Magnera (MAGN) 22 Feb 242023 Q4 Earnings call transcript

Ladies and gentlemen, good day, and welcome to the Glatfelter's Q4 2023 Earnings Release Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ramesh Shettigar. Please go ahead, sir.

Thank you, Lisa. to Fourth welcome Call. Earnings and morning, Glatfelter's Quarter XXXX Conference Good is President, Vice Shettigar, Financial This Senior Treasurer. Chief Ramesh Officer and

call fourth our President Officer to is Glatfelter the of Poneman, Executive and quarter myself. and Thomas Chief On results present

presentation, we few standard have reminders. Before I a our begin

and During this GAAP-based today's these of financial will to our morning, the use earnings in term adjusted in reconciliation our well measures. as release A is slides. call results earnings included as other we the non-GAAP investor financial measures

We make risks also forward-looking will are statements subject and today to that uncertainties.

from as XXXX Our forward-looking XX-Q, speak to under materially release statements XXXX Form factors will that XX-K them. are and we over these with disclose and website, of our of filed have today's and obligation turn These only the could to no our SEC update Thomas. now I Form been statements. cause which actual on available results to call are today, all the differ our

call. with in February the end shareholders we I'll speak a Thank that our significant market which and announced sharing $XX towards million EBITDA Full of expected, industry-wide for more . you, Berry Investor light Glatfelter's achieved Fourth plans for most company We for Global's results by XXXX begin the the and detail Quarter everyone, in the full Glatfelter Call. year, I quarter of with with and and fourth solid Ramesh. $XX.X in third X, business, and Year quarter continued were quarter, and notably, strategic as line with to to to adjusted million the challenges. our welcome guidance. Hello, of consistent on HH&S Also the merge milestone proposed

period. volume approximately each during improvements sites the to fourth prior XX-month profitability careful performance. to of focus exceptional our highlights $X by quarter, direct which adjusted in to This achieved operational Spunlace reflection outcome segment commercial is team results EBITDA fourth our now the cost the million quarter in over contributed our Spunlace of generating expanded and quarter of segment. products, the compared improvement in for improved branded Turning The throughout the Glatfelter's a discipline and Sontara

with EBITDA In we previously progress in the margins segment quarter XX% pleased fundamentals half are the made the Composite the are in approaching fourth third addition, of as our sustaining with quarter throughout the year. underlying gains the second Fibers

benefits wire and largely addressing from took We actions production. the in-client year to the are throughout improving attributed our direct gap cost price seeing the we turnaround the

Uber In from segment earlier divested addition, the benefited having the the in Smithen, year. Germany facility

result key As volumes commercial we cost momentum, carefully our absorption balance to major our with in markets. restoring have on a efforts inventories increased fixed demand we as of match this

end overall pronounced XXXX, tabletop our namely segment, European we In with down fourth compared to the this volumes competitive in categories. experienced feminine and segment's our Airlaid X% challenges market quarter of hygiene

addition, to we in which maintenance performance. extensive our contributed facility conducted negatively also shutdown Gatineau the In planned an segment's

to actions the XXXX, realized diversify to customer significant our profitability required base. we we enter that our maintain us As take quickly Airlaid market and

consumers result, environment. seeing to inflationary pricing decision this expense respond which we volume, potential in consciously we a As out at are actions made protect the margins play through of as to been the now slow have

expanding will product results. turn and will are deliver take I in our multifaceted concentration working reduce efforts recognize this diversify innovation intended and we portfolio Also, time our the call over now sustainability. Ramesh. while the to to customer to approach to We customer base

price same driven the was . Spunlace as well levels. was the of million, results fourth lower Adjusted favorable year fourth same third $XX typical down provided a gap. our by a X declines Airlaid inventory preserve downtime. in higher of summary quarter. production, EBITDA strong EBITDA adverse constant volume. quarter due price customers quarter Slide gap, fourth the a segment. EBITDA XXXX million lower within shipments Materials price $X provides Thank concessions and by despite the Composite investor you, Thomas. cost planned higher count compared turnaround million. lower guidance last versus quarter $XX.X results. was cost manage costs reductions cost improved approximately during approximately very driven approximately and energy the period our line and reflecting currency was million as shipments on Slide actions prices production Materials $XX selective the and year. in quarter earnings full presentation price year, X raw million and versus EBITDA by was to lower by in driven $X were improvements. to summary nonfloating of in and operational basis the year. lower Fibers favorable by which approximately driven shows with quarter mainly approximately last Airlaid maintenance to by mainly by of $X Lower pass-throughs, Revenues head and range to quarter Europe incline gap to a EBITDA wire to selling mainly for last Selling related prices cost were last material lower million, results same were XX% period

