Clearwater Paper Reports Third Quarter 2023 Results
- Clearwater Paper had an outstanding Q3 2023, with net sales of $520 million.
- Adjusted net income for Q3 2023 was $37 million, $6 million higher than Q3 2022.
- Adjusted EBITDA for Q3 2023 was $81 million, up from $77 million in Q3 2022.
- The company redeemed 2025 notes in Q4 2023 and repurchased $5 million of outstanding shares.
- Net debt was reduced by $69 million in Q3 2023, totaling $416 million since 2020.
- None.
THIRD QUARTER HIGHLIGHTS
- Outstanding performance driven by strong operational results and continued market strength in tissue
-
Net sales of
$520 million 3% from the third quarter of last year -
Net income of
$37 million $2.17 -
Adjusted net income of
$37 million $6 million -
Adjusted EBITDA of
$81 million $3 million -
Adjusted EBITDA margin at
15% , up from14% during the third quarter of last year - Redeeming 2025 notes in Q4 2023 with a combination of a new term loan, cash on hand, and drawing on existing ABL facility
-
Repurchased
$5 million $10 million -
Reduced net debt by
$69 million $416 million
“We had an outstanding third quarter which came in at the higher end of our expectations, driven by good operational performance in both businesses and continued strength in tissue. Demand remained strong in tissue, while we balanced paperboard supply and demand to manage inventory levels,” said Arsen Kitch, president and chief executive officer. “We continued to focus on our financial flexibility by reducing net debt by
OVERALL RESULTS
For the third quarter of 2023, Clearwater Paper reported net sales of
For the first nine months of 2023, Clearwater Paper reported net sales of
Pulp and Paperboard Segment
Net sales in the Pulp and Paperboard segment were
Net sales in the Pulp and Paperboard segment were
Pulp and Paperboard Sales Volumes and Prices:
-
Paperboard sales volumes were 187,944 tons in the third quarter of 2023, a decrease of
10% compared to 208,298 tons in the third quarter of 2022. Paperboard sales volumes were 563,502 tons in the first nine months of 2023, a decrease of10% compared to 625,557 tons in the first nine months of 2022. -
Paperboard average net selling price decreased
4% to$1,350 $1,405 5% to$1,401 $1,334
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 80,588 tons in the third quarter of 2023, an increase of
5% compared to 76,938 tons in the third quarter of 2022. Retail tissue volumes sold were 236,108 tons in the first nine months of 2023, an increase of3% compared to 228,968 tons in the first nine months of 2022. -
Retail tissue average net selling price increased
4% to$3,198 $3,082 8% to$3,204 $2,980
COMPANY OUTLOOK
“We are optimistic that our strong performance in tissue will continue into next year, driven by stable demand and improved cost structure. We also expect a gradual recovery in paperboard volumes starting in 2024. The refinancing of our 2025 notes will improve our financial flexibility and position us to continue to invest in our business and take advantage of strategic opportunities as they arise,” 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. To register for the conference call, please visit https://conferencingportals.com/event/kDmRPaIa. After registering, confirmation will be sent by email, including dial-in details and unique conference call codes for entry. Registration is open through the live call, but we recommend that you register a day in advance or at minimum 10 minutes before the start of the call. 