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RockTenn Posts Record Fiscal 3Q '09 Earnings

July 27, 2009 - RockTenn today reported earnings for the quarter ended June 30, 2009 of $2.24 per diluted share. The Company’s adjusted earnings were $1.44 per diluted share, excluding specific items related to the alternative fuel tax credit, debt extinguishment costs and other restructuring charges. Adjusted earnings per diluted share increased 106% over the prior year quarter adjusted earnings of $0.70 per diluted share.

Third Quarter Results

  • Net sales of $703.9 million for the third quarter of fiscal 2009 decreased $67.1 million over the third quarter of fiscal 2008.
  • Segment income increased to $150.0 million compared to $67.3 million in the prior year quarter, a 123% increase over the prior year quarter. Segment income includes the alternative fuel tax credit of $32.7 million, net of expenses for the period from January 22, 2009 to June 30, 2009. This tax credit is scheduled to expire on December 31, 2009.
  • RockTenn incurred pre-tax debt extinguishment costs and related items of $1.9 million, or $0.03 per diluted share after-tax, for the third quarter of fiscal 2009 related to the purchase of $93.3 million principal amount of our 8.20% notes due August 2011 and the issuance of $100 million of 9.25% notes due March 2016.
  • RockTenn’s pre-tax restructuring and other costs, net of related minority interest, were $0.9 million, or $0.02 per diluted share after-tax, for the third quarter of fiscal 2009 related to plant closures, net of minority interest.

RockTenn Chairman and Chief Executive Officer James A. Rubright stated, “Our adjusted earnings of $1.44 for the quarter and $3.42 for the nine months ended June 2009, reflect the very low cost positions we have achieved in our businesses and the economic resiliency of our food and consumer packaging based businesses. Total tons shipped were up 5.7% over the second quarter, reflecting the continued outperformance of our consumer and corrugated packaging operations. Although recycled fiber costs have continued to increase from the January lows, our other costs have remained low and paperboard and containerboard pricing have stabilized in recent weeks. Accordingly, we expect to continue to generate strong cash flows based on our proven operating model.”

SEGMENT RESULTS

Paperboard and Containerboard Tons Shipped and Average Price

Total tons shipped in the third quarter of fiscal 2009 decreased by 38,642 tons over the prior year quarter but increased on a sequential quarter basis by 28,273 tons. The average selling price for all paperboard and containerboard grades decreased $2 per ton from the prior year quarter and decreased $22 per ton on a sequential quarter basis.

Consumer Packaging Segment

Consumer Packaging segment net sales declined 3.0% in the third quarter of fiscal 2009 compared to the prior year quarter, due to lower volumes partially offset by higher folding carton unit pricing. Segment income increased $55.1 million over the prior year quarter to $83.0 million due primarily to $32.7 million of alternative fuel tax credit and lower recycled fiber and energy costs, which were partially offset by higher chemical costs.

Corrugated Packaging Segment

Corrugated Packaging segment net sales decreased $22.4 million to $186.5 million in the third quarter of fiscal 2009, due to lower volumes. Segment income was $49.6 million in the third quarter of fiscal 2009 and segment return on sales was 26.6%.

Merchandising Displays Segment

Merchandising Displays segment net sales decreased $6.4 million over the prior year third quarter. Segment income was $8.0 million in the third quarter of fiscal 2009 and $8.4 million in the prior year quarter.

Specialty Paperboard Products Segment

Specialty Paperboard Products segment net sales decreased $24.9 million in the third quarter of fiscal 2009 primarily due to decreased volumes and lower recycled fiber prices. Segment income increased $1.6 million to $9.4 million compared to the prior year quarter.

Cash Provided By Operating Activities

Net cash provided by operating activities in the third quarter of fiscal 2009 was $111.7 million.

Financing and Investing Activities

We reduced net debt by $82.4 million in the quarter and $269.8 million in the twelve months ended June 30, 2009. Our Credit Agreement Debt/EBITDA ratio was 2.66 times at June 30, 2009. On July 14, 2009 we amended our receivables-backed financing facility. The $100 million amended facility has a three year term.

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 $2.8 billion. We operate locations in the United States, Canada, Mexico, Chile and Argentina.

SOURCE: RockTenn




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