Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q2 2023 Earnings Presentation
20 slides from Clearwater Paper's earnings presentation, Aug 1, 2023
Slide 1: Clearwater Paper Second Quarter Earnings Release Materials
CLEARWATER PAPER CORPORATION SECOND QUARTER EARNINGS RELEASE MATERIALS AUGUST 1, 2023 ARSEN S. KITCH President, Chief Executive Officer And Director BECKY BARCKLEY Corporate Controller and Interim Chief Financial Officer
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Cautionary Statement Regarding 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
Slide 3: Q2 2023 Business Highlights
Q2 2023 BUSINESS HIGHLIGHTS Overall • Net sales $525 million, down slightly versus Q2 2022 • Net income $30 million • Adjusted net income $30 million, up $11 million versus Q2 2022 • Adjusted EBITDA $71 million, up $8 million versus Q2 2022 Pulp and Paperboard • SBS prices increased from Q2 2022 • S
Slide 4: Business Update – Pulp and Paperboard
BUSINESS UPDATE – PULP AND PAPERBOARD PRICING OFFSETTING INFLATION, DRIVING STRONG RESULTS Industry (SBS) • Shipments, production, and operating rates decreased YTD Q2 2023 versus YTD Q2 2022 based on AF&PA data • Shipments (in tons) decreased 12.6% • Production decreased 9.1% • Operating rates decr
Slide 5: Business Update – Consumer Products
BUSINESS UPDATE – CONSUMER PRODUCTS SHIPMENTS STRENGTHENED; PRICES INCREASED Industry • Consumers shifting to private brands with economic uncertainty and inflation • Private brand market share hit a high of 36.3%1 • 94.2% capacity utilization during the quarter based on RISI data Clearwater Paper •
Slide 6: Financial Performance
FINANCIAL PERFORMANCE ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Quarter Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net sales $ 524.6 $ 526.4 $ 1,050.0 $ 1,014.6 Cost of sales 438.7 455.2 887.2 877.2 Selling, general and adminstrative 39.1 33.9 75.1 66.7 Other operating charges, net
Slide 7: Segment Profit and Loss and Adjusted EBITDA
SEGMENT PROFIT AND LOSS AND ADJUSTED EBITDA ($ IN MILLIONS) Quarter Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net Sales Pulp and Paperboard $ 272.3 $ 295.8 $ 551.0 $ 562.0 Consumer Products 253.6 232.1 502.0 455.2 Eliminations (1.3) (1.5) (3.0) (2.6) $ 524.6 $ 526.4 $ 1,050.0 $ 1,
Slide 8: Pulp and Paperboard Q2 2023 Results
PULP AND PAPERBOARD Q2 2023 RESULTS Q2 2023 VS. Q2 2022 SEGMENT RESULTS ($ IN MILLIONS) SEGMENT OPERATING INCOME SEGMENT ADJUSTED EBITDA © Clearwater Paper Corporation 2023 8
Slide 9: Consumer Products Q2 2023 Results
CONSUMER PRODUCTS Q2 2023 RESULTS Q2 2023 VS. Q2 2022 SEGMENT RESULTS ($ IN MILLIONS) SEGMENT OPERATING INCOME SEGMENT ADJUSTED EBITDA © Clearwater Paper Corporation 2023 9
Slide 10: Capital Structure and Allocation
CAPITAL STRUCTURE AND ALLOCATION Capital structure summary Liquidity Profile ($ in millions)1 • Ample liquidity ABL Availability $275.0 • No material near-term debt maturities Less Utilization (3.5) • Corporate/Issuer ratings: Ba2/BB- Plus Unrestricted Cash 41.7 Liquidity $313.2 Capital allocation •
