RockTenn Reports 3Q Fiscal 2013

RockTenn reported earnings for the quarter ended June 30, 2013 of $1.91 per diluted share and adjusted earnings of $2.16 per diluted share. Adjusted earnings per share increased 127% over the prior year quarter.

Net sales of $2,448 million for the third quarter of fiscal 2013 increased $145 million compared to the third quarter of fiscal 2012. Segment income of $274 million increased $115 million or 72% over the prior year quarter.

RockTenn’s restructuring and other costs and operating losses and transition costs due to plant closures for the third quarter of fiscal 2013 were $0.25 per diluted share after-tax. These costs primarily consisted of $22 million of pre-tax facility closure charges and $2 million of pre-tax acquisition and integration costs. The pre-tax facility closure charges primarily consisted of corrugated converting facilities acquired in the Smurfit-Stone Acquisition.

“Our quarterly adjusted earnings of $2.16 per share, up 93% over the preceding quarter and 127% over the prior year quarter, reflect the continued substantial improvements we are making in operating our businesses, executing capital projects and executing our sales and pricing strategy,” said RockTenn chairman and CEO James A. Rubright. “As these broadly based initiatives continue to strengthen and as we further implement the current pricing initiatives in corrugated packaging and consumer paperboard grades, our earnings for the fourth quarter and the next fiscal year should also be sharply higher than our earnings for the comparable prior year periods.”

Corrugated Packaging segment tons shipped increased approximately 102,000 tons over the prior year quarter due to increased production from operating improvements and reduced maintenance outage tons. Consumer Packaging segment paperboard and pulp shipments of approximately 363,000 tons increased approximately 15,000 tons over the prior year quarter.

Corrugated Packaging segment net sales increased $174 million to $1,720 million and segment income increased $123 million to $196 million in the third quarter of fiscal 2013 compared to the prior year quarter. The increased sales and earnings are primarily related to higher selling prices and volumes and increased synergies that were partially offset by higher commodity and other costs. In addition, as a result of the previously disclosed restructuring and extension of a steam supply contract for its Jacksonville recycled containerboard mill, RockTenn recorded a $0.10 per share non-cash gain in the quarter by reducing amortization expense. Corrugated Packaging segment EBITDA margin was 17.3% for the third quarter of fiscal 2013.

Consumer Packaging segment net sales increased $16 million and segment income declined $8 million in the third quarter of fiscal 2013 compared to the prior year quarter primarily as generally lower selling prices and higher virgin fiber and energy costs more than offset higher volumes and lower recycled fiber costs. Consumer Packaging segment EBITDA margin was 15.7% for the third quarter of fiscal 2013.

Recycling segment net sales decreased $64 million over the prior year third quarter to $275 million primarily as a result of lower volume and pricing. Segment income was relatively flat at $2 million in the third quarter of fiscal 2013 compared to the prior year quarter. Recycling segment EBITDA margin was 1.9% for the third quarter of fiscal 2013.

Cash provided by operations was $270 million in the third quarter of fiscal 2013, after pension funding in excess of expense of $45 million.