Earnings call transcript Q4 2022

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Operator

Good day everyone, and welcome to the Q4 2022 Glatfelter Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Ramesh Shettigar. Please go ahead.

Ramesh Shettigar

Thank you, Lynette. to fourth welcome call. earnings and morning, Glatfelter's quarter XXXX conference Good is President, Vice Shettigar, Financial This Senior Treasurer. Chief Ramesh Officer, and

call fourth our President Officer to is Glatfelter the of Fahnemann, Executive and quarter myself. and Thomas Chief On results present

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

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

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

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

the will call over turn Thomas. to I now

Thomas Fahnemann

Ramesh. is Glatfelter's Thank you, welcome conference you pleasure be a call. today. to with quarter fourth to Hello, everyone, and It

completed my first performance CEO, the by the now delivered as quarter during encouraged quarter we I'm fourth Glatfelter's of full XXXX. Having

embraced team shortly joining delivered million. million issue, $XX this I was impact on one-time this upper the Through quality plan Our EBITDA has million. to our supplier after reflecting impact was of quarter. result that $XX.X occurred the we $XX.X the in adjusted $XX when And adjusted the issue their announced end of the our guidance of When efforts, financial million of the excluding global Glatfelter. EBITDA for quickly business turnaround underlying from a

performance pricing by three Composite quarter, across to compared shape continue by to in branded improved the Sontara to and improvement operations ago, a actions period and year talent and Our efforts the actions. and were we on our Airlaid focused prior targeted segments, our driven bench. in to primarily key productivity investing leadership organization improvements strengthen same pricing our demonstrated Materials spunlace compared Performance Fibers the important

positive concerted manage generation improvements and achieved addition, through reduce cash and to working aggressively team capital in In the our accounts inventory. receivables efforts

business seasonal underlying fundamentals as our of order in and demand. I challenges strategy of call. in and macroeconomic patterns by inflation, provide as Despite the on well XXXX. raw energy additional anticipated, the turnaround today's of importance the remain continued details towards I be material will business shifts these progress related our and to continuing the on the As our in turnarounds end to confident with impacted deliver challenges, to

very a us call Before to that six-year financing Ramesh, for with company turning sufficient Angelo, letter signed the binding new the Gordon I'm allows financing This to long-term. the over Glatfelter also meet will that February for address give needs the loan pleased maturity. the runway upcoming to term debt to its share commitment XXXX

working Gordon and and Angelo, the of the are financings close the group quarter. first end We led our by with to bank PNC by its advisors

now fourth on Ramesh? performance. our will financial Ramesh details additional quarter provide

Ramesh Shettigar

Thank you, Thomas.

of summary interest goodwill which related resulting our quarter charge in taken charge $X.XX a quarter, an of Composite impairment EPS primarily to of segment. of GAAP fourth Fibers part loss was the investor operation, the a a the impairment environment to our the We X which provides from Fiber due Composite performance. asset is higher and Slide presentation reported for rate OberSchmitten

synthetic related of fiber $X.X $XX.X range a million one-time supplier. was EBITDA million from to $XX and guidance to claim of our Adjusted raw that million was material customer by charge a compared caused $XX million defective includes with a

previous near EBITDA range quarter. the which anticipated for fourth in was the guidance, upper not our the charge, of we Excluding end were this one-time

compared respectively were taken prior in income operating and actions gap surcharges, raw the resulting was X% pressures quarters. quarter of pricing and the and mainly multiple to driven helping pass-through from energy XXXX, cumulative Airlaid Fibers Materials with price-cost prices higher year. and narrowing from by Composite offset inflationary higher selling fourth along both This last XX% material by provisions

QX the Spunlace also operating income but benefits sequentially XXXX. XXXX, price of from selling cost from $X.X was controls inflation. and million improved approximately This in to line with QX segment by delivered actions offset continued

the liberation. initiatives positive inventory our as capital due in Working quarter the cash reduction ongoing focus part largely was of to fourth on

higher customers fourth approximately cost XX% without by Slide increases initiated a Materials. quarter of Airlaid stemming other year well such were as Revenues prices for mainly pass-throughs period X constant last on results for million basis of $XX arrangements. the same shows a up contractual as selling currency driven summary versus from price

lower declines driven hygiene care while shipments year-over-year, end home was of related at to home care by wipes related by X% pressures ordering in customer the the Volume categories. sizes, hygiene The due on was to decline mainly consumer multi-pack inflationary and patterns. quarter softening end and wipes, to more demand the was

Operations and production and offset to lower costs. while year, spending by prior mostly unfavorable slightly were personnel the

related hedging year. quarter line and in currency last exchange was of Foreign fourth with the

converted despite a quarter shows XX% prices versus results quarter up volume base same multiple surcharges being with of last revenue increase for the X were energy revenues have we XXXX half of The Composite on constant XX% mainly actions pricing selling floating segment. a inflation. Total over to mechanism, approximately segment's a $XX summary the to lower due was successfully coupled currency in taken million fourth and the Slide as Fiber of price combat year. basis higher by revenue to

