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Boise Inc. announces Q2 results; sales were up

Wednesday, August 04, 2010

Press release from the issuing company

Boise, Idaho - Boise Inc. today reported net income of $13.3 million or $0.16 per diluted share for second quarter 2010 compared with net income of $50.9 million or $0.60 per diluted share for second quarter 2009. Net income excluding special items was $11.4 million or $0.14 per diluted share in second quarter 2010 compared with $3.3 million or $0.04 per diluted share in second quarter 2009.

EBITDA excluding special items was $67.0 million for second quarter 2010 compared with $53.0 million for second quarter 2009.

"During the second quarter, we began to benefit from improving pricing trends in both packaging and paper markets and experienced growth in our packaging and packaging demand-driven paper businesses," said Alexander Toeldte, President and Chief Executive Officer of Boise Inc. "Shipments in our corrugated packaging business were up 17% over the prior year, and sales volumes of our premium office, label and release, and flexible packaging products grew 14% over the prior year period. During the second quarter, we completed planned annual outages at our International Falls and Wallula mills. Looking ahead to the third quarter, we have no planned annual maintenance outages and expect to continue to benefit from the recently implemented price increases."

Sales
Total sales for second quarter 2010 were $521.6 million, up $42.2 million, or 9%, from $479.4 million for second quarter 2009 and up $27.5 million from first quarter 2010 sales of $494.1 million.

Paper segment sales increased $7.8 million during second quarter 2010 compared with second quarter 2009 due primarily to increased sales prices. Packaging segment sales increased $35.9 million during second quarter 2010 compared with second quarter 2009 driven by higher sales volumes for corrugated products and newsprint and higher sales prices for linerboard and newsprint. These increases were offset partially by lower sales prices of corrugated products compared with the prior year.

Prices and Volumes
Pricing for uncoated freesheet improved in second quarter 2010 compared with second quarter 2009 and first quarter 2010. Average net selling prices for uncoated freesheet papers increased $12 per ton, or 1%, to $970 per ton during second quarter 2010 compared with second quarter 2009 and increased $29 per ton from first quarter 2010. In first quarter 2010, we implemented a $40-per-ton price increase across most of our uncoated freesheet grades, including cut-size office papers, offset, and midweight opaque grades. In April 2010, we announced a $60-per-ton price increase effective in May across virtually all of our uncoated office papers and printing and converting grades, from which we expect to further benefit beginning in third quarter 2010. Overall, uncoated freesheet sales volumes were 312,000 tons during second quarter 2010, a decrease of 1% versus the prior year period, and flat from first quarter 2010. Combined sales volumes of premium office, label and release, and flexible packaging papers, which represented 32% of our total second quarter 2010 uncoated freesheet sales volumes, increased by 14% compared with second quarter 2009.

Corrugated container and sheet sales volumes improved 17% during second quarter 2010 compared with second quarter 2009 and increased 4% from first quarter 2010. This increase was due primarily to increased sales of sheets from our sheet feeder plant in Texas as a result of improving industrial markets in the area. Corrugated container and sheet prices increased 6% sequentially from first quarter 2010 driven by higher selling prices for containerboard. Corrugated container and sheet prices decreased 5% in second quarter 2010 from second quarter 2009 driven primarily by an increased sales mix of corrugated sheets relative to corrugated containers.

Linerboard net selling prices to third parties increased $38 per ton, or 13%, to $340 per ton in second quarter 2010 compared with $302 per ton in second quarter 2009 and improved $44 per ton sequentially from first quarter 2010. In first quarter 2010, we implemented a $50-per-ton and $70-per-ton price increase on domestic linerboard sales in the eastern and western U.S., respectively. During second quarter, we implemented an additional $60-per-ton increase on domestic linerboard sales. In July, we announced an additional $60-per-ton increase on domestic linerboard sales effective on August orders. Linerboard sales volumes to third parties were 54,000 tons during second quarter 2010, flat from second quarter 2009. Third-party sales volumes decreased 13% sequentially from first quarter 2010 as improved sales volumes in our corrugated product and sheet operations during second quarter 2010 resulted in less linerboard available for sales to third parties.

Input Costs
Total fiber, energy, and chemical costs for second quarter 2010 were $215.1 million, an increase of $31.4 million, or 17%, compared with costs of $183.7 million for second quarter 2009. The increase was driven primarily by higher fiber costs and higher consumption of all inputs due to increased production volumes.

Total fiber costs during second quarter 2010 were $117.1 million, an increase of $24.9 million, or 27%, from $92.2 million incurred in second quarter 2009. This was due to higher purchased pulp prices and increased fiber consumption. Fiber costs in second quarter 2010 increased $1.6 million, or 1%, compared with $115.5 million in first quarter 2010.

Energy costs in second quarter 2010 were $48.1 million, an increase of $7.6 million, or 19%, compared with $40.5 million in second quarter 2009. This was driven by increased consumption of energy due to higher production volumes, offset partially in the Paper segment by lower electrical prices and more favorable energy mix. Energy costs in second quarter 2010 decreased $15.3 million, or 24%, from $63.4 million in first quarter 2010 due to seasonal decreases in consumption and lower natural gas prices.

Chemical costs in second quarter 2010 were $49.9 million, a decrease of $1.1 million, or 2%, compared with $51.0 million in second quarter 2009 as lower prices were offset partially by higher consumption of commodity chemicals. Chemical costs were up $0.8 million, or 2%, compared with $49.1 million in first quarter 2010 due to higher prices.

 

 

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