Neenah Paper Reports 2007 Third Quarter Results



    ALPHARETTA, Ga., Nov. 7 /CNW/ -- Neenah Paper, Inc. (NYSE:   NP) today
reported income from continuing operations for the third quarter 2007 of $16.5
million, or $1.08 per diluted common share, compared with income from
continuing operations of $4.6 million, or $0.31 per diluted common share, for
the third quarter of 2006. Consolidated net income in the third quarter of
2007 included a reduction of income tax expense of $8.9 million, or $0.59 per
diluted common share, due to a decrease in deferred tax liabilities as a
result of newly enacted lower German statutory tax rates. Consolidated net
sales of $251.9 million for the third quarter 2007 increased almost 80 percent
versus the prior year, and operating income of $16.3 million in the current
quarter was 55 percent ahead of prior year levels. Results in 2007 include the
Company's acquisitions of Neenah Germany and the Fox River Paper Company.
    Fine Paper quarterly net sales in 2007 of $95.3 million increased 77
percent, from $53.8 million last year, primarily due to higher volumes from
the addition of Fox River. Operating income was $9.3 million in the third
quarter of 2007, compared to $12.8 million in the third quarter of 2006.
Operating income in the current quarter reflected integration costs associated
with implementing a new manufacturing footprint following the closure of the
former Fox River Housatonic and Urbana paper mills, as well as the impact of
annual maintenance downs at the Company's four remaining fine paper mills.
Higher selling prices in 2007 were not able to offset increased costs for
pulp, distribution and other inputs.
    Technical Products net sales were $99.9 million in the third quarter of
2007, compared to $33.5 million in the same period last year. The increase was
primarily due to the Neenah Germany acquisition, although net sales also
benefited from an improved mix and higher selling prices in the domestic
business. Operating income for the third quarter of 2007 was $3.2 million, up
from $0.9 million in the third quarter of 2006. Third quarter results tend to
be lower compared to other quarters due to scheduled mill maintenance downs
and lower customer demand in the second half of the year. The higher operating
income in 2007 compared with 2006 was primarily due to the inclusion of Neenah
Germany. Benefits of the improved mix and higher selling prices in domestic
operations were offset by higher costs for pulp, distribution and energy.
    Net sales for Pulp in the third quarter of 2007 were $56.7 million, an
increase of five percent from $54.2 million for the same period of 2006. Sales
grew as a result of higher market selling prices in 2007 and the absence of
pulp hedging losses, which reduced net sales by $4.3 million in 2006. These
factors offset an 11 percent decline in volume compared with unusually high
shipments in the third quarter of 2006. The pulp segment achieved operating
income of $6.7 million in the quarter, compared with an operating loss of $0.3
million in 2006. The increase in income resulted from the higher selling
prices, strong mill performance, the absence of pulp hedge losses and lower
distribution costs that were able to offset negative impacts of a
significantly stronger Canadian dollar, increased fiber costs and lower sales
volumes.
    Commenting on results, Sean Erwin, Chairman and Chief Executive Officer
said, "Third quarter paper results reflect the scheduled annual mill
maintenance downs and an external landscape that remains challenging due to
higher input costs. Recently implemented selling price increases for most
paper products and efficiency gains should help to mitigate these impacts. In
addition, we are continuing to make progress on key initiatives to integrate
and deliver synergies from the Fox River and Neenah Germany purchases and to
optimize our product mix. In pulp, our teams and the mill continue to perform
well and the Pictou operation was again profitable despite the stronger
Canadian dollar and weakness in the lumber market that is impacting the price
of wood chips."
    Selling, general and administrative expense was $20.5 million in the
third quarter of 2007, compared with $13.1 million in the third quarter of
2006. The increase was primarily due to incremental expenses of acquired
companies. However, as a percent of net sales, selling, general and
administrative expense declined from 9.3 to 8.1 percent. Net interest expense
of $6.4 million in the third quarter of 2007 increased from $2.8 million in
the third quarter of 2006 as a result of added borrowings to finance
acquisitions. Net debt in the quarter was reduced by $13 million from second
quarter levels. Tax expense in the third quarter 2007 was significantly lower
than the prior year due to the previously mentioned $8.9 million credit
related to the statutory rate change in Germany.
    
