Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q1 2016 Earnings Presentation
30 slides from Clearwater Paper's earnings presentation, Apr 28, 2016
Slide 1: Clearwater Paper Corporation First Quarter 2016 Supplemental Information
CLEARWATER PAPER CORPORATION FIRST QUARTER 2016 SUPPLEMENTAL INFORMATION 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 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 financial models; the costs, timing and benefits ass
Slide 3: First Quarter Financial Highlights
FIRST QUARTER FINANCIAL HIGHLIGHTS $437 MILLION NET SALES, UP 1.3% VS. Q4’15, VS. OUR OUTLOOK OF UP 0% TO 1% $38 MILLION GAAP OPERATING INCOME, UP 4% VS. Q4’15 $60 MILLION ADJUSTED EBITDA1, UP 2% VS. Q4’15, AT HIGH END OF OUR OUTLOOK OF $52 TO $60 MILLION 1 DILUTED GAAP EPS OF $1.05, ADJUSTED DILUTE
Slide 4: Financial Summary (GAAP Basis)
FINANCIAL SUMMARY (GAAP BASIS) (UNAUDITED) (Dollars in thousands - except per-share amounts) Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Net sales $ 434,026 $ 444,558 $ 442,222 $ 431,595 $ 437,204 Selling, general and administrative expenses ($28,957) ($28,138) ($28,284) ($30,308) ($30,795) Operating income (loss
Slide 5: Financial Summary (Adjusted Basis)
FINANCIAL SUMMARY (ADJUSTED BASIS) (UNAUDITED) (Dollars in thousands - except per-share amounts) Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Outlook5 Net sales $ 434,026 $ 444,558 $ 442,222 $ 431,595 $ 437,204 1%-3% higher 1 Adjusted gross profit $ 46,478 $ 60,946 $ 69,170 $ 67,280 $ 68,989 Adjusted gross p
Slide 6: Consolidated Adjusted EBITDA Bridge Q1'16 vs. Q4'15
Q1’16 VS. Q4’15 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ. EBITDA1 (MILLIONS) Lower paperboard pricing, higher mix of tissue $70 PRICE/MIX parent roll sales Higher tissue shipments, paperboard shipment VOLUME volume stable $65 Network efficiency improvements and favorable TRANSPORTATION rates due to
Slide 7: Consolidated Adjusted EBITDA Bridge Q1'16 vs. Q1'15
Q1’16 VS. Q1’15 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ. EBITDA1 (MILLIONS) Lower paperboard pricing, higher mix of commodity grade paperboard sales, higher mix PRICE/MIX of tissue parent roll sales, partly offset by tissue $65 price increase $1.1 $1.4 $15.1 $60.1 $60 Higher tissue shipments, highe
Slide 8: Strategic Investment and Operational Improvement Scorecard as of Q1'16
STRATEGIC INVESTMENT AND OPERATIONAL IMPROVEMENT SCORECARD AS OF Q1’16 FULL RUN-RATE EXPECTED ADJUSTED EBITDA1 IMPACT (MILLIONS $) $30-$35 $27-$32 $21-$24 $37-$54 • Strategic plan announced in Q1’15, expected capex 100% of $237-$249 million 80% • Expected to yield a $115-$145 million Adjusted EBITDA
Slide 9: Key Segment Results – Consumer Products
KEY SEGMENT RESULTS – CONSUMER PRODUCTS (UNAUDITED) CONSUMER PRODUCTS CROSS-CYCLE Q1'15 Q2’15 Q3’15 Q4’15 Q1’16 FINANCIAL MODEL Shipments Non-Retail (short tons)1 21,107 24,744 21,250 23,077 24,358 Retail (short tons) 71,102 71,476 76,856 73,004 75,027 Total Tissue Tons 92,209 96,220 98,106 96,081 9
Slide 10: Clearwater Paper Tissue Shipments and U.S. Retail Tissue Market
