Market Overview

Buckeye's First Quarter FY 2012 Results

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MEMPHIS, Tenn.--(BUSINESS WIRE)--

Buckeye Technologies Inc. (NYSE: BKI) today announced first quarter adjusted net income* of $29.9 million or $0.74 per share, which excludes net income of $11.2MM or $0.28 per share from cellulosic biofuel credits generated in 2009. Adjusted net income* rose 118% as compared to the prior year period's $13.7 million or $0.34 per share, which excluded net income of $51.3 million or $1.26 per share from cellulosic biofuel credits generated in 2009.

Net sales of $240 million were up 19% versus last year's first quarter sales of $202 million. Sales benefited from higher selling prices and increased cotton linter pulp shipment volume. The $0.40 increase in adjusted EPS*, compared to the prior year period, was driven by these same factors. Aside from significantly higher cotton linter costs, cost inflation for chemicals, transportation and other raw materials was modest with energy prices stable.

Comparing the first quarter of fiscal 2012 to the fourth quarter of fiscal 2011, sales were down $16 million or 6% lower as we rebuilt inventories at our Foley mill back to target levels and nonwovens shipment volume was down. Adjusted Operating Income* was flat at $44.0 million even with the lower sales revenue as selling, research and administrative expenses and direct costs were down relative to the fourth quarter, and higher selling prices were sufficient to offset increases in input costs during the first quarter. Adjusted EPS* of $0.74 was up $0.06 compared to $0.68 in the fourth quarter. Adjusted EPS* benefitted from a foreign exchange gain, lower net interest expense and a lower effective tax rate.

Chairman and Chief Executive Officer John B. Crowe said, “We were pleased with our first quarter fiscal 2012 financial results. As we said on our August earnings call, our record fourth quarter revenue of $256 million was going to be hard to duplicate in the first quarter due to very low beginning specialty wood fibers inventory levels. Our first quarter sales revenue of $240 million is our second best quarter ever, and our gross margin of 23.7% of sales was significantly better compared to last year's 18.0%. The key drivers to year over year improvements continue to be strong markets and selling prices, better capacity utilization at our Memphis specialty cotton fibers plant, and benefits from our cost improvement initiatives. We maintained a balanced approach to the allocation of the cash flow generated during the quarter. Our excellent first quarter cash flow generation allowed us to pay a record bonus to all of our employees (reflecting the record FY 2011 performance), invest $11 million in capital projects, repurchase 356,000 shares ($8.6 million) of Buckeye common stock, increase our dividend to $0.06 per share, and further reduce our debt by $7 million. We expect strong sales, earnings and cash flow trends to continue.”

Buckeye has scheduled a conference call for Wednesday morning, October 26, at 11:00 a.m. ET to discuss first quarter performance. Persons interested in listening by telephone may dial in at (800) 533-7619 within the United States. International callers should dial (785) 830-1923. 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.

Note Regarding Non-GAAP Financial Measures

*This release includes certain financial information not derived in accordance with generally accepted accounting principles (“GAAP”). The non-GAAP measures presented are “adjusted operating income”, “adjusted net income”, “adjusted earnings per share”, “free cash flow” and are equal to net income, pre-tax income, operating income and earnings per share excluding the after-tax effects of alternative fuel mixture credits (AFMC) and cellulosic biofuel credits (CBC), investment tax credits (ITC) on prior period expenditures, asset impairment cost, restructuring cost and early debt extinguishment cost.

 

1st Quarter

4th Quarter

($ in Millions)

2012

 

2011

2011

Operating income

Operating income in accordance with GAAP

44.0

23.6

30.9

Special items:

Restructuring costs

---

0.6

0.1

Asset impairment

 

---

     

---

     

13.0

 

Adjusted operating income

44.0

24.2

44.0

 

Net income

Net income in accordance with GAAP

41.1

64.4

14.1

Special items, after-tax:

Restructuring costs

---

0.6

0.1

AFMC / CBC

(11.2 ) (51.3 ) 0.6

Asset Impairment

 

---

     

---

     

13.0

 

Adjusted net income

29.9

13.7

27.8

 

Earnings per share (EPS)

EPS in accordance with GAAP

$

1.02

$

1.59

$

0.35

Special items, after-tax, per share:

Restructuring costs

---

0.01

---

AFMC / CBC

(0.28

)

(1.26

)

0.01

Asset impairment

 

---

     

---

     

0.32

 

Adjusted EPS

$

0.74

$

0.34

$

0.68

 

Free Cash Flow

Net cash provided by operating activities

28.5

82.0

68.0

Net cash used in investing activities

 

(10.8

)

   

(12.0

)

   

(16.5

)

Free Cash Flow

17.7

70.0

51.5

Note Regarding Forward-Looking Statements

This press release also contains forward-looking statements within the meaning of the federal securities laws and is intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. “Forward-looking statements” generally can be identified by the use of forward-looking terminology such as “assumptions,” “target,” “guidance,” “outlook,” “plans,” “projection,” “may,” “will,” “would,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “potential,” or “continue (or the negative or other derivatives of each of these terms or similar terminology). The “forward-looking statements” include, without limitation, statements regarding the economic outlook for the Company and the demand for its product, and expected levels of cash flow and debt reduction. These statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A discussion of factors that could cause results to vary is included in the Company's Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission.

BUCKEYE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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