQUIDITY AND CAPITAL RESOURCES

Our business requires significant expenditures for new or enhanced equipment, to support our research and development efforts, and to support our business strategy. In addition, we have mandatory debt service requirements of both principal and interest. The following table summarizes cash flow information for each of the periods presented:

~~- 39 -~~


		Six months ended June 30,					Six months ended June 30,
In thousands	In thousands	2022		2021		In thousands	2023		2022
Cash, cash equivalents and restricted cash at the beginning of period	Cash, cash equivalents and restricted cash at the beginning of period	$	148,814	$	111,665	Cash, cash equivalents and restricted cash at the beginning of period	$	119,162	$	148,814
Cash provided (used) by	Cash provided (used) by					Cash provided (used) by
Operating activities	Operating activities	(79,535)		1,365		Operating activities	(53,021)		(79,535)
Investing activities	Investing activities	(18,136)		(181,136)		Investing activities	(16,723)		(18,136)
Financing activities	Financing activities	33,546		165,138		Financing activities	10,515		33,546
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(3,587)		(1,432)		Effect of exchange rate changes on cash	1,096		(3,587)
Change in cash and cash equivalents from discontinued operations	Change in cash and cash equivalents from discontinued operations	(231)		(238)		Change in cash and cash equivalents from discontinued operations	(428)		(231)
Net cash used	Net cash used	(67,943)		(16,303)		Net cash used	(58,561)		(67,943)
Cash, cash equivalents and restricted cash at the end of period	Cash, cash equivalents and restricted cash at the end of period	80,871		95,362		Cash, cash equivalents and restricted cash at the end of period	60,601		80,871
Less: restricted cash in Prepaid and other current assets	Less: restricted cash in Prepaid and other current assets	(2,000)		(2,000)		Less: restricted cash in Prepaid and other current assets	(3,600)		(2,000)
Less: restricted cash in Other assets	Less: restricted cash in Other assets	(7,395)		(9,197)		Less: restricted cash in Other assets	(3,137)		(7,395)
Cash and cash equivalents at the end of period	Cash and cash equivalents at the end of period	$	71,476	$	84,165	Cash and cash equivalents at the end of period	$	53,864	$	71,476

At June 30, ~~2022,~~2023, we had ~~$71.5~~$53.9 million in cash and cash equivalents (“cash”) held by both domestic and foreign subsidiaries. Approximately ~~89.3%~~97.2% of our cash and cash equivalents is held by our foreign subsidiaries but could be repatriated without incurring a significant amount of additional taxes.

Cash used by operating activities in the first six months of ~~2022~~2023 totaled ~~$79.5~~$53.0 million compared with ~~cash provided by operating activities of $1.4~~$79.5 million in the same period a year ago. The ~~increase~~decrease in cash used was primarily due to ~~an increase~~a decrease in working capital usage of approximately $33.0 million, primarily due to: i) accounts receivable, ~~inventory and~~which was driven by higher accounts receivables in the first six months of 2022 due in part to the termination of the Spunlace factoring program in the U.S., ii) inventory, which was driven by higher inventory values in 2022 due to raw material and energy inflation, partially offset by iii) accounts payable which declined in 2023 due to inflationary impacts in 2022. Operating cash also improved $10.6 million from a ~~factoring arrangement previously utilized by certain former Jacob Holm entities, an $11.5 million reduction in adjusted EBITDA, a $7.6 million increase~~decrease in income taxes paid ~~and a $13.0 million increase in interest paid.~~

Adjusted EBITDA Six months ended June 30,
In thousands 2022 2021
Net income (loss) $ (110,379) $ 9,804
Exclude: Income (loss) from discontinued operations, net of tax (371) 82
Add back: Taxes on Continuing operations (13,489) 11,211
Depreciation and amortization 34,936 28,466
Interest expense, net 15,479 3,272
EBITDA (73,824) 52,835
Adjustments:
Goodwill and other asset impairment charges 117,349 —
Russia/Ukraine conflict charges 3,948 —
Strategic initiatives 2,488 8,434
Share-based compensation (1)
2,419 2,537
Corporate headquarters relocation 223 361
Cost optimization actions 589 —
Timberland sales and related costs (2,962) (2,403)
Adjusted EBITDA $ 50,230 $ 61,764

