EX-99.1 2 glt-ex991_6.htm PRESS RELEASE ISSUED FEBRUARY 7, 2017, TO REPORT RESULTS OF OPERATIONS FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2017, FILED HEREWITH. glt-ex991_6.htm

 

 

Exhibit 99.1

 

 

 

 

 

NEWS RELEASE

 

Corporate Headquarters

 

96 South George Street

 

York, Pennsylvania 17401 U.S.A.

 

www.glatfelter.com

 

 

For Immediate Release

Contacts:

 

 

Investors:

Media:

 

John P. Jacunski

William T. Yanavitch

 

(717) 225-2794

(717) 225-2747

 

 

GLATFELTER REPORTS FULL YEAR AND FOURTH QUARTER 2016 EARNINGS

 

YORK, Pennsylvania – February 7, 2017 – Glatfelter (NYSE: GLT) today reported net income of $21.6 million, or $0.49 per diluted share, for the year ended December 31, 2016 compared with $64.6 million, or $1.47 per diluted share, in the year ended December 31, 2015.  Adjusted earnings in 2016, totaled $60.7 million, or $1.38 per diluted share compared with $58.9 million or $1.34 per diluted share, in 2015.

 

For the fourth quarter of 2016, the Company reported a loss of $16.2 million, or $0.37 per share, including a $25.1 million, after-tax, charge for the Fox River environmental matter.  This compared to net income of $34.3 million, or $0.78 per share in the fourth quarter of 2015.  Adjusted earnings for the fourth quarter of 2016 were $17.6 million, or $0.40 per share compared with $22.9 million, or $0.52 per share, for the same period a year ago.  Adjusted earnings is a non-GAAP measure for which a reconciliation is provided within this release.

 

Consolidated net sales for the year ended December 31, 2016 totaled $1,604.8 million compared with $1,661.1 million in 2015.  Net sales totaled $390.9 million and $412.9 million in the fourth quarters of 2016 and 2015, respectively.  Lower selling prices unfavorably impacted the quarter-over-quarter comparison by $6.4 million and shipping volumes declined 5.2%.  Foreign currency translation unfavorably impacted sales by $4.8 million.

 

“As we expected, this quarter’s results reflect the challenging market conditions we faced throughout much of the year,” said Dante C. Parrini, Chairman and Chief Executive Officer.  “Our Composite Fibers’ and Specialty Papers’ results were affected by excess capacity in certain key markets and its impact on product pricing.  In addition, both business units were impacted by machine downtime due to lower shipments and to reduce inventory levels.  On a positive note, our continuous improvement initiatives are generating significant cost savings allowing us to offset much of the market impacts and our Advanced Airlaid Materials business continued to deliver solid results with record production levels and growth across nearly every product segment.”

 

Mr. Parrini continued, “While Glatfelter operated in a slow-growth environment during most of 2016, adjusted earnings for the year increased 3% compared with last year due to substantial growth in our Airlaid business and our focus on operational excellence and continuous improvement initiatives.  We remain committed to our long-term strategy to grow our engineered material businesses.  Despite the more competitive markets in Composite Fibers, we expect to see volume growth in 2017, and we are implementing a cost optimization initiative that is expected to deliver approximately $10 million of annual savings.  We anticipate continued growth in our Advanced Airlaid Materials business and we are on track with plans to complete the new Fort Smith, Arkansas facility later this year.  At the same time, we remain committed to identifying growth opportunities and driving efficiencies throughout our business.”

 

 

 

 

 

- more -

Glatfelter Reports 2016 Full Year and Fourth Quarter Results

page 2

 

The following table sets forth a reconciliation of net income (loss) on a GAAP basis to adjusted earnings, a non-GAAP measure:

 

 

Three months ended December 31

 

 

 

2016

 

 

2015

 

In thousands, except per share

 

Amount

 

 

Diluted EPS

 

 

Amount

 

 

Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(16,180

)

 

$

(0.37

)

 

$

34,298

 

 

$

0.78

 

Adjustments (pre-tax)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fox River environmental matter

 

 

40,000

 

 

 

 

 

 

 

—

 

 

 

 

 

Pension settlement charge

 

 

7,306

 

 

 

 

 

 

 

—

 

 

 

 

 

Specialty Papers' environmental compliance

 

 

1,703

 