CLEARWATER PAPER TISSUE SHIPMENTS AND U.S. RETAIL TISSUE MARKET CLW Q1’16 by CLW Q4’15 by U.S. Retail Tissue Market ($) Market Segment Market Segment (MultiOutlet)1 (% of Tons) (% of Tons) Other Other PRIVATE Parent Parent 1% Rolls 1% CATEGORY LABEL BRANDS TOTAL Rolls 15% 15% Total Retail AFH 23% 77
Slide 11: Consumer Products Adjusted EBITDA Bridge Q1'16 vs. Q4'15
Q1’16 VS. Q4’15 CONSUMER PRODUCTS ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) $40 PRICE/MIX Higher mix of parent roll sales $35 $0.5 $32.6 VOLUME Higher retail and parent roll sales $1.5 $1.2 $30 $2.0 PULP Lower external pulp pricing $1.2 $0.6 $1.2 $25.6 $25 Network efficiency improvemen
Slide 12: Key Segment Results – Pulp and Paperboard
KEY SEGMENT RESULTS – PULP AND PAPERBOARD (UNAUDITED) PULP AND PAPERBOARD CROSS-CYCLE Q1’15 Q2’15 Q3’15 Q4’15 Q1’16 FINANCIAL MODEL Shipments Paperboard (short tons) 191,635 204,983 198,535 201,580 201,340 Sales Price Paperboard ($/short ton) $1,031 $997 $979 $956 $952 Segment net sales ($ in thousa
Slide 13: Clearwater Paper Paperboard Shipments and U.S. Paperboard Market
CLEARWATER PAPER PAPERBOARD SHIPMENTS AND U.S. PAPERBOARD MARKET CLW Q1’16 by CLW Q4’15 by U.S. Paperboard Production3 Market Segment Market Segment (% of Tons) (% of Tons) CLEARWATER CATEGORY PAPER OTHER Folding Folding 55% 55% Total Domestic 14% 86% SBS1 Market Share Folding 19% 81% Food Service2
Slide 14: Pulp and Paperboard Adjusted EBITDA Bridge Q1'16 vs. Q4'15
Q1’16 VS. Q4’15 PULP AND PAPERBOARD ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) $50 PRICE/MIX Lower paperboard pricing $46.3 $1.6 VOLUME Paperboard shipment volume stable $0.0 $1.2 $45 $0.6 $3.0 Higher wood prices at Idaho due to higher WOOD FIBER regional demand $0.4 $41.5 ENERGY Lower
Slide 15: Projected 2016 Pulp and Paperboard Maintenance Expense of $65 Million
PROJECTED 2016 PULP AND PAPERBOARD MAINTENANCE EXPENSE OF $65 MILLION (DIRECT AND INDIRECT COSTS) Projected 2016 Pulp and Paperboard Maintenance Expense (Millions $) $30 $29 $20 $15 $12 $10 $9 $- Q1'16 Q2'16 Q3'16 Q4'16 Major outage at Idaho, projected cost of $15-$18 million 14
Slide 16: Clearwater Paper Cross-Cycle Financial Model
CLEARWATER PAPER CROSS-CYCLE FINANCIAL MODEL CLEARWATER PAPER CROSS-CYCLE (Dollars in thousands) Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 FINANCIAL MODEL Net sales 100% 100% 100% 100% 100% 100% Adjusted gross profit margin1 10.7% 13.7% 15.6% 15.6% 15.8% 17.0% Adjusted SG&A expenses1 as % of net sales (6.8%) (7
Slide 17: Adjusted Return on Invested Capital
ADJUSTED RETURN ON INVESTED CAPITAL1 (UNAUDITED) 15% 14% 13% 12.9% 12.8% 12.6% 12.0% 12% 11.2% 11% 10.5% 10% 9% 8% 2 3 4 2011 2012 2013 2014 2015 LTM Ending 5 3/31/16 1,2,3,4,5,6 Adjusted ROIC 1 Adjusted Return on Invested Capital (Adjusted ROIC) is defined as [Net Earnings + Interest Expense] / [Ta
Slide 18: Second Quarter 2016 Outlook
SECOND QUARTER 2016 OUTLOOK (COMPARED TO Q1’16)1 ARROWS REPRESENT ADJUSTED EBITDA2 IMPACT CONSUMER PRODUCTS PULP AND PAPERBOARD CORPORATE • Slightly lower • Slightly higher: SHIPMENT VOLUME IMPACT ON ADJUSTED 2-4% lower 1-3% higher EBITDA2 • Higher: • Slightly lower: PRICE/MIX IMPACT ON ADJUSTED EBI
Slide 19: Q2'16 Outlook Reconciliation of Non-GAAP Financial Measures
