Neenah Paper Reports 2009 Fourth Quarter and Full Year Results
February 24 2010 - 4:56PM
PR Newswire (US)
ALPHARETTA, Ga., Feb. 24 /PRNewswire-FirstCall/ -- Neenah Paper,
Inc. (NYSE:NP) today reported adjusted earnings of $0.33 per
diluted common share in the fourth quarter of 2009, compared to an
adjusted loss of $0.62 per share in the fourth quarter of 2008. Net
sales of $155 million in the fourth quarter of 2009 increased five
percent from a year ago and were also three percent higher than
third quarter 2009 levels. Operating income was $11 million in the
fourth quarter of 2009 and compared to an adjusted loss of $9
million in the fourth quarter of 2008 and income of $10 million in
the third quarter of 2009. "Our businesses continued to gain
momentum with a fourth sequential quarterly increase in sales, EBIT
and margins. Cost reduction initiatives implemented in 2009,
coupled with recent selling price increases and improving business
conditions, put us on solid footing heading into 2010," said Sean
Erwin, Chairman and Chief Executive Officer. "In addition, our
capital structure improved in the quarter as we again used
available cash flow to reduce debt and successfully renewed and
extended our revolving credit facility." Excluded from the
calculation of adjusted earnings in the fourth quarter of 2009 was
interest expense of $1.4 million, or $0.06 per share, for costs
associated with refinancing the company's revolving credit
facility. In the fourth quarter of 2008, adjustments included a
pre-tax goodwill impairment charge of $54.5 million, or $3.69 per
share, and an increase to tax expense of $3.9 million, or $0.27 per
share. On a GAAP basis, earnings were $0.28 per diluted common
share in the fourth quarter of 2009 and a loss of $4.58 per share
in the fourth quarter of 2008. Adjusted earnings is a non-GAAP
measure and is reconciled to comparable GAAP measures later in this
release. Quarterly Segment and Other Financial Results Fine Paper
fourth quarter 2009 net sales of $66.5 million increased from $63.1
million in the third quarter but were below fourth quarter 2008
sales of $72.3 million. Increased sales versus the third quarter
were a result of higher volumes, which reflected both stabilizing
market conditions and recent product launches. Decreased year on
year sales were due to lower market demand for premium writing,
text and cover papers in the fourth quarter of 2009. Operating
income for Fine Paper of $9.3 million in the fourth quarter of 2009
compared to operating income of $9.7 million in the third quarter
of 2009 and $1.2 million in the fourth quarter of 2008. The decline
in income versus the third quarter was primarily a result of higher
fiber costs, partly offset by higher volumes and mill efficiencies.
Compared to the fourth quarter of 2008, operating income increased
significantly as a result of actions taken to reduce costs, as well
as lower input prices and increased operating efficiencies.
Technical Products net sales were $88.0 million in the fourth
quarter of 2009, increased both from $87.1 million reported in the
third quarter and $74.3 million reported in the fourth quarter of
2008. Sales growth versus the third quarter was primarily due to
gains in tape and abrasives, partly offset by seasonal slowdowns in
Europe. Compared with the fourth quarter of 2008, sales grew as a
result of a 13 percent increase in volumes and also benefitted from
a stronger Euro, which represented $6 million of the U.S. dollar
sales growth. Operating income for Technical Products of $6.5
million in the fourth quarter of 2009 increased from $5.2 million
in the third quarter of 2009 and significantly improved from the
$6.0 million adjusted operating loss in the fourth quarter of 2008.
