Wausau Paper Posts 1st Quarter Loss
April 25, 2006 (Press Release) - Wausau Paper today reported a net loss for the first quarter of $1.3 million, or $0.03 per share, compared with net earnings of $1.9 million, or $0.04 per share, last year. Net sales rose 6 percent to $283.7 million, and shipments increased 1 percent to 224,000 tons.
First-quarter results reflect after-tax stock incentive charges of $0.02 per share, including a cumulative effect charge of $0.01 per share related to the adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payments. Prior-year results included after-tax stock incentive credits of $0.02 per share.
"Net sales reached record first-quarter levels with each of our three business segments achieving year-over-year improvement," said Thomas J. Howatt, president and CEO. "Much of this improvement is the result of progress made in pursuing our proven business strategies - niche markets, product innovation, benchmark customer service, and operational excellence. For the quarter, revenues from products developed in the last three years exceeded our target of 25 percent. Production efficiencies improved 2 percent from a year ago, and cost containment activities delivered meaningful benefits. Along with the proven contributions from executing our strategies, we are beginning to see market conditions strengthen, particularly compared with the weak levels of late last year."
Specialty Products reported first-quarter operating profits of $2.4 million compared with $3.9 million last year. Net sales increased 3 percent while shipments declined 2 percent. "Selling price increases and mix gains could only partially offset energy and other manufacturing cost increases, resulting in a year-over-year decline in profitability," Mr. Howatt said. "Market fundamentals are gradually improving with pricing leverage returning in this sector. Combined with product development successes and strong operations, this leverage is helping create positive profit momentum in our Specialty Products business segment."
Printing & Writing reported first-quarter operating losses of $7.1 million compared with losses of $4.6 million last year. Net sales and shipments increased 7 percent and 4 percent, respectively. "While the first quarter benefited from market and productivity gains compared with last year's fourth quarter, results declined from year-earlier levels, in large part because of significantly higher energy prices," commented Mr. Howatt. "Uncoated freesheet markets have clearly improved from late 2005, with year-over-year demand increasing solidly in the first quarter. These circumstances, coupled with recent capacity closures and intense selling efforts, resulted in substantial gains in our target markets, such as consumer products, where shipments increased 27 percent."
Towel & Tissue operating profits reached record first-quarter levels of $9.0 million compared with operating profits of $7.9 million last year. Net sales and shipments increased 11 percent and 6 percent, respectively. Mr. Howatt stated, "Selling price increases, mix improvements and volume gains helped drive profits. 'Away-from-home' towel and tissue markets remain balanced with first-quarter growth trending up about 2 percent. Executing our value-added product strategy continues to deliver growth - in both sales and profitability - that exceeds the industry. Shipments of value-added and Green SealŪ certified products increased 14 percent and 23 percent, respectively."
Looking to the second quarter, Mr. Howatt said, "While fiber prices are increasing modestly, energy prices have moderated from record levels of late last year. Most encouraging, however, is the pricing leverage that is beginning to return in our Printing & Writing and Specialty Products businesses. This leverage, combined with sales mix gains and a seasonal increase in demand, is expected to drive improvement as compared to the first quarter. As a result, second-quarter earnings are expected to approximate prior-year earnings of $0.06 per share, excluding 2005 pulp mill closure charges."
Discussing the company's timberland sales and stock buy-back programs, Mr. Howatt noted that approximately 700 acres were sold during the quarter for an after-tax gain of $1 million and that approximately 75,000 shares of common stock were repurchased during the quarter. "We will continue to execute against our earlier timberland sales and stock repurchase plans as a means of enhancing shareholder value," concluded Mr. Howatt.
Wausau Paper produces fine printing and writing papers, technical specialty papers, and "away-from-home" towel and tissue products. Green SealŪ is a registered trademark of Green Seal, Inc., in Washington D.C., and is used by permission.
SOURCE: Wausau Paper