NewPage Announces Q2 2014 Net Loss Due to Pricing Pressures, Inclement Weather

MIAMISBURG, OH—August 4, 2014—NewPage Holdings has announced its results of operations for the second quarter of 2014.

Net sales in the second quarter of 2014 were $733 million compared to $720 million in the second quarter of 2013. Net sales improved due to higher sales volume of paper partially offset by lower paper prices. Paper pricing is impacted by lower industry demand. Paper sales volume totaled 811,000 tons and 783,000 tons for the second quarter of 2014 and 2013. Average paper prices were $885 per ton and $892 per ton in the second quarter of 2014 and 2013.

For the second quarter of 2014, net loss was $30 million compared to a net loss of $13 million in the second quarter of 2013. The increase in net loss was the result of higher input costs of $20 million driven by the continuing effects of extreme weather-related factors through April 2014 and lower paper prices, partially offset by lower non-cash stock compensation expense, lower pension expense, cost reduction initiatives and other general and administrative expenses.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization as further adjusted as shown in the attached reconciliation) was $43 million in the second quarter of 2014 compared to $50 million in second quarter of 2013.

NewPage ended the second quarter with total liquidity of $271 million, consisting of $263 million of availability under the revolving credit facility and $8 million of available cash and cash equivalents.

Operating cash flows were $26 million in the second quarter of 2014 compared to $19 million in the second quarter of 2013. Operating cash flows in the second quarter of 2013 includes $16 million in non-recurring bankruptcy-related items. For the six months ended June 30, 2014, the company used $51 million of cash in operations compared to $23 million for the six months ended June 30, 2013. The increase is primarily the result of higher input costs, driven by weather-related factors, higher cash interest and other cash charges associated with the February 2014 debt refinancing, partially offset by a reduction in cash requirements for bankruptcy-related items. Cash used for operating activities during the six months ended June 30, 2013, includes $58 million in non-recurring bankruptcy-related payments.

Additional Information
The NewPage second quarter ended June 30, 2014 Form 10-Q as filed with the U.S. Securities and Exchange Commission today can be found on the NewPage website. The company believes this information is sufficient to answer questions and no conference call is planned.

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About NewPage
NewPage is a leading producer of printing and specialty papers in North America with $3.1 billion in net sales for the year ended December 31, 2013. NewPage is headquartered in Miamisburg, OH, and owns paper mills in Kentucky, Maine, Maryland, Michigan, Minnesota and Wisconsin. These mills have a total annual production capacity of approximately 3.5 million tons of paper.

The company’s portfolio of paper products includes coated, supercalendered and specialty papers. These papers are used in commercial printing to create corporate collateral, magazines, catalogs, books, coupons, inserts and direct mail as well as in specialty paper applications including beverage bottle labels, food and medical packaging, pressure-sensitive labels and release liners.

Source: NewPage.

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  • Larry Edwards

    NewPage along with the rest of our domestic paper manufacturers did not control their costs by getting rid of the unions. They also did not reinvest their capital to purchase new state of the art paper machines to keep pace with the global paper industry. Mills like APP installed paper machines that were 3 times wider and 3 times faster compared to U.S. paper manufacturers. Cost per unit is the only way you can survive the global paper market. Based on cost per ton, the U.S. was no longer a player in the global paper market. To get APP out of the U.S. market, Asia Pulp & Paper was sued by American paper mills for dumping paper below market pricing. After losing the law suit, 38% tariffs were levied on their coated paper and they could no longer compete in the U.S. market. Little did the U.S. paper manufacturers know that APP was generating 30% profits at the prices they were selling their paper. For 20 to 25 years domestic paper manufacturers did nothing and, by putting their heads in the sand, the rest of the world passed them by. It is difficult to believe the U.S. dominated the global paper market 20 years ago. I am surprised NewPage is still in business. It won’t be long before they join the ranks of others who have already closed their doors.