Operating income and margins increased sequentially in the fourth
quarter of 2009 as a result of the sales growth, ongoing cost
reduction initiatives and lower energy prices. Compared to the
fourth quarter of 2008, when additional downtime was taken as a
result of global demand weakness and customer destocking, volumes
and manufacturing efficiencies improved significantly and offset
the impact of lower average selling prices. Consolidated selling,
general and administrative (SG&A) expense of $18.1 million in
the fourth quarter 2009 compared to $19.8 million in the fourth
quarter of 2008. Lower spending in 2009 resulted from cost
reduction initiatives implemented throughout the year. Unallocated
corporate expense of $4.5 million in the fourth quarter of 2009
compared to $4.4 million in the prior year. Net interest expense of
$6.8 million in the fourth quarter of 2009 included $1.4 million
for costs incurred in conjunction with amending and restating our
bank credit agreement and to write-off deferred financing costs
associated with our previous bank credit agreement. Excluding this,
interest expense of $5.4 million declined from $6.4 million in the
prior year as a result of reduced debt levels and lower interest
rates. The effective income tax rate for the fourth quarter of 2009
was nine percent, and this compared with an adjusted rate of ten
percent for the fourth quarter of 2008. The effective tax rate can
vary significantly, depending on the mix and amounts of income
between different tax jurisdictions. Cash flow provided from
operations in the fourth quarter of 2009 was $10.5 million and
compared to $12.9 million in the fourth quarter of 2008. In 2009,
cash flow reflected improved earnings, while 2008 results included
a substantial reduction in working capital. Capital spending of
$2.4 million in the fourth quarter of 2009 declined from $6.4
million spent in the fourth quarter of 2008. Available cash flow
was used to reduce debt by $6 million in the quarter. Debt at
December 31, 2009 was $319 million and compared to debt of $365
million at December 31, 2008. Full Year 2009 Net sales of $573.9
million in 2009 compared with sales of $732.3 million in 2008.
Sales in 2009 for both segments decreased as a result of
significantly lower volumes resulting from the global economic
downturn and corresponding weaker market demand. Sales recovered
throughout 2009 as economic conditions improved, particularly in
the second half of the year. Adjusted operating income of $33.5
million in 2009 compared to adjusted income of $24.5 million in
2008. Income increased in 2009 as a result of over $20 million of
savings from cost reduction activities, including the shutdown of
the Ripon fine paper mill in May 2009, and lower input costs. These
items offset the impact of lower volumes in 2009. Items excluded
from adjusted income included $17.1 million for restructuring
charges associated with the May 2009 shutdown of the Ripon mill
and, in 2008, gains of $10.7 million for asset sales and settlement
of Terrace Bay employee benefit plans, and a $54.5 million charge
for impairment of goodwill. Adjusted earnings per diluted common
share were $0.76 in 2009 and $0.26 in 2008. A reconciliation of
adjusted income measures to comparable GAAP measures is shown
below: Continuing Operations Fourth Quarter Full Year
-------------- --------- 2009 2008 2009 2008 Operating Income
(Loss) $11.3 $(63.7) $16.4 $(19.3) Impairment Charge - 54.5 - 54.5
Restructuring Charge (Credit) (0.5) - 17.1 - Gains on Asset Sales -
- - (6.4) Gain on Benefits Plan Settlement - - - (4.3) ---- ----
---- ---- Adjusted Operating Income (Loss) $10.8 $(9.2) $33.5 $24.5
===== ===== ===== ===== Income (Loss) $4.1 $(67.0) $(1.8) $(47.3)
Impairment Charge - 54.0 - 54.0 Restructuring Charge (Credit) (0.3)
- 11.1 - Refinancing Interest Expense 0.9 - 0.9 - Income Tax
Adjustments 0.3 3.9 1.0 3.9 Gains on Asset Sales - - - (4.0) Gain
on Benefits Plan Settlement - - - (2.7) ---- ---- ---- ----
Adjusted Net Income (Loss) $5.0 $(9.1) $11.2 $4.0 ===== ===== =====
===== Diluted Earnings (Loss) per Share $0.28 $(4.58) $(0.12)
$(3.24) Impairment Charge - 3.7 - 3.7 Restructuring Charge (Credit)
(0.02) - 0.76 - Refinancing Interest Expense 0.06 - 0.06 - Income
Tax Adjustments 0.02 0.27 0.07 0.27 Gains on Asset Sales - - -
(0.27) Gain on Benefits Plan Settlement - - - (0.18) ---- ---- ----
---- Adjusted Diluted Earnings (Loss) per Share $0.33 $(0.62) $0.76
$0.26 ===== ====== ===== ===== Diluted Shares 15,001 14,620 14,655
14,642 Cash from operating activities was $64.9 million in 2009 and
$13.1 million in 2008. Cash flow in 2009 reflected improved
earnings and working capital reductions, including a $10.9 million
tax refund received in the first quarter. In 2008, working capital
was a significant use of cash flow. Capital spending of $8.4
million in 2009 compared to $30.0 million in 2008. Available free
cash flows were used to pay down debt, which decreased
approximately $48 million in 2009. Discontinued Operations
Discontinued operations include results from the company's divested
pulp mills and its remaining timberlands operation. Net income of
$0.8 million in the fourth quarter of 2009 compared to a net loss
of $0.7 million in the fourth quarter of 2008. The loss in 2008
resulted from an increase in the income tax provision. Year-to-date
net income of $0.6 million in 2009 compared to a net loss of $111.2
million in 2008. Prior year results included after-tax charges of
$109.5 million to write down assets and recognize other charges
related to the sale of the Pictou pulp mill in June 2008. Outlook
The company noted certain assumptions for 2010, as follows: --
Continued modest recovery in market demand in both segments. --
Sustained benefits from most cost reduction initiatives implemented
in 2009. -- Higher material input costs, especially in the first
half of the year, partly offset by lower costs of energy and
increased selling prices. -- Estimated consolidated tax rate
percent in the mid 20's. -- Minimal cash tax payments on North
American income due to use of existing net operating loss
carryforwards. -- Capital spending of approximately $15 million. --
Quarterly dividend of $0.10 per share. Conference Call Neenah Paper
will hold a webcast to discuss fourth quarter earnings and other
matters of interest at 11 a.m. Eastern time on Thursday, February
25, 2010. Stockholders and other interested parties are invited to
either listen live to the webcast or participate directly in the
call by following the instructions noted in the company's web site
(http://www.neenah.com/). A taped audio replay of the call will be
available on the site beginning approximately two hours after the
call and lasting through March 19, 2010. About Neenah Paper, Inc.
