Caraustar Industries, Inc. (Nasdaq: CSAR), a recycled packaging company, announced that sales for the first quarter were $234.3 million, an increase of 6.4 percent over sales of $220.2 million for the same quarter in 2005.
Income from continuing operations for the first quarter of 2006 was $85.3 million, or $2.95 per share, compared to 2005 first quarter income from continuing operations of $2.1 million, or $0.07 per share.
The first quarter 2006 included a gain of $135.2 million pre-tax, or approximately $3.03 per share, on the sale of the company’s 50-percent partnership interest in its Standard Gypsum L.P. joint venture. Negatively impacting first quarter 2006 income from continuing operations were accelerated depreciation of $1.2 million ($0.03 per share) related to the closure of the company’s Birmingham, Alabama folding carton plant as well as a $1.2 million ($0.03 per share) litigation settlement related to a patent infringement lawsuit in the company’s Industrial & Consumer Products Group (ICPG).
Michael J. Keough, president and chief executive officer of Caraustar, commented, “While volumes continued reasonably strong and fiber costs were lower in the first quarter, we are still challenged by high fuel and energy costs. The recently announced $40 per ton price increase on uncoated recycled boxboard was effective in converting the previously implemented $25 per ton energy surcharge into pricing, but we are having limited success on the incremental $15 per ton.
“We continue to make steady progress in transforming Caraustar into a more focused and consistently profitable business. In the first quarter 2006, we sold our interest in Standard Gypsum and refinanced our revolving credit facility to facilitate the call of all $257.5 million of our outstanding 9.875 percent Senior Subordinated Notes. We integrated the Charlotte folding carton facility acquired in December into our Custom Packaging Group, which enabled the rationalization of our Birmingham, Alabama folding carton operation. We also divested three solid fiber partition facilities that had been acquired as a component of the Smurfit Industrial Products Division in 2002.
“Subsequent to March 31, 2006, Caraustar announced the signing of an agreement to sell its Sprague Paperboard mill located in Versailles, Connecticut for $14.5 million. That transaction and the continuing negotiations for the sale of Caraustar’s other two coated recycled boxboard mills and the contract packaging business are part of the company’s previously announced decision to exit non-core businesses.”
Caraustar is one of the world’s largest integrated manufacturers of converted recycled paperboard. 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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