Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q3 2023 Earnings Presentation
20 slides from Clearwater Paper's earnings presentation, Oct 30, 2023
Slide 1: Third Quarter Earnings Release Materials
CLEARWATER PAPER CORPORATION THIRD QUARTER EARNINGS RELEASE MATERIALS OCTOBER 30, 2023 ARSEN KITCH President, Chief Executive Officer and Director SHERRI BAKER 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 as amended
Slide 3: Q3 2023 Business Highlights
Q3 2023 BUSINESS HIGHLIGHTS Overall • Net sales $520 million, down 3% versus Q3 2022 • Net income $37 million, up $16 million versus Q3 2022 • Adjusted net income $37 million, up $6 million versus Q3 2022 • Adjusted EBITDA $81 million, up $3 million versus Q3 2022 Pulp and Paperboard • SBS prices do
Slide 4: Business Update – Pulp and Paperboard
BUSINESS UPDATE – PULP AND PAPERBOARD SOFT DEMAND LEADING TO CAPACITY DOWNTIME, LOWER MARKET PRICING Industry (SBS) • Shipments, production, and operating rates decreased YTD Q3 2023 versus YTD Q3 2022 based on AF&PA data • Shipments (in tons) decreased 15.7% • Production decreased 12.9% • Operating
Slide 5: Business Update – Consumer Products
BUSINESS UPDATE – CONSUMER PRODUCTS SHIPMENTS STRENGTHENED; PRICES INCREASED Industry • Consumers shifting to private brands with economic uncertainty and inflation • Private brand market share continued at a high of 36%1 • Nearly 94% capacity utilization YTD August 2023 based on RISI data Clearwate
Slide 6: Financial Performance
FINANCIAL PERFORMANCE ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Quarter Ended Sept 30, Nine Months Ended Sept 30, 2023 2022 2023 2022 Net sales $ 519.9 $ 538.8 $ 1,569.9 $ 1,553.3 Cost of sales 427.4 454.8 1,314.6 1,332.0 Selling, general and adminstrative 36.4 32.9 111.5 99.6 Other operating charge
Slide 7: Segment Profit and Loss and Adjusted EBITDA
SEGMENT PROFIT AND LOSS AND ADJUSTED EBITDA ($ IN MILLIONS) Quarter Ended Sept 30, Nine Months Ended Sept 30, 2023 2022 2023 2022 Net Sales Pulp and Paperboard $ 261.4 $ 300.8 $ 812.4 $ 862.8 Consumer Products 259.3 241.0 761.3 696.1 Eliminations (0.8) (3.0) (3.8) (5.6) $ 519.9 $ 538.8 $ 1,569.9 $ 1
Slide 8: Pulp and Paperboard Q3 2023 Results
PULP AND PAPERBOARD Q3 2023 RESULTS Q3 2023 VS. Q3 2022 ADJUSTED EBITDA ($ IN MILLIONS) Lower market pricing as reported by Reduced Lower fiber, RISI operating energy, and schedules and chemical lower costs shipments © Clearwater Paper Corporation 2023 8
Slide 9: Consumer Products Q3 2023 Results
CONSUMER PRODUCTS Q3 2023 RESULTS Q3 2023 VS. Q3 2022 ADJUSTED EBITDA ($ IN MILLIONS) Lower pulp, chemicals, freight and Benefits from other input previously costs announced price increases © 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 $263.5 • No material near-term debt maturities Less Utilization (3.5) • Corporate/Issuer ratings: Ba2/BB- Plus Unrestricted Cash 110.2 Liquidity $370.2 Capital allocation
Slide 11: Outlook for Q4 and 2023 Overall Assumptions
OUTLOOK FOR Q4 AND 2023 OVERALL ASSUMPTIONS Q4 2023: $60 to $70 million of Adjusted EBITDA • Lower PPD pricing as reported by RISI • Planned major maintenance outage at our Arkansas paperboard mill 2023: $278 to $288 million of Adjusted EBITDA • $42 million benefit due to fewer major maintenance out
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 $70 million per year outside of major projects 2 • Reduce leverage to increase flexibility Preserve financial • Target net leverage ratio around 2.5
Slide 13: Appendix
APPENDIX © Clearwater Paper Corporation 2023 13
Slide 14: Pulp and Paperboard Sequential Quarter Results
PULP AND PAPERBOARD SEQUENTIAL QUARTER RESULTS Q3 2023 VS. Q2 2023 ADJUSTED EBITDA ($ IN MILLIONS) Lower fiber Lower market and chemical pricing as costs reported by RISI © Clearwater Paper Corporation 2023 14
Slide 15: Consumer Products Sequential Quarter Results
CONSUMER PRODUCTS SEQUENTIAL QUARTER RESULTS Q3 2023 VS. Q2 2023 ADJUSTED EBITDA ($ IN MILLIONS) Lower pulp and other raw material costs © Clearwater Paper Corporation 2023 15
Slide 16: Key Segment Information
KEY SEGMENT INFORMATION Q3’2021 Q4’2021 Q1’2022 Q2’2022 Q3’2022 Q4’2022 Q1’2023 Q2’2023 Q3’2023 Pulp and Paperboard Sales ($ millions) $237.5 $261.3 $266.2 $295.8 $300.8 $273.5 $278.8 $272.3 $261.4 Adjusted EBITDA ($ millions) $43.5 $61.9 $59.5 $61.2 $73.0 $26.7 $66.2 $51.3 $53.1 Paperboard shipment
Slide 17: Reconciliation of Adjusted EBITDA
RECONCILIATION OF ADJUSTED EBITDA ($ IN MILLIONS) Quarter Ended Nine Months Ended September 30, June 30, September 30, 2023 2022 2023 2023 2022 Net income $ 36.6 $ 20.6 $ 29.7 $ 90.1 $ 51.9 Income tax provision 11.0 18.9 10.2 29.0 29.3 Interest expense, net 6.9 8.0 7.5 22.0 27.3 Depreciation and amo
Slide 18: Reconciliation of Adjusted Income
RECONCILIATION OF ADJUSTED INCOME ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Quarter Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income $ 36.6 $ 20.6 $ 90.1 $ 51.9 Add back: Income tax provision 11.0 18.9 29.6 29.3 Income before income taxes 47.6 39.5 119.7 81.2 Add ba
Slide 19: Additional Reconciliations
ADDITIONAL RECONCILIATIONS ($ IN MILLIONS) Net Debt Dec 31, 2021 Mar 31, 2022 June 30, 2022 Sept 30, 2022 Dec 31, 2022 Mar 31, 2023 June 30, 2023 Sept 30, 2023 Cash $ 25.2 $ 36.4 $69.5 $50.8 $53.7 $16.7 $41.7 $110.2 Current debt 1.6 1.6 1.0 1.0 0.9 0.9 0.9 0.9 Long term debt 637.6 617.7 589.9 564.9
Slide 20: Major Maintenance Schedule
MAJOR MAINTENANCE SCHEDULE ADJUSTED EBITDA IMPACT ($ 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 2024e 1,2 Q1 Q2 Q3 Q4 Total 1. This information is based upon management’s current assumptions and estimates. 2. See “Forward-Look