Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q1 2023 Earnings Presentation
20 slides from Clearwater Paper's earnings presentation, May 2, 2023
Slide 1: First Quarter Earnings Release Materials
CLEARWATER PAPER CORPORATION FIRST QUARTER EARNINGS RELEASE MATERIALS MAY 2, 2023 ARSEN S. KITCH President, Chief Executive Officer And Director MICHAEL J. MURPHY Senior Vice President And Chief Financial Officer
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Cautionary Statement Regarding 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
Slide 3: Q1 2023 Business Highlights
Q1 2023 BUSINESS HIGHLIGHTS Overall • Net sales $525 million • Net income $24 million • Adjusted net income $25 million • Adjusted EBITDA $66 million Pulp and Paperboard • SBS prices increased from Q1 2022 and flat with Q4 2022 • Demand softened Consumer Products • Tissue prices increased, offset by
Slide 4: Business Update – Pulp and Paperboard
BUSINESS UPDATE – PULP AND PAPERBOARD PRICING OFFSETTING INFLATION, DRIVING STRONG RESULTS Industry • Demand and order backlogs softened during Q1 • While inflation and economic uncertainty exist, end markets tend to be economically resilient • RISI reported market price increases • $250 / ton in 20
Slide 5: Business Update – Consumer Products
BUSINESS UPDATE – CONSUMER PRODUCTS SHIPMENTS STRENGTHENED; PRICES INCREASED Industry • Consumers shifting to private brands with economic uncertainty and inflation • Private brand market share increased from 34.4% in March 2022 to 34.9%1 in March 2023 Clearwater Paper • Strong demand with Q1 2023 s
Slide 6: Financial Performance
FINANCIAL PERFORMANCE ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Quarter Ended March 31, 2023 2022 Net sales $ 525.4 $ 488.2 Cost of sales 448.5 422.0 Selling, general and adminstrative 36.0 32.8 Other operating charges, net 1.1 0.5 Income from operations 39.8 32.9 Non-operating expense (7.5) (10.3)
Slide 7: Segment Profit and Loss and Adjusted EBITDA
SEGMENT PROFIT AND LOSS AND ADJUSTED EBITDA ($ IN MILLIONS) Quarter Ended March 31, 2023 2022 Net Sales Pulp and Paperboard $ 278.8 $ 266.2 Consumer Products 248.3 223.0 Eliminations (1.7) (1.1) $ 525.4 $ 488.2 Operating Income Pulp and Paperboard $ 57.1 $ 50.3 Consumer Products 4.2 0.9 Corporate an
Slide 8: Pulp and Paperboard Q1 2023 Results
PULP AND PAPERBOARD Q1 2023 RESULTS Q1 2023 VS. Q1 2022 SEGMENT RESULTS ($ IN MILLIONS) SEGMENT OPERATING INCOME SEGMENT ADJUSTED EBITDA © Clearwater Paper Corporation 2023 8
Slide 9: Consumer Products Q1 2023 Results
CONSUMER PRODUCTS Q1 2023 RESULTS Q1 2023 VS. Q1 2022 SEGMENT RESULTS ($ IN MILLIONS) SEGMENT OPERATING INCOME SEGMENT ADJUSTED EBITDA © Clearwater Paper Corporation 2023 9
Slide 10: Capital Structure and Allocation
CAPITAL STRUCTURE AND ALLOCATION Capital structure summary Liquidity Profile ($ in millions)1 • Ample liquidity ABL Availability $275.0 • No material near-term debt maturities Less Utilization (3.5) • Corporate/Issuer ratings: Ba2/BB- Plus Unrestricted Cash 16.7 Liquidity $288.2 Capital allocation •