 

 

 

 

 

 

—

 

 

 

 

 

Airlaid capacity expansion costs

 

 

1,353

 

 

 

 

 

 

 

50

 

 

 

 

 

Cost optimization actions

 

 

3,446

 

 

 

 

 

 

 

212

 

 

 

 

 

Timberland sales and related costs

 

 

—

 

 

 

 

 

 

 

(18,162

)

 

 

 

 

Total adjustments (pre-tax)

 

 

53,808

 

 

 

 

 

 

 

(17,900

)

 

 

 

 

Income taxes (1)

 

 

(19,983

)

 

 

 

 

 

 

6,503

 

 

 

 

 

Total after-tax adjustments

 

 

33,825

 

 

$

0.78

 

 

 

(11,397

)

 

$

(0.26

)

Adjusted earnings

 

$

17,645

 

 

$

0.40

 

 

$

22,901

 

 

$

0.52

 

 

 

(1)

Tax effect on adjustments calculated based on the tax rate of the jurisdiction in which each adjustment originated.

The sum of individual per share amounts set forth above may not agree to adjusted earnings per share due to rounding.

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

 

 

Fourth Quarter Business Unit Results

 

Composite Fibers

 

 

Three months ended December 31

 

Dollars in thousands

 

2016

 

 

2015

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons shipped

 

 

35,110

 

 

 

37,585

 

 

 

(2,475

)

 

 

(6.6

)%

Net sales

 

$

125,349

 

 

$

131,821

 

 

$

(6,472

)

 

 

(4.9

)%

Operating income

 

 

13,784

 

 

 

15,883

 

 

 

(2,099

)

 

 

(13.2

)%

Operating margin

 

 

11.0

%

 

 

12.0

%

 

 

 

 

 

 

 

 

 

Composite Fibers’ net sales decreased $6.5 million, or 4.9%, primarily due to a 6.6% decline in shipping volumes and $0.9 million from lower selling prices.    

 

Composite Fibers’ fourth quarter of 2016 operating income totaled $13.8 million, a decrease of $2.1 million compared to the year-ago period.  The effect of lower selling prices and shipping volumes were nearly offset by lower raw material and energy prices.  In addition, operating results were unfavorably impacted by $2.5 million due to the costs of downtime to reduce inventory levels and better match market demand.  These costs were partially offset by continuous improvement and cost control actions.  Foreign currency translation adversely impacted results by $0.9 million reflecting the less favorable impact from hedging activities in 2016 compared to 2015.

 

 

Advanced Airlaid Materials

 

 

Three months ended December 31

 

Dollars in thousands

 

2016

 

 

2015

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons shipped

 

 

24,932

 

 

 

24,537

 

 

 

395

 

 

 

1.6

%

Net sales

 

$

60,852

 

 

$

61,603

 

 

$

(751

)

 

 

(1.2

)%

Operating income

 

 

6,594

 

 

 

6,029

 

 

 

565

 

 

 

9.4

%

Operating margin

 

 

10.8

%

 

 

9.8

%

 

 

 

 

 

 

 

 

 

- more -

Glatfelter Reports 2016 Full Year and Fourth Quarter Results

page 3

 

Advanced Airlaid Materials’ net sales decreased $0.8 million in the year-over-year comparison primarily due to $0.7 million of lower selling prices reflecting the impact of cost pass-through arrangements.  Shipping volumes increased 1.6%, or 3.3% on a square-meter basis, primarily due to continued growth of wipes and table top products.  

 

Operating income for the fourth quarter of 2016, totaled $6.6 million, or 9.4% higher than the comparable period a year ago.  Results benefited by $0.7 million from improved operations compared to the prior year.  Lower raw material and energy prices improved operating profit by $1.0 million and were offset by a reduction in selling prices related to cost pass-through arrangements and by unfavorable foreign currency translation.

 

 

Specialty Papers

 

 

 

Three months ended December 31

 

Dollars in thousands

 

2016

 

 

2015

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tons shipped

 

 

196,573

 

 

 

208,583

 

 

 

(12,010

)

 

 

(5.8

)%

Net sales

 

$

204,665

 

 

$

219,427

 

 

$

(14,762

)

 

 

(6.7

)%

Energy and related sales, net

 

 

2,128

 

 

 

1,727

 

 

 

401

 

 

 

23.2

%

Operating income

 

 

13,260

 

 

 

15,921

 

 

 

(2,661

)

 

 

(16.7

)%

Operating margin

 

 

6.5

%

 

 

7.3

%

 

 

 

 

 

 

 

 

 

Specialty Papers’ net sales decreased $14.8 million, or 6.7%, due to a 5.8% decrease in shipping volumes and a $4.8 million impact from lower selling prices.

