Glatfelter (US:GLT)2020-11-09 19:53Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2020 was $29 million, with adjusted earnings per share at $0.16, aligning with expectations [7] - Year-to-date adjusted free cash flow improved by $7 million, with net leverage at 2.4 times at quarter end [10][26] - Adjusted earnings from continuing operations decreased to $7 million or $0.16 per share, down from $0.22 per share in the same period last year [12][13] Business Line Data and Key Metrics Changes - Airlaid Materials achieved adjusted EBITDA of $18.6 million, driven by a stronger euro and favorable product mix, with shipments growing 4% compared to the prior quarter [7] - Composite Fibers shipments increased by 21% sequentially, recovering from a severe contraction in Q2, although profitability was impacted by manufacturing downtime [8][15] - Airlaid segment revenues were down 6.4% year-over-year on a constant currency basis, primarily due to lower selling prices [19] Market Data and Key Metrics Changes - Demand for tabletop products in the Airlaid segment remained soft, with a 38% decline year-over-year, although there was a 98% sequential improvement from Q2 [21] - The Composite Fibers segment saw stable performance in food and beverage categories, with growth in single-serve coffee and tea shipments [45] - The Metalized business faced challenges due to the exit from commoditized parts of the business earlier in the year [47] Company Strategy and Development Direction - The company is focused on leveraging its operating model to drive performance and improve earnings and cash flow [30] - There is a commitment to growing the Airlaid segment through both organic and inorganic means, with a focus on supporting market growth [56] - The company has relocated its corporate headquarters to Charlotte, North Carolina, indicating a strategic shift [11] Management's Comments on Operating Environment and Future Outlook - Management noted that the pandemic has created volatility, but the company has successfully navigated challenges, generating an 11% increase in adjusted EBITDA year-to-date compared to 2019 [29] - Future expectations include flat shipments in Q4 compared to Q3, with improved production levels anticipated to benefit operating profit [18] - The company remains cautious about the ongoing pandemic and its potential impact on operations and demand [70] Other Important Information - Corporate costs for 2020 are expected to be $27 million, below previous guidance [23] - The company has maintained a strong liquidity position with available liquidity of $195 million [26] Q&A Session Summary Question: Overview of performance across different business lines - Management highlighted that tabletop products in the Airlaid segment were most adversely impacted by COVID, while home care products saw strong demand [40] Question: Impact of wallcover demand recovery - Management indicated that if current demand continues, they expect to have turned the corner, but uncertainties remain due to COVID [67] Question: Plans for incremental capacity in Airlaid business - Management confirmed a commitment to growing the Airlaid segment and exploring various growth investment opportunities [56] Question: Ongoing costs related to Fox River - Management stated that while a large payment settled litigation, ongoing maintenance and monitoring costs will be spread out over time [60] Question: Use of excess capital going forward - Management emphasized a conservative approach to preserving balance sheet capacity while looking for profitable growth opportunities [80]