Oppenheimer Comments On Schweitzer-Mauduit Intl. Following Earnings Miss

Schweitzer-Mauduit SWM reported adjusted EPS of $0.97, which missed Oppenheimer/Street estimates of $1.08/$1.10. The earnings miss was largely due to lower RTL sales volumes and start-up expenses at the new European LIP facility. Despite this, management reiterated 2011 EPS guidance of "at least $5." First-quarter revenue declined 6.2% to $180.7M. Revenues were hurt by lower volumes, lower price/mix contribution, and FX. SWM suffered higher inflationary costs, primarily wood pulp and energy, which negatively impacted operating profit by $6.2M for the quarter. Operating profit was $26.4M, or 14.6% of revenue, a decrease of 280bps YoY. Schweitzer-Mauduit estimates capex of $55M-75M in 2011. The company will incur $30M-35M to transfer equipment to China and suspend the Philippines project. Cash could be impacted by $55M to $70M due to negative working capital and severance charges. SWM continues to demonstrate a commitment to returning cash to shareholders. The company repurchased $30M worth of shares in the quarter and authorized an additional $75M for repurchases. Oppenheimer has a Perform rating on SWM SWM closed Wednesday at $48.85