 

Specialty Papers’ operating income totaled $13.3 million in the fourth quarter of 2016, or a decrease of $2.7 million compared with the same period a year ago.  The adverse impact of lower selling prices was partially offset by $2.1 million of lower raw material and energy prices.  Machine downtime reduced operating profit by $4.0 million and was offset by productivity and other cost improvements.

 

 

Other Financial Information

 

The Company recorded a $40.0 million charge in the fourth quarter of 2016, to increase its reserve for the Fox River environmental matter.  The increase in the reserve reflects management’s current assessment of recent developments in this matter as a direct result of a proposed consent decree between other defendants and the United States and the impact this agreement may have on the overall resolution of the Company’s liability. A more complete discussion of these developments and the Fox River matter is included in the Company’s Current Report on Form 8-K filed on January 19, 2017 and in its 2016 third quarter report on Form 10-Q.

 

During the fourth quarter of 2016, the Company recorded a pension settlement charge of $7.3 million and settled $24.2 million of benefits in connection with a voluntary program offered to deferred vested terminated participants. This charge is excluded from earnings in the determination of adjusted earnings. Excluding the charge, pension expense totaled $1.4 million and $2.5 million in the fourth quarter of 2016 and 2015, respectively.  Because the Company’s qualified plan remains overfunded, a cash contribution is not expected for the foreseeable future.  

 

The Company recorded an income tax benefit of $17.2 million on a pre-tax loss of $33.4 million. On adjusted earnings, the effective tax rate was 13.6 % in the fourth quarter of 2016 compared to 12.8% in the same quarter a year ago.  The fourth quarter 2016 tax rate benefited by $1.9 million primarily due to the release of reserves in connection with the completion of tax audits, statute closures and changes in statutory tax rates.

 

 

- more -

Glatfelter Reports 2016 Full Year and Fourth Quarter Results

page 4

 

2016 Full Year Results

 

The following table sets forth a reconciliation of results determined on a GAAP basis to adjusted earnings:

 

 

Year ended December 31

 

 

 

2016

 

 

2015

 

In thousands, except per share

 

Amount

 

 

Diluted EPS

 

 

Amount

 

 

Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

21,554

 

 

$

0.49

 

 

$

64,575

 

 

$

1.47

 

Adjustments (pre-tax)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fox River environmental matter

 

 

40,000

 

 

 

 

 

 

 

10,000

 

 

 

 

 

Pension settlement charge

 

 

7,306

 

 

 

 

 

 

 

—

 

 

 

 

 

Specialty Papers' environmental compliance

 

 

8,348

 

 

 

 

 

 

 

—

 

 

 

 

 

Airlaid capacity expansion costs

 

 

2,661

 

 

 

 

 

 

 

50

 

 

 

 

 

Cost optimization actions

 

 

3,534

 

 

 

 

 

 

 

2,461

 

 

 

 

 

Asset impairment charge

 

 

—

 

 

 

 

 

 

 

1,201

 

 

 

 

 

Timberland sales and related costs

 

 

—

 

 

 

 

 

 

 

(20,867

)

 

 

 

 

Acquisition and integration related costs

 

 

—

 

 

 

 

 

 

 

178

 

 

 

 

 

Total adjustments (pre-tax)

 

 

61,849

 

 

 

 

 

 

 

(6,977

)

 

 

 

 

Income taxes (1) (2)

 

 

(22,719

)

 

 

 

 

 

 

1,328

 

 

 

 

 

Total after-tax adjustments

 

 

39,130

 

 

 

0.90

 

 

 

(5,649

)

 

 

(0.13

)

Adjusted earnings

 

$

60,684

 

 

$

1.38

 

 

$

58,926

 

 

$

1.34

 

 

 

(1)

Tax effect for adjustments calculated based on the tax rate of the jurisdiction in which each adjustment originated.

