Glatfelter Corp

Previous wording

In June, the Company reported the achievement of all required approvals and clearances under competition and foreign direct investment laws. Also, Berry received a favorable ruling from the IRS related to the transaction's tax treatment. The transaction is subject to additional customary closing conditions that are currently underway, including approval by Glatfelter shareholders. The transaction is expected to close in the second half of 2024. Prior to the completion of the Merger, Glatfelter and HHNF will continue to operate as independent companies.

Current wording

Previously, the Company reported the achievement of all required approvals and clearances under competition and foreign direct investment laws and Berry received a favorable private letter ruling from the U.S. Internal Revenue Service regarding the qualification of the spin-off and the merger as tax-free transactions under the Internal Revenue Code. On October 23, 2024 we obtained the shareholder approval for the merger and the transaction is expected to close on November 4, 2024. Prior to the completion of the Merger, Glatfelter and HHNF will continue to operate as independent companies.

Previous wording

Six months ended June 30, 2024 versus the six months ended June 30, 2023

Current wording

Nine Months ended September 30, 2024 versus the nine months ended September 30, 2023

Previous wording

Overview For the first six months of 2024, we reported a loss from continuing operations of $41.9 million, or $0.93 per share compared with a loss of $49.8 million or $1.11 per share in the same period in 2023. The following table sets forth summarized consolidated results of operations:

Current wording

Overview For the first nine months of 2024, we reported a loss from continuing operations of $61.9 million, sor $1.37 per share compared with a loss of $69.5 million or $1.54 per share in the same period in 2023. The following table sets forth summarized consolidated results of operations:

Previous wording

The reported results are in accordance with generally accepted accounting principles in the United States (“GAAP”) and reflect the impact of a number of significant items including strategic initiatives, turnaround strategy costs, debt refinancing, and CEO transition costs, among others. Our operating results for the six months ended June 30, 2024 reflect: i) the impact of European market challenges resulting in lower sales volumes, as well as, lower production; ii) higher interest expense stemming from the debt refinancing in the first six months of 2023; iii) costs incurred related to the merger with Berry’s HHNF business.

Current wording

The reported results are in accordance with generally accepted accounting principles in the United States (“GAAP”) and reflect the impact of a number of significant items including strategic initiatives, turnaround strategy costs, debt refinancing, and CEO transition costs, among others. Our operating results for the nine months ended September 30, 2024 reflect: i) the impact of macroeconomic conditions and new sanctions related to wallcover resulting in lower sales volumes, as well as, lower production; ii) higher interest expense stemming from the debt refinancing in the first nine months of 2023; iii) costs incurred related to the merger with Berry’s HHNF business.

Previous wording

In addition to the results reported in accordance with GAAP, we evaluate our performance using financial metrics not calculated in accordance with GAAP, including adjusted earnings and adjusted earnings before interest expense, interest income, income taxes, depreciation and amortization and share-based compensation (“Adjusted EBITDA”). On an adjusted earnings basis, a non-GAAP measure, we had an adjusted loss from continuing operations of $26.2 million, or $0.58 per share for the first six months of 2024, compared with a loss of $26.3 million, or $0.58 per share, a year ago. Our Adjusted EBITDA, also a non-GAAP measure, was $49.4 million for the six months ended June 30, 2024 as compared to $42.0 million for the same period in 2023. We disclose this information to allow investors to evaluate our performance exclusive of certain items that impact the comparability of results from period to period and we believe it is helpful in understanding underlying operating trends and cash flow generation.

Current wording

In addition to the results reported in accordance with GAAP, we evaluate our performance using financial metrics not calculated in accordance with GAAP, including adjusted earnings and adjusted earnings before interest expense, interest income, income taxes, depreciation and amortization and share-based compensation (“Adjusted EBITDA”). On an adjusted earnings basis, a non-GAAP measure, we had an adjusted loss from continuing operations of $38.0 million, or $0.84 per share for the first nine months of 2024, compared with a loss of $36.7 million, or $0.81 per share, a year ago. Our Adjusted EBITDA, also a non-GAAP measure, was $74.0 million for the nine months ended September 30, 2024 as compared to $67.5 million for the same period in 2023. We disclose this information to allow investors to evaluate our performance exclusive of certain items that impact the comparability of results from period to period and we believe it is helpful in understanding underlying operating trends and cash flow generation.

