Wausau Paper Posts 2nd Quarter 2011 Profit
July 26, 2011 - Wausau Paper [yesterday] reported that:
- Second-quarter net earnings of $0.07 per share compared with a first-quarter net loss of $0.03 per share and prior-year net earnings of $0.11 per share.
- Excluding special items, second-quarter adjusted net earnings of $0.08 per share increased from first-quarter and prior-year earnings of $0.03 per share and $0.07 per share, respectively.
- Product trials on the Paper segment’s rebuilt Brainerd, Minnesota, paper machine were successfully completed with commercialization underway.
- Tissue segment’s $220 million expansion is advancing according to plan — groundbreaking at the Harrodsburg, Kentucky, site is scheduled for early August.
The company reported second-quarter net earnings of $3.2 million, or $0.07 per share, compared with net earnings of $5.6 million, or $0.11 per share, in the prior year. Net sales increased 1 percent to $267.1 million, as shipments decreased 3 percent to 162,000 tons, due primarily to volume reductions associated with a reduced operating schedule at the Paper segment’s mill in Brokaw, Wisconsin.
Second-quarter results included after-tax capital-related expenses of $0.7 million, or $0.01 per share, associated with the Brainerd machine rebuild and the Tissue segment expansion at Harrodsburg. Second-quarter results also included after-tax timberland sales gains of $0.2 million, or less than $0.01 per share, in the current year and $2.3 million, or $0.05 per share, in the prior year. Excluding capital-related expenses and timberland sales gains, second-quarter adjusted net earnings were $3.7 million, or $0.08 per share, compared with adjusted earnings of $3.3 million, or $0.07 per share, last year. Adjusted net earnings for the first six months of 2011 were $5.0 million, or $0.10 per share, compared with prior-year earnings of $7.4 million, or $0.15 per share.
Commenting on second-quarter results, Thomas J. Howatt, president and CEO, stated, “Earnings improved from first-quarter and prior-year levels despite elevated input costs, demand variability and persistently weak economic conditions. Increased shipments in targeted technical markets drove product mix gains and enabled our Paper unit to achieve a third consecutive quarter of year-over-year profit improvement. At the same time, Tissue segment profits recovered from the first quarter as shipments rebounded to seasonally normal levels.”
Looking to the third quarter, Mr. Howatt commented, “Commercialization of tape products from the rebuilt Brainerd machine is well underway and we expect volumes to ramp up over the next several quarters. Customer response to our announced Tissue capacity expansion has been highly encouraging and we are working to accelerate growth ahead of the planned January 2013 tissue machine start-up. These projects support growth in our target markets and are expected to substantially improve long-term shareholder returns.”
The company expects that the initial benefits of recent selling price increases will only partially offset record-high wastepaper costs and continuing demand weakness in printing & writing markets over the next quarter. As a result, adjusted third-quarter earnings are expected in the range of $0.11 - $0.14 per share as compared with $0.20 per share last year.
The Tissue segment's second-quarter operating profit of $8.7 million improved from $6.3 million in the first quarter and compared with $10.5 million last year. First- and second-quarter results included pre-tax expenses related to the Tissue expansion project of $0.2 million and $0.4 million, respectively. Net sales declined 1 percent as shipments increased 1 percent over the year-ago period. Value-added Green Seal™-certified product shipments increased 3 percent as compared with the same period last year while fiber and energy costs increased $2.8 million. Phased implementation of announced selling price increases is expected to offset rapidly escalating purchased parent roll and record-high wastepaper costs to improve profitability late in the year.
The $220 million Tissue expansion announced on April 13 is proceeding according to schedule with groundbreaking scheduled for August 2. The project, which includes a 75,000 ton-per-year machine capable of producing premium towel and tissue products from 100 percent recycled fiber, is expected to be completed in late 2012 with start-up scheduled for the first quarter of 2013.
The Paper segment reported a second-quarter operating profit of $2.4 million compared with $1.4 million last year. Current-year results include pre-tax expenses of $0.7 million associated with completion of tape trials on the rebuilt Brainerd machine. Shipments declined 5 percent due largely to a reduced operating schedule implemented earlier in the year at the Brokaw mill while net sales increased 1 percent, reflecting the benefit of increased selling prices and product mix improvement. With commercialization of tape and industrial grades well underway on the rebuilt machine, the Paper segment intends to further improve product mix and profitability by shifting Brainerd production from printing & writing to technical products over the next 18-24 months.
On April 4, 2011, the company issued $50 million of seven-year Senior Notes with an interest rate of 4.68 percent per annum. Proceeds were used, in part, to repay $35 million of Senior Notes maturing in August with an interest rate of 7.43 percent per annum.
The company sold 320 acres of timberlands in the second quarter for an after-tax gain of $0.2 million. Approximately 7,600 acres of non-strategic timberlands remain in the company’s sales program.
Wausau Paper produces and markets specialty papers for industrial, commercial and consumer end markets as well as a complete line of away-from-home towel and tissue products.
SOURCE: Wausau Paper