Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Investor Presentation (September 2012)
37 slides from Clearwater Paper's investor presentation, Sep 11, 2012
Slide 1: Clearwater Paper Corporation
Exhibit 99.1 Clearwater Paper Corporation September 2012
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation 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 our strategies to grow our business, optimize profitability and
Slide 3: Agenda
Agenda I. Overview of Clearwater Paper II. Clearwater Paper’s Value Proposition III. Clearwater Paper’s Strategic Plan 2
Slide 4: Overview of Clearwater Paper
Overview of Clearwater Paper 3
Slide 5: Introduction to Clearwater Paper
Introduction to Clearwater Paper • We are a company formed in late 2008 with more than 60 years of operating history • Operate two business segments of similar size – Pulp and Paperboard: 43% of 2011 net sales – Consumer Products: 57% of 2011 net sales • Financial overview – LTM Net Sales: $1.9 bill
Slide 6: Our Strategy to Create Shareholder Value
Our Strategy to Create Shareholder Value • Lead private label quality Grow our Tissue • Expand geographically Business • Expand retail channel penetration Optimize Profitability • Improve sales mix of Paperboard • Reduce costs Business • Continue to improve quality Build a High • Develop common cult
Slide 7: Overview of Consumer Tissue Division
Overview of Consumer Tissue Division Clearwater Paper is one of the largest North American manufacturers of private label tissue, focused on high value tissue products across all categories, retail channels and geographies Key Products Overview of Facilities Clearwater Paper Tissue Parent Roll Clear
Slide 8: Clearwater Paper is Well Positioned to Capitalize on Favorable Tissue Market Dynamics
Clearwater Paper is Well Positioned to Capitalize on Favorable Tissue Market Dynamics Stable Growth - The tissue market has grown an average of 2% annually since 1996 Source: U.S. Tissue demand per RISI, U.S. Population per U.S. Census Note: Projected U.S. Tissue Demand based on North American tissu
Slide 9: Private Label Continues to Capture Market Share in Tissue
Private Label Continues to Capture Market Share in Tissue Clearwater Paper ranks as one of the largest North American private label tissue manufacturers 2011 U.S. Retail Tissue Private Label Market Share of Total U.S. Industry Product Mix Grocery, Drug, Mass (No Walmart) Channels 55.4% Facial Tissue
Slide 10: Significant Opportunity Still Exists for Clearwater Paper To Expand Across the U.S. Private Label Market
Significant Opportunity Still Exists for Clearwater Paper To Expand Across the U.S. Private Label Market Grocery West Midwest East Total Equalized Case Volumes (mm) 37 53 88 178 % of U.S. Population 23% 34% 43% 100% % Private Label (PL) 41% 26% 25% 28% % Clearwater Paper of PL 96% 72% 36% 64% • Clea
Slide 11: Significant Opportunity Also Exists for Clearwater Paper to Expand in Non-Grocery Channels
Significant Opportunity Also Exists for Clearwater Paper to Expand in Non-Grocery Channels Total U.S. Grocery U.S. Drug and Mass (178mm cases) (68mm cases, No Walmart) • If Clearwater Paper could replicate its total U.S. grocery model in the U.S. Drug and Mass channels, an 18% market share represent
Slide 12: North American Market Demand Expected to Absorb Projected Capacity Increases
North American Market Demand Expected to Absorb Projected Capacity Increases (in thousands of short tons) 2011 Demand to Capacity 2013E Demand to Capacity Ratio of 97% Ratio of 97% 9,400 515 105 (260) 9,760 9,109 9,443 2011 Tissue 2011 Tissue Projected Projected Projected Projected 2013 Projected 20
Slide 13: Overview of Pulp and Paperboard Division
Overview of Pulp and Paperboard Division Clearwater Paper ranks as one of the top five largest paperboard manufacturers in North America Key Products Overview of Facilities Clearwater Paper Pulp Pulp Production¹: 845,000 tons Clearwater Paper SBS Paperboard Production¹: 775,000 tons 2011E North Amer
Slide 14: Paperboard Demand Remains Stable and Pricing Outlook is Favorable in the U.S.
