You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: I'm Mark Chekanow, Director of Investor Relations at SWM.
Actual results may differ materially from the results suggested by these comments for a number of reasons, which are discussed in more detail in our Securities and Exchange Commission filings, including our annual report on Form 10-K and our quarterly reports on Form 10-Q.
In particular, the extent to which the COVID-19 pandemic continues to impact our business is uncertain and depends on numerous evolving factors which are difficult to predict, including the duration and scope of the pandemic and actions taken in response to it.
Unless stated otherwise, financial and operational metric comparisons are to the prior-year period and relate to continuing operations.
These continue to be interesting times around the world.
I've seen in news reports, COVID is moderating somewhat, but also not retreating as fully as everyone had hoped.
At the same time, dramatic demand increases have caused widespread supply disruptions with rapid and sometimes unprecedented price increases on many input costs, coupled with shortages of key raw materials.
In mid-2020, while many companies dealt with weak sales results and lengthy production outages from COVID-related stay-at-home orders, SWM's performance was quite strong, with several AMS markets proving resilient to COVID pressures and our Paper business exceeding expectations.
SWM's global teams were agile and our portfolio robust with good demand across many end markets, resulting in outstanding 2020 third quarter earnings.
We were expecting a similar story this year by building on an already strong portfolio, combined with the additional capabilities offered by our acquisition of Scapa in April.
We have high conviction that the fundamental story remains positive as demonstrated by the strong top line growth continuing in AMS. However, 2021 has seen global supply chains in disarray and rapid inflation and challenges accelerated throughout the third quarter, with higher input costs compounded by limited availability of some key raw materials and global shipping bottlenecks; these headwinds are clearly impacting our bottom line results.
While we continue to successfully implement price increases with the latest round becoming effective October 1, we have still been lagging in many cases, pressuring margins and resulting in us delivering adjusted earnings per share of $0.82 for the third quarter.
But we do see some early signs of moderation.
We expect these conditions to continue at least through the fourth quarter before our actions deliver better margin recovery.
Given our results to date and near-term view, we expect that our full year 2021 adjusted earnings per share will be below our original guidance for the full year, but do expect sequential improvements throughout 2022.
As you will see in the following commentary, our overall portfolio remains very good -- remains strong with very good demand, and we are confident that the actions we have and will continue to take will return us to the levels of profitability expected from our company.
As demonstrated by our agile teams last year, we are well positioned to continue to execute against our long-term strategic plans despite these shorter-term disruptions.
In AMS, overall sales nearly doubled, including the benefit of Scapa acquisition, with underlying organic sales increasing a strong 10% in the quarter.
Demand remains positive in several of our most strategic product lines, particularly in transportation and filtration end markets.
Transportation was up approximately 25%.
Fundamentals remain very strong and consumers are driving rapid growth for our high-value paint protection films.
As we noted in last quarter's call, that despite being the world's largest supplier of these base films, our sales could have been even higher if not for raw material scarcity.
Year-to-date, we have missed tens of millions of dollars in sales due to this midterm constraint.
To address this, we have expanded our supplier network and qualified additional suppliers' resins with our customers and secured additional supply for 2022.
Though still constrained, access to more raw materials should support our ability to deliver even greater than 10% growth next year on top of what will be already rapid growth in 2021.
We further expect our recent acquisitions to allow us to continue to innovate by expanding our offerings in this key product area, thereby executing against our stated strategy of offering our customers greater solutions to their needs.
We also continue to invest in capacity worldwide to capitalize on increasing consumer awareness and adoption of paint protection films and continued middle-class growth in many countries.
Filtration also grew approximately 25% in the quarter as the need for cleaner and purer continues to drive positive trends.
Water and process materials led the way.
Again, echoing comments from the second quarter call, our water customers continued to relay bullish outlooks to our commercial teams as they restock from depleted inventory levels, see increased activity at processing sites and convey positive outlooks for additional capacity coming online in emerging markets.
Process filtration also remained strong, albeit somewhat constrained by the semiconductor shortage, but we see continued momentum as chip makers work to fulfill unmet demand.
On the air filtration side, sales nearly matched third quarter of last year when our sales grew more than 60% on widespread COVID-driven HVAC system upgrades.
And we are encouraged that this business is maintaining such a high level of activity.
