Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q4 2017 Earnings Presentation
31 slides from Clearwater Paper's earnings presentation, Feb 5, 2018
Slide 1: Fourth Quarter and Full Year 2017 Supplemental Information
CLEARWATER PAPER CORPORATION FOURTH QUARTER AND FULL YEAR 2017 SUPPLEMENTAL INFORMATION 02/05/18 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 Q1 2018; the costs, timi
Slide 3: 2017 Full Year Highlights
2017 FULL YEAR HIGHLIGHTS $1,730 MILLION NET SALES, FLAT VS. 2016 $72 MILLION GAAP OPERATING INCOME $190 MILLION ADJUSTED EBITDA1, AT THE LOW END OF OUR MOST RECENT OUTLOOK RANGE OF $190 TO $210 MILLION DILUTED GAAP EPS OF $5.88 AND ADJUSTED DILUTED EPS OF $2.321 COMPLETED MAJOR MAINTENANCE AT BOTH
Slide 4: Fourth Quarter Financial Highlights
FOURTH QUARTER FINANCIAL HIGHLIGHTS $437 MILLION NET SALES, UP 2% VS. Q3'17 $27 MILLION GAAP OPERATING INCOME $58 MILLION ADJUSTED EBITDA1, AT HIGH END OF OUTLOOK RANGE OF $50 TO $60 MILLION DILUTED GAAP EPS OF $4.88 AND ADJUSTED DILUTED EPS OF $0.871 AN INCREMENTAL $12 MILLION CONTRIBUTION TO COST
Slide 5: Financial Summary (GAAP Basis)
FINANCIAL SUMMARY (GAAP BASIS) (UNAUDITED) Twelve Months Ended December 31, (Dollars in thousands - except per-share amounts) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 2016 2017 Net sales $437,204 $436,671 $435,320 $425,568 $437,525 $429,663 $426,504 $436,716 $1,734,763 $1,730,408 Gross Profit
Slide 6: Financial Summary (Adjusted Basis)
FINANCIAL SUMMARY (ADJUSTED BASIS) (UNAUDITED) Twelve Months Ended December 31, Q1'18 (Dollars in thousands - except per-share amounts) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Outlook7 2016 2017 2% - 3% Net sales $437,204 $436,671 $435,320 $425,568 $437,525 $429,663 $426,504 $436,716 Lower $
Slide 7: 2017 vs. 2016 Consolidated Adjusted EBITDA Bridge
2017 VS. 2016 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ, EBITDA1 (MILLIONS) Stronger mix of ultra tissue, lower parent roll and PRICE/MIX non-retail sales in CPD $225 Lower due to away-from-home volume. Lower $5.0 parent roll volume due to shutdown of two tissue $214.8 VOLUME machines at the Neenah f
Slide 8: Q4'17 vs. Q3'17 Consolidated Adjusted EBITDA Bridge
Q4’17 VS. Q3’17 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ, EBITDA1 (MILLIONS) $65 Lower promotional spend and stronger mix of $20.1 $60 PRICE/MIX ultra quality tissue sales, partially offset by $57.5 paperboard mix -$1.2 -$0.9 $55 Lower retail tissue and parent roll sales, partly VOLUME offset by hig
Slide 9: Q4'17 vs. Q4'16 Consolidated Adjusted EBITDA Bridge
Q4’17 VS. Q4’16 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ, EBITDA1 (MILLIONS) Stronger mix of ultra tissue, lower parent roll PRICE/MIX sales and lower promotional spend at CPD, and $67 $10.9 higher paperboard pricing due to Q3'17 increase Lower non-retail tissue sales, partly offset by $62 VOLUME hi
Slide 10: Strategic Investment and Operational Improvement Scorecard as of Q4'17
STRATEGIC INVESTMENT AND OPERATIONAL IMPROVEMENT SCORECARD AS OF Q4'17 FULL RUN-RATE EXPECTED IMPACT (MILLIONS $)1 COST SAVINGS1 $30-$35 $20-$21 $21-$24 $44-$65 • Strategic plan announced in Q1’15, expected capex of $229-$241 million • Expected to yield a $115-$145 million cost savings by the end of
Slide 11: Shelby Expansion: $340 Million
