Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q2 2017 Earnings Presentation
29 slides from Clearwater Paper's earnings presentation, Aug 2, 2017
Slide 1: Clearwater Paper Corporation Second Quarter 2017 Supplemental Information
CLEARWATER PAPER CORPORATION SECOND QUARTER 2017 SUPPLEMENTAL INFORMATION 08/02/17 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 Q3 and full year 2017; t
Slide 3: Second Quarter Financial Highlights
SECOND QUARTER FINANCIAL HIGHLIGHTS $430 MILLION NET SALES, DOWN 2% VS. Q1'17 $20 MILLION GAAP OPERATING INCOME $45 MILLION ADJUSTED EBITDA1, AT THE MID-POINT OF OUR OUTLOOK RANGE OF $42 TO $48 MILLION GAAP AND ADJUSTED1 EPS OF $0.48 COMPLETED MAJOR MAINTENANCE OUTAGE AT OUR ARKANSAS PAPERBOARD MILL
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 Q2'17 Net sales $437,204 $436,671 $435,320 $425,568 $437,525 $429,663 Gross Profit $68,557 $74,820 $38,715 $57,044 $50,495 $48,930 Selling, general and administrative expenses (
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 Q3'17 Outlook5 Net sales $437,204 $436,671 $435,320 $425,568 $437,525 $429,663 1% - 3% higher 1 Adjusted gross profit $68,989 $75,353 $41,051 $60,215 $56,698 $50,148 A
Slide 6: Q2'17 vs. Q1'17 Consolidated Adjusted EBITDA Bridge
Q2’17 VS. Q1’17 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ, EBITDA1 Weaker mix of ultra quality tissue sales, partly (MILLIONS) PRICE/MIX offset by higher paperboard pricing and improved $55 mix Slightly lower shipments of commodity grade VOLUME paperboard and non-retail tissue sales $50 $49.3 RAW MAT
Slide 7: Q2'17 vs. Q2'16 Consolidated Adjusted EBITDA Bridge
Q2’17 VS. Q2’16 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ, EBITDA1 (MILLIONS) Weaker mix of ultra quality tissue sales, partly $70 PRICE/MIX offset by lower mix of commodity grade paperboard sales $66.3 $65 Lower non-retail sales due to shutdown of two tissue machines at the Neenah facility, partly -
Slide 8: Strategic Investment and Operational Improvement Scorecard as of Q2'17
STRATEGIC INVESTMENT AND OPERATIONAL IMPROVEMENT SCORECARD AS OF Q2'17 • Strategic plan announced FULL RUN-RATE EXPECTED IMPACT (MILLIONS $)3 in Q1’15, expected capex OPERATING INCOME $23-$28 $15-$16 $16-$19 $44-$65 of $229-$2411 million ADJUSTED EBITDA2 $30-$35 $20-$21 $21-$24 $44-$65 • Expected to
Slide 9: Key Segment Results - Consumer Products
KEY SEGMENT RESULTS - CONSUMER PRODUCTS (UNAUDITED) CONSUMER PRODUCTS CROSS-CYCLE Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 FINANCIAL MODEL Shipments Non-Retail (short tons)1 24,358 20,028 18,384 19,182 16,678 13,736 Retail (short tons) 75,027 79,095 82,216 77,704 78,686 77,714 Total Tissue Tons 99,385 99
Slide 10: Clearwater Paper Tissue Shipments and U.S. Retail Tissue Market
CLEARWATER PAPER TISSUE SHIPMENTS AND U.S. RETAIL TISSUE MARKET CLW Q2'17 by CLW Q1'17 by U.S. Retail1 Tissue Market ($) Market Segment Market Segment (MultiOutlet) (% of Tons) (% of Tons) Parent Other Parent Other Rolls 1% Rolls 1% PRIVATE 9% 11% CATEGORY LABEL BRANDS TOTAL AFH 6% AFH 6% Total Reta
Slide 11: Q2'17 vs. Q1'17 Consumer Products Adjusted EBITDA Bridge
Q2'17 VS. Q1'17 CONSUMER PRODUCTS ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) $40 Weaker mix of ultra quality tissue sales, partly PRICE /MIX offset by lower parent roll sales $35 VOLUME Lower non-retail tissue sales $30 RAW MATERIALS Higher external pulp pricing $27.0 $5.5 $0.1 $27.5 In
Slide 12: Key Segment Results - Pulp and Paperboard
KEY SEGMENT RESULTS – PULP AND PAPERBOARD (UNAUDITED) PULP AND PAPERBOARD CROSS-CYCLE Q1'16 Q2'16 Q3'16 Q4'16 Q1'173 Q2'173 FINANCIAL MODE Shipments Paperboard (short tons) 201,340 199,132 196,271 199,415 210,382 207,152 Sales Price Paperboard ($/short ton) $952 $948 $927 $920 $927 $955 Segment net
Slide 13: Clearwater Paper Paperboard Shipments and U.S. Paperboard Market
CLEARWATER PAPER PAPERBOARD SHIPMENTS AND U.S. PAPERBOARD MARKET CLW Q2'17 by CLW Q1'17 by U.S. Paperboard Production3 Market Segment Market Segment (% of Tons) (% of Tons) CLEARWATER CATEGORY PAPER OTHER Folding Folding 56% 52% Total Domestic SBS1 Market Share 14% 86% Folding 19% 81% 2 Food Food Se
Slide 14: Q2'17 vs. Q1'17 Pulp and Paperboard Adjusted EBITDA Bridge
