Investor Meetings. November 2008

Transcription

1 Investor Meetings November 2008

2 Forward-Looking Statement This document includes certain forward-looking statements within the meaning 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 in other countries in which Glatfelter currently does business, demand for or pricing of its products; changes in tax legislation, governmental laws, regulations and policies and actions of regulatory bodies; orderly execution of regularly scheduled maintenance outages; technological changes and innovations and other factors. In light of these risks, uncertainties and other factors, the forward-looking events discussed in this presentation 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 presentation 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 presentation. More information about these factors is contained in Glatfelter's filings with the U.S. Securities and Exchange Commission, which are available at 1

3 Agenda Glatfelter Overview Business Unit Review Financial Review Summary 2

4 Glatfelter Company Snapshot Two Business Units: Composite Fibers Specialty Papers 2007 Segment Breakdown Net Sales: Key Product Offerings: Production Capacity: ~ $1.1 billion - Filtration Papers for the tea and coffee industry - Book Publishing papers - Papers for Carbonless products, specialized Envelopes, and Postage Stamps - Metallized papers - Overlay papers for decorative laminate applications - Digital Imaging papers ~ 790k short tons per annum ($ in millions) GLT Specialty Papers $802 70% 30% Production Facilities: Timberlands Owned / Managed: Eight production facilities located in the U.S., Europe, and the Philippines ~ 36,000 acres located in Pennsylvania, Delaware, and Virginia Total Sales: $1.1 Billion GLT Composite Fibers $346 Employees Worldwide: ~ 3,700 Our Vision is to become the global supplier of choice in Specialty Papers and Engineered Products. 3

5 Creating the Global Supplier of Choice in Specialty Papers and Engineered Products Over the past 5 years, we have changed and enhanced nearly every part of the Company to create: Culture of innovation Substantial pipeline of new products Leading positions in high value, niche markets Flexible operating platform Stronger customer relationships Our strategic actions have driven: Revenue has more than doubled 51% improvement in EBITDA over last two years 34% CAGR in adjusted earnings 2008 expected to be the 5 th consecutive year of solid earnings growth Strong balance sheet As a result of the actions we have taken, Glatfelter is well positioned despite the uncertain macroeconomic environment. 4

6 GLT Product Innovation Focused and Prolific Keys to New Product Development Success Culture of Innovation Drives Volume growth Mix improvement Market share gains Margin expansion New Product Development as % of Gross Revenue 60% 52% 52% 53% 54% 47% Speed Time-to-market reduced by 25% Strategic Spending Approximately $9 million per year <1% of sales revenue Focus Profitability benchmarks Tighter integration with operating units Top 10 new product focus list Extensive customer involvement YTD Note: New product revenue includes products developed, enhanced, or improved within the five previous years. We continue to exceed our annual goal of 50% of revenue generated from the sale of new products. 5

7 33.3% Focused on High-Value, Niche Markets 66.7% 20 Average 2008 YTD Prices per Ton $5,079 Glatfelter Weighted Average $1,163 Glatfelter Products Commodity Products $1,123 $958 $768 $658 Composite Fibers Specialty Papers Uncoated Freesheet Offset 50 lb Source: Forest Web. Note: Market Pulp and Newsprint prices quoted in U.S. dollars per metric tonne; all other paper products are quoted in U.S. dollars per ton. Market Pulp NBSK Newsprint 30 lb East As a specialty paper producer, Glatfelter realizes significantly higher per ton prices on its products. 6

8 Glatfelter Global Reach Chillicothe, OH Scaër, France Caerphilly, UK Lydney, UK York, PA Spring Grove, PA Fremont, OH Gernsbach, Germany Germany Suzhou, China Hong Kong, China Lanao del Norte, Philippines Sales Offices Production Facilities Glatfelter End- Markets Glatfelter operates globally with production facilities located in the U.S., Europe and the Philippines, and it markets products into ~80 countries worldwide. 7

