Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q1 2020 Earnings Presentation
23 slides from Clearwater Paper's earnings presentation, May 5, 2020
Slide 1: Clearwater Paper Corporation First Quarter 2020 Supplemental Information
Clearwater Paper Corporation FIRST QUARTER 2020 SUPPLEMENTAL INFORMATION May 5, 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 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 our response to COVID-19 and the imp
Slide 3: Introductions
Introductions Arsen S. Kitch President, Chief Executive Officer and Director • With Clearwater Paper since 2013, previous experience: • Senior Vice President and General Manager Consumer Products Division • Vice President, Finance and Financial Planning and Analysis • Prior roles with Nestlé USA, KK
Slide 4: COVID-19 - Q1 Operational Update
COVID-19 - Q1 Operational Update Committed to protecting our two most important assets: our employees and reputation with customers Taking care of our employees: • Temperature checks and sanitation practices • Social distancing guidelines • Remote work access and travel restrictions • Enhanced benef
Slide 5: COVID-19 - Q1 Business Update: Consumer Products Division
COVID-19 - Q1 Business Update Consumer Products Division Operational performance: • 15.2 million cases of tissue shipped in Q1 • ~19% above past four quarter trend • Demonstrated ability to execute against increased demand Industry context: • Retail tissue sales up over 90% in March per IRI • Invent
Slide 6: COVID-19 - Q1 Business Update: Paperboard Division
COVID-19 - Q1 Business Update Paperboard Division Operational performance: • Volume increased 4.5% in Q1’20 vs. Q4’19 • Strong shipments in March, driven by demand for food packaging Industry context: • We estimate 2/3 of industry demand driven by recession resilient end- markets segments • 1/3 of d
Slide 7: Q1 Business Highlights
Q1 Business Highlights $477.9 million net sales, up 10% vs. Q4'19, up 11% vs. Q1'19 $18.8 million operating income Q1’20 Diluted net earnings per share of $0.62 RESULTS $55.4 million Adjusted EBITDA1 Outperformance driven by elevated demand in tissue and continued improvements in our cost structure
Slide 8: Clearwater Paper Sequential Quarter Results
Clearwater Paper Sequential Quarter Results GAAP Measures (dollars in millions) Period Net Sales Operating Income Net Income Q1'20 $477.9 $18.8 $10.3 Q4'19 $435.5 $18.1 $2.0 Q1'20 vs. Q4'19 Adjusted EBITDA1 ($ millions) Strong demand in Public utility power failure paperboard and in Arkansas, absenc
Slide 9: Consumer Products Sequential Quarter Results
Consumer Products Sequential Quarter Results GAAP Measures (dollars in millions) Operating Operating Income Period Net Sales Income Percentage Q1'20 $265.7 $14.3 5.4% Q4'19 $230.6 $1.6 0.7% Q1'20 vs. Q4'19 Segment Adjusted EBITDA1 ($ millions) Incremental volume from new and existing customers and p
Slide 10: Paperboard Sequential Quarter Results
Paperboard Sequential Quarter Results GAAP Measures (dollars in millions) Operating Operating Income Period Net Sales Income Percentage Q1'20 $212.2 $26.5 12.5% Q4'19 $204.9 $35.3 17.2% Q1'20 vs. Q4'19 Segment Adjusted EBITDA1 ($ millions) Public utility power failure in Arkansas, absence of one-tim
Slide 11: Q2'20 Outlook of Non-GAAP Financial Measures
Q2’20 Outlook1 of Non-GAAP Financial Measures (unaudited) Adjusted EBITDA Outlook1,2 OUTLOOK THREE MONTHS ENDING JUNE 30, 2020 RANGE OF ESTIMATE (Dollars in millions) FROM TO GAAP net income $1.3 $8.7 Interest expense, net 11.9 12.0 Income tax provision (benefit) 0.4 2.9 Depreciation and amortizatio
Slide 12: Outlook
