Glatfelter Fourth Quarter 2013 Earnings Up on Composite Fibers Sales
"Our growth businesses of Composite Fibers and Advanced Airlaid Materials delivered significantly higher operating profit during the fourth quarter." — Dante C. Parrini, Chairman and CEO, Glatfelter.
Feb. 13, 2014 - Glatfelter (NYSE: GLT) today reported 2013 full year adjusted earnings per diluted share of $1.40 (GAAP $1.52) compared with $1.25 per diluted share in 2012 (GAAP $1.36). For the 2013 fourth quarter Glatfelter reported adjusted earnings of $15.0 million, or $0.34 per diluted share, compared with $11.2 million, or $0.26 per diluted share, in the 2012 fourth quarter. On a GAAP basis, fourth quarter 2013 net income totaled $16.5 million, or $0.37 per diluted share, compared with $7.0 million, or $0.16 per diluted share, in the fourth quarter of 2012.
Consolidated net sales in the fourth quarter of 2013 totaled $434.8 million compared with $391.4 million in the fourth quarter of 2012. On an organic and constant currency basis, net sales increased 1.1 percent in the fourth quarter of 2013 compared to the fourth quarter of 2012.
“Our growth businesses of Composite Fibers and Advanced Airlaid Materials delivered significantly higher operating profit during the fourth quarter,” said Dante C. Parrini, chairman and chief executive officer. “Healthy growth in their key markets of tea, single-serve coffee and feminine hygiene, together with solid operations and the impact of the Dresden acquisition, led those business units to a combined 95 percent improvement in quarterly operating profit compared to a year ago. I am obviously very disappointed with the 60 percent decline in operating profit for Specialty Papers. During the quarter, a 12 percent reduction in pulp production at our Ohio facility led to results that were substantially below our expectations and the year-ago period. We are aggressively taking corrective actions to address this issue and we expect to see improvements as we go forward.”
Parrini continued, “The full year 2013 was a very successful year for Glatfelter as we reported record revenues, significantly grew earnings, completed a significant acquisition and generated substantial free cash flow. As I look ahead, we will continue to execute our strategy which is delivering meaningful results for our shareholders. We have invested in both organic growth opportunities and acquisitions to capitalize on our leading positions in growing markets such as tea, single serve coffee, feminine hygiene and nonwoven wall cover. The market environment for Specialty Papers is improving and we are well positioned to take advantage of these conditions. At the same time, we continue to drive operational excellence across our businesses — all of which should enable us to generate substantial earnings growth and healthy free cash flow in 2014.”
Composite Fibers’ results include the financial results of Dresden prospectively from the April 30, 2013 acquisition date.
Net sales for this business increased $45.2 million, or 42.9 percent, primarily due to the inclusion of Dresden. Excluding Dresden, Composite Fibers’ net sales increased $7.7 million, or 7.3 percent on a constant currency basis, primarily due to stronger shipments of tea and single-serve coffee products.
Composite Fibers’ fourth-quarter 2013 operating income increased $8.5 million primarily due to $6.0 million of operating income from the inclusion of Dresden in 2013, lower raw material and energy costs and improved product mix.
Foreign currency translation favorably impacted operating income by $0.2 million compared with the prior-year quarter.
Advanced Airlaid Materials
On a year-over-year basis, Advanced Airlaid Materials’ net sales increased $4.4 million, or 4.3 percent on a constant currency basis, primarily due to a 5.4 percent increase in shipping volumes, led by feminine hygiene, and a $1.7 million benefit from foreign currency translation. The effect of contractual pricing arrangements resulted in lower average selling prices which adversely impacted the net sales comparison by $1.1 million.
Fourth quarter 2013 operating income increased $2.8 million, or 56.2 percent, compared with the year-ago quarter, primarily due to higher shipments, a $1.7 million energy rebate and a $0.6 million benefit from foreign currency translation.
On a year-over-year basis, Specialty Papers’ net sales decreased $6.2 million, or 2.8 percent, primarily due to the $1.1 million impact of lower average selling prices, 1.7 percent lower shipping volumes and mix changes in the comparison to the fourth quarter of 2012.
Operating income declined $10.7 million in the year-over-year comparison primarily due to $4.7 million of costs related to pulp mill performance issues at its Ohio facility. The operating issues caused a 12 percent reduction in pulp production resulting in higher per ton pulp production costs as well as increased use of higher cost purchased pulp. In the fourth quarter of 2012, operating income benefited from a $1.4 million LIFO inventory valuation adjustment.
Composite Fibers’ shipping volumes are anticipated to be approximately 10 percent higher in the first quarter of 2014 compared to the fourth quarter of 2013. In addition, selling prices are expected to be generally in line with the fourth quarter of 2013, and input costs are expected to be slightly higher.
Shipping volumes for the Advanced Airlaid Materials business unit in the first quarter of 2014 are expected to be approximately 5 percent higher than the fourth quarter of 2013. Average selling prices are expected to decline due to pricing provisions in certain customer contracts. Input costs are expected to be generally in line with the fourth quarter of 2013.
For Specialty Papers, the Company expects shipping volumes to increase slightly in the first quarter of 2014 compared with the fourth quarter of 2013. Overall higher selling prices are expected to add $3 million to operating profit compared to the fourth quarter of 2013 due to the realization of announced price increases. Input costs are expected to be in line with the fourth quarter of 2013 and the Company expects to incur approximately $3 million of cost penalties associated with severe weather.
The Company expects pension expense in 2014 to decrease to approximately $6.2 million compared with $14.2 million in 2013.
Headquartered in York, PA, Glatfelter is a global manufacturer of specialty papers and fiber-based engineered materials, offering over a century of experience, technical expertise and world-class service. U.S. operations include facilities in Spring Grove, PA and Chillicothe and Fremont, OH. International operations include facilities in Canada, Germany, France, the United Kingdom and the Philippines, a representative office in China and a sales and distribution office in Russia. Glatfelter’s sales approximate $1.7 billion annually. To learn more, please visit: www.glatfelter.com.