Clearwater Paper Corporation (NYSE:CLW), a premier
supplier of quality tissue and bleached paperboard products, today
reported financial results for the second quarter and six months
ended June 30, 2023.
SECOND QUARTER HIGHLIGHTS
- Net sales of $525 million, slightly below the second quarter of
last year
- Net income of $30 million, or $1.75 per diluted share
- Adjusted net income of $30 million, $11 million higher than the
second quarter of last year
- Adjusted EBITDA of $71 million, $8 million higher than second
quarter of last year
- Adjusted EBITDA margin at 13.6%, up from 12% during the second
quarter of last year
- Reduced net debt by $25 million from first quarter of this
year
- Repurchased $8 million of outstanding shares, with $15 million
remaining under program
“We had a stronger than expected second quarter, with solid
operational performance and lower than expected costs for key
inputs such as pulp, energy, and transportation. Tissue demand
remained strong, while paperboard was soft as consumer spending
slowed and customers continued to manage inventories,” said Arsen
Kitch, president and chief executive officer. “We continued to
focus on cash flow generation and were able to reduce our net debt
by $25 million and repurchase 263 thousand shares of our
stock.”
OVERALL RESULTS
For the second quarter of 2023, Clearwater Paper reported net
sales of $525 million compared to net sales of $526 million for the
second quarter of 2022. Net income for the second quarter of 2023
was $30 million, or $1.75 per diluted share, compared to net income
for the second quarter of 2022 of $15 million, or $0.86 per diluted
share. On a non-GAAP basis, Clearwater Paper reported adjusted net
income in the second quarter of 2023 of $30 million, or $1.74 per
diluted share, compared to second quarter 2022 adjusted net income
of $19 million, or $1.11 per diluted share. Adjusted EBITDA for the
second quarter of 2023 was $71 million, compared to the second
quarter of 2022 Adjusted EBITDA of $63 million.
For the first six months of 2023, Clearwater Paper reported net
sales of $1.1 billion, a 3% increase compared to net sales of $1.0
billion for the first six months of 2022. Net income for the first
six months of 2023 was $54 million, or $3.15 per diluted share,
compared to net income for the first six months of 2022 of $31
million, or $1.83 per diluted share. On a non-GAAP basis,
Clearwater Paper reported adjusted net income in the first six
months of 2023 of $55 million, or $3.21 per diluted share, compared
to first six months of 2022 adjusted net income of $36 million, or
$2.13 per diluted share. Adjusted EBITDA for the first six months
of 2023 was $137 million, compared to the first six months of 2022
Adjusted EBITDA of $122 million.
Pulp and Paperboard Segment
Net sales in the Pulp and Paperboard segment were $272 million
for the second quarter of 2023, down 8% compared to second quarter
2022 net sales of $296 million. Segment operating income for the
second quarter of 2023 was $42 million, compared to $52 million for
the second quarter of 2022. Adjusted EBITDA for the segment was $51
million in the second quarter of 2023, compared to $61 million in
the second quarter of 2022. The decrease in operating income and
Adjusted EBITDA was primarily driven by planned production downtime
to manage inventories, higher maintenance costs and lower sales
volumes, partially offset by higher sales prices.
Net sales in the Pulp and Paperboard segment were $551 million
for the first six months of 2023, down 2% compared to net sales of
$562 million in the first six months of 2022. Segment operating
income for the first six months of 2023 was $99 million, compared
to $102 million for the first six months of 2022. Adjusted EBITDA
for the segment was $118 million in the first six months of 2023,
compared to $121 million in the first six months of 2022. The
decrease in operating income and Adjusted EBITDA was driven
primarily by planned production downtime to manage inventories and
lower sales volumes, partially offset by higher sales prices.
Pulp and Paperboard Sales Volumes and Prices:
- Paperboard sales volumes were 186,160 tons in the second
quarter of 2023, a decrease of 14% compared to 215,903 tons in the
second quarter of 2022. Paperboard sales volumes were 375,558 tons
in the first six months of 2023, a decrease of 10% compared to
417,259 tons in the first six months of 2022.
