NewPage Releases Q3 Financials, Reports Net Increase
MIAMISBURG, OH—November 7, 2013—NewPage Holdings today reported its financial results for the third quarter of 2013.
Net income in the third quarter of 2013 was $21 million compared to a net loss of $47 million in the third quarter of 2012. The increase was primarily driven by improved gross margin and lower reorganization items from the prior-year quarter.
Net sales in the third quarter of 2013 were $780 million compared to $803 million in the third quarter of 2012, a decline of three percent. The decrease was primarily the result of lower sales volume of paper and lower average paper prices, partially offset by improved mix.
Operating cash flows in the third quarter of 2013 were $7 million, which included $2 million of bankruptcy-related payments. Operating cash flows in the third quarter of 2012 were $13 million, which included $17 million of bankruptcy-related payments. For the nine months ended September 30, 2013, the company used $16 million of cash in operations, which included $60 million of bankruptcy-related payments. For the nine months ended September 30, 2012, the company used $35 million of cash in operations, which included $51 million of bankruptcy-related payments and a $38 million interest payment on pre-petition debt.
Adjusted EBITDA was $85 million in the third quarter of 2013 compared to $58 million in the third quarter of 2012.
"Overall, our third quarter financial results are in line with our expectations," said George Martin, president and CEO for NewPage. "A weaker commercial environment was largely offset by reduced controllable costs and lower inflation."
NewPage ended the third quarter with $292 million of total liquidity, consisting of $288 million of availability under the revolving credit facility and $4 million of available cash and cash equivalents. "During the third quarter, we maintained a strong liquidity position," said Jay Epstein, senior vice president and CFO. "In the fourth quarter, due to the seasonal nature of our business, we expect finished goods inventory to decline. We will continue to focus on managing our working capital."
Lower year over year prices reflect the continuing decline in demand for printing and writing paper. As reported by the Pulp and Paper Products Council or PPPC, North American demand for printing and writing papers declined 1.8 percent for the first nine months of the year compared to the same timeframe in 2012.
Costs of sales declined during the third quarter on a year over year basis by $63 million. Decreased volume and lower pension, depreciation and maintenance expenses were offset somewhat by inflation. Inflation was lower than expected for the quarter driven largely by lower latex prices and lower wood costs.
Basis of Presentation
The implementation of the Chapter 11 plan and the application of fresh start accounting materially changed the carrying amounts and classifications reported in the company's consolidated financial statements and resulted in it becoming a new entity for financial reporting purposes. Accordingly, the company's consolidated financial statements for periods prior to December 31, 2012 will not be comparable to its consolidated financial statements as of December 31, 2012 or for periods subsequent to December 31, 2012. References to "Successor" or "Successor Company" refer to NewPage Holdings on or after December 31, 2012, after giving effect to the implementation of the Chapter 11 plan and the application of fresh start accounting. References to "Predecessor" or "Predecessor Company" refer to NewPage prior to December 31, 2012.
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, 2012. 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.