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Wausau Paper Announces Third-Quarter Results

In a release issued October 1, the Company set forth full-year guidance for adjusted net earnings from continuing operations of $0.28-$0.30 per diluted share compared to prior-year adjusted net earnings of $0.33 per diluted share.

CONFERENCE CALLWausau Paper’s third-quarter conference call is scheduled for 10:00 a.m. Eastern on Tuesday, October 30, and can be accessed through the Investors section of the Company’s website at www.wausaupaper.com. A replay of the webcast will be available at the same site through November 6.

About Wausau Paper:Wausau Paper produces and markets specialty papers for industrial, commercial and consumer end markets as well as a complete line of away-from-home towel and tissue products. The Company is headquartered in Mosinee, Wisconsin, and is listed on the NYSE under the symbol WPP. To learn more about Wausau Paper visit: www.wausaupaper.com .

Safe Harbor under the Private Securities Litigation Reform Act of 1995: The matters discussed in this news release concerning the Company’s future performance or anticipated financial results are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities Reform Act of 1995. Such statements involve risks and uncertainties which may cause results to differ materially from those set forth in these statements. Among other things, these risks and uncertainties include the strength of the economy and demand for paper products, increases in raw material and energy prices, manufacturing problems at Company facilities, and other risks and assumptions described under “Information Concerning Forward-Looking Statements” in Item 7 and in Item 1A of the Company’s Form 10-K for the year ended December 31, 2011. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

               
 
Wausau Paper
Interim Report - Quarter Ended September 30, 2012
 
(in thousands, except per share amounts)
Condensed Consolidated Statements Three Months Nine Months
of Operations (unaudited) Ended September 30, Ended September 30,
2012 2011 2012 2011
Net sales $ 202,249 $ 212,488 $ 631,303 $ 620,055
Cost of sales   180,706     187,481     557,579     548,073  
Gross profit 21,543 25,007 73,724 71,982
Selling & administrative expenses (Note 3)   30,185     14,697     74,837     50,045  
Operating (loss) profit (8,642 ) 10,310 (1,113 ) 21,937
Interest expense (648 ) (1,640 ) (2,388 ) (5,457 )
Loss on early extinguishment of debt - - - (666 )
Other expense, net   (7 )   (5 )   (17 )   (15 )
Earnings from continuing operations before income taxes (9,297 ) 8,665 (3,518 ) 15,799
Provision (credit) for income taxes   (4,144 )   3,312     (2,006 )   5,809  
(Loss) earnings from continuing operations (5,153 ) 5,353 (1,512 ) 9,990
(Loss) earnings from discontinued operations, net of taxes (Note 2)   (156 )   (172 )   4,646     (2,970 )
Net (loss) earnings $ (5,309 ) $ 5,181   $ 3,134   $ 7,020  
 
Net (loss) earnings per share:
Continuing operations $ (0.10 ) $ 0.11 $ (0.03 ) $ 0.20
Discontinued operations   (0.00 )   (0.00 )   0.09     (0.06 )
Net (loss) earnings per share - basic * $ (0.11 ) $ 0.11   $ 0.06   $ 0.14  
Net (loss) earnings per share - diluted $ (0.11 ) $ 0.10   $ 0.06   $ 0.14  
 
Weighted average shares outstanding-basic   49,323     49,171     49,309     49,155  
Weighted average shares outstanding-diluted   49,323     49,425     49,528     49,386  
 
* Totals may not foot due to rounding differences.
 
           
Condensed Consolidated Balance Sheets (Unaudited) (Note 1) September 30, December 31,
2012 2011
Current assets $ 170,049 $ 226,334
Property, plant, and equipment, net 444,267 369,836
Other assets 81,669 82,660
Assets of discontinued operations (Note 2)   444   -
Total Assets $ 696,429 $ 678,830
 
Current liabilities $ 116,812 $ 155,295
Long-term debt 165,000 127,650
Other liabilities 208,278 199,641
Liabilities of discontinued operations (Note 2) 1,482 -
Stockholders' equity   204,857   196,244
Total Liabilities and Stockholders' Equity $ 696,429 $ 678,830
 
           
Condensed Consolidated Statements Nine Months
of Cash Flows (Unaudited) (Note 1) Ended September 30,
2012 2011
Cash flows from operating activities:
Net earnings $ 3,134 $ 7,020
Provision for depreciation, depletion, and amortization 34,455 42,298
Gain on sale of business (12,535 ) -
Impairment of long-lived assets 2,075 -
Loss on early extinguishment of debt - 666
Other non-cash items 6,433 (1,989 )
Changes in operating assets and liabilities:
Receivables 8,587 (6,315 )
Inventories 26,966 4,907
Other   (37,771 )   (14,379 )
Net cash provided by operating activities   31,344     32,208  
 
Cash flows from investing activities:
Capital expenditures (110,346 ) (63,071 )
Grants received for capital expenditures 236 610
Proceeds from sale of business 20,837 -
Proceeds from sale of assets   4,777     1,781  
Net cash used in investing activities   (84,496 )   (60,680 )
 
Cash flows from financing activities:
Net borrowings of commercial paper 6,350 20,535
Borrowings under credit agreement 3,000 33,000
Payments under credit agreement (3,000 ) (33,000 )
Issuances of notes payable 50,000 50,000
Payments under notes payable obligations - (35,000 )
Payments under industrial development bond agreement (19,000 ) -
Payment of premium on early extinguishment of debt - (708 )
Dividends paid   (4,438 )   (4,430 )
Net cash provided by financing activities   32,912     30,397  
 
Net (decrease) increase in cash & cash equivalents $ (20,240 ) $ 1,925  
 

Note 1.