SHELBY EXPANSION: $340 MILLION Improve operational efficiency Install NTT Tissue Machine WAREHOUSE PAPER MACHINE in Eastern Regions. Less and Converting Equipment CONSOLIDATION reliance on 3PL Shelby, NC adjacent to current Shelby, NC adjacent to current LOCATION LOCATION Tissue plant Tissue plant C
Slide 12: Key Segment Results - Consumer Products
KEY SEGMENT RESULTS - CONSUMER PRODUCTS (UNAUDITED) CONSUMER PRODUCTS CROSS-CYCLE Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 FINANCIAL MODEL Shipments Non-Retail (short tons)1 24,358 20,028 18,384 19,182 16,678 13,736 12,958 12,190 Retail (short tons) 75,027 79,095 82,216 77,704 78,686 77,714 7
Slide 13: Clearwater Paper Tissue Shipments and U.S. Retail Tissue Market
CLEARWATER PAPER TISSUE SHIPMENTS AND U.S. RETAIL TISSUE MARKET CLW Q4'17 by CLW Q3'17 by Market Segment Market Segment (% of Tons) (% of Tons) U.S. Retail1 Tissue Market Q4'17 ($) Parent Other Parent Other (MultiOutlet) Rolls 1% Rolls 1% AFH 7% 8% AFH PRIVATE 6% 6% CATEGORY LABEL BRANDS TOTAL Total
Slide 14: Q4'17 vs. Q3'17 Consumer Products Adjusted EBITDA Bridge
Q4'17 VS. Q3'17 CONSUMER PRODUCTS ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) $32 $4.3 $30 Lower promotional spend and stronger mix of PRICE/MIX ultra quality tissue sales $28 -$2.1 $0.8 VOLUME Lower retail tissue and parent roll sales $0.5 $25.9 $25.8 $26 -$1.8 Higher customer freight r
Slide 15: Key Segment Results – Pulp and Paperboard
KEY SEGMENT RESULTS – PULP AND PAPERBOARD (UNAUDITED) PULP AND PAPERBOARD CROSS-CYCLE Q1'16 Q2'16 Q3'16 Q4'16 Q1'173 Q2'173 Q3'173 Q4'173 FINANCIAL MODEL Shipments Paperboard (short tons) 201,340 199,132 196,271 199,415 210,382 207,152 200,569 210,098 Sales Price Paperboard ($/short ton) $952 $948 $
Slide 16: Clearwater Paper Paperboard Shipments and U.S. Paperboard Market
CLEARWATER PAPER PAPERBOARD SHIPMENTS AND U.S. PAPERBOARD MARKET CLW Q4'17 by CLW Q3'17 by Market Segment Market Segment U.S. Paperboard Production3 (% of Tons) (% of Tons) CLEARWATER CATEGORY PAPER OTHER Folding Folding 57% Total Domestic 14% 86% 53% SBS1 Market Share Folding 18% 82% Food Service2
Slide 17: Q4'17 vs. Q3'17 Pulp and Paperboard Adjusted EBITDA Bridge
Q4’17 vs. Q3'17 PULP AND PAPERBOARD ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) $50 $19.3 $0.3 $44.5 $45 PRICE/MIX Relatively stable mix $40 $35 VOLUME Higher paperboard shipments $30 Higher freight rates primarily due to weather TRANSPORTATION related events $1.1 $0.7 $25 $23.4 -$0.3 Id
Slide 18: Clearwater Paper Cross-Cycle Financial Model
CLEARWATER PAPER CROSS-CYCLE FINANCIAL MODEL Twelve Months Ended CLEARWATER December 31, PAPER CROSS-CYCLE (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 2016 2017 FINANCIAL MODEL Net sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Adjusted gross profit margin1 1
Slide 19: Q1'18 Outlook Reconciliation of Non-GAAP Financial Measures
Q1’18 OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) OUTLOOK THREE MONTHS ENDING MARCH 31, 2018 RANGE OF ESTIMATE (Dollars in thousands) FROM TO Earnings before interest, income taxes, and depreciation & amortization (EBITDA)2: GAAP net earnings $4,700 $9,700 Interest expense, ne
Slide 20: Q1'18 Outlook Reconciliation of Non-GAAP Financial Measures
Q1’18 OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) OUTLOOK THREE MONTHS ENDING MARCH 31, 2018 RANGE OF ESTIMATE (Dollars in thousands) FROM TO GAAP Operating Income $16,000 $21,000 Directors' equity-based compensation expense 300 300 Reorganization related expenses 4,300 4,300
