Sep 07, 2007. /Lesprom Network/. Standard & Poor's Ratings Services said on September 6, 2007 that it affirmed its ratings on Caraustar Industries Inc., including its 'B+' corporate credit rating, and removed the ratings from CreditWatch where they were placed with negative implications on May 9, 2007. The placement had been the result of poor first-quarter earnings and negative free cash flow. The outlook is negative. "The affirmation and CreditWatch removal incorporate prospects for meaningfully improved second-half 2007 financial results aided by better pricing, steady volumes, and cost savings, plus greater liquidity," said Standard & Poor's credit analyst Pamela Rice. "Still, we remain cautious about the company's ability to permanently improve its cost structure to offset high recycled fiber costs and competitive market conditions. As a result, Caraustar will need to sustain higher profitability over the next few quarters and meaningfully strengthen its credit measures to maintain its current ratings." Consolidated debt, including debt-like obligations, was $347 million at June 30, 2007, with debt to EBITDA a very weak 8.7x. Austell, Georgia-based Caraustar is a recycled paperboard producer. Ms. Rice said, "We could lower the ratings if Caraustar's profitability does not improve as we currently expect in the next few quarters or if market conditions deteriorate. We could revise the outlook to stable if the company is able to realize sufficient benefits from its rationalization and cost-reduction efforts to meaningfully improve earnings over the next few quarters, which along with debt reduction, produces credit measures appropriate for the ratings."