~~(1)Adjust~~e~~d EBITDA for 2021 has been restated~~due to ~~add back share-based compensation consistent with our amended credit agreement. The share-based compensation adjustment represents the non-cash~~ ~~amount of share-based compensation expense included in results of operations.~~

~~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,~~higher Canadian income taxes and ~~depreciation~~withholding tax in the first six months of 2022 and ~~amortization. Adjusted EBITDA is calculated using EBITDA~~a U.K. income tax refund in Q1 2023. Interest paid increased $11.1 million due to higher interest rates on our debt stemming from the debt refinancing in the first quarter of 2023.

Net cash used by investing activities was $16.7 million compared with $18.1 million in the same period a year ago. Capital expenditures totaled $17.5 million and ~~further excludes certain items management considers~~$22.7 million for the six months ended June 30, 2023 and 2022, respectively. Capital expenditures are expected to ~~be unrelated to the company’s core operations. The adjustments include asset impairment charges, costs of strategic initiatives, certain cost optimization~~total between $30 million and ~~restructuring activities, corporate headquarters relocation expenses, as well as the elimination of gains~~$35 million in 2023.

- 4045 -

~~from sales of timberlands. Adjusted EBITDA is a performance measure that excludes costs that we do not consider to be indicative of our ongoing operating performance.~~

Net cash used by investing activities was $18.1 million compared with $181.1 million in the same period a year ago. During the six months ended June 30, 2021, we used $172.3 million for the Mount. Holly acquisition. Capital expenditures totaled $22.7 million and $11.2 million for the six months ended June 30, 2022 and 2021, respectively, and are expected to be $45 million to $50 million, including $7 million to $8 million for Spunlace integration, for the full year 2022.

Net cash provided by financing activities totaled ~~$33.5~~$10.5 million in the first six months of ~~2022~~2023 compared with ~~$165.1~~$33.5 million in the same period of ~~2021.~~2022. The change in financing activities primarily reflects ~~a decrease~~the new €250.0 million Term Loan we entered into in ~~borrowings under our~~which the proceeds were used to fully extinguish the €220.0 million Term Loan, the IKB term loans and reduced the revolving credit ~~agreement.~~facility balance. In ~~2021,~~2022, we used borrowings under the revolving credit facility ~~to pay~~ for ~~the Mount Holly acquisition.~~working capital and other operating expenditures.

As discussed in Item 1 - Financial Information, Note - ~~16,~~15, our Credit Agreement contains a number of customary compliance covenants. As of June 30, ~~2022,~~2023, the leverage ratio, as calculated in accordance with the definition in our Credit Agreement, was ~~5.3x,~~3.4x, well within the maximum limit allowed under our Credit Agreement. A breach of these requirements would give rise to certain remedies under the Revolving Credit Facility, among which are the termination of the agreement and accelerated repayment of the outstanding borrowings plus accrued and unpaid interest under the Credit ~~Agreement.~~Agreement and the Term loan. As discussed in Note 16 - “Long Term Debt,” on ~~May 9, 2022,~~March 30, 2023, we amended our Credit Agreement to ~~increase~~permit the maximum leverage ratio (calculated as consolidated senior secured debt to ~~6.75~~consolidated adjusted EBITDA) to be 4.25 to 1.0 ~~until~~through the quarter ended December 31, ~~2023, after which the maximum ratio will step~~2024, stepping down to 4.0 to ~~1.0.~~1.0 at March 31, 2025, and 3.50 to 1.0 at March 31, 2026.

Details of our outstanding long-term indebtedness are set forth under Item 1 - Financial Statements – Note 16 -“Long-Term Debt."

