RockTenn Reports Fiscal 2nd Quarter 2012 Earnings

April 25, 2012 - RockTenn today reported earnings for the quarter ended March 31, 2012 of $0.44 per diluted share and adjusted earnings of $0.97 per diluted share.

Second Quarter Results

  • Net sales of $2,282.9 million for the second quarter of fiscal 2012 increased $1,490.0 million over the second quarter of fiscal 2011, primarily as a result of the May 27, 2011, Smurfit-Stone acquisition.
  • Segment income of $157.3 million, adjusted to eliminate $6.7 million of pre-tax losses at our recently closed Matane, Quebec containerboard mill, was $164.0 million up $70.3 million or 75.0% over the prior year quarter, primarily as a result of the Smurfit-Stone acquisition and increased profitability in our Consumer Packaging segment.
  • RockTennís restructuring and other costs and operating losses and transition costs due to plant closures, net of related noncontrolling interest were $0.36 per diluted share after-tax, for the second quarter of fiscal 2012. These costs consisted primarily of $19.3 million of pre-tax facility closure charges primarily related to the Matane mill and corrugated container plants acquired in the Smurfit-Stone acquisition, $7.7 million of pre-tax operating losses and transition costs primarily in connection with the Matane mill closure and consolidating converting facilities and $8.7 million of pre-tax integration and acquisition costs that primarily consisted of professional services and other employee costs.
  • We recognized a pre-tax loss on extinguishment of debt of $19.5 million, or $0.17 per diluted share in connection with the redemption of our 9.25% senior notes due March 2016 at a redemption price equal to 104.625% of par and to expense unamortized deferred financing and discount costs.

Chairman and Chief Executive Officerís Statement
RockTenn Chairman and Chief Executive Officer James A. Rubright stated, ďRockTennís adjusted earnings of $.97 per share reflect very strong earnings and margin growth in our consumer packaging businesses. Our corrugated segment results were reduced by continued competitive domestic box markets amid stable domestic containerboard pricing and by lower export pricing for containerboard and pulp. Export demand and pricing and pulp pricing are improving from the seasonal and cyclical bottom we believe we experienced in the quarter.Ē

SEGMENT RESULTS

Containerboard and Paperboard Tons Produced
Total tons produced in the second quarter of fiscal 2012 were approximately 2.17 million tons, an increase of approximately 1.6 million tons over the prior year quarter due to the Smurfit-Stone acquisition, and a sequential decrease of approximately 124,000 tons from the first quarter of fiscal 2012. 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 $1,296.5 million to $1,505.9 million in the second quarter of fiscal 2012 compared to the prior year quarter, due primarily to the Smurfit-Stone acquisition. Segment income of $68.7 million, adjusted to eliminate $6.7 million of pre-tax losses at our recently closed Matane, Quebec containerboard mill, increased to $75.4 million in the second quarter of fiscal 2012 compared to $30.1 million in the prior year quarter. Corrugated Packaging segment EBITDA margin was 11.8% for the second quarter of fiscal 2012.

Consumer Packaging Segment
Consumer Packaging segment net sales increased $79.8 million in the second 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 $84.4 million in the second quarter of fiscal 2012 compared to $61.0 million in the prior year quarter due primarily to increased display sales, generally higher selling prices, lower recycled and virgin fiber and energy costs that were partially offset by higher chemical and freight costs. Consumer Packaging segment EBITDA margin was 16.8% for the second quarter of fiscal 2012.

Recycling and Waste Solutions Segment
Recycling and Waste Solutions segment net sales increased $255.3 million over the prior year second quarter to $296.1 million primarily due to the Smurfit-Stone acquisition. Segment income was $4.2 million in the second quarter of fiscal 2012 compared to $2.6 million in the prior year.

Cash Provided From Operating, Financing and Investing Activities
At March 31, 2012, total debt was $3.4 billion and our Leverage Ratio (as hereinafter defined) was 2.78 times, well below our maximum credit agreement covenant of 3.75 times. Net debt decreased by $61.7 million in the March quarter to $3.4 billion. Cash provided by operations was $192.7 million in the second quarter of fiscal 2012, after pension and postretirement funding more than expense of $40.0 million. We also invested $120.6 million in capital expenditures 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. RockTennís 26,000 employees are committed to exceeding their customersí expectations — every time. For more information visit: www.rocktenn.com.

SOURCE: RockTenn