Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Investor Presentation (March 2017)
46 slides from Clearwater Paper's investor presentation, Mar 9, 2017
Slide 1: Clearwater Paper Corporation March 2017
Clearwater Paper Corporation March 2017 Exhibit 99.1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This 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, North American tissue demand and capacity, private
Slide 3: Overview of Clearwater Paper
Overview of Clearwater Paper
Slide 4: Introduction to Clearwater Paper
INTRODUCTION TO CLEARWATER PAPER We are a company formed in late 2008 with more than 60 years of operating history We operate two business segments Pulp and paperboard: 43% of 2016 net sales Consumer products: 57% of 2016 net sales Financial overview for 2016 Net Sales: $1.7 Billion Adjusted EBITDA1
Slide 5: Consumer Products Division Overview
Consumer Products Division Overview Clearwater Paper is one of the LARGEST NORTH AMERICAN MANUFACTURERS OF PRIVATE LABEL TISSUE, focused on high value tissue products across all categories, retail channels and geographies.
Slide 6: Consumer Products Division market drivers
Consumer Products Division market drivers STABLE GROWTH – The tissue market has grown an average of 1% − 2% annually since 1996, consistent with population growth. U.S. Tissue Demand (Indexed) U.S. Population (mm) Source: RISI estimates as of December 2016, U.S. Population per U.S. Census December 2
Slide 7: Consumer Products Division capacity and retail channels
Consumer Products Division capacity and retail channels Overview of Facilities Tissue Production Capacity1: 413,000 tons Tissue Conversion Capacity1: 370,000 tons ● Clearwater Paper Tissue Parent Roll ● Clearwater Paper Tissue Converting 1 Annual capacity is an estimate based on assumptions and judg
Slide 8: Private label continues to capture market share in tissue
private label continues to capture market share in tissue Clearwater Paper ranks as one of the LARGEST NORTH AMERICAN PRIVATE LABEL TISSUE MANUFACTURERS Private Label Market Share of Total U.S. ($) 2016 U.S. Retail Tissue Industry Product Mix 2016 Bath Tissue 54% Paper Towels 32% Facial Tissue 10% N
Slide 9: Opportunity for private label and Clearwater Paper to grow market share nationally
Opportunity for private label and clearwater paper to grow market share NATIONALLY Clearwater Paper Market Share by Region ($)1 WEST MID-WEST EAST Clearwater Paper 16.7% 7.1% 4.6% Brand Names 72.2% 75.7% 76.4% Other Private Label 11.1% 17.2% 19.0% 1 Market share for 2014-2016 was calculated using IR
Slide 10: North American market demand vs. capacity
north american market demand vs. capacity Longer Term Market Expected to Remain in Equilibrium Source: RISI August 2016 update for Outlook for World Tissue Business, RISI February 2017 US Tissue Monthly Data 1 It is assumed that any productivity improvements (approximately 100k per year or 1% of cap
Slide 11: Paperboard Division Overview
PaPERBOARD Division Overview LEADING MANUFACTURER OF SBS1 used in packaging of premium consumer goods, pharmaceuticals, food and liquid, and food service plates, cups and folding cartons. 1 Solid Bleach Sulfate paperboard
Slide 12: Paperboard demand expected to remain stable
PAPERBOARD DEMAND expected to REMAIN STABLE U.S. Bleached Paperboard total production (Indexed)1 Source: RISI estimates as of December 2016 ¹ Actual and estimated production was obtained from RISI – Total tons bleached paperboard produced in US ² Average price per short ton of 16 pt. SBS folding car
Slide 13: Pulp and paperboard division capacity and markets
Pulp and paperboard division capacity and markets Clearwater Paper ranks as one of the top five largest paperboard manufacturers in North America ● Clearwater Paper Pulp ● Clearwater Paper SBS ● Manchester SBS Sheeting Overview of Facilities Pulp Production Capacity1: 857,000 tons Paperboard Product
Slide 14: Our Macro Strategy to Create Shareholder Value
