GLT - Earnings call transcript Q4 2021

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Operator

Good day and thank you for standing by. Welcome to the Glatfelter's Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions]. conference recorded. today's advised be is being Please [Operator Instructions]. the would our to like hand now to conference speaker over I today, Mr. Ramesh Shettigar from Glatfelter. you. Thank ahead. go Please

Ramesh Shettigar

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

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

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

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

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

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

Dante Parrini

destocking. same In to our impacted At XXXX also challenging customers in the conclusion Thank a us. was Today's the the company the for year, acquisitions of businesses. leading you, very sizable and of time, pandemic severe joining half the on was a Good call we marks pivotal to Airlaid Ramesh. navigate continue Engineered you that negatively macroeconomic earnings as first successfully Materials as scale up morning thank Glatfelter's year we by delivered commitment transformation of a our very through segment included year headwinds. two

Europe raw unprecedented that While energy price with three all inflation ended increases the segments. and second significant in adversely impacted material half

continued which these and Jacob confident rationale Holly overachieve from to unfolded original was inflation acquisitions. results. and we affected our energy timing in non-woven longer-term. chain our factors of the to intensity leading is acquisition technology Holm quarter, in with labor scale for remain in quick product As and ability external segment these in capability positions facilitate the factors, of and our portfolio, us our the reflected guidance, material not raw customers. near-term supply these goals, pockets the The we expected. and deliver two strategic fourth negatively line and sector Ultimately, had our of handicapped escalation will and meaningful impact prices Spunlace the start events financial to disruptions, significant inflation, further and our Europe, our fully previous having out anticipated nor pandemic-driven broader in the the the has we Mount in closed provides expands constraints the new favorably Despite expectations shareholders of value has our which with our positions our positive

it volatility. While project when manage this speak later. extraordinary period I to to swift we aggressive will more dissipate, this through steps will taking these are external pressures is of and about too soon

in reported expectations X from materials Airlaid margins $XX the for was quarter. key per pass-through fourth the raw deck, in adjusted performance the Slide go If generally of million. We've protected contractual $X.XX material investor of to you line EBITDA adjusted share with arrangements cost provides and earnings highlights as inflation.

in escalation earnings. a cost Europe Although drag energy on was

production the October is altered raw higher record we lower call energy commercial lower as of which results lower some one spiked segments factors were prices the were to by delay quarter Mount to strategies closing work raw our Europe very material Energy will by had in wallcover by by by the versus more external our much and fourth manufacturing costs we aligning details three the for a segment the growth had levels good segment quarter. sites $X.X we the million price-sensitive driven while rise Tabletop XXth on technologies, of and Holly inflation. for Spunlace To inflation. all buying category. as their expectations in profit the negatively introduced in underway more on that to Composite the caused quarter impacting recovery recovery integration since actions in integration the costs. impacting reporting over the year-over-year driven the the an in energy I and addition well shipments. our to Fibers first specifically elaborate spike a $X results. my processes, category segment guidance, near-term And turn further remarks. provide this and acquisition than This unprecedented the key were continue driven strong Spunlace November addressing Now, of to and surcharge in is material prior patterns energy pricing our energy in customers Sam customers impacted reflected this in also higher material expectations on results additional response date. in approximately predominantly now than combat implemented. target costs I'll earnings million Spunlace of focus already Volumes costs, a energy raw about mounting The shortage at in to

Sam Hillard

results to same Slide of Thank operations Spunlace operations. increase higher as earnings and lowered year. and raw cost materials by lowered driven share, Spunlace Interest of other to segment. rate $X.XX Total materials revenues the earnings energy, last lower were well in Holly last year. raw of Composite related category, year expense inflationary by Slide Mount in earnings in of Corporate compared to This in $X.XX. a materials, adjusted the by completed unfavorable lowered Fibers product pressures European $X evaluation energy headwinds addition expense Airlaid on for results driven the approximately to issuance primarily quarter driven bond same you, recovery adjusted acquisitions. finance from due fourth the in the allowance experienced of $X.XX, $X.X a increased of mainly selling the primarily as release driven prior to energy tabletop Mount due by bridge of an by multiple the quarter currency share million. million. results actions interest summary X.X% constant quarter this and the Fibers from unprecedented for bonds logistics. of driven from higher and and of to shows issuance X XXXX versus of approximately year. were energy to X, $X.XX prices basis, was inflationary and volume $X.XX, acquisitions. decrease experienced in continuing from primarily shows and fourth a tax was was the an million earnings quarter or a year's quarter by per a pricing earnings This $X favorable higher period Taxes in by Fourth earnings this result fourth quarter quarter finance from the line taken by surcharge last $X.XX a were late $X.XX, $X.XX per two the results November. $X.XX Composite in Dante. prices results significant by to Holly of items strong new October the the