All shipments Overall, sanctions the Russia last was impacted most the of shortfall million by as shipments. beverage partially decline Wallcover higher the as accounted were volume categories offset on by year. by better unfavorably mix versus this was impacted $X.X half and approximately into sold food volume and EU category this lower the except lower results for products from beverage food market.

same key of and by million energy, price the quarter in versus earnings year. raw lowered freight escalation last materials, Continued the $XX.X

impairment $X.X to quarter unfavorable and by were lower by offset production the first other Dresden the depreciation taken spending in and inventory driven million XXXX. but manage following levels, partially Operations lower of reduced

Foreign million $X.X British footprint. the from cost creating our in exchange manufacturing UK weaker benefit was pound a favorable

higher shows Revenues up a fourth prior one by results month the impact ownership and of by month, the X was offset than segment. mostly XX% prices shipments fixed from additional this of of Selling shipments summary Spunlace were The favorably and was compared slightly were mainly million but XX% $XX.X and were volume only higher higher continued year raw $X.X shipments year-over-year surcharges while year, driven inflation Slide more the the quarter offset million. energy for year. results quarter higher to last fourth favorable by energy than material by costs. impacting additional despite and

and improve net $X.X other were mainly cash FX manage items million driven levels unfavorable, and production flows. Operations, by a lower inventory to

since Glatfelter was the actions taken portfolio. the acquisition structure the lower personnel the on manage spending reflecting cost However, integrate the and into to broader segment

corporate X other financial items. costs Slide shows and

corporate took customer After defective quarter, higher year an directly normal we course. due the continue has customer were million products extensive customer. costs the proactively a not fourth of by with and our ship in this by synthetic has steps one-time million relationship caused with -- This to versus $X approximately to other the no from fiber a same $X.X and necessary charge claim material. the For our quality impacted the review, period last commercial our to teams settle matter the

amount this & in and have a this final related to losses related we issue. with it Other. to addition, is insurance Corporate offering known fiber timing it never to its was the have also In charge to The and Since settlement a at not carrier of product that point. initiated we claim new supplier recover this market, made recorded our the

one-time this reflecting lower taken turnaround and were million plan. part our costs accruals charge, corporate Excluding as incentive of reduced headcount $X actions actually

adjusted in summary. On was significant shows inventory cash million. and was of including our capital we XXXX, full-year flow produce for and in Other Slide $XXX a U.S. factoring materials working approximately and earnings consumed the values by driven to free taxes products, Holm factors, cash higher XXXX Lower flows due by business. to receivable were spunlace the termination million inflation expenditures added elevated X usage. $XX by when flow cash Working contributing usage higher higher Jacob program increases, capital our million primarily the higher raw versus to basis, $XX by the million due driven energy price multiple lower impacted paid capital accounts place our to cash acquired negatively factors of higher interest. a cash $X and

liquidity Slide and shows some metrics. sheet XX balance

the faulty ratio bank as Our mainly fiber claim December due of Xx customer to to XX, covenant related to the leverage material. increased

upcoming group debt loan by to in with of Angelo financings first the his executed in mentioned working end a letter new commitment to our process have led six-year remarks, and As the we Thomas and the refinance conclude by Gordon quarter. a of opening are our bank the with PNC term maturity

at end and cash refinancing on focus sheet. be completing delivering earnings available growth, generation, $XX to Our balance continues the and our QX was of liquidity approximately million, our near-term flow the

a is XXXX. XX Slide of summary for our guidance

we moving from favorable company's raw the cap our material energy the improvement Germany's expected provide and can The earnings Furthermore, to to introduction abate, year-over-year quarter we're to about offsetting and macroeconomic the price optimistic see growth attributed from away guidance. as ahead annual current sequential of we EBITDA and program. providing traction expect inflation. to be Looking headwinds guidance of an are potential -- some largely turnaround pricing energy the strategy year, including to

$XXX be full-year costs expense quarter. million, to of $XX projection full-year expect interest million to of expense to million, approximately EBITDA and includes from approximately financing refinancing XXXX, other the interest accruals. For the first be in we Corporate the incentive range $XXX and approximately $XX completed million. costs of which of million $XX in latest D&A the including

with we expenditures, million $XX to flow As is This our be between highlights our integration for capital items, cash further and line including spent $XX expect disciplined million. in and spunlace allocation. XXXX capital

continued by inflation on liberation finally, cash $XX energy, actions. are account capital and to of million working We raw And year-over-year on to expected $XX be $XX cash expect million. in million taxes and materials between lower improve and focus

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

Thomas Fahnemann

Ramesh. you, Thank

Today, performance the EBITDA optimistic quarter to first pleased was plan, half we of introduced by would I see as actually $X plan, first the XXXX. concept the I nearly with results of executing turnaround I'm gained say our benefited our the we When million. improvements early some to in during fourth begin

in confident for I delivering standard team project perform results. to is that remain and to approach the ability accountable hold management responsibility our by disciplined set sole with the office been whose turnaround strategy the to has

some To initiatives, we comprised of key recap earlier discussed of the six it's call. turnaround today's which in strategy,

effectiveness; operational fifth, second, improvement; six, to optimization; margin and reduction; cost portfolio fourth, liberation; fixed First, returning third, spunlace cash profitability.

