GLT - Earnings call transcript Q2 2021

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Operator

Good day, and thank you for standing by. Welcome to Glatfelter's quarterly earnings release conference call. [Operator Instructions] I would now like to hand the call over to your speaker today, Mr. Ramesh Shettigar. Please go ahead.

Ramesh Shettigar

Brenna. you, Thank welcome Call. and XXXX Quarter Second Good to Conference Earnings morning, Glatfelter's This Investor President Treasurer. Vice is Shettigar, Ramesh of Relations Corporate and

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

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

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

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

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

Dante Parrini

products call. I'll nonwoven execution acquisition important pending strong acquisition the Jacob details Also, of for of the growth in Ramesh. Holly. quarter Thank customer segment. the today. results tabletop we entering despite Good joining more for and the and sector. the with were related Airlaid outcomes versus a by destocking announced performance demand driven in a expectations about our with throughout downtime positive us and the consistent you Mount Glatfelter market associated delivered for from softer These strategy, ongoing transformation provide overall you, recovery Holm, demand this anticipating and thank leader morning,

XX expectations adjusted $X.XX for closing dining in X of ongoing excellent million. investor and Slide to new provides in-person hours closing. the up Holly the of results of opportunities portfolio. Airlaid above for adjusted the to restarting earnings driven highlights after a following the addition As within for execution second $XX contributed by results, with the integrated a quarterly quarter globally. in favorably per Mount excited system EBITDA as all the tabletop Mount transaction, quarter. rebound performed to We're the Holly category share production team's began see deck Materials the recover and of standing the reported Glatfelter and we we shipping, the

While overall volume continued we customers experience elevated hygiene to inventory as did growth levels destock from was the during demand lower-than-anticipated healthy, maintained products pandemic. in

category for to meaningfully, cost the the of up headwinds input normalized below energy We the expect positively to third segment. some prices quarter impacted while higher-than-anticipated higher-than-anticipated year. and the the prices The but pressures, of profitability negatively unfavorable first in pricing during segment more mix in profitability. address be this announced Fibers And inflationary material costs second levels this half results actions quarter Composite second in energy was quarter. shipping and proved helped during to buying enough the the raw to the not volume patterns challenging as were and return offset impact logistics expectations to

an benefit of meaningful people. our quarter. take Glatfelter and the to price from more a in the third safety the enterprise health expect We At increases remains on effect focus level,

Holly, far us Jacob transformation strategically acquisition which executing of strategy. momentous in Glatfelter's more fully long-term growth Mount on that the ensuring pandemic. the current to saying positioned has nonwovens they in and despite product results. July XX, Holm, while on nature customers May, operational been second acquisition I'll commentary Jacob goes all products I portfolio It technologies, keep did provide the the Glatfelter's in year of opening a benefit after acquisition the of global mentioned in growth my closed Holm XXXX reach. attractive without Sam? to with has quality manufacturer while continue scale, remarks, announced additional our efforts facilities essential Our health category, expand being review our And earnings. as quarter, leading supply the we as In thus also quarter of to global and from and the to an of Sam on evolving uninterrupted to ongoing premium hygiene platform the completes accretive of his the immediately we

Sam Hillard

you, Thank Dante.

results in year. from pandemic-driven to currency lowered quarter were were from Fibers last second reflecting customers raw X second elevated doubling of this six driven Slide second of Fibers $X.XX. $X.XX share, cost to control of taxes ongoing pandemic share from a acquisition by earnings related near a initiatives. primarily $X.XX Holly, and earnings bridge in summary earnings weeks of in by prices lowered pandemic of quarter quarter. quarter Slide year's of $X.XX in line with adjusted due our the the Mount of volume results Total of results decrease Also X.X% X and from softness destock on QX $X in noteworthy hygiene the production by Materials levels. driven per for of trough XXXX. materials and were quarter shows inventory category to of is earnings the from as of same last Second year our continued for quarter other was $X.XX segment. the Composite last reflected segment favorable $X.XX quarter a ownership higher shows the Airlaid or the items inflation softness include quarter. operations Composite wallcover constant that our basis lower $X period million And the second year by $X.XX higher during the versus last Materials energy. costs of in results guidance continuing selling driven interest, adjusted the by Airlaid Corporate million higher per revenues the a and

laminates. by energy shipping shortages, and quarter. food resulting beverage in a the XX% in strong negatively prices was overall by levels to specialties $X significant driven Excluding of demand higher pulp volumes category, segment. headwind shipments Higher were production, and wallcover, lower required composite impacted metallized, The quarter in a thereby growth increased driving container this however, strong for million, The technical the creating approximately $X and wood by million results benefit earnings. impacted during

actions, unfavorably to input but the implement partially currency announced price continue and $XXX,XXX. higher results We selling And quarter, pricing costs. activity by the during realization related only hedging offset impacted

