Buckeye Technologies Inc. (NYSE:BKI) today announced that it earned $6.6 million after tax (17 cents per share) in the quarter ended March 31, 2007. This included $0.8 million after tax in restructuring expenses associated with consolidations made in our European Sales Offices, Product and Market Development, and corporate overhead.
During the same quarter of the prior year, the Company lost $0.8 million after tax (2 cents per share) which included $1.1 million after tax in restructuring and impairment expenses associated with the closure of the Glueckstadt, Germany cotton linter pulp plant in December, 2005.
Net sales in the just completed quarter were $193 million, 6% higher than $181 million achieved in the same quarter of the prior year. Net sales for the first nine months of fiscal year 2007 were $569 million, also 6% higher than net sales of $535 million for the same period last year.
Buckeye Chairman John B. Crowe commented, “Demand for our products continues to be strong, and our operations are responding to the challenge of matching production and sales. Good cash flow generation enabled us to reduce debt by $13 million during the quarter.”
Mr. Crowe went on to say, “The consolidations in our European Sales Offices, Product and Market Development and corporate overhead complement the operations consolidations we completed during the last several years and will provide annual savings of over $2 million.”
Buckeye, a leading manufacturer and marketer of specialty fibers and nonwoven materials, is headquartered in Memphis, Tennessee, USA. The Company currently operates facilities in the United States, Germany, Canada, and Brazil. Its products are sold worldwide to makers of consumer and industrial goods.
Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws that involve risks and uncertainties, including but not limited to economic, competitive, governmental, and technological factors affecting the Company’s operations, financing, markets, products, services and prices, and other factors. For further information on factors which could impact the Company and the statements contained herein, please refer to public filings with the Securities and Exchange Commission.
| BUCKEYE TECHNOLOGIES INC. | ||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| (unaudited) | ||||||||||
| (In thousands, except per share data) | ||||||||||
| Three Months Ended | Nine Months Ended | |||||||||
| March 31 2007 | December 31 2006 | March 31 2006 | March 31 2007 | March 31 2006 | ||||||
| Net sales | $ 193,009 | $ 184,730 | $ 181,407 | $ 569,145 | $ 535,117 | |||||
| Cost of goods sold | 160,070 | 155,711 | 157,063 | 477,853 | 460,872 | |||||
| Gross margin | 32,939 | 29,019 | 24,344 | 91,292 | 74,245 | |||||
| % of Sales | 17.1% | 15.7% | 13.4% | 16.0% | 13.9% | |||||
| Selling, research and administrative expenses | 11,680 | 11,163 | 12,293 | 34,047 | 35,053 | |||||
| Amortization of intangibles and other | 500 | 507 | 486 | 1,638 | 1,494 | |||||
| Impairment of long-lived assets | - | - | 1,469 | - | 1,469 | |||||
| Restructuring costs | 1,201 | 11 | 333 | 1,224 | 3,425 | |||||
| Operating income | 19,558 | 17,338 | 9,763 | 54,383 | 32,804 | |||||
| Net interest expense and amortization of debt costs | (10,020) | (10,440) | (11,061) | (31,211) | (31,819) | |||||
| Loss on early extinguishment of debt | (85) | (96) | - | (737) | (151) | |||||
| Gain on sale of assets held for sale | - | - | - | 355 | - | |||||
| Foreign exchange and other | 422 | 246 | 148 | 674 | (242) | |||||
| Income (loss) before income taxes | 9,875 | 7,048 | (1,150) | 23,464 | 592 | |||||
| Income tax expense (benefit) | 3,302 | 3,228 | (355) | 9,264 | (178) | |||||
| Net income (loss) | $ 6,573 | $ 3,820 | $ (795) | $ 14,200 | $ 770 | |||||
