Pope & Talbot net loss widened to $42.9 million in 2Q 2007 on CAD strengthening

Aug 10, 2007. /Lesprom Network/. Pope & Talbot, Inc. reported on August 9, 2007 a net loss of $42.9 million for the second quarter of 2007 compared with a net loss of $21.8 million for the same quarter of 2006 and $18.6 million for the first quarter of 2007. The net loss for the second quarter of 2007 was $2.62 per share on 16.4 million shares, compared with a net loss of $1.35 per share on 16.2 million shares for the second quarter of 2006 and a net loss of $1.15 per share on 16.3 million shares for the first quarter of 2007. Revenues were $236.5 million for the second quarter compared with $213.6 million for the second quarter of 2006 and $200.5 million for the first quarter of 2007. As a result of the company's adoption of an accounting pronouncement for planned major maintenance activities issued in the latter part of 2006, the second quarter 2006 net loss is $7.3 million more than the amount previously reported. The company's operating performance significantly declined in the second quarter of 2007 compared to both the second quarter of 2006 and the first quarter of 2007. In the second quarter of 2007, the Company's operating loss was $30.3 million and earnings before interest, taxes, depreciation and amortization (EBITDA) was negative $17.7 million, as compared with an operating loss of $10.5 million and negative EBITDA of $0.2 million for the same quarter of 2006. For the first quarter of 2007, operating loss was $14.7 million and EBITDA was negative $4.4 million. Higher pulp raw material, manufacturing costs and maintenance costs, combined with the negative impact of a strengthening Canadian dollar relative to the U.S. dollar offset improved pulp market prices and increased pulp shipments in the second quarter of 2007 as compared to the prior periods. The strengthening Canadian currency also impacted wood products costs, which were also higher than the prior periods as a result of increased shipments. Lumber prices, while improving from the first quarter of 2007 levels, continued to reflect depressed lumber market conditions. "The unfavorable movement of the Canadian dollar and a scarcity of affordable fiber resources have combined to tighten our liquidity and severely impact earnings," said Harold Stanton, president and chief executive officer. "While these factors are largely out of our control, we cannot maintain the status quo and expect to withstand this current market environment. We are actively taking steps to improve our liquidity. As previously announced, we are curtailing one of three production lines at our Nanaimo pulp mill to reduce operating costs and conserve fiber in light of current market conditions. We are managing working capital by reducing inventories to minimal levels and optimizing cash conversion between our collections and payables. We have initiated actions to reduce non-employee administrative expenses throughout the company and have implemented a salary and new hire freeze for all staff and salaried positions. Additionally, we have closed our Corporate flight department and have sold the company airplane. As we investigate longer-term capital and financing alternatives, I am hopeful that our current lenders will be supportive of our efforts and will grant us a prudent timeframe to execute an appropriate strategy." Pope & Talbot is a pulp and wood products company. The company is based in Portland, Oregon and trades on the New York stock exchange. Pope & Talbot was founded in 1849 and produces market pulp and softwood lumber at mills in the U.S. and Canada. Markets for the company's products include the U.S., Europe, Canada, South America, and the Pacific Rim.