Smurfit-Stone Container Reports Third Quarter Results
Oct. 24, 2007 - Smurfit-Stone Container Corp reported adjusted net income of $28 million, or $0.11 per diluted share, for the third quarter 2007. These results compare to adjusted net income of $15 million, or $0.06 per share, in the second quarter 2007 and $31 million, or $0.12 per share, in the prior year quarter.
Adjusted net income reflects adjustments to net income (loss) available to common stockholders (as detailed in full report). The third quarter 2007 net loss available to common shareholders was $96 million, or $0.38 per share. These results included the previously announced loss on the sale of the Brewton, AL mill of $97 million, or $0.38 per share, which reflected the allocation of $146 million of goodwill. Net proceeds from this transaction drove debt reduction of $328 million in the quarter.
Sales for the third quarter were $1.89 billion, up 2.2 percent from the third quarter 2006.
Commenting on third quarter results, Patrick J. Moore, chairman and CEO, said, "Smurfit-Stone's operating performance has consistently improved this year with third quarter adjusted net income nearly doubling from the second quarter. Prices increased across all of our major product lines for the second straight quarter. As planned, we made additional progress with our strategic initiatives program. The divestiture of our Brewton mill in the third quarter represented a major milestone in our restructuring efforts and helped drive further debt reduction."
Third quarter operating highlights:
- Segment operating profits improved $20 million sequentially to
- 100 percent containerboard mill operating rates
- Average domestic linerboard price improved 1.6% sequentially
- $97 million in capital investments primarily focused on cost reduction
- $18 million incremental initiative benefits from the second quarter;
450 headcount reduction
Commenting on third quarter operations, Steven J. Klinger, president and COO, said, "Sound execution drove improved sequential operating results. Our mills ran full and we achieved our highest containerboard production since the start of our strategic program, despite several mill closures over the past two years. At the same time, we achieved record low third quarter containerboard inventory levels. Higher average containerboard prices reflected the early stages of our current price initiative. Box prices increased nearly 1 percent both year-over-year and sequentially. Container shipments were down 8 percent from the prior year, 5.3 percent due to continued efforts to rationalize box plants and improve margins by exiting unprofitable accounts. Benefits from our capital investment program, lower headcount, and box plant/mill closures in the second quarter resulted in higher initiative savings."
While the company expects significant price improvement in the fourth quarter, earnings will likely decrease sequentially due to seasonal and timing factors. Results will be impacted by significant additional mill maintenance downtime and associated costs, higher energy usage and wood fiber costs, and the impact from the Brewton mill sale. Commenting on the company's outlook, Moore said, "Despite slightly lower anticipated fourth quarter earnings, we remain on track to achieve our longer term objectives. Our strategic initiatives program is on schedule to reduce costs $525 million by the end of 2008. These efforts, along with our $400 million incremental capital program, should drive continued margin and efficiency improvements at Smurfit-Stone."
SOURCE: Smurfit-Stone Container Corp.