Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Investor Presentation (March 2016)
44 slides from Clearwater Paper's investor presentation, Mar 8, 2016
Slide 1: Clearwater Paper Corporation March 2016
Clearwater Paper Corporation March 2016 Exhibit 99.1
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, private label tissue market share growth, North Ame
Slide 3: Overview of Clearwater Paper
Overview of Clearwater Paper
Slide 4: Introduction to Clearwater Paper
INTRODUCTION TO CLEARWATER PAPER We are a company formed in late 2008 with more than 60 years of operating history We operate two business segments Pulp and paperboard: 45% of 2015 net sales Consumer products: 55% of 2015 net sales Financial overview for 2015 Net Sales: $1.8 Billion Adjusted EBITDA1
Slide 5: Consumer Products Division Overview
Consumer Products Division Overview Clearwater Paper is one of the LARGEST NORTH AMERICAN MANUFACTURERS OF PRIVATE LABEL TISSUE, focused on high value tissue products across all categories, retail channels and geographies.
Slide 6: Consumer Products Division market drivers
Consumer Products Division market drivers STABLE GROWTH – The tissue market has grown an average of 1% − 2% annually since 1996, consistent with population growth. U.S. Tissue Demand (Indexed) U.S. Population (mm) Source: RISI estimates as of December 2015, U.S. Population per U.S. Census December 2
Slide 7: Consumer Products Division capacity and retail channels
Consumer Products Division capacity and retail channels Overview of Facilities Tissue Production Capacity1: 438,000 tons Tissue Conversion Capacity1: 435,000 tons ● Clearwater Paper Tissue Parent Roll ● Clearwater Paper Tissue Converting 1 Represents 2015 annual volumes. 2 IRI Panel data for Retail
Slide 8: Private label continues to capture market share in tissue
private label continues to capture market share in tissue Clearwater Paper ranks as one of the LARGEST NORTH AMERICAN PRIVATE LABEL TISSUE MANUFACTURERS Private Label Market Share of Total U.S. ($) 2015 U.S. Retail Tissue Industry Product Mix 2015 Bath Tissue 54% Paper Towels 32% Facial Tissue 10% N
Slide 9: Opportunity for private label and Clearwater Paper to grow market share nationally
Opportunity for private label and clearwater paper to grow market share NATIONALLY Clearwater Paper Market Share by Region ($)1 WEST MID-WEST EAST Clearwater Paper 17.5% 6.5% 4.6% Brand Names 72.8% 76.5% 76.9% Other Private Label 9.7% 17.0% 18.5% 1 Market share for 2014-2015 was calculated using IRI
Slide 10: North American market demand vs. capacity
north american market demand vs. capacity Longer Term Market Expected to Remain in Equilibrium Source: RISI May 2015 update for Outlook for World Tissue Business and company estimates, RISI January 2016 US Tissue Monthly Data 1 It is assumed that any productivity improvements (approximately 100k per
Slide 11: Paperboard Division Overview
PaPERBOARD Division Overview LEADING MANUFACTURER OF SBS1 used in packaging of premium consumer goods, pharmaceuticals, food and liquid, and food service plates, cups and folding cartons. 1 Solid Bleach Sulfate paperboard
Slide 12: Paperboard demand expected to remain stable
PAPERBOARD DEMAND expected to REMAIN STABLE U.S. Bleached Paperboard total production (Indexed)1 Source: RISI estimates as of December 2015 ¹ Actual and estimated production was obtained from RISI – Total tons bleached paperboard produced in US ² Average price per short ton of 16 pt. SBS folding car
Slide 13: Pulp and paperboard division capacity and markets
Pulp and paperboard division capacity and markets Clearwater Paper ranks as one of the top five largest paperboard manufacturers in North America Overview of Facilities Pulp Production Capacity1: 856,000 tons Paperboard Production Capacity1: 818,000 tons ● Clearwater Paper Pulp ● Clearwater Paper SB
Slide 14: Our Macro Strategy to Create Shareholder Value
Our Macro Strategy to Create Shareholder VALUE GROW our Tissue Business > Lead private label in quality > Expand geographically > Diversify retail channel penetration Optimize Profitability of Paperboard and Tissue Businesses > Improve sales mix > Reduce costs > Continue to improve quality
