Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q3 2019 Earnings Presentation
28 slides from Clearwater Paper's earnings presentation, Oct 24, 2019
Slide 1: Clearwater Paper Corporation Third Quarter 2019 Supplemental Information
CLEARWATER PAPER CORPORATION THIRD QUARTER 2019 SUPPLEMENTAL INFORMATION 10/24/19 LINDA MASSMAN PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR ROBERT HRIVNAK SENIOR VICE PRESIDENT FINANCE AND CHIEF FINANCIAL OFFICER
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation of supplemental information contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding major maintenance; debt leverage; li
Slide 3: Third Quarter 2019 Business Highlights
THIRD QUARTER 2019 BUSINESS HIGHLIGHTS $429 $445 Million millionnet netsales, sales,flat downvs. (2%) Q4'18vs. Q2'19 and up 4% from Q3'18 ($2)Million $14 millionGAAP GAAPoperating operatingincome loss and (0.6%) and 3.3%margin margin FINANCIAL PERFORMANCE Diluted GAAP Diluted GAAPEPS LossofPer Share
Slide 4: Clearwater Paper Sequential Quarter Results
CLEARWATER PAPER SEQUENTIAL QUARTER RESULTS GAAP Measures (dollars in millions) Q3'19 Net $445.2 Operating $(2.5) Net $(11.0) Q2'19 Sales $452.0 (Loss) Income $15.3 Loss ($0.4) Q3'19 vs. Q2'19 Adjusted EBITDA1 Bridge ADJ. EBITDA1 (MILLIONS) $2.2 $50 Slightly lower paperboard pricing related to impac
Slide 5: Clearwater Paper Year Over Year Same Quarter Results
CLEARWATER PAPER YEAR OVER YEAR SAME QUARTER RESULTS GAAP Measures (dollars in millions) Q3'19 Net $445.2 Operating $(2.5) Net (Loss) $(11.0) Q3'18 Sales $426.5 (Loss) Income $46.9 Earnings $34.4 ADJ. EBITDA1 1 Q3'19 vs. Q3’18 Adjusted EBITDA Bridge (MILLIONS) $60 $3.0 Higher net paperboard and tiss
Slide 6: Consumer Products Sequential Quarter Results
CONSUMER PRODUCTS SEQUENTIAL QUARTER RESULTS GAAP Measures (dollars in millions) Q3'19 Segment $228.5 Segment $(4.4) Segment Operating (1.9)% Q2'19 Net Sales $224.3 Operating Loss ($5.1) Loss Percentage (2.3%) SEGMENT ADJ. EBITDA1 (MILLIONS) $18 $3.0 Q3'19 vs. Q2'19 Segment Adjusted EBITDA1 Bridge $
Slide 7: Pulp and Paperboard Sequential Quarter Results
PULP AND PAPERBOARD SEQUENTIAL QUARTER RESULTS GAAP Measures (dollars in millions) Q3'19 Segment $216.6 Segment $17.1 Segment Operating 7.9% Q2'19 Net Sales $227.7 Operating Income $33.6 Income Percentage 14.8% SEGMENT ADJ. EBITDA1 (MILLIONS) Q3'19 vs. Q2'19 Segment Adjusted $45 $43.1 $3.0 EBITDA1 B
Slide 8: Strategic Capital Investments
STRATEGIC CAPITAL INVESTMENTS Shelby Expansion Lewiston Pulp Optimization Installed NTT tissue machine, Replaced a batch digester SCOPE converting equipment and SCOPE system with a continuous warehousing digester LOCATION Shelby, NC LOCATION Lewiston, ID CAPACITY 70,000 - 75,000 tons per year Increa
Slide 9: Balanced Capital Allocation
BALANCED CAPITAL ALLOCATION (Dollars in millions and shares in thousands) Cash Capital Expenditures Expected Future Capital Allocation $296 • Capex approximately $60 million per year • Pay down debt with cash flow from operations $200 $155 $129 $126 $93 2014 2015 2016 2017 2018 Q1-Q3 2019 1 Cumulati
Slide 10: Debt, Interest and Cash Flow
DEBT, INTEREST AND CASH FLOW (Dollars in millions) 1 2 Net Debt Total Leverage Ratio ST Debt LT Debt $887 $890 $946 $719 $773 $896 $697 $697 $695 $695 5.70 4.29 4.97 4.99 3.75 $78 $50 $24 $190 $193 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Net Interest Expense Cash Flow From Operat
Slide 11: Q4'19 Adjusted EBITDA Outlook, Adjusted Earnings Outlook and Reconciliation
Q4’19 ADJUSTED EBITDA OUTLOOK1 , ADJUSTED EARNINGS OUTLOOK1 AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Adjusted EBITDA Outlook Adjusted Net Earnings (Loss) Outlook OUTLOOK OUTLOOK THREE MONTHS ENDING THREE MONTHS ENDING DECEMBER 31, 2019 DECEMBER 31, 2019 RANGE OF ESTIMATE RANGE O
Slide 12: Q4'19 Outlook
Q4'19 OUTLOOK1 NET SALES 1% - 2% Lower ADJUSTED OPERATING MARGIN2,3 2.5% - 4.5% ADJUSTED EBITDA2 $38M - $46M ADJUSTED NET (LOSS) EARNINGS PER DILUTED COMMON SHARE2,4 ($0.15) - $0.27 1 This information is based upon management’s current expectations and estimates, which are in part based on market an
Slide 13: Five Quarter Trends
FIVE QUARTER TRENDS (Dollars in millions) 1,2 Net Sales Adjusted EBITDA & Margin $452.0 $445.2 $50.1 $46.7 $426.5 $428.7 $428.8 $43.9 $39.8 11.7% $30.9 10.9% 9.3% 9.7% 6.9% Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 1,3 1 Adjusted Operating Income (Loss) & Margin Adjusted Net Earnin
Slide 14: Five Quarter Segment Trends
