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Sequentially improved adjusted per share net loss of $0.02
Strong case volume growth of 7.4%
Intent to return 50% of free cash flow to shareholders over time
Full-year 2014 guidance of 6% volume growth; $65-$70MM EBITDA
On a reported basis, third-quarter 2013 results from continuing operations were a net loss of $0.04 per share. Excluding special items, the adjusted net loss from continuing operations was $0.02 per share, improved sequentially from the net loss from continuing operations, excluding special items, of $0.05 per share for the three months ended June 30, 2013.
Net sales increased 5.6 percent to $91.7 million in the third quarter of 2013 compared to $86.8 million in the third quarter of 2012, and 4.6 percent compared to $87.6 million in the second quarter of 2013.
Results of continuing operations reflect the impact of the Harrodsburg, Kentucky, manufacturing and converting operations as the facility continues to advance along the anticipated start-up curve and transition inventory in support of the launch of new products.
Case Volume Growth of 7.4%
Third-quarter volume of cases shipped increased 7.4 percent in 2013 compared to the same period in 2012, with all-time record cases shipped for the Company of over 4,358,000.
The Company launched an additional four new products in its Green Seal TM DublNature ® family of premium away-from-home towel and tissue products produced from its new ATMOS technology-enabled Harrodsburg paper machine in the third quarter. The Company has now introduced a total of 20 new tissue, roll and folded towel products to the market since May 2013.
To scale various support processes following the exit of the specialty paper business, the Company will be further reducing overall salaried staffing levels, including a 55 percent reduction in Wisconsin-based staffing. Overall salaried staffing level reductions will approach 20 percent by the end of 2013.
Policy for Return of Capital to Shareholders
As previously announced, after a thorough review of its expected cash flows and capital allocation policies, the Company has established a targeted return of capital percentage of 50 percent of its free cash flow, which the Company defines as net cash flow provided by operating activities less payments for property and equipment. This policy of a greater return of capital to shareholders reflects the Company’s confidence in its strategy and long-term business outlook as well as a commitment to delivering value to our shareholders.
The return of capital is expected to take the form of dividends, share repurchases, or a combination of both. The timing and amount of dividends or share repurchases will be determined by the Company based on expected cash flows, pro forma leverage levels and obligations under credit agreements, evaluation of market conditions, trading price of the stock, and other factors. The Company’s capital allocation and return policies will continue to be subject to regular review by the Board.
Henry C. Newell, president and CEO, commented, “Third-quarter results demonstrate continued progress on our strategic repositioning efforts and our first quarter as a 100 percent tissue company. We are delivering on our growth commitments with 7.4 percent case volume growth in the third quarter and continue to make progress in optimizing our ramp up plan. We expect strong case volume growth and continued EBITDA margin expansion in the fourth quarter of 2013.”