Financing activities include cash used for common stock dividends. ~~In the first six months of 2022 and 2021, we used $12.5 million and $12.0 million, respectively, of cash for dividends on our common stock.~~ Our Board of Directors determines what, if any, dividends will be paid to our shareholders. ~~Dividend payment decisions are based upon then-existing factors~~In the third quarter of 2022, our Board of Directors suspended the Company’s quarterly cash dividend to focus efforts on optimizing the operational and ~~conditions and, therefore, historical trends~~financial results of ~~dividend payments are not necessarily indicative~~the business. As such, we paid no cash dividends in the first six months of ~~future payments.~~2023. In the first six months of 2022, we paid $12.5 million of cash for dividends on our common stock.

We are subject to various federal, state and local laws and regulations intended to protect the environment, as well as human health and safety. At various times, we have incurred significant costs to comply with these regulations and we could incur additional costs as new regulations are developed or regulatory priorities change.

At June 30, ~~2022,~~2023, we had ample liquidity consisting of ~~$71.5~~$53.9 million of cash on hand and ~~$131.6~~$89.6 million of capacity under our revolving credit facility. We expect to meet all of our near and long-term cash needs from a combination of operating cash flow, cash and cash equivalents, our existing credit facility and other long-term debt.

On April 13, 2023, our credit rating from Moody’s Investor Service was upgraded to B3, in part due to our successful refinancing of our €220.0 million Term Loan with the €250.0 million AG Loan as discussed in Note 16 - “Long Term Debt,”. In October 2022, our credit rating was downgraded by S&P Global Ratings to CCC+ based on its latest assessment of our business, and no further action has been taken to date. Although the Moody’s Investor Service ratings upgrade action is positive, it does not impact our current interest costs, or reduce the possibility of default on any of our debt.

Off-Balance-Sheet Arrangements As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had not entered into any off-balance-sheet arrangements. Financial derivative instruments, to which we are a party, and guarantees of indebtedness, which solely consist of obligations of subsidiaries, are reflected in the condensed consolidated balance sheets included herein in Item 1 – Financial Statements.

- 4146 -

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS


		Year Ended December 31															June 30, 2022					Year Ended December 31															June 30, 2023
In thousands, except percentages	In thousands, except percentages	2022			2023			2024			2025			2026			Carrying Value		Fair Value		In thousands, except percentages	2023			2024			2025			2026			2027			Carrying Value		Fair Value
Long-term debt	Long-term debt																				Long-term debt
Average principal outstanding	Average principal outstanding																				Average principal outstanding
At variable interest rates	At variable interest rates	$	272,541		$	261,116		$	255,403		$	81,161		$	54,700		$	275,398	$	275,398	At variable interest rates	$	299,764		$	105,534		$	105,534		$	71,127		$	—		$	105,534	$	105,534
At fixed interest rates – Term Loans		533,306			521,934			502,221			500,382			500,000			537,163		385,434
At fixed interest rates																					At fixed interest rates	785,477			767,204			766,217			766,217			766,217			769,337		600,302
																	$	812,561	$	660,832																	$	874,871	$	705,836
Weighted-average interest rate	Weighted-average interest rate																				Weighted-average interest rate
On variable rate debt	On variable rate debt	2.44		%	2.44		%	2.44		%	2.44		%	2.44		%					On variable rate debt	3.56		%	8.01		%	8.01		%	5.40		%	—		%
On fixed rate debt – Term Loans		4.51		%	4.58		%	4.74		%	4.75		%	4.75		%
On fixed rate debt																					On fixed rate debt	5.91		%	7.00		%	7.01		%	7.01		%	7.01		%

Our market risk exposure primarily results from changes in interest rates and currency exchange rates. The table above presents the average principal outstanding and related interest rates for the next five years for debt outstanding as of June 30, ~~2022.~~2023. Fair values included herein have been determined based upon rates currently available to us for debt with similar terms and remaining maturities.

