Wausau Paper Reports 2nd Quarter Loss
July 30, 2012 - Wausau Paper today reported that:
- Second-quarter net loss per share, including discontinued operations, was $0.03 per share compared to year-ago net earnings of $0.07 per share.
- Second-quarter earnings from continuing operations were $0.04 per share compared to earnings from continuing operations of $0.10 per share the year before.
- Excluding special items, second-quarter adjusted earnings from continuing operations were $0.09 per share, reflecting strong performance by the Tissue segment, compared to $0.11 per share last year.
During the first and second quarters of 2012, the Company substantially completed the sale of its premium Print & Color brands, inventory and select equipment, and the permanent closure of its Brokaw, Wisconsin, manufacturing site. The Company began reporting the operations of the Brokaw manufacturing facility and related closure activities as a discontinued operation as of March 31, 2012, in the condensed consolidated balance sheet. Additionally, the discontinued operation is separately presented from continuing operations for all periods presented in the condensed consolidated statements of operations. All results discussed below exclude the discontinued operation unless otherwise indicated.
The Company reported net earnings for the second quarter of $2.1 million, or $0.04 per share, compared with net earnings of $4.8 million, or $0.10 per share, in the prior year. Net sales declined one percent to $212.9 million, as shipments were flat at 132,000 tons.
Second-quarter results included after-tax capital-related expenses of $0.9 million, or $0.02 per share, associated with the Tissue segment expansion project in Harrodsburg, Kentucky, and after-tax expenses of $1.4 million, or$0.03 per share, related to settlement charges associated with a defined benefit pension plan. Prior-year results included after-tax capital-related expenses of $0.7 million, or $0.01 per share, associated with a paper machine rebuild at Brainerd, Minnesota, and the Tissue segment expansion. Excluding these items, adjusted earnings per share from continuing operations were $0.09 per share in the second-quarter of 2012 compared to $0.11 per share in the same period of 2011. Adjusted net earnings from continuing operations for the first six months of 2012 were $9.3 million, or $0.19 per share, compared with prior-year adjusted net earnings of $7.6 million, or $0.15 per share. Although these comparisons are non-GAAP measures, the Company believes that the presentation of adjusted net earnings from continuing operations provides a useful analysis of ongoing operating trends.
Including discontinued operations, net of tax, second-quarter net losses were $1.3 million, or $0.03 per share, compared to net earnings of $3.2 million, or $0.07 per share, for the same period last year. Current-quarter results included earnings from continuing operations before income taxes offset by income tax expense and a net loss from discontinued operations of $3.4 million, or $0.07 per share. Prior-year results included earnings from continuing operations before income taxes, offset by income tax expense, and a net loss from discontinued operations of $1.6 million, or $0.03 per share.
For the six months ended June 30, 2012, including discontinued operations, net of tax, net earnings were $8.4 million, or $0.17 per share, compared to net earnings of $1.8 million, or $0.04 per share, for the same period last year. Net earnings included earnings from continuing operations before income taxes offset by income tax expense and net earnings from discontinued operations of $4.8 million, or $0.10 per share. Net earnings in the prior year included earnings from continuing operations before income taxes, offset by income tax expense, and a net loss from discontinued operations of $2.8 million, or $0.06 per share.
Commenting on first-half performance and second-quarter results, Henry C. Newell, president and CEO said, “The first half has been a period of high intensity for both of our businesses as we execute against our strategic initiatives to grow both tissue and paper; execute our tissue expansion and complete the exit of our print franchise.
“Through the second quarter we have demonstrated tissue case growth of over 3 percent at approximately 13 percent operating margins; demonstrated growth in our technical markets of approximately 8 percent; significantly exceeded cash expectations for the exit of Print; and our tissue expansion is on schedule and budget.
“We will see increasing intensity as we move through the second half; we expect to continue our growth momentum in both tissue and technical markets and the startup of the new paper machine will dominate our priorities. We are cautious in our guidance for the second half due primarily to a challenging economic environment and expect full year adjusted net earnings to be in the $0.39 - $0.41 per share range versus prior-year adjusted net earnings of $0.33per share.”
The Tissue segment’s second-quarter operating profit of $9.1 million included pre-tax expense of $1.5 million related to the expansion activity and compared with prior-year operating profit of $8.7 million, including $0.4 million in expansion-related pre-tax expense. Net sales and tons shipped increased 3 percent and 1 percent, respectively, due to mid-2011 pricing actions and growth in total cases shipped of 2 percent.
The Company’s $220 million Tissue expansion project in Harrodsburg remains on schedule and on budget for the fourth-quarter start-up of the new tissue and towel machine.
The Paper segment reported a second-quarter operating profit of $2.0 million. Including pre-tax capital related expense of $0.7 million in the prior year, Paper achieved an operating profit of $4.9 million for the same period in 2011.
During the first quarter, we completed the sale of this segment’s premium Print & Color brands, inventory and select equipment, and ceased papermaking operations at the former primary Print & Color manufacturing site. In the second quarter, we ceased converting operations at the site and continued to execute closure-related activities. Discontinued operations for the second quarter included, net-of-tax, a loss of $3.4 million, or $0.07 per share from operations. On the same basis, discontinued operations for the prior year had a loss, net of tax, of $1.6 million, or $0.03 per share.
On April 9, 2012, the Company issued $50 million of Senior Notes with a maturity date of June 30, 2016, and an interest rate of 4 percent per annum. Proceeds were used, in part, to extinguish $19 million of Industrial Revenue Bonds on June 1, 2012.
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, and is listed on the NYSE under the symbol WPP
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, and is listed on the NYSE under the symbol WPP.
SOURCE: Wausau Paper