9 Agenda Glatfelter Overview Business Unit Review Financial Review Summary 8

10 Specialty Papers Leading Positions in High-value Niche Markets Specialty Papers (70% of Sales) Key Facts 2007 Net Sales: $802 million 2007 Tons Sold: ~726k tons 2007 Avg. Price: ~$1,104 / ton Estimated Segment Position Book Publishing #1 Postal Applications #1 Playing Cards #1 Greeting Cards #2 Carbonless Products #2 Key Products (sales) Envelope & Converting 16% Engineered Products 18% Carbonless & Forms 43% Book Publishing 23% Specialty Papers focuses on papers for the production of high-quality hardbound books, envelopes, carbonless papers and other highly engineered paper products. 9

11 Specialty Papers U.S. Uncoated Freesheet Market Overview Profound Structural Change Industry landscape has changed very rapidly More globally focused Fewer players 1998: Numerous Producers Vying for Market Share 2007: Top 5 Producers With Over 80% Market Share Champion International Paper Weyerhaeuser Willamette Hammermill James River Chesapeake Pentair Union Camp Consolidated Mead Great Northern SD Warren Boise Cascade Finch Pryun Crown Vantage Boise Cascade Domtar International Paper Georgia Pacific Consolidation in N.A. paper industry has changed the competitive landscape and resulted in capacity reductions and improved prices. 10

12 Transformation of Specialty Papers Business Unit Delivering Results Strategic Actions Focused on Costs and Process Improvements Chillicothe Improvements in % increase in productivity Equipment streamlined 9.3% reduction in staffing levels Spring Grove Continuous Improvement Program $7 million benefit in 2007 NPD Initiatives Substantial pipeline of new products Utilizing NPD capabilities and market leadership positions to offset Carbonless decline (2008 volume changes) Envelope 14% Engineered Products Book Publishing 9% 1% > Carbonless (6%) Specialty Papers is well-positioned to capitalize on changing market dynamics aggressive cost control, new products, and differentiation. 11

13 SPBU Operating Income $3 3,9 6 1 $3 3,6 0 8 $18,9 58 $19,0 2 1 $10,4 9 6 ( $2,3 6 2 ) ( $1,3 6 4 ) Q3'07 YTD Q3'08 YTD Improving industry fundamentals, strategic positioning, and focus on cost reduction have driven substantial improvement in profitability. 12

14 Composite Fibers Leading Positions in High-Value Niche Markets Composite Fibers (30% of Sales) Key Facts 2007 Net Sales: $346 million 2007 Tons Sold: ~73k tons 2007 Avg. Price: ~$4,750 / ton Estimated Segment Position Tea Bags & Coffee Filters #1 Metallized Products #2 Composite Laminates #1 Key Product Sales Mix Metallized Products 13% Composite Laminates 16% Technical Specialties 9% Food & Beverage 62% Composite Fibers utilizes an array of specialized fibers to create highly specialized papers. 13

15 Transformation of Composite Fibers Business Unit Delivering Results Strategic Actions Focused on Costs and Capacity Expansion to Meet Demand Caerphilly Acquisition Doubled metallized products Operating Initiatives Completed two machine upgrades in 2008 to expand capacity to serve Food & Beverage and Technical Specialties markets Continue to target 1% - 2% productivity improvement per year Machine upgrade planned for 2009 to expand capacity to serve Food & Beverage market NPD Initiatives Continuing to ramp up new technical specialty products Enhances market leadership position and unique value proposition Shipping volumes increased in all market segments in 2008 Food & Beverage up 4% and Technical Specialties up 12% Composite Fibers is well-positioned to capitalize on growing demand capacity expansion, aggressive cost management, new products, and differentiation. 14

16 Composite Fibers Operating Income $2 5,8 8 3 $17,8 8 2 $18,3 2 2 $17,4 9 6 $19,9 50 $2 1,2 6 4 $10, Q3'07 YTD Q3'08 YTD Strategic acquisitions and operational excellence have driven substantial profitability improvement. 15

