New acquisitions almost triple Rock-Tenn stock

ATLANTA - Rock-Tenn Co. has disproved many Wall Street analysts during recent months and it plans to continue doing so.

Rock-Tenn CEO James Rubright said as much during a presentation at the SunTrust Robinson Humphrey 36th Annual Institutional Conference in Atlanta on Tuesday.

The Norcross-based company has seen its stock price nearly triple over the past 13 months. On February 8, 2006, the stock closed at $12.52. On Tuesday, it closed at $35.30.

All this has been done despite negative outlooks from some Wall Street experts.

"It's certainly not the analysts because right now, as we have been throughout a period in which our stock went from $12 to $35, we're very unfavored by the analyst community," Rubright said. "But it seems to me that the people who buy our stock have been showing increasing confidence in the company's future."

The turning point for Rock-Tenn, which manufactures paperboard, packaging and merchandise displays, was its $550 million acquisition of Gulf States' bleach board mill and 11 carton folding plants, Rubright said.

Rubright said the company felt it was "buying the premium asset in the premium paper board space for a very low price" when it made the purchase in June 2005.

Rock-Tenn thought the acquisition would better the company but underestimated its success. Rock-Tenn was able to reach its $180 million debt reduction target nine months early.

So with cash flow exceeding expectations, the company has continued to make acquisitions - albeit smaller ones than its Gulf States purchase.

The company's four most recent acquisitions have totaled $48.2 million.

"All these things were just little pieces around our business that we're able to find attractive opportunities," Rubright said. "It's a very conservative, very low-risk investment strategy, but it's a nice use of the money that cumulatively over time adds up."

Rubright said Rock-Tenn expects to continue making smaller acquisitions like this as it moves forward and believes moves like this will continue to improve the company's stock.

"It's a little company, but it's a great little company," Rubright said.