GLT (NYSE: GLT) Investor Meetings December 2011

Transcription

1 GLT (NYSE: GLT) Investor Meetings December 2011

2 Agenda GLT Value Drivers Business Overview Strategic Direction Financial Summary Appendix 2

3 Forward Looking Statements Any statements included in this document, 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 These statements are based on management s current expectations and are subject to numerous risks, uncertainties and other unpredictable or uncontrollable factors, which may cause actual results or performance to differ materially from the Company s expectations. Various risks and factors that could cause future results to differ materially from those expressed in the forward-looking statements include, but are not limited to: changes in industry, business, market, political and economic conditions in the U.S. and other countries in which Glatfelter does business, demand for or pricing of its products, changes in tax legislation, governmental laws, regulations and policies, initiatives of regulatory authorities, acquisition integration risks, technological changes and innovations, market growth rates, cost reduction initiatives, and other factors. In light of these risks, uncertainties and other factors, the forward-looking events discussed in this document 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 document 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 document. More information about these factors is contained in Glatfelter s filings with the U.S. Securities and Exchange Commission, which are available at 3

4 Glatfelter Value Drivers Sustained Revenue Growth Leading positions in global growth markets Tea and Coffee markets growing at 5% Feminine Hygiene market growing at 6% Innovation leaders in key markets drives revenue growth opportunities Expect to supplement with acquisition growth Expanding Margins Driving cost reduction and productivity improvements Leveraging leading positions in niche segments Strong cash flow and financial strength to fund future growth Expect strong 2011 cash flow Instituted $50 million share repurchase program Timberland holdings of 32,000 acres Strong balance sheet to fund growth opportunities 4

5 Agenda GLT Value Drivers Business Overview Strategic Direction Financial Summary Appendix 5

6 Increasing Exposure to Growth Markets 2009 Net Sales: $1,184 million TTM 9/30/11 Net Sales: $1,587 million Composite Fibers $392 Specialty Papers $792 Advanced Airlaid Materials $248 Composite Fibers $468 Specialty Papers $ Adj. EBITDA: $126.2 million *includes corp. unallocated of ($12.9) TTM 9/30/11 Adj. EBITDA: $158.8 million *includes corp. unallocated of ($16.4) Composite Fibers $45.7 Specialty Papers $93.4 Composite Fibers $64.6 Advanced Airlaid Materials $19.2 Specialty Papers $91.5 Glatfelter has significantly increased its exposure to growth markets with approximately 50% of revenue and EBITDA now coming from growth markets. 6

7 Leading Positions in Growing Niche Markets Specialty Papers Composite Fibers Advanced Airlaid Materials Postal Applications #1 Playing Cards #1 Trade Book Publishing #1 Greeting Cards #2 Carbonless Products #2 Tea Bags & Coffee Filters #1 Composite Laminates #1 Metallized Products #2 Feminine Hygiene #1 Adult Incontinence #1 Food Pads #2 Specialty Wipes #2 Glatfelter has leading market share positions in its key product lines. 7

8 Agenda GLT Value Drivers Business Overview Strategic Direction Financial Summary Appendix 8

9 Strategic Growth Drivers Globalization Leading positions in growing markets Tea and Coffee and Fem. Hy. growing 5%-6% Expand service with global customers Expand into adjacent markets and new geographies Continuous Improvement Aggressively manage costs Create incremental capacity Driver of operating income growth Target 1% of revenue as annual financial benefit Specialization & Innovation Innovation leader in key markets Well-established new product development process Over 50% of revenue from new products for 7 consecutive years Key differentiator for all businesses Financial Discipline Improved cash flow profile Strong Balance Sheet Disciplined capital allocations Liquidity = Options 9

10 Agenda GLT Value Drivers Concert Acquisition Strategic Direction Financial Summary Appendix 10

11 Specialty Papers Specialty Papers volumes outperformed the broader uncoated free-sheet market for the 7 th consecutive year. 11

12 Specialty Papers Business Unit Key Product Sales Mix Operating Income & EBITDA Margin Envelope & Converting, 19% Engineered Products, 18% Book Publishing, 20% Carbonless & Forms, 43% 12.1% 7.5% $19.0 $ % $ % $ % 11.1% 10.5% $55.9 $58.4 $56.0 Year-Over-Year Change in Shipments 2.0% (5.5%) 7.0% (5.0%) 4.0% 1.6% 2.5% 0.0% (5.0%) (-8.0%) (0.7%) (16.0%) 3.5% 2.6% (-2.3%) (-3.7%) YTD UFS Market Demand for N.A. Glatfelter Shipments (adjusted for acquisitions) TTM Operating Income EBITDA % 9/30/11 Strong operating income and cash flow Intensive focus on new products Superior customer service Aggressive cost control Asset flexibility Outperforming the broader market 12

