Glatfelter's Efforts to Reduce Costs and Expand Market Position
2023-07-30
Glatfelter, a leading global supplier of specialty papers and engineered materials, held its earnings call meeting to discuss its efforts to reduce costs and improve procurement processes. The company had set a target of achieving $20 million in savings, and this was the focal point of the discussion.
During the meeting, the company highlighted its commitment to reducing costs and waste in its operations and procurement processes. This included efforts to negotiate better payment terms and pricing with suppliers, as well as finding ways to decrease costs and improve efficiency. The company acknowledged the challenges posed by an inflationary environment but remained confident in its ability to achieve its cost-saving goals.
One of the most interesting topics discussed during the meeting was the company's focus on improving its market position in the critical cleaning area, particularly in Europe and other regions outside the United States. Glatfelter currently has a strong presence in the US but is underrepresented in other parts of the world. To address this, the company plans to invest in sales and marketing efforts, including the establishment of a dedicated sales group and product management team for its Sontara product.
The company acknowledged that expanding its market share would take time, as certain products need qualification at suppliers like Airbus, which typically takes around six months. However, they expressed confidence in the superiority of their product and believed that customers would appreciate it, especially considering the relatively lower price sensitivity in the critical cleaning area compared to other sectors.
In terms of the market outlook, Glatfelter acknowledged the challenging environment, with pressure on pricing and a decrease in demand in certain areas. The company mentioned making surgical price adjustments to preserve volumes and expressed confidence in maintaining volumes through these adjustments. While raw material prices were decreasing, they were not declining as fast as desired. The company also mentioned that Chinese demand had not met expectations. To mitigate these challenges, Glatfelter is actively working on monetizing non-core assets and expects to make announcements in the near future.
The company's key drivers for success include a commitment to sustainable products and operational improvements, organizational changes, the formation of a product management function, and an expanded senior executive team. These initiatives are aimed at driving growth and improving the company's overall performance.
In terms of its product and service plans, Glatfelter aims to expand volume in areas such as Airlaid and certain areas in composite fibers. The company is also working on projects with major blue-chip customers to further increase its volume. The strategy involves preserving volumes through surgical pricing adjustments and closely monitoring raw material prices. Additionally, Glatfelter is diligently working on monetizing non-core assets to strengthen its financial position.
While specific Key Performance Indicators (KPIs) discussed during the meeting were not explicitly mentioned, the company's focus on reducing costs, improving procurement processes, and achieving $20 million in savings suggests that financial performance is a significant KPI for Glatfelter.
Looking ahead, the company reaffirmed its full-year EBITDA guidance and expressed optimism about its financial performance. Glatfelter is actively assessing its core products to strengthen its value proposition and restore investor confidence. The company's progress on strategic initiatives is still a work in progress, with the operations and procurement teams actively working towards their goals. Glatfelter's capital spending plans prioritize debt repayment as the number one capital allocation priority, and they have set a manageable guidance range for capital spending in the coming years.
The participants in the earnings call meeting included senior executives from Glatfelter, such as the Senior Vice President, Chief Financial Officer, and Corporate Treasurer, as well as analysts from financial institutions.
In conclusion, Glatfelter's earnings call meeting highlighted the company's efforts to reduce costs, improve procurement processes, and expand its market position in critical cleaning. Despite the challenges posed by the market environment, the company remains confident in its ability to achieve its goals and drive growth. With a focus on financial performance and strategic initiatives, Glatfelter aims to strengthen its position in the industry and deliver value to its stakeholders.