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Paperboard packaging maker

Rock-Tenn

(RKT)

Q1 FY09 revenue grew 17.9% to $703.10 million from $596.30 million a year ago, attributable to $151.90 million contribution from the

Southern Container

acquisition and increased selling prices, partially offset by reduced volumes.

Segment-wise, Corrugated Packaging's revenue more than tripled to $203.20 million from $61.40 million, boosted by the Southern Container acquisition, which contributed $151.90 million, along with higher sales prices in its legacy corrugated business. However, Consumer Packaging segment's revenue inched down 1.6% to $368.80 million from $374.70 million, due to lower volumes, partially offset by higher selling prices. Furthermore, Specialty Paperboard Products revenue slipped 18.0% to $75.30 million from $91.80 million, on account of decreased volumes shipped and lower recycled fiber selling prices. Finally, Merchandising Displays sales shrunk 8.8% to $74.80 million from $82.00 million, impacted by reduced demand for promotional displays.

Reviewing its operational metrics, Rock-Tenn's total shipments soared 47.2% to 533,877 tons from 362,596 tons a year ago. However, recycled paperboard shipped fell 5.6% to 204,927 tons from 217,081 tons, while shipments of bleached paperboard increased 8.4% to 86,338 tons. Moreover, containerboard shipments increased almost five times to 221,907 tons from 44,699 tons a year ago. Meanwhile, average selling price per ton declined marginally to $596.00 from $599.00 in Q1 FY08.

The company's gross profit margin improved 656 basis points to 28.83% from 22.27%, as higher revenue growth offset a 10.0% rise in cost of goods sold to $538.30 million. Selling, general and administrative expenses surged 25.0% to $81.50 million from $65.20 million in the year-ago quarter. Conversely, operating margin expanded 484 basis points to 11.85% from 7.01%. Total interest expenses more than doubled to $26.40 million from $11.80 million, thereby deteriorating the interest coverage ratio to 3.16 from 3.54 in the previous year's quarter. Furthermore, the company reported a 74.9% surge in its Q1 FY09 earnings, helped by strong performance from its corrugated packaging segment and lower recycled fiber and energy costs. Net income advanced to $30.60 million or $0.79 per share from $17.50 million or $0.46 per share in Q1 FY08.

For the quarter ended Dec. 31, 2008, cash and cash equivalents dwindled 64.3% to $12.70 million from $35.60 million, while net cash flow from operating activities swelled 122.4% to $49.60 million. Total debt more than doubled to $1.61 billion from $738.30 million; whereas shareholders' equity climbed 5.6% to $637.00 million from $603.20 million. As a result, the debt-to-equity worsened to 2.52 from 1.22 a year ago. A quick ratio of 0.53 reflects the company's inability to meet its short-term liquidity requirements. Meanwhile, return on assets shrunk 139 basis points to 3.29% from 4.68%, while return on equity ascended 96 basis points to 14.90% from 13.94% in Q1 FY08.

Recently, the company declared a dividend of $0.10 per share on its Class A common stock, payable on Feb. 10, 2009.

A detailed report covering this quarterly release is now available. To purchase the report, click here.