Wausau Paper Corp. Earnings Cheat Sheet: Shrinking Margins for Fifth Consecutive Quarter, Net Income Falls

Wausau Paper Corp. (NYSE:WPP) reported its results for the third quarter. Wausau Paper manufactures, converts, and sells paper and paper products.

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Wausau Paper Corp Earnings Cheat Sheet for the Third Quarter

Results: Net income for Wausau Paper Corp. fell to $5.2 million (10 cents per share) vs. $13.2 million (27 cents per share) a year earlier. This is a decline of 60.6% from the year earlier quarter.

Revenue: Fell 3% to $265.8 million from the year earlier quarter.

Actual vs. Wall St. Expectations: WPP reported adjusted net income of 11 cents per share. By that measure, the company fell short of mean estimate of 12 cents per share. It fell short of the average revenue estimate of $272.7 million.

Quoting Management: Commenting on third-quarter results, Thomas J. Howatt, president and CEO, said, “Consistent with our earlier expectations, third-quarter earnings improved from second-quarter levels as pricing actions and improved product mix offset record-high fiber costs and continuing demand weakness. While market conditions cause us to be cautious in our near-term earnings outlook, our focus remains on strategic execution and long-term shareholder value creation,” Mr. Howatt continued. “To that end, our Board of Directors approved the conditional sale of our remaining timberland assets and reaffirmed the Company’s initiatives to evaluate strategic alternatives for the print & color portion of our Paper business unit. These initiatives are entirely consistent with our approach to support investment in our highly successful Tissue business and narrow our Paper unit focus to growth-oriented technical markets.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 5.3 percentage points to 10.2% from the year earlier quarter. Over that time, margins have contracted on average three percentage points per quarter on a year-over-year basis.

The company fell short of estimates last quarter after being in line with expecations the quarter before with net income of 7 cents.

Over the last five quarters, revenue has fallen an average of 0.8% year over year. The biggest drop came in the most recent quarter, when revenue fell 3% from the year earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 10 cents a share to 9 cents over the last sixty days. For the fiscal year, the average estimate has moved up from 31 cents a share to 33 cents over the last seven days.

Competitors to Watch: Neenah Paper, Inc. (NYSE:NP), International Paper Co. (NYSE:IP), Domtar Corp. (NYSE:UFS), P.H. Glatfelter Company (NYSE:GLT), Verso Paper Corp. (NYSE:VRS), Boise Inc. (NYSE:BZ), UPM-Kymmene Corp. (UPMKY), Clearwater Paper Corp (NYSE:CLW), Schweitzer-Mauduit Intl., Inc. (NYSE:SWM), and Sappi Limited (NYSE:SPP).

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(Source: Xignite Financials)