 

(2)

Includes release of $1.4 million of tax reserves on timberland sales in 2015.

The sum of individual per share amounts set forth above may not agree to adjusted earnings per share due to rounding.

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

 

 

Balance Sheet and Other Information

 

Cash and cash equivalents totaled $55.4 million as of December 31, 2016, and net debt was $317.2 million compared with $255.4 million at the end of 2015.  (Refer to the calculation of this measure provided in the tables at the end of this release.)  

 

Capital expenditures during 2016 and 2015 are summarized below:

 

Capital Expenditures

 

Three months ended

December 31

 

 

Year ended

December 31

 

In thousands

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialty Papers' environmental compliance projects

 

$

16,926

 

 

$

7,885

 

 

$

69,470

 

 

$

26,873

 

Airlaid capacity expansion

 

 

9,614

 

 

 

67

 

 

 

30,681

 

 

 

109

 

Other capital expenditures

 

 

16,670

 

 

 

17,657

 

 

 

60,007

 

 

 

72,907

 

Total capital expenditures

 

$

43,210

 

 

$

25,609

 

 

$

160,158

 

 

$

99,889

 

 

 

Adjusted free cash flow for the year ended December 31, 2016, was $51.8 million compared with $54.0 million in 2015.  (Refer to the calculation of these measures provided in this release.)  

 

 

Outlook

 

Composite Fibers’ shipping volumes in the first quarter of 2017 are expected be approximately 5% higher than the fourth quarter with this benefit being offset by lower selling prices.  Raw material prices are expected to increase slightly primarily due to higher fiber prices.

 

Advanced Airlaid Materials’ shipping volumes are expected to be slightly higher than the 2016 fourth quarter. Selling prices and raw material and energy prices are expected to be in line with the fourth quarter.

- more -

Glatfelter Reports 2016 Full Year and Fourth Quarter Results

page 5

 

 

Specialty Papers’ shipping volumes in the first quarter are expected to be slightly higher than the fourth quarter of 2016.  Selling prices are expected to decline slightly and raw material and energy prices are expected to be stable.  However, overall energy costs are expected to increase by approximately $4 million due to seasonality and the recently completed boiler conversions from coal to natural gas. These higher costs are expected to be offset by less market downtime in the first quarter than in the fourth quarter of 2016.  Depreciation and amortization expense is expected to increase by approximately $1 million due to the startup of the environmental compliance assets.

 

Consolidated capital expenditures are expected to total between $125 million and $140 million for 2017.

 

Depreciation and amortization expense is expected to be approximately $72 million for 2017 compared with $65.8 million in 2016.

 

Pension expense is expected to be $5.3 million for 2017 compared with $5.5 million, excluding the pension settlement charge, in 2016.

 

The effective tax rate on adjusted earnings is expected to be approximately 24% in 2017 compared with 16.5% for 2016.

 

 

Conference Call

 

As previously announced, the Company will hold a conference call at 11:00 a.m. (Eastern) today to discuss its fourth quarter results.  The Company’s earnings release and an accompanying financial supplement, which includes significant financial information to be discussed on the conference call, will be available on Glatfelter’s Investor Relations website at the address indicated below.  Information related to the conference call is as follows:

 

What:

Glatfelter’s 4th Quarter 2016 Earnings Release Conference Call

 

 

When:

Tuesday, February 7, 2017, 11:00 a.m. (ET)

 

 

Number:

US dial 888.335.5539

 

 

 

International dial 973.582.2857

 

 

Conference ID:

53778626

 

 

Webcast:

http://www.glatfelter.com/about_us/investor_relations/default.aspx

 

 

Rebroadcast Dates:

February 7, 2017, 2:00 p.m. through February 21, 2017, 11:59 p.m.

 

 

Rebroadcast Number:

Within US dial 855.859.2056

 

 

 

International dial 404.537.3406

 

 

Conference ID:

53778626

 

Interested persons who wish to hear the live webcast should go to the website prior to the starting time to register, download and install any necessary audio software.

