The pre-tax maintenance cold outage costs at its mill in DeRidder, Louisiana, which occur once every five years, reduced 1Q results by $22.4 million. In addition, incremental depreciation expense related to shortening the useful lives of some of its assets, primarily at its mill in International Falls, Minnesota, reduced results by $5.3 million.
"We completed the DeRidder outage safely and on budget. Nevertheless, our 1Q results fell short of our expectations," said Alexander Toeldte, president and CEO. "We experienced unfavorable mix changes in our Packaging segment that partially offset the benefits of the fall 2012 linerboard price increase. In addition, decreasing prices for uncoated freesheet negatively affected our results in Paper."
"In pursuit of our long-term strategic objectives, we are pleased to announce our decision to invest between $110 and $120 million in the conversion of our idled newsprint machine at DeRidder to produce lightweight linerboard and corrugating medium. We will also install an OCC pulping facility at the mill as part of the project. The investment adds approximately 270,000 tons of lightweight containerboard capacity to our system and allows us to optimize the product mix on our current linerboard machine, increasing the mill's overall containerboard output by approximately 300,000 tons. We are targeting a mid-2014 start-up for the completed project, which we expect will create about 50 jobs."
Packaging segment sales for 1Q 2013 were $287 million, an increase of $14.8 million, or 5%, compared with 1Q 2012. The increase was related primarily to 5% sales volume growth in its network of box plants and the benefit from implementation of the 2012 fall linerboard price increase, offset partially by unfavorable mix changes in our corrugated products and decreases in sales prices and volumes of newsprint.
Packaging segment EBITDA was $17.2 million for 1Q 2013, a decrease compared with $37.9 million for the same period last year. The decrease resulted from maintenance cold outage costs at DeRidder of approximately $22.4 million in 1Q 2013, compared with $1.8 million of outage costs in the prior-year quarter. These costs include both maintenance costs and lost sales volume resulting from the downtime. The benefit from the implementation of the 2012 fall linerboard price increase was offset partially by unfavorable mix changes in its corrugated products, higher medium costs, and decreases in sales prices and volumes of newsprint.
Paper segment sales for 1Q 2013 were $332.7 million, a decrease of $49.7 million, or 13%, compared with 1Q 2012. Average net sales price for uncoated freesheet declined from $976 per short ton in 1Q 2012 to $929 in 1Q 2013, or 5%. Total uncoated freesheet sales volumes decreased 8% versus the prior-year period, and 1% compared with 4Q 2012.
1Q 2013, Paper segment EBITDA was $45.6 million, a decrease of $9.5 million, or 17% compared with 1Q 2012. The decrease was due primarily to lower net sales prices of uncoated freesheet papers.
Boise Inc. manufactures a wide variety of packaging and paper products. Boise's range of packaging products includes linerboard and corrugating medium, corrugated containers and sheets, and protective packaging products.