Glatfelter (US:GLT)2023-02-27 21:48Financial Performance - Glatfelter reported net sales of $1.5 billion in 2022, an increase from $1.08 billion in 2021, representing a growth of approximately 37.5%[21]. - For the year ended December 31, 2022, the company reported a loss from continuing operations of $194.1 million, or a loss of $4.33 per share, compared to income of $6.7 million and $0.15 per share in 2021[110]. - The company reported a net loss of $194.2 million in 2022, compared to a net income of $6.9 million in 2021[126]. - Basic earnings per share for 2022 was $(4.33), a decline from $0.15 in 2021[212]. - The operating loss for 2022 was $164.0 million, a significant decline from an operating income of $28.6 million in 2021[212]. - Adjusted loss for 2022 was $19.0 million, or $0.42 loss per share, compared to adjusted earnings of $27.6 million, or $0.61 per diluted share in 2021[112]. - Gross profit for 2022 was $148.8 million, representing 10.0% of net sales, down from 13.3% in 2021[137]. - The company incurred costs of products sold amounting to $1,342.5 million in 2022, up from $939.9 million in 2021, reflecting a 42.9% increase[212]. Segment Performance - The Airlaid Materials segment generated net sales of approximately $601.5 million in 2022, accounting for 40.4% of total net sales, while Composite Fibers contributed $523.9 million (35.1%) and Spunlace $365.9 million (24.5%)[21]. - The Airlaid Materials segment reported an operating income increase of $12.6 million in 2022, while the Composite Fibers segment experienced a decrease of $20.5 million[112]. - The Spunlace segment reported a net loss of $9.3 million in 2022, compared to a loss of $1.3 million in 2021[135]. - Composite Fibers' net sales decreased by $32.9 million, or 5.9%, in 2022, primarily due to a 22.0% decline in shipments, particularly a 45.1% drop in wallcover shipments related to the Russia-Ukraine conflict[142]. Acquisitions and Strategic Initiatives - The acquisition of Georgia-Pacific's Mt. Holly business for $170.9 million in May 2021 expanded Glatfelter's footprint in the U.S. nonwovens market[19]. - The acquisition of Jacob Holm for approximately $304 million in October 2021 established a new Spunlace reporting segment, enhancing Glatfelter's product portfolio[20]. - The company has suspended dividends, freeing up approximately $25 million in cash annually to support its turnaround strategy[17]. - Glatfelter's turnaround strategy includes a focus on margin improvement, with pricing actions expected to benefit throughout 2023[17]. Operational Challenges - The company anticipates ongoing challenges due to the military conflict between Russia and Ukraine, impacting production, sales, and supply chain costs[107]. - The company operates manufacturing sites in Europe that are adversely impacted by the military conflict in Ukraine, leading to potential shortages and increased costs of natural gas, which may affect operational efficiency[63]. - The risk of cyber-security incidents has increased due to ongoing geopolitical tensions, potentially affecting operations and supply chains[64]. - Continued geopolitical tensions and sanctions against Russia may lead to further adverse consequences for the company's business and financial results[65]. - Disruptions in the global supply chain could negatively impact the company's ability to manufacture and deliver products, potentially increasing transportation costs significantly[66]. Debt and Financial Position - The company had approximately $312.3 million of secured debt and $532.0 million of unsecured debt as of December 31, 2022[59]. - As of December 31, 2022, the company had $844.2 million in long-term debt, with approximately 37.0% at variable interest rates[171]. - The leverage ratio as of December 31, 2022, was 6.0x, within the maximum limit allowed under the Credit Agreement, which was amended to increase the maximum leverage ratio to 6.75 until December 31, 2023[160]. - The weighted-average interest rate on variable-rate debt was 3.84%, and a hypothetical 100 basis point increase in interest rates would raise annual interest expense by $3.1 million[171]. Environmental and Regulatory Costs - The company is subject to substantial costs related to environmental regulations, which may impact financial performance[72]. - The company maintains accruals for environmental liabilities, adjusting them as assessments and remediation actions continue[181]. Currency and International Operations - A significant portion of the company's net sales and earnings is generated from international operations, exposing it to foreign currency exchange rate fluctuations, particularly with the euro, British pound, and Canadian dollar[67]. - The company's euro-denominated net sales are estimated to exceed euro expenses by approximately €190 million annually, exposing it to currency exchange rate risks[173]. - The company is subject to risks associated with changes in foreign currency exchange rates, particularly with the euro, British pound sterling, Canadian dollar, and Philippine peso[173]. Workforce and Governance - The company employs approximately 3,250 people worldwide, with 67.8% represented by local works councils or trade unions in various regions[39]. - The company's internal control over financial reporting was deemed effective as of December 31, 2022, according to an independent audit[190].