Filing identity and reporting period
The supplied filing is Glatfelter Corporation’s Form 10-K for the fiscal year ended December 31, 2021, filed February 25, 2022. It is not identified as a Magnera Corp filing, and the text reports annual results, not standalone 2021 fourth-quarter results. The company and period should be verified against the intended filing.
Glatfelter supplies engineered materials for filtration, hygiene, wipes, packaging and industrial applications. Its three reporting segments were Composite Fibers, Airlaid Materials and Spunlace. In 2021, it acquired Mount Holly (May) and Jacob Holm (October); Spunlace results are included only from the Jacob Holm acquisition date.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Net sales | $1,084.7 million | $916.5 million |
| Gross profit / margin | $144.8 million / 13.3% | $147.9 million / 16.1% |
| Operating income | $28.6 million | $49.2 million |
| Continuing-operations income / diluted EPS | $6.7 million / $0.15 | $20.8 million / $0.47 |
| Net income / diluted EPS | $6.9 million / $0.15 | $21.3 million / $0.48 |
| Cash from operations | $71.0 million | $109.0 million |
| Capital expenditures | $30.0 million | $28.1 million |
Sales increased $168.2 million, principally from Mount Holly and Jacob Holm contributions of $60.6 million and $57.6 million, respectively, and higher average selling prices of $50.6 million. Organic shipments declined 3.6%. Gross margin fell 2.8 percentage points as raw-material and energy inflation outweighed price increases. Adjusted earnings, a non-GAAP measure, declined to $27.6 million, or $0.61 per diluted share, from $37.4 million, or $0.84.
At year-end, cash and cash equivalents were $138.4 million; current assets were $636.6 million and current liabilities $371.2 million. Long-term debt, net of deferred issuance costs, was $775.9 million, compared with $315.4 million in 2020. The company reported $118.3 million of revolving commitments available after letters of credit and a 3.8x covenant leverage ratio, within its 5.25x maximum. It issued $500 million of 4.750% senior notes due 2029. Dividends paid were $24.5 million.
Material changes, outlook and commentary
- Composite Fibers operating income declined to $37.4 million from $52.1 million; higher raw-material and European energy costs increased expenses by $36.4 million in aggregate.
- Airlaid Materials operating income declined to $42.2 million from $46.3 million. Mount Holly expanded the segment; reported selling-price increases were more than offset by higher costs.
- New Spunlace recorded $57.6 million of sales and a $1.3 million operating loss for the two months included in 2021. Management cited customer order recalibration, raw-material availability, inflation, energy costs, lower production and labor challenges.
- Management estimated 2022 capital expenditures of $45–$50 million. The filing provides no specific full-year 2022 revenue or earnings guidance. Management expects liquidity needs to be met with operating cash flow, cash and borrowing capacity.
- The company’s strategy emphasizes engineered-materials growth, innovation and sustainability, cost optimization, acquisition integration, and balance-sheet flexibility. Expected Mount Holly and Jacob Holm growth and synergies are subject to execution and integration risks.
Risks, contingencies and unusual items
- Key exposures include raw-material, energy and freight inflation; supply-chain disruption; foreign-exchange movements; competition; customer concentration; and operational interruptions. Approximately 52% of 2021 sales were to customers in Europe, and approximately 16% of consolidated sales were to Procter & Gamble.
- The filing reports approximately $95 million of 2021 sales to customers in Russia and Ukraine and notes possible sanctions, demand disruption and risks to European natural-gas supply.
- Fox River environmental reserves totaled $16.2 million at year-end, including $2.2 million current and $14.0 million long-term. The company said it did not expect costs to exceed accrued amounts by a material amount.
- 2021 GAAP results included significant acquisition-related and other items; adjusted earnings excludes specified items, including $30.9 million of strategic-initiative costs and a $5.2 million gain on timberland and other dispositions. The non-GAAP measure is not a substitute for GAAP results.
- The Jacob Holm purchase-price allocation was preliminary, including assessment of potential tax liabilities. Management and the auditor excluded the acquired businesses from their 2021 internal-control assessment; the auditor nevertheless gave an unqualified opinion on the financial statements and on controls for the assessed scope.
Important facts for investors to verify
- Confirm that Glatfelter’s 2021 Form 10-K is the intended filing; the request names Magnera Corp.
- Review acquisition integration, Jacob Holm’s final purchase-price allocation and whether expected synergies materialized.
- Assess debt maturity and covenant headroom, variable-rate exposure, and the capacity to fund capital spending and dividends.
- Monitor whether pricing and customer pass-throughs can keep pace with input, energy and logistics costs, and whether organic volumes recover.
- Check subsequent disclosures on Russia/Ukraine exposure, European energy supply, customer concentration and Fox River obligations.