Outlook Q2’20: $45 to $55 million of adjusted EBITDA • Volume normalizing, impact of reported RISI SBS price reduction Other FY ’20 assumptions • $49 - $51M interest expense • $45 - $50M capital expense • $109 - $112M depreciation and amortization expense • Income tax expense expected to be offset b
Slide 13: Capital Structure and Liquidity
Capital Structure and Liquidity Supportive, stable capital structure Liquidity Profile ($ in millions)1 ABL Availability $231.5 • Capital structure provides ample liquidity Less Utilization (57.9) • No material near-term debt maturities Plus Unrestricted Cash 60.8 • Corporate/Issuer ratings: Ba2/BB-
Slide 14: Value Proposition
Value Proposition Well positioned across two attractive businesses Consumer Products: 1. Tissue is need-based and economically resilient 2. Shift to private-branded over branded product continues with long runway 3. Clearwater has national scale and superior supply chain performance Paperboard: 1. D
Slide 15: Appendix
Appendix © Clearwater Paper Corporation 2020
Slide 16: Clearwater Paper Year over Year Results
Clearwater Paper Year over Year Results GAAP Measures (dollars in millions) Period Net Sales Operating Income Net Income Q1'20 $477.9 $18.8 $10.3 Q1'19 $428.8 $14.4 $3.8 Q1'20 vs. Q1’19 Adjusted EBITDA1 Bridge ($ millions) Organic growth and strong demand due to Lower pricing in both pandemic busine
Slide 17: Five Quarter Segment Trends
Five Quarter Segment Trends CONSUMER PRODUCTS PAPERBOARD total net sales ($ millions) total net sales ($ millions) 1,2 1,2 adjusted EBITDA & margin adjusted EBITDA & margin 1 Non-GAAP measure - See Appendix for the reconciliation to the most comparable GAAP measure. 2 Non-GAAP measure - Segment Adju
Slide 18: Key Segment Results (unaudited)
Key Segment Results (unaudited) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Consumer Products Shipments Retail (short tons) 73,356 76,175 79,526 79,748 90,791 Non-Retail (short tons)1 10,266 6,623 6,882 8,393 9,002 Total Tissue Tons 83,622 82,798 86,408 88,141 99,793 Converted Products (cases in thousands)2 12,32
Slide 19: Major Maintenance Schedule
Major Maintenance Schedule (Dollars 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 2020e 1 2021e 1 2022e 1 Q1 Q2 Q3 Q4 Total 1 This information is based upon management’s current expectations and estimates, as well a
Slide 20: Key Commodity Consumption Volumes
Key Commodity Consumption Volumes 1 COGS Input Unit of Measure Approximate Annual Volume (in millions) Purchased Pulp Ton 0.30 Fiber Bone Dry Ton 1.50 Diesel Gallon 10.0 Electric MWh 1.20 Natural Gas MMBTU 10.7 Polyethylene Pound 30.0 Caustic Pound 90.0 Chlorate Pound 30.0 1 Approximated annual volu
Slide 21: Adjusted Net Earnings and Adjusted EBITDA Reconciliation
Adjusted Net Earnings and Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures (unaudited) (Dollars in millions) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Net income (loss) $ 3.8 $ (0.4) $ (11.0) $ 2.0 $ 10.3 Add back: Income tax provision (0.7) (3.4) 8.7 (2.3) 6.2 Earnings before income taxes $ 4.5 $
Slide 22: Segment Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures
Segment Adjusted EBITDA Reconciliation of Non-GAPP Financial Measures (unaudited) (Dollars in millions) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Consumer Products segment income (loss) $ 1.3 $ (5.1) $ (4.4) $ 1.6 $ 14.3 Depreciation and amortization 14.7 17.4 19.0 18.6 17.3 Adjusted EBITDA Consumer Products1 $
Slide 23: Free Cash Flow (Unaudited)
Free Cash Flow (Unaudited) (Dollars in millions) Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Net Income $3.8 ($0.4) ($11.0) $2.0 $10.3 Depreciation and amortization 25.8 28.6 31.9 29.3 28.0 Stock compensation 0.8 1.3 0.9 1.1 1.5 Change in working capital (61.9) 15.4 (57.2) 36.3 (27.5) Loss on retirement of debt -