Glatfelter Corporation
Q4 2020 Earnings Call Transcript

Published: 5 Feb 2021

[Operator:]

Thank you for standing by, and welcome to the Glatfelter's Quarterly Earnings Release Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ramesh Shettigar.

[Ramesh Shettigar:]

Thank you, Celene. Good morning, and welcome to Glatfelter's 2020 fourth quarter earnings conference call. This is Ramesh Shettigar, Vice President of Investor Relations and Corporate Treasurer. On the call today to present our fourth quarter results are Dante Parrini, Glatfelter's Chairman and Chief Executive Officer; and Sam Hillard, Senior Vice President and Chief Financial Officer. Before we begin our presentation, I have a few standard reminders. During our call this morning, we will use the term adjusted earnings as well as other non-GAAP financial measures. A reconciliation of these measures to our GAAP-based results is included in today's earnings release and in the investor slides. We will also make forward-looking statements today that are subject to risks and uncertainties. Our 2019 Form 10-K filed with the SEC and today's release, both of which are available on our website, disclose factors that could cause our actual results to differ materially from these forward-looking statements. These statements speak only as of today, and we undertake no obligation to update them.

[Dante Parrini:]

Thank you, Ramesh. Good morning, and thank you for joining us. Today's earnings call marks the conclusion of a very successful year in Glatfelter's transformation. Our strong financial performance amid a global pandemic speaks to the durability of the new Glatfelter. As businesses across the globe faced unprecedented challenges, we continue to make progress by focusing on employee health and safety while ensuring uninterrupted supply of critical products to our customers. And our reshaped portfolio helped deliver full year adjusted EBITDA growth of 12% for the company. Slide 3 provides a summary of our fourth quarter results. Glatfelter continued its track record of delivering quarterly results that meet or exceed expectations by generating better-than-expected adjusted EBITDA of $30 million and adjusted earnings per share of $0.22. Airlaid Materials posted higher quarterly shipments versus the same period last year in all product categories, except tabletop, which continues to be heavily impacted by the pandemic. As a result, it was necessary to take additional downtime to manage inventory, which negatively impacted profitability. Composite Fibers posted excellent quarterly results as strong demand for wallcover and composite laminate products translated into higher production. This, when combined with a favorable mix and higher asset utilization, boosted profitability. At an enterprise level, we continue to benefit from our transformation, including an improved cost structure and an optimized engineered materials portfolio comprised of over 85% essential consumer staples. Our adjusted free cash flow for the year increased by $29 million, driven by EBITDA growth, and lower cash usage for working capital and taxes. With meaningful debt reduction and net leverage of 1.8x, we ended the year with a very healthy balance sheet. Additionally, we recently announced the acquisition of Georgia-Pacific's U.S. nonwovens business, further underscoring our focus on strategic growth. I will speak more about this acquisition later in my closing remarks. At this point, I'll turn the call over to Sam to give an in-depth review of our fourth quarter results. Sam?

[Sam Hillard:]

Thank you, Dante. Fourth quarter adjusted earnings from continuing operations was $9.6 million or $0.22 per share, an increase of $0.05 or 29% versus the same period last year. On a GAAP basis, we had income from continuing operations of $9.1 million or $0.20 per share versus a net loss of $44.8 million in the same period last year as a result of terminating our traditional defined benefit pension plan.

[Dante Parrini:]

Thanks, Sam. Summing up our accomplishments for the year as presented on Slide 10. I'm pleased to report that we delivered on a variety of important dimensions. Above all, we kept our employees safe and our facilities operational despite the challenges of the pandemic. Our Airlaid business managed to offset a decline in tabletop volume with growth in health and hygiene products. In Composite Fibers, our focus on continuous improvement and operational excellence, coupled with strong commercial execution, strengthened the profitability of the segment. We also optimized our metallized products business by consolidating the German operation into our U.K. facility. At an enterprise level, our flatter and more agile operating model generated greater speed and efficiencies while enhancing our overall cost structure. We delevered the balance sheet using our strong cash flows to increase our capacity for future growth opportunities. And we issued our first sustainability report, formalizing our ESG priorities. All of this would not have been possible without the hard work, dedication and resiliency of our global workforce. We're excited about our recent announcement to acquire Georgia-Pacific’s U.S. nonwovens business, which is covered on Slide 11. This acquisition includes an Airlaid production facility in Mount Holly, North Carolina and an R&D center located in Memphis, Tennessee. We believe this synergistic acquisition is a strong strategic fit for Glatfelter and is complementary to our existing Airlaid platform. The combination will enable capacity optimization, operational enhancements and higher output to better service our customers' growing needs in the nonwovens industry.

[Operator:]

[Dante Parrini:]

Okay. Well, it appears that we don't have any questions. So I'll thank you for joining our call today, and we look forward to speaking with you again next quarter. Enjoy the rest of your day.

[Operator:]

This concludes today's conference call. You may now disconnect.