Buckeye Technologies Inc. (NYSE:BKI) today announced that it earned $15.9 million after tax ($.41 per share) in the quarter ended June 30, 2007. The Company’s results included a $2.0 million pre-tax benefit from a water conservation partnership payment, a $2.1 million pre-tax benefit from reversal of accrued interest related to cancellation of a contingent note owed to Stac-Pac Technologies Inc., and a $3.3 million tax benefit from adjustments relating to federal and state valuation allowances and credits. The combined benefit of these three items on our Q4 earnings was $.15 per share.
During the same quarter of the prior year the Company earned $1.2 million after tax ($.03 per share) which included a $0.8 million tax benefit ($.02 per share) related to a reduction in Canadian federal and provincial tax rates and restructuring and impairment expenses of $0.5 million after tax ($.01 per share) primarily associated with equipment sales at the closed operations in Lumberton, North Carolina and Glueckstadt, Germany.
During the 2007 fiscal year, the Company earned $30.1 million after tax ($.79 per share) which included the benefit of the $5.7 million after tax ($.15 per share) discussed above and restructuring charges of $0.8 million after tax ($.02 per share). This compares to fiscal year 2006 earnings of $2.0 million after tax ($.05 per share), including restructuring and impairment expenses of $3.6 million after tax ($.10 per share).
Net sales for the April-June quarter were $200 million, 3.5% above the $193 million achieved in the same quarter of the prior year. Net sales for fiscal year 2007 were $769 million, 5.6% above the $728 million achieved in the prior year.
Chairman and Chief Executive Officer John B. Crowe said, “We are pleased with the improved results, both for the quarter and fiscal year. We credit the improved earnings to strong demand across all of our businesses and to the combination of higher prices, better mix and cost reductions. Reduced costs and higher volumes at our Americana plant also contributed to improved earnings, both for the quarter and total year. Our Nonwoven materials segment sales and earnings were strong for the total year, but even though sales were higher, operating income for the quarter was down compared to the January – March quarter due to higher corporate SRA allocations and special maintenance items. We continue to generate strong cash flow and we lowered our debt during the year by $76 million (from $521 million to $445 million), which includes the cancellation of the $5.0 million Stac-Pac note.”
Mr. Crowe went on to say, “With the anticipated improved fourth quarter results, we provided an earnings alert on July 25. Today we are releasing our results ahead of schedule and we will discuss fourth quarter and annual results at our conference call scheduled for 10:30 a.m. Eastern, Wednesday, August 8, 2007 following a review of our results with the Board of Directors at the previously scheduled August 7 meeting. We appreciate your understanding for the delay between today’s announcement and our conference call.”
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 | Year Ended | ||||||||||||||||||||
June 30 | March 31 | June 30 | June 30 | June 30 | |||||||||||||||||
2007 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||
| Net sales | $ | 200,176 | $ | 193,009 | $ | 193,368 | $ | 769,321 | $ | 728,485 | |||||||||||
| Cost of goods sold | 159,653 | 160,070 | 167,815 | 637,505 | 628,687 | ||||||||||||||||
