Buckeye Technologies Inc. (NYSE:BKI) today announced earnings for fiscal year 2013. Net sales for the year were $812 million, down $82 million or 9% compared to net sales from continuing operations in fiscal 2012. Specialty Fibers external sales were down $72 million or 11% due to a small drop in shipment volume, lower fluff pulp and specialty cotton fibers pricing, and unfavorable sales mix due to weak market conditions in Europe. Nonwovens sales were down $10 million entirely due to the sale of the Merfin Systems converting business in mid-fiscal year 2012.

Adjusted net income* for the 2013 fiscal year was $92 million or $2.32 per share, compared to a record $111 million or $2.76 per share in fiscal 2012, and the previous record net income of $91 million or $2.23 per share in fiscal 2011. The two biggest drivers of the reduction in adjusted net income between fiscal years 2012 and 2013 were lower fluff pulp prices and unfavorable sales mix in the specialty fibers segment, where operating income was down $34 million year over year. Operating income for the nonwoven materials segment was up $9 million in fiscal year 2013 compared to fiscal year 2012 due to a large reduction in fixed manufacturing costs resulting from the closure of our Delta, B.C., Canada airlaid facility in December 2012.

Fourth quarter net sales were $216 million, down $9 million or 4% versus net sales of $225 million in the fourth quarter of fiscal 2012. While shipment volume was up 9%, driven by increased shipments from our Foley wood fibers facility, this was offset by unfavorable mix and lower selling prices in our specialty fibers segment.

Fourth quarter adjusted net income* was $23.0 million or $0.58 per share. This excludes net after-tax charges of $5.0 million, or $0.13 per share, primarily relating to the pending merger with Georgia-Pacific and adjustments related to the CBC fuel tax credit. Adjusted net income* was down compared to the prior year's $26.2 million or $0.66 per share, which excluded net income of $2.3 million, or $0.05 per share, primarily consisting of adjustments relating to the cellulosic biofuel credit. This $3.2 million reduction in adjusted net income* was mainly driven by unfavorable sales mix and by lower selling prices for fluff and specialty wood pulp. We generated $61.4 million in net cash provided by operating activities during the quarter, invested $30.2 million in capital projects (including $15.5 million on the oxygen delignification and specialty conversion projects), reduced debt by $21.1 million to $41.2 million, and paid a regular quarterly dividend of $3.5 million. At the end of the quarter our cash and short term investments stood at $58.1 million.

Comparing the fourth quarter to the third quarter of fiscal 2013, sales were up $20 million or 10% as shipment volume was up 15% in our specialty fibers segment and was flat in our nonwovens segment. Adjusted EPS* of $0.58 was up $0.05 versus the third quarter on the increase in shipment volume.

Buckeye, a leading manufacturer and marketer of specialty fibers and nonwoven materials, is headquartered in Memphis, Tennessee, USA. The Company currently operates facilities in the United States and Germany. Its products are sold worldwide to makers of consumer and industrial goods.

Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws and is intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "assumptions," "target," "guidance," "outlook," "plans," "projection," "may," "will," "would," "expect," "intend," "estimate," "anticipate," "believe," "potential," or "continue (or the negative or other derivatives of each of these terms or similar terminology). The "forward-looking statements" include, without limitation, statements regarding the economic outlook for Buckeye and the demand for its products, Buckeye's pending business combination with Georgia-Pacific LLC, the results and timing of Buckeye's strategic investments and growth opportunities and expected levels of cash flow and debt reduction. These statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A discussion of factors that could cause results to vary is included in Buckeye's Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission.

Note Regarding Non-GAAP Financial Measures

*This release includes certain financial information not derived in accordance with generally accepted accounting principles ("GAAP"). The non-GAAP measures presented are "adjusted operating income", "adjusted net income", "and adjusted earnings per share", "free cash flow". The first three measures are equal to operating income, net income and earnings per share excluding the after-tax effects of alternative fuel mixture credits (AFMC) and cellulosic biofuel credits (CBC), goodwill and long-term asset impairment cost, restructuring cost, gain on sale of assets, and GP merger related expenses. "Free cash flow" is equal to net cash provided by operating activities less net cash used in investing activities (excluding purchase of short term investments).

