Clearwater Paper Reports Third Quarter 2022 Results
Clearwater Paper Corporation (NYSE:CLW) reported strong financial results for the third quarter and first nine months of 2022. Net sales reached $539 million, a 20% increase from the previous year, with net income of $21 million or $1.21 per diluted share. The company also reported adjusted EBITDA of $77 million for the quarter, significantly up from $50 million in Q3 2021. For the first nine months, net sales totaled $1.6 billion, a 21% increase year-over-year. Clearwater is focused on operational performance amid inflation challenges, improving financial flexibility to enhance shareholder value.
- Net sales up 20% year-over-year to $539 million in Q3 2022.
- Net income increased to $21 million, or $1.21 per diluted share, compared to $2 million in Q3 2021.
- Adjusted EBITDA for Q3 2022 at $77 million, up from $50 million YoY.
- Net sales for first nine months of 2022 were $1.6 billion, a 21% increase from $1.3 billion in 2021.
- Continued reduction in net debt, with nearly $106 million reduced year-to-date.
- Operating income in the Consumer Products segment decreased to $10 million for the first nine months of 2022 from $12 million in 2021.
- Adjusted EBITDA for the Consumer Products segment fell to $57 million in the first nine months of 2022 from $61 million in the previous year.
THIRD QUARTER HIGHLIGHTS
- Delivered strong performance in the quarter, with price realization helping offset inflation
-
Net sales of
$539 million 20% compared to the third quarter of last year -
Net income of
$21 million $1.21 -
Adjusted EBITDA of
$77 million -
Continued to reduce net debt, with nearly
$106 million
"We had an excellent third quarter, which exceeded our expectations with strong volumes, pricing and operational performance,” said
OVERALL RESULTS
For the third quarter of 2022, Clearwater Paper reported net sales of
For the first nine months of 2022, Clearwater Paper reported net sales of
Impacting the first nine months of 2021, Clearwater Paper incurred impairment and other closure costs associated with the closure of the company's
Pulp and Paperboard Products Segment
Net sales in the Pulp and Paperboard Products segment were
Net sales in the Pulp and Paperboard Products segment were
For both periods in 2022, the increase in operating income and Adjusted EBITDA was driven by higher sales prices and the absence of planned major maintenance, partly offset by higher input costs specifically related to chemicals, freight and energy.
Paperboard Sales Volumes and Prices:
- Paperboard sales volumes were 208,298 tons in the third quarter of 2022 compared to 203,439 tons in the third quarter of 2021. Paperboard sales volumes were 625,557 tons in the first nine months of 2022 compared to 610,702 tons in the first nine months of 2021.
-
Paperboard average net selling price increased
28% to$1,405 $1,102 26% to$1,334 $1,062
Consumer Products Segment
Net sales in the Consumer Products segment were
Net sales in the Consumer Products segment were
Retail Tissue Sales Volumes and Prices:
-
Retail tissue volumes sold were 76,938 tons in the third quarter of 2022 compared to 76,237 tons in the third quarter of 2021. Retail tissue volumes sold were 228,968 tons in the first nine months of 2022, an increase of
10% compared to 208,496 tons in the first nine months of 2021. -
Retail tissue selling prices increased
13% to$3,082 $2,732 8% to 2,980 per ton in the first nine months of 2022, compared to$2,748
COMPANY OUTLOOK
“During previous periods of economic uncertainty demand for our products was relatively resilient. In today’s economic environment, our continued focus is on operational performance while offsetting the impact of inflation. We are continuing to improve our financial flexibility to take advantage of opportunities to create shareholder value,” concluded Kitch.
