YORK, Pa., May 05, 2020 (GLOBE NEWSWIRE) -- Glatfelter (NYSE: GLT), a leading global supplier of engineered materials, today reported its results for the first quarter of 2020 which are summarized in the following table:
On an adjusted basis, earnings from continuing operations for the three months ended March 31, 2020 and 2019 were $10.8 million, or $0.24 per share, compared with $7.3 million, or $0.16 per share, respectively. Adjusted earnings is a non-GAAP financial measure for which a reconciliation to the nearest GAAP-based measure is provided within this release. Consolidated net sales totaled $231.6 million and $229.1 million for the three months ended March 31, 2020 and 2019, respectively. On a constant currency basis, Composite Fibers’ net sales increased by 5.5% and Airlaid Materials’ net sales increased by 0.1%.
“Glatfelter started the year strong by building upon the great strides made through our transformation efforts in 2019,” said Dante C. Parrini, Chairman and Chief Executive Officer. “Both segments delivered excellent performance in the first quarter, increasing shipments and improving profitability over the prior year, while also exceeding quarterly expectations. In Airlaid Materials, shipments were up approximately 6% year-over-year, driven by robust demand for table top, home care and wipes products. This growth, coupled with solid operations, enabled Airlaid Materials to deliver a nearly 20% improvement in operating income and quarterly records for profitability and margins. Composite Fibers increased year-over-year shipments by 14% and operating profit improved by 33%, reflecting strong growth across all product categories while benefiting from lower pulp prices, efficient operations and an improved cost structure.”
Mr. Parrini continued, “As the world responds to COVID-19, the health and safety of our employees and their families are a top priority, and we are taking all necessary measures to protect them. We instituted several new safety, hygiene and communication protocols throughout our facilities and implemented work-from-home arrangements, where practical. We are proud to be part of the essential workforce supporting global response efforts to the pandemic. Accordingly, we are proactively identifying and mitigating risks to safeguard the continuity of our business and are pleased to report that all production facilities remain operational. We are well-positioned to supply our customers high-quality engineered materials necessary to manufacture a variety of consumer staples, including wipes, health and hygiene products, and food and beverage items during this challenging time.”
“While we are witnessing unprecedented volatility around the world, our confidence remains steadfast in the resolve of Glatfelter PEOPLE and the resiliency of our business. We will continue to take actions to ensure business continuity, enhance product and service offerings, and maintain rigorous financial discipline. Although a decline in global economic activity is projected, demand for most of Glatfelter’s products remains strong. We are on very solid footing from a liquidity and leverage perspective following the successful cost optimization initiatives and debt refinancing completed in 2019. With a stable and defensible product portfolio, leaner cost structure, and more agile and efficient operating model, Glatfelter remains deeply committed to supporting its customers and maintaining industry-leading positions even in these uncertain times,” concluded Mr. Parrini.
Composite Fibers’ net sales increased $4.0 million or 3.1%, compared to the year-ago first quarter, driven by robust shipments in all categories, which was partially offset by unfavorable foreign currency translation of $3.1 million.
Composite Fibers’ first quarter 2020 operating income of $15.1 million was $3.8 million or 33% higher than first quarter 2019. Higher shipping volumes across all product categories favorably impacted results by $1.2 million. Operations added $1.0 million primarily driven by higher production rates to meet demand, as well as cost reduction initiatives. A $4.0 million benefit from lower prices for wood pulp and energy was partially offset by a $2.6 million impact from lower selling prices in certain product categories. Currency favorably impacted results by $0.2 million compared to the year-ago quarter.
Airlaid Materials
Airlaid Materials’ net sales decreased $1.6 million in the year-over-year comparison. Strong shipments of table top, home care and wipes products increased volume by 5.6%, while lower selling prices of $4.8 million for contractual pass-through arrangements and a $1.7 million impact from currency translation exceeded the benefits of favorable volume.
Airlaid Materials’ first quarter 2020 operating income of $12.0 million was $2.0 million or 20% higher when compared to the first quarter of 2019. Higher shipping volumes contributed $1.0 million of additional earnings while price declines due to raw material pass-through provisions were more than offset by lower raw material and energy prices, adding net $0.5 million of profit. Operations were $0.4 million favorable, mainly driven by higher production to support the stronger demand.
Other Financial Information
The amount of “Other and Unallocated” operating expense in the table of Segment Financial Information totaled $14.8 million in the first quarter of 2020 compared with $9.7 million in the same period a year ago. Excluding the items identified to present “adjusted earnings,” unallocated expenses for the first quarter of 2020 declined $0.6 million compared to the first quarter of 2019, primarily reflecting lower corporate costs.
Net interest expense totaled $1.5 million in the first quarter of 2020 compared with $3.2 million, excluding debt refinancing costs, in the same quarter of 2019, reflecting savings generated from the Company’s debt refinancing completed in early 2019.
In the first quarter of 2020, income from continuing operations totaled $10.0 million and income tax expense totaled $2.6 million. The income tax expense in the first quarter of 2020 includes a $2.6 million tax benefit recorded in connection with passage of the Coronavirus Aid, Relief, and Economic Security Act (“CARES”). This Act modified the “net operating loss” provisions of previous law to allow certain losses to be carried back five years. This tax benefit is excluded from adjusted earnings. On adjusted pre-tax income of $17.8 million, income tax expense was $7.0 million in the first quarter of 2020. The comparable amounts in the same quarter of 2019 were $9.5 million and $2.2 million, respectively. The effective tax rate on adjusted earnings was 39.3% in the first quarter of 2020.
Balance Sheet and Other Information
Cash and cash equivalents totaled $104.2 million as of March 31, 2020, and net debt was $246.3 million compared with $233.7 million at the end of 2019. Net leverage on March 31, 2020 and December 31, 2019 was 2.2 times. (Refer to the calculation of this measure provided in the tables at the end of this release.)
Capital expenditures during the first three months of 2020 and 2019 totaled $7.0 million and $5.9 million, respectively. Adjusted free cash flow for the three months of 2020 was a use of $12.6 million compared with a use of $30.0 million in the year earlier period. (Refer to the calculation of measure provided in the tables at the end of this release.)
Discontinued Operations
On October 31, 2018, we completed the previously announced sale of our Specialty Papers business unit on a cash-free and debt-free basis to Pixelle Specialty Solutions LLC, an affiliate of Lindsay Goldberg for $360 million.
The results of operations for our Specialty Papers business unit have been classified as discontinued operations for all periods presented in the consolidated statements of income.
About Glatfelter
Glatfelter is a leading global supplier of engineered materials. The Company’s high-quality, innovative and customizable solutions are found in tea and single-serve coffee filtration, personal hygiene and packaging products as well as home improvement and industrial applications. Headquartered in York, PA, and transitioning to new headquarters in Charlotte, NC, the Company’s annualized net sales approximate $925 million with customers in over 100 countries and approximately 2,600 employees worldwide. Operations include eleven manufacturing facilities located in the United States, Canada, Germany, France, the United Kingdom and the Philippines. Additional information about Glatfelter may be found at www.glatfelter.com.
