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» Wausau Paper Q1 2010 Earnings Call Transcript
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Statements made during this presentation, other than those that refer to past results are forward-looking statements made pursuant to the Safe Harbor provisions of the Securities Reform Act of 1995. Such statements, including those concerning expected performance, and price increases and future earnings or dividends involve risks and uncertainties that may cause results to differ materially from the expectations set forth during this discussion. Among other things, these risks and uncertainties include the risks and assumptions described in item 1A and item 7 of the company's Form 10-K for the year ended December 31, 2009.The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. In addition our presentation refers to certain non-GAAP financial measures. A reconciliation of these measures to GAAP is provided in the appendix of this presentation and is also available on our website. With those formalities out of the way, I'll now turn the call over to Tom Howatt. Tom? Tom Howatt Good morning everyone. I'll begin with highlights of our second quarter performance. Second quarter net earnings of $0.11 a share represents a significant improvement from the $0.04 per share loss reported last year. Adjusted earnings for the quarter were $0.07 per share, with Tissue and Paper both achieving solid results despite absorbing $22 million in year-over-year fiber cost increases. We believe the performance of our paper segment is particularly noteworthy, with the business remaining profitable despite a weak economic recovery and an unprecedented run-up of fiber costs over the last year. Overall results also include maintenance outages at our Rhinelander and Middletown mill that were not present in prior year result. Finally, we completed the replacement of our bank credit facility, which concludes the refinancing activities we've highlighted in previous quarters. We expect the pace of economic recovery to be very modest for the foreseeable future with market sectors tight and consumer spending continuing to experience limited growth. At the same time, our core market strategy is continue to create opportunities for growth, as we benefit from our green leader position in away-from-home tissue market and from the Paper segments capacity realignment in growth markets such as food, tape and coated liners.
Finally, market pulp pricing has clearly peaked for the cycle with several suppliers already announcing list price reductions. This will provide an increasing benefit over the balance of the year.Adjusted net earnings of $0.07 per share for the quarter were achieved despite observing year-over-year fiber cost increases equal to $0.28 per share. Results benefited from solid product mix gains of tissue as well as recent capital investments and capacity realignment in growth markets in paper. We believe the restructuring and investment actions we've taken in recent years coupled with effective market development strategies have positioned us to achieve relative earnings stability in the face of significant input cost volatility. Our Tissue segment reported operating profits of $10.5 million compared last year's record second quarter profit of $13.8 million. Results were driven by a 9% increase in our Green Seal certified grade against the backdrop of nearly flat market demand. Overall, shipments were flat as competitive market conditions, limited volume for support on our commodity oriented grades. Earnings were also impacted by waste paper costs that more than doubled for the quarter and a scheduled maintenance outage at the Middletown mill not included in prior year results. Hank will now review market conditions and the performance of our Paper segment, Hank? Hank Newell Thank you, Tom. This morning I will provide comments on the second quarter performance of the Paper segment, an overview of our core markets and an update on the progress of our Brainerd machine rebuild and priorities for the balance of 2010. We have made rapid progress in every aspect of our business since forming the Paper segment in January. This includes aligning our organization around core markets, establishing investment plans for our manufacturing operations and creating an operating framework that overtime reduces the historical volatility of our margins. Read the rest of this transcript for free on seekingalpha.com