Clearwater Paper Corporation (NYSE:CLW), a premier
supplier of bleached paperboard and quality consumer tissue today
reported financial results for the second quarter and six months
ended June 30, 2024.
SECOND QUARTER HIGHLIGHTS
- Continued strong demand in tissue, improved demand in
paperboard
- Completed acquisition of Augusta paperboard manufacturing
facility
- Net sales of $586 million, up 12% from the second quarter of
last year, primarily driven by incremental sales volume from
Augusta
- Net loss of $26 million, or $1.55 per diluted share compared to
$30 million income, or $1.75 per diluted share in the second
quarter of last year
- Adjusted EBITDA of $35 million, $36 million less than second
quarter of last year, driven by the $32 million impact from the
planned major maintenance at the Lewiston, Idaho facility
"We completed the acquisition of the Augusta facility in May and
our integration is on track. We are pleased with the quality of the
assets and are committed to achieving our targeted synergies by the
end of 2026,” said Arsen Kitch, president and chief executive
officer. “Our tissue business continues to deliver outstanding
performance, and we are expecting a gradual recovery in paperboard
market demand in the coming quarters.”
STRATEGIC UPDATES
On July 22, 2024, the company announced that it has signed
definitive agreements to sell its consumer products division
(tissue business) to Sofidel America Corp. for $1.06 billion,
subject to customary adjustments. The transaction is subject to
regulatory approval other customary closing conditions and is
currently expected to close in the fourth quarter of 2024.
“We thoroughly explored strategic options for our tissue
business and believe that Sofidel will be well positioned to
continue investing in these assets for long-term growth,” said
Kitch. "This is a transformational time for Clearwater paper, and
we are looking forward to the next chapter of value creation as we
continue our strategy to scale and grow our paperboard
business.”
OVERALL RESULTS
For the second quarter of 2024, Clearwater Paper reported net
sales of $586 million compared to net sales of $525 million for the
second quarter of 2023. Clearwater Paper reported a net loss for
the second quarter of 2024 of $26 million, or $1.55 per diluted
share, compared to net income for the second quarter of 2023 of $30
million, or $1.75 per diluted share. Adjusted EBITDA for the second
quarter of 2024 was $35 million, compared to the second quarter of
2023 Adjusted EBITDA of $71 million.
For the first six months of 2024, Clearwater Paper reported net
sales of $1.1 billion, a 3% increase compared to net sales of $1
billion for the first six months of 2023. Clearwater Paper reported
a net loss for the first six months of 2024 of $9 million, or $0.52
per diluted share, compared to net income for the first six months
of 2023 of $54 million, or $3.15 per diluted share. Adjusted EBITDA
for the first six months of 2024 was $97 million, compared to the
first six months of 2023 Adjusted EBITDA of $137 million.
Pulp and Paperboard Segment
Net sales in the Pulp and Paperboard segment were $334 million
for the second quarter of 2024, up 23% compared to second quarter
2023 net sales of $272 million. Segment operating loss for the
second quarter of 2024 was $12 million, compared to operating
income of $42 million for the second quarter of 2023. Adjusted
EBITDA for the segment was $11 million in the second quarter of
2024, compared to $51 million in the second quarter of 2023. The
decrease in operating income and Adjusted EBITDA was driven by
lower sales prices and the impacts of the company's planned major
maintenance outage at its Lewiston, Idaho facility, partially
offset by lower wood costs and an insurance recovery realized in
the second quarter of 2024 related to a significant weather event
at its Lewiston, Idaho facility which occurred in the first quarter
of 2024.
Net sales in the Pulp and Paperboard segment were $578 million
for the first six months of 2024, up 5% compared to net sales of
$551 million in the first six months of 2023. Segment operating
income for the first six months of 2024 was $13 million, compared
to $99 million for the first six months of 2023. Adjusted EBITDA
for the segment was $45 million in the first six months of 2024,
compared to $118 million in the first six months of 2023. The
decrease in operating income and Adjusted EBITDA was primarily
driven by lower sales prices and the impacts of the company's
planned major maintenance outage at its Lewiston Idaho facility,
partially offset by lower wood costs.
Pulp and Paperboard Sales Volumes and Prices:
- Paperboard sales volumes were 272,585 tons in the second
quarter of 2024, an increase of 46% compared to 186,160 tons in the
second quarter of 2023. Paperboard sales volumes were 459,888 tons
in the first six months of 2024, an increase of 22.5% compared to
375,558 tons in the first six months of 2023.
- Paperboard average net selling price decreased 14% to $1,216
per ton for the second quarter of 2024, compared to $1,413 per ton
in the second quarter of 2023. Paperboard average net selling price
decreased 13% to $1,244 per ton for the first six months of 2024,
compared to $1,428 per ton in the first six months of 2023.
