Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q4 2015 Earnings Presentation
31 slides from Clearwater Paper's earnings presentation, Feb 10, 2016
Slide 1: Clearwater Paper Fourth Quarter and Full Year 2015 Supplemental Information
CLEARWATER PAPER CORPORATION FOURTH QUARTER AND FULL YEAR 2015 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, the effects of new Consumer Products business; U.S.
Slide 3: 2015 Full Year Highlights
2015 FULL YEAR HIGHLIGHTS $1,752 MILLION NET SALES, $124 MILLION GAAP OPERATING INCOME, UP 55% VS. 2014, $211 MILLION ADJUSTED EBITDA1, DOWN 12% VS. 2014 DILUTED GAAP EPS OF $2.97, ADJUSTED DILUTED EPS OF $3.131 FOCUS ON CPD COST STRUCTURE RESULTED IN 630 BASIS POINT IMPROVEMENT IN CPD GAAP OPERATIN
Slide 4: Fourth Quarter Highlights
FOURTH QUARTER HIGHLIGHTS $432 MILLION NET SALES, DOWN 2.4% VS. Q3’15, VS. OUR OUTLOOK OF DOWN 3% TO 5%, WITH NEAR RECORD PAPERBOARD SHIPMENTS $36.3 MILLION GAAP OPERATING INCOME, DOWN 9% VS. Q3’15 $59 MILLION ADJUSTED EBITDA1, DOWN 7% VS. Q3’15, IN HIGH END OF OUR RANGE OF $54 TO $62 MILLION 1 DILU
Slide 5: Financial Summary (GAAP Basis)
FINANCIAL SUMMARY (GAAP BASIS) (UNAUDITED) Twelve Months Ended RESULTS INCLUDE SPECIALTY MILLS1 POST SPECIALTY MILLS December 31, (Dollars in thousands - except per-share amounts) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 2014 1 2015 Net sales $ 484,920 $ 498,759 $ 511,142 $ 472,318 $ 434,026
Slide 6: Financial Summary (Adjusted Basis)
FINANCIAL SUMMARY (ADJUSTED BASIS) (UNAUDITED) 6 Twelve Months Ended RESULTS INCLUDE SPECIALTY MILLS POST SPECIALTY MILLS December 31, 5 (Dollars in thousands - except per-share amounts) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Outlook 2014 6 2015 Net sales $ 484,920 $ 498,759 $ 511,142
Slide 7: 2015 vs. 2014 Consolidated Adjusted EBITDA Bridge
2015 VS. 2014 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ. EBITDA1 SALE OF (MILLIONS) Divested 5 specialty mills in Q4‘14 SPECIALTY MILLS $250 Lower paperboard pricing, higher mix of PRICE/MIX commodity grade paperboard sales, higher mix of tissue parent roll sales $10.0 $1.0 $22.0 $240 $238.5 $18.4 Hi
Slide 8: Q4'15 vs. Q3'15 Consolidated Adjusted EBITDA Bridge
Q4’15 VS. Q3’15 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ. EBITDA1 (MILLIONS) Lower paperboard pricing, higher mix of $65 $2.9 $2.9 PRICE/MIX commodity grade paperboard sales, higher mix of $63.2 $7.5 tissue parent roll sales $0.6 $1.2 $1.7 $60 $0.8 $1.3 $58.9 Higher paperboard and tissue parent roll
Slide 9: Q4'15 vs. Q4'14 Consolidated Adjusted EBITDA Bridge
Q4’15 VS. Q4’14 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ. EBITDA1 (MILLIONS) SALE OF Divested 5 specialty mills in Q4‘14 SPECIALTY MILLS $65 Lower paperboard pricing, higher mix of $6.7 $2.2 commodity grade paperboard sales, higher PRICE/MIX tissue parent roll mix, partly offset by tissue $60 $0.4 $
Slide 10: Key Segment Results – Consumer Products
KEY SEGMENT RESULTS – CONSUMER PRODUCTS (UNAUDITED) CONSUMER RESULTS INCLUDE SPECIALTY MILLS5 POST SPECIALTY MILLS PRODUCTS CROSS-CYCLE Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2’15 Q3’15 Q4’15 FINANCIAL MODEL Shipments Non-Retail (short tons)1 56,839 59,832 59,703 57,765 21,107 24,744 21,250 23,077 Retail (s
Slide 11: Clearwater Paper Tissue Shipments and U.S. Retail Tissue Market
