Clearwater Paper Posts 1Q Loss on Maintenance Costs
April 29, 2010 - Clearwater Paper Corp. today reported financial results for the first quarter ended March 31, 2010. The company reported net earnings for the first quarter of 2010 of $0.5 million, or $0.04 per diluted common share, compared to net earnings of $13.6 million, or $1.19 per diluted common share, for the first quarter of 2009. Included in the first quarter 2010 results is a one-time tax charge of $4.4 million or $0.37 per diluted share, resulting from the passage of the Patient Protection and Affordable Care Act of 2010.
The company also had scheduled major maintenance costs of $16.9 million in the first quarter of 2010 compared to $1.5 million in the first quarter of 2009, representing an increase of $15.4 million or an estimated after-tax $0.86 per diluted share impact on first quarter results.
“First quarter results were strong even while undertaking our scheduled major maintenance. This was driven by stronger than expected performance in our Pulp and Paperboard segment, aided by a positive pricing environment and by steady performance in our Consumer Products business," said Gordon Jones, president and chief executive officer.
"We are also continuing to evaluate whether to build a new paper machine and expect to announce a decision before our second quarter earnings call,” Jones noted.
FIRST QUARTER 2010 SEGMENT PERFORMANCE
Operating income for the first quarter of 2010 was $24.8 million, compared with operating income of $29.1 million for the first quarter of 2009. Net sales of $137.9 million for the quarter were slightly higher than first quarter 2009 net sales of $136.2 million.
- The increase in net sales was driven by a 3.8% increase in volume, partially offset by 2.5% lower net selling prices.
- Operating income was lower as a result of significantly higher pulp costs.
Pulp and Paperboard
For the first quarter of 2010 the segment had an operating loss of $6.8 million, compared to operating income of $2.2 million for the first quarter of 2009. This loss included major maintenance costs of $16.9 million in the quarter compared to $1.5 million in the same period of 2009. Net sales of $208.0 million for the quarter were up 26.4% compared to first quarter 2009 net sales of $164.6 million.
- Higher net sales for the quarter were primarily the result of significant paperboard volume increases and higher pulp prices and volumes. Paperboard shipments increased by 37,857 tons, or 24.9%, while paperboard net selling prices slipped 3.0% compared to first quarter 2009. Market pulp pricing increased by 37.1% and shipments to third parties increased to 13,762 tons as compared to an unusually low level in first quarter 2009.
- Operating income for the quarter was reduced by the $16.9 million in scheduled major maintenance costs mentioned previously, with all other expenses relatively flat as a percentage of net sales.
- There was no income related to alternative fuel mixture tax credits in either first quarter of 2009 or first quarter of 2010. The company has a balance of approximately $62 million in taxes receivable at March 31, 2010 associated with the alternative fuel mixture tax credits.
- Effective January 1, 2010, the company consolidated the former Wood Products segment into its Pulp & Paperboard segment. We will report the two together going forward under the heading Pulp and Paperboard. Wood products revenue increased $5.7 million compared to first quarter 2009, driven by a 55.1% increase in shipment volumes and relatively flat pricing.
The company’s effective income tax rate for the first quarter of 2010 was 92.7% compared to 37.0% for the same period last year. The higher tax rate was primarily due to the effect of the passage of the Patient Protection and Affordable Care Act of 2010, which resulted in the reversal of $4.4 million in deferred tax assets due to the elimination of the benefit of the Medicare Part D subsidies from taxable income after December 31, 2012. The annual estimated effective tax rate for 2010, excluding this item, is approximately 34.1%.
ABOUT CLEARWATER PAPER
Clearwater Paper manufactures premium consumer tissue, high-quality bleached paperboard and wood products at six facilities across the country.
SOURCE: Clearwater Paper Corp.