Slide 1: Fourth Quarter and Full Year 2014 Supplemental Information
rwater Paper Corporation Fourth Quarter and Full Year 2014 Supplemental Information 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 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, segment, corporate and consolidated outlook for Q1
Slide 3: 2014 Highlights
2014 Highlights • Record net sales • Record Adjusted EBITDA • Record retail and Through Air Dried (TAD) tissue case shipments • Completed sale of five specialty mills • Completion of $100 million share buyback program • Announcement of new $100 million share buyback program • Refinanced $375 million
Slide 4: Financial Summary (Unaudited)
Financial Summary (Unaudited) (Dollars in thousands - except per-share amounts) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Outlook5 Twelve Months Ended December 31, 2012 2013 2014 Net sales $ 460,824 $ 471,002 $ 487,845 $ 470,159 $ 484,920 $ 498,759 $ 511,142 $ 472,318 Down 8%-10%6 $ 1,87
Slide 5: 2014 vs. 2013 Consolidated Adjusted EBITDA Bridge
2014 vs. 2013 Consolidated Adjusted EBITDA1 Bridge Price/Mix Higher paperboard pricing due to continued strong market demand, higher retail tissue pricing due to increase in mix of TAD shipments Volume Higher paperboard shipments as a result of strong market demand and higher machine uptime, higher
Slide 6: Q4'14 vs. Q3'14 Consolidated Adjusted EBITDA Bridge
Q4’14 vs. Q3’14 Consolidated Adjusted EBITDA1 Bridge Price/Mix Weaker mix of retail vs. non-retail tissue shipments, weaker mix within retail tissue shipments, partially offset by higher paperboard pricing Volume Seasonally lower paperboard shipments exacerbated by West Coast ports labor slowdown Tr
Slide 7: Q4'14 vs. Q4'13 Consolidated Adjusted EBITDA Bridge
Q4’14 vs. Q4’13 Consolidated Adjusted EBITDA1 Bridge Price/Mix Higher paperboard pricing and tissue mix shift towards TAD products Volume Lower paperboard shipments partially offset by higher retail tissue shipments Wood Fiber Higher fiber prices due to wet weather in the South and strong fiber dema
Slide 8: Key Segment Results – Consumer Products
Key Segment Results – Consumer Products (Unaudited) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Consumer Products Cross-Cycle Financial Model Shipments Non-Retail (short tons)1 5 5,235 57,012 61,222 57,774 56,839 59,832 59,703 57,765 Retail (short tons) 7 7,361 75,045 72,427 70,696 70,919 75,009
Slide 9: Clearwater Paper Tissue Shipments and U.S. Retail Tissue Market
Clearwater Paper Tissue Shipments and U.S. Retail Tissue Market U.S. Retail Tissue Market (MultiOutlet) Category Private Label Brands Total Total Retail Tissue Share (Equivalent Cases) 27 73 100 Change in Share 2014 vs. 2013 1.1 (1.1) - Data Source: IRI Worldwide - 52 Weeks Ending 1/4/15. 8
Slide 10: Q4'14 vs. Q3'14 Consumer Products Adjusted EBITDA Bridge
Q4’14 vs. Q3’14 Consumer Products Adjusted EBITDA1 Bridge Price/Mix Weaker mix of retail vs. non-retail shipments, weaker mix within retail shipments Volume Seasonally lower retail and nonretail tissue shipments External Pulp Slightly lower pulp pricing, primarily in hardwood Chemicals Lower chemica
Slide 11: Key Segment Results – Pulp and Paperboard
Key Segment Results – Pulp and Paperboard (Unaudited) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Pulp and Paperboard Cross-Cycle Financial Model Shipments Paperboard (short tons) 186,350 190,518 199,408 188,776 200,665 195,924 201,609 176,467 Sales Price Paperboard ($/short ton) $ 935 $ 946 $ 9
Slide 12: Clearwater Paper Paperboard Shipments and U.S. Paperboard Market
Clearwater Paper Paperboard Shipments and U.S. Paperboard Market U.S. Paperboard Production Category Clearwater Paper Other Total Domestic SBS1 Market Share 13% 87% Folding 18% 82% Food Service2 14% 86% Liquid Packaging 5% 95% Data Source: American Forest and Paper Association Solid Bleached Domesti
Slide 13: Q4'14 vs. Q3'14 Pulp and Paperboard Adjusted EBITDA Bridge
Q4’14 vs. Q3’14 Pulp and Paperboard Adjusted EBITDA1 Bridge Price/Mix Higher pricing slightly offset by product mix Volume Seasonally lower paperboard shipments exacerbated by West Coast ports labor slowdown Chemicals Temporary higher usage due to a lime kiln capital investment installation Energy T
Slide 14: Clearwater Paper Cross-Cycle Financial Model
Clearwater Paper Cross-Cycle Financial Model (Dollars in thousands) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 2012 2013 2014 Twelve Months Ended December 31, Clearwater Paper Cross-Cycle Financial Model Net sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Adjusted gross profit
Slide 15: Return on Invested Capital
