Henry C. Newell, president and CEO, commented, “Fourth-quarter earnings were consistent with our expectations with Tissue returning to double-digit margins and Paper segment profits pressured by print sector performance and reduced technical volumes. The sale of our remaining timberlands and ongoing exit of our participation in print & color markets narrow our focus to growth in profitable tissue and technical paper markets, significantly reduces execution risk and provides for a strong and flexible balance sheet to support our ongoing strategic investments.”
Further commenting on 2012 Mr. Newell remarked, “2012 is about growth as we target tissue and technical market sales increases of 8 percent and 13 percent, respectively. In addition, we are focused on the fourth-quarter completion and start-up of our new towel and tissue machine at the Harrodsburg facility and our exit from print & color in a manner that delivers value for shareholders, protects long-standing customer relationships and treats our employees with the respect that they have earned.” Mr. Newell continued, “We are determined to deliver year-over-year earnings growth and expect first-quarter adjusted earnings in the range of $0.04-$0.07 per share.” Adjusted earnings in the first quarter of 2011 were $0.03 per share.
TISSUE SEGMENTThe Tissue segment’s fourth-quarter operating profit of $9.4 million increased from $7.0 million in the third quarter and compares with $11.1 million last year. Third- and fourth-quarter results included pre-tax expenses associated with the Tissue expansion project of $0.7 million and $1.0 million, respectively. Excluding project-related expenses, Tissue’s operating margin of 11.9 percent increased from third-quarter levels of 8.9 percent due largely to reduced wastepaper costs and full realization of earlier selling price increases. As compared with the same period last year, net sales were essentially flat while shipments declined 2 percent. Full-year operating profit was $31.4 million compared with $46.1 million last year with $2.2 million in project-related expenses and $10.9 million in fiber and energy cost increases driving much of the decrease. Net sales and shipments decreased 2 percent. While market demand for away-from-home towel and tissue products declined slightly in 2011, sales of Tissue's Green Seal™-certified products increased 3 percent and represented 54 percent of total sales.
Tissue’s $220 million expansion project at Harrodsburg, Kentucky remains on budget and continues to meet all construction and product development milestones. Systems testing and machine start-up are now anticipated to occur in the fourth quarter of 2012.