Paperboard Demand Remains Stable and Pricing Outlook is Favorable in the U.S. Bleached paperboard prices are expected to remain at attractive levels through 2016 Source: RISI, Projected GDP growth estimates represent Bloomberg median estimates as of 28-Aug-2012 ¹ Based on tons produced. Projections
Slide 15: Clearwater Paper's Value Proposition
Clearwater Paper’s Value Proposition 14
Slide 16: Clearwater Paper Leads its Peer Groups in Value Creation…
Clearwater Paper Leads its Peer Groups in Value Creation… 450% 250%+ Total Return Since Spin-off 400% 350% 258.3% 237.3% 300% 250% 200% 84.7% 75.9% 150% 57.0% 100% 50% 0% Dec-2008 Jul -2009 Mar-2010 Oct-2010 May-2011 Jan-2012 Aug-2012 Spin Date Clearwater Paper Small Cap Tissue¹ Paperboard² Large Ca
Slide 17: …Through a Proven Track Record of EBITDA Growth
…Through a Proven Track Record of EBITDA Growth ($ in millions) Adjusted EBITDA1,2 $ 214 $ 196 $ 174 $ 167 $ 75 2008 2009 2010 2011 LTM • We participate in the premier segments of the paper market: Bleached Paperboard and Tissue • Strong integration across business groups creates synergistic value S
Slide 18: …With Improving Margins
…With Improving Margins Adjusted EBITDA Margin 1, 2 13.5% 14.0% 11.4% 11.8% 10.6% 9.8% 10.1% 9.0% 9.2% Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 $11.4mm in $3.1mm in $15.5mm in Planned Major Planned Major Planned Major Maintenance Maintenance Maintenance Adjusted EBITDA Margin Adj. EBITDA Marg
Slide 19: …And Successful Execution on Its Publicly Stated Goals
…And Successful Execution on Its Publicly Stated Goals Stated Goal Timeframe Current Status Shelby TAD machine is on budget and on track to begin Complete New Paper Machine and operations in Q4 2012 with full capacity run rate by end of 2013 Corresponding Converting Lines at 2010 – 2013 Shelby, NC F
Slide 20: …Which Has Led to Multiple Expansion Since the Spin
…Which Has Led to Multiple Expansion Since the Spin 12x 10.4x 10x 8x 7.0x 6.9x 6x 6.0x 4x Strong upward trend in multiple over time 2x 0x Dec -2008 May -2009 Oct-2009 Mar -2010 Aug-2010 Jan-2011 Jun-2011 Oct-2011 Mar -2012 Aug-2012 Spin Date Clearwater Paper Small Cap Tissue¹ Paperboard² Large Cap C
Slide 21: …And Multiple Growth Rate Higher than Industry
…And Multiple Growth Rate Higher than Industry Change in 1-Year Forward EBITDA Multiple Since Clearwater Spin 93.6% 37.8% 16.9% 16.5% Clearwater Paper Small Cap Tissue¹ Paperboard² Large Cap Consumer Products³ Source: Bloomberg, Capital IQ, market data as of 28-Aug-2012 Note: Represents current 1-ye
Slide 22: The Value Proposition for Clearwater Paper Shareholders
The Value Proposition for Clearwater Paper Shareholders • One of the largest premium private label tissue and bleached paperboard producers in North America • Attractive, growing and stable tissue market with increasing adoption of private label products driving overall market growth • Strong compet
Slide 23: Clearwater Paper's Strategic Plan
Clearwater Paper’s Strategic Plan 22
Slide 24: Clearwater Paper's Strategic Plan
Clearwater Paper’s Strategic Plan • The Board and Management conducted an extensive evaluation and analysis of numerous opportunities to enhance shareholder value, including S.A.C.’s proposal, over the past three months, with the help of Goldman Sachs, legal, tax and other outside advisors • This an
Slide 25: Significant Benefits Expected from the Shelby Project
Significant Benefits Expected from the Shelby Project • Provides a 70,000 ton TAD paper machine and tissue converting facility capable of producing ultra grades of private label bath tissue and paper towels • Upgrade Las Vegas TAD paper machine to produce bath and towels to support regional needs •
Slide 26: Better than Expected Benefits from the Cellu Tissue Integration