                   

 

($ in Millions)Q4-2013Q4-2012Q3-2013YTD-2013YTD-2012

Operating income

Operating income in accordance with GAAP $27.8 $40.0 $29.9 $121.4 $164.0
Special items:
GP merger related expenses 5.5 --- --- 5.5 ---
Restructuring costs 0.3 --- 0.8 9.9 0.3
Asset and Goodwill impairment---0.30.73.64.5
Adjusted operating income

(Excludes Americana)

$33.6 $40.3 $31.4 $140.4 $168.8

 

Net income

Q4-2013Q4-2012Q3-2013YTD-2013YTD-2012
Net income in accordance with GAAP $18.0 $28.5 $28.3 $88.7 $90.0
Special items, after-tax:
GP merger related expenses 3.6 --- --- 3.6 ---
Gain on sale of assets held for sale --- --- (7.3) (7.3) ---
Earn-out from King sale --- --- (0.2) (0.2) ---
AFMC / CBC 1.1 (3.3) 0.1 (4.4) (10.5)
Restructuring costs 0.3 1.2 0.8 9.6 1.9
Asset and Goodwill impairment---(0.2)(0.7)2.229.6
Adjusted net income $23.0 $26.2 $21.0 $92.2 $111.0

 

Earnings per share (EPS) - Diluted

Q4-2013Q4-2012Q3-2013YTD-2013YTD-2012
EPS in accordance with GAAP $0.45 $0.71 $0.71 $2.23 $2.24
Special items, after-tax, per share:
GP merger related expenses 0.09 --- --- 0.09

---

Gain on sale of assets held for sale --- --- (0.19) (0.19)

---

Earn-out from King sale --- --- --- --- ---
AFMC / CBC 0.03 (0.08) --- (0.11) (0.27)
Restructuring costs 0.01 0.03 0.02 0.24 0.05
Asset and Goodwill Impairment------(0.01)0.060.74
Adjusted EPS $0.58 $0.66 $0.53 $2.32 $2.76
 

($ in Millions)

Q4-2013

Q4-2012

Q3-2013

YTD-2013

YTD-2012

Free Cash Flow

Net cash provided by operating activities $61.4 $87.4 $46.1 $136.2 $171.8
Proceeds from sale of assets 0.2 6.1 19.9 20.1 11.7
Purchases of property, plant & equipment / Other (30.4) (38.9) (27.4) (109.9) (85.4)
Proceeds from insurance settlement related to capital investments---------4.3---
Free Cash Flow $31.2 $54.6 $38.6 $50.7 $98.1
 

Loss from Discontinued Operations

As a result of the disposition of our Americana operations in Q4 2012, we have reported the results of the operations for this business, including the loss recognized from the sale and less applicable income taxes (benefit), in discontinued operations in our consolidated income statement. The table below shows the detail behind the loss from discontinued operations for each period reported in the press release financial statements.

               

($ in Millions)

Q4-2013

Q4-2012

YTD2013

YTD2012

Net Sales $--- $--- $-- $14.3
COGS---0.3---14.9
Gross Margin --- (0.3) -- (0.6)
Asset Impairment Cost --- 0.1 -- 49.2
Other Operating Expense---1.8---2.7
Operating Loss --- (2.2) -- (52.5)
Net Interest Income --- 0.1 -- 0.5
Foreign Exchange & Other---(0.3)---(0.2)
Loss before Tax --- (2.4) -- (52.2)
Income Tax Benefit---(0.5)(1.4)(23.3)
Income (Loss) from Discontinued Operations $--- $(1.9) $1.4 $(28.9)
 

 
BUCKEYE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
                   
 
Three Months Ended Year Ended
June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
 
Net sales $ 215,597 $ 195,562 $ 224,940 $ 812,450 $ 894,881
Cost of goods sold   167,247     152,204     171,877     623,303     677,396  
Gross margin 48,350 43,358 53,063 189,147 217,485
Gross margin as a percentage of sales22.4%22.2%23.6%23.3%24.3%
 
Selling, research and administrative expenses 19,776 11,408 12,257 56,568 46,704
Amortization of intangibles and other 531 517 510 2,070 2,021
Asset impairment loss - 701 329 3,591 2,094
Goodwill impairment loss - - - - 2,425
Restructuring costs 304 855 - 9,918 234
Other operating income   (71 )   -     -     (4,351 )   (32 )
 
Operating income 27,810 29,877 39,967 121,351 164,039
 
Net interest expense and amortization of debt costs (352 ) (314 ) 5,211 (1,869 ) (499 )
Gain on sale of assets held for sale - 7,346 - 7,346 -
Foreign exchange and other   1     508     301     88     386  
Income from continuing operations before income taxes 27,459 37,417 45,479 126,916 163,926
Income tax expense   9,443     10,524     15,075     39,607     45,011  
Income from continuing operations 18,016 26,893 30,404 87,309 118,915
Income (loss) from discontinued operations, net of tax   -     1,369     (1,889 )   1,369     (28,887 )
Net Income $ 18,016   $ 28,262   $ 28,515   $ 88,678   $ 90,028  
 
 
Computation of diluted earnings per share under the two-class method:
 
Net income attributable to shareholders $ 18,016 $ 28,262 $ 28,515 $ 88,678 $ 90,028

Less: Distributed and undistributed income allocated to participating securities (nonvested stock)

