Wausau Paper Corp. Earnings: Margins Shrink For Fifth Straight Quarter

Wausau Paper Corp. (NYSE:WPP) reported a drop to a loss in the fourth quarter driven by higher costs. Wausau Paper manufactures, converts, and sells paper and paper products.

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Wausau Paper Corp Earnings Cheat Sheet for the Fourth Quarter

Results: Reported a loss of $28.7 million (58 cents per diluted share) in the quarter. The paper company had net income of $15.2 million or 31 cents per share in the year earlier quarter.

Revenue: Fell 2.9% to $252.7 million from the year earlier quarter.

Actual vs. Wall St. Expectations: Wausau Paper Corp. reported adjusted net income of 4 cents per share. By that measure, the company fell short of mean estimate of 5 cents per share. Analysts were expecting revenue of $249.3 million.

Quoting Management: Henry C. Newell, president and CEO, commented, “Fourth-quarter earnings were consistent with our expectations with Tissue returning to double-digit margins and Paper segment profits pressured by print sector performance and reduced technical volumes. The sale of our remaining timberlands and ongoing exit of our participation in print & color markets narrow our focus to growth in profitable tissue and technical paper markets, significantly reduces execution risk and provides for a strong and flexible balance sheet to support our ongoing strategic investments.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 18.4 percentage points to -6.6% from the year earlier quarter. Over that time, margins have contracted on average 6.1 percentage points per quarter on a year-over-year basis.

The company has now fallen short of estimates in the last two quarters. In the third quarter, it missed expectations by one cent with net income of 11 cents versus a mean estimate of net income of 12 cents per share.

The company’s loss in the latest quarter follows profits in the previous two quarters. The company reported a profit of $5.2 million in the third quarter and a profit of $3.2 million in the second quarter.

Revenue has fallen in the past two quarters. In the third quarter, revenue declined 3% to $265.8 million from the year earlier quarter.

Looking Forward: Analysts have a more positive outlook about the company’s results for next quarter. The average estimate for first quarter of the next fiscal year is 5 cents per share, an increase from 3 cents sixty days ago. For the fiscal year, the average estimate has been unchanged at 27 cents a share.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com