RockTenn (NYSE:RKT) today reported earnings for the quarter ended
June 30, 2014 of $1.82 per diluted share and adjusted earnings of
$1.97 per diluted share.
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|
Three Months |
Three Months |
Nine Months |
Nine Months |
|
Ended |
Ended |
Ended |
Ended |
|
June 30, |
June 30, |
June 30, |
June 30, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Earnings per diluted
share |
$1.82 |
$1.91 |
$4.46 |
$7.55 |
|
|
|
|
|
Alternative fuel mixture credit tax reserve
adjustment |
― |
― |
― |
(3.47) |
Restructuring and other costs and operating
losses and transition costs due to plant closures |
0.13 |
0.25 |
0.42 |
0.55 |
Acquisition inventory step-up |
0.02 |
― |
0.02 |
― |
|
|
|
|
|
Adjusted earnings per diluted
share |
$1.97 |
$2.16 |
$4.90 |
$4.63 |
Third Quarter Results
- Net sales of $2,531 million for the third quarter of fiscal
2014 increased $83 million compared to the third quarter of fiscal
2013 primarily as a result of the Tacoma Mill and specialty display
acquisitions completed in May 2014 and December 2013, respectively,
and higher selling prices. Segment income of $263 million decreased
$12 million compared to the prior year quarter primarily due to
increased commodity and other costs which exceeded the impact of
higher selling prices, productivity improvements and income
from the acquisitions.
- RockTenn's restructuring and other costs and operating losses
and transition costs due to plant closures for the third quarter of
fiscal 2014 were $0.13 per diluted share after-tax. These costs
primarily consisted of $9 million of pre-tax integration and
acquisition costs and $5 million of pre-tax facility closure
charges associated with previously closed facilities.
Chief Executive Officer's Statement
RockTenn Chief Executive Officer, Steve Voorhees, stated, "Our
team delivered another quarter of solid operating results as
measured by our adjusted earnings per share of $1.97 and free cash
flow per share of $2.82. Over the last 12 months credit
agreement EBITDA has increased to $1.6 billion, a 19% increase
compared to last year and free cash flow has increased by $3.24 to
$12.39 per share, a 35% increase, both of which reflect the
continued strong operating performance of our team. Our balance
sheet continues to provide us with the ability to make sound
capital allocation decisions and continue to generate attractive
free cash flow returns."
Segment Results
Mill and Converting Tons Shipped
Corrugated Packaging segment shipments of approximately
1,962,000 tons increased 2.1% or approximately 40,000 tons compared
to the prior year. In the quarter, we took approximately 89,000
tons of major maintenance and capital outage downtime. Consumer
Packaging segment shipments of approximately 394,000 tons decreased
0.5% or approximately 2,000 tons compared to the prior year
quarter.
Corrugated Packaging Segment
Corrugated Packaging segment net sales increased $55 million to
$1,774 million and segment income decreased $16 million to $180
million in the third quarter of fiscal 2014 compared to the prior
year quarter. The increased sales are primarily related to the
Tacoma Mill acquisition and higher selling prices whose impact on
segment income was more than offset by higher commodity and other
costs. Segment income in the third quarter of fiscal 2014 included
the recognition of a $9 million gain related to the recording of
additional value of spare parts at our containerboard mills
acquired in the Smurfit-Stone acquisition. Segment income in the
third quarter of fiscal 2013 included an $11.4 million benefit
related to the restructuring and extension of our Jacksonville
recycled containerboard mill's steam supply contract.
Corrugated Packaging segment EBITDA margin was 17.4% for the
third quarter of fiscal 2014 down 70 basis points from the prior
year quarter.
Consumer Packaging Segment
Consumer Packaging segment net sales increased $15 million to
$497 million in the third quarter of fiscal 2014 compared to the
prior year quarter due to higher selling prices. Segment income of
$60 million in the third quarter of fiscal 2014 was impacted
primarily by the higher selling prices which were more than offset
by the impact of lower volumes and higher commodity costs and other
items. Consumer Packaging segment EBITDA margin was 16.5% for the
third quarter of fiscal 2014 down slightly compared to the prior
year quarter.
Merchandising Displays Segment
Merchandising Displays segment net sales increased $59 million
over the prior year third quarter to $225 million primarily due to
higher volumes and the impact of a specialty display acquisition
completed in December 2013. Segment income increased $4 million in
the third quarter of fiscal 2014 compared to the prior year quarter
primarily due to the impact of higher volumes which were partially
offset by higher commodity and other items including higher costs
associated with supporting and onboarding new
business. Merchandising Displays segment EBITDA margin was
11.3% for the third quarter of fiscal 2014 down 70 basis points
from the prior year quarter.
Recycling Segment
Recycling segment net sales decreased $38 million over the prior
year third quarter to $85 million primarily due to lower volumes
and recovered fiber prices as a result of soft global markets and
seven collection facility closures during the past year. Segment
income was relatively flat in the third quarter of fiscal 2014
compared to the prior year quarter primarily as the impact of lower
volumes and market conditions were partially offset by the impact
of cost structure improvements.
Cash Provided From Operating, Financing and Investing
Activities
Cash from operations was $218 million in the third quarter of
fiscal 2014 after pension and postretirement funding more than
expense of $131 million compared to cash from operations of $270
million in the prior year quarter after pension and postretirement
funding more than expense of $45 million. Due primarily to
the $341 million associated with the May 16, 2014 acquisition of
the Tacoma Mill, Net Debt (as defined) increased $312 million in
the June quarter to $2.95 billion and at June 30, 2014, our
Leverage Ratio (as defined) was 1.90 times. Total debt was
$2.99 billion at June 30, 2014. Additionally during the quarter, we
invested $151 million in capital expenditures, returned $25 million
in dividends to our shareholders and repurchased $21 million of
common stock.
Conference Call
We will host a conference call to discuss our results of
operations for the third quarter of fiscal 2014 and other topics
that may be raised during the discussion at 9:00 a.m., Eastern
Time, on July 30, 2014. The conference call will be webcast live
with an accompanying slide presentation, along with a copy of this
press release, at www.rocktenn.com.
