Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q2 2019 Earnings Presentation
28 slides from Clearwater Paper's earnings presentation, Jul 31, 2019
Slide 1: Clearwater Paper Corporation Second Quarter 2019 Supplemental Information
CLEARWATER PAPER CORPORATION SECOND QUARTER 2019 SUPPLEMENTAL INFORMATION 07/31/19 LINDA MASSMAN PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR ROBERT HRIVNAK 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 the cost, production capacity and st
Slide 3: Second Quarter 2019 Business Highlights
SECOND QUARTER 2019 BUSINESS HIGHLIGHTS $452 Million $429 millionnet netsales, sales,flat up vs. 5% Q4'18 vs. Q1'19 $15 Million $14 millionGAAP GAAPoperating operatingincome incomeand and3.3% 3.4%margin margin FINANCIAL PERFORMANCE Diluted GAAP Diluted GAAP EPS EPS of of $0.23 ($0.03) 1,2 1 Solid op
Slide 4: Clearwater Paper Sequential Quarter Results
CLEARWATER PAPER SEQUENTIAL QUARTER RESULTS GAAP Measures (dollars in millions) Q2'19 Net $452.0 Operating $15.3 Net $(0.4) Q1'19 Sales $428.8 Income $14.4 Earnings $3.8 ADJ. EBITDA1 Q2'19 vs. Q1'19 Adjusted EBITDA Bridge (MILLIONS) $47 PRICE/MIX Relatively stable $5.9 $3.0 Strong demand drove recor
Slide 5: Clearwater Paper Year Over Year Same Quarter Results
CLEARWATER PAPER YEAR OVER YEAR SAME QUARTER RESULTS GAAP Measures (dollars in millions) Q2'19 Net $452.0 Operating $15.3 Net $(0.4) Q2'18 Sales $432.1 Income $18.4 Earnings $7.0 ADJ. EBITDA1 Q2'19 vs. Q2’18 Adjusted EBITDA Bridge (MILLIONS) $55 $1.4 Higher paperboard and tissue pricing from PRICE/M
Slide 6: Consumer Products Sequential Quarter Results
CONSUMER PRODUCTS SEQUENTIAL QUARTER RESULTS GAAP Measures (dollars in millions) Q2'19 Segment $224.3 Segment $(5.1) Segment Operating (2.3)% Q1'19 Net Sales $223.3 Operating Income $1.3 Income Percentage 0.6% SEGMENT ADJ. EBITDA1 (MILLIONS) $18 Q2'19 vs. Q1'19 Segment Adjusted EBITDA Bridge $16.0 $
Slide 7: Pulp and Paperboard Sequential Quarter Results
PULP AND PAPERBOARD SEQUENTIAL QUARTER RESULTS GAAP Measures (dollars in millions) Q2'19 Segment $227.7 Segment $33.6 Segment Operating 14.8% Q1'19 Net Sales $205.4 Operating Income $29.4 Income Percentage 14.3% SEGMENT ADJ. EBITDA1 (MILLIONS) $48 $3.0 Q2'19 vs. Q1'19 Segment Adjusted EBITDA Bridge
Slide 8: Strategic Capital Investments
STRATEGIC CAPITAL INVESTMENTS Shelby Expansion Lewiston Pulp Optimization Installed NTT tissue machine, Replaced a batch digester SCOPE converting equipment and SCOPE system with a continuous warehousing digester LOCATION Shelby, NC LOCATION Lewiston, ID CAPACITY 70 - 75,000 tons per year Increase p
Slide 9: Balanced Capital Allocation
BALANCED CAPITAL ALLOCATION (Dollars in millions and shares in thousands) Cash Capital Expenditures Expected Future Capital Allocation $296 • Capex approximately $60 million per year • Pay down debt with cash flow from operations $200 $155 $129 $93 $108 2014 2015 2016 2017 2018 YTD 2019 1 Cumulative
Slide 10: Debt, Interest and Cash Flow
DEBT, INTEREST AND CASH FLOW (Dollars in millions) 1 2 Net Debt Total Leverage Ratio ST Debt LT Debt $887 $890 $719 $773 $702 $697 $697 $695 $695 $595 4.97 4.99 3.79 3.75 4.29 $24 $78 $107 $190 $193 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Net Interest Expense Cash Flow From Opera
Slide 11: Q3'19 Adjusted EBITDA Outlook, Adjusted Earnings Outlook and Reconciliation
Q3’19 ADJUSTED EBITDA OUTLOOK1 , ADJUSTED EARNINGS OUTLOOK1 AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Adjusted EBITDA Outlook Adjusted Net Loss Outlook OUTLOOK OUTLOOK THREE MONTHS ENDING THREE MONTHS ENDING SEPTEMBER 30, 2019 SEPTEMBER 30, 2019 RANGE OF ESTIMATE RANGE OF ESTIMAT
Slide 12: Q3'19 Outlook
Q3'19 OUTLOOK1 NET SALES 0% - 1% Lower ADJUSTED OPERATING MARGIN2,3 (0.5%) - 1.5% ADJUSTED EBITDA2 $24M - $32M ADJUSTED NET LOSS PER DILUTED COMMON SHARE2,4 ($0.39) - ($0.24) 1 This information is based upon management’s current expectations and estimates, which are in part based on market and indus
Slide 13: Five Quarter Trends
FIVE QUARTER TRENDS (Dollars in millions) 1,2 Net Sales Adjusted EBITDA & Margin $452.0 $432.1 $50.1 $46.7 $426.5 $428.7 $428.8 $43.8 $43.9 $39.8 11.7% 10.9% 10.1% 9.7% 9.3% Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 1,3 1 Adjusted Operating Income & Margin Adjusted Net Earnings $24
