Wausau Paper Swings to Fourth Quarter Profit
Feb. 8, 2010 - Wausau Paper today reported that in the fourth-quarter and full-year 2009:
- Adjusted fourth-quarter earnings of $0.14 per share improved from $0.03 per share a year ago while adjusted full-year earnings of $0.59 per share reached their highest level in ten years.
- Towel & Tissue achieved record operating profits of $49.5 million in 2009 while adjusted operating profits improved substantially for Printing & Writing and Specialty Products.
- The January 1, 2010 combination of the Printing & Writing and Specialty Products businesses into a single “Paper” unit concluded a multi-year restructuring of these businesses.
- Cost reduction and cash conservation measures drove a $27 million reduction in working capital and $74 million reduction in debt during 2009 with debt-to-capital declining to 34 percent from 48 percent at year-end 2008.
The company reported fourth-quarter net earnings of $9.2 million, or $0.19 per share, compared with net losses of $1.8 million, or $0.04 per share, in the prior year. Net sales decreased 7 percent to $257.8 million while shipments declined 2 percent to 168,000 tons, due primarily to volume reductions associated with the permanent closure of a paper mill in Jay, Maine.
Fourth-quarter results included after-tax facility closure charges of $0.6 million, or $0.01 per share, related primarily to the December closure of a converting facility in Appleton, Wisconsin and the second-quarter closure of the Jay mill; after-tax gains of $2.3 million, or $0.05 per share, related to a tax credit for the use of alternative fuel mixtures at the Mosinee, Wisconsin, facility; after-tax gains of $1.6 million, or $0.03 per share, from the sale of non-strategic timberlands; and charges of $1.0 million, or $0.02 per share, related to a tax audit settlement and other permanent tax items. Prior-year fourth-quarter results included after-tax charges of $3.7 million, or $0.08 per share, relating to a paper machine shutdown at the Jay facility and after-tax timberland sales gains of $0.5 million, or $0.01 per share. Excluding these items, adjusted fourth-quarter 2009 net earnings were $6.8 million, or $0.14 per share, compared with adjusted net earnings of $1.4 million, or $0.03 per share, last year. Adjusted net earnings are a non-GAAP measure and three-month and year-end results are reconciled to GAAP earnings below.
For the full-year 2009, Wausau Paper reported adjusted net earnings of $28.8 million, or $0.59 per share, compared with adjusted net earnings of $0.5 million, or $0.01 per share, in the prior year. Net sales decreased 13 percent to $1,032.1 million while shipments declined 12 percent to 685,000 tons, due primarily to volume reductions associated with the permanent closure the Jay mill.
Thomas J. Howatt, president and CEO, commented, “Despite economic weakness and demand uncertainty, adjusted fourth-quarter and full-year earnings reached their strongest levels since 1999. Results were driven by cost reduction and cash conservation measures implemented early in 2009 as well as completion of multi-year business restructuring initiatives and several strategic capital projects. These actions have improved our cost structure and competitive position while aligning our facilities with markets in which our technical capabilities provide a competitive advantage.” Mr. Howatt continued, “With debt at its lowest level in more than a decade and cash flows substantially improved, we are positioned to compete effectively in our core markets and strategically invest in our businesses to drive increased shareholder value.”
BUSINESS UNIT RESULTS
Printing & Writing reported a fourth-quarter operating profit of $3.0 million compared with $2.8 million last year, although net sales and shipments declined 8 percent and 5 percent, respectively. Current-quarter results include pre-tax charges of $0.3 million related primarily to closure of the Appleton converting facility while prior-year results include credits of $0.2 million related to the December 2007 closure of our mill in Groveton, New Hampshire. Excluding the impact of facility closures, Printing & Writing’s fourth-quarter operating profit of $3.3 million compared favorably with $2.6 million reported last year.
Full-year operating profit of $8.0 million compared favorably with 2008 operating losses of $27.0 million while net sales declined 11 percent and shipments declined 8 percent due primarily to weak market demand. Exclusive of $2.8 million of facility closure charges and expenses associated with the start-up of the Bedford Park, Illinois, distribution facility, 2009 operating profit of $10.7 million compared favorably with prior-year adjusted operating losses of $3.4 million. With demand for uncoated freesheet papers declining 11 percent during 2009, improved results were driven by benefits associated with its two-year profit recovery initiative and lower fiber and energy costs.
Specialty Products’ fourth-quarter operating profit of $4.1 million included pre-tax charges of $0.6 million related to the closure of the Jay mill and pre-tax gains of $3.7 million from an alternative fuel mixture tax credit. Prior-year operating losses were $8.3 million and included pre-tax charges of $6.0 million related primarily to a permanent paper machine shutdown. Exclusive of closure charges and the alternative fuel tax credit, Specialty Products’ fourth-quarter operating profit of $1.0 million improved from an operating loss of $2.3 million last year. Net sales and shipments declined 15 percent and 3 percent, respectively, due to facility closures and demand weakness in a number of market segments.
For the full year, operating profit of $1.6 million compared favorably with 2008 operating losses of $11.6 million despite net sales and shipments declining 25 percent and 22 percent, respectively. Exclusive of facility closure charges of $25.7 million, gains of $13.5 million related to the alternative fuel tax credit, and a gain of $2.7 million related to the sale of a non-core yeast manufacturing business, adjusted operating profit of $11.2 million reached its strongest level since 2004 and compared favorably with prior-year adjusted operating losses of $1.4 million. The restructuring of Specialty Products has improved profitability and narrowed the business unit’s focus to four core markets – food, tape, liner, and industrial. Additionally, the business unit’s combination with Printing & Writing will further reduce administrative costs and improve the flexibility with which mature and growth-oriented markets can be served.
Towel & Tissue reported fourth-quarter operating profits of $12.5 million compared with prior-year operating profits of $9.1 million as net sales and shipments increased 5 percent and 6 percent, respectively. For the full-year, Towel & Tissue achieved record operating profits of $49.5 million compared with 2008 operating profits of $32.8 million as net sales increased 1 percent and shipments declined 1 percent. Profits improved on a year-over-year basis due to improved sales mix, reduced wastepaper and energy costs, and benefits associated with the first-quarter rebuild of the towel machine at the Middletown, Ohio, mill.
Demand for “away-from-home” towel and tissue products declined 6 percent during 2009 while our total shipments declined just 1 percent and our value-added product volume increased 6 percent. Above-market performance continues to be driven by growth of our Green Seal™-certified products and innovative dispensers such as our new “Hybrid” cabinet which provides options for both electronic “touch-free” and mechanical operation.
The company sold 4,300 acres of timberlands in the fourth quarter for an after-tax gain of $1.6 million and sold a total of 5,000 acres for the full-year for an after-tax gain of $2.0 million. Approximately 12,000 acres of non-strategic timberlands remain in the sales program which began in 2005.
Commenting on the first-quarter outlook, Mr. Howatt said, “We remain very encouraged about our ability to grow in our core markets through a focus on product innovation and superior service, and by the benefits of our recently completed restructuring initiatives at our Paper segment. While overall market conditions remain relatively weak, demand has stabilized and we expect year-over-year volume gains in select markets. At the same time we face a much more difficult input cost environment than last year. As a result we expect first-quarter earnings to be modestly below prior year levels of $0.07 per share.”
About Wausau Paper
Wausau Paper produces and markets fine printing and writing papers, technical specialty papers, and “away-from-home” towel and tissue products.
SOURCE: Wausau Paper