- Paperboard average net selling price increased 6% to $1,413 per
ton for the second quarter of 2023, compared to $1,332 per ton in
the second quarter of 2022. Paperboard average net selling price
increased 10% to $1,428 per ton for the first six months of 2023,
compared to $1,299 per ton in the first six months of 2022.
Consumer Products Segment
Net sales in the Consumer Products segment were $254 million for
the second quarter of 2023, up 9% compared to second quarter 2022
net sales of $232 million. Segment operating income for the second
quarter of 2023 was $25 million compared to operating income of $3
million in the second quarter of 2022. Adjusted EBITDA for the
segment was $40 million in the second quarter of 2023, compared to
$19 million in the second quarter of 2022. The increase in
operating income and Adjusted EBITDA was driven by higher sales
prices and lower input costs, primarily in freight and energy.
Net sales in the Consumer Products segment were $502 million for
the first six months of 2023, up 10% compared to net sales of $455
million in the first six months of 2022. Segment operating income
for the first six months of 2023 was $29 million compared to
operating income of $4 million in the first six months of 2022.
Adjusted EBITDA for the segment was $59 million in the first six
months of 2023, compared to $35 million in the first six months of
2022. The increase in operating income and Adjusted EBITDA was
driven by higher sales prices partially offset by higher input
costs, primarily in pulp, freight and energy costs.
Retail Tissue Sales Volumes and Prices:
- Retail tissue volumes sold were 78,672 tons in the second
quarter of 2023 compared to 76,604 tons in the second quarter of
2022. Retail tissue volumes sold were 155,520 tons in the first six
months of 2023, an increase of 2% compared to 152,030 tons in the
first six months of 2022.
- Retail tissue average net selling price increased 8% to $3,214
per ton in the second quarter of 2023, compared to $2,984 per ton
in the second quarter of 2022. Retail tissue average net selling
price increased 10% to $3,207 per ton in the first six months of
2023, compared to $2,928 per ton in the first six months of
2022.
COMPANY OUTLOOK
“We expect continued strength in our tissue business in the
coming quarters, with projected strong demand and lower input costs
driving improved margins. We also anticipate that our paperboard
volumes will improve in the second half of this year as compared to
the first half. We will continue our focus on cash flow generation
through strong operating performance and managing inventories by
matching supply with demand,” continued Kitch.
WEBCAST INFORMATION
Clearwater Paper Corporation will discuss these results during
an earnings conference call that begins at 2:00 p.m. Pacific Time
today. A live webcast and accompanying supplemental information
will be available on the company's website at
http://ir.clearwaterpaper.com. A replay of today's conference call
will be available on the website at
https://ir.clearwaterpaper.com/investors/events-and-presentations
beginning at 5:00 p.m. Pacific Time today.
ABOUT CLEARWATER PAPER
Clearwater Paper is a premier supplier of private brand tissue
to major retailers, including grocery, club, mass merchants, and
discount stores. In addition, the company produces bleached
paperboard used by quality-conscious printers and packaging
converters, and offers services that include custom sheeting,
slitting, and cutting. Clearwater Paper's employees build
shareholder value by developing strong relationships through
quality and service.
USE OF NON-GAAP MEASURES
In this press release, the company presents certain non-GAAP
financial information for the second quarter and first six months
of 2023 and 2022, including adjusted income and Adjusted EBITDA.
Because these amounts are not in accordance with GAAP,
reconciliations to net income as determined in accordance with GAAP
are included in the tables at the end of this press release. The
company presents these non-GAAP metrics because management believes
they assist investors and analysts in comparing the company's
performance across reporting periods on a consistent basis by
excluding items that the company does not believe are indicative of
its core operating performance. In addition, the company uses
Adjusted EBITDA: (i) as a factor in evaluating management’s
performance when determining incentive compensation, (ii) to
evaluate the effectiveness of the company's business strategies,
and (iii) because the company's credit agreement and the indentures
governing the company's outstanding notes use metrics similar to
Adjusted EBITDA to measure the company's compliance with certain
covenants.
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 as amended, including statements regarding demand,
inflation, our expectations regarding the paperboard and tissue
markets, operational and financial performance, and our focus on
cash flow and inventory management. These forward-looking
statements are based on current expectations, estimates,
assumptions, and projections that are subject to change, and actual
results may differ materially from the forward-looking statements.