| Gross margin | 40,523 | 32,939 | 25,553 | 131,816 | 99,798 | ||||||||||||||||
| Selling, research and administrative expenses | 12,974 | 11,680 | 12,709 | 47,021 | 47,762 | ||||||||||||||||
| Amortization of intangibles and other | 697 | 500 | 506 | 2,335 | 2,000 | ||||||||||||||||
| Impairment of long-lived assets | - | - | 621 | - | 2,090 | ||||||||||||||||
| Restructuring costs | 24 | 1,201 | 101 | 1,249 | 3,526 | ||||||||||||||||
| Operating income | 26,828 | 19,558 | 11,616 | 81,211 | 44,420 | ||||||||||||||||
| Net interest expense and amortization of debt costs | (7,587 | ) | (10,020 | ) | (11,414 | ) | (38,798 | ) | (43,233 | ) | |||||||||||
| Loss on early extinguishment of debt | (95 | ) | (85 | ) | - | (832 | ) | (151 | ) | ||||||||||||
| Gain on sale of assets held for sale | - | - | - | 355 | - | ||||||||||||||||
| Foreign exchange and other | 1,228 | 422 | (110 | ) | 1,902 | (352 | ) | ||||||||||||||
| Income before income taxes | 20,374 | 9,875 | 92 | 43,838 | 684 | ||||||||||||||||
| Income tax expense (benefit) | 4,456 | 3,302 | (1,118 | ) | 13,720 | (1,296 | ) | ||||||||||||||
| Net income | $ | 15,918 | $ | 6,573 | $ | 1,210 | $ | 30,118 | $ | 1,980 | |||||||||||
| Earnings per share | |||||||||||||||||||||
| Basic | $ | 0.42 | $ | 0.17 | $ | 0.03 | $ | 0.80 | $ | 0.05 | |||||||||||
| Diluted | $ | 0.41 | $ | 0.17 | $ | 0.03 | $ | 0.79 | $ | 0.05 | |||||||||||
| Weighted average shares for basic earnings per share | 38,166 | 37,841 | 37,661 | 37,842 | 37,622 | ||||||||||||||||
Adjusted weighted average shares for diluted earnings per share | 38,772 | 38,396 | 37,684 | 38,218 | 37,658 | ||||||||||||||||
BUCKEYE TECHNOLOGIES INC. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(unaudited) | |||||||
(In thousands) | |||||||
June 30 | June 30 | ||||||
2007 | 2006 | ||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 14,790 | $ | 8,734 | |||
| Accounts receivable, net | 116,865 | 114,098 | |||||
| Inventories | 86,777 | 98,567 | |||||
| Deferred income taxes and other | 9,452 | 8,473 | |||||
| Total current assets | 227,884 | 229,872 | |||||
| Property, plant and equipment, net | 537,655 | 531,898 | |||||
| Goodwill | 155,937 | 149,106 | |||||
| Intellectual property and other, net | 30,346 | 38,677 | |||||
| Total assets | $ | 951,822 | $ | 949,553 | |||
| Liabilities and stockholders' equity | |||||||
| Current liabilities: | |||||||
| Trade accounts payable | $ | 41,030 | $ | 32,973 | |||
| Accrued expenses | 49,532 | 48,416 | |||||
| Current portion of capital lease obligations | 399 | 627 | |||||
| Current portion of long-term debt | - | 1,294 | |||||
| Total current liabilities | 90,961 | 83,310 | |||||
| Long-term debt | 445,138 | 519,414 | |||||
| Deferred income taxes | 41,761 | 35,686 | |||||
| Capital lease obligations | 356 | 755 | |||||
| Other liabilities | 26,452 | 20,671 | |||||
| Stockholders' equity | 347,154 | 289,717 | |||||
| Total liabilities and stockholders' equity | $ | 951,822 | $ | 949,553 | |||
BUCKEYE TECHNOLOGIES INC. | |||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(unaudited) | |||||||||
(In thousands) | |||||||||
Year Ended | |||||||||
June 30, 2007 | June 30, 2006 | ||||||||
OPERATING ACTIVITIES | |||||||||
| Net income | $ | 30,118 | $ | 1,980 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
| Impairment of long-lived assets | - | 2,090 | |||||||
| Depreciation | 49,212 | 46,903 | |||||||
| Amortization | 3,258 | 3,336 | |||||||
