GLT - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Glatfelter's 2020 First Quarter Earnings Conference Call. At this time all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to conference like speaker to now Mr. today would hand over the your I Shettigar. Ramesh you. Thank ahead, go Please sir.

Ramesh Shettigar

is President, Thank to quarter This Glatfelter's Rachel. XXXX Shettigar, you, Good first earnings morning conference Corporate Relations and Investor and welcome Ramesh Treasurer. Vice call.

today President call first our Officer. and Glatfelter's Chief present Dante and Sam quarter Executive and Financial Chief to Officer; are Hillard Parrini, the On results Chairman Senior Vice

a few Before standard we I begin our have presentation, reminders.

as use our measures other well investor call is earnings this earnings term During the reconciliation to financial and today's release results as will financial these the A we GAAP-based measures. included non-GAAP in slides. in adjusted morning, of our

today will to are subject uncertainties. We statements risks make also that forward-looking and

filed which today's all from These could differ and obligation with to only the Our these update available XX-K are cause undertake to as statements. no of XXXX disclose Form SEC three our release, XX-Q and factors of materially our them. forward-looking Form QX website, on results that we speak actual and statements today, XXXX

turn I Dante. over to now the call will

Dante Parrini

morning earnings Ramesh. $X.XX adjusted performed the these and was only extremely improvement EBITDA prior quarter also $XX significant in over you delivering us. We're for Good year, of results pleased our to well you, Thank quarterly first XXXX, million. Not of business per joining share report adjusted that thank of expectations. and this a exceeded

and the delivering years, last have the especially Our our traction two over product of meaningful more are transformation categories, portfolio efforts reshaping gained firm results. toward stable

quarter point of $XX.X increase EBITDA basis XX.X%, XXX record last posted Airlaid EBITDA margins of and year. Materials over the same a million

accelerating playing role we earnings and enhance produce assets everyday in life, the a are growth to profile. Our and materials critical Glatfelter's Airlaid

XX.X%. categories up delivered driving operating margins of product of expand to were the XXXX. Year-over-year performance profit Composite EBITDA growth shipments a in XX% basis quarter, first on strong by shipment XX% favorable in the improvement building to fourth in the very XXX and the of all segment points Fibers had quarter

details I we into first been as share address Sam results, the on how company operating some we the of Before COVID-XX. quarter have goes to the wanted perspectives

Our top safety We and our implemented our new work-from-home facilities families. safety, instituted communication several and of is employees their the protocols hygiene health practical. arrangements and throughout priority and where

the as response Our life global essential classified of and our business we proud play is including pandemic. the to vast products to to produce everyday majority in we're part the supporting efforts

to produce and staples to challenging the We materials, a mitigating our customers are engineered of diligently risks, to critical variety ensure assessing time. enable supply consumer of constant this during

Glatfelter Given remain these efforts, all operational. production facilities

Sam? to questions. point, provide to I'll turn for in-depth first before over review results. opening I remarks the the of this call will At then Sam our closing offer call an quarter

Sam Hillard

Thank you, Dante.

First $XX.X well quarter of was from to $X.X quarter per $X.XX Airlaid first or the of share, million million Fibers as segments adjusted and costs. last continuing in both attributed The lower Materials income earnings increase improvement was Composite performance as in exceptional corporate versus an operations $X.XX year.

year adjusted categories, improved operations shipments of solid by driven $X.XX in of $X.XX earnings support Fibers quarter. and earnings bridge a per higher shows the from prices. all quarter result first demand, production to lower Composite X, Slide last share across by year's product that to first in this $X.XX higher pulp

items a by guidance. line $X.XX taxes but rate early from $X.XX, in interest spending. unfavorably results for products care, costs $X.XX tabletop by improved improved by strong demand and and earnings achieved utilization. with borrowing earnings home lower and lower by in $X.XX driven XXXX relative other through our XXXX, tax improved result Net wipes, highly from results Corporate efficient costs asset Materials debt higher expense refinancing to by by and Airlaid driven impacted