Slide 11: Outlook for Q3 and 2023 Overall Assumptions
OUTLOOK FOR Q3 AND 2023 OVERALL ASSUMPTIONS Q3 2023: $73 to $83 million of Adjusted EBITDA • Lower input costs, specifically in pulp and transportation 2023 assumptions vs. 2022 • $42 million benefit due to fewer major maintenance outages and better operating performance • $15 to $25 million benefit
Slide 12: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES DISCIPLINED APPROACH TO CAPITAL ALLOCATION 1 Sustain the • Invest capital to sustain current asset base business • $60 to $70 million per year outside of major projects 2 • Reduce leverage to increase flexibility Preserve financial • Target net leverage ratio around 2.5
Slide 13: Appendix
APPENDIX © Clearwater Paper Corporation 2023 13
Slide 14: Pulp and Paperboard Sequential Quarter Results
PULP AND PAPERBOARD SEQUENTIAL QUARTER RESULTS Q2 2023 VS. Q1 2023 SEGMENT RESULTS ($ IN MILLIONS) SEGMENT OPERATING INCOME SEGMENT ADJUSTED EBITDA © Clearwater Paper Corporation 2023 14
Slide 15: Consumer Products Sequential Quarter Results
CONSUMER PRODUCTS SEQUENTIAL QUARTER RESULTS Q2 2023 VS. Q1 2023 SEGMENT RESULTS ($ IN MILLIONS) SEGMENT OPERATING INCOME SEGMENT ADJUSTED EBITDA © Clearwater Paper Corporation 2023 15
Slide 16: Key Segment Information
KEY SEGMENT INFORMATION Q2’2021 Q3’2021 Q4’2021 Q1’2022 Q2’2022 Q3’2022 Q4’2022 Q1’2023 Q2’2023 Pulp and Paperboard Sales ($ millions) $227.4 $237.5 $261.3 $266.2 $295.8 $300.8 $273.5 $278.8 $272.3 Adjusted EBITDA ($ millions) $22.0 $43.5 $61.9 $59.5 $61.2 $73.0 $26.7 $66.2 $51.3 Paperboard shipment
Slide 17: Reconciliation of Adjusted EBITDA
RECONCILIATION OF ADJUSTED EBITDA ($ IN MILLIONS) Quarter Ended Six Months Ended June 30, March 31, June 30, 2023 2022 2023 2023 2022 Net income $ 29.7 $ 14.7 $ 23.8 $ 53.5 $ 31.3 Income tax provision 10.2 4.4 8.4 18.6 10.4 Interest expense, net 7.5 10.7 7.6 15.1 19.3 Depreciation and amortization e
Slide 18: Reconciliation of Adjusted Income
RECONCILIATION OF ADJUSTED INCOME ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Quarter Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income $ 29.7 $ 14.7 $ 53.5 $ 31.3 Add back: Income tax provision 10.2 4.4 18.6 10.4 Income before income taxes 39.9 19.1 72.1 41.7 Add back: Debt reti
Slide 19: Additional Reconciliations
ADDITIONAL RECONCILIATIONS ($ IN MILLIONS) Net Debt Sept 30, 2021 Dec 31, 2021 Mar 31, 2022 June 30, 2022 Sept 30, 2022 Dec 31, 2022 Mar 31, 2023 June 30, 2023 Cash $ 27.8 $ 25.2 $ 36.4 $69.5 $50.8 $53.7 $16.7 $41.7 Current debt 1.6 1.6 1.6 1.0 1.0 0.9 0.9 0.9 Long term debt 676.5 637.6 617.7 589.9
Slide 20: Major Maintenance Schedule
MAJOR MAINTENANCE SCHEDULE ADJUSTED EBITDA IMPACT ($ IN MILLIONS) $34 $30 - $35 $30 $27 $24 $5 $20 $7 $28 $22 $17 $5 - $7 $10 $4 $2 1 2017 2018 2019 2020 2021 2022 2023e 2024e1,2 Q1 Q2 Q3 Q4 Total 1. This information is based upon management’s current assumptions and estimates. 2. See “Forward-Looki