SchweitzerMauduit International Inc. (SWM, Financial) filed Quarterly Report for the period ended 2009-03-31.
Schweitzer-Mauduit International Inc. is a diversified producer of premium specialty papers and the world's largest supplier of fine papers to the tobacco industry. SchweitzerMauduit International Inc. has a market cap of $345.2 million; its shares were traded at around $22.5 with a P/E ratio of 31.7 and P/S ratio of 0.5. The dividend yield of SchweitzerMauduit International Inc. stocks is 2.7%.
Gross profit was $41.6 million in the three month period ended March 31, 2009, an increase of $21.6 million from the prior-year quarter. The gross profit margin was 22.6 percent, increasing from 10.5 percent in the prior-year quarter. Restructuring and impairment expenses were $0.3 million and $2.0 million for the three month periods ended March 31, 2009 and 2008, respectively. Operating profit was $22.8 million in the three month period ended March 31, 2009 versus zero in the prior-year quarter. The higher gross profit and operating profit were both primarily due to $17.6 million in higher average selling prices and a favorable mix of products sold, $4.5 million in cost savings, $2.4 million in favorable inflationary impacts and $0.6 million in currency exchange benefits. These benefits were partially offset by $0.5 million in higher non-manufacturing expenses, primarily due to higher incentive compensation accruals, and $1.9 million from decreased sales volumes.
Capital spending was $2.6 million and $18.6 million during the three month periods ended March 31, 2009 and 2008, respectively. The decrease in capital spending was primarily due to spending of $7.2 million in the 2008 period for the rebuild of a paper machine and improvements to the bobbin slitting process at PdM, $1.2 million for steam network improvements at Papeteries de Saint-Girons S.A.S. and $1.2 million for a new slitting machine in the Philippines. There was no major capital project for which spending was $1.0 million or more in the 2009 period.
In April 2009, we announced a decision to close our finished tipping paper facility, Papeteries de Malaucène SAS, located in France. Due to ongoing losses at the facility, the Company previously recorded a $13.4 million fixed asset impairment charge in the fourth quarter of 2008, which represented the majority of the related fixed asset values. This mill closure is expected to result in severance of 210 employees. Meetings with the unions and the Works Council are ongoing; however, we expect to record $22 million in restructuring expense including $20 million in estimated cash severance payments and $2 million in non-cash charges beginning in the second quarter of 2009 through the planned completion of the actions in the fourth quarter of 2009. Payment of the cash severances is expected to be completed by the end of 2010.
The U.S. segments operating profit was $13.0 million in the three month period ended March 31, 2009, a $7.6 million increase from operating profit of $5.4 million in the prior-year quarter. Higher selling prices and changes in the mix of products sold increased operating profit by $8.8 million, primarily due to higher sales of cigarette paper for LIP cigarettes. The favorable mix of products sold was partially offset by unfavorable fixed cost absorption of $1.8 million as a result of lower machine utilization.
As of March 31, 2009, we had net operating working capital of $68.4 million and cash and cash equivalents of $3.5 million, compared with net operating working capital of $54.0 million and cash and cash equivalents of $11.9 million as of December 31, 2008. Changes in these amounts include the impacts of changes in currency exchange rates which are not included in the changes in operating working capital presented on the consolidated statements of cash flow.
Read the The complete ReportSWM is in the portfolios of Richard Pzena of Pzena Investment Management LLC.
Schweitzer-Mauduit International Inc. is a diversified producer of premium specialty papers and the world's largest supplier of fine papers to the tobacco industry. SchweitzerMauduit International Inc. has a market cap of $345.2 million; its shares were traded at around $22.5 with a P/E ratio of 31.7 and P/S ratio of 0.5. The dividend yield of SchweitzerMauduit International Inc. stocks is 2.7%.
Highlight of Business Operations:
Net sales were $184.1 million in the three month period ended March 31, 2009, a 3.0 percent decrease over the prior-year quarter. Net sales decreased $5.7 million as a result of $16.1 million in unfavorable foreign currency exchange rate impacts from a stronger U.S. dollar compared to the euro and Brazilian real and $10.5 million from an 11 percent decrease in unit sales volumes. These declines were largely offset by $20.9 million in higher average selling prices, primarily due to an improved mix of products sold.Gross profit was $41.6 million in the three month period ended March 31, 2009, an increase of $21.6 million from the prior-year quarter. The gross profit margin was 22.6 percent, increasing from 10.5 percent in the prior-year quarter. Restructuring and impairment expenses were $0.3 million and $2.0 million for the three month periods ended March 31, 2009 and 2008, respectively. Operating profit was $22.8 million in the three month period ended March 31, 2009 versus zero in the prior-year quarter. The higher gross profit and operating profit were both primarily due to $17.6 million in higher average selling prices and a favorable mix of products sold, $4.5 million in cost savings, $2.4 million in favorable inflationary impacts and $0.6 million in currency exchange benefits. These benefits were partially offset by $0.5 million in higher non-manufacturing expenses, primarily due to higher incentive compensation accruals, and $1.9 million from decreased sales volumes.
Capital spending was $2.6 million and $18.6 million during the three month periods ended March 31, 2009 and 2008, respectively. The decrease in capital spending was primarily due to spending of $7.2 million in the 2008 period for the rebuild of a paper machine and improvements to the bobbin slitting process at PdM, $1.2 million for steam network improvements at Papeteries de Saint-Girons S.A.S. and $1.2 million for a new slitting machine in the Philippines. There was no major capital project for which spending was $1.0 million or more in the 2009 period.
In April 2009, we announced a decision to close our finished tipping paper facility, Papeteries de Malaucène SAS, located in France. Due to ongoing losses at the facility, the Company previously recorded a $13.4 million fixed asset impairment charge in the fourth quarter of 2008, which represented the majority of the related fixed asset values. This mill closure is expected to result in severance of 210 employees. Meetings with the unions and the Works Council are ongoing; however, we expect to record $22 million in restructuring expense including $20 million in estimated cash severance payments and $2 million in non-cash charges beginning in the second quarter of 2009 through the planned completion of the actions in the fourth quarter of 2009. Payment of the cash severances is expected to be completed by the end of 2010.
The U.S. segments operating profit was $13.0 million in the three month period ended March 31, 2009, a $7.6 million increase from operating profit of $5.4 million in the prior-year quarter. Higher selling prices and changes in the mix of products sold increased operating profit by $8.8 million, primarily due to higher sales of cigarette paper for LIP cigarettes. The favorable mix of products sold was partially offset by unfavorable fixed cost absorption of $1.8 million as a result of lower machine utilization.
As of March 31, 2009, we had net operating working capital of $68.4 million and cash and cash equivalents of $3.5 million, compared with net operating working capital of $54.0 million and cash and cash equivalents of $11.9 million as of December 31, 2008. Changes in these amounts include the impacts of changes in currency exchange rates which are not included in the changes in operating working capital presented on the consolidated statements of cash flow.
Read the The complete ReportSWM is in the portfolios of Richard Pzena of Pzena Investment Management LLC.
