ATLANTA, Feb. 29 /PRNewswire-FirstCall/ -- Caraustar Industries, Inc. (NASDAQ:CSAR) today announced that sales from continuing operations for the fourth quarter ended December 31, 2007 were $203.9 million compared to sales of $203.0 million for the same quarter in 2006. Loss from continuing operations for the fourth quarter of 2007 was $7.0 million, or $0.25 per share, compared to a 2006 fourth quarter loss of $10.8 million, or $0.38 per share. The fourth quarter 2007 and 2006 results from continuing operations included restructuring and impairment costs of approximately $3.5 million and $12.4 million, of which $3.3 million and $4.1 million were cash charges, respectively. The effect of restructuring and impairment costs on earnings per share from continuing operations was $0.08 per share and $0.27 per share for the fourth quarters of 2007 and 2006, respectively. Also included in the fourth quarter of 2007 loss from operations were pre-tax charges of $1.8 million, or $0.04 per share, related to a customer bankruptcy. The $6.9 million improvement in pre-tax operating loss was primarily attributable to lower restructuring and impairment costs.
Paperboard volume as recorded by the company declined 22.2 thousand tons, or 9.3 percent, in the fourth quarter 2007 versus the fourth quarter 2006. Driving the decline was a reduction in outside paperboard purchased (-9.1 thousand tons), the closure of the Lafayette, IN and Reading, PA mills (-9.4 thousand tons) and lower gypsum facing paper production from our Premier Boxboard Limited (PBL) joint venture (-7.1 thousand tons) attributable to the decline in the housing market. Partly offsetting these reductions was an increase in same-mill uncoated recycled boxboard (URB) volume of 3.2 thousand tons. Containerboard volume sold at our PBL joint venture was up 24.3 thousand tons in the same period but historically has not been included in the company's volume reporting. Industry volume was down 3.8 percent overall. Caraustar URB mill utilization, however, was 91.0 percent versus industry utilization of 90.3 percent.
For the year ended December 31, 2007, sales from continuing operations were $854.2 million, a decrease of 8.4 percent from sales of $933.0 million in 2006. Loss from continuing operations was $0.62 per share for the year ended December 31, 2007. Income from continuing operations for the year ended December 31, 2006 was $1.82 per share. The following table presents the earnings per share impact of restructuring costs and other significant transactions during 2007 and 2006: Full Year
2007 2006
Restructuring and Impairment Costs $(0.29) $(0.82)
Gain on Sale of Standard Gypsum - 2.93
Loss on Redemption of Debt - (0.22)
Accelerated Depreciation Expense (0.01) (0.13) The $106.3 million decrease in pre-tax operating results was primarily attributable to the gain on sale of the company's 50-percent partnership interest in Standard Gypsum, L.P. in 2006, a loss on redemption of debt in 2006, lower restructuring and impairment costs in 2007 and a decrease in equity in income of unconsolidated affiliates in 2007.
Michael J. Keough, president and chief executive officer of Caraustar, commented, "The company has worked hard to replace volume impacted by a slowing U.S. economy. During the fourth quarter, our gypsum facing paper mills operated near capacity by producing alternate paper grades (tube and core grades at our Sweetwater mill and containerboard grades at our PBL joint venture), and our same-mill URB volume was up slightly over prior year. Capacity utilization for the industry continues in the low 90 percentiles. We are still challenged by high fiber and energy costs, which compressed margins $17 a ton in our mill group in the fourth quarter. As a result of continued cost pressures, we announced price increases for URB ($40/ton) and converted products (8%) in the first quarter 2008.
"We continue to invest in our core businesses, which is exemplified by the upgrade at our Sweetwater mill for tube and core grades, improvements at Austell Mill One for book stock, the new baler and shredder at our RFG facility in Texarkana, four new high-speed tube and core winders, one new edge protector line, two new folding carton presses and the recent acquisition of the assets of Mayers Fibre Tube and Core in Winnipeg, Canada. At our PBL joint venture, we have had a number of successful trials for higher margin white-top linerboard for our partner, Temple-Inland. As we refine production, we expect that this additional product line will complement PBL's production of gypsum facing paper and other containerboard products. We believe that PBL will provide improved performance in 2008 versus 2007.
"Despite market pressures, we continue to refine and redefine the company to operate in these challenging times." Joint Ventures Caraustar's 50-percent owned interest in the Premier Boxboard Limited (PBL) mill contributed $0.8 million in equity in income from unconsolidated affiliates in the fourth quarter 2007 versus $0.4 million in the fourth quarter of 2006. Cash distributions were $3.0 million compared to zero for the same period last year. Both the increase in earnings and cash distributions were attributable to increased containerboard volume which offset the decline in gypsum facing paper volume.