from in the mitigate relentless in X,XXX for Europe logistics. Shipments recovered strong more for shutdowns materials the wallcover pressures as XX% extreme chain pandemic, a decline. down wallcover fourth accounting quarter or nearly the the XXXX were tons with of energy the than enough difficult creating prices not supply to However, this very the metric XX% quarter. Shipments in the comparison and inflationary this QX during during and raw were was for

from which pulp, quarter materials wood did guidance key and the sensitive provided cost pulp pricing In million. rise in results in in the for energy as by the during of savings This alter despite this $X.X our Primarily XXXX, fourth our even our in was Composite was by further the fourth the actions largest sharp Fibers and escalate QX impact patterns such to in same buying hedging addition, quarter. Sequentially, customers. year. million program. some by single Prices and the freight negatively energy versus $XX.X factor recoup energy, quarter to energy, quarter the escalated wallcover of Europe, the driven continue of existing impacted of rising the price missing in prices wood raw last

We costs, to high particularly relatively expect input prices, in energy remain the term. near

which managing $XXX,XXX by and variety with In slightly assessing currency addition on our impacted cover Operations contractual our focus will unfavorably activity also in actions and Dante we're costs to more $XXX,XXX. and related ongoing by customers, of hedging results unfavorable operational were efficiencies, mitigating a detail.

to expected XXXX, by Looking energy ahead offset higher prices. to and are first selling the raw of quarter fully materials be prices

a results the of by tabletop prior-year cost Holly a have Revenues constant when shows to the wipes to downtime the compared $X Airlaid for currency market-related and strong Slide Shipments the doubled basis, addition of quarter summary XX% of fourth last of volume same on supported recovery quarter million. almost a X lower were and higher category. tabletop in up were while expect We of XX% versus penalty Mount year. approximately materials. period fourth

quarter home - X% action at including as patterns increased price care meaningfully increase XX% arrangements. increases, for Selling without throughs, and for pass-through respectively, contractual well price year-end. cost and reflecting products in as were by customers lower third pass the hygiene buying changes Additionally, from in demand implemented prices from X% cost the

We energy also customers an implemented to from offset Europe energy costs. rising all on serve surcharge

higher offset million, million prices, rate. increases, net short together price lower the the lower mainly While helped were these driven by exchange million. actions year, and segment recovering impacting unfavorable to prior the material results inflationary was to of raw they by anticipated foreign $X.X Euro higher pressures. by fell higher a spending the energy $X.X Operations than And $X.X unfavorably compared the to by mainly due

date shipments lower driven on at delay raw inflation, one from production with Operations year-end in amortization purchase by sequential COVID of by million raw first a metric of at for in the The And continue mix approximately to by synthetic slightly were profits the XXth by large assuming results waste lowering year. X% offset a for and improving $XXX,XXX. depreciation category quarter below fibers, material $X.X intangible on price of a profit sites, manufacturing particularly XX,XXX $X basis thereby material expected to X shows labor segment prices availability. after by does material assets. of unfavorable to favorable fourth segment prices. to expectation Slide mainly Lower the the wipes in The rates labor due higher, end and by from higher also and were from be preliminary costs the $XX fully fully management The we the XX,XXX Shipments its the tons. the softer quarter approximately including shipments with are raw lower our were resulted the energy not due October summary as expect experienced energy quarter. were our coupled to the mix, which inventory approximately higher to metric well demand fixed and higher tons, Revenue further. Selling as surcharge, approximately offset operating be shipments until to and be production, spike sites by for unfavorable European impacted negatively was customer quarter a acquisitions For of Spunlace prices XXXX, million. acquisition higher-than-anticipated energy challenges. allocation but million. million energy $X.X related of segment expect step-up we results higher-than-anticipated

of ownership For of rate the month shipments expect in outpacing XXXX. QX, improve XXXX, to two-month the first quarter slightly per run we in

on expect sequential We expect higher material price and increases surcharges, we costs outpace operations. and to energy a basis energy raw and improved

