MeadWestvaco Corp. (MWV)
Q1 2010 Earnings Call
April 28, 2010 10:00 am ET
Jason Thompson - Director of IR
John Luke - Chairman and CEO
Jim Buzzard - President
Mark Rajkowski - CFO
George Staphos - Bank of America
Claudia Hueston - JP Morgan
Gail Glazerman - UBS
Mark Wilde - Deutsche Bank
Mark Weintraub - Buckingham Research
Mark Connelly - CLSA
Richard Skidmore - Goldman Sachs
Peter Ruschmeier - Barclays
Previous Statements by MWV
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Ladies and gentlemen, thank you for standing by and welcome to MWV first quarter results conference call. At this time, all participants are in a listen-only mode and later we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions) And as a reminder, today's conference is being recorded.
I would now like to turn the call over to host, Director of Investor Relations, Mr. Jason Thompson. Please go ahead, sir.
Thanks Kelly and good morning, everyone. This morning we announced our results before the market opened. The notification of this morning's call was broadly disclosed. Further, this morning's call is being web cast at mwv.com and slides that accompany this call are available there as well.
I will briefly remind you that certain statements we make are forward-looking and are not guarantees of future performance and are subject to known and unknown risks and uncertainties described in our public filings. Furthermore, contents contain time sensitive information that although correct today, may change with the passage of time.
First, a brief recap of the results we reported this morning. For the first quarter, we’ve reported net income of 24 million or $0.14 per share. This includes net favorable after tax items totaling 5 million or $0.03 per share. Now here to tell you more about our results for the first quarter are John Luke, Chairman and CEO, Jim Buzzard, our President, and Mark Rajkowski, CFO. I will now turn the call over to John.
Thanks Jason and good morning. MWV had another solid performance in the first quarter. Our positive earnings performance outpaced not only last year’s first quarter but also the same pre-recession period in 2008 and 2007. It represents a fourth consecutive quarter of earnings growth directly attributable to our market participation and business model improvement strategies demonstrating that we are on the right track and are continuing to create a fundamentally more profitable company capable of generating consistent higher returns for shareholders.
It is these areas of strategic focus that will position us for greater profitability in the near term, well in advance of any full economics recoveries. With these strategies and some modest improvement and demand in the first quarter we increased volume compared to last year including both share gains and increased orders in many of our targeted markets. We increased sales for our higher value solutions for personal care, health care and home and garden packaging and we captured share gains with paper board in the food service tobacco and commercial print markets. We are also making significant gains in many of our specialty chemicals and consumer and office products markets. And Jim will provide more details in just a moment about these and other highlights across the company.
With the operating leverage we’ve created over the past year, having eliminated more than $185 million of structural cost, this improvement in volume had a beneficial impact on earnings performance during the quarter. The progress we have driven is gratifying and the underlying signs of market improvement compared to a year ago are welcome. That said, general market demand still remains well below peak 2007 levels and it remains uncertain whether the present improvement trend is durable or just temporary. While we hope that the current trajectory continues, we are continuing to plan for sustained softness. In either of that, we will continue to execute the strategy that has helped us deliver successful results throughout this challenging economic environment.
Specifically, we will continue to shape and execute our market participation strategies to ensure that we are driving our own destiny, creating opportunities for profitable growth with innovative products like MWare, Promina and Shell pack with investment in enhanced strategies in emerging markets like Brazil and China and with continued emphasis on overhead cost reductions and manufacturing productivity.
With still limited visibility into what economic and market conditions maybe in the second half of this year, these areas of emphasis will continue to be the biggest contributors to our success. Across MWV today, we have significant positive momentum and are moving forward with pace and purpose. We’re more profitable due to our discipline strategies to improve our revenue mix, exit low return business and close on profitable facilities. We are more competitive in targeted markets having launched innovative new products and expanded in the right geographies. We are more efficient and effective having reduced cost, significantly improve manufacturing productivity and augmented our organization with new talent and capabilities.
And our financial strength is both sound and continues to build. We remain on the right path to make MWV a fundamentally more profitable company and a more valuable investment, both in today’s still soft and uncertain economy and in more prosperous times ahead.
I’d now like to turn the call over to Jim Buzzard to talk about our business results in the first quarter before Mark discusses our financial metrics and provides more detailed outlook for the second quarter. Jim?
Thanks John. This was one of our strongest quarters to start the year in recent memory as we often report a small loss in the seasonally slow period. Compared to the first quarter last year, we’ve extended our positive earnings momentum with a significantly improved cost structure from ongoing actions, increased operating productivity to their facilities, share gains with targeted products and some increase in demand in key markets. These are things we’ve been focused on each of businesses for more than a year and the impact continues to show in our overall results. During the quarter, we generated important commercial momentum for our participations strategies, gaining shares with targeted products and growing our positions in emerging markets. And for the first time since economic crisis began, demand trends turned upward in certain of our markets. I'll highlight some of the specific trends in each of our businesses in just a moment.