Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q3 2015 Earnings Presentation
29 slides from Clearwater Paper's earnings presentation, Oct 29, 2015
Slide 1: Third Quarter 2015 Supplemental Information
CLEARWATER PAPER CORPORATION THIRD QUARTER 2015 SUPPLEMENTAL INFORMATION LINDA MASSMAN PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR JOHN HERTZ SENIOR VICE PRESIDENT FINANCE AND CHIEF FINANCIAL OFFICERPRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR JOHN HERTZ SENIOR VICE PRESIDENT FINANCE AND CHIE
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: Third Quarter Financial Highlights
THIRD QUARTER FINANCIAL HIGHLIGHTS $442 MILLION NET SALES, DOWN 0.5% VS. Q2‘15 $63 MILLION ADJUSTED EBITDA1, UP 25% VS. Q2‘15 A 290 BASIS POINTS ADJUSTED EBITDA MARGIN1,2 IMPROVEMENT VS. Q2’15 HIGHEST ADJUSTED EBITDA MARGIN1,2 SINCE Q4’10 RETURNED $57 MILLION TO SHAREHOLDERS AS PART OF $100 MILLION
Slide 4: Financial Summary (Unaudited)
FINANCIAL SUMMARY (UNAUDITED) 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. 2 Adjusted gross profit margin is defined as Adjusted gross profit divided by Net sales. 3 Adjusted operating margin is defined as Adjusted operating income divi
Slide 5: Third Quarter Business Summary
THIRD QUARTER BUSINESS SUMMARY CONSUMER PRODUCTS • Secured new business to cover volume lost in Q1’15 due to merger related distractions at a top customer • New business ramped up faster than expected in Q3’15, leading to temporary increase in transportation costs • Volume mix of new business is imp
Slide 6: Q3'15 vs. Q2'15 Consolidated Adjusted EBITDA Bridge
Q3’15 VS. Q2’15 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. 5 $50.7 $2.2 $0.8 $1.4 $3.7 $1.4 $8.5 $1.0 $1.0 $2.0 $2.3 $63.2 $30 $35 $40 $45 $50 $55 $60 $65 ADJ. EBITDA1 (MILLIONS) PRICE/MIX Higher m
Slide 7: Q3'15 vs. Q3'14 Consolidated Adjusted EBITDA Bridge
Q3’15 VS. Q3’14 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. 6 SALE OF SPECIALTY MILLS Divested 5 specialty mills in Q4‘14 PRICE/MIX Lower paperboard pricing in commodity grades offset by tissue pric
Slide 8: Key Segment Results – Consumer Products (Unaudited)
KEY SEGMENT RESULTS – CONSUMER PRODUCTS (UNAUDITED) 7 1 Includes away-from-home (AFH), contract, machine-glazed (MG) and parent roll tissue products. 2 Includes retail, AFH, and contract tissue case products. 3 Non-GAAP measure – See Appendix for the definition and reconciliation to the most compara
Slide 9: Clearwater Paper Tissue Shipments and U.S. Retail Tissue Market
8% Parent Rolls 16% Other 2% CLW Q2’15 by Market Segment (% of Tons) CLEARWATER PAPER TISSUE SHIPMENTS AND U.S. RETAIL TISSUE MARKET 8 Retail 78% AFH 8% Parent Rolls 13% Other 1% CLW Q3’15 by Market Segment (% of Tons) U.S. Retail Tissue Market (MultiOutlet)1 CATEGORY PRIVATE LABEL BRANDS TOTAL Tota
Slide 10: Consumer Products Q3'15 Outlook vs. Actual
Retail 74% AFHPRICE/MIX SHIPMENT VOLUMES EXTERNAL PULP CHEMICAL COSTS OP. & PKG. SUPPLIES TRANSPORTATION COSTS ENERGY COSTS MAINTENANCE SG&A SEPTEMBER ’15 Q3’15 OUTLOOK VERSUS Q2’15 0-2% higher 2-4% higher Cost / shipped ton: stable Cost / shipped ton: stable Cost / shipped ton: stable Cost / shippe
Slide 11: Key Segment Results – Pulp and Paperboard (Unaudited)
KEY SEGMENT RESULTS – PULP AND PAPERBOARD (UNAUDITED) 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. 10 2 Segment Adjusted EBITDA margin is defined as Segment Adjusted EBITDA divided by Segment net sales. PULP AND PAPERBOARD CROSS-CYCLE Q
Slide 12: Clearwater Paper Paperboard Shipments and U.S. Paperboard Market
CLEARWATER PAPER PAPERBOARD SHIPMENTS AND U.S. PAPERBOARD MARKET 11 U.S. Paperboard Production3 CATEGORY CLEARWATER PAPER OTHER Total Domestic SBS1 Market Share 14% 86% Folding 18% 82% Food Service2 14% 86% Liquid Packaging 6% 94% Folding 57% Food Service 32% Liquid Pkg 11% CLW Q2’15 by Market Segme
Slide 13: Pulp and Paperboard Q3'15 Outlook vs. Actual
PRICE/MIX SHIPMENT VOLUMES WOOD FIBER CHEMICAL COSTS OP. & PKG. SUPPLIES TRANSPORTATION COSTS ENERGY COSTS MAINTENANCE SG&A SEPTEMBER ‘15 Q3’15 OUTLOOK VERSUS Q2’15 0-1% lower 3-4% lower Cost / shipped ton: stable Cost / shipped ton: lower Cost / shipped ton: stable Cost / shipped ton: stable Cost /
Slide 14: Clearwater Paper Cross-Cycle Financial Model
CLEARWATER PAPER CROSS-CYCLE FINANCIAL MODEL 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. 13 (Dollars in thousands) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Net sales 100% 100% 100% 100% 100% 100% 100% 100% Adjusted gross profit margin
Slide 15: Adjusted Return on Invested Capital (Unaudited)
