Pioneer Announces 2004 Results

Pioneer Announces 2004 Results 


HOUSTON, March 28  /PRNewswire-FirstCall/ -- Pioneer Companies, Inc. (OTC:PONR)
(BULLETIN BOARD: PONR)  today reported that for the fourth quarter of 2004 it
had net income of $4.5 million, or $0.41 per diluted share, compared to a net
loss of $5.2 million, or $0.52 per diluted share, in the fourth quarter of
2003.  Revenues for the fourth quarter of 2004 were $115.0 million as compared
to $93.3 million for the same period in 2003.  For the year ended December 31,
2004, Pioneer reported a net loss of $1.2 million, or $0.12 per diluted share,
on revenues of $407.1 million, compared to net income of $18.2 million, or
$1.79 per diluted share, on revenues of $378.7 million for the year ended
December 31, 2003.  Comparisons between the calendar year periods are affected
by certain charges related to the settlement of derivatives-related litigation
in early 2003.

Pioneer realized average electrochemical unit, or ECU, netbacks of $480 in the
fourth quarter of 2004 and $393 for the full year, compared to average ECU
netbacks of $366 in the fourth quarter of 2003 and $382 for all of 2003.
Production also increased in 2004, with total production of 704,000 ECUs in
2004, representing approximately 97% of Pioneer's production capacity, compared
to 671,000 ECUs in 2003, representing approximately 93% of production capacity.
 Revenues also improved in the 2004 periods as compared to 2003 as a result of
higher volumes and prices for sales of Pioneer's other products.

A $12.7 million increase in cost of sales - products for 2004 resulted from
higher variable costs during the year, primarily attributable to $10.8 million
of increased electricity and salt costs resulting from higher prices for both
raw materials and increased production levels, $3.5 million of increased costs
related to purchases of caustic soda for resale, and an $8.8 million increase
in freight costs resulting from higher volumes and fuel surcharges. 
Depreciation in 2004 was also $3.9 million higher than in 2003, resulting from
a charge relating to the decision in the first quarter of 2004 to discontinue
chlor-alkali production in Tacoma.  The increase in variable costs was offset
to an extent by lower fixed costs, including a $3.3 million decrease in
personnel costs as a result of an organizational efficiency project that was
implemented during the year and that Pioneer refers to as Project STAR, the
absence of $3.5 million in maintenance projects that were completed in 2003 and
the absence of a $9.5 million environmental charge recorded in 2003.  A fourth
quarter increase in cost of sales - product of $3.4 million as compared to the
year-earlier period resulted from higher variable costs and lower fixed costs
in the same categories.

Selling, general and administrative expenses in 2004 were $4.4 million higher
than in 2003, resulting from higher consulting fees of $4.1 million
attributable to Project STAR and a $2.4 million increase in employee benefit
costs in 2004, partially offset by $1.8 million of decreased bad debt expense.
Fourth quarter selling, general and administrative expenses were $7.2 million
and $3.2 million in 2004 and 2003, respectively.  The $4.0 million increase was
primarily related to higher employee benefit costs of $3.1 million and higher
professional fees of $0.9 million in 2004.

Significant charges and credits, not specifically related to plant operating
and maintenance activities and which affect the comparability of operating
income between periods, are as follows (amounts in millions):

                                    Three Months Ended      Year Ended
                                       December 31,         December 31,
                                      2004    2003         2004     2003

  Operating income (loss)             $14.8    $0.3        $22.1    $39.8

  Charges (credits)
    Cost of sales - products           $---    $---         $---     $9.5
    Cost of sales - derivatives         ---     ---          ---     21.0
    Change in fair value of
     derivatives                        ---     ---          ---    (87.3)
    Asset impairment                    ---     ---          ---     40.8

    Other items                         0.5     0.8          4.0      0.3

  Charges and credits noted above are detailed as follows:

