ALPHARETTA, Ga., May 9, 2007 /PRNewswire-FirstCall via COMTEX News Network/
-- Neenah Paper, Inc. (NYSE: NP) today reported income from continuing
operations for the first quarter 2007 of $15.2 million, or $1.01 per diluted
common share, compared with income from continuing operations of $3.4 million,
or $0.23 per diluted common share, for the first quarter of 2006. Net sales of
$224.7 million for the first quarter 2007 increased almost 70 percent versus the
prior year, while operating income of $27.6 million grew 176 percent from $10.0
million reported in the first quarter 2006. Results for the first quarter of
2007 include the company's recent acquisitions of Neenah Germany and Fox River
Paper Company.
Commenting on results for the quarter, Sean Erwin, Chairman and Chief
Executive Officer said, "The benefits of the strategic changes we have made over
the past year are evident with our increased scale and more profitable and
diversified businesses. We are realizing gains with our expanded Technical
Products platform and are excited about our ability to move forward as the
leader in the premium fine paper market and take advantage of the opportunities
and synergies available from the Fox River acquisition. Our results also reflect
record operating performance at our Pictou pulp mill and ongoing strength in the
pulp market."
Fine Paper net sales of $72.3 million in the first quarter of 2007 grew 24
percent compared with $58.1 million in the first quarter of 2006, primarily due
to added sales from Fox River following its acquisition on March 1, 2007.
Operating income of $12.4 million in the first quarter of 2007 declined from
$15.6 million in the first quarter of 2006. The decrease resulted from
significantly higher prices for hardwood pulp as well as a less favorable sales
mix and weaker market conditions. These items were only partly offset by higher
selling prices and improved manufacturing efficiencies.
Technical Products net sales of $100.7 million in the first quarter of 2007
more than tripled from $33.0 million in the same period of 2006. In addition to
reflecting a full quarter for Neenah Germany, sales benefited from increased
volumes and higher net prices in domestic operations. Operating income for the
first quarter of 2007 was $10.2 million compared to $2.0 million in the first
quarter of 2006. The higher operating income in 2007 was due to both the
inclusion of the German operations and gains in the domestic business, the
latter benefiting from higher volumes and prices and more efficient mill
operations that offset higher costs for pulp and other raw materials.
Net sales for Pulp (continuing operations) in the first quarter of 2007 were
$52.0 million compared with $43.1 million for the same period of 2006. Shipments
increased 11 percent, while market selling prices increased approximately 20
percent. These improvements were partly offset by lower sales of by-products.
Operating income was $8.0 million in the first quarter of 2007 versus a loss of
$3.6 million in the same quarter of 2006. The improvement resulted from
increased selling prices, higher volumes and record productivity at the Pictou
mill that more than offset higher costs for wood following the sale of 500,000
acres of our timberlands in June 2006. Operating income in 2007 also included
$1.4 million for amortization of the deferred gain on the timberlands sale.
Selling, general and administrative ("SG&A") expense was $17.9 million in
the first quarter of 2007 and compared with $15.1 million in the first quarter
of 2006. The increase was primarily due to direct added expenses for acquired
companies. As a percentage of sales, SG&A declined from an average of 11
percent for the first quarter of 2006 to 8 percent in the first quarter 2007.
Net interest expense was $6.0 million in the first quarter of 2007, increasing
from $4.5 million in the first quarter of 2006 as a result of added borrowings
to finance the Fox River and Neenah Germany acquisitions. The effective tax rate
in the first quarter of 2007 was approximately 30 percent, compared with 38
percent in 2006.
Discontinued Operations
The company's Terrace Bay pulp and woodlands operations, excluding certain
post-retirement obligations, were transferred to Terrace Bay Pulp Inc. and Eagle
Logging Inc. in August 2006. Results from Terrace Bay have been classified as
discontinued operations for all periods presented. Losses for discontinued
operations in the first quarter of 2007 were $0.5 million primarily as a result
of expenses for certain post-employment obligations of former Terrace Bay
employees. In the first quarter of 2006, there was a net loss of $2.5 million
from discontinued operations.