Neenah Paper is a leading global manufacturer of premium,
performance- based papers and specialty products used in a variety
of applications including filtration, printing and writing, and as
backing and component materials for many specialized industrial and
consumer applications. Products are marketed under well-known
brands such as CLASSIC®, ENVIRONMENT®, CRANE®, KIMDURA®, Gessner®,
JET-PRO® SofStretch(TM) and varitess®. Based in Alpharetta,
Georgia, the company has paper manufacturing operations in the
United States and Germany and approximately 500,000 acres of
timberlands in Nova Scotia, Canada. Additional information about
Neenah Paper can be found at the company's web site
(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: (i) worldwide
economic conditions, (ii) significant capital and credit market
instability and deterioration, (iii) U.S. dollar/Euro and other
exchange rates, (iv) changes in prices for pulp, energy, latex and
other raw materials, (v) the cost or availability of raw materials,
(vi) unanticipated expenditures related to the cost of compliance
with environmental and other governmental regulations and (vii) 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
Year Ended December 31, December 31, ------------- -------------
2009 2008 2009 2008 ---- ---- ---- ---- Net Sales $154.5 $146.6
$573.9 $732.3 Cost of products sold 125.9 135.6 472.3 633.2 -----
----- ----- ----- Gross Profit 28.6 11.0 101.6 99.1 Selling,
general and administrative expenses 18.1 19.8 69.1 75.2 Other
(income) expense - net (0.3) 0.4 (1.0) (11.3) Restructuring costs
(0.5) - 17.1 - Goodwill and other intangible asset impairment
charges - 54.5 - 54.5 ---- ---- ---- ---- Operating Income (Loss)
11.3 (63.7) 16.4 (19.3) Interest expense-net 6.8 6.4 23.2 25.0 ----
---- ---- ---- Income (Loss) From Continuing Operations Before
Income Taxes 4.5 (70.1) (6.8) (44.3) Provision (benefit) for income
taxes 0.4 (3.1) (5.0) 3.0 ---- ---- ---- ---- Income (Loss) From
Continuing Operations 4.1 (67.0) (1.8) (47.3) Income (Loss) From
Discontinued Operations, net of income taxes 0.8 (0.7) 0.6 (111.2)
---- ---- ---- ---- Net Income (Loss) $4.9 $(67.7) $(1.2) $(158.5)
==== ====== ===== ======= Earnings (Loss) Per Common Share: Basic
Continuing Operations $0.28 $(4.58) $(0.12) $(3.24) Discontinued
Operations 0.05 (0.05) 0.04 (7.59) ---- ---- ---- ---- $0.33
$(4.63) $(0.08) $(10.83) ===== ====== ====== ======= Diluted
Continuing Operations $0.28 $(4.58) $(0.12) $(3.24) Discontinued
Operations 0.05 (0.05) 0.04 (7.59) ---- ---- ---- ---- $0.33
$(4.63) $(0.08) $(10.83) ===== ====== ====== ======= Weighted
Average Common Shares Outstanding(000s) Basic 14,666 14,620 14,655
14,642 ====== ====== ====== ====== Diluted 15,001 14,620 14,655
14,642 ====== ====== ====== ====== NEENAH PAPER, INC. AND
SUBSIDIARIES BUSINESS SEGMENT DATA (In millions) (Unaudited) Three
Months Ended Year Ended December 31, December 31, -------------
------------- 2009 2008 2009 2008 ---- ---- ---- ---- Net Sales:
Fine Paper $66.5 $72.3 $255.6 $335.5 Technical Products 88.0 74.3
