Shares of specialty-paper maker P. H. Glatfelter Company (GLT -1.70%) plunged in Wednesday trading, to close the day down 10.4%.
Glatfelter reported its fiscal first-quarter 2017 financial results yesterday after market close. Profits for the quarter declined 30% year over year to just $0.26 per share. Nonetheless, Glatfelter CEO Dante Parrini insisted that earnings "were in line with expectations," and argued that Glatfelter's pro forma, or "adjusted," earnings were actually $0.39 per share -- and thus right in line with analyst estimates for pro forma earnings.
One thing's for certain, though. Analysts had predicted that Glatfelter would book revenues of $400.1 million in Q1, down less than 1% from last year's revenue haul. By that measure, the $390.7 million in revenues that Glatfelter reported clearly missed analyst expectations -- and were also down 3% year over year.
That seems to have served as reason enough for investors to sell off the stock.
Glatfelter wasn't entirely clear on what investors should expect from it in Q2, or for the rest of 2017, either. Management noted that its composite-fibers division (its second smallest) will probably ship about 5% more product in Q2 than it did in Q1, at prices roughly equal to Q1, but with input costs for energy rising slightly. That appears to imply that the company expects sales from this division to approximate $131 million in the current quarter -- down about $5 million from last year -- and at lower profitability.
Advanced airlaid materials, the company's smallest division, should see sales and profits both rise "slightly." Meanwhile, specialty papers, Glatfelter's flagship business, will see sales slip sequentially, and "slightly," while suffering price declines and higher costs. By my estimation, that works out to perhaps an 8% decline in sales for this division, with profits suffering even more.
Long story short, if you didn't like Q1's results, you're probably going to hate Q2. I suspect that's why sellers are winning the argument over Glatfelter stock today.