Buckeye CEO pleased with Q2 FY 2011 results
Buckeye Technologies Inc announced second quarter net income of $17.1 million or $0.42 per share. Second quarter earnings included after-tax costs relating to early retirement of debt, restructuring, and accrued interest associated with the cellulosic biofuel credit totaling $3.2 million, or $0.08 per share. This compared to net income of $46.3 million or $1.18 per share in the prior year comparable period, which included net income of $37.5 million, or $0.96 per share, from alternative fuel mixture credits.
Chairman and Chief Executive Officer John B. Crowe said, "We were very pleased with our second quarter financial results. Excluding special items such as the significant income we recognized in past quarters related to the various fuel tax credits, this was a record earnings quarter for Buckeye. Earnings showed strong improvement compared both to the same quarter a year ago and to the immediately preceding quarter, and we expect this upward trend to continue.
“The demand for specialty wood pulp remains very strong, with average selling prices up by about 17% on January 1 compared to the second quarter average and up more than 20% compared to the prior year quarter. Fluff pulp prices remain at high levels. We now have more than 90% of our Memphis cotton linter pulp demand covered by long-term sales contracts containing cost pass-through provisions. Input costs for specialty fibers remain fairly stable with the exception of cotton linters.
“After the seasonally weak second quarter, we expect nonwovens sales and earnings to improve in the third quarter on increased shipments, increased selling prices and stable fluff pulp prices. We should start to realize cost savings during the next two quarters as phase one of our Foley energy independence project continues to ramp up this quarter and from the recent move to one-machine operation at our Delta airlaid plant."
Mr. Crowe continued, "In spite of increased capital spending for acquiring land adjacent to our Florida specialty wood facility and on our Foley energy independence project along with cash outflows for bond interest, retirement plan funding and property taxes, our long-term debt was reduced by $1 million during the second quarter. We expect to generate sufficient cash flow during the next two quarters which should allow us to reduce long-term debt to about $100 million by the end of the fiscal year.
“Based on several measures, this would be the lowest debt level in our history. Given our positive outlook going forward and our demonstrated ability to consistently generate strong cash flows, Buckeye will be increasing its quarterly cash dividend by 25% from $0.04 to $0.05 with its March 15th dividend payment. We continue to be encouraged about our outlook and ability to continue to increase shareholder value."
Net sales were $209.5 million for the second quarter of fiscal 2011, up 14% versus net sales of $183.3 million in the second quarter of fiscal 2010 due to higher selling prices and improved mix. Shipment volume was down 4% year over year as we finished rebuilding inventories at our Foley mill and specialty cotton fibers shipments were impacted by limited availability and high prices of cotton linters.