Consumer Products Segment
Net sales in the Consumer Products segment were $253 million for
the second quarter of 2024, flat compared to second quarter 2023
net sales of $254 million. Segment operating income for the second
quarter of 2024 was $27 million compared to operating income of $25
million in the second quarter of 2023. Adjusted EBITDA for the
segment was $41 million in the second quarter of 2024, compared to
$40 million in the second quarter of 2023. The increases in
operating income and Adjusted EBITDA were driven by higher volumes
and lower input costs partially offset by lower sales prices.
Net sales in the Consumer Products segment were $506 million for
the first six months of 2024, up 1% compared to net sales of $502
million in the first six months of 2023. Segment operating income
for the first six months of 2024 was $59 million compared to
operating income of $29 million in the first six months of 2023.
Adjusted EBITDA for the segment was $87 million in the first six
months of 2024, compared to $59 million in the first six months of
2023. The increase in operating income and Adjusted EBITDA was
driven by higher volumes and lower input costs offset by lower
sales prices.
Retail Tissue Sales Volumes and Prices:
- Retail tissue volumes sold were 81,196 tons in the second
quarter of 2024, an increase of 3% compared to 78,672 tons in the
second quarter of 2023. Retail tissue volumes sold were 161,125
tons in the first six months of 2024, an increase of 4% compared to
155,520 tons in the first six months of 2023.
- Retail tissue average net selling price decreased 3% to $3,104
per ton in the second quarter of 2024, compared to $3,214 per ton
in the second quarter of 2023. Retail tissue average net selling
price decreased 3% to 3,121 per ton in the first six months of
2024, compared to $3,207 per ton in the first six months of
2023.
COMPANY OUTLOOK
“We remain confident in the long-term fundamentals of the
paperboard market and expect gradual demand recovery for the
balance of 2024 and into 2025. We currently expect to close the
sale of our tissue business in the fourth quarter of 2024, subject
to customary closing conditions and regulatory approval. Our plan
is to use the proceeds to de-lever our balance sheet and continue
executing our strategy to grow and diversify our paperboard product
portfolio,” 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. A replay of today's
conference call will be available on the website beginning at 5:00
p.m. Pacific Time today.
ABOUT CLEARWATER PAPER
Clearwater Paper is a premier supplier of paperboard and private
brand tissue. The company’s paperboard operations serve
quality-conscious printers and packaging converters, with services
that include custom sheeting, slitting, and cutting. The company’s
tissue operations serve private brand market retail customers
including grocery, club, mass merchants, and discount stores.
Clearwater Paper’s employees build shareholder value by developing
strong relationships through quality and service. For more
information on Clearwater Paper, please visit our website at
www.clearwaterpaper.com.
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 2024 and 2023, including 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 Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended by the Private Securities Litigation Reform Act of 1995 as
amended, including statements regarding: the acquisition of the
paperboard manufacturing facility and associated business in
Augusta, Georgia; our expectations regarding tissue performance and
paperboard demand; the expected timing and structure of the pending
consumer products division (tissue business) sale transaction; the
ability of the parties to complete the pending tissue business sale
transaction considering the various closing conditions; the
company’s paperboard strategy, including its plans to further scale
and increase capacity utilization; the company’s plans for the
proceeds from the pending tissue business sale transaction,
including its plan to meaningfully de-lever its balance sheet; and
the company’s expectation that paperboard represents the best
opportunity for steady and sustainable value creation. These
forward-looking statements are based on management’s current
expectations, estimates, assumptions and projections that are
subject to change. Our actual results of operations may differ
