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

November 06, 2009 | About:
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10qk

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Wausau Paper Corp. (WPP) filed Quarterly Report for the period ended 2009-09-30.

WAUSAU PAPER MILLS CO. manufactures and sells paper through two operating divis ions: the Printing and Writing Division and the Rhinelander division. The Printing and Writing Division manufactures fine printing writing andspecialty papers. The Rhinelander Division manufactures lightweight dense technical specialty papers which are sold directly to converters and end users. Typical end uses are pressure-sensitive products medical packaging food packaging and multiple laminated products. Small volumes of yeast and lignosulfonates are also manufactured. Wausau Paper Corp. has a market cap of $475.9 million; its shares were traded at around $9.73 with a P/E ratio of 20.2 and P/S ratio of 0.4.

Highlight of Business Operations:

In the third quarter of 2009, we reported net earnings of $14.6 million, or $0.30 per share, compared to prior year net earnings of $2.3 million, or $0.05 per share. 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 Specialty Products Jay, Maine paper mill and the planned closure of Printing & Writings 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 at our Specialty Products mill in Mosinee, Wisconsin, and $1.7 million, or $0.03 per share, related to the sale of Specialty Products non-strategic yeast manufacturing operations.

Net earnings for the third quarter of 2008 included after-tax facility closure charges of $3.9 million, or $0.08 per share, primarily related to the closure of Printing & Writings Groveton, New Hampshire mill and the shutdown of a paper machine at Specialty Products Jay, Maine paper mill. Also, the third quarter of 2008 included income tax benefits of $0.9 million, or $0.02 per share, related to the settlement of a Federal tax examination and closure of the related tax years, and an after-tax credit of $1.4 million, or $0.03 per share, related to the sale of timberlands.

For the nine months ended September 30, 2009, we reported net earnings of $11.4 million, or $0.23 per share, compared to a net loss of $14.1 million, or $0.29 per share in the first nine

months of 2008. The 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 closure of Specialty Products Jay, Maine paper mill, the closure of Printing & Writings Groveton, New Hampshire paper mill, and the planned closure of Printing & Writings Appleton, Wisconsin converting facility. In addition, the 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 Printing & Writings Bedford Park, Illinois distribution center and one-time expenses associated with the towel machine rebuild in our Towel & Tissue business segment. Also, the net earnings for the nine months ended September 30, 2009, include 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 at our Specialty Products mill in Mosinee, Wisconsin, $1.7 million, or $0.03 per share, related to the sale of Specialty Products non-strategic yeast manufacturing operations, and $0.3 million, or $0.01 per share, related to the sale of timberlands.

The net loss for the first nine months of 2008 includes after-tax charges of $17.7 million, or $0.36 per share, related to the closure of Printing & Writings Groveton, New Hampshire mill, the sale and closure of Specialty Products roll wrap operations, and the shutdown of a paper machine at Specialty Products Jay, Maine paper mill. The nine months ended September 30, 2008, also includes income tax benefits of $0.9 million, or $0.02 per share, related to the settlement of a Federal tax examination and closure of the related tax years and an after-tax credit of $3.4 million, or $0.07 per share, related to the sale of timberlands.

Year-to-date, gross profit increased in 2009 compared to the same period in 2008. The increase in gross profit during the first nine months of 2009, as compared to the first nine months of 2008, is primarily due to considerable declines in fiber and energy prices, the impact of the alternative fuel mixture tax credit, and a gain on the sale of non-strategic assets. The favorable impacts more than offset a decrease in average net selling price, costs associated with market-related downtime, the gross profit impact of facility closure charges, a decrease in gains from the sales of timberlands, and increases in other manufacturing costs over the same comparative periods. In total, fiber related costs decreased by approximately $51 million in the first nine months of 2009 compared to the same period of 2008, while energy prices decreased by nearly $13 million over the same comparative period. During the first nine months of 2009, gains on sales of timberlands were $0.5 million, while gains on sales of timberlands during the first nine months of 2008 amounted to $5.5 million. Also, the alternative fuel mixture credit impacted gross profit by approximately $9.7 million in the first three quarters of 2009, while the sale of our non-strategic yeast manufacturing operation, impacted gross profit by approximately $2.9 million. In addition, gross profit margin in the nine months ended September 30, 2009, were negatively impacted by combined facility closure charges of approximately $22.0 million primarily related to the closure of the Jay, Maine paper mill and the planned closure of the Appleton, Wisconsin converting facility. During the nine months ended September 30, 2008, we recognized $12.2 million of expense in cost of sales as a result of the facility closure charges related to the closure of the Groveton, New Hampshire paper mill and the shutdown of a paper machine at the Jay, Maine paper mill.

Read the The complete ReportWPP is in the portfolios of John Keeley of Keeley Fund Management, NWQ Managers of NWQ Investment Management Co.

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