Neenah, Inc. (NYSE:NP) Q2 2019 Earnings Conference Call - Final Transcript
Aug 07, 2019 • 11:00 am ET
Good morning, and welcome to the Neenah Quarter Two Earnings Conference Call. [Operator Instructions]
I would now like to turn the conference over to Mr. Bill McCarthy, Vice President of Investor Relations. Please go ahead, sir.
Mr. Bill McCarthy
Thank you, and good morning. With me on the call today are John O'Donnell, Chief Executive Officer; and Bonnie Lind, our Chief Financial Officer. John and Bonnie will provide comments on business and financial results for the most recent quarter, along with thoughts on the remainder of the year. After these remarks, we'll open up the call for questions.
Let me start with a few headlines. We released earnings yesterday afternoon, reporting second quarter sales of $253 million. This was down 7% versus last year's record quarter. However, excluding impacts from currency and the December sale of our Brattleboro operation, sales were 2% lower, mostly reflecting softer global and economic and market conditions. Quarterly GAAP earnings of $0.80 per share compared to a loss of $0.29 last year. 2018 included $1.47 per share, primarily for a noncash write-down of Brattleboro following our decision to divest.
In 2019, GAAP earnings included non-routine costs of $0.15 per share. The majority of this was for accelerated depreciation and other noncash costs associated with plans to idle a fine paper machine in the third quarter as we consolidate and optimize our manufacturing footprint. Excluding these items in both periods, adjusted earnings per share of $0.95 this quarter increased substantially from $0.69 in the first quarter, well below $1.18 per share reported in the second quarter of 2018.
Details on adjusting items and a reconciliation to comparable GAAP figures is included in our press release. I'll end by noting that our comments today may include forward-looking statements, and actual results could differ from these statements due to uncertainties and risks outlined on our website and in our SEC filings.
With that, I'll turn things over to John.
Thank you, and good morning, everyone. I was very pleased with the progress our team's made in the second quarter despite the weaker global economic conditions. With our daily focus on the drivers of financial performance within our control, I'm confident we'll continue to deliver the improvements we're expecting.
A few examples from the quarter include: an accelerating top line growth in key categories like filtration and premium packaging; a 200-basis-point increase in adjusted operating margins versus the first quarter. This was heavily influenced by our cost control and pricing activities, offsetting $4 million of year-on-year input cost increases. And finally, we substantially improved cash flow generation, enabling us to pay down over $20 million in debt.
As Bill noted, consolidated sales were 2% lower after excluding divestitures and currency impacts. Each segment was down about that same percentage. In Fine Paper & Packaging, the commercial print market remains pressured, and our teams continue to actively address market representation options to ensure that our selective distribution strategy provides the most effective go-to-market model to serve our customers. Growth in premium packaging partly offset