Our Macro Strategy to Create Shareholder VALUE GROW our Tissue Business > Lead private label in quality > Expand geographically > Diversify retail channel penetration Optimize Profitability of Paperboard and Tissue Businesses > Improve sales mix > Reduce costs > Continue to improve quality
Slide 15: Successful execution of previously stated goals
GOAL Optimize the Paperboard Business Successful execution of Previously StateD goals TIMEFRAME ongoing STATUS Permanent shutdown of two high cost tissue machines and restructuring at our Neenah, Wisconsin tissue facility Announced permanent closure of our Oklahoma City converting facility, which is
Slide 16: Clearwater Paper cross cycle financial model
clearwater paper cross cycle FINANCIAL MODEL 1 Net sales for the twelve months ending December 31, 2015 and 2016 were $1,752.4M and $1,734.8M, respectively. 2 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. twelve months ending December 31,
Slide 17: 2017 Focus
2017 FOCUS Pulp optimization at mills Increase operating equipment efficiencies Execute on our manufacturing network optimization plan 2017 FOCUS Reduce supply chain costs through further improvements in logistics optimization Complete warehouse automation project at Lewiston and Elwood facilities I
Slide 18: Strategic Investments expected to achieve adjusted EBITDA margin target
Strategic Investments expected to Achieve adjusted ebitda Margin Target (MILLIONS $) 2015 2016 2017-2018 FULL RUN-RATE EXPECTED1 STRATEGIC INVESTMENTS2 Capex CAPEX CAPEX ADJUSTED EBITDA Impact Pulp Optimization $29 $61 $58-$68 $30-$35 Warehouse Automation $12 $16 $12-$14 $27-$32 Paper Machine and Co
Slide 19: Strategic investment and operational improvement scorecard as of Q4'16
Strategic investment and operational improvement scorecard as of Q4’16 Strategic plan announced in Q1’15, expected capex of $237-$249 million Expected to yield a $97-$127 million operating income increase by 20182 Expected to yield a $115-$145 million Adjusted EBITDA1 increase by 20182 Would yield a
Slide 20: Expected Adjusted EBITDA from strategic investments and operational improvements
Expected Adjusted ebitda from strategic investments and operational improvements1, 2 Expected to yield a $115-$145 million Adjusted EBITDA increase over the $230M reset run rate1 In addition, assume an annual $10-15 million of margin pressure Implies $285-$335 million Adjusted EBITDA run rate in 201
Slide 21: Shelby Expansion: $340 Million Paper Machine
SHELBY EXPANSION: $340 MILLION PAPER MACHINE Install NTT Tissue Machine and Converting Equipment location Shelby, NC adjacent to current Tissue plant Capacity 70,000 Tons Cost $283 Million START PRODUCTION Q1-2019 Full SHIPMENT RUN-Rate Late 2020 WAREHOUSE CONSOLIDATION Improve operational efficienc
Slide 22: Why Invest Now?
Why INVEST Now? We need additional ultra-quality tissue capacity to keep pace with our existing customers’ growth and the capacity to add new customers We have limited availability of ultra-quality tissue today Demand for about half the capacity within our existing customer base Ultra-quality segmen
Slide 23: Clearwater Paper's Value Proposition
Clearwater Paper’s Value Proposition
Slide 24: Balanced Capital Allocation
Balanced Capital Allocation 2011-2016 Repurchased 34% of total shares outstanding from 2011 through 2016 Continued investment in the business while returning capital to investors Capital Allocation 2011-2016 2011–2016 Capex 32% TAD Expansion & Strategic Capex 36% Stock Repurchase 32% Cumulative Shar
Slide 25: Clearwater Paper is a Leader Amongst its Peers in Value Creation
Clearwater Paper Small-Cap Tissue1 Paperboard2 Large-Cap Consumer3 S&P 500 Kimberly Clark Clearwater Paper is a Leader Amongst its Peers in Value Creation Source: Bloomberg. Market data as of February 21, 2017 Note: Total Shareholder Return includes dividends reinvested and stock price performance.