Return on Invested Capital1,6 (Unaudited) 1 Return on Invested Capital (ROIC) is defined as [Net Earnings + Interest Expense] / [Tangible Stockholders’ Equity6 + Debt – Excess (Deficit) Cash6]. 2 Weighted Average Cost of Capital (WACC) is defined as [(Debt x Cost of Debt x {1-Marginal Tax Rate})/(De
Slide 16: Pro Forma Impact of Sale of Specialty Mills
Pro Forma Impact of Sale of Specialty Mills (Unaudited) (Dollars in millions) Consumer Products Including Specialty Mills Specialty Mills Pro Forma Twelve Months Ended December 31, 2014 Twelve Months Ended November 30, 2014 Consumer Products Excluding Specialty Mills Pro Forma Net sales $ 1,183.4 $
Slide 17: 2015 Outlook (Compared to 2014)
2015 Outlook (Compared to 2014)1 Consumer Products (excluding specialty mills) Pulp and Paperboard Corporate Shipment volumes Improved shipments (1-2% higher) Improved shipments (1-3% higher) Price/Mix Slightly higher (0-1% higher) Slightly higher (0-1% higher) Pulp/Wood Fiber costs Cost / shipped t
Slide 18: First Quarter 2015 Outlook (Compared to Q4'14)
First Quarter 2015 Outlook (Compared to Q4’14)1 Consumer Products (excluding specialty mills) Pulp and Paperboard Corporate Shipment volumes Slightly higher (0-1% higher) Improved shipments (1-5% higher) Price/Mix Slightly higher (0-1% higher) Slightly higher (0-1% higher) Pulp/Wood Fiber costs Cost
Slide 19: Bridge to Q1'15 Adjusted EBITDA Outlook
Bridge to Q1’15 Adjusted EBITDA Outlook1,2 1 This information is based upon management’s current expectations and estimates, 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
Slide 20: EBITDA Sensitivities
EBITDA Sensitivities COGS Input Unit of Measure 2014 Units (Approximation) $ Change Per Unit +/- Approximate Annual EBITDA Impact +/- (Dollars in millions) Purchased Pulp Ton 250,000 $25 $6.3 Chips/Sawdust Ton 2,300,000 $3 $5.8 Diesel Gallon of Diesel 10,000,000 $0.50 $5.0 Linehaul Rate Mile 65,000,
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) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 2012 2013 2014 Twelve Months Ended December 31, Gross profit1 $ 46,615 $ 56,481 $ 46,608 $ 68,755 $ 58,291 $ 64,648 $ 76,685 $ 58,675
Slide 22: Segment Adjusted Operating Income (Loss) Reconciliation
Segment Adjusted Operating Income (Loss) Reconciliation of Non-GAAP Financial Measures (Unaudited) (Dollars in thousands) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 2012 2013 2014 Twelve Months Ended December 31, Consumer Products Operating income (loss) $ 10,124 $ 14,815 $ 13,445 $ 14,415 ($52
Slide 23: Adjusted Net Earnings & Diluted Adjusted Net Earnings per Share
Adjusted Net Earnings & Diluted Adjusted Net Earnings per common share Reconciliation of Non-GAAP Financial Measures (Unaudited) (Dollars in thousands - except per-share amounts) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 2012 2013 2014 Twelve Months Ended December 31, GAAP net (loss) earnings
Slide 24: Adjusted Income Tax Provision Reconciliation
Adjusted Income Tax Provision Reconciliation of Non-GAAP Financial Measure (Unaudited) (Dollars in thousands) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 2012 2013 2014 Twelve Months Ended December 31, GAAP income tax benefit (provision) $14,675 ($6,962) $5,183 $55,825 ($3,558) ($9,942) ($3,735)
Slide 25: EBITDA & Adjusted EBITDA Reconciliation
EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures (Unaudited) (Dollars in thousands) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 2012 2013 2014 Twelve Months Ended December 31, Earnings before interest, income taxes, and depreciation & amortization (EBITDA)1 GAAP net (loss)
Slide 26: Segment EBITDA & Adjusted EBITDA Reconciliation
Segment EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures (Unaudited) (Dollars in thousands) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 2012 2013 2014 Twelve Months Ended December 31, Consumer Products Operating income (loss) $ 10,124 $ 14,815 $ 13,445 $ 14,415 ($523) $ 12,
Slide 27: ROIC Tangible Stockholders' Equity & Excess Cash Reconciliation
Return on Invested Capital Tangible Stockholders’ Equity & Excess Cash Reconciliation of Non-GAAP Financial Measures (Unaudited) (Dollars in thousands) 2009 2010 2011 2012 2013 2014 Net earnings1 $ 69,520 $ 73,800 $ 39,674 $ 64,131 $ 106,955 ($2,315) Interest expense, net 15,505 22,571 44,809 33,796
Slide 28: Q1'15 Outlook Reconciliation of Non-GAAP Financial Measures
Q1’15 Outlook Reconciliation of Non-GAAP Financial Measures (Unaudited) Outlook Three Months Ending March 31, 2015 (Dollars in thousands) Range of Estimate From To Earnings before interest, income taxes, and depreciation & amortization (EBITDA)1 GAAP net earnings $4,500 $7,500 Interest expense, net
Slide 29: For more information: www.clearwaterpaper.com
For more information: www.clearwaterpaper.com 28