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Rock-Tenn Company’s (RKT - Analyst Report) second-quarter fiscal 2013 adjusted earnings came in at $1.12 per share, up 15% from the year-ago quarter’s earnings of 97 cents per share, well ahead of the Zacks Consensus Estimate of $1.02.

The quarter excluded a tax benefit due to the reversal of previously established tax reserves relating to alternative fuel mixture credits acquired in the Smurfit-Stone Acquisition of $3.47 per share and restructuring and other costs as well as operating losses and transition costs stemming from plant closures of 14 cents per share. The year-ago quarter noted expenses related to restructuring and other as well as operating losses and transition costs stemming from plant closures of 36 cents per share and loss of 17 cents per share on early extinguishment of debt. Including these items, earnings in the reported quarter were $4.45 per share compared with 44 cents per share in the year-ago quarter.

Operating Performance

Total revenue improved 2% year over year to $2.325 billion, missing the Zacks Consensus Estimate of $2.355 billion. The top line decreased due to lower sales in the Consumer Packaging and Recycling segments, somewhat offset by increase in the Corrugated Packaging segment.

Cost of goods sold edged up 1% to $1.94 billion. Gross profit increased 7% to $385 million. Selling, general and administrative expenses increased 3% to $237 million. Adjusted operating income increased 13% to $148 million.

Segmental Performance

Corrugated Packaging Segment: Net sales in the segment rose 7% to $1.6 billion in the quarter. Adjusted operating income surged 67% to $114 million. Results were aided by higher selling prices and containerboard volume, partially offset by higher operating expenses including $12 million of incremental maintenance outage expense.

Consumer Packaging Segment: The segment’s net sales slipped 3% to $626 million. Operating income declined 25% to $63 million as a result of lower selling prices, lower display sales and lower bleached paperboard volume, due to the planned major maintenance outage at RockTenn’s Demopolis bleached paperboard mill.

Recycling: Net sales in the segment fell 8% to $271 million due to lower volume. The segment reported operating income of $3.5 million, down 17% from $4.2 million in the year-ago quarter.

Financial Position

Cash and cash equivalents increased to $51.3 million as of Mar 31, 2013, from $37.2 million as of Sep 30, 2012. Cash provided by operating activities were $175 million for second-quarter fiscal 2013, compared to $193 million in the year-ago quarter. Debt-to-capitalization ratio improved to 45% as of Mar 31, 2013, from 50% as of Sep 30, 2012. RockTenn also increased its annualized dividend by 33% to $1.20 per share. The increased dividend will be paid on May 20, 2013.

RockTenn is one of the leading integrated manufacturers of corrugated and consumer packaging and recycling solutions in North America. It operates in the U.S., Canada, Mexico, Chile, Argentina and China.

RockTenn currently retains a short-term Zacks Rank #2 (Buy). Other stocks with a favorable Zacks Rank in the same industry are PH Glatfelter Co. (GLT - Snapshot Report), KapStone Paper and Packaging Corporation (KS - Snapshot Report) and Resolute Forest Products Inc. (RFP - Snapshot Report), with a Zacks Rank #1 (Strong Buy).

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