|
ALPHARETTA, Ga.--(BUSINESS WIRE)--May. 9, 2012--
Neenah Paper, Inc. (NYSE:NP) today reported adjusted earnings from
continuing operations of $0.77 per diluted common share in the first
quarter of 2012 compared to adjusted earnings of $0.54 per share in the
first quarter of 2011. Excluding adjustments, earnings in the first
quarter of 2012 of $0.54 per share compared to earnings of $0.45 per
share in the prior year period. Items excluded from adjusted earnings in
2012 totaled $0.23 per share for a pension settlement charge and costs
to integrate brands purchased from Wausau Paper Corp. on January 31. In
2011, adjusted earnings excluded $0.09 per share for costs associated
with the early redemption of a portion of the Company’s long-term bonds.
Adjusted earnings are reconciled to GAAP figures later in this release.
Net sales of $198.2 million in the first quarter of 2012 grew 15 percent
compared with the first quarter of 2011, while adjusted operating income
of $22.2 million increased 29 percent. Operating income increased in
both Technical Products and Fine Paper as a result of higher net pricing
and cost efficiencies, with Fine Paper further benefitting from higher
volumes related to the purchased brands.
"Each of our businesses performed well during the first quarter, with
combined operating income for the two segments achieving a new quarterly
record. We are improving topline performance with volume gains and price
realization in higher value products and are realizing manufacturing
cost efficiencies that have come from a consistent emphasis on improved
operating throughput,” said John O’Donnell, Chief Executive Officer.
“Both sales and integration of the recently acquired brands are ahead of
expectations, and the transaction has generated the anticipated strong
market support and internal efficiencies that we knew could be a game
changer for some of our manufacturing facilities.”
Quarterly Segment and Other Financial Results
Technical Products net sales were $106.0 million in the
first quarter of 2012, slightly ahead of $105.4 million in the first
quarter of 2011. After adjusting for unfavorable currency impacts
resulting from a weaker Euro in 2012, revenue grew three percent and
reflected volume gains in filtration and label products that offset
lower tape sales, as well as a higher value mix and increased selling
prices for most products.
Operating income for Technical Products of $12.5 million in the first
quarter of 2012 increased 19 percent compared with $10.5 million in the
first quarter of 2011. Higher income in 2012 resulted from improved
manufacturing efficiencies, increased selling prices and growth in
higher value products. Year on year input costs were relatively flat, as
lower fiber costs were offset by increased prices for other materials.
Fine Paper net sales of $86.4 million in the first quarter
of 2012 increased 28 percent compared with prior year sales of $67.3
million. Higher sales in 2012 resulted from volume growth primarily due
to acquired Wausau brands, but also from growth in core premium brands
and double-digit sales gains in luxury packaging, labels and into
international markets. Increased sales in 2012 also reflected net
selling prices that were slightly higher than the prior year period.
Operating income of $10.8 million in the first quarter of 2012 compared
to $10.5 million in 2011. Operating income in 2012 included $2.5 million
of integration costs for the acquired brands. Excluding these costs,
operating income increased 27 percent in 2012 as a result of growth in
volume, higher average selling prices and lower manufacturing costs.
Lower costs were due to improved efficiencies as well as lower pulp
prices.
Other/Unallocated Corporate Costs include unallocated
corporate expense and sales and profits from non-premium business
acquired in the Wausau transaction. In the first quarter of 2012, sales
for these products were $5.8 million, with operating income of $0.7
million; in 2011, there were no comparable sales or profits. Unallocated
corporate costs were $7.8 million in the first quarter of 2012 and $6.2
million in 2011. Results in 2012 included $3.5 million for pension
settlement charges and in 2011 included $2.4 million for costs related
to the early retirement of bonds. Excluding these two items, unallocated
costs were $4.3 million in 2012 and $3.8 million in 2011.
Consolidated selling, general and administrative (SG&A) expense
was $19.5 million in the first quarter of 2012 compared to
$17.0 million in the first quarter of 2011. Higher spending in 2012
reflected increased costs related to the purchased fine paper brands, as
well as higher employee benefit costs and timing of certain items.
Net interest expense of $3.6 million in the first quarter
of 2012 compared to $4.5 million in the same quarter of 2011. Reduced
interest expense in 2012 resulted from lower debt levels, primarily due
to the early redemption of $65 million of Senior Notes in March 2011.
The effective income tax rate of 29 percent for the first
quarter of 2012 compared to a rate of 32 percent in the first quarter of
2011 and was equal to the 2011 full year rate of 29 percent.
Cash flow used in operations in the first quarter of 2012
was $13.6 million and included unusual items totaling $20.7 million.
