RockTenn predicts bright future after positive quarter

Total net sales of $2.4bn for the third quarter of fiscal 2013 increased $145m compared to Q3 of fiscal 2012. Segment income of $274m increased $115m or 72% over the prior year quarter.

RockTenn's restructuring, operating losses and transition costs due to plant closures for Q3 fiscal 2013 consisted of $22m of pre-tax facility closure charges and $2m of pre-tax acquisition and integration costs. 

The pre-tax facility closure charges related to corrugated converting facilities acquired in the Smurfit-Stone acquisition.

Earnings growth predicted​

James A. Rubright, RockTenn chairman and chief executive officer, said: "Our quarterly adjusted earnings of $2.16 per share, up 93% over the preceding quarter and 127% over the prior year quarter, reflect the continued substantial improvements we are making in operating our businesses, executing capital projects and executing our sales and pricing strategy. ​

“As these broadly based initiatives continue to strengthen and as we further implement the current pricing initiatives in corrugated packaging and consumer paperboard grades, our earnings for the fourth quarter and the next fiscal year should also be sharply higher than our earnings for the comparable prior year periods."​

Corrugated Packaging segment net sales increased $174m to $1.7bn and segment income increased $123m to$196m in the third quarter of fiscal 2013 year over year.

The increased sales and earnings are related to higher selling prices and volumes and increased synergies that were partially offset by higher commodity and other costs, said the firm.

As a result of the restructuring and extension of a steam supply contract for its Jacksonville recycled containerboard mill, RockTenn recorded a $0.10 per share non-cash gain in the quarter by reducing amortization expense. 

Segment income in the Corrugated Packaging segment included $6.7m of pre-tax losses at the Matane, Quebec containerboard mill in the nine months ended 30 June 2012.

Selling prices down​

Consumer Packaging segment net sales increased $16m and segment income declined $8m in the third quarter of fiscal 2013 compared to the prior year quarter.

This was due to generally lower selling prices and higher virgin fiber and energy costs which were more than offset higher volumes and lower recycled fiber costs.

Corrugated Packaging segment tons shipped increased 102,000 tons over the prior year quarter due to increased production from operating improvements and reduced maintenance outage tons.  

Consumer Packaging segment paperboard and pulp shipments of 363,000 tons increased 15,000 tons over the prior year quarter.

Recycling segment net sales decreased $64m over the prior year to $275m primarily as a result of lower volume and pricing and segment income was relatively flat at $2m in the third quarter compared to the prior year.