Clearwater Paper Corporation · NYSE:CLW

Clearwater Paper — Q3 2020 Earnings Presentation

23 slides from Clearwater Paper's earnings presentation, Nov 3, 2020

  1. Slide 1: Clearwater Paper Third Quarter 2020 Earnings Release Materials

    Clearwater Paper Corporation THIRD QUARTER 2020 EARNINGS RELEASE MATERIALS NOVEMBER 3, 2020 ARSEN KITCH PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR MIKE MURPHY SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

  2. 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

  3. Slide 3: Q3 2020 Business Highlights

    Q3 2020 Business Highlights Overall  Net Income of $21 million and Adjusted EBITDA of $77 million  Generated $40+ million in free cash flow Consumer Products  Demand normalizing but was still elevated  Production met demand and largely replenished inventory levels  Service levels returning to p

  4. Slide 4: Q3 2020 Operational Update

    Q3 2020 Operational Update Committed to protecting our two most important assets: our employees and our customer relationships Taking care of our employees:  Temperature checks and sanitation practices  Social distancing and face covering requirements  Remote work access and travel restrictions 

  5. Slide 5: Business Update – Consumer Products

    Business Update – Consumer Products COVID related demand for retail tissue continued to normalize in Q3 2020, as anticipated Industry  Pre-COVID: ~10 million ton North America demand with ~2/3 at home and ~1/3 away from home  COVID pandemic is leading to shift to at-home demand  Paper towels are

  6. Slide 6: Business Update - Paperboard

    Business Update - Paperboard Diversified range of end-market products and flexibility in our supply chain provided overall stable financial results Industry  We estimate ~2/3 of industry demand is driven by recession resilient end-market segments, such as food packaging and other consumer goods  ~

  7. Slide 7: Financial Performance

    Financial Performance ($ in millions, except per share amounts) Quarter Ended Sept. 30, Nine Months Ended Sept. 30, 2020 2019 2020 2019 Net Sales $ 457.4 $ 445.2 $ 1,415.8 $ 1,326.0 Cost of Sales 378.6 418.7 1,198.3 1,212.8 Selling, general and adminstrative 29.3 27.0 89.4 83.9 Other operating charg

  8. Slide 8: Revenue, Income and Adjusted EBITDA by Segment

    Revenue, Income and Adjusted EBITDA by Segment ($ in millions) Quarter Ended Sept. 30, Nine Months Ended Sept. 30, 2020 2019 2020 2019 Net Sales Consumer Products $ 248.3 $ 228.5 $ 789.1 $ 676.2 Paperboard 209.1 216.6 626.6 649.7 $ 457.4 $ 445.2 $ 1,415.8 $ 1,326.0 Operating Income Consumer Products

  9. Slide 9: Consumer Products Results

    Consumer Products Results Q3 2020 vs. Q3 2019 Segment Adjusted EBITDA ($ in millions) Higher volume from pandemic and Favorable mix new customer partially offset by programs lower pricing Improved cost absorption from higher volumes coupled with lower pulp and transportation costs Page 9 © Clearwate

  10. Slide 10: Consumer Products Sales and Production

    Consumer Products Sales and Production ($ in millions) % changes % changes Q3 Q4 Q1 Q2 Q3 Q3 2020 vs Q3 2020 vs 2019 2019 2020 2020 2020 Q3 2019 Q2 2020 Sales, Cases 13.2 13.3 15.2 16.0 14.5 10.2% -9.4% Production, Cases 12.9 13.6 13.9 15.9 15.3 18.9% -3.7% Adjusted EBITDA $ 14.6 $ 20.2 $ 31.6 $ 53.

