Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q2 2020 Earnings Presentation
22 slides from Clearwater Paper's earnings presentation, Aug 4, 2020
Slide 1: Second Quarter 2020 Earnings Release Materials
Clearwater Paper Corporation SECOND QUARTER 2020 EARNINGS RELEASE MATERIALS AUGUST 4, 2020 ARSEN S. KITCH PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR MICHAEL J. MURPHY SENIOR VICE PRESIDENT AND 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 2020 Business Highlights
Q2 2020 Business Highlights Overall . Record Net Income of $23 million and record Adjusted EBITDA of $79 million . Generated $100 million in free cash flow Consumer Products . Increased production to meet elevated demand in Q2 with significant cost leverage . Supply chain was resilient with elevated
Slide 4: Q2 2020 Operational Update
Q2 2020 Operational Update Committed to protecting our two most important assets: our employees and our customer relationships Taking care of our employees: . Temperature checks and sanitation practices . Social distancing and face covering requirements . Remote work access and travel restrictions .
Slide 5: Business Update – Consumer Products
Business Update – Consumer Products Elevated demand for tissue continued into Q2 2020 but at more sustainable pace in June and July Industry . Pre-COVID: ~10 million ton North America demand with ~2/3 at home and ~1/3 away from home . COVID pandemic is leading to shift to at-home demand . Rationaliz
Slide 6: Business Update - Paperboard
Business Update - Paperboard Diversified range of end-market products and flexibility in our supply chain provided overall stable financial results Industry . We estimate ~2/3 of industry demand is driven by recession resilient end-market segments, such as food packaging and other consumer goods . ~
Slide 7: Financial Performance
Financial Performance ($ in millions, except per share amounts) Quarter Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net Sales$ 480.5 $ 452.0 $ 958.4 $ 880.8 Cost of Sales 396.7 409.8 819.7 794.1 Selling, general and adminstrative 32.6 26.5 60.1 56.9 Other operating charges, net 3.0
Slide 8: Revenue, Income and Adjusted EBITDA by Segment
Revenue, Income and Adjusted EBITDA by Segment $ in millions Quarter Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net Sales Consumer Products$ 275.1 $ 224.3 $ 540.8 $ 447.7 Paperboard 205.4 227.7 417.6 433.1 $ 480.5 $ 452.0 $ 958.4 $ 880.8 Operating Income Consumer Products$ 36.6 $ (
Slide 9: Consumer Products Results Q2 2020 vs. Q2 2019
Consumer Products Results Q2 2020 vs. Q2 2019 Segment Adjusted EBITDA ($ in millions) Higher volume from pandemic and new customers Lower pricing partially offset by Improved cost favorable mix absorption from higher volumes and lower pulp and transportation costs Page 9 © Clearwater Paper Corporati
Slide 10: Consumer Products Sequential Quarter Results
Consumer Products Sequential Quarter Results Q2 2020 vs. Q1 2020 Segment Adjusted EBITDA ($ in millions) Improved cost Higher absorption from volume from higher volumes pandemic and driven transportation demand costs 1 Page 10 © Clearwater Paper Corporation 2020
Slide 11: Consumer Products Sales and Production
Consumer Products Sales and Production % changes % changes Q2 2020 vs Q2 2020 vs In millions Q2 2019 Q1 2020 Q2 2020 Q2 2019 Q1 2020 Sales, Cases 12.5 15.2 16.0 28.2% 5.3% Production, Cases 12.8 13.9 15.9 24.4% 14.0% Adjusted EBITDA $ 12.3 $ 31.6 $ 53.7 337.8% 70.1% Total Tissue – All Outlets 2020 Y
Slide 12: Paperboard Results Q2 2020 vs. Q2 2019
Paperboard Results Q2 2020 vs. Q2 2019 Segment Adjusted EBITDA ($ in millions) Lower pricing Lower input partially offset Lower costs (fiber by favorable shipments, and energy) mix due to one- time items in Q2 19 and utility outage in Q2 20 Page 12 © Clearwater Paper Corporation 2020
Slide 13: Paperboard Sequential Quarter Results
Paperboard Sequential Quarter Results Q2 2020 vs. Q1 2020 Segment Adjusted EBITDA ($ in millions) Lower input costs (fiber and energy) and higher production Page 13 © Clearwater Paper Corporation 2020
Slide 14: Outlook
Outlook Q3 20: $64 to $74 million of Adjusted EBITDA . Tissue sales volume expected to be up year over year but at a lower growth rate than the second quarter of 2020 Other FY 20 assumptions . $48 - $50M interest expense . $45 - $50M capital expense . $109 - $112M depreciation and amortization expen
Slide 15: Capital Structure and Allocation
Capital Structure and Allocation Capital structure: supportive and stable . Capital structure provides ample liquidity Liquidity Profile ($ in millions)1 . No material near-term debt maturities ABL Availability $220.6 . Corporate/Issuer ratings: Ba2/BB- Less Utilization (4.4) Plus Unrestricted Cash
Slide 16: 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
Slide 17: Appendix
Appendix © Clearwater Paper Corporation 2020
Slide 18: Key Segment Sales Information
Key Segment Sales Information Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Consumer Products Shipments in short tons Retail 73,356 76,175 79,526 79,748 90,791 95,432 Non-Retail (away from home and parent rolls) 10,266 6,623 6,882 8,393 9,002 5,812 Sales Price per short ton Retail $ 2,789 $ 2,764
Slide 19: Reconciliation of Adjusted EBITDA
Reconciliation of Adjusted EBITDA ($ in millions) Three Months Ended June 30, March 31, Six Months Ended June 30, 2020 2019 2020 2020 2019 Net income (loss) $ 22.8 $ (0.4) $ 10.3 $ 34.5 $ 3.4 Income tax provision 10.4 3.3 (6.2) 4.7 4.0 Interest expense, net 12.0 10.9 12.8 24.9 19.4 Depreciation and
Slide 20: Reconciliation of Adjusted Income
Reconciliation of Adjusted Income ($ in millions, except per share amounts) Three Months ended June Six Months Ended June 30, 2020 2019 2020 2019 Net income $ 22.8 $ (0.4) $ 33.1 $ 3.4 Add back: Income tax provision 10.4 3.3 4.2 4.0 Income before income taxes 33.2 2.9 37.3 7.4 Add back: Debt retirem
Slide 21: Additional Reconciliations
Additional Reconciliations ($ in millions) Reconciliation of Net Debt December 31, 2019 March 30, 2020 June 30, 2020 Cash$ 20.0 $ 60.8 $ 48.2 Current debt 17.9 58.1 1.6 Long-term debt 884.5 883.9 827.9 add: Deferred debt costs 8.1 7.7 6.4 less: Financing leases (22.0) (22.0) (21.6) 888.5 927.7 814.3
Slide 22: Major Maintenance Schedule
Major Maintenance Schedule ($ in millions) $30 $24 $23 - $27 $22 Arkansas $18 $20 $7 $15 - $20 $7 $18 Idaho Idaho $15 $17 $10 None None 2015 2016 2017 2018 2019 2020e1 2021e 1 2022e 1 Q1 Q2 Q3 Q4 Total 1 This information is based upon management’s current expectations and estimates, as well as histo