Notably though, our overall filtration sales have been impacted by labor challenges that constrained our growth.
We estimate the total impact to be in the range of $4 million to $5 million per quarter in lost sales, implying our total filtration business could have been up nearly 40% in the third quarter compared to last year.
Though there is limited visibility on when labor markets will reach equilibrium, we are taking multiple actions at various plants to address the issues in the meantime and are seeing increased interest in open positions.
These actions are a combination of increasing rate wages where needed to assure we are competitive; increasing our focus on supporting those currently in roles; and investing in automation to reduce our reliance on labor and improve efficiencies.
AMS' legacy healthcare business faced a tough year-on-year comparison as last year we benefited from the unprecedented demand in face mask materials.
Outside of that, we saw good gains in both consumer and higher-margin specialty wound care categories.
Regarding Scapa's performance, we are pleased that it is in line with our sales expectations.
Excluding currency fluctuations and GAAP accounting conversions, the overall business rebounded strongly versus 2020 and is nearing pre-COVID levels on the top line.
On the healthcare side, we are seeing good growth in consumer wellness products, whereas products more reliant on hospital foot traffic remain below pre-COVID levels.
In Industrial, we again saw a strong growth versus 2020.
Those sales are performing well.
Scapa is experiencing similar inflationary and supply chain pressures as the rest of our businesses.
Although we are disappointed that inflationary pressures, material sourcing challenges and labor availability negatively impacted the bottom line, top line performance for AMS has been strong.
Though we have successfully increased prices multiple times, these actions quite simply were not sufficient to keep pace with rapidly increasing raw material prices.
Customers are generally accepting these increases, and we will continue these actions as needed.
On a positive note, we do see early signs of resin pricing easing during the fourth quarter, and if that trend continues, should put us in an improved price cost position in 2022.
It is also important to note that while we have been addressing the above challenges, we have continued to drive our innovation process and invest in capacity and efficiency improvements across many of our segments.
These efforts will allow us to continue to position ourselves for continued growth.
Switching to Engineered Papers.
Quarterly top and bottom line results were softer than last year, though this was to be expected as last year's third quarter was the highest quarterly segment of operating profits we have achieved over the past 5 years.
While we were very happy with this performance last year as many businesses were suffering from weak demand, we knew that the inventory builds our customers took to handle the pandemic would reverse in time.
As you may recall, when we outlined our 2021 annual guidance, our expectation was to return to a more historical EP segment profit level given the large '22 benefit -- 2020 benefit of several large customers building LIP inventory to derisk their supply chains.
Unfortunately, while the decline in sales of 12% on a 10% volume decrease was generally anticipated, EP was not an exception to the inflationary pressures seen across global manufacturing.
Higher input costs for wood pulp, freight, and most recently, escalating energy and natural gas prices have far exceeded our expectations to date.
But just as with AMS, we have been actively raising prices to recoup higher wood pulp costs.
Due to the more standard contractual obligations, these increases lagged the pace of inflation, although we expect to catch up in the coming quarters.
We have also been able to negotiate additional volumes as a further offset to pricing constraints.
Just as with resin, we do believe we have seen peak pulp prices and expect modest near-term relief.
Importantly, we are not slowing our investments in innovation and finding ways to improve our cost structure.
Heat-not-Burn sales demonstrated continued momentum as our customers invest heavily in reduced-risk products.
Our hemp products are also going commercial, and we are in the process of finalizing our first meaningful commercial contract for hemp filler products to be used in non-tobacco, non-nicotine-based alternative smoking products.
This customer alone could become a multimillion-dollar customers within 2 years.
Our investments in hemp processing technologies and botanicals are beginning to bear fruit.
And like all new innovations, these product lines deliver an attractive margin profile.
I reiterate that despite grappling with the current supply chain headwinds and inflation, it is critical for our long-term outlook to continue to drive innovation and partner with current and potential new customers to drive growth in new product categories.
Regarding our cost structure, we have announced that we will be closing our Winkler site in Manitoba, Canada, at the end of the year.
This site primarily processed materials for our recently closed Spotswood, New Jersey site.
Though always a difficult decision to close facilities, we believe it was the prudent decision given the Spotswood shutdown.
Starting with AMS, third quarter sales increased 87% with organic growth at 10%.