materially from those expressed or implied by the forward-looking
statements contained in this press release. Factors that could
cause or contribute to such material differences in actual results
include, but are not limited to: one or more closing conditions to
the pending tissue business sale transaction, including certain
regulatory approvals, may not be satisfied or waived, on a timely
basis or otherwise; the tissue business sale transaction may not be
completed in the time frame expected by the parties, or at all;
there may be unexpected costs, charges or expenses resulting from
the pending tissue business sale transaction; there may be
stockholder litigation in connection with the pending tissue
business sale transaction or the acquisition of the Augusta,
Georgia paperboard manufacturing facility or other settlements or
investigations may affect the timing or occurrence of the pending
tissue business sale transaction or result in significant costs of
defense, indemnification and liability; our inability to realize
the expected benefits of the Augusta, Georgia paperboard
manufacturing facility acquisition because of integration
difficulties or other challenges; risks relating to the integration
of the Augusta, Georgia paperboard manufacturing facility and
achievement of anticipated financial results and other benefits of
the acquisition; 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; our 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, 2023. 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)
2024
2023
2024
2023
Net sales
$
586.4
$
524.6
$
1,082.6
$
1,050.0
Costs and expenses:
Cost of sales
550.8
438.7
972.5
887.2
Selling, general and administrative
expenses
38.0
39.1
74.3
75.1
Other operating (income) charges, net
1
17.0
(0.4
)
25.0
0.6
Total operating costs and expenses
605.9
477.3
1,071.7
962.9
Income (loss) from operations
(19.5
)
47.3
10.9
87.1
Interest expense, net
(16.0
)
(7.5
)
(22.6
)
(15.1
)
Other non-operating income
0.3
0.1
0.7
0.2
Total non-operating expense
(15.7
)
(7.4
)
(21.9
)
(14.9
)
Income (loss) before income taxes
(35.2
)
39.9
(11.0
)
72.1
Income tax provision (benefit)
(9.4
)
10.2
(2.4
)
18.6
Net income (loss)
$
(25.8
)
$
29.7
$
(8.6
)
$
53.5
Net income (loss) per common share:
Basic
$
(1.55
)
$
1.76
$
(0.52
)
$
3.18
Diluted
(1.55
)
1.75
(0.52
)
3.15
Average shares outstanding (in
thousands):
Basic
16,661
16,865
16,634
16,849
Diluted
16,661
16,958
16,634
17,003
1
Other operating charges, net consist of
amounts unrelated to ongoing core operating activities. Please
refer to Note 11 within Clearwater Paper's Form 10-Q filed with the
SEC for the period ended June 30, 2024 for the detailed
breakout of this amount.
Clearwater Paper
Corporation
Condensed Consolidated Balance
Sheets
(Unaudited)
(In millions)
June 30, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
39.6
$
42.0
Receivables, net
255.8
184.5
Inventories, net
420.2
319.8
Other current assets
18.3
17.9
Total current assets
733.9
564.1
Property, plant and equipment, net
1,605.1
990.1
Goodwill and intangible assets, net
54.1
41.5
Other assets, net
85.3
76.1
Total assets
$
2,478.4
$
1,671.8
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt
$
5.2
$
0.8
Accounts payable and accrued
liabilities
418.1
285.1
Total current liabilities
423.3
286.0
Long-term debt
1,137.9
462.3
Liability for pension and other
postretirement employee benefits
54.7
55.7
Deferred tax liabilities and other
long-term obligations
204.0
199.1
Total liabilities
1,819.8
1,003.0
Stockholders' equity:
Common stock
—
—
Additional paid-in capital
13.5
14.9
Retained earnings
675.8
684.5
Accumulated other comprehensive loss, net
of tax
(30.7
)
(30.7
)
Total stockholders' equity
658.6
668.8
Total liabilities and stockholders'
equity
$
2,478.4
$
1,671.8
Clearwater Paper
Corporation
Consolidated Statements of
Cash Flows
(Unaudited)
Quarter Ended June 30,
Six Months Ended June
30,
(In millions)
2024
2023
2024
2023
Operating activities
Net income (loss)
$
(25.8
)
$
29.7
$
(8.6
)
$
53.5
Adjustments to reconcile net income (loss)
to net cash flows provided by operating activities:
Depreciation and amortization
30.9
24.6
54.1
49.4
Equity-based compensation expense
4.7
1.5
8.1
3.4
Deferred taxes
(3.5
)
(1.6
)
(5.1
)
(2.9
)
Defined benefit pension and other
postretirement employee benefits
(0.8
)
(0.6
)
(1.7
)
(1.1
)
Amortization of deferred debt costs
0.7
0.3
1.1
0.6
Loss on sale or impairment associated with