~~Our market risk exposure primarily results from changes in interest rates and currency exchange rates.~~ At June 30, ~~2022,~~2023, we had ~~$812.6~~$874.9 million of long-term debt, of which ~~33.9%~~$105.5 million was at variable interest rates. Variable-rate debt represents borrowings under our credit agreement. Borrowing rates under our credit agreement ~~that accrues interest~~are determined at our option at the time of each borrowing. For all U.S. Dollar denominated borrowings, the borrowing rate is either, (a) the bank’s base rate which is equal to the greater of i) the prime rate; ii) the overnight bank funding rate plus 50 basis points; or iii) the daily Simple Secured Overnight Financing Rate (“SOFR”) rate plus 100 basis points plus an applicable spread over either i), ii) or iii) ranging from 250 basis points to 400 basis points based on ~~one-month U.S.~~the Company’s leverage ratio; or (b) the daily Term SOFR-rate plus an applicable margin ranging from 350 basis points to 500 basis points based on the Company’s leverage ratio. For non-U.S. Dollar ~~LIBOR~~denominated borrowings, interest is based on the Euro-rate or ~~one-month Euro LIBOR indexes, but in no event less than zero,~~EURIBOR-rate plus an applicable margin ranging from 350 basis points to 500 basis points based on the ~~applicable margin.~~ Company’s leverage ratio.

At June 30, ~~2022,~~2023, the weighted-average interest rate paid was equal to ~~2.44%~~8.01%. A hypothetical 100 basis point increase in the interest rate on variable rate debt would increase annual interest expense by ~~$1.6~~$1.1 million. In the event rates are 100 basis points lower, interest expense would be ~~$0.5~~$1.1 million lower.

We are subject to certain risks associated with changes in foreign currency exchange rates to the extent our operations are conducted in currencies other than the U.S. dollar. On an annual basis, our euro denominated revenue exceeds euro expenses by an estimated €190 million. With respect to the British pound sterling, Canadian dollar, and Philippine peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the euro. As a result, particularly with respect to the euro, we are exposed to changes in currency exchange rates and such changes could be significant.

As part of our overall risk management practices, we enter into financial derivatives primarily designed to either i) hedge foreign currency risks associated with forecasted transactions – “cash flow hedges”; or ii) mitigate the impact that changes in currency exchange rates have on intercompany financing transactions and foreign currency denominated receivables and payables – “foreign currency hedges.” For a more complete discussion of this activity, refer to Item 1 – Financial Statements – Note 18.

Critical Accounting Estimates

The preceding discussion and analysis of our consolidated financial position and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to long-lived assets, environmental liabilities, and income taxes. We base our estimates on historical experience and on various other assumptions that we believe are ~~subject to certain risks associated with~~reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. We believe that our policies for long- and indefinite-lived assets, environmental

- 47 -

liabilities and income taxes represent the most significant and subjective estimates used in the preparation of our consolidated financial statements and are therefore considered our critical accounting policies and estimates.

During the six months ended June 30, 2023, there were no changes in ~~foreign currency exchange rates to~~our critical accounting policies or estimates. See Note 2 — Accounting Policies, of the ~~extent~~Condensed Consolidated Financial Statements included elsewhere in this Report on Form 10-Q and in our ~~operations are conducted in currencies other than~~Annual Report on Form 10-K for the ~~U.S. Dollar. On an annual basis,~~year ended December 31, 2022, as filed with the SEC, for additional information regarding our Euro denominated revenue exceeds euro expenses by an estimated €150 million. With respect to the British Pound Sterling, Canadian Dollar, and Philippine Peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the Euro. As a result, particularly with respect to the Euro, we are exposed to changes in currency exchange rates and such changes could be significant.critical accounting policies.

Long- and indefinite-lived Assets We evaluate the recoverability of our long- and indefinite-lived assets, including plant, equipment, timberlands, goodwill, and other intangible assets periodically or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Goodwill is reviewed for impairment annually during the fourth quarter, or more frequently if impairment indicators are present.

