HOUSTON, May 8 /PRNewswire-FirstCall/ -- Pioneer Companies, Inc.
(NASDAQ:PONR) today reported net income of $16.1 million, or $1.35
per diluted share, on revenues of $134.9 million for the three
months ended March 31, 2006. This compares to net income of $15.0
million, or $1.28 per diluted share, on revenues of $119.1 million
for the first quarter of 2005. Pioneer's average ECU netback during
the first quarter of 2006 was $616, which was $3 lower than the
preceding quarter, and $68 higher than the first quarter of 2005.
The increase in revenues for the three months ended March 31, 2006
compared to the first quarter of 2005 resulted from a higher ECU
netback, as well as higher prices for bleach and other Pioneer
products. Pioneer's ECU production was 165,359 ECUs in the first
quarter of 2006, as compared to 163,729 ECUs and 161,635 ECUs in
the preceding quarter and the first quarter of 2005, respectively.
Cost of sales for the three-months ended March 31, 2006 increased
by $12.0 million, to $99.6 million, as compared to the first
quarter of 2005. In the most recent quarter, Pioneer's cost of
sales included an increase in variable product costs of $11.0
million and an increase in fixed costs of $1.0 million, as compared
to the first quarter of 2005. The variable product cost increase of
$11.0 million included higher production costs of $9.4 million
related primarily to higher energy prices, and $1.2 million as a
result of higher production volumes. Pioneer also incurred higher
freight costs of $3.3 million compared to the prior year period.
These variable cost increases were partially offset by a decrease
of $1.8 million in the costs of purchases for resale due to certain
sales contracts expiring related to Pioneer's former chlor-alkali
facility in Tacoma and lower costs of $1.1 million for non-ECU
products resulting from the closure of its Cornwall plant in mid
2005. Pioneer's fixed costs increased by $1.0 million due to higher
personnel costs of $0.4 million, higher depreciation expense of
$0.4 million and higher plant utilities costs of $1.3 million. That
increase was offset in part by lower maintenance costs of $1.5
million, mainly caused by fewer turnaround projects in the first
quarter of 2006 compared to the 2005 period. Selling, general and
administrative expenses decreased by $0.4 million, or approximately
5%, to $8.1 million for the first quarter of 2006, compared to the
same period of 2005. This decrease included $1.1 million of lower
bad debt expense due to improvements in accounts receivables from
certain customers in higher risk industries and a decrease of $1.5
million in the employee bonus accrual from the prior period.
Partially offsetting these decreases was $1.2 million of higher
professional fees in the first quarter of 2006, of which $0.9
million was related to our ongoing Sarbanes-Oxley compliance
efforts. Additionally, there were $1.2 million of higher employee
related costs in the current period. During the first quarter of
2006, Pioneer redeemed $50.0 million of its senior secured notes,
plus paid a prepayment premium of $2.5 million, which reduced the
balance of its outstanding senior notes to $100 million. Further,
there were no borrowings under Pioneer's revolving credit facility
in the first quarter of 2006. Interest expense for the three months
ended March 31, 2006 was $2.5 million, compared to $4.3 million
during the year-earlier period. Pioneer has substantial Canadian
operations and accordingly must measure Canadian dollar-denominated
account balances in U.S. dollars impacts for financial reporting
purposes. Accordingly, in the first quarter of 2006, Pioneer
reported as other income, $0.2 million of currency exchange gain,
compared to a $0.2 million currency exchange gain in the first
quarter of 2005. Income tax expense for the first quarter of 2006
was $6.7 million, primarily from taxes on income from Pioneer's
Canadian operations. The Company had available net operating loss
carryforward to offset its taxable U.S. income. In comparison,
Pioneer reported an income tax expense of $3.4 million for the
first quarter of 2005. At March 31, 2006, Pioneer had liquidity of
$52.5 million, which included $26.1 million of cash and $26.4
million available for borrowing under Pioneer's revolving credit
facility, which was net of $3.6 million of outstanding letters of
credit. Michael Y. McGovern, Pioneer's Chairman, President and
Chief Executive Officer, stated, "The first quarter of 2006 was
another outstanding quarter for Pioneer. With continuing strong
demand for chlorine and caustic soda, our average ECU netback of
$616 for the first quarter of 2006 showed only a slight decline
from the ECU average netback of $619 during the fourth quarter of
2005." Mr. McGovern continued, "Two other recent events are worth
noting. As previously discussed, our total debt has been reduced to
$103 million as of March 31, 2006. This provides the Company with
much greater financial flexibility. The second event was the new
six-year union contract recently ratified by our production and
maintenance employees at our Becancour, Quebec facility. This
demonstrates the positive labor-management relationship at
Becancour which benefits all involved parties, and most especially
our customers who rely on Pioneer to be a reliable supplier of our
products." Pioneer, based in Houston, manufactures chlorine,
caustic soda, bleach, hydrochloric acid and related products used
in a variety of applications, including water treatment, plastics,
pulp and paper, detergents, agricultural chemicals, pharmaceuticals
and medical disinfectants. Pioneer owns and operates four
chlor-alkali plants and several downstream manufacturing facilities
in North America. Pioneer's common stock trades on the NASDAQ Stock
Market under the symbol PONR. Pioneer has filed its quarterly
report on Form 10-Q for the quarter ended March 31, 2006, and has
posted it to its Internet web site. Other information and press
releases of Pioneer Companies, Inc. can also be obtained from its
Internet web site at http://www.piona.com/ . Pioneer will conduct a
teleconference on May 10, 2006, at 9:00 a.m. Central time in order
to discuss its financial results for the first quarter of 2006.