Our long-term. the every efforts portfolio progressing part are of asset strategic consider review near we optimization and the and of and financial with value as for portfolio the each

We not is specific any operational changes the on however, this footprint. initiative; required portfolio communicated we yet that continue our to refine work planned to essential and have progress

align or are that assets well Our with have overall and main leaders to our is scale fit for market potential scale, strength. goal the Glatfelter's

results Turning see improving began margins. Materials to in improvement. focus while was marked as and Fiber be This to the growth. Airlaid in the on Composite margin top-line And segment. subsequent in our and greater achieved We than profitability to pricing Spunlace place branded through to initiative absolutely overall products commitment impacted quarter simply EBITDA as rather well our Sontara actions this may in essential are improvement our short-term, segment, and volumes our fourth

overall As a products at and rate to are profitability. our we to productive to confident price ability our volatile, inflation be our competitively continues improve in

on our leaner initiative focused third fixed a structure. reducing and Our cost is achieving costs

are investments fourth product run the way safety, our taken is toward not nearly in we by actions XXXX. or to people. quarter We rate XX% with risk of well $XX of throughout organization, approximately It on of the implementing remain jeopardizing savings never XXXX easy million quality the full-year and the jobs eliminate to during committed

providing to we have progress initiated spending, indirect additional area forward as I we the to the Additionally, update this and upside on an work. savings in examine actions look

These our efforts reviewing our receivables, and addition the results. Ramesh accounts our initiative and allocation, to announced Work continually up call, decision our will both I pricing. raw inventory, cash and reviewing to dividend, EBITDA. goods finished in down suspend The in is this cash solely on this debt, As team fourth liberation which previously Board's on discussed approximately significantly initiative paying material initiative, capital $XX decreasing and managing of annually. is working are million contributed increasing our quarterly leverage, earlier within focused free today's to the

this complex materials, improvements. effectiveness. total improvements to our in is managing capital Turning our of ongoing levels, while initiative five, sites the initiatives inventory manufacturing actions. number targeted also arguably Each $XX of that work turnaround has collectively of most area million operational and The raw

In addition, with we provide needed ensuring underway labor and ongoing essential impact to out to volatile rolling excellent maintain tools we customer standard the market the drive wage from initiative are Six service. well This Sigma improvements offsetting continued inflation. principles for a while is

is aimed initiative in segment, each initiatives. sixth of comprises Our improving previous five our which at the performance spunlace turnaround

the to initial manufacturing team As we and Sontara non-wovens improvements needed earlier, and must the continues of Airlaid signs to mentioned Also, do but work achieve this branded the continue step Composite intensity fits change to good are the and leverage its complementary given we pleased progress, technology markets. to by segment. Fiber the business in further with urgency

our to-date made in start. efforts fourth progress the is simply we quarter just To turnaround summarize the the

in prices and to better our with stabilize more ahead, must price-cost levels. be prices key material that gaps while we manage raw speed tenacity, us the until For normal initiatives successful we to return energy months the continue to prevail will and progress

proud turnaround all control: expanded daily our to driving colleagues accepting and Glatfelter many committed safely, they their the and of core accountability working the of as Glatfelter's improvements, new adapting factors spirit and the the remain on value. focused I'm operational within to required within plan

take initiatives deliver questions, growing time and we addressing assessing which a for speak on on development the make ensure important, growth. product to is Before turnaround mandate, the we to that world's our are commitment ESG to long-term company's opening the for turnaround. our leads to with We in approach spent focus I Having toward Glatfelter's the turnaround today's that provide that while to strategy. I'm to simply progressing strategic to profitable must opportunity a me business sustainability innovation strategy. new on strategy longer-term to for will few that discuss recognize platform we us excited begins And parallel positive confident and want call our impact not this remain enough innovation, first [sic] a our now our and organic the communities,

As our and Report ongoing to goals ethics ever will I'm efforts are strategic part for in social, our to that XXXX ESG Sustainability pleased of environmental, ESG December that share outlined priorities, These tied coming our our work, we governance guide and first years. issued and goals. development and directly our new product the

to find continue our we new in for innovation with addition, through technologies. product In unique manufacturing materials renewable combined solutions invest alternative to use the

as based Closures we Ocean So initiative innovative will confirmed develop for our to by recently competitive cap. this a fiber customers natural advantage our Blue screw create an approach,

on of the notably Perhaps team in development battery has most innovation separator. the the the made based excellent with several front, a progress lithium ion months non-woven past

unique several key who and product's and the actively reviewing benefits characteristics evaluating the keenly interested customers in are material, technology. trial We are product with

in look more the about forward have sharing we details the on impact process, could potential the this still early product battery electrical to While market.

call will I the that, questions. With open for

Operator

[Operator Instructions]. you. Thank

We'll take Spitz from America. question Bank line your first Please from ahead. of Roger the go of

Roger Spitz

Thank you. Good morning.