Investors who wish to participate in the webcast via
teleconference should dial 888-790-4710 (inside the U.S.) or
773-756-0961 (outside the U.S.) at least 15 minutes prior to the
start of the call and enter the passcode ROCKTENN. Replays of
the call will be available through August 13, 2014 and can be
accessed at 866-351-2785 (U.S. callers) and 203-369-0055 (outside
the U.S.).
About RockTenn
RockTenn (NYSE:RKT) is one of North America's leading providers
of packaging solutions and manufacturers of containerboard and
paperboard. RockTenn's 26,000 employees are committed to exceeding
their customers' expectations – every time. The Company operates
locations in the United States, Canada, Mexico, Chile and
Argentina. For more information, visit www.rocktenn.com.
Cautionary Statements
Statements in this release that do not relate strictly to
historical facts are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on our current expectations,
beliefs, plans or forecasts and use words such as will, estimate,
anticipate, project, intend, or expect, or refer to future time
periods, and include statements made in this report regarding,
among other things, our belief that our balance sheet provides us
with the ability to make sound capital allocation decisions and
continue to generate attractive free cash flow returns. These
statements are subject to certain risks and uncertainties including
with respect to our expectations regarding economic, competitive
and market conditions generally; expected volumes and price levels
of purchases by customers; fiber and energy costs; costs associated
with facility closures; competitive conditions in our businesses;
and possible adverse actions of our customers, our competitors and
suppliers. These expectations are based on assumptions that
management believes are reasonable; however, undue reliance should
not be placed on these forward-looking statements because these
risks and uncertainties could cause actual results to differ
materially from those contained in any forward-looking statements.
There are many other factors and uncertainties that impact these
forward-looking statements that we cannot predict accurately,
including our ability to achieve benefits from the Smurfit-Stone
acquisition, including synergies, performance improvements and
successful implementation of capital projects. Further, our
business is subject to a number of general risks that would affect
any such forward-looking statements including, among others,
decreases in demand for our products; increases in energy, raw
materials, shipping and capital equipment costs; reduced supply of
raw materials; fluctuations in selling prices and volumes; intense
competition; the potential loss of certain key customers; changes
in environmental and other governmental regulation; and adverse
changes in general market and industry conditions. These risks are
more particularly described in our filings with the Securities and
Exchange Commission, including under the caption
"Business―Forward-Looking Information" and "Risk Factors" in our
Annual Report on Form 10-K for the fiscal year ended September 30,
2013. The information contained in this release speaks as of the
date hereof and we do not undertake any obligation to update this
information as future events unfold.
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ROCK-TENN
COMPANY |
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME |
(UNAUDITED) |
(IN MILLIONS, EXCEPT
PER SHARE AMOUNTS) |
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|
|
|
|
|
|
|
|
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FOR THE THREE MONTHS ENDED |
FOR THE NINE MONTHS ENDED |
|
June 30, |
June 30, |
June 30, |
June 30, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
|
|
|
|
|
NET SALES |
$ 2,530.9 |
$ 2,448.3 |
$ 7,287.1 |
$ 7,060.3 |
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|
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|
Cost of Goods Sold |
2,041.3 |
1,951.6 |
5,922.5 |
5,768.9 |
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|
|
|
|
|
|
|
|
|
Gross Profit |
489.6 |
496.7 |
1,364.6 |
1,291.4 |
Selling, General and Administrative
Expenses |
245.3 |
243.9 |
725.6 |
704.3 |
Restructuring and Other Costs, net |
13.3 |
23.5 |
45.1 |
52.0 |
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|
|
|
|
|
|
|
|
|
Operating Profit |
231.0 |
229.3 |
593.9 |
535.1 |
Interest Expense |
(23.9) |
(25.6) |
(71.1) |
(81.9) |
Loss on Extinguishment of Debt |
-- |
-- |
-- |
(0.3) |
Interest Income and Other Income (Expense),
net |
0.1 |
(1.8) |
