Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q1 2017 Earnings Presentation
28 slides from Clearwater Paper's earnings presentation, Apr 20, 2017
Slide 1: Clearwater Paper Corporation First Quarter 2017 Supplemental Information
CLEARWATER PAPER CORPORATION FIRST QUARTER 2017 SUPPLEMENTAL INFORMATION 04/20/17 LINDA MASSMAN PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR JOHN HERTZ 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 outlook for Q2 2017; the costs, timi
Slide 3: First Quarter Financial Highlights
FIRST QUARTER FINANCIAL HIGHLIGHTS $438 MILLION NET SALES, UP 3% VS. Q4’16 $21 MILLION GAAP OPERATING INCOME 1 $49 MILLION ADJUSTED EBITDA , AT LOW END OF OUR OUTLOOK RANGE OF $48 TO $56 MILLION DILUTED GAAP EPS OF $0.45, ADJUSTED DILUTED EPS OF $0.641 COMPLETED CLOSURE OF OKLAHOMA CITY TISSUE CONVE
Slide 4: Financial Summary (GAAP Basis)
FINANCIAL SUMMARY (GAAP BASIS) (UNAUDITED) (Dollars in thousands - except per-share amounts) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Net sales $ 437,204 $ 436,671 $ 435,320 $ 425,568 $ 437,525 Gross Profit $ 68,557 $ 74,820 $ 38,715 $ 57,044 $ 50,495 Selling, general and administrative expenses ($30,795) ($34
Slide 5: Financial Summary (Adjusted Basis)
FINANCIAL SUMMARY (ADJUSTED BASIS) (UNAUDITED) (Dollars in thousands - except per-share amounts) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Outlook5 Net sales $ 437,204 $ 436,671 $ 435,320 $ 425,568 $ 437,525 0% - 1% higher Adjusted gross profit1 $ 68,989 $ 75,353 $ 41,051 $ 60,215 $ 56,698 Adjusted gross
Slide 6: Consolidated Adjusted EBITDA Bridge Q1'17 vs. Q4'16
Q1’17 VS. Q4’16 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE Higher mix of retail tissue sales, partly offset by PRICE/MIX higher mix of commodity grade paperboard sales ADJ. EBITDA1 (MILLIONS) $60 Higher paperboard sales due to Manchester Industries acquisition in late Q4’16, partly offset by VOLUME lower
Slide 7: Consolidated Adjusted EBITDA Bridge Q1'17 vs. Q1'16
Q1’17 VS. Q1’16 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE Lower paperboard pricing and higher mix of ADJ. EBITDA1 PRICE/MIX commodity grade paperboard sales, partly (MILLIONS) offset by higher mix of retail tissue sales $65 Lower non-retail tissue sales due to shutdown of two tissue machines at the Neena
Slide 8: Strategic Investment and Operational Improvement Scorecard as of Q1'17
STRATEGIC INVESTMENT AND OPERATIONAL IMPROVEMENT SCORECARD AS OF Q1’17 • Strategic plan announced FULL RUN-RATE EXPECTED IMPACT (MILLIONS $)4 in Q1’15, expected capex OPERATING INCOME $23-$28 $15-$162 $16-$19 $44-$652 of $229-$2411 million ADJUSTED EBITDA3 $30-$35 $20-$212 $21-$24 $44-$652 • Expecte
Slide 9: Key Segment Results – Consumer Products
KEY SEGMENT RESULTS – CONSUMER PRODUCTS (UNAUDITED) CONSUMER PRODUCTS CROSS-CYCLE Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 FINANCIAL MODEL Shipments Non-Retail (short tons)1 24,358 20,028 18,384 19,182 16,678 Retail (short tons) 75,027 79,095 82,216 77,704 78,686 Total Tissue Tons 99,385 99,123 100,600 96,886
Slide 10: Tissue Shipments and U.S. Retail Tissue Market
CLEARWATER PAPER TISSUE SHIPMENTS AND U.S. RETAIL TISSUE MARKET CLW Q1’17 by CLW Q4’16 by U.S. Retail Tissue Market ($) Market Segment Market Segment (MultiOutlet)1 (% of Tons) (% of Tons) Other Other PRIVATE Parent Parent Rolls 1% Rolls 1% CATEGORY LABEL BRANDS TOTAL 11% 12% AFH AFH Total Retail 6%
Slide 11: Consumer Products Adjusted EBITDA Bridge Q1'17 vs. Q4'16
Q1’17 VS. Q4’16 CONSUMER PRODUCTS ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) PRICE/MIX Higher mix of retail tissue sales $40 Lower non-retail tissue sales due to shutdown VOLUME of two paper machines at the Neenah facility $35 $1.4 $0.5 $2.4 $5.5 $1.0 $32.0 $0.6 Increased internal inven
Slide 12: Key Segment Results – Pulp and Paperboard
KEY SEGMENT RESULTS – PULP AND PAPERBOARD (UNAUDITED) PULP AND PAPERBOARD CROSS-CYCLE Q1’16 Q2’16 Q3’16 Q4’16 Q1’173 FINANCIAL MODEL Shipments Paperboard (short tons) 201,340 199,132 196,271 199,415 210,382 Sales Price Paperboard ($/short ton) $952 $948 $927 $920 $927 Segment net sales ($ in thousan
Slide 13: Paperboard Shipments and U.S. Paperboard Market
CLEARWATER PAPER PAPERBOARD SHIPMENTS AND U.S. PAPERBOARD MARKET CLW Q1’17 by CLW Q4’16 by U.S. Paperboard Production3 Market Segment Market Segment (% of Tons) (% of Tons) CLEARWATER CATEGORY PAPER OTHER Folding Folding 52% 53% Total Domestic 14% 86% SBS1 Market Share Folding 18% 82% Food Service2
Slide 14: Pulp and Paperboard Adjusted EBITDA Bridge Q1'17 vs. Q4'16
Q1’17 VS. Q4’16 PULP AND PAPERBOARD ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) $40 Higher mix of commodity grade paperboard PRICE/MIX sales $0.3 $35.4 $35.0 $0.5 $0.7 $0.6 $0.5 $35 Higher paperboard sales due to Manchester VOLUME Industries acquisition in late Q4’16 $30 Higher wood pric
Slide 15: Clearwater Paper Cross-Cycle Financial Model
CLEARWATER PAPER CROSS-CYCLE FINANCIAL MODEL CLEARWATER PAPER CROSS-CYCLE (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 FINANCIAL MODEL Net sales 100% 100% 100% 100% 100% 100% Adjusted gross profit margin1 15.8% 17.3% 9.4% 14.1% 13.0% 17.0% Adjusted SG&A expenses1 as % of net sales (6.9%) (7.
