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RockTenn Posts Record 2nd Quarter Earnings

April 27, 2009 - RockTenn today reported earnings for the quarter ended March 31, 2009 of $0.97 per diluted share. The Company’s adjusted earnings were $1.02 per diluted share, excluding specific items related to the March 2008 Southern Container acquisition and other restructuring charges. Adjusted earnings per diluted share increased 55% over the prior year quarter adjusted earnings of $0.66 per diluted share.

Second Quarter Results

  • Net sales of $676.3 million for the second quarter of fiscal 2009 decreased $9.6 million over the second quarter of fiscal 2008 primarily due to reduced volumes and decreased recycled fiber pricing, which more than offset increased net sales in our Corrugated Packaging segment resulting from the Southern Container acquisition.
  • Segment income increased to $96.7 million compared to $57.3 million in the prior year quarter, a 69% increase over the prior year quarter.
  • RockTenn’s pre-tax restructuring and other costs, net of related minority interest, were $2.9 million, or $0.05 per diluted share after-tax, for the second quarter of fiscal 2009 primarily related to Southern Container acquisition related deferred compensation expense (“ESU Expense”) of $1.4 million, acquisition related integration expenses of $0.8 million, and $0.7 million related to plant closures, net of minority interest.
  • RockTenn incurred pre-tax operating losses at previously closed facilities of $0.3 million, primarily at the Company’s Baltimore, Maryland folding carton facility.

RockTenn chairman and CEO James A. Rubright stated, “Our record adjusted earnings for the first six months of fiscal 2009 of $1.98 per share bear out the defensive character of our businesses, and the benefits of being a very low cost provider to food and consumer products companies.”

“Much lower costs for recycled fiber and energy, and much better than forecast performance by our acquired Southern Container corrugated operations, drove our ability to reduce debt by $276 million in the first 12 full months following the acquisition, well ahead of the commitment we made at the time of the acquisition to achieve $200 million in annual debt reduction.”

“While we expect difficult market conditions to continue over the balance of the fiscal year, we also expect recycled fiber and energy costs to remain low, which would enable us to continue to generate strong cash flows ahead of our acquisition related commitments.”

SEGMENT RESULTS

Paperboard and Containerboard Tons Shipped and Average Price
Total tons shipped in the second quarter of fiscal 2009, which includes 142,363 tons shipped by the Solvay containerboard mill acquired in March 2008, increased by 54,377 tons over the prior year quarter. The average selling price for all paperboard and containerboard grades decreased $10 per ton on a sequential quarter basis.

Consumer Packaging Segment
Consumer Packaging segment net sales were $362.9 million in the second quarter of fiscal 2009 compared to $394.8 million in the prior year quarter, due to lower volumes partially offset by higher unit pricing. Segment income increased $6.7 million over the prior year quarter to $39.2 million due primarily to lower recycled fiber and energy costs in our mills, which were partially offset by higher virgin fiber and chemical costs. Segment return on sales was 10.8% compared to 8.2% in the prior year quarter.

Corrugated Packaging Segment
Corrugated Packaging segment net sales increased due to the Southern Container acquisition. Segment income was $41.6 million in the second quarter of fiscal 2009 and segment return on sales was 23.6%.

Merchandising Displays Segment
Merchandising Displays segment net sales decreased $11.4 million over the prior year second quarter due to decreased demand for promotional displays. Segment income was $9.7 million in the second quarter of fiscal 2009 and $13.8 million in the prior year quarter.

Specialty Paperboard Products Segment
Specialty Paperboard Products segment net sales decreased $29.6 million in the second quarter of fiscal 2009 primarily due to decreased volumes and lower recycled fiber prices. Segment income was $6.2 million, and $6.6 million in the prior year quarter.

Cash Provided By Operating Activities
Net cash provided by operating activities in the second quarter of fiscal 2009 was $105.9 million.

Financing and Investing Activities
We reduced net debt by $92.6 million in the quarter and $276.3 million in the twelve months since March 31, 2008, following our acquisition of Southern Container. Our Credit Agreement Debt/EBITDA ratio was 3.25 times at March 31, 2009. We estimate that adjusted earnings per diluted share accretion from the acquisition were $0.29 in the quarter and $1.23 for the thirteen months following the March 2008 acquisition.

About RockTenn
RockTenn is one of North America’s leading manufacturers of paperboard, containerboard, consumer and corrugated packaging and merchandising displays, with annual net sales of approximately $3 billion. The company operate locations in the United States, Canada, Mexico, Chile and Argentina.

SOURCE: RockTenn




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