These items were comprised of $6.6 million for inventories acquired as
part of the $21 million payment to Wausau (with the remaining $14.1
million shown as Investing Activities), $2.5 million for Wausau-related
integration costs, $6.9 million for one-time pension payments, and $4.7
million for excess tax benefits from stock-based compensation (fully
offset in Financing Activities). Excluding these items, cash provided by
operations of $7.1 million in the first quarter of 2012 improved from
$1.4 million in the first quarter of 2011, primarily due to higher
operating income in 2012. Capital spending of $3.5 million in the first
quarter of 2012 compared with $8.2 million in the prior year period.
Debt as of March 31, 2012 of $199.7 million compared to
$186.2 million as of December 31, 2011. Cash and equivalents as of March
31, 2012 were $3.3 million compared to $12.8 million as of year-end
2011. Increased net debt in the first quarter of 2012 was primarily due
to additional borrowing on the Company’s revolving credit facility to
finance the $20.7 million payment in January 2012 for acquired brands
and assets.
Reconciliation to GAAP Measures
The company will report adjustments to GAAP figures when it is believed
to be helpful to more clearly communicate results of ongoing operations.
In these instances, a reconciliation of adjusted income measures to
comparable GAAP measures will be provided, as shown below:
|
Continuing Operations
|
|
|
First Quarter
|
|
|
$ millions
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Income
|
|
|
$
|
16.2
|
|
|
|
$
|
14.8
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
Pension settlement charge
|
|
|
|
3.5
|
|
|
|
|
|
|
Integration Costs
|
|
|
|
2.5
|
|
|
|
|
-
|
|
|
Costs for early redemption of bonds
|
|
|
|
-
|
|
|
|
|
2.4
|
|
|
Adjusted Operating Income
|
|
|
$
|
22.2
|
|
|
|
$
|
17.2
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Income
|
|
|
$
|
8.9
|
|
|
|
$
|
7.0
|
|
|
Pension settlement charge
|
|
|
|
2.2
|
|
|
|
|
|
|
Integration Costs
|
|
|
|
1.5
|
|
|
|
|
-
|
|
|
Costs for early redemption of bonds
|
|
|
|
-
|
|
|
|
|
1.4
|
|
|
Adjusted Income
|
|
|
$
|
12.6
|
|
|
|
$
|
8.4
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings per Diluted Common Share
|
|
|
$
|
0.54
|
|
|
|
$
|
0.45
|
|
|
Pension settlement charge
|
|
|
|
0.14
|
|
|
|
|
|
|
Integration Costs
|
|
|
|
0.09
|
|
|
|
|
-
|
|
|
Costs for early redemption of bonds
|
|
|
|
-
|
|
|
|
|
0.09
|
|
|
Adjusted Earnings per Share
|
|
|
$
|
0.77
|
|
|
|
$
|
0.54
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares
|
|
|
|
15,855
|
|
|
|
|
15,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conference Call
Neenah Paper will hold a webcast to discuss first quarter earnings and
other matters of interest at 11:00 a.m. Eastern time on Thursday, May
10, 2012. Stockholders and other interested parties are invited either
to listen live to the webcast via the Company’s Internet site at www.neenah.com
by clicking on the Investors tab and going to the News and Events page
or participate actively in the call by dialing (888) 893-0989 from the
U.S. and Canada or (706) 758-4223 for other locations. All participants
should use conference ID 76007304.
A replay of the call will be available through the company’s web site
until June 10, 2012 and may also be accessed by dialing (855) 859-2056
in the U.S. or (404) 537-3406 internationally, using conference ID
76007304.
About Neenah Paper, Inc.
Neenah Paper is a leader in premium image and performance-based
products, including filtration, specialized substrates used for tapes,
labels and other products, and high-end printing papers. Products are
marketed under well-known brands such as CLASSIC®, ASTROBRIGHTS®,
ENVIRONMENT®, CRANE®, SUNDANCE®, KIMDURA®, Gessner®, JET-PRO®
SofStretch(TM) and varitess®. Neenah Paper is headquartered
in Alpharetta, Georgia and sells products in over 70 countries worldwide
from manufacturing operations in the United States and Germany.
