RockTenn Reports 2Q Fiscal 2014 Earnings

RockTenn reported earnings for the quarter ended March 31, 2014 of $1.13 per diluted share and adjusted earnings of $1.27 per diluted share. Adjusted earnings per diluted share increased 13% over the prior year quarter.

Net sales of $2,394 million for the second quarter of fiscal 2014 increased $69 million compared to the second quarter of fiscal 2013. Segment income of $202 million increased $28 million or 16% over the prior year quarter, despite an estimated $44 million pre-tax adverse impact, or $0.38 per diluted share, related to severe weather on the second quarter of fiscal 2014, as compared to expectations coming into the quarter.

“Our 16% increase in segment income reflects well on our team’s performance in an environment of severe weather during the March quarter,” said RockTenn CEO Steve Voorhees. “We generated $227 million of cash from operations and $171 million of free cash flow, or $2.34 per share, which is a 40% increase over the prior year quarter. We reduced our leverage ratio from 1.84 to 1.75 times; our balance sheet provides us with the wherewithal to invest in our business and continue to generate attractive free cash flow returns.”

Corrugated Packaging segment net sales increased $44 million to $1,652 million and segment income increased $26 million to $133 million in the second 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, higher commodity and other costs due to the severe weather in the second quarter of fiscal 2014. Corrugated Packaging segment EBITDA margin was 15.2% for the second quarter of fiscal 2014 up 130 basis points over the prior year quarter.

Consumer Packaging segment net sales increased $21 million to $489 million in the second quarter of fiscal 2014 compared to the prior year quarter due to higher selling prices and volumes. Segment income of $49 million in the second quarter of fiscal 2014 was impacted primarily by the higher selling prices and volumes which were more than offset by the impact of higher commodity costs and other items due to the severe weather in the second quarter of fiscal 2014. Consumer Packaging segment EBITDA margin was 14.6% for the second quarter of fiscal 2014, down slightly compared to the prior year quarter.

Merchandising Displays segment net sales increased $51 million over the prior year second quarter to $213 million primarily due to higher volumes and the full quarter impact of a specialty display acquisition completed last quarter. Segment income increased $4 million in the second quarter of fiscal 2014 compared to the prior year quarter primarily due to the impact of higher volumes. Merchandising Displays segment EBITDA margin was 10.0% for the second quarter of fiscal 2014 up 50 basis points over the prior year quarter.

Recycling segment net sales decreased $41 million over the prior year second quarter to $90 million primarily due to lower volumes as a result of soft markets for recovered fiber and several collection facility closures during the past year. Segment income decreased $1 million in the second quarter of fiscal 2014 compared to the prior year quarter primarily due to the impact of lower volumes and market conditions which were partially offset by the impact of cost structure improvements.