Just -- a

Thomas Fahnemann

Hey, Roger.

Roger Spitz

that Couple debt a of potentially the be is a million, refinancing or XXXX of which flow financial would that cash things, $XX is slide, book include the number on interest free Ramesh, meant number, the to cash other cost?

Ramesh Shettigar

is $XX about cash expected supply so $XX that program and million. $XX million a out of But The rest about is -- number. the costs piece Yes, chain million, financing and is of on. interest to would that be some Sure. be the Roger, accrual, cash book that about

Roger Spitz

$XXX Okay. points that the that does €XX million? the upfront include related two new to -- million, And

Ramesh Shettigar

No.

Roger Spitz

Six-year term loan --

Ramesh Shettigar

-- Well the

Roger Spitz

would That be [indiscernible] presumably.

Ramesh Shettigar

not amortization be The -- because in life but the Yes. the included that's of the included million, over amortized entire that is will the $XX $XX million, of loan.

Roger Spitz

right. All

for Thank now. it. Got And back. come That's me Okay. it you. then let

Ramesh Shettigar

Yes. Sure.

Okay.

Operator

Carlson line the from next with hear Josh Capital. We'll Wool of

Josh Wool

Thomas, made and the on progress of Ramesh, in QX. some good morning congrats

Ramesh Shettigar

Josh. Thanks,

Thomas Fahnemann

Josh Thanks,

Josh Wool

questions, the I'm you the in as plan few then last a particularly last energy very to insights Thomas, some escalating high-level queue more specific direct get Europe. mostly turnaround inflation prices, the implement quarter. for may you've picture introduced going questions, your challenges begun to with I about big start around and have back I but were by presented those. in you rapid quarter, And

inflation the cooled. are While rate rate at no prices Europe in and an is objectively prices high, energy have longer still increasing accelerating

macro how has is, your strategy? changed high-level, question very the and my the So is much at current a supportive backdrop environment of

Thomas Fahnemann

Okay. Yes.

really Definitely, materials seen Josh, off. already raw Thanks, have macro have leveled Certain Josh. actually Okay. environment. improvements the in we

down freight to materials, however, little levels coming we link us, have higher. which selectively. as are going really still Some But some and be raw costs fluff really as at a such still still pulp; key might elevated well very are they're important bit

So we are still very high-level. very, at a

have raw I price is we look to areas not us which sign bit kind in now for because level with right XXXX, if accept that high the a are willing Overall, these and of little pass-through at actually continue we good are at a Because where consumers customers materials, pushing seen our also we a price back customers to to as progresses, levels. come year arrangements. down prices certain expect for are the

and news us. help So are year that's expecting actually we progresses the that good as will this

come the the back bring -- and to really turnaround again, margins levels. That's to pre-pandemic our our back is again, to strategy, I maybe if objective

yet. job excellent not quarter, really our done have fourth We progress is made the but already in

gap. price-cost So and we to to increases we price on that really continuously push order have have the work to close in

our question, we be think the of And -- think so supportive and think situation current for I XXXX. for will yes, summarizing our answer strategy I goals and your I the

Josh Wool

about back so maybe I profitability margin pre-pandemic talk bit levels of and ended EBITDA not returning Composite quarter level. and looking last ton, far you And is I pre-pandemic Fibers. dollar from goal Okay. a pretty at think little that. levels to the specific Well, get per away let's your you to know I'm to and to kind XXXX absolute expressed

insights to So of it you're goal, can -- what And of timeline lot a degradation will you conflict sanctions. provide necessary? given this business the and in was into this the of what related maybe achieve level require any specifically scale taking in to the kind steps volume the additional Ukraine

doesn't maybe to that. at the at speak So so you assuming change, scale that can you're you're

Thomas Fahnemann

And if at Yes. this bag. Josh, I mean, again, a mixed Fiber, look I Composite is

have You different different segments with of profitability. levels

So get we at are right looking are where And like segment. we looking to back pre-pandemic is profitability. we now, what this to the segment really by would

Our the a -- look material high the if Russia at was wallcover margin which relatively the this I Ukraine, -- asset, and the providing was for Dresden for business.

back So expect that have. which three to the don't to next we come this two levels the over will we years