Slide 11: Outlook for Q2 and 2023 Overall Assumptions
OUTLOOK FOR Q2 AND 2023 OVERALL ASSUMPTIONS Q2 2023:$58 to $68 million of Adjusted EBITDA • Lower paperboard volumes • Lower input costs, specifically energy, pulp and transportation 2023 Operational Assumptions vs. 2022 • $42 million benefit due to fewer major maintenance outages and better operati
Slide 12: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES DISCIPLINED APPROACH TO CAPITAL ALLOCATION 1 Sustain the • Invest capital to sustain current asset base business • $60 to $70 million per year outside of major projects 2 • Reduce leverage to increase flexibility Preserve financial • Target net leverage ratio around 2.5
Slide 13: Appendix
APPENDIX © Clearwater Paper Corporation 2023 13
Slide 14: Pulp and Paperboard Sequential Quarter Results
PULP AND PAPERBOARD SEQUENTIAL QUARTER RESULTS Q1 2023 VS. Q4 2022 SEGMENT RESULTS ($ IN MILLIONS) SEGMENT OPERATING INCOME SEGMENT ADJUSTED EBITDA Note: Q4’22 had a major maintenance outage which impacted Adjusted EBITDA by $28 million and we had no major maintenance outages in Q1 2023 © Clearwater
Slide 15: Consumer Products Sequential Quarter Results
CONSUMER PRODUCTS SEQUENTIAL QUARTER RESULTS Q1 2023 VS. Q4 2022 SEGMENT RESULTS ($ IN MILLIONS) SEGMENT OPERATING INCOME SEGMENT ADJUSTED EBITDA © Clearwater Paper Corporation 2023 15
Slide 16: Key Segment Information
KEY SEGMENT INFORMATION Q1’2021 Q2’2021 Q3’2021 Q4’2021 Q1’2022 Q2’2022 Q3’2022 Q4’2022 Q1 2023 Pulp and Paperboard Sales ($ millions) $219.7 $227.4 $237.5 $261.3 $266.2 $295.8 $300.8 $273.5 $278.8 Adjusted EBITDA ($ millions) $34.0 $22.0 $43.5 $61.9 $59.5 $61.2 $73.0 $26.7 $66.2 Paperboard shipment
Slide 17: Reconciliation of Adjusted EBITDA
RECONCILIATION OF ADJUSTED EBITDA ($ IN MILLIONS) Quarter Ended March 31, December 31, 2023 2022 2022 Net income $ 23.8 $ 16.6 $ (5.9) Income tax provision (benefit) 8.4 6.0 (2.3) Interest expense, net 7.6 8.6 7.3 Depreciation and amortization expense 24.8 25.4 25.9 Other operating charges, net 1.1
Slide 18: Reconciliation of Adjusted Income
RECONCILIATION OF ADJUSTED INCOME ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Quarter Ended March 31, 2023 2022 Net income $ 23.8 $ 16.6 Add back: Income tax provision 8.4 6.0 Income before income taxes 32.2 22.6 Add back: Debt retirement costs - 0.2 Other operating charges, net 1.1 0.5 Adjusted incom
Slide 19: Additional Reconciliations
ADDITIONAL RECONCILIATIONS ($ IN MILLIONS) Net Debt June 30, 2021 Sept 30, 2021 Dec 31, 2021 Mar 31, 2022 June 30, 2022 Sept 30, 2022 Dec 31, 2022 Mar 31, 2023 Cash $ 60.9 $ 27.8 $ 25.2 $ 36.4 $69.5 $50.8 $53.7 $16.7 Current debt 1.7 1.6 1.6 1.6 1.0 1.0 0.9 0.9 Long term debt 716.2 676.5 637.6 617.7
Slide 20: Major Maintenance Schedule
MAJOR MAINTENANCE SCHEDULE ADJUSTED EBITDA IMPACT ($ IN MILLIONS) $34 $30 - $35 $30 $27 $24 $5 $20 $7 $28 $22 $17 $5 - $7 $10 $4 $2 1 2017 2018 2019 2020 2021 2022 2023e 2024e1,2 Q1 Q2 Q3 Q4 Total 1. This information is based upon management’s current assumptions and estimates. 2. See “Forward-Looki