WEBCAST INFORMATION
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 third quarter and first nine months of 2022 and 2021, including adjusted income (loss) 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 amounts 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 product demand, operational performance, market conditions, mitigation of inflationary pressures, share repurchases, capital allocation and shareholder value creation. 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: impact of the COVID-19 pandemic on our operations, our suppliers' operations and our customer demand; competitive pricing pressures for our products, including as a result of increased capacity as additional manufacturing facilities are operated by our competitors and the impact of foreign currency fluctuations on the pricing of products globally; customer acceptance and timing and quantity of purchases of our tissue products, including the existence of sufficient demand for and the quality of tissue produced by our expanded
|
|||||||||||||
Consolidated Statements of Operations |
|||||||||||||
(Unaudited) |
|||||||||||||
|
|
|
|
|
|||||||||
|
Quarter Ended |
|
Nine Months Ended |
||||||||||
(In millions, except per-share data) |
2022 |
2021 |
|
2022 |
2021 |
||||||||
Net sales |
$ |
538.8 |
|
$ |
450.5 |
|
|
$ |
1,553.3 |
|
$ |
1,282.8 |
|
Costs and expenses: |
|
|
|
|
|
||||||||
Cost of sales |
|
454.8 |
|
|
398.2 |
|
|
|
1,332.0 |
|
|
1,160.9 |
|
Selling, general and administrative expenses |
|
32.9 |
|
|
28.3 |
|
|
|
99.6 |
|
|
82.5 |
|
Other operating charges, net |
|
2.2 |
|
|
10.2 |
|
|
|
8.5 |
|
|
55.1 |
|
Total operating costs and expenses |
|
489.9 |
|
|
436.7 |
|
|
|
1,440.0 |
|
|
1,298.5 |
|
Income (loss) from operations |
|
48.9 |
|
|
13.8 |
|
|
|
113.3 |
|
|
(15.6 |
) |
Interest expense, net |
|
(8.0 |
) |
|
(8.9 |
) |
|
|
(27.3 |
) |
|
(27.5 |
) |
Debt retirement costs |
|
— |
|
|
(0.5 |
) |
|
|
(0.5 |
) |
|
(0.5 |
) |
Other non-operating expense |
|
(1.4 |
) |
|
(2.8 |
) |
|
|
(4.3 |
) |
|
(7.8 |
) |
Total non-operating expense |
|
(9.4 |
) |
|
(12.2 |
) |
|
|
(32.1 |
) |
|
(35.7 |
) |
Income (loss) before income taxes |
|
39.5 |
|
|
1.7 |
|
|
|
81.2 |
|
|
(51.4 |
) |
Income tax provision (benefit) |
|
18.9 |
|
|
(0.3 |
) |
|
|
29.3 |
|
|
(13.8 |
) |
Net income (loss) |
$ |
20.6 |
|
$ |
1.9 |
|
|
$ |
51.9 |
|
$ |
(37.6 |
) |
|
|
|
|
|
|
||||||||
Net income (loss) per common share: |
|
|
|
|
|
||||||||
Basic |
$ |
1.23 |
|
$ |
0.12 |
|
|
$ |
3.09 |
|
$ |
(2.25 |
) |
Diluted |
|
1.21 |
|
|
0.11 |
|
|
|
3.04 |
|
|
(2.25 |
) |
|
|
|
|
|
|
||||||||
Average shares of common stock used to compute net income (loss) per share: (in thousands) |
|
|
|
||||||||||
Basic |
|
16,754 |
|
|
16,687 |
|
|
|
16,777 |
|
|
16,689 |
|
Diluted |
|
17,093 |
|
|
16,971 |
|
|
|
17,085 |
|
|
16,689 |
|
|
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(Unaudited) |
|||||||
|
|
|
|||||
(In millions) |
|
|
|||||
Assets |
|
|
|||||
