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Meadwestvaco Corp. has a market cap of $4.7 billion; its shares were traded at around $27.45 with a P/E ratio of 26.1 and P/S ratio of 0.8. The dividend yield of Meadwestvaco Corp. stocks is 3.4%.MWV is in the portfolios of Brian Rogers of T Rowe Price Equity Income Fund, Richard Aster Jr of Meridian Fund, Jeremy Grantham of GMO LLC, Kenneth Fisher of Fisher Asset Management, LLC.
Highlight of Business Operations: For the three months ended March 31, 2010, MeadWestvaco Corporation (“MeadWestvaco”, “MWV” or the “company”) reported net income of $24 million, or $0.14 per share, compared to a net loss of $79 million, or $0.46 per share, for the three months ended March 31, 2009. The results for the three months ended March 31, 2010 include an income tax benefit primarily related to favorable domestic tax audit settlements of $10 million, or $0.06 per share, and after-tax restructuring charges of $5 million, or $0.03 per share, related to employee separation costs, asset write-downs and facility closures. The results for the three months ended March 31, 2009 include after-tax restructuring charges of $51 million, or $0.30 per share, related to employee separation costs, asset write-downs and facility closures.
Profit for the Packaging Resources segment was $30 million for the three months ended March 31, 2010 compared to $19 million for the three months ended March 31, 2009. Profit in 2010 benefited by $24 million from improved manufacturing productivity and lower overhead costs compared to 2009. In addition, profit in 2010 benefited by $4 million from improved pricing and product mix, $4 million from input cost deflation, $2 million from higher volume and $2 million from favorable foreign currency exchange and other items compared to 2009. During 2010, unseasonably cold and wet weather in the South and South East regions in the U.S. reduced fiber availability across the industry resulting in increased costs of production and raw materials for the segment, which adversely affected profit by about $25 million.
Sales for the Community Development and Land management segment were $45 million for the three months ended March 31, 2010 compared to $86 million for the three months ended March 31, 2009. Segment profit was $23 million for the three months ended March 31, 2010 compared to $56 million for the three months ended March 31, 2009. Profit from real estate activities was $17 million in 2010 compared to $53 million in 2009. The segment sold approximately 5,000 acres for gross proceeds of $22 million in 2010 compared to approximately 34,000 acres for gross proceeds of $68 million in 2009. Profit from forestry operations and leasing activities was $6 million in 2010 compared to $3 million in 2009. Increased profitability in forestry operations was driven by improved volumes and pricing for the segment’s wood products.
Corporate and Other loss was $82 million for the three months ended March 31, 2010 compared to $175 million for the three months ended March 31, 2009. Contributing to the decreased loss in 2010 were lower restructuring charges of $74 million, higher pension income of $5 million, lower interest expense of $5 million and other net favorable items of $9 million driven largely by lower corporate spending compared to 2009.
Cash used in investing activities was $24 million for the three months ended March 31, 2010 compared to $43 million for the three months ended March 31, 2009. Net cash used in investing activities for the three months ended March 31, 2010 was driven by capital expenditures of $38 million, offset in part by proceeds from dispositions of assets of $4 million and other sources of funds of $10 million. Net cash used in investing activities for the three months ended March 31, 2009 was driven by capital expenditures of $45 million and other uses of funds of $2 million, offset in part by proceeds from dispositions of assets of $4 million. Annual capital spending in 2010 is expected to range from $250 million to $300 million depending on demand trends across the company’s businesses.
Cash used in financing activities was $67 million for the three months ended March 31, 2010 compared to $68 million for the three months ended March 31, 2009. Net cash used in financing activities for the three months ended March 31, 2010 was driven by dividend payments of $39 million and repayment of long-term debt of $16 million, as well as from common stock repurchases of $26 million. During 2010, management acquired and permanently retired approximately 1.1 million shares of MeadWestvaco common stock to avoid dilution of earnings per share relating to exercises of employee stock options. The shares were acquired under the 2005 share buy-back authorization by the company’s Board of Directors, of which approximately 1 million remained available for repurchase as of March 31, 2010. Net cash provided by financing activities for the three months ended March 31, 2010 included additional borrowings of $11 million and other sources of funds of $3 million. Net cash used in financing activities for the three months ended March 31, 2009 was driven by dividend payments of $39 million and by changes in book overdrafts and other uses of funds of $29 million.
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