Previous wording

CEO transition costs. This adjustment reflects a non-cash pension settlement charge associated with the separation of our former CEO related to a lump-sum distribution made in Q1 2023 under the terms of his non-qualified pension plan agreement.

Current wording

CEO transition costs. This adjustment reflects costs associated with the separation of our former CEO, including a non-cash pension settlement charge related to a lump-sum distribution made in Q1 2023 under the terms of his non-qualified pension plan agreement.

Previous wording

Adjusted earnings and adjusted EBITDA are considered measures not calculated in accordance with GAAP, and therefore are non-GAAP measures. The non-GAAP financial information should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with GAAP. The following table sets forth the reconciliation of net loss to adjusted earnings for the periods presented:

Current wording

Adjusted earnings and adjusted EBITDA are considered measures not calculated in accordance with GAAP, and therefore are non-GAAP measures. The non-GAAP financial information should not be considered in isolation from, or as

Previous wording

(1)For 2024, primarily reflects consulting and legal fees associated with the pending Berry HHNF merger of $13.9 million, and personnel retention, to offset the risk of potential employee departures due to the pending transaction, and other costs of $1.1 million. For 2023, primarily reflects integration activities including consulting and legal fees of $0.7 million, the write-off of a construction in process asset deemed unusable of $0.5 million, employee separation costs of $0.1 million, and other costs of $0.4 million.

Current wording

(2)For 2024, primarily reflects consulting and legal fees associated with the pending Berry HHNF merger of $20.7 million, and personnel retention, to offset the risk of potential employee departures due to the pending transaction, of $1.8 million, a contract settlement of $0.4 million, and other costs of $0.1 million. For 2023, primarily reflects integration activities including consulting and legal fees of $1.2 million, the write-off of construction in process asset deemed unusable of $0.5 million, employee separation costs of $0.1 million, and other costs of $0.4 million.

Previous wording

(2)For 2024, primarily reflects employee separation costs. For 2023, reflects employee separation costs of $4.0 million and $2.7 million in professional fees.

Current wording

(3)For 2024, primarily reflects employee separation costs. For 2023, reflects employee separation costs of $4.3 million and $2.7 million in professional fees.

Previous wording

(3)Reflects employee separation costs of $10.4 million and professional services fees and other costs of $0.4 million in connection with the closure of the Ober-Schmitten facility.

Current wording

(4)Reflects disposal costs of $17.8 million, legal fees of $0.5 million, employee separation costs of $0.1 million, and other costs of $0.4 million in connection with the closure of the Ober-Schmitten facility.

Previous wording

(4)Reflects $1.8 million write-off of deferred debt issuance costs in connection with the Company’s debt refinancing in Q1 2023, and $0.1 million in early repayment penalties and write-off of unamortized financing fees on the IKB loans.

Current wording

(5)Reflects $1.8 million write-off of deferred debt issuance costs in connection with the Company’s debt refinancing in Q1 2023, and $0.1 million in early repayment penalties and write-off of unamortized financing fees on the IKB loans.

Previous wording

(5)Reflects pension settlement charge related to former CEO's separation.

Current wording

(6)Reflects pension settlement charge related to former CEO's separation.

Previous wording

(6)Reflects $0.2 million of interest income on employee retention credits claimed under the CARES Act of 2020 and the subsequent related amendments.

Current wording

(7)Reflects $0.3 million of interest income on employee retention credits claimed under the CARES Act of 2020 and the subsequent related amendments, offset by professional fees of less than $0.1 million.

Previous wording

(7)Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated. For items originating in the U.S., no tax effect is recognized due to the previously established valuation allowance on the net deferred tax assets.

Current wording

(8)Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated. For items originating in the U.S., no tax effect is recognized due to the previously established valuation allowance on the net deferred tax assets.

Previous wording

(8)Tax effect of applying certain provisions of the CARES Act of 2020. The amount in 2023 also includes $2.4 million of deferred tax expense resulting from valuation allowance for Ober-Schmitten facility.

Current wording

(9)Tax effect of applying certain provisions of the CARES Act of 2020. The amount in 2023 also includes $2.4 million of deferred tax expense resulting from valuation allowance for Ober-Schmitten facility.