XXXX, X% results expect $XXX,XXX. the ahead X% be in third Composite to impacting Looking Fibers of by to we sequentially, to higher favorably quarter shipments approximately

when hygiene the higher year maintained expected recover dining second shows quarter. expect for on selling up results Airlaid logistics for in We of for with supported from globally. inflation prices compared basis, fully quarter. the be the second second Demand as during continued Materials. began X the a and summary a offset of the line raw X% however, as strong quarter operations destock material, demand was addition are Holly prior Mount currency tabletop the lower a Slide to pandemic. to energy were by high quarter rebound inventory versus to in-person to quarter constant Revenues levels products, and in to And customers

growth as in we stated, we projecting As product QX And all result, is transitory. a believe meaningful previously decline are categories. this in

started July, materially has picked for up has evidence, demand wipes hygiene and in improve. to As

inventory unfavorable to lower exchange arrangements by more manage demand. return than versus prices Selling to due material of in customers, pass-through half of was in the the mainly increased the a expect year. contractual second last net $XXX,XXX. We prices, but by to by $XXX,XXX lowered and higher buying normalized categories production the by cost were results earnings align patterns better second Operations levels from raw foreign energy offset of in with quarter year. our all more with quarter customer $X.X reducing million and And

but both expect offsetting and the to anticipated higher. Airlaid we quarter Materials higher, approximately to third shipments prices be each For of to input be prices XXXX, XX% Selling other. in fully XX% are

Additionally, financial higher expected sequentially The $X to increased by QX is in corporate levels expect X meet customer for Slide million a other items. impact costs operating addition machine to prepare and increased production favorably we approximately and the to to million upgrade. $X demand shows also to the strong production volume. profit

the million to year costs spend the by continued For last control. second driven compared favorable by $X.X quarter, were corporate period same when

corporate $XX full million. of to XXXX is to which year improvement be million, approximately $XX expense full than million. $XX income for previous and of $XX the guidance for an our expect $XX other million be guidance Interest and approximately costs from year, lower projected We million our to now previous are

pretax earnings, XX% driven be flow X in in Slide for rate XXXX XX%, estimated offset is guidance tax the an shows was lower by changes previous our lower to overall UK between to XX% mix full tax year the the jurisdictional XX%. of The cash by Our is And our than XX%. and of increase rate slightly quarter summary. rate.

cash million by by higher for items. flow lower special working after Second adjusting usage approximately quarter was year-to-date adjusted $X mainly free capital driven

X expect for costs. amortization the integration balance some $XX We approximately is Slide reduction Mount and Depreciation metrics. between shows million expense $XX on with sheet driven largely be better-than-anticipated million. be by to our year projected being million, expenditures and the Holly capital $XX liquidity execution to and

$XXX June acquisition approximately XXXX, we Our completed to driven Holly million. our announced Dante Jacob pending shortly. acquisition, million. $XXX net These XXXX, which Mount leverage cover liquidity May continue the mainly which of this XX, after to not increased ratio the do X.Xx recently approximately in of by we acquisition Holm, at more include will maintain increased by Even figures debt

appendix We in the prepared also Dante. I will concludes have located the call details my our deck. financing additional investor to back of now remarks. This turn

