RockTenn Reports 1Q 2014 Results

RockTenn reported earnings for the quarter ended Dec. 31, 2013 of $1.50 per diluted share and adjusted earnings of $1.66 per diluted share. Adjusted earnings per diluted share increased 23% over the prior year quarter.
 
Net sales for the first quarter of 2014 were $2,363 million, an increase of $76 million compared to the first quarter of fiscal 2013. Segment income of $235 million increased $26 million or 13% over the prior year quarter.

RockTenn’s restructuring and other costs and operating losses and transition costs due to plant closures for the first quarter of fiscal 2014 were $0.16 per diluted share after-tax. These costs primarily consisted of $10 million of pre-tax facility closure charges and $7 million of pre-tax acquisition and integration costs. The pre-tax facility closure charges primarily consisted of equipment impairments and carrying costs for facilities acquired in the Smurfit-Stone acquisition.

“The success of our team in executing our strategy drove our 23% increase in adjusted earnings per share over the prior year quarter,” said RockTenn CEO Steve Voorhees. “We used our cash flow in the quarter to buy back $53 million of RockTenn stock, acquire NPG for $60 million, pay dividends of $26 million and reduce our leverage ratio from 1.95 to 1.84 times. We expect to continue to improve our business performance and generate strong free cash flow during the remainder of fiscal 2014.”

Corrugated Packaging segment shipments of approximately 1,814,000 tons decreased approximately 3.6% or approximately 67,000 tons compared to the prior year quarter due to lower customer demand for containerboard and corrugated containers. Consumer Packaging segment shipments of approximately 378,000 tons increased 2.6% or approximately 10,000 tons compared to the prior year quarter primarily due to higher converting shipments.

Corrugated Packaging segment net sales increased $62 million to $1,652 million and segment income increased $20 million to $158 million in the first quarter of fiscal 2014 compared to the prior year quarter. The increased sales and earnings are primarily related to higher selling prices which were partially offset by lower volumes and higher commodity and other costs. Corrugated Packaging segment EBITDA margin was 16.3% for the first quarter of fiscal 2014 up 90 basis points over the prior year quarter.

Consumer Packaging segment net sales increased $19 million and segment income increased $3 million in the first quarter of fiscal 2014 compared to the prior year quarter. Segment income was impacted primarily by higher selling prices and converting volumes which were partially offset by higher commodity and other costs. Consumer Packaging segment EBITDA margin was 16.9% for the first quarter of fiscal 2014, essentially flat compared to the prior year quarter.

Merchandising Displays segment net sales increased $23 million over the prior year first quarter to $185 million primarily due to higher volumes. Segment income increased $8 million in the first quarter of fiscal 2014 compared to the prior year quarter primarily due to the impact of higher volumes. Merchandising Displays segment EBITDA margin was 11.9% for the first quarter of fiscal 2014 up 290 basis points over the prior year quarter.

Recycling segment net sales decreased $27 million over the prior year first quarter to $100 million, primarily as the impact of lower volumes due primarily to soft export markets for recovered fiber and several collection facility closures which were partially offset by increased selling prices. Segment income decreased $4 million in the first quarter of fiscal 2014 compared to the prior year quarter primarily due to impact of lower volumes and market conditions which were partially offset by the impact of cost structure improvements.

Cash provided by operations was $305 million in the first quarter of fiscal 2014, up $27 million compared to the prior year quarter, after pension funding in excess of expense of $35 million. The company reduced net debt (as defined) by $80 million in the December quarter to $2.73 billion and at Dec. 31, 2013.