Liquidity The company ended the year with a cash balance of $6.5 million compared to $1.0 million at the end of 2006. During 2007, Caraustar generated $0.4 million of cash in operating activities, compared to cash used from operations of $3.1 million the previous year. This increase was primarily attributable to a $12.6 million decrease in working capital, a $13.8 million reduction in cash payments for interest, partially offset by a decrease in distributions from PBL of $4.0 million, an $11.9 million increase in pension contributions and reduced income from operations before restructuring and impairment costs of $5.9 million. Cash proceeds from asset sales of approximately $28.7 million received in 2007 also supplemented liquidity. Capital expenditures decreased year-over-year from $38.2 million to $26.6 million in 2007. The $11.6 million decrease was primarily due to unusually large investments in 2006 that were completed in 2007. Those major investments that commenced in 2006 included significant machinery and equipment upgrades in our mill and carton systems, development and implementation of ERP (Enterprise Resource Planning) systems, and $1.7 million associated with the buyout of leased equipment precipitated by the sale of the partition business in the first quarter of 2006. Capital expenditures in 2008 are expected to be less than $15 million.
As of December 31, 2007, the company had $10.3 million in borrowings outstanding under the revolving portion of its Senior Credit Facility and $15.0 million of letters of credit outstanding that reduce availability. As of December 31, 2007, the company had availability under the revolving portion of the Senior Credit Facility of $31.3 million.
Caraustar Industries, Inc. will host a conference call to review fourth quarter and full-year 2007 financial results on Friday, February 29, 2008 beginning at 9:00 a.m. (EST) that will be webcast live. In order to listen to the webcast of its conference call, participants can log on to the Caraustar website at http://www.caraustar.com/ and look for the webcast button/icon on the "Investor Relations" page.
Caraustar Industries, Inc. (NASDAQ:CSAR), a recycled packaging company, is one of the world's largest integrated manufacturers of converted recycled paperboard. The company is a socially responsible corporation, is committed to environmentally sound practices and is dedicated to providing customers with outstanding value through innovative products and services. Caraustar has developed its leadership position in the industry through diversification and integration from raw materials to finished products. Caraustar serves the four principal recycled boxboard product end-use markets: tubes and cores; folding cartons; gypsum facing paper and specialty paperboard products. For additional information on Caraustar, please visit the company's website at http://www.caraustar.com/.
This press release contains certain "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, that represent the company's expectations, anticipations or beliefs about future events, operating results, financial condition, business plans and industry trends and their potential impact on the company's business and financial results. Statements that are not statements of historical fact, as well as statements including words such as "expect," "intend," "will," "believe," "estimate," "project," "budget," "forecast," "anticipate," "plan," "may," "would," "could," "should," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to differ materially from results expressed or implied by such statements. Such risk factors include, among others: fluctuations in raw material prices and energy costs, increases in pension and insurance costs, downturns in industrial production, housing and construction and the consumption of durable and nondurable goods, the degree and nature of competition, the degree of market receptiveness to price increases and energy surcharges, changes in demand for the company's products, the degree of success achieved by the company's new product initiatives, uncertainties related to the company's ability to successfully complete its announced strategic transformation plan, future financing plans and needs, the impact on the company of its results of operation in recent years and the sufficiency of its financial resources to absorb the impact, changes in government regulations, the company's ability to service its substantial indebtedness, and unforeseen difficulties with the consolidation, integration of the company's accounting and control operations and IT systems. Additional relevant risk factors that could cause actual results to differ materially are discussed in the company's registration statements and its most recent reports on Form 10-K, 10-Q and 8-K, as amended, filed with or furnished to, the Securities Commission. These documents may be accessed through the web site of the Securities and Exchange Commission (http://www.sec.gov/). The company does not undertake any obligation to update any forward-looking statements and is not responsible for any changes made to this press release by wire or Internet services.