driven categories. summary Slide on higher product compared growth for higher in a last first X, currency shipments constant results all year XX% were shows Composite basis volume of segment. to revenues Fibers a X.X% were by the quarter of Total as

was and newer with demand reflecting tea coffee up growth Beverage given specialties both Composite grew continued while moist shipments strong pandemic X% categories up & like dispersible success the and product beverages. laminates driven changes XX% technical in for Food demand customer wipes. were XX%, single-serve of by products

shipments recorded in metallized by energy prices million, to more primarily improvement wood offset million, products than prices relative decreased of milder first meaningful and volume of rose XX% $X.X but XXXX. material lower in $X Wallcover were XX% to related pulp. and Selling by raw quarter

million elevated and favorable by of strong were hedging to effect relative year meet foreign to $XXX,XXX. was period quarter favorable The the and operations $X Operations exchange same by production driven demand. slightly in by the last net efficient

wallcover Looking and be ahead to metallized. XX% the expected to quarter, for overall shipments by approximately entirely support first almost relative the the are segment quarter driven second lower to

XX% related impacting in between The XX% oil region largest in our prices, related pandemic to demand economy, decline the the in effects end and Russian wallcover is decline these directly including be materials. projected to market, is which is the wallcover global the terms volume COVID-XX of of for and on severely

Dresden adjust shipments. result, anticipated facility a we be downtime As production will to taking our in with

We business driven lower in by million downtime UK to to wallcover lower metallized volume Dresden to impact X% the in Metallized shipment sequential Caerphilly, combined the of be results $X projected the to by and approximately impact $X.X sequentially negatively facility. estimate and quarterly our XX% of million. metallized consolidation is

down quarter line with to remain prices material to expect for raw Selling we all expect to levels. facilities categories the production other in quarter. to and prices expected be We second demand in first are to the product and first quarter all operational shipment flat be the slightly

XX% summary quarterly XX.X% Materials Slide utilization, XX%. set $XX cost of This to operating of another QX X with strong segment quarter structure. underscoring by quarter profile shows of first of Materials. our a Airlaid and results asset and operating exceeding margin profit previous demand a guidance Airlaid record for XX% for posted margins EBITDA million record margin of was

driven Revenues $X.X quarter prior pass-through lower the currency prices were million customers. constant by cost selling basis from a with arrangements contractual flat of versus year on

more was of and by million. lower $X.X this energy than raw prices However, offset material

Shipments products. home solid primarily X% a and grew tabletop care wipes, coming from

deep positively team products customer to continues proprietary differentiators to quality commercial to our ongoing Our production key leverage cultivate as contributing growth. of relationships and the the competition characteristics to

production pandemic-driven meet favorably profitability in by COVID customer demand, the given $XXX,XXX including Operations higher to patterns. lift buying impacted elevated

prices to For remain the and line shipments X% Airlaid by to expected quarter, to raw anticipate total all operational. anticipate facilities in sequentially. second and prices increase material are be we Selling we

costs shows financial other items. X and corporate Slide

in costs the quarter, results. $XXX,XXX. the functional corporate by model seeing benefits fully first we Glatfelter For favorable With come were through transitioned the operating our to are

We be the of expect in to XXXX costs to million million $XX range guidance. $XX consistent previous corporate with

Gernsbach, production charge completed our In second all first metallized production and the our in over consolidated the in booked of quarter has which $X quarter. Germany metallized with we $X another This we closure of Caerphilly, be booked into a $X million now to to facility. in million, restructuring the UK April, we resulted million expect

of $X.X and equipment $X.X recorded far costs million depreciation to severance-related employee the accelerate million so for idled. have We

projected further million during We have XXXX structure. lower total other other $XX to locations approximately European compared and about year. to to also quarter initiatives in this expense million implemented our be the income Interests or improve XXXX cost optimization are $X in in cost and for

shows X flow Slide cash our summary.