(0.9) |
(1.9) |
Equity in Income of Unconsolidated
Entities |
4.1 |
1.2 |
7.3 |
2.9 |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES |
211.3 |
203.1 |
529.2 |
453.9 |
|
|
|
|
|
Income Tax (Expense) Benefit |
(76.9) |
(61.4) |
(200.7) |
100.3 |
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|
|
|
|
|
|
|
|
CONSOLIDATED NET INCOME |
134.4 |
141.7 |
328.5 |
554.2 |
|
|
|
|
|
|
|
|
|
|
Less: Net Income Attributable to
Noncontrolling Interests |
(1.1) |
(1.6) |
(2.7) |
(3.4) |
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|
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NET INCOME ATTRIBUTABLE TO
ROCK-TENN COMPANY SHAREHOLDERS |
$ 133.3 |
$ 140.1 |
$ 325.8 |
$ 550.8 |
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Computation of diluted earnings
per share under the two-class method (in millions, except per share
data): |
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|
|
Net income attributable to Rock-Tenn
Company shareholders |
$ 133.3 |
$ 140.1 |
$ 325.8 |
$ 550.8 |
Less: Distributed and
undistributed income available to participating
securities |
-- |
-- |
(0.1) |
(0.1) |
Distributed and undistributed income
available to Rock-Tenn Company shareholders |
$ 133.3 |
$ 140.1 |
$ 325.7 |
$ 550.7 |
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|
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|
|
Diluted weighted average shares
outstanding |
73.0 |
73.2 |
73.1 |
73.0 |
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|
|
|
Diluted earnings per share |
$ 1.82 |
$ 1.91 |
$ 4.46 |
$ 7.55 |
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ROCK-TENN
COMPANY |
SEGMENT
INFORMATION |
(UNAUDITED) |
(IN
MILLIONS) |
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FOR THE THREE MONTHS ENDED |
FOR THE NINE MONTHS ENDED |
|
June 30, |
June 30, |
June 30, |
June 30, |
|
2014 |
2013 |
2014 |
2013 |
|
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|
|
NET SALES: |
|
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|
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|
|
|
|
Corrugated Packaging |
$ 1,774.2 |
$ 1,719.3 |
$ 5,077.8 |
$ 4,917.3 |
Consumer Packaging |
497.0 |
482.1 |
1,458.4 |
1,403.2 |
Merchandising Displays |
225.1 |
166.4 |
622.7 |
490.4 |
Recycling |
85.4 |
123.6 |
275.1 |
381.1 |
Intersegment Eliminations |
(50.8) |
(43.1) |
(146.9) |
(131.7) |
|
|
|
|
|
TOTAL NET SALES |
$ 2,530.9 |
$ 2,448.3 |
$ 7,287.1 |
$ 7,060.3 |
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SEGMENT INCOME: |
|
|
|
|
Corrugated Packaging |
$ 179.8 |
$ 196.1 |
$ 470.6 |
$ 441.3 |
Consumer Packaging |
59.6 |
59.1 |
166.5 |
164.5 |
Merchandising Displays |
21.4 |
17.2 |
57.7 |
41.7 |
Recycling |
2.1 |
2.0 |
5.0 |
9.8 |
|
|
|
|
|
TOTAL SEGMENT
INCOME |
$ 262.9 |
$ 274.4 |
$ 699.8 |
$ 657.3 |
|
|
|
|
|
Restructuring and Other Costs, net |
(13.3) |
(23.5) |
(45.1) |
(52.0) |
Non-Allocated Expenses |
(14.5) |
(20.4) |
(53.5) |
(67.3) |
Interest Expense |
(23.9) |
(25.6) |
(71.1) |
(81.9) |
Loss on Extinguishment of Debt |
-- |
-- |
-- |
(0.3) |
Interest Income and Other Income (Expense),
net |
0.1 |
(1.8) |
(0.9) |
(1.9) |
|
|
|
|
|
INCOME BEFORE INCOME
TAXES |
$ 211.3 |
$ 203.1 |
$ 529.2 |
$ 453.9 |
|
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ROCK-TENN
COMPANY |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(UNAUDITED) |
(IN
MILLIONS) |
|
|
|
|
|
|
FOR THE THREE MONTHS
ENDED |
FOR THE NINE MONTHS ENDED |
|
June 30, |
June 30, |
June 30, |
June 30, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
|
Consolidated net income |
$ 134.4 |
$ 141.7 |
$ 328.5 |
$ 554.2 |
|
|
|
|
|
Adjustments to reconcile consolidated net
income to net cash provided by operating activities: |
|
|
|
|
Depreciation and amortization |
146.7 |
132.4 |
433.3 |
409.7 |
Deferred income tax expense
(benefit) |
61.8 |
53.4 |
172.2 |
(115.3) |
Loss on extinguishment of debt |
-- |
-- |
-- |
0.3 |
Share-based compensation expense |
9.8 |
13.0 |
29.4 |
35.7 |
Loss (Gain) on disposal of plant and
equipment and other, net |
1.6 |
0.9 |
(0.7) |
(4.6) |
Equity in income of unconsolidated
entities |
(4.1) |
(1.2) |
(7.3) |
(2.9) |
Pension and other postretirement funding
more than expense |
(130.8) |
(45.0) |
(217.3) |
(87.5) |
Impairment adjustments and other non-cash
items |
1.9 |
9.1 |
7.8 |
15.2 |
Changes in operating assets and
liabilities, net of acquisitions: |
|
|
|
|
Accounts receivable |
(39.6) |
(46.4) |
104.0 |
(41.3) |
Inventories |
16.0 |
(17.2) |
(22.1) |
(64.2) |
Other assets |
6.5 |
-- |
(27.4) |
(34.7) |
Accounts payable |
(39.7) |
(1.0) |
(45.5) |
34.0 |
