Exhibit 99.1
FOR IMMEDIATE RELEASE
Cellu Tissue Holdings, Inc. Announces Second Quarter 2005 Results
Quarterly Sales Growth of 17.9% over the prior year
East Hartford, Conn. – October 11, 2004—Cellu Tissue Holdings, Inc., an established leader in the manufacturing of high-quality business-to-business and consumer tissue grades used in health care and consumer products worldwide, today announced financial results for the second quarter ended August 26, 2004.
Second Quarter 2005 Operating Results
Sales totaled $86.3 million for the second quarter ended August 26, 2004, compared to $73.2 million for the second quarter of fiscal year 2004, an increase of $13.1 million, or 17.9%. For the quarter ended August 26, 2004, Cellu Tissue reported gross profit of $10.9 million or 12.7% of net sales, compared to $7.9 million or 10.8% for the comparable period in the prior year. Income from operations for the second quarter ended August 26, 2004 was $6.3 million compared to $4.3 million for the comparable period in the prior year.
For the quarter ended August 26, 2004, the Company realized net income of $3.5 million, compared to net income of $1.9 million for the comparable period in the prior year. Included in the quarter ended August 26, 2004 net income is a $2.4 million ($1.6 million net of tax) gain related to the sale of a previously idled paper machine at one of the Company’s mills.
Sales within the Tissue Segment for the quarter ended August 26, 2004 totaled $60.5 million, an increase of 25.4% from $48.2 million for the comparable period in the prior year. Sales within the Machine-Glazed Paper Segment for the quarter ended August 26, 2004 totaled $25.8 million, an increase of 3.2% from $25.0 million for the comparable period in the prior year. The increase in net sales is attributable to improved mix, higher selling prices, and an increase in volume sold over the prior year. For the quarter ended August 26, 2004 the Company sold 69,167 tons of tissue hard rolls, machine-glazed paper hard rolls and converted paper products. This is an increase of 5,535 tons or 8.7% over the comparable period in the prior year. Income from operations in the Tissue Segment for the quarter ended August 26, 2004 was $4.6 million compared to $2.5 million for the second quarter in the prior year. This increase is attributable to the increase in net sales, partially offset by increased pulp, energy and freight costs. Income from operations experienced by the Machine-Glazed Paper Segment for the quarter ended August 26, 2004 was $2.0 million, consistent with the second quarter in the prior year.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter ended August 26, 2004 totaled $12.5 million, compared to $8.5 million for the comparable period in the prior year. Included in current quarter EBITDA is $.3 million related to accelerated vesting of certain stock options. Of the increase over the prior year of $4.0 million, $2.4 million relates to the recognition of a gain on the sale of a paper machine at one of the Company’s mills and the remainder is attributable to improved gross profit over the prior year.
Russell C. Taylor, President and Chief Executive Officer of Cellu Tissue,
commented: “ This quarter was a record quarter for the Company with regards to net sales and EBITDA. We experienced strong net sales growth through both volume and price increases. The price increases were critical to offset rising pulp, energy and fuel costs.”
Notice Relating to the Use of Non-GAAP Measures
Attached to this press release are tables setting forth our unaudited consolidated statements of operations, financial position and selected consolidated financial data, including information concerning our cash flow position, selected consolidated segment data, and reconciliations of consolidated net income from operations to consolidated EBITDA. EBITDA is not a measure of performance under accounting principles generally accepted in the United States and should not be considered in isolation or used as a substitute for income from operations, net income, net cash provided by operating activities, or other operating or cash flow data prepared in accordance with generally accepted accounting principles. We have presented EBITDA because this measure is used by investors, as well as our own management, to evaluate the operating performance of our business, including its ability to service debt.
Cellu Tissue’s management invites you to listen to our conference call on October 12, 2004 at 10 a.m. ET regarding second quarter fiscal 2005 financial results. The dial-in number is (800) 762-4758 or International (480) 629-9034; participant code 749587.
Cellu Tissue Holdings, Inc. is a manufacturer of a variety of specialty tissue hard rolls and machine-glazed paper used in the manufacture of various end products, including diapers, facial and bath tissue, assorted paper towels and food wraps. In addition, the Company produces a variety of converted tissue products. Information about Cellu Tissue Holdings, Inc. is available on the Internet at www. cellutissue.com.
For further information, please contact Dianne Scheu, Chief Financial Officer of Cellu Tissue Holdings, Inc. @ 678-393-2651, Ext. 2164; scheud@cellutissue.com.
