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

May 10, 2010 | About:
10qk

10qk

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Wausau Paper Corp. (WPP) filed Quarterly Report for the period ended 2010-03-31.

Wausau Paper Corp. has a market cap of $401.44 million; its shares were traded at around $8.19 with a P/E ratio of 13.65 and P/S ratio of 0.39. WPP is in the portfolios of John Keeley of Keeley Fund Management, NWQ Managers of NWQ Investment Management Co.

Highlight of Business Operations:

For the first quarter of 2010, we reported net earnings of $2.9 million, or $0.06 per share, compared to a prior year net loss of $1.4 million, or $0.03 per share. Net sales and product shipments both increased in the three months ended March 31, 2010, as compared to the same period in 2009 due to demand improvement in most market categories.

Net earnings during the first quarter 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, which eliminated the income tax deduction for federal subsidies received for providing retiree prescription drug benefits. For additional 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 quarter of 2009 included after-tax facility closure charges of $2.8 million, or $0.06 per share, primarily related to the closure of a paper mill in Jay, Maine, and a converting facility in Appleton, Wisconsin; and after-tax charges of $1.9 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. For additional information on the facility closures, please refer to Note 2 Restructuring in the Notes to Condensed Consolidated Financial Statements.

Gross profit for the three months ended March 31, 2010, was $27.0 million compared to $20.2 million for the three months ended March 31, 2009. Gross profit margins in the first quarter of 2009 were negatively impacted by pre-tax facility closure charges of approximately $3.7 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 first quarter of 2010. For additional information on the facility closures, refer to Note 2 Restructuring in the Notes to Condensed Consolidated Financial Statements. Year-over-year, sales volume and mix improvements, as well as energy price declines of $1.6 million, offset fiber cost increases of $12.0 million, contributing to gross profit margin improvement.

Selling and administrative expenses in the first quarter of 2010 were $19.2 million compared to $19.0 million in the same period of 2009. Stock-based incentive compensation programs resulted in expense of $0.2 million during the first quarter of 2010 compared to a credit of $0.7 million during the first quarter of 2009. After adjusting for stock-based incentive compensation programs, the majority of the quarter-over-quarter decrease in selling and administrative expense was primarily a result of decreased wages and benefits over the same comparative periods.

Interest expense in the first quarter of 2010 was $1.3 million compared to interest expense of $2.7 million in the first quarter of 2009. The decline in interest expense is due to a significant reduction in average debt balances outstanding during the respective periods combined with a lower average interest rate on debt. Total debt was $130.9 million and $216.2 million at March 31, 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.

Capital spending for the first three months of 2010 was $6.2 million compared to $20.8 million during the first three months of 2009. The decrease in capital expenditures in the first quarter of 2010 as compared to the same period in 2009 is due to the $32.5 million towel machine rebuild in our Tissue segment and $15 million fiber handling project in our Paper segment that were either completed or in process during the first quarter of 2009. Total capital spending for the full-year of 2010 is expected to be approximately $36 million.

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