   (186 )   (287 )   (341 )   (929 )   (1,248 )

Distributed and undistributed income available to shareholders

 $ 17,830   $ 27,975   $ 28,174   $ 87,749   $ 88,780  
 
 
Diluted income per share from continuing operations $ 0.45 $ 0.68 $ 0.76 $ 2.20 $ 2.98
Diluted income (loss) per share from discontinued operations   -     0.03     (0.05 )   0.03     (0.74 )
Diluted earnings per share $ 0.45   $ 0.71   $ 0.71   $ 2.23   $ 2.24  

 
BUCKEYE TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
           
 
June 30 March 31 June 30
2013 2013 2012
Current assets:
Cash and cash equivalents $ 17,130 $ 55,220 $ 38,284
Short term investments 40,932 - 8,813
Accounts receivable, net 125,682 128,624 126,705
Inventories 96,821 105,058 90,183
Deferred income taxes and other   7,955   10,882   25,697
Total current assets 288,520 299,784 289,682
 
Property, plant and equipment, net 551,234 532,278 492,109
Deferred income taxes 44,421 40,678 42,427
Intellectual property and other, net   11,146   11,624   13,193
Total assets $ 895,321 $ 884,364 $ 837,411
 
 
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 38,269 $ 28,372 $ 40,600
Accrued expenses 43,664 35,708 43,135
Other current liabilities   -   -   -
Total current liabilities 81,933 64,080 83,735
 
Long-term debt 41,172 62,271 58,578
Deferred income taxes 4,399 4,536 4,930
Other liabilities 85,124 89,637 87,132
Stockholders' equity   682,693   663,840   603,036
Total liabilities and stockholders' equity $ 895,321 $ 884,364 $ 837,411

 
BUCKEYE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
                         
Three Months Ended Year Ended
June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
OPERATING ACTIVITIES
Net income $ 18,016 $ 28,262 $ 28,515 $ 88,678 $ 90,028

Adjustments to reconcile net income to net cash provided by operating activities:

Asset impairment loss - 701 465 3,591 51,268
Depreciation 11,517 10,975 12,091 46,377 50,136
Amortization 686 672 665 2,691 2,641
Loss on goodwill impairment - - - - 2,425
Deferred income taxes 81 (422 ) 1,253 3,533 (14,454 )
Noncurrent AFMC refund payable (3,676 ) - (3,648 ) (388 ) 10,247
Gain on sale of assets held for sale - (7,346 ) - (7,346 ) -
Loss on disposal of equipment 319 253 954 1,653 1,602
Insurance settlement - - - (4,277 ) -
Provision for bad debts 330 373 37 663 (57 )
Excess tax benefit from stock based compensation (89 ) (81 ) (1,367 ) (2,380 ) (4,062 )
Stock-based compensation expense 1,723 1,210 868 5,603 4,245
Other 2,076 241 2,107 2,320 1,861
Change in operating assets and liabilities
Accounts receivable (5,212 ) (359 ) 3,108 1,052 6,548
Income tax receivable 8,104 8,747 6 (2 ) -
Inventories 8,437 366 20,227 (6,046 ) (5,119 )
Other assets (1,659 ) 13,120 (2,889 ) 12,074 803
Accounts payable and other liabilities   20,715     (10,651 )   24,977     (11,612 )   (26,349 )
Net cash provided by operating activities 61,368 46,061 87,369 136,184 171,763
 
INVESTING ACTIVITIES
Purchases of property, plant & equipment (30,233 ) (27,178 ) (38,734 ) (109,362 ) (84,940 )
Proceeds from sale of assets 220 19,896 6,085 20,116 11,760
Short term investments (41,274 ) 9,075 (9,213 ) (32,199 ) (9,213 )

Proceeds from insurance settlement related to capital investments

-

-

-

4,277

-

Other   (191 )   (202 )   (128 )   (520 )   (481 )
Net cash provided by (used in) investing activities (71,478 ) 1,591 (41,990 ) (117,688 ) (82,874 )
 
FINANCING ACTIVITIES
Net borrowings (payments) under revolving line of credit (21,099 ) (37,008 ) (11,561 ) (17,406 ) (38,343 )
Excess tax benefit from stock based compensation 89 81 1,367 2,380 4,062
Purchase of treasury shares - - (22,327 ) (9,203 ) (32,916 )
Net proceeds from sale of equity interests 284 135 253 2,503 3,054
Payment of dividend (3,536 ) (3,608 ) (3,164 ) (13,737 ) (10,756 )
Other   -     -     (1,057 )   (938 )   (1,526 )
Net cash provided by (used in) financing activities (24,262 ) (40,400 ) (36,489 ) (36,401 ) (76,425 )
 
Effect of foreign currency rate fluctuations on cash   (3,718 )   (1,342 )   (7,773 )   (3,249 )   (4,674 )
 