So with enjoying honest. right do we of not had business much quite we about which and to other of piece now can unfortunately to businesses, there's this are substitute it be this really kind not margin,

we talking go we by looking profitability, sector, about the at tea, to really is are to I'm a pre-pandemic back What to way enjoyed that segment where food and segment. which get go we coffee, and have the still beverage

Yourself right market in this kind all projects we weakness the some Composite are lemonade see Do and now of is, we although we the pretty pleased right with now that. are building Fibers, It the seeing industry business development of One in things

the this segment always back a So on looking the off And mix. But product part back we segment right the hopefully said, I half weakness depends it in from are it like XXXX. of standpoint we specifically to now and at leveling seeing XXXX. first in are here, come will of that's because some

Josh Wool

you order to of are directly or -- site customers impacted you more reducing at Are one more this maybe reviewing this that top that is in else? elaborate anything site and taken selling given would've Can another would've then considering you've in the relatedly, so volume? volume customers on sanctions. strategic or the of kind alternatives the moving at on Ukraine back What the the mentioned range the conflict what it OberSchmitten Okay. the of alternatives site, it was of the site? Maybe facility the by fixed production costs those for issue. and I been to the Dresden. And actions the make either the with but and selling for you packing including thought status the

Thomas Fahnemann

of are Okay. our Yes, let options and you're now Josh, okay. evaluation, absolutely OberSchmitten right. me right and the with part start table, on OberSchmitten all is

now reemphasize we all all working just can details, looking the So through options and right are everything at are but open.

is Russian Dresden early providing as despite really Dresden, lost business we in business far an we Dresden that As positive concerned, Ukraine, is Russia the but evaluated fact -- EBITDA. the XXXX, still

because bottom to accretive -- the line. all by far and rates, utilization our And being this is we lost Dresden which way with have from able this we away So been optimum are volume.

we capacity some Dresden. convert kind as So with to part looking we still up. to the wallcover mean, able it innovation business, and were And we have filled which Europe, chain, also on in we we not of Western are we unfortunately I at but Russian-Ukrainian businesses. profitable of other idle the are products, our to able were as focusing fill

Dresden fully to is picture that paint want loaded. don't a I

a providing We and positive But have in Dresden is still is are away we and a of there. lot still EBITDA. idle a accretive capacity

So Dresden issue now table as the portfolio as far on right not our is concerned. is

Josh Wool

in from had and Okay. the back now months then May of Thomas, Jacob queue. me more be evaluate benefit I'll to get six the Holm. one you've

have a ask questions business. questions few about the answer the can going all you and parts them in I'm or So just collectively. I to

I'll the get And this strategies Holm's your medium historical then priorities product the approach back you Jacob commoditized get And to the contribution including you you Sontara brand do in, the Sontara drivers the the any to profitability, long-term? to observations most and more? around pricing more the which leverage choose in significant Relatedly, generally, more participate lines? queue. from about key changes markets business do in First, are and versus have the of to out foresee what

Thomas Fahnemann

Okay.

also part, contributed So we profits the I yes, of all kind maybe the of Sontara drapes, and to COVID the Jacob if at and Sontara, the performance to for the the mask you think first masks helped surgical generated details, business the And COVID tailwind and the the counts, of during to at components. it significantly company, acquired what and prior really business before Soultz. COVID. helped And the look hygiene majority wipes Asheville medical Holm also

surface wipes, new Holm additional wipes being contracts, Jacob in secured hard cleaning and also benefited used from traditional ways.

You even I And needed have weights. of discussion not transitioned to you from remember spunlace price product, much just during pandemic, products mean and from hygiene basis the specifically, get at and to technology components spunlace point. benefited diapers lower a really carted that was feminine Soultz making

uplift just pandemic. I the a to specific price And Soultz during cost really big benefit were a was for raw providing during that prices were falling, the mean costs this trending spread that in widened. So time, and time higher material

were that I So profits were. as as why high they hope addresses question, these your

looking on And material a to forward, to and this, need these need you and to offerings we sustainable really strong if medical from use I free. in a more and and a a stronger meet this, be chemicals Sontara in binders we on what our and which focus is of transitioning, changing And fluorocarbon the Europe. we products critical products all to in sustainable envision produce cleaning regulations both coating our Sontara. at towards focus coded coded you take plastic much expect we And look And place pipeline order mean free businesses. adhesive have to

are for and pipeline, We the really progress, making in exciting we very Sontara. lot projects a specifically of have good

we them product. it really one the And percentage and with brand pushing offer producing and we if in world. market. us are materials part U.S. in market And now sustainable This biggest a but sustainable right And rest now. this key are can alternatives, a branded helping is is the are sustainable the leveraging, are are as relative what differentiator target mean go I offerings. Sontara products And the higher the is we we the our this of with which our a of seeing and already the business. in leveraging also I are to we We of Europe and

the of just hygiene to business, stable three part can we and months second operationally I lower The our transform really manufacturer. the cost say wipes, a ago, have I and same said and to

