Buckeye Technologies Inc. (NYSE:BKI) today announced earnings for the January – March quarter of 11 cents per share compared to 26 cents per share in the same period last year due to reduced demand and associated production downtime in the Specialty Fibers segment resulting from the global economic downturn. This was 4 cents per share better than earnings for the October-December period excluding the impact of a goodwill impairment charge which reduced earnings by $3.30 per share in that quarter.
Net sales of $171.6 million for the quarter were down 15% compared to the same quarter a year ago, with sales in the Specialty Fibers segment down 18% and sales in the Nonwoven Materials segment only off 2%. Specialty Fibers sales were negatively impacted by reduced demand for cotton specialty fibers, wood specialty fibers used in automotive applications, and fluff pulp. Net sales for the quarter were down 7% compared to the October-December quarter, primarily driven by reduced sales from our Memphis cotton cellulose plant.
Chairman and Chief Executive Officer John B. Crowe said, “While not satisfied with our overall results, we were pleased that underlying earnings improved compared to the October-December quarter in spite of a drop in sales revenue. We continued to take market downtime at our Foley, Memphis and Americana plants during the quarter to match production to shipment demand, and effective May 1st, we will further reduce staffing at our Memphis cotton cellulose plant in order to match capacity to reduced demand levels for products supplied by this plant. On the average, selling prices were comparable to the preceding quarter, as the impact of the January 1st price increases on our high-end wood specialty fibers products was offset by lower prices for fluff pulp and other products. We started to see some significant reductions in raw materials, energy and transportation costs during the quarter and we believe that chemical costs peaked during the January – March quarter. Our Nonwoven materials segment also reported higher shipment volumes and improved operating income compared to the October-December quarter.”
Mr. Crowe went on to say, “We made progress toward our 2009 debt reduction goal, as we generated $12.2 million in free cash flow during the quarter, reduced our debt by $2.7 million and added $9.5 million to our cash balance. Also, during the month of April we have received $25.4 million in refunds related to the alternative fuels credit covering the period between February 12th and April 14th. We recognized no benefit related to this credit in the January-March quarter. We continue to believe that the Company is in much better condition to weather this downturn as compared with previous downturns because of the improvements in our balance sheet and cost structure.”
Buckeye has scheduled a conference call for Wednesday morning, April 29, at 11:00 a.m. ET to discuss third quarter performance. Persons interested in listening by telephone may dial in at (877) 719-9804 within the United States. International callers should dial (719) 325-4781. Supplemental material for the call will be available on the Company’s website at www.bkitech.com or at www.streetevents.com.
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.
*This release includes certain financial information not derived in accordance with generally accepted accounting principles (“GAAP”). The non-GAAP measure used is “free cash flow” and is equal to net cash provided by operating activities less net cash used in investing activities. The Company believes that the presentation of this non-GAAP measure provides information that is useful to investors as it indicates more clearly and concisely the amount of cash generated by operations that remains available for payment of debt, share repurchase or dividends after funding capital expenditures, but this information should not be considered a substitute for any measures derived in accordance with GAAP. The Company manages cash flows available for debt pay down by measuring “free cash flow” and includes this measure in all-employee bonus and at-risk compensation bonus targets.