Previous wording

depreciation and amortization. Adjusted EBITDA is calculated using EBITDA and further excludes certain items management considers to be unrelated to the company’s core operations. The adjustments include, among others, strategic initiative costs, turnaround strategy costs, and share-based compensation expense. Adjusted EBITDA is a performance measure that excludes costs that we do not consider to be indicative of our ongoing operating performance.

Current wording

EBITDA is a measure used by management to assess our operating performance and is calculated using income (loss) from continuing operations and excludes interest expense, interest income, income taxes, and depreciation and amortization. Adjusted EBITDA is calculated using EBITDA and further excludes certain items management considers to be unrelated to the company’s core operations. The adjustments include, among others, strategic initiative costs, turnaround strategy costs, and share-based compensation expense. Adjusted EBITDA is a performance measure that excludes costs that we do not consider to be indicative of our ongoing operating performance.

Previous wording

30 - and the extent of cash flow generated from these core operations. Such amounts are presented under the caption “Other and Unallocated.” In the evaluation of operating segments results, management does not use any measures of total assets. This presentation is aligned with the management and operating structure of our company. It is also on this basis that the Company’s performance is evaluated internally and by the Company’s Board of Directors.

Current wording

31 - and the extent of cash flow generated from these core operations. Such amounts are presented under the caption “Other and Unallocated.” In the evaluation of operating segments results, management does not use any measures of total assets. This presentation is aligned with the management and operating structure of our company. It is also on this basis that the Company’s performance is evaluated internally and by the Company’s Board of Directors.

Previous wording

Net sales totaled $656.7 million and $735.2 million in the six months ended June 30, 2024 and 2023, respectively. Net sales for Airlaid Materials, Composite Fibers and Spunlace decreased by 16.0%, 9.5% and 2.3%, respectively, on a constant currency basis.

Current wording

Net sales totaled $988.8 million and $1,065.1 million in the nine months ended September 30, 2024 and 2023, respectively. Net sales for Airlaid Materials, Composite Fibers and Spunlace decreased by 12.8%, 5.6% and 1.1%, respectively, on a constant currency basis.

Previous wording

Airlaid Materials’ second quarter net sales decreased $21.9 million in the year-over-year comparison mainly driven by lower selling prices from cost pass-through arrangements and lower energy surcharges in Europe as both raw materials and energy input costs declined compared to last year. Shipments were 3.7% lower driven by declines in the hygiene categories mainly due to pricing actions taken in 2023 to retain margins as well as lower shipments in the wipes category related to timing. Currency translation was unfavorable by $0.7 million.

Current wording

Airlaid Materials’ first nine months net sales decreased $58.5 million in the year-over-year comparison mainly driven by lower selling prices of $41.0 million from cost pass-through arrangements and lower energy surcharges in Europe as both raw materials and energy input costs declined compared to last year. Shipments were 3.3% lower driven by declines in the hygiene categories mainly due to pricing actions taken in 2023 to retain margins as well as lower shipments in the home care category. Currency translation was favorable by $0.6 million.

Previous wording

Airlaid Materials’ first six months of operating income of $12.5 million was $11.1 million lower when compared to the first six months of 2023. Selling price decreases of $33.3 million were mostly offset by lower raw material, energy, and other inflation costs of $32.1 million. For the first six months of 2024, primary raw material input costs decreased by $29 million, or 18%, and energy costs decreased by $2.1 million, or 12%, compared to the same six months of 2023. As of June 30, 2024, Airlaid Materials had approximately 76% of its net sales with contracts with pass-through provisions. Operations were unfavorable by $5.8 million mainly driven by lower production and higher wage inflation. The impact of currency and related hedging negatively impacted earnings by $1.5 million. The primary drivers of the change in Airlaid Materials’ operating income are summarized in the following chart (presented in millions):

Current wording

Airlaid Materials’ first nine months of operating income of $22.8 million was $12.0 million lower when compared to the first nine months of 2023. Selling price decreases of $41.0 million were mostly offset by lower raw material, energy, and other inflation costs of $38.5 million. For the first nine months of 2024, primary raw material input costs decreased by $36.6 million, or 15%, and energy costs decreased by $1.8 million, or 10%, compared to the same nine months of 2023. As of September 30, 2024, Airlaid Materials had approximately 76% of its net sales with contracts with pass-through provisions. Operations were unfavorable by $5.2 million mainly driven by lower production and higher wage inflation. The impact of currency and related hedging negatively impacted earnings by $1.1 million. The primary drivers of the change in Airlaid Materials’ operating income are summarized in the following chart (presented in millions):

Previous wording

Composite Fibers’ net sales were $25.0 million lower in the first six months of 2024, compared to 2023 due to lower selling prices of $18.6 million. Even though shipments were higher 1.9%, it was largely driven by the composite laminates and food and beverage categories that have lower average selling prices compared to other inclined wire products lowering the revenue for the six months. Currency translation was favorable by $0.4 million.

