Neenah, Inc. (NYSE:NP)

On 3/08/2012 we added NP to the GeoBargain list @ $29.38

 
Catalyst: A 52 week high play that had a GPR of 4.  The company made an acquistion of WAUSAU paper that was slated to add $100 million in revenue and allow NP an opportunity to gain new customers and begin cross selling many of their product offerings.

We are now removing NP from the GeoBargain List @ $26.80

Current road block: Although the company is setting record sales and profit figures, the company's GPR is now down 2 with tough comparisons for the foreseeable future after the upcoming fourth quarter.  Soft demand in the industry is another potential road block, demand is expected to decrease over the next 12 to 18 months, according to Moody's.

• Peak performance: Reached a high of  $31.66 on 03/19/2012 for a maiximum potential return of 8%
• Current Price: $26.80

Second Quarter 2012 Results

• Net sales of $211.7 million in the second quarter of 2012 grew 16 percent compared with the second quarter of 2011.
• Adjusted earnings from continuing operations of $0.85 per diluted common share in the second quarter of 2012 compared with earnings of $0.49 per share in the second quarter of 2011.

“Our businesses set an all-time quarterly record for sales and profits, with Technical Products and Fine Paper each delivering double-digit earnings growth. Our teams are executing well against key objectives of growing high value, performance-oriented Technical Products offerings and delivering the value promised from our expanded Fine Paper business,” said John O’Donnell, Chief Executive Officer. “In addition, both businesses are realizing cost benefits from more efficient manufacturing operations; and this, along with our strong market positions, will serve us well in what may be weaker global economic conditions in the second half of the year.”

ALPHARETTA, Ga.--(BUSINESS WIRE)--Neenah Paper, Inc. (NYSE:NP), announced today that its Board of Directors has authorized a program that would allow the Company to repurchase up to $10 million of its outstanding common stock.

Purchases by the Company under this program would be made from time to time in the open market or in privately negotiated transactions in accordance with the requirements of applicable law. The timing and amount of any purchases will depend on share price, market conditions and other factors. The program does not require the Company to purchase any specific number of shares and may be suspended or discontinued at any time.

“This action by our Board provides us with added flexibility in how we can deploy our cash when we believe our share price is undervalued,” said John O’Donnell, Chief Executive Officer. “Our balance sheet and ability to generate cash flow remains strong, and we continue to look for ways to invest that will deliver attractive returns for our shareholders.”

The stock repurchase program is expected to be funded using cash on hand or borrowings under the Company’s existing revolving credit facility. As of March 31, 2012, Neenah Paper had approximately 16 million shares of common stock outstanding.

First Quarter 2012 Results

• Net sales of $198.2 million in the first quarter of 2012 grew 15 percent compared with the first quarter of 2011
• Adjusted earnings from continuing operations of $0.77 per diluted common share in the first quarter of 2012 compared to adjusted earnings of $0.54 per share in the first quarter of 2011.

"Each of our businesses performed well during the first quarter, with combined operating income for the two segments achieving a new quarterly record. We are improving topline performance with volume gains and price realization in higher value products and are realizing manufacturing cost efficiencies that have come from a consistent emphasis on improved operating throughput,” said John O’Donnell, Chief Executive Officer. “Both sales and integration of the recently acquired brands are ahead of expectations, and the transaction has generated the anticipated strong market support and internal efficiencies that we knew could be a game changer for some of our manufacturing facilities.”

Premium research note from our 52 week high blog on 1/25/2012

This is the 2nd paper product company that has entered our new high list in the last 2 weeks, the other being KS. After the December 2011 quarter stock will have a GPR of 4. Upside to analyst estimates could be in the cards if it consummates an acquisition agreement with WAUSAU paper announced in December 2011. Stock is selling at a meager 10 times 2012 analyst EPS estimates of $2.20.  Company just raised its dividend 9%. We believe stock could approach $33.

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We will now start tracking NP's financial results. Please see our premium research note from 1/25/2012

 Fourth quarter and full year 2011 results

• Net sales of $165.5 million in the fourth quarter of 2011 grew three percent compared with the prior year period
• Earnings from continuing operations of $0.47 per diluted common share in the fourth quarter of 2011 compared to adjusted earnings of $0.30 per share in the fourth quarter of 2010

For the full year, 2011

• Net sales of $696.0 million were up six percent versus the prior year
• Adjusted earnings per diluted common share increased 30 percent, from $1.47 in 2010 to $1.91 in 2011

“Both our Technical Products and Fine Paper businesses finished the year with growth in revenues and significant improvement in profit levels. Cash flow generated from these higher earnings and disciplined working capital management was used to reduce net debt by more than $13 million in the quarter,” said John O’Donnell, Chief Executive Officer. “For the full year, our performance reflected successful strategy execution with growth in key markets, expanded operating margins, a cadence of high-return capital investments and significantly lower debt. As we enter 2012, our businesses are well-positioned for continued improvement despite the current economic uncertainty in Europe. In addition, we are excited by the market opportunities made possible by our recent acquisition of Wausau’s premium fine paper brands.”

Outlook

The company noted certain items expected to impact 2012 results:

• Additional annualized sales of over $100 million from premium paper brands purchased from Wausau Paper Corp. for $21 million on January 31, 2012.
• One-time integration costs of approximately $10 million related to the Wausau transaction.
• Continued economic uncertainty in Europe and a weaker euro.
• Lower input costs for some grades of pulp, partly offset by higher costs for other materials and selling price adjustments on certain customer contracts.
• Capital spending of approximately $25 million.
• Quarterly dividends of $0.12 per share, an increase of almost 10 percent from 2011.