Wausau-Mosinee Paper Corporation Reports Higher Second-Quarter Earnings
MOSINEE, Wis.–(BUSINESS WIRE)–July 21, 2004–Wausau-Mosinee Paper Corporation (NYSE:WMO) today reported second-quarter earnings of $3.7 million, or $0.07 per share, compared with 2003 second-quarter earnings of $3.2 million, or $0.06 per share. Net sales rose 9 percent to $264.1 million from $242.8 million last year, while shipments increased 5 percent.
Net income for this year’s second quarter included an after-tax charge of $1.3 million, or $0.02 per share, related to the Company’s stock incentive plans, compared with a charge of $0.4 million, or $0.01 per share, for the same period last year. Second-quarter results also included after-tax costs of approximately $1 million, or $0.02 per share, associated with operational issues affecting Printing & Writing’s Brokaw pulp mill.
Net earnings for the first half of 2004 were $7.2 million, or $0.14 per share, compared with $4.6 million, or $0.09 per share, for the first half of 2003. Earnings included stock incentive charges of $0.03 per share in 2004 and $0.01 per share in 2003. Net sales increased 7 percent to $515.9 million, while shipments increased 3 percent.
“Market-share gains and product-mix enhancements drove strong top-line growth during the second quarter as each of our three businesses reported increased sales and shipments,” explained Thomas J. Howatt, president and CEO. “Particularly encouraging was the 9 percent sales gain, which represents the largest year-over-year improvement since the fourth quarter of 1999.
“While market conditions and product pricing improved modestly during the quarter, nearly half of our gain in average selling price was the result of product mix improvements,” Howatt said. “These mix improvements were achieved largely from our focused product and business development efforts,” Mr. Howatt said. “Revenues from products developed within the past three years approached 40 percent, handily exceeding our corporate goal of 25 percent.
“At the same time, market pulp and wastepaper costs increased by nearly $4 million, while energy costs continued at historically high levels. Despite these pressures, we remain focused on key elements of our business that will drive long-term improvement in profitability.”
Specialty Paper reported its eighth consecutive quarter of year- over-year improvement with operating profits of $3.4 million, compared with $0.1 million last year. Net sales and shipments increased 18 percent and 11 percent, respectively, with shipments of higher-priced core products up 13 percent over year-ago levels. “Select selling price increases, improved demand for industrial papers and market-share gains drove significant improvement in net sales and operating profit,” Mr. Howatt pointed out.
Printing & Writing reported second-quarter operating profits of $2.0 million, compared with $2.7 million last year. Current-year results include costs of approximately $1.7 million related to operational issues involving the Brokaw pulp mill’s recovery system and power boiler. “As part of the mill’s annual utilities outage in June, we identified significant issues with the recovery boiler and took an extended outage to make the necessary repairs that will optimize the long-term operation of the boiler,” said Mr. Howatt. “This work was completed during the quarter and we do not anticipate any continuing operational impact.”
Net sales and shipments were up slightly over year-earlier results, while premium paper shipments increased 12 percent. “Consumer product shipments increased nearly 20 percent compared with 2003, helping drive significant growth in higher-value premium products,” Mr. Howatt continued.
Towel & Tissue reported second-quarter operating profits of $8.1 million compared with $8.4 million last year. Prior-year results included pre-tax income of $4.2 million as a license fee in settlement of a patent infringement lawsuit. “On the strength of a selling price increase early in the quarter, average selling price improved 4 percent,” Mr. Howatt said. “This increase, combined with strong cost reduction results, offset higher wastepaper costs and enabled us to achieve substantial year-over-year profit improvement, excluding the impact of the patent infringement settlement.”
Looking to the third quarter, Mr. Howatt said, “Market conditions are steadily improving although higher fiber costs and historically high energy prices have somewhat offset the benefit of recent selling price increases. Our focus remains on those key drivers of our business that will ensure long-term success: product leadership, emphasis on niche markets, operational excellence and benchmark service to our customers. As a result, we expect our positive earnings trend to continue with third-quarter earnings comfortably exceeding prior-year results of $0.12 per share.”
Wausau-Mosinee’s second-quarter conference call is scheduled for 11:00 a.m. (EDT) on Thursday, July 22, and can be accessed through the Company’s web site at www.wausaumosinee.com under “Investor Information.” A replay of the webcast will be available at the same site through July 29.
Wausau-Mosinee Paper Corporation produces fine printing and writing papers, technical specialty papers, and “away-from-home” towel and tissue products.
