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Q2 net sales up at Buckeye Technologies
25 Jan '12
4 min read
Buckeye Technologies Inc. announced second quarter adjusted net income of $27.9 million or $0.69 per share, which excludes after-tax non-cash asset impairment charges of $29.7 million, or $0.74 per share, related to the announced closure of the cotton linter pulp production line in Brazil and sale of our converting business in North Carolina, and income tax expense of $3.6 million or $0.09 per share related to cellulosic biofuel credits.
Adjusted net income rose 37% as compared to the prior year period's $20.3 million, or $0.50 per share, which excluded after tax costs of $3.2 million, or $0.08 per share, from early extinguishment of debt, restructuring and accrued interest related to cellulosic biofuel credits.
Net sales of $227 million were up 8% versus last year's second quarter sales of $210 million. Sales benefited from higher selling prices and increased specialty wood fibers shipment volume. The $0.19 increase in adjusted EPS, compared to the prior year period, was driven by these same factors. The prior year quarter also benefited by $0.05 per share from the final insurance settlement related to June 2010 power outage at our Florida specialty wood pulp facility. Aside from higher cotton linter costs, which were up about 30% in North America over the year ago quarter, cost inflation for chemicals, transportation and other raw materials was modest with energy prices stable.
Comparing the second quarter to the first quarter of fiscal 2012, sales were down $13 million or 5%. Nonwovens shipment volume was down 10% due to seasonal weakness in Europe and lower North American volume. Specialty cotton shipment volume was also down 11% due to the winding down of operations at Americana and supply chain inventory adjustments in the LED TV end-markets. For specialty wood, shipment volume was up 2% but this was offset by the impact of lower fluff pulp prices. Adjusted Operating Income was off $1.4 million due to lower shipment volume and reduced fluff pulp prices, although gross margin improved from 23.7% to 24.0% and selling, research and administrative expenses were down $1.0 million compared to the first quarter. Adjusted EPS of $0.69 was down $0.05 compared to $0.74 in the first quarter due to lower operating income ($0.02), a higher tax rate ($0.02) and foreign exchange gain/loss ($0.01).
Chairman and Chief Executive Officer John B. Crowe said, “We were pleased with our second quarter fiscal 2012 financial results, which exceeded the expectations we shared during our last earnings call in October. The key drivers of year over year improvements continue to be strong markets and selling prices, better capacity utilization at our Memphis specialty cotton fibers plant, and benefits from our cost improvement initiatives.
“We continue to focus on generating free cash flow and returns on investment above our cost of capital which we did again in the quarter. One aspect of this focus is our restructuring efforts. In January, we announced the closure of our cotton linter pulp production line in Brazil and continued discussions with multiple parties for the potential sale of this facility. Also in January, we announced the sale of our non-core Merfin Systems converting business in North Carolina. These moves will allow us to redirect cash and management focus from under-performing or non-core businesses into strategic investment and growth opportunities. Key examples of that are our Foley energy project, which we expect to complete in the third quarter of fiscal year 2012, and the Foley specialty wood pulp expansion project, which is on track for completion at the end of calendar year 2012. Overall our business has good momentum.”
Buckeye, a leading manufacturer and marketer of specialty fibers and nonwoven materials, is headquartered in Memphis, Tennessee, USA. The Company currently operates facilities in the United States, Germany and Canada. Its products are sold worldwide to makers of consumer and industrial goods.
Adjusted net income rose 37% as compared to the prior year period's $20.3 million, or $0.50 per share, which excluded after tax costs of $3.2 million, or $0.08 per share, from early extinguishment of debt, restructuring and accrued interest related to cellulosic biofuel credits.
Net sales of $227 million were up 8% versus last year's second quarter sales of $210 million. Sales benefited from higher selling prices and increased specialty wood fibers shipment volume. The $0.19 increase in adjusted EPS, compared to the prior year period, was driven by these same factors. The prior year quarter also benefited by $0.05 per share from the final insurance settlement related to June 2010 power outage at our Florida specialty wood pulp facility. Aside from higher cotton linter costs, which were up about 30% in North America over the year ago quarter, cost inflation for chemicals, transportation and other raw materials was modest with energy prices stable.
Comparing the second quarter to the first quarter of fiscal 2012, sales were down $13 million or 5%. Nonwovens shipment volume was down 10% due to seasonal weakness in Europe and lower North American volume. Specialty cotton shipment volume was also down 11% due to the winding down of operations at Americana and supply chain inventory adjustments in the LED TV end-markets. For specialty wood, shipment volume was up 2% but this was offset by the impact of lower fluff pulp prices. Adjusted Operating Income was off $1.4 million due to lower shipment volume and reduced fluff pulp prices, although gross margin improved from 23.7% to 24.0% and selling, research and administrative expenses were down $1.0 million compared to the first quarter. Adjusted EPS of $0.69 was down $0.05 compared to $0.74 in the first quarter due to lower operating income ($0.02), a higher tax rate ($0.02) and foreign exchange gain/loss ($0.01).
Chairman and Chief Executive Officer John B. Crowe said, “We were pleased with our second quarter fiscal 2012 financial results, which exceeded the expectations we shared during our last earnings call in October. The key drivers of year over year improvements continue to be strong markets and selling prices, better capacity utilization at our Memphis specialty cotton fibers plant, and benefits from our cost improvement initiatives.
“We continue to focus on generating free cash flow and returns on investment above our cost of capital which we did again in the quarter. One aspect of this focus is our restructuring efforts. In January, we announced the closure of our cotton linter pulp production line in Brazil and continued discussions with multiple parties for the potential sale of this facility. Also in January, we announced the sale of our non-core Merfin Systems converting business in North Carolina. These moves will allow us to redirect cash and management focus from under-performing or non-core businesses into strategic investment and growth opportunities. Key examples of that are our Foley energy project, which we expect to complete in the third quarter of fiscal year 2012, and the Foley specialty wood pulp expansion project, which is on track for completion at the end of calendar year 2012. Overall our business has good momentum.”
Buckeye, a leading manufacturer and marketer of specialty fibers and nonwoven materials, is headquartered in Memphis, Tennessee, USA. The Company currently operates facilities in the United States, Germany and Canada. Its products are sold worldwide to makers of consumer and industrial goods.
Buckeye Technologies Inc
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