Exhibit 99.1
FOR IMMEDIATE RELEASE
Cellu Tissue Holdings, Inc. Announces Third Quarter 2007 Results
Alpharetta, GA — January 4, 2007—Cellu Tissue Holdings, Inc. (the “Company” or “Cellu Tissue”), 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 third quarter ended November 23, 2006.
As previously announced, our Parent Company was acquired in the second quarter of fiscal 2007 and as a result of this transaction (the “Merger”), purchase accounting was applied. Accordingly, the third quarter fiscal 2007 results are impacted by the effects of purchase accounting as highlighted below.
Third Quarter 2007 Operating Results
Net sales for the third quarter ended November 23, 2006 totaled $83.3 million compared to $81.5 million for the comparable period in the prior year, an increase of $1.8 million, or 2.2%. For the third quarter ended November 23, 2006 the Company sold 61,835 tons of tissue hard rolls, machine-glazed paper hard rolls and converted paper products. This is a decrease of 2,153 tons, or 3.4%, from the comparable period in the prior year. Included in this decrease is the effect of the shutdown of the machine-glazed machine at the Company’s Ontario facility, which occurred in the third quarter of the fiscal year ended February 28, 2006 and represents a decrease of 1,345 tons in the third quarter ended November 23, 2006, compared to the third quarter of the prior fiscal year. Net of the effect of this shutdown, tons sold decreased 808, or 1.3%, for the third quarter ended November 23, 2006 from the comparable period in the prior year. Offsetting the decrease in volume sold for the third quarter ended November 23, 2006 was an increase in net selling price per ton to $1,347 for the third quarter ended November 23, 2006 from $1,274 for the comparable period in the prior year. Net sales within the Tissue Segment for the third quarter ended November 23, 2006 totaled $58.1 million, an increase of 2.1% from $56.9 million for the comparable period in the prior year. Net sales within the Machine-Glazed Paper Segment for the third quarter ended November 23, 2006 totaled $25.2 million, an increase of 2.2% from $24.6 million for the comparable period in the prior year. These increases are driven by an increase in net selling price per ton partially offset by the decrease in tonnage sold as noted above.
For the third quarter ended November 23, 2006, Cellu Tissue reported gross profit of $5.9 million, or 7.1%, of net sales, compared to $6.7 million, or 8.3%, for the comparable period in the prior year. Included in the third quarter ended November 23, 2006 is $1.9 million of additional depreciation expense in cost of goods sold as compared to depreciation expense associated with our historical basis of accounting prior to the
Merger. Income from operations for the third quarter ended November 23, 2006 was $2.4 million compared to income of $.8 million for the comparable period in the prior year. Income from operations in the Tissue Segment for the third quarter ended November 23, 2006 was $1.9 million compared to income of $1.1 million for the third quarter in the prior year. Income from operations in the Machine-Glazed Paper Segment for the third quarter ended November 23, 2006 was $.5 million compared to a loss of $.3 million for the third quarter in the prior year. Included in the current year results is $.2 million of non-cash compensation expense related to the vesting of restricted stock awards granted after the merger and $.2 million of other compensation expense related to the merger. Included in the prior year results were $1.0 million of restructuring costs and $1.5 million of merger-related transaction costs. No such costs were incurred in the third quarter of the current fiscal year.
For the third quarter ended November 23, 2006, the Company reported a pretax loss of $1.6 million, compared to a pretax loss of $3.5 million for the comparable period in the prior year. For the third quarter ended November 23, 2006, the Company experienced a net loss of $1.1 million, compared to a net loss of $1.2 million for the comparable period in the prior year.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter ended November 23, 2006 totaled $8.1 million, compared to $4.4 million for the comparable period in the prior year. Included in the current year results is $.2 million of non-cash compensation expense related to the vesting of restricted stock awards granted after the merger and $.2 million of other compensation expense related to the merger. The increase over the prior year is primarily reflective of the add-back of the additional depreciation expense in the third quarter ended November 23, 2006 as noted above. Furthermore, the prior year results included $1.0 million of restructuring costs and $1.5 million of merger-related transaction costs.
Russell C. Taylor, President and Chief Executive Officer of Cellu Tissue, commented: “We are encouraged with our business results and in particular our growth in converted tissue products. We believe we are seeing the peak or near peak of recent price trends in fiber, energy and other raw material. Our business sector results have been steadily improving from the fourth quarter of 2006 and we remain very confident in our converting products growth strategy”.
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, selected consolidated financial data including information concerning our cash flow position, combined consolidated statements of operations with respect to the period from March 1, 2006 to June 12, 2006 (preacquisition) and the period from June 13, 2006 to November 23, 2006 (post-acquisition), selected consolidated segment data, and reconciliations of consolidated net income from operations to consolidated EBITDA. EBITDA is not a measure of performance under U.S. generally accepted accounting principles and should not be considered in isolation or used as a substitute for income from operations, net income, net cash provided by
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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 January 5, 2007 at 10 a.m. ET regarding third quarter fiscal 2007 financial results. The dial-in number is (877) 209-0397 or International (612) 332-1210; participant code 857103. A taped replay of the conference call will be available after 1:30 p.m. January 5, 2007 until January 19, 2007. The number to call for the taped replay is (800) 475-6701 or International (320) 365-3844, access code 857103.
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. Cellu Tissue’s customers include major North American producers of branded and unbranded disposable consumer absorbent and tissue products for the personal and health care markets; consumer and away-from-home tissue products companies; national and regional tissue products distributors; and third-party converters who sell their products to food, bakery and confections companies. Cellu Tissue services a diverse group of high-quality customers, with three of its top 10 customers belonging to the Fortune 150 group of companies.
For more information, contact Cellu Tissue Holdings, Inc. at www. cellutissue.com.
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