Temple-Inland Inc. Reports Third Quarter 2006 Results

Business Wire, Oct 24, 2006

AUSTIN, Texas -- Temple-Inland Inc. (NYSE:TIN) today reported third quarter 2006 net income of $96 million, or $0.87 per diluted share, compared with third quarter 2005 net income of $38 million, or $0.33 per diluted share, and second quarter 2006 net income of $192 million, or $1.71 per diluted share.

Results for third quarter 2006 include an after-tax special charge of $6 million, or $0.06 per share, primarily associated with previously-announced converting facility closures and also an increase in litigation reserves. As reflected in the table below, net income per diluted share, excluding special items, for third quarter 2006 is $0.93 per share, compared with $0.47 per share in third quarter 2005, and $0.98 per share in second quarter 2006.

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Corrugated Packaging operating income improved in third quarter 2006 compared with third quarter 2005, principally due to higher corrugated container prices and lower energy costs. Third quarter 2006 earnings were negatively affected by $7 million from the previously-announced maintenance downtime at the Bogalusa linerboard mill. Earnings improved in third quarter 2006 compared with second quarter 2006 due to higher corrugated container prices and lower freight and energy costs, which more than offset higher recycled fiber costs.

Shipments in third quarter 2006 were down 6%, on a volume per workday basis, compared with second quarter 2006 due to the previously-announced normal slower seasonal pattern of our Mexico agriculture business, the sale of Performance Sheets (a sheet feeder plant in City of Industry, California) August 2006, and temporary closure of our Binghamton, New York box plant due to flooding. On a volume per workday basis, shipments of corrugated containers were down 3% in third quarter 2006 compared with third quarter 2005 due to the sale of Performance Sheets and the temporary closure of our Binghamton, New York box plant due to flooding.

Average prices for corrugated containers in third quarter 2006 were up 11% compared with third quarter 2005 and up 3% compared with second quarter 2006. The average cost of recycled fiber in third quarter 2006 was up 8% compared with third quarter 2005 and up 16% compared with second quarter 2006. Freight costs were up $8 million compared with third quarter 2005 but down $5 million compared with second quarter 2006. Energy costs were down $4 million in third quarter 2006 compared with third quarter 2005 and down $1 million compared with second quarter 2006.

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Operating income for third quarter 2006 of $83 million was a record third quarter for Forest Products. Earnings improved in third quarter 2006 compared with third quarter 2005 due to improved particleboard and gypsum prices, and the January 2006 acquisition of our partner's interest in Standard Gypsum. Earnings declined in third quarter 2006 compared with second quarter 2006 due to declining lumber prices and lower gypsum volumes.

Average lumber prices in third quarter 2006 were down 26% compared with third quarter 2005 and down 14% compared with second quarter 2006. Gypsum prices were up 31% compared with third quarter 2005 and up 5% compared with second quarter 2006. Particleboard prices were up 28% compared with third quarter 2005 and up 10% compared with second quarter 2006.

Shipments of lumber, gypsum and particleboard were up in third quarter 2006 compared with third quarter 2005. Shipments of lumber, gypsum and particleboard were down in third quarter 2006 compared with second quarter 2006.

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Real Estate earnings in third quarter 2006 were $15 million. We sold 660 acres of high-value land at an average sales price of approximately $7,800 per acre in third quarter 2006, resulting in a gain of $5 million.

Residential development activity for all wholly and partially owned projects during third quarter 2006 included the sale of 638 lots at an average price of approximately $53,000 per lot.

Commercial activity in third quarter 2006 included the sale of 137 acres at an average price of $186,000 per acre, resulting in a gain of $6 million.

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Financial Services earnings declined in third quarter 2006 compared with third quarter 2005 principally from a higher mix of securities in our portfolio of earning assets. Earnings declined in third quarter 2006 compared with second quarter 2006 principally due to lower average earning assets.

Comments

In announcing third quarter results, Kenneth M. Jastrow, II, chairman and chief executive officer of Temple-Inland Inc., said, "Third quarter 2006 was a record third quarter for Temple-Inland. Our results reflect continued benefit from the execution of our strategy. In addition, we repurchased 2.2 million shares in the quarter and reduced debt by $124 million.

"Corrugated Packaging results reflect improved pricing and business improvement resulting from our strategic initiatives of full integration and asset utilization. On a volume per workday basis, our volume is essentially flat in first nine months 2006 compared with first nine months 2005, despite the closure of three box plants since third quarter 2005. In addition, we have closed eleven box plants since third quarter 2003, which has increased asset utilization and lowered cost.