Fortress Paper Ltd. (TSX: FTP.TO) (“Fortress Paper” or the “Company”) reported net income of $3.7 million for the fourth quarter of 2009 on sales of $51.0 million or diluted earnings per share of $0.35. For the fourth quarter of 2008 the Company reported net income of $2.8 million on sales of $46.3 million or basic and diluted earnings per share of $0.27. In the third quarter of 2009 the Company reported net income of $3.5 million on sales of $51.0 million or basic and diluted earnings per share of $0.34.
Adjusted net income for the fourth quarter of 2009 was $0.47 per share. Adjusted net income for the previous year comparative period and prior quarter was $0.28 per share and $0.38 per share, respectively.
EBITDA was $7.9 million or 15.4% of sales for the three months ended December 31, 2009. For the three months ended December 31, 2008 EBITDA was $6.0 million or 13.2% of sales. EBITDA for the third quarter of 2009 was $7.0 million or 13.7% of sales. In the fourth quarter of 2009 both mills experienced strong sales and earnings throughout the quarter. The increase in EBITDA relative to the prior year comparative period was partially due to the global financial and economic crisis which impacted sales late in 2008.
For the year ended December 31, 2009, Fortress Paper recorded net income of $12.7 million or $1.23 per share (diluted) on sales of $198.3 million. For the year ended December 31, 2008, the Company recorded net income of $12.7 million or $1.24 per share (diluted) on sales of $189.0 million.
Adjusted net income for the year ended December 31, 2009 was $13.8 million or $1.34 per share (diluted). Adjusted net income for the previous year comparative period was $13.3 million or $1.30 per share (diluted).
EBITDA was $25.6 million for the year ended December 31, 2009 compared to $25.0 million for the year ended December 31, 2008.
EBITDA relative to the prior year was slightly improved. Due to the global financial and economic crisis Fortress experienced a slow start to the year; however, this was more than compensated by a very strong second half. Order logs for both mills continue to show strength.
EBITDA is defined as net income before interest, income taxes, depreciation, amortization, non-operating income and expenses and stock based compensation which the Company considers to be a key performance indicator. EBITDA is not a generally accepted earnings measure and should not be considered as an alternative to earnings or cash flows as determined in accordance with Canadian generally accepted accounting principles. As there is no standardized method of calculating EBITDA, the Company’s use for the term may not be comparable with similarly titled measures used by other companies.
Combining strong results from both mills this quarter has resulted in consecutive record quarterly EBITDA for Fortress. As the year has progressed our mills have weathered the economic crisis and produced continually better results as the year progressed. Maintaining a strong balance sheet at a time the company is evaluating internal growth initiatives and accretive acquisition opportunities puts Fortress in an advantageous position.
The Dresden mill in particular has shown resilience through the economic crisis and progressively turned out improved results quarter over quarter. The Landqart mill has also performed well in the second half of the year coinciding with higher margin banknote paper production.
The market for security papers continues to show strength and the order book for wallpaper base has grown to its current level of eight weeks.
As news released October 14, 2009, Durasafe(R) banknote paper was officially launched at the Washington Banknote Conference held in December 2009. Currently several national banks are working on trials with Durasafe(R) banknote paper. Estimating the time to commercialization with prospective customers such as printers and national banks is dependent on a number of variables that are not within the Company’s control. Some variables consist of the integration of other new and innovative security features and the timing of a new banknote series launch.
Durasafe(R) is an innovative banknote substrate, which consists of two 100% cotton paper layers, which contain all the security features common to traditional banknote paper but with a polymer core. This three layer substrate dramatically increases the durability and design options as compared to conventional paper banknotes. Durasafe(R) adds the unique ability to implement security features consisting of semi and fully transparent windows of different shapes, sizes and positions.
Source: Fortress Paper Corporate Website