to a unfavorable efficiency. inflation was cost last our were Operations same in to cost the due million This net operational Europe, price improve were earnings category. X% alternate and wage coupled prior extended other primarily largely was due in gap high with the driven versus Also, primarily million. Gatineau to $X due tabletop by softness was general maintenance competition to compared to lower [indiscernible]. facility to year. the by $X.X weaker the market year, basis, in ongoing the shipments downtime unfavorable higher year-over-year, substrates by Volume On from by of period

larger down results basis a from gains Slide were prior million for due prices shows hedging related revenues constant a Foreign selling currency currency beverage to year. customers. quarter earnings Composite Total impacted with $XXX,XXX, implemented the exchange floating X food $X.X and by and segment. the fourth to of on XX% hedging negatively primarily shipments due contracts lower and Fibers from of summary

sales Ober-Schmitten that lower composite Excluding the The quarter, was approximately volume partially to in divested specialties. wallcover but was offset X%. third operation was due food primarily technical beverage decline from by was by in year-over-year improvement categories the laminates and and and

reversing site, versus $X.X first by materials, improved freight further key quarter energy quarter fourth year-over-year the any raw $X.X divestiture our prices eliminating the losses the of and for ongoing Ober-Schmitten favorably Also, and results impacted full was Lower was cost by million. million earnings trend. by million, hedging gap since other benefits by and price by was million, driven last production. quarter last inclined favorable by year, the higher Operations And same gains $X.X from $X.X exchange unfavorable from negative wire foreign the mainly driven year.

million, positive were summary fourth and material by shipments gap in offset and a cleaning consumer categories. by and segment. material, care $X the other coming critical for hygiene approximately X%, energy from were inflation the $X lower in primarily price X% prices by wipes shipments by we driven as Revenues cost resulting hygiene favorable down a of in Volume currency shows health results constant by ended categories, materials. cost and Raw partially the improved XXXX. basis, pass-through driven provisions raw million Spunlace higher in quarter X Slide on lower selling of was wipes

that an $X.X tornadoes other undamaged items was and a in are expensed and the million fourth deductible, cost except by within was Operations, in manufacturing higher of the fourth FX operation damaged facilities. through be area been impacted portion the intense and facility. a head insurance and $X for production. The covered was by efficiencies, the resumed the which favorable of series Spunlace count of on Production expected the to subsequently converting production Tennessee adjusted excluded were repairs focus earnings. million warehousing In reductions quarter, from quarter in has a the fully company's

Slide with corporate and last XXXX. a shows versus fourth were costs financial and quarter XXXX shows our the year cash X Corporate corporate year $X.X flow basis, X summary. costs of lower were costs Slide full other on in line million approximately items.

$XX usage capital For cash full XXXX. driven same declines Working approximately million price $XX in our free million was versus turnaround our of by XXXX, initiatives material cash approximately under and working flow lower capital raw higher period was by year the adjusted strategy.

payments metrics. our by interest Slide to shows elevated approximately related Cash by of refinancing carried higher Cash into by and income was the lower some timing And liquidity over XX interest million, million. jurisdictional XXXX. balance in $XX taxes $XX sheet lower rate environment. and driven were changes million was by $X in and XXXX CapEx mainly paid

at million in XX, of the of and be December ratio as and million. year-end. X.Xx had a calculated guidance available We're is liquidity the was XX XXXX flow of leverage expecting approximately agreement our million bank for of to $XXX $XXX $XXX EBITDA Our credit and we XXXX. Slide EBITDA cash range summary under as

back it of flow we $XX cash to million will by the and $XX are related be $XX be strategy between turnaround nonoperating and other $XX my to cash is million. to capital I This the is be integration $XX and expect usage and approximately estimated planning, to approximately remarks. costs concludes items $XX million to favorable following: deductible, Cash relates tornado projected to interest between $XX Thomas. capital million. cash approximately As items, cash expenditures million to insurance turn million. be expected million; onetime merger tax call prepared now Working