Slide 15: Successful execution of previously stated goals
Successful execution of Previously StateD goals TIMEFRAME ongoing STATUS Established cross divisional supply chain function to drive out costs system wide Certified 41 Green Belts, added 3 Black Belts and completed 1,600 continuous improvement projects Higher availability of internal pulp Consolidat
Slide 16: Clearwater Paper cross cycle financial model
clearwater paper cross cycle FINANCIAL MODEL 1 Net sales for the year ended December 31, 2015 were $1,752.4 million. Net sales for the fourth quarter ended December 31, 2015 were $431.6 million. 2 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measu
Slide 17: 2016 Focus
2016 FOCUS Pulp optimization at mills Startup of new swing-line in Las Vegas Standardize the back end of our converting lines 2016 FOCUS Reduce supply chain costs through further improvements in logistics optimization Launch warehouse automation project at Shelby, Las Vegas and Lewiston facilities I
Slide 18: Strategic Investments expected to achieve adjusted EBITDA margin target
Strategic Investments expected to Achieve adjusted ebitda Margin Target (MILLIONS $) 2015 2016 2017-2018 FULL RUN-RATE EXPECTED1 STRATEGIC INVESTMENTS2 Capex CAPEX CAPEX ADJUSTED EBITDA Impact Pulp Optimization $29 $61 $58-$68 $30-$35 Warehouse Automation $12 $16 $12-$14 $27-$32 Paper Machine and Co
Slide 19: Expected Adjusted EBITDA from strategic investments and operational improvements
Expected Adjusted ebitda from strategic investments and operational improvements1, 2 Expected to yield a $115-$145 million Adjusted EBITDA increase over the $230M reset run rate1 In addition, assume an annual $10-15 million of margin pressure Implies $285-$335 million Adjusted EBITDA run rate in 201
Slide 20: Clearwater Paper's Value Proposition
Clearwater Paper’s Value Proposition
Slide 21: Balanced Capital Allocation
Balanced Capital Allocation 2011-2015 Repurchased 28% of total shares outstanding from 2011 through 2015 Continued investment in the business while returning capital to investors Capital Allocation 2011-2015 2011–2015 Capex 33% TAD Expansion & Strategic Capex 34% Stock Repurchase 33% Cumulative Shar
Slide 22: Clearwater Paper is a leader amongst its peers in value creation
Clearwater Paper Small-Cap Tissue1 Paperboard2 Large-Cap Consumer3 S&P 500 Clearwater Paper is a Leader Amongst its Peers in Value Creation Source: Bloomberg. Market data as of February 25, 2016 Note: Total Shareholder Return includes with dividends reinvested and stock price performance. 1 Small ca
Slide 23: Which has led to multiple expansion since the spin
² Paperboard peers include International Paper, Graphic Packaging, Kapstone, MeadWestvaco, Packaging Corp of America, RockTenn, Sonoco and WestRock. MeadWestvaco is excluded following merger announcement on January 26, 2015, and WestRock included in place of RockTenn beginning June 24, 2015. ³ Large
Slide 24: Adjusted Return on Invested Capital
Adjusted Return on Invested Capital1,6 (Unaudited) 1 Adjusted Return on Invested Capital (Adjusted ROIC) is defined as [Net Earnings + Interest Expense] / [Tangible Stockholders’ Equity6 + Debt – Excess (Deficit) Cash6] adjusted for non-recurring discrete items. 2 2013 Adjusted ROIC Net Earnings was
Slide 25: Clearwater Paper's Outlook
‘yy CLEARWATER PAPER. = CLEARWATER PAPER’S OUTLOOK
Slide 26: First quarter 2016 Outlook
First quarter 2016 Outlook (Compared to Q4’15)1 Arrows represent adjusted ebitda impact Consumer products Pulp and Paperboard Corporate Shipment volumes Slightly higher: 0–1% higher Slightly higher: 0-1% higher Price/mix Slightly higher: 0–1% higher Stable Pulp/Wood Fiber Costs Cost/shipped ton: sta
Slide 27: Bridge to Q1'16 Adjusted EBITDA Outlook
BRIDGE TO Q1’16 ADJUSTED EBITDA OUTLOOK1,2 1This information is based upon management’s expectations and estimates as of February 10, 2016, which are in part based on market and industry data. Many factors are outside the control of management, including particularly input costs for commodity produc
Slide 28: 2016 Outlook
2016 outlook1 Price/Mix 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 declines in the second half. Uncertainty remains around further impacts from incremental imports
