Glatfelter composite fibers Q2 sales surge 31.2%

These results compare with second-quarter 2012 net income of $13.4 million or $0.31 per diluted share and adjusted earnings in the prior year quarter of $5.3 million or $0.12 per diluted share.

Consolidated net sales for the second quarter of 2013 totaled $426.0 million, a quarterly record and a 10.7 percent increase compared with $384.7 million in the second quarter of 2012 reflecting organic growth of 3.1 percent and acquisition growth of 7.2 percent.

Second-Quarter Business Unit Results

Composite Fibers

Composite Fibers’ results include the financial results of Dresden prospectively from the April 30, 2013 acquisition date.

Net sales for this business increased $33.9 million, or 31.2 percent, primarily due to the inclusion of Dresden. On an organic basis, Composite Fibers’ net sales increased $5.4 million or 5.0 percent, primarily due to stronger shipments of single-serve coffee and tea products.

Composite Fibers’ second-quarter 2013 operating income increased by $8.5 million including $5.5 million from the Dresden acquisition, higher shipping volumes, production efficiency improvements and lower depreciation. Dresden’s results were adversely affected by approximately $0.8 million as a result of severe regional flooding which forced operations to be idled for five days.

During the second quarter of 2013, the Company completed the upgrade of a machine at the Gernsbach, Germany facility, restarting production in mid-May 2013. Downtime associated with the machine upgrade adversely impacted operating results by approximately $1.5 million during the second quarter.

Foreign currency translation favorably impacted operating income by $0.1 million compared with the prior-year quarter.

Other Financial Information

During the second-quarter 2013, the Company incurred acquisition and integration related costs totaling $4.8 million, pre-tax or $4.0 million after-tax. All such costs are excluded from the determination of non-GAAP adjusted earnings.

Approximately $1.1 million, pre-tax, was related to the step-up in fair value of acquired inventory existing at the acquisition date and sold during the second quarter and is recorded as a component of costs of products sold and the remaining costs are included in selling, general and administrative expenses in the accompanying consolidated statements of income.

Pension expense totaled $3.2 million and $2.6 million for the second quarters of 2013 and 2012, respectively. Because the Company’s qualified plan remains overfunded, a cash contribution is not expected to be made in 2013 or for the foreseeable future.

Interest expense totaled $4.5 million and $4.2 million in the second quarters of 2013 and 2012, respectively. The increase was primarily due to additional borrowings to fund the Dresden acquisition.