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Buckeye Announces January-March Quarter Results

Buckeye Technologies Inc. (NYSE:BKI) today announced earnings for the January-March quarter of 26 cents per share compared to 17 cents per share in the year ago quarter. These results include a $0.8 million (2 cents per share) tax benefit related to the identification of additional R&D tax credits. Earnings for the prior year period included $0.8 million after tax (2 cents per share) in restructuring expenses associated with consolidations made in our European Sales Offices, Product and Market Development, and corporate overhead.

Net sales for the third quarter of fiscal 2008 increased 5% to $201.9 million as compared to fiscal 2007 third quarter net sales of $193.0 million. Net sales for the first nine months of fiscal 2008 were $610.2 million, up 7% compared to net sales of $569.1 million for the same period last year.

Chairman and Chief Executive Officer John B. Crowe said, We had a another good quarter, with sales up 5% and earnings per share up 55% versus the same period a year ago, even though our operating performance fell short of our expectations. Unplanned maintenance outages at our Florida wood cellulose facility, delayed shipments due to ocean vessel availability issues and lower Nonwovens sales negatively impacted our results. A significant accomplishment for the quarter was the reduction of long-term debt by $18.6 million during the quarter to $394.5 million.

Mr. Crowe added, We have recently replaced a sizeable portion of the nonwovens business that we lost at the beginning of January, and we expect Nonwovens sales and operating income to increase over the next several quarters. While we expect higher sales and production volumes in the April-June quarter versus the immediately preceding quarter, we anticipate that our margins will be constrained by higher input and transportation costs.

Buckeye has scheduled a conference call for later this morning at 11:00 a.m. EDT to discuss third quarter performance. Persons interested in listening by telephone may dial in at (877) 857-6176 within the United States. International callers should dial (719) 325-4826.

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 Companys 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 EndedNine Months Ended
March 31, 2008December 31, 2007March 31, 2007March 31, 2008March 31, 2007
Net sales $ 201,865 $ 210,922 $ 193,009 $ 610,186 $ 569,145
Cost of goods sold 167,664 168,943 160,070 493,351 477,852
Gross margin34,20141,97932,939116,83591,293
Gross margin as a percentage of sales16.9%19.9%17.1%19.1%16.0%
Selling, research and administrative expenses 11,470 11,796 11,680 34,740 34,047
Amortization of intangibles and other 468 361 500 1,390 1,638
Restructuring costs - - 1,201 96 1,225
Operating income22,26329,82219,55880,60954,383
Net interest expense and amortization of debt costs (7,814 ) (8,524 ) (10,020 ) (25,495 ) (31,211 )
Early extinguishment of debt - 251 (85 ) (535 ) (737 )
Gain on sale of assets held for sale - - - - 355
Foreign exchange and other 313 (94 ) 422 51 674
Income before income taxes14,76221,4559,87554,63023,464
Income tax expense 4,340 7,589 3,302 16,845 9,264
Net income$10,422$13,866$6,573$37,785$14,200
Earnings per share $ 0.27 $ 0.36 $ 0.17 $ 0.97 $ 0.38
Diluted earnings per share $ 0.26 $ 0.35 $ 0.17 $ 0.96 $ 0.37
Weighted average shares for basic earnings per share
39,011 38,953 37,887 38,902 37,750
Weighted average shares for diluted earnings per share
39,372 39,448 38,442 39,360 38,048

BUCKEYE TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands)
March 31December 31June 30
200820072007
Current assets:
Cash and cash equivalents$20,835$23,566$14,790
Accounts receivable, net121,985120,413116,865
Inventories103,53192,14086,777
Deferred income taxes and other9,7169,3719,452
Total current assets256,067245,490227,884
Property, plant and equipment, net544,957542,796537,655
Goodwill160,285164,251155,937
Intellectual property and other, net29,94730,45930,346
Total assets$991,256$982,996$951,822
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable$44,659$38,32341,030
Accrued expenses55,30248,63649,532
Current portion of capital lease obligations459560399
Short-term debt647219-
Total current liabilities101,06787,73890,961
Long-term debt394,532413,149445,138
Deferred income taxes56,37953,22341,761
Capital lease obligations--356
Other liabilities27,70226,71426,452
Stockholders' equity411,576402,172347,154
Total liabilities and stockholders' equity$991,256$982,996$951,822