Current assets: |
|
|
|||||
Cash and cash equivalents |
$ |
50.8 |
|
$ |
25.2 |
|
|
Receivables, net |
|
180.4 |
|
|
167.4 |
|
|
Inventories |
|
326.8 |
|
|
277.7 |
|
|
Other current assets |
|
12.1 |
|
|
16.9 |
|
|
Total current assets |
|
570.2 |
|
|
487.2 |
|
|
Property, plant and equipment |
|
2,968.6 |
|
|
2,961.5 |
|
|
Accumulated depreciation |
|
(1,945.4 |
) |
|
(1,879.7 |
) |
|
Property, plant and equipment, net |
|
1,023.1 |
|
|
1,081.8 |
|
|
Other assets, net |
|
110.3 |
|
|
121.1 |
|
|
Total Assets |
$ |
1,703.6 |
|
$ |
1,690.1 |
|
|
|
|
|
|||||
Liabilities and stockholders' equity |
|
|
|||||
Current liabilities: |
|
|
|||||
Current portion of long-term debt |
$ |
1.0 |
|
$ |
1.6 |
|
|
Accounts payable and accrued liabilities |
|
294.1 |
|
|
252.5 |
|
|
Total current liabilities |
|
295.1 |
|
|
254.1 |
|
|
Long-term debt |
|
564.9 |
|
|
637.6 |
|
|
Liability for pension and other postretirement employee benefits |
|
71.3 |
|
|
73.6 |
|
|
Deferred tax liabilities and other long-term obligations |
|
203.1 |
|
|
213.1 |
|
|
Total liabilities |
|
1,134.4 |
|
|
1,178.3 |
|
|
|
|
|
|||||
Stockholders' equity: |
|
|
|||||
Common stock |
|
— |
|
|
— |
|
|
Additional paid-in capital |
|
25.7 |
|
|
23.6 |
|
|
Retained earnings |
|
582.7 |
|
|
530.7 |
|
|
Accumulated other comprehensive loss, net of tax |
|
(39.1 |
) |
|
(42.6 |
) |
|
Total stockholders' equity |
|
569.2 |
|
|
511.7 |
|
|
Total liabilities and stockholders' equity |
$ |
1,703.6 |
$ |
1,690.1 |
|||
|
|||||||||||||
Consolidated Statements of Cash Flows |
|||||||||||||
(Unaudited) |
|||||||||||||
|
Quarter Ended |
|
Nine Months Ended |
||||||||||
(In millions) |
2022 |
2021 |
|
2022 |
2021 |
||||||||
Operating activities |
|
|
|
|
|
||||||||
Net income (loss) |
$ |
20.6 |
|
$ |
1.9 |
|
|
$ |
51.9 |
|
$ |
(37.6 |
) |
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities: |
|
|
|
|
|
||||||||
Depreciation and amortization |
|
26.2 |
|
|
25.9 |
|
|
|
77.4 |
|
|
79.6 |
|
Equity-based compensation expense |
|
4.0 |
|
|
3.8 |
|
|
|
9.6 |
|
|
6.9 |
|
Deferred taxes |
|
(1.6 |
) |
|
2.4 |
|
|
|
(5.8 |
) |
|
(19.4 |
) |
Defined benefit pension and other postretirement employee benefits |
|
0.7 |
|
|
2.1 |
|
|
|
2.2 |
|
|
5.3 |
|
Amortization of deferred debt costs and debt retirement |
|
0.5 |
|
|
1.0 |
|
|
|
1.8 |
|
|
1.9 |
|
Loss on sale or impairment associated with assets |
|
1.2 |
|
|
— |
|
|
|
5.8 |
|
|
37.1 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
||||||||
(Increase) decrease in accounts receivable |
|
4.2 |
|
|
(12.9 |
) |
|
|
(17.6 |
) |
|
(0.1 |
) |
Increase in inventory |
|
(39.2 |
) |
|
(3.5 |
) |
|
|
(49.1 |
) |
|
(28.3 |
) |
Decrease in other current assets |
|
1.4 |
|
|
0.9 |
|
|
|
5.6 |
|
|
5.3 |
|
Increase (decrease) in accounts payable and accrued liabilities |
|
(4.4 |
) |
|
(4.8 |
) |
|
|
50.0 |
|
|
13.8 |
|
Other, net |
|
(0.3 |
) |
|
(0.5 |
) |
|
|
1.1 |
|
|
— |
|
Net cash flows provided by operating activities |
|
13.3 |
