Glatfelter reported second-quarter 2013 net income of $0.9 million, or $0.02 per diluted share, and adjusted earnings of $5.1 million, or $0.12 per diluted share.

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.

In the second quarter of 2013, the Company recorded an income tax provision of $2.0 million on adjusted pre-tax earnings resulting in an effective tax rate of 28.2 percent. In the comparable quarter a year ago, the income tax provision totaled $2.1 million and the effective tax rate was 28.0 percent.

“We generated strong results in our Composite Fibers and Advanced Airlaid Materials businesses during the second quarter,” said Dante C. Parrini, chairman and chief executive officer. “Operating profit for Composite Fibers more than doubled during the quarter driven by both organic growth and a strong start from the Dresden acquisition.

"Our Advanced Airlaid Materials business improved operating profit by 14 percent driven by a 7 percent improvement in net sales. Shipments for the Specialty Papers business continued to outperform the broader market but lower selling prices and unexpected operating disruptions led to disappointing results for the second quarter.”

Mr. Parrini continued, “We are well positioned to generate improved results, as the benefits from a number of our recent strategic and operating initiatives continue to be realized. We are increasing our earnings accretion estimate for the Dresden acquisition to $0.45 to $0.50 per share on an annualized basis, compared with our initial estimate of $0.25 per share as a result of new estimated depreciation and amortization expense.

"We also expect continued organic growth in our Composite Fibers and Advanced Airlaid Materials businesses, and we are focused on improving the operating performance in Specialty Papers.”