Dante Parrini

company. of momentum remain the is continue to Looking for the the robust, for year we expect for that for half we as foreseeable prospects Composite and future. optimistic and about very the ahead, beyond we products continue the building second Fibers Demand

and will contributor are meaningful as a hold earnings pressures. be Our inflationary pricing segment we actions this taking offset in to

inflation continue resume from as demand. strong dining. across Materials We place global order strengthening conditions and half the mitigate and that very the with to cost on travel chain demand to deliver exiting we and demand and weakness associated is input wipes, effects destocking the of demand first was year. are took consumers believe during July operations period in supply in-person the strong constraints to for Tabletop categories. will we improved is leisure customer optimize of Airlaid all work of benefiting

the the more return in category normalized demand with expected year Additionally, second beginning levels. to the is half hygiene of to to recover

a execution efficient of of continued exceptionally and Our synergy to pace is cost the cost And flow. for our contributing performing stance an improving on Holly EBITDA strategic opportunities accelerating transformation perspective, delivering I'm growth realization. From and Mount the business growth initiatives. new integration pleased with responding and and seeking are people well, control thereby challenges, to Glatfelter structure, on cash maintaining aggressive free

the access France to Care the medical the to in Sontara growth United new organized very Health company As Basel, agreement we for will excited $XXX technologies this Care. new a fabrics, former and four Skin in two will which customers in company about operating Professional, three meaningful and Headquartered each new signed diversification spunlace in categories. is & sustainable producer The leading addition noted, Personal providing platforms hygiene, million. nonwoven and a facilities, business; a States Switzerland, expand portfolio, units: definitive Glatfelter's and We're DuPont Jacob purchase in product industrial personal scale, Jacob of and add care, Spain. footprint. manufacturing is and has Holm materials the global and one Holm and to

transaction to Glatfelter of reductions, value $XX synergies synergistic with see earnings, expansive a prominent approximately Holm to to that believe from highly million benefit optimization, the product $XXX improvements, cost annual these to In line we million. covering The this units project million generated this achieve months XX, and We applications ending XX within opportunities we $XX can be the to to of is cost stakeholders. $XX could demand approximately subject with synergies diverse sourcing you months be The Jacob customary is savings base. million close anticipate attributed $XX closing. and operational and business approximately EBITDA acquisition expected all is Through expected after of creation their significant COVID-driven will antitrust As $XX these XX, million. regulatory strategic portfolio, revenue review to estimated XX customer an that million Slide normalize. offer Of year. product June is later operating

issuance While of for financing this the $XXX to million transaction, the purchase intend we we have obtained new committed unsecured bond. with XXX% finance a senior

an and exceptional approximately reflecting synergies. the Jacob acquisition create Xx This forma increase of Glatfelter's premium It global EBITDA Holm is quality, net sales expected will portfolio With annual transaction, leverage billion. to also changes. increase for post-COVID at Xx forma from that scale COVID-adjusted to with approximately the of sustainable $X.X closing pro with aligns engineered will materials the long-term pro Glatfelter's growth opportunities lifestyle when with well

times transformation actions As and XX you a of can depth Slide see, company's the these brief of at and are recent snapshot exciting the provides and Glatfelter. evolution outcomes. breadth

focus Our growing creation accelerating and new on technologies, near-term investments, priorities our will organic our portfolio wave value acquisitions next the of and with with emphasis deleveraging; integrating continued sheet fully discipline. growth assets and utilizing synergies by capturing be and both on an balance intellectual exploring of inorganic and property; innovation

are will build concludes Glatfelter. accelerating a now new we and closing your the execution for We as momentum the open call truly generating of I remarks. pace This my questions.

Operator

of Mark from is Instructions] Bank of first [Operator Montreal. question Your Wilde

Mark Wilde

much by in the just a expected in Composite of Airlaid kind what about to quarter Composite bigger your Airlaid of you could to means it the Fibers maintain in gap gap in but clear quarter the Fibers. Sam, mean, thinking in that comments, in that terms price wasn't of both start I of In third little had? position Fibers. cost current we're you or and it to gap you a had if in a second going whether whether terms some quarter quarter wondered me recover actually simply third bit your I we of in second Composite

Sam Hillard

other. be also We offsetting material expect but to maintain, prices to raw selling each both fully them the price, the

Mark Wilde

would I would what which time of you in be million Composite when -- that the was recovering of about line negative think some actually the gap, $X Fibers? on So case

Sam Hillard

I done balance closely, a with frame terms monitor keep the a direct we in don't think of market of a as on market. obviously, the here. customers material into make good And and time we'll raw raw long-term little much trying I can. Mark. we I capture pricing. we've as our know, price of and increase something think very maintain trying balance, it's prices, have you give sure it's it's our happy price hard delicate the earlier But in to specific as to a we a material announcing keep good positions the and to get and we mean, pulse job visibility energy that But in

Mark Wilde

quarter earlier more And making you of wouldn't seems reason sort you in but I here? can is expect headway kind increases quarter? mean, there I catching be it lags, to understand any like little a might in the those of the third cost third we to start up

Sam Hillard

Obviously, you're So you the got on of I talking think Airlaid sure, Fibers side. make just specifically because see here built that we'll some as we've the pass-throughs to in. know, Composite

Mark Wilde

pass-throughs the good. are Yes, there pretty

Sam Hillard

Yes.

