Temple-Inland's net income plummeted 95% during the third quarter, compared with the same period last year, to $6 million, despite a 1% increase in net sales to $974 million, the corrugated packaging and building material manufacturer reported today.
Results for the Austin, Texas-based company were impacted by a 29% decrease in total segment operating income, to $79 million, as well as a $23 million other operating income expense, which was not included in the segment results.
Temple-Inland's building products segment posted a $5 million operating loss, a 50% improvement from the same period a year ago. Revenues for the segment also improved by 6% to $166 million during the quarter.
Higher gypsum and particleboard prices coupled with higher particleboard volumes helped drive results. The company is not expecting the same results during the fourth quarter as it said volumes for all building products are typically lower compared with the third quarter due to seasonality.
Lumber sales increased $2 million to $53 million during the quarter, driven by a 4% increase in unit sales to 205 million board feet. Gypsum wallboard went in the opposite direction, however, as revenues fell 19% to $34 million and unit sales fell 22% to 270 million square feet. Revenues for particleboard jumped 33% to $40 million, as the company manufactured 112 million square feet of the product. Medium density fiberboard production remained flat at 30 million square feet, but sales increased $1 million to $18 million. Fiberboard revenues also remained consistent at $7 million, even though production fell 11% to 33 million square feet.
The company's corrugated packaging segment, its bread and butter, saw income drop 30.5%, while revenues fell $1 million to $808 million.
During the quarter Temple-Inland was aggressively pursued by International Paper, which announced in early September that it reached a merger agreement between the two companies. The agreement has International Paper acquiring all of Temple-Inland's outstanding common stock for $32 per share and the company will also take on $600 million of Temple-Inland's year end debt. The transaction is valued at $4.3 billion and is expected to close during the first quarter of next year.