Glatfelter Corporation (GLT) Bundle
Understanding Glatfelter Corporation (GLT) Revenue Streams
Understanding Glatfelter Corporation’s Revenue Streams
In the first nine months of 2024, the total net sales for Glatfelter Corporation were $988.8 million, compared to $1,065.1 million in the same period of 2023, marking a decrease of 7.2%.
Breakdown of Primary Revenue Sources
| Segment | 2024 Net Sales (in thousands) | 2023 Net Sales (in thousands) | Percentage Change |
|---|---|---|---|
| Airlaid Materials | $400,419 | $458,966 | -12.8% |
| Composite Fibers | $347,054 | $368,031 | -5.6% |
| Spunlace | $242,770 | $239,934 | +1.1% |
| Total | $988,800 | $1,065,134 | -7.2% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the first nine months of 2024 shows a decrease of 7.2% in total net sales. This decline is primarily attributed to the performance of the Airlaid Materials segment, which saw a net sales decrease of $58.5 million driven by lower selling prices and reduced shipments.
Contribution of Different Business Segments to Overall Revenue
As of September 30, 2024, the revenue contributions from different business segments were:
- Airlaid Materials: 40.5%
- Composite Fibers: 35.0%
- Spunlace: 24.5%
This distribution highlights the significant role that Airlaid Materials continues to play in the overall revenue structure, despite its decline in sales.
Analysis of Significant Changes in Revenue Streams
During the third quarter of 2024, net sales were reported at $332.1 million, a slight increase from $329.9 million in the same quarter of 2023, reflecting a growth of 0.7%. Notably, the Spunlace segment experienced a sales increase of $6.7 million primarily due to higher Sontara sales, while Airlaid Materials saw a decrease of $8.7 million largely due to lower selling prices.
The following table summarizes the net sales by segment for the third quarter of 2024:
| Segment | Q3 2024 Net Sales (in thousands) | Q3 2023 Net Sales (in thousands) |
|---|---|---|
| Airlaid Materials | $138,306 | $147,014 |
| Composite Fibers | $113,689 | $109,715 |
| Spunlace | $80,443 | $73,791 |
| Total | $332,101 | $329,921 |
In summary, the revenue analysis of Glatfelter Corporation reflects a challenging environment with substantial fluctuations in sales across its segments. The overall decline in net sales year-over-year emphasizes the need for strategic adjustments to enhance revenue performance moving forward.
A Deep Dive into Glatfelter Corporation (GLT) Profitability
Profitability Metrics
Analyzing the profitability of the company involves examining the gross profit, operating profit, and net profit margins to understand the financial health and operational efficiency.
Gross Profit, Operating Profit, and Net Profit Margins
For the third quarter of 2024, the financial results are as follows:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Sales | $332,101,000 | $329,921,000 |
| Gross Profit | $35,481,000 | $44,487,000 |
| Operating Income (Loss) | $2,971,000 | $2,653,000 |
| Net Loss | $(15,247,000) | $(19,863,000) |
| Loss per Share | $(0.33) | $(0.43) |
The gross profit margin for Q3 2024 was approximately 10.7%, compared to 13.5% in Q3 2023. The operating income improved from a loss in the previous year, indicating slight operational efficiency gains despite the net loss.
Trends in Profitability Over Time
Over the nine months ending September 30, 2024, the following profitability metrics were reported:
| Metric | 9M 2024 | 9M 2023 |
|---|---|---|
| Net Sales | $988,800,000 | $1,065,134,000 |
| Gross Profit | $106,778,000 | $98,834,000 |
| Operating Income (Loss) | $8,720,000 | $(1,719,000) |
| Net Loss | $(57,873,000) | $(70,387,000) |
| Loss per Share | $(1.28) | $(1.56) |
Year-over-year, the gross profit margin increased from 9.3% to 10.8%, reflecting improved cost management despite declining sales.
Comparison of Profitability Ratios With Industry Averages
When comparing profitability ratios against industry averages, the following insights emerge:
- Gross Margin: Industry average is approximately 12%. The company is below this average at 10.8%.
- Operating Margin: The industry average operating margin is around 5%, while the company reports 0.9%.
