Nonwovens demand continues to grow, Buckeye
Buckeye Technologies Inc. announced first quarter net income of $64.4 million or $1.59 per share. First quarter earnings included net income of $51.3 million, or $1.26 per share, from cellulosic biofuel credits generated in 2009. This compared to net income of $39.2 million or $1.00 per share in the prior year comparable period, which included net income of $35.1 million, or $0.89 per share, from alternative fuel mixture credits (“AFMC”).
Net sales were $202 million for the first quarter of fiscal 2011, up 14% versus net sales of $177 million in the first quarter of fiscal 2010 due to higher selling prices and improved mix. Shipment volume for the specialty fibers segment was down 7% year over year as we rebuilt inventories after the fourth quarter power outage at our Florida specialty wood pulp facility and limited raw material availability constrained shipments from our specialty cotton fibers plants. Nonwovens shipment volume was up 9% year over year.
Excluding income from the AFMC and CBC tax credits and certain other items, adjusted net income was $13.7 million, or $0.34 per share versus first quarter fiscal 2010 net income of $4.5 million, or $0.12 per share. The $0.22 per share increase in adjusted EPS, compared to last year, was largely driven by higher selling prices and improved mix in the specialty fibers segment.
Comparing the first quarter to the fourth quarter of FY10, adjusted EPS was up $0.08. Sales were down $3 million in spite of higher selling prices as shipment volume overall was down 5%. Increased selling prices on fluff pulp and specialty cotton fibers combined with increased nonwovens production and shipment volumes accounted for about half of the improved profitability in the first quarter. The reduced impact of the fourth quarter power outage on the first quarter of FY11 relative to the fourth quarter of FY10 accounted for the rest of the improvement.
Chairman and Chief Executive Officer John B. Crowe said, “Buckeye's first quarter results exceeded our expectations going into the quarter. Earnings showed strong improvement compared both to the same quarter a year ago and to the immediately preceding quarter. We continue to be sold out in specialty wood and can sell all the cotton pulp we can make although we are still raw material constrained. Fluff pulp demand and prices continue to be strong. Nonwovens demand continues to grow. Input costs have remained fairly stable with the exception of cotton linters.
“We continue to work on profit improvement initiatives, and as such during the quarter we made the decision to consolidate all production at our Delta, B.C. Canada airlaid facility on the newer of the two machines at that site. This is expected to result in a cost reduction of $2.5 – $3.0 million per year, and a total restructuring charge of approximately $1 million over the first two quarters of this fiscal year. Our Foley energy independence projectis on schedule with phase one coming on line next month and full completion scheduled for the fall of 2011.”