Dante Parrini

add can I comment. maybe Mark, So a

and that we of QX. some end So at to there started actions pricing fall-through in the took the materialize, QX was

the from contribution significant QX. and and more pricing QX a expect for announced actions and negotiated We in-place

as input logistics the think and project definitely will point bit compared inflation is great that of making issues dislocations, with material specificity. But QX the a and and with with these compensate in and cost was was supply in that expect a actions Sam of are some help of match and elements. bit we're QX factors a little So chain the we little up challenging definitely some more of to be place actions QX. that offsetting cost taking I inflation pricing internally some more put will And more to

Mark Wilde

coffee of business. basis kind coffee tea where I give expect on what was you mean, second full and And several weak big have I quarter. the last see noticed for trend tea us you year the the year-over-year tea some pretty you in and volume sense been in in and the of then years, now in for the volumes? drivers growth and Can that coffee a

Dante Parrini

and I big or are would coffee. both to we growth holding projections segment picture, tea say our still for of category

coffee, a were than pretty basis of was early because QX For comp products we benefited tea strong bags. that stuffing more the from one had so tea -- a pantry year-over-year on

Sam referenced of logistic And factor. So that also some a shortages the containers. challenges and was of then

some And comparison. period-to-period And a had can quarter on changes continue. coffee sometimes we're you point still that a affect say anticipating for that a good mid-single-digit year-over-year or from mix regional get geographic would of view, a I coffee basis. growth to rate we

So I'd supply around the are provided say, tea with react than generally of nuances these dislocations to chain having world. the speaking, issues coffee no some that real and other by to

Mark Wilde

Sam, And the would about sheet, target up range what your be? to Holm. Jacob Can you turning people following you're Xx leverage remind going balance just of be to

Sam Hillard

target So that to we Papers point to then when committing with acquisition, mean, Mark, the I as historically, GP, from leverage down Steinfurt levered recently acquisition to Specialty have focused there. of the Xx. last up a And we we think deleveraging. we I mill around very And though, have can had the of on we as quarter, wake been up range have you after an out we over don't were in the saw that levered of simultaneous the fact sale X.X. we're

So at, we coming playbook have is Obviously, typically Mark. a to higher here. than target up there, range but specific what we replicate out we'll been have don't Xx that

Mark Wilde

the to spectrum? differences you where from you will Holm. then, between just do business and product people Jacob sort help Jacob turning just in And you Dante, your Can understand sit of for Holm what the existing

Dante Parrini

Certainly.

a that these scale investors that we types and would we strategy. the even investments felt business complement acquisition add on or the correct consistent and our add be is talked, growth felt could we of unit owners existing We've businesses. of Mark, with product the would business, could lines ongoing were adjacencies broaden about very our that and transformation in the or So rightful and to occasions the categories new business ones new if several

in business terms the continuum of gaps in So technologies, kind fits Holm Jacob in filling of nonwovens nicely terms some our of on some of or portfolio. technology the holes

we through wire know, nonwoven capacity in our assets you have incline As Fibers. Composite wetlaid

still Airlaid then assets business. Materials the broaden Holm, in lines hygiene a have and segment. filtration, We with web producer, about very our Airlaid care, with wide I helps spunlace benefits. now and strength and a uniformity, new And There's provides predominantly existing of of it it Jacob is personal diameters which but it basis good very be range spunlace, too say weights, would specifically shapes. high and range of filament not some overlap fiber technical, to very wide offers

us to produce of of So types different feedstocks. it gives lot different materials capabilities a a with of lot

ownership inputs. about I petroleum-based think their Jacob goal XX% And so, plant-based. all that across with one have was business sometimes having portfolio within entire feedstocks we product of are associate the people to the that the the alternatives Glatfelter's appreciated fact XX or years things XXX% about of a that sustainable And spunlace categories. next Holm prior stated for they of