CONFERENCE CALL
As previously announced, Neenah Paper will hold a conference call to discuss
first quarter earnings and other matters of interest at 11 a.m. (Eastern) on
Thursday, May 10. The call will be simultaneously broadcast over the World Wide
Web, and stockholders and other interested parties are invited to listen to the
live broadcast or participate in the call by following the instructions set out
in the Investor Relations section of the company's Web site (www.neenah.com). A copy of the
press release and related financial information is also posted on the site, and
a replay of the call will be available at the site through May 31.
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), STARWHITE(R), ESSE(R), KIMDURA(R) and MUNISING LP(R), Gessner(R)
and varitess(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 paper manufacturing operations in the United
States and Germany, and a pulp mill and related timberlands in Nova Scotia,
Canada. Additional information about Neenah Paper can be found at the company's
web site at 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, U.S.
dollar/Euro and other 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, the ability
of the company to realize anticipated cost savings, and the successful
integrations of the former Fox River business and Neenah Germany operations.
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 STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
(Unaudited)
For the Three Months Ended March 31,
2007 2006
Net Sales $224.7 $132.9
Cost of products sold 181.2 109.4
Gross Profit 43.5 23.5
Selling, general and administrative expenses 17.9 15.1
Gain on sale of woodlands (1.4) -
Other income - net (0.6) (1.6)
Operating Income 27.6 10.0
Interest expense-net 6.0 4.5
Income From Continuing Operations
Before Income Taxes 21.6 5.5
Provision for income taxes 6.4 2.1
Income From Continuing Operations 15.2 3.4
Loss From Discontinued Operations (0.5) (2.5)
Net Income $14.7 $0.9
Earnings (Loss) Per Common Share:
Basic
Continuing Operations $1.03 $0.23
Discontinued Operations (0.04) (0.17)
Basic $0.99 $0.06
Diluted
Continuing Operations $1.01 $0.23
Discontinued Operations (0.03) (0.17)
Diluted $0.98 $0.06
Weighted Average Common
Shares Outstanding (000s)
Basic 14,790 14,743
Diluted 15,005 14,796
NEENAH PAPER INC AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(In millions)
(Unaudited)
For the Three Months
Ended March 31,
Business Segment Data 2007 2006
Net Sales:
Fine Paper $72.3 $58.1
Technical Products 100.7 33.0
Pulp 52.0 43.1
Intersegment Sales (0.3) (1.3)
Consolidated Total $224.7 $132.9
Operating Income:
Fine Paper $12.4 $15.6
Technical Products 10.2 2.0
Pulp 8.0 (3.6)
Unallocated corporate expenses (3.0) (4.0)
Consolidated Total $27.6 $10.0
Balance Sheet Data March 31, December 31,
2007 2006
Cash and cash equivalents(1) $3.5 $1.6
Adjusted working capital(2) 149.9 92.6
Total debt 359.9 283.6
Stockholders' equity 203.7 184.9
Total assets 890.7 744.7
For the Three Months Ended March 31,
Cash Flow Data 2007 2006
Cash provided by operating
activities $0.4 $16.3
Depreciation and amortization 11.0 6.7
Amortization of stock-based
compensation 1.7 1.4
Capital expenditures 6.2 3.4
Pension contributions(3) 1.9 1.8
Notes:
(1) - Excludes $10.1 million of restricted cash which is available for the
payment of certain capital expenditures.
(2) - Adjusted working capital consists of all current assets and current
liabilities, net of cash (including restricted cash) and debt
payable within one year.
(3) - Cash contributions to pension trusts.
SOURCE Neenah Paper, Inc.
Bill McCarthy, Vice President - Financial
Analysis and Investor Relations of Neenah
Paper, Inc., +1-678-518-3278
http://www.neenah.com/
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