Magnera (MAGN) 9 May 242024 Q1 Earnings call transcript

Good day, and welcome to the Glatfelter's Q1 2024 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.

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

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

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

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

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

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

to I'm headwinds call. business environment market proposed milestone to than Berry end adjusted Quarter HHNF but expiration related the Global's as the representing quarter will Also, towards you, or from and Europe a lower business, First proposed more the I waiting the with segment with Glatfelter market to XXXX Ramesh. today's approximately HSR is we we $X the global volatile last the regulatory work year. the difficult that quarter challenges underway Glatfelter's significant with our the same speak of the report of level EBITDA million continue Call. the of currently. We to welcome in face relation Investor period. of produced merger reached million results that $XX.X the for merger most to at industry-wide everyone, Hello, and achieved mixed Thank economic solid pleased to

generated driven throughout Spunlace by XXXX. highlights first gap of ongoing performance performance, was improvements combined EBITDA million gain continues segment sites. to $X.X the the primarily million momentum, This Turning the our quarter efficiencies quarter first of operational Spunlace with $X approximately Glatfelter's having higher to now versus price-cost of

nominal hold In swept I'm our following operational our Soultz, Composite continue branded our operations despite operational primarily costs. material of through combination actions Overall, increase. a and volume while demonstrate using raw to to their restructuring. Sontara the is continues inventories Composite to a tornado while met European a that commend improvements positive Spunlace, quarter Tennessee community to $X million trajectory market. to in difficult report was performance recovery December. XXXX. further to through facility steps dedication addition, the Fibers the in the we of higher commitments for this backdrop facility restoring to the we customer maintain have based that team carefully performance following pricing against the and work business, pricing segment balance price-cost Fibers products team volumes, site's to Fibers delivered I Composite Also to gains managed a effectively volatile energy This pleased compared realized and ensuring during our achieved the on continues The efforts. Transitioning XXXX in France gap benefits mitigating and first hard approximately uptime for were be targeted EBITDA taken solid fully

approximately decline along and adverse the in generated European EBITDA first production remain with markets $X most its of million attributed $X Our to prolonged the shipments market weakness, was as lower in tenuous. dynamics. lower challenging with the pricing million segment Airlaid, which segment quite European quarter resulted The

manufacturer recently we innovative And materials. our dynamics, new products plastic-free address targeted with Swedish Airlaid customer to In These are Despite in sustainable the Europe. Shipping annually. plant-based our when part share a and will to for supplements. potential customer production volume customers' has qualified a nutritional new a we segment. I efforts for creative the I'm for of this strategy we our overall for business key applications application using call are to the addition, innovation Airlaid for volume Glatfelter's Also, excited demand experience competition over solution have generate fully closures commercial Airlaid continues caps first ongoing that alternatives substrates. brand-new to with Airlaid shipped blue recently ocean to of ramped to use producers the that up, potential of growing to turn segment's reduce initiatives Ramesh. concentration related now accelerating from by the meaningful

to selling Selling prices primarily reflecting declines levels. Composite summary material $X provides margins shipments. mainly million driven raw were first last versus EBITDA million, the to results. demand price lower quarter improved energy first by of Airlaid X weaker European to Materials a to and and year, were price-cost year. in operational gap. due quarter Fibers $XX.X Revenues points. by results million basis improved Slide last costs down quarter last compared mainly a lower lower constant in last was EBITDA Spunlace period compared the Materials a XX strong prices and driven same approximately by reduction Thank higher of investor on by selective by $X customers $XX leading improvements. Slide regain nonfloating million Thomas. X and in cost versus a $X quarter to was basis the headcount year, shipments drop while earnings was lower shows Adjusted concessions EBITDA by pass-throughs, gap, from to inventory mainly Europe by summary our EBITDA segment. you, for Airlaid very The currency the and period $X consequently same favorable million of EBITDA volume. price-cost lower production approximately year X% driven lower was to XX% favorable of manage presentation million, same the lower

to Tabletop Europe. primarily shipments decline categories On pricing net actions was Home and protect by year-over-year, earnings unfavorable taken in dynamic. and cost to driven margins like price-cost the in was improve our largely due a weaker basis, Volume The million. XXXX to in Hygiene, $X.X price lower was gap by Care

further Europe in to put continue softness market ongoing impacting downward pressure However, volume.

