Glatfelter Corporation

Stand by, we're about to begin. Good day, and welcome to the Glatfelter's Q2 2023 Earnings Release Conference Call. Today's conference is being recorded. At this time, I would like to hand the call over to Ramesh Edigar. Please go ahead.

Thank you, Ali. Good morning, and welcome to Glatfelter's 2023 Second Quarter Earnings Conference Call. This is Ramesh Shedegar, Senior Vice President, Chief Financial Officer and Treasurer. On the call to present our second quarter results is Thomas Fahneman, President and Chief Executive Officer of Glatfelter, and myself. Before we begin our presentation, I have a few standard reminders. During our call this morning, we will use the term adjusted earnings as well as other non-GAAP financial measures. A reconciliation of these financial measures to our GAAP-based results is included in today's earnings release and in the investor slides. We will also make forward-looking statements today that are subject to risks and uncertainties. Our 2022 Form 10-K filed with the SEC and today's release are available on our website. Disclose factors that could cause our actual results to differ materially from these forward-looking statements. These statements speak only as of today and we undertake no obligation to update them. I will now turn the call over to Thomas.

Thank you, Ramesh. Hello, everyone, and welcome to Gladfelder's second quarter conference call for 2023. It's a pleasure to be with you today. Throughout today's call, I will take the opportunity to provide context on several key challenges the business faced during the second quarter as our results fell below expectations. More importantly, I will highlight the outcomes we delivered during the second quarter with our turnaround strategy to address these challenges. First, the prevailing market headwinds and overall macroeconomic environment in both Europe and North America, along with continued customer destocking, resulted in lower sales volume and negative earnings impact of approximately $7 million when combined with machine downtime to manage inventory levels. The team diligently worked to deliver approximately $7 million of earnings through our turnaround strategy, with results attributed primarily to price increases and fixed cost reductions. We also experienced two fires, one in Fort Smith, Arkansas, and another in our Asheville, North Carolina, facility that resulted in an approximate $3 million loss of earnings during the second quarter. I'm thankful for the quick actions of our employees at each site that fortunately resulted in no personal injury or long-term damage to either facility. Blattfelder has benefited from top quartile safety performance over many years of benchmarking and refinements to our global safety program, and we remain committed to incorporating even more stringent fire prevention measures in the months ahead. In addition, we had another approximately 3 million negative impact resulting from foreign exchange effects, customer financing, and other items. Finally, as part of our portfolio review, we announced the closure of our Oberschmitten site in May, following a lengthy but unsuccessful sale process against the backdrop of poor site profitability given the weak cuisine and electrical markets. Since that time, the team has been working to fulfill remaining orders while negotiating the balance of interest and social plan with the site's Economic Committee and Works Council, all while preparing to decommission the site. Since announcing the closure, customers have been working to secure alternative suppliers, and we are experiencing high rates of employee absenteeism and turnover. While we continue to manage the operations in this turbulent environment, we have incurred operating losses of approximately $4 million in the second quarter. As I reflect on our performance this quarter, including the positive results we delivered with the turnaround strategy, had it not been for the continued macroeconomic and operational challenges impacting our bottom line, our second quarter results would have been in line with the first quarter of 2023. The turnaround actions that we are taking are now setting the stage for improved profitability as sales volumes return. While our business fundamentals remain quite sound, we are lowering our annual guidance to $100 million to $110 million in light of the market weakness and accelerated deterioration of Oberschmitten's financial performance following the closure announcement. I will now turn the call over to Ramesh.