Ramesh. you, Thank

specialty recently the majority second Berry Glatfelter half mentioned approximately company start proposed company adjusted a global in synergies. EBITDA Berry excited million, its The The and materials business, approximately expected pro the of nonwovens combined close films forma pro at plans at revenue I combination merging really the of business HH&S in a the and I'm forma of leading XXXX. Global's publicly call, a merger anticipated of As create for traded industry. announced will proposed the of $X.X which transaction values to is with of about including the billion $XXX with

strong and company range this scale Glatfelter's Xx. the and complementary solutions the Glatfelter's creates of a suppliers. subscale prospect shareholders, size to customers joining forma For net strategic about current and capacity greater balance within of technologies, for footprint sheet and rating and products a We're combined acquisitions, to future talent, of improves agencies leverage profile markets our our a the forces for excited our growth foundation leverage also deliver by customers. transaction with for leverage to addressing this combined and provides pro Also, transaction capital

will brand. converting as of Pacific and Glatfelter markets will opportunities such capacity benefit areas the stronger, American for anticipate Glatfelter Sontara where the and We create Latin very in the business X Asia

a long-term and a innovation to meaningful business establish We for start will work successful platform with the new diligently for growth.

well. very time Finally, I'm organizations proposed now culture and on X similar and Glatfelter focused XXXX. on close share remain of stakeholders the values the the performance the in delivering and that transaction, team serve Between set will confident tenacious will strong we

execute our successful We the is a will to we completed. prepare for turnaround further strategy proposed as continue integration transaction on once

the year EBITDA Given our million work XXXX, the I believe in Glatfelter XXXX. to $XXX the has ability full outstanding for million completed $XXX in deliver of team to in range

questions. reflects challenges, we now for these ongoing And progress macroeconomic guidance look will fundamentals with open headwinds updates and I in This market to and finally, in strong, the our along volatility, on limited with ahead. colleagues. the providing visibility along Despite Berry the eagerly new remain anticipated our anticipate particularly organization shaping months business we forward continued our call Europe.

[Operator Instructions]

Spitz our question comes Bank of And Roger from first America. today with

This is actually Roger. for on Olivia

and in So where the main Glatfelter shares what key and market Glatfelter Berry other the business overlap? [indiscernible] of HH&S are players

health, we the like we categories though end really have product even complementary. are very hygiene, Okay, in same

on product but segment. competing just we're -- product, compete really don't we same in it's the So

one product. So by this competing same very synergies but will It's in different not positive we have of this we is are merger really the just the about things segments really with really that some proposed products. product

nonwoven of Got on do global compete it. directly And what percentage with market woven. the based fiber-based polypropylene

people certain where choice based I the very is products, mean with can't building percentage. characteristics. many on I way. applications, different performance make up end construction between you are health either there's always to difficult the products auto than in varies come is question go can or using and really it I a say even can And different What that the the care different a mean, users section. this

mentioned and are the polymer business But more more of of can you as the ours on really go there lot I fiber products on can product go are side portfolios not side. are You same. the a or which complementary again, before, the and various

application. the some for there's depending switch again, to So but -- customers flexibility on

it. Got spend? how CapEx then And Okay. much does HH&S

Olivia, X forward, probably X% looking the years. historically, between say next they've to anywhere for I of would Yes, X X% But spent and sales.

lines probably X% to fair I X% term, think more X% longer X%. probably then to of sales. it's project to the of along And

guess, Okay. That's the of and very helpful. what normalized maintenance And I CapEx the CapEx is [indiscernible]?

-- that's a it's comment bit to too that. Olivia, on early Yes, for us

X asset the before companies that final at is provide come these portfolio, together, time view we As we as can is the scheduling what growth take some a look what probably maintenance, at we on that. . as look point of of will

That's guess Okay. mature facilities? providing fair. entities will be then will guarantees guarantees bonds the the through benefit And new I Glatfelter the that of from credit

foreign facilities credit expected those foreign guarantee by guarantee our bonds that facilities. will NewCo's The Yes. be And to Glatfelter to or of guaranteed bonds. will borrowers are extent credit to be entities guarantors, Glatfelter expected those entities the all not domestic include that the

be Okay. repaid and the credit HH&S with debt be from will And new then facility? how will co transferred much

Yes.

of NewCo, revolver So the Glatfelter debt about about, up new be all will raised to will about the the with be at $XXX will Angelo be and billion company, the I between Berry, to will start of the then that debt transaction retire used $X $X.X essentially merger, would and Gordon billion be But it, into that will term to revolver. closing, million say which the from an the for existing rest undrawn costs. loan dividend SpinCo be call will coming

plan last to very on HH&S helpful. Newco question, does our then That's the And in report how segment? Okay.