| Loss on early extinguishment of debt | 832 | 151 | |||||||
| Deferred income taxes | 7,205 | (5,464 | ) | ||||||
| Gain on sale of assets held for sale | (355 | ) | - | ||||||
| Loss on disposal of equipment | 1,190 | - | |||||||
| Provision for bad debts | (47 | ) | 123 | ||||||
| Other | 1,295 | 2,192 | |||||||
| Change in operating assets and liabilities | |||||||||
| Accounts receivable | (1,931 | ) | 8,535 | ||||||
| Inventories | 13,159 | 10,900 | |||||||
| Other assets | (1,041 | ) | (5,954 | ) | |||||
| Accounts payable and other liabilities | 8,490 | (6,071 | ) | ||||||
| Net cash provided by operating activities | 111,385 | 58,721 | |||||||
| INVESTING ACTIVITIES | |||||||||
| Purchases of property, plant & equipment | (45,200 | ) | (45,591 | ) | |||||
| Proceeds from sale of assets | 521 | 1,163 | |||||||
| Other | (539 | ) | (467 | ) | |||||
| Net cash used in investing activities | (45,218 | ) | (44,895 | ) | |||||
| FINANCING ACTIVITIES | |||||||||
| Net borrowings (payments) under line of credit | (3,000 | ) | 350 | ||||||
| Payments on long term debt and other | (67,752 | ) | (16,813 | ) | |||||
| Net proceeds from sale of equity interests | 9,858 | 549 | |||||||
| Net cash used in financing activities | (60,894 | ) | (15,914 | ) | |||||
| Effect of foreign currency rate fluctuations on cash | 783 | 896 | |||||||
| Increase (decrease) in cash and cash equivalents | 6,056 | (1,192 | ) | ||||||
| Cash and cash equivalents at beginning of period | 8,734 | 9,926 | |||||||
| Cash and cash equivalents at end of period | $ | 14,790 | $ | 8,734 | |||||
BUCKEYE TECHNOLOGIES INC. | |||||||||||||||||||||
SUPPLEMENTAL FINANCIAL DATA | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||||
| SEGMENT RESULTS | June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||
2007 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||
| Specialty Fibers | |||||||||||||||||||||
| Net sales | $ | 143,432 | $ | 135,398 | $ | 136,173 | $ | 543,831 | $ | 515,855 | |||||||||||
| Operating income (a) | 22,241 | 15,948 | 7,110 | 63,671 | 35,842 | ||||||||||||||||
| Depreciation and amortization (b) | 8,312 | 7,901 | 7,826 | 31,770 | 29,945 | ||||||||||||||||
| Capital expenditures | 16,231 | 8,727 | 3,819 | 36,614 | 42,410 | ||||||||||||||||
| Nonwoven Materials | |||||||||||||||||||||
| Net sales | $ | 66,002 | $ | 65,386 | $ | 63,916 | $ | 258,843 | $ | 240,873 | |||||||||||
| Operating income (a) | 4,535 | 5,873 | 5,515 | 21,233 | 15,919 | ||||||||||||||||
| Depreciation and amortization (b) | 4,013 | 3,898 | 3,893 | 16,047 | 15,835 | ||||||||||||||||
| Capital expenditures | 1,474 | 1,845 | 450 | 4,316 | 1,939 | ||||||||||||||||
| Corporate | |||||||||||||||||||||
| Net sales | $ | (9,258 | ) | $ | (7,775 | ) | $ | (6,721 | ) | $ | (33,353 | ) | $ | (28,243 | ) | ||||||
| Operating loss (a) | 52 | (2,263 | ) | (1,009 | ) | (3,693 | ) | (7,341 | ) | ||||||||||||
| Depreciation and amortization (b) | 1,126 | 844 | 909 | 3,775 | 3,398 | ||||||||||||||||
| Capital expenditures | 1,260 | 1,338 | 143 | 4,270 | 1,242 | ||||||||||||||||
| Total | |||||||||||||||||||||
| Net sales | $ | 200,176 | $ | 193,009 | $ | 193,368 | $ | 769,321 | $ | 728,485 | |||||||||||
| Operating income (a) | 26,828 | 19,558 | 11,616 | 81,211 | 44,420 | ||||||||||||||||
| Depreciation and amortization (b) | 13,451 | 12,643 | 12,628 | 51,592 | 49,178 | ||||||||||||||||
| Capital expenditures | 18,965 | 11,910 | 4,412 | 45,200 | 45,591 | ||||||||||||||||