| Earnings (loss) per share | ||||||||||
| Basic | $ 0.17 | $ 0.10 | $ (0.02) | $ 0.38 | $ 0.02 | |||||
| Diluted | $ 0.17 | $ 0.10 | $ (0.02) | $ 0.37 | $ 0.02 | |||||
| Weighted average shares for basic earnings per share | 37,887 | 37,702 | 37,638 | 37,750 | 37,606 | |||||
| Adjusted weighted average shares for diluted earnings per share | ||||||||||
| 38,442 | 38,010 | 37,638 | 38,048 | 37,646 | ||||||
| BUCKEYE TECHNOLOGIES INC. | |||
| CONSOLIDATED BALANCE SHEETS | |||
| (In thousands) | |||
March 31 | June 30 | ||
| (unaudited) | |||
| Current assets: | |||
| Cash and cash equivalents | $ 15,497 | $ 8,734 | |
| Accounts receivable, net | 114,900 | 112,758 | |
| Inventories | 82,851 | 98,567 | |
| Deferred income taxes and other | 8,687 | 8,473 | |
| Total current assets | 221,935 | 228,532 | |
| Property, plant and equipment, net | 524,066 | 531,898 | |
| Goodwill | 147,091 | 149,106 | |
| Intellectual property and other, net | 35,881 | 38,677 | |
| Total assets | $ 928,973 | $ 948,213 | |
| Liabilities and stockholders' equity | |||
| Current liabilities: | |||
| Trade accounts payable | $ 34,124 | $ 32,973 | |
| Accrued expenses | 53,311 | 47,076 | |
| Current portion of capital lease obligations | 399 | 627 | |
| Current portion of long-term debt | 54,615 | 1,294 | |
| Total current liabilities | 142,449 | 81,970 | |
| Long-term debt | 416,629 | 519,414 | |
| Deferred income taxes | 40,496 | 35,686 | |
| Capital lease obligations | 356 | 755 | |
| Other liabilities | 21,761 | 20,671 | |
| Stockholders' equity | 307,282 | 289,717 | |
| Total liabilities and stockholders' equity | $ 928,973 | $ 948,213 | |
| BUCKEYE TECHNOLOGIES INC. | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (unaudited) | |||||||
| (In thousands) | |||||||
| Nine Months Ended | |||||||
March 31, | March 31, | ||||||
| OPERATING ACTIVITIES | |||||||
| Net income | $ 14,200 | $ 770 | |||||
| Adjustments to reconcile net income to | |||||||
| net cash provided by operating activities: | |||||||
| Impairment of long-lived assets | - | 1,469 | |||||
| Depreciation | 36,454 | 34,947 | |||||
| Amortization | 2,354 | 2,408 | |||||
| Loss on early extinguishment of debt | 737 | 151 | |||||
| Deferred income taxes and other | 6,479 | (2,887) | |||||
| Gain on sale of assets held for sale | (355) | - | |||||
| Change in operating assets and liabilities | |||||||
| Accounts receivable | (1,523) | 6,375 | |||||
| Inventories | 15,881 | (8,758) | |||||
| Other assets | (754) | (4,267) | |||||
| Accounts payable and other liabilities | 6,631 | (5,168) | |||||
| Net cash provided by operating activities | 80,104 | 25,040 | |||||
| INVESTING ACTIVITIES | |||||||
| Purchases of property, plant & equipment | (26,235) | (41,179) | |||||
| Proceeds from sale of assets | 521 | 42 | |||||
| Other | (380) | (376) | |||||
| Net cash used in investing activities | (26,094) | (41,513) | |||||
| FINANCING ACTIVITIES | |||||||
| Net borrowings (payments) under line of credit | 368 | 33,486 | |||||
| Payments on long term debt and other | (50,127) | (16,636) | |||||
| Net proceeds from sale of equity interests | 2,308 | 549 | |||||
| Net cash provided by (used in) financing activities | (47,451) | 17,399 | |||||
| Effect of foreign currency rate fluctuations on cash | 204 | 294 | |||||
| Increase in cash and cash equivalents | 6,763 | 1,220 | |||||
| Cash and cash equivalents at beginning of period | 8,734 | 9,926 | |||||
| Cash and cash equivalents at end of period | $ 15,497 | $ 11,146 | |||||
| BUCKEYE TECHNOLOGIES INC. | |||||||||||
| SUPPLEMENTAL FINANCIAL DATA | |||||||||||
| (unaudited) | |||||||||||
| (In thousands) | |||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||