Additional information about Neenah Paper can be found at the company's
web site, 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: (i) unexpected challenges
associated with the integration of the Wausau premium business; (ii)
changes in prices for pulp, energy, latex and other raw materials, (iii)
worldwide economic conditions, (iv) U.S. dollar/euro and other exchange
rates, (v) significant capital and credit market volatility, (vi) the
availability of raw materials, (vii) unanticipated expenditures related
to the cost of compliance with environmental and other governmental
regulations and (viii) the ability of the company to realize anticipated
cost savings. These and other factors that could cause or contribute to
actual results differing materially from any forward-looking statements
are discussed in more detail in our other filings with the Securities
and Exchange Commission. 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
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
(In millions, except share and per share data)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
$
|
198.2
|
|
|
|
|
$
|
172.7
|
|
|
|
Cost of products sold
|
|
|
156.3
|
|
|
|
|
|
139.5
|
|
|
|
|
Gross Profit
|
|
|
41.9
|
|
|
|
|
|
33.2
|
|
|
|
Selling, general and administrative expenses
|
|
|
19.5
|
|
|
|
|
|
17.0
|
|
|
|
SERP settlement charge
|
|
|
3.5
|
|
|
|
|
|
-
|
|
|
|
Acquisition integration costs
|
|
|
2.5
|
|
|
|
|
|
-
|
|
|
|
Costs for early redemption of bonds
|
|
|
-
|
|
|
|
|
|
2.4
|
|
|
|
Other (income) expense - net
|
|
|
0.2
|
|
|
|
|
|
(1.0
|
)
|
|
|
|
Operating Income
|
|
|
16.2
|
|
|
|
|
|
14.8
|
|
|
|
Interest expense-net
|
|
|
3.6
|
|
|
|
|
|
4.5
|
|
|
|
|
Income From Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before Income Taxes
|
|
|
12.6
|
|
|
|
|
|
10.3
|
|
|
|
Provision for income taxes
|
|
|
3.7
|
|
|
|
|
|
3.3
|
|
|
|
|
Income From Continuing Operations
|
|
|
8.9
|
|
|
|
|
|
7.0
|
|
|
|
Loss from discontinued operations, net of
income taxes
|
|
|
-
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
Net Income
|
|
$
|
8.9
|
|
|
|
|
$
|
6.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Common Share:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations
|
|
$
|
0.55
|
|
|
|
|
$
|
0.47
|
|
|
|
|
Discontinued Operations
|
|
|
-
|
|
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
$
|
0.55
|
|
|
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations
|
|
$
|
0.54
|
|
|
|
|
$
|
0.45
|
|
|
|
|
Discontinued Operations
|
|
|
-
|
|
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
$
|
0.54
|
|
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common
|
|
|
|
|
|
|
|
|
|
Shares Outstanding (000s)
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
15,483
|
|
|
|
|
|
14,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
15,855
|
|
|
|
|
|
15,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEENAH PAPER, INC. AND SUBSIDIARIES
|
|
|
BUSINESS SEGMENT DATA
|
|
|
(In millions)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
2012
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales:
|
|
|
|
|
|
|
|
|
|
|
Technical Products
|
|
$
|
106.0
|
|
|
|
|
$
|
105.4
|
|
|
|
|
Fine Paper
|
|
|
86.4
|
|
|
|
|
|
67.3
|
|
|
|
|
Other
|
|
|
|
5.8
|
|
|
|
|
|
-
|
|
|
|
|
|
Consolidated
|
|
$
|
198.2
|
|
|
|
|
$
|
172.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income:
|
|
|
|
|
|
|
|
|
|
Technical Products
|
|
$
|
12.5
|
|
|
|
|
$
|
10.5
|
|
|
|
|
Fine Paper
|
|
|
10.8
|
|
|
|
|
|
10.5
|
|
|
|
|
Other
|
|
|
|
0.7
|
|
|
|
|
|
-
|
|
|
|
|
Unallocated corporate costs
|
|
|
(7.8
|
)
|
|
|
|
|
(6.2
|
)
|
|
|
|
|
Consolidated
|
|
$
|
16.2
|
|
|
|
|
$
|
14.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEENAH PAPER, INC. AND SUBSIDIARIES
|
|
SELECTED BALANCE SHEET DATA
|
|
(In millions)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2012
