Exhibit 99.1
FOR IMMEDIATE RELEASE
Cellu Tissue Holdings, Inc. Announces First Quarter 2008 Results
Alpharetta, GA – July 12, 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 first quarter ended May 31, 2007.
As previously announced, Cellu Parent Corporation, our Parent Company, was acquired in the second quarter of the fiscal year ended February 28, 2007, or fiscal year 2007, and, as a result of this transaction (the “Merger”), purchase accounting was applied. Furthermore, in the first quarter of the fiscal year ending February 29, 2008, or fiscal year 2008, the Company completed the acquisition of CityForest Corporation (“CityForest”). Accordingly, the first quarter fiscal year 2008 results are impacted by the effects of purchase accounting related to both these transactions and CityForest’s operating results, as highlighted below.
First Quarter Fiscal Year 2008 Operating Results
Net sales for the first quarter ended May 31, 2007 totaled $103.2 million compared to $78.6 million for the comparable period in the prior year, an increase of $24.6 million, or 31.2%. For the first quarter ended May 31, 2007, the Company sold 79,387 tons of tissue hard rolls, machine-glazed paper hard rolls and converted paper products. This is an increase of 18,028 tons, or 29.4%, from the comparable period in the prior year. Included in this increase is $8.9 million of net sales generated and 10,276 tons sold from the date of acquisition (March 21, 2007) through May 31, 2007 related to CityForest. Also, contributing to the increase in net sales from the comparable period in the prior year is an increase in net selling price per ton to $1,300 for the first quarter ended May 31, 2007 compared to $1,282 for the comparable period in the prior year. Net sales within the tissue segment for the first quarter ended May 31, 2007 totaled $77.6 million, an increase of 40.3%, from $55.3 million for the comparable period in the prior year. Net sales within the machine-glazed paper segment for the first quarter ended May 31, 2007 totaled $25.6 million, an increase of 9.7%, from $23.3 million for the comparable period in the prior year. The increase within the tissue segment is primarily attributable to the acquisition of CityForest. The increase within the machine-glazed paper segment is attributable to an increase in tonnage sold and an increase in net selling price per ton.
For the first quarter ended May 31, 2007, Cellu Tissue reported gross profit of $8.3 million, or 8.0% of net sales, compared to $6.9 million, or 8.7%, for the comparable period in the prior year. The increase in gross profit for the quarter ended May 31, 2007 is attributable to the CityForest acquisition and a decrease per ton in energy costs over the comparable period in the prior year, despite an increase in depreciation expense related to
purchase accounting. For the quarter ended May 31, 2007, depreciation expense is $6.7 million, or 6.5%, of net sales compared to depreciation expense of $3.5 million, or 4.5%, of net sales for the comparable period in the prior year. Income from operations for the first quarter ended May 31, 2007 was $3.6 million, consistent with the comparable period in the prior year. Income from operations in the tissue segment for the first quarter ended May 31, 2007 was $4.1 million compared to income of $2.9 million for the first quarter in the prior year. Loss from operations in the machine-glazed paper segment for the first quarter ended May 31, 2007 was $.5 million compared to income of $.6 million for the first quarter in the prior year. Selling, general and administrative expense increased $1.4 million from the comparable period in the prior year due to the acquisition, costs incurred in connection with preparation for becoming compliant with Sarbanes Oxley, increased workers compensation expense and bonuses accrued in the quarter ended May 31, 2007. Furthermore, included in the current quarter results is $.2 million of stock and related compensation expense related primarily to the vesting of restricted stock and stock option awards granted after the merger. Included in the results for the comparable period in the prior year were less than $.1 million of stock and related compensation expense and $.1 million of merger-related transaction costs.
For the first quarter ended May 31, 2007, the Company reported a pretax loss of $1.7 million, compared to a pretax loss of $.7 million for the comparable period in the prior year. For the first quarter ended May 31, 2007, the Company experienced a net loss of $1.1 million, compared to a net loss of $.5 million for the comparable period in the prior year.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter ended May 31, 2007 totaled $10.0 million, compared to $7.0 million for the comparable period in the prior year. The increase over the prior year is primarily reflective of the add-back of the additional depreciation expense in the first quarter ended May 31, 2007 as noted above and the CityForest acquisition.
Russell C. Taylor, President and Chief Executive Officer of Cellu Tissue, commented: “ We are very pleased with the acquisition of CityForest in the first quarter 2008. The integration of the acquired company into our tissue business has gone smoothly”.
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, 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 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
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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 July 13, 2007 at 10 a.m. ET regarding first quarter fiscal year 2008 financial results. The dial-in number is (888) 428-4479 or International (651) 291-0900; participant code 879319. A taped replay of the conference call will be available after 1:30 p.m. July 13, 2007 until July 27, 2007. The number to call for the taped replay is (800) 475-6701 or International (320) 365-3844, access code 879319.
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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