CLEARWATER PAPER TISSUE SHIPMENTS AND U.S. RETAIL TISSUE MARKET CLW Q4’15 by CLW Q3’15 by U.S. Retail Tissue Market ($) Market Segment Market Segment (MultiOutlet)1 (% of Tons) (% of Tons) Other Parent Other PRIVATE Parent 1% Rolls 1% CATEGORY LABEL BRANDS TOTAL Rolls 13% 15% AFH Total Retail 22% 78
Slide 12: Q4'15 vs. Q3'15 Consumer Products Adjusted EBITDA Bridge
Q4’15 VS. Q3’15 CONSUMER PRODUCTS ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) $40 PRICE/MIX Higher mix of parent roll sales $35 Lower retail sales volume partly offset by VOLUME higher parent roll volume $30.8 $3.8 $30 Favorable internal transportation costs due to TRANSPORTATION improve
Slide 13: Key Segment Results – Pulp and Paperboard
KEY SEGMENT RESULTS – PULP AND PAPERBOARD (UNAUDITED) PULP AND PAPERBOARD CROSS-CYCLE Q1'14 Q2'14 Q3'14 Q4'14 Q1’15 Q2’15 Q3’15 Q4’15 FINANCIAL MODEL Shipments Paperboard (short tons) 200,665 195,924 201,609 176,467 191,635 204,983 198,535 201,580 Sales Price Paperboard ($/short ton) $988 $1,017 $1,
Slide 14: Clearwater Paper Paperboard Shipments and U.S. Paperboard Market
CLEARWATER PAPER PAPERBOARD SHIPMENTS AND U.S. PAPERBOARD MARKET CLW Q4’15 by CLW Q3’15 by U.S. Paperboard Production3 Market Segment Market Segment (% of Tons) (% of Tons) CLEARWATER CATEGORY PAPER OTHER Folding Folding 61% 55% Total Domestic 14% 86% SBS1 Market Share Folding 18% 82% Food Service2
Slide 15: Q4'15 vs. Q3'15 Pulp and Paperboard Adjusted EBITDA Bridge
Q4’15 VS. Q3’15 PULP AND PAPERBOARD ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 Lower paperboard pricing, higher mix of (MILLIONS) PRICE/MIX commodity grade paperboard sales $50 $2.9 $0.3 $46.3 $0.8 $1.4 $44.2 $1.7 VOLUME Higher paperboard shipment tons $45 $3.7 $1.4 $0.7 $40 WOOD FIBER Lower purch
Slide 16: Clearwater Paper Cross-Cycle Financial Model
CLEARWATER PAPER CROSS-CYCLE FINANCIAL MODEL CLEARWATER Twelve Months Ended December 31, PAPER CROSS-CYCLE (Dollars in thousands) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 2014 2015 FINANCIAL MODEL Net sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Adjusted gross profit margin1 1
Slide 17: Adjusted Return on Invested Capital
ADJUSTED RETURN ON INVESTED CAPITAL1,6 (UNAUDITED) 15% 14% 13% 12.9% 12.8% 12.6% 12% 11.2% 11% 10.5% 10% 9% 8% 3 4 2011 2012 2013 2 2014 2015 1,2,3,4,5 Adjusted ROIC 1 Adjusted Return on Invested Capital (Adjusted ROIC) is defined as [Net Earnings + Interest Expense] / [Tangible Stockholders’ Equity
Slide 18: First Quarter 2016 Outlook
FIRST QUARTER 2016 OUTLOOK (COMPARED TO Q4’15)1 ARROWS REPRESENT ADJUSTED EBITDA IMPACT CONSUMER PRODUCTS PULP AND PAPERBOARD CORPORATE • Slightly higher: • Slightly higher: SHIPMENT VOLUMES 0–1% higher 0-1% higher • Slightly higher: • Stable PRICE/MIX 0–1% higher • Cost/shipped ton: • Cost/shipped
Slide 19: Q1'16 Outlook Reconciliation of Non-GAAP Financial Measures
Q1’16 OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) OUTLOOK THREE MONTHS ENDING MARCH 31, 2016 RANGE OF ESTIMATE (Dollars in thousands) FROM TO Earnings before interest, income taxes, and depreciation & amortization (EBITDA)2: GAAP net earnings $13,000 $18,000 Interest expense,
Slide 20: Bridge to Q1'16 Adjusted EBITDA Outlook
