Caraustar Sees Loss for Quarter

Caraustar Industries announced that revenues for the third quarter, an increase of 2.2 percent from revenues of $234.9 million for the same quarter of 2001. Net loss for the third quarter of 2002 was $4.5 million, compared to third quarter 2001 net income of $955,000.

For the nine-month period ended September 30 revenues were $695.4 million compared to revenues of $697.7 million for 2001. The net loss for the first nine months of 2002 was $4.6 million compared to a net loss of $9.5 million in 2001. Thomas V. Brown, president and CEO of Caraustar, stated, "We are pleased with our continued volume growth in an otherwise sluggish market. For the third quarter of 2002, compared with the third quarter of 2001, demand for Caraustar's products grew 4.7 percent in tonnage while the industry declined 1.7 percent. On a year-to-date basis our tonnage shipped is 5.5 percent ahead of 2001, while the industry lags last year by 3.2 percent. The volume growth in clay coated boxboard was particularly impressive, with a third quarter gain of 12.8 percent over last year and a year-to-date gain of 11.6 percent over 2001. In both cases the industry had modest losses in volume of less than 1 percent.

"Despite the volume gains, we could not offset the unusual cost increases in recovered fiber. The resulting margin compression drove the earnings shortfall and was exaggerated by the delay in implementing product price increases both in mill and converted products. Operating cash flow remained positive for the quarter at $15 million and, on a year-to-date basis, is $55.9 million, 20 percent ahead of last year.

"The outlook for the fourth quarter includes modest continued margin recovery with expected flat fiber costs. We expect softness in demand at the end of the fourth quarter, as is generally the case, but ahead of a very soft 2001 fourth quarter. "

Gross paperboard margins at the company's paperboard mills decreased $12 per ton in the third quarter of 2002 compared to the second quarter of 2002, as paperboard selling prices increased $21 per ton and recovered fiber costs increased $33 per ton. Energy costs at the company's paper mills decreased $4 per ton to $45 per ton in the third quarter of 2002 compared to the second quarter of 2002. Paperboard margins on tubes and cores decreased $2 per ton, as selling prices increased $20 per ton and paperboard costs increased $22 per ton in the third quarter of 2002 compared to the second quarter of 2002.