Slide 16: Q2'17 Outlook: Reconciliation of Non-GAAP Financial Measures
Q2’17 OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) OUTLOOK THREE MONTHS ENDING JUNE 30, 2017 RANGE OF ESTIMATE (Dollars in thousands) FROM TO Earnings before interest, income taxes, and depreciation & amortization (EBITDA)2: GAAP net earnings $6,250 $9,500 Interest expense, net
Slide 17: Q2'17 Outlook: Reconciliation of Non-GAAP Financial Measures
Q2’17 OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) OUTLOOK THREE MONTHS ENDING JUNE 30, 2017 RANGE OF ESTIMATE (Dollars in thousands) FROM TO GAAP Operating Income $17,500 $22,500 Directors' equity-based compensation expense $500 $500 Costs associated with Long Island facility
Slide 18: Q2'17 Outlook
Q2’17 OUTLOOK1 ADJ. EBITDA2 (MILLIONS) $55 $1-$2 $50 $49 $0-$1 $9-$10 $42-$48 $45 $2-$3 $4-$5 $40 $1-$2 $1 $35 $30 Q1'17 Shipment Price/Mix Maintenance Pulp Chemicals Lower Beg Inv Productivity Q2'17 2 Adj. EBITDA Volumes Unit Cost Adj. EBITDA 1,2 Outlook NET SALES 0% - 1% higher ADJUSTED OPERATING
Slide 19: Appendix
ai ale APPENDIX
Slide 20: Adjusted Gross Profit & Adjusted SG&A Reconciliation
ADJUSTED GROSS PROFIT & ADJUSTED SG&A RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Gross profit1 $ 68,557 $ 74,820 $ 38,715 $ 57,044 $ 50,495 Costs associated with Long Island facility closure 432 533 466 460 466 Pension settlement ex
Slide 21: Segment Adjusted Operating Income (Loss) Reconciliation
SEGMENT ADJUSTED OPERATING INCOME (LOSS) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Consumer Products Operating income $ 18,390 $ 18,544 $ 17,201 $ 13,781 $ 6,189 Costs associated with Long Island facility closure 432 533 466 460 46
Slide 22: 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) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 GAAP net earnings $ 18,446 $ 20,864 $ 901 $ 9,343 $ 7,515 Special items, after tax1: Direct
Slide 23: Adjusted Income Tax Provision Reconciliation
ADJUSTED INCOME TAX PROVISION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 GAAP income tax provision ($11,673) ($11,905) ($859) ($6,675) ($5,000) Special items, tax impact: Directors' equity-based compensation (expense) benefit (261) (
Slide 24: EBITDA & Adjusted EBITDA Reconciliation
EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Earnings before interest, income taxes, and depreciation & amortization (EBITDA)1 GAAP net earnings $ 18,446 $ 20,864 $ 901 $ 9,343 $ 7,515 Interest expense, net2 7
Slide 25: Segment EBITDA & Adjusted EBITDA Reconciliation
SEGMENT EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Consumer Products Operating income $ 18,390 $ 18,544 $ 17,201 $ 13,781 $ 6,189 Depreciation and amortization expense 13,759 14,203 15,022 16,391 18,242 1 Se
Slide 26: Reconciliation of GAAP to Non-GAAP: Strategic Investments
RECONCILIATION OF GAAP TO NON-GAAP: STRATEGIC INVESTMENTS1 (UNAUDITED) 2 FULL RUN-RATE EXPECTED ADJUSTED EBITDA IMPACT OTHER PROJECTS OPERATIONAL IMPROVEMENTS CONTINUOUS WAREHOUSE PAPER MACHINE CONVERTING OPERATIONAL SALES & MARKETING STRANDED (Dollars in millions) DIGESTER AUTOMATION UPGRADES LINE
Slide 27: Reconciliation of GAAP to Non-GAAP: Strategic Investments
RECONCILIATION OF GAAP TO NON-GAAP: STRATEGIC INVESTMENTS1 (UNAUDITED) 2 Q1'17 ADJUSTED EBITDA IMPACT CONTINUOUS WAREHOUSE OPERATIONAL (Dollars in millions) DIGESTER AUTOMATION OTHER PROJECTS IMPROVEMENTS Operating income ($ 0.2) $1.6 $2.3 $3.9 Depreciation $ 0.2 $ 0.4 $ 0.5 $ - EBITDA2 $ - $ 2.0 $
Slide 28: For More Information: www.clearwaterpaper.com
FOR MORE INFORMATION: WWW.CLEARWATERPAPER.COM 27