13 Composite Fibers 2010 was a breakout year for Composite Fibers, which increased operating profit by 50% over 2009 results. 13

14 Composite Fibers Business Unit Technical Specialties 9% Composite Laminates 12% Key Product Sales Mix Metallized 21% Food & Beverage 58% 47,669 $198.1 Revenue & Shipment Trends 85,559 90,350 93,197 80,064 72,855 68,148 $468.4 $430.0 $392.1 $419.2 $346.0 $292.8 $10.7 Operating Income & EBITDA Margin 12.9% 11.9% $ % 11.8% 11.6% $25.9 $25.0 $ % $ % $ TTM 9/30/11 Operating Income EBITDA % TTM 9/30/11 Net Sales Tons Sold Shipments increased 13% in 2010 and 4% in 2011 Tea and coffee shipments up 8% in 10 and 14% in 11 EBITDA margins up 220 bps since 09 Growing global markets > 5% CI program increasing productivity and expanding margins Announced $50 million investment to expand capacity 14

15 Advanced Airlaid Materials Advanced Airlaid Materials grew shipments by 17% in 2010 and is well-positioned for meaningful growth. 15

16 Advanced Airlaid Materials Business Unit Home Care, 7.1% Adult Incontinence, 3.2% Key Product Sales Mix Food Pads, 4.2% Other, 4.0% Feminine Hygiene, 81.5% Operating Income / EBITDA Margin % Leader to Feminine Hygiene market Shipments grew 17% in 2010 and 9% in 2011 Feminine Hygiene and Adult Incontinence markets growing 6% - 7% per year Developing next generation products with key market leaders Profit improvement initiatives are expanding margins $7.6 million converting investment (festooner) provides margin expansion opportunity Start-up in Q

17 Consolidated Financials Glatfelter ended 2010 and entered 2011 financially strong and well-positioned for continued growth. 17

18 Financial Highlights Net Sales Adj. EBITDA / Margin % ($ in millions) ($ in millions) 11.5% 10.7% 10.7% 10.0% 9.0% 9.7% 9.9% $66 $88 $112 $125 $126 $151 $ TTM 9/30/11 Adj. EBITDA Margin % Strategic acquisitions, organic growth and Continuous Improvement driving EBITDA growth. 18

19 Solid EPS Performance Net Pension went from income of $16m ($0.22/share) in 08 to an expense of $7.0m (-$0.09/ share) in 09. Effective strategic execution has driven long-term earnings growth. 19

20 Pension Expense and Funded Status (in millions) Service and interest costs $31.4 $32.0 $33.4 $34.1 Expected return on plan assets (50.1) (39.8) (40.3) (41.8) Amortization of prior service and actuarial costs One-time settlement charges Pension (Income) / Expense $(16.1) $7.0 $9.2 $10.1 Funded status $14.3 $79.6 $92.1 N/A Cash contributions* $0 $0 $0 $0 * Qualified plans only Qualified plans are fully funded with no cash contribution expected for the foreseeable future. 20

21 Substantial Improvement in Free Cash Flow avg. FCF of $78 million, excluding AFM/CBC credits avg. FCF of $2 million $137.6 $29.7 $131.5 $54.9 $71.4 $67.9 $107.9 $17.8 $21.0 $11.8 $1.0 $76.6 $ TTM 9/30/11 ($20.0) ($72.9) Reflects costs related to the Chillicothe and Lydney acquisitions, and the Neenah facility shutdown Free Cash Flow Exc. AFM/CBC Free Cash Flow from AFM/CBC Glatfelter s business transformation has resulted in a step-change improvement in free cash flow generation. 21

22 Strong Balance Sheet (in millions) 31-Dec Dec Dec Sep-11 Cash $32.2 $135.4 $95.8 $98.3 Total Debt $313.3 $254.6 $333.0 $332.7 Collateralized Debt ($70.7) ($36.7) ($36.7) ($36.7) Net Debt $210.4 $82.5 $200.5 $197.8 Shareholders Equity $342.7 $510.7 $552.4 $558.6 TTM Adjusted EBITDA (exc. Pension Inc.) $125.7 $126.2 $150.9 $158.8 Leverage 1.7x 0.7x 1.3x 1.2x Notes: The above calculation is not intended to be used for purposes of calculating debt covenant compliance. The sum of individual amounts set forth above may not agree to the column totals due to rounding. Strong balance sheet provides financial flexibility to support growth investments. 22