318.3 396.8 ---- ---- ---- ---- Consolidated $154.5 $146.6 $573.9
$732.3 ====== ====== ====== ====== Operating Income (Loss): Fine
Paper $9.3 $1.2 $17.5 $34.0 Technical Products 6.5 (60.5) 14.4
(42.3) Corporate and other (4.5) (4.4) (15.5) (11.0) ---- ---- ----
---- Consolidated $11.3 $(63.7) $16.4 $(19.3) ===== ===== =====
===== NEENAH PAPER, INC. AND SUBSIDIARIES SELECTED BALANCE SHEET
DATA (In millions) (Unaudited) December 31, 2009 December 31, 2008
----------------- ----------------- ASSETS Cash and cash
equivalents $5.6 $3.3 Accounts receivable - net 67.7 63.2
Inventories 70.7 88.6 Deferred income taxes 61.7 65.4 Prepaid and
other current assets 24.5 33.5 ---- ---- Total current assets 230.2
254.0 Property, plant and equipment - net 284.4 316.2 Deferred
income taxes 37.4 35.3 Goodwill and other intangibles - net 72.4
72.5 Other non-current assets 13.1 12.0 ---- ---- Total assets
$637.5 $690.0 ====== ====== LIABILITIES AND STOCKHOLDERS' EQUITY
Debt payable within one year $55.6 $24.1 Accounts payable 30.0 35.3
Accrued expenses 48.8 50.3 ---- ---- Total current liabilities
134.4 109.7 Long-term debt 263.6 340.5 Deferred income taxes 23.7
25.4 Noncurrent employee benefits and other obligations 108.1 111.3
----- ----- Total liabilities 529.8 586.9 Stockholders' equity
107.7 103.1 ----- ----- Total liabilities and stockholders' equity
$637.5 $690.0 ====== ====== NEENAH PAPER, INC. AND SUBSIDIARIES
SELECTED CASH FLOW DATA (In millions) (Unaudited) Three Months
Ended Year Ended December 31, December 31, -------------
------------- 2009 2008 2009 2008 ---- ---- ---- ---- Operating
Activities Net income (loss) $4.9 $(67.7) $(1.2) $(158.5)
Depreciation and amortization 9.0 8.7 34.5 38.6 Stock-based
compensation 1.2 0.9 4.7 4.0 Deferred income tax benefit (1.6) 0.6
(9.4) (55.7) Pre-tax losses on disposal of assets 0.2 (2.6) 6.5
160.9 Goodwill and other intangible asset impairment charge - 54.5
- 54.5 Decrease (increase) in working capital (2.4) 16.7 27.4
(21.5) Pension and other postretirement benefits (1.8) 0.5 2.4
(7.6) Other 1.0 1.3 - (1.6) --- --- ---- ---- Cash provided by
operating activities 10.5 12.9 64.9 13.1 ---- ---- ---- ----
Investing Activities Capital expenditures (2.4) (6.4) (8.4) (30.0)
Other - (0.7) 0.1 (0.4) ---- ---- --- ---- Cash used in investing
activities (2.4) (7.1) (8.3) (30.4) ---- ---- ---- ----- Financing
Activities Short and long-term borrowings 42.3 4.9 54.8 72.4
Repayment of debt (48.6) (14.0) (103.0) (37.9) Share purchases - -
- (9.4) Cash dividends paid (1.5) (1.5) (5.9) (6.0) Other - (0.7)
(0.1) (0.9) - ---- ---- ---- Cash provided by (used in) financing
activities (7.8) (11.3) (54.2) 18.2 ---- ----- ----- ---- Effect of
exchange rates on cash and cash equivalents (0.1) 0.1 (0.1) - ----
--- ---- ---- Increase (decrease) in cash and cash equivalents $0.2
$(5.4) $2.3 $0.9 ==== ===== ==== ==== DATASOURCE: Neenah Paper,
Inc. CONTACT: Bill McCarthy, Vice President - Financial Analysis
and Investor Relations of Neenah Paper, Inc., +1-678-518-3278 Web
Site: http://www.neenah.com/
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