Caraustar Industries, Inc. Unaudited Supplemental Data Volume Sold (tons): In thousands
Q4 2007 Q3 2007 Q2 2007 Q1 2007 Q4 2006 CSAR Mill Tons Sold (Market) * 101.5 111.4 112.5 117.6 119.7
CSAR Mill Tons Converted 82.1 83.7 86.4 79.7 77.0
Total CSAR Mill Tons * 183.6 195.1 198.9 197.3 196.7
Outside Paperboard Purchased 32.2 38.6 40.3 41.5 41.3
Total Paperboard Controlled * 215.8 233.7 239.2 238.8 238.0 Tube & Core Tons 74.4 77.4 77.6 75.6 76.2
Folding Carton Tons 52.0 55.4 56.8 57.7 56.5
Gypsum Paper Tons * 44.6 50.1 52.0 50.5 51.3
Other Specialty Tons * 44.8 50.8 52.8 55.0 54.0
Total Paperboard Controlled * 215.8 233.7 239.2 238.8 238.0 PBL gypsum facing and other
specialty paper sold * 28.0 35.0 36.3 35.8 35.1
Changes in Selling Price and Costs ($/ton): Q4 2007 vs. Q4 2006 Q4 2007 vs. Q3 2007 Mill Average Selling Price $33.1 ($1.5)
Mill Average Fiber Cost 52.2 3.6
Mill Average Fuel & Energy Cost (2.5) 7.1
Net Decrease ($16.6) ($12.2) Tubes and Cores Average Selling Price $43.3 $0.0
Tubes & Cores Average Paperboard Cost 36.1 (4.1)
Net Increase $7.2 $4.1
Reconciliation of Net Cash Provided by (Used in) Operations to Earnings
Before Interest, Taxes, Depreciation and Amortization (as defined by our
Senior Credit Facility Agreement): In thousands
Q4 2007 Q3 2007 Q2 2007 Q1 2007 Q4 2006
Net cash provided by (used in)
operating activities $5,909 $6,755 $(4,381) $(7,847) $(6,963)
Changes in working capital
items and other (11,523) (2,188) 7,211 2,400 6,914
Benefit for income taxes (3,923) (1,289) (1,533) (3,290) (8,069)
Change in deferred taxes 4,029 1,438 1,616 3,414 6,009
Interest expense 4,401 4,880 4,829 4,650 4,391
Return of investment in
unconsolidated affiliates 1,797 - - - - EBITDA ** $690 $9,596 $7,742 $(673) $2,282
* Includes gypsum facing and other specialty paper sold by Caraustar's
50%-owned, unconsolidated Premier Boxboard ("PBL") joint venture.
** This item is not a financial measure under generally accepted
accounting principals (GAAP) in the United States. Because this item is
not a GAAP financial measure, other companies may present similarly
titled items determined with differing adjustments. Accordingly, this
measure as presented should not be used to evaluate the Company's
performance by comparison to any similarly titled measures presented by
other companies. The Company has included this non-GAAP financial
measure because it uses this measure, and believes this measure is
useful in evaluating the Company's ongoing comparable operating
results, cash position and its ability to generate cash. The tables
above include a reconciliation of this non-GAAP financial measure with
the most comparable GAAP measurement. Investors are strongly urged to
review these reconciliations. In addition, the exclusion of certain
adjustment items in the calculation of these non-GAAP measures does not
imply that such items are non-recurring, infrequent or unusual. The
Company has experienced such items in prior periods, and may experience
similar items in future periods.
CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data) For The Three Months Ended For The Years Ended
December 31, December 31,
2007 2006 2007 2006 Sales $203,915 $203,033 $854,219 $933,044
Cost of goods sold 182,481 178,519 747,780 801,351
Selling, general and
administrative expenses 25,855 26,521 103,193 122,529
(Loss) income from
operations before
restructuring and
impairment costs (4,421) (2,007) 3,246 9,164
Restructuring and
impairment costs 3,516 12,391 13,183 37,790
Loss from operations (7,937) (14,398) (9,937) (28,626)
Other (expense) income:
Interest expense (4,401) (4,391) (18,760) (25,913)
Interest income 50 95 208 3,829
Equity in income of
unconsolidated affiliates 826 507 1,770 5,613
Loss on redemption
of senior
subordinated notes - - - (10,272)
Gain on sale of interest
in unconsolidated affiliates - - 19 135,247
Other, net 196 (18) 370 52
(3,329) (3,807) (16,393) 108,556
(Loss) income from
continuing operations
before income taxes
and minority interest (11,266) (18,205) (26,330) 79,930
Benefit (provision)
for income taxes 4,276 7,430 8,712 (27,984)
Minority interest
in income - - - (102)
(Loss) income from
continuing operations (6,990) (10,775) (17,618) 51,844 Discontinued operations:
Income (loss) from
discontinued operations
before income taxes 569 (2,356) (8,221) (6,809)
(Provision) benefit for
income taxes of
discontinued operations (353) 639 1,323 2,297
Income (loss) from
discontinued operations 216 (1,717) (6,898) (4,512) Net (loss) income $(6,774) $(12,492) $(24,516) $47,332 Basic (loss) income per
common share
Continuing operations $(0.25) $(0.38) $(0.62) $1.82
