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Wausau Paper Corp. Reports Operating Results (10-Q)

August 09, 2010 | About:
10qk

10qk

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Wausau Paper Corp. (WPP) filed Quarterly Report for the period ended 2010-06-30.

Wausau Paper Corp. has a market cap of $334.8 million; its shares were traded at around $6.83 with a P/E ratio of 13.13 and P/S ratio of 0.32. WPP is in the portfolios of John Keeley of Keeley Fund Management, NWQ Managers of NWQ Investment Management Co, Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

In the second quarter of 2010, we reported net earnings of $5.6 million, or $0.11 per share, compared to a prior year net loss of $1.9 million, or $0.04 per share. The net loss for the second quarter of 2009 includes after-tax facility closure charges of $13.4 million, or $0.27 per share, primarily related to the closures of the Jay, Maine paper mill and the Appleton, Wisconsin converting facility. In addition, the second quarter of 2009 includes an after-tax credit of $3.6 million, or $0.07 per share, related to a tax credit for the use of alternative fuel mixtures at the Mosinee, Wisconsin facility. The second quarter of 2010 includes after-tax gains on sales of timberlands of $2.3 million, or $0.05 per share. The second quarter of 2009 included after-tax gains on sales of timberlands of $0.4 million, or $0.01 per share. In the second quarter of 2010 compared to the same period in 2009, net sales increased slightly, while product shipments decreased, mostly due to facility closures completed in 2009 and a modest demand decline in some market categories. For additional information on the facility closures and the tax credit, please refer to Note 2 Restructuring and Note 3 Alternative Fuel Mixture Credits, respectively, in the Notes to Condensed Consolidated Financial Statements.

information on income taxes, please refer to Note 4 Income Taxes in the Notes to Condensed Consolidated Financial Statements. The net loss for the first six months of 2009 includes after-tax facility closure charges of $16.2 million, or $0.33 per share, related primarily to the closures of the Jay, Maine paper mill and the Appleton, Wisconsin converting facility, and after-tax charges of $2.0 million, or $0.04 per share, related to the rebuild of a towel machine at the Middletown, Ohio mill and the start-up of a distribution center in Bedford Park, Illinois. In addition, the first six months of 2009 include an after-tax credit of $3.6 million, or $0.07 per share, related to a tax credit for the use of alternative fuel mixtures at the Mosinee, Wisconsin facility. The first half of 2010 includes after-tax gains on sales of timberlands of $2.3 million, or $0.05 per share. The first half of 2009 included after-tax gains on sales of timberlands of $0.4 million, or $0.01 per share. For additional information on the facility closures and the tax credit, please refer to Note 2 Restructuring and Note 3 Alternative Fuel Mixture Credits, respectively, in the Notes to Condensed Consolidated Financial Statements.

Gross profit for the three months ended June 30, 2010, was $30.5 million compared to $23.6 million for the three months ended June 30, 2009. Gross profit margins in the second quarter of 2009 were negatively impacted by pre-tax facility closure charges of approximately $18.3 million primarily related to the shutdown of the Jay, Maine mill and the closure of the Appleton, Wisconsin converting facility. There were no facility closure charges incurred during the second quarter of 2010. For additional information on the facility closures, refer to Note 2 Restructuring in the Notes to Consolidated Financial Statements. Also, during the second quarter of 2009, gross profit was positively impacted by $5.7 million related to the alternative fuel mixture tax credit earned at the Mosinee, Wisconsin paper mill. For additional information on the tax credit, refer to Note 3 Alternative Fuel Mixture Credits in the Notes to Consolidated Financial Statements. Our timberland sales program favorably impacted gross profit in the three months ended June 30, 2010 and 2009, by $3.7 million and $0.6 million, respectively. Comparing the three months ended June 30, 2010 with the same period in 2009, sales price and mix improvements, combined with energy price declines of $2 million, were unable to offset fiber cost increases of $22 million and increases in maintenance and other manufacturing costs.

Year-to-date, gross profit increased to $57.5 million in 2010, from $43.9 million reported in 2009. Fiber related costs increased by approximately $34 million in the first half of 2010 compared to the first half of 2009, while energy prices decreased by approximately $4 million over the same comparative period. In addition, gross profit margins in the first six months of 2009 were negatively impacted by combined charges of approximately $22.0 million related to the closures of the Jay, Maine paper mill and the Appleton, Wisconsin converting facility. For additional information on the facility closures, refer to Note 2 Restructuring in the Notes to Condensed Consolidated Financial Statements. During the first half of 2009, gross profit was positively impacted by a $5.7 million alternative fuel mixture tax credit earned at the Mosinee, Wisconsin paper mill. For additional information on the tax credit, refer to Note 3 Alternative Fuel Mixture Credits in the Notes to Consolidated Financial Statements. Our timberland sales program favorably impacted gross profit in the six months ended June 30, 2010 and 2009, by $3.7 million and $0.6 million, respectively.

Capital spending for the first six months of 2010 was $15.9 million compared to $31.2 million during the first six months of 2009. The decrease in capital expenditures in the first half of 2010 as compared to the same period in 2009 is due to the $32 million towel machine rebuild in our Tissue segment and $15 million fiber handling project at the Brokaw, Wisconsin mill. The towel machine rebuild and the fiber handling project were either completed or in process during the first half of 2009. The previously announced $27 million capital project to rebuild a paper machine at the Brainerd, Minnesota mill is scheduled for completion in the first quarter of 2011. Approximately $12 million related to the rebuild will be spent in 2010, with the remaining amount anticipated to be spent in 2011. Total capital spending for the full year of 2010 is expected to be approximately $41 million.

During 2005, we announced our intent to sell approximately 42,000 acres of timberlands, at values expected to result in an after-tax gain of $29 million. Since introducing the timberland sales program, we have sold approximately 32,000 acres and have realized after-tax earnings of approximately $26.1 million. During the second quarter of 2010, we sold approximately 2,200 acres of timberlands, resulting in an after-tax gain of $2.3 million, compared to sales of approximately 700 acres of timberlands, resulting in an after-tax gain of $0.4 million, during the same period of 2009. Year-to-date, we have sold approximately 2,200 acres of timberlands, resulting in an after-tax gain of $2.3 million, compared to sales of approximately 800 acres of timberlands, resulting in an after-tax gain of $0.4 million, during the first six months of 2009. A total of approximately 10,000 acres remains in the timberland sales program and we expect to sell these timberlands over the next two years. We have not committed to implement additional timberland sales programs in the future.

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