Fourth Quarter Results
1996 Third Quarter Results
Release 9:00 a.m. January 27, 1997
P. H. Glatfelter Company's earnings per common share for the fourth quarter of 1996 were $.40 compared to $.39 for the same period in 1995. Net income for the quarter was $16,916,000, slightly below the $17,186,000 recorded for the like period in 1995. Earnings per share for the 1996 period were about 3% above the 1995 period due to fewer shares outstanding as a result of the Company continuing to buy back common stock under its share repurchase program. The Company's results are outstanding when considering the poor condition of the paper markets in general during the past quarter. Net sales for the fourth quarter of 1996 were $141,314,000 compared to $141,022,000 experienced in the 1995 period as higher volume was offset by lower prices for printing papers.
For the year 1996, net income and earnings per common share were $60,399,000 and $1.41, respectively, as compared to $65,828,000 and $1.49 for 1995. Net sales decreased 9% to $566,084,000 from $623,709,000 in 1995. The Company is pleased with the financial results for 1996 as compared to 1995 as they compare most favorably to those of its competitors. The results again show how the specialty nature of the Company's products distinguishes P. H. Glatfelter from other paper companies.
Many challenges were presented in 1996 for companies that participate in the printing paper portion of the industry. Demand for printing paper products was slow early in the year, improved in the second and third quarters, and then slowed again in the fourth quarter. Pricing for printing papers declined during the year. Demand and pricing for the Company's printing papers, specifically, papers sold to the book publishing industry, held up better than the rest of the printing paper market. Demand and pricing for tobacco and other specialty products were not impacted by the softer printing paper market and remained relatively constant during the year.
As the Company looks into the first part of 1997, it sees continued slow demand and pricing pressure within the printing paper markets. The Company believes demand will improve during the second half of the year and that some price relief may occur during the last six months. Demand and pricing for tobacco and other specialty papers is expected to remain relatively stable throughout the year. The Company is well positioned to capitalize on an improving printing paper market; its focus on niche markets and specialized products will continue to set it apart from other paper companies.
Three Months Ended December 31 Year Ended December 31 1996 1995 1996 1995
Net Sales $ 141,314,000 $ 141,022,000 $ 566,084,000 $ 623,709,000
Net Income $ 16,916,000 $ 17,186,000 $ 60,399,000 $ 65,828,000
Earnings per Common Share $ .40 $ .39 $ 1.41 $ 1.49
TO OUR SHAREHOLDERS:
Your Company's net income and earnings per common share for the three months ended September 30, 1996, were $13,237,000 and $.31, respectively, as compared to $17,103,000 and $.39 for the same period in 1995. Net sales for the three-month period decreased 13.1% to $139,748,000 from $160,771,000 in 1995. For the first nine months of 1996 net income and earnings per common share were $43,483,000 and $1.01, respectively, as compared to $48,642,000 and $1.10 for the same period in 1995. Sales for the nine-month period declined to $424,770,000 from $482,687,000 in 1995.
We were pleased with the third quarter and nine-month results considering the continued unstable market conditions that existed in the printing and writing paper portion of the industry. Your Company's net income for the third quarter and first nine months of 1996 declined modestly from the levels experienced for the same time periods in 1995. This was primarily due to lower selling prices for most of its printing and writing papers, offset somewhat by lower material costs for market pulp and wastepaper. The comparison of revenues and net income for your Company in the 1996 periods versus 1995 are outstanding when contrasted to the disappointing numbers reported for most other paper companies for the same periods. We have again shown our ability to outperform other paper companies due to our focus on non-commodity, niche markets and products.
Your Company's third quarter financial results, as compared to other quarters in the year, are always negatively impacted by planned annual maintenance shutdowns. Such shutdowns were taken at each of our mills during the third quarter of 1996 and were completed according to plan. Steady demand during the quarter for your Company's products allowed each of the mills to operate without any unplanned downtime due to lack of orders.
Pricing for the Company's products was mixed. Some deterioration in pricing was noted for printing and writing papers during the quarter; however, price increases for those same products have been announced for October. Prices for tobacco and other specialty products as well as lightweight printing papers remained relatively constant during the third quarter.
Strong demand for tobacco and other specialty papers throughout 1996 has allowed the Company to enhance margins by enriching product mix. For example, strong demand for coated specialty papers has allowed the Company's Spring Grove mill to increase production of those papers by adding a third shift at its coating operation. The Company believes that customer demand will support this level of production until at least the end of the year.
As mentioned in last quarter's report, market pulp costs increased modestly on July 1. Another modest increase has been announced and is in effect as of October 1. If these higher pulp costs remain in effect, an environment would be provided where printing paper prices could also rise. We are hopeful that continued stable paper and pulp markets can be sustained over the balance of the year, leading to solid financial performance during the fourth quarter of 1996.
I thank you for your continued interest in and support of the Company. We continue to be optimistic about the longer term prospects for your Company and believe that the uncoated printing and writing portion of the industry is moving into a more healthy situation of better balance between supply and demand.
T. C. Norris
Chairman and President
November 1, 1996
P. H. GLATFELTER COMPANY
SPRING GROVE, PENNSYLVANIA
SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION
(in thousands except per share amounts)
Three Months Ended Nine Months Ended September 30 September 30 1996 1995 1996 1995
Net sales $139,748 $160,771 $424,770 $482,687
Income before income taxes 21,736 28,095 71,334 79,971
Income taxes - current and deferred 8,499 10,992 27,851 31,329
Net income 13,237 17,103 43,483 48,642
Earnings per common share $ .31 $ .39 $ 1.01 $ 1.10
Number of shares used in per share calculations 42,789 44,352 42,978 44,392
|The Board of Directors has authorized the repurchase
in the open market or
in privately negotiated transactions of up to 12,000,000 shares of the
Company's common stock in the aggregate. Under these authorizations, as of
September 30, 1996, the Company had repurchased 11,037,803 shares.