Current wording

Composite Fibers’ net sales were $21.0 million lower in the first nine months of 2024, compared to 2023 due to lower selling prices of $20.9 million. Even though shipments were higher 2.3%, it was largely driven by the composite laminates and metallized products categories that have lower average selling prices compared to other inclined wire products lowering the revenue for the nine months. Currency translation was favorable by $0.3 million.

Previous wording

Composite Fibers had an operating income for the first six months of $14.3 million which was $7.3 million higher when compared to the first six months of 2023. Selling price decreases of $18.6 million were more than offset by lower raw material, energy, and other inflation costs of $22.0 million. For the first six months of 2024, primary raw material input costs decreased by $17.7 million, or 5%, and energy costs decreased by $4.3 million, or 11%, compared to the same six months of 2023. As of June 30, 2024, Composite Fibers had approximately 46% of its net sales with contracts with pass-through provisions. Operations were favorable by $1.4 million mainly driven by higher inclined wire production when compared to the same period in 2023. The impact of currency and related hedging negatively impacted earnings by $0.1 million. The primary drivers of the change in Composite Fibers’ operating income are summarized in the following chart (presented in millions):

Current wording

Composite Fibers had an operating income for the first nine months of $20.6 million which was $6.3 million higher when compared to the first nine months of 2023. Selling price decreases of $20.9 million were fully offset by lower raw material, energy, and other inflation costs of $20.9 million. For the first nine months of 2024, primary raw material input costs decreased by $15.7 million, or 3%, and energy costs decreased by $5.2 million, or 10%, compared to the same nine months of 2023. As of September 30, 2024, Composite Fibers had approximately 45% of its net sales with contracts with pass-through provisions. Operations were favorable by $1.9 million mainly driven by higher inclined wire production when compared to the same period in 2023. The impact of currency and related hedging positively impacted earnings by $0.1 million. The primary drivers of the change in Composite Fibers’ operating income are summarized in the following chart (presented in millions):

Previous wording

Spunlace’s net sales were$3.8 million lower in the first six months of 2024 compared to 2023, mainly driven by lower selling prices of $6.4 million due to cost pass-through arrangements. Shipments were slightly higher year over year by 1.3%. Currency translation was slightly unfavorable by $0.1 million.

Current wording

Spunlace’s net sales were$2.8 million higher in the first nine months of 2024 compared to 2023, mainly driven by higher shipments of Sontara product categories that have higher average selling prices compared to health and hygiene products. This was partially offset by lower selling prices of $7.6 million mainly due to cost pass-through arrangements. Currency translation was slightly favorable by $0.1 million.

Previous wording

Spunlace had an operating income for the first six months of $5.0 million which was $8.3 million higher when compared to the operating loss of $3.3 million of the first six months of 2023. Selling price decreases of $6.4 million were more than offset by lower raw material, energy, and other inflation costs of $11.5 million. For the first six months of 2024, primary raw material input costs decreased by $10.8 million, or 13%, and energy costs decreased by $0.7 million, or 6%, compared to the same six months of 2023. As of June 30, 2024, Spunlace had approximately 50% of its net sales with

Current wording

Spunlace had an operating income for the first nine months of $6.3 million which was $10.7 million higher when compared to the operating loss of $4.4 million of the first nine months of 2023. Selling price decreases of $7.6 million were more than offset by lower raw material, energy, and other inflation costs of $13.2 million. For the first nine months of 2024, primary raw material input costs decreased by $12.2 million, or 10%, and energy costs decreased by $0.9 million, or

Previous wording

32 - contracts with pass-through provisions. Operations were favorable by $3.3 million mainly driven by higher production, lower operational spending, and improved operations when compared to the same period in 2023. The impact of currency and related hedging negatively impacted earnings by $0.2 million. The primary drivers of the change in Spunlace’s operating income are summarized in the following chart (presented in millions):

Current wording

6%, compared to the same nine months of 2023. As of September 30, 2024, Spunlace had approximately 53% of its net sales with contracts with pass-through provisions. Operations were favorable by $4.3 million mainly driven by higher production, lower operational spending, and improved operations when compared to the same period in 2023. The impact of currency and related hedging negatively impacted earnings by $0.1 million.