earnings successfully by quarter, flow improvement stronger million. of $XX.X litigation During was negative related first interest same River Also million primarily payment with This the the $X.X million. operating the settled last driven to we cash to in payment. period and Fox matter XXXX, cash $XX was the favorable year QX approximately a by lower

compensation cost of optimization-related payments Correspondingly higher made incentive in the of million. and we first quarter XXXX, $X

for in $XX we consistent prior estimated XX% to XXXX year to and is be rate capital expect tax $XX amortization be million the while for and million. guidance, between to and line be Our expenditures projected $XX Also with depreciation expense is guidance. between with million, XX% prior

perspective well-positioned optimization the sheet refinancing and liquidity metrics. XXXX. we X following shows balance cost very successful Slide some completed are a initiative liquidity and and from leverage Overall, in debt

and million. of available Our net was our debt was March times $XXX $XXX liquidity million with leverage on about XX X.X

We expect in increase. XXXX improve to net and cash as flow and further earnings leverage our liquidity

I well as as finally, S&P both note and company. like for their to Glatfelter that Moody's also recently for And stable the would have respective outlook ratings their reaffirmed

back This my call concludes prepared remarks. will turn to now the Dante. I

Dante Parrini

Thanks, Sam.

As innovative are proud life. part of to we're for Glatfelter's broader materials everyday essential produce purpose, that

tied keep XX% of enjoyed and beverage to approximately their lifestyle, XX, revenues hygiene are on and or clean safe. surroundings consumer its that slide Glatfelter's care solutions products on and staples, see products basis food and personal customers healthy maintain whether to a daily can a you As

staying Glatfelter resolve our have very essential this fulfill the to us world. is around people on possible I'm the and employees in And rely can quarter all with what of dedication made customers first Our excellent role. the this performance of accomplished proud and our expectation. customer work, mills worked I and They them running unwavering tirelessly by to for commitment. pandemic. their safe focused while keep despite exceeding delivering compliant in hard the And and manner, a operational commend professionalism

launched positive Now efforts Earth a new shift Day, engineered Glatfelter with keep company. to transformation to website news. with some I'd and On a as other pace gears content reflect we updated leading our like materials to the new

We to various and we find informative you highlight initiatives expanded the website navigate. easy sustainability, hope commitment and -- Our expanded to our policies priorities. reporting ESG our including new to

outlook. our where recently profile Glatfelter business. their Sam credit stable balance with to our our concluded agencies of ratings robust This positive reported, their sheet, both direction as Also rating just another strong the is testament and liquidity conversations for and maintain respective we reaffirmed

time. to wallcover its especially, serving closing, remain during our Composite And metallized keeping products. to apart our hygiene the relatively for and In experiencing from Fibers committed elevated the Demand segment due fully health Materials customers healthy safe stable for we strong, and employees our standards this categories, is our demand and around critical world. remain and Airlaid

encouraged though our impact business in value performance the remains on in we the is to business Even and and term. of well our the We're volatility generate very uncertainty. longer COVID-XX confident durability model believe of economy, positioned an global over are by and the society having meaningful Glatfelter the such face of unprecedented

open now questions. your call for the will I

Operator

comes Your [Operator of the from Kurt question from line D.A. Davidson. Yinger first Instructions]

ask Your open. your line question. Please is

Kurt Yinger

for everyone. question. my Good Yes. Thanks morning, taking

Sam Hillard

Kurt. morning, Good

Kurt Yinger

mean, XX% on the Composite start to wanted of the components of correct math just that are I sales. wallcover I and Fibers guide. metallized my volume if morning. Good is about

those And sequentially. kind so of time a two that to kind decline I'm how themselves can XX% segment tough by full segments having lead bridging just of

you be helpful. of the be weak So touch just that might maybe well could as other that portfolio if on would areas

Sam Hillard

Yes, Kurt. sure

So first right. of all is your rough math

metallized of was in sales XX% Fiber think Composite QX wallcovering I and was X%.