As mentioned, sales could have been even higher if not for supply chain disruptions with some of our specialty resins, coupled with understaffing at some of our sites due to a tight labor market.
Directionally, it is possible AMS organic sales could have been up 20% without some of the constraints that we are dealing with.
We had excellent sales performance, particularly in transportation and filtration, each growing about 25% despite those limitations.
Adjusted operating profit increased 9%, reflecting the high organic sales growth and the incremental profits from Scapa.
However, significant inflationary costs, particularly with raw materials, along with supply chain issues pressured margins.
Segment adjusted operating margin contracted 750 basis points to 10.5%, in large part due to higher input costs.
Higher resin costs, mostly for polypropylene, had a negative effect on operating profits of approximately $5 million, net of the price increases that were effective in the period.
We recouped about half of the resin cost inflation, similar to the second quarter recovery ratio.
We've continued to raise prices and are actively engaged with our customers as we continue to catch up to a market that has seen rapidly escalating prices that reached record levels during the third quarter.
For context on the recent price escalation, during the second quarter, polypropylene prices increased to about $1.20 per pound, up 150% year-over-year.
Due to the 1 quarter lag from when we purchase, produce and sell, we felt that impact during our third quarter.
In the third quarter, prices continued to rise sharply to an average price of approximately $1.40 per pound, which will flow through the P&L during the fourth quarter.
We are, however, very encouraged to see some pullback in the polypropylene market in October.
And industry projections show continued softness of these record high levels during the fourth quarter and throughout next year.
Current projections call for pricing to reach under $1 by the second half of 2022.
While polypropylene is the single biggest variance driver, other factors such as higher costs for other materials and freight also contributed to margin contraction of the base business.
Regarding Scapa's profit contribution, the acquisition boosted AMS segment adjusted operating profits by over $9 million, similar to the second quarter.
However, as noted in our release, approximately $2.5 million of Scapa's SG&A costs were booked in our unallocated costs, not within AMS. So please be cognizant of that when assessing our segment financial results.
The transaction was slightly dilutive to adjusted earnings per share in the quarter, with elevated costs and supply chain disruptions causing the variance to our original expectations.
Outside of these external factors, we are pleased with how the business is performing and are confident in Scapa's progress with rebounding to pre-COVID sales and profit levels and our ability to deliver cost synergies in the near term and commercial synergies in the longer term.
Simply put, we expect to drive significantly improved results in 2022 and beyond as supply chain conditions normalize and our pricing catches up to the elevated raw materials environment.
For Engineered Papers, second quarter sales were down 12% on a 10% volume decline.
As Jeff detailed, we knew this would be a very challenging comparison to prior year, in large part due to a normalization of LIP volumes.
This carries an inherent negative mix impact on our profits as well, which was compounded by higher costs for wood pulp and other inputs.
Pulp costs alone were approximately a $3 million negative impact compared to last year, net of the price increases effective during the quarter.
While we've executed price increases to some customers, this business is more contract based, so our recovery rate has been less than half.
For context, the NBSK wood pulp index was up 40% to nearly $1,200 per ton in the second quarter compared to last year, which flowed through the P&L in the third quarter, and the third quarter index was up 60% to nearly $1,340 per ton, which will impact fourth quarter results.
The index appears to have peaked at this elevated level in recent months and industry projections are for some more modest relief in the coming quarters.
Regarding adjusted unallocated expenses, we saw an increase of $4 million during the quarter.
However, as noted, $2.5 million of the increase was Scapa's unallocated costs booked in our unallocated costs.
The remainder of the increase related to higher third-party consulting fees as well as higher IT expenses to support the growth of the business.
On a consolidated basis, sales for the quarter increased 37% to $384 million but decreased 1% on an organic basis.
Adjusted operating profit decreased 24% to $40 million.
Third quarter 2021 GAAP earnings per share was $0.38 versus $0.78.
The most material GAAP earnings per share items that are excluded from adjusted earnings per share were higher purchase accounting expenses of $0.29 per share compared to $0.15 last year due to the Scapa acquisition.
In addition, integration expenses were $0.08 per share.
Normalizing for those and other items, adjusted earnings per share was $0.82, down from last year's $1.16 per share.
To put some of the supply chain and cost headwinds into perspective, we estimate that cost inflation on resins and pulp alone that we did not recoup through price increases had an impact of over $0.20 per share on earnings per share in the quarter.