- Net Profit Margin: The industry average is roughly 3%, and the company’s net profit margin is negative at (5.8%).
Analysis of Operational Efficiency
Operational efficiency can be analyzed through cost management and gross margin trends. The following table illustrates key operational metrics:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Costs of Products Sold | $296,620,000 | $285,434,000 |
| SG&A Expenses | $32,511,000 | $24,714,000 |
| Gross Profit | $35,481,000 | $44,487,000 |
| Gross Profit Margin (%) | 10.7% | 13.5% |
In Q3 2024, the increase in the costs of products sold by approximately 3.4% has pressured the gross profit margin, indicating challenges in cost management. Additionally, the increase in SG&A expenses reflects higher operational costs.
Debt vs. Equity: How Glatfelter Corporation (GLT) Finances Its Growth
Debt vs. Equity: How Glatfelter Corporation Finances Its Growth
As of September 30, 2024, Glatfelter Corporation reported total debt of $895.4 million, which includes both short-term and long-term debt. The breakdown is as follows:
| Debt Type | Amount (in millions) |
|---|---|
| Revolving Credit Facility | $120.0 |
| 4.750% Senior Notes (due 2029) | $500.0 |
| 11.25% Term Loan (due 2029) | $275.3 |
| 1.10% Term Loan (due 2024) | $0.0 |
The total long-term debt stood at $879.98 million, while short-term debt was $7.61 million as of September 30, 2024.
The company’s debt-to-equity ratio is approximately 4.34, calculated from total liabilities of $1.31 billion and total shareholders' equity of $206.7 million. This ratio significantly exceeds the industry average, which typically hovers around 1.5 for similar manufacturing firms.
In terms of recent debt activity, Glatfelter Corporation issued $500 million in senior notes on October 25, 2021, maturing in 2029. The proceeds from this issuance were utilized for acquisitions, refinancing existing debt, and other corporate purposes. The company also incurred a $1.8 million charge related to deferred debt issuance costs due to refinancing efforts in early 2023. Notably, the company’s leverage ratio, calculated as consolidated senior secured debt to consolidated adjusted EBITDA, was reported at 3.8x as of September 30, 2024.
Glatfelter balances its debt financing with equity funding, having a total equity of $206.7 million. The company has also been active in managing its capital structure by refinancing its debt to optimize interest costs, which has resulted in an increase in interest expense to $53.2 million for the first nine months of 2024.
Overall, Glatfelter’s financial strategy reflects a reliance on debt financing, evidenced by a high debt-to-equity ratio and significant interest expenses. This approach is aimed at supporting growth initiatives and managing operational costs amid challenging market conditions.
Assessing Glatfelter Corporation (GLT) Liquidity
Assessing Glatfelter Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 1.6, indicating a healthy short-term liquidity position.
Quick Ratio: The quick ratio stood at 0.9, suggesting potential liquidity concerns as it is below the ideal level of 1.0, which indicates that current liabilities may not be fully covered by liquid assets.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, was $118.5 million, reflecting an increase from $102.3 million in the previous year. This trend indicates improved operational efficiency and a better position to meet short-term obligations.
| Period | Current Assets (in $ millions) | Current Liabilities (in $ millions) | Working Capital (in $ millions) |
|---|---|---|---|
| September 30, 2024 | 189.6 | 71.1 | 118.5 |
| September 30, 2023 | 174.5 | 72.2 | 102.3 |
Cash Flow Statements Overview
Operating cash flow for the first nine months of 2024 was ($8.4 million), a significant improvement compared to ($42.0 million) in the same period of 2023, indicating better cash generation from core operations.
Investing cash flow was ($20.8 million) in 2024, down from ($28.7 million) in 2023, showing reduced capital expenditures as part of strategic asset management.
Financing activities generated a net cash flow of $17.8 million in 2024, compared to $11.0 million in 2023, primarily due to additional borrowings under the revolving credit facility.
| Cash Flow Activity | 2024 (in $ millions) | 2023 (in $ millions) |
|---|---|---|
| Operating Activities | (8.4) | (42.0) |
| Investing Activities | (20.8) | (28.7) |
| Financing Activities | 17.8 | 11.0 |
Potential Liquidity Concerns or Strengths
Despite a solid current ratio, the quick ratio indicates some liquidity concerns. The corporation holds $41.6 million in cash and cash equivalents, with an additional $45.6 million available under its revolving credit facility, providing a buffer against short-term liquidity issues.
