ALPHARETTA, Ga., Aug. 3 /CNW/ -- Neenah Paper (NYSE: NP)
reported today second quarter 2005 net income of $6.8 million, or $0.46 per
diluted common share. Results included $0.07 per share for restructuring
charges related to the previously announced closure of the Terrace Bay No. 1
pulp mill on May 1. Net income in the second quarter of 2004, during which
operations were part of Kimberly-Clark, was $23.7 million, but did not include
interest expense or other changes attributable to being a stand-alone company.
SECOND QUARTER RESULTS
Consolidated net sales for the second quarter of 2005 were $189.3 million
versus $207.4 million in the second quarter of 2004. The combined paper
businesses posted year over year revenue gains, but pulp sales were lower, due
in part to reduced volumes following the shutdown of the No. 1 mill at Terrace
Bay.
Operating income for the second quarter of 2005 was $14.8 million and
included a $1.7 million restructuring charge for the No. 1 mill shutdown at
Terrace Bay. Compared to 2004 second quarter results, operating income was
lower primarily due to pulp operations, which included $9 million of higher
costs due to a stronger Canadian dollar, and corporate expenses of $7.9
million resulting from operating as a stand-alone company. In addition, higher
costs of raw materials and energy across all business segments were only
partly offset by cost savings programs. Operating income in the second quarter
of 2004 was $37.3 million.
Fine Paper net sales for the second quarter of 2005 grew 1 percent versus
the prior year period on slightly higher volumes and prices. Operating income
for this segment was $16.0 million in 2005, compared with $18.4 million in the
same quarter of 2004. In 2005, operating income was impacted by increased
costs for hardwood fiber and allocated corporate expenses.
In the Technical Paper segment, volumes for the second quarter of 2005
were up 3 percent versus the second quarter 2004 while sales were down 1
percent due to a mix which reflected additional demand for lower-priced
products. Operating income for Technical Paper in the second quarter 2005 was
$3.1 million, compared with $6.1 million in the same period of 2004. The
decline in operating results in 2005 was due primarily to increased costs of
approximately $2 million for latex and energy, as well as allocated corporate
expenses and a sales mix with more lower-priced products.
Pulp net sales in the second quarter of 2005 fell approximately 16 percent
compared to the second quarter of 2004, with volumes declining 18 percent. Net
average selling prices for pulp in the quarter were slightly below 2004, as
increased discounts offset slightly higher prices and a more favorable mix due
to increased sales of softwood pulp. In the second quarter of 2005, the
segment had an operating loss of $2.6 million, compared with operating income
of $13.8 million in the same period of 2004. In addition to the approximately
$9 million increase in costs from a stronger Canadian dollar compared with the
second quarter 2004, operating results were lower in 2005 due to the $1.7
million restructuring charge, lower volumes and higher costs for raw
materials, energy and allocated corporate expenses.
Commenting on results, Sean Erwin, Chairman and Chief Executive Officer,
said, "Second quarter results reflect more challenging industry conditions
versus a year ago due to increased prices for wood, latex and energy, and a
much stronger Canadian dollar. However, our teams are showing that they can
grow our paper business even in weak market conditions with the fine paper
segment delivering a sixth consecutive quarter of year-on-year growth and
continued strong demand within the technical paper segment. These results are
being supported with the launch of new offerings and by the strength of our
existing brands and products. In addition, we are making progress in other
areas with the successful closure of the Terrace Bay No. 1 mill, $3 million of
year-on-year cost savings in the second quarter and implementation of a
hedging strategy to mitigate some of the variability of external factors.
Continued progress will be important as the impact of scheduled downs at our
mills will be included in the second half of the year. Overall, we remain
focused on both short and longer term initiatives to grow our paper
businesses, generate value in pulp, particularly at Terrace Bay, and deliver
cost savings across all segments."
CONFERENCE CALL
Neenah Paper's conference call to discuss first quarter earnings and other
matters of interest to investors and analysts will be held at 11 a.m. (EDT) on
August 4. The call will be simultaneously broadcast over the World Wide Web
and stockholders and others are invited to listen to the live broadcast by
following the instructions set out in the Investors section of the company's
Web site (http://www.neenah.com). A replay of the call will be available at
the same site through August 26.
About Neenah Paper, Inc.
