Boise Inc. Thursday reported a net loss of $2.2 million for second quarter 2013, compared with net income of $13.7 million for the same period in 2012. Excluding special items, net income was $10.5 million, or $0.10 per diluted share, for second quarter 2013. Earnings before interest, taxes, depreciation and amortization, known as EBITDA, excluding special items was $71.2 million for second quarter 2013, compared with $75.1 million for the same period last year.
Special items during the quarter included $15.3 million of pretax costs, of which $9 million will be cash expenditures related primarily to the company’s plan to shut down two uncoated freesheet paper machines and an off-machine coater at the International Falls mill. Additionally, Boise recorded $5.5 million of incremental depreciation expense related to shortening the useful lives of some assets, primarily at mill in International Falls.
“We grew both sales and margins in our packaging business during second quarter. However, prices declined during the quarter in paper,” said Alexander Toeldte, president and chief executive officer. “The two, large strategic projects we announced in May are both proceeding as planned. At our mill in DeRidder, La., the conversion of an idled newsprint machine to lightweight linerboard and medium is on schedule and budget. Likewise, the closure of the machines in International Falls is progressing smoothly and on schedule for completion in early fourth quarter 2013. We continue to believe both these projects will enhance not only the competitiveness of these mills but also the competitiveness of the company overall.” Packaging Segment
Packaging segment sales for second quarter 2013 were $300.6 million, an increase of $15.8 million, or 6 percent, compared with second quarter 2012. The increase related primarily to benefits from implementation of the linerboard price increase announced in fall 2012 and 5 percent sales volume growth in the company’s network of box plants, offset partially by a 6 percent decrease in sales prices of newsprint. Prices for corrugated containers and sheets increased 5 percent in second quarter 2013, compared with last year’s second quarter. ”We expect to begin benefiting from the $50-per-ton linerboard price increase we announced in May 2013 during third quarter, with full realization expected in fourth quarter 2013,” Toeldte said. Packaging segment EBITDA, excluding special items, was $49.1 million for second quarter 2013, an increase of $9.1 million, compared with $40 million for the same period last year. The increase was due to the implementation of fall 2012 linerboard price increase, sales volume increases, and lower maintenance outage costs of $5.9 million, offset partially by about $2 million of lower revenue in newsprint. During second quarter 2013, key input costs for fiber, energy, and chemicals increased in total over second quarter 2012, due primarily to increased consumption and higher prices for some key inputs. During second quarter, we began to see some margin improvements at our operations in California and Texas, which experienced competitive pressures in recent quarters. We expect the combination of announced price increases and investments in our corrugated operations to improve our results for the rest of the year. Paper Segment
Paper segment sales for second quarter 2013 were $334.8 million, a decrease of $28.4 million, or 8 percent, compared with second quarter 2012. Excluding sales at the mill in St. Helens, Ore., where the company ceased paper production in December 2012, second quarter sales decreased $11.8 million, compared with second quarter 2012. The decrease related to lower uncoated freesheet net sales prices. Excluding St. Helens, the average net sales price for uncoated freesheet declined $52, or 5 percent, compared with second quarter 2012. And the uncoated freesheet volumes increased 1 percent, compared with the same period last year. In second quarter 2013, paper segment EBITDA, excluding special items, was $28.2 million, a decrease of $12.7 million, compared with second quarter 2012. The decrease was due primarily to lower net sales prices of uncoated freesheet papers and temporarily higher selling expenses, offset in part by lower fiber costs. During second quarter 2013, Boise successfully completed maintenance outages at mills in International Falls and Wallula, Wash., at a total cost of $8.7 million, which was slightly lower than the $9.8 million of maintenance outage costs at the same facilities in second quarter 2012.
