Wausau Paper swings to first quarter profit
April 24, 2007 - Wausau Paper today reported net earnings for the first quarter of $15.0 million, or $0.29 per share, compared with a net loss of $0.5 million, or $0.01 per share, in the previous year. Net sales rose 6 percent to a record first-quarter $299.4 million, and shipments increased 1 percent to a record 227,000 tons.
Included in current-year results were one-time state tax benefits of $12.0 million, or $0.24 per share, related to the January 1, 2007, restructuring of the company's subsidiaries to realign them more closely with Wausau Paper's current operating structure. The subsidiary realignment allows for the utilization of previously reserved state net operating loss and credit carryovers.
First-quarter results also included an after-tax gain of $0.4 million, or $0.01 per share, from the sale of timberlands and stock incentive credits of less than $0.01 per share. Prior-year first-quarter results included after-tax timberland sales gains of $1.0 million, or $0.02 per share, and stock incentive charges of $1.2 million, or $0.02 per share, including a cumulative effect charge of $0.4 million, or $0.01 per share, related to the adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payments.
"Record shipments and net sales, coupled with relentless efforts to improve operations in the face of historically high energy and rising fiber costs, produced solid gains in the first quarter compared with a year ago," said Thomas J. Howatt, president and CEO.
"During the first quarter, nearly 30 percent of net sales came from products developed in the last three years, eclipsing our goal of 25 percent, while at the same time paper mill productivity gains again exceeded our corporate target of 1 percent," Howatt added.
Specialty Products reported first-quarter operating profits of $2.7 million compared with $3.2 million last year, with the decrease primarily attributable to cost pressures, most notably market pulp. Net sales increased 2 percent while shipments declined 2 percent. "First-quarter profits improved substantially from the breakeven result reported in the fourth quarter and represent Specialty's best performance since last year's first quarter," Howatt stated. "Despite competitive market conditions we were successful in expanding our line of environmentally preferable products, allowing us to further penetrate attractive niche markets. At the same time, strong operations and cost containment activities have allowed us to partially offset continuing cost pressures."
Printing & Writing reported first-quarter operating losses of $1.8 million compared with losses of $6.8 million last year. Net sales and shipments increased 7 percent and 3 percent, respectively. "In contrast, the industry's uncoated freesheet shipments declined approximately 6 percent in the same period, a clear indicator that we are gaining market share," commented Howatt. "Moreover, industry consolidation and capacity closures are beginning to create pricing momentum in printing and writing grades. Year-over-year comparisons also reflect the enhanced productivity we've achieved as well as the reduction of market-related downtime taken in the first quarter of 2006."
Towel & Tissue operating profits reached record first-quarter levels of $9.7 million compared with operating profits of $9.2 million last year. Net sales and shipments increased 11 percent and 6 percent, respectively. Howatt commented, "Selling price increases, mix improvements and volume gains offset increased wastepaper costs and helped drive a ninth consecutive quarterly profit record. Despite 'away-from-home' market growth of less than 2 percent, our Green SealŪ certified and value-added product shipments each increased more than 20 percent. This above-market growth continues to be driven by strong placements of our innovative proprietary dispensers and the introduction of new products."
Discussing the second-quarter outlook, Howatt said, "Energy costs remain at historically high levels while fiber costs continue their upward trend. At the same time, we are encouraged by signs of returning pricing leverage in many of our product areas. The initial influence of pricing leverage, and efforts to contain costs and improve efficiency are expected to drive profit improvement compared with year-ago levels. As a result, we expect second-quarter earnings in the range of $0.08 and $0.10 per share, including timberland sales gains of $0.02 per share." Second-quarter 2006 results were $0.07 per share and included $0.02 per share in timberland sales gains.
Wausau Paper produces fine printing and writing papers, technical specialty papers, and "away-from-home" towel and tissue products.
SOURCE: Wausau Paper