Neenah Paper manufactures and distributes a wide range of premium and
specialty paper grades, with well-known brands such as CLASSIC(R),
ENVIRONMENT(R), KIMDURA(R) and MUNISING LP(R). The company also produces and
sells bleached pulp, primarily for use in the manufacture of tissue and
writing papers. Neenah Paper is based in Alpharetta, Georgia, and has
manufacturing operations in Wisconsin, Michigan and in the Canadian provinces
of Ontario and Nova Scotia. Additional information about Neenah Paper can be
found at the company's web site at http://www.neenah.com.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this press release may constitute "forward-looking"
statements as defined in Section 27A of the Securities Act of 1933 (the
"Securities Act"), Section 21E of the Securities Exchange Act of 1934 (the
"Exchange Act"), the Private Securities Litigation Reform Act of 1995 (the
"PSLRA"), or in releases made by the Securities and Exchange Commission, all
as may be amended from time to time. Statements contained in this press
release that are not historical facts may be forward-looking statements within
the meaning of the PSLRA. Any such forward-looking statements reflect our
beliefs and assumptions and are based on information currently available to us
and are subject to risks and uncertainties that could cause actual results to
differ materially, including but not limited to, changes in U.S./Canadian
dollar currency exchange rates, changes in pulp prices, the cost or
availability of raw materials, unanticipated expenditures related to the cost
of compliance with environmental and other governmental regulations and the
ability of the company to realize anticipated cost savings. Forward-looking
statements are only predictions and involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. We undertake no obligation to publicly update any
forward-looking statements, whether as a result of new information, future
events or otherwise. These cautionary statements are being made pursuant to
the Securities Act, the Exchange Act and the PSLRA with the intention of
obtaining the benefits of the "safe harbor" provisions of such laws. Neenah
Paper, Inc. cautions investors that any forward-looking statements we make are
not guarantees or indicative of future performance.
NEENAH PAPER INC AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2005 2004 2005 2004
Net Sales $ 189.3 $ 207.4 $ 385.9 $ 405.8
Cost of products sold 159.8 162.4 331.1 327.7
Gross Profit 29.5 45.0 54.8 78.1
Selling, general and
administrative expenses 13.5 9.6 26.2 18.7
Restructuring costs and asset
impairment loss(1) 1.7 - 6.0 -
Other Income - net (0.5) (1.9) (1.1) (2.2)
Operating Income 14.8 37.3 23.7 61.6
Interest expense - net 4.6 - 9.3 -
Income Before
Income Taxes 10.2 37.3 14.4 61.6
Provision for income taxes 3.4 13.6 4.9 22.8
Net Income $ 6.8 $ 23.7 $ 9.5 $ 38.8
Earnings Per Common Share:
Basic $ 0.46 $ 1.60 $ 0.64 $ 2.63
Diluted $ 0.46 $ 1.60 $ 0.64 $ 2.63
Weighted Average Common
Shares Outstanding (000s)
Basic 14,739 14,738 14,738 14,738
Diluted 14,786 14,738 14,790 14,738
Notes:
1 - For the three and six months ended June 30, 2005, Restructuring
costs and asset impairment loss represent costs associated with the
closure of the No. 1 Mill at Terrace Bay.
NEENAH PAPER INC AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(In millions)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
Business Segment Data 2005 2004 2005 2004
Net Sales:
Fine Paper $ 56.8 $ 56.2 $ 114.7 $ 112.3
Technical Paper 34.4 34.8 70.3 68.9
Pulp 105.1 124.9 214.3 238.9
Intersegment Sales (7.0) (8.5) (13.4) (14.3)
Consolidated
Total $ 189.3 $ 207.4 $ 385.9 $ 405.8
Operating Income (Loss):
Fine Paper $ 16.0 $ 18.4 $ 33.0 $ 36.6
Technical Paper 3.1 6.1 7.8 13.2
Pulp (2.6) 13.8 (13.7) 12.8
Unallocated corporate
expenses (1.7) (1.0) (3.4) (1.0)
Consolidated Total $ 14.8 $ 37.3 $ 23.7 $ 61.6
Balance Sheet Data June 30, Dec. 31,
2005 2004
Cash and Cash Equivalents $ 37.5 $ 19.1
Adjusted Working Capital(1) 99.1 97.3
Total Debt 229.0 225.0
Stockholders' Equity 204.6 197.1
Total Assets 579.0 565.7
For the Six Months
Ended June 30,
Cash Flow Data 2005 2004
Cash Provided By Operating
Activities $ 28.6 $ 41.6
Depreciation and amortization(2) 14.2 18.2
Capital expenditures 10.6 4.9
Pension contributions(3) 8.6 8.3
Notes:
1 - Adjusted working capital consists of all current assets and
current liabilities, net of cash and debt payable within one year.
2 - Results for 2005 include approximately $1.0 million for
amortization of bond issuance costs.
3 - Amounts of cash contributed to pension trusts.
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