Net Cash provided by Operating Activities | $ | 21,271 | ||||
Net Cash used in Investing Activities | (9,092 | ) | ||||
Free Cash Flow | $ | 12,179 |
| BUCKEYE TECHNOLOGIES INC. | ||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| March 31, 2009 | December 31, 2008 | March 31, 2008 | March 31, 2009 | March 31, 2008 | ||||||||||||||||||||||
| Net sales | $ | 171,635 | $ | 184,665 | $ | 201,865 | $ | 577,593 | $ | 610,186 | ||||||||||||||||
| Cost of goods sold | 147,765 | 161,533 | 167,664 | 495,253 | 493,351 | |||||||||||||||||||||
| Gross margin | 23,870 | 23,132 | 34,201 | 82,340 | 116,835 | |||||||||||||||||||||
| Gross margin as a percentage of sales | 13.9 | % | 12.5 | % | 16.9 | % | 14.3 | % | 19.1 | % | ||||||||||||||||
| Selling, research and administrative expenses | 10,601 | 11,266 | 11,470 | 34,077 | 34,740 | |||||||||||||||||||||
| Amortization of intangibles and other | 465 | 471 | 468 | 1,405 | 1,390 | |||||||||||||||||||||
| Goodwill impairment | - | 138,008 | - | 138,008 | - | |||||||||||||||||||||
| Restructuring costs | - | - | - | - | 96 | |||||||||||||||||||||
| Operating income | 12,804 | (126,613 | ) | 22,263 | (91,150 | ) | 80,609 | |||||||||||||||||||
| Net interest expense and amortization of debt costs | (7,206 | ) | (7,469 | ) | (7,814 | ) | (22,113 | ) | (25,495 | ) | ||||||||||||||||
| Early extinguishment of debt | - | 401 | - | 401 | (535 | ) | ||||||||||||||||||||
| Foreign exchange and other | 100 | 213 | 313 | (518 | ) | 51 | ||||||||||||||||||||
| Income (loss) before income taxes | 5,698 | (133,468 | ) | 14,762 | (113,380 | ) | 54,630 | |||||||||||||||||||
| Income tax expense (benefit) | 1,412 | (8,484 | ) | 4,340 | (1,532 | ) | 16,845 | |||||||||||||||||||
| Net income (loss) | $ | 4,286 | $ | (124,984 | ) | $ | 10,422 | $ | (111,848 | ) | $ | 37,785 | ||||||||||||||
| Earnings (loss) per share | $ | 0.11 | $ | (3.23 | ) | $ | 0.27 | $ | (2.89 | ) | $ | 0.97 | ||||||||||||||
| Diluted earnings per share | $ | 0.11 | $ | (3.23 | ) | $ | 0.26 | $ | (2.89 | ) | $ | 0.96 | ||||||||||||||
Weighted average shares for basic earnings per share | 38,672 | 38,670 | 39,011 | 38,682 | 38,902 | |||||||||||||||||||||
Weighted average shares for diluted earnings per share | 38,765 | 38,670 | 39,372 | 38,682 | 39,360 | |||||||||||||||||||||
| BUCKEYE TECHNOLOGIES INC. | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (In thousands) | ||||||||||||
| March 31 | December 31 | June 30 | ||||||||||
| 2009 | 2008 | 2008 | ||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 18,879 | $ | 8,491 | $ | 10,393 | ||||||
| Accounts receivable, net | 111,953 | 108,111 | 127,521 | |||||||||
| Inventories | 101,507 | 115,548 | 110,254 | |||||||||
| Deferred income taxes and other | 11,174 | 11,186 | 11,530 | |||||||||
| Total current assets | 243,513 | 243,336 | 259,698 | |||||||||
| Property, plant and equipment, net | 516,947 | 522,785 | 555,708 | |||||||||
| Goodwill | 2,425 | 2,425 | 163,622 | |||||||||
| Intellectual property and other, net | 25,372 | 26,088 | 30,197 | |||||||||
| Total assets | $ | 788,257 | $ | 794,634 | $ | 1,009,225 | ||||||
| Liabilities and stockholders' equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Trade accounts payable | $ | 28,194 | $ | 33,678 | $ | 49,157 | ||||||
| Accrued expenses | 42,448 | 42,892 | 50,451 | |||||||||
| Current portion of capital lease obligations | - | - | 358 | |||||||||
| Short-term debt | - | - | 207 | |||||||||
| Total current liabilities | 70,642 | 76,570 | 100,173 | |||||||||
| Long-term debt | 388,563 | 391,311 | 393,910 | |||||||||
| Deferred income taxes | 50,729 | 48,531 | 57,963 | |||||||||
| Other liabilities | 24,646 | 25,430 | 27,622 | |||||||||
| Stockholders' equity | 253,677 | 252,792 | 429,557 | |||||||||
