Pioneer Announces 2005 First Quarter Results

Pioneer Announces 2005 First Quarter Results 


HOUSTON, May 16  /PRNewswire-FirstCall/ -- Pioneer Companies, Inc.
(NASDAQ:PONR) today reported net income of $15.0 million, or $1.28 per diluted
share, on revenues of $119.1 million for the three months ended March 31, 2005,
as compared to a net loss of $7.3 million, or $0.73 per diluted share, on
revenues of $91.0 million for the first quarter of 2004.

Pioneer's average ECU netback during the first quarter of 2005 was $548, which
was $68 higher than the preceding quarter and $209 higher than the first
quarter of 2004.  The increase in revenues that resulted from the higher ECU
netback was offset in part by lower ECU sales volumes, as a result of lower
sales volume for caustic soda.  Revenues in the most recent quarter also
reflected higher prices for bleach and Pioneer's other products.  Pioneer's ECU
production was 161,635 ECUs in the first quarter of 2005, as compared to
173,690 ECUs and 169,555 ECUs in the preceding quarter and the first quarter of
2004, respectively.  Production during the first quarter of 2005 was reduced by
approximately 17,500 ECUs as a result of disruptions to rail service to
Pioneer's plant in Henderson, Nevada, a seasonal reduction in orders affecting
the Becancour, Quebec plant, and a planned maintenance outage at the plant in
St. Gabriel, Louisiana.

Cost of sales during the quarter ended March 31, 2005, was $0.3 million higher
than during the first quarter of 2004.  Variable product costs during the first
quarter of 2005 were $1.8 million higher than in the 2004 first quarter, with a
$2.9 million increase in prices for salt, electricity and other raw materials
being partially offset by $1.6 million in lower costs due to lower production
volume, in addition to higher non-ECU purchases for resale of $0.5 million. 
There was also a $2.3 million increase in maintenance costs, partially offset
by lower salaries and employee-related costs as a result of workplace
reductions brought about as a result of an on-going organizational efficiency
project.  Also offsetting these increases was the absence of depreciation of
approximately $3.4 million related to a decision to discontinue chlor-alkali
production at the Tacoma facility in the first quarter of 2004.

Selling, general and administrative expenses in the first quarter of 2005 were
$1.9 million higher than during the earlier period primarily as a result of an
increase in personnel expenses of $1.3 million, resulting from increased
employee bonus accruals partially offset by a decrease in salaries and other
employee-related costs, along with an increase in bad debt expense of
approximately $0.9 million.  There was also the absence of approximately $0.5
million in consulting fees recognized in the first quarter of 2004 relating to
the organizational efficiency project.

During the first quarter of 2005 Pioneer redeemed a portion of its senior
secured indebtedness and had reduced borrowings under its revolving credit
agreement.  As a result, for the three months ended March 31, 2005, interest
expense was $4.3 million, compared to $4.7 million during the year-earlier
period.

Pioneer's net income is affected by the remeasurement of Canadian dollar-
denominated account balances in U.S. dollars for financial reporting purposes.
In the first quarter of 2005, Pioneer reported as other income $0.2 million of
currency exchange gain, compared to a $0.1 million currency exchange gain in
the first quarter of 2004.

Income tax expense for the quarter ended March 31, 2005, was $3.4 million,
derived primarily from income from Pioneer's Canadian operations.  Available
net operating loss carryforward was applied to offset the taxable income.  For
the first quarter of 2004 Pioneer reported an income tax benefit of $0.3
million.

At March 31, 2005, Pioneer had liquidity of $41.0 million, which included the
amount available for borrowing under Pioneer's revolving credit facility of
$25.4 million, net of letters of credit outstanding on that date, and cash of
$15.6 million.  Pioneer anticipates that it will be required to redeem and
prepay up to approximately $18.3 million principal amount of certain
indebtedness during May 2005 under certain debt covenants requiring the
application of amounts defined as excess cash flow.

