Nonwovens / Technical Textiles


Glatfelter reports third quarter results including turnaround strategy to drive improved profitability under new CEO

Glatfelter Corporation (NYSE: GLT), a leading global supplier of engineered materials, today reported third quarter financial results and details of the Company's turnaround strategy to drive rapid operational and financial improvements despite continued inflationary and energy price headwinds.

2022 Third Quarter Highlights

  • Improved revenue by 33% attributable to Jacob Holm acquisition (“Spunlace”) • Record operating income in Airlaid Materials
  • Improved pricing and cost mitigation actions in Composite Fibers
  • Goodwill impairment charge of $42.5 million for Spunlace
  • Company-wide turnaround strategy launched to drive rapid profit improvement

"Our portfolio of core products is fundamentally strong and I am confident we can mitigate the impact of inflation and energy headwinds and return to profitability,” said Thomas Fahnemann, President and Chief Executive Officer of Glatfelter. “We are executing a turnaround strategy focused on driving rapid improvement in the Company’s overall profitability. Our efforts are focused on six key areas: (1) portfolio optimization, (2) margin improvement, (3) fixed cost reductions, (4) cash liberation, (5) operational effectiveness and (6) returning Spunlace to profitability.”

“We are seeing early signs of progress with our strategy in Airlaid Materials given the segment’s record EBITDA achieved in the third quarter. Also, our actions in Composite Fibers are laying the necessary foundation toward repositioning the segment on a similar trajectory as Airlaid Materials," said Mr. Fahnemann.

Mr. Fahnemann added, “Spunlace performance in the third quarter continued to disappoint, and while this segment remains strategic to the portfolio, the pace of operational and commercial change needs to accelerate. We are addressing this with urgency and have engaged expert external resources to supplement our team. Despite the downward pressure from Spunlace, the Company’s overall portfolio remains resilient, although performance is below the true potential this enterprise is capable of achieving. We are committed to delivering progress against our plan in the near-term and lay the foundation for shareholder value creation over the long-term.”

The Company will provide shareholders with further details related to the Company’s turnaround initiatives under its new CEO during the earnings conference call.

Third Quarter Results

The following table sets forth a reconciliation of results on a GAAP basis to an adjusted earnings basis, a non-GAAP measure:

(1) For 2022, primarily reflects professional services fees (including legal, audit, valuation specialists and consulting) of $1.6 million, employee separation and other costs of $0.6 million and other costs, all of which are directly related to acquisitions. For 2021, reflects professional services fees related to acquisitions (including transaction advisory, legal, audit and valuation specialists) of $2.7 million and other costs all of which are directly related to acquisitions.

(2) Reflects cash severance and transition related costs of $4.6 million partially offset by a $3.1 million non-cash benefit related to the forfeiture of stock-based compensation awards. In addition to the transition costs recognized in Q3 2022, we expect to recognize additional non-cash charges in Q1 2023 related to settlement accounting when we settle a portion of the former CEO's non-qualified pension obligation under the terms of the pension plan.

(3) Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated. For items originating in the U.S., no tax effect is recognized due to the previously established valuation allowance on the net deferred tax assets.

(4) Reflects the tax effect of applying certain provisions of the CARES Act of 2020.

A description of each of the adjustments presented above is included later in this release.

Airlaid Materials

Airlaid Materials’ net sales increased $12.8 million in the year-over-year comparison mainly driven by higher selling prices from cost-pass-through arrangements with customers and pricing actions to recover significant inflation. Shipments were 3.7% lower mainly driven by lower table top shipments and in home care due to higher shipments in third quarter last year as a customer was ramping up production in their new facility. Currency translation was $12.7 million unfavorable.

Airlaid Materials’ third quarter operating income of $16.6 million was $1.8 million higher when compared to the third quarter of 2021. Lower shipments were more than offset by favorable mix, improving results by $0.5 million. Selling price increases and energy surcharges of $22.8 million fully offset higher raw material and energy costs of $20.2 million. Operations and other costs were favorable by $1.4 million mainly driven by higher production to support the strong demand in North America and the reduction of incentive accruals. The impact of currency and related hedging negatively impacted earnings by $2.6 million due to a weakening Euro.

Composite Fibers

Composite Fibers’ net sales decreased $9.8 million or 7.1% in the third quarter of 2022, compared to the year-ago quarter. Higher selling prices of $22.7 million were more than offset by lower shipments of 23.8% and unfavorable currency translation of $16.7 million. Wallcover shipments were 54% below prior year from continued lower shipments to customers in Russia and Ukraine due to ongoing conflict in the region, including sanctions prohibiting the sale of certain wallcover into Russia.

Composite Fibers had operating income for the third quarter of $6.6 million compared with $5.8 million operating income in the third quarter of 2021. Higher selling prices and energy surcharges of $22.7 million fell $1.6 million short of fully recovering continued inflation in energy, raw material, and freight of $24.3 million. Lower shipments negatively impacted income by $2.7 million. Market-related downtime, primarily in our German facilities, was more than offset by lower depreciation, lower overall spending, reduction in incentive accruals and lower energy consumption, positively impacting results by a net $1.8 million. The impact of currency and related hedging positively impacted earnings by $3.3 million.


Spunlace had an operating loss of $4.7 million in the third quarter compared with a loss of $1.8 million in the second quarter of 2022. Shipments for the third quarter were approximately 9% lower compared to second quarter due to labor shortages in U.S. sites impacting production combined with lower shipments from European sites related to weaker demand, which together unfavorably impacted results by $2.7 million. Higher raw material and energy costs unfavorably impacted earnings by $7.0 million while higher selling prices and energy surcharges improved earnings by $2.9 million. Operations, foreign exchange and other costs were favorable $4.0 million mainly driven by lower energy consumption due to lower overall production rates, personnel related costs, including reductions in incentive accruals, and progress with our integration cost reduction efforts.

Other Financial Information

The amount of operating expense not allocated to a reporting segment in the Segment Financial Information totaled $52.6 million in the third quarter of 2022 compared with $6.0 million in the same period a year ago. Excluding the items identified to present “adjusted earnings,” unallocated expenses for the third quarter of 2022 increased $1.5 million compared to the third quarter of 2021.

In the third quarter of 2022, our pre-tax income from continuing operations totaled $44.3 million and we recorded an income tax provision of $4.9 million. On adjusted pre-tax income of $2.0 million, the income tax expense was $6.3 million in the third quarter of 2022, which primarily related to the tax provision for foreign jurisdictions, reserves for uncertain tax positions, and valuation allowances for domestic and foreign jurisdiction losses for which no tax benefit could be recognized. The comparable amounts in the same quarter of 2021 were adjusted pre-tax income of $12.9 million and income tax expense of $3.4 million, respectively.

Balance Sheet and Other Information

Cash and cash equivalents totaled $95.3 million as of September 30, 2022, and net debt was $723.5 million compared with $648.9 million at the end of 2021. Net leverage, as calculated in accordance with the financial covenants of our bank credit agreement, was in compliance and increased to 5.7 times at September 30, 2022, versus 3.8 times at December 31, 2021.

Capital expenditures during the first nine months of 2022 and 2021, totaled $30.1 million and $18.5 million, respectively. Adjusted free cash flow for the first nine months of 2022 was a use of $88.1 million compared with an inflow of $30.4 million in the same period of 2021. (Refer to the calculation of this measure provided in the tables at the end of this release).

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