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Wausau Paper Announces Fourth Quarter And Full-Year 2012 Results

Stocks in this article: WPP

For the full year of 2012, income from discontinued operations, net of tax, was $4.5 million, or $0.09 per share, compared to a net loss of $57.0 million, or $1.15 per diluted share in 2011. Both full-year periods include charges with respect to the discontinuance of paper making and closure of the facility.

CONFERENCE CALL

Wausau Paper will hold an analyst and investors conference call at 11:00 a.m. (EST) today, Monday, February 11. This call can be accessed through the Company’s website at www.wausaupaper.com under “Investors.” A replay of the webcast will be available at the same site through February 18.

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 Private Securities Litigation 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 Corp.
Quarter and Year Ended December 31, 2012
               
(in thousands, except per share amounts)
Condensed Consolidated Statements Three Months Twelve Months
of Operations (Unaudited) (Note 1) Ended December 31, Ended December 31,
2012 2011 2012 2011
Net sales $ 190,866 $ 203,034 $ 822,169 $ 823,089
Cost of sales   173,756     144,529     731,335     692,603  
Gross profit 17,110 58,505 90,834 130,486
Selling & administrative expenses (Note 3)   20,135     18,233     94,972     68,278  
Operating (loss) profit (3,025 ) 40,272 (4,138 ) 62,208
Interest expense (972 ) (1,435 ) (3,360 ) (6,850 )
Loss on early extinguishment of debt - - - (666 )
Other income (expense), net   5     (4 )   (12 )   (61 )
(Loss) earnings from continuing operations before income taxes (3,992 ) 38,833 (7,510 ) 54,631
(Credit) provision for income taxes   (1,659 )   13,914     (3,665 )   19,287  
(Loss) earnings from continuing operations (2,333 ) 24,919 (3,845 ) 35,344
(Loss) earnings from discontinued operations, net of taxes (Note 2)   (125 )   (53,637 )   4,521     (57,042 )
Net (loss) earnings $ (2,458 ) $ (28,718 ) $ 676   $ (21,698 )
 
Net (loss) earnings per share - basic:
Continuing operations $ (0.05 ) $ 0.51 $ (0.08 ) $ 0.72
Discontinued operations   (0.00 )   (1.09 )   0.09     (1.16 )
Net (loss) earnings per share - basic * $ (0.05 ) $ (0.58 ) $ 0.01   $ (0.44 )
 
Net (loss) earnings per share - diluted:
Continuing operations $ (0.05 ) $ 0.50 $ (0.08 ) $ 0.72
Discontinued operations   (0.00 )   (1.08 )   0.09     (1.15 )
Net (loss) earnings per share - diluted * $ (0.05 ) $ (0.58 ) $ 0.01   $ (0.44 )
 
Weighted average shares outstanding-basic   49,323     49,175     49,312     49,160  
Weighted average shares outstanding-diluted   49,323     49,493     49,312     49,413  
 
* Totals may not foot due to rounding differences.
 
Condensed Consolidated Balance Sheets (Unaudited) (Note 1) December 31, December 31,
2012 2011
Current assets $ 166,856 $ 226,334
Property, plant, and equipment, net 460,656 369,836
Other assets   73,203     82,660  
Total Assets $ 700,715   $ 678,830  
 
Current liabilities $ 98,186 $ 155,295
Long-term debt 196,200 127,650
Other liabilities 199,995 199,641
Liabilities of discontinued operations (Note 2) 833 -
Stockholders' equity   205,501     196,244  
Total Liabilities and Stockholders' Equity $ 700,715   $ 678,830  
 
Condensed Consolidated Statements Twelve Months
of Cash Flows (Note 1) Ended December 31,
2012 (Unaudited) 2011
Cash flows from operating activities:
Net earnings (loss) $ 676 $ (21,698 )
Provision for depreciation, depletion, and amortization 47,642 55,815
Gain on sale of business (12,515 ) -
Gain on sale of assets (960 ) (36,202 )
Impairment of long-lived assets 2,075 58,837
Non-cash inventory, spare parts and other writedowns - 13,093
Other non-cash items (222 ) (20,454 )
Loss on early extinguishment of debt - 666
Changes in operating assets and liabilities:
Receivables 21,726 6,432
Inventories 18,235 18,965
Other   (40,729 )   (10,970 )
Net cash provided by operating activities   35,928     64,484  
 