prior addition, mix last factors impacted Operations million to primarily $X.X year, to tonnes same unfavorably much we last of higher by and versus by color stronger lower X other $X.X were compared inflation had were tabletop results was unfavorable year. combined production levels. the compared wage million. In due inventory period year Also, shipments. approximately approximately manage to the X,XXX unfavorable These when general to

and from the composite lower Fibers year. Overall, prices quarter laminates also versus and the a million currency the $XX period prices with for from pricing to lower Total remains XX% food favorable although revenues to $XX.X mix price-cost floating mainly same metallized the contracts related declining lower last million contributed revenue a compared results and to gap by categories, to the for implemented mainly production. versus on basis, other $X which raw key the constant by prior by and materials, due due selling preserve larger Fibers Operations lower beverage were of customers with by foreign freight, year. Slide exchange million, was $XXX,XXX. hedging improved And $XXX,XXX, due was for and and earnings volume. hedging mainly summary And Composite shows shipments currency to quarter exchange actions same segment. Foreign $XX.X were down to year. impacted first million by earnings targeted unfavorable X% by quarter overall nominally last gains unfavorable for prices the energy from X negatively primarily of higher Composite

by items. $X.X million, Operations positive and were year. X energy year, basis, by of shipments Wipes the and by favorable shows Hygiene through categories, X% X spending. Slide and lower for lower items versus the corporate first offset Critical intense quarter X%, headcount shipments lower driven in $X.X on the Wipes, in by categories. professional constant million partially manufacturing driven a and Slide on costs raw services other $XXX,XXX primarily first Revenues and costs pass-throughs Hygiene the in operational Volume gap. favorable were lower by were cost financial a currency efficiencies, Corporate in of softer driven by this of inflation $X material prices material, were spending quarter shows other down summary was Cleaning. Raw lower focus results resulting approximately Healthcare Spunlace from segment. last coming largely other but reductions selling stronger million and price-cost

However, strategic proposed driven this our transaction costs quarter, by were initiatives business. with higher Berry's HHNF

X flow summary. Slide our shows cash

our million of was environment. higher and balance first were XXXX, XXXX XX lower was quarter in rate $X free cash interest liquidity cash million higher $X paid our period taxes in by Cash the adjusted Working cash capital higher sheet by million some refinancing shows approximately and versus For million. Slide was usage interest XXXX. and $X by the QX related to flow the same elevated $X metrics. in XXXX

approximately available my remarks. I of bank the was and under of the $XX million calculated Our end at back as prepared had now leverage ratio, call of XX, concludes we This as agreement X.Xx to the Thomas. credit turn March liquidity will QX.

as Thank of team I are Curt organization is organizational materials to and efforts a a Multiple assess day X Begle, business, Extensive into assessing to in organization. focused on industry. Integration and anticipated the throughout close X remain starting publicly half Berry excited while Merchant of of X talent by planning you, leading the prospects the Board are will organizations that under direction work Ramesh. structure, in including key which operations co-CEO. the specialty to areas of of Glatfelter the prepare XXXX. businesses create team effective combined and on leadership The Global's the ensure HHNF the includes teams such company Directors extensive with underway for the traded second the integrating the formation new

technologies. with of products work tremendous IT by companies' is In underway, and business a integration excellence planned schedule, and which collective and along combined the I'm processes is the that pleased focused efforts by carefully on is operational addition, leverages teams. the guided well manufacturing complementary systems our being The

in and I approach we forward the additional call meaningful to the performance months. I now the will regarding look transaction, proposed for open coming integration details Glatfelter sharing to the of questions. a efforts of ensure closing the Ruth? As

go Wool [Operator Capital. Instructions] We Josh Carlson first will to with

When just to a the here. preliminary NewCo and report QX, talking process a some know do to also for a the few financing I expect HSR questions a Before I When file you approval. saw and could and expect and about April kind and new financing? of late a financing of the Berry S-X press some the on you Berry when you in get you branding? preparations. from the the target outside of do for is questions I corporate deal on to name there place announce noted

Glatfelter still conditions we and have do meet shareholders question, close all securing different the Again, of order to the for Thanks we approvals working by the regulatory have heavily includes on to U.S. are outside several Yes. the transaction, we which to approval Josh. things in

we closing we half of still this very the second that in are So optimistic are the transaction year.

