Business News
Rock-Tenn Reports Higher Income on Strong Sales Increase for the First Quarter of Fiscal 2008
Thursday 24. January 2008 - Rock-Tenn Company (NYSE:RKT) today reported earnings for the quarter ended December 31, 2007 of $0.46 per diluted share. The Company reported net income of $17.5 million, or $0.46 per diluted share, for the first quarter of fiscal 2008 compared to $15.1 million, or $0.39 per diluted share, for the prior year quarter.
— Adjusted net income of $0.51 per diluted share excluding restructuring and other costs primarily related to the closing of our Chicopee, Massachusetts folding carton plant.
Adjusted net income reflects adjustments to net income, as described below:
1Q 1Q
2008 2007
———————————————————————-
Net income per diluted share $ 0.46 $ 0.39
Restructuring and other costs, net 0.05 0.01
———————————————————————-
Adjusted net income per diluted share $ 0.51 $ 0.40
First Quarter Results
— Net sales of $596.3 million for the first quarter of fiscal 2008 increased $62.4 million, or 11.7%, over the first quarter of fiscal 2007.
— Segment income was $48.0 million compared to $42.5 million in the prior year quarter, or 12.9% over the prior year quarter.
— Income for the first quarter of fiscal 2008 included pre-tax restructuring and other costs of $3.0 million, or $0.05 per diluted share after-tax, primarily related to the decision to close the Chicopee, Massachusetts folding carton plant. The closing of the Chicopee plant takes advantage of low cost production capacity resulting from our acquisition related capital investments in one of the plants we acquired from Gulf States in 2005 and furthers the Company’s strategy of concentrating production in larger facilities with market leading cost positions. Rock-Tenn’s pre-tax restructuring and other costs were $0.5 million, or $0.01 per diluted share after-tax, for the first quarter of fiscal 2007.
Segment Results
Consumer Packaging Segment
Consumer Packaging segment net sales were $327.3 million in the first quarter of fiscal 2008 compared to $303.1 million in the prior year quarter, due to higher unit pricing in the fiscal 2008 quarter representing pass through of higher paperboard costs and increased sales volumes. Segment income increased $4.6 million over the prior year quarter to $16.3 million in the first quarter of fiscal 2008. Segment return on sales increased to 5.0% compared to 3.9% in the prior year quarter.
Paperboard Segment
Paperboard segment net sales increased $24.2 million from the prior year quarter to $235.0 million on higher selling prices and a 1,624 increase in tons shipped. Bleached paperboard tons shipped increased 7.6% over the prior year quarter to 79,623 tons. The average selling price for all paperboard grades increased $41 per ton over the prior year quarter. Average recycled fiber costs increased $49 per ton over the prior year quarter and energy and chemical costs each increased $4 per ton of recycled paperboard. Segment income was $21.5 million compared to $23.9 million in the prior year quarter. During the quarter we received approximately $1.7 million in recovery of previously expensed environmental costs, which was largely offset by approximately $1.3 million of impact in our Dallas mill associated with a dryer section failure and rebuild in December.
Merchandising Displays Segment
Merchandising Displays segment net sales increased $21.1 million, or 34.6%, over the prior year first quarter, to $82.0 million on strong demand for promotional displays. Segment income increased 56.9% to $8.0 million compared to $5.1 million in the prior year quarter.
Corrugated Packaging Segment
Corrugated Packaging segment net sales increased $4.6 million over the prior year quarter to $41.2 million in the first quarter of fiscal 2008, due to increased volumes and price increases to recover higher paperboard costs. Segment income was $2.2 million in the first quarter of fiscal 2008 and $1.8 million in the prior year quarter.
Chairman and Chief Executive Officer’s Statement
Rock-Tenn Company Chairman and Chief Executive Officer James A. Rubright stated, “Strong sales growth in our consumer packaging, corrugated packaging and merchandising display segments drove our 27.5% increase in adjusted net income per share. Operating efficiencies flowing from our commitment to performance excellence in our consumer packaging segment enabled us to achieve the return on sales target of 5% that we established when we acquired the Gulf States assets in 2005.”
Cash Provided By Operating Activities
Net cash provided by operating activities in the first quarter of fiscal 2008 was $22.3 million compared to $32.3 million in the prior year quarter. The decrease was primarily due to the reduction of non-debt current liabilities.