Glatfelter Reports Fourth Quarter 2017 Results, Exploring Strategic Alternatives for Specialty Papers Business Unit
Feb. 6, 2018 - Glatfelter (NYSE: GLT) today reported a net loss of $10.1 million, or $0.23 per share for the fourth quarter of 2017 compared with a net loss of $16.2 million, or $0.37 per share in the fourth quarter of 2016. Adjusted earnings for the fourth quarter of 2017 was $15.0 million, or $0.34 per diluted share compared with $17.6 million, or $0.40 per diluted share, for the same period a year ago.
On an adjusted basis, earnings before interest, taxes, depreciation and amortization and excluding pension expense (“Adjusted EBITDA”) for the three months ended December 31, 2017 and 2016, totaled $41.5 million and $41.7 million, respectively. Adjusted earnings and Adjusted EBITDA are non-GAAP financials measures for which reconciliations to the nearest GAAP-based measure are provided within this release. Consolidated net sales totaled $399.9 million and $390.9 million for the three months ended December 31, 2017 and 2016, respectively. Composite Fibers' and Advanced Airlaid Materials' net sales increased, on a constant currency basis, by 7.7% and 3.1%, respectively. Specialty Papers' net sales declined 6.9% in the quarter-over-quarter comparison.
“Our fourth-quarter operating performance reflects continued strength of our engineered materials businesses,” said Dante C. Parrini, Chairman and Chief Executive Officer. “Composite Fibers delivered a 22% increase in operating income compared with the fourth quarter of 2016. Earnings were driven by strong volume growth of 18%, as well as improved operating efficiencies and cost optimization initiatives.
Advanced Airlaid Materials grew operating profit by 9% over the fourth quarter a year ago with shipments up 2%. Demand for our airlaid products remains strong as this business brings new capacity to the market, with shipments from Fort Smith, Arkansas on schedule for the first quarter. Our fourth quarter's results, on an adjusted earnings basis, also benefited from an unusually low effective tax rate of 6.7%.”
Mr. Parrini said, “Our Specialty Papers business continued to face challenging market conditions which, when coupled with operating inefficiencies, led to lower profitability during the quarter. We are encouraged by recent announcements of price increases and additional industry capacity being taken out of the market which should be constructive for the business going forward. Our focus remains on aggressively pursuing cost efficiencies and process improvements to improve profitability.
“As we look ahead into 2018, we expect our cash flow profile to improve significantly with the completion of our major capital programs. For our Airlaid business, we are in the process of completing customer qualifications and product testing for our new Fort Smith facility which is on schedule for commercial shipments later in the first quarter. We expect to deliver 10% to 15% volume growth in 2018 as a result of this new capacity. For Composite Fibers, we expect solid shipment growth as demand remains strong. For Specialty Papers, we are encouraged by recently announced price increases in uncoated free sheet and carbonless products while we remain focused on operational factors that are in our control.”
Specialty Papers Business Unit
Mr. Parrini concluded, “Our Board of Directors and management team regularly evaluate opportunities to enhance shareholder value and have decided to explore a range of potential strategic alternatives for Specialty Papers. Our strategic review process reflects a strong commitment to maximizing shareholder value by accelerating the growth potential for Composite Fibers and Advanced Airlaid Materials, and determining the best option for Specialty Papers.”
A possible outcome of the strategic review process may include, but is not limited to, the sale of the Specialty Papers business. At this time, the Company's Board has not set a timetable for the completion of the process nor has it made any decisions related to any specific strategic alternatives. There can be no assurance that the review of strategic alternatives will result in a particular outcome. The Company does not intend to provide any updates unless or until it determines that further disclosure is appropriate or necessary. The Company has retained Credit Suisse as its financial advisor to assist in the review of strategic alternatives for the Specialty Papers business.
Glatfelter is a global supplier of specialty papers and fiber-based engineered materials, offering innovation, world-class service and over a century and a half of technical expertise. To learn more, please visit: www.glatfelter.com.