So platforms, sustainable around progress and intellectual technology of combining at our advance to materials. issues the we're the the the engineered prospects to businesses, property the continue excited know-how,

So franchise, produces which business a again, ago, very years very complementary. aspect in Sontara handful well-respected and And is it business, Holm goods. one also DuPont other acquired of Jacob the a finished of attractive is they

additional will vectors as we of would Glatfelter time. set introduce to about a be over value helpful new process that growth and technology element along think So the stream this

fills some lot our in in a very again, and GLT holes attractive, complementary portfolio. with So really of fit

Mark Wilde

of in gotten we just look be for Airlaid think an value it synergies, EBITDA we of they've benefits you it would the portfolio than lot if lower kind current margin seems fairly additive. you at that that you the is take do, either what which stuff Dante, And of a Sam, be yields when COVID-related add or your actually to out then and still And they business. but

margins. implied You than a the actually margins to quite the margins a might be actually better, bit expect your little and lower existing are

address can issue? that you So

Dante Parrini

a year subscale there we in you EBITDA when of through X space. these hard and caliber Glatfelter And scale, nonwoven between may better. the build parallels effort Because are we put broader put were of centers some businesses if we efficiencies excellence and into a more of dedicated a our play we independent able ways, And which Industries/our different lot and small of and had model Concert and margins buy more Industries, were Airlaid work, to business, recall, talent. in acquired So find cost could scale Concert X.X%. the Mark, business player was in attract

of case little multitude And bringing a across scale we a factors the the product table and And be the Holm. same a as a a to strategic purview into so Jacob there broader, seat are key more at lot went expect more and these bit a categories. of global of supplier that with

jumping-off by is good So $XX reduction normalizing of not $XX $XX a trailing endpoint to and off jumping-off I then where envision on XX to million the $XX the a would million EBITDA say million be. million top point synergies the of that's we their but point,

We we will especially scale the continue those to we're centers leverage innovation, of to improvement, that solution in in ESG. applications. portfolio the the look for for more sustainability a that is and world much perfect we building accelerating as apply think sensitized building And is continuous excellence, are our build

Mark Wilde

one for And me. Dante, last

think to your you're doing What which think machine quarter, organically you be would about that rebuild in I we of would this the might or much slack how -- when Glatfelter? growing capacity about capacity need company? the the to have point base, at following either capacity you Just at acquiring you said kind fourth get at think the

Dante Parrini

first, capacity segments. I'll QX with utilization across start rates So our

we're in for XXs. the Composite Airlaid And in the for the we business, high XXs. So were high Fibers,

existing earning market confidence. customers' asset share and types and any to accrue may that of changes our So trust Glatfelter on growth to to we to base still room go have utilize accommodate based

Mount goes money Holm deleveraging. the realization to making Secondly, focused of for asked our Sam my and on leverage To we're question States Holly may bit the you close tag and going made expecting acquisitions about we just we on investment one very it work and post we at when a less in longer. shareholders' were back tenure targets, a Jacob bought use be a And execution in to synergy great that to delever to we the you we -- we two smaller made United and low to much and quickly, And Europe. went in XXXX our leverage priority when recall, company. mid-Xs and in sophisticated did. made an the And put

I much record. team and think is execution and capable, better this more tools have track we

I expect re-up in think So we expect reducing will areas across large across successful support part our us portfolio. to be fully expanded GDP, growth and to and perhaps our trends a of debt supporting new pretty we where to quickly. market and of continue continue GDP-plus Glatfelter demand from portfolio And forecast unconstrained then will identify the these our require

And in we certainly the point execution to investing continue make of is on the So a that's short-term or of calculus. that as got that's planning may position we and we're finer we to investment a date we're part what a customers. tactical view on or having a some at logical we the and whether let that. best being for confidence clear public closer with trust know a will and the happen full GLT, capacity to we've earn point not get next when our organic, inorganic job and today investments sure put to do But our that of that than fantastic other making

Operator

And sir. there questions. Please continue, are further no

Dante Parrini

look you our to very quarter. again Have today, we joining for third Okay. and day. forward talking us to after good a much thank Well, you

Operator

This concludes today's for you participating. call. conference Thank

disconnect. now may You

Magnera (MAGN) 8 Aug 212021 Q2 Earnings call transcript