The fair value of our reporting units, which are also our operating segments, is determined using a market approach and a discounted cash flow model. Our evaluations include a variety of qualitative factors and analyses based on estimates of future cash flows expected to be generated from the use of the underlying assets, trends or other determinants of fair value. If the value of an asset determined by these evaluations is less than its carrying amount, a loss is recognized for the difference between the fair value and the carrying value of the asset. In 2022, all the goodwill of our Composite Fibers and Spunlace operating segments was fully impaired. Our Airlaid Materials segment’s fair value substantially exceeded its carrying value at the time of its last valuation performed in connection with the last annual impairment test in the fourth quarter of ~~2021. Our Composite Fibers segment, having performed its last valuation and having recognized a goodwill impairment in the first quarter of 2022, has a~~2022. Airlaid Material’s fair value, ~~that approximates its carrying value. Our Spunlace~~as well as the asset groups within each of our operating segment, ~~which was formed in conjunction with the Jacob Holm acquisition on October 29, 2021, also has a fair value that approximates its carrying value. Both Composite Fibers’ and Spunlace’s fair value~~ could be impacted by factors such as unexpected changes in inflation, significant disruptions in the delivery of energy to our sites, particularly in Europe, ~~or the Company’s inability to continue to increase selling prices in response to inflationary pressures.~~among other factors. Future adverse changes such as these or in market conditions or poor operating results of the related business may indicate an inability to recover the carrying value of the assets, thereby possibly requiring an impairment charge in the future.

~~- 42 -~~

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures Our Chief Executive Officer and our principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, ~~2022,~~2023, have concluded that, as of the evaluation date, our disclosure controls and procedures are effective.

Changes in Internal Controls During the three months ended June 30, 2023, we completed the implementation of new enterprise resource planning and manufacturing systems for Spunlace’s Old Hickory, Tennessee, U.S.A and Asturias, Spain locations. There were no other changes in our internal control over financial reporting during the three months ended June 30, ~~2022,~~2023 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

- 4348 -

PART II – OTHER INFORMATION

ITEM ~~1A. RISK FACTORS~~

The following updated risk factor should be considered in addition to the risk factors set forth under Part I, Item 1A. Risk Factors in our 2021 Form 10-K. Except as described herein, there have been no material changes with respect to the risk factors disclosed in our 2021 Form 10-K.1. LEGAL PROCEEDINGS

~~The conflict between Russia~~See the discussion of legal proceedings contained in Note 19 - “Commitments, Contingencies and ~~Ukraine has adversely affected, and may continue~~Legal Proceedings” to ~~adversely affect,~~ our ~~business,~~unaudited consolidated financial ~~condition, and results of operations.~~

Approximately $95 million of our net sales in 2021, or 7.3% of our net sales in 2021, was earned from customers located in Russia and Ukraine. The geopolitical conditions resulting from the Russia/Ukraine military conflict, including government-imposed sanctions and the current macroeconomic climate in Russia and Ukraine, have adversely impacted both demand for our products and our ability to deliver products to this region, as well as, limited customers' access to financial resources and their ability to satisfy obligations to us. For example, as a direct result of the military conflict, economic sanctions, and the disruptions in the region’s financial systems, our management expects a significant reduction in wallcover revenues and cash flows, for the foreseeable future, from our facility located in Dresden, Germany that produces wallcover paper, a significant portion of which historically was sold into the Ukraine and Russian markets. Certain wallcover base paper, together with certain filtration products produced by our Composite Fibers segment, are subject to sanction restrictions and currently are unable to be sold into the Russian market. As a result, during the first six months of 2022, we recorded a $117.3 million non-cash asset impairment charge related to assets of our Dresden facility and an impairment of our Composite Fibers business' goodwill. Moreover, certain customers have not been able to satisfy outstanding accounts receivables and, as such, during the first six months of 2022, we recognized bad debt expense of approximately $2.9 million directly related to Russian and Ukrainian customers. At June 30, 2022, we had accounts receivable, net of reserves, from customers in this region totaling approximately $2.6 million which we expect to collect in normal course.

