Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q3 2017 Earnings Presentation
28 slides from Clearwater Paper's earnings presentation, Oct 19, 2017
Slide 1: Clearwater Paper Corporation Third Quarter 2017 Supplemental Information
CLEARWATER PAPER CORPORATION THIRD QUARTER 2017 SUPPLEMENTAL INFORMATION 10/19/17 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 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 outlook for Q4; the costs, timing an
Slide 3: Third Quarter Financial Highlights
THIRD QUARTER FINANCIAL HIGHLIGHTS $427 MILLION NET SALES, DOWN 1% VS. Q2'17 $5 MILLION GAAP OPERATING INCOME $38 MILLION ADJUSTED EBITDA1, BELOW OUR ORIGINAL OUTLOOK RANGE OF $40 TO $46 MILLION GAAP EPS OF $0.05 AND ADJUSTED EPS OF $0.321 COMPLETED MAJOR MAINTENANCE OUTAGE AT OUR IDAHO PAPERBOARD M
Slide 4: Financial Summary (GAAP Basis)
FINANCIAL SUMMARY (GAAP BASIS) (UNAUDITED) (Dollars in thousands - except per-share amounts) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Net sales $437,204 $436,671 $435,320 $425,568 $437,525 $429,663 $426,504 Gross Profit $68,557 $74,820 $38,715 $57,044 $50,495 $48,930 $39,923 Selling, general and ad
Slide 5: Financial Summary (Adjusted Basis)
FINANCIAL SUMMARY (ADJUSTED BASIS) (UNAUDITED) (Dollars in thousands - except per-share amounts) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Outlook5 Net sales $437,204 $436,671 $435,320 $425,568 $437,525 $429,663 $426,504 1% - 3% higher Adjusted gross profit1 $68,989 $75,353 $41,051 $60,215 $56
Slide 6: Q3'17 vs. Q2'17 Consolidated Adjusted EBITDA Bridge
Q3’17 VS. Q2’17 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ, EBITDA1 (MILLIONS) $55 Stronger mix of ultra quality tissue sales, PRICE/MIX improved paperboard mix $6.0 $50 Lower shipments of commodity grade paperboard -$1.1 VOLUME due to inventory build ahead of continuous digester startup, lower non-re
Slide 7: Q3'17 vs. Q3'16 Consolidated Adjusted EBITDA Bridge
Q3’17 VS. Q3’16 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ, EBITDA1 (MILLIONS) $45 Stronger mix of retail tissue sales, higher PRICE/MIX paperboard pricing Lower non-retail sales due to shutdown of two tissue machines at the Neenah facility, partly $40 $4.5 VOLUME offset by higher paperboard shipment
Slide 8: Strategic Investment and Operational Improvement Scorecard as of Q3'17
STRATEGIC INVESTMENT AND OPERATIONAL IMPROVEMENT SCORECARD AS OF Q3’17 FULL RUN-RATE EXPECTED IMPACT (MILLIONS $)2 • Strategic plan OPERATING INCOME $23-$28 $15-$16 $16-$19 $44-$65 announced in Q1’15, ADJUSTED EBITDA2 $30-$35 $20-$21 $21-$24 $44-$65 expected capex of $229-$241 million 100% $9.8 • Ex
Slide 9: Key Segment Results - Consumer Products
KEY SEGMENT RESULTS - CONSUMER PRODUCTS (UNAUDITED) CONSUMER PRODUCTS CROSS-CYCLE Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 FINANCIAL MODEL Shipments Non-Retail (short tons)1 24,358 20,028 18,384 19,182 16,678 13,736 12,958 Retail (short tons) 75,027 79,095 82,216 77,704 78,686 77,714 77,544 Total T
Slide 10: Clearwater Paper Tissue Shipments and U.S. Retail Tissue Market
CLEARWATER PAPER TISSUE SHIPMENTS AND U.S. RETAIL TISSUE MARKET CLW Q3'17 by CLW Q2'17 by U.S. Retail1 Tissue Market ($) Market Segment Market Segment (MultiOutlet) (% of Tons) (% of Tons) Parent Other Parent Other Rolls 1% Rolls 1% PRIVATE AFH 8% 9% CATEGORY LABEL BRANDS TOTAL AFH 6% 6% Total Retai
Slide 11: Q3'17 vs. Q2'17 Consumer Products Adjusted EBITDA Bridge
Q3'17 VS. Q2'17 CONSUMER PRODUCTS ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) $35 $3.6 PRICE/MIX Stronger mix of ultra quality tissue sales $30 -$0.2 $27.5 VOLUME Lower non-retail tissue sales -$2.9 $0.2 $25.9 -$0.9 Higher external pulp pricing, lower internal pulp $25 -$1.4 RAW MATERIAL
Slide 12: Key Segment Results – Pulp and Paperboard
KEY SEGMENT RESULTS – PULP AND PAPERBOARD (UNAUDITED) PULP AND PAPERBOARD CROSS-CYCLE Q1'16 Q2'16 Q3'16 Q4'16 Q1'173 Q2'173 Q3'173 FINANCIAL MODEL Shipments Paperboard (short tons) 201,340 199,132 196,271 199,415 210,382 207,152 200,569 Sales Price Paperboard ($/short ton) $952 $948 $927 $920 $927 $
Slide 13: Clearwater Paper Paperboard Shipments and U.S. Paperboard Market
CLEARWATER PAPER PAPERBOARD SHIPMENTS AND U.S. PAPERBOARD MARKET CLW Q3'17 by CLW Q2'17 by U.S. Paperboard Production3 Market Segment Market Segment (% of Tons) (% of Tons) CLEARWATER Folding Folding CATEGORY PAPER OTHER 57% 56% Total Domestic SBS1 Market Share 14% 86% Folding 19% 81% 2 Food Service