Income taxes |
19.2 |
4.9 |
4.8 |
(8.8) |
Accrued liabilities and other |
34.3 |
25.4 |
(10.6) |
32.8 |
|
|
|
|
|
NET CASH PROVIDED BY OPERATING
ACTIVITIES |
218.0 |
270.0 |
749.1 |
722.6 |
INVESTING ACTIVITIES: |
|
|
|
|
Capital expenditures |
(150.6) |
(113.1) |
(377.7) |
(307.1) |
Cash paid for purchase of businesses, net of
cash acquired |
(340.7) |
(6.2) |
(400.7) |
(6.2) |
Return of capital from unconsolidated
entities |
6.4 |
0.2 |
6.8 |
0.8 |
Proceeds from the sale of subsidiaries |
3.0 |
-- |
6.8 |
-- |
Proceeds from sale of property, plant and
equipment |
6.5 |
4.6 |
19.8 |
11.9 |
Proceeds from property, plant and equipment
insurance settlement |
1.5 |
2.0 |
4.9 |
7.7 |
|
|
|
|
|
NET CASH USED FOR INVESTING
ACTIVITIES |
(473.9) |
(112.5) |
(740.1) |
(292.9) |
FINANCING ACTIVITIES: |
|
|
|
|
Additions to revolving credit facilities |
60.1 |
40.4 |
202.9 |
94.9 |
Repayments of revolving credit
facilities |
(46.2) |
(20.4) |
(199.7) |
(72.2) |
Additions to debt |
420.0 |
31.0 |
592.7 |
226.2 |
Repayments of debt |
(120.3) |
(196.6) |
(450.0) |
(620.4) |
Commercial card program |
0.8 |
-- |
0.8 |
-- |
Debt issuance costs |
(0.2) |
(0.2) |
(0.4) |
(1.8) |
Cash paid for debt extinguishment costs |
-- |
-- |
-- |
(0.1) |
Issuances of common stock, net of related
minimum tax withholdings |
0.9 |
1.6 |
(12.9) |
1.0 |
Purchases of common stock |
(20.8) |
-- |
(73.8) |
-- |
Excess tax benefits from share-based
compensation |
0.4 |
0.6 |
14.9 |
4.8 |
(Repayments to) advances from unconsolidated
entity |
(4.8) |
0.6 |
(2.8) |
0.9 |
Cash dividends paid to shareholders |
(25.1) |
(21.6) |
(76.0) |
(53.7) |
Cash distributions to noncontrolling
interests |
(1.2) |
(1.6) |
(1.5) |
(3.9) |
|
|
|
|
|
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES |
263.6 |
(166.2) |
(5.8) |
(424.3) |
Effect of exchange rate changes on cash and
cash equivalents |
0.1 |
(0.3) |
0.4 |
(0.3) |
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS |
7.8 |
(9.0) |
3.6 |
5.1 |
Cash and cash equivalents at beginning of
period |
32.2 |
51.3 |
36.4 |
37.2 |
|
|
|
|
|
Cash and cash equivalents at
end of period |
$ 40.0 |
$ 42.3 |
$ 40.0 |
$ 42.3 |
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION: |
|
|
|
|
Cash paid during the period for: |
|
|
|
|
Income taxes, net of refunds |
$ (4.0) |
$ 3.1 |
$ 10.6 |
$ 15.3 |
Interest, net of amounts
capitalized |
6.3 |
8.4 |
49.4 |
60.4 |
|
ROCK-TENN
COMPANY |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(UNAUDITED) |
(IN
MILLIONS) |
|
|
|
|
June 30, |
September 30, |
|
2014 |
2013 |
ASSETS |
CURRENT ASSETS: |
|
|
Cash and cash equivalents |
$ 40.0 |
$ 36.4 |
Restricted cash |
8.9 |
9.3 |
Accounts receivable (net of allowances of
$24.1 and $26.8) |
1,080.0 |
1,134.9 |
Inventories |
964.8 |
937.9 |
Other current assets |
280.7 |
297.9 |
|
|
|
TOTAL CURRENT
ASSETS |
2,374.4 |
2,416.4 |
|
|
|
Property, plant and equipment at cost: |
|
|
Land and buildings |
1,258.3 |
1,203.1 |
Machinery and equipment |
6,977.5 |
6,467.8 |
Transportation equipment |
15.7 |
13.8 |
Leasehold improvements |
25.0 |
24.7 |
|
8,276.5 |
7,709.4 |
Less accumulated depreciation and
amortization |
(2,463.4) |
(2,154.7) |
Net property, plant and equipment |
5,813.1 |
5,554.7 |
Goodwill |
1,914.1 |
1,862.1 |
Intangibles, net |
685.0 |
699.4 |
Other assets |
184.1 |
200.8 |
|
|
|
TOTAL ASSETS |
$ 10,970.7 |
$ 10,733.4 |
LIABILITIES AND
EQUITY |
CURRENT LIABILITIES: |
|
|
Current portion of debt |
$ 63.1 |
$ 2.9 |
Accounts payable |
787.1 |
802.1 |
Accrued compensation and benefits |
210.4 |
249.0 |
Other current liabilities |
206.9 |
189.4 |
|
|
|
TOTAL CURRENT
LIABILITIES |
1,267.5 |
1,243.4 |
|
|
|
Long-term debt due after one year |
2,923.3 |
2,841.9 |
Pension liabilities, net of current
portion |
769.1 |
975.2 |
Postretirement medical liabilities, net of
current portion |
118.1 |
118.3 |
Deferred income taxes |
1,191.8 |
1,063.1 |
Other long-term liabilities |
168.5 |
165.4 |
Redeemable noncontrolling interests |
14.6 |
13.3 |
|
|
|
Total Rock-Tenn Company shareholders'
equity |
4,517.4 |
4,312.3 |
Noncontrolling interests |
0.4 |
0.5 |
Total Equity |
4,517.8 |
4,312.8 |
|
|
|
TOTAL LIABILITIES AND
EQUITY |
$ 10,970.7 |
$ 10,733.4 |
|
Rock-Tenn Company
Quarterly Statistics |
|
|
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|
|
Key Financial
Statistics |
(In Millions, Unless
Otherwise Specified) |
|
|
|
|
|
|
|
1st Quarter |
2nd Quarter |
3rd Quarter |
4th Quarter |
Fiscal Year |
|
|
|
|
|
|
Net Income Attributable to Rock-Tenn
Company Shareholders |
|
|
|
|
2012 |
$ 76.7 |
$ 31.9 |
