Buckeye registers strong 2nd quarter

February 5, 2010 -- Memphis-based Buckeye Technologies just completed its strongest quarter in a year and a half.

The company headquartered on 75 acres at Jackson and Tillman reported second-quarter net income of $46.3 million, compared to a $125 million loss for the same quarter the previous year.

"We are encouraged by the improving trends in our business, as evidenced by the strong rebound in earnings versus the first quarter and our first year-over-year gains since the July-September quarter of 2008," chairman and CEO John B. Crowe said in a prepared release.

The company doesn't produce finished products, but rather ingredients, like specialty fibers and nonwoven materials, that other manufacturers use to make things.

Buckeye Technologies products are used to make such products as casings for hot dogs and other foods, high-performance tire cord, and automotive oil and fuel filters.

Demand for its products has grown so strong that one of the company's biggest challenges is acquiring enough raw material to keep up with it, Crowe said in a telephone interview.

"Our markets had recovered to the point that in our specialty business particularly, we were sold out in our specialty fibers for what we could supply," he said.

Specifically, Buckeye Technologies needs more cotton seeds. That's a problem because domestic cotton production has fallen in recent years while China has consumed more and more cotton.

"Going forward, we won't be able to take as much advantage of orders of our cotton specialty products because we'll run into constraints in raw material," Crowe said. "We depend on cotton crops and the crushing of the seeds for oil, where lint is removed."

At Jackson and Tillman, Buckeye Technologies has both its corporate headquarters and the world's largest plant for taking lint from cotton seed, Crowe said.

The product Buckeye Technologies makes from the lint is used to make such things as LCD screens and cotton-bonded paper.

The company has 1,425 employees total, about 255 of whom work in Memphis.

Buckeye Technologies continues to reduce its debt, now down to $290 million. It was more than $700 million six or seven years ago, Crowe said.

The goal has been to cut the debt to $275 million by June 30, but "we think we'll be below that by March 30," Crowe said.

The future looks bright for the company, he said. Discretionary products that use the company's fibers -- such as the LCD screens -- are starting to sell again.

The increased orders don't "feel like just an inventory build," Crowe said. "I believe all our customers are learning to run with adequate inventories and not excessive ones."

-- Tom Bailey Jr.: 529-2388

Buckeye Technologies 2nd Quarter

Net income: $46.3 million ($1.18 per share), compared to $125 million loss in same quarter in 2008

Adjusted net income (excluding $37.5 million from alternative fuel mixture credits): $8.8 million, compared to $2.6 million in same quarter in 2008.

Net sales: $183 million, compared to $185 million in same quarter in 2008