 

 


- more -

Glatfelter Reports 2016 Full Year and Fourth Quarter Results

page 6

 

Caution Concerning Forward-Looking Statements  

 

Any statements included in this press release which pertain to future financial and business matters are “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995.  The Company uses words such as “anticipates”, “believes”, “expects”, “future”, “intends”, “plans”, and similar expressions to identify forward-looking statements.  Any such statements are based on the Company’s current expectations and are subject to numerous risks, uncertainties and other unpredictable or uncontrollable factors that could cause future results to differ materially from those expressed in the forward-looking statements including, but not limited to: changes in industry, business, market, political and economic conditions in the U.S. and other countries in which the Company does business, demand for or pricing of its products, changes in the cost to construct the new airlaid facility and the availability and costs of a qualified workforce, changes in tax legislation, governmental laws, regulations and policies, initiatives of regulatory authorities, technological changes and innovations, and market growth rates.  In light of these risks, uncertainties and other factors, the forward-looking matters discussed in this press release may not occur and readers are cautioned not to place undue reliance on these forward-looking statements.  The forward-looking statements speak only as of the date of this press release and Glatfelter undertakes no obligation, and does not intend, to update these forward-looking statements to reflect events or circumstances occurring after the date of this press release.  More information about these factors is contained in Glatfelter’s filings with the U.S. Securities and Exchange Commission, which are available at www.glatfelter.com.

 

 

About Glatfelter

 

Glatfelter is a global supplier of specialty papers and fiber-based engineered materials, offering innovation, world-class service and over a century and a half of technical expertise. Headquartered in York, PA, the company employs over 4,300 people and serves customers in over 100 countries. U.S. operations include facilities in Pennsylvania and Ohio. International operations include facilities in Canada, Germany, France, the United Kingdom and the Philippines, and sales and distribution offices in China and Russia. Glatfelter’s sales approximate $1.6 billion annually and its common stock is traded on the New York Stock Exchange under the ticker symbol GLT. Additional information may be found at www.glatfelter.com.

 

 

 

- more -

 

page 7

 

P. H. Glatfelter Company and subsidiaries

Consolidated Statements of Income

(unaudited)

 

 

Three months ended

December 31

 

 

Year ended

December 31

 

In thousands, except per share

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Net sales

 

$

390,865

 

 

$

412,852

 

 

$

1,604,797

 

 

$

1,661,084

 

Energy and related sales, net

 

 

2,128

 

 

 

1,728

 

 

 

6,141

 

 

 

5,664

 

Total revenues

 

 

392,993

 

 

 

414,580

 

 

 

1,610,938

 

 

 

1,666,748

 

Costs of products sold

 

 

336,126

 

 

 

356,464

 

 

 

1,392,335

 

 

 

1,463,783

 

Gross profit

 

 

56,867

 

 

 

58,116

 

 

 

218,603

 

 

 

202,965

 

Selling, general and administrative expenses

 

 

85,898

 

 

 

27,505

 

 

 

190,694

 

 

 

127,706

 

Losses (gains) on dispositions of plant, equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   and timberlands, net

 

 

185

 

 

 

(18,225

)

 

 

216

 

 

 

(21,113

)

Operating income (loss)

 

 

(29,216

)

 

 

48,836

 

 

 

27,693

 

 

 

96,372

 

Non-operating income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(3,858

)

 

 

(4,287

)

 

 

(15,822

)

 

 

(17,464

)

Interest income

 

 

2

 

 

 

51

 

 

 

206

 

 

 

283

 

Other, net

 

 

(315

)

 

 

(423

)

 

 

(1,271

)

 

 

(615

)

Total other expense

 

 

(4,171

)

 

 

(4,659

)

 

 

(16,887

)

 

 

(17,796

)

Income (loss) before income taxes

 

 

(33,387

)

 

 

44,177

 

 

 

10,806

 

 

 

78,576

 

Income tax provision (benefit)

 

 

(17,207

)

 

 

9,879

 

 

 

(10,748

)

 

 

14,001

 

Net income (loss)

 

$

(16,180

)

 

$

34,298

 

 

$

21,554

 

 

$

64,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.37

)

 

$

0.79

 

 

$

0.49

 

 

$

1.49

 

Diluted

 

 

(0.37

)

 

 

0.78

 

 

 

0.49

 

 

 

1.47

 

Cash dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

per common share

 

$

0.125

 

 

$

0.12

 

 

$

0.50

 

 

$

0.48

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

43,577

 

 

 

43,499

 

 

 

43,558

 

 

 

43,397

 

Diluted

 

 

43,577

 

 

 

43,878

 

