Buckeye Technologies announced first quarter adjusted net income of $29.9 million or $0.74 per share, which excludes net income of $11.2MM or $0.28 per share from cellulosic biofuel credits generated in 2009. Adjusted net income rose 118% as compared to the prior year period's $13.7 million or $0.34 per share, which excluded net income of $51.3 million or $1.26 per share from cellulosic biofuel credits generated in 2009.
Net sales of $240 million were up 19% versus last year's first quarter sales of $202 million. Sales benefited from higher selling prices and increased cotton linter pulp shipment volume. The $0.40 increase in adjusted EPS, compared to the prior year period, was driven by these same factors. Aside from significantly higher cotton linter costs, cost inflation for chemicals, transportation and other raw materials was modest with energy prices stable.
Buckeye also announced that its Board of Directors approved
funding to increase the high-end specialty wood pulp capacity by 42,000 tons at its Buckeye Florida "Foley" operation. The cost of the project is expected to be approximately $79 million with an anticipated rate of return of 15% to 20%. Engineering and design work is nearing completion, and construction is expected to begin in January 2012 with project startup planned for December 2012. This investment will be funded by cash flow from operations.
Buckeye's chairman and CEO John Crowe, says, "This specialty expansion project will provide much needed high-purity specialty volume for strategic customers in all of our high-end markets including casings, tire cord, ethers, filtration, micro-crystalline cellulose, and acetate. Additionally, this will improve our overall plant product mix from 42% specialty wood pulp to just over 50% specialty wood pulp while maintaining the Foley plant's existing total capacity at 465,000 tons per year. This is the type of high-return organic growth opportunity that we will continue to target as we allocate our free cash flow to its highest and best use. We believe this project will provide excellent value to our customers and our shareholders."