12.4% 12.7% 11.1% 12.7% 10.6% 8.3% 7.7% 6.5% 4.5% 3.4% 0% 5% 10% 15% 2011 2012 2013 2014 LTM Ending 9/30/15 Adjusted ROIC1,3,4,5 WACC2 5 3 4 ADJUSTED RETURN ON INVESTED CAPITAL1,6 (UNAUDITED) 14 1 Adjusted Return on Invested Capital (Adjusted ROIC) is defined as [Net Earnings + Interest Expense] / [
Slide 16: Fourth Quarter 2015 Outlook (Compared to Q3'15)
FOURTH QUARTER 2015 OUTLOOK (COMPARED TO Q3’15)1 ARROWS REPRESENT ADJUSTED EBITDA IMPACT 15 CONSUMER PRODUCTS PULP AND PAPERBOARD CORPORATE SHIPMENT VOLUMES • Slightly lower: 0–1% lower • Lower 4-6% lower PRICE/MIX • Stable • Slightly lower 0-2% lower PULP/WOOD FIBER COSTS •Cost/shipped ton: stable
Slide 17: Bridge to Q4'15 Adjusted EBITDA Outlook
BRIDGE TO Q4’15 ADJUSTED EBITDA OUTLOOK1,2 16 1 This information is based upon management’s current expectations and estimates, which are in part based on market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actu
Slide 18: EBITDA Sensitivities
EBITDA SENSITIVITIES 17 COGS INPUT UNIT OF MEASURE Purchased Pulp Ton 250,000 $25 $6.3 Chips/Sawdust Ton 2,300,000 $3 $6.9 Diesel Gallon of Diesel 10,000,000 $0.50 $5.0 Linehaul Rate Mile 65,000,000 $0.10 $6.5 Chemicals Paper Ton Produced 1,200,000 $5 $6.0 Electricity MWh 1,200,000 $5 $6.0 Natural G
Slide 19: Appendix
APPENDIX 18 MILLIONS)
Slide 20: Adjusted Gross Profit & Adjusted SG&A Reconciliation
ADJUSTED GROSS PROFIT & ADJUSTED SG&A RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) 19 1 Gross profit is defined as net sales minus cost of sales. 2 Adjusted gross profit and Adjusted selling, general and administrative expenses exclude the impact of the items listed that we do not belie
Slide 21: Segment Adjusted Operating Income (Loss)
SEGMENT ADJUSTED OPERATING INCOME (LOSS) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) 1 Adjusted operating income (loss) excludes the impact of the items listed that we do not believe are indicative of our core operating performance. 20 (Dollars in thousands) Q1'14 Q2'14 Q3'14 Q4'14 Q1'
Slide 22: Adjusted Net Earnings & Adjusted Net Earnings per Diluted Share
ADJUSTED NET EARNINGS & ADJUSTED NET EARNINGS PER DILUTED COMMON SHARE RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) 1 All non-tax items are tax effected at the expected annual rate for that period. 21 2 Adjusted net earnings and Adjusted net earnings per diluted common share exclude the
Slide 23: Adjusted Income Tax Provision
ADJUSTED INCOME TAX PROVISION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE (UNAUDITED) 1 Adjusted income tax provision excludes the impact of the items listed that we do not believe are indicative of our core operating performance. 22 (Dollars in thousands) Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Slide 24: EBITDA & Adjusted EBITDA
EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) 23 1 EBITDA is a non-GAAP measure that management uses as a supplemental performance measure. The most directly comparable GAAP measure is net earnings (loss). EBITDA is net earnings (loss) adjusted for net interest e
Slide 25: Segment EBITDA and Segment Adjusted EBITDA
1 Segment EBITDA is a non-GAAP measure that management uses as a supplemental performance measure. The most directly comparable GAAP measure is segment operating income (loss). Segment EBITDA is segment operating income (loss) adjusted for depreciation and amortization. It should not be considered a
Slide 26: Return on Invested Capital, Tangible Stockholders' Equity & Excess Cash
RETURN ON INVESTED CAPITAL, TANGIBLE STOCKHOLDERS’ EQUITY & EXCESS CASH RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) 25 1 Non-GAAP measure. 2 Tangible stockholders' equity is defined as stockholders’ equity less Goodwill and Intangible assets, net. 3 Excess cash is defined as the sum of
Slide 27: Pro Forma Impact of Sale of Specialty Mills (Unaudited)
CONSUMER PRODUCTS INCLUDING SPECIALTY MILLS SPECIALTY M ILLS PRO FORMA CONSUMER PRODUCTS EXCLUDING SPECIALTY M ILLS (Dollars in millions) TWELVE MONTHS ENDED DECEMBER 31, 2014 TWELVE MONTHS ENDED NOVEMBER 30, 2014 PRO FORMA Net sales $1,183.4 $217.7 $965.7 Adjusted operating income1 $54.8 $8.8 $46.0
Slide 28: Q4'15 Outlook Reconciliation of Non-GAAP Financial Measures
Q4’15 OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) 27 1 This information is based upon management’s current expectations and estimates, which are in part based on market and industry data. Many factors are outside the control of management, including particularly input costs fo
Slide 29: For More Information: www.clearwaterpaper.com
FOR MORE INFORMATION: WWW.CLEARWATERPAPER.COM 28