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Rock-Tenn Posts Fourth Quarter Results

Nov. 7, 2007 - Rock-Tenn Company today reported earnings for the quarter ended September 30, 2007 of $0.50 per diluted share and for the fiscal year then ended of $2.07 per diluted share. The Company reported net income of $21.5 million, or $0.57 per diluted share, and $28.7 million, or $0.77 per diluted share, for the prior year quarter, and prior fiscal year, respectively.

  • Adjusted net income of $0.57 per diluted share for the fourth quarter of fiscal 2007 compared to $0.52 per diluted share in the prior year quarter
  • Cash flow from operations of $97.3 million for the fourth quarter of fiscal 2007; $238.3 million for the fiscal year
  • Stated total paperboard capacity increased 62,500 tons per year from productivity initiatives

FOURTH QUARTER RESULTS

  • Net sales of $604.8 million for the fourth quarter of fiscal 2007 increased $35.1 million, or 6.2%, over the fourth quarter of fiscal 2006.
  • Segment income was $54.2 million compared to $50.5 million in the prior year quarter.
  • The Company reported net income of $19.7 million, or $0.50 per diluted share, for its fourth quarter of fiscal 2007. The Company reported net income of $21.5 million, or $0.57 per diluted share, in the prior year quarter.
  • Income for the fourth quarter of fiscal 2007 included pre-tax restructuring and other costs of $2.4 million, or $0.04 per diluted share, after-tax primarily related to the closure of our Stone Mountain, Georgia folding carton plant and a pre-tax expense of $1.7 million, or $0.03 per diluted share, after-tax during the quarter related to the planned outage to increase the capacity of our Battle Creek coated recycled paperboard mill.
  • The Company recorded tax benefits of $2.4 million in the prior year quarter, or $0.06 per diluted share, primarily due to a change in its state effective tax rate. Income for the fourth quarter of fiscal 2006 included pre-tax restructuring and other costs of $0.6 million, or $0.01 per diluted share, after-tax.

SEGMENT RESULTS

Packaging Products Segment
Packaging Products segment net sales were $326.0 million in the fourth quarter of fiscal 2007 compared to $320.8 million in the prior year quarter, with higher unit pricing in the fiscal 2007 quarter representing pass through of higher paperboard costs offset by lower sales volumes. Segment income of $12.1 million in the fourth quarter of fiscal 2007 was $0.5 million higher than the fourth quarter of fiscal 2006. Segment return on sales was 3.7% compared to 3.6% in the prior year quarter.

Paperboard Segment
Paperboard segment net sales increased $27.3 million from the prior year quarter to $249.5 million on higher selling prices and an increase in paperboard tons shipped. Bleached paperboard tons shipped increased 5.9% over the prior year quarter to 88,730 tons. The average selling price for all paperboard grades increased $36 per ton over the prior year quarter. Average fiber costs increased $27 per ton over the prior year quarter. Segment income of $29.3 million increased $0.8 million over the prior year quarter.

Merchandising Displays Segment
Merchandising Displays segment net sales increased $16.1 million, or 23.2%, over the prior year fourth quarter, to $85.5 million on strong demand for promotional displays. Segment income increased 20.5% to $10.6 million compared to $8.8 million in the prior year quarter.

Corrugated Segment
Corrugated segment net sales increased $1.9 million over the prior year quarter to $40.7 million in the fourth quarter of fiscal 2007, primarily due to increased production at the Company’s corrugators. Segment income was $2.2 million in the fourth quarter of fiscal 2007 and $1.6 million in the prior year quarter.

Chairman and Chief Executive Officer’s Statement
Rock-Tenn Company Chairman and Chief Executive Officer James A. Rubright stated, “Our fourth quarter and full year earnings fulfilled our expectations for a record year in many respects. We achieved record earnings of $81.7 million, record Credit Agreement EBITDA of $286.5 million, record tons produced in both recycled and bleached categories and record sales and earnings in our display business. Our businesses continued to perform well in the fourth quarter as paperboard mill operating rates remained very high and strong demand for corrugated packaging and displays continued into the start of our first quarter of fiscal 2008.”

Cash Provided By Operating Activities
Net cash provided by operating activities in the fourth quarter of fiscal 2007 was $97.3 million, an increase of $42.0 million over the prior year quarter.

Financing and Investing Activities
During the quarter Rock-Tenn Company decreased debt by $10.7 million and paid $58.7 million to repurchase 2,143,700 shares of common stock of the Company. The Company’s Credit Agreement Debt/EBITDA ratio was 2.55 times as of September 30, 2007, based on Credit Agreement EBITDA for the twelve months ended September 30, 2007 of $286.5 million. Upon the filing of our Form 10-K for the period ended September 30, 2007, we will have the right to cause the lien on certain assets required under our Senior Credit Facility to be released due to our satisfying the requirement to be below a Credit Agreement Debt/EBITDA ratio of 3.0 times for two sequential quarters.

SOURCE: Rock-Tenn Company




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