We now, low are month good time. And you area. in It can just transfer I and just the making making be takes owners month gets business a but right this really And we excellence that to it accomplish tell we are to introduced progress. by to previous need better, this. didn't progress. again, cost operational needs

as so just better. we myself, I and and most area improving the it's I at And assets working but progress mean, can are are we I'm dealing we are hard little Asheville steps, team repeat hard getting the we operations working making, really is mentioned is month optimize Soultz really the I to these mean, pleased extremely Every making are complex but progress. is again, with and really them, and with,

these in also by get the order on might is become spunlace wipes margins. more But area this newer products to which competitive business in and operations. hopefully so, innovation biggest us the lines, improving and higher generating our again, help And focus hygiene to for are in

Operator

the next queue, move in to Bryant Shaun this & from Hamill. time, line Segall we'll the At Nicholson

Your line open. is

Shaun Nicholson

me I'm I'm forward-looking kind What if Ramesh, tell the time but -- can obviously you is maybe of was first -- guys, guess annual quarter. or to if me want wrong, guidance I've it the you seen this I I remind did Usually, provided.

think And out picture EBITDA maybe terms do you kind practice on you guys there of to of past. a a versus you so how -- maybe the what of of of made range in kind kind a the the can of what good the of year general made had basis put

Thomas Fahnemann

Okay. Yes.

I let maybe see mean, me basis. a Ramesh I number they thinking can expect to of our to rationale honest, maybe now add -- to forecastle our and one, be Let then can think our give on yearly details yearly you investors it's important start a right some what you that. giving behind this is

We quarter. the which quarter have If the volatile $XXX improvements we'll expect are quarter see order million you would in control, still look things seeing million. environment high -- that at we I changes to highly we quarter manage and get by and should to by to $XXX we can can

actually So as in on our the are and strategy. for back end the we more load steps implementing implement heavy turnaround successful

mean, out see takes like at by But and the be environment fixed hand, I have XX% in executed, we have is you improvement look I time quick to already other quarter just reduction, we so in need people and I volatile to Europe, time quarter. get cost the still longer decisions. If program highly the our a you on said will very of

by see you we should down. you give yearly kind And confident to the very see some much get you by which can might to so and But you quarter see think range. XXX But it in more the some we feel of control, into quarter XXX makes because changes quarter. might improvement -- up fluctuations general, sense quarter to a see forecast and we things

Ramesh Shettigar

acquisitions. years received and specialty feedback -- six IR I've time when over papers, seen transformation did Shaun, in role sold that these been the I add And to is, having we our almost I from what for we've investors would and the we

picture like. looking the for what I looks around are think clarity additional investors medium-term

quarter the segments, gets bigger that translation. of one for picture a giving the guidance when at time think lost in I And we're each

that to help the wanted of kind we so picture. away complete And from move

think to really would a As with say on investors up and is move year-over-year what that strategy short basis, Thomas what the mentioned, significant element to aggregates annual. of what that's us like, medium-term quarterly think I I very to from a understand that would we looks turnaround being having add what prompted performance, helpful to our I to

Shaun Nicholson

Okay. That's helpful. Yes.

be and going leverage you from the cost capital any asset have the emerge? kind leverage an through, that -- -- have guidance you it? from of think of on when versus have come what side, that tailwinds, you lower of from if predominantly so other drive you range that but would as asset to guys working cash year in Just that sales sale of think the de-leveraging, will flow know end interest you side is kind a free to I an that higher some kind through is

Ramesh Shettigar

about multiple it would There's one were we Clearly, XXXX say in that the solve from no $XX $XX of where -- million compared come EBITDA talked a in formula Yes. $XXX use of what to XXXX. will meaningful we're the areas, of would that versus about year-over-year guiding the from to in is working We've I trying piece $XXX capital amount leverage Shaun. million cash was to on million that our improve it's for EBITDA. by us. million, improvement increase to

you're so optimization, portfolio right. about talked We've

could sales can. We're as down, -- did cut we potentially the as contribute we keep which We've CapEx that. asset tight we've eliminated to Some to last trying our the year. dividend,

And here XXXX as I things to that So to solving say we all and together just sales us. for being picture wouldn't look multiple beyond. forward our it kind it's of coming would equation I asset as classify leverage improve help

Shaun Nicholson

this Okay. not to quarters back of of so the that strategy but Got the you you you in really happen you but think you've least, and one over profitability that's been go guys try inflation to of kind to raw and to guess, haven't inflationary when year, you absorb. then backdrop had try kept what's past? already where of really at last the pricing. pricing, kind of the or the lot And with to only the talked lost some year couple that I last to able the recapture eat one last you've look know the pricings Is on up past, today, material on a cover and early what recapture at obviously do had can I able it.

