Industry Reports

Deutsche Bank Reports Summaries

080429 Deutsche Bank Report - TINs 1Q in 100 Words

Deutsche Bank - Equity Research

Temple-Inland {Ticker: TIN, Closing Price: USD 11.74, Target Price: USD 27.00, Recommendation: Buy}.

* In-line w/ low expectations.   Reported ($0.12). Excl'g special items, # = ($0.05).  DB @ ($0.05), FC @ ($0.04).  Cost pressures & mill outages hit c'bd.  Bldg prod's was hit by lower prices & weaker vol's.  Tax rate helped by $0.02/share.

* Segments.

* Corrugated pkg.  EBIT = $55MM, 07Q1 = $64MM, 07Q4 = $75MM.  Avg wk vol's up 3% y/y.   Box prices +$23/ton y/y, +$2/ton q/q.  Fiber, freight & energy up approx. $50MM y/y.  2 mill outages cost approx. $13MM.

* Building Prod's.  EBIT = ($21MM), 07Q1 = $16MM, 07Q4 = ($15MM).    w/ $11MM/qtr of D&A, Q1 EBITDA =  ($10MM).  Prices & vol's weak across portfolio.  Throttling back production of gypsum & lumber, headcount -18%.   Seasonal rally should help Q2 results.

* Other issues.   (1) 08E Capex trimmed by $20-25MM to $170-175MM, (2) G&A costs below target in Q1 at $21MM, FY08 = $90-95MM, (3) cost pressures persist in Q2, w/ OCC as only good news.

* Change in view?   2008 looks even more challenging than expected.  Rising raw materials & soft bldg prod's mkts = tough 2008.   We think Q2 c'board hike is “dead”, but late summer hike is possible.  We continue to like stock on valuation basis.  We are trimming '08 & '09 from $0.30 & $0.90, respectively, to $0.10 & $0.75, respectively.