Wausau Paper Swings to First Quarter Profit on Strong Volumes
May 1, 2012 - Wausau Paper [yesterday] reported that:
- First-quarter net earnings were $0.20 per share compared to a prior year first-quarter net loss of $0.03 per share.
- First-quarter earnings from continuing operations were $0.03 per share compared to breakeven earnings from continuing operations a year ago.
- Excluding special items, first-quarter adjusted earnings from continuing operations were $0.10 per share compared to $0.04 per share last year, reflecting improved volume and margin performance by both business segments.
During the first quarter of 2012, the Company substantially completed its previously announced sale of the premium Print & Color brands, inventory and select equipment, as well as, the permanent closure of its manufacturing site in Brokaw, Wisconsin. Consequently, the Company will be reporting the operations of the Brokaw manufacturing facility and its related closure activities as a discontinued operation at March 31, 2012, in the condensed consolidated balance sheet. Additionally, the discontinued operation will be separately stated from continuing operations for all periods presented in the condensed consolidated statements of operations. All results discussed below exclude the results of the discontinued operation unless otherwise indicated.
The Company reported first-quarter earnings of $1.5 million, or $0.03 per share, compared with a loss of $0.2 million, in the prior year. Net sales increased 13 percent to $216.2 million, as shipments increased 16 percent to 136,000 tons.
First-quarter results included after-tax capital-related expenses of $1.2 million, or $0.02 per share associated with the Tissue segment expansion project in Harrodsburg and a charge related to a previously terminated contract of $0.04 per share. Prior-year results included after-tax capital-related expenses of $2.3 million, or $0.05 per share, associated with a paper machine rebuild at Brainerd, Minnesota, and the Tissue segment expansion at Harrodsburg. Excluding these items, adjusted earnings per share from continuing operations were $0.10 per share in the first-quarter of 2012 compared to $0.04 per share in the same period of 2011. Although this comparison is a non-GAAP measure, the Company believes that the presentation of adjusted net earnings provides a useful analysis of ongoing operating trends. Adjusted earnings for the three-month period are reconciled to GAAP earnings below.
Including discontinued operations, net of tax, net earnings for the Company were $9.8 million, or $0.20 per share for the three months ended March 31, 2012, compared to a net loss of $1.4 million, or $0.03 per share, for the same period last year. Net earnings for the three months ended March 31, 2012, include earnings from continuing operations before income taxes offset by income tax expense and net earnings from discontinued operations of $8.2 million, or $0.17 per share. Net earnings in the prior year include earnings from continuing operations before income taxes, offset by income tax expense, and a net loss from discontinued operations of $1.2 million, or $0.02 per share.
Commenting on first-quarter results and the Company’s growth initiatives, Henry C. Newell, president and CEO, said, “2012 is about growth for Wausau Paper and our first quarter was a solid start with year-over-year volume growth in Tissue of approximately 5 percent and approximately 14 percent in our technical paper markets. Earnings performance in both segments exceeded expectations due to operational initiatives in Tissue and order strength in our economically sensitive technical markets. On a strategic level, we continued to execute the exit of Print & Color during the quarter and remain on schedule for the fourth-quarter startup of our new Tissue machine.”
“We expect both segments to continue their rate of performance in the second quarter. Adjusted earnings from operations are expected in the range of $0.09 - $0.11 per share.” Adjusted earnings in the second quarter of 2011 were $0.11 per share.
The Tissue segment’s first-quarter operating profit of $9.2 million included pre-tax expense of $1.9 million related to the expansion activity and compared with prior-year operating profit of $6.3 million. Net sales and shipments increased 6 percent and 5 percent, respectively due to benefit from mid-2011 pricing actions, an improving cost structure and prior-year shipment weakness resulting from adverse weather conditions.
The Company’s $220 million Tissue expansion project at Harrodsburg remains on schedule and on budget. Site and facility preparations are meeting all original construction targets.
The Paper segment reported a first-quarter operating profit of $0.3 million, including a charge of $3.3 million relating to a natural gas transportation contract at the previously closed manufacturing facility in Groveton, New Hampshire. On a comparable basis in the prior year, Paper achieved an operating profit of $0.6 million, including pre-tax charges of $3.3 million in capital-related expense. Net sales and shipments from continuing operations increased 17 percent and 22 percent, respectively, primarily on the growth of technical paper markets.
During the quarter, we completed the sale of the premium Print & Color brands, inventory and select equipment to Neenah Paper and, in February of this year, ceased papermaking operations at the Brokaw manufacturing site. Discontinued operations for the quarter include, net-of-tax, a gain from the sale of the business of $7.7 million, or $0.16 per share, and $0.5 million, or $0.01 per share in first quarter results from operations partially offset by closure-related costs. Discontinued operations for the prior year was a loss of $1.2 million, or $0.02 per share.
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. The Company is headquartered in Mosinee, Wisconsin.
SOURCE: Wausau Paper