Cash flows from investing activities:
Capital expenditures (149,424 ) (78,063 )
Grants received for capital expenditures 236 610
Proceeds from sale of business 20,817 -
Proceeds from sale of assets   7,194     43,830  
Net cash used in investing activities   (121,177 )   (33,623 )
 
Cash flows from financing activities:
Net borrowings (payments) of commercial paper 32,050 (14,590 )
Borrowings under credit agreement 8,500 36,250
Payments under credit agreement (3,000 ) (36,250 )
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   (5,918 )   (5,905 )
Net cash provided by (used in) financing activities   62,632     (6,203 )
 
Net (decrease) increase in cash & cash equivalents $ (22,617 ) $ 24,658  
 

Note 1.

 

The results of operations of the Paper segment's Brokaw, Wisconsin manufacturing facility have been reported as discontinued operations in the Condensed Consolidated Statements of Operations for all periods presented. The corresponding assets and liabilities of the discontinued operation have been reclassified at December 31, 2012 in accordance with authoritative literature on discontinued operations. The Condensed Consolidated Balance Sheet at December 31, 2012, is unaudited. The assets and liabilities of the discontinued operation were not retroactively reclassified in the Condensed Consolidated Balance Sheet at December 31, 2011, and as a result, the balances may not be comparable between periods. The December 31, 2011, Condensed Consolidated Balance Sheet is derived from audited financial statements. The Condensed Consolidated Statements of Cash Flows for the year ended December 31, 2012 and 2011, 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 manufacturing facility. 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 determined that the remaining assets and liabilities of the Brokaw mill, which were included as part of our Paper segment, met the criteria for discontinued operations presentation as established in Accounting Standards Codification Subtopic 205-20, "Discontinued Operations".

 

Note 3.

Within the Corporate & Eliminations reporting segment, the three months and year ended December 31, 2012, include $0.5 million and $7.1 million, respectively, related to settlement charges associated with various defined benefit pension plans. Also, for the year ended December 31, 2012, the Paper segment incurred pre-tax charges of $7.7 million related to the settlement of a defined benefit pension plan for a previously closed facility. The settlements are included in selling and administrative expenses in the Condensed Consolidated Statements of Operations. During the year ended December 31, 2012, we made contributions of $23.9 million to our defined benefit pension and retirement plans.

 

Note 4.

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 manufacturing and 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.

 
 

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

 
       
(In thousands, except ton data) Three Months Twelve Months
(Unaudited) Ended December 31, Ended December 31,
2012     2011 2012     2011
Net sales external customers
Tissue $ 86,881 $ 86,967 $ 343,582 $ 336,268
Paper   103,985     116,067   478,587     486,821
$ 190,866   $ 203,034 $ 822,169   $ 823,089
 
Operating profit (loss)
Tissue $ 7,186 $ 9,382 $ 32,952 $ 31,358
Paper (4,644 ) 720 (10,215 ) 12,071
Corporate & Eliminations   (5,567 )   30,170   (26,875 )   18,779
$ (3,025 ) $ 40,272 $ (4,138 ) $ 62,208
 
Depreciation, depletion, and amortization
Tissue $ 7,836 $ 7,109 $ 27,637 $ 29,992
Paper 4,511 4,130 16,988 16,842
Corporate & Unallocated   838     716   2,935     2,561
$ 13,185   $ 11,955 $ 47,560   $ 49,395
 
Tons sold
Tissue 45,202 44,055 177,458 173,451
Paper   74,144     79,322   333,891     326,810
  119,346     123,377   511,349     500,261
 
 

Note 5.

Reconciliation of Non-GAAP Financial Measures:

 

The following tables set forth certain non-U.S. generally accepted accounting principles ("GAAP") financial metrics. Management believes that the financial metrics presented are frequently used by investors and provide a useful analysis of ongoing operating trends. These metrics are presented as a complement to enhance the understanding of operating results but are not a substitution of GAAP results. The totals in the tables may not foot due to rounding differences.

