KTRE.com Lufkin and Nacogdoches |Temple-Inland Inc. Reports Third Quarter 2008 Results
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AUSTIN, Texas--(BUSINESS WIRE)--Oct. 28, 2008--Temple-Inland Inc. (NYSE: TIN) today reported third quarter 2008 net income of $3 million, or $0.03 per diluted share, compared with third quarter 2007 net income of $36 million, or $0.33 per diluted share, and second quarter 2008 net income of $8 million, or $0.07 per diluted share.
Results for third quarter 2008 include special items of $0.06 per share, consisting of (i) an after tax benefit of $7 million, or $0.07 per share, resulting from an increase in the estimated 2008 effective tax rate on previously reported special items; and (ii) an after tax charge of $1 million, or $0.01 per share, primarily related to early repayment of Premier Boxboard Limited LLC debt.
Third Quarter Second Quarter
--------------- --------------
2008 2007 2008
------- ------- --------------
Net income per share $0.03 $0.33 $0.07
Adjustment for special items ($0.06) ($0.16) $0.00
------- ------- --------------
Net income (loss) per share, excluding ($0.03) $0.17 $0.07
special items
Corrugated Packaging
Third Quarter Second Quarter
------------- --------------
2008 2007 2008
-------- ---- --------------
Segment Operating Income ($ in Millions) $50 $70 $52
Corrugated packaging segment operating income declined in third quarter 2008 compared with third quarter 2007 as higher box prices were more than offset by lower box shipments, higher energy, freight, and chemical costs, and 38,000 tons of downtime and expenses associated with Hurricanes Gustav and Ike. The earnings impact from the hurricanes was approximately $13 million in third quarter 2008. Operating income declined in third quarter 2008 compared with second quarter 2008 as higher box prices were more than offset by lower box shipments and hurricane related expenses noted above.
Building Products
Third Quarter Second Quarter
------------- --------------
2008 2007 2008
-------- ---- --------------
Segment Operating Income ($ in Millions) ($6) ($4) $1
Building products segment operating income declined in third quarter 2008 compared with third quarter 2007 as higher lumber and particleboard prices were more than offset by declining volumes for lumber, gypsum and particleboard, the impact of hurricane-related downtime and expenses, and severance charges. The impact from the hurricanes was approximately $1 million and the severance charges were approximately $1 million. Operating income declined in third quarter 2008 compared with second quarter 2008 principally due to lower volumes for all products, hurricane related downtime and expenses, and severance charges.
Comments
Doyle R. Simons, chairman and chief executive officer of Temple-Inland Inc., said, "Third quarter results reflect the negative effect on our operations of Hurricanes Gustav and Ike and the impact of a weakening economy on the demand for our products, especially in the month of September.
"In corrugated packaging, we successfully implemented a box price increase during the third quarter and will realize a full quarter's benefit of the box price increase in the fourth quarter. We continue to make progress on our strategic initiative of lowering costs at our converting facilities through improved asset utilization. We expect to see the benefit from these efforts in fourth quarter 2008 and into 2009.
"In building products, shipments for all of our products declined in the third quarter, reflecting continued difficult market conditions. We remain focused on matching our supply with demand and lowering costs. In the quarter, we further reduced our headcount and incurred $1 million of severance charges.
"We acquired the remaining 50% interest in Premier Boxboard Limited from Caraustar Industries in the third quarter and are pleased with the integration of the mill into our system. We remain confident that we will quickly realize all planned synergies."
Temple-Inland will host a conference call on October 28, 2008 at 9:30 am EDT to discuss results of third quarter 2008. To access the conference call, listeners calling from the United States and Canada should dial 1-866-394-6665 at least 15 minutes prior to the start of the call. The passcode for the conference call is: 68785819. Those wishing to access the call from outside the United States and Canada should dial 1-706-634-1667 and use the same passcode as set forth above. Replays of the call will be available for two weeks following completion of the live call and can be accessed at 1-800-642-1687 in the United States and Canada and at 1-706-645-9291 outside the United States and Canada. The passcode for the replay is: 68785819.
Temple-Inland Inc. is a manufacturing company focused on corrugated packaging and building products. The fully integrated corrugated packaging operation consists of 7 mills and 64 converting facilities. The building products operation manufactures a diverse line of building products for new home construction, commercial and repair and remodeling markets. Temple-Inland's address on the World Wide Web is www.templeinland.com.
This release contains "forward-looking statements" within the meaning of the federal securities laws. These statements reflect management's current views with respect to future events and are subject to risk and uncertainties. We note that a variety of factors and uncertainties could cause our actual results to differ significantly from the results discussed in the forward-looking statements. Factors and uncertainties that might cause such differences include, but are not limited to: general economic, market, or business conditions; the opportunities (or lack thereof) that may be presented to us and that we may pursue; fluctuations in costs and expenses including the costs of raw materials, purchased energy, and freight; changes in interest rates; demand for new housing; accuracy of accounting assumptions related to impaired assets, pension and postretirement costs and contingency reserves; competitive actions by other companies; changes in laws or regulations; our ability to execute certain strategic and business improvement initiatives; the accuracy of certain judgments and estimates concerning the integration of acquired operations; and other factors, many of which are beyond our control.