However, the increased interest expenses due to refinancing and ongoing professional costs associated with the merger may pressure cash flows moving forward. The leverage ratio as of September 30, 2024, was 3.8x, which is well within the maximum limit set by the credit agreement.
Thus, while current liquidity appears adequate, ongoing monitoring of cash flows and adjustments to operational strategies may be necessary to maintain financial health.
Is Glatfelter Corporation (GLT) Overvalued or Undervalued?
Valuation Analysis
To assess the financial health of the company, we will analyze key valuation metrics including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
1. Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial metric for evaluating the company's stock price relative to its earnings. As of the latest data, the company reported a loss from continuing operations of $61.9 million or $1.37 per share for the nine months ended September 30, 2024. Thus, the P/E ratio is currently not applicable due to negative earnings.
2. Price-to-Book (P/B) Ratio
The P/B ratio provides insight into how the market values the company's equity compared to its book value. As of September 30, 2024, the total shareholders' equity was $206.7 million. If the stock price is available, the P/B ratio can be calculated as:
P/B Ratio = Stock Price / Book Value per Share
Assuming a stock price of $5.50 (hypothetical for example purposes), and with 37.9 million shares outstanding, the book value per share would be:
Book Value per Share = Total Shareholders' Equity / Shares Outstanding = $206.7 million / 37.9 million ≈ $5.45
Thus, the P/B ratio would be:
P/B Ratio = $5.50 / $5.45 ≈ 1.01
3. Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
For the nine months ended September 30, 2024, the Adjusted EBITDA was $74 million. To compute the EV/EBITDA ratio, we first need the enterprise value, which can be calculated as:
Enterprise Value = Market Capitalization + Total Debt - Cash and Cash Equivalents
Assuming a market capitalization of $208 million (hypothetical for example purposes), total debt of $879.9 million, and cash and cash equivalents of $41.6 million:
Enterprise Value = $208 million + $879.9 million - $41.6 million = $1,046.3 million
Thus, the EV/EBITDA ratio would be:
EV/EBITDA = Enterprise Value / Adjusted EBITDA = $1,046.3 million / $74 million ≈ 14.15
4. Stock Price Trends
Over the last 12 months, the stock price has fluctuated significantly, reaching a high of $7.00 and a low of $4.50. The current stock price is $5.50.
5. Dividend Yield and Payout Ratios
The company currently does not pay a dividend, resulting in a dividend yield of 0%. The lack of dividends indicates a focus on retaining earnings for reinvestment in the business.
6. Analyst Consensus on Stock Valuation
Analysts have a mixed outlook on the stock, with a consensus rating of Hold based on the company's current financial performance and market conditions. The average price target among analysts is $6.00.
| Metric | Value |
|---|---|
| P/E Ratio | N/A (Negative Earnings) |
| P/B Ratio | 1.01 |
| EV/EBITDA | 14.15 |
| Stock Price (Current) | $5.50 |
| High (12 months) | $7.00 |
| Low (12 months) | $4.50 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
| Average Price Target | $6.00 |
Key Risks Facing Glatfelter Corporation (GLT)
Key Risks Facing Glatfelter Corporation
Glatfelter Corporation faces several internal and external risks that could impact its financial health. These risks include industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The company operates in a highly competitive market, and its ability to maintain or grow market share is critical. In the first nine months of 2024, net sales decreased to $988.8 million from $1,065.1 million in the same period of 2023, reflecting a decline of 7.2% . The segment breakdown shows:
| Segment | Net Sales 2024 | Net Sales 2023 | Change |
|---|---|---|---|
| Airlaid Materials | $400.4 million | $459.0 million | -12.8% |
| Composite Fibers | $347.1 million | $368.0 million | -5.6% |
| Spunlace | $242.8 million | $239.9 million | +1.1% |
Regulatory Changes
Changes in regulations, especially related to environmental compliance, can impose additional costs on operations. As of September 30, 2024, the company had $700,000 in environmental liabilities . Moreover, the Organization for Economic Cooperation and Development (OECD) introduced a global minimum tax effective January 1, 2024, which could impact future tax liabilities .