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 third quarter and first nine 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: product demand, cost structure improvements, our expectations regarding the paperboard and tissue markets, operational and financial performance, the redemption of our notes, our financial flexibility, our continued investment in our business, our ability to take advantage of strategic opportunities as they arise, and our focus on cash flow generation and inventory management. 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: 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
Clearwater Paper Corporation |
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Consolidated Statements of Operations |
|||||||||||||
(Unaudited) |
|||||||||||||
|
|
|
|
|
|||||||||
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||
(In millions, except per-share data) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Net sales |
$ |
519.9 |
|
$ |
538.8 |
|
|
$ |
1,569.9 |
|
$ |
1,553.3 |
|
Costs and expenses: |
|
|
|
|
|
||||||||
Cost of sales |
|
427.4 |
|
|
454.8 |
|
|
|
1,314.6 |
|
|
1,332.0 |
|
Selling, general and administrative expenses |
|
36.4 |
|
|
32.9 |
|
|
|
111.5 |
|
|
99.6 |
|
Other operating charges, net |
|
1.8 |
|
|
2.2 |
|
|
|
2.4 |
|
|
8.5 |
|
Total operating costs and expenses |
|
465.5 |
|
|
489.9 |
|
|
|
1,428.5 |
|
|
1,440.0 |
|
Income from operations |
|
54.4 |
|
|
48.9 |
|
|
|
141.5 |
|
|
113.3 |
|
Interest expense, net |
|
(6.9 |
) |
|
(8.0 |
) |
|
|
(22.0 |
) |
|
(27.3 |
) |
Debt retirement costs |
|
— |
|
|
— |
|
|
|
— |
|
|
(0.5 |
) |
Other non-operating (expense) income |
|
0.1 |
|
|
(1.4 |
) |
|
|
0.3 |
|
|
(4.3 |
) |
Total non-operating expense |
|
(6.8 |
) |
|
(9.4 |
) |
|
|
(21.7 |
) |
|
(32.1 |
) |
Income before income taxes |
|
47.6 |
|
|
39.5 |
|
|
|
119.8 |
|
|
81.2 |
|
Income tax provision |
|
11.0 |
|
|
18.9 |
|
|
|
29.6 |
|
|
29.3 |
|
Net income |
$ |
36.6 |
|
$ |
20.6 |
|
|
$ |
90.1 |
|
$ |
51.9 |
|
|
|
|
|
|
|
||||||||
Net income per common share: |
|
|
|
|
|
||||||||
Basic |
$ |
2.20 |
|
$ |
1.23 |
|
|
$ |
5.37 |
|
$ |
3.09 |
|
Diluted |
|
2.17 |
|
|
1.21 |
|
|
|
5.29 |
|
|
3.04 |
|
|
|
|
|
|
|
||||||||
Average shares outstanding (in thousands): |
|
|
|
||||||||||
Basic |
|
16,682 |
|
|
16,754 |
|
|
|
16,800 |
|
|
16,777 |
|
Diluted |
|
16,895 |
|
|
17,093 |
|
|
|
17,051 |
|
|
17,085 |
|
Clearwater Paper Corporation |
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Condensed Consolidated Balance Sheets |
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(Unaudited) |
||||||
|
|
|
||||
(In millions) |
September 30, 2023 |
December 31, 2022 |
||||
Assets |
|
|
||||
Current assets: |
|
|
||||
Cash and cash equivalents |
$ |
110.2 |
|
$ |
53.7 |
|
Receivables, net |
|
173.0 |
|
|
188.8 |
|
Inventories |
|
333.3 |
|
|
324.0 |
|
Other current assets |
|
10.5 |
|
|
19.9 |
|
Total current assets |
|
627.0 |
|
|
586.3 |
|
Property, plant and equipment, net |
|
993.8 |
|
|
1,017.1 |
|
Other assets, net |
|
116.2 |
|
|
100.1 |
|
Total assets |
$ |
1,737.0 |
|
$ |
1,703.5 |
|
|
|
|
||||
Liabilities and stockholders' equity |
|
|
||||
Current liabilities: |
|
|
||||
Current portion of long-term debt |
$ |
0.9 |
|
$ |
0.9 |
|
Accounts payable and accrued liabilities |