assets
0.7
—
0.8
1.1
Changes in operating assets and
liabilities, excluding the effects of acquired business:
Increase in accounts receivable
(65.6
)
(7.7
)
(57.8
)
(14.1
)
(Increase) decrease in inventories
9.2
5.3
1.0
(17.0
)
(Increase) decrease in other current
assets
2.3
5.4
—
5.8
Increase (decrease) in accounts payable
and accrued liabilities
69.4
(10.7
)
89.9
(42.5
)
Other, net
(1.2
)
(0.1
)
(1.5
)
0.6
Net cash flows provided by operating
activities
21.1
46.0
80.3
36.9
Investing activities
Additions to property, plant and
equipment, net
(18.1
)
(12.8
)
(36.6
)
(34.3
)
Acquisition of business
(708.2
)
—
(708.2
)
—
Net cash flows used in investing
activities
(726.3
)
(12.8
)
(744.8
)
(34.3
)
Financing activities
Borrowings on long-term debt
726.7
—
723.5
12.0
Repayments of long-term debt
(30.3
)
(0.2
)
(50.5
)
(12.5
)
Repurchases of common stock
(3.0
)
(8.4
)
(3.5
)
(10.1
)
Payments of debt issuance costs
(4.1
)
—
(4.5
)
(0.1
)
Other, net
0.2
(0.4
)
(2.9
)
(4.6
)
Net cash flows provided by (used in)
financing activities
689.6
(8.9
)
662.1
(15.3
)
Increase (decrease) in cash, cash
equivalents
(15.6
)
24.3
(2.4
)
(12.7
)
Cash and cash equivalents at beginning of
period
55.2
17.4
42.0
54.4
Cash and cash equivalents at end of
period
$
39.6
$
41.7
$
39.6
$
41.7
Clearwater Paper
Corporation
Segment Information
(Unaudited)
Quarter Ended June 30,
Six Months Ended June
30,
(In millions)
2024
2023
2024
2023
Segment net sales:
Pulp and Paperboard
$
333.6
$
272.3
$
578.1
$
551.0
Consumer Products
252.8
253.6
505.9
502.0
Eliminations
—
(1.3
)
(1.4
)
(3.0
)
Total segment net sales
$
586.4
$
524.6
$
1,082.6
$
1,050.0
Operating income (loss):
Pulp and Paperboard
$
(12.2
)
$
42.0
$
13.1
$
99.1
Consumer Products
27.4
25.0
59.0
29.2
Corporate and eliminations
(17.7
)
(20.1
)
(36.2
)
(40.6
)
Other operating (income) charges, net
1
(17.0
)
0.4
(25.0
)
(0.6
)
Income (loss) from operations
$
(19.5
)
$
47.3
$
10.9
$
87.1
1
Other operating charges, net consist of
amounts unrelated to ongoing core operating activities. Please
refer to Note 11 within Clearwater Paper's Form 10-Q filed with the
SEC for the period ended June 30, 2024 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)
2024
2023
2024
2023
Net income (loss)
$
(25.8
)
$
29.7
$
(8.6
)
$
53.5
Add back:
Income tax provision (benefit)
(9.4
)
10.2
(2.4
)
18.6
Interest expense, net
16.0
7.5
22.6
15.1
Depreciation and amortization
30.9
24.6
54.1
49.4
Inventory revaluation on acquired
business
6.8
—
6.8
—
Other operating (income) charges, net
1
17.0
(0.4
)
25.0
0.6
Other non-operating income
(0.3
)
(0.1
)
(0.7
)
(0.2
)
Adjusted EBITDA
$
35.3
$
71.5
$
96.8
$
137.2
Pulp and Paperboard segment income
(loss)
$
(12.2
)
$
42.0
$
13.1
$
99.1
Inventory revaluation on acquired
business
6.8
—
6.8
—
Depreciation and amortization
16.5
9.3
24.8
18.5
Adjusted EBITDA Pulp and Paperboard
$
11.1
$
51.3
$
44.8
$
117.6
Consumer Products segment income
$
27.4
$
25.0
$
59.0
$
29.2
Depreciation and amortization
14.0
14.7
28.2
29.7
Adjusted EBITDA Consumer Products
$
41.4
$
39.7
$
87.1
$
58.9
Corporate and other expenses
$
(17.7
)
$
(20.1
)
$
(36.2
)
$
(40.6
)
Depreciation and amortization
0.5
0.6
1.1
1.2
Adjusted EBITDA Corporate and other
$
(17.2
)
$
(19.5
)
$
(35.1
)
$
(39.3
)
Pulp and Paperboard segment
$
11.1
$
51.3
$
44.8
$
117.6
Consumer Products segment
41.4
39.7
87.1
58.9
Corporate and other
(17.2
)
(19.5
)
(35.1
)
(39.3
)
Adjusted EBITDA
$
35.3
$
71.5
$
96.8
$
137.2
1
Other operating charges, net consist of
amounts unrelated to ongoing core operating activities. Please
refer to Note 11 within Clearwater Paper's Form 10-Q filed with the
SEC for the period ended June 30, 2024 for the detailed
breakout of this amount.
Clearwater Paper
Corporation
Reconciliation of Non-GAAP
Financial Measures
(Unaudited)
June 30, 2024
March 31, 2024
December 31, 2023
Calculation of net debt:
Current portion of long-term debt
$ 5.2
$ 0.9
$ 0.8
Long-term debt
1,137.9
442.3
462.3
Add back:
Unamortized deferred debt costs
14.2
4.9
5.1
Less:
Cash and cash equivalents
39.6
55.2
42.0
Net debt
$ 1,117.6
$ 392.9
$ 426.3
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240806180761/en/
Investor contact: Sloan Bohlen Solebury Strategic
Communications 509-344-5906 investorinfo@clearwaterpaper.com
Media contact: Jules Joy Director, Corporate
Communications 509-344-5953 Julia.joy@clearwaterpaper.com
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