Factors that could cause actual results to differ materially
include, but are not limited to: competitive pricing pressures for
our products, including as a result of capacity additions, demand
reduction and the impact of foreign currency fluctuations on the
pricing of products globally; changes in the U.S. and international
economies and in general economic conditions in the regions and
industries in which we operate; manufacturing or operating
disruptions, including equipment malfunctions and damage to our
manufacturing facilities; the loss of, changes in prices in regard
to, or reduction in, orders from a significant customer; changes in
the cost and availability of wood fiber and wood pulp; changes in
energy, chemicals, packaging and transportation costs and
disruptions in transportation services impacting our ability to
receive inputs or ship products to customers; reliance on a limited
number of third-party suppliers, vendors and service providers
required for the production of our products and our operations;
changes in customer product preferences and competitors' product
offerings; cyber-security risks; larger competitors having
operational, financial and other advantages; consolidation and
vertical integration of converting operations in the paperboard
industry; our ability to successfully execute capital projects and
other activities to operate our assets, including effective
maintenance, implement our operational efficiencies and realize
higher throughput or lower costs; IT system disruptions and IT
system implementation failures; labor disruptions; cyclical
industry conditions; changes in expenses, required contributions
and potential withdrawal costs associated with our pension plans;
environmental liabilities or expenditures and climate change; our
ability to attract, motivate, train and retain qualified and key
personnel; ability to service our debt obligations and restrictions
on our business from debt covenants and terms; changes in our
banking relations, or in our customer supply chain financing;
negative changes in our credit agency ratings; changes in laws,
regulations or industry standards affecting our business; and other
risks and uncertainties described from time to time in the
company's public filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the year
ended December 31, 2022. The forward-looking statements are made as
of the date of this press release and the company does not
undertake to update any forward-looking statements based on new
developments or changes in the company's expectations after the
date of this press release.
Clearwater Paper
Corporation
Consolidated Statements of
Operations
(Unaudited)
Quarter Ended June 30,
Six Months Ended June
30,
(In millions, except per-share
data)
2023
2022
2023
2022
Net sales
$
524.6
$
526.4
$
1,050.0
$
1,014.6
Costs and expenses:
Cost of sales
438.7
455.2
887.2
877.2
Selling, general and administrative
expenses
39.1
33.9
75.1
66.7
Other operating (income) charges, net
(0.4
)
5.7
0.6
6.3
Total operating costs and expenses
477.3
494.9
962.9
950.2
Income from operations
47.3
31.5
87.1
64.4
Interest expense, net
(7.5
)
(10.7
)
(15.1
)
(19.3
)
Debt retirement costs
—
(0.3
)
—
(0.5
)
Other non-operating (expense) income
0.1
(1.4
)
0.2
(2.8
)
Total non-operating expense
(7.4
)
(12.4
)
(14.9
)
(22.7
)
Income before income taxes
39.9
19.1
72.2
41.7
Income tax provision
10.2
4.4
18.6
10.4
Net income
$
29.7
$
14.7
$
53.5
$
31.3
Net income per common share:
Basic
$
1.76
$
0.87
$
3.18
$
1.86
Diluted
1.75
0.86
$
3.15
$
1.83
Average shares outstanding (in
thousands):
Basic
16,865
16,849
16,849
16,788
Diluted
16,958
17,078
17,003
17,080
`
Clearwater Paper
Corporation
Condensed Consolidated Balance
Sheets
(Unaudited)
(In millions)
