Caraustar Industries, Inc. (Nasdaq: CSAR), a recycled packaging company, reported lower sales for the fourth quarter – $211 million compared to $211.7 million for the same quarter in 2004. Loss from continuing operations for the fourth quarter of 2005 was $35.6 million, or $1.24 per share, compared to 2004 fourth quarter net income from continuing operations of $8.4 million, or $0.29 per share.
The $52.8 million decline in pre-tax operating results was primarily attributable to higher restructuring and impairment costs, higher energy and freight costs, partially offset by lower fiber costs and a $1.1 million increase in equity in income of unconsolidated affiliates.
Mill volume, excluding joint ventures and discontinued operations, for the fourth quarter of 2005 decreased approximately 2.6 thousand tons compared to the same quarter last year, as demand was relatively comparable across all paperboard grades. Gypsum facing paper at the company’s 50-percent owned unconsolidated Premier Boxboard Limited LLC (PBL) joint venture increased in volume by 22.5 percent over fourth quarter 2004.
Year ended December 31, 2005
For the year ended December 31, 2005, sales from continuing operations were $862.4 million, a decrease of 1.0 percent from sales of $871.5 million in 2004. Loss per share from continuing operations was $1.09 for the year ended December 31, 2005, including approximately $1.33 in restructuring and impairment costs. Income from continuing operations for the year ended December 31, 2004 was $0.25 per share, including $0.04 in restructuring and impairment costs, net of gain on sale of real estate.
Michael J. Keough, president and chief executive officer of Caraustar, commented, “We reported positive results for both fourth quarter and the full- year 2005 after considering restructuring costs and discontinued operations. While volumes continued reasonably strong in the seasonally lower fourth quarter, we are still challenged by high fuel and energy costs which were up about $18 per mill ton versus the same quarter last year and $10 per mill ton when compared to the third quarter of 2005. As a result of the continued high energy costs, we recently announced a $40 per ton price increase on uncoated recycled boxboard, which includes the conversion of a previously implemented $25 per ton energy surcharge. Our mill group operated at 92.7 percent in the fourth quarter while the industry operated at 91.8 percent of capacity.
“As announced in January, we continue to transform Caraustar into a leaner, more focused company with emphasis on gypsum facing paper and uncoated recycled boxboard and converted products. We see Caraustar and the industry in a state of major consolidation and restructuring that we believe will ultimately have a positive effect on our business.”
Caraustar is one of the world’s largest integrated manufacturers of converted recycled paperboard. Caraustar has developed its leadership position in the industry through diversification and integration from raw materials to finished products. Caraustar serves the four principal recycled boxboard product end-use markets: tubes, cores and composite cans; folding cartons; gypsum facing paper and specialty paperboard products.
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