23 Glatfelter Value Drivers Sustained Revenue Growth Leading positions in global growth markets Tea and Coffee markets growing at 5% Feminine Hygiene market growing at 6% Innovation leaders in key markets drives revenue growth opportunities Expect to supplement with acquisition growth Expanding Margins Driving cost reduction and productivity improvements Leveraging leading positions in niche segments Strong cash flow and financial strength to fund future growth Expect strong 2011 cash flow Instituted $50 million share repurchase program Timberland holdings of 32,000 acres Strong balance sheet to fund growth opportunities 23

24 Agenda GLT Value Drivers Concert Acquisition Strategic Direction Financial Summary Appendix 24

25 Flexible Operating Platforms, Strong Global Reach Lydney, UK Gatineau, Quebec Caerphilly, UK Scaër, France Fremont, OH York, PA Chillicothe, OH Spring Grove, PA Atlanta, GA Moscow, Russia Falkenhagen, Germany Gernsbach, Germany Suzhou, China Hong Kong, China Corporate Headquarters Specialty Papers Composite Fibers Advanced Airlaid Materials Sales / Distribution Offices Glatfelter end-markets Lanao del Norte, Philippines 2010 revenue breakdown North America 65% $1.0 billion Europe / ROW 35% $0.5 billion Total 100% $1.5 billion Glatfelter s strong global production platform in core geographies is enhanced by key sales and distribution operations. 25

26 Reconciliation of Non-GAAP Adjusted Earnings Per Share and Net Debt Sep'11 TTM Net income (loss) $0.87 ($0.27) $1.40 $1.27 $2.70 $1.17 $1.04 Alternative fuel mixture credits / cellulosic biofuel (2.09) (0.50) - Gains from timberlands sales and other asset sales (0.25) (0.20) (0.97) (0.24) - (0.02) (0.07) Insurance recoveries (0.29) Shutdown, restructuring charges and asset writedowns (0.01) Acquisition and integration costs Foreign currency hedge on acquisition price 0.04 Debt redemption costs 0.04 Ecusta related reserves Fox River reserve 0.35 Adjusted earnings $0.35 $0.55 $0.81 $1.04 $0.64 $0.88 $1.00 Pension Impact on Adjusted EPS (0.23) (0.24) (0.18) (0.22) Adjusted earnings excluding pension $0.12 $0.31 $0.63 $0.82 $0.74 $1.00 $1.14 ($ in thousands) Calculation of net debt excluding collateralized debt: Dec' 07 Dec '08 Dec '09 Dec '10 Sep '11 Short term debt $1,136 $5,866 $3,888 $798 $0 Long term debt $312,049 $307,419 $250,695 $332,224 $332,741 Total $313,185 $313,285 $254,583 $333,022 $332,741 (-) Cash ($29,833) ($32,234) ($135,420) ($95,788) ($98,251) Total debt less cash $283,352 $281,051 $119,163 $237,234 $234,490 (-) Collateralized debt ($34,000) ($70,695) ($36,695) ($36,695) ($36,695) Net debt excluding collateralized debt $249,352 $210,356 $82,468 $200,539 $197,795 Note: The sum of individual per share amounts set forth above may not agree to adjusted income per share due to rounding. 26

27 Reconciliation of Non-GAAP Adjusted EBITDA, Excluding Pension In millions /30/11 TTM Net income $ 38.6 $ (12.2) $ 63.5 $ 57.9 $ $ 54.4 $ 48.2 Interest expense, net Income tax provision (benefit) 21.5 (10.0) (20.9) 5.9 Depreciation, depletion and amortization EBITDA Net pension (income) expense (16.5) (17.0) (12.9) (16.1) (Reversals of) shutdown and restructuring charges (0.9) Gain on disposition of aircraft, timberland sales and transaction related costs (20.3) (15.7) (79.0) (18.6) (0.5) (0.4) (3.8) Insurance recoveries (20.2) (0.2) Cellulosic bio-fuel and alternative fuel mixture credits (105.5) Charge for environmental remediation Acquisition and integration costs Write-off of Concert Indemnification Receivable Foreign currency hedge on acquisition price Debt redemption premium Adjusted EBITDA, excluding pension $ 66.4 $ 88.4 $ $ $ $ $ Note: The sum of individual line items set forth above may not agree to adjusted EBITDA due to rounding. 27

28 28