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Hallmark Pricing & Profitability. January 28, 2010. Total Hallmark. 2009 Volume – 4,756,202# 2008 Volume – 7,200,368# 33% Decline 2009 GM%* - 7% * Using Current Pricing for All, Actual Costs for (Shasta and Warm White) and Standard Costs for all other items. Shasta - Tiara.
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Hallmark Pricing & Profitability January 28, 2010
Total Hallmark • 2009 Volume – 4,756,202# • 2008 Volume – 7,200,368# 33% Decline • 2009 GM%* - 7% * Using Current Pricing for All, Actual Costs for (Shasta and Warm White) and Standard Costs for all other items
Shasta - Tiara Sales & Item Information Pricing Information • 2009 Volume -- 3,558,666# • 2008 Volume -- 4,929,274# 28% Decline • 2009 GM%* -- 9% • Uses Shasta Marking Roll on PM • Added 20% PCW in 2009 at no cost to Hallmark • Caliper change in exchange for $1.00/cwt price decrease • NP cost reduced $1.70/cwt with this change * Using Current Pricing & Actual Costs February, 2000 Price $72.08 January, 2010 Price $66.15 Pricing activity last two years: • $3.00/cwt increase 1/1/08 • $2.50/cwt increase 9/1/08 • $1.00/cwt decrease 1/1/10
Shasta – Warm White Sales & Item Information Pricing Information • 2009 Volume – 695,704# • 2008 Volume – 1,172,222# 41% Decline • 2009 GM%* -- 6% • Uses Shasta Marking Roll on PM • Added 20% PCW in 2009 at no cost to Hallmark • Caliper change in exchange for $1.00/cwt price decrease * Using Current Pricing & Actual costs February, 2000 Price $72.08 January, 2010 Price $66.15 Pricing activity last two years: • $3.00/cwt increase 1/1/08 • $2.50/cwt increase 9/1/08 • $1.00/cwt decrease 1/1/10
Shasta - Pink Sales & Item Information Pricing Information • 2009 Volume – 72,912# • 2008 Volume – 73,039# Level • 2009 GM%* - (10%) • Uses Shasta Marking Roll on PM • Added 20% PCW in 2009 at no cost to Hallmark • Run on A5 with different felt pattern? Or another machine with a different felt pattern? * Using Standard Costs March, 2004 Price $58.90 January, 2010 Price $68.50 Pricing activity last two years: • $3.02/cwt increase 1/1/08 • $3.00/cwt increase 9/1/08 Recommendations • Increase price $3 – 5/cwt • M&H or Managed Inventory program
Luxfelt Sales & Item Information Pricing Information • 2009 Volume – 85,472# • 2008 Volume – 224,286# 62% Decline • 2009 GM%* -- (36%) • Uses Gainsborough Felt Roll on the PM *Using Standard Costs January, 2002 Price $58.90 January, 2010 Price $69.00 Pricing activity last two years: • $3.52/cwt increase 1/1/08 • $3.00/cwt increase 9/1/08 Recommendations • Impose 40,000# minimum • Investigate switching to Sundance or Shasta roll • Savings to NP of $10,000 or $12.00/cwt for this change • If no change in pattern implement price increase
Howard Felt Sales & Item Information Pricing Information • 2009 Volume – 159,867# • 2008 Volume – 385,345# 58% Decline • 2009 GM%* - (21%) • Uses Sundance Felt on PM • Is Sundance Ultra White and Howard Linen Warm White for color * Using Standard Costs June, 2001 Price $55.86 January, 2010 Price $66.50 Pricing activity last two years: • $2.37/cwt increase 1/1/08 • $3.00/cwt increase 9/1/08 Recommendations • Impose minimum order quantities • Implement price increase of $3 – 5/cwt
NP Brands Sales Information Brand Sale Information • 2009 Volume – 183,580# • 2008 Volume – 416,202# 55% Decline • 2009 GM%* - 21% * Using Standard Costs • Majority of volume in Environment, Esse and Teton • Esse and Environment have deviated pricing • Esse has not had an increase since 2007 • Environment program was new in 2008 and has not had an increase yet • Recommendations • Implement a $5/cwt increase on Esse • Implement a $3/cwt increase on Environment
Hallmark Action Items: • Customer /external activities: • Mill brands (Environment / ESSE®/ Teton – increase $3/cwt May 1, 2010 • Howard Felt Opaque Bright White – increase $3/cwt May 1 • Tiered price implementation - a second increase in Sep/Oct • Howard Felt Opaque Warm White – increase $5/cwt May 1 • 10M lb order minimums • Tiered price implementation – second increase in Sep/Oct • LuxfeltCover – increase price $3/cwt May 1 • Raise order minimum to 40,000 lbs, or • 10,000 lb order minimum if finish can move to SUNDANCE® felt (approximately $12/cwt cost savings or $10,000 to Whiting mill) • Standardize on SUNDANCE® Ultra Bright White • Shasta Pink – increase $3/cwt May 1; • Tiered price implementation – second increase in Sep/Oct
Hallmark Action Items: • Customer /external activities: • Shasta Tiara – increase $3/cwt May 1 • Investigate transitioning finish to SUNDANCE® • Increase PCW to 30% for additional $1/cwt or remove 20% PCW content from offering • Shasta Warm White – increase $3/cwt May 1 • Increase PCW to 30% for additional $1/cwt or remove 20% PCW content from offering • Implementing the following price increase will raise profitability from 7% to 11% GP. If we can add $1/cwt to move to 30% PCW it raises GP to 12%, likewise eliminating the 20% PCW for virgin has the same effect. • Review pulp pricing in Jul/Aug to evaluate profitability of Shasta WW and Tiara and next pricing actions.
Hallmark Action Items: • Neenah / internal activities: • Modify furnish – reduce costs by $0.60/cwt – no visible impact to customer • Increase filler load of Shasta Warm White from 4% to 8% - reduce costs by $1.64/cwt – no perceived impact to customer • Implement standard packaging – productivity rate improvement approximately $0.75/cwt • Would require elimination of plastic sheeting and plastic cover bag. • Opportunity to reduce costs by combined $3/cwt with minimal, if any impact to customer.