|
|
16.3 |
|
|
|
132.8 |
|
|
64.4 |
|
Investing activities |
|
|
|
|
|
||||||||
Additions to property, plant and equipment, net |
|
(6.7 |
) |
|
(8.9 |
) |
|
|
(19.9 |
) |
|
(29.9 |
) |
Net cash flows used in investing activities |
|
(6.7 |
) |
|
(8.9 |
) |
|
|
(19.9 |
) |
|
(29.9 |
) |
Financing activities |
|
|
|
|
|
||||||||
Repayments of long-term debt |
|
(25.3 |
) |
|
(40.5 |
) |
|
|
(80.8 |
) |
|
(41.3 |
) |
Taxes paid related to net share settlement of equity awards |
|
— |
|
|
— |
|
|
|
(2.5 |
) |
|
(1.7 |
) |
Repurchases of common stock |
|
(1.0 |
) |
|
— |
|
|
|
(4.9 |
) |
|
— |
|
Other |
|
0.7 |
|
|
— |
|
|
|
0.7 |
|
|
0.5 |
|
Net cash flows used in financing activities |
|
(25.7 |
) |
|
(40.5 |
) |
|
|
(87.6 |
) |
|
(42.5 |
) |
|
|
|
|
|
|
||||||||
Increase (decrease) in cash, cash equivalents and restricted cash |
|
(19.1 |
) |
|
(33.1 |
) |
|
|
25.3 |
|
|
(8.1 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
70.6 |
|
|
62.0 |
|
|
|
26.2 |
|
|
36.9 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
51.5 |
|
$ |
28.9 |
|
|
$ |
51.5 |
|
$ |
28.9 |
|
|
|||||||||||||
Segment Information |
|||||||||||||
(Unaudited) |
|||||||||||||
|
|
|
|
||||||||||
|
Quarter Ended |
|
Nine Months Ended |
||||||||||
(In millions) |
2022 |
2021 |
|
2022 |
2021 |
||||||||
Segment 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 |
) |
Net sales |
$ |
538.8 |
|
$ |
450.5 |
|
|
$ |
1,553.3 |
|
$ |
1,282.8 |
|
|
|
|
|
|
|
||||||||
Operating income (loss): |
|
|
|
|
|
||||||||
Pulp and Paperboard |
$ |
63.7 |
|
$ |
34.6 |
|
|
$ |
165.9 |
|
$ |
72.6 |
|
Consumer Products |
|
5.2 |
|
|
3.7 |
|
|
|
9.6 |
|
|
11.5 |
|
Corporate and eliminations |
|
(17.8 |
) |
|
(14.3 |
) |
|
|
(53.8 |
) |
|
(44.8 |
) |
Other operating charges, net 1 |
|
(2.2 |
) |
|
(10.2 |
) |
|
|
(8.5 |
) |
|
(55.1 |
) |
Income (loss) from operations |
$ |
48.9 |
|
$ |
13.8 |
|
|
$ |
113.3 |
|
$ |
(15.6 |
) |
1 |
Other operating charges, net consist of amounts unrelated to ongoing core operating activities. Please refer to Note 8 within Clearwater Paper's Form 10-Q filed with the |
|
|||||||||||||
Reconciliation of Non-GAAP Financial Measures |
|||||||||||||
Adjusted EBITDA |
|||||||||||||
(Unaudited) |
|||||||||||||
|
|||||||||||||
|
Quarter Ended |
|
Nine Months Ended |
||||||||||
(In millions) |
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 |
) |
Interest expense, net |
|
8.0 |
|
|
8.9 |
|
|
|
27.3 |
|
|
27.5 |
|
Depreciation and amortization |
|
26.2 |
|
|
25.9 |
|
|
|
77.4 |
|
|
79.6 |
|
Other operating charges, net1 |
|
2.2 |
|
|
10.2 |
|
|
|
8.5 |
|
|
55.1 |
|
Debt retirement costs |
|
— |
|
|
0.5 |
|
|
|
0.5 |
|
|
0.5 |
|
Other non-operating expense |
|
1.4 |
|
|
2.8 |
|
|
|
4.3 |
|
|
7.8 |
|
Adjusted EBITDA |
$ |
77.3 |
|
$ |
49.9 |
|
|
$ |
199.2 |
|
$ |
119.0 |
|
|
|
|
|
|
|
||||||||
Pulp and Paperboard segment income |
$ |
63.7 |
|
$ |
34.6 |
|
|
$ |
165.9 |
|
$ |
72.6 |
|
Depreciation and amortization |
|
9.3 |
|
|
8.9 |
|
|
|