$ 58.2 |
$ 82.3 |
$ 249.1 |
2013 |
86.0 |
324.7 |
140.1 |
176.5 |
727.3 |
2014 |
109.7 |
82.8 |
133.3 |
|
|
|
|
|
|
|
|
Diluted Earnings per
Share |
|
|
|
|
|
2012 |
$ 1.06 |
$ 0.44 |
$ 0.81 |
$ 1.14 |
$ 3.45 |
2013 |
1.18 |
4.45 |
1.91 |
2.40 |
9.95 |
2014 |
1.50 |
1.13 |
1.82 |
|
|
|
|
|
|
|
|
Depreciation &
Amortization |
|
|
|
|
|
2012 |
$ 132.7 |
$ 132.6 |
$ 131.4 |
$ 137.6 |
$ 534.3 |
2013 |
138.1 |
139.2 |
132.4 |
142.5 |
552.2 |
2014 |
143.2 |
143.4 |
146.7 |
|
|
|
|
|
|
|
|
Capital Expenditures |
|
|
|
|
|
2012 |
$ 81.6 |
$ 120.6 |
$ 146.1 |
$ 104.1 |
$ 452.4 |
2013 |
92.0 |
102.0 |
113.1 |
133.3 |
440.4 |
2014 |
100.6 |
126.5 |
150.6 |
|
|
|
|
|
|
|
|
Mill System Operating
Rates |
|
|
|
|
|
2012 |
96.4% |
90.6% |
92.4% |
97.7% |
94.3% |
2013 |
97.6% |
96.1% |
98.2% |
97.1% |
97.2% |
2014 |
90.4% |
94.3% |
96.7% |
|
|
|
Rock-Tenn Company
Quarterly Statistics |
|
|
|
|
|
|
|
|
|
|
Segment Operating
Statistics |
(Sales and Income In
Millions, Shipments in Thousands of Tons Unless Otherwise
Specified) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
|
2nd Quarter |
|
3rd Quarter |
|
4th Quarter |
|
Fiscal Year |
Corrugated Packaging Segment Net
Sales |
|
|
|
|
|
|
|
|
|
2012 |
$ 1,522.2 |
|
$ 1,504.7 |
|
$ 1,545.3 |
|
$ 1,597.2 |
|
$ 6,169.4 |
2013 |
1,589.8 |
|
1,608.2 |
|
1,719.3 |
|
1,744.4 |
|
6,661.7 |
2014 |
1,651.9 |
|
1,651.7 |
|
1,774.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corrugated Packaging Intersegment Net
Sales |
|
|
|
|
|
|
|
|
|
2012 |
$ 32.3 |
|
$ 30.4 |
|
$ 29.4 |
|
$ 30.2 |
|
$ 122.3 |
2013 |
28.6 |
|
28.9 |
|
27.2 |
|
30.9 |
|
115.6 |
2014 |
29.7 |
|
36.5 |
|
34.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corrugated Packaging Segment
Income |
|
|
|
|
|
|
|
|
|
2012 |
$ 109.7 |
(1) |
$ 75.3 |
(2) |
$ 73.5 |
(3) |
$ 112.7 |
(4) |
$ 371.2 |
2013 |
137.6 |
|
107.6 |
|
196.1 |
|
237.5 |
|
678.8 |
2014 |
157.7 |
|
133.1 |
|
182.3 |
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Return On Sales |
|
|
|
|
|
|
|
|
|
2012 |
7.2% |
(1) |
5.0% |
(2) |
4.8% |
(3) |
7.1% |
(4) |
6.0% |
2013 |
8.7% |
|
6.7% |
|
11.4% |
|
13.6% |
|
10.2% |
2014 |
9.5% |
|
8.1% |
|
10.3% |
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corrugated Packaging Segment
Shipments (6) |
|
|
|
|
|
|
|
|
|
2012 |
1,842.3 |
|
1,826.5 |
|
1,884.5 |
|
1,964.1 |
|
7,517.4 |
2013 |
1,869.6 |
|
1,860.0 |
|
1,922.2 |
|
1,921.7 |
|
7,573.5 |
2014 |
1,803.8 |
|
1,809.5 |
|
1,961.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corrugated Container Shipments - BSF
(7) |
|
|
|
|
|
|
|
|
|
2012 |
18.8 |
|
18.9 |
|
19.2 |
|
19.5 |
|
76.4 |
2013 |
19.0 |
|
18.7 |
|
19.5 |
|
19.1 |
|
76.3 |
2014 |
18.4 |
|
18.2 |
|
18.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corrugated Container Per
Shipping Day - MMSF (7) |
|
|
|
|
|
|
|
|
2012 |
312.8 |
|
295.4 |
|
305.5 |
|
308.7 |
|
305.5 |
2013 |
310.7 |
|
302.5 |
|
304.9 |
|
302.4 |
|
305.1 |
2014 |
301.5 |
|
288.8 |
|
298.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes $0.4 million of
inventory step-up expense. |
(2) Excludes $6.7 million of
operating losses at the then recently closed Matane, Quebec
containerboard mill. |
(3) Excludes $0.2 million of
inventory step-up expense. |
(4) Excludes $0.2 million of
inventory step-up expense. |
(5) Excludes $2.5 million of
inventory step-up expense. |
(6) Corrugated Packaging Segment
Shipments are expressed as a tons equivalent which includes
external and intersegment tons shipped from our Corrugated mills
plus Corrugated Container Shipments converted from BSF to tons.
Excludes container shipments in Asia. |
(7) MMSF - millions of square
feet and BSF - billions of square feet and is included in the
Corrugated Packaging Segment Shipments on a converted basis.
Excludes container shipments in Asia. |
|
|
|
|
|
|
Rock-Tenn Company Quarterly
Statistics |
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Statistics |
|
|
|
|
|
(Sales and Income In
Millions, Shipments in Thousands of Tons Unless Otherwise
Specified) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
2nd Quarter |
3rd Quarter |
4th Quarter |
Fiscal Year |
Consumer Packaging Segment Net
Sales |
|
|
|
|
|
2012 |
$ 464.9 |
$ 484.1 |
$ 473.9 |
$ 496.4 |
$ 1,919.3 |
2013 |
452.8 |
468.3 |
482.1 |
495.5 |
1,898.7 |
2014 |
472.1 |
489.3 |
497.0 |
|
|
|
|
|
|
|
|
Consumer Packaging Intersegment Net
Sales |
|
|
|
|
|
2012 |
$ 6.9 |
$ 6.1 |
$ 5.3 |
$ 7.6 |
$ 25.9 |
2013 |
5.1 |
5.4 |
5.2 |
9.4 |
25.1 |
2014 |
5.7 |
5.3 |
6.9 |
|
|
|
|
|
|
|
|
Consumer Packaging Segment
Income |
|
|
|
|
|
2012 |
$ 62.0 |
$ 64.5 |
$ 69.7 |
$ 81.0 |