June 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
41.7
$
53.7
Receivables, net
196.6
188.8
Inventories
340.4
324.0
Other current assets
13.4
19.9
Total current assets
592.1
586.3
Property, plant and equipment, net
1,000.2
1,017.1
Other assets, net
112.7
100.1
Total assets
$
1,705.0
$
1,703.5
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt
$
0.9
$
0.9
Accounts payable and accrued
liabilities
262.6
311.1
Total current liabilities
263.5
312.0
Long-term debt
564.8
564.9
Liability for pension and other
postretirement employee benefits
57.2
58.2
Deferred tax liabilities and other
long-term obligations
205.0
196.4
Total liabilities
1,090.5
1,131.5
Stockholders' equity:
Common stock
—
—
Additional paid-in capital
17.7
28.5
Retained earnings
630.3
576.8
Accumulated other comprehensive loss, net
of tax
(33.4
)
(33.3
)
Total stockholders' equity
614.5
572.1
Total liabilities and stockholders'
equity
$
1,705.0
$
1,703.5
Clearwater Paper
Corporation
Consolidated Statements of
Cash Flows
(Unaudited)
Quarter Ended June 30,
Six Months Ended June
30,
(In millions)
2023
2022
2023
2022
Operating activities
Net income
$
29.7
$
14.7
$
53.5
$
31.3
Adjustments to reconcile net income to net
cash flows provided by operating activities:
Depreciation and amortization
24.6
25.7
49.4
51.2
Equity-based compensation expense
1.5
4.9
3.4
5.5
Deferred taxes
(1.6
)
(1.9
)
(2.9
)
(4.1
)
Defined benefit pension and other
postretirement employee benefits
(0.6
)
0.8
(1.1
)
1.5
Amortization of deferred debt costs and
debt retirement
0.3
0.7
0.6
1.3
Loss on sale or impairment associated with
assets
—
4.6
1.1
4.6
Increase (decrease) in cash from changes
in operating assets and liabilities:
Accounts receivable
(7.7
)
(11.3
)
(14.1
)
(21.8
)
Inventories
5.3
(5.8
)
(17.0
)
(10.0
)
Other current assets
5.4
4.2
5.8
4.2
Accounts payable and accrued
liabilities
(10.7
)
40.6
(42.5
)
54.5
Other, net
(0.1
)
1.3
0.6
1.4
Net cash flows provided by operating
activities
46.0
78.5
36.9
119.5
Investing activities
Additions to property, plant and
equipment, net
(12.8
)
(5.4
)
(34.3
)
(13.2
)
Net cash flows used in investing
activities
(12.8
)
(5.4
)
(34.3
)
(13.2
)
Financing activities
Borrowings on short-term debt
—
—
12.0
—
Repayments of borrowings on short-term
debt
—
—
(12.0
)
—
Repayments of long-term debt
(0.2
)
(35.1
)
(0.5
)
(55.5
)
Taxes paid related to net share settlement
of equity awards
(0.4
)
(1.0
)
(4.6
)
(2.5
)
Repurchases of common stock
(8.4
)
(3.9
)
(10.1
)
(3.9
)
Other, net
—
—
(0.1
)
—
Net cash flows used in financing
activities
(8.9
)
(40.0
)
(15.3
)
(61.9
)
Increase (decrease) in cash, cash
equivalents and restricted cash
24.3
33.1
(12.7
)
44.4
Cash, cash equivalents and restricted cash
at beginning of period
17.4
37.5
54.4
26.2
Cash, cash equivalents and restricted cash
at end of period
$
41.7
$
70.6
$
41.7
$
70.6
Clearwater Paper
Corporation
Segment Information
(Unaudited)
Quarter Ended June 30,
Six Months Ended June
30,
(In millions)
2023
2022
2023
2022
Segment net sales:
Pulp and Paperboard
$
272.3
$
295.8
$
551.0
$
562.0
Consumer Products
253.6
232.1
502.0
455.2
Eliminations
(1.3
)
(1.5
)
(3.0
)
(2.6
)
Total segment net sales
$
524.6
$
526.4
$
1,050.0
$
1,014.6
Operating income (loss):
Pulp and Paperboard
$
42.0
$
52.0
$
99.1
$
102.3
Consumer Products
25.0
3.5
29.2
4.4
Corporate and eliminations
(20.1
)
(18.2
)
(40.6
)
(36.0
)
Other operating income (charges), net
1
0.4
(5.7
)
(0.6
)
(6.3
)
Income from operations
$
47.3
$
31.5
$
87.1
$
64.4
1 Other operating income (charges), net consist of amounts
unrelated to ongoing core operating activities. Please refer to
Note 9 within Clearwater Paper's Form 10-Q filed with the SEC for
the period end June 30, 2023 for the detailed breakout of this
amount.