Q2’16 OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) OUTLOOK THREE MONTHS ENDING JUNE 30, 2016 RANGE OF ESTIMATE (Dollars in thousands) FROM TO Earnings before interest, income taxes, and depreciation & amortization (EBITDA)2: GAAP net earnings $17,000 $22,000 Interest expense, n
Slide 20: Bridge to Q2'16 Adjusted EBITDA Outlook
BRIDGE TO Q2’16 ADJUSTED EBITDA OUTLOOK1,2 ADJ. EBITDA2 (MILLIONS) $75 $65 $56-$64 $60 $1-($1) $0-$2 $2-$3 $2-$4 $0-$1 $55 $45 $35 $25 $15 Q1'16 Shipment Volumes Price/Mix Wood Fiber Energy Maintenance Q2'16 2 Adj. EBITDA & Repairs Adj. EBITDA Outlook 1,2 1 This information is based upon management’
Slide 21: Appendix
ai ale APPENDIX
Slide 22: Adjusted Gross Profit & Adjusted SG&A Reconciliation
ADJUSTED GROSS PROFIT & ADJUSTED SG&A RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Gross profit1 $ 44,194 $ 60,211 $ 68,330 $ 66,817 $ 68,557 Costs associated with Long Island facility closure 554 735 728 446 432 Costs associated with
Slide 23: Segment Adjusted Operating Income (Loss) Reconciliation
SEGMENT ADJUSTED OPERATING INCOME (LOSS) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Consumer Products Operating income $ 12,395 $ 17,032 $ 15,521 $ 10,756 $ 18,390 Costs associated with Long Island facility closure 554 735 728 446 4
Slide 24: 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) Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 GAAP net earnings $ 5,757 $ 15,597 $ 23,064 $ 11,565 $ 18,446 Special items, after tax:1 Di
Slide 25: Adjusted Income Tax Provision Reconciliation
ADJUSTED INCOME TAX PROVISION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE (UNAUDITED) (Dollars in thousands) Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 GAAP income tax provision ($1,698) ($8,702) ($9,100) ($17,005) ($11,673) Special items, tax impact: Directors' equity-based compensation benefit (expense) 145 4
Slide 26: EBITDA & Adjusted EBITDA Reconciliation
EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Earnings before interest, income taxes, and depreciation & amortization (EBITDA)1 GAAP net earnings $ 5,757 $ 15,597 $ 23,064 $ 11,565 $ 18,446 Interest expense, ne
Slide 27: Segment EBITDA & Adjusted EBITDA Reconciliation
SEGMENT EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Consumer Products Operating income $ 12,395 $ 17,032 $ 15,521 $ 10,756 $ 18,390 Depreciation and amortization expense 12,977 13,438 14,048 14,132 13,759 Seg
Slide 28: ROIC, Tangible Stockholders' Equity & Excess Cash Reconciliation
RETURN ON INVESTED CAPITAL, TANGIBLE STOCKHOLDERS’ EQUITY & EXCESS CASH RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Twelve Months Ending March 31, (Dollars in thousands) 2011 2012 2013 2014 2015 2016 Net earnings (loss) $ 39,674 $ 64,131 $ 106,955 ($2,315) $ 55,983 $ 68,672 Interest ex
Slide 29: Reconciliation of GAAP to Non-GAAP: Strategic Investments
RECONCILIATION OF GAAP TO NON-GAAP: STRATEGIC INVESTMENTS1 FULL RUN-RATE EXPECTED ADJUSTED EBITDA 2 IMPACT OTHER PROJECTS OPERATIONAL IMPROVEMENTS CONTINUOUS WAREHOUSE PAPER MACHINE CONVERTING OPERATIONAL SALES & MARKETING STRANDED (Dollars in millions) DIGESTER AUTOMATION UPGRADES LINE EFFICIENCY E
Slide 30: For More Information: www.clearwaterpaper.com
FOR MORE INFORMATION: WWW.CLEARWATERPAPER.COM 29