 

 

44,129

 

 

 

43,942

 

 

 

 

page 8

 

Business Unit Financial Information

(unaudited)

 

Three months ended December 31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dollars in millions

 

Composite Fibers

 

 

Advanced Airlaid Materials

 

 

Specialty Papers

 

 

Other and Unallocated

 

 

Total

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Net sales

 

$

125.3

 

 

$

131.8

 

 

$

60.9

 

 

$

61.6

 

 

$

204.7

 

 

$

219.4

 

 

$

-

 

 

$

-

 

 

$

390.9

 

 

$

412.9

 

Energy and related sales, net

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2.1

 

 

 

1.7

 

 

 

-

 

 

 

-

 

 

 

2.1

 

 

 

1.7

 

Total revenue

 

 

125.3

 

 

 

131.8

 

 

 

60.9

 

 

 

61.6

 

 

 

206.8

 

 

 

221.1

 

 

 

-

 

 

 

-

 

 

 

393.0

 

 

 

414.6

 

Costs of products sold

 

 

100.4

 

 

 

104.6

 

 

 

52.0

 

 

 

53.8

 

 

 

178.5

 

 

 

196.1

 

 

 

5.2

 

 

 

2.0

 

 

 

336.1

 

 

 

356.5

 

Gross profit (loss)

 

 

24.9

 

 

 

27.2

 

 

 

8.9

 

 

 

7.8

 

 

 

28.3

 

 

 

25.0

 

 

 

(5.2

)

 

 

(2.0

)

 

 

56.9

 

 

 

58.1

 

SG&A

 

 

11.1

 

 

 

11.3

 

 

 

2.3

 

 

 

1.8

 

 

 

15.0

 

 

 

9.1

 

 

 

57.5

 

 

 

5.4

 

 

 

85.9

 

 

 

27.5

 

Gains on dispositions of plant, equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   and timberlands, net

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0.2

 

 

 

(18.2

)

 

 

0.2

 

 

 

(18.2

)

Total operating income (loss)

 

 

13.8

 

 

 

15.9

 

 

 

6.6

 

 

 

6.0

 

 

 

13.3

 

 

 

15.9

 

 

 

(62.9

)

 

 

10.8

 

 

 

(29.2

)

 

 

48.8

 

Non operating expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4.2

)

 

 

(4.7

)

 

 

(4.2

)

 

 

(4.7

)

Income (loss) before income taxes

 

$

13.8

 

 

$

15.9

 

 

$

6.6

 

 

$

6.0

 

 

$

13.3

 

 

$

15.9

 

 

$

(67.1

)

 

$

6.1

 

 

$

(33.4

)

 

$

44.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplementary Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net tons sold (thousands)

 

 

35.1

 

 

 

37.6

 

 

 

24.9

 

 

 

24.5

 

 

 

196.6

 

 

 

208.6

 

 

 

-

 

 

 

-

 

 

 

256.6

 

 

 

270.7

 

Depreciation, depletion and amortization

 

$

6.7

 

 

$

6.1

 

 

$

1.9

 

 

$

2.4

 

 

$

6.6

 

 

$

6.7

 

 

$

0.9

 

 

$

0.6

 

 

$

16.1

 

 

$

15.8

 

Capital expenditures

 

 

5.1

 

 

 

9.5

 

 

 

11.7

 

 

 

3.2

 

 

 

21.6

 

 

 

12.5

 

 

 

4.8

 

 

 

0.4

 

 

 

43.2

 

 

 

25.6

 

 

 

Year ended December 31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dollars in millions

 

Composite Fibers

 

 

Advanced Airlaid Materials

 

 

Specialty Papers

 

 

Other and Unallocated

 

 

Total

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Net sales

 

$

517.0

 

 

$

541.5

 

 

$

244.3

 

 

$

244.6

 

 

$

843.6

 

 

$

875.0

 

 

$

-

 

 

$

-

 

 

$

1,604.8

 

 

$

1,661.1

 

Energy and related sales, net

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6.1

 

 

 

5.7

 

 

 

-

 

 

 

-

 

 

 

6.1

 

 

 

5.7

 

Total revenue

 

 

517.0

 

 

 

541.5

 

 

 

244.3

 

 

 

244.6

 

 

 

849.7

 

 

 

880.7

 

 

 