Individuals who are interested in listening to the teleconference
may call (800) 314-3563 at that time and request to listen to the
Pioneer earnings teleconference. A replay of this teleconference
will be available from 11:00 a.m. (Central time) on May 10, 2006,
until 11:00 a.m. on May 16, 2006, by dialing (800) 633-8284,
reservation #21291710. Certain statements in this news release are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act. Forward- looking statements
relate to matters that are not historical facts. Such statements
involve risks and uncertainties, including, but not limited to, the
cyclical nature of the markets for Pioneer's products and raw
materials, the fluctuations in demand and prices for Pioneer's
products and raw materials, increases in energy prices, Pioneer's
access to and the cost of rail transportation, Pioneer and industry
production volumes, competitive prices, and other risks and
uncertainties described in Pioneer's filings with the Securities
and Exchange Commission. Actual outcomes may vary materially from
those indicated by the forward-looking statements. PIONEER
COMPANIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited,
in thousands, except per share data) Three Months Ended March 31,
2006 2005 Revenues $134,872 $119,090 Cost of sales (99,638)
(87,608) Gross profit 35,234 31,482 Selling, general and
administrative expenses (8,079) (8,463) Other items 312 (505)
Operating income 27,467 22,514 Interest expense, net (2,466)
(4,256) Other income (expense), net (2,290) 173 Income before
income taxes 22,711 18,431 Income tax expense (6,661) (3,411) Net
income $ 16,050 $ 15,020 Net Income per share: Basic $ 1.36 $ 1.34
Diluted $ 1.35 $ 1.28 Weighted average number of shares
outstanding: Basic 11,761 11,176 Diluted 11,864 11,779 PIONEER
COMPANIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited,
in thousands) March 31, Dec. 31, 2006 2005 Assets Current assets
$108,286 $151,603 Property, plant and equipment, net 155,330
158,960 Other assets, net 4,177 4,310 Excess reorganization value
over the fair value of identifiable assets 84,064 84,064 Total
assets $351,857 $398,937 Liabilities and stockholders' equity
Current liabilities $ 47,404 $ 59,932 Long-term debt, less current
portion 101,979 152,739 Employee benefit and other long-term
liabilities 80,791 81,276 Total stockholders' equity 121,683
104,990 Total liabilities and stockholders' equity $351,857
$398,937 PIONEER COMPANIES, INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited, in thousands) Three Months Ended March 31, 2006
2005 Operating activities: Net income $ 16,050 $ 15,020 Adjustments
to reconcile net income to net cash flows from operating
activities: Depreciation and amortization 6,030 5,685 Provision for
(recovery of) losses on accounts receivable (674) 603 Deferred tax
expense 742 3,311 Gain on disposal of assets (312) (74) Currency
exchange gain (153) (173) Loss on early debt extinguishment 2,500
--- Stock-based compensation expense 378 --- Accretion expense 76
--- Net effect of changes in operating assets and liabilities
(4,953) 1,183 Net cash flows from operating activities 19,684
25,555 Investing activities: Capital expenditures (3,087) (3,932)
Proceeds from disposal of assets 132 74 Net cash flows used in
investing activities (2,955) (3,858) Financing activities: Payment
of premium on early debt extinguishment (2,500) --- Repayments of
long-term debt (51,135) (22,316) Proceeds from issuance of stock,
net 218 8 Net cash flows used in financing activities (53,417)
(22,308) Effect of exchange rate changes on cash (17) (14) Net
change in cash and cash equivalents (36,705) (625) Cash and cash
equivalents at beginning of period 62,790 16,191 Cash and cash
equivalents at end of period $ 26,085 $ 15,566 DATASOURCE: Pioneer
Companies, Inc. CONTACT: Gary Pittman of Pioneer Companies, Inc.,
+1-713-570-3200 Web site: http://www.piona.com/
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