And the lost sales on transportation films alone was more than a $0.10 impact.
When combined with the other inflationary items like freight and energy and other constraints on growth, we could have very well seen adjusted earnings per share growth this quarter despite the difficult LIP comparisons we had anticipated.
To reiterate our comments from last quarter, these are our best directional estimates and indications, but they are clearly -- they clearly convey the magnitude of the financial impacts.
Though the costs and challenges are real, we see signs of relief on several of them, which should put us up for improving results as we move past the fourth quarter with comparisons getting easier throughout next year.
To recap, we have secured additional specialty resins for our transportation films business.
Our price increases will continue to catch up to input costs.
We see fourth quarter costs of resin and pulp easing, that are expected to be realized in 2022.
And we have visibility on cost and commercial synergies in Scapa for next year.
We are disappointed that this year's earnings will finish below our original expectations.
However, we firmly believe many of the challenges are temporary and are currently turning the corner.
With respect to the fourth quarter, we expect adjusted earnings per share to be down approximately 20% from $0.77 in the prior-year quarter, implying full year adjusted earnings per share could finish about 10% below the low end of our original guided range.
This reflects the high-cost raw materials purchased during the third quarter flowing through the P&L, continued lost sales due to material scarcity and some understaffing in our sites, with other key variables being joint venture results and final year tax rate.
We're still assessing next year's outlook, and we'll issue guidance in February.
But at this stage, we see strong operating profit growth in 2022.
This could mean potentially exiting 2022 on a run rate approaching $4 of adjusted EPS, assuming the current tax rate, which is generally consistent with our original 2021 guidance we issued before many of these challenges escalated.
Regarding cash flows, year-to-date operating cash flow was approximately $28 million, down from $108 million in the prior year.
Year-to-date adjusted operating profits were lower by $6 million.
We incurred $14 million of cash costs related fees and expenses in connection with the Scapa acquisition.
And we saw a $50 million increase in working capital outflows.
In addition to robust sales growth, which would naturally drive working capital outflows related to higher receivables, the inflationary environment is pushing our cash cost of inventories still on the balance sheet significantly higher.
This inventory factor alone accounts for approximately $30 million of higher cash outflows compared to last year.
Although sales growth and higher costs have impacted our typically strong second half cash flows, we would expect to resume more historically strong cash flow generation as working capital levels normalize during the fourth quarter and into 2022.
Net debt finished the second quarter just over $1.2 billion.
Net debt to adjusted EBITDA for the terms of our credit agreement was 4.8x at the end of the third quarter.
Despite leverage increasing, we remain comfortably below our 5.5 covenant level and have approximately $160 million in liquidity, consisting of our current cash balance of $73 million and $86 million of availability on our revolving credit facility.
In addition, we are in the process of closing the sale of assets related to discontinued operations, which is expected to be completed during the fourth quarter.
Now, back to Jeff.
As we close out 2021, we want to keep the ups and downs of the past 18 months in perspective.
Our global teams overcame many challenges and uncertainties last year to deliver strong operational and financial performance in 2020.
And while we are grappling with supply chain headwinds this year, though very different issues, these 2 will ultimately normalize.
We remain laser-focused on addressing those issues within our control, with price increases to offset higher costs, sourcing projects to combat raw material scarcity, and initiatives to improve staffing levels at our production sites to meet demand.
We are confident we can return to a run rate of $4 in earnings per share later in 2022 with the stage set for sustained growth in the years to follow.
Despite the all-hands-on-deck approach required to address current challenges, we have not lost sight of the strategic imperatives to position us for long-term growth.
These imperatives include innovation of new products, offering expanded solutions, realizing the synergies of our recent acquisitions and leveraging manufacturing 4.0 technology to improve operations.
And underscoring all those initiatives is a cultural foundation based on unwavering commitments to each other and our customers as we navigate these unprecedented times.
We are excited about our portfolio and the future growth it portends.
That concludes our remarks.

user
schweitzer-mauduit international inc - qtrly total sales were $383.6 million, up 37.3%, but down 1% on organic basis.
schweitzer-mauduit international inc - qtrly gaap earnings per share was $0.38.
schweitzer-mauduit international inc - qtrly adjusted earnings per share was $0.82.

assistant