This release includes non-GAAP financial measures. The required reconciliations to GAAP financial measures are included in this release.
TEMPLE-INLAND INC. AND SUBSIDIARIES
CONSOLIDATED EARNINGS AND SEGMENT RESULTS
(Preliminary and Unaudited)
Third Quarter First Nine Months
--------------- -----------------
2008 2007 2008 2007
------- ------- -------- --------
(In millions, except per share)
Revenues
------------------------------------
Corrugated packaging $ 797 $ 748 $ 2,371 $ 2,288
Building products 179 195 540 642
Timber and timberland (a) -- 20 -- 59
----- ----- ------ ------
Total revenues $ 976 $ 963 $ 2,911 $ 2,989
===== ===== ====== ======
Income
------------------------------------
Corrugated packaging $ 50 $ 70 $157 $ 212
Building products (6) (4) (26) 23
Timber and timberland (a) -- 18 -- 53
----- ----- ------ ------
Total segment operating income 44 84 131 288
Items not included in segments
General and administrative expense (17) (23) (59) (75)
Share-based compensation (10) (2) (16) (34)
Other operating income (expense) (1) (6) (16) (16)
Other non-operating income
(expense) (3) -- (1) 1
Net interest income (expense) on
financial assets and
nonrecourse financial liabilities
of special purpose entities (1) -- (4) --
Interest expense on debt (21) (29) (58) (86)
----- ----- ------ ------
Income (loss) before taxes (9) 24 (23) 78
Income tax (expense) benefit 12 (13) 21 (34)
----- ----- ------ ------
Income (loss) from continuing
operations 3 11 (2) 44
Discontinued operations -- 25 -- 96
----- ----- ------ ------
Net income (loss) $ 3 $ 36 $(2) $ 140
===== ===== ====== ======
Average basic shares outstanding 106.7 106.2 106.7 105.9
Average diluted shares outstanding 107.6 107.8 107.6 107.9
Earnings per share - Basic
------------------------------------
Income (loss) from continuing
operations $ 0.03 $ 0.11 $ (0.02) $ 0.41
Discontinued operations -- 0.23 -- 0.92
----- ----- ------ ------
Net income (loss) $ 0.03 $ 0.34 $ (0.02) $ 1.33
===== ===== ====== ======
Earnings per share - Diluted (b)
------------------------------------
Income from continuing operations $ 0.03 $ 0.11 $ N/A $ 0.41
Discontinued operations -- 0.22 N/A 0.89
----- ----- ------ ------
Net income $ 0.03 $ 0.33 $N/A $ 1.30
===== ===== ====== ======
Dividends per share $ 0.10 $ 0.28 $ 0.30 $ 0.84
===== ===== ====== ======
(a) We no longer have a timber and timberland segment as a result of
the fourth quarter 2007 sale of our timberland.
(b) Earnings per diluted share not applicable for first nine months
2008 due to our year-to-date loss from continuing operations.
TEMPLE-INLAND INC. AND SUBSIDIARIES
SUMMARIZED CONSOLIDATED BALANCE SHEETS
(Preliminary and Unaudited)
Third Year-
Quarter-End End
2008 2007
----------- ----------
ASSETS (Dollars in millions)
Current Assets $ 1,143 $1,277
Property and Equipment 1,680 1,632
Financial Assets of Special Purpose Entities 2,383 2,383
Goodwill 393 365
Other Assets 272 285
--------- ---------
TOTAL ASSETS $ 5,871 $ 5,942
========= =========
LIABILITIES
Current Liabilities $ 522 $890
Long-Term Debt 1,192 852
Nonrecourse Financial Liabilities of Special
Purpose Entities 2,140 2,140
Deferred Tax Liability 749 762
Liability for Pension Benefits 73 71
Liability for Postretirement Benefits 118 123
Other Long-Term Liabilities 312 324
--------- ---------
TOTAL LIABILITIES 5,106 5,162
SHAREHOLDERS' EQUITY 765 780
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,871 $ 5,942
========= =========
SUMMARIZED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Preliminary and Unaudited)
Third Second First First Nine
Quarter Quarter Quarter Months
2008 2008 2008 008
------- ------- ------- ----------
CASH PROVIDED BY (USED FOR)
OPERATIONS (Dollars in millions)
Operations (including payments
related to our 2007
transformation plan of $11
million in third quarter and
$39 million in first quarter) $ 66 $57(a) $19 $142
Working capital (including
payments related to our 2007
transformation plan of $20
million in third quarter, $1
million in second quarter and
$276 million in first quarter) (20) (7) (358) (385)
----- --- ----- --------
46 50 (339) (243)
----- --- ----- --------
CASH PROVIDED BY (USED FOR)
INVESTING
Capital expenditures (40) (42) (34) (116)
Acquisition, net of cash acquired (57) -- -- (57)
Other (2) (3) (1) (6)
----- --- ----- --------
(99) (45) (35) (179)
----- --- ----- --------
CASH PROVIDED BY (USED FOR)
FINANCING
Cash dividends to shareholders (11) (10) (11) (32)
Net change in debt 68 15 204 287
Other 2 (4) (8) (10)
----- --- ----- --------
59 1 185 245
----- --- ----- --------
Net increase (decrease) in cash and
cash equivalents 6 6 (189) (177)
Cash and cash equivalents at
beginning of period 44 38 227 227
----- --- ----- --------
Cash and cash equivalents at end of
period $ 50 $ 44 $ 38 $ 50
===== == ===== ========
SUPPLEMENTAL INFORMATION
Depreciation and amortization $ 51 $50 $50 $151
(a) Includes a $15 million voluntary, discretionary contribution to
our defined benefit plan.
