Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q3 2018 Earnings Presentation
27 slides from Clearwater Paper's earnings presentation, Nov 8, 2018
Slide 1: Clearwater Paper Corporation Third Quarter 2018 Supplemental Information
CLEARWATER PAPER CORPORATION THIRD QUARTER 2018 SUPPLEMENTAL INFORMATION 11/08/18 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 the Shelby, North Carolina expansion
Slide 3: Third Quarter Financial Highlights
THIRD QUARTER FINANCIAL HIGHLIGHTS $426 MILLION NET SALES, DOWN 1% VS. Q2'18 $47 MILLION GAAP OPERATING INCOME $49 MILLION ADJUSTED EBITDA1, ABOVE OUTLOOK RANGE OF $40 TO $46 MILLION DILUTED GAAP EPS OF $2.08 AND ADJUSTED DILUTED EPS OF $1.351 RECORD PAPERBOARD SHIPMENTS COMPLETED DIVESTITURE OF LAD
Slide 4: Financial Summary (GAAP Basis)
FINANCIAL SUMMARY (GAAP BASIS) (UNAUDITED) (Dollars in thousands - except per-share amounts) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Net sales $437,525 $429,663 $426,504 $436,716 $436,952 $432,099 $426,460 Gross Profit $50,465 $48,602 $39,742 $61,258 $44,519 $44,945 $50,239 Selling, general and ad
Slide 5: Financial Summary (Adjusted Basis)
FINANCIAL SUMMARY (ADJUSTED BASIS) (UNAUDITED) (Dollars in thousands - except per-share amounts) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Outlook7 Net sales $437,525 $429,663 $426,504 $436,716 $436,952 $432,099 $426,460 1% - 2% Lower 1 Adjusted gross profit $56,668 $49,820 $41,048 $61,675 $44
Slide 6: Q3'18 vs. Q2'18 Consolidated Adjusted EBITDA Bridge
Q3’18 VS. Q2’18 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ, EBITDA1 (MILLIONS) $54 Higher paperboard and tissue pricing from PRICE/MIX previously announced increases and better mix $52 $2.9 Record paperboard shipments more than offset VOLUME by lower tissue shipments due to partial loss of a large cus
Slide 7: Q3'18 vs. Q3'17 Consolidated Adjusted EBITDA Bridge
Q3’18 VS. Q3’17 CONSOLIDATED ADJUSTED EBITDA1 BRIDGE ADJ, EBITDA1 (MILLIONS) $50 $2.2 $48.9 Higher paperboard pricing offset by lower tissue PRICE/MIX pricing and higher mix of non-retail tissue $1.9 shipments $12.0 $45 VOLUME Record paperboard shipments PULP/WOOD FIBER Higher pulp and fiber prices
Slide 8: Shelby Expansion: $380 - $390 Million
SHELBY EXPANSION: $380 - $390 MILLION Improve operational efficiency Install NTT Tissue Machine WAREHOUSE PAPER MACHINE in Eastern Regions. Less and Converting Equipment CONSOLIDATION reliance on 3PL Shelby, NC adjacent to current Shelby, NC adjacent to current LOCATION LOCATION Tissue plant Tissue
Slide 9: Credit Agreement Covenant Amendments
CREDIT AGREEMENT COVENANT AMENDMENTS • Amended Senior Secured revolving line of credit (revolver) covenants ◦ Leverage ratio covenant changed from a total debt ratio to a secured debt ratio only ◦ Interest coverage ratio covenant reduced ◦ Added an asset coverage ratio COVENANT FROM TO Leverage Net
Slide 10: Key Segment Results - Consumer Products
KEY SEGMENT RESULTS - CONSUMER PRODUCTS (UNAUDITED) CONSUMER PRODUCTS CROSS-CYCLE Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 FINANCIAL MODEL Shipments Retail (short tons) 78,686 77,714 77,544 75,123 80,971 73,070 70,335 Non-Retail (short tons)1 16,678 13,736 12,958 12,190 11,236 17,316 18,525 Total T
Slide 11: Clearwater Paper Tissue Shipments and U.S. Retail Tissue Market
CLEARWATER PAPER TISSUE SHIPMENTS AND U.S. RETAIL TISSUE MARKET CLW Q3'18 by CLW Q2'18 by Market Segment Market Segment (% of Tons) (% of Tons) U.S. Retail1 Tissue Market Q3'18 ($) Other Other (MultiOutlet) Parent Parent Rolls 1% Rolls 1% 12% 13% PRIVATE CATEGORY LABEL BRANDS TOTAL AFH AFH 6% 6% Tot
Slide 12: Q3'18 vs. Q2'18 Consumer Products Adjusted EBITDA Bridge
Q3'18 VS. Q2'18 CONSUMER PRODUCTS ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) $20 Higher pricing due to previously announced PRICE/MIX increase and better product mix $18 Lower retail offset partially by higher non-retail VOLUME shipments $16 $2.9 $3.0 PULP Higher pulp prices $14 $0.2 $1
Slide 13: Key Segment Results - Pulp and Paperboard
KEY SEGMENT RESULTS – PULP AND PAPERBOARD (UNAUDITED) PULP AND PAPERBOARD CROSS-CYCLE Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 FINANCIAL MODEL Shipments Paperboard (short tons) 210,382 207,152 200,569 210,098 206,309 216,582 218,135 Sales Price Paperboard ($/short ton) $927 $955 $965 $962 $960 $972