 

Balance sheet amounts at September 30, 2012, are unaudited. The December 31, 2011, amounts are derived from audited financial statements. The assets and liabilities of the discontinued operation were not retroactively reclassified in the balance sheet at December 31, 2011, and as a result, the balances are not comparable between periods. The statements of cash flows for the nine months ended September 30, 2012 and 2011, are unaudited and include discontinued operations in both periods presented.

 

Note 2.

In December 2011, we announced that our Board of Directors had approved the sale of our premium Print & Color brands, and the closure of our Brokaw, Wisconsin paper mill. The sale of the premium Print & Color brands, select paper inventory, and certain manufacturing equipment to Neenah Paper, Inc. closed on January 31, 2012, generating proceeds of $20.5 million and a pre-tax gain of $12.2 million. We permanently ceased papermaking operations at the mill on February 10, 2012. We have determined that the remaining assets and liabilities of the Brokaw mill, which are included as part of our Paper segment, meet the criteria for discontinued operations presentation as established in Accounting Standards Codification Subtopic 205-20, "Discontinued Operations".

 

During the third quarter of 2012, we continued to execute restructuring activities related to the closure of the Brokaw mill, and have recognized pre-tax charges of approximately $0.4 million during the three months ended September 30, 2012. Exclusive of the gain recorded for the sale of the Print & Color brands, during the nine months ended September 30, 2012, we have recognized pre-tax charges of approximately $6.7 million. No significant additional pre-tax closure charges are expected to be incurred during the remainder of 2012.

 

Note 3.

Within the Corporate & Eliminations reporting segment, the second and third quarters of 2012 included pre-tax charges of $2.2 million and $4.4 million, respectively, related to settlement charges associated with various defined benefit pension plans. Also in the third quarter of 2012, the Paper segment incurred pre-tax charges of $7.7 million related to the settlement of a defined benefit pension plan. These settlements are included in selling and administrative expenses in the three and nine months ended September 30, 2012. We previously disclosed in our consolidated financial statements for the year ended December 31, 2011, that we anticipated making contributions of approximately $23 million directly to our defined benefit pension and retirement plans in 2012. As of September 30, 2012, we have made contributions of $23.5 million to our defined benefit pension and retirement plans and now expect to contribute approximately $24.0 million during the full year of 2012.

 

Note 4.

Interim Segment Information

 

We have evaluated our disclosures of our business segments in accordance with the Financial Accounting Standards Board Accounting Standards Codification Subtopic 280-10, and as a result we have classified our operations into two principal reportable segments: Tissue and Paper, each providing different products. Separate management of each segment is required because each business unit is subject to different marketing, production, and technology strategies.

 

The Tissue segment produces a complete line of towel and tissue products that are marketed along with soap and dispensing systems for the "away-from-home" market. Tissue operates a paper mill in Middletown, Ohio and a converting facility in Harrodsburg, Kentucky. The Paper segment produces specialty papers within three core markets - Food, Industrial & Tape, and Coated & Liner. These products are produced at manufacturing facilities located in Brainerd, Minnesota and in Rhinelander and Mosinee, Wisconsin. In 2011 and into 2012, the Paper segment produced fine printing and writing papers at a manufacturing facility in Brokaw, Wisconsin. Papermaking operations at the Brokaw facility permanently ceased on February 10, 2012. We have reported the Brokaw facility as a discontinued operation. See Note 2 for additional information.

 

Following is net sales, operating profit (loss), and other significant items by segment. The net sales, operating profit (loss), and other significant items exclude discontinued operations in all periods presented.

 

       
(In thousands, except ton data) Three Months Nine Months
(Unaudited) Ended September 30, Ended September 30,
2012     2011 2012     2011
Net sales external customers
Tissue $ 86,632 $ 86,381 $ 256,701 $ 249,301
Paper   115,617     126,107     374,602     370,754  
$ 202,249   $ 212,488   $ 631,303   $ 620,055  
 
Operating profit (loss)
Tissue $ 7,506 $ 7,008 $ 25,766 $ 21,976
Paper (7,884 ) 5,885 (5,571 ) 11,352
Corporate & Eliminations   (8,264 )   (2,583 )   (21,308 )   (11,391 )
$ (8,642 ) $ 10,310   $ (1,113 ) $ 21,937  
 
Depreciation, depletion, and amortization
Tissue $ 6,645 $ 7,533 $ 19,801 $ 22,883
Paper 4,204 4,158 12,477 12,712
Corporate & Unallocated   767     639     2,097     1,845  
$ 11,616   $ 12,330   $ 34,375   $ 37,440  
 
Tons sold
Tissue 44,773 44,125 132,256 129,396
Paper   79,389     83,912     259,747     247,488  
  124,162     128,037     392,003     376,884  




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