BRIDGE TO Q1’16 ADJUSTED EBITDA OUTLOOK1,2 ADJ. EBITDA2 (MILLIONS) $75 $65 $0-$1 $0-$1 $0-$1 $0-$1 $52-$60 $59 $2-$4 $55 $0-$2 $45 $35 $25 $15 Q4'15 Shipment Volumes Price/Mix Wood Fiber Operating & Maintenance Wages & Benefits Q1'16 2 Adj. EBITDA Packaging Supplies & Repairs Adj. EBITDA Outlook 1,2
Slide 21: 2016 Outlook
2016 OUTLOOK1 Previously announced and implemented CPD price increases are in effect. RISI is projecting paperboard pricing to remain at Q4’15 levels through the first half of 2016, with modest PRICE/MIX declines in the second half. Uncertainty remains around further impacts from incremental imports
Slide 22: Appendix
ai ale APPENDIX
Slide 23: Adjusted Gross Profit & Adjusted SG&A Reconciliation
ADJUSTED GROSS PROFIT & ADJUSTED SG&A RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Twelve Months Ended December 31, (Dollars in thousands) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 2014 2015 1 Gross profit $ 58,291 $ 64,648 $ 76,685 $ 58,675 $ 44,194 $ 60,211 $ 68,330 $ 66,817 $ 2
Slide 24: Segment Adjusted Operating Income (Loss) Reconciliation
SEGMENT ADJUSTED OPERATING INCOME (LOSS) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Twelve Months Ended December 31, (Dollars in thousands) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 2014 2015 Consumer Products Operating (loss) income ($523) $ 12,705 $ 12,535 ($30,745) $ 12,395 $
Slide 25: Adjusted Net Earnings & Adjusted EPS 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) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 2014 2015 GAAP net earnings (loss) $ 6,2
Slide 26: Adjusted Income Tax Provision Reconciliation
ADJUSTED INCOME TAX PROVISION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE (UNAUDITED) Twelve Months Ended December 31, (Dollars in thousands) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 2014 2015 GAAP income tax provision ($3,558) ($9,942) ($3,735) ($1,321) ($1,698) ($8,702) ($9,100) ($17,005)
Slide 27: EBITDA & Adjusted EBITDA Reconciliation
EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Twelve Months Ended December 31, (Dollars in thousands) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 2014 2015 Earnings before interest, income taxes, and depreciation & amortization (EBITDA)1 GAAP net earnings (lo
Slide 28: Segment EBITDA & Adjusted EBITDA Reconciliation
SEGMENT EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Twelve Months Ended December 31, (Dollars in thousands) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 2014 2015 Consumer Products Operating (loss) income ($523) $ 12,705 $ 12,535 $ (30,745) $ 12,395 $ 17,032
Slide 29: ROIC, Tangible Stockholders' Equity & Excess Cash Reconciliation
RETURN ON INVESTED CAPITAL, TANGIBLE STOCKHOLDERS’ EQUITY & EXCESS CASH RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) 2011 2012 2013 2014 2015 Net earnings (loss) $ 39,674 $ 64,131 $ 106,955 ($2,315) $ 55,983 Interest expense, net 44,809 33,796 44,036 39,150 31,182
Slide 30: Pro Forma Impact of Sale of Specialty Mills
PRO FORMA IMPACT OF SALE OF SPECIALTY MILLS (UNAUDITED) CONSUM ER CONSUM ER P RODUCTS P RODUCTS INCLUDING SP ECIA LTY SP ECIA LTY M ILLS EXCLUDING M ILLS P RO FORM A SP ECIA LTY M ILLS TWELVE M ONTHS ENDED TWELVE M ONTHS ENDED (Do llars in millio ns) DECEM B ER 31, 2014 NOVEM B ER 30, 2014 P RO FORM
Slide 31: For More Information: www.clearwaterpaper.com
FOR MORE INFORMATION: WWW.CLEARWATERPAPER.COM 30