(0.1

)

 

 

-

 

 

 

1,610.9

 

 

 

1,666.7

 

Costs of products sold

 

 

416.4

 

 

 

434.4

 

 

 

209.5

 

 

 

215.7

 

 

 

752.6

 

 

 

804.5

 

 

 

13.8

 

 

 

9.2

 

 

 

1,392.3

 

 

 

1,463.8

 

Gross profit (loss)

 

 

100.6

 

 

 

107.1

 

 

 

34.8

 

 

 

28.9

 

 

 

97.1

 

 

 

76.2

 

 

 

(13.9

)

 

 

(9.2

)

 

 

218.6

 

 

 

203.0

 

SG&A

 

 

46.3

 

 

 

45.7

 

 

 

8.4

 

 

 

7.6

 

 

 

55.9

 

 

 

43.3

 

 

 

80.1

 

 

 

31.0

 

 

 

190.7

 

 

 

127.7

 

Gains on dispositions of plant, equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   and timberlands, net

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0.2

 

 

 

(21.1

)

 

 

0.2

 

 

 

(21.1

)

Total operating income (loss)

 

 

54.3

 

 

 

61.4

 

 

 

26.4

 

 

 

21.3

 

 

 

41.2

 

 

 

32.9

 

 

 

(94.2

)

 

 

(19.1

)

 

 

27.7

 

 

 

96.4

 

Non operating expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(16.9

)

 

 

(17.8

)

 

 

(16.9

)

 

 

(17.8

)

Income (loss) before income taxes

 

$

54.3

 

 

$

61.4

 

 

$

26.4

 

 

$

21.3

 

 

$

41.2

 

 

$

32.9

 

 

$

(111.1

)

 

$

(36.9

)

 

$

10.8

 

 

$

78.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplementary Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net tons sold (thousands)

 

 

151.8

 

 

 

153.8

 

 

 

99.0

 

 

 

96.0

 

 

 

794.3

 

 

 

802.2

 

 

 

-

 

 

 

-

 

 

 

1,045.1

 

 

 

1,051.9

 

Depreciation, depletion and amortization

 

$

27.8

 

 

$

26.2

 

 

$

9.0

 

 

$

8.8

 

 

$

26.3

 

 

$

26.0

 

 

$

2.7

 

 

$

2.2

 

 

$

65.8

 

 

$

63.2

 

Capital expenditures

 

 

18.8

 

 

 

26.8

 

 

 

36.8

 

 

 

7.8

 

 

 

99.0

 

 

 

63.5

 

 

 

5.6

 

 

 

1.8

 

 

 

160.2

 

 

 

99.9

 

 

The sum of individual amounts set forth above may not agree to the consolidated financial statements included herein due to rounding.

 

 

 

 

page 9

 

Selected Financial Information

(unaudited)

 

 

Year ended December 31

 

In thousands

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

Cash Flow Data

 

 

 

 

 

 

 

 

Cash provided (used) by:

 

 

 

 

 

 

 

 

Operating activities

 

$

116,110

 

 

$

133,743

 

Investing activities

 

 

(160,888

)

 

 

(77,254

)

Financing activities

 

 

(3,019

)

 

 

(48,016

)

 

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

65,826

 

 

 

63,236

 

Capital expenditures

 

 

160,158

 

 

 

99,889

 

 

 

December 31

 

 

December 31

 

 

 

2016

 

 

2015

 

Balance Sheet Data

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

55,444

 

 

$

105,304

 

Total assets

 

 

1,521,259

 

 

 

1,500,416

 

Total debt

 

 

372,608

 

 

 

360,662

 

Shareholders’ equity

 

 

653,826

 

 

 

663,247

 

 

The amount set forth for Total debt as of December 31, 2015, has been restated to retroactively adopt Accounting Standards Number 2015-03, Interest - Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs.

 

 

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

 

This press release includes a measure of earnings before the effects of certain specifically identified items, which is referred to as adjusted earnings, a non-GAAP measure.  The Company uses non-GAAP adjusted earnings to supplement the understanding of its consolidated financial statements presented in accordance with GAAP.  Non-GAAP adjusted earnings is meant to present the financial performance of the Company’s core operations, which consists of the production and sale of specialty papers, composite fibers papers and airlaid non-woven materials.  Management and the Company’s Board of Directors use non-GAAP adjusted earnings to evaluate the performance of the Company’s fundamental business in relation to prior periods.  For purposes of determining adjusted earnings, the following items are excluded:

 

 

•

Fox River environmental matter. This adjustment reflects charges incurred to increase our reserve for estimated costs related to government oversight, remediation of environmental contamination and long-term monitoring and maintenance at the Fox River site. These costs are irregular in timing and as such may not be indicative of our past or future performance.