$ 277.2 |
2013 |
54.9 |
50.5 |
59.1 |
66.8 |
231.3 |
2014 |
57.6 |
49.3 |
59.6 |
|
|
|
|
|
|
|
|
Return on Sales |
|
|
|
|
|
2012 |
13.3% |
13.3% |
14.7% |
16.3% |
14.4% |
2013 |
12.1% |
10.8% |
12.3% |
13.5% |
12.2% |
2014 |
12.2% |
10.1% |
12.0% |
|
|
|
|
|
|
|
|
Consumer Packaging Segment Shipments
(1) |
|
|
|
|
|
2012 |
370.3 |
377.6 |
384.0 |
382.2 |
1,514.1 |
2013 |
368.5 |
380.1 |
396.2 |
403.0 |
1,547.8 |
2014 |
378.1 |
386.0 |
394.3 |
|
|
|
|
|
|
|
|
Consumer Packaging Converting
Shipments - BSF (2) |
|
|
|
|
|
2012 |
5.0 |
5.2 |
5.1 |
5.2 |
20.5 |
2013 |
4.9 |
5.2 |
5.3 |
5.3 |
20.7 |
2014 |
5.0 |
5.3 |
5.2 |
|
|
|
|
|
|
|
|
Consumer Packaging Converting Per
Shipping Day - MMSF (2) |
|
|
|
|
|
2012 |
83.5 |
81.0 |
80.6 |
83.1 |
82.0 |
2013 |
81.0 |
83.9 |
82.3 |
84.3 |
82.9 |
2014 |
82.0 |
83.6 |
83.3 |
|
|
|
|
|
|
|
|
(1) Consumer Packaging Segment
Shipments are expressed as a tons equivalent which includes
external and intersegment tons shipped from our Consumer mills plus
Consumer Packaging Converting Shipments converted from BSF to
tons. The shipment data excludes gypsum paperboard liner tons
shipped by Seven Hills Paperboard LLC, our unconsolidated joint
venture, since it is not consolidated. |
(2) MMSF - millions of square
feet and BSF - billions of square feet and is included in the
Consumer Packaging Segment Shipments on a converted basis. |
|
Rock-Tenn Company
Quarterly Statistics |
|
|
|
|
|
|
|
Segment Operating
Statistics |
(Sales and Income In
Millions, Shipments in Thousands of Tons Unless Otherwise
Specified) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
2nd Quarter |
|
3rd Quarter |
4th Quarter |
Fiscal Year |
Merchandising Displays Segment Net
Sales |
|
|
|
|
|
|
2012 |
$ 159.1 |
$ 168.0 |
|
$ 158.5 |
$ 170.4 |
$ 656.0 |
2013 |
161.9 |
162.1 |
|
166.4 |
184.2 |
674.6 |
2014 |
184.6 |
213.0 |
|
225.1 |
|
|
|
|
|
|
|
|
|
Merchandising Displays Intersegment
Net Sales |
|
|
|
|
|
|
2012 |
$ 3.7 |
$ 3.8 |
|
$ 3.7 |
$ 3.4 |
$ 14.6 |
2013 |
4.2 |
3.9 |
|
4.2 |
4.8 |
17.1 |
2014 |
4.4 |
4.6 |
|
3.7 |
|
|
|
|
|
|
|
|
|
Merchandising Displays Segment
Income |
|
|
|
|
|
|
2012 |
$ 18.3 |
$ 20.0 |
|
$ 14.1 |
$ 17.9 |
$ 70.3 |
2013 |
11.8 |
12.7 |
|
17.2 |
22.7 |
64.4 |
2014 |
19.3 |
17.3 |
(1) |
21.4 |
|
|
|
|
|
|
|
|
|
Return on Sales |
|
|
|
|
|
|
2012 |
11.5% |
11.9% |
|
8.9% |
10.5% |
10.7% |
2013 |
7.3% |
7.8% |
|
10.3% |
12.3% |
9.5% |
2014 |
10.5% |
8.1% |
(1) |
9.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recycling Segment Net
Sales |
|
|
|
|
|
|
2012 |
$ 171.0 |
$ 172.3 |
|
$ 170.0 |
$ 137.2 |
$ 650.5 |
2013 |
126.8 |
130.7 |
|
123.6 |
113.0 |
494.1 |
2014 |
99.6 |
90.1 |
|
85.4 |
|
|
|
|
|
|
|
|
|
Recycling Intersegment Net
Sales |
|
|
|
|
|
|
2012 |
$ 6.6 |
$ 5.9 |
|
$ 6.1 |
$ 6.2 |
$ 24.8 |
2013 |
6.3 |
6.2 |
|
6.5 |
6.9 |
25.9 |
2014 |
5.8 |
4.1 |
|
5.3 |
|
|
|
|
|
|
|
|
|
Recycling Segment
Income |
|
|
|
|
|
|
2012 |
$ 3.5 |
$ 4.2 |
|
$ 2.2 |
$ (2.8) |
$ 7.1 |
2013 |
4.3 |
3.5 |
|
2.0 |
4.6 |
14.4 |
2014 |
0.1 |
2.8 |
|
2.1 |
|
|
|
|
|
|
|
|
|
Return on Sales |
|
|
|
|
|
|
2012 |
2.0% |
2.4% |
|
1.3% |
(2.0)% |
1.1% |
2013 |
3.4% |
2.7% |
|
1.6% |
4.1% |
2.9% |
2014 |
0.1% |
3.1% |
|
2.5% |
|
|
|
|
|
|
|
|
|
Fiber Reclaimed and
Brokered |
|
|
|
|
|
|
2012 |
2,064.5 |
1,996.9 |
|
2,039.7 |
2,014.5 |
8,115.6 |
2013 |
1,945.0 |
1,802.5 |
|
1,819.2 |
1,826.6 |
7,393.3 |
2014 |
1,562.5 |
1,564.0 |
|
1,573.6 |
|
|
|
|
|
|
|
|
|
(1) Excludes $0.3 million of
inventory step-up expense. |
Non-GAAP Financial Measures and
Reconciliations
We have included financial measures that are not prepared in
accordance with GAAP. Any analysis of non-GAAP financial
measures should be used only in conjunction with results presented
in accordance with GAAP. Below, we define the non-GAAP
financial measures, provide a reconciliation of each non-GAAP
financial measure to the most directly comparable financial measure
calculated in accordance with GAAP, and discuss the reasons that we
believe this information is useful to management and may be useful
to investors. These measures may differ from similarly
captioned measures of other companies in our industry. The
following non-GAAP measures are not intended to be substitutes for
GAAP financial measures and should not be used as such.
Net Debt
We have defined the non-GAAP measure "Net Debt" to include the
aggregate debt obligations reflected in our consolidated balance
sheet, less the hedge adjustments resulting from fair value
interest rate derivatives or swaps, if any, and less the balance of
our cash and cash equivalents.