27.8 |
|
|
26.9 |
|
Adjusted EBITDA Pulp and Paperboard |
$ |
73.0 |
|
$ |
43.5 |
|
|
$ |
193.7 |
|
$ |
99.5 |
|
|
|
|
|
|
|
||||||||
Consumer Products segment income |
$ |
5.2 |
|
$ |
3.7 |
|
|
$ |
9.6 |
|
$ |
11.5 |
|
Depreciation and amortization |
|
16.0 |
|
|
15.9 |
|
|
|
46.9 |
|
|
49.4 |
|
Adjusted EBITDA Consumer Products |
$ |
21.2 |
|
$ |
19.6 |
|
|
$ |
56.6 |
|
$ |
60.9 |
|
|
|
|
|
|
|
||||||||
Corporate and other expenses |
$ |
(17.8 |
) |
$ |
(14.3 |
) |
|
$ |
(53.8 |
) |
$ |
(44.8 |
) |
Depreciation and amortization |
|
0.9 |
|
|
1.1 |
|
|
|
2.6 |
|
|
3.3 |
|
Adjusted EBITDA Corporate |
$ |
(16.9 |
) |
$ |
(13.1 |
) |
|
$ |
(51.1 |
) |
$ |
(41.4 |
) |
|
|
|
|
|
|
||||||||
Pulp and Paperboard segment |
$ |
73.0 |
|
$ |
43.5 |
|
|
$ |
193.7 |
|
$ |
99.5 |
|
Consumer Products segment |
|
21.2 |
|
|
19.6 |
|
|
|
56.6 |
|
|
60.9 |
|
Corporate and other |
|
(16.9 |
) |
|
(13.1 |
) |
|
|
(51.1 |
) |
|
(41.4 |
) |
Adjusted EBITDA |
$ |
77.3 |
|
$ |
49.9 |
|
|
$ |
199.2 |
|
$ |
119.0 |
|
1 |
Other operating charges, net consist of amounts unrelated to ongoing core operating activities. Please refer to Note 8 within Clearwater Paper's Form 10-Q filed with the |
|
|||||||||||
Reconciliation of Non-GAAP Financial Measures |
|||||||||||
(Unaudited) |
|||||||||||
|
|||||||||||
|
Quarter Ended |
|
Nine Months Ended |
||||||||
(In millions, except per-share data) |
2022 |
2021 |
|
2022 |
2021 |
||||||
|
|
|
|
|
|
||||||
Adjusted net income (loss): |
|
|
|
|
|
||||||
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 back: |
|
|
|
|
|
||||||
Debt retirement costs |
|
— |
|
0.5 |
|
|
|
0.5 |
|
0.5 |
|
Other operating charges, net |
|
2.2 |
|
10.2 |
|
|
|
8.5 |
|
55.1 |
|
Adjusted income before tax |
$ |
41.6 |
$ |
12.4 |
|
|
$ |
90.2 |
$ |
4.2 |
|
Normalized income tax provision |
|
10.4 |
|
3.1 |
|
|
|
22.5 |
|
1.0 |
|
Adjusted net income |
$ |
31.2 |
$ |
9.3 |
|
|
$ |
67.6 |
$ |
3.1 |
|
|
|
|
|
|
|
||||||
Weighted average diluted shares (thousands) |
|
17,093 |
|
16,971 |
|
|
|
17,085 |
|
16,689 |
|
|
|
|
|
|
|
||||||
Adjusted income per diluted share |
$ |
1.83 |
$ |
0.55 |
|
|
$ |
3.96 |
$ |
0.19 |
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Calculation of net debt: |
|
|
|
|
|
||||||
Current portion long-term debt |
$ |
1.0 |
$ |
1.0 |
|
|
$ |
1.6 |
$ |
1.6 |
|
Long-term debt |
|
564.9 |
|
589.9 |
|
|
|
617.7 |
|
637.6 |
|
Add back: |
|
|
|
|
|
||||||
Unamortized deferred debt costs |
|
3.6 |
|
3.8 |
|
|
|
4.4 |
|
4.8 |
|
Less: |
|
|
|
|
|
||||||
Financing leases |
|
24.4 |
|
24.7 |
|
|
|
18.7 |
|
19.1 |
|
Cash and cash equivalents |
|
50.8 |
|
69.5 |
|
|
|
36.4 |
|
25.2 |
|
Net debt |
$ |
494.2 |
$ |
500.5 |
|
|
$ |
568.6 |
$ |
599.8 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20221031005763/en/
Investors contact:
Solebury Trout
509.344.5906
investorinfo@clearwaterpaper.com
News media:
208.488.8398
julia.joy@clearwaterpaper.com
Source:
FAQ
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