Previous wording

38 - demand. The impact of currency and related hedging negatively impacted earnings by $0.4 million. The primary drivers of the change in Spunlace’s operating income are summarized in the following chart (presented in millions):

Current wording

The primary drivers of the change in Spunlace’s operating income are summarized in the following chart (presented in millions):

Previous wording

Other and Unallocated The amount of operating expense not allocated to a reporting segment in the Segment Financial Information totaled $26.0 million in the first six months of 2024 compared with $31.7 million in the same period a year ago. Excluding the items identified to present “adjusted earnings,” unallocated expenses for the first six months of 2024 decreased $2.6 million compared to the first six months of 2023 mainly driven by a loss recovery settlement with a supplier for faulty material supplied to Glatfelter in 2022 and lower professional services costs.

Current wording

Other and Unallocated The amount of operating expense not allocated to a reporting segment in the Segment Financial Information totaled $41.0 million in the first nine months of 2024 compared with $46.5 million in the same period a year ago. Excluding the items identified to present “adjusted earnings,” unallocated expenses for the first nine months of 2024 decreased $2.3 million compared to the first nine months of 2023 mainly driven by Ober-Schmitten divestiture costs incurred in 2023.

Previous wording

Income taxes In the first six months of 2024, our U.S. GAAP pre-tax loss from continuing operations totaled $33.8 million and we recorded an income tax provision of $8.1 million, which primarily related to the tax provision for foreign jurisdictions, reserves for uncertain tax positions, and valu ation allowances for domestic and foreign jurisdiction losses for which no tax benefit could be recognized. The comparable amounts in the same first six months of 2023 were a pre-tax loss of$39.7 million and an income tax provision of$10.1 million.

Current wording

Income taxes In the first nine months of 2024, our U.S. GAAP pre-tax loss from continuing operations totaled $52.4 million and we recorded an income tax provision of $9.6 million, which primarily related to the tax provision for foreign jurisdictions, reserves for uncertain tax positions, and valu ation allowances for domestic and foreign jurisdiction losses for which no tax benefit could be recognized. The comparable amounts in the same first nine months of 2023 were a pre-tax loss of$56.1 million and an income tax provision of$13.4 million.

Previous wording

Foreign Currency We own and operate facilities in Canada, Germany, France, the United Kingdom, Spain, and the Philippines. The functional currency of our Canadian operations is the U.S. dollar. However, in Germany, France and Spain, it is the euro, in the UK, it is the British pound sterling, and in the Philippines the functional currency is the peso. On an annual basis, our euro denominated net sales exceeds euro expenses by an estimated €170 million. For the three months ended June 30, 2024, the average currency exchange rate was 1.08 dollar/euro compared with 1.09 in the same period of 2023. With respect to the British pound sterling, Canadian dollar, and Philippine peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the euro. As a result, we are exposed to changes in currency exchange rates and such changes could be significant. The translation of the results from international operations into U.S. dollars is subject to changes in foreign currency exchange rates.

Current wording

Foreign Currency We own and operate facilities in Canada, Germany, France, the United Kingdom, Spain, and the Philippines. The functional currency of our Canadian operations is the U.S. dollar. However, in Germany, France and Spain, it is the euro, in the UK, it is the British pound sterling, and in the Philippines the functional currency is the peso. On an annual basis, our euro denominated net sales exceeds euro expenses by an estimated €170 million. For the nine months ended September 30, 2024, the average currency exchange rate was 1.09 dollar/euro compared with 1.08 in the same period of 2023. With respect to the British pound sterling, Canadian dollar, and Philippine peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the euro. As a result, we are exposed to changes in currency exchange rates and such changes could be significant. The translation of the results from international operations into U.S. dollars is subject to changes in foreign currency exchange rates.

Previous wording

The table below summarizes the translation impact on reported results that changes in currency exchange rates had on our non-U.S. based operations from the conversion of these operation’s results for the first six months of 2024.

Current wording

The table below summarizes the translation impact on reported results that changes in currency exchange rates had on our non-U.S. based operations from the conversion of these operation’s results for the first nine months of 2024.