BUCKEYE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
Three Months EndedNine Months Ended
March 31, 2008December 31, 2007March 31, 2007March 31, 2008March 31, 2007
OPERATING ACTIVITIES
Net income$10,422$13,866$6,573$37,785$14,200
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 12,670 12,780 12,143 38,079 36,454
Amortization 540 624 706 1,666 2,354
Loss on early extinguishment of debt - (251 ) 85 535 737
Deferred income taxes 3,133 5,834 2,096 13,591 4,350
Gain on sale of assets held for sale - - - - (355 )
Loss on disposal of equipment 230 448 486 794 701
Provision for bad debts (52 ) (1 ) (11 ) (62 ) 170
Excess tax benefit from stock based compensation - (29 ) (1 ) (44 ) (6 )
Other 408 364 432 956 1,258
Change in operating assets and liabilities
Accounts receivable (541 ) 951 (8,383 ) (1,316 ) (1,523 )
Inventories (10,550 ) 2,166 3,489 (13,955 ) 15,881
Other assets (1,356 ) 555 2,103 (1,020 ) (754 )
Accounts payable and other liabilities 11,684 (14,925 ) 6,297 3,714 6,631
Net cash provided by operating activities26,58822,38226,01580,72380,098
INVESTING ACTIVITIES
Purchases of property, plant & equipment (12,513 ) (9,702 ) (11,910 ) (31,205 ) (26,235 )
Proceeds from sale of assets - - - - 521
Other (118 ) (89 ) (100 ) (253 ) (380 )
Net cash used in investing activities(12,631)(9,791)(12,010)(31,458)(26,094)
FINANCING ACTIVITIES
Net borrowings (payments) under line of credit (17,796 ) (6,267 ) 1,855 64,204 368
Payments on long term debt and other (101 ) (98 ) (14,438 ) (113,918 ) (50,127 )
Payments for debt issuance costs - (112 ) - (1,401 ) -
Excess tax benefit from stock based compensation - 29 1 44 6
Net proceeds from sale of equity interests - 3,037 1,209 5,742 2,308
Net cash used in financing activities(17,897)(3,411)(11,373)(45,329)(47,445)
Effect of foreign currency rate fluctuations on cash 1,209 383 172 2,109 204
Increase (decrease) in cash and cash equivalents(2,731)9,5632,8046,0456,763
Cash and cash equivalents at beginning of period23,56614,00312,69314,7908,734
Cash and cash equivalents at end of period$20,835$23,566$15,497$20,835$15,497

BUCKEYE TECHNOLOGIES INC.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
(In thousands)
Three Months EndedNine Months Ended
SEGMENT RESULTSMarch 31, 2008December 31, 2007March 31, 2007March 31, 2008March 31, 2007
Specialty Fibers
Net sales$150,928$148,208$135,398$434,837$400,399
Operating income (a)22,26525,88915,94870,22041,430
Depreciation and amortization (b)8,4928,1577,90124,66423,458
Capital expenditures10,9818,4688,72727,36920,383
Nonwoven Materials
Net sales$58,157$71,966$65,386$201,753$192,841
Operating income (a)1,2775,2735,87314,50416,698
Depreciation and amortization (b)3,7914,2413,89812,26412,034
Capital expenditures1,2987371,8452,7422,842
Corporate
Net sales$(7,219)$(9,252)$(7,775)$(26,404)$(24,095)
Operating loss (a)(1,279)(1,340)(2,263)(4,115)(3,745)
Depreciation and amortization (b)8547448442,5412,649
Capital expenditures2344971,3381,0943,010
Total
Net sales$201,865$210,922$193,009$610,186$569,145
Operating income (a)22,26329,82219,55880,60954,383
Depreciation and amortization (b)13,13713,14212,64339,46938,141
Capital expenditures12,5139,70211,91031,20526,235
(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 EndedNine Months Ended
ADJUSTED EBITDAMarch 31, 2008December 31, 2007March 31, 2007March 31, 2008March 31, 2007
Income$10,422$13,866$6,573$37,785$14,200
Income tax expense4,3407,5893,30216,8459,264
Interest expense7,7318,4359,77625,13830,476
Amortization of debt costs259267319829979
Early extinguishment of debt-(251)85535737
Depreciation, depletion and amortization13,13813,14212,64339,46938,141
EBITDA35,89043,04832,698120,60293,797
Asset impairments-----
Non cash charges230448506794961
Gain on sale of assets held for sale----(355)
Restructuring charges--1,201-1,225
Adjusted EBITDA$36,120$43,496$34,405$121,395$95,628
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, 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 EndedNine months Ended
March 31, 2007December 31, 2007March 31, 2007
reconciled toreconciled toreconciled to
NET SALES RECONCILIATIONMarch 31, 2008March 31, 2008March 31, 2008
Net sales$193.0$210.9$569.1
Volume (1)(12.7)(17.5)(17.3)
Pricing (2)18.17.848.1
Product sales mix and other (3)3.50.710.3
Net sales$201.9$201.9$610.2
(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 EndedNine months Ended
March 31, 2007December 31, 2007March 31, 2007
reconciled toreconciled toreconciled to
EARNINGS PER SHARE RECONCILIATION (4)March 31, 2008March 31, 2008March 31, 2008
EARNINGS (LOSS) PER SHARE$0.17$0.35$0.37
Volume (5)(0.04)(0.06)(0.05)
Pricing / product mix (6)0.310.130.83
Costs (7)

(0.25

)

(0.20

)

(0.37

)
Restructuring, impairment, early debt extinguishment costs0.02-0.02
Corporate / Other (8)

0.05

0.04

0.16

EARNINGS PER SHARE$0.26$0.26$0.96
(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:

Buckeye Technologies Inc.
Steve Dean, 901-320-8352
Senior Vice President
and Chief Financial Officer
or
Daryn Abercrombie, 901-320-8908
Investor Relations
www.bkitech.com

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