Buckeye Technologies Reports Third Quarter Results
April 30, 2013 - Buckeye Technologies Inc. (BKI) today announced third quarter net sales of $195.5 million and adjusted net income* of $21.0 million. Adjusted EPS* of $0.53 for the third fiscal quarter of 2013 compares with $0.67 in the third fiscal quarter of 2012 and $0.60 in the second quarter of the 2013 fiscal year. EPS in the second fiscal quarter of 2013 benefited by $0.11 from the final net insurance settlement from the June 2012 steam drum failure at Foley.
Net sales for the quarter were down $21.5 million, or 10%, compared to the year ago quarter. Shipment volume was down 3% with nonwovens volume up 11% and specialty fibers volume off 4%. The Company continued to experience weak demand in some of our high-end specialty fiber markets, particularly from the European tire cord market. Selling prices were down year over year in the fluff pulp market. Cotton specialty fibers selling prices were also lower as we passed through reductions in raw cotton linter costs to our customers. Product mix was unfavorable, as we shipped about 5,500 tons this quarter into the commodity viscose staple fiber market.
Adjusted operating income* of $31.4 million for the third fiscal quarter of 2013 was down $10.5 million compared to the year ago quarter, due to lower volume, selling prices and unfavorable product mix in our specialty fibers segment. Nonwovens operating income improved by $2.8 million, an increase of 92%, compared to the year-ago quarter due to increased sales and increased capacity utilization.
Adjusted net income* of $21.0 million, or $0.53 per share, excludes a net after-tax gain of $7.3 million, or $0.18 per share, from the sale of the land and building and impairment and restructuring charges related to the closure of our Delta airlaid nonwovens plant, which ceased production in November and a tax benefit related to discontinued operations. Adjusted net income* was down $6.0 million, or $0.14 per share, compared to the prior year period’s $27.0 million, or $0.67 per share, which excluded after-tax costs of $1.2 million, or $0.03 per share, related to the closure of the cotton linter pulp plant in Americana, Brazil, the sale of the converting business in King, North Carolina, and accrued interest expense related to cellulosic biofuel credits.
Comparing the third fiscal quarter of 2013 to the second fiscal quarter of 2013, sales were down $8.8 million, or 4%. Shipment volume was down 9% with nonwovens volume up 6% and specialty fibers volume off 11%. While demand from the European tire cord and global LED screen markets remained weak, we began to see some improvement during the quarter and were able to reduce our shipments into the viscose staple fiber market by almost 7,000 tons. Adjusted operating income* was down $5.0 million, of which $6.6 million was due to the insurance recovery in the second quarter. Otherwise, third quarter adjusted operating income was better than the second quarter due to improved nonwovens performance and lower selling, research and administrative expenses. Adjusted EPS* of $0.53 was down $0.07 versus the second quarter, of which $0.11 was due to the second quarter insurance recovery.
Free cash flow* was $38.5 million for the quarter. Capital expenditures, at $27.2 million, remained at a high level as Buckeye continues work on the specialty conversion and oxygen delignification projects at its Foley Mill. Proceeds from the sale of assets were $19.9 million as we completed the sale of the land and building at our Delta, B.C., Canada site in February. Long-term debt has decreased by 37.0 million since December 31.
Chairman and Chief Executive Officer John B. Crowe said, “Our third quarter fiscal 2013 earnings were better than expected, with adjusted EPS* exceeding our guidance by $0.04. Our nonwovens segment results were better than expected and SRA spending was lower than expected for the quarter.”
Buckeye, a leading manufacturer and marketer of specialty fibers and nonwoven materials, is headquartered in Memphis, Tennessee, USA. The Company currently operates facilities in the United States, Germany, and Canada. Its products are sold worldwide to makers of consumer and industrial goods.
*This release includes certain financial information not derived in accordance with generally accepted accounting principles (“GAAP”). The non-GAAP measures presented are “adjusted operating income,” “adjusted net income,” “and adjusted earnings per share,” “free cash flow.” The first three measures are equal to net income, pre-tax income, operating income and earnings per share excluding the after-tax effects of alternative fuel mixture credits (AFMC) and cellulosic biofuel credits (CBC), goodwill and long-term asset impairment cost, and restructuring cost. “Free cash flow” is equal to net cash provided by operating activities less net cash used in investing activities (excluding purchase of short term investments.
SOURCE: Buckeye Technologies Inc.