FIVE QUARTER SEGMENT TRENDS (Dollars in millions) Consumer Products Pulp & Paperboard Total Net Sales $227.7 $228.5 $223.3 $224.3 $216.0 $216.6 $214.8 $211.6 $212.7 $205.4 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Adj. EBITDA & Margin 1,2 $47.7 $41.5 $43.1 $16.0 $38.9 $15.7 $14.6 $
Slide 15: Major Maintenance Schedule
Major Maintenance Schedule (Dollars in millions) $30 $25 - $26 $23 - $27 $22 $6 - $7 $15 - $20 $18 $20 $7 Idaho $19 $18 Idaho $15 $10 None None Arkansas 1 1 1 1 2015 2016 2017 2018 2019e 2020e 2021e 2022e Q1 Q2 Q3 Q4 2019: Idaho mill in Q3 and Arkansas mill in Q4 1 This information is based upon man
Slide 16: Key Commodity Consumption Volumes
KEY COMMODITY CONSUMPTION VOLUMES Approximated Annual Approximated Annual expected EBITDA2 Volume1 $ Change Per Impact +/- COGS Input Unit of Measure (in Millions) Unit1 +/- (in Millions) Purchased Pulp Ton 0.27 $20.00 $5.4 Fiber Bone Dry Ton 1.5 $4.00 $6.0 Diesel Gallon 10.0 $0.50 $5.0 Electric MWh
Slide 17: Appendix & Reconciliations
APPENDIX & RECONCILIATIONS 17
Slide 18: Financial Summary (GAAP Basis)
FINANCIAL SUMMARY (GAAP BASIS) (UNAUDITED) (Dollars in thousands - except per-share amounts) Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Net sales $426,460 $428,707 $428,779 $451,993 $445,188 Gross Profit $50,239 $46,503 $44,533 $42,168 $26,484 Selling, general and administrative expenses ($26,283) ($27,161) ($30
Slide 19: Financial Summary (Adjusted Basis)
FINANCIAL SUMMARY (ADJUSTED BASIS) (UNAUDITED) (Dollars in thousands - except per-share amounts) Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Outlook8 Net sales $426,460 $428,707 $428,779 $451,993 $445,188 1% - 2% Lower Adjusted gross profit1 $50,399 $46,601 $44,533 $42,168 $26,484 Adjusted gross profit marg
Slide 20: Key Segment Results
KEY SEGMENT RESULTS (UNAUDITED) Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Consumer Products Shipments Retail (short tons) 70,335 69,480 73,356 76,175 79,526 Non-Retail (short tons)1 18,525 11,500 10,266 6,623 6,882 Total Tissue Tons 88,860 80,980 83,622 82,798 86,408 Converted Products (cases in thousands)2 11,
Slide 21: Clearwater Paper Segment Shipments and U.S. Market
CLEARWATER PAPER SEGMENT SHIPMENTS AND U.S. MARKET CLW Q3'19 by Retail Tissue Market Segment (% of Tons) CLW Q3'19 by U.S. Paperboard Market Segment (% of Tons) Parent Other AFH Rolls 6% 2%1% Folding 53% Food Service 40% Liquid Retail Pkg 91% 7% U.S. Retail Tissue Market Q3'19 ($) U.S. Paperboard Pr
Slide 22: Adjusted Gross Profit & Adjusted SG&A Reconciliation
ADJUSTED GROSS PROFIT & ADJUSTED SG&A RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Gross profit1 $50,239 $46,503 $44,533 $42,168 $26,484 Reorganization expenses associated with SG&A cost control measures 2 — — — — Reorganization relat
Slide 23: Segment Adjusted Operating Income (Loss) Reconciliation
SEGMENT ADJUSTED OPERATING INCOME (LOSS) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Consumer Products Operating income (loss)1 $21,675 ($193,558) $1,271 ($5,133) ($4,438) Reorganization expenses associated with SG&A cost control mea
Slide 24: Adjusted Net Earnings & Adjusted EPS Reconciliation
ADJUSTED NET EARNINGS & ADJUSTED NET EARNINGS PER DILUTED COMMON SHARE RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands - except per-share amounts) Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 GAAP net earnings (loss) $34,444 ($187,772) $3,837 ($424) ($10,973) Adjustments, after tax1
Slide 25: EBITDA & Adjusted EBITDA Reconciliation
EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Earnings before interest, income taxes, depreciation & amortization (EBITDA)1 GAAP net earnings (loss) $34,444 ($187,772) $3,837 ($424) ($10,973) Interest expense,
Slide 26: Segment EBITDA & Adjusted EBITDA Reconciliation
SEGMENT EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Consumer Products Consumer Products segment net sales $211,642 $212,743 $223,336 $224,340 $228,544 Operating income (loss)3 $21,675 ($193,558) $1,271 ($5,13
Slide 27: Reconciliation of GAAP to Non-GAAP: Strategic Capital Investments
RECONCILIATION OF GAAP TO NON- GAAP: STRATEGIC CAPITAL INVESTMENTS (UNAUDITED) FULL RUN-RATE EXPECTED ADJUSTED EBITDA2 IMPACT Shelby Lewiston Pulp (Dollars in millions) Expansion1 Optimization 1 Expected operating income $38.0 - $48.0 $17.5 - $27.5 Expected depreciation $17.0 $7.5 Expected EBITDA2 $
Slide 28: For More Information: www.clearwaterpaper.com
FOR MORE INFORMATION: WWW.CLEARWATERPAPER.COM 28