Previous wording

Overview For the second quarter of 2024, we reported a loss from continuing operations of $15.8 million, or $0.35 per share compared with a loss of $36.6 million or $0.82 per share in the same period in 2023. The following table sets forth summarized consolidated results of operations:

Current wording

Overview For the third quarter of 2024, we reported a loss from continuing operations of $20.0 million, or $0.44 per share compared with a loss of $19.7 million or $0.43 per share in the same period in 2023. The following table sets forth summarized consolidated results of operations:

Previous wording

The reported results are in accordance with generally accepted accounting principles in the United States (“GAAP”) and reflect the impact of a number of significant items including strategic initiatives, turnaround strategy costs, the loss on sale of our Ober-Schmitten operations, and COVID-19 ERC recovery, among others. Our operating results for the three months ended June 30, 2024 reflect: i) the impact of challenges in the European markets and with consumer demand resulting in lower sales volumes and sales, as well as, lower production, ii) higher interest expense stemming from the debt refinancing in the first quarter of 2023, iii) costs incurred related to our turnaround strategy, iv) costs associated with the pending merger with Berry’s HHNF business.

Current wording

The reported results are in accordance with generally accepted accounting principles in the United States (“GAAP”) and reflect the impact of a number of significant items including strategic initiatives, turnaround strategy costs, and the loss on sale of our Ober-Schmitten operations, among others. Our operating results for the three months ended September 30, 2024 reflect: i) the impact of macroeconomic conditions and new sanctions related to wallcover resulting in lower sales volumes, as well as, lower production, ii) higher interest expense stemming from the debt refinancing in the first quarter of 2023, iii) costs incurred related to our turnaround strategy, iv) costs associated with the pending merger with Berry’s HHNF business.

Previous wording

In addition to the results reported in accordance with GAAP, we evaluate our performance using financial metrics not calculated in accordance with GAAP, including adjusted earnings and adjusted earnings before interest expense, interest income, income taxes, depreciation and amortization and share-based compensation (“Adjusted EBITDA”). On an adjusted earnings basis, a non-GAAP measure, we had an adjusted loss from continuing operations of $11.3 million, or $0.25 per share for the second quarter of 2024, compared with a loss of $20.5 million, or $0.45 per share, a year ago. Our Adjusted EBITDA, also a non-GAAP measure, was $25.6 million for the three months ended June 30, 2024 as compared to $17.3 million for the same period in 2023. We disclose this information to allow investors to evaluate our performance exclusive of certain items that impact the comparability of results from period to period and we believe it is helpful in understanding underlying operating trends and cash flow generation.

Current wording

In addition to the results reported in accordance with GAAP, we evaluate our performance using financial metrics not calculated in accordance with GAAP, including adjusted earnings and adjusted earnings before interest expense, interest income, income taxes, depreciation and amortization and share-based compensation (“Adjusted EBITDA”). On an adjusted earnings basis, a non-GAAP measure, we had an adjusted loss from continuing operations of $11.8 million, or $0.26 per share for the third quarter of 2024, compared with a loss of $10.4 million, or $0.23 per share, a year ago. Our Adjusted EBITDA, also a non-GAAP measure, was $24.6 million for the three months ended September 30, 2024 as compared to $25.5 million for the same period in 2023. We disclose this information to allow investors to evaluate our performance exclusive of certain items that impact the comparability of results from period to period and we believe it is helpful in understanding underlying operating trends and cash flow generation.

Previous wording

(1)For 2024, primarily reflects consulting and legal fees associated with the pending Berry HHNF merger of $3.4 million, and personnel retention, to offset the risk of potential employee departures due to the pending transaction, and other costs of $0.7 million. For 2023, primarily reflects integration activities including the write-off of a construction in process asset deemed unusable of $0.5 million, consulting and legal fees of $0.3 million, and other costs of $0.1 million.

Current wording

(2)For 2024, primarily reflects consulting and legal fees associated with the pending Berry HHNF merger of $6.9 million, and personnel retention, to offset the risk of potential employee departures due to the pending transaction, of $0.7 million, and a contract settlement of $0.4 million. For 2023, primarily reflects professional fees (tax and IT) of $0.4 million and other costs of $0.1 million.

