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

November 09, 2010 | About:
10qk

10qk

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Wausau Paper Corp. (WPP) filed Quarterly Report for the period ended 2010-09-30.

Wausau Paper Corp. has a market cap of $424.6 million; its shares were traded at around $8.66 with a P/E ratio of 17.7 and P/S ratio of 0.4. 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, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

In the third quarter of 2010, we reported net earnings of $13.2 million, or $0.27 per share, compared to prior year net earnings of $14.6 million, or $0.30 per share. The net earnings in the three months ended September 30, 2010, includes after-tax gains on sales of timberlands of $2.6 million, or $0.05 per share, and an after-tax gain of $0.8 million, or $0.02 per share, due to Internal Revenue Service clarification regarding calculation of a 2009 alternative fuel mixtures tax credit. The net earnings for the third quarter of 2009 includes after-tax facility closure charges of $0.7 million, or $0.01 per share, primarily related to the closure of the Jay, Maine paper mill and the Appleton, Wisconsin converting facility. In addition, net earnings for the three months ended September 30, 2009, includes after-tax credits of $2.5 million, or $0.05 per share, related to a tax credit for the use of qualified alternative fuel mixtures and $1.7 million, or $0.03 per share, related to the sale of a non-strategic yeast manufacturing operation. 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.

For the nine months ended September 30, 2010, we reported net earnings of $21.6 million, or $0.44 per share, compared to net earnings of $11.4 million, or $0.23 per share, in the first nine months of 2009. Net earnings during the first nine months of 2010 were impacted by income tax charges of $1.2 million, or $0.02 per share, related to the passage of the Patient Protection and Affordable Care and Health Care and Education Reconciliation Acts of March 2010. For additional information on income taxes, please refer to Note 4 Income Taxes in the Notes to

Condensed Consolidated Financial Statements. The first nine months of 2010 also include after-tax gains on sales of timberlands of $4.9 million, or $0.10 per share, and an after-tax gain of $0.8 million, or $0.02 per share, due to Internal Revenue Service clarification regarding calculation of a 2009 alternative fuel mixtures tax credit. Net earnings for the first nine months of 2009 includes after-tax facility closure charges of $16.7 million, or $0.34 per share, primarily related to the closures of the Jay, Maine paper mill, and the Appleton, Wisconsin converting facility. In addition, net earnings during the nine months ended September 30, 2009, includes after-tax charges of $1.9 million, or $0.04 per share, related to expenses incurred due to the start-up of a distribution center in Bedford Park, Illinois, and one-time expenses associated with the towel machine rebuild at the Middletown, Ohio mill. Also, net earnings for the nine months ended September 30, 2009, includes after-tax credits of $6.1 million, or $0.12 per share, related to a tax credit for the use of qualified alternative fuel mixtures, an after-tax gain of $1.7 million, or $0.03 per share, related to the sale of a non-strategic yeast manufacturing operation, and after-tax gains on sales of timberlands of $0.3 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 September 30, 2010, was $42.6 million compared to $49.4 million for the three months ended September 30, 2009. Gross profit margins in the third quarter of 2010 were positively impacted by $1.3 million related to a tax credit for the use of qualified alternative fuel mixtures and $4.2 million related to gains on sales of timberlands. Gross profit margins in the third quarter of 2009 were positively impacted by a tax credit for the use of qualified alternative fuel mixtures of $4.0 million and the sale of a non-strategic yeast manufacturing operation, which positively impacted gross profit by $2.9 million. Comparing the three months ended September 30, 2010 with the same period in 2009, sales price and mix improvements, combined with energy price declines of $2 million, were more than offset by a $21 million increase in fiber related costs, volume reductions, and increases in other manufacturing costs.

Year-to-date, gross profit increased to $100.0 million in 2010, from $93.3 million reported in 2009. Fiber-related costs increased by approximately $55 million in the nine months ended September 30, 2010, compared to the same period in 2009, while energy prices decreased by approximately $6 million over the same comparative periods. In addition, gross profit margins for the first nine months of 2010 were positively impacted by $1.3 million related to a tax credit for the use of qualified alternative fuel mixtures and $7.9 million related to gains on sales of timberlands. Gross profit margins in the first nine months of 2009 were negatively impacted by combined facility closure charges of $22.0 million primarily related to the closure of the Jay, Maine paper mill and the Appleton, Wisconsin converting facility, and positively impacted by an alternative fuel mixture tax credit of $9.7 million, the sale of a non-strategic yeast manufacturing operation of $2.9 million, and gains on sales of timberlands of $0.5 million.

Interest expense in the third quarter of 2010 was $1.7 million, compared to interest expense of $2.4 million in the third quarter of 2009. For the first nine months of 2010, interest expense decreased to $4.9 million from $8.2 million of interest expense recorded during the same period in 2009. The decrease in both the quarter-over-quarter and year-over-year comparisons is due to a reduction in average debt balances outstanding during the respective periods. Total debt was $114.1 million and $126.9 million at September 30, 2010 and 2009, respectively. Total debt at December 31, 2009, was $118.0 million. Interest expense during the remainder of 2010 is expected to continue to be lower than 2009 levels.

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