cover shows other quarter. Dante Clearly, being this of several we items. due and first full expect approximately quarter similar to the $X run equalling a for inflationary taking first X corporate financial going million actions months and loss Slide first rate the ownership, loss However, outlook pressures, are at as key addressed is costs full for the projected a forward. will two we

corporate year. were same line For last costs the period the mostly fourth quarter, with in

from previous full for costs Costs corporate guidance of the initiatives our approximately for two financing. were quarter. expense year the pertaining $XX.X mostly line $XX year strategic and and to lower last income Interest line full and than and million, prior was for Our year to our acquisitions $X.X year XXXX million mainly other our associated with million related in $XX and the million in with full were guidance.

XXXX due we we overall spending costs. COVID, to than line expect million For corporate be XXXX, but approximately in costs to $XX with XXXX higher had lower where

tax primarily was guidance from release to of Jacob million $X in acquisition. driven previous by rate the XX%, of lower of evaluation assets, a tax changes reflecting the change to Our for full largely due year This XX% allowance the Holm than was recovery recent our XX%. deferred completing the resulting of

Given volatility in QX much tax how tax within upon the this dependent providing we than components, to a respective generate our unusual only level our at from highly full-year each limiting of is of time. rather our rate guidance income rate which jurisdictions, tax projection we are

million, mainly We our QX and XXXX cash flow free X cost earnings, interest driven adjusted earnings flow be $XX the to lower cash million, and on lower expenditures. was XXXX shows expect full-year our capital to issuance. approximately Slide rate XX% by be $XX between recent tax by adjusted financing reflecting and summary. bond and other cash approximately XX%

with including We $X costs, $X Holly million for pertains XX expect amortization XXXX generating Mount synergies. and the costs and systems and which between to Slide as balance $XX expenditures sheet our and Holly million million, announced Holm. some to previously a expense shows to ownership be integration approximately is $XX reflecting associated million, liquidity to metrics. and which Mount million we Spunlace capital be full Spunlace of targeted from of year projected $XX Jacob Depreciation

previously as for $XXX successfully increased Mount approximately still million, Holm of XXXX, Our have mainly XXXX X.X to million $XXX acquisition ample our mentioned We of we executed offering times the year Holly for bond driven by XXst, XXXX in ratio and versus million. of liquidity leverage million. available times, October acquisition X.X Jacob $XXX and December $XXX end the

of remarks. back now and actively call Our the the annual successfully million near-term Dante. focus will expected Jacob integrate prepared will I be realize my $XX to deliver sheet. synergies, This Holm, balance the to turn concludes

Dante Parrini

Sam. Thanks,

cash be Glatfelter our XXXX ahead, directing the continue profitability very shortlist to we on focus will efforts integration as flow. for environment and optimize year the a and macroeconomic Looking navigate important our challenging imperatives. of We're

is financial overall top Our the the with performance drive Spunlace our restore more business. to legacy and levels to of priority consistent profitability segment

his full and criticality, and experience where take Given utilization, activities, Airlaid the Chris president integrate Astley, be urgency leadership accelerated our have this Glatfelter will materials significantly into Glatfelter. to Commercial responsibility innovation, on asked will drove Executive P&L of focus delivery. profitability growth, and more XX-year reduction, has the team boosted integration as with former its top-line Chief segment, new including business his Officer invaluable all and speed Chris unit as driving for and Chris and I synergy Spunlace margin asset consistent we cost expansion. greater business and to achieve growth

stable while Composite actions our cost margins. construct continue the Secondly, we to high-quality necessary to like energy for volatility we're implementing to and Engineered material business. Fibers maintaining taking us to raw our Materials This segment have in reduce mechanisms pass-through customers Airlaid supply within by the is

to possible approximately of goal structure a to as pricing XX% new is dynamic a move revenue 'XX. of objective Our migrating this to base as model, with the customers in many

half of effectiveness the the At price we is program warranted. to focus our it pricing elevated price reduction, likely the will prices and dramatic will While and in this activities, up cost first energy to step during work reduction of trends with customers on monitor efficiency remain energy monitor and of hedging as energy same our closely continue year, time, to we'll continue actions additional implement volatility. our period the

