Press release from the issuing company
Creve Coeur, Mo. and Chicago - Smurfit-Stone Container Corporation today reported net income of $65 million, or $0.65 per diluted share, for the third quarter ended Sept. 30, 2010, compared with net income attributable to common stockholders of $1.41 billion, or $5.41 per diluted share, for the second quarter of 2010, and $65 million, or $0.25 per share, for the third quarter of 2009.
Smurfit-Stone's third quarter 2010 adjusted net income was $76 million, or $0.76 per diluted share, up from adjusted net income of $2 million, or $0.01 per diluted share, in the second quarter of this year, and an adjusted net loss of ($23) million, or ($0.09) per diluted share, in the third quarter of 2009. The adjustments in the third quarter of 2010 were primarily the exclusion of costs related to reorganization and restructuring. The major adjustment in the second quarter of 2010 was the exclusion of $1.42 billion of income, including tax benefits, related to the Company's emergence from bankruptcy.
Diluted Earnings Per Share Attributable to Common Stockholders
The Company reported operating income of $142 million for the third quarter of 2010, compared to an operating loss of ($6) million in the second quarter of 2010, and operating income of $159 million in the third quarter of 2009. The sequential improvement in operating income reflects increased net sales in the third quarter due to higher selling prices, lower maintenance-related downtime, lower fiber costs, and cost savings achieved in mill and container operations. Third quarter 2009 operating income significantly benefitted from income related to the alternative fuel tax credits that were received in 2009.
Patrick J. Moore, Smurfit-Stone's Chief Executive Officer, commented, "I am pleased with our strong third quarter performance, which benefitted from favorable pricing trends and lower input costs driven primarily by fiber. Importantly, we are realizing cost savings and efficiency improvements from our financial restructuring, investments in our core business, and focused efforts such as our Operational Excellence initiative. I'm proud of the efforts and commitment of our employees which contributed significantly to the strong quarter. I view the positive momentum in the quarter as an important step in delivering on the accelerated performance improvement we are pursuing."
Adjusted EBITDA for the third quarter of 2010 was $239 million, up from $102 million in the second quarter of 2010, and $94 million in the third quarter of 2009. The sequential improvement in adjusted EBITDA reflects higher selling prices, reduced maintenance-related downtime and related expenses, lower fiber costs, and improvements in overall operating productivity including additional headcount reductions made in the quarter.
Net sales for the third quarter of this year were $1.63 billion, up 4.5 percent from $1.56 billion in the second quarter of 2010 and up 15.3 percent over sales of $1.42 billion in the third quarter of 2009. The improvement in third quarter 2010 net sales is primarily due to higher average selling prices during the quarter.
Third Quarter Highlights
- The Company achieved very strong results in its first quarter since emerging from bankruptcy, demonstrating the performance capabilities of the new Smurfit-Stone.
- Ongoing efforts to reduce operating costs were also a significant contributor to higher earnings and cash generation in the quarter, with overall headcount being reduced by 460 positions in the quarter and 1,368 positions year to date.
- Strong cash generation, with cash balances growing by $124 million in the quarter, resulting in net debt of less than $730 million at September 30, 2010.
Smurfit-Stone expects moderately lower sequential earnings in the fourth quarter from the third quarter, as continued price improvement will be more than offset by additional mill maintenance costs, normal seasonal demand declines and higher energy usage. The Company also expects higher recycled fiber costs in the fourth quarter.
In addition to the major cost reduction focus in the business operations, the Company is undertaking a significant reduction in its selling, general and administrative costs, primarily through reductions of more than 450 positions for full-year 2010, or more than 14 percent of its workforce in these functions. The Company expects to realize net savings of more than $50 million in 2011 as compared to 2010, and has identified opportunities for additional savings in 2012.
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