Slide 21: Q1'18 Outlook
Q1'18 OUTLOOK1 NET SALES 2% - 3% Lower ADJUSTED OPERATING MARGIN2,3 4.5% - 6% ADJUSTED EBITDA2 $42M - $52M ADJUSTED NET EARNINGS PER DILUTED COMMON SHARE2,4 $0.49 - $0.79 1 This information is based upon management’s current expectations and estimates, which are in part based on market and industry
Slide 22: 2018 Full Year Outlook
2018 FULL YEAR OUTLOOK1 Expecting continued price pressure due to the changing retail landscape and new tissue PRICE/MIX entrants. Tissue converted product under pressure offset by higher parent roll volume. Higher VOLUME paperboard volume given more uptime on machines due to no scheduled major outa
Slide 23: Appendix
AG sisegoorss APPENDIX
Slide 24: Adjusted Gross Profit & Adjusted SG&A Reconciliation of Non-GAAP Financial Measures
ADJUSTED GROSS PROFIT & ADJUSTED SG&A RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Twelve Months Ended December 31, (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 2016 2017 Gross profit1 $68,557 $74,820 $38,715 $57,044 $50,495 $48,930 $39,923 $61,439 $239,136 $20
Slide 25: Segment Adjusted Operating Income (Loss) Reconciliation of Non-GAAP Financial Measures
SEGMENT ADJUSTED OPERATING INCOME (LOSS) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Twelve Months Ended December 31, (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 2016 2017 Consumer Products Operating income $18,390 $18,544 $17,201 $13,781 $6,189 $10,534 $4,43
Slide 26: Adjusted Net Earnings & Adjusted Net Earnings Per Diluted Share Reconciliation
ADJUSTED NET EARNINGS & ADJUSTED NET EARNINGS PER DILUTED COMMON SHARE RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Twelve Months Ended December 31, (Dollars in thousands - except per-share amounts) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 2016 2017 GAAP net earnings $18,446 $20,
Slide 27: Adjusted Income Tax Provision Reconciliation of Non-GAAP Financial Measure
ADJUSTED INCOME TAX PROVISION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE (UNAUDITED) Twelve Months Ended December 31, (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 2016 2017 GAAP income tax provision ($11,673) ($11,905) ($859) ($6,675) ($5,000) ($3,955) $3,095 $62,245 ($31
Slide 28: EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures
EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Twelve Months Ended December 31, (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 2016 2017 Earnings before interest, income taxes, and depreciation & amortization (EBITDA)1 GAAP net earnings $18
Slide 29: Segment EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures
SEGMENT EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Twelve Months Ended December 31, (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 2016 2017 Consumer Products Operating income $18,390 $18,544 $17,201 $13,781 $6,189 $10,534 $4,436 $7,457
Slide 30: Discretionary Free Cash Flow Reconciliation of Non-GAAP Financial Measure
DISCRETIONARY FREE CASH FLOW RECONCILIATION OF NON-GAAP FINANCAIL MEASURE (UNAUDITED) DISCRETIONARY FREE CASH FLOW1 Twelve Months Ending December 31, (Dollars in millions) 2016 2017 GAAP net cash provided by operating activities 172,751 $177,670 Payments for maintenance capital expenditures2 (59,400
Slide 31: For More Information: www.clearwaterpaper.com
FOR MORE INFORMATION: WWW.CLEARWATERPAPER.COM 31