|
260.0 |
|
|
311.1 |
|
Total current liabilities |
|
260.9 |
|
|
312.0 |
|
Long-term debt |
|
564.8 |
|
|
564.9 |
|
Liability for pension and other postretirement employee benefits |
|
56.9 |
|
|
58.2 |
|
Deferred tax liabilities and other long-term obligations |
|
205.9 |
|
|
196.4 |
|
Total liabilities |
|
1,088.4 |
|
|
1,131.5 |
|
|
|
|
||||
Stockholders' equity: |
|
|
||||
Common stock |
|
— |
|
|
— |
|
Additional paid-in capital |
|
15.1 |
|
|
28.5 |
|
Retained earnings |
|
666.9 |
|
|
576.8 |
|
Accumulated other comprehensive loss, net of tax |
|
(33.5 |
) |
|
(33.3 |
) |
Total stockholders' equity |
|
648.5 |
|
|
572.1 |
|
Total liabilities and stockholders' equity |
$ |
1,737.0 |
|
$ |
1,703.5 |
|
Clearwater Paper Corporation |
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Consolidated Statements of Cash Flows |
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(Unaudited) |
|||||||||||||
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||
(In millions) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Operating activities |
|
|
|
|
|
||||||||
Net income |
$ |
36.6 |
|
$ |
20.6 |
|
|
$ |
90.1 |
|
$ |
51.9 |
|
Adjustments to reconcile net income to net cash flows provided by operating activities: |
|
|
|
|
|
||||||||
Depreciation and amortization |
|
24.4 |
|
|
26.2 |
|
|
|
73.8 |
|
|
77.4 |
|
Equity-based compensation expense |
|
3.5 |
|
|
4.0 |
|
|
|
7.0 |
|
|
9.6 |
|
Deferred taxes |
|
(4.4 |
) |
|
(1.6 |
) |
|
|
(7.3 |
) |
|
(5.8 |
) |
Defined benefit pension and other postretirement employee benefits |
|
(0.4 |
) |
|
0.7 |
|
|
|
(1.5 |
) |
|
2.2 |
|
Amortization of deferred debt costs and debt retirement |
|
0.3 |
|
|
0.5 |
|
|
|
0.9 |
|
|
1.8 |
|
Loss on sale or impairment associated with assets |
|
0.3 |
|
|
1.2 |
|
|
|
1.4 |
|
|
5.8 |
|
Increase (decrease) in cash from changes in operating assets and liabilities: |
|
|
|
|
|
||||||||
Accounts receivable |
|
23.6 |
|
|
4.2 |
|
|
|
7.9 |
|
|
(17.6 |
) |
Inventories |
|
6.9 |
|
|
(39.2 |
) |
|
|
(10.1 |
) |
|
(49.1 |
) |
Other current assets |
|
2.9 |
|
|
1.4 |
|
|
|
8.6 |
|
|
5.6 |
|
Accounts payable and accrued liabilities |
|
(6.0 |
) |
|
(4.4 |
) |
|
|
(46.9 |
) |
|
50.0 |
|
Other, net |
|
0.4 |
|
|
(0.3 |
) |
|
|
1.0 |
|
|
1.1 |
|
Net cash flows provided by operating activities |
|
88.2 |
|
|
13.3 |
|
|
|
125.0 |
|
|
132.8 |
|
Investing activities |
|
|
|
|
|
||||||||
Additions to property, plant and equipment, net |
|
(14.2 |
) |
|
(6.7 |
) |
|
|
(48.5 |
) |
|
(19.9 |
) |
Net cash flows used in investing activities |
|
(14.2 |
) |
|
(6.7 |
) |
|
|
(48.5 |
) |
|
(19.9 |
) |
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 |
) |
|
(25.3 |
) |
|
|
(0.7 |
) |
|
(80.8 |
) |
Taxes paid related to net share settlement of equity awards |
|
(0.1 |
) |
|
— |
|
|
|
(4.7 |
) |
|
(2.5 |
) |
Repurchases of common stock |
|
(5.0 |
) |
|
(1.0 |
) |
|
|
(15.1 |
) |
|
(4.9 |
) |
Other, net |
|
(0.1 |
) |
|
0.7 |
|
|
|
(0.2 |
) |
|
0.7 |
|
Net cash flows used in financing activities |
|
(5.5 |
) |
|
(25.7 |
) |
|
|
(20.7 |
) |
|
(87.6 |
) |
|
|
|
|
|
|
||||||||
Increase (decrease) in cash, cash equivalents and restricted cash |
|
68.5 |
|
|
(19.1 |
) |
|
|
55.8 |
|
|
25.3 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
41.7 |
|
|
70.6 |
|
|
|
54.4 |
|
|
26.2 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
110.2 |
|
$ |
51.5 |
|
|
$ |
110.2 |