Better than Expected Benefits from the Cellu Tissue Integration • Cellu Tissue integration is currently on track and we expect to fully integrate Cellu Tissue operations by end of 2012 • We anticipate that the company will recognize $28 million of synergies in 2012 with annual run rate synergies of
Slide 27: Projected Pulp Price Decreases Should Contribute to Strong EBITDA Growth
Projected Pulp Price Decreases Should Contribute to Strong EBITDA Growth 26
Slide 28: Significant Value Associated with the Integrated Lewiston Site
Significant Value Associated with the Integrated Lewiston Site • Lewiston facility produces 534,000 tons of pulp, 443,000 tons of paperboard and 189,000 tons of tissue • Represents 64%, 58% and 32% respectively of the company’s total production of pulp, paperboard and tissue • Lewiston operations sh
Slide 29: Our Efficiency Projects Are Poised to Deliver to the Bottom Line
Our Efficiency Projects Are Poised to Deliver to the Bottom Line • Sale of Wood Products operations with a secure fiber agreement expected to improve annual operating income by $5-$8 million • Implementation of 18 month maintenance cycle at Lewiston pulp and paperboard facility expected to improve a
Slide 30: Key Initiatives Expected to Significantly Improve Earnings Power
Key Initiatives Expected to Significantly Improve Earnings Power ($ in millions) Realization of Full Cost Shelby Cellu Tissue Savings Ramp-up Synergies Programs • Expected • Incremental • Expected benefit benefit from savings from lean manufacturing full ramp-up of expected from and cost optimizatio
Slide 31: …And Drive Value Creation for Shareholders
…And Drive Value Creation for Shareholders ($ in millions, except per share data) EBITDA Multiple 6.0 x 7.0 x 8.0 x Pro Forma Adjusted EBITDA1 Run Rate $ 300 $ 300 $ 300 Value $ 1,800 $ 2,100 $ 2,400 Implied Enterprise Value $ 1,800 $ 2,100 $ 2,400 Less: Net Debt ² $(488) $(488) $(488) Implied Equit
Slide 32: Core Strategy to Drive Shareholder Value
Core Strategy to Drive Shareholder Value • Continue to capitalize on our position as one of the largest premium private label tissue and bleached paperboard producers in North America • Take advantage of the attractive tissue market and the recent trend of increasing adoption of private label produc
Slide 33: Appendix
Appendix 32 i al
Slide 34: Reconciliation of GAAP to Non-GAAP: Clearwater Paper EBITDA and Adjusted EBITDA
Reconciliation of GAAP to Non-GAAP: Clearwater Paper EBITDA and Adjusted EBITDA ($ in millions) 2008 2009 2010 2011 LTM Net Earnings $9.7 $182.5 $73.8 $39.7 $45.4 Income Tax Provision 5.6 93.2 2.4 31.2 42.5 Interest Expense 13.1 15.5 22.6 44.8 41.4 Earnings Before Interest and 28.5 $291.2 $98.8 $115
Slide 35: Reconciliation of GAAP to Non-GAAP: Clearwater Paper Pro Forma Adjusted EBITDA
Reconciliation of GAAP to Non-GAAP: Clearwater Paper Pro Forma Adjusted EBITDA ($ in millions) Cellu Pro Forma Tissue Cost Adjusted Shelby Synergies Optimization EBITDA Operating Income $37.0 $35.0 $16.0 $210.0 Depreciation & Amortization 13.0 - 3.0 90.0 EBITDA 1 $50.0 $35.0 $19.0 $300.0 - - - - Adj
Slide 36: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures Clearwater Paper Definitions of Non-GAAP Measures EBITDA is a non-GAAP measure that Clearwater Paper management uses to evaluate the cash generating capacity of Clearwater Paper. The most directly comparable GAAP measure is net earnings. EBITDA, as defined by Clearwa
Slide 37: North American Tissue Projected Capacity Change
North American Tissue Projected Capacity Change ANNOUNCED NEW PAPER MACHINES COMPANY LOCATION CONV/TAD TONS STARTUP DATECHANNEL/BUSINESS/PRODUCTS First Quality Anderson, SC TAD 70,000 3rd Q, 2012 Retail/P.L./BRT Patriarch Partners Gorham, NH CONV 35,000 3rd Q, 2012 Retail/P.L. ST Paper Franklin, VA
Clearwater Paper — Investor Presentation (September 2012) on 6ix