Thomas Fahnemann

Yes.

again, differentiate me Let this. we segment. to think little by I bit a answer have And

a we the is cost-price think actually lot or I more put in Fibers, not which the October/November actually There there. the we before mean, we issues in I hand, inflation we of the -- mean, year implemented they were where fourth our the back a kind able that were in to September less and and Composite fine. it on pass quarter, this over segment on that of we other was we initiated as what gap, absolutely right. hit. accumulated there Airlaid you're were had margins able was I to and do to

end is this of of kind levels. So XXXX

through because customer materialize Some had in of should But probably really end didn't we the year QX things that. in honor this commitments until see the there. QX had and we coming to you

prices to expect $XX if are where able be $X down XXXX. but million yes, a this number, gap, through prices haven't we benefit $XX $XX okay, if recovered that certain will we would of But we if are something hopefully gap, $XX in close before coming be million smaller million to in are really if bit fact price-cost be successful? cost-price realistic win $XX million, very that's part QX, little million we million even coming profits Might What were, on able getting I mean, we you it's to number. we it prices it, to But material would the to with I raw that are which longer. we don't to in QX, talked of So maybe I to accumulated for little we QX, is back get expect realistic where that might think that a we hold about to bit we down. are hopefully of from said, the really

will will related gap. prices hold as be price-cost the to be on we XXXX, not accumulated far bit to higher in money, but to a which even little as to able close We hopefully the longer,

Sontara, where hand to mean, competitive. in think is the also the we need on area mentioned get And hygiene that's on, very and other I issue wipes were because our I assets the where the volume point in to same before the in purpose area really they're we successful I on spunlace lost we

big Europe have is in I we focus share. order can fine. is focused be main really back. rest still also we and mainly mean, to our improving Sontara world. increasing here. get market we and operations There's There to the is wipes share is and of volumes see in lot The I on really improving the question not then a problem U.S. penetrate think a and pretty our market decent and operations get competitive, but the hygiene our more of potential and a

Operator

of Let's from a move to line of Bank Spitz the America follow-up. with Roger

Roger Spitz

the the cash $XX flow any wondering suggests positive million. this Thank of XXXX plus just new But would costs follow-up. the item XXXX free just interest flow cash Ramesh, you slightly cash issue perhaps cash initiative whether new of $XX for XXXX debt sort about restructuring I'm make to items million the and costs flow. closure

Ramesh Shettigar

Yes.

Roger, question. So good

the free flow negative the expense flow, of I million with this want we're it the to or we've that at still provided when is, all refinancing. at -- million. we clarify $XX elevated look interest to the a from be cash we -- by and cost call that's primarily all, be free And driven interest $XX going where First to it'll just look guidance the cash having

flow. on into still is We'll really be to have restructuring uses improvement an XXXX We'll relatively We're all taxes in wanted some negative as sure other elevated But folks free as well incremental Yes, and certainly XXXX that's there have we capital. this debt going which improving so will as what cash will interest. see to understood, be flat. through working and mentioned, earnings. we're from we're tight the Cash as improvement working staying make which on. that, CapEx. will cash But be cost we we you like can

and will a try on, to XXXX. idea then free And free to that still talking regarding flow and and take of cash going so is down cash that then about into get positive debt. and pay been has some to net-net the flow the be But so negative actions continue Thomas optimization portfolio

Roger Spitz

that's paid? Got it. use $XX or be full debt the to interest, XXXX X% is million include you that cash making pay cash new And a up being of of would the

Ramesh Shettigar

Yes. Good. Yes.

assumes cash So million $XX for would full the interest. right that that pay now, we

Roger Spitz

Great. Full then cash. cash. -- Full And

Ramesh Shettigar

Correct.

Roger Spitz

forma on $XX the €XXX have a X% million, OID Lastly, pro with extra liquidity, or debt you in maybe that that pro €XXX million give sheet cash terms liquidity? million would forma you you're of refinancing? a replacing more of and the so doing the balance cost. Does additional -- That's for there's million

Ramesh Shettigar

We've yes, coming we some the borrowing here our using of got mean, that loans think that to will that we're grossing sheet. due BW, the German, also revolver of be to term got not this so Well, are later up about, pay I year. you've IKB, some down balance

maturities the to used this year, So that those pay have later of get will debt some smaller eventually down all other we Roger.

up balance proceeds of So you grossed for $XX million, getting the will I from think delta of loan. the wouldn't sheet if new of extra that term

Roger Spitz

much, Ramesh. Makes sense. Thank you very

Ramesh Shettigar

Okay. Good.

Operator

We'll from Wool a from follow-up go Josh Carlson to Capital.

Josh Wool

a two questions. Hey guys, I had just more

costs, energy hedging bit occurred First, it's associated Germany maybe prices how your the on more that can may direct just a you provide reducing caps program, in costs either detail spikes going or in with volatility have little the price your gas impact forward?