| Total liabilities and stockholders' equity | $ | 788,257 | $ | 794,634 | $ | 1,009,225 | ||||||
| BUCKEYE TECHNOLOGIES INC. | ||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| March 31, 2009 | December 31, 2008 | March 31, 2008 | March 31, 2009 | March 31, 2008 | ||||||||||||||||||||||
| OPERATING ACTIVITIES | ||||||||||||||||||||||||||
| Net income (loss) | $ | 4,286 | $ | (124,984 | ) | $ | 10,422 | $ | (111,848 | ) | $ | 37,785 | ||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||||||||
| Depreciation | 11,824 | 12,026 | 12,670 | 36,593 | 38,079 | |||||||||||||||||||||
| Amortization | 634 | 613 | 540 | 1,886 | 1,666 | |||||||||||||||||||||
| Early extinguishment of debt | - | (401 | ) | - | (401 | ) | 535 | |||||||||||||||||||
| Loss on goodwill impairment | - | 138,008 | - | 138,008 | - | |||||||||||||||||||||
| Deferred income taxes | 1,828 | (7,934 | ) | 3,133 | (4,761 | ) | 13,591 | |||||||||||||||||||
| Loss on disposal of equipment | 217 | 507 | 230 | 891 | 794 | |||||||||||||||||||||
| Provision for bad debts | 263 | 17 | (52 | ) | 253 | (62 | ) | |||||||||||||||||||
| Excess tax benefit from stock based compensation | - | - | - | - | (44 | ) | ||||||||||||||||||||
| Other | 154 | (327 | ) | 408 | 218 | 956 | ||||||||||||||||||||
| Change in operating assets and liabilities | ||||||||||||||||||||||||||
| Accounts receivable | (4,783 | ) | 16,705 | (541 | ) | 6,797 | (1,316 | ) | ||||||||||||||||||
| Inventories | 13,467 | (8,540 | ) | (10,550 | ) | 4,086 | (13,955 | ) | ||||||||||||||||||
| Other assets | 866 | 181 | (1,356 | ) | 1,189 | (1,020 | ) | |||||||||||||||||||
| Accounts payable and other liabilities | (7,485 | ) | (19,387 | ) | 11,684 | (23,100 | ) | 3,714 | ||||||||||||||||||
| Net cash provided by operating activities | 21,271 | 6,484 | 26,588 | 49,811 | 80,723 | |||||||||||||||||||||
| INVESTING ACTIVITIES | ||||||||||||||||||||||||||
| Purchases of property, plant & equipment | (8,994 | ) | (13,929 | ) | (12,513 | ) | (34,005 | ) | (31,205 | ) | ||||||||||||||||
| Other | (98 | ) | (50 | ) | (118 | ) | (171 | ) | (253 | ) | ||||||||||||||||
| Net cash used in investing activities | (9,092 | ) | (13,979 | ) | (12,631 | ) | (34,176 | ) | (31,458 | ) | ||||||||||||||||
| FINANCING ACTIVITIES | ||||||||||||||||||||||||||
| Net borrowings (payments) under line of credit | (2,655 | ) | 3,773 | (17,796 | ) | (114 | ) | 64,204 | ||||||||||||||||||
| Payments on long term debt and other | - | (5,253 | ) | (101 | ) | (5,358 | ) | (113,918 | ) | |||||||||||||||||
| Payments for debt issuance costs | - | - | - | - | (1,401 | ) | ||||||||||||||||||||
| Excess tax benefit from stock based compensation | - | - | - | - | 44 | |||||||||||||||||||||
| Purchase of treasury shares | - | - | - | (494 | ) | - | ||||||||||||||||||||
| Net proceeds from sale of equity interests | - | - | - | - | 5,742 | |||||||||||||||||||||
| Net cash used in financing activities | (2,655 | ) | (1,480 | ) | (17,897 | ) | (5,966 | ) | (45,329 | ) | ||||||||||||||||
| Effect of foreign currency rate fluctuations on cash | 864 | (985 | ) | 1,209 | (1,183 | ) | 2,109 | |||||||||||||||||||
| Increase (decrease) in cash and cash equivalents | 10,388 | (9,960 | ) | (2,731 | ) | 8,486 | 6,045 | |||||||||||||||||||
| Cash and cash equivalents at beginning of period | 8,491 | 18,451 | 23,566 | 10,393 | 14,790 | |||||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 18,879 | $ | 8,491 | $ | 20,835 | $ | 18,879 | $ | 20,835 | ||||||||||||||||
| BUCKEYE TECHNOLOGIES INC. | ||||||||||||||||||||||||||
| SUPPLEMENTAL FINANCIAL DATA | ||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| SEGMENT RESULTS | March 31, 2009 | December 31, 2008 | March 31, 2008 | March 31, 2009 | March 31, 2008 | |||||||||||||||||||||
| Specialty Fibers | ||||||||||||||||||||||||||