TEMPLE-INLAND INC. AND SUBSIDIARIES
REVENUES AND UNIT SALES, EXCLUDING JOINT VENTURE OPERATIONS
(Preliminary and Unaudited)
Third Quarter First Nine Months
------------- -----------------
2008 2007 2008 2007
------ ------ -------- --------
(Dollars in millions)
Revenues
Corrugated packaging
Corrugated packaging $ 729 $ 717 $ 2,231 $ 2,178
Paperboard (a)(b) 68 31 140 110
----- ---- ------ -------
Total corrugated packaging $ 797 $ 748 $ 2,371 $ 2,288
===== ==== ====== =======
Building products
Pine lumber $ 60 $ 64 $ 177 $ 190
Particleboard 46 42 138 143
Gypsum wallboard 33 52 101 189
Medium density fiberboard 18 15 56 49
Fiberboard 11 13 33 41
Other 11 9 35 30
----- ---- ------ -------
Total building products $ 179 $ 195 $ 540 $ 642
===== ==== ====== =======
Timber and Timberland (c)
Fiber and other N/A $ 20 N/A $ 59
==== =======
Unit Sales
Corrugated packaging
Corrugated packaging, thousands of
tons 810 839 2,504 2,535
Paperboard, thousands of tons (a)(b) 150 67 304 243
----- ---- ------ -------
Total, thousands of tons 960 906 2,808 2,778
===== ==== ====== =======
Building products
Pine lumber, mbf 189 215 593 640
Particleboard, msf &a, mp;a, mp;nbs, p; 117 119 372 396
Gypsum wallboard, msf 255 368 813 1,164
Medium density fiberboard, msf 34 32 110 106
Fiberboard, msf 52 75 170 228
(a) Paperboard includes containerboard and light-weight gypsum facing
paper.
(b) Comparisons of revenue and unit sales of paperboard are affected
by the July 25, 2008 purchase of our partner's interest in Premier
Boxboard Limited LLC. The effects on revenues and unit sales for the
periods presented are not material.
(c) We no longer have a timber and timberland segment as a result of
the fourth quarter 2007 sale of our timberland.
TEMPLE-INLAND INC. AND SUBSIDIARIES
CALCULATION OF NON-GAAP FINANCIAL MEASURES
(Preliminary and Unaudited)
Second
Third Quarter Quarter
---------------------
2008 2007 2008
---------- ---------- ---------
(In millions, except per share)
NET INCOME EXCLUDING SPECIAL ITEMS
--------------------------------------
Net income in accordance with GAAP $ 3 $ 36 $ 8
-------- -------- --------
Special items, after-tax:
Transformation plan:
Transformation costs -- 4 --
Discontinued operations -- (25) --
-------- -------- --------
-- (21) --
-------- -------- --------
Other:
Charges related to early repayment
of PBL debt 1 -- --
Litigation and other -- 3 --
Effect of increasing the estimated
annual effective
tax rate on previously reported
special items (7) -- --
-------- -------- --------
(6) 3 --
-------- -------- --------
Total special items, after-tax (6) (18) --
-------- -------- --------
Net income (loss), excluding special
items, as defined $ (3) $ 18 $ 8
======== ======== ========
Net income, per share, in accordance
with GAAP $ 0.03 $ 0.33 $ 0.07
-------- -------- --------
Special items, after-tax, per diluted
share:
Transformation plan:
Transformation costs -- 0.04 --
Discontinued operations -- (0.22) --
-------- -------- --------
-- (0.18) --
-------- -------- --------
Other:
Charges related to early repayment
of PBL debt 0.01 -- --
Litigation and other -- 0.02 --
Effect of increasing the estimated
annual effective
tax rate on previously reported
special items (0.07) -- --
-------- -------- --------
(0.06) 0.02 --
------- -------- --------
Total special items, after-tax (0.06) (0.16) --
-------- -------- --------
Net income (loss) per share, excluding
special items, as defined $ (0.03) $ 0.17 $ 0.07
======== ======== ========
Average basic shares outstanding 106.7 106.2 106.6
Average diluted shares outstanding 107.6 107.8 107.4
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