Slide 26: Which Has Led to Multiple Expansion Since the Spin
² Paperboard peers include International Paper, Graphic Packaging, Kapstone, MeadWestvaco, Packaging Corp of America, Sonoco and WestRock. MeadWestvaco is excluded following merger announcement on January 26, 2015. ³ Large-cap consumer product peers include Kimberly-Clark and Procter & Gamble. Which
Slide 27: Clearwater Paper's Outlook
Ly CLEARWATER, PAPER, CLEARWATER PAPER’S OUTLOOK
Slide 28: Q1'17 Outlook Reconciliation of Non-GAAP Financial Measures
Q1’17 Outlook1 Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 This information is based upon management’s expectations and estimates as of February 8, 2017, which are in part based on market and industry data. Many factors are outside the control of management, including particularly in
Slide 29: Q1'17 Outlook Reconciliation of Non-GAAP Financial Measures
Q1’17 Outlook1 Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 This information is based upon management’s expectations and estimates as of February 8, 2017, which are in part based on market and industry data. Many factors are outside the control of management, including particularly in
Slide 30: Q1'17 Outlook
Q1’17 OUTLOOK1 1This information is based upon management’s expectations and estimates as of February 8, 2017, which are in part based on market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actual results may di
Slide 31: Appendix
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Slide 32: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures Clearwater Paper Definitions of Non-GAAP Measures EBITDA is a non-GAAP measure that Clearwater Paper management uses as a supplemental performance measure to evaluate the cash generating capacity of Clearwater Paper. The most directly comparable GAAP measure is net e
Slide 33: Reconciliation of GAAP to Non-GAAP: EBITDA and Adjusted EBITDA
Reconciliation of GAAP to Non-GAAP: Clearwater Paper EBITDA1 and Adjusted EBITDA1 ¹ Non-GAAP measure – See Appendix for the definition. 2 Interest expense, net for 2009, 2013, 2014 and 2016 includes debt retirement costs of $6.2, $17.1, $24.4 and $0.4 million respectively. ($ in millions) 2008 2009
Slide 34: EBITDA & Adjusted EBITDA Reconciliation
EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 Non-GAAP measure. 2 Interest expense, net for the fourth quarter of 2016 includes debt retirement costs of $0.4 million. 3 Non-GAAP measure - Adjusted EBITDA excludes the impact of the items listed that we do not be
Slide 35: Segment EBITDA & Adjusted EBITDA Reconciliation
Segment EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 Segment EBITDA is a non-GAAP measure that management uses as a supplemental performance measure. The most directly comparable GAAP measure is segment operating income (loss). Segment EBITDA is segment operat
Slide 36: Return on Invested Capital, Tangible Stockholders' Equity & Excess Cash
Return on Invested Capital, Tangible Stockholders’ Equity & Excess Cash Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 Non-GAAP measure. 2 Tangible stockholders' equity is defined as stockholders’ equity less Goodwill and Intangible assets, net. 3 Excess cash is defined as the sum of Ca
Slide 37: Adjusted Gross Profit & Adjusted SG&A
Adjusted Gross Profit & Adjusted SG&A Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 Gross profit is defined as net sales minus cost of sales. 2 Non-GAAP measure – Adjusted gross profit and Adjusted selling, general and administrative expenses exclude the impact of the items listed that
Slide 38: Segment Adjusted Operating Income (Loss)
Segment Adjusted Operating Income (Loss) Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 Non-GAAP measure – Adjusted operating income (loss) excludes the impact of the items listed that we do not believe are indicative of our core operating performance.
Slide 39: Adjusted Net Earnings & Adjusted Net Earnings per Diluted Common Share
Adjusted Net Earnings & Adjusted Net Earnings per Diluted common share Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 All non-tax items are tax effected at the expected annual rate for that period. 2 Non GAAP measure – Adjusted net earnings and Adjusted net earnings per diluted common s
Slide 40: Key Segment Results – Pulp and Paperboard
Key Segment Results – Pulp and Paperboard (Unaudited) 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. 2 Non-GAAP measure – Segment Adjusted EBITDA margin is defined as Segment Adjusted EBITDA divided by Segment net sales. Pulp and Paperboa
Slide 41: Key Segment Results – Consumer Products
Key Segment Results – Consumer Products (Unaudited) 1 Includes away-from-home (AFH), contract and parent roll tissue products. 2 Includes retail, AFH, and contract tissue case products. 3 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. 4 Non
Slide 42: Reconciliation of GAAP to Non-GAAP: Strategic investments
Reconciliation of GAAP to Non-GAAP: Strategic investments1 (Unaudited) 1 Based on Q1’15 prices, input costs, and market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actual results may differ materially from the
Slide 43: Reconciliation of GAAP to Non-GAAP: Strategic investments
Reconciliation of GAAP to Non-GAAP: Strategic investments1 (Unaudited) 1 Based on Q1’15 prices, input costs, and market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actual results may differ materially from the
Slide 44: Reconciliation of GAAP to Non-GAAP: Shelby Expansion
Reconciliation of GAAP to Non-GAAP: SHELBY EXPANSION1 (Unaudited) 1 Based on Q1’15 prices, input costs, and market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actual results may differ materially from the infor
Slide 45: Major Maintenance Schedule
Major Maintenance Schedule1 1 This information is based upon management’s expectations and estimates as of February 8, 2017. 2015 2016 2017 2018 2019 2020 2021 2022 Major Maintenance $ Millions $22 $18 $24-26 $0 TBD TBD TBD TBD Lewiston Q1 Q3 Q3 Q1 Q3 Q1 Cypress Bend Q2 Q2 Q3 Q2
Slide 46: North American Tissue Projected Capacity Change
North American Tissue Projected Capacity Change Source: RISI Company Mill/Location Conv/TAD Capacity Change Estimated Date Channel/Business/Products Announced New Capacity through 2019 Von Drehle Corporation Natchez, MS Conv 35,000 2016:Q1 Valmet Advantage NTT St. Croix Tissue (APP) Baileyville, ME
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