– Earnings ex-items were $0.27 per share, up 17% vs. $0.23 on the same basis in the prior year
– Revenue declined 3%; grew 3.5% ex-currency and portfolio from volume and price/mix improvement
– Enterprise EBITDA ex-items of $188 million was essentially unchanged; includes $19 million of currency impact and $13 million of lower pension income
– Margin improvement program savings were $19 million; cumulative program savings are $104 million
– Pending merger with RockTenn on track to close in the second quarter
– Specialty Chemicals spinoff to shareholders on track to occur this year.
MeadWestvaco Corporation, a global leader in packaging and packaging solutions, reported total business segment EBITDA of $227 million in the first quarter of 2015, a modest increase versus the prior year . Continued momentum with the company’s end market-focused commercial strategy, solid operational execution and benefits from cost reduction actions drove the improvement. As a result, the company’s Packaging businesses again delivered EBITDA and EBITDA margin growth, while the Specialty Chemicals business maintained strong EBITDA margins from increases across targeted performance chemicals markets, and continued gains in carbon technology markets.
“The strong performance across our businesses this quarter is the result of excellent commercial and operational execution,” said John A. Luke, Jr., chairman and chief executive officer, MWV. “The momentum we have established with our market-focused strategy has carried into 2015 and helped us create our own growth and deliver EBITDA improvement in our businesses during a challenging economic period.” Luke continued, “As we prepare to create the premier global packaging company with RockTenn, there is tremendous excitement about our complementary capabilities and the opportunities to serve the growing global packaging marketplace. Our engagement and planning over the last 90 days further validates the strength of our combination, which is on track to be completed in the current quarter. And our positive outlook across targeted end markets and expected realization of the merger benefits give us great confidence that the combined company will generate attractive long-term shareholder returns.”
First Quarter Comparison
Sales from continuing operations in the first quarter of 2015 were $1.28 billion compared to $1.32 billion in the first quarter of 2014. Income from continuing operations attributable to the company was $31 million or $0.18 per share in the first quarter of both 2015 and 2014. Income from continuing operations attributable to the company excluding special items was $46 million or $0.27 per share in the first quarter of 2015, compared to $39 million or $0.23 per share in the first quarter of 2014.
First Quarter Segment Results
Following is a summary of first quarter 2015 results by business segment. All comparisons of the results for the first quarter of 2015 are with the first quarter of 2014 on a continuing operations basis.
Food & Beverage
In the Food & Beverage segment, sales decreased 2.4% (+2% ex-currency) to $745 million in the first quarter of 2015 compared to $763 million in first quarter of 2014. EBITDA decreased 6% to $103 million in the first quarter of 2015 compared to $109 million in the first quarter of 2014. Excluding incremental expense of $20 million associated with planned maintenance, EBITDA increased 13% to $123 million in the first quarter of 2015.
– Positive price/mix drove the overall increase in revenue excluding currency
– Volume declined modestly (<-1%); made gains in beverage, tobacco and certain food applications versus softer overall paperboard packaging markets
– Manufacturing productivity was positive excluding the incremental expense of $20 million associated with planned maintenance
– Current demand is stable to improving; SBS and CNK® backlogs at approximately five weeks
– Entered into a definitive agreement to acquire the Carolina® business from International Paper to enhance the company’s leadership position in the attractive SBS commercial print solutions market.
Home, Health & Beauty
In the Home, Health & Beauty segment, sales decreased 12.2% (-1% ex-currency and portfolio) to $180 million in the first quarter of 2015 compared to $205 million in the first quarter of 2014. EBITDA increased 17% to $34 million in the first quarter of 2015 compared to $29 million in the first quarter of 2014.
– Price/mix increased from volume growth in higher value dispensing markets – fragrance pumps, airless beauty solutions and lawn care sprayers all had double-digit gains
– Overall volume was down from lower promotional activity in certain categories resulting in standard pump and trigger unit declines
– Manufacturing productivity initiatives, cost savings actions and resin deflation drove significant operational improvement.
In the Industrial segment, sales decreased 5.5% (+11% ex-currency) to $121 million in the first quarter of 2015 compared to $128 million in the first quarter of 2014. EBITDA increased 23% to $32 million in the first quarter of 2015 compared to $26 million in the first quarter of 2014.
– EBITDA margins were 32% (+800 bps) despite challenging domestic growth environment
– Corrugated volume was up 8% with gains in targeted food and fruit markets
– Price/mix improved 6% led by pricing actions to recover margins and offset inflation
– Record mill production drove strong manufacturing productivity improvement
– 13% revenue growth was driven by increased demand for high-quality packaging materials among major personal care and produce customers.
In the Specialty Chemicals segment, sales grew 3.0% (+6% ex-currency) to $239 million in the first quarter of 2015 compared to $232 million in the first quarter of 2014. EBITDA of $58 million was essentially unchanged in the first quarter of 2015 compared to the first quarter of 2014.
– Volume grew from increases in targeted performance chemical and carbon solutions (adhesives, asphalt and automotive carbon), and more than offset oilfield drilling solution declines
– Price/mix declined modestly as increased shipments of performance chemicals for adhesives and asphalt essentially offset lower shipments of oilfield drilling solutions
– Continued productivity gains were more than offset by startup expenses related to the carbon expansion project; startup of the new facility is expected in Q1 2016
– Spinoff to shareholders is on track to be completed by the end of the year.
Community Development and Land Management
Sales for the Community Development and Land Management segment were $3 million in the first quarter of 2015 compared to $2 million in the first quarter of 2014. A loss of $3 million was reported for the first quarter of both 2015 and 2014.
In the first quarter of 2015, total pre-tax input costs of energy, raw materials and freight decreased by $12 million compared to the first quarter of 2014.
In the first quarter of 2015, the pre-tax impact on earnings from foreign currency exchange was $19 million unfavorable compared to the first quarter of 2014.
Cash flow used in operating activities from continuing operations was $113 million in the first quarter of 2015 compared to $207 million in the first quarter of 2014. In the year-ago period the company paid alternative minimum taxes totaling $98 million in conjunction with the 2013 forestlands sale to Plum Creek Timber.
The effective tax rate attributable to continuing operations, excluding the effects of discrete tax items, was approximately 29% in the first quarter of 2015. The mix and level of earnings between domestic and foreign operations contributed to the difference between the effective tax rate and statutory rates.
During the first quarter of 2015, MWV paid a regular quarterly dividend of $0.25 per share. On April 27, 2015, the Board of Directors declared a regular quarterly dividend of $0.25 per share to be paid May 26, 2015 to shareholders of record on May 7, 2015.