| (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 | Year Ended | ||||||||||||||||||||
| ADJUSTED EBITDA | June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||
2007 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||
| Income | $ | 15,918 | $ | 6,573 | $ | 1,210 | $ | 30,118 | $ | 1,980 | |||||||||||
| Income tax expense (benefit) | 4,456 | 3,302 | (1,118 | ) | 13,720 | (1,296 | ) | ||||||||||||||
| Interest expense | 7,377 | 9,776 | 11,135 | 37,853 | 42,381 | ||||||||||||||||
| Amortization of debt costs | 321 | 319 | 371 | 1,300 | 1,487 | ||||||||||||||||
| Early extinguishment of debt | 95 | 85 | - | 832 | 151 | ||||||||||||||||
| Depreciation, depletion and amortization | 13,451 | 12,643 | 12,628 | 51,592 | 49,178 | ||||||||||||||||
| EBITDA | 41,618 | 32,698 | 24,226 | 135,415 | 93,881 | ||||||||||||||||
| Asset impairments | - | - | 621 | - | 2,090 | ||||||||||||||||
| Non-cash charges | 490 | 506 | 443 | 1,451 | 1,484 | ||||||||||||||||
| Gain on sale of assets held for sale | - | - | - | (355 | ) | - | |||||||||||||||
| Restructuring charges | 24 | 1,201 | 101 | 1,249 | 3,526 | ||||||||||||||||
| Adjusted EBITDA | $ | 42,132 | $ | 34,405 | $ | 25,391 | $ | 137,760 | $ | 100,981 | |||||||||||
| We calculate EBITDA as earnings before cumulative effect of change in accounting plus interest expense, income taxes and depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by adding back the following items: asset impairment charges, non-cash 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 new US revolving credit facility, established on July 25, 2007, 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.). | |||||||||||||||||||||
BUCKEYE TECHNOLOGIES INC. | ||||||||||||
SUPPLEMENTAL RECONCILIATIONS | ||||||||||||
(unaudited) | ||||||||||||
(In thousands, except per share data) | ||||||||||||
Three Months Ended | Year Ended | |||||||||||
June 30, 2006 | March 31, 2007 | June 30, 2006 | ||||||||||
reconciled to | reconciled to | reconciled to | ||||||||||
| NET SALES RECONCILIATION | June 30, 2007 | June 30, 2007 | June 30, 2007 | |||||||||
| Net sales | $ | 193.4 | $ | 193.0 | $ | 728.5 | ||||||
| Volume (1) | (7.9 | ) | 2.7 | (9.6 | ) | |||||||
| Pricing (2) | 11.4 | 3.2 | 32.4 | |||||||||
| Product sales mix and other (3) | 3.3 | 1.3 | 18.0 | |||||||||
| Net sales | $ | 200.2 | $ | 200.2 | $ | 769.3 | ||||||
(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 on the translation of sales denominated in currencies other than the US dollar. | ||||||||||||
Three Months Ended | Year Ended | |||||||||||
June 30, 2006 | March 31, 2007 | June 30, 2006 | ||||||||||
EARNINGS PER SHARE | reconciled to | reconciled to | reconciled to | |||||||||
RECONCILIATION (4) | June 30, 2007 | June 30, 2007 | June 30, 2007 | |||||||||
| EARNINGS (LOSS) PER SHARE | $ | 0.03 | $ | 0.17 | $ | 0.05 | ||||||
Volume (a) (5) | (0.02 | ) | 0.02 | 0.01 | ||||||||
Pricing / product mix (a) (6) | 0.21 | 0.05 | 0.55 | |||||||||
Costs (a) (7) | 0.02 | 0.03 | 0.05 | |||||||||
| Impact of Americana, Brazil facility transition (8) | 0.06 | 0.03 | 0.05 | |||||||||
| Restructuring, impairment, early debt extinguishment costs | 0.01 | 0.02 | 0.07 | |||||||||
| Corporate / Other (9) | 0.10 | 0.09 | 0.01 | |||||||||
| EARNINGS PER SHARE | $ | 0.41 | $ | 0.41 | $ | 0.79 | ||||||
(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. | ||||||||||||
Contacts:
Steve Dean, 901-320-8352
Senior
Vice President and Chief Financial Officer
or
Shirley Spears,
901-320-8125
Investor Relations
www.bkitech.com