that's far approvals about first as we get depends, financing determined, And all question different the your authorities. it concerned, still and be need to is the to of as all, from

then normally, and mean the it segment thought that Okay. as just But in generally a economic ask And seems the focus was would price of volumes then QX, weakness biggest the costs I downtime. generally. driver I on I I on about Airlaid, given kind the of performance whole.

than less was be QX. trying how I And indicator. Europe, improved year-over-year, were sequentially, a CPG I down that continued I including kind stock, sequentially, mean, bit And make a question, and caught bit think guard. off to as were I'm so of guess decline some they to data to improve the guys what I'm shipments understand little the usually some you little I it seen realized but label from maybe the a I've so like guys year-over-year leading has which can relates that hearing of of

forecasting So the back your had a line? that? a either of what inventory kind was such with why you kind severe issue downtime to take in or of planning get like to Or

but was XX% Laminates QX segment. The subsegment was Composite we're growth different have Composite by Josh, slightly kind lower, start up 'XX volume Composite this I driven saw growth in this let Wallcover. 'XX. Fibers, mainly In that and QX in that tea, Maybe will and was expecting pick the with think of a me because Beverage we And tea segment QX. Food segment by from mainly side picture just and Fibers. let's driven by through go to we

of mainly kind think a I It's We in less XX% are still more again, area, the still only running -- gone. the areas, doing which coffee, rate if Laminates, the we what's seeing that's a CF is right segment still now be in -- still would has or area, in would -- actually, than The really lagging other are in we and little Composite higher trend we're Food areas. And bit Beverage other where at where are then positive the the continue seeing all destocking of this we XXXX. and the vanished. it

of kind CF. that's So

On improving. the Spunlace Spunlace side, actually also is

in overall mainly have an X% QX. volume QX volume QX in April bit, some and the driven because by additional mix I little the Wipes growth seen and some bought the going we and area upside was large that to on have We also and we QX from also customers 'XX a And mean, side. into seeing volume here see growth Hygiene on

now, that. and when shows remember the Critical also volumes right with we we about business customers. but existing you ago, this XX% Cleaning development, in seeing a talked with from new mainly increase, all and qualifying said Sontara, a Sontara are year we are we What higher might

all is QX category. Spunlace one It's on have QX the done. Unfortunately, new also this a versus volume XX%. to Hygiene regions. that's much by kind we Home see story. to take look you goal, destocking Airlaid, overall overall we it If We have XX% Europe minus been was minus and the And more just volume to America, offset we with that but different different seeing from Tabletop, dependent of dropped X% to not driven our customers XX%, and are we widen in an have here, in in challenging North and totally So are to Wipes, in increase QX. the have of Airlaid, Europe the big area. And this really be portfolio, really protect Hygiene different the decline has and really in an QX, we we to product by And we area our products. our with In look that here, categories. mainly markets Care. Europe, probably our think on and margins. know really actions in had less at at And And I strategy

We at some making and customers. really shipments and are year, good the 'XX. Asia, of will big products competition we're And issue all in the are results the progress Airlaid. But that new from other and as right better first new Airlaid of but far Europe edge made Europe supplying really in in than we kind this, is see second we from competition with is we with half the And this as probably is have now the kind of concerned. what customers issue Turkey. is also actually substrates, seeing

standpoint there year-over-year earnings. quarter. out Europe And things geographic decline an kind kind been Josh, we of a fourth when why gotten and that's did has issue, kind in came of flag right? dramatic we of the But of clearly, the us worse from have for

years, I'm be to extent, the reliability persistent? Airlaid but a you Europe. other just downtime. don't the going strong Airlaid, downtime. around inventory But the how in like And is of but of including surprising your for and that home more give of been bit how just many not some growth helpful, kind from us just of we've segments. volume is the kind and to of table to in in context, of I maybe it's a little on downtime How level some trying that period much a because is economic in unusual unusual, context by like demand The just have spoiled understand went is to it

much kind this quarter this could happens different happened wondering your maybe was than that to so or have really time from just expectation time. what So of

production clearly, we say had Europe, dial would were kind I in as demand softened Yes. seeing as our well. to the of we us for down