|
$ |
51.5 |
|
Clearwater Paper Corporation |
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Segment Information |
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(Unaudited) |
|||||||||||||
|
|
|
|
|
|||||||||
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||
(In millions) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Segment net sales: |
|
|
|
|
|
||||||||
Pulp and Paperboard |
$ |
261.4 |
|
$ |
300.8 |
|
|
$ |
812.4 |
|
$ |
862.8 |
|
Consumer Products |
|
259.3 |
|
|
241.0 |
|
|
|
761.3 |
|
|
696.1 |
|
Eliminations |
|
(0.8 |
) |
|
(3.0 |
) |
|
|
(3.8 |
) |
|
(5.6 |
) |
Total segment net sales |
$ |
519.9 |
|
$ |
538.8 |
|
|
$ |
1,569.9 |
|
$ |
1,553.3 |
|
|
|
|
|
|
|
||||||||
Operating income (loss): |
|
|
|
|
|
||||||||
Pulp and Paperboard |
$ |
42.7 |
|
$ |
63.7 |
|
|
$ |
141.8 |
|
$ |
165.9 |
|
Consumer Products |
|
31.4 |
|
|
5.2 |
|
|
|
60.6 |
|
|
9.6 |
|
Corporate and eliminations |
|
(18.0 |
) |
|
(17.8 |
) |
|
|
(58.5 |
) |
|
(53.8 |
) |
Other operating charges, net 1 |
|
(1.8 |
) |
|
(2.2 |
) |
|
|
(2.4 |
) |
|
(8.5 |
) |
Income from operations |
$ |
54.4 |
|
$ |
48.9 |
|
|
$ |
141.5 |
|
$ |
113.3 |
|
1Other operating 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 September 30, 2023 for the detailed breakout of this amount. |
Clearwater Paper Corporation |
|||||||||||||
Reconciliation of Non-GAAP Financial Measures |
|||||||||||||
Adjusted EBITDA |
|||||||||||||
(Unaudited) |
|||||||||||||
|
|
|
|
||||||||||
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||
(In millions) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Net income |
$ |
36.6 |
|
$ |
20.6 |
|
|
$ |
90.1 |
|
$ |
51.9 |
|
Add back: |
|
|
|
|
|
||||||||
Income tax provision |
|
11.0 |
|
|
18.9 |
|
|
|
29.6 |
|
|
29.3 |
|
Interest expense, net |
|
6.9 |
|
|
8.0 |
|
|
|
22.0 |
|
|
27.3 |
|
Depreciation and amortization |
|
24.4 |
|
|
26.2 |
|
|
|
73.8 |
|
|
77.4 |
|
Other operating charges, net1 |
|
1.8 |
|
|
2.2 |
|
|
|
2.4 |
|
|
8.5 |
|
Debt retirement costs |
|
— |
|
|
— |
|
|
|
— |
|
|
0.5 |
|
Other non-operating (income) expense |
|
(0.1 |
) |
|
1.4 |
|
|
|
(0.3 |
) |
|
4.3 |
|
Adjusted EBITDA |
$ |
80.6 |
|
$ |
77.3 |
|
|
$ |
217.6 |
|
$ |
199.2 |
|
|
|
|
|
|
|
||||||||
Pulp and Paperboard segment income |
$ |
42.7 |
|
$ |
63.7 |
|
|
$ |
141.8 |
|
$ |
165.9 |
|
Depreciation and amortization |
|
9.4 |
|
|
9.3 |
|
|
|
27.9 |
|
|
27.8 |
|
Adjusted EBITDA Pulp and Paperboard |
$ |
52.1 |
|
$ |
73.0 |
|
|
$ |
169.6 |
|
$ |
193.7 |
|
|
|
|
|
|
|
||||||||
Consumer Products segment income |
$ |
31.4 |
|
$ |
5.2 |
|
|
$ |
60.6 |
|
$ |
9.6 |
|
Depreciation and amortization |
|
14.4 |
|
|
16.0 |
|
|
|
44.1 |
|
|
46.9 |
|
Adjusted EBITDA Consumer Products |
$ |
45.8 |
|
$ |
21.2 |
|
|
$ |
104.7 |
|
$ |
56.6 |
|
|
|
|
|
|
|
||||||||
Corporate and other expenses |
$ |
(18.0 |
) |
$ |
(17.8 |
) |
|
$ |
(58.5 |
) |
$ |
(53.8 |
) |
Depreciation and amortization |
|
0.6 |
|
|
0.9 |
|
|
|
1.8 |
|
|
2.6 |
|
Adjusted EBITDA Corporate and other |
$ |
(17.4 |
) |
$ |
(16.9 |
) |
|
$ |
(56.7 |
) |
$ |
(51.1 |
) |
|
|
|
|
|
|
||||||||
Pulp and Paperboard segment |
$ |
52.1 |
|
$ |
73.0 |
|
|
$ |
169.6 |
|
$ |
193.7 |
|
Consumer Products segment |
|
45.8 |
|
|
21.2 |
|
|
|
104.7 |
|
|
56.6 |
|
Corporate and other |
|
(17.4 |
) |
|
(16.9 |
) |
|
|
(56.7 |
) |
|
(51.1 |
) |
Adjusted EBITDA |
$ |
80.6 |
|
$ |
77.3 |
|
|
$ |
217.6 |
|
$ |
199