Our management uses Net Debt, along with other factors, to
evaluate our financial condition. We believe that Net Debt is an
appropriate supplemental measure of financial condition and may be
useful to investors because it provides a more complete
understanding of our financial condition before the impact of our
decisions regarding the appropriate use of cash and liquid
investments. Set forth below is a reconciliation of Net Debt to the
most directly comparable GAAP measures, Current Portion of Debt and
Long-term Debt Due After One Year for various periods.
|
|
|
|
|
|
(In Millions) |
June 30, |
Mar. 31, |
June 30, |
Mar. 31, |
June 30, |
|
2014 |
2014 |
2013 |
2013 |
2012 |
|
|
|
|
|
|
Current Portion of Debt |
$63.1 |
$32.0 |
$54.1 |
$29.7 |
$257.7 |
Long-Term Debt Due After One Year |
2,923.3 |
2,634.8 |
2,972.3 |
3,149.3 |
3,102.6 |
Total Debt |
2,986.4 |
2,666.8 |
3,026.4 |
3,179.0 |
3,360.3 |
Less: Hedge Adjustments Resulting From
Fair Value Interest Rate Derivatives or Swaps |
― |
― |
― |
― |
(0.2) |
|
2,986.4 |
2,666.8 |
3,026.4 |
3,179.0 |
3,360.1 |
Less: Cash and Cash
Equivalents |
(40.0) |
(32.2) |
(42.3) |
(51.3) |
(19.5) |
Net Debt |
$2,946.4 |
$2,634.6 |
$2,984.1 |
$3,127.7 |
$3,340.6 |
|
|
|
|
|
|
Net Debt (Increase) Repayment - QTR |
$ (311.8) |
|
$143.6 |
|
|
Net Debt (Increase) Repayment - LTM |
$37.7 |
|
$356.5 |
|
|
Cash Generated for Net Debt (Increase) Repayment,
Dividends, Acquisitions/Investments, Stock Repurchases and Pension
Funding in Excess of Expense (or Free Cash Flow)
We have defined the non-GAAP financial measure "Cash Generated
for Net Debt Repayment, Dividends, Acquisitions/Investments, Stock
Repurchases and Pension Funding in Excess of Expense", which we
also refer to as "free cash flow", to be the sum of the non-GAAP
measure Net Debt (Increase) Repayment and the following cash flow
statement line items: Cash dividends paid to shareholders,
Cash paid for the purchase of business, net of cash acquired plus
Investment in unconsolidated entities, Purchases of common stock
and Pension and other postretirement funding more than expense.
"Net Debt (Increase) Repayment" is the difference between Net Debt
at two points in time. Our management uses Cash Generated for Net
Debt (Increase) Repayment, Dividends, Acquisitions/Investments,
Stock Repurchases and Pension Funding in Excess of Expense, along
with other factors, to evaluate our performance. We believe
that this measure is an appropriate supplemental measure of
financial performance and may be useful to investors because it
provides a measure of cash generated for the benefit of
shareholders.
Set forth below is a calculation of Cash Generated for Net Debt
(Increase) Repayment, Dividends, Acquisitions/Investments, Stock
Repurchases and Pension Funding in Excess of Expense for the three
and twelve months ended June 30, 2014 and June 30, 2013 using
the various non-GAAP and GAAP measures referenced above (in
millions):
|
|
|
|
Three Months |
Three Months |
|
Ended |
Ended |
|
June 30, 2014 |
June 30, 2013 |
|
|
|
Net Debt (Increase) Repayment |
$ (311.8) |
$143.6 |
Cash dividends paid to
shareholders |
25.1 |
21.6 |
Cash paid for the purchase of business, net
of cash acquired plus Investment in unconsolidated
entities |
340.7 |
6.2 |
Purchases of common stock |
20.8 |
― |
Pension and postretirement funding more than
expense |
130.8 |
45.0 |
Cash Generated for Net Debt (Increase)
Repayment, Dividends, Acquisition/Investments and Pension in Excess
of Expense |
$205.6 |
$216.4 |
Average diluted shares outstanding |
73.0 |
73.2 |
Cash Generated for Net Debt (Increase)
Repayment, Dividends, Acquisition /Investments and Pension in
Excess of Expense, Per Share |
$2.82 |
$2.96 |
|
|
|
|
|
|
|
Twelve Months |
Twelve Months |
|
Ended |
Ended |
|
June 30, 2014 |
June 30, 2013 |
|
|
|
Net Debt Repayment |
$37.7 |
$356.5 |
Cash dividends paid to
shareholders |
97.6 |
67.8 |
Cash paid for the purchase of business, net
of cash acquired plus Investment in unconsolidated
entities |
400.9 |
11.3 |
Purchases of common stock |
73.8 |
― |
Pension and postretirement funding more than
expense |
296.9 |
230.6 |
Cash Generated for Net Debt (Increase)
Repayment, Dividends, Acquisition/Investments and Pension in Excess
of Expense |
$906.9 |
$666.2 |
Average diluted shares outstanding |
73.2 |
72.8 |
Cash Generated for Net Debt (Increase)
Repayment, Dividends, Acquisition /Investments and Pension in
Excess of Expense, Per Share |
$12.39 |
$9.15 |
Segment EBITDA Margins
Our management uses "Segment EBITDA Margins", along with other
factors, to evaluate our segment performance against our
peers. Management believes that investors also use this
measure to evaluate our performance relative to our peers.
