Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q4 2020 Earnings Presentation
25 slides from Clearwater Paper's earnings presentation, Feb 25, 2021
Slide 1: Clearwater Paper Fourth Quarter 2020 Earnings Release Materials
Clearwater Paper Corporation Fourth Quarter 2020 Earnings Release Materials February 25, 2021 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: Q4 2020 Business Highlights
Q4 2020 BUSINESS HIGHLIGHTS Overall Net Income of $23 million and Adjusted EBITDA of $72 million Generated $58 million in free cash flow Consumer Products Volatile demand during quarter Tissue production largely met demand Service levels were strong even during spike in quarter Paperboard
Slide 4: Q4 2020 Operational Update
Q4 2020 OPERATIONAL UPDATE Committed to protecting our two most important assets: our people and our customer relationships Taking Care of Our People: Temperature checks and sanitation practices Social distancing and face covering requirements Remote work access and travel restrictions Enhan
Slide 5: Business Update – Consumer Products
BUSINESS UPDATE – CONSUMER PRODUCTS COVID related demand for retail tissue was volatile in Q4 2020, leading to higher than expected shipments Industry (North America) Pre-COVID: ~10 million ton demand with ~2/3 at home, ~1/3 away from home COVID pandemic led to shift to at-home demand • Paper to
Slide 6: Business Update – Paperboard
BUSINESS UPDATE - PAPERBOARD Diversified range of end-market products and flexibility in our supply chain provided overall strong results Industry We estimate ~2/3 of industry demand is driven by recession resilient end-market segments, such as food packaging and other consumer goods ~1/3 of dem
Slide 7: Financial Performance
FINANCIAL PERFORMANCE ($ in millions, except per share amounts) Quarter Ended December 31, Year Ended December 31, 2020) 2019) 2020) 2019) Net Sales $ 452.8 $ 435.5 $ 1,868.6 $ 1,761.5 Cost of Sales 376.1 384.2 1,574.4 1,597.0 Selling, general and adminstrative 32.6 28.9 122.0 112.8 Other operating
Slide 8: Revenue, Income and Adjusted EBITDA by Segment
REVENUE, INCOME AND ADJUSTED EBITDA BY SEGMENT ($ in millions) Quarter Ended December 31, Year Ended December 31, 2020) 2019) 2020) 2019) Net Sales Consumer Products $ 243.6 $ 230.6 $ 1,032.7 $ 906.8 Paperboard 209.3 204.9 835.9 854.7 $ 452.8 $ 435.5 $ 1,868.6 $ 1,761.5 Operating Income Consumer Pro
Slide 9: Consumer Products Results
CONSUMER PRODUCTS RESULTS Q4 2020 vs. Q4 2019 Segment Adjusted EBITDA ($ in millions) Lower input costs from pulp, Higher volume Favorable mix Shelby resulting in offset by lower improvements improved pricing and lower absorption transportation costs Page 9 © Clearwater Paper Corporation 2020
Slide 10: Consumer Products Sales and Production
CONSUMER PRODUCTS SALES AND PRODUCTION Clearwater Paper Information % changes) % changes) Q4 2020 vs) Q4 2020 vs) ($ in millions) Q4 2019) Q1 2020) Q2 2020) Q3 2020) Q4 2020) Q4 2019) Q3 2020) Sales, Cases 13.2 15.2 16.0 14.5 13.9 5.3% -4.2% Production, Cases 13.6 13.9 15.9 15.3 13.9 2.4% -9.0% Adju
Slide 11: Paperboard Results
PAPERBOARD RESULTS Q4 2020 vs. Q4 2019 Segment Adjusted EBITDA ($ in millions) Absence of major outage at Lower pricing Higher sales Arkansas mill partially offset volume offset by higher by favorable mix input costs Page 11 © Clearwater Paper Corporation 2020
Slide 12: Outlook for 2021
OUTLOOK FOR 2021 Q1 2021: $51 to $59 Million of Adjusted EBITDA Strength in paperboard Lower expected tissue volumes Modest inflation Includes $6 – $8 million impact from weather event FY 2021 Operational Assumptions Price/mix – impact of announced price increase in paperboard Volume – C
Slide 13: Capital Structure and Allocation
CAPITAL STRUCTURE AND ALLOCATION Capital Structure: Supportive and Stable Liquidity Profile ($ in millions)1 Capital structure provides ample liquidity ABL Availability $227.1 No material near-term debt maturities Less Utilization (3.6) Corporate/Issuer ratings: Ba2/BB- Plus Unrestricted Cash