Slide 14: Clearwater Paper Paperboard Shipments and U.S. Paperboard Market
CLEARWATER PAPER PAPERBOARD SHIPMENTS AND U.S. PAPERBOARD MARKET CLW Q3'18 by CLW Q2'18 by Market Segment Market Segment U.S. Paperboard Production Q3'183 (% of Tons) (% of Tons) CLEARWATER CATEGORY PAPER OTHER Folding Folding 59% Total Domestic 14% 86% 55% SBS1 Market Share Folding 19% 81% Food Ser
Slide 15: Q3'18 vs. Q2'18 Pulp and Paperboard Adjusted EBITDA Bridge
Q3’18 vs. Q2'18 PULP AND PAPERBOARD ADJUSTED EBITDA1 BRIDGE SEGMENT ADJ. EBITDA1 (MILLIONS) $50 Higher prices due to previously announced PRICE/MIX increase $1.5 $48 $0.9 $47.7 VOLUME Record paperboard shipments $0.4 $2.9 -$1.6 PULP/WOOD FIBER Lower fiber prices $46 ENERGY Turbine outages $44 $43.6
Slide 16: Clearwater Paper Cross-Cycle Financial Model
CLEARWATER PAPER CROSS-CYCLE FINANCIAL MODEL CLEARWATER PAPER CROSS-CYCLE (Dollars in thousands) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 FINANCIAL MODEL Net sales 100% 100% 100% 100% 100% 100% 100% 100% Adjusted gross profit margin1 13.0% 11.7% 9.7% 14.2% 10.2% 10.6% 11.8% 17.0% Adjusted SG&A expe
Slide 17: Q4'18 Adjusted EBITDA Outlook Reconciliation
Q4’18 ADJUSTED EBITDA OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) OUTLOOK THREE MONTHS ENDING DECEMBER 31, 2018 RANGE OF ESTIMATE (Dollars in thousands) FROM TO Earnings before interest, income taxes, and depreciation & amortization (EBITDA)2: GAAP net earnings $5,400 $8,200 I
Slide 18: Q4'18 Adjusted Net Earnings Outlook Reconciliation
Q4’18 ADJUSTED NET EARNINGS OUTLOOK1 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) OUTLOOK THREE MONTHS ENDING DECEMBER 31, 2018 RANGE OF ESTIMATE (Dollars in thousands) FROM TO GAAP Operating Income $15,000 $21,000 Directors' equity-based compensation expense 300 300 Reorganization expe
Slide 19: Q4'18 Outlook
Q4'18 OUTLOOK1 NET SALES 1% - 2% Lower ADJUSTED OPERATING MARGIN2,3 4.0% - 5.5% ADJUSTED EBITDA2 $40M - $46M ADJUSTED NET EARNINGS PER DILUTED COMMON SHARE2,4 $0.39 - $0.56 1 This information is based upon management’s current expectations and estimates, which are in part based on market and industr
Slide 20: Appendix
AG sisegoorss APPENDIX
Slide 21: Adjusted Gross Profit & Adjusted SG&A Reconciliation
ADJUSTED GROSS PROFIT & ADJUSTED SG&A RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Gross profit1,2 $50,465 $48,602 $39,742 $61,258 $44,519 $44,945 $50,239 Costs associated with Long Island facility closure 466 661 610 298
Slide 22: Segment Adjusted Operating Income (Loss) Reconciliation
SEGMENT ADJUSTED OPERATING INCOME (LOSS) RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Consumer Products Operating income1,3 $6,204 $10,698 $4,525 $7,546 $1,629 ($3,604) $21,675 Costs associated with Long Island facility cl
Slide 23: Adjusted Net Earnings & Adjusted EPS 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) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 GAAP net earnings $7,515 $8,037 $863 $80,924 $2,600 $6,961 $34,444 Adjustments,
Slide 24: Adjusted Income Tax Provision Reconciliation
ADJUSTED INCOME TAX PROVISION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE (UNAUDITED) (Dollars in thousands) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 GAAP income tax (provision) benefit ($5,000) ($3,955) $3,095 $62,245 $360 ($2,510) ($3,675) Adjustments, tax impact: Directors' equity-based compens
Slide 25: EBITDA & Adjusted EBITDA Reconciliation
EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Earnings before interest, income taxes, and depreciation & amortization (EBITDA)1 GAAP net earnings $7,515 $8,037 $863 $80,924 $2,600 $6,961 $34,444 Int
Slide 26: Segment EBITDA & Adjusted EBITDA Reconciliation
SEGMENT EBITDA & ADJUSTED EBITDA RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) (Dollars in thousands) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Consumer Products Operating income1,4 $6,204 $10,698 $4,525 $7,546 $1,629 ($3,604) $21,675 Depreciation and amortization expense 18,242 16,292 1
Slide 27: For More Information: www.clearwaterpaper.com
FOR MORE INFORMATION: WWW.CLEARWATERPAPER.COM 27