Increase in cash and cash equivalents   (38,090 )   5,910     1,117     (21,154 )   7,790  
Cash and cash equivalents at beginning of period   55,220     49,310     37,167     38,284     30,494  
Cash and cash equivalents at end of period $ 17,130   $ 55,220   $ 38,284   $ 17,130   $ 38,284  

 
BUCKEYE TECHNOLOGIES INC.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
(In thousands)
                     
Three Months Ended Year Ended
SEGMENT RESULTS June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Specialty Fibers
Net sales $ 161,862 $ 142,601 $ 170,950 $ 601,173 $ 686,733
Operating income (a) 31,427 27,723 39,106 131,295 165,441
Depreciation and amortization (b) 8,204 7,682 7,670 31,246 31,033
Total assets 571,305 549,821 487,764 571,305 487,764
Capital expenditures 25,706 24,323 33,368 96,901 73,364
 
Nonwoven Materials
Net sales $ 58,599 $ 57,380 $ 61,827 $ 228,543 $ 239,007
Operating income (a) 6,172 5,786 3,626 21,199 11,735
Depreciation and amortization (b) (8,395 ) 2,905 3,945 2,160 16,087
Total assets 147,258 153,970 182,924 147,258 182,924
Capital expenditures 3,145 2,002 4,171 8,697 9,368
 
Corporate
Net sales $ (4,864 ) $ (4,419 ) $ (7,837 ) $ (17,266 ) $ (30,859 )
Operating income (loss) (a) (9,790 ) (3,632 ) (2,765 ) (31,143 ) (13,137 )
Depreciation and amortization (b) 9,829 905 987 12,631 3,861
Total assets 176,758 180,573 166,723 176,758 166,723
Capital expenditures 1,382 853 1,195 3,764 2,208
 
Total
Net sales $ 215,597 $ 195,562 $ 224,940 $ 812,450 $ 894,881
Operating income (a) 27,809 29,877 39,967 121,351 164,039
Depreciation and amortization (b) 9,638 11,492 12,602 46,037 50,981
Total assets 895,321 884,364 837,411 895,321 837,411
Capital expenditures 30,233 27,178 38,734 109,362 84,940
 
(a) The corporate segment includes operating elements such as segment eliminations, amortization of intangibles, impairment of long-lived assets, goodwill impairment, alternative fuel mixture credits, charges related to restructuring, unallocated at-risk compensation and unallocated stock-based compensation for executive officers and certain other employees. Corporate net sales represents the elimination of intersegment sales included in the specialty fibers reporting segment.
 
(b) Depreciation and amortization includes depreciation, depletion and amortization of intangibles.
 
Three Months Ended Year Ended
ADJUSTED EBITDA June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
 
Net income $ 18,015 $ 28,262 $ 28,515 $ 88,678 $ 90,028
Elimination of discontinued operations - (1,369 ) 1,889 (1,369 ) 28,887
Income tax expense (benefit) 9,443 9,155 15,075 39,607 45,011
Interest expense 220 202 (5,296 ) 1,407 140
Amortization of debt costs 156 155 155 622 620
Depreciation, depletion and amortization   12,048     11,492     12,601     48,447     50,980  
EBITDA 39,882 47,897 52,939 177,392 215,666
Asset impairments - 701 (2,408 ) 3,591 1,782
Restructuring 304 855 2,737 9,918 2,971
Non cash charges 319 253 803 1,668 1,645
Gain on sale of assets held for sale   -     (7,346 )   -     (7,346 )   -  
Adjusted EBITDA $ 40,505   $ 42,360   $ 54,071   $ 185,223   $ 222,064  
 
 
We calculate EBITDA as earnings before cumulative effect of change in accounting plus interest expense, income taxes and depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by adding back the following items: asset impairment charges, goodwill impairment, restructuring charges incurred since the inception of the current credit facility, non-cash charges and other (gains) losses and deducting any non-cash expense associated with alternative fuel mixture credits. You should not consider adjusted EBITDA to be an alternative measure of our net income, as an indicator of operating performance; or our cash flow, as an indicator of liquidity. Adjusted EBITDA corresponds with the definition contained in our US revolving credit facility, established on October 22, 2010, and it provides useful information concerning our ability to comply with debt covenants. Although we believe adjusted EBITDA enhances your understanding of our financial condition, this measure, when viewed individually, is not a better indicator of any trend as compared to other measures (e.g., net sales, net earnings, net cash flows, etc.). Prior period amounts have been adjusted to conform to the definition contained in our new credit facility.

Buckeye Technologies Inc.
Steve Dean, 901-320-8352
Executive Vice President
and Chief Financial Officer
or
Eric Whaley, 901-320-8509
Investor Relations
Website: www.bkitech.com