 

 

•

Pension settlement charge. This adjustment reflects the one-time charge incurred during 2016 in connection with the settlement of certain pension liabilities as part of a voluntary offer to vested terminated participants. Our qualified pension plan is overfunded and this action did not require us to contribute any cash.

 

 

•

Specialty Papers environmental compliance. These adjustments reflect non-capitalized, one-time costs incurred by the business unit directly related to the compliance with the U.S. EPA Best Available Retrofit Technology rule and the Boiler Maximum Achievable Control Technology rule.  This adjustment includes costs incurred during the transition period in which the newly installed equipment was brought on-line.

 

 

•

Airlaid capacity expansion costs. These adjustments reflect non-capitalized, one-time costs incurred related to the start-up of a new airlaid production facility in Ft. Smith, Arkansas.

 

 

•

Cost optimization actions. This adjustment reflects charges incurred in connection with initiatives to optimize the cost structure of certain business units in response to changes in business conditions.  The costs are primarily related to headcount reduction efforts, asset write-offs and certain contract termination costs.

 

 

 

page 10

 

 

•

Asset impairment charges. This adjustment represents a non-cash charge required to adjust to its estimated fair value the carrying value of a trade name intangible asset recorded in connection with the 2013 Dresden acquisition. Charges of this nature are irregular in timing and as such may not be indicative of our past and future performance.

 

•

Timberland sales and related costs. These adjustments exclude gains from the sales of timberlands as these items are not considered to be part of our core business, ongoing results of operations or cash flows. These adjustments are irregular in timing and amount and may significantly benefit our operating performance. As such, these items may not be indicative of past and future performance of the Company and therefore are excluded for comparability purposes.

 

•

Acquisition and integration related costs. These adjustments include costs directly related to the consummation of the acquisition process and those related to integrating businesses previously acquired. These costs are irregular in timing and as such may not be indicative of our past and future performance.

 

Unlike net income determined in accordance with GAAP, non-GAAP adjusted earnings does not reflect all charges and gains recorded by the Company for the applicable period and, therefore, does not present a complete picture of the Company’s results of operations for the respective period.  However, non-GAAP adjusted earnings provide a measure of how the Company’s core operations are performing, which management believes is useful to investors because it allows comparison of such operations from period to period.  Non-GAAP adjusted earnings should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with GAAP.

 

 

Calculation of Adjusted Free Cash Flow

 

Three months ended

December 31

 

 

Year ended

December 31

 

In thousands

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash from operations

 

$

56,673

 

 

$

63,220

 

 

$

116,110

 

 

$

133,743

 

Less: Capital expenditures

 

 

(43,210

)

 

 

(25,609

)

 

 

(160,158

)

 

 

(99,889

)

     Add back: Airlaid capacity expansion

 

 

9,614

 

 

 

67

 

 

 

30,681

 

 

 

109

 

     Add back: Specialty Papers' environmental compliance projects

 

 

16,926

 

 

 

7,885

 

 

 

69,470

 

 

 

26,873

 

     Exclude: Cellulosic biofuel/Alternative fuel mixture credits

 

 

-

 

 

 

(2,751

)

 

 

(4,277

)

 

 

(6,816

)

Adjusted free cash flow

 

$

40,003

 

 

$

42,812

 

 

$

51,826

 

 

$

54,020

 

 

 

 

Net Debt

 

December 31

 

 

December 31

 

In thousands

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

8,961

 

 

$

7,366

 

Long term debt

 

 

363,647

 

 

 

353,296

 

Total

 

 

372,608

 

 

 

360,662

 

Less: Cash

 

 

(55,444

)

 

 

(105,304

)

Net Debt

 

$

317,164

 

 

$

255,358

 

 

The amounts set forth above as of December 31, 2015, have been restated to retroactively adopt Accounting Standards Number 2015-03, Interest - Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs.