Henry C. Newell, president and CEO, commented, “We have made significant progress on repositioning the Company to focus on tissue. The recent investment in the Tissue business positions us for growth, with a long term return on capital goal of 18% and achievement of 15% return on capital by the end of 2014. The conversion of our new tissue machine from conventional to ATMOS production has been completed and we’re qualifying and producing products to support the launch of our new DublNature® brand in the second quarter. We remain committed to delivering six percent case shipment growth in our tissue business by the 4Q 2013.
“We were also pleased to have announced during the quarter a letter of intent to divest our paper business to KPS Capital Partners in a manner that we believe will create value for our shareholders.”
The Paper segment reported a 1Q adjusted operating profit of $3.2 million, compared with an adjusted operating profit of $3.6 million in the prior year.
1Q results reflect excellent progress toward the targeted EBITDA improvement of $15 million for 2013. Net sales and shipments declined approximately 18% and 21%, respectively, on a year-over-year basis.
During the first quarter, the Tissue segment executed an outage to make the final installations and commission ATMOS technology on the new machine located in Harrodsburg. As anticipated, the outage, commercialization and startup curve of the new machine, as well as incremental depreciation and additional costs to support the expansion project, impacted 1Q results and resulted in operating profit for the segment of $3.8 million in 2013 compared to prior year 1Q operating profit, excluding capital-related expenses, of $11.1 million.
In the 1Q 2013 adjusted EBITDA was $12.8 million, or 16.4 percent margin. The targeted adjusted EBITDA margin is 21 to 23% by the 4Q 2013.
Wausau Paper produces and markets specialty papers for industrial, commercial and consumer end markets as well as a complete line of away-from-home towel and tissue products.