Glatfelter Reports First Quarter 2014 Results
April 29, 2014 - Glatfelter (GLT) today reported first quarter 2014 net income of $14.6 million, or $0.33 per diluted share, and adjusted earnings of $14.1 million, or $0.32 per diluted share. For the first quarter of 2013, net income was $15.6 million, or $0.36 per diluted share, and adjusted earnings were $17.4 million or $0.40 per share.
Consolidated net sales totaled $455.7 million in the first quarter of 2014, a 12.5 percent increase compared with $405.2 million in the first quarter of 2013. On an organic basis, net sales increased 2.3 percent in the year over year comparison.
“Our first-quarter results reflect the continuing strength of our two growth businesses as they delivered a combined 6 percent increase in net sales on an organic basis,” said Dante C. Parrini, chairman and chief executive officer. “Both Composite Fibers, driven by the previously acquired Dresden business, and Advanced Airlaid Materials reported improved operating profit of 65 percent and 30 percent, respectively, over the prior year. The outlook for Composite Fibers remains positive as the business has greater capacity to meet growing market demand and Advanced Airlaid Materials continues to grow through its leadership positions in growing global hygiene markets.
“In Specialty Papers, we entered 2014 faced with significant challenges presented by pulp mill performance issues in Ohio, which when combined with the impact of severe weather, led to disappointing financial results this quarter. In March, we successfully resolved the pulp mill issues and production has returned to more normalized levels. Looking ahead, I am confident the building blocks are in place to deliver improved performance in this business, as demand for our business continues to be healthy and we are well-positioned to capitalize on improving pricing conditions.”
FIRST QUARTER BUSINESS UNIT RESULTS
Net sales for this business increased $46.7 million, or 41.8 percent, primarily due to the inclusion of Dresden. Excluding Dresden, Composite Fibers’ net sales increased $5.4 million, or 4.8 percent, on an organic basis, primarily due to stronger shipments of tea and single-serve coffee products. Foreign currency translation favorably impacted the year-over-year net sales comparison by $3.7 million.
Composite Fibers’ first-quarter 2014 operating income increased $7.6 million due to the inclusion of Dresden partially offset by raw material and other cost inflation.
Advanced Airlaid Materials
On a year-over-year basis, Advanced Airlaid Materials’ net sales increased $5.1 million, or 7.7 percent, primarily due to a 4.9 percent increase in shipping volumes. Foreign currency translation favorably impacted the year-over-year net sales comparison by $1.5 million.
First quarter 2014 operating income increased $1.4 million, or 30 percent, compared with the year-ago quarter, primarily due to higher shipments and $1.0 million from currency translation. These favorable factors were partially offset by $0.6 million in costs, net of insurance recoveries, related to fires at this business unit’s facilities in 2013.
On a year-over-year basis, Specialty Papers’ net sales decreased $1.3 million, or 0.6 percent primarily due to mix changes. Higher average selling prices favorably affected the comparison by $1.7 million.
Operating income declined $15.9 million in the year-over-year comparison primarily due to $9.4 million of costs related to pulp mill performance issues at its Ohio facility which caused a 16 percent reduction in pulp production in the year-over-year comparison resulting in higher per ton pulp production costs as well as increased use of higher cost purchased pulp. In addition, the first quarter results were adversely impacted by $6.6 million of costs related to severe weather conditions. Energy and related sales increased $4.2 million in the year-over-year comparison as severe weather conditions in 2014 resulted in higher selling prices for excess power.
Composite Fibers’ shipping volumes are anticipated to be approximately 5 percent higher in the second quarter of 2014 compared to the first quarter of 2014. The benefit of higher shipping volumes is expected to be offset by lower capacity utilization during the quarter. In addition, selling prices are expected to be generally in line with the first quarter of 2014, and input costs are expected to be slightly higher.
Shipping volumes for Advanced Airlaid Materials in the second quarter of 2014 are expected to be flat compared with the first quarter of 2014. Average raw material prices are expected to be slightly higher than the first quarter of 2014 resulting in slightly higher selling prices consistent with our pass through arrangements.
For Specialty Papers, the Company expects shipping volumes in the second quarter of 2014 to be in line with the first quarter of 2014. Overall higher selling prices are expected to add $2 million to $3 million to operating profit compared to the first quarter of 2014 due to the realization of announced price increases. Input costs are expected to be in line with the first quarter of 2014. The Company also plans to complete the annually scheduled maintenance outages at its facilities in the second quarter of 2014. The outages are expected to adversely impact operating profit by approximately $28 million, pre-tax, compared with $22 million in the second quarter of 2013 due to an expanded scope of work.
Headquartered in York, Pennsylvania, 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.