Olivia, too now. right this is early really

. I We as have to before, line we'll tell. mentioned X is along the but this weeks and provide early too -- announcement now information closing, right to

from our Angelo next comes Jennings Gordon. Instructions] Mike of [Operator And question

Excellent.

over Let's you're a standout more for kind of nice nature? thinking year. us talk minute. much much how of for about the of Can this kind think sustainable? 'XX. is that give the performance of little in generally and trajectory it's onetime course spunlace a kind how about color, a I And you business a How about bit of Obviously,

where result we Again, -- the about with a and are real Sure. very it we you story, think is and if this pleased started. turnaround

line look quality. I whether [indiscernible], sites and the end we So X and segment our dramatically operational Asheville performance, work it's wipe very waste, our if diligently at hygiene we on downtime, for availability improved

side, on and get to the and And all where we are area I So the performance. for cleaning we this helped tremendously year business coming to Sontara where that's a segments real into improve focusing paying is a it and and reported now, this think we a critical other now on we are the new takes see off. our ago, time us, opportunity that, and unique little

X, we little still pleased Spunlace you that's mainly is, performance, if side. I excited at QX see to growth to times we further So to we we but your question business, And seeing definitely, a you QX answer turnaround. see, that very bit we're Sontara this Sontara mean, very look from is and Can about the still take were that. with probably come do the will the are need because too we are about growth and now early, able

it. money, I So We a business not a mean, I stabilizing would right we're I on now, good forward. characterize now losing huge stabilized made think, yes, This money, is step Mike. foundation. And it we're making we it.

where about we go, X% And very margin. are think are and a we optimistic. We around I EBITDA know to

the more into bit or however sort kind in for you're Can that the focus. Congrats. margin being what Airlaid to in of the understand some of seeing best be It U.S. bit And softness. little the that some maybe little help whether versus what you're visibility a sort seeing more. side, us of help mostly of a think out it's then you seems you give big you around I know Europe Europe, commentary or been can on lay a that's us? of volume

in volumes at let and move in me critical and XXXX. we I in economic headwinds, I was for there down a mainly on to we the on mean, specifically Airlaid European really if the hygiene, situation, honest, which product. of say, disappoint you look a far but and feminine but lot also they is where market, quality, volume cheaper mean, destocking customers really main based are again, kind solutions. and high mean also the going like are The still still to, mean was look as under inflation the alternatives. some overall business, of I the lot be top were concerned there as I because Europe, customers areas cheaper cable It's have segment, pressure of our

Okay.

Airlaid the finding which could time. are XXXX, if that value half Now it's takes but little I we the of is product second and where product one, the work our than it that, bit XXXX also We other of And will here, And looking ongoing. all add and better at actually half. and look Airlaid segments of projects It a into time. have first different are takes coming, little doing we customers. the really a is to already be that's bit also

represented XXXX, same is more before, said, more or mentioned need a realize customer is again, we also portion our business. XXXX. fine. But are high if less portfolio. be this a our at market big concentration even we we when of this to we situation end in early is turning, robust or balanced And sold out, Airlaid big the as on very in And market a which had we the of the time, And actually customers,

well. are doing We that as

would time. that bit volume a customers, and some So are little of we volume, but C replacing takes we call with B consciously I this and what lost also

Air, least, but one, unfortunately, now even phenomenon if down, there's pulp went it's I going much fluff to in down, slower come not that pricing, at the look but and fluff pulp And again. last everything was up

have issue, So we Yes. tackle. that's to business. in another And Airlaid a which our challenge it's

strategy. a combined more a that but have made clear little all we So complicated,

what So be back executing we will half, we'll to you are have. that first see second and and used will the half to better get than strategy, the that we

participation. gentlemen, questions. Thank QX [Operator Instructions] today's further And Call. are ladies your you no conclude Glatfelter's there Release And does for this XXXX Earnings and Conference

disconnect. now may You