you've that financial both got the about then compounding of it volumes So segment. impact downtime the a downtime lost But it. revenue keep of the mind the Dresden impact. but that's particularly it's a also related is the quarter meaningful to for And in in the

related $X.X million and impact. that those to $X million is to the two combined So segments

Kurt Yinger

it. Got

Food orders at are any Okay. That within there and makes & usual all, or business a pretty And Composite stay-at-home benefits much you demand as sense. seeing the from it standpoint? Fibers, from Beverage is

Dante Parrini

And Sam growth had in year-over-year tea said, in a the know as you single as XXXX, we Well, soft. coffee. category was little bit both and tea single-serve

we coffee. So very recovery And tea. in strong continue we've seen single-serve a to position in have

mind en that really COVID-XX second react until start to to the March. half in of consumers Keep didn't the masse

you for people the a working and dealing categories a pickup pantry number transition to that home bit call accumulating to want seen tailwind it supplies just of little for we've across So whatever hoarding from uncertainty. of were stuffing with a

well & QX. category we Food see the did in that continue some upside we perform will to Beverage So and expect

Sam Hillard

too there's this And be obviously forget also beverages, in type that in-office of Kurt, single-serve of don't down environment. which consumption the would

Kurt Yinger

Right.

weaker landscape makes given appreciate Okay. pricing thinking Fibers, then I you risks are looking just overall the forward? Composite competitive And backdrop mean, potentially just demand there? environment, I Maybe That and within about how the sense. that. the any

Dante Parrini

and can if energy and changes. between see at price, you QX mix the input volume think our and cost relationship then Well selling look results, you I

a basis on We recognize but as points. margin. combination, we down, margins us do beneficial to when impact for XXX not some that customers so our are tends have of by it that an have which pass-through And much the was increase helped input do arrangements costs

and creating perfect uncertainty. also our would of think perhaps view. QX the the banks a volatility better comments of about a than but that pandemic for and reserve I actions and is qualify we many are So lot know have landscape taken view current around world the by we a guidance governments not between today the I And all

we confident have we're bit of both the view, guidance have so across pretty providing for reporting our And segments. a a And in of we but QX that do view. occluded an we're

Kurt Yinger

Appreciate allocation on two. the it. last then thinking million us that you're just priorities? discretionary update an could then you Got spending think more how would CapEx And annual of basis? within the also million you bare items what to Dante. $XX Could bones remind And just $XX guide, us about within of you there? more level on maybe some a capital about And as capital

Dante Parrini

deal Sure. the I'll talk with CapEx. I'll allocation let about capital piece. Sam

making in last I that to very very taken balance making sure crisis through we it with you your will and over costs eye have think each saying Glatfelter And protect when an XX well we're position the that So environment good imperatives. your crisis. serve acute aggressive into and sure sheet, you goes cash the as on in, without heading a in are us have you're manage flows you're put sure making that we actions continue a phase of the the months that XX to very

we're a balance strong in sheet. to the focus near going So continue on we to sure making have term,

want comment want have our able be where making do of regardless we aggressive business also it's that able gears sustain, a to and and CapEx? to to more We you we're what way. time And investments comes Sam position endure liquidity shift and grow a position to our when be willing are about to on to that. in strong we

Sam Hillard

Sure. Yes.

we million of QX So CapEx. had for $X

made $XX in the guidance the $XX million bit versus little behind that's so to that given that But similar million where say. patterns last back fair we've annualize we a you of to half it $XX see if of So did million, up the we year year.

say mills and a continuing performance company money going maintained replacing would of like out. continue hawk make to maintenance I Obviously, and to operate, with the need we as and respond our watch flow well spending we're the sure they're wear our to capital the parts spending But this, we're cash they and to overall accordingly. and on all

to that's were less back on needed. deliver longer if we no If have you watch something all it's going but to expect needs sure cylinders where have and So that we'll maintenance firing then were to not capital happen that would continue continue. to spend we'll to and