Set forth below is a reconciliation of Segment EBITDA margins to
the most directly comparable GAAP measures, Segment Income and
Segment Net Sales for the quarter ending June 30, 2014:
|
|
|
|
|
|
|
(In Millions, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corrugated Packaging |
Consumer Packaging |
Merchandising Displays |
Recycling |
Corporate / Other |
Consolidated |
|
|
|
|
|
|
|
Segment Net Sales |
$1,774.2 |
$497.0 |
$225.1 |
$85.4 |
$ (50.8) |
$2,530.9 |
Less: Trade Sales |
(67.5) |
— |
— |
— |
— |
(67.5) |
Adjusted Segment Sales |
$1,706.7 |
$497.0 |
$225.1 |
$85.4 |
$ (50.8) |
$2,463.4 |
|
|
|
|
|
|
|
Segment Income (1) |
$182.3 |
$59.6 |
$21.4 |
$2.1 |
|
$265.4 |
Depreciation and Amortization |
114.0 |
22.4 |
4.0 |
2.7 |
3.6 |
146.7 |
EBITDA |
$296.3 |
$82.0 |
$25.4 |
$4.8 |
|
|
|
|
|
|
|
|
|
Segment EBITDA Margins |
17.4% |
16.5% |
11.3% |
5.6% |
|
|
|
|
|
|
|
|
|
(1) Corrugated Packaging
segment excludes $2.5 million of inventory step-up expense. |
Credit Agreement EBITDA and Total Funded
Debt
"Credit Agreement EBITDA" is calculated in accordance with the
definition contained in our Credit Facility. Credit Agreement
EBITDA is generally defined as Consolidated Net Income plus:
consolidated interest expense, income taxes of the consolidated
companies determined in accordance with GAAP, depreciation and
amortization expense of the consolidated companies determined in
accordance with GAAP, loss on extinguishment of debt and financing
fees, certain non-cash and cash charges incurred, including certain
restructuring and other costs, acquisition and integration costs,
charges and expenses associated with the write-up of inventory
acquired and other items.
"Total Funded Debt" is calculated in accordance with the
definition contained in our Credit Facility. Total Funded Debt
is generally defined as aggregate debt obligations reflected in our
balance sheet, less the hedge adjustments resulting from terminated
and existing fair value interest rate derivatives or swaps, if any,
less certain cash, plus additional outstanding letters of credit
not already reflected in debt and certain guarantees.
Our management uses Credit Agreement EBITDA and Total Funded
Debt to evaluate compliance with our debt covenants and borrowing
capacity available under our Credit Facility. Management
believes that investors also use these measures to evaluate our
compliance with our debt covenants and available borrowing
capacity. Borrowing capacity is dependent upon, in addition to
other measures, the "Credit Agreement Debt/EBITDA ratio" or the
"Leverage Ratio," which is defined as Total Funded Debt divided by
Credit Agreement EBITDA. As of the June 30, 2014 calculation,
our Leverage Ratio was 1.90 times. Our maximum permitted
Leverage Ratio under the Credit Facility at June 30, 2014 was 3.50
times.
Set forth below is a reconciliation of Credit Agreement EBITDA
for the twelve months ended June 30, 2014 and June 30, 2013, to the
most directly comparable GAAP measure, Consolidated Net
Income:
|
|
|
(In Millions) |
Twelve Months |
Twelve Months |
|
Ended |
Ended |
|
June 30, 2014 |
June 30, 2013 |
|
|
|
Consolidated Net Income |
$506.8 |
$637.6 |
Interest Expense, net |
85.4 |
99.2 |
Income Taxes |
279.2 |
(62.9) |
Depreciation and Amortization |
575.8 |
547.3 |
Additional Permitted Charges |
156.2 |
125.8 |
Credit Agreement EBITDA |
$1,603.4 |
$1,347.0 |
|
|
|
Set forth below is a
reconciliation of Total Funded Debt to the most directly comparable
GAAP measures, Current portion of debt and Long-term debt due after
one year: |
|
|
|
(In Millions, except ratio) |
June 30, |
June 30, |
|
2014 |
2013 |
|
|
|
Current Portion of Debt |
$63.1 |
$54.1 |
Long-Term Debt Due After One Year |
2,923.3 |
2,972.3 |
Total Debt |
2,986.4 |
3,026.4 |
Plus: Letters of Credit, Guarantees and
Other Adjustments |
53.5 |
59.7 |
Total Funded Debt |
$3,039.9 |
$3,086.1 |
|
|
|
Credit Agreement EBITDA for the Twelve Months
Ended |
$1,603.4 |
$1,347.0 |
|
|
|
Leverage Ratio |
1.90 |
2.29 |
Adjusted Net Income and Adjusted Earnings per Diluted
Share
We also use the non-GAAP measures "adjusted net income" and
"adjusted earnings per diluted share". Management believes
these non-GAAP financial measures provide our board of directors,
investors, potential investors, securities analysts and others with
useful information to evaluate the performance of the Company
because it excludes restructuring and other costs, net, and other
specific items that management believes are not indicative of the
ongoing operating results of the business. The Company and our
board of directors use this information to evaluate the Company's
performance relative to other periods. We believe that the
most directly comparable GAAP measures to adjusted net income and
adjusted earnings per diluted share are Net income attributable to
Rock-Tenn Company shareholders and Earnings per Diluted Share,
respectively. Set forth at the beginning of this press release
is a reconciliation of adjusted earnings per diluted share to
Earnings per diluted share. Set forth below is a reconciliation of
adjusted net income to Net income attributable to Rock-Tenn Company
shareholders:
|
|
|
|
|
|
Three Months |
Three Months |
Nine Months |
Nine Months |
|
Ended |
Ended |
Ended |
Ended |
|
June 30, |
June 30, |
June 30, |
June 30, |
(In Millions) |
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Net income attributable to Rock-Tenn
Company shareholders |
$133.3 |
$140.1 |
$325.8 |
$550.8 |
|
|
|
|
|
Alternative fuel mixture credit tax reserve
adjustment |
— |
— |
— |
(252.9) |
Restructuring and other costs and operating
losses and transition costs due to plant closures |
8.7 |
18.0 |
30.4 |
39.9 |
Acquisition inventory step-up |
1.6 |
— |
1.8 |
— |
Loss on extinguishment of debt |
— |
— |
— |
0.2 |
|
|
|
|
|
Adjusted net
income |
$143.6 |
$158.1 |
$358.0 |
$338.0 |
CONTACT: RockTenn
John Stakel, SVP-Treasurer, 678-291-7901
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