Oct 24, 2012. /Lesprom Network/. Buckeye Technologies Inc. announced 1Q net sales of $197 million and adjusted net income of $24.6 million or $0.62 per share. Net sales for the quarter were down $35 million or 15% compared to the year ago quarter, mainly due to lost sales resulting from the June steam drum failure outage at Foley facility and weaker demand in some of wood and cotton specialty fibers markets. The sale of the Merfin Systems converting business in the 3Q of fiscal 2012 accounted for $5 million of the year over year reduction in net sales, as the company said in the press release received by Lesprom Network. Adjusted operating income of $39 million was down $4.4 million compared to the year ago quarter on lower sales volumes, although gross margin was very strong at 25.4% for the quarter compared to 24.3% in the year ago quarter, driven by margin improvements at our cotton cellulose and nonwovens plants. The June outage at our Foley mill had a negative impact of $2.2 million on first quarter operating income and $0.04 on EPS. Selling, general and administrative (SRA) expenses of $13.2 million were up $0.8 million year over year due to growth initiative consulting and legal fees incurred during the quarter. Adjusted net income of $24.6 million, or $0.62 per share, excludes net income of $5.5 million or $0.14 per share relating to the cellulosic biofuel credit and after-tax restructuring charges of $0.6 million or $0.02 per share. Adjusted net income* was down $5.3 million or $0.12 per share compared to the prior year period’s $29.9 million or $0.74 per share, which excluded net income of $11.2 million or $0.28 per share relating to the cellulosic biofuel credit. The year over year reduction in adjusted net income was driven by the drop in adjusted operating income mentioned above as well as by a higher effective tax rate. Comparing the 1Q of fiscal year 2013 to the 4Q of fiscal 2012, sales were down $28 million or 12%. This was mainly due to a $27 million reduction in sales from the Foley specialty wood fibers facility, as shipments were impacted by the June outage and demand softness in some markets. Adjusted operating income was down $1.3 million due to lower shipment volume and unfavorable mix at Foley, and higher SRA expenses. These were partly offset by higher operating income from Memphis specialty cotton fibers plant and our Nonwovens segment. The net impact of the June outage was $1.9 million less in 1Q than in 4Q. Adjusted EPS of $0.62 was down $0.04 versus the fourth quarter due to lower adjusted operating income and a higher effective tax rate. Chairman and CEO John B. Crowe said, “Our 1Q fiscal 2013 financial results came in as we expected, except that the impact of the June outage at Foley on the quarter was less than expected. We are experiencing some weaker conditions in a few of the specialty fibers markets, namely in tire cord, auto filtration and fluff pulp. We are seeing positive signs as well, though, in the LCD/LED markets for our cotton specialty fibers, where we see growth returning in 2013, and in nonwovens, where our shipment volume is up year over year. We were pleased to see our gross margin improve to above 25% in the quarter. During the quarter, we made good progress on our Specialty Expansion Project and the Oxygen Delignification Project at our Florida wood fibers facility. Both are important projects and are expected to come on-line in April and July 2013 respectively, and will be key contributors for revenue growth and cost reduction. In our Nonwovens business, we continue to work toward transitioning the supply of our current customers from our Delta facility to our other two Nonwovens facilities following the Delta closure, which remains on schedule for December 2012.” Mr. Crowe went on to say, “While the headwinds we forecasted in August did arrive, we are committed to disciplined execution of our strategy. With continued strong cash flow and a strong balance sheet, we are well-positioned to continue to provide shareholder value and to meet the challenges of a sluggish economy over the next couple of quarters.” Buckeye, a leading manufacturer and marketer of specialty fibers and nonwoven materials, is headquartered in Memphis, Tennessee, USA. The Company currently operates facilities in the United States, Germany, and Canada.