FiberMark reports 2Q net loss of $1.4 million

Aug 15, 2005. /Lesprom Network/. FiberMark, Inc. issued its financial results for the second quarter ended June 30, 2005. The company reported a net loss of $1.4 million, or $0.20 per share, versus net income of $0.6 million, or $0.08 per share, in 2004. The change to a net loss position was largely due to higher raw material, energy and manufacturing costs and higher depreciation expenses, partially offset by lower selling and administrative expenses due to lower information technology maintenance costs and professional services, a $1.9 million asset disposal gain due to the sale of an idle facility, price increases, improvements in product mix and lower fixed costs. In addition, reorganization expenses related to the chapter 11 filing were $1.1 million higher than in the second quarter of 2004. Foreign exchange translation benefits contributed to $0.4 million of the change.

Net sales in the second quarter of 2005 were $115.6 million compared with $111.0 million in the prior-year quarter, an increase of $4.6 million or 4.1%. Favorable foreign exchange rates increased second quarter 2005 sales by $2.6 million compared with the 2004 quarter. Net of currency effects, current year net sales increased by $2.0 million or 1.8% versus the prior year period.

In the second quarter of 2005, earnings before interest, taxes, depreciation, amortization and chapter 11-related reorganization expenses (EBITDAR), improved to $11.3 million from $10.4 million in the prior-year quarter, largely reflecting a gain on the disposal of assets and lower SG&A expenses, which were partially offset by lower volume in the company's North American operations and higher energy, raw material and manufacturing costs. FiberMark believes that such non-GAAP financial information assists investors and others by providing financial information in a format that presents comparable financial trends of ongoing business activities.

For the six months ended June 30, 2005, the company reported a net loss of $3.7 million in 2005 compared with a net loss of $16.3 million in 2004. The $12.6 million reduction in net loss was primarily due to lower interest expense ($8.5 million lower), largely due to the cessation of interest expense accruals on the senior notes pending the outcome of the bankruptcy process and lower reorganization expenses related to chapter 11 ($5.3 million lower), offset by lower income from operations ($1.2 million lower). Lower income from operations reflects lower SG&A expenses ($1.6 million decrease) and a $1.9 million gain on disposal of assets.

Consolidated net sales for the six months ended June 30 were $230.4 million in 2005 compared with $223.4 million in 2004, an increase of $7.0 million or 3.1%. Currency translation increased year-to-date 2005 sales by $5.5 million compared with 2004. Net of currency translation, current year net sales increased by $1.5 million, or 0.7% versus last year.

Net sales from German operations in the six months ended 2005 were $118.6 million compared with $108.2 million in the prior-year period, an increase of $10.4 million or 9.6%. Excluding the translation effects of a stronger euro, which accounted for $5.3 million in sales for the six-month period in 2005 compared with the prior period, sales from German operations rose by $5.1 million or 4.7%. Gains in nearly all markets, particularly in our filtration and abrasive base businesses, overshadowed smaller declines in our nonwoven wallcovering and coating base businesses.

Net sales from North American operations were $111.7 million in 2005 compared with $115.3 million in the prior-year period, a decrease of $3.6 million or 3.1%. Modest gains in office products were more than offset by declines in publishing/packaging and technical specialties.

In the first six months of 2005, earnings before interest, taxes, depreciation, amortization and chapter 11-related reorganization expenses (EBITDAR), improved to $23.8 million from $23.7 million in the prior-year period, largely reflecting a gain on the disposal of assets and lower SG&A expenses, which were partially offset by lower volume in the company's North American operations and higher raw material, energy and manufacturing costs.