| SEGMENT RESULTS | March 31, 2007 | December 31, 2006 | March 31, 2006 | March 31, 2007 | March 31, 2006 | ||||||
| Specialty Fibers | |||||||||||
| Net sales | $ 135,398 | $ 130,126 | $ 127,223 | $ 400,399 | $ 379,682 | ||||||
| Operating income (a) | 15,948 | 13,194 | 7,010 | 41,430 | 28,732 | ||||||
| Depreciation and amortization (b) | 7,901 | 7,859 | 7,439 | 23,458 | 22,119 | ||||||
| Capital expenditures | 8,727 | 6,083 | 5,999 | 20,383 | 38,591 | ||||||
| Nonwoven Materials | |||||||||||
| Net sales | $ 65,386 | $ 62,488 | $ 61,171 | $ 192,841 | $ 176,957 | ||||||
| Operating income (a) | 5,873 | 4,846 | 5,105 | 16,698 | 10,404 | ||||||
| Depreciation and amortization (b) | 3,898 | 3,965 | 3,842 | 12,034 | 11,942 | ||||||
| Capital expenditures | 1,845 | 580 | 484 | 2,842 | 1,489 | ||||||
| Corporate | |||||||||||
| Net sales | $ (7,775) | $ (7,884) | $ (6,987) | $ (24,095) | $ (21,522) | ||||||
| Operating loss (a) | (2,263) | (702) | (2,352) | (3,745) | (6,332) | ||||||
| Depreciation and amortization (b) | 844 | 851 | 802 | 2,649 | 2,489 | ||||||
| Capital expenditures | 1,338 | 1,057 | 338 | 3,010 | 1,099 | ||||||
| Total | |||||||||||
| Net sales | $ 193,009 | $ 184,730 | $ 181,407 | $ 569,145 | $ 535,117 | ||||||
| Operating income (a) | 19,558 | 17,338 | 9,763 | 54,383 | 32,804 | ||||||
| Depreciation and amortization (b) | 12,643 | 12,675 | 12,083 | 38,141 | 36,550 | ||||||
| Capital expenditures | 11,910 | 7,720 | 6,821 | 26,235 | 41,179 | ||||||
| (a) Asset impairment and restructuring costs are included in operating income for the corporate segment. | |||||||||||
| (b) Depreciation and amortization includes depreciation, depletion and amortization of intangibles. | |||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||
| ADJUSTED EBITDA | March 31, 2007 | December 31, 2006 | March 31, 2006 | March 31, 2007 | March 31, 2006 | ||||||
| Income (loss) | $ 6,573 | $ 3,820 | $ (795) | $ 14,200 | $ 770 | ||||||
| Income tax expense (benefit) | 3,302 | 3,228 | (355) | 9,264 | (178) | ||||||
| Net interest expense | 9,701 | 10,124 | 10,691 | 30,232 | 30,703 | ||||||
| Amortization of debt costs | 319 | 316 | 370 | 979 | 1,116 | ||||||
| Early extinguishment of debt | 85 | 96 | - | 737 | 151 | ||||||
| Depreciation, depletion and amortization | 12,643 | 12,675 | 12,083 | 38,141 | 36,550 | ||||||
| EBITDA | 32,623 | 30,259 | 21,994 | 93,553 | 69,112 | ||||||
| Interest income | 75 | 101 | 133 | 244 | 543 | ||||||
| Asset impairments | - | - | 1,469 | - | 1,469 | ||||||
| Loss on disposal of assets (c) | 423 | 107 | 278 | 638 | 524 | ||||||
| Gain on sale of assets held for sale | - | - | - | (355) | - | ||||||
| Restructuring charges (d) | - | 11 | 333 | 24 | 3,425 | ||||||
| Adjusted EBITDA | $ 33,121 | $ 30,478 | $ 24,207 | $ 94,104 | $ 75,073 | ||||||
| We calculate EBITDA as earnings before cumulative effect of change in accounting plus net interest expense, income taxes and depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by adding back the following items: interest income, cumulative effect of changes in accounting, asset impairment charges, restructuring charges and other (gains) losses. You should not consider adjusted EBITDA to be an alternative measure of our net income, as an indicator of operating performance; or our cash flow, as an indicator of liquidity. Adjusted EBITDA corresponds with the definition contained in our US revolving credit facility and it provides useful information concerning our ability to comply with debt covenants. Although we believe adjusted EBITDA enhances your understanding of our financial condition, this measure, when viewed individually, is not a better indicator of any trend as compared to other measures (e.g., net sales, net earnings, net cash flows, etc.). | |||||||||||
