Buckeye Technologies Inc. (NYSE:BKI) today announced earnings for the July-September quarter of 34 cents per share compared to 10 cents per share in the same period last year. These results include a $2.2 million (6 cents per share) one-time favorable tax benefit related to the recently enacted reduction in Germany’s corporate tax rate.
Chairman and Chief Executive Officer John B. Crowe said, “As I said in our performance update last week, first quarter net sales were up 3% compared to the same period last year. The earnings improvement is a combination of higher prices, better mix and cost control. Nonwovens shipments were especially strong with net sales up 10% compared to the same period last year. Strong cash flow enabled us to reduce debt by $26 million during the just completed quarter. Demand for our specialty wood and cotton products, nonwoven materials and fluff pulp continues to be strong.”
Buckeye has scheduled a conference call at 3:00 p.m. EDT, Tuesday, October 23, 2007 to discuss first quarter performance.
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 | ||||||||||||
Sept 30, | June 30, | Sept 30, | ||||||||||
| 2007 | 2007 | 2006 | ||||||||||
| Net sales | $ | 197,399 | $ | 200,176 | $ | 191,406 | ||||||
| Cost of goods sold | 156,744 | 159,653 | 162,071 | |||||||||
| Gross margin | 40,655 | 40,523 | 29,335 | |||||||||
| Gross margin as % of sales | 20.6 | % | 20.2 | % | 15.3 | % | ||||||
| Selling, research and administrative expenses | 11,474 | 12,974 | 11,204 | |||||||||
| Amortization of intangibles and other | 561 | 697 | 631 | |||||||||
| Restructuring costs | 96 | 24 | 13 | |||||||||
| Operating income | 28,524 | 26,828 | 17,487 | |||||||||
| Net interest expense and amortization of debt costs | (9,157 | ) | (7,587 | ) | (10,751 | ) | ||||||
| Loss on early extinguishment of debt | (786 | ) | (95 | ) | (556 | ) | ||||||
| Gain on sale of assets held for sale | - | - | 355 | |||||||||
| Foreign exchange and other | (168 | ) | 1,228 | 6 | ||||||||
| Income before income taxes | 18,413 | 20,374 | 6,541 | |||||||||
| Income tax expense | 4,916 | 4,456 | 2,734 | |||||||||
| Net income | $ | 13,497 | $ | 15,918 | $ | 3,807 | ||||||
| Earnings per share | ||||||||||||
| Basic | $ | 0.35 | $ | 0.42 | $ | 0.10 | ||||||
| Diluted | $ | 0.34 | $ | 0.41 | $ | 0.10 | ||||||
| Weighted average shares for basic earnings per share | 38,743 | 38,166 | 37,661 | |||||||||
| Adjusted weighted average shares for diluted earnings per share | ||||||||||||
| 39,260 | 38,772 | 37,684 | ||||||||||
| BUCKEYE TECHNOLOGIES INC. | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||
| (unaudited) | |||||||||
| (In thousands) | |||||||||
Sept 30, | June 30, | Sept 30, | |||||||
| 2007 | 2007 | 2006 | |||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 14,003 | $ | 14,790 | $ | 18,058 | |||
| Accounts receivable, net | 120,199 | 116,865 | 113,073 | ||||||
| Inventories | 94,050 | 86,777 | 91,798 | ||||||
| Deferred income taxes and other | 9,514 | 9,452 | 8,158 | ||||||
Total current assets | 237,766 | 227,884 | 231,087 | ||||||
| Property, plant and equipment, net | 541,582 | 537,655 | 525,566 | ||||||
| Goodwill | 162,116 | 155,937 | 148,868 | ||||||
| Intellectual property and other, net | 30,439 | 30,346 | 37,203 | ||||||
| Total assets | $ | 971,903 | $ | 951,822 | $ | 942,724 | |||
| Liabilities and stockholders' equity | |||||||||
| Current liabilities: | |||||||||
