Wausau Paper announced financial and operating results for the three- and nine-month periods ended September 30, 2015.
Financial Results. Third-quarter adjusted EBITDA from continuing operations in 2015 was $16.9 million compared with adjusted EBITDA of $13.8 million in 2014.
On a reported basis, net earnings from continuing operations were $1.7 million, or $0.03 per share, in the third quarter of 2015 compared with a prior-year third-quarter net loss from continuing operations of $9.2 million, or $0.18 per share.
Case Volume Growth
Third-quarter case shipment volume increased 1.6 percent in 2015 compared with the same period in 2014 and represented an all-time shipment record for any quarter.
Strategic product shipments – those products sold in conjunction with proprietary dispensing systems or produced from premium substrates – comprised slightly more than 50 percent of third-quarter 2015 sales, a more than 1 percentage point increase over the strategic product component of shipment mix in the prior-year quarterly period.The improved margin of both strategic and support products shipped in 2015 contributed to a 3.3 percentage point improvement in adjusted EBITDA margin of 17.7 percent as compared with 14.4 percent for the third quarter of 2014.
Michael C. Burandt, CEO, commented, “Our quarterly results continue to reflect the above-market demand growth of our premium product lines, as the positive market response to these differentiated products continues to drive mix enhancement and higher margins. We remain very pleased with the systematic improvement being driven throughout our business as a result of our Margin Enhancement Initiative (“MEI”). During the year, we have eliminated 73 SKU’s from our product offering and have realized continuous improvement in our manufacturing, converting and distribution operations. Combined, these efforts, as well as others, have resulted in a third quarter gross profit margin of 19.9 percent, a nearly 4 percentage point improvement over the prior year’s gross profit margin.”
Mr. Burandt added, “In mid-October, we announced to all stakeholders our Board’s acceptance of the offer by SCA Americas, Inc. to acquire Wausau Paper. This transaction is a testament to our talented employees and the strong, focused company they have helped to create. Further, our customers will benefit from expanded products and services that the combined company will provide.”
Outlook for remainder of 2015
Commenting on the balance of 2015, Mr. Burandt, said, “Our teams remain focused on delivering the significant performance benefits we have realized from MEI through the first nine months of 2015. Further benefit from these activities along with the market’s continuing favorable response to our premium products and the resulting strategic mix and adjusted EBITDA margin improvement is expected. While not reflecting the impact of potential fourth-quarter costs we’ll incur with respect to the transaction, full-year adjusted EBITDA guidance laid forth earlier this year of $60 to $63 million, continues to express our expectations of the underlying business.”
2015 Third-Quarter and Nine-Month Results
Continuing Operations. The following third-quarter and nine-month discussion, as well as the financial highlights and other information summarized in the preceding discussion, contain comparisons of financial elements including EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net earnings (loss) and adjusted net earnings (loss) per share. These financial elements are not measurements of our performance under generally accepted accounting principles (GAAP) and should not be considered an alternative to net earnings (loss) or any other performance measures derived in accordance with GAAP. Additionally, the non-GAAP measures presented may not be the same as similar measures used by other companies. The Company believes that the presentation of select non-GAAP measures provides a useful analysis of ongoing operating trends. Please refer to the attached Reconciliation of Non-GAAP Financial Measures.
Third-quarter net sales, reflecting some pressure from SKU rationalization programs, were $95.4 million, flat compared with the third quarter of 2014. On a year-to-date basis, net sales rose approximately 3.2 percent to $270.5 million compared to $262.1 million in 2014. Higher net sales in the year-to-date period were driven primarily by case shipment volume growth of 3.4 percent. Average net selling price for the comparable quarter and nine-month periods declined slightly as actual selling price improvement was more than offset by the unfavorable impact of the Canadian exchange rate.