NewPage Announces Second Quarter 2014 Financial Results

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Aug 01, 2014, 04:07 ET

MIAMISBURG, Ohio, Aug. 1, 2014 /PRNewswire/ -- NewPage Holdings Inc. ("NewPage") today 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.

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, Ohio, 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. To learn more, visit www.NewPageCorp.com.

Forward-Looking Statements
This press release may contain "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws. The company does not intend, and undertakes no obligation, to update any forward-looking statements.

NewPage Holdings Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
Three Months Ended June 30, 2014 and 2013
Dollars in millions, except per share amounts

		2014		2013

Net sales	$	733	$	720

Cost of sales		714		686
Selling, general and administrative expenses		28		34
Interest expense		21		13
Income (loss) before income taxes		(30)		(13)
Income tax (benefit)		—		—
Net income (loss)	$	(30)	$	(13)

Net income (loss) per share:
Basic and diluted	$	(4.24)	$	(1.84)

Weighted average common shares outstanding:
Basic and diluted		7,092,477		7,080,000

NewPage Holdings Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
Six Months Ended June 30, 2014 and 2013
Dollars in millions, except per share amounts

		2014		2013

Net sales	$	1,490	$	1,476

Cost of sales		1,469		1,401
Selling, general and administrative expenses		52		75
Interest expense		70		24
Income (loss) before income taxes		(101)		(24)
Income tax (benefit)		—		—
Net income (loss)	$	(101)	$	(24)

Net income (loss) per share:
Basic and diluted	$	(14.25)	$	(3.34)

Weighted average common shares outstanding:
Basic and diluted		7,090,989		7,080,000

Cash dividends paid per common share	$	34.35	$	—

NewPage Holdings Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
June 30, 2014 and December 31, 2013
Dollars in millions, except per share amounts

		2014		2013
ASSETS
Cash and cash equivalents	$	8	$	83
Restricted cash		7		—
Accounts receivable, net		216		204
Inventories		530		520
Other current assets		17		25
Total current assets		778		832

Property, plant and equipment, net		1,156		1,208
Other assets		159		135
TOTAL ASSETS	$	2,093	$	2,175

LIABILITIES AND EQUITY
Accounts payable	$	195	$	168
Other current liabilities		142		177
Current maturities of long-term debt		45		—
Total current liabilities		382		345

Long-term debt		737		487
Other long-term obligations		298		308
Commitments and contingencies

EQUITY
Preferred stock, 100,000 shares authorized, $0.001 per share par value		—		—
Common stock, par value $0.001 (16,000,000 shares authorized with 7,104,079
shares issued and 7,092,477 outstanding on June 30, 2014, and with
7,093,924 shares issued and 7,087,239 outstanding on December 31, 2013)		—		—
Treasury stock, at cost (11,602 shares on June 30, 2014 and 6,685 shares on
December 31, 2013)		(1)		—
Additional paid-in capital		572		814
Accumulated deficit		(103)		(2)
Accumulated other comprehensive income (loss)		208		223
Total equity		676		1,035
TOTAL LIABILITIES AND EQUITY	$	2,093	$	2,175

NewPage Holdings Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
Six Months Ended June 30, 2014 and 2013
Dollars in millions

		2014		2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(101)	$	(24)
Adjustments to reconcile net income (loss) to
net cash provided by (used for) operating activities:
Depreciation and amortization		92		91
Non-cash interest expense		3		3
Non-cash loss on extinguishment/modification of debt		23		—
(Gain) loss on disposal of assets		1		1
Pension expense (income)		(5)		2
Pension funding		(15)		(9)
Equity award expense (income)		(2)		8
Deferred income taxes		1		—
Changes in operating assets and liabilities:
Accounts receivable		(12)		(1)
Inventories		(10)		(63)
Other operating assets		(13)		(19)
Accounts payable		27		(18)
Accrued expenses and other obligations		(40)		6
Net cash provided by (used for) operating activities		(51)		(23)

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(39)		(31)
Proceeds from sales of assets		4		—
Restricted cash		(7)		—
Net cash provided by (used for) investing activities		(42)		(31)

CASH FLOWS FROM FINANCING ACTIVITIES
Payment of financing costs		(28)		(1)
Proceeds from issuance of long-term debt		735		—
Repayments of long-term debt		(495)		(3)
Common stock cash dividends paid		(243)		—
Acquisition of treasury stock		(1)		—
Borrowings on revolving credit facility		319		171
Payments on revolving credit facility		(269)		(152)
Net cash provided by (used for) financing activities		18		15

Net increase (decrease) in cash and cash equivalents		(75)		(39)
Cash and cash equivalents at beginning of period		83		43
Cash and cash equivalents at end of period	$	8	$	4

NewPage Holdings Inc. and Subsidiaries
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA (unaudited)
Dollars in millions

			Six				Three		Six		Twelve
			Months		Year		Months		Months		Months
			Ended		Ended		Ended		Ended		Ended
			June 30,		December 31,		June 30,		June 30,		June 30,
			2013		2013		2014		2014		2014

Net income (loss)		$	(24)	$	(2)	$	(30)	$	(101)	$	(79)
	Interest expense		24		47		21		70		93
	Income tax (benefit)		—		(2)		—		—		(2)
	Depreciation and amortization		91		184		46		92		185
EBITDA		$	91	$	227	$	37	$	61	$	197

	Equity awards		8		14		1		(2)		4
	(Gain) loss on disposal of assets		1		2		—		1		2
	Integration and related severance costs and other charges		8		14		—		—		6
	Post-emergence bankruptcy-related items		3		4		1		1		2
	Merger related costs		1		8		4		6		13
	Other		(1)		—		—		1		2
Adjusted EBITDA⁽¹⁾		$	111	$	269	$	43	$	68	$	226
	Pro forma effects of project cost savings program⁽²⁾										56
Adjusted EBITDA (including pro forma effects of
cost savings program)										$	282

⁽¹⁾	Does not include pro forma effects of our project cost savings program used in certain covenants under our credit facilities.
⁽²⁾	Represents cost savings expected to be realized as part of our project cost savings program.

	EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation and amortization. EBITDA and Adjusted EBITDA (as described in the table above) are not measures of our performance under accounting principles generally accepted in the United States ("U.S. GAAP"), are not intended to represent net income (loss), and should not be used as alternatives to net income (loss) as indicators of performance. EBITDA and Adjusted EBITDA are shown because they are bases upon which our management assesses performance and are primary components of certain covenants under our credit facilities. In addition, our management believes EBITDA and Adjusted EBITDA are useful to investors because they and similar measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies. The use of EBITDA and Adjusted EBITDA instead of net income (loss) has limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Our measures of EBITDA and Adjusted EBITDA are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.