RockTenn Reports Fiscal 2012 First Quarter Earnings

Jan. 24, 2012 - RockTenn today reported earnings for the quarter ended December 31, 2011 of $1.06 per diluted share and adjusted earnings of $1.18 per diluted share.

FIRST QUARTER RESULTS

  • Net sales of $2,267.7 million for the first quarter of fiscal 2012 increased $1,506.6 million over the first quarter of fiscal 2011, primarily as a result of the May 27, 2011, Smurfit-Stone acquisition.
  • Segment income, adjusted to eliminate $0.4 million of pre-tax acquisition inventory step-up, was $193.5 million, up 74.8% over the prior year quarter, primarily as a result of the Smurfit-Stone acquisition.
  • RockTenn’s restructuring and other costs and operating losses and transition costs due to plant closures, net of related noncontrolling interest were $0.12 per diluted share after-tax, for the first quarter of fiscal 2012. These costs consisted primarily of $3.6 million of pre-tax facility closure charges primarily related to former Smurfit-Stone corrugated container plants, $7.3 million of pre-tax integration and acquisition costs that primarily consisted of professional services and other employee costs and $1.6 million of pre-tax operating losses and transition costs in connection with consolidating converting facilities.

Chairman and Chief Executive Officer’s Statement
RockTenn Chairman and Chief Executive Officer James A. Rubright stated, “Our adjusted earnings of $1.18 per share reflect continued earnings accretion from the Smurfit-Stone acquisition, which we estimate at $.15 for the quarter and $1.03 for the seven months since we completed the acquisition. Our earnings were lower than the prior quarter due to the combination of normal seasonal volume and mix trends, major maintenance outage expenses and very competitive export containerboard markets and domestic box markets.”

SEGMENT RESULTS

Containerboard and Paperboard Tons Produced
Total tons produced in the first quarter of fiscal 2012 were approximately 2.28 million tons, an increase of approximately 1.7 million tons over the prior year quarter due to the Smurfit-Stone acquisition, and a sequential decrease of approximately 106,000 tons. The sequential quarter decrease was primarily due to scheduled maintenance and market related downtime in our containerboard mills.

Corrugated Packaging Segment
Corrugated Packaging segment net sales increased $1,324.5 million to $1,522.8 million in the first quarter of fiscal 2012 compared to the prior year quarter, due primarily to the Smurfit-Stone acquisition. Segment income, adjusted to eliminate $0.4 million of pre-tax acquisition inventory step-up, increased to $109.7 million in the first quarter of fiscal 2012 compared to $37.4 million in the prior year quarter. Corrugated Packaging segment EBITDA margin was 13.9% for the first quarter of fiscal 2012.

Consumer Packaging Segment
Consumer Packaging segment net sales increased $75.9 million in the first quarter of fiscal 2012 compared to the prior year quarter, primarily due to increased display sales including those from the Smurfit-Stone acquisition and generally higher selling prices throughout the segment. Segment income was $80.3 million in the first quarter of fiscal 2012 compared to $71.0 million in the prior year quarter due primarily to income from the acquired display facilities and higher selling prices that were partially offset by higher recycled fiber, chemical and freight costs. Consumer Packaging segment EBITDA margin was 16.8% for the first quarter of fiscal 2012.

Recycling and Waste Solutions Segment
Recycling and Waste Solutions segment net sales increased $287.5 million over the prior year first quarter to $329.4 million primarily due to the Smurfit-Stone acquisition. Segment income was $3.5 million in the first quarter of fiscal 2012 compared to $2.3 million in the prior year.

Cash Provided From Operating, Financing and Investing Activities
At December 31, 2011, net debt was $3.4 billion and our Leverage Ratio (as hereinafter defined) was 2.73 times, well below our maximum credit agreement covenant of 3.75 times. Net debt increased by $31.2 million in the December quarter. We generated $157.9 million in cash during the quarter before the payment of deferred compensation expense to a former Smurfit executive. Cash provided by operations was $145.1 million. Cash provided by operations was reduced by $68.9 million of contributions to our qualified pension plans in excess of expense and $69.4 million to build primarily containerboard inventory to meet anticipated system supply shortfalls later in the year due to planned major mill outages. We also invested $81.6 million in capital expenditures, invested $89.1 million in business purchases and investments and returned $14.1 million in dividends to our shareholders.

RockTenn is one of North America's leading integrated manufacturers of corrugated and consumer packaging and recycling solutions, with net sales of $10 billion. RockTenn’s 26,000 employees are committed to exceeding their customers’ expectations – every time. The Company operates locations in the United States, Canada, Mexico, Chile, Argentina and China. For more information, visit www.rocktenn.com.

SOURCE: RockTenn