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RockTenn Reports Fiscal 2nd Quarter Earnings

April 27, 2010 - RockTenn today reported earnings for the quarter ended March 31, 2010 of $0.83 per diluted share. The Company’s adjusted earnings were $0.70 per diluted share, excluding primarily items related to the alternative fuel tax credit, loss on extinguishment of debt and restructuring charges, compared to the prior year quarter adjusted earnings of $1.02 per diluted share.

Second Quarter Results

  • Net sales of $731.9 million for the second quarter of fiscal 2010 increased $55.6 million compared to the second quarter of fiscal 2009.
  • Segment income was $83.0 million compared to $96.7 million in the prior year quarter. Segment income in the second quarter of fiscal 2010 includes the release of $8.1 million of reserves attributable to the alternative fuel tax credit.
  • During the second quarter of fiscal 2010 we recorded pre-tax expense of $3.3 million, or $0.05 per diluted share after-tax, which represents the write off of unamortized deferred financing costs and debt discount in connection with our repayment of the $120 million outstanding Term Loan B balance using proceeds from our revolving credit facility.
  • RockTenn’s pre-tax restructuring and other costs, net of related noncontrolling interest, were $1.0 million, or $0.02 per diluted share after-tax, for the second quarter of fiscal 2010 consisting primarily of plant closing related asset impairments.
  • RockTenn incurred pre-tax operating losses at previously closed facilities, net of related noncontrolling interest, of $0.6 million, or $0.01 per diluted share after-tax.

Chairman and Chief Executive Officer’s Statement
RockTenn Chairman and Chief Executive Officer James A. Rubright stated, “RockTenn achieved another quarter of strong earnings and cash flow generation as sales volumes rose over the prior year quarter mitigating the impact of higher recycled fiber costs, which peaked late in the month of March. Our net debt repayment and dividends during the quarter were $88.3 million and $5.8 million, or a total of $48.2 million ($1.24 per share) after excluding the effect of alternative fuel tax credits.”

SEGMENT RESULTS

Paperboard and Containerboard Tons Shipped and Average Price
Total tons shipped in the second quarter of fiscal 2010 increased by 75,493 tons over the prior year quarter and increased on a sequential quarter basis by 9,102 tons. The average selling price for all paperboard and containerboard grades decreased $20 per ton from the prior year quarter and increased $16 per ton on a sequential quarter basis.

Consumer Packaging Segment
Consumer Packaging segment net sales increased 6.4% in the second quarter of fiscal 2010 compared to the prior year quarter, due to higher paperboard volumes. Segment income increased $5.7 million over the prior year quarter to $44.9 million due primarily to the $8.1 million of alternative fuel tax credits, higher paperboard volumes and increased income in our folding carton business, which were largely offset by higher recycled and virgin fiber costs.

Corrugated Packaging Segment
Corrugated Packaging segment net sales increased $14.5 million to $191.0 million in the second quarter of fiscal 2010 compared to the prior year quarter, due to higher volumes which were partially offset by lower selling prices. Segment income was $20.9 million in the second quarter of fiscal 2010 and segment return on sales was 10.9%.

Merchandising Displays Segment
Merchandising Displays segment net sales decreased $5.8 million over the prior year second quarter. Segment income increased to $11.2 million in the second quarter of fiscal 2010 compared to $9.7 million in the prior year quarter. Segment return on sales increased to 14.5%.

Specialty Paperboard Products Segment
Specialty Paperboard Products segment net sales increased $26.2 million in the second quarter of fiscal 2010 compared to the prior year quarter primarily due to higher recycled fiber prices and volumes and increased paperboard volumes which were partially offset by lower paperboard and other selling prices. Segment income was $6.0 million in the second quarter of fiscal 2010 and $6.2 million in the prior year quarter.

Cash Provided By Operating Activities
Net cash provided by operating activities in the second quarter of fiscal 2010 was $117.1 million compared to $105.9 million in the prior year quarter primarily due to the receipt of our $26.4 million 2009 federal income tax refund during the second quarter of fiscal 2010 which was primarily due to alternative fuel tax credits.

Financing and Investing Activities
We reduced net debt by $88.3 million in the quarter and $330.4 million in the twelve months ended March 31, 2010. Our Credit Agreement Debt/EBITDA ratio was 2.07 times at March 31, 2010, well below our maximum permitted ratio of 4.25 times.

About RockTenn
RockTenn is one of North America’s leading manufacturers of paperboard, containerboard and consumer and corrugated packaging, with annual net sales of approximately $2.9 billion.

SOURCE: RockTenn




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