   *  In the first quarter of 2003, cost of sales - products included
      $9.5 million in Pioneer's reserves for environmental remediation
      liabilities, based on an analysis of environmental concerns at all of
      Pioneer's plants.
   *  In the first quarter of 2003, Pioneer and the Colorado River
      Commission settled their dispute over certain derivative positions
      relating to the supply of power to Pioneer's Henderson facility.  As a
      result, the receivable of $21.0 million that Pioneer had recorded for
      estimated net proceeds from matured derivatives was reversed, and the
      net liability of $87.3 million that had been recorded for the net
      mark-to-market loss on outstanding derivative positions was also
      reversed.
   *  Pioneer recorded an impairment charge of $40.8 million in the first
      quarter of 2003, since the settlement with the Colorado River
      Commission resulted in the use of higher-cost power at the Henderson
      facility, and recognition of an impairment of the facility's asset
      value.
   *  Pioneer recognized employee severance and related benefits costs in
      2004 of $4.0 million related to Project STAR and the transfer of
      bleach production from Cornwall, Ontario to Becancour, Quebec.



Pioneer reported other expense of $2.8 million in 2004, consisting of currency
exchange loss, compared to $5.8 million of currency exchange loss in 2003.  For
the three months ended December 31, 2004, other expense included $1.7 million
of currency exchange loss as compared to $1.3 million of currency exchange loss
in the comparable period in the prior year.

Pioneer's income tax expense in 2004 was $2.1 million, compared to an income
tax benefit of $3.3 million in 2003.  In 2004 there was a benefit from the net
loss of Canadian operations, but a valuation allowance in a greater amount was
recorded against Pioneer's Canadian capital loss carryforward as a result of a
determination that it is unlikely that the carryforward will be applied against
future capital gains.

At December 31, 2004, Pioneer had liquidity of $43.0 million, which included
cash and cash equivalents of $16.2 million and available borrowings under
Pioneer's revolving credit facility of $26.8 million, net of letters of credit
outstanding as of such date.

Michael Y. McGovern, Pioneer's President and Chief Executive Officer, stated,
"There were several positive developments for Pioneer in 2004.  Strong demand
for both chlorine and caustic soda during the year resulted in increased
production and higher ECU netbacks, which averaged $480 in the fourth quarter. 
During the year we also implemented Project STAR, an important organizational
efficiency project that has provided benefits to our cost structure.  We
believe those developments were important factors that contributed to our
ability to sell common stock in an underwritten public offering in December. 
The $22.1 million in net proceeds of the offering were used to reduce our
outstanding indebtedness, with a major portion of that reduction occurring in
January 2005."

Pioneer, based in Houston, manufactures chlorine, caustic soda, bleach,
hydrochloric acid and related products used in a variety of applications,
including water treatment, plastics, pulp and paper, detergents, agricultural
chemicals, pharmaceuticals and medical disinfectants.  The Company owns and
operates four chlor-alkali plants and several downstream manufacturing
facilities in North America.

The Company has filed its annual report on Form 10-K for the year ended
December 31, 2004, and has posted it to its Internet web site, so it is readily
accessible.  Other information and press releases of Pioneer Companies, Inc.
can also be obtained from its Internet web site at http://www.piona.com/ .

Pioneer will conduct a teleconference on March 30, 2005, at 1:00 p.m. Central
time in order to discuss its 2004 financial results.  Individuals who are
interested in listening to the teleconference may call [phone] at that
time and request to listen to the Pioneer earnings teleconference.  A replay of
the teleconference will be available from 3:00 p.m. (Central time) on March 30,
2005, until 3:00 p.m. on April 1, 2005, by dialing [phone], reservation
#21236988.

Certain statements in this news release are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act.  Forward- looking
statements relate to matters that are not historical facts.  Such statements
involve risks and uncertainties, including, but not limited to, Pioneer's high
financial leverage, global political and economic conditions, the effects of
our organizational efficiency project, the demand and prices for Pioneer's
products, Pioneer and industry production volumes, competitive prices, the
cyclical nature of the markets for many of Pioneer's products and raw
materials, the effect of Pioneer's results of operations on its debt
agreements, and other risks and uncertainties described in Pioneer's filings
with the Securities and Exchange Commission.  Actual outcomes may vary
materially from those indicated by the forward-looking statements.