Slide 29: Appendix
yy CLEARWATER, PAPER. z= APPENDIX
Slide 30: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures Clearwater Paper Definitions of Non-GAAP Measures EBITDA is a non-GAAP measure that Clearwater Paper management uses as a supplemental performance measure to evaluate the cash generating capacity of Clearwater Paper. The most directly comparable GAAP measure is net e
Slide 31: Reconciliation of GAAP to Non-GAAP: EBITDA and Adjusted EBITDA
Reconciliation of GAAP to Non-GAAP: Clearwater Paper EBITDA1 and Adjusted EBITDA1 ¹ Non-GAAP measure – See Appendix for the definition. 2 Interest expense, net for 2009, 2013, and 2014 includes debt retirement costs of $6.2, $17.1 and $24.4 million respectively. ($ in millions) 2008 2009 2010 2011 2
Slide 32: EBITDA & Adjusted EBITDA Reconciliation
EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures (Unaudited) ¹ Non-GAAP measure. 2 Interest expense, net for the third quarter of 2014 includes debt retirement costs of $24.4 million. 3 Non-GAAP measure - Adjusted EBITDA excludes the impact of the items listed that we do not be
Slide 33: Segment EBITDA & Adjusted EBITDA Reconciliation
Segment EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures (Unaudited) 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 operat
Slide 34: 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) 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 Ca
Slide 35: Q1'16 Outlook Reconciliation
Q1’16 Outlook1 Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 This information is based upon management’s expectations and estimates as of February 10, 2016, which are in part based on market and industry data. Many factors are outside the control of management, including particularly i
Slide 36: Adjusted Gross Profit & Adjusted SG&A
Adjusted Gross Profit & Adjusted SG&A Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 Gross profit is defined as net sales minus cost of sales. 2 Non-GAAP measure – Adjusted gross profit and Adjusted selling, general and administrative expenses exclude the impact of the items listed that
Slide 37: Segment Adjusted Operating Income (Loss)
Segment Adjusted Operating Income (Loss) Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 Non-GAAP measure – Adjusted operating income/profit (loss) excludes the impact of the items listed that we do not believe are indicative of our core operating performance.
Slide 38: 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. 2 Non-GAAP measure – Adjusted net earnings and Adjusted net earnings per diluted common s
Slide 39: Key Segment Results – Pulp and Paperboard
Key Segment Results – Pulp and Paperboard (Unaudited) 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. 2 Non-GAAP measure – Segment Adjusted EBITDA margin is defined as Segment Adjusted EBITDA divided by Segment net sales. Pulp and Paperboa
Slide 40: Key Segment Results – Consumer Products
Key Segment Results – Consumer Products (Unaudited) 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 comparabl
Slide 41: Pro Forma Impact of Sale of Specialty Mills
Pro Forma Impact of Sale of Specialty Mills (Unaudited) 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure.
Slide 42: Reconciliation of GAAP to Non-GAAP: Strategic investments
Reconciliation of GAAP to Non-GAAP: Strategic investments2 ¹ Non-GAAP measure – See Appendix for the definition. 2 Based on Q1’15 prices, input costs, and market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actu
Slide 43: Major Maintenance Schedule
Major Maintenance Schedule1 2014 2015 2016 2017 2018 2019 2020 2021 Major Maintenance $MMs $0 $22 $14 TBD $0 TBD TBD TBD Lewiston Q1 Q3 Q3 Q1 Q3 Cypress Bend Q2 Q2 Q2 Q2 1 This information is based upon management’s expectations and estimates as of February 10, 2016.
Slide 44: North American Tissue Projected Capacity Change
North American Tissue Projected Capacity Change Source: RISI Company Mill/Location Conv/TAD Capacity Change Estimated Date Channel/Business/Products Announced New Capacity through 2016 Double Tree/Royal Gila Bend, AZ Conv 32,000 2015:Q1 PrimeLine PM from Adritz Orchids Paper Products Pryor, OK Conv
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