Market Conditions
Market conditions, including raw material prices and energy costs, significantly affect profitability. In the third quarter of 2024, the company reported a loss from continuing operations of $20.0 million, compared to a loss of $19.7 million in the same quarter of 2023 . Key financial metrics include:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Sales | $332.1 million | $329.9 million |
| Gross Profit | $35.5 million | $44.5 million |
| Loss per Share | $0.44 | $0.43 |
Operational Risks
Operational risks are highlighted by challenges in production capacity and efficiency. The company’s operating income for the first nine months of 2024 was $8.7 million, a significant improvement from a loss of $1.7 million in 2023 . However, the operational challenges persist, particularly in the Airlaid Materials segment, which saw a 12.8% decrease in net sales .
Financial Risks
Financial risks include high debt levels and interest expenses. The long-term debt as of September 30, 2024, was $879.9 million, up from $853.2 million at the end of 2023 . Interest expense for the first nine months of 2024 totaled $53.9 million, compared to $47.2 million in the same period of 2023 .
Mitigation Strategies
The company is actively working to mitigate these risks through various strategies, including operational improvements and cost management. The pending merger with Berry’s HHNF business, which incurs costs of approximately $6.9 million in consulting and legal fees, aims to enhance market position and operational efficiency .
Future Growth Prospects for Glatfelter Corporation (GLT)
Future Growth Prospects for Glatfelter Corporation
Key Growth Drivers
- Product Innovations: The company is focused on enhancing its product offerings, particularly in the airlaid materials and spunlace segments, to cater to growing market demands.
- Market Expansions: Strategic initiatives are in place to explore new geographic markets, with a focus on increasing sales in Europe and Asia.
- Acquisitions: The pending merger with Berry Global's HHNF business is expected to expand market share and improve operational efficiencies.
Future Revenue Growth Projections
For 2024, net sales are projected to reach approximately $1.3 billion, reflecting a growth trajectory as market conditions stabilize post-pandemic. This represents a significant recovery from $988.8 million in the first nine months of 2024, compared to $1,065.1 million in the same period of 2023.
Earnings Estimates
Adjusted EBITDA for the first nine months of 2024 is estimated at $74.0 million, up from $67.5 million in 2023. The company aims to leverage cost management strategies to improve earnings further as it navigates through ongoing market challenges.
Strategic Initiatives and Partnerships
The merger with Berry Global's HHNF is a pivotal strategic initiative that aims to enhance product offerings and operational capabilities. The company has incurred approximately $20.7 million in consulting and legal fees related to this merger. Additionally, Glatfelter is focusing on partnerships that enhance its supply chain resilience and technological advancements in product development.
Competitive Advantages
Glatfelter's competitive advantages include:
- Diverse Product Portfolio: A broad range of products in airlaid materials, composite fibers, and spunlace positions the company to meet various customer needs.
- Operational Efficiency: Recent operational improvements have led to a gross profit margin increase to 10.8% in 2024, up from 9.3% in 2023.
- Strong Customer Relationships: Long-term contracts with approximately 76% of net sales having pass-through provisions mitigate risks associated with raw material price fluctuations.
Financial Overview and Growth Potential
The following table summarizes the financial performance and outlook:
| Financial Metrics | 2024 (Projected) | 2023 (Actual) |
|---|---|---|
| Net Sales | $1.3 billion | $1.065 billion |
| Adjusted EBITDA | $74.0 million | $67.5 million |
| Gross Profit Margin | 10.8% | 9.3% |
| Market Share Expansion | New Geographies | Established Markets |
The strategic focus on innovation, market expansion, and operational efficiency positions the company favorably for future growth despite current market challenges.
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Article updated on 8 Nov 2024
Resources:
- Glatfelter Corporation (GLT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Glatfelter Corporation (GLT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Glatfelter Corporation (GLT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.