Temple-Inland Inc. Reports First Quarter 2007 Results

Business Wire, April 25, 2007

AUSTIN, Texas -- Temple-Inland Inc. (NYSE:TIN) today reported first quarter 2007 net income of $38 million, or $0.35 per diluted share, compared with first quarter 2006 net income of $79 million, or $0.70 per diluted share, and fourth quarter 2006 net income of $103 million, or $0.96 per diluted share.

Results for first quarter 2007 include a net after-tax special charge of $9 million, or $0.08 per share, related to costs for the Transformation Plan and an increase in litigation reserves after a recent California Supreme Court decision resulted in a longer limitation statute applying to certain claims in California regarding meal break laws. As reflected in the table below, net income per diluted share, excluding special items, for first quarter 2007 is $0.43 per share, compared with $0.72 per share in first quarter 2006, and $0.72 per share in fourth quarter 2006.

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Corrugated Packaging operating income improved first quarter 2007 compared with first quarter 2006, principally due to higher corrugated container prices and lower energy costs. Operating income declined in first quarter 2007 compared with fourth quarter 2006 principally due to higher recycled fiber costs. Higher actual corrugated container volumes in first quarter 2007 compared with fourth quarter 2006 offset higher energy costs, planned maintenance at Rome, GA linerboard mill and lower corrugated container prices due to the loss of higher priced agriculture shipments in California and Mexico due to weather.

Shipments first quarter 2007 were down 5%, on a volume per workday basis, compared with first quarter 2006 primarily due to the sale of Performance Sheets (a sheet feeder plant in City of Industry, California) August 2006. Excluding Performance Sheets, volumes were down 1% in first quarter 2007 compared with first quarter 2006 on a volume per workday basis. Actual shipments of corrugated containers were up 5% in first quarter 2007 compared with fourth quarter 2006. On a volume per workday basis, shipments of corrugated containers were down 1% first quarter 2007 compared with fourth quarter 2006. Additionally, shipments in first quarter 2007 were negatively impacted approximately 10,000 tons by weather conditions in California and Mexico.

Average prices for corrugated containers first quarter 2007 were up 8% compared with first quarter 2006, but down 1% compared with fourth quarter 2006. First quarter 2007 prices were negatively affected by the loss of higher priced agriculture business in California and Mexico due to weather conditions. The average cost of recycled fiber first quarter 2007 was up 60% compared with first quarter 2006, and up 33% compared with fourth quarter 2006. Freight costs first quarter 2007 were down $1 million compared with first quarter 2006 and fourth quarter 2006. Energy costs were down $6 million first quarter 2007 compared with first quarter 2006, but up $3 million compared with fourth quarter 2006.

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Operating income declined first quarter 2007 compared with first quarter 2006 primarily due to lower lumber prices and lower prices and shipments of gypsum. Operating income declined first quarter 2007 compared with fourth quarter 2006 principally due to lower prices and shipments for gypsum.

Average lumber prices first quarter 2007 were down 25% compared with first quarter 2006, but up 1% compared with fourth quarter 2006. Gypsum prices were down 7% compared with first quarter 2006, and down 11% compared with fourth quarter 2006. Particleboard prices were up 22% compared with first quarter 2006, but down 4% compared with fourth quarter 2006.

Shipments of lumber and particleboard were down in first quarter 2007 compared with first quarter 2006, but up compared with fourth quarter 2006. Shipments for gypsum were down in first quarter 2007 compared with first quarter 2006 and fourth quarter 2006.

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Real estate reported operating income of $3 million in first quarter 2007, reflecting a slowdown in residential activity. First quarter 2006 segment operating income included a gain of $8 million on the sale of five acres of land for commercial use.

During first quarter 2007, 268 acres of high-value land not suitable for development were sold at an average price of approximately $5,600 per acre.

Residential activity for wholly owned and joint venture projects during first quarter 2007 included the sale of 441 lots at an average price of approximately $56,400 per lot.

Commercial activity during first quarter 2007, principally related to joint venture projects, included the sale of 30 acres at an average price of $294,000 per acre.

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Financial Services operating income first quarter 2007 was flat compared with first quarter 2006. Operating income declined first quarter 2007 compared with fourth quarter 2006 principally due to lower average earning assets.

Comments

In announcing first quarter results, Kenneth M. Jastrow, II, chairman and chief executive officer of Temple-Inland Inc., said, "Our Corrugated Packaging operation continues to benefit from strategic initiatives of full integration and increasing asset utilization. During first quarter 2007, our containerboard mills achieved record production levels despite planned maintenance downtime at Rome, GA. In addition, converting costs declined in first quarter 2007 compared with fourth quarter 2006 as asset utilization continued to increase.