  11. Slide 11: Paperboard Results

    Paperboard Results Q3 2020 vs. Q3 2019 Segment Adjusted EBITDA ($ in millions) Absence of Lower pricing major outage at partially offset Lower sales Idaho mill by favorable mix volume Page 11 © Clearwater Paper Corporation 2020

  12. Slide 12: Outlook

    Outlook Q4 2020: $52 to $62 million of Adjusted EBITDA  Tissue volumes expected to be at or below Q4 2019 sales of 13.3 million cases  Tissue production will largely be similar to sales  Continued stability in paperboard  No major COVID disruptions Other FY 2020 assumptions  Interest expense: $

  13. Slide 13: Capital Structure and Allocation

    Capital Structure and Allocation Capital structure: supportive and stable Liquidity Profile ($ in millions)1 ABL Availability $234.2  Capital structure provides ample liquidity Less Utilization (4.4)  No material near-term debt maturities Plus Unrestricted Cash 47.5  Corporate/Issuer ratings: Ba2

  14. Slide 14: Clearwater Paper Value Proposition

    Clearwater Paper Value Proposition Well positioned across two attractive businesses Consumer Products:  Leading private brand provider with national scale & superior supply chain performance  Shift to private-branded over branded product continues with long runway  Tissue is need-based and econom

  15. Slide 15: Appendix

    Appendix © Clearwater Paper Corporation 2020

  16. Slide 16: Consumer Products Sequential Quarter Results

    Consumer Products Sequential Quarter Results Q3 2020 vs. Q2 2020 Segment Adjusted EBITDA ($ in millions) Favorable mix Normalization of Negative absorption pandemic driven from lower volume, demand increased input costs in transportation, and energy, partly offset by lower pulp prices Page 16 © Clea

  17. Slide 17: Paperboard Sequential Quarter Results

    Paperboard Sequential Quarter Results Q3 2020 vs. Q2 2020 Segment Adjusted EBITDA ($ in millions) Lower input costs Unfavorable mix in fiber offset by higher freight and chemical costs Page 17 © Clearwater Paper Corporation 2020

  18. Slide 18: Key Segment Sales Information

    Key Segment Sales Information Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Consumer Products Shipments in short tons Retail 73,356 76,175 79,526 79,748 90,791 95,432 86,292 Non-Retail (away from home and parent rolls) 10,266 6,623 6,882 8,393 9,002 5,812 3,799 Sales Price per short ton Re

  19. Slide 19: Reconciliation of Adjusted EBITDA

    Reconciliation of Adjusted EBITDA ($ in millions) Three Months Ended June 30, Nine Months Ended 2020 2019 2020 2020 2019 Net income (loss) $ 21.4 $ (11.0) $ 22.8 $ 54.5 $ (7.6) Income tax provision 9.9 (8.7) 10.4 14.1 (4.7) Interest expense, net 12.2 13.1 12.0 37.0 32.5 Depreciation and amortization

  20. Slide 20: Reconciliation of Adjusted Income

    Reconciliation of Adjusted Income ($ in millions income, except per share amounts) Three Months ended Nine Months Ended 2020 2019 2020 2019 Net income (loss) $ 21.4 $ (11.0) $ 54.5 $ (7.6) Add back: Income tax provision (benefit) 9.9 (8.7) 14.1 (4.7) Income (loss) before income taxes 31.3 (19.7) 68.

  21. Slide 21: Additional Reconciliations

    Additional Reconciliations ($ in millions) Reconciliation of Net Debt December 31, 2019 March 30, 2020 June 30, 2020 September 30, 2020 Cash $ 20.0 $ 60.8 $ 48.2 $ 47.5 Current debt 17.9 58.1 1.6 1.7 Long-term debt 884.5 883.9 827.9 785.5 add: Deferred debt costs 8.1 7.7 6.4 8.2 less: Financing leas

  22. Slide 22: Major Maintenance Schedule

    Major Maintenance Schedule ($ in millions) $30 $25 - $30 $24 $22 $19 - $23 $18 $20 $7 $7 $18 $17 $15 $10 Idaho None None 1 2015 2016 2017 2018 2019 2020e 2021e 2022e 1 Q1 Q2 Q3 Q4 Total 1 This information is based upon management’s current expectations and estimates, as well as historical averages.

  23. Slide 23: Key Commodity Consumption Volumes

    Key Commodity Consumption Volumes Approximate Annual1 Unit of Volume1 COGS Input Measure (in millions) Purchased Pulp Ton 0.3 Fiber Bone Dry Ton 1.6 Diesel Gallon 10 Electric MWh 1 Natural Gas MMBTU 10 Polyethylene Pound 30 Caustic Pound 90 Chlorate Pound 30 1 Approximated annual volume and expense

Clearwater Paper — Q3 2020 Earnings Presentation on 6ix