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: Forward Looking Statements
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
Slide 3: Q3 2022 Business Highlights
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 increa
Slide 4: Business Update – Pulp and Paperboard
BUSINESS UPDATE – PULP AND PAPERBOARD PRICING OFFSETTING INFLATION, DRIVING STRONG RESULTS 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 • $30/ton in October 2022 C
Slide 5: Business Update – Consumer Products
BUSINESS UPDATE – CONSUMER PRODUCTS SHIPMENTS STRENGTHEN Industry • Consumer buying behavior being affected by inflation • Private brand market share rising, now above 35%1 Clearwater Paper • Strong demand with Q3 2022 shipments of 12.6 million cases compared to 12.3 million in Q3 20212 • Production
Slide 6: Financial Performance
FINANCIAL PERFORMANCE ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Quarter Ended Sept. 30, Nine Months Ended Sept. 30, 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 charg
Slide 7: Segment Profit and Loss and Adjusted EBITDA
SEGMENT PROFIT AND LOSS AND ADJUSTED EBITDA ($ IN MILLIONS) Quarter Ended Sept. 30, Nine Months Ended Sept. 30, 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 $
Slide 8: Pulp and Paperboard Results
PULP AND PAPERBOARD RESULTS Q3 2022 VS. Q3 2021 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Higher input costs including fiber, energy, chemicals and Higher pricing freight © Clearwater Paper Corporation 2022 8
Slide 9: Consumer Products Results
CONSUMER PRODUCTS RESULTS Q3 2022 VS. Q3 2021 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Higher sales and production volume Higher pricing and improved Higher input mix costs including pulp, energy and freight © Clearwater Paper Corporation 2022 9
Slide 10: Capital Structure and Allocation
CAPITAL STRUCTURE AND ALLOCATION Capital structure summary: Liquidity Profile ($ in millions)1 • Ample liquidity ABL Availability $250.0 • No material near-term debt maturities Less Utilization (3.7) • Corporate/Issuer ratings: Ba2/BB- Plus Unrestricted Cash 50.8 Capital allocation objectives: Liqui
Slide 11: Outlook for Q4 and 2022 Overall Assumptions
OUTLOOK FOR Q4 AND 2022 OVERALL ASSUMPTIONS Q4 2022: $38 to $48 million of Adjusted EBITDA • Major maintenance outage at Lewiston, ID facility impacting EBITDA by $21 to $25 million • Positive impact of previously announced price increases • Cost inflation impacting Adjusted EBITDA by $7 to $11 mill
Slide 12: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Disciplined approach to capital allocation 1 Sustain the • Invest capital to sustain current asset base business • $60 to $70 million per year outside of major projects 2 • Target net leverage ratio of 2.5x through a cycle In order of priority Preserve financial • Reduc
Slide 13: Appendix
APPENDIX © Clearwater Paper Corporation 2022 13
Slide 14: Pulp and Paperboard Sequential Quarter Results
PULP AND PAPERBOARD SEQUENTIAL QUARTER RESULTS Q3 2022 VS. Q2 2022 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Lower volume due to timing Higher input Higher pricing of price costs including increases fiber and chemicals © Clearwater Paper Corporation 2022 14
Slide 15: Consumer Products Sequential Quarter Results
CONSUMER PRODUCTS SEQUENTIAL QUARTER RESULTS Q3 2022 VS. Q2 2022 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Higher sales and production volume Higher pricing Higher input and improved costs including mix pulp, chemicals and energy offset by lower freight © Clearwater Paper Corporation 2022 15
Slide 16: Key Segment Information
KEY SEGMENT INFORMATION Q3’2020 Q4’2020 Q1’2021 Q2’2021 Q3’2021 Q4’2021 Q1’2022 Q2’2022 Q3’2022 Pulp and Paperboard Sales ($ millions) $217.2 $220.4 $219.7 $227.4 $237.5 $261.3 $266.2 $295.8 $300.8 Adjusted EBITDA ($ millions) $41.8 $42.8 $34.0 $22.0 $43.5 $61.9 $59.5 $61.2 $73.0 Paperboard shipment
Slide 17: Reconciliation of Adjusted EBITDA
RECONCILIATION OF ADJUSTED EBITDA ($ IN MILLIONS) Quarter Ended Nine Months Ended September 30, June 30, September 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
Slide 18: Reconciliation of Adjusted Income
RECONCILIATION OF ADJUSTED INCOME ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Quarter Ended Sept. 30, Nine Months Ended Sept. 30, 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.
Slide 19: Additional Reconciliations
ADDITIONAL RECONCILIATIONS ($ IN MILLIONS) 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 $50.8 Current debt 1.7 1.7 1.7 1.6 1.6 1.6 1.0 1.0 Long term debt 716.4 716.3 716.2 676
Slide 20: Major Maintenance Schedule
MAJOR MAINTENANCE SCHEDULE ADJUSTED EBITDA IMPACT ($ IN MILLIONS) $35 - $40 $30 $27 $27 - $31 $24 $5 2023 $20 $7 or 2024 expected $22 $17 Idaho $10 $4 $2 2017 2018 2019 2020 2021 2022e1 2023e 1,2 Q1 Q2 Q3 Q4 Total 1. This information is based upon management’s assumptions and estimates. 2. Estimates