                         PIONEER COMPANIES, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                  (in thousands, except per share data)

                         Three Months Ended            Year Ended
                            December 31,               December 31,
                          2004         2003         2004         2003

  Revenues              $115,038      $93,327     $407,115     $378,675
  Cost of sales -
   product               (92,526)     (89,090)    (353,454)    (340,804)
  Cost of sales -
   derivatives               ---          ---          ---      (20,999)
  Total cost of sales    (92,526)     (89,090)    (353,454)    (361,803)
  Gross profit            22,512        4,237       53,661       16,872
  Selling, general and
   administrative
   expenses               (7,226)      (3,164)     (27,608)     (23,204)
  Change in fair value
   of derivatives            ---          ---          ---       87,271
  Asset impairment           ---          ---          ---      (40,818)
  Other items               (535)        (786)      (3,974)        (340)
  Operating income        14,751          287       22,079       39,781
  Interest expense, net   (4,575)      (4,879)     (18,356)     (19,064)
  Other expense, net      (1,725)      (1,282)      (2,838)      (5,816)

  Income (loss) before
   income taxes            8,451       (5,874)         885       14,901
  Income tax (expense)
   benefit                (3,916)         684       (2,127)       3,286
  Net income (loss)       $4,535      $(5,190)     $(1,242)     $18,187

  Income (loss) per share:
    Basic                  $0.44       $(0.52)      $(0.12)       $1.82
    Diluted                $0.41       $(0.52)      $(0.12)       $1.79
  Weighted average number
   of shares outstanding:
    Basic                 10,359       10,003       10,113       10,002
    Diluted               10,941       10,327       10,113       10,169



                         PIONEER COMPANIES, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                              (in thousands)

                                                December 31,   December 31,
                                                    2004           2003
                       Assets
  Current assets                                   $90,983        $61,471
  Net property, plant and equipment                172,198        189,534
  Other assets, net                                  4,359          3,931
  Excess reorganization value over the fair
   value of identifiable assets                     84,064         84,064
  Total assets                                    $351,604       $339,000

         Liabilities and stockholders' equity
  Current liabilities                              $42,819        $48,881
  Long-term debt, less current portion             200,797        203,803
  Other long-term liabilities                       70,093         67,326
  Total stockholders' equity                        37,895         18,990
  Total liabilities and stockholders' equity      $351,604       $339,000



                         PIONEER COMPANIES, INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (in thousands)

                                                  Year Ended    December 31,
                                                     2004          2003
  Operating activities:
    Net income (loss)                              $(1,242)       $18,187
    Adjustments to reconcile net income (loss)
     to net cash flows from operating activities:
      Depreciation and amortization                 25,514         21,551
      Provision for (recovery of) loss on
       accounts receivable                            (384)         1,296
      Deferred tax expense (benefit)                 2,127         (3,142)
      Derivatives - cost of sales and change
       in fair value                                   ---        (66,272)
      Asset impairment                                 ---         40,818
      (Gain) loss on disposal of assets                (10)           761
      Currency exchange (gain) loss                  2,840          5,825
      Net effect of changes in operating assets
       and liabilities                              (9,552)        (4,763)
    Other                                              346            ---
       Net cash flows from operating activities     19,639         14,261
  Investing activities:
    Capital expenditures                            (8,384)        (9,998)
    Proceeds from disposal of assets                   315            ---
       Net cash flows used in investing activities  (8,069)        (9,998)
  Financing activities:
    Net borrowings (payments) under revolving
     credit arrangements                           (16,823)         2,119
    Repayments of long-term debt                    (3,079)        (7,494)
    Proceeds from issuance of stock, net            22,374              8
       Net cash flows from (used in) financing
        activities                                   2,472         (5,367)
  Effect of exchange rate changes on cash              203            261
  Net change in cash and cash equivalents           14,245           (843)
  Cash and cash equivalents at beginning of period   1,946          2,789
  Cash and cash equivalents at end of period       $16,191         $1,946


DATASOURCE: Pioneer Companies, Inc.



CONTACT:  Gary Pittman of Pioneer Companies, Inc., [phone]



Web site:  http://www.piona.com/ 

Copyright