| Trade accounts payable | $ | 42,032 | $ | 41,030 | $ | 37,278 | |||
| Accrued expenses | 58,861 | 49,532 | 57,793 | ||||||
| Current portion of capital lease obligations | 407 | 399 | 544 | ||||||
| Short-term debt and current portion of long-term debt | 505 | - | 998 | ||||||
| Total current liabilities | 101,805 | 90,961 | 96,613 | ||||||
| Long-term debt | 418,917 | 445,138 | 495,348 | ||||||
| Deferred income taxes | 47,019 | 41,761 | 36,508 | ||||||
| Capital lease obligations | 251 | 356 | 659 | ||||||
| Other liabilities | 26,115 | 26,452 | 20,789 | ||||||
| Stockholders' equity | 377,796 | 347,154 | 292,807 | ||||||
| Total liabilities and stockholders' equity | $ | 971,903 | $ | 951,822 | $ | 942,724 | |||
| BUCKEYE TECHNOLOGIES INC. | ||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (unaudited) | ||||||||||||
| (In thousands) | ||||||||||||
| Three Months Ended | ||||||||||||
| Sept 30, 2007 | June 30, 2007 | Sept 30, 2006 | ||||||||||
OPERATING ACTIVITIES | ||||||||||||
| Net income | $ | 13,497 | $ | 15,918 | $ | 3,807 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation | 12,629 | 12,758 | 12,146 | |||||||||
| Amortization | 502 | 904 | 937 | |||||||||
| Loss on early extinguishment of debt | 786 | 95 | 556 | |||||||||
| Deferred income taxes | 4,624 | 2,855 | 543 | |||||||||
| Gain on sale of assets held for sale | - | - | (355 | ) | ||||||||
| Loss on disposal of equipment | 116 | 489 | - | |||||||||
| Provision for bad debts | (9 | ) | (217 | ) | 49 | |||||||
| Excess tax benefit from stock based compensation | (15 | ) | (20 | ) | - | |||||||
| Other | 184 | 37 | 684 | |||||||||
| Change in operating assets and liabilities | ||||||||||||
| Accounts receivable | (1,726 | ) | (408 | ) | 2,745 | |||||||
| Inventories | (5,571 | ) | (2,722 | ) | 6,681 | |||||||
| Other assets | (219 | ) | (287 | ) | (1,294 | ) | ||||||
| Accounts payable and other liabilities | 6,955 | 1,859 | 13,465 | |||||||||
| Net cash provided by operating activities | 31,753 | 31,261 | 39,964 | |||||||||
| INVESTING ACTIVITIES | ||||||||||||
| Purchases of property, plant & equipment | (8,990 | ) | (18,965 | ) | (6,605 | ) | ||||||
| Proceeds from sale of assets | - | - | 521 | |||||||||
| Other | (46 | ) | (159 | ) | (124 | ) | ||||||
| Net cash used in investing activities | (9,036 | ) | (19,124 | ) | (6,208 | ) | ||||||
| FINANCING ACTIVITIES | ||||||||||||
| Net borrowings (payments) under line of credit | 88,267 | (6,228 | ) | (3,000 | ) | |||||||
| Payments on long term debt and other | (113,719 | ) | (14,765 | ) | (21,429 | ) | ||||||
| Payments for debt issuance costs | (1,289 | ) | - | - | ||||||||
| Excess tax benefit from stock based compensation | 15 | 20 | - | |||||||||
| Net proceeds from sale of equity interests | 2,705 | 7,550 | - | |||||||||
| Net cash used in financing activities | (24,021 | ) | (13,423 | ) | (24,429 | ) | ||||||
| Effect of foreign currency rate fluctuations on cash | 517 | 579 | (3 | ) | ||||||||
| Increase (decrease) in cash and cash equivalents | (787 | ) | (707 | ) | 9,324 | |||||||
| Cash and cash equivalents at beginning of period | 14,790 | 15,497 | 8,734 | |||||||||
| Cash and cash equivalents at end of period | $ | 14,003 | $ | 14,790 | $ | 18,058 | ||||||
| BUCKEYE TECHNOLOGIES INC. | ||||||||||||
| SUPPLEMENTAL FINANCIAL DATA | ||||||||||||
| (unaudited) | ||||||||||||
| (In thousands) | ||||||||||||
| Three Months Ended | ||||||||||||