In addition, we operate manufacturing sites elsewhere in Europe that have been adversely impacted as a result of the military conflict in Ukraine and related geopolitical events and sanctions. In many instances, these sites depend on the availability of natural gas for use in the production of products. The supply of a substantial portion of the natural gas used may originate from Russia. We expect that shortages in supply and increases in costs of natural gas will adversely impact our ability to operate these sites in an efficient and cost-effective manner, for the foreseeable future.

The risk of cyber-security incidents and cyber attacks has increased in connection with the ongoing conflict, driven by justifications such as retaliation for the sanctions imposed in conjunction with the conflict. It is possible that such incidents or attacks could have collateral effects on additional critical infrastructure and financial institutions globally, which could adversely affect our operations and could increase the frequency and severity of cyber-based attacks against our information technology systems. The proliferation of malware from the conflict, into systems unrelated to the conflict, or cyberattacks against U.S. companies in retaliation for U.S. sanctions against Russia or U.S. support of Ukraine, could also adversely affect our operations and our supply chain.

~~To the extent the current conflict adversely affects our business, financial condition and results of operations, it may also have the effect of heightening many other risks disclosed~~statements in Part I, Item ~~1A. Risk Factors in our 2021 Form 10-K, any~~1 of this report, which could materially and adversely affect our business and results of operations, however, due to the continually evolving nature of the conflict, the potential impact that the conflict could have on such risk factors, and others that cannot yet be identified, remains uncertain.

In the event that current geopolitical tensions fail to abate, or deteriorate further, or additional governmental sanctions are enacted against the Russian economy or its banking and monetary systems, we may face additional adverse consequences to our business and results of operations. Even if the conflict moderates or a resolution between Ukraine and Russia is reached, we expect that we will continue to experience ongoing adverse consequences to our business, financial condition and results of operation resulting from the conflict for the foreseeable future, including because certain of the economic and other sanctions imposed, or that may be imposed, against Russia may continue for a period of time after any resolution has been reached.

incorporated herein by reference.

ITEM 5. OTHER INFORMATION

~~- 44 -~~During the three months ended June 30, 2023, none of the Company’s directors or “officers,” as defined in Rule 16a-1(f) of the Exchange Act, adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

ITEM 6. EXHIBITS

The following exhibits are filed or furnished herewith or incorporated by reference as indicated.


		Incorporated by reference to
10.1	Amended and Restated 2022 Long-Term Incentive Plan**	Appendix A to the Proxy Statement filed March 31, 2023
10.2	Form of Restricted Stock Unit Award Certificate (form effective as of May 5, 2023)**
10.3	Form of Performance Share Award Certificate (form effective as of May 5, 2023)**
10.4	Form of Non-Employee Director Restricted Stock Unit Award Certificate (form effective as of May 5, 2023)**
31.1	Certification of ~~Dante C. Parrini, Chairman~~Thomas M. Fahnemann, President and Chief Executive Officer of Glatfelter, pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2	Certification of Ramesh Shettigar, Senior Vice President, Chief Financial Officer and Treasurer of Glatfelter, pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Certification of ~~Dante C. Parrini, Chairman~~Thomas M. Fahnemann, President and Chief Executive Officer of Glatfelter, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, furnished herewith.
32.2	Certification of Ramesh Shettigar, Senior Vice President, Chief Financial Officer and Treasurer of Glatfelter, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, furnished herewith.
~~10.1~~	~~First Amendment to Fourth Amended and Restated Credit Agreement~~	~~Ex. 10.1 to~~ ~~Form 8-K filed May 10, 2022~~
~~10.2~~	~~Glatfelter Corporation 2022 Long-Term Incentive Plan~~	~~Ex. 99.1 to~~ ~~Form S-8 filed May 11, 2022~~
~~10.3~~	~~Form of Restricted Stock Unit Award Certificate (form effective as of May 5, 2022)~~
~~10.4~~	~~Form of Performance Share Award Certificate (form effective as of May 5, 2022)~~
~~10.5~~	~~Form of Restricted Stock Unit Award Certificate for CEO (form effective as of May 5, 2022)~~
~~10.6~~	~~Form of Performance Share Award Certificate for CEO (form effective as of May 5, 2022)~~
~~10.7~~	~~Form of Non-Employee Director Restricted Stock Unit Award Certificate (form effective as of May 5, 2022)~~
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data file because its iXBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema.
101.CAL	Inline XBRL Extension Calculation Linkbase.
101.DEF	Inline XBRL Extension Definition Linkbase.
101.LAB	Inline XBRL Extension Label Linkbase.
101.PRE	Inline XBRL Extension Presentation Linkbase.
104	Cover Page Interactive Data File (formatted as an inline XBRL and contained in Exhibit 101).