Safe Harbor under the Private Securities Litigation Reform Act of 1995: The matters discussed in this news release concerning the Company’s future performance or anticipated financial results are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities Reform Act of 1995. Such statements involve risks and uncertainties which may cause results to differ materially from those set forth in these statements. Among other things, these risks and uncertainties include the strength of the economy and demand for paper products, increases in raw material and energy prices, manufacturing problems at Company facilities, and other risks and assumptions described in Item 1 of the Company’s Form 10-K for the year ended December 31, 2003. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
WAUSAU-MOSINEE PAPER CORPORATION Interim Report - Quarter-Ended June 30, 2004 (in thousands, except share amounts) Condensed Consolidated Statements of Operations Three Months Six Months (unaudited) Ended June 30, Ended June 30, 2004 2003 2004 2003 Net Sales $264,109 $242,833 $515,924 $482,659 Cost of Sales 235,973 217,737 461,090 436,684 Gross Profit 28,136 25,096 54,834 45,975 Selling & Administrative Expense 19,754 17,419 38,638 33,663 Operating Profit 8,382 7,677 16,196 12,312 Interest Expense (2,550) (2,570) (5,077) (5,071) Other Income/(Expense), Net 98 15 292 1 Earnings Before Income Taxes 5,930 5,122 11,411 7,242 Provision for Income Taxes 2,193 1,894 4,222 2,679 Net Earnings $3,737 $3,228 $7,189 $4,563 Net Earnings Per Share (Basic & Diluted) $0.07 $0.06 $0.14 $0.09 Weighted Average Shares Outstanding (Basic) 51,663,152 51,550,078 51,640,274 51,543,521 Condensed Consolidated Balance Sheets (Note 1) June 30, December 31, 2004 2003 Current Assets $285,938 $251,418 Property, Plant & Equipment, Net 548,218 565,722 Other Assets 41,363 40,960 Total Assets $875,519 $858,100 Current Liabilities $133,299 $115,004 Long-term Debt 161,754 162,174 Other Liabilities 230,258 230,606 Stockholders' Equity 350,208 350,316 Total Liabilities & Stockholders' Equity $875,519 $858,100 Condensed Consolidated Statements Six Months of Cash Flow (unaudited) Ended June 30, 2004 2003 Net Cash Provided by Operating Activities $40,085 $27,965 Cash Provided by (Used in) Investing Activities: Capital Expenditures (9,471) (9,975) Acquisition of Business 0 (8,413) Proceeds on Sale of Property, Plant & Equipment 12 6 (9,459) (18,382) Cash Provided by (Used in) Financing Activities: Payments Under Capital Lease Obligation (55) (34) Dividends Paid (8,773) (8,763) Proceeds from Stock-Option Exercises 1,279 135 (7,549) (8,662) Net Increase in Cash $23,077 $921 Note 1 - Balance sheet amounts at June 30, 2004, are unaudited. The December 31, 2003, amounts are derived from audited financial statements. Note 2 - Effective March 3, 2003, the Company acquired certain assets of a laminated papers producer. The acquisition was accounted for as a purchase business combination and, accordingly, the purchase price has been allocated using the fair values of the acquired receivables, inventory, machinery and equipment, and identifiable intangible assets. No goodwill was recorded as a result of this acquisition. Note 3 - During the second quarter of 2003, the Company's Towel & Tissue Group reached a settlement of all claims of the parties in its previously announced patent litigation. As a result of the settlement, the Company recognized $4.2 million in pre-tax income as a fee for licensing certain patented dispenser technologies. Note 4 - Interim Segment Information The Company's operations are classified into three principal reportable segments: the Printing & Writing Group, the Specialty Paper Group, and the Towel & Tissue Group, each providing different products. Separate management of each segment is required because each business unit is subject to different marketing, production and technology strategies. Printing & Writing produces a broad line of premium printing and writing grades at manufacturing facilities in Brokaw, Wisconsin; and Groveton, New Hampshire. Printing & Writing also includes two converting facilities that produce laminated roll wrap and related specialty finishing and packaging products, and a converting facility that converts printing and writing grades. Specialty Paper produces specialty papers at its manufacturing facilities in Rhinelander, Wisconsin; Mosinee, Wisconsin; and Jay, Maine. Towel & Tissue produces a complete line of towel and tissue products that are marketed along with soap and dispensing systems for the "away-from-home" market. Towel & Tissue operates a paper mill in Middletown, Ohio, and a converting facility in Harrodsburg, Kentucky. Sales, operating profit, and asset information by segment is as follows: (in thousands, except ton data) June 30, December 31, 2004 2003 Segment Assets (Note 1) Printing & Writing $282,836 $283,711 Specialty Paper 330,944 334,079 Towel & Tissue 163,514 165,199 Corporate & Unallocated(a) 98,225 75,111 $875,519 $858,100 Three Months Six Months Ended June 30, Ended June 30, 2004 2003 2004 2003 Net Sales External Customers (unaudited) Printing & Writing $101,181 $99,458 $201,282 $197,835 Specialty Paper 105,771 89,701 206,702 182,159 Towel & Tissue 57,157 53,674 107,940 102,665 $264,109 $242,833 $515,924 $482,659 Operating Profit (unaudited) Printing & Writing $1,971 $2,704 $4,522 $4,190 Specialty Paper 3,375 64 6,826 1,576 Towel & Tissue 8,131 8,372 13,432 12,403 Total Reportable Segment Operating Profit 13,477 11,140 24,780 18,169 Corporate & Eliminations (5,095) (3,463) (8,584) (5,857) Interest Expense (2,550) (2,570) (5,077) (5,071) Other Income/(Expense), Net 98 15 292 1 Earnings Before Income Taxes $5,930 $5,122 $11,411 $7,242 Three Months Six Months Ended June 30, Ended June 30, 2004 2003 2004 2003 Depreciation, Depletion and Amortization (unaudited) Printing & Writing $4,172 $4,499 $8,348 $8,657 Specialty Paper 5,977 6,297 12,002 12,419 Towel & Tissue 4,506 4,529 9,002 9,111 Corporate & Unallocated 285 188 570 371 $14,940 $15,513 $29,922 $30,558 Tons Sold (unaudited) Printing & Writing 90,881 90,672 183,121 179,403 Specialty Paper 91,726 82,651 179,311 170,326 Towel & Tissue 38,710 38,091 74,133 72,441 221,317 211,414 436,565 422,170 (a)Segment assets do not include intersegment accounts receivable, cash, deferred tax assets and certain other assets which are not identifiable with the segments.
CONTACT: Wausau-Mosinee Paper Corporation, Mosinee Scott P. Doescher, 715-693-4470 www.wausaumosinee.com SOURCE: Wausau-Mosinee Paper Corporation