Boise Inc. Reports First Quarter 2013 Loss
May 2, 2013 (Press Release) - Boise Inc. today reported a net loss of $(1.2) million, or $(0.01) per diluted share, for first quarter 2013, compared with net income of $21.3 million, or $0.21 per diluted share, for the same period in 2012. EBITDA (1) was $56.2 million for first quarter 2013, compared with $87.4 million for first quarter 2012. The pre-tax maintenance cold outage costs at our mill in DeRidder, Louisiana, which occur once every five years, reduced our first quarter results by $22.4 million. In addition, incremental depreciation expense related to shortening the useful lives of some of our assets, primarily at our mill in International Falls, Minnesota, reduced our results by $5.3 million.
"We completed the DeRidder outage safely and on budget. Nevertheless, our first quarter results fell short of our expectations," said Alexander Toeldte, president and chief executive officer. "We experienced unfavorable mix changes in our Packaging segment that partially offset the benefits of the fall 2012 linerboard price increase. In addition, decreasing prices for uncoated freesheet negatively affected our results in Paper."
"In pursuit of our long-term strategic objectives, we are pleased to announce our decision to invest between $110 and $120 million in the conversion of our idled newsprint machine at DeRidder to produce lightweight linerboard and corrugating medium. We will also install an OCC pulping facility at the mill as part of the project. The investment adds approximately 270,000 tons of lightweight containerboard capacity to our system and allows us to optimize the product mix on our current linerboard machine, increasing the mill's overall containerboard output by approximately 300,000 tons. We are targeting a mid-2014 start-up for the completed project, which we expect will create about 50 jobs."
"To improve the cost competitiveness of our Paper business, where we operate against the background of secularly declining demand for our products, we have made the difficult decision to close two paper machines and an off-machine coater at our International Falls mill. These closures, which we expect to occur no later than fourth quarter 2013, will reduce our annual uncoated freesheet capacity by approximately 115,000 tons, or 9%, and allow us to focus our efforts on key products and machines that drive our profitability, improve our cash flow, and enhance the overall competitiveness of our International Falls mill and our Paper business. This decision will result in the loss of approximately 300 jobs. We understand the impact this decision has on our dedicated employees, as well as the community of International Falls. We appreciate their efforts and support over the years."
Packaging segment sales for first quarter 2013 were $287.0 million, an increase of $14.8 million, or 5%, compared with first quarter 2012. The increase was related primarily to 5% sales volume growth in our network of box plants and the benefit from implementation of the 2012 fall linerboard price increase, offset partially by unfavorable mix changes in our corrugated products and decreases in sales prices and volumes of newsprint. Prices for our corrugated containers and sheets increased $2 per msf or 3% in first quarter 2013, compared with first quarter 2012. Unfavorable mix changes in our corrugated products include the effect of lower prices due to competitive pressures in some of the markets we serve.
Packaging segment EBITDA was $17.2 million for first quarter 2013, a decrease compared with $37.9 million for the same period last year. The decrease resulted from maintenance cold outage costs at DeRidder of approximately $22.4 million in first quarter 2013, compared with $1.8 million of outage costs in the prior-year quarter. These costs include both maintenance costs and lost sales volume resulting from the downtime. The benefit from the implementation of the 2012 fall linerboard price increase was offset partially by unfavorable mix changes in our corrugated products, higher medium costs, and decreases in sales prices and volumes of newsprint. We expect the combination of announced price increases, business improvements, and lower maintenance outage costs to improve our results for the rest of the year.
Lower uncoated freesheet net sales prices affected our first quarter 2013 sales, compared with first quarter and fourth quarter 2012. Paper segment sales for first quarter 2013 were $332.7 million, a decrease of $49.7 million, or 13%, compared with first quarter 2012. Our average net sales price for uncoated freesheet declined from $976 per short ton in first quarter 2012 to $929 in first quarter 2013, or 5%. Total uncoated freesheet sales volumes decreased 8% versus the prior-year period, and 1% compared with fourth quarter 2012. Sales volumes and prices in first quarter were also lower due to our decision to cease paper production at our St. Helens, Oregon, mill in 2012, which represented approximately 5% of our annual paper capacity. Excluding St. Helens, our volumes declined 5% and our prices declined $43 per short ton, or 4%.
In first quarter 2013, Paper segment EBITDA was $45.6 million, a decrease of $9.5 million, or 17% compared with first quarter 2012. The decrease was due primarily to lower net sales prices of uncoated freesheet papers.
Headquartered in Boise, Idaho, Boise Inc. (NYSE: BZ) manufactures a wide variety of packaging and paper products. Boise's range of packaging products includes linerboard and corrugating medium, corrugated containers and sheets, and protective packaging products. Boise's paper products include imaging papers for the office and home, printing and converting papers, and papers used in packaging, such as label and release papers. Our employees are committed to delivering excellent value while managing our businesses to sustain environmental resources for future generations. Visit our website at www.BoiseInc.com.
SOURCE: Boise Inc.