MeadWestvaco's CEO Discusses Q1 2012 Results - Earnings Call Transcript

MeadWestvaco (MWV)

Q1 2012 Earnings Call

April 25, 2012 10:00 am ET


Jason Thompson - Director of Investor Relations

John A. Luke - Chairman, Chief Executive Officer and Chairman of Executive Committee

James A. Buzzard - President

E. Mark Rajkowski - Chief Financial Officer and Senior Vice President


Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division

Phil M. Gresh - JP Morgan Chase & Co, Research Division

Mark W. Connelly - Credit Agricole Securities (USA) Inc., Research Division

Mark A. Weintraub - The Buckingham Research Group Incorporated

Gail S. Glazerman - UBS Investment Bank, Research Division

George L. Staphos - BofA Merrill Lynch, Research Division

Mark Wilde - Deutsche Bank AG, Research Division

Chip A. Dillon - Vertical Research Partners Inc.

Chip A. Dillon - Crédit Suisse AG, Research Division



Ladies and gentlemen, thank you for standing by, and welcome to MeadWestvaco Corporation First Quarter Results. [Operator Instructions] As a reminder this conference is being recorded. I would now like to turn the call over to Director of Investment Relations, Jason Thompson. Please go ahead.

Jason Thompson

Thanks, Suzanne, and good morning, everyone. This morning, we announced our results before the market opened, and a notification of this morning's call was broadly disclosed. Further, this morning's call is being webcast at and slides that accompany this call are available there as well.

I'll 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.

All the results we share this morning are presented on a continuing operations basis. For the first quarter, the company's income from continuing operations was $49 million or $0.28 per share. Excluding special items, adjusted net income from continuing operations was $60 million or $0.34 per share.

Now here to tell you more about our results in the first quarter are John Luke, Chairman and CEO; Jim Buzzard, our President; and Mark Rajkowski, our Chief Financial Officer.

I'll now turn the call over to John.

John A. Luke

Jason, thanks, and good morning. Moving on to the momentum of our strong performance last year, we have extended our performance with a solid start in 2012. Our profitable growth strategies generated increased top line sales and solid earnings during the first quarter. Performance that was gratifying given the continuing challenges in the global economy, especially the crisis in Europe and the related growth impacts in Brazil and China. We had year-over-year sales growth of 4% in the first quarter. This is a significant improvement compared to flat performance in the fourth quarter and this renewed growth included both volume increases in our Packaging and Specialty Chemicals markets, as well as higher pricing and product mix improvement. We also had a very good quarter of land sales and development activity in our CDLM business.

We're generating above-market growth in several of our end markets by executing our strategy focused on commercial excellence, innovation, emerging markets and expanded participation with new technologies and capabilities. This morning, I'll use these 4 pillars of our growth strategy as the context to share some highlights for our performance.

First, commercial excellence, where we're working to become the most commercially proficient company in our industry by continuously strengthening our ties to the world's largest consumer products companies in order to earn a larger share of their packaging spend. As an example of our success during the quarter, we outpaced underlying growth in the beverage market, in part, due to contributions from a new product launch for AB InBev's Michelob ULTRA. This is one of the first solutions to hit the marketplace from the pipeline of projects we developed through our brand engagement work that our beverage team detailed for you during our meeting here in Richmond last December.

Second, innovation, where we're using insights to develop new solutions that deliver valuable benefits for brand owners, retailers and consumers. We had a few exciting developments during the first quarter. Two of our adherence package, Shellpak and Dosepak, won awards from the Healthcare Compliance Packaging Council. This is an affirmation of the leadership position that we have built in this segment of the health care market. Also, during the quarter, we launched a new product, Shellpak Renew. It combines the same adherence-enhancing characteristics of our classic Shellpak with a fully recyclable paperboard format. Shellpak Renew is now in Kroger stores nationwide.

Also at Kroger's, we're running the first store trials for Captivate. As you'll recall, Captivate is a shopper-ready packaging solution that can revolutionize grocery categories. They're hard-to-stock, hard-to-shop and hard for brands to stand out on crowded store shelves. The early response to these trials is positive.

Third, emerging markets, where we're using our existing leadership positions to translate our market and consumer insights for the growing middle classes in places like Brazil, China and India. We had 5% growth in our corrugated business in Brazil during the quarter, compared to a reported industry average in Brazil of about 1%. This follows 2.7% GDP growth in Brazil in 2011 and annual projections of 3% to 4% for 2012. In China, where GDP estimates have been revised down to roughly 8% and many are closely watching trends and manufacturing output, we have low double-digit growth. Among the many highlights in China, we continue to increase sales of beverage multipacks as this format gains favor with consumers. In India, we have a modest presence and continue to proactively evaluate opportunities to expand our participation in that country where growth, while projected to be about 7% this year, is facing long-term, very attractive prospects.

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