Clearwater Paper Corporation · NYSE:CLW
Clearwater Paper — Q3 2022 Earnings Presentation
20 slides from Clearwater Paper's earnings presentation, Oct 31, 2022
Slide 1: Third Quarter Earnings Release Materials
CLEARWATER PAPER CORPORATION THIRD QUARTER EARNINGS RELEASE MATERIALS OCTOBER 31, 2022 ARSEN S. KITCH President, Chief Executive Officer And Director MICHAEL J. MURPHY Senior Vice President And Chief Financial Officer
Slide 2: Cautionary Statement Regarding 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 statements regarding order
Slide 3: Q3 2022 Business Highlights
Overall • Net sales $539 million, up 20% compared to prior year • Net income $21 million • Adjusted net income $31 million • Adjusted EBITDA $77 million • Inflation pressures across both businesses Pulp and Paperboard • Continued strong customer demand • SBS prices increased Consumer Products • Dema
Slide 4: Business Update – Pulp and Paperboard
Industry • Demand and order backlogs remain stable • RISI reported market price increases • $250/ton in 2021, $100/ton in Q1 2022 and $100/ton in Q2 2022 • $20/ton in September 2022 • $30/ton in October 2022 Clearwater Paper • Demand and order backlogs are stable • Continued expected benefit of prev
Slide 5: Business Update – Consumer Products
Industry • Consumer buying behavior being affected by inflation • Private brand market share rising, now above 35%1 Clearwater Paper • Strong demand with Q3 2022 shipments of 12.6 million cases compared to 12.3 million in Q3 20212 • Production without meaningful market related downtime in Q3 • Infla
Slide 6: Financial Performance
© Clearwater Paper Corporation 2022 FINANCIAL PERFORMANCE ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2022 2021 2022 2021 Net sales 538.8$ 450.5$ 1,553.3$ 1,282.8$ Cost of sales 454.8 398.2 1,332.0 1,160.9 Selling, general and adminstrative 32.9 28.3 99.6 82.5 Other operating charges, net 2.2 10.2 8.5
Slide 7: Segment Profit and Loss and Adjusted EBITDA
© Clearwater Paper Corporation 2022 SEGMENT PROFIT AND LOSS AND ADJUSTED EBITDA ($ IN MILLIONS) 2022 2021 2022 2021 Net Sales Pulp and Paperboard 300.8$ 237.5$ 862.8$ 684.6$ Consumer Products 241.0 214.2 696.1 603.2 Eliminations (3.0) (1.2) (5.6) (5.0) 538.8$ 450.5$ 1,553.3$ 1,282.8$ Operating Incom
Slide 8: Pulp and Paperboard Results Q3 2022 vs. Q3 2021
PULP AND PAPERBOARD RESULTS Q3 2022 VS. Q3 2021 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Higher pricing Higher input costs including fiber, energy, chemicals and freight © Clearwater Paper Corporation 2022 8
Slide 9: Consumer Products Results Q3 2022 vs. Q3 2021
CONSUMER PRODUCTS RESULTS Q3 2022 VS. Q3 2021 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Higher sales and production volume Higher input costs including pulp, energy and freight © Clearwater Paper Corporation 2022 9 Higher pricing and improved mix
Slide 10: Capital Structure and Allocation
© Clearwater Paper Corporation 2022 CAPITAL STRUCTURE AND ALLOCATION Capital structure summary: • Ample liquidity • No material near-term debt maturities • Corporate/Issuer ratings: Ba2/BB- Capital allocation objectives: • Fund typical maintenance and business improvement capital investments of appr
Slide 11: Outlook for Q4 and 2022
OUTLOOK FOR Q4 AND 2022 OVERALL ASSUMPTIONS © Clearwater Paper Corporation 2022 Q4 2022: $38 to $48 million of Adjusted EBITDA • Major maintenance outage at Lewiston, ID facility impacting EBITDA by $19 to $23 million • Positive impact of previously announced price increases • Cost inflation impacti
Slide 12: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES © Clearwater Paper Corporation 2022 • Invest capital to sustain current asset base • $60 to $70 million per year outside of major projects • Target net leverage ratio of 2.5x through a cycle • Reduce leverage below target to increase flexibility • Support financing of f
Slide 13: Appendix
APPENDIX © Clearwater Paper Corporation 2022 13
Slide 14: Pulp and Paperboard Sequential Quarter Results
PULP AND PAPERBOARD SEQUENTIAL QUARTER RESULTS Q3 2022 VS. Q2 2022 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Higher input costs including fiber and chemicals Higher pricing © Clearwater Paper Corporation 2022 14 Lower volume due to timing of price increases
Slide 15: Consumer Products Sequential Quarter Results
CONSUMER PRODUCTS SEQUENTIAL QUARTER RESULTS Q3 2022 VS. Q2 2022 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Higher input costs including pulp, chemicals and energy offset by lower freight © Clearwater Paper Corporation 2022 15 Higher pricing and improved mix Higher sales and production volume
Slide 16: Key Segment Information
KEY SEGMENT INFORMATION 1. Includes both retail and away-from-home (AFH) cases. AFH was exited in Q3, 2021. 1.5 million in 2020 and 0.8 million in 2021. 2. Non-retail includes away-from-home and parent rolls. Q3’2020 Q4’2020 Q1’2021 Q2’2021 Q3’2021 Q4’2021 Q1’2022 Q2’2022 Q3’2022 Pulp and Paperboard
Slide 17: Reconciliation of Adjusted EBITDA
RECONCILIATION OF ADJUSTED EBITDA ($ IN MILLIONS) June 30, 2022 2021 2022 2022 2021 Net income $ 20.6 $ 1.9 $ 14.7 $ 51.9 $ (37.6) Income tax provision 18.9 (0.3) 4.4 29.3 (13.8) Interest expense, net 8.0 8.9 10.7 27.3 27.5 Depreciation and amortization expense 26.2 25.9 25.7 77.4 79.6 Other operati
Slide 18: Reconciliation of Adjusted Income
© Clearwater Paper Corporation 2022 RECONCILIATION OF ADJUSTED INCOME ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2022 2021 2022 2021 Net income (loss) 20.6$ 1.9$ 51.9$ (37.6)$ Add back: Income tax provision (benefit) 18.9 (0.3) 29.3 (13.8) Income (loss) before income taxes 39.5 1.7 81.2 (51.4) Add ba
Slide 19: Additional Reconciliations
ADDITIONAL RECONCILIATIONS Net Debt Dec 31, 2020 Mar 31, 2021 June 30, 2021 Sept 30, 2021 Dec 31, 2021 Mar 31, 2022 June 30, 2022 Sept 30, 2022 Cash $ 35.9 $ 57.1 $ 60.9 $ 27.8 $ 25.2 $ 36.4 $69.5 $50.8 Current debt 1.7 1.7 1.7 1.6 1.6 1.6 1.0 1.0 Long term debt 716.4 716.3 716.2 676.5 637.6 617.7 5
Slide 20: Major Maintenance Schedule Adjusted EBITDA Impact
MAJOR MAINTENANCE SCHEDULE ADJUSTED EBITDA IMPACT ($ IN MILLIONS) 1. This information is based upon management’s assumptions and estimates. 2. Estimates assume major maintenance outages at both Cypress Bend, AR and Lewiston, ID mills. The Lewiston recovery boiler screen tube replacement project is l