| Net sales | $ | 123,853 | $ | 137,739 | $ | 150,928 | $ | 426,571 | $ | 434,837 | ||||||||||||||||
| Operating income (a) | 10,861 | 11,339 | 22,207 | 42,271 | 70,295 | |||||||||||||||||||||
| Depreciation and amortization (b) | 7,793 | 8,060 | 8,492 | 24,201 | 24,664 | |||||||||||||||||||||
| Capital expenditures | 7,789 | 11,855 | 10,981 | 29,741 | 27,369 | |||||||||||||||||||||
| Nonwoven Materials | ||||||||||||||||||||||||||
| Net sales | $ | 57,210 | $ | 56,841 | $ | 58,157 | $ | 179,913 | $ | 201,753 | ||||||||||||||||
| Operating income (a) | 2,912 | 1,506 | 1,238 | 7,948 | 14,529 | |||||||||||||||||||||
| Depreciation and amortization (b) | 3,577 | 3,497 | 3,791 | 11,119 | 12,264 | |||||||||||||||||||||
| Capital expenditures | 866 | 1,558 | 1,298 | 3,202 | 2,742 | |||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||
| Net sales | $ | (9,428 | ) | $ | (9,915 | ) | $ | (7,219 | ) | $ | (28,891 | ) | $ | (26,403 | ) | |||||||||||
| Operating loss (a) | (969 | ) | (139,458 | ) | (1,182 | ) | (141,369 | ) | (4,215 | ) | ||||||||||||||||
| Depreciation and amortization (b) | 919 | 940 | 854 | 2,678 | 2,542 | |||||||||||||||||||||
| Capital expenditures | 339 | 516 | 234 | 1,062 | 1,094 | |||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Net sales | $ | 171,635 | $ | 184,665 | $ | 201,865 | $ | 577,593 | $ | 610,187 | ||||||||||||||||
| Operating income (a) | 12,803 | (126,613 | ) | 22,263 | (91,150 | ) | 80,609 | |||||||||||||||||||
| Depreciation and amortization (b) | 12,289 | 12,497 | 13,137 | 37,998 | 39,470 | |||||||||||||||||||||
| Capital expenditures | 8,994 | 13,929 | 12,513 | 34,005 | 31,205 | |||||||||||||||||||||
| (a) The corporate segment includes operating elements such as segment eliminations, amortization of intangibles, impairment of long-lived assets, charges related to restructuring, unallocated at-risk compensation and unallocated stock-based compensation for executive officers and certain other employees. We have reclassified the at-risk compensation and stock based compensation from the specialty fibers and nonwovens segments for previous periods for comparability. Corporate net sales represents the elimination of intersegment sales included in the specialty fibers reporting segment. | ||||||||||||||||||||||||||
| (b) Depreciation and amortization includes depreciation, depletion and amortization of intangibles. | ||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| ADJUSTED EBITDA | March 31, 2009 | December 31, 2008 | March 31, 2008 | March 31, 2009 | March 31, 2008 | |||||||||||||||||||||
| Income | $ | 4,286 | $ | (124,984 | ) | $ | 10,422 | $ | (111,848 | ) | $ | 37,785 | ||||||||||||||
| Income tax expense | 1,412 | (8,484 | ) | 4,340 | (1,532 | ) | 16,845 | |||||||||||||||||||
| Interest expense | 6,979 | 7,271 | 7,731 | 21,483 | 25,138 | |||||||||||||||||||||
| Amortization of debt costs | 262 | 261 | 259 | 785 | 829 | |||||||||||||||||||||
| Early extinguishment of debt | - | (401 | ) | - | (401 | ) | 535 | |||||||||||||||||||
| Depreciation, depletion and amortization | 12,289 | 12,497 | 13,138 | 37,998 | 39,469 | |||||||||||||||||||||
| EBITDA | 25,228 | (113,840 | ) | 35,890 | (53,515 | ) | 120,601 | |||||||||||||||||||
| Asset impairments | - | 138,008 | - | 138,008 | - | |||||||||||||||||||||
| Non cash charges | 361 | 522 | 230 | 1,091 | 794 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 25,589 | $ | 24,690 | $ | 36,120 | $ | 85,584 | $ | 121,395 | ||||||||||||||||
| 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 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.). | ||||||||||||||||||||||||||
Contacts:
Steve Dean, 901-320-8352
Senior
Vice President and Chief Financial Officer
or
Daryn
Abercrombie, 901-320-8908
Investor Relations
www.bkitech.com