Thomas Fahnemann

Okay. Yes.

about and the I Let the is majority our caps, actually you of to mean, this you this if at try gas look ping -- that. talk you mean, me talk to if about Germany I business. is

cap per hour. portfolio at cap Germany power they is gas actually and I cap per the what And look and does at price, so megawatt €XX introduced what that's at is, megawatt is power did the a hour, mean, gas your And €XXX price. actually also government they is

whatever hedging or or higher. price So pre-buying as is you as whatever, is so far your did not concerned

of XXXX. The is in take of €XX the works. an first then okay? quarter system of that's let the how gas the And So kind system me megawatt example, place until hour, as end per

and the last So prices quarters of tremendously place. And price that this Josh, €XXX with our guaranteed the as know, mean year helps all the you'll remember, company, for okay? actually all is we five €XXX, cap had because planning we and for this over and I

tremendously. is really helps €XX the So

yes, happened that XXX%. last, weeks, Germany -- Europe say the fact inventory specifically due in overall, but the number one, would what in Interesting I were XX X GAAP to really in a the inventory to

consumed. lot season got a winter, with so inventory a mild not So they the relatively and went full luckily into

market end now, February, kind cap. was price price I mean, which at right price enter the of down. high of the actually cap inventories drove even that levels, below relatively sometimes So the market

way. driving which market the to that the is actually be in So, best honest outcome, that is

programs, talked €XXX Germany kind way, this is quite the just ways probably we want mean, gas certain with fact, level, and helping. in honest I okay? stability. X.Xx So €XX are the what government about don't suppliers, to to in the our despite for mean, UK for planning that it were that. other and it's U.S. Not the market same and actually us, big in So now that. by falling a to is and gives stabilizing power I around our in just the But more I And is that's while kind be everybody. France you and the or thing, thing. less the And the doing for other level. again, still compared happened of higher for ignore relief same And line faced than XXXX a for true the but is all of customers, that best the at is for also I the price

right is just value So us, and kind it really helps, I chain. are where now, have but and not whole say we the to of this

Josh Wool

versus but deal. And how always Airlaid or specifically, let's Okay. business on Spunlace in reporting substrates, say, Airlaid you or you you guys into structure structure do end product, I've the got that substrate that like market you just reporting Jacob of open-ended it When other the by wide substrate, Spunlace. a and more is now strategies, if have two could doing healthcare marketing, thinking it's of market. Holm since end the you that adjacent product same benefits that customer you substrates and one basis kind the to two you let's reported by of more versus a manage R&D I consumer, so, completed pricing, market, guess, just same pretty now plan Glatfelter's question and and have the kind even the sell about have say same and the plan

Thomas Fahnemann

Yes.

about internal of That's we had a good Okay. a lot question discussions that. and

So let me just tell you where we now. right are

and in already more kind and company of times end innovation sense. aligning Fibers any end Composite market if more towards sense because make this also three our of any a are doesn't there's towards we markets we Glatfelter organizations and mean, one make in coming align made ops the it So steps I to rep area kind this have to segmentation doesn't

that. doing already are we So

operations this along two concerned. as already ops is early far concerned, as January, we leadership very are did are and really customers our are we before, So the aligned by there. segment mentioned and far What them I aligned expertise really as also happy segment we not the people really improved We as technology, have to will. on if you we is really and already by Board and knowledge

care So of. taken already that's

to significant I public it all immediately it it, if mean, I I and -- changes in requires as comes this honest. mean our could do to systems other But quite would and Now do things. I Josh, there's be if reporting

to our growth So this honest, need as to in generate strategy extremely as we organic order us. pipeline. priority starting and about concerned, the then work, We think innovation to are is quite be excited push the turnaround really I with site far the but for I'm

I think these I think things have right. higher you're Ultimately, absolutely priority.

or months this markets. the promise towards XX happen But in work a and and far XX concerned, I think more that. because as IT cannot segments is all we should as market lot probably I report systems this will reporting that internal of requires next months

to get organic priorities than we strategy that. like to? And is But something develop turnaround We to of the kind our right need for platform just with that We has quite innovations now need this growth done. to go we be the Absolutely. to would have higher priority honest. other

Josh Wool

thanks -- And Well, the for all Perfect. details.

Thomas Fahnemann

time. take will it And

Okay.

Josh Wool

for it Great. Thanks for all the details me. guys. That's

Thomas Fahnemann

Okay. Thanks, Josh.

Operator

turn or At back this to Thomas Fahnemann the call. Q&A any portion time, remarks. additional of our that over conference to for closing I would conclude does today's like

Thomas Fahnemann

and the much concludes time this interest your and our then call. very you us, you. with Thank spent Okay. Thank you for

Ramesh Shettigar

you. Thank

Operator

for participation. does you your today's teleconference. all thank We That conclude

Magnera (MAGN) 21 Feb 232022 Q4 Earnings call transcript