So the X had kind that want we of that certain very sure. of with Yes. high-XXs to to able customers. the right? of the that seen terms is meaningful. was money, meaningful decisions a to B base. being where of also Also, customer a reallocate previously if capacity to talked be -- to We we've is absorption some going in enough that and high-XXs. into if book business the XXXX, impact having want was C all the capacity in utilization which absorption not generating made the about We we're pretty keep in And not mid- volume make we customers And The business takes business we want the to time, to can that that typically broadening make play sure the then in segments, across this very, mid- conscious quite capital-intensive mind role.

you then so Yes, guess, the the last I was this to Airlaid a base maybe When customers like issue the some Is broadening that question second that could this have context rate to QX? Just question in more back level? new of more get it saying Or so I the normal around replace out absorption is there? I and kind operating that and that. some around of the is think last just do is customer is finding, half?

Josh. Okay,

remarks and XXXX, it. where year full XXXX right we this these We earlier, that shipments first see mentioned we we're application Now It's really then it's this. seeing coming new you'll but see what I in of as again, my half are replace already in we ramping and second can -- the are And exciting. all in seeing up. QX, the now impact are again, some is volume and in

that's Because that. we a totally because substrates, absolutely Airlaid in -- get we biggest different where which new point other price a the with and cannot do can't which segment, just can profitability. also enough and also faced We position nice a we providing have we have is applications issue

that see we're don't and Turkey coming of yet, it the see initiated in it's Europe, bit to strategy this already and 'XX. XX, mainly months back XX in coming in and half little a coming again, back Asia, something from We you'll 'XX, your we ago but question, seeing then second to But and the U.S. the fruition. year in

we in level. talk prices of pulp see pretty price rising hard as be the North Fibers, And can And experience the because Europe. any about of pulp. entered impact just below looking should contracts speak Airlaid of rising competition or here, Okay. pulp of different They summer. maybe fact said, of but this changes getting as been albeit energy they're year, America and the goes now at last And at let's the also being up. substrates you given They a negative very in well competitiveness that to again, pulp elevated the dipped prices and they've to peak. you margins? kind price with the that the you're through as XXXX not your Composite will or on negatively or squeezed other either And worse positive what When

we increases Josh. the mean QX. seeing are price I in Okay, pulp

X.X there's a So X, inventory. And around months. a we'll our on X are but bit at if floating lag, average, little on would will say, a with, we time around time X about about look but it's I lag. it, months different, pass contracts normally I it's Then get months are holding so that we customers,

floating of and segment Food as have, our customers. other mechanisms we some also, know, with implemented Beverage these And you in and

are as very lag, is a here, in America. were to it accepted. but There's will X% on. If our Again, working on was and we'll but that with X%, more already prices a able always time roughly speak. North the help, And market we this generally help. increase So by conditions, competitive at we I much we look pass Europe side, that that challenging, non-floating will

Okay. Helpful.

last question, cash can one and queue, Just the in I flow. then get back around

seasonality any of balance that also and are on any kind your some seasonality? of of and out. spend the Just context And help of timing us expectations guideposts QX normal the the can performance in over there model of XXXX restructuring the around versus that kind

Sure.

a year standpoint, that's is seasonality to us, we've over I of terms working in creep we having and typically, moderated, a appropriately, say well. in in input it's flow, going-in the as But would positive what have in here, quite it's this say, working a pass-throughs I should we last where our is cash inflation for heavy energy, working was the can Josh, to capital a manage be strained. that capital outflow at expectation But impact to could first stays we've expecting. continue capital cost the starts to up the costs, similar cash years. profile. breakeven from situation year inflation we like been working if slightly least that seen if as several have quarter last And whether So able would capital structured the well, whether saw

costs overall, the these more we the cash of perspective. the throughout seasonality transaction, positive typically is as year think of we're that of premerger the about year out integration to onetime all some rest restructuring kind HHNF of second fairly half until But the year, kind all costs, way spread the So incurring a closing. is the related the from of and that of flow the

So right this year right cash we're picture we are of into going But where manage appropriately. to to flow now now, versus continuing that largely unchanged. our going be as is

time. others at the no queue are in There this

give Then ask to have. Josh why he opportunity any further questions we don't does if an

[Operator Instructions]

guys. me, appreciate for it That's it. I

are no this There other questions at time.

with you next quarter. again you much, and speak Thank right. All we will very

Okay. Thank you.

today's conclude for call. your does This you Thank conference participation.

now disconnect. may You