2
CELLU TISSUE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars, in thousands)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| August 26 |
| August 28 |
| August 26 |
| August 28 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net sales |
| $ | 86,275 |
| $ | 73,199 |
| $ | 165,060 |
| $ | 136,795 |
|
Cost of goods sold |
| 75,353 |
| 65,305 |
| 145,184 |
| 122,251 |
| ||||
Gross profit |
| 10,922 |
| 7,894 |
| 19,876 |
| 14,544 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative expenses |
| 3,967 |
| 3,369 |
| 7,590 |
| 6,407 |
| ||||
Accelerated vesting of stock options-noncash |
| 293 |
|
|
| 534 |
|
|
| ||||
Compensation from redemption of stock options |
|
|
|
|
| 3,414 |
|
|
| ||||
Amortization of intangibles |
| 336 |
| 186 |
| 693 |
| 373 |
| ||||
Income from operations |
| 6,326 |
| 4,339 |
| 7,645 |
| 7,764 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Write-off of debt issuance costs and prepayment penalties |
|
|
|
|
| 3,318 |
|
|
| ||||
Interest expense, net |
| 4,057 |
| 1,447 |
| 7,947 |
| 2,897 |
| ||||
Foreign currency (gain) loss |
| 212 |
| (31 | ) | 196 |
| 374 |
| ||||
Other (income) expense |
| (2,355 | ) | (3 | ) | (2,355 | ) | 37 |
| ||||
Income (loss) before income tax |
| 4,412 |
| 2,926 |
| (1,461 | ) | 4,456 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income tax expense (benefit) |
| 876 |
| 1,061 |
| (3,998 | ) | 1,616 |
| ||||
Net income |
| $ | 3,536 |
| $ | 1,865 |
| $ | 2,537 |
| $ | 2,840 |
|
3
CELLU TISSUE HOLDINGS, INC,
CONSOLIDATED BALANCE SHEETS
(Dollars, in thousands)
|
| August 26 |
| February 29 |
| ||
|
| (Unaudited) |
|
|
| ||
ASSETS |
|
|
|
|
| ||
CURRENT ASSETS: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 12,166 |
|
|
| |
Receivables, net |
| 41,718 |
| $ | 37,438 |
| |
Receivables, other |
| 3,900 |
|
|
| ||
Inventories |
| 22,862 |
| 24,803 |
| ||
Prepaid expenses and other current assets |
| 2,055 |
| 2,119 |
| ||
Income tax receivable |
| 5,770 |
| 712 |
| ||
Deferred income taxes |
| 1,134 |
| 1,134 |
| ||
Assets held for sale |
|
|
| 2,270 |
| ||
TOTAL CURRENT ASSETS |
| 89,605 |
| 68,476 |
| ||
PROPERTY, PLANT AND EQUIPMENT, NET |
| 96,644 |
| 100,122 |
| ||
DEBT ISSUANCE COSTS |
| 7,467 |
| 4,712 |
| ||
GOODWILL |
| 13,724 |
| 13,724 |
| ||
OTHER ASSETS |
| 101 |
| 178 |
| ||
TOTAL ASSETS |
| $ | 207,541 |
| $ | 187,212 |
|
|
|
|
|
|
| ||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) |
|
|
|
|
| ||
CURRENT LIABILITIES: |
|
|
|
|
| ||
Revolving lines of credit |
|
|
| $ | 11,353 |
| |
Cash overdraft |
|
|
| 4,760 |
| ||
Accounts payable |
| $ | 21,830 |
| 16,858 |
| |
Accrued expenses |
| 12,354 |
| 11,227 |
| ||
Accrued interest |
| 7,464 |
| 292 |
| ||
Current portion of long-term debt |
| 270 |
| 7,470 |
| ||
TOTAL CURRENT LIABILITIES |
| 41,918 |
| 51,960 |
| ||
LONG-TERM DEBT, LESS CURRENT PORTION |
| 160,647 |
| 36,964 |
| ||
DEFERRED INCOME TAXES |
| 13,688 |
| 13,688 |
| ||
OTHER LIABILITIES |
| 118 |
| 118 |
| ||
STOCKHOLDERS' EQUITY(DEFICIENCY) |
| (8,830 | ) | 84,482 |
| ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIENCY) |
| $ | 207,541 |
| $ | 187,212 |
|
4
CELLU TISSUE HOLDINGS, INC.
