Buckeye Technologies Inc. Reports Operating Results (10-Q)
Buckeye Technologies, Inc. has a market cap of $1.07 billion; its shares were traded at around $26.65 with a P/E ratio of 10.2 and P/S ratio of 1.2. The dividend yield of Buckeye Technologies, Inc. stocks is 1.2%. Buckeye Technologies, Inc. had an annual average earning growth of 6% over the past 10 years.
Highlight of Business Operations:Net sales for the three months ended September 30, 2012, were $197 million, down $34 million, or 15%, compared to net sales of $231 million for the same period in 2011. This decline was primarily due to lower shipment volume in the specialty fibers segment due to lost sales resulting from the Foley steam drum failure and weaker demand in some of our wood and cotton specialty fibers markets. The sale of our King, North Carolina converting business accounted for a $5 million reduction in net sales compared to the three months ended September 30, 2011. Specialty fibers segment sales decreased 18% and sales in the nonwoven materials segment (excluding the impact of the King divestiture) were down 2%. Shipment volume, excluding the King divestiture, was down 14% compared to the prior year, with specialty fibers shipments down 17% and nonwovens shipment volume up 2%. Average selling prices on our high-end wood pulp were up 10% compared to the year-ago quarter, largely offsetting lower fluff pulp prices, which decreased by $119 per ton between these two periods.
Operating income for the three months ended September 30, 2012, was $38.0 million, down $5.4 million from the same period in 2011. This decrease was largely driven by the lower sales volume. Aside from cotton linter and fluff pulp costs, which have decreased significantly versus the same period a year ago, costs for chemicals, wood, other raw materials, and energy were stable. Gross margin improved from 24.3% to 25.4% as a percentage of sales, reflecting margin improvements at our cotton cellulose and nonwovens plants. Also impacting operating income for the three months ended September 30, 2012, were $1.0 million of restructuring costs related to the corporate restructuring of our executive management team and a gain of $2.5 million on insurance proceeds related to the Foley steam drum failure. Selling, research and administrative expenses for the quarter increased to $13.2 million from $12.3 million in the prior-year period, reflecting an increase in consulting and legal fees related to our ongoing efforts to identify new growth opportunities.
Net earnings for the three months ended September 30, 2012, of $29.5 million, or $0.74 per diluted share, were down $11.6 million, or $0.29 per diluted share compared to the same period a year ago. The variation in the net benefit from the cellulosic biofuel credit (“CBC”) accounted for $5.7 million or $0.15 per diluted share of this reduction in net income, while restructuring costs accounted for an additional $0.6 million, net of tax, or $0.02 per diluted share reduction. The remaining $5.3 million or $0.12 per diluted share reduction in net income was the result of lower sales and a higher effective tax rate, which effects were partially offset by the gain on the insurance proceeds.
Net cash provided by operating activities for the three months ended September 30, 2012, of $3.7 million decreased by $24.8 million compared to $28.5 million for the same period a year ago. This year over year decrease in cash flows from operations was driven by decreased sales revenue, the repayment of alternative fuel mixture credits (“AFMC”), and inventory build. Inventories increased $24.0 million during the current year quarter as we rebuilt inventories after the June outage at our Foley facility caused by the steam drum failure and due to weaker demand in some markets. Purchases of property, plant and equipment increased by $17.4 million compared to the same period last year, reflecting capital spending on the Foley Specialty Expansion Project and expenditures due to the Foley steam drum failure. Borrowings on our revolving line of credit increased $23.3 million for the current year quarter as we repaid $28.2 million in AFMCs to the IRS in exchange for higher value CBCs which we expect to receive within the current fiscal year.
Net sales for the three months ended September 30, 2012, were $34.5 million or 14.9% lower than in the comparable prior-year period, primarily due to lower sales volume in the specialty fibers segment. Higher selling prices on our high-end wood pulp were offset by lower fluff pulp prices. The divestiture of our converting business lowered net sales in the nonwoven materials segment by $5.0 million compared to the same period a year ago. In addition, exchange rates in Europe unfavorably impacted net sales for the nonwoven materials segment by $3.2 million.
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