Slide 14: Five Quarter Segment Trends
FIVE QUARTER SEGMENT TRENDS (Dollars in millions) Consumer Products Pulp & Paperboard Total Net Sales $227.7 $223.3 $224.3 $216.0 $221.6 $214.8 $212.7 $210.5 $211.6 $205.4 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Adj. EBITDA & Margin 1,2 $47.7 $43.6 $41.5 $43.1 $16.0 $38.9 $15.7 $
Slide 15: Major Maintenance Schedule
Major Maintenance Schedule (Dollars in millions) $30 $23 - $27 $23 - $27 $22 $10 $18 $7 - $8 $15 - $20 $15 - $20 $7 Idaho $16 - $19 $18 $20 $15 Idaho Idaho None Arkansas 1 1 1 1 2015 2016 2017 2018 2019e 2020e 2021e 2022e Q1 Q2 Q3 Q4 2019: Idaho mill in Q3 and Arkansas mill in Q4 1 This information
Slide 16: Key Commodity Consumption Volumes
KEY COMMODITY CONSUMPTION VOLUMES Approximated Annual Approximated Annual expected EBITDA2 Volume1 $ Change Per Impact +/- COGS Input Unit of Measure (in Millions) Unit1 +/- (in Millions) Purchased Pulp Ton 0.27 $20.00 $5.4 Fiber Bone Dry Ton 1.5 $4.00 $6.0 Diesel Gallon 10.0 $0.50 $5.0 Electric MWh
Slide 17: Appendix & Reconciliations
APPENDIX & RECONCILIATIONS 17
Slide 18: Financial Summary (GAAP Basis)
FINANCIAL SUMMARY (GAAP BASIS) (UNAUDITED) (Dollars in thousands - except per-share amounts) Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Net sales $432,099 $426,460 $428,707 $428,779 $451,993 Gross Profit $44,945 $50,239 $46,503 $44,533 $42,168 Selling, general and administrative expenses ($26,564) ($26,283) ($27
Slide 19: Financial Summary (Adjusted Basis)
FINANCIAL SUMMARY (ADJUSTED BASIS) (UNAUDITED) (Dollars in thousands - except per-share amounts) Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Outlook8 Net sales $432,099 $426,460 $428,707 $428,779 $451,993 0% - 1% Lower Adjusted gross profit1 $45,768 $50,399 $46,601 $44,533 $42,168 Adjusted gross profit marg
Slide 20: Key Segment Results
KEY SEGMENT RESULTS (UNAUDITED) Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Consumer Products Shipments Retail (short tons) 73,070 70,335 69,480 73,356 76,175 Non-Retail (short tons)1 17,316 18,525 11,500 10,266 6,623 Total Tissue Tons 90,386 88,860 80,980 83,622 82,798 Converted Products (cases in thousands)2 12
Slide 21: Clearwater Paper Segment Shipments and U.S. Market
CLEARWATER PAPER SEGMENT SHIPMENTS AND U.S. MARKET CLW Q2'19 by Retail Tissue Market Segment (% of Tons) CLW Q2'19 by U.S. Paperboard Market Segment (% of Tons) Parent Other AFH Rolls 6% 2%1% Folding 55% Food Service 38% Liquid Retail Pkg 91% 7% U.S. Retail Tissue Market Q2'19 ($) U.S. Paperboard Pr
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) Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Gross profit1 $44,945 $50,239 $46,503 $44,533 $42,168 Reorganization expenses associated with SG&A cost control measures 31 2 — — — Other reorganizatio
Slide 23: Segment Adjusted Operating Income (Loss) Reconciliation
SEGMENT ADJUSTED OPERATING INCOME (LOSS) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Consumer Products Operating income (loss)1 ($3,604) $21,675 ($193,558) $1,271 ($5,133) Reorganization expenses associated with SG&A cost control mea
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) Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 GAAP net earnings (loss) $6,961 $34,444 ($187,772) $3,837 ($424) Adjustments, after tax1: D
Slide 25: EBITDA & Adjusted EBITDA Reconciliation
EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Earnings before interest, income taxes, depreciation & amortization (EBITDA)1 GAAP net earnings (loss) $6,961 $34,444 ($187,772) $3,837 ($424) Interest expense, net
Slide 26: Segment EBITDA & Adjusted EBITDA Reconciliation
SEGMENT EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Consumer Products Consumer Products segment net sales $221,585 $211,642 $212,743 $223,336 $224,340 Operating income (loss)3 ($3,604) $21,675 ($193,558) $1,2
Slide 27: Reconciliation of GAAP to Non-GAAP: Strategic Capital Investments
RECONCILIATION OF GAAP TO NON- GAAP: STRATEGIC CAPITAL INVESTMENTS (UNAUDITED) FULL RUN-RATE EXPECTED ADJUSTED EBITDA2 IMPACT Shelby Lewiston Pulp (Dollars in millions) Expansion1 Optimization 1 Expected operating income $38.0 - $48.0 $17.5 - $27.5 Expected depreciation $17.0 $7.5 Expected EBITDA2 $
Slide 28: For More Information: www.clearwaterpaper.com
FOR MORE INFORMATION: WWW.CLEARWATERPAPER.COM 28