Q2’17 vs. Q1'17 PULP AND PAPERBOARD ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) $40 $0.9 $2.2 -$0.4 PRICE/MIX Higher paperboard pricing and improved mix $35.4 $35 Slightly lower shipments of commodity grade VOLUME paperboard $0.9 $30.0 $30 Lower natural gas pricing and lower seasonal ENE
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 Q2'17 FINANCIAL MODEL Net sales 100% 100% 100% 100% 100% 100% 100% Adjusted gross profit margin1 15.8% 17.3% 9.4% 14.1% 13.0% 11.7% 17.0% Adjusted SG&A expenses1 as % of net
Slide 16: Q3'17 Outlook Reconciliation of Non-GAAP Financial Measures
Q3’17 OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) OUTLOOK THREE MONTHS ENDING SEPTEMBER 30, 2017 RANGE OF ESTIMATE (Dollars in thousands) FROM TO Earnings before interest, income taxes, and depreciation & amortization (EBITDA)2: GAAP net earnings $5,000 $7,700 Interest expense
Slide 17: Q3'17 Outlook Reconciliation of Non-GAAP Financial Measures
Q3’17 OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) OUTLOOK THREE MONTHS ENDING SEPTEMBER 30, 2017 RANGE OF ESTIMATE (Dollars in thousands) FROM TO GAAP Operating Income $14,300 $19,300 Directors' equity-based compensation expense 300 300 Costs associated with Long Island facili
Slide 18: Revised 2017 Outlook Reconciliation of Non-GAAP Financial Measures
REVISED 2017 OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) REVISED OUTLOOK TWELVE MONTHS ENDING DECEMBER 31, 2017 RANGE OF ESTIMATE (Dollars in thousands) FROM TO Earnings before interest, income taxes, and depreciation & amortization (EBITDA)2: GAAP net earnings $34,600 $42,900
Slide 19: Q3'17 Outlook
Q3’17 OUTLOOK1 NET SALES 1% - 3% higher ADJUSTED OPERATING MARGIN2,3 3% - 4.5% ADJUSTED EBITDA2 $40M - $46M ADJUSTED NET EARNINGS PER DILUTED COMMON SHARE2,4 $0.34 - $0.50 Revised full year 2017 outlook of $190 to $210 million adjusted EBITDA1,2 1 This information is based upon management’s current
Slide 20: Appendix
AG sisegoorss APPENDIX
Slide 21: Adjusted Gross Profit & Adjusted SG&A Reconciliation of Non-GAAP
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 Q2'17 Gross profit1 $68,557 $74,820 $38,715 $57,044 $50,495 $48,930 Costs associated with Long Island facility closure 432 533 466 460 466 661 Pension
Slide 22: Segment Adjusted Operating Income (Loss) Reconciliation of Non-GAAP
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 Q2'17 Consumer Products Operating income $18,390 $18,544 $17,201 $13,781 $6,189 $10,534 Costs associated with Long Island facility closure 432 533 4
Slide 23: Adjusted Net Earnings & Adjusted EPS Reconciliation of Non-GAAP
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 Q2'17 GAAP net earnings $18,446 $20,864 $901 $9,343 $7,515 $8,037 1 Special items, after ta
Slide 24: Adjusted Income Tax Provision Reconciliation of Non-GAAP
ADJUSTED INCOME TAX PROVISION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 GAAP income tax provision ($11,673) ($11,905) ($859) ($6,675) ($5,000) ($3,955) Special items, tax impact: Directors' equity-based compensation (expense)
Slide 25: EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP
EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Earnings before interest, income taxes, and depreciation & amortization (EBITDA)1 GAAP net earnings $18,446 $20,864 $901 $9,343 $7,515 $8,037 2 Interest expen
Slide 26: Segment EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP
SEGMENT EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Consumer Products Operating income $18,390 $18,544 $17,201 $13,781 $6,189 $10,534 Depreciation and amortization expense 13,759 14,203 15,022 16,391 18
Slide 27: Reconciliation of GAAP to Non-GAAP: Strategic Investments
RECONCILIATION OF GAAP TO NON-GAAP: STRATEGIC INVESTMENTS1 (UNAUDITED) FULL RUN-RATE EXPECTED ADJUSTED EBITDA2 IMPACT OTHER PROJECTS OPERATIONAL IMPROVEMENTS CONTINUOUS WAREHOUSE PAPER MACHINE CONVERTING OPERATIONAL SALES & MARKETING STRANDED (Dollars in millions) DIGESTER AUTOMATION UPGRADES LINE E
Slide 28: Reconciliation of GAAP to Non-GAAP: Strategic Investment
RECONCILIATION OF GAAP TO NON-GAAP: STRATEGIC INVESTMENT1 (UNAUDITED) Q2'17 ADJUSTED EBITDA2 IMPACT CONTINUOUS WAREHOUSE OPERATIONAL (Dollars in millions) DIGESTER AUTOMATION OTHER PROJECTS IMPROVEMENTS Operating income $0.3 $2.1 $2.0 $2.4 Depreciation $0.2 $0.4 $0.6 $— EBITDA2 $0.5 $2.5 $2.6 $2.4 A
Slide 29: For More Information: www.clearwaterpaper.com
FOR MORE INFORMATION: WWW.CLEARWATERPAPER.COM 29