Smurfit-Stone Container 4th Quarter Income Up
Jan. 28, 2008 - Smurfit-Stone Container Corp. today reported fourth quarter 2007 adjusted net income of $23 million, or $0.09 per diluted share. These results represent a $0.03 per share improvement compared to adjusted net income of $14 million, or $0.06 per share, in the prior year quarter.
For full year 2007, adjusted net income was $44 million, or $0.17 per share, an increase of $0.32 per share compared to an adjusted net loss of $39 million, or $0.15 per share, in 2006.
Adjusted net income (loss) reflects adjustments to net income (loss) available to common stockholders, as detailed above. Adjustments to the company's 2007 net loss of $0.45 per diluted share include a $0.38 per share loss related to the sale of assets in the third quarter of 2007 and a $0.20 per share non-cash foreign currency translation loss.
Sales were $1.84 billion for the fourth quarter 2007 compared to $1.82 billion in the prior year quarter. Full year 2007 sales were $7.42 billion representing a 3.7 percent increase over 2006 sales of $7.16 billion.
EXECUTING SMURFIT-STONE'S TRANSFORMATION STRATEGY
Commenting on the company's results, Patrick J. Moore, chairman and CEO, said, "I am pleased to report Smurfit-Stone's year-over-year adjusted earnings improved both in the fourth quarter and full year 2007. The successful implementation of our recent price increases, improving business mix, and savings from operational improvements drove higher profits, despite continued inflationary cost pressures. We reduced debt significantly during the year, strengthening our balance sheet and enhancing our financial flexibility. At the same time, we invested capital to establish one of the most modern converting operations in North America. As we continue to execute our strategy, I am confident our efforts will drive improved financial performance in the future."
Solid Operating Performance
- Exceeded 2007 cumulative strategic initiatives benefit target of
- Average prices improved sequentially 5.7 percent and 2.4 percent,
respectively, for domestic linerboard and boxes
- Record low year-end containerboard inventory levels
- Capital investments of $116 million in fourth quarter 2007 and
$384 million in 2007
- 2 box plant closures in fourth quarter 2007, 12 in 2007, and 28 since
- Headcount reductions were 200 in the fourth quarter 2007, 1,750 in
2007, and 5,350 since 2005
Commenting on operations, Steven J. Klinger, president and COO, said, "We executed well throughout 2007 and achieved $438 million in cumulative savings from our strategic initiatives program. Our recent $40 per ton containerboard and box price initiatives were successfully completed by January 1. Fourth quarter per-day box shipments were up sequentially as expected but were down 8 percent from the prior year, 6 percent due to box plant closures and continued efforts to improve margins by exiting unprofitable accounts. At the same time, strong containerboard export demand contributed to lower containerboard inventories. Inventory levels were down both sequentially and year-over-year, ending 2007 at record low levels. Mill production was down sequentially in the fourth quarter due to higher scheduled maintenance downtime. Operating profits declined compared to the third quarter due to lower mill production, seasonally higher energy usage, and higher fiber cost. As we transform our operations for long-term success, we invested to modernize our operations and have closed higher cost facilities. Despite transition costs during this period of change, we are improving productivity and our competitive position in the marketplace."
Improved Financial Flexibility
- Reduced debt $47 million in fourth quarter 2007 and $275 million in
- $344 million revolving credit availability at year end 2007
- Reduced interest expense and extended bond maturities in 2007
- Credit rating upgraded by S&P in fourth quarter 2007
Commenting on the company's financial position, Charles A. Hinrichs, senior vice president and CFO, said, "We significantly improved Smurfit-Stone's financial flexibility in 2007. We divested non-core operations and applied those proceeds to debt reduction. Liquidity remains excellent. During the year, we refinanced our highest coupon bond, which reduced interest expense and extended bond maturities. As a result, we have no significant bond maturities until 2012. Recognizing the progress we have made, S&P upgraded Smurfit-Stone's corporate credit rating in the fourth quarter 2007."
OUTLOOK - IMPROVED FINANCIAL PERFORMANCE
Higher average prices and incremental benefits from the company's strategic initiatives program should drive higher year-over-year adjusted net income in the first quarter and full year 2008, despite a slowing US economy. Seasonal factors will drive sequentially lower first quarter profits due to higher energy usage and timing issues contributing to additional employee benefit costs. Commenting on the company's long-term outlook, Moore said, "Smurfit-Stone is a different company since the inception of our transformation program. Our operations are more cost effective, our mills are more productive, and we are building one of the most modern converting operations in North America. These efforts are establishing a platform for long-term profitability and increased shareholder value in the future."
SOURCE: Smurfit-Stone Container Corp.