| c) The definition of Adjusted EBITDA limits the add back of losses on disposal of assets to $1.0 million for any 12 month period. Since we exceeded the $1.0 million threshold during the three months ended March 31, 2007, our add back was limited to $423 of the $486 of losses recorded during the quarter. | |||||||||||
| d) The definition of Adjusted EBITDA limits the add back of restructuring charges to costs incurred from January 1, 2005 through December 31, 2006. Therefore, restructuring charges of $1,201 incurred in the three months ended March 31, 2007 have not been added back. | |||||||||||
| On March 31, 2007 we had borrowing capacity of $61.5 million on the revolving credit facility. The portion of this amount that we could borrow will depend on our financial results and ability to comply with certain borrowing conditions under the revolving credit facility. | |||||||||||
| BUCKEYE TECHNOLOGIES INC. | |||||||||
| SUPPLEMENTAL RECONCILIATIONS | |||||||||
| (unaudited) | |||||||||
| (In thousands, except per share data) | |||||||||
| Three Months Ended | Nine Months Ended | ||||||||
| March 31, 2006 reconciled to March 31, 2007 | December 31, 2006 reconciled to March 31, 2007 | March 31, 2006 reconciled to March 31, 2007 | |||||||
| NET SALES RECONCILIATION | |||||||||
| Net sales | $ 181.4 | $ 184.7 | $ 535.1 | ||||||
| Volume (1) | (2.0) | 1.8 | (7.2) | ||||||
| Pricing (2) | 7.8 | 5.7 | 21.0 | ||||||
| Product sales mix and other (3) | 5.8 | 0.8 | 20.2 | ||||||
| Net sales | $ 193.0 | $ 193.0 | $ 569.1 | ||||||
| (1) Volume relates to the change in volume on comparable products | |||||||||
| (2) Pricing relates to the changes in unit prices on comparable products | |||||||||
| (3) Product sales mix relates to the impact of changes in the mix of products shipped. Other includes the impact of changes in foreign currency exchange rates have on the currency translation of sales denominated in currencies other than the US dollar. | |||||||||
| Three Months Ended | Nine Months Ended | ||||||||
| March 31, 2006 reconciled to March 31, 2007 | December 31, 2006 reconciled to March 31, 2007 | March 31, 2006 reconciled to March 31, 2007 | |||||||
| EARNINGS PER SHARE RECONCILIATION (4) | |||||||||
| EARNINGS (LOSS) PER SHARE | $ (0.02) | $ 0.10 | $ 0.02 | ||||||
Volume (a) (5) | (0.02) | 0.00 | 0.03 | ||||||
Pricing / product mix (a) (6) | 0.16 | 0.10 | 0.38 | ||||||
Costs (a) (7) | 0.01 | (0.04) | (0.07) | ||||||
| Impact of Americana, Brazil facility transition (8) | 0.05 | (0.01) | (0.01) | ||||||
| Restructuring, impairment, early debt extinguishment costs | 0.01 | (0.02) | 0.05 | ||||||
| Corporate / Other (9) | (0.02) | 0.04 | (0.03) | ||||||
| EARNINGS PER SHARE | $ 0.17 | $ 0.17 | $ 0.37 | ||||||
(a) Excludes impact of Americana facility transition | |||||||||
| (4) All calculations are net of taxes | |||||||||
| (5) Volume - Changes in volume on comparable products at prior period gross margins (price, unit cost and mix are at the same levels as the prior quarter). | |||||||||
| (6) Pricing / Product Mix - Impact of changes in selling prices (on comparable products) and changes in the mix of products shipped. | |||||||||
| (7) Costs - Changes in production volume, energy related prices, price and usage of chemicals and raw materials, transportation costs, direct spending and selling, research and administrative expenses. | |||||||||
| (8) Americana impact is shown separately. | |||||||||
| (9) Corporate / Other - Net interest expense, intangible amortization, foreign exchange gain(loss), gain(loss) on sale of assets, other income(expense), and tax adjustments and changes in tax rate. | |||||||||
