Consolidated operating income of $22.6 million in the 4Q 2013 compared with $15.9 million in the 4Q 2012. Earnings in 2012 included $1.5 million of costs to integrate acquired fine paper brands and for early redemption of bonds. Excluding these items, income increased 30% in 2013 as a result of sales growth, manufacturing efficiencies and lower administrative costs that offset higher input costs, notably for pulp.
Net interest expense of $2.7 million in the 4Q 2013 declined from $3 million in the same quarter of 2012 as a result of lower interest rates in 2013 following the early redemption and refinancing of the Company’s Senior Notes in May 2013.
"We finished the year with momentum, as both business segments delivered top and bottom line increases as a result of improving economic conditions, strong operational performance and successful execution of our strategy to grow in profitable niche markets like filtration, specialty backings and premium fine papers and packaging,” said John O’Donnell, CEO. “Our teams improved efficiencies, achieving double-digit operating margins and an increased return on capital, while generating $55 million in free cash flow. We are encouraged as we enter 2014 and this confidence is evidenced to our shareholders through our commitment to an attractive dividend.”
Net sales of $844.5 million in 2013 increased 4% compared with sales of $808.8 million in 2012. The increase in revenues resulted from 8% growth in Fine Paper, primarily reflecting increased volume from acquired brands and a higher value mix of products, as well as 2% growth in Technical Products as a result of favorable currency impacts, volume growth, and a higher value product mix that offset lower selling prices. Other segment sales declined 10% primarily as a result of lower volumes of these non-strategic grades.
Operating income of $83.8 million in 2013 increased 19% compared with $70.4 million in 2012. Excluding costs of approximately $10 million in 2012 and $1.3 million in 2013 for integration, pension settlement and early retirement of debt, operating income in 2013 increased 6% as a result of volume growth, higher net selling prices and improved manufacturing operations that more than offset higher input costs.
Neenah Paper is a leader in premium image and performance-based products, including filtration, specialized substrates used for tapes, labels and other products, and high-end printing papers.