NewPage Reports First Quarter Loss
May 6, 2010 - NewPage Corp. today announced its results of operations for the first quarter of 2010. Net sales were $817 million in the first quarter of 2010 compared to $722 million in the first quarter of 2009, an increase of $95 million, or 13 percent. The increase in net sales in the first quarter of 2010 resulted primarily from higher sales volumes, partially offset by lower average paper prices during the quarter. Net sales in the first quarter of 2009 were affected by decreased advertising spending and magazine and catalog circulation that was largely attributable to general economic factors and inventory reductions by customers.
Net loss attributable to NewPage was $(175) million in the first quarter of 2010 compared to $(109) million in the first quarter of 2009. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $15 million in the first quarter of 2010 compared to $55 million in the first quarter of 2009. The decline in Adjusted EBITDA resulted from pricing deterioration of over $100 million, partially offset by improved volume, deflation on chemical and energy input costs, and the recognition of $13 million of income from alternative fuel mixture tax credits as income recognition criteria was met during the quarter.
"During the first quarter of 2010, we saw a significant rebound in sales volumes as customer demand increased and advertising began to recover. The industry experienced a 19 percent increase in coated paper sales volumes in the first quarter of 2010 compared to the first quarter last year," said Tom Curley, NewPage President and Chief Executive Officer. "At NewPage, our coated paper sales volume increased 27 percent for the first quarter of 2010, and we gained market share. Our total sales volumes were up 31 percent compared to the first quarter of 2009, largely driven by improved coated paper demand. We believe improved sales demand indicates that our industry is prepared for significantly improved results for the remainder of 2010."
"NewPage ended the first quarter with $13 million of cash and announced asset sales with the potential to generate an additional $150 million of cash," said David J. Prystash, Senior Vice President and Chief Financial Officer for NewPage. "In addition, our liquidity improved to $247 million at the end of the first quarter of 2010, up from $224 million at year end 2009, a $23 million improvement. We ended the quarter with no borrowings outstanding on our revolver as a result of the issuance of the additional $70 million of First Lien Notes and working capital improvements during the first quarter of 2010. While we envision continued recovery in 2010, we have taken the steps necessary to provide available liquidity that will allow us to deal with a slower recovery than we presently anticipate."
Gross margin (loss) deteriorated to (3.9) percent for the first quarter of 2010 from 0.3 percent for the first quarter of 2009, primarily as a result of lower sales prices.
Interest expense in the first quarter of 2010 was $97 million compared to $67 million in the first quarter of 2009. The increase was primarily due to higher interest rates on outstanding debt.
"We see 2010 as a recovery year with sales demand improving. The increase in market share along with a better mix of product sales and our announced price increases will improve margins. We are staying focused on servicing our customers with quality products, and keeping our machines running efficiently," added Curley. "Our continuing efforts at improving productivity will help us to offset higher input costs."
NewPage, together with other paper companies and the United Steelworkers Union, is continuing to pursue the antidumping and countervailing duty cases filed last year against Chinese and Indonesian imports of coated sheet products. "Our goal is to restore a coated paper marketplace in which everyone can compete fairly," said Mark A. Suwyn, NewPage Chairman. "We commend the U.S. Department of Commerce for its preliminary countervailing and dumping duty determinations against certain coated paper imports from China and Indonesia. The successful resolution of these cases will help create the level playing field needed for us to continue to make investments in our plants, equipment and people."
About NewPage Corporation
Headquartered in Miamisburg, Ohio, NewPage Corporation is the largest coated paper manufacturer in North America, based on production capacity, with $3.1 billion in net sales for the year ended December 31, 2009. The company's product portfolio is the broadest in North America and includes coated freesheet, coated groundwood, supercalendered, newsprint and specialty papers. These papers are used for corporate collateral, commercial printing, magazines, catalogs, books, coupons, inserts, newspapers, packaging applications and direct mail advertising.
NewPage owns paper mills in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia, Canada. These mills have a total annual production capacity of approximately 4.4 million tons of paper, including approximately 3.2 million tons of coated paper, approximately 1.0 million tons of uncoated paper and approximately 200,000 tons of specialty paper.
SOURCE: NewPage Corp.