|
|
December 31, 2011
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
3.3
|
|
$
|
12.8
|
|
Restricted cash
|
|
|
|
|
-
|
|
|
7.0
|
|
Accounts receivable - net
|
|
|
|
|
97.2
|
|
|
71.4
|
|
Inventories
|
|
|
|
|
99.4
|
|
|
68.8
|
|
Deferred income taxes
|
|
|
|
|
16.1
|
|
|
17.6
|
|
Prepaid and other current assets
|
|
|
|
|
14.8
|
|
|
15.9
|
|
|
Total current assets
|
|
|
|
|
230.8
|
|
|
193.5
|
|
Property, plant and equipment - net
|
|
|
|
|
253.3
|
|
|
252.3
|
|
Deferred income taxes
|
|
|
|
|
47.8
|
|
|
45.5
|
|
Goodwill and other intangibles - net
|
|
|
|
|
77.3
|
|
|
62.4
|
|
Other non-current assets
|
|
|
|
|
11.4
|
|
|
11.4
|
|
|
Total assets
|
|
|
|
$
|
620.6
|
|
$
|
565.1
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Debt payable within one year
|
|
|
|
$
|
12.4
|
|
$
|
21.7
|
|
Accounts payable
|
|
|
|
|
52.2
|
|
|
30.2
|
|
Accrued expenses
|
|
|
|
|
52.4
|
|
|
51.6
|
|
|
Total current liabilities
|
|
|
|
|
117.0
|
|
|
103.5
|
|
Long-term debt
|
|
|
|
|
187.3
|
|
|
164.5
|
|
Deferred income taxes
|
|
|
|
|
16.2
|
|
|
16.0
|
|
Non-current employee benefits
|
|
|
|
|
110.8
|
|
|
113.0
|
|
Other noncurrent obligations
|
|
|
|
|
1.4
|
|
|
1.4
|
|
|
Total liabilities
|
|
|
|
|
432.7
|
|
|
398.4
|
|
Stockholders' equity
|
|
|
|
|
187.9
|
|
|
166.7
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
620.6
|
|
$
|
565.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEENAH PAPER, INC. AND SUBSIDIARIES
|
|
|
SELECTED CASH FLOW DATA
|
|
|
(In millions)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
|
|
2011
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
8.9
|
|
|
|
|
$
|
6.9
|
|
|
|
Depreciation and amortization
|
|
|
|
7.3
|
|
|
|
|
|
7.7
|
|
|
|
Stock-based compensation
|
|
|
|
1.6
|
|
|
|
|
|
1.0
|
|
|
|
Excess tax benefit from stock-based compensation
|
|
|
(4.7
|
)
|
|
|
|
|
(0.3
|
)
|
|
|
Deferred income tax provision
|
|
|
|
1.4
|
|
|
|
|
|
1.4
|
|
|
|
Inventory acquired in Wausau acquisition
|
|
|
(6.6
|
)
|
|
|
|
|
-
|
|
|
|
SERP payment, net of settlement charge
|
|
|
(3.4
|
)
|
|
|
|
|
-
|
|
|
|
Loss on retirement of bonds
|
|
|
|
-
|
|
|
|
|
|
2.4
|
|
|
|
Increase in working capital
|
|
|
|
(17.3
|
)
|
|
|
|
|
(14.6
|
)
|
|
|
Pension and other postretirement benefits
|
|
|
(0.6
|
)
|
|
|
|
|
(2.6
|
)
|
|
|
Other
|
|
|
|
(0.2
|
)
|
|
|
|
|
(0.5
|
)
|
|
|
|
Net cash (used in) provided by operating activities
|
|
|
(13.6
|
)
|
|
|
|
|
1.4
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(3.5
|
)
|
|
|
|
|
(8.2
|
)
|
|
|
Purchase of Wausau brands
|
|
|
|
(14.1
|
)
|
|
|
|
|
-
|
|
|
|
Decrease in restricted cash
|
|
|
|
7.0
|
|
|
|
|
|
-
|
|
|
|
Purchase of marketable securities
|
|
|
|
(0.1
|
)
|
|
|
|
|
(1.4
|
)
|
|
|
Other
|
|
|
|
-
|
|
|
|
|
|
0.1
|
|
|
|
|
Cash used in investing activities
|
|
|
|
(10.7
|
)
|
|
|
|
|
(9.5
|
)
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
Short and long-term borrowings – net of
|
|
|
|
|
|
|
|
|
|
|
|
|
debt issuance costs
|
|
|
26.0
|
|
|
|
|
|
33.6
|
|
|
|
Repayment of debt
|
|
|
|
(13.0
|
)
|
|
|
|
|
(66.6
|
)
|
|
|
Proceeds from exercise of stock options
|
|
|
3.9
|
|
|
|
|
|
0.2
|
|
|
|
Shares purchased
|
|
|
|
(5.0
|
)
|
|
|
|
|
(0.5
|
)
|
|
|
Cash dividends paid
|
|
|
|
(1.9
|
)
|
|
|
|
|
(1.7
|
)
|
|
|
Excess tax benefit from stock-based compensation
|
|
|
4.7
|
|
|
|
|
|
0.3
|
|
|
|
|
Cash provided by (used in) financing activities
|
|
|
14.7
|
|
|
|
|
|
(34.7
|
)
|
|
|
|
Effect of exchange rates on cash and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash equivalents
|
|
|
0.1
|
|
|
|
|
|
0.1
|
|
|
|
|
Net increase (decrease) in cash and cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equivalents
|
|
$
|
(9.5
|
)
|
|
|
|
$
|
(42.7
|
)
|
|
Source: Neenah Paper, Inc.
Neenah Paper, Inc.
Bill McCarthy, 678-518-3278
Vice
President - Financial Analysis and Investor Relations
|