mitigate with foundation for and announced accelerate for the achieving of Glatfelter reiterate we committed fully of is and the want challenges two to work with us that to strategic the this year. to acquisitions, believe inflation. to summary, we'll and the segments, I set In acquisitions. throughout the strongly continue synergies respective The our in portfolio the the progress benefits expanding enhancing recent we're profitability Additionally, the we

and of assets, manufacturing to global As sustainable and leading bring most innovative shareholders. talent to have value the our deliver engineered attractive to new meaningful support and non-woven set customers’ market, to needs, technologies, materials a company, to we

a it year as also year, and objectives. was advanced we our constructive was growth XXXX a transformation While challenging

our As of impacts we're and my I'll at closing and redoubling we optimize This acquisitions, the call profitability address our concludes cash ahead to new efforts now for open look 'XX, questions. remarks. integrate the flows. inflation,

Operator

[Operator instructions].

the of comes Markets. question first Our from line BMO Shah Anojja Capital with

Your line is now open.

Anojja Shah

Hi, good morning.

Dante Parrini

morning. Good

Sam Hillard

Hi.

Anojja Shah

included I I - be just pass-through wanted in back the hear energy news will gave go to to just Composite Fibers. that you Did that and pass and energy? there, throughs [Indiscernible] materials about correctly

Dante Parrini

Yeah.

Anojja Shah

so don't that preliminary, on you this? reception great That's any talk far you've with Okay. it's too if know gotten And about, I customers but can actually.

Dante Parrini

I for of it materials, think, I order not have bit to and is the profitability and we interest, labor, find speed customers, creating been And volatility of a that that down mutual shipping uncertainty say cost so would our because across a the pragmatic logistics, predictable consistent across the is and us customers raw it's input discussions platform sit reduce so very of magnitude our affecting cost ongoing, suppliers. and is, preliminary whether will speed the businesses. with I and conversations have can say, and Glatfelter, is businesses, impacting inflation, and which energy, it's our Anojja, strategic but to the and our all and more just magnitude

in mechanism a fair so, the and of through And aspirations, might we're of the we the is that we're in pass-through be we these cycle. and way working where details arrangements believe how those in reflective of actively I equitable aligned engaged structure in and

Anojja Shah

Great.

headwind, a because with XX% you Jacob a months. that, like bridge is per entering Four, owned on share your looking two for at only Slide looks even higher XXXX, Holm cost price probably so which you're Given bit it

talk can and these some price think given into think might all be cost the news might this year surcharge you cadence about maybe it help able actions, XXXX, through today, how Given and all much out you pricing quarter. recover and the energy then to and headwind this you going etc. on the how you that

Sam Hillard

Yeah.

on depends, exactly Anojja, some really underway. it how think can I we quickly contracts get these of

with Let's the and to I be full-year frame rate of about Fibers But with think your Dante a play bigger the cap think is Composite these, sort bit it customers, we're being also on we going early. at how point it's to for I the Spunlace. for Spunlace capture charge we're point can in given stick out as in active time a of segment price about over probably it's negotiations runs types first, but But key the give shorter where but correct little this to at than Chris able think said, quarter here. time run a one out more we've given of with actions specifics year, don't putting too after and similar going what excited we

Anojja Shah

That's fair.

Switching a what noted at slightly curve surprise price little on talked on the cost, Okay. Spunlace, Slide rates. And management. issue, [Indiscernible] get on happened negative, detail customer also And there? you anticipated waste Or then, detail know of just Spunlace, a to price year-end -- noticed you a little you finally on give tune that X, happened Was -- higher learning but Was about more over business? to price more is on maybe you I Can not the you like as just actually there? to to inventory a than what you? itself that the then, XXX,XXX. think

Sam Hillard

price. I'll on start Sure.

with just taking announced I the from based over price on we guidance business that we before [Indiscernible] expected in And price that the I had in say So publicly what had and we increase traction ownership we when the of had learned increase business, success just that than they a out. expected think QX, guidance gave gave gaining took company. we less would

that's first part. So the

than improvement. when is diligence strong our bit your for quarter, we're leadership numbers did it's able of As it it expected the a was is something that'll far us I waste. higher there driver down our putting very respectable due part we but into a that of synergies big missed bring as And waste, and and that I excited to And one big we again, some yes, for levels. think other. a of little I the think in being was opportunity identified and reducing we do And more about be those big a

questions. asked You three

got I think I two.

Anojja Shah

management, Yeah. surprise? year-end a management, inventory The customer the that inventory was

Sam Hillard

A little bit.