**Management contract or compensatory plan

- 4549 -

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Glatfelter Corporation (Registrant)

August ~~2, 2022~~3, 2023

	By	/s/ David C. Elder
		David C. Elder
		Vice President, Finance and Chief Accounting Officer
		(Principal ~~Accounting Officer)~~accounting officer)

- 4650 -


In thousands	Mount Holly		Jacob Holm		Total
Total consideration	$	170,919	$	303,952	$	474,871
Less: Debt repaid	—		(148,000)		(148,000)
Cash consideration	$	170,919	$	155,952	$	326,871


In thousands	December 31, 2021		Impairment		Purchase price allocation adjustment		Translation		June 30, 2022
Goodwill
Composite Fibers	$	78,438	$	(56,062)	$	—	$	(1,968)	$	20,408
Airlaid Materials	109,486		—		—		(6,105)		103,381
Spunlace	48,241		—		(500)		(3,242)		44,499
Total	$	236,165	$	(56,062)	$	(500)	$	(11,315)	$	168,288
Other Intangible Assets	December 31, 2021		Impairment		Amortization		Translation		June 30, 2022
Composite Fibers
Tradename - non-amortizing	$	3,601	$	(3,530)	$	—	$	(71)	$	—

Technology and related	38,614		(37,823)		—		(791)		—
Accumulated amortization	(19,224)		19,380		(424)		268		—
Net	19,390		(18,443)		(424)		(523)		—

Customer relationships and related	34,739		(34,046)		—		(693)		—
Accumulated amortization	(22,104)		22,351		(587)		340		—
Net	12,635		(11,695)		(587)		(353)		—

Airlaid Materials
Tradename	4,485		—		—		(1,133)		3,352
Accumulated amortization	(603)		—		(88)		63		(628)
Net	3,882		—		(88)		(1,070)		2,724

Technology and related	17,825		—		—		(756)		17,069
Accumulated amortization	(4,552)		—		(587)		387		(4,752)
Net	13,273		—		(587)		(369)		12,317

Customer relationships and related	44,585				—		(2,038)		42,547
Accumulated amortization	(10,512)		—		(1,864)		895		(11,481)
Net	34,073		—		(1,864)		(1,143)		31,066

Spunlace
Products and Tradenames	27,623				—		(1,638)		25,985
Accumulated amortization	(253)		—		(801)		343		(711)
Net	27,370		—		(801)		(1,295)		25,274

Technology and related	14,547				—		(862)		13,685
Accumulated amortization	(202)		—		(676)		335		(543)
Net	14,345		—		(676)		(527)		13,142

Customer relationships and related	28,003				—		(1,660)		26,343
Accumulated amortization	(268)		—		(846)		344		(770)
Net	27,735		—		(846)		(1,316)		25,573

Total intangibles	214,022		(75,399)		—		(9,642)		128,981
Total accumulated amortization	(57,718)		41,731		(5,873)		2,975		(18,885)
Net intangibles	$	156,304	$	(33,668)	$	(5,873)	$	(6,667)	$	110,096