17 Agenda Glatfelter Overview Business Unit Review Financial Review Summary 16

18 Financial Highlights Net Sales Adj. EBITDA* / % Margin ($ in millions) ($ in millions) $986 $1,148 $861 $966 16% 15% 14% $86 $83 $83 $105 $125 11% 11% $88 13% 14% $107 $533 $544 $ Q3'07 YTD Q3'08 YTD Q3'07 YTD Q3'08 YTD * Note: Adjusted EBITDA is calculated by deducting one-time income & expenses that do not form a part of the company s core business. Some of these one-time items include (1) gains from timberland sales (2) insurance recoveries (3) reserves for environmental matters (4) debt redemption charges (5) acquisition & integration costs and (6) shutdown & restructuring charges. Strategic acquisitions and execution of profit improvement initiatives drove EBITDA increase of 51% over the last two years. 17

19 Solid EPS Performance Reflects Improving Profitability $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 $0.25 $0.30 $0.35 $0.55 $0.81 $ Q3'07 YTD $0.74 Q3'08 YTD Strong Q3 results demonstrating effective execution of our strategies adjusted earnings increased 42% in 2008 with a five year CAGR of 34%. 18

20 Strong Balance Sheet ($ millions) 30-Sep Dec-07 Cash $15.9 $29.8 Total Debt $314.1 $313.2 Collateralized Debt ($70.7) ($34.0) Net Debt $227.5 $249.4 Shareholder's Equity $499.1 $476.1 Leverage 1.8x 2.2x 134% improvement in operating cash flow over 2 years Healthy net debt with no near-term maturities Pension plan remains fully funded despite recent market declines Timberland monetization has generated $120.8 million of pre-tax proceeds over the last three years ~36,000 acres located in Pennsylvania, Delaware, and Virginia Proceeds used to pay down debt Expect minimal sales during the remainder of 2008 and 2009 Strong balance sheet provides financial flexibility to support growth investments. 19

21 Agenda Glatfelter Overview Business Unit Review Financial Review Summary 20

22 Well Positioned for Shareholder Value Creation Diverse product offerings and geographical footprint Effective and efficient platform of innovation Demonstrated track record of solid tactical execution Proven ability to create value through strategic acquisitions Strong balance sheet Our unique position as paper specialists sets Glatfelter apart in the products we make, the markets we serve, and the value we deliver. 21

23 Appendix 22

24 Reconciliation of GAAP earnings with adjusted earnings Q3'07 YTD Q3'08 YTD Net incom e $0.30 $1.27 $0.87 ($0.27) $1.40 $0.29 $0.97 Shutdow n and restructuring $0.20 $0.29 $0.02 $0.79 $0.00 $0.00 ($0.01) Acquisition & Integration costs $0.19 $0.03 $0.03 $0.02 Fox River Reserve $0.35 $0.35 $0.00 Ecusta related reserve $0.16 $0.00 $0.00 Debt redemption premium $0.04 $0.00 $0.00 $0.00 Timberland sales ($0.46) ($0.78) ($0.25) ($0.20) ($0.97) ($0.15) ($0.24) Insurance recoveries ($0.48) ($0.29) $0.00 $0.00 $0.00 $0.00 Asset w rite dow ns $0.05 Total Adjustments to Incom e ($0.05) ($0.97) ($0.52) $0.82 ($0.59) $0.23 ($0.23) Adjusted incom e $0.25 $0.30 $0.35 $0.55 $0.81 $0.52 $

25 Net Sales by Market Segment SPBU Book Publishing $170 $143 $157 $167 $185 Carbonless & Forms $0 $0 $0 $267 $346 Envelope & Converting $74 $82 $92 $103 $117 Engineered Products $107 $113 $130 $137 $137 Other $7 $0 $2 $20 $18 Total $358 $338 $381 $694 $803 CFBU Food & Beverage $97 $107 $103 $180 $219 Composite Laminates $38 $47 $43 $51 $53 Metallized $29 $33 $36 $40 $45 Technical Specialties & Other $1 $17 $17 $22 $29 Total $165 $204 $199 $293 $346 24