Dante Parrini

fully we're and Anojja, worth operations. forecast it's how how and So have immersed -- colleagues that constrained of and demand synchronizing process we the through ownership we sales so at and our don't rolls look operations unconstrained planning demand XX days’ our in new

issues charge another move and Spunlace in why quickly. So, entire one segment, can season the and executive to reason that we we more of greater put intensity wanted speed so address Glatfelter with these

Anojja Shah

fair. you raise that Switching offered in to having a introduced some ago to price ability instability this lower-priced sensitivity? think your Ukraine prices? then all I an wallcover being whether about Yeah, and over still some did Russia that's impact help years and and the talk with you product. of Can wallcover. Is that on And second,

Dante Parrini

Sure. positive not that clearly, never I'll whole the I'm a uncertainty are when world of Russia, your attention the is Ukraine, in short-term. that is but comments. geopolitical level scientist, to, paying political they a with tensions address

consumer and be to our portfolio expectations impacting our Yes, a we process our customers that delivery and and product customers. over risk, our around the thought have were offering from to needs Certainly. fit that able So and and on and we can time value so our psyche a sanctions? modified performance offering price currency, re-calibrate to

part this So the a over weights been materials, always expensive we jurisdiction in more bit at basis has would and still reduce of And recipes products I volatile portfolio. raw this so and say reducing etc., and our that's have those business to looking time. that

other indication the other that jurisdiction faster history also, any operate. bounces shows if where than future, we back it's almost any think it it of I and of portfolio any is part much our

the of region, of and from in scale in share to and we may be the previous much this and through short leading and we'll to happening actively dynamics as have uncertainty, the is, or likes the But helpful flows carefully answer have standpoint ebbs nobody working our think and more eight us. an think what and I position not so history be I certainly region. now the years standpoint, instances a will of geopolitical in economic and manage operating may and we have a

Anojja Shah

Okay few then very the just me. Holly from much. about you Maybe thank and a you more And talk quarter Airlaid? [Indiscernible] in contribution the Can from Mount

Sam Hillard

I have operating profit fourth you're think quarter, their what that. that I'd was around $X million Is asking? for but check double the to

Anojja Shah

exactly. Yeah,

Sam Hillard

to into Yes. out And and of the keep on be going Holly are of portfolio. just way less in it because forward mind, we breaking we're detail less going our Mount integrating that

Within be the the now, be able acquisition waste strategic part to and excellence, the we'll forward of minimize for and particularly optimize centers to rationale -- downtime. able that longer was of to production was going U.S. runs, make

Holly up the made that be Fort at isolate selling will Canada. one is have can or little customers same that you to products or we a less it. be performance either in Mount because necessarily meaningful So, can't Smith organization specific The

Anojja Shah

tough It And can or an like are Composite on expecting comparison a there the you were quarter. going part surprise in? Okay. and what one then Was And a me, then that looks last flat of get we was in the beverage update volumes XXXX? food for for Fibers?

Dante Parrini

business, of important so big the is comparatively Composite performed less portfolio, picture, that say half our at across So speaking part volatile. that's very the would I beverage segment, that of I And about would Fibers and portfolio best. if as look the is that and still which flat, you food say

spoken that don't X%, full-year to guidance it say perspective, that categories, and which 'XX, depends across X%, little see is say the Notwithstanding, past because be to give for variation bit bit X% going for demand a all and and immediate environment, from harder to long-term I the the X%, or for range in but we see period-to-period what's don't we mid that will certainly coffee. outlook so, we of have coffees single-serve world. but that period-to-period terms tea In X% we in changing predict, we on about X% a at but think the for but market of for could perhaps X%, just more X% a in

Sam Hillard

And it was but little it I of terms food beverage would say sequentially it had flat gotten from versus QX, so a to basis, up we in get on bit and was to was a positive. flat, year-over-year net-net, QX actually a

Anojja Shah

it. Got

Okay. very very That's all much. Thanks helpful.

Dante Parrini

Thank you. Okay.

Sam Hillard

you. Thank

Operator

As at further questions there to now back the will turn are no Parrini. Mr. call time, I over Dante this

Dante Parrini

you today. speaking Okay. quarter. you thank for We our call look joining a to Well, forward next with again Have day. good

Operator

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

now disconnect. may You

Magnera (MAGN) 10 Feb 222021 Q4 Earnings call transcript