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meadwestvaco 1Q08_Earnings_Slides

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  • 1. First Quarter 2008 Earnings Report April 30, 2008 John A. Luke, Jr. Chairman and CEO James A. Buzzard President E. Mark Rajkowski Senior Vice President and CFO Results presented on continuing operations basis
  • 2. Forward-looking Statements Certain statements in this document and elsewhere by management of the company that are neither reported financial results nor other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such information includes, without limitation, the business outlook, assessment of market conditions, anticipated financial and operating results, strategies, future plans, contingencies and contemplated transactions of the company. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors which may cause or contribute to actual results of company operations, or the performance of achievements of each company, or industry results, to differ materially from those expressed or implied by the forward-looking statements. In addition to any such risks, uncertainties and other factors discussed elsewhere herein, risks, uncertainties, and other factors that could cause or contribute to actual results differing materially from those expressed or implied for the forward-looking statements include, but are not limited to, events or circumstances which affect the ability of MeadWestvaco to realize improvements in operating earnings from the company’s ongoing cost reduction initiatives; the ability of MeadWestvaco to close announced and pending transactions, including divestitures; the reorganization of the company’s packaging business units; competitive pricing for the company’s products; changes in raw materials pricing; energy and other costs; fluctuations in demand and changes in production capacities; changes to economic growth in the United States and international economies; government policies and regulations, including, but not limited to those affecting the environment and the tobacco industry; the company’s continued ability to reach agreement with its unionized employees on collective bargaining agreements; the company’s ability to execute its plans to divest or otherwise realize the greater value associated with its forestlands; adverse results in current or future litigation; currency movements; and other risk factors discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2007, and in other filings made from time to time with the SEC. MeadWestvaco undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Investors are advised, however, to consult any further disclosures made on related subjects in the company’s reports filed with the SEC. 2 First Quarter 2008 Earnings Report
  • 3. John A. Luke, Jr. Chairman and Chief Executive Officer
  • 4. First Quarter Summary First Quarter 2008 vs. 2007 6% $15M Business Segment Sales Profit • Solid top-line growth in targeted global packaging markets; growth driven by well-balanced geographic and end market participation; positive momentum continuing • Segment earnings impacted by steep input cost inflation, bad debt charges (CSG and C&OP), and previously announced maintenance outage (PRG) • Announced agreement to sell North Charleston Kraft mill for $485M • Released preliminary master plan for East Edisto 4 First Quarter 2008 Earnings Report
  • 5. Critical Operating Tasks Focused on Profitable Growth Strategic Focus Area Initiatives and Results Launched national roll-out of Shellpak with Wal-Mart Gaining share in global high-end fragrance market Innovation Leveraging Keltec foamer and airless technology Packaging platform emerging market sales up 20+% Strong demand in Asia region Emerging Markets Double digit sales & earnings growth at Rigesa Quarter benefited from G&A savings Productivity Progress masked by Mahrt outage 5 First Quarter 2008 Earnings Report
  • 6. James A. Buzzard President
  • 7. Packaging Resources 1Q08 vs. 1Q07 Segment Sales $631 million 8% $11M Segment Profit $32 million • Higher shipment volumes in a number of key grades, including beverage, liquid packaging and commercial print • Grew business in emerging markets, including volume growth in Asia and double digit sales and profitability growth for Rigesa • Price improvements helped offset higher than expected input and maintenance costs, including outage at Mahrt Mill 7 First Quarter 2008 Earnings Report
  • 8. Consumer Solutions 1Q08 vs. 1Q07 Segment Sales $606 million 7% $11M Segment Profit $9 million • Sales growth in global personal care, home and garden, beverage, and tobacco lines of business drove top-line improvement • Segment profit negatively impacted by input cost inflation, bad debt charges and costs related to shifting our production platform to lower cost markets • Generated sales momentum, market share gains, and new product opportunities during the quarter that will benefit segment earnings going forward 8 First Quarter 2008 Earnings Report
  • 9. Consumer & Office Products 1Q08 vs. 1Q07 Segment Sales $208 million 3% $1M Segment Loss ($3) million • Sales up slightly in seasonally light quarter • Solid back-to-school season in Brazilian business • Segment loss slightly unfavorable to prior year; favorable excluding bad debt charge in current quarter 9 First Quarter 2008 Earnings Report