Previous wording

(3)Reflects employee separation costs of $10.4 million and professional services fees and other costs of $0.3 million in connection with the divestiture of the Ober-Schmitten facility.

Current wording

(3)Reflects employee separation costs of $0.4 million.

Previous wording

(5)Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated. For items originating in the U.S., no tax effect is recognized due to the previously established valuation allowance on the net deferred tax assets.

Current wording

(6)Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated. For items originating in the U.S., no tax effect is recognized due to the previously established valuation allowance on the net deferred tax assets.

Previous wording

Schmitten divestiture costs, turnaround strategy costs, strategic initiative costs, and share-based compensation expense. Adjusted EBITDA is a performance measure that excludes costs that we do not consider to be indicative of our ongoing operating performance.

Current wording

36 - be unrelated to the company’s core operations. The adjustments include, among others, Ober-Schmitten divestiture costs, turnaround strategy costs, strategic initiative costs, and share-based compensation expense. Adjusted EBITDA is a performance measure that excludes costs that we do not consider to be indicative of our ongoing operating performance.

Previous wording

Net sales totaled $329.4 million and $357.0 million in the three months ended June 30, 2024 and 2023, respectively. Net sales decreased for Airlaid Materials and Composite Fibers by 13.9% and 5.7%, respectively, and increased for Spunlace by 3.9%, on a constant currency basis.

Current wording

Net sales totaled $332.1 million and $329.9 million in the three months ended September 30, 2024 and 2023, respectively. Net sales decreased for Airlaid Materials by 5.9% and increased for Composite Fibers and Spunlace by 3.6% and 8.7%, respectively, on a constant currency basis.

Previous wording

Airlaid Materials’ first six months net sales decreased $49.8 million in the year-over-year comparison mainly driven by lower selling prices of $33.3 million from cost pass-through arrangements and lower energy surcharges in Europe as both raw materials and energy input costs declined compared to last year. Shipments were 3.7% lower driven by declines in the hygiene categories mainly due to pricing actions taken in 2023 to retain margins as well as lower shipments in the wipes category related to timing. Currency translation was relatively unchanged compared to the prior year.

Current wording

Airlaid Materials’ third quarter net sales decreased $8.7 million in the year-over-year comparison mainly driven by lower selling prices from cost pass-through arrangements as raw materials input costs declined compared to last year. Shipments were 2.5% lower driven by declines in the hygiene categories mainly due to pricing actions taken in 2023 to retain margins. Currency translation was favorable by $0.6 million.

Previous wording

Airlaid Materials’ 2024 second-quarter operating income of $7.5 million was $2.2 million lower than the second-quarter operating income in 2023. Lower shipments in the hygiene categories due to pricing actions taken in 2023 to retain margins and lower shipments in the wipes category related to timing lowered earnings by $0.8 million. Selling price decreases and lower energy surcharges of $13.0 million were more than offset by lower raw material, energy, and other inflationary costs of $14.2 million. For the second quarter of 2024, primary raw material input costs decreased by $13.7 million, or 17%. Energy costs were slightly lower by 2%, compared to second quarter of 2023. As of June 30, 2024, Airlaid Materials had approximately 76% of its net sales with contracts with pass-through provisions. Operations and other costs were unfavorable by $2.1 million mainly driven by lower production. The impact of currency and related hedging negatively impacted earnings by $0.5 million. The primary drivers of the change in Airlaid Materials’ operating income are summarized in the following chart (presented in millions):

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Airlaid Materials’ 2024 third quarter operating income of $10.3 million was $0.9 million lower than the third quarter operating income in 2023. Lower shipments in the hygiene categories due to pricing actions taken in 2023 to retain margins and lower shipments in the home care category related to timing lowered earnings by $0.7 million. Selling price decreases and lower energy surcharges of $7.8 million were moderately offset by lower raw material, energy, and other inflationary costs of $6.4 million. For the third quarter of 2024, primary raw material input costs decreased by $6.5 million, or 9%, and energy costs increased by $0.2 million, or 3%, compared to the third quarter of 2023. As of September 30, 2024, Airlaid Materials had approximately 75% of its net sales with contracts with pass-through provisions. Operations and other costs were favorable by $0.7 million mainly driven by lower production. The impact of currency and related hedging positively impacted earnings by $0.5 million. The primary drivers of the change in Airlaid Materials’ operating income are summarized in the following chart (presented in millions):