Friday, 07 August 2015 07:59

Wausau Paper Reports Second-Quarter 2015 Results

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wau logoWausau Paper (NYSE:WPP) has announced financial and operating results for the three- and six-month period ended June 30, 2015.

“Our teams remain focused on furthering the significant performance benefits we are realizing from MEI in the second half of the year. We are pleased with the market’s favorable response to our premium products and the resulting improvement in our strategic mix.”

Second-Quarter Highlights

Financial Results

  • Second-quarter adjusted EBITDA from continuing operations in 2015 was $14.5 million compared with adjusted EBITDA of $9.9 million in 2014. Second quarter 2015 adjusted EBITDA exceeded the Company’s previous guidance range of $13 to $14 million.
  • On a reported basis, net earnings from continuing operations were $2.5 million, or $0.05 per share, in the second quarter of 2015 compared with a prior-year second-quarter net loss from continuing operations of $3.7 million, or $0.07 per share.

Case Volume Growth

  • Second-quarter case shipment volume increased 2 percent in 2015 compared with the same period in 2014, resulting in a second-quarter shipment record of approximately 4.4 million cases for the Company.
  • Strategic product shipments - those products sold in conjunction with proprietary dispensing systems or produced from premium substrates - comprised slightly more than 49 percent of the Company’s sales for the second quarter of 2015 and similar to the strategic product shipment mix in the prior-year quarterly period. The improved margin quality of both strategic and support products shipped in 2015 contributed to a 5 percentage point improvement in adjusted EBITDA margin of 16 percent as compared with 11.1 percent for the second quarter of 2014.

Michael C. Burandt, CEO, commented, “Our second quarter results reflect the continuing above-market demand growth for our premium DublNature® and Artisan™ products lines, the positive market response to our differentiated product portfolio, and the benefits from the significant number of Margin Enhancement Initiative (MEI) projects that are evidenced by ongoing improvement in operating performance, as well as, increased cash generation. We are very pleased with the pace of growth of our premium products and the contributions of our entire team toward improving our operating platform.”

Third-Quarter 2015 Outlook

Commenting on the third quarter, Mr. Burandt, said, “Our teams remain focused on furthering the significant performance benefits we are realizing from MEI in the second half of the year. We are pleased with the market’s favorable response to our premium products and the resulting improvement in our strategic mix.

“Although costs of production have improved through the first half of 2015, we maintain our prior forecast for modest cost pressure related to wastepaper pricing through the balance of the year. As a result we currently expect third quarter adjusted EBITDA of $17 million to $18 million,” Mr. Burandt concluded.

2015 Second-Quarter and First-Half 2015 Results

Continuing Operations

The following second-quarter and six-month discussion, as well as the financial highlights and other information summarized in the preceding discussion, contain comparisons of financial elements including EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net earnings (loss) and adjusted net earnings (loss) per share. These financial elements are not measurements of our performance under generally accepted accounting principles (GAAP) and should not be considered an alternative to net earnings (loss) or any other performance measures derived in accordance with GAAP. Additionally, the non-GAAP measures presented may not be the same as similar measures used by other companies. The Company believes that the presentation of select non-GAAP measures provides a useful analysis of ongoing operating trends. Please refer to the attached Reconciliation of Non-GAAP Financial Measures.

Second-quarter net sales for 2015 were $90.9 million, an increase of approximately 2 percent compared to $89.2 million in the second quarter of 2014. On a year-to-date basis, net sales rose approximately 5 percent to $175.1 million compared to $166.7 million in 2014. Higher net sales in both the quarter and year-to-date periods, were driven primarily by case shipment volume growth of 2 percent and more than 4 percent, respectively. Average net selling price for the comparable quarterly and first-half periods was relatively flat as actual selling price improvement was largely offset by the unfavorable impact of the Canadian exchange rate.

         

The following table provides a reconciliation of EBITDA(1) to adjusted EBITDA for both the three- and six-month periods ended June 30:

         
   

Three Months
Ended June 30,

 

Six Months
Ended June 30,

   

2015

 

2014

 

2015

 

2014

EBITDA   $ 18.0     $ 6.8     $ 32.0     $ 12.4  
Expense related to change in control provisions         1.4           1.4  
Expense related to severance benefit of former CEO         1.6           1.6  
Credit for contract at former manufacturing facility     (3.5 )         (7.4 )    
Adjusted EBITDA   $ 14.5     $ 9.9     $ 24.6     $ 15.5  
                 
Adjusted EBITDA margin     16.0 %     11.1 %     14.1 %     9.3 %
                                 

Note: Totals may not foot due to rounding differences

(1) See also the attached reconciliation of Non-GAAP Financial Measures to the most directly comparable GAAP measure.

                                 

Year-over-year improvements in adjusted EBITDA and adjusted EBITDA margins in both the second quarter and first half periods of 2015 were driven by the improved quality of mix and volume of products sold, as well as continued operational improvement. These positive factors were partially offset by pre-tax costs of approximately $1.2 million as a result of planned, routine maintenance outages that occurred at both our Kentucky and Ohio, facilities in the second quarter of 2015.

Excluding the after-tax impact of the special items previously mentioned, second quarter 2015 adjusted net earnings were $0.2 million, or $0.00 per share, compared to an adjusted net loss of $1.8 million, or $0.04 per share, in the second quarter of 2014. On a reported basis, second quarter net earnings were $2.5 million, or $0.05 per share, in 2015 compared to a net loss of $3.7 million, or $0.07 per share, in the year-ago period.

The first half of 2015 and 2014, excluding special items previously mentioned, resulted in adjusted net losses of $2.0 million, or $0.04 per share, and $6.2 million, or $0.12 per share, respectively. On a reported basis, net earnings for the first half of 2015 were $2.7 million, or $0.05 per share, compared to a net loss of $8.2 million, or $0.16 per share, for the first six months of 2014.

About Wausau Paper:

Wausau Paper produces and markets a complete line of away-from-home towel and tissue products, as well as soap and dispensing systems. The Company is listed on the NYSE under the symbol WPP. To learn more about Wausau Paper visit wausaupaper.com.

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