Clearwater Paper
Corporation
Reconciliation of Non-GAAP
Financial Measures
Adjusted EBITDA
(Unaudited)
Quarter Ended June 30,
Six Months Ended June
30,
(In millions)
2023
2022
2023
2022
Net income
$
29.7
$
14.7
$
53.5
$
31.3
Add back:
Income tax provision
10.2
4.4
18.6
10.4
Interest expense, net
7.5
10.7
15.1
19.3
Depreciation and amortization
24.6
25.7
49.4
51.2
Other operating (income) charges, net1
(0.4
)
5.7
0.6
6.3
Debt retirement costs
—
0.3
—
0.5
Other non-operating (income) expense
(0.1
)
1.4
(0.2
)
2.8
Adjusted EBITDA
$
71.5
$
63.0
$
137.2
$
121.9
Pulp and Paperboard segment income
$
42.0
$
52.0
$
99.1
$
102.3
Depreciation and amortization
9.3
9.2
18.5
18.5
Adjusted EBITDA Pulp and Paperboard
$
51.3
$
61.2
$
117.6
$
120.8
Consumer Products segment income
$
25.0
$
3.5
$
29.2
$
4.4
Depreciation and amortization
14.7
15.6
29.7
30.9
Adjusted EBITDA Consumer Products
$
39.7
$
19.1
$
58.9
$
35.3
Corporate and other expenses
$
(20.1
)
$
(18.2
)
$
(40.6
)
$
(36.0
)
Depreciation and amortization
0.6
0.9
1.2
1.8
Adjusted EBITDA Corporate and other
$
(19.5
)
$
(17.3
)
$
(39.3
)
$
(34.2
)
Pulp and Paperboard segment
$
51.3
$
61.2
$
117.6
$
120.8
Consumer Products segment
39.7
19.1
58.9
35.3
Corporate and other
(19.5
)
(17.3
)
(39.3
)
(34.2
)
Adjusted EBITDA
$
71.5
$
63.0
$
137.2
$
121.9
1 Other operating (income) charges, net consist of amounts
unrelated to ongoing core operating activities. Please refer to
Note 9 within Clearwater Paper's Form 10-Q filed with the SEC for
the period end June 30, 2023 for the detailed breakout of this
amount.
Clearwater Paper
Corporation
Reconciliation of Non-GAAP
Financial Measures
(Unaudited)
Quarter Ended June 30,
Six Months Ended June
30,
(In millions, except per share
data)
2023
2022
2023
2022
Adjusted net income:
Net income
$
29.7
$
14.7
$
53.5
$
31.3
Add back:
Income tax provision
10.2
4.4
18.6
10.4
Income before income taxes
39.9
19.1
72.2
41.7
Add back:
Debt retirement costs
—
0.3
—
0.5
Other operating (income) charges, net
(0.4
)
5.7
0.6
6.3
Adjusted income before tax
$
39.4
$
25.2
$
72.8
$
48.5
Normalized income tax provision
9.9
6.3
18.2
12.1
Adjusted net income
$
29.6
$
18.9
$
54.6
$
36.4
Weighted average diluted shares
(thousands)
16,958
17,078
17,003
17,080
Adjusted income per diluted share
$
1.74
$
1.11
$
3.21
$
2.13
June 30, 2023
March 31, 2023
December 31, 2022
Calculation of net debt:
Current portion of long-term debt
$
0.9
$
0.9
$
0.9
Long-term debt
564.8
564.9
564.9
Add back:
Unamortized deferred debt costs
3.0
3.2
3.4
Less:
Finance leases
23.7
24.0
24.2
Cash and cash equivalents
41.7
16.7
53.7
Net debt
$
503.3
$
528.3
$
491.3
For additional information on Clearwater
Paper, please visit our website at www.clearwaterpaper.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230801124715/en/
Investors contact: Sloan Bohlen Solebury Strategic
Communications 509.344.5906 investorinfo@clearwaterpaper.com
Media contact: Julia Joy Clearwater Paper Corporation 509.344.
5953 julia.joy@clearwaterpaper.com
ClearWater Paper (NYSE:CLW)
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