Slide 14: Key Accomplishments in 2020
KEY ACCOMPLISHMENTS IN 2020 People Outstanding job by the team - focusing on health and safety at our facilities Supported our people with enhanced benefits, products, and a financial bonus New senior leadership team Tissue Met or exceeded customer expectations as consumer buying patterns we
Slide 15: Clearwater Paper Value Proposition
CLEARWATER PAPER VALUE PROPOSITION Well positioned across two attractive businesses Consumer Products: Leading private brand provider with national scale & superior supply chain performance Shift to private-branded over branded product continues with long runway Tissue is need-based and econom
Slide 16: Appendix
Appendix © Clearwater Paper Corporation 2020
Slide 17: Consumer Products Sequential Quarter Results
CONSUMER PRODUCTS SEQUENTIAL QUARTER RESULTS Q4 2020 vs. Q3 2020 Segment Adjusted EBITDA ($ in millions) Lower pricing Favorable input Customer cost in inventory issues transportation, and intentional raw materials select customer and energy exits Page 17 © Clearwater Paper Corporation 2020
Slide 18: Paperboard Sequential Quarter Results
PAPERBOARD SEQUENTIAL QUARTER RESULTS Q4 2020 vs. Q3 2020 Segment Adjusted EBITDA ($ in millions) Higher input costs in energy Unfavorable mix offset by lower and lower maintenance pricing costs Page 18 © Clearwater Paper Corporation 2020
Slide 19: Key Segment Sales Information
KEY SEGMENT SALES INFORMATION Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Consumer Products Shipments Retail (short tons) 73,356 76,175 79,526 79,748 90,791 95,432 86,292 83,347 Non-Retail (short tons) 10,266 6,623 6,882 8,393 9,002 5,812 3,799 6,498 Converted Products (cases in
Slide 20: Reconciliation of Adjusted EBITDA
RECONCILIATION OF ADJUSTED EBITDA ($ in millions) Quarter Ended Dec. 31, Sept. 30 Year Ended Dec. 31, 2020 2019 2020 2020 2019 Net income (loss) $ 22.6 $ 2.0 $ 21.4 $ 77.1 $ (5.6) Income tax provisions 7.0 2.3 9.9 21.1 (2.3) Interest expense, net 9.5 12.4 12.2 46.5 44.9 Depreciation and amortization
Slide 21: Reconciliation of Adjusted Income
RECONCILIATION OF ADJUSTED INCOME ($ in millions income, except per share amounts) Quarter Ended December 31,) Year Ended December 31,) 2020) 2019) 2020) 2019) Net income $ 22.6 $ 2.0 $ 77.1 $ (5.6) Add back: Income tax provision 7.0 2.3 21.1 (2.3) Income before income taxes 29.6 4.3 98.2 (7.9) Add
Slide 22: Additional Reconciliations
ADDITIONAL RECONCILIATIONS ($ in millions) Reconciliation of Net Debt Dec 31, 2019 March 30, 2020 June 30, 2020 Sept 30, 2020 Dec 31, 2020 Cash $ 20.0 $ 60.8 $ 48.2 $ 47.5 $ 35.9 Current debt 17.9 58.1 1.6 1.7 1.7 Long term debt 884.5 883.9 827.9 785.5 716.4 add: Deferred debt costs 8.1 7.7 6.4 8.2
Slide 23: Major Maintenance Schedule
MAJOR MAINTENANCE SCHEDULE ($ in millions) $30 $25 - $30 $24 $19 - $23 $22 $18 $20 $7 $7 $23 $18 $17 $15 Idaho $10 None None 2015 2016 2017 2018 2019 2020 2021e 1 2022e1 Q1 Q2 Q3 Q4 Total 1 This information is based upon management’s current expectations and estimates, as well as historical averages
Slide 24: Key Commodity Consumption Volumes
KEY COMMODITY CONSUMPTION VOLUMES Unit of Approximate Annual Volume 1 1 COGS Input Measure (in millions) Purchased Pulp Ton 0.3 Fiber Bone Dry Ton 1.7 Diesel Gallon 10 Electric MWh 1.0 Natural Gas MMBTU 10 Polyethylene Pound 30 Caustic Pound 90 Chlorate Pound 30 1 Approximated annual volume and expe
Slide 25: IRI Panel Data - Total Tissue – All Outlets
50.0% -50.0% 0.0% 100.0% 150.0% 200.0% 250.0% Jan-05-2020 in Dollars Jan-12-2020 Jan-19-2020 Jan-26-2020 Feb-02-2020 Feb-09-2020 Feb-16-2020 Feb-23-2020 Mar-01-2020 Mar-08-2020 Mar-15-2020 Mar-22-2020 Mar-29-2020 Year over Year Growth Rate Apr-05-2020 Apr-12-2020 Apr-19-2020 Apr-26-2020 May-03-2020