Kurt Yinger

color Great. the Appreciate good in and the luck quarter. upcoming

Sam Hillard

you. Thank

Operator

Shah Markets. from from Capital comes the question next Your line of Anojja BMO

question. line open. is Your ask your Please

Anojja Shah

morning. good Hi,

Sam Hillard

Hi Anojja

Anojja Shah

mentioned some the had in cost reduction EU. You efforts

you doing I you of separate from And I sorry the but think give restructuring? that's if Caerphilly. from what that I'm financial did can there more you you're that? in And on any sort if so it savings -- give missed details expect

Sam Hillard

Yes. Sure.

facility spend of facility was the from this quarter related the majority So restructuring vast production. the Gernsbach Caerphilly for our reported and we consolidation to our metallized that's to for

I spend. was think that million the So $X $X.X of million

or next related as kind -- or another expect see year it the did in well $X.X savings the restructuring it's we savings You to -- Germany. the certainly rest far of of deliver the year. in by spend is savings of the sorry is spend Caerphilly But EU to because million-ish some which EU for

Anojja Shah

it. Got

So this EU A isn't program? of a new sort separate program?

Dante Parrini

Gernsbach we're and operation move out about U.K. is this QX after We'll hey do earnings we call something, yes. the restructuring call Well, that That metallized everything said conveyed of down we in mean part I will shut where the or to FTEs. some was the for during the going take looked at little facilities to a QX this XXX the earnings the take I European Dresden discrete it a this cost have wallcover things Tightening some at metallized. say. business get crew to manufacturing business portfolio one also up was pre-COVID-XX. out whether bit and We've of across a would better facility to structure other

Anojja Shah

Right.

detail What the see? Okay. expect management then mentioned benefits. seeing And little complete structure you're the a just that you on switching What gears you more already to and functional that? give to seeing? you some Can you're switch is

Dante Parrini

putting our the I'll of Glatfelter add footprint these function engineered the Sam I'll and different start and felt The costs business. scale model build we really were of other globe. a wanted unit And as divestiture the to new comments. standard operating to materials We structures. fit had an how that of business was Sure. in drivers to our any we and business business new to the have invite duplicative specialty costs adjust we this and across the the of in wanted processes

focus we've on in standard streamlining commercial and place and in instituting their organizations out. business more execution in And and global execution. more focus We leaders are thinning chain wanted they've supply and put excellence processes built expertise

a And and emphasis on being organization able we're have agility prior placing speed to wider quickly. we more flatter to So operate COVID-XX. an

us So, I that think well. served

Fibers performance saw carried topline And I a the you over that commercial of in our we're coordinated are some effort. same and in QX global as the in that and of And improvement hands-on reliable, in implement especially service seeing play to benefits of supply that Composite our we supply chain forces believe volume terms network strong focused chain that make distribution and more in very is representative corporate we're into having QX, our out also costs. task so and customers. and to we And suppliers to sure and and strong dynamic you've reliable maintain our our can that our and manage overall seen ensure continued how

handful of benefits. would I So, are say those a

quantitative you add anything, at pleased are with directionally where Do to are this some Sam? we're we Some but want are more qualitative, point.

Sam Hillard

-- we quarter, of first in QX our XX% firing to Supply were operating covered delivered other to to guided that XX%. commented well. in Global example was QX and Airlaid that more one margins our the had quarter to, tangible margins he been point tangible his expected ahead last example Chain all so or to, just just cylinders we improve on new the improvement one it think looking and -- to Maybe we I we QX very team of have SVP place. operating that. of we we

Anojja Shah

you. helpful. Thank really all That’s Great.

Sam Hillard

Okay.

Operator

are Parrini. further no Dante now There questions. the to will turn Mr. I over call

Dante Parrini

Okay. good we today you joining to everyone with look well. Have like call forward for quarter. thank stay and a Well, to again our day and next speaking I'd

Operator

this concludes and gentlemen, you Ladies conference Thank participating. call. for today's

disconnect. now may You

Magnera (MAGN) 9 May 202020 Q1 Earnings call transcript