    Discontinued Operations
    
    The Company's Terrace Bay pulp and woodlands operations, excluding
certain post-retirement obligations, were transferred to Terrace Bay Pulp Inc.
and Eagle Logging Inc. in August 2006. Results from Terrace Bay have been
classified as discontinued operations for all periods presented. Losses for
discontinued operations in the third quarter of 2007 were $1.1 million due to
expenses for certain post-employment obligations of former Terrace Bay
employees. In the third quarter of 2006, there was a net loss of $19.0 million
from discontinued operations, including losses related to the sale of the
facility and curtailment and partial settlement of the Ontario pension plan.
    
    Year-To-Date
    
    Year-to-date consolidated net sales through the third quarter were $734.7
million in 2007 and $417.1 million in 2006. Higher sales in 2007 resulted from
acquisitions and improved selling prices in all product segments. For the same
nine month period, income from continuing operations was $35.0 million, or
$2.31 per diluted common share in 2007, compared to $92.2 million, or $6.22
per diluted common share, in the prior year.
    Results in 2007 and 2006 included gains of $0.18 and $5.17 per diluted
common share, respectively, related to the sale of timberlands; and 2007
results included an additional $0.59 per diluted common share for the impact
of the change in German tax rates on deferred tax liabilities. Excluding these
items, adjusted earnings per diluted common share for the first nine months of
2007 increased almost 50 percent, from $1.05 in 2006 to $1.54 in 2007. These
adjusted earnings are a non-GAAP measure and are reconciled to GAAP earnings
in a table that can be found at the end of this release.
    Adjusted earnings per share increased in 2007 as a result of additional
earnings from acquired businesses, an improved Technical Products mix, higher
pulp earnings and a decline in the effective tax rate due to changes in
corporate structure in connection with the acquisition of Neenah Germany and
the mix of income between tax jurisdictions.
    Losses from discontinued operations were $0.15 per diluted common share
for the first nine months of 2007 and $2.19 per diluted common share for the
same period in 2006.
    
    CONFERENCE CALL
    
    As previously announced, Neenah Paper will hold a conference call to
discuss third quarter earnings and other matters of interest at 11 a.m.
(Eastern) on Thursday, November 8. The call will be simultaneously broadcast
via the internet, and stockholders and other interested parties are invited to
listen to the live broadcast or participate in the call by following the
instructions set out in the Investor Relations section of the company's Web
site (www.neenah.com). A copy of the press release and related financial
information is also posted on the site, and a replay of the call will be
available at the site through November 30.
    
    About Neenah Paper, Inc.
    
    Neenah Paper manufactures and distributes a wide range of premium and
specialty paper grades, with well-known brands such as CLASSIC(R),
ENVIRONMENT(R), STARWHITE(R), ESSE(R), KIMDURA(R) and MUNISING LP(R),
Gessner(R) and varitess(R). The company also produces and sells bleached pulp,
primarily for use in the manufacture of tissue and writing papers. Neenah
Paper is based in Alpharetta, Georgia, and has paper manufacturing operations
in the United States and Germany, and a pulp mill and related timberlands in
Nova Scotia, Canada. Additional information about Neenah Paper can be found at
the company's web site at www.neenah.com.
    