Discontinued operations $0.01 $(0.06) $(0.24) $(0.16)
Net (loss) income $(0.24) $(0.44) $(0.86) $1.66
Weighted average number
of shares outstanding 28,640 28,595 28,621 28,575 Diluted (loss) income per
common share
Continuing operations $(0.25) $(0.38) $(0.62) $1.82
Discontinued operations $0.01 $(0.06) $(0.24) $(0.16)
Net (loss) income $(0.24) $(0.44) $(0.86) $1.66
Diluted weighted average
number of shares
outstanding 28,640 28,595 28,621 28,607 CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands) December 31, December 31,
2007 2006
ASSETS
Current assets:
Cash and cash equivalents $6,548 $1,022
Receivables, net of allowances 74,207 85,577
Inventories 65,412 75,041
Refundable income taxes 104 172
Current deferred tax assets 5,841 9,272
Other current assets 7,061 8,354
Assets of discontinued operations
held for sale 96 -
Total current assets 159,269 179,438 Property, plant and equipment:
Land 9,803 10,316
Buildings and improvements 83,685 93,275
Machinery and equipment 402,968 436,705
Furniture and fixtures 32,345 29,975
528,801 570,271
Less accumulated depreciation (288,892) (306,666)
Property, plant and equipment, net 239,909 263,605 Goodwill 122,542 127,574 Investment in unconsolidated affiliates 39,117 41,574 Other assets 11,183 12,084 $572,020 $624,275 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Current maturities of debt $5,830 $5,830
Accounts payable 63,968 65,033
Accrued interest 1,773 1,482
Accrued compensation 9,828 10,127
Accrued pension 496 271
Capital lease obligations 72 544
Other accrued liabilities 20,913 27,187
Total current liabilities 102,880 110,474 Long-term debt, less current maturities 253,012 260,092
Long-term capital lease obligations 14 91
Deferred income taxes 34,082 43,315
Pension liability 27,980 38,854
Other liabilities 14,233 9,863 Shareholders' equity
Common stock 2,947 2,909
Additional paid-in capital 192,978 191,411
Retained deficit (35,127) (7,502)
Accumulated other comprehensive loss (20,979) (25,232)
Total shareholders' equity 139,819 161,586
$572,020 $624,275 CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands) For the Years Ended
December 31, December 31,
2007 2006
Operating activities:
Net (loss) income $(24,516) $47,332
Depreciation and amortization 19,907 24,171
Equity-based compensation expense 1,335 1,795
Loss on redemption of senior
subordinated notes - 10,272
Restructuring and impairment costs 9,693 28,678
Deferred income taxes (10,497) 23,702
Gain on sale of interest in
unconsolidated affiliates (19) (135,247)
Loss on sale of assets held for sale - 4,862
Equity in income of
unconsolidated affiliates (1,770) (5,613)
Distributions from
unconsolidated affiliates 2,203 5,080
Changes in operating assets and
liabilities, net of acquisitions 4,100 (8,146)
Net cash provided by (used in)
operating activities 436 (3,114) Investing activities:
Purchases of property, plant
and equipment (26,601) (38,169)
Proceeds from disposal of
property, plant and equipment 7,054 3,554
Proceeds from sale of assets
held for sale 21,680 26,336
Acquisition of businesses, net
of cash acquired - (11,059)
Changes in restricted cash (147) 14,841
Net proceeds from the sale of
interest in unconsolidated affiliates 161 148,460
Return of investment in
unconsolidated affiliates 1,838 2,920
Investment in unconsolidated affiliates (78) -
Net cash provided by investing activities 3,907 146,883 Financing activities:
Proceeds from senior credit
facility - revolver 143,160 74,027
Repayments of senior credit
facility - revolver (137,821) (69,027)
Proceeds from senior credit
facility - term loan - 35,000
Repayments of senior credit
facility - term loan (11,063) (3,889)
Repayments of long-term debt - (272,474)
Proceeds from note payable 7,436 -
Deferred debt costs - (1,139)
Payments for capital lease obligations (549) (504)
Issuances of stock, net of forfeitures 20 107
Net cash provided by (used in)
financing activities 1,183 (237,899) Net change in cash and cash equivalents 5,526 (94,130)
Cash and cash equivalents at
beginning of period 1,022 95,152
Cash and cash equivalents at end
of period $6,548 $1,022 Supplemental Disclosures: Cash payments for interest $20,876 $34,643
Income tax payments, net of refunds $300 $2,520
Property acquired under capital leases $- $36
CONTACT: Ronald J. Domanico
Senior Vice President and
Chief Financial Officer
(770) 948-3101
DATASOURCE: Caraustar Industries, Inc.
CONTACT: Ronald J. Domanico, Senior Vice President and Chief Financial Officer, of Caraustar Industries, Inc., +1-770-948-3101 Web site: http://www.caraustar.com/
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