Glatfelter reported 2015 full year adjusted earnings per diluted share of $1.34 (GAAP $1.47) compared with $1.55 per diluted share in 2014 (GAAP $1.57). For the 2015 fourth quarter Glatfelter reported adjusted earnings of $22.9 million, or $0.52 per diluted share, compared with $19.7 million, or $0.45 per diluted share, in the 2014 fourth quarter. On a GAAP basis, fourth quarter 2015 net income totaled $34.3 million, or $0.78 per diluted share, compared with $19.6 million, or $0.45 per diluted share, in the fourth quarter of 2014.
Consolidated net sales totaled $412.9 million in the fourth quarter of 2015 compared with $436.3 million in the fourth quarter of 2014. On a constant currency basis, net sales declined $5.1 million, or 1.2 percent.
“Our fourth-quarter 2015 financial results reflect a solid finish to a very challenging year,” said Dante C. Parrini, Chairman and Chief Executive Officer. “In the fourth quarter, we saw solid growth in key product lines within our Composite Fibers and Advanced Airlaid Materials businesses and earnings growth across all three of our business segments. We also delivered improved overall earnings and cash flow performance as the full effects of our previously announced continuous improvement and cost reduction initiatives were realized.
“Overall, I am pleased with how our team managed through the many challenges we faced in 2015 by capitalizing on improved demand for single-serve coffee, tea and Advanced Airlaid Materials products during the second half of the year, and withstanding the ongoing weakness in Russia and Ukraine and currency headwinds. Our performance during the year was also driven by our successful execution of cost reduction and continuous improvement initiatives which delivered full year savings of $31 million, exceeding our target for the year.”
Mr. Parrini concluded, “As we enter 2016, we see growth opportunities in food and beverage, feminine hygiene, specialty wipes and electrical markets. At the same time, we remain mindful of weakness in Russia and Ukraine, which continues to impact the nonwoven wallcover market, as well as the effect of a weak Euro. Our efforts to continuously improve the safety, reliability and efficiency of our operations, manage costs, and bring new value-added products to market will continue to be critical to our success in 2016 and beyond.”
Fourth-Quarter Business Unit Results
Net sales for this business unit declined $15.9 million, or 10.8 percent, primarily due to $13.7 million of unfavorable currency translation and $2.4 million from lower selling prices. Shipping volumes declined slightly due to a 13.9 percent decline in nonwoven wallcover which offset solid gains in all other market segments.
Composite Fibers’ fourth-quarter 2015 operating income totaled $15.9 million, a $2.3 million or 17.0 percent improvement compared to the year-ago period. The higher operating income was due to improved operating performance of $4.4 million driven by less market-related downtime, higher production rates, and other operating efficiencies and $2.5 million of lower raw material and energy prices. These benefits more than offset the adverse impact of lower selling prices and currency translation. The change in currency exchange rates negatively impacted results by $1.7 million.
Advanced Airlaid Materials
Advanced Airlaid Materials’ net sales decreased $3.9 million largely due to $4.6 million of unfavorable currency translation and a $1.5 million negative impact from lower selling prices which more than offset the benefit of higher shipping volumes.
Fourth-quarter 2015 operating income increased 4.5 percent compared to the same quarter a year ago as lower raw material and energy costs of $2.2 million more than offset the adverse impact of lower selling prices, downtime for incremental capacity expansion projects, other inflationary costs and a one-time benefit in the fourth quarter of 2014. Currency translation favorably impacted operating income by $0.8 million.
Specialty Papers’ net sales declined $3.6 million, or 1.6 percent, due to lower selling prices which negatively impacted the comparison by $4.9 million, of which $0.9 million was due to unfavorable currency impacts. Shipping volumes were up 3.5 percent, outperforming the broader uncoated free-sheet market for the quarter and for the eleventh consecutive year.
Operating income increased slightly in the year over year comparison as lower raw material and energy costs of $5.5 million and higher energy related sales were partially offset by the adverse impact of lower selling prices.
Other Financial Information
Pension expense totaled $2.5 million and $1.6 million for the fourth quarters of 2015 and 2014, respectively. For 2016, the Company expects full year pension expense to be approximately $4.6 million compared to $9.1 million for all of 2015. Because the Company’s qualified plan remains overfunded, a cash contribution was not required to be made in 2015 nor is a contribution expected in the foreseeable future.
During 2015, the Company reduced its workforce by approximately 3 percent in connection with the global workforce efficiency and cost reduction program initiated earlier in the year. In connection with these actions, the Company recorded charges totaling, on a pre-tax basis, $2.5 million for severance and related costs, of which $0.2 million was recorded in the fourth quarter of 2015.
The Company sold 14,230 acres of timberlands during the fourth quarter of 2015 for $22.0 million and realized an after-tax gain of $11.6 million.
In the 2015 fourth quarter, the Company recorded an income tax provision of $3.4 million on adjusted pre-tax earnings, an effective tax rate of 12.8 percent. In the comparable quarter a year ago, the income tax provision totaled $4.7 million and the effective tax rate was 19.3 percent. The lower tax rate in the 2015 fourth quarter reflects the timing of recognizing certain tax credits and related adjustments and the impact of a greater proportion of earnings generated in lower tax foreign jurisdictions relative to the U.S.In the 2015 fourth quarter, the Company recorded an income tax provision of $3.4 million on adjusted pre-tax earnings, an effective tax rate of 12.8 percent. In the comparable quarter a year ago, the income tax provision totaled $4.7 million and the effective tax rate was 19.3 percent. The lower tax rate in the 2015 fourth quarter reflects the timing of recognizing certain tax credits and related adjustments and the impact of a greater proportion of earnings generated in lower tax foreign jurisdictions relative to the U.S.
2015 Full Year Results
Net income for 2015 totaled $64.6 million, or $1.47 per diluted share, compared with $69.2 million, or $1.57 per diluted share, in 2014. Adjusted earnings totaled $58.9 million, or $1.34 per diluted share, compared with $68.5 million, or $1.55 per diluted share, in 2014.
Consolidated net sales for year ended December 31, 2015 were $1,661.1 million compared with $1,802.4 million for 2014. On a constant currency basis, net sales declined $40.3 million, or 2.2 percent. Shipping volumes declined less than one percent.