    Cautionary Note Regarding Forward-Looking Statements
    
    Certain statements in this press release may constitute "forward-looking"
statements as defined in Section 27A of the Securities Act of 1933 (the
"Securities Act"), Section 21E of the Securities Exchange Act of 1934 (the
"Exchange Act"), the Private Securities Litigation Reform Act of 1995 (the
"PSLRA"), or in releases made by the Securities and Exchange Commission, all
as may be amended from time to time. Statements contained in this press
release that are not historical facts may be forward-looking statements within
the meaning of the PSLRA. Any such forward-looking statements reflect our
beliefs and assumptions and are based on information currently available to us
and are subject to risks and uncertainties that could cause actual results to
differ materially including, but not limited to, changes in U.S./Canadian
dollar, U.S. dollar/Euro and other currency exchange rates, changes in pulp
prices, the cost or availability of raw materials, unanticipated expenditures
related to the cost of compliance with environmental and other governmental
regulations, the ability of the company to realize anticipated cost savings,
and the successful integrations of the former Fox River business and Neenah
Germany operations. Forward-looking statements are only predictions and
involve known and unknown risks, uncertainties and other factors that may
cause our actual results, performance or achievements, or industry results, to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. We undertake no
obligation to publicly update any forward-looking statements, whether as a
result of new information, future events or otherwise.  These cautionary
statements are being made pursuant to the Securities Act, the Exchange Act and
the PSLRA with the intention of obtaining the benefits of the "safe harbor"
provisions of such laws. Neenah Paper, Inc. cautions investors that any
forward-looking statements we make are not guarantees or indicative of future
performance.



    
                        NEENAH PAPER INC AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In millions, except share and per share data)
                                   (Unaudited)
    

    
                                         Three Months Ended  Nine Months Ended
                                           September 30,       September 30,
                                           2007     2006       2007     2006
    

    
    Net Sales                              $251.9   $141.4   $734.7   $417.1
    Cost of products sold                   219.2    121.4    627.8    347.5
          Gross Profit                       32.7     20.0    106.9     69.6
    Selling, general and administrative
     expenses                                20.5     13.1     60.3     40.0
    Gain on sale of woodlands                (1.6)    (1.5)    (4.5)  (124.1)
    Other income - net                       (2.5)    (2.1)    (4.2)    (5.7)
          Operating Income                   16.3     10.5     55.3    159.4
    Interest expense-net                      6.4      2.8     18.9     11.4
          Income From Continuing
           Operations
          Before Income Taxes                 9.9      7.7     36.4    148.0
    (Benefit) provision for income taxes     (6.6)     3.1      1.4     55.8
          Income From Continuing
           Operations                        16.5      4.6     35.0     92.2
          Loss From Discontinued
           Operations                        (1.1)   (19.0)    (2.3)   (32.4)
          Net Income (Loss)                 $15.4   $(14.4)   $32.7    $59.8
    


    
    Earnings (Loss) Per Common Share:
    Basic
          Continuing Operations             $1.10    $0.31    $2.35    $6.25
          Discontinued Operations           (0.07)   (1.29)   (0.15)   (2.20)
                                            $1.03   $(0.98)   $2.20    $4.05
    

    
    Diluted
          Continuing Operations             $1.08    $0.31    $2.31    $6.22
          Discontinued Operations           (0.07)   (1.28)   (0.15)   (2.19)
                                            $1.01   $(0.97)   $2.16    $4.03
    

    
    Weighted Average Common
          Shares Outstanding (000s)
          Basic                            14,924   14,756   14,857   14,749
    

    Diluted                          15,213   14,846   15,147   14,823



    
                        NEENAH PAPER INC AND SUBSIDIARIES
                          SELECTED FINANCIAL INFORMATION
                   Reconciliation of Non-GAAP Disclosure Items
                       (In millions, except per share data)
    

    
    Reconciliation of consolidated operating income to adjusted operating
    income:
    

    
                                      Three Months Ended     Nine Months Ended
                                         September 30,         September 30,
                                        2007       2006       2007       2006
    

    
    Operating income                   $16.3      $10.5      $55.3     $159.4
    Subtract: Gain on sale of
     woodlands                          (1.6)      (1.5)      (4.5)    (124.1)
    Adjusted operating income          $14.7       $9.0      $50.8      $35.3
    

    
    Reconciliation of net income
     to adjusted net income:
    

    
                                      Three Months Ended     Nine Months Ended
                                         September 30,         September 30,
                                        2007       2006       2007       2006
    

    
    Net Income (Loss)                  $15.4     $(14.4)     $32.7      $59.8
    Add (subtract):
         After-tax gain on sale of
          woodlands                     (1.0)      (0.9)      (2.8)     (76.6)
         Benefit from change in
          German tax law                (8.9)        -        (8.9)        -
         Loss from discontinued
          operations, net of tax         1.1       19.0        2.3       32.4
    Adjusted net income                 $6.6       $3.7      $23.3      $15.6
    

