NewPage announces 19% sales increase in Q3
Friday, November 05, 2010
Press release from the issuing company
Miamisburg, Ohio - NewPage Corporation today announced its results of operations for the third quarter of 2010. Net sales were $943 million in the third quarter of 2010 compared to $791 million in the third quarter of 2009, an increase of $152 million, or 19 percent. The increase in net sales resulted primarily from higher sales volumes. Net sales in the third quarter of 2009 were affected by decreased advertising spending and magazine and catalog circulation that was largely attributable to general economic factors and inventory reductions by customers. "We expect our business for the remainder of the year to be generally consistent with trends at the end of the third quarter of 2010," said George F. Martin, president and chief executive officer for NewPage. "We also expect to see continued price realization in the fourth quarter from our previous price announcements."
Net loss attributable to NewPage was $(67) million in the third quarter of 2010 compared to $(138) million in the third quarter of 2009. The improvement was primarily a result of higher sales volumes and lower interest expense partially offset by lower other income recognized for alternative fuel mixture tax credits. Interest expense in the third quarter of 2010 was $93 million compared to $194 million in the third quarter of 2009, primarily as a result of a charge of $133 million on the refinancing of debt and related transactions in the third quarter of 2009, offset by higher interest rates on outstanding debt in 2010.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization as further adjusted as shown in the attached reconciliation) was $106 million in the third quarter of 2010 compared to $140 million in the third quarter of 2009.
"In the third quarter of 2010, our total sales volume increased 16 percent compared to the third quarter of last year. Demand increased relative to last year and we started to realize the benefit of our previously announced price increases, plus we are seeing results from our cost reduction initiatives," added Martin. As a result of higher demand and lower industry production capacity, NewPage did not take any market-related downtime in the third quarter of 2010 compared to 101,000 tons in the third quarter of 2009.
"NewPage ended the third quarter of 2010 with liquidity of $125 million, consisting of $8 million of cash and cash equivalents and $117 million available for borrowing under the revolving credit facility," said David J. Prystash, senior vice president and chief financial officer for NewPage.
On November 3, 2010, NewPage completed the sale of certain assets of the NewPage Port Hawkesbury mill in Nova Scotia, Canada to Nova Scotia Power Inc. for creation of a 60-megawatt biomass co-generation facility for approximately CDN $80 million. "The proceeds from the asset sale of the Port Hawkesbury biomass project will enhance year-end liquidity," added Prystash.
On November 1, 2010, Great Lakes Utilities and Consolidated Water Power Company, a subsidiary of NewPage, signed an Asset Sale Agreement for five CWPCo hydroelectric projects located along the Wisconsin River in DuBay, Stevens Point, Whiting, Biron and Wisconsin Rapids, Wisconsin. This transaction is subject to various regulatory approvals and is not expected to close in 2010.
Gross margin for the third quarter of 2010 was 6.2 percent compared to 0.8 percent in the third quarter of 2009, primarily as a result of higher sales volumes and the effects of not taking market-related downtime in 2010.
On October 22, 2010, in the trade case initiated by NewPage, together with two other U.S. coated paper producers and the United Steelworkers Union, the International Trade Commission found that imports of coated paper from China and Indonesia pose a threat of material injury to U.S. producers and workers. That finding was based on a unanimous vote by the bipartisan commission, and clears the way for the Commerce Department to impose duties on the covered products.
"We are pleased with the International Trade Commission's finding on injury," added Martin. "The determination underscores the effects of unfair competition on the U.S. industry, where government subsidies and dumping have suppressed prices and forced mill closures. As we have said throughout this process, we are willing to compete with anyone in the world as long as we have a level playing field."
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