Michael Y. McGovern, Pioneer's President and Chief Executive Officer, stated,
"With continuing strong demand for chlorine and caustic soda, our ECU netback
averaged $548 during the first quarter of this year, and the average ECU
netback continued to improve to an average of approximately $570 in April. We
are pleased that our strong performance in the quarter will enable us to make a
significant prepayment of our outstanding debt.  We believe that rail
transportation difficulties and continuing high electricity prices are the
critical factors that could affect the net benefits of the strong markets for
our products during the current year."

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.  Pioneer owns and
operates four chlor-alkali plants and several downstream manufacturing
facilities in North America.  Pioneer's common stock began trading on the
NASDAQ Stock Market on April 15, 2005, under the symbol PONR.

Pioneer has filed its quarterly report on Form 10-Q for the quarter ended March
31, 2005, and has posted it to its Internet web site.  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 May 17, 2005, at 9:00 a.m. Central
time in order to discuss its financial results for the first quarter of 2005. 
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 this teleconference will be available from 11:00
a.m. (Central time) on May 17, 2005, until 11:00 a.m. on May 19, 2005, by
dialing [phone], reservation #21247159.

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 demand and
prices for Pioneer's products and raw materials, Pioneer's access to and the
cost of rail transportation, 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
               (unaudited, in thousands, except per share data)

                                                  Three Months Ended
                                                        March 31,
                                                  2005             2004
  Revenues                                      $119,090        $ 91,032
  Cost of sales                                  (87,608)        (87,317)
  Gross profit                                    31,482           3,715
  Selling, general and administrative expenses    (8,463)         (6,589)
  Other items                                       (505)           (165)
  Operating income (loss)                         22,514          (3,039)
  Interest expense, net                           (4,256)         (4,642)
  Other income, net                                  173             126

  Income (loss) before income taxes               18,431          (7,555)
  Income tax benefit (expense)                    (3,411)            262
  Net income (loss)                              $15,020        $ (7,293)

  Net Income (loss) per share:
      Basic                                      $  1.34        $  (0.73)
      Diluted                                    $  1.28        $  (0.73)
  Weighted average number of shares outstanding:
      Basic                                       11,176          10,006
      Diluted                                     11,779          10,006



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


                                                 March 31,     December 31,
                                                   2005            2004
                   Assets
  Current assets                                 $98,304         $90,983
  Net property, plant and equipment              170,471         172,198
  Other assets, net                                4,298           4,359
  Excess reorganization value over the fair
   value of identifiable assets                   84,064          84,064
  Total assets                                  $357,137        $351,604

       Liabilities and stockholders' equity
  Current liabilities                            $46,839         $42,819
  Long-term debt, less current portion           178,649         200,797
  Employee benefit and other long-term
   liabilities                                    78,726          70,093
  Total stockholders' equity                      52,923          37,895
  Total liabilities and stockholders' equity    $357,137        $351,604



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

                                                   Three Months Ended
                                                         March 31,
                                                   2005            2004
  Operating activities:
    Net income (loss)                            $15,020         $(7,293)
    Adjustments to reconcile net income (loss)
     to net cash flows from operating activities:
       Depreciation and amortization               5,685           8,884
       Provision for (recovery of) losses on
        accounts Receivable                          603            (653)
       Deferred tax (benefit) expense              3,311            (262)
       Gain (loss) on disposal of assets             (74)            175
       Currency exchange gain                       (173)           (129)
       Net effect of changes in operating
        assets and Liabilities                     1,183          13,481
            Net cash flows from operating
             activities                           25,555          14,203
  Investing activities:
    Capital expenditures                          (3,932)         (2,325)
    Proceeds from disposal of assets                  74             ---
            Net cash flows used in investing
             activities                           (3,858)         (2,325)
  Financing activities:
    Net payments under revolving credit
     arrangements                                    ---         (10,209)
    Repayments of long-term debt                 (22,316)         (1,166)
    Proceeds from issuance of stock, net               8              18
            Net cash flows used in financing
             activities                          (22,308)        (11,357)
  Effect of exchange rate changes on cash            (14)             35
  Net change in cash and cash equivalents           (625)            556
  Cash and cash equivalents at beginning
   of period                                      16,191           1,946
  Cash and cash equivalents at end of period     $15,566          $2,502


DATASOURCE: Pioneer Companies, Inc.



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



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

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