    
    Reconciliation of earnings per
     share to adjusted earnings
     per share:
    

    
                                       Three Months Ended    Nine Months Ended
                                         September 30,         September 30,
                                        2007       2006       2007       2006
    

    
    Earnings Per Diluted Common
     Share                             $1.01     $(0.97)     $2.16      $4.03
    Add (subtract):
         After-tax gain on sale of
          woodlands                    (0.06)     (0.06)     (0.18)     (5.17)
         Benefit from change in
          German tax law               (0.59)       -        (0.59)       -
         Loss from discontinued
          operations, net of tax        0.07       1.28       0.15       2.19
    

    
    Adjusted earnings from
     continuing operations per
     diluted common share              $0.43      $0.25      $1.54      $1.05
    

    
    Notes:
         In accordance with generally accepted accounting principles in the
         United States ("GAAP"), reported net income and earnings per diluted
         share include the after-tax effects of discontinued operations and
         unusual and non-recurring items. In addition, reported operating
         income includes the pre-tax effects of non-recurring items.  We
         believe that by adjusting such reported amounts to exclude the
         effects of these items, the resulting adjusted operating income,
         adjusted net income and adjusted earnings per share are on a basis
         that reflects the results of our ongoing operations.  Adjusted
         operating income, adjusted net income and adjusted earnings per share
         are not recognized terms under GAAP and should not be considered in
         isolation or as a substitute for operating income, effective tax
         rate, net income, earnings per share or any other performance
         measures derived in accordance with GAAP.  Other companies may use
         different methodologies for calculating their non-GAAP financial
         measures and, accordingly, the Company's non-GAAP financial measures
         may not be comparable to their measures.
    



    
                        NEENAH PAPER INC AND SUBSIDIARIES
                             SELECTED FINANCIAL DATA
                                  (In millions)
                                   (Unaudited)
    

    
                                         Three Months Ended  Nine Months Ended
                                            September 30,      September 30,
    Business Segment Data                  2007      2006     2007      2006
    

    
    Net Sales:
      Fine Paper                            $95.3    $53.8   $271.2   $169.2
      Technical Products                     99.9     33.5    303.1    100.3
      Pulp                                   56.7     54.2    160.7    149.4
      Intersegment Sales                       -      (0.1)    (0.3)    (1.8)
         Consolidated                      $251.9   $141.4   $734.7   $417.1
    

    
    Operating Income (Loss):
      Fine Paper                             $9.3    $12.8    $34.9    $43.9
      Technical Products                      3.2      0.9     22.1      5.8
      Pulp                                    6.7     (0.3)     8.6    119.2
      Unallocated corporate expenses         (2.9)    (2.9)   (10.3)    (9.5)
         Consolidated                       $16.3    $10.5    $55.3   $159.4
    


    Balance Sheet Data                   September 30, 2007  December 31,
2006

    
    Cash and cash equivalents                         $6.2              $1.6
    Adjusted working capital(1)                      151.2              92.6
    Total debt                                       339.2             283.6
    Stockholders' equity                             262.1             184.9
    Total assets                                     931.8             744.7
    


    Nine Months Ended September 30,

    Cash Flow Data                                 2007              2006

    
    Cash provided by operating activities            $44.5             $52.7
    Depreciation and amortization                     33.5              21.0
    Stock-based compensation                           5.1               3.9
    Capital expenditures                              37.2              15.4
    Pension contributions(2)                           6.3              21.0
    

    
    Notes:
    (1) Adjusted working capital consists of all current assets and current
        liabilities, net of cash (including restricted cash) and debt payable
        within one year.
    (2) Cash contributions to pension trusts, including $10.6 million in
        August 2006 for partial settlement of the Ontario plan.
    




For further information:

For further information: Bill McCarthy, Vice President - Financial 
Analysis and Investor Relations of Neenah Paper, Inc., +1-678-518-3278 Web
Site: http://www.neenah.com/

Organization Profile

NEENAH PAPER, INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890