MOSINEE, Wisc.--July 22, 2002--Wausau-Mosinee Paper Corporation today announced second-quarter net earnings of $5.7 million, or $.11 per share, compared to net earnings of $.7 million or $.01 per share in the same period last year. Second- quarter earnings include stock incentive credits of less than $.01 per share in 2002 and charges of $.04 per share in 2001. Second-quarter net sales were $237.8 million compared to $240.6 million last year.
Net earnings for the first six months of 2002 were $9.1 million, or $.18 per share, compared to a loss of $3.1 million, or $.06 per share, the year before. Stock incentive expenses were less than $.01 per share in the first half of 2002 and $.05 per share in the first two quarters of 2001. Net sales through the first two quarters were $463.7 million compared to $474.8 million last year.
"A strong second-quarter performance by our Printing & Writing Group, with operating earnings up 72 percent to $10.5 million, was a major contributor to our fourth consecutive quarter of year-over-year earnings improvement," said Thomas J. Howatt, President and CEO. "Our earnings progress has continued despite weak economic conditions, demonstrating the value of our strong customer service philosophy and intense focus on cost reduction activities.
"The improved second-quarter operating margins of our Printing & Writing Group, which increased to 11 percent from 6 percent a year ago, reflect substantial progress with our initiatives to increase operating efficiencies and improve sales mix," Mr. Howatt said. Also contributing to the year-over-year improvement were reduced market pulp and natural gas costs.
Market conditions remain the most difficult in the Specialty Paper Group, with second-quarter average selling prices declining 10 percent on a year-over-year basis. The Group initiated a comprehensive cost reduction process in the second quarter, recording a pre-tax consulting expense of $1.3 million. Excluding this expense, Specialty Paper's second-quarter operating loss declined by nearly half, to $1.5 million from $2.8 million last year. "Although a significant expense in the quarter, the Specialty Paper Group's cost reduction process is expected to yield substantial results as identified opportunities are fully implemented over the next 12 to 18 months. Together with the benefits delivered by our other internal initiatives, these efforts are expected to result in break-even operating results over the second half of the year," Mr. Howatt said.
Towel & Tissue shipments increased 7 percent for the quarter over the same period last year, but operating profits were adversely impacted by significantly higher wastepaper prices from year-ago levels and declined to $6.3 million from $7.1 million the year before. "While shipment gains in the quarter could not fully offset wastepaper price increases, the fundamentals of our Towel & Tissue Group remain strong. Selling price increases announced in May are expected to return operating margins to higher levels in the third quarter," Mr. Howatt said. For the first half of the year, operating profits for the Towel & Tissue Group rose to $11.8 million from $11.4 million last year.
Mr. Howatt noted that second-quarter results benefited from a $900,000 decline in interest expense, reflecting the substantial reduction in debt achieved over the last year.
Commenting on the third-quarter outlook, Mr. Howatt stated, "The timing of an economic recovery and improved industry conditions remains unclear with only towel and tissue demand expanding at this time. With market pulp and wastepaper prices trending higher, we continue to focus on our internal initiatives to drive bottom-line growth. We believe these efforts will result in third-quarter earnings comparable to the prior year."
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