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Buckeye benefits from lower cotton linter costs
27
Jan '10
Buckeye Technologies Inc. announced second quarter net income of $46.3 million or $1.18 per share compared to a loss of $125.0 million or ($3.23) per share in the same period last year. Second quarter earnings included net income of $37.5 million, or $0.96 per share, from alternative fuel mixture credits (AFMC) earned during the quarter. During the same quarter of the prior year, the Company's results included a $127.6 million ($3.30 per share) after-tax loss related to a non-cash goodwill impairment charge. Net sales were $183 million for the second quarter of fiscal 2010 compared to $185 million in the second quarter of fiscal 2009.

Excluding income from AFMC, adjusted net income was $8.8 million, or $0.22 per share versus second quarter fiscal 2009 adjusted net income (excluding non-cash goodwill impairment) of $2.6 million, or $0.07 per share. This $0.15 per share increase in earnings compared to the same quarter a year ago was largely due to increased shipment volume, which was up about 9%, and the resulting improvement in capacity utilization. Also contributing to improved earnings were significantly lower raw material costs and other cost reductions at our cotton specialty plants, and reduced interest expense.

Adjusted earnings of $0.22 per share in the just completed quarter were up $0.11 (+100%) compared to the $0.11 earned in the first quarter excluding the impact of AFMC. This improvement in earnings was driven by a significant rebound in our specialty fibers business. Product mix improved as we shifted volume out of the viscose staple fiber market back into our traditional niche markets like casings, tire cord and ethers due to improving demand in those markets. We also benefited from higher viscose staple fiber and fluff pulp pricing, improving volumes at our cotton specialty plants and lower cotton linter costs compared to the first quarter.

Chairman and Chief Executive Officer John B. Crowe said, "We are encouraged by the improving trends in our business, as evidenced by the strong rebound in earnings versus the first quarter and our first year over year gains since the July-September quarter of 2008. We are benefitting from improved demand, a better mix, rising fluff pulp prices and lower interest expense. We continued to reduce our debt during the second quarter to $290 million, with a target of $275 million by the end of our fiscal year in June. We also completed the redemption of $35 million of our 8.5% 2013 senior notes on January 4th using available cash and borrowings on our bank revolver, which we expect to generate annual interest savings of about $2.4 million per year going forward at current interest rates. The Buckeye organization continues to focus on growing sales, reducing costs and maintaining tight control on working capital."

Buckeye Technologies Inc

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