SEGMENT RESULTS | Sept 30, | June 30, | Sept 30, | |||||||||
| 2007 | 2007 | 2006 | ||||||||||
| Specialty Fibers | ||||||||||||
| Net sales | $ | 135,701 | $ | 143,432 | $ | 134,875 | ||||||
| Operating income (a) | 22,066 | 22,241 | 12,288 | |||||||||
| Depreciation and amortization (b) | 8,015 | 8,312 | 7,698 | |||||||||
| Capital expenditures | 7,920 | 16,231 | 5,573 | |||||||||
| Nonwoven Materials | ||||||||||||
| Net sales | $ | 71,630 | $ | 66,002 | $ | 64,967 | ||||||
| Operating income (a) | 7,954 | 4,535 | 5,979 | |||||||||
| Depreciation and amortization (b) | 4,232 | 4,013 | 4,171 | |||||||||
| Capital expenditures | 707 | 1,474 | 417 | |||||||||
| Corporate | ||||||||||||
| Net sales | $ | (9,932 | ) | $ | (9,258 | ) | $ | (8,436 | ) | |||
| Operating loss (a) | (1,496 | ) | 52 | (780 | ) | |||||||
| Depreciation and amortization (b) | 944 | 1,126 | 954 | |||||||||
| Capital expenditures | 363 | 1,260 | 615 | |||||||||
| Total | ||||||||||||
| Net sales | $ | 197,399 | $ | 200,176 | $ | 191,406 | ||||||
| Operating income (a) | 28,524 | 26,828 | 17,487 | |||||||||
| Depreciation and amortization (b) | 13,191 | 13,451 | 12,823 | |||||||||
| Capital expenditures | 8,990 | 18,965 | 6,605 | |||||||||
| (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 | ||||||||||||
| ADJUSTED EBITDA | Sept 30, | June 30, | Sept 30, | |||||||||
| 2007 | 2007 | 2006 | ||||||||||
| Income | $ | 13,497 | $ | 15,918 | $ | 3,807 | ||||||
Income tax expense | 4,916 | 4,456 | 2,734 | |||||||||
| Interest expense | 8,972 | 7,377 | 10,475 | |||||||||
| Amortization of debt costs | 302 | 321 | 344 | |||||||||
| Early extinguishment of debt | 786 | 95 | 556 | |||||||||
| Depreciation, depletion and amortization | 13,191 | 13,451 | 12,823 | |||||||||
| EBITDA | 41,664 | 41,618 | 30,739 | |||||||||
| Non-cash charges | 117 | 490 | 108 | |||||||||
| Gain on sale of assets held for sale | - | - | (355 | ) | ||||||||
| Restructuring charges | - | 24 | 13 | |||||||||
| Adjusted EBITDA | $ | 41,781 | $ | 42,132 | $ | 30,505 | ||||||
| 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 prior to July 1, 2007 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.). | ||||||||||||
| BUCKEYE TECHNOLOGIES INC. | ||||||||
| SUPPLEMENTAL RECONCILIATIONS | ||||||||
| (unaudited) | ||||||||
| (In thousands, except per share data) | ||||||||
Three Months Ended | ||||||||
| NET SALES RECONCILIATION | Sept 30, 2006 Sept 30, 2007 | June 30, 2007 | ||||||
| Net sales | $ | 191.4 | $ | 200.2 | ||||
| Volume (1) | (9.9 | ) | (6.2 | ) | ||||
| Pricing (2) | 13.7 | 3.8 | ||||||
| Product sales mix and other (3) | 2.2 | (0.4 | ) | |||||
| Net sales | $ | 197.4 | $ | 197.4 | ||||
| (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 | ||||||||
| EARNINGS PER SHARE RECONCILIATION (4) | Sept 30, 2006 | June 30, 2007 | ||||||
| EARNINGS (LOSS) PER SHARE | $ | 0.10 | $ | 0.41 | ||||
| Volume (5) | (0.05 | ) | (0.03 | ) | ||||
| Pricing / product mix (6) | 0.24 | 0.06 | ||||||
| Costs (7) | (0.01 | ) | - | |||||
| Restructuring, impairment, early debt extinguishment costs | (0.01 | ) | (0.01 | ) | ||||
| Corporate / Other (8) | 0.07 | (0.09 | ) | |||||
| EARNINGS PER SHARE | $ | 0.34 | $ | 0.34 | ||||
| (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) 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
Sr.
Vice President and Chief Financial Officer
or
Investor
Relations:
Shirley Spears, 901-320-8125
www.bkitech.com