Slide 14: Q3'17 vs. Q2'17 Pulp and Paperboard Adjusted EBITDA Bridge
Q3’17 vs. Q2'17 PULP AND PAPERBOARD ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) $40 PRICE/MIX Improved mix of paperboard sales $35 $2.4 $0.5 Lower shipments of commodity grade paperboard VOLUME due to inventory build ahead of continuous $30.0 -$0.9 digester startup $30 ENERGY Lower natur
Slide 15: Clearwater Paper Cross-Cycle Financial Model
CLEARWATER PAPER CROSS-CYCLE FINANCIAL MODEL CLEARWATER PAPER CROSS-CYCLE (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 FINANCIAL MODEL Net sales 100% 100% 100% 100% 100% 100% 100% 100% Adjusted gross profit margin1 15.8% 17.3% 9.4% 14.1% 13.0% 11.7% 9.7% 17.0% Adjusted SG&A expen
Slide 16: Q4'17 Outlook Reconciliation of Non-GAAP Financial Measures
Q4’17 OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) OUTLOOK THREE MONTHS ENDING DECEMBER 31, 2017 RANGE OF ESTIMATE (Dollars in thousands) FROM TO Earnings before interest, income taxes, and depreciation & amortization (EBITDA)2: GAAP net earnings $8,500 $14,000 Interest expense
Slide 17: Q4'17 Outlook Reconciliation of Non-GAAP Financial Measures
Q4’17 OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) OUTLOOK THREE MONTHS ENDING DECEMBER 31, 2017 RANGE OF ESTIMATE (Dollars in thousands) FROM TO GAAP Operating Income $22,500 $27,500 Directors' equity-based compensation expense 300 300 Costs associated with Long Island facilit
Slide 18: Q4'17 Outlook
Q4’17 OUTLOOK1 ADJ. EBITDA2 (MILLIONS) $65 $50-$60 $60 $55 $18-$20 $1-$2 $0-$3 $50 $45 $0-$2 $40 $38 $2-$4 $35 $30 Q3'17 Volume Price/Mix Maintenance Energy Pulp Q4'17 Adj. EBITDA2 Adj. EBITDA 1,2 Outlook NET SALES 1% - 3% higher ADJUSTED OPERATING MARGIN2,3 6% - 7.5% ADJUSTED EBITDA2 $50M - $60M AD
Slide 19: Appendix
AG sisegoorss APPENDIX
Slide 20: Adjusted Gross Profit & Adjusted SG&A Reconciliation
ADJUSTED GROSS PROFIT & ADJUSTED SG&A RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Gross profit1 $68,557 $74,820 $38,715 $57,044 $50,495 $48,930 $39,923 Costs associated with Long Island facility closure 432 533 466 460 46
Slide 21: Segment Adjusted Operating Income (Loss) Reconciliation
SEGMENT ADJUSTED OPERATING INCOME (LOSS) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Consumer Products Operating income $18,390 $18,544 $17,201 $13,781 $6,189 $10,534 $4,436 Costs associated with Long Island facility clos
Slide 22: Adjusted Net Earnings & Adjusted Net Earnings Per Diluted Share 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) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 GAAP net earnings $18,446 $20,864 $901 $9,343 $7,515 $8,037 $863 Adjustments, a
Slide 23: Adjusted Income Tax Provision Reconciliation
ADJUSTED INCOME TAX PROVISION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 GAAP income tax provision ($11,673) ($11,905) ($859) ($6,675) ($5,000) ($3,955) $3,095 Adjustments, tax impact: Directors' equity-based compensation
Slide 24: EBITDA & Adjusted EBITDA Reconciliation
EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Earnings before interest, income taxes, and depreciation & amortization (EBITDA)1 GAAP net earnings $18,446 $20,864 $901 $9,343 $7,515 $8,037 $863 2 Int
Slide 25: Segment EBITDA & Adjusted EBITDA Reconciliation
SEGMENT EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Consumer Products Operating income $18,390 $18,544 $17,201 $13,781 $6,189 $10,534 $4,436 Depreciation and amortization expense 13,759 14,203 15,
Slide 26: Reconciliation of GAAP to Non-GAAP: Strategic Investments
RECONCILIATION OF GAAP TO NON-GAAP: STRATEGIC INVESTMENTS1 (UNAUDITED) FULL RUN-RATE EXPECTED ADJUSTED EBITDA2 IMPACT OTHER PROJECTS OPERATIONAL IMPROVEMENTS CONTINUOUS WAREHOUSE PAPER MACHINE CONVERTING OPERATIONAL SALES & MARKETING STRANDED (Dollars in millions) DIGESTER AUTOMATION UPGRADES LINE E
Slide 27: Reconciliation of GAAP to Non-GAAP: Strategic Investment
RECONCILIATION OF GAAP TO NON-GAAP: STRATEGIC INVESTMENT1 (UNAUDITED) Q3'17 ADJUSTED EBITDA2 IMPACT CONTINUOUS WAREHOUSE OPERATIONAL (Dollars in millions) DIGESTER AUTOMATION OTHER PROJECTS IMPROVEMENTS Operating income $0.1 $1.7 $5.5 $3.5 Depreciation $0.3 $0.6 $0.6 $— EBITDA2 $0.4 $2.3 $6.1 $3.5 A
Slide 28: For More Information: www.clearwaterpaper.com
FOR MORE INFORMATION: WWW.CLEARWATERPAPER.COM 28