NewPage Fourth Quarter Loss Widens on Charges
Feb. 17, 2011 - NewPage Corporation today announced its results of operations for the fourth quarter and full year 2010.
Net sales were $946 million in the fourth quarter of 2010 compared to $857 million in the fourth quarter of 2009, an increase of $89 million, or 10 percent. For the full year 2010, net sales were $3,596 million compared to $3,106 million for 2009, an increase of $490 million, or 16 percent. Net sales were affected primarily by higher sales volume of core paper and higher sales volume and higher average prices of other non-core paper, partially offset by lower average core paper prices in 2010 compared to 2009. Gross margin for the fourth quarter of 2010 was 8.8 percent compared to (6.2) percent in the fourth quarter of 2009, primarily as a result of higher sales volumes and the effects of not taking market-related downtime in 2010.
During 2010, North American printing paper demand increased compared to 2009. This was a result of a recovery of advertising spending and magazine and catalog circulation during 2010 following a decline in 2009 attributable to weak economic factors and inventory reductions by customers.
"On December 8, 2010, we revised our guidance for the fourth quarter as result of our decision to close the Whiting mill in Wisconsin. Our fourth quarter financial results were in line with that guidance and we did see quarter over quarter improvement in our EBITDA results," said George F. Martin, president and chief executive officer of NewPage.
Net income (loss) attributable to NewPage was $(240) million in the fourth quarter of 2010 compared to $(55) million in the fourth quarter of 2009. During the fourth quarter, NewPage announced plans to permanently close the Whiting, Wisconsin mill by the end of February 2011 and recognized asset impairment charges of $196 million in other (income) expense. For the full year 2010, net loss attributable to NewPage was $(656) million compared to $(308) million in 2009. The decrease was primarily a result of lower average sales prices, asset impairment charges and lower other income recognized for the alternative fuel mixture tax credits, partially offset by higher core paper sales volume and lower interest expense.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization as further adjusted as shown in the attached reconciliation) was $263 million in 2010 compared to $432 million in 2009.
As a result of higher demand and lower industry production capacity, NewPage did not take any market-related downtime in the fourth quarter of 2010 compared to 104,000 tons in the fourth quarter of 2009. For the full year, NewPage took 39,000 tons of market-related downtime during 2010, compared to 515,000 tons of market-related downtime during 2009.
NewPage closed the year with $149 million of liquidity, consisting of $8 million of cash and cash equivalents and $141 million available for borrowing under the revolving credit facility.
"Sales proceeds of $79 million from Port Hawkesbury biomass project improved year-end liquidity," said David J. Prystash, senior vice president and chief financial officer for NewPage. Other previously announced asset sales remain subject to pending regulatory review.
The NewPage Form 10-K Annual Report to be filed with the U.S. Securities and Exchange Commission today can be found on the NewPage Web site. The company believes this information is sufficient to answer questions, and no conference call is planned.
Headquartered in Miamisburg, Ohio, NewPage Corporation is the largest coated paper manufacturer in North America, based on production capacity, with $3.6 billion in net sales for the year ended December 31, 2010. 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 3.1 million tons of coated paper, approximately 1.1 million tons of uncoated paper and approximately 200,000 tons of specialty paper.
SOURCE: NewPage Corp.