SUMMARY OF CONSOLIDATED CASH FLOW ACTIVITY (Unaudited)
(Dollars, in thousands)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| August 26 |
| August 28 |
| August 26 |
| August 28 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 3,536 |
| $ | 1,865 |
| $ | 2,537 |
| $ | 2,840 |
|
Write-off of debt issuance costs-noncash |
|
|
|
|
| 2,894 |
|
|
| ||||
Accelerated vesting of stock options-noncash |
| 293 |
|
|
| 534 |
|
|
| ||||
Accretion of debt discount |
| 75 |
|
|
| 148 |
|
|
| ||||
Depreciation and amortization |
| 4,026 |
| 4,099 |
| 8,002 |
| 8,187 |
| ||||
(Gain) loss on sale of property, plant & equipment |
| (2,381 | ) | (2 | ) | (2,381 | ) | 37 |
| ||||
Unearned compensation |
| 151 |
| 167 |
| 297 |
| 334 |
| ||||
Changes in working capital |
| 1,741 |
| (4,943 | ) | (2,644 | ) | (9,297 | ) | ||||
Net cash provided by operating activities |
| 7,441 |
| 1,186 |
| 9,387 |
| 2,101 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
| ||||
Proceeds for sale of property, plant and equipment, net |
| 4,004 |
|
|
| 4,004 |
|
|
| ||||
Capital expenditures |
| (2,123 | ) | (2,475 | ) | (3,183 | ) | (5,259 | ) | ||||
Net cash provided by (used in) investing activities |
| 1,881 |
| (2,475 | ) | 821 |
| (5,259 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
| ||||
(Payments) borrowings of debt, net |
|
|
| (3,608 | ) | 116,336 |
| (5,682 | ) | ||||
Borrowings (payments) on revolving line of credit, net |
|
|
| 4,958 |
| (10,953 | ) | 8,525 |
| ||||
Cash dividends |
|
|
|
|
| (96,789 | ) |
|
| ||||
Prepayment penalties |
|
|
|
|
| (424 | ) |
|
| ||||
Debt issuance costs |
| (88 | ) |
|
| (6,319 | ) |
|
| ||||
Net cash (used in) provided by financing activities |
| (88 | ) | 1,350 |
| 1,851 |
| 2,843 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Effect of foreign currency |
| 190 |
| (61 | ) | 107 |
| 315 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net increase in cash and cash equivalents |
| 9,424 |
| 0 |
| 12,166 |
| 0 |
| ||||
Cash and cash equivalents at beginning of period |
| 2,742 |
| 0 |
| 0 |
| 0 |
| ||||
Cash and cash equivalents at end of period |
| $ | 12,166 |
| $ | 0 |
| $ | 12,166 |
| $ | 0 |
|
5
CELLU TISSUE HOLDINGS, INC.
CONSOLIDATED BUSINESS SEGMENT INFORMATION (Unaudited)
(Dollars, in thousands)
BUSINESS SEGMENTS
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| August 26 |
| August 28 |
| August 26 |
| August 28 |
| ||||
NET SALES: |
|
|
|
|
|
|
|
|
| ||||
Tissue |
| $ | 60,501 |
| $ | 48,228 |
| $ | 115,514 |
| $ | 88,608 |
|
Machine-Glazed Paper |
| 25,774 |
| 24,971 |
| 49,546 |
| 48,187 |
| ||||
Consolidated |
| $ | 86,275 |
| $ | 73,199 |
| $ | 165,060 |
| $ | 136,795 |
|
|
|
|
|
|
|
|
|
|
| ||||
INCOME FROM OPERATIONS: |
|
|
|
|
|
|
|
|
| ||||
Tissue |
| $ | 4,644 |
| $ | 2,537 |
| $ | 6,016 |
| $ | 4,768 |
|
Machine-Glazed Paper |
| 2,018 |
| 1,988 |
| 2,321 |
| 3,368 |
| ||||
Corporate amortization of intangibles |
| (336 | ) | (186 | ) | (692 | ) | (373 | ) | ||||
|
| $ | 6,326 |
| $ | 4,339 |
| $ | 7,645 |
| $ | 7,763 |
|
6
CELLU TISSUE HOLDINGS, INC.
RECONCILIATION OF CONSOLIDATED NET INCOME TO EBITDA
(Unaudited) (Dollars, in thousands)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| August 26 |
| August 28 |
| August 26 |
| August 28 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
NET INCOME |
| $ | 3,536 |
| $ | 1,865 |
| $ | 2,537 |
| $ | 2,840 |
|
Add back: |
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
| 4,026 |
| 4,099 |
| 8,002 |
| 8,187 |
| ||||
Interest expense |
| 4,065 |
| 1,448 |
| 7,957 |
| 2,899 |
| ||||
Income tax (benefit) expense |
| 876 |
| 1,061 |
| (3,998 | ) | 1,615 |
| ||||
EBITDA |
| $ | 12,503 |
| $ | 8,473 |
| $ | 14,498 |
| $ | 15,541 |
|
7