  • 10. Specialty Chemicals 1Q08 vs. 1Q07 Segment Sales $124 million 11% Segment Profit $12 million $8M • Significant improvement in sales across all major lines of business • Demand grew for Pine Chemicals for industrial applications • Carbon technologies business winning in non-automotive adsorption markets • Integration of Eastman Chemical product lines proceeding well; expected to be accretive in 2008 10 First Quarter 2008 Earnings Report
  • 11. E. Mark Rajkowski Senior Vice President and Chief Financial Officer
  • 12. Key Financial Information 1Q 2008 1Q 2007 Change (In millions, pre-tax) Sales $ 1,518 $ 1,428 6% Adjusted Gross Profit 1 225 235 -4% Adjusted SG&A 2 195 198 -2% Profit from Segments 3 50 65 -23% Adjusted EBIT 4 $ 28 $ 40 -30% Adjusted Gross Margin % 14.8% 16.5% (170) bps Adjusted SG&A % 12.8% 13.9% (110) bps 1 Adjusted gross profit excludes restructuring charges and one-time costs of $4 million and $7 million for the first quarter ended 2008 and 2007, respectively, as well as gains associated with a one-time pension adjustment of $4M in the first quarter ended 2008. 2 Adjusted SG&A expense excludes restructuring charges and one-time costs of $4 million and $13 million for the first quarter ended 2008 and 2007, respectively. Adjusted SG&A also excludes gains associated with a one-time pension adjustment of $6 million and charges for a bad debt write-off of $8 million for first quarter 2008. 3 Profit from segments defined as the sum of the segment profits of the Packaging Resources, Consumer Solutions, Consumer and Office Products, and Specialty Chemicals segments and excludes Corporate and Other profit/(loss), which includes restructuring charges and one-time costs. 4 Adjusted EBIT excludes restructuring charges and one-time costs of $8 million and $21 million for the first quarter ended 2008 and 2007, respectively. Adjusted EBIT also excludes interest income of $9 million and $4 million in first quarter ended 2008 and 2007, respectively. Adjusted EBIT also excludes gains associated with a one-time pension adjustment of $10 million and charges for a bad debt write-off of $8 million for first quarter 2008. Adjusted EBIT includes remaining portion of Other Income/(Expense) after exclusion of interest expense and the items outlined above. 12 First Quarter 2008 Earnings Report
  • 13. Total Company – 1Q 08 vs. 1Q 07 Loss Before Taxes $10 ($23) $39 ($39) ($27) $ millions $0 ($10) ($8) $6 $13 ($9) ($20) $10 ($8) ($30) ($40) ($50) Pr Pe Re Ba 1Q Vo En Ne F/ 1Q X ic ns st d lu er t 07 08 e/ /O Co ru D m gy io M eb A A ct e th n st /M ix ct ct ur ts C er P at ua ua ur in ro 'l/ l l ta g/ d F ilm uc O rg ne h tiv en tP - ti ity t m ric e e 13 First Quarter 2008 Earnings Report
  • 14. Appendix 14 First Quarter 2008 Earnings Report
  • 15. Bleached Board Shipments: 392,000 tons in 1Q08, up 2% vs. 1Q07 Pricing: Up $35 per ton vs. 1Q07; +4% Backlogs: Approximately 3 weeks Coated Natural Kraft Shipments: 271,000 tons in 1Q08, up 5% vs. 1Q07 Pricing: Up $24 per ton vs. 1Q07; +4% Backlogs: Approximately 4 weeks 15 First Quarter 2008 Earnings Report
  • 16. Corporate & Other Reconciliation Corporate & Other - As Reported ($ in millions) 1Q '08 1Q '08 1Q 1Q 4Q vs. vs. 2008 2007 2007 1Q '07 4Q '07 Corporate & Other - As Reported (73) (92) 42 19 (115) Remove: Restructuring charges 8 16 41 (8) (33) One-time costs - 5 5 (5) (5) Total restructuring & one-time items 8 21 46 (13) (38) Subtotal (65) (71) 88 6 (153) Remove: Pension credit (30) (14) (15) (16) (15) Interest expense 54 49 53 5 1 Interest income (9) (4) (9) (5) - Sales and Use Tax Refund - (6) - 6 - AL/WV Timberland sales gains - - (167) - 167 Community Development/Land Management (8) (10) (15) 2 7 Corporate & Other - As Adjusted (58) (56) (65) (2) 7 16 First Quarter 2008 Earnings Report
  • 17. Adjusted SG&A – 1Q 08 vs. 1Q 07 $225 ($15) $6 $ millions $198 $195 $6 $200 $175 $150 1Q 1Q In Pr Fo fla od re 07 08 tio ig uc A A n n tiv ct ct Ex ua ua ity ch l* l* an ge * See slide 12 for definition of Adjusted SG&A 17 First Quarter 2008 Earnings Report
  • 18. Packaging Resources - Segment Profit 1Q 08 vs. 1Q 07 ($25) $80 $26 $70 $60 ($14) $43 $ millions $2 $50 $32 $40 $30 $20 $10 $0 Pr 1Q Vo En Ne 1Q ic lu er tC 07 08 e m gy /M os A A e /M ix ct tP ct at ua ua ro 'l / l l du Fr gh ct iv tP i ty ri c e 18 First Quarter 2008 Earnings Report
  • 19. Consumer Solutions – Segment Profit 1Q 08 vs. 1Q 07 $35 $30 $ millions $25 $20 ($1) ($4) $20 ($9) $15 $6 $9 $2 ($5) $10 $5 $0 Pr 1Q Vo En Ne Ba F/ 1Q X ic lu er t d 07 08 e/ /O Co m D gy M eb A A e th st /M ix ct ct t er P at ua ua ro 'l/ l l d F uc rg h tiv tP ity ric e 19 First Quarter 2008 Earnings Report
  • 20. Consumer & Office Products – Segment Loss 1Q 08 vs. 1Q 07 $5 $8 ($5) $4 ($3) $ millions ($3) ($2) ($2) $0 ($3) ($5) Pr 1Q Vo En Ne Ba O 1Q th ic lu er t d 07 08 e e/ Co m D gy r M eb A A e st /M ix ct ct t P at ua ua ro 'l/ l l d F uc rg h tiv tP ity ric e 20 First Quarter 2008 Earnings Report
  • 21. Specialty Chemicals – Segment Profit 1Q 08 vs. 1Q 07 $25 $20 ($1) $9 $2 $15 ($1) $12 $ millions $10 ($1) $4 $5 $0 Pr 1Q Vo En Ne O 1Q th ic lu er t 07 08 e e/ Co m gy r M A A e st /M ix ct ct P at ua ua ro 'l/ l l d F uc rg h tiv tP ity ric e 21 First Quarter 2008 Earnings Report

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