    Three Months Ended December 31, 2012
(in thousands) Consolidated     Tissue     Paper     Corporate & Other
 
Net loss $ (2,458 ) $ - $ - $ -
Loss from discontinued operations, net of taxes (125 ) - - -
Credit for income taxes (1,659 ) - - -
Interest expense and other, net   (967 )   -     -     -  
Operating (loss) profit (3,025 ) 7,186 (4,644 ) (5,567 )
Depreciation, depletion, and amortization   13,185     7,836     4,511     838  
EBITDA $ 10,160   $ 15,022   $ (133 ) $ (4,729 )
 
Net sales $ 190,866 $ 86,881 $ 103,985
EBITDA margin 5.3 % 17.3 % -0.1 %
 
EBITDA $ 10,160 $ 15,022 $ (133 ) $ (4,729 )
Capital related expenses (1) 2,985 2,985 - -
Defined benefit retirement plan settlement charges 519 - - 519
Gain on sale of property   (2,149 )   -     (2,149 )   -  
Adjusted EBITDA $ 11,515   $ 18,007   $ (2,282 ) $ (4,210 )
 
Net sales $ 190,866 $ 86,881 $ 103,985
Adjusted EBITDA margin 6.0 % 20.7 % -2.2 %
 
Adjusted EBITDA $ 11,515 $ 18,007 $ (2,282 ) $ (4,210 )
Depreciation, depletion, and amortization   13,185     7,836     4,511     838  
Adjusted operating (loss) profit $ (1,670 ) $ 10,171   $ (6,793 ) $ (5,048 )
 
Three Months Ended December 31, 2011
(in thousands) Consolidated Tissue Paper Corporate & Other
 
Net loss $ (28,718 ) $ - $ - $ -
Loss from discontinued operations, net of taxes (53,637 ) - - -
Provision for income taxes 13,914 - - -
Interest expense and other, net   (1,439 )   -     -     -  
Operating profit 40,272 9,382 720 30,170
Depreciation, depletion, and amortization   11,955     7,109     4,130     716  
EBITDA $ 52,227   $ 16,491   $ 4,850   $ 30,886  
 
Net sales $ 203,034 $ 86,967 $ 116,067
EBITDA margin 25.7 % 19.0 % 4.2 %
 
EBITDA $ 52,227 $ 16,491 $ 4,850 $ 30,886
Capital related expenses (1) 994 994 - -
Gain on sale of timberlands   (35,599 )   -     -     (35,599 )
Adjusted EBITDA $ 17,622   $ 17,485   $ 4,850   $ (4,713 )
 
Net sales $ 203,034 $ 86,967 $ 116,067
Adjusted EBITDA margin 8.7 % 20.1 % 4.2 %
 
Adjusted EBITDA $ 17,622 $ 17,485 $ 4,850 $ (4,713 )
Depreciation, depletion, and amortization   11,955     7,109     4,130     716  
Adjusted operating profit (loss) $ 5,667   $ 10,376   $ 720   $ (5,429 )
 
Twelve Months Ended December 31, 2012
(in thousands) Consolidated Tissue Paper Corporate & Other
 
Net earnings $ 676 $ - $ - $ -
Earnings from discontinued operations, net of taxes 4,521 - - -
Credit for income taxes (3,665 ) - - -
Interest expense and other, net   (3,372 )   -     -     -  
Operating (loss) profit (4,138 ) 32,952 (10,215 ) (26,875 )
Depreciation, depletion, and amortization   47,560     27,637     16,988     2,935  
EBITDA $ 43,422   $ 60,589   $ 6,773   $ (23,940 )
 
Net sales $ 822,169 $ 343,582 $ 478,587
EBITDA margin 5.3 % 17.6 % 1.4 %
 
EBITDA $ 43,422 $ 60,589 $ 6,773 $ (23,940 )
Capital related expenses (1) 8,355 8,355 - -
Charge for contract at former manufacturing facility (2) 3,324 - 3,324 -
Defined benefit retirement plan settlement charges 14,835 - 7,689 7,146
Gain on sale of property   (2,149 )   -     (2,149 )   -  
Adjusted EBITDA $ 67,787   $ 68,944   $ 15,637   $ (16,794 )
 
Net sales $ 822,169 $ 343,582 $ 478,587
Adjusted EBITDA margin 8.2 % 20.1 % 3.3 %
 
Adjusted EBITDA $ 67,787 $ 68,944 $ 15,637 $ (16,794 )
Depreciation, depletion, and amortization   47,560     27,637     16,988     2,935  
Adjusted operating profit (loss) $ 20,227   $ 41,307   $ (1,351 ) $ (19,729 )
 
Twelve Months Ended December 31, 2011
(in thousands) Consolidated Tissue Paper Corporate & Other
 
Net loss $ (21,698 ) $ - $ - $ -
Loss from discontinued operations, net of taxes (57,042 ) - - -
Provision for income taxes 19,287 - - -
Interest expense and other, net   (7,577 )   -     -     -  
Operating profit 62,208 31,358 12,071 18,779
Depreciation, depletion, and amortization   49,395     29,992     16,842     2,561  
EBITDA $ 111,603   $ 61,350   $ 28,913   $ 21,340  
 
Net sales $ 823,089 $ 336,268 $ 486,821
EBITDA margin 13.6 % 18.2 % 5.9 %
 
EBITDA $ 111,603 $ 61,350 $ 28,913 $ 21,340
Capital related expenses (1) 6,248 2,221 4,027 -
Gain on sale of timberlands   (36,015 )   -     -     (36,015 )
Adjusted EBITDA $ 81,836   $ 63,571   $ 32,940   $ (14,675 )
 
Net sales $ 823,089 $ 336,268 $ 486,821
Adjusted EBITDA margin 9.9 % 18.9 % 6.8 %
 
Adjusted EBITDA $ 81,836 $ 63,571 $ 32,940 $ (14,675 )
Depreciation, depletion, and amortization   49,395     29,992     16,842     2,561  
Adjusted operating profit (loss) $ 32,441   $ 33,579   $ 16,098   $ (17,236 )
 
 
Three Months Ended Twelve Months Ended
December 31, December 31,
(in thousands) 2012 2011 2012 2011
 
Net (loss) earnings $ (2,458 ) $ (28,718 ) $ 676 $ (21,698 )
Earnings (loss) from discontinued operations, net of taxes 125 53,637 (4,521 ) 57,042
Capital related expenses, net of tax (1) 1,881 643 5,264 4,043
Charge for contract at former manufacturing facility, net of tax (2) - - 2,094 -
Defined benefit retirement plan settlement charges, net of tax 327 - 9,346 -
Gain on sale of timberlands and other property, net of tax (1,354 ) (23,033 ) (1,354 ) (23,302 )
Settlement of income tax matters   -     -     (728 )   -  
Adjusted net (loss) earnings $ (1,479 ) $ 2,529   $ 10,777   $ 16,085  
 
 
Three Months Ended Twelve Months Ended
December 31, December 31,
(all amounts in dollars per diluted share) 2012 2011 2012 2011
 
Net (loss) earnings per share $ (0.05 ) $ (0.58 ) $ 0.01 $ (0.44 )
(Loss) earnings from discontinued operations, net of taxes 0.00 1.08 (0.09 ) 1.15
Capital related expenses, net of tax (1) 0.04 0.01 0.11 0.08
Charge for contract at former manufacturing facility, net of tax (2) - - 0.04 -
Defined benefit retirement plan settlement charges, net of tax 0.01 - 0.19 -
Gain on sale of timberlands and other property, net of tax (0.03 ) (0.47 ) (0.03 ) (0.47 )
Settlement of income tax matters   -     -     (0.01 )   -  
Adjusted net (loss) earnings per share $ (0.03 ) $ 0.05   $ 0.22   $ 0.33  
 

(1)

 

Expenses associated with the rebuild of a paper machine at Brainerd, Minnesota, in 2011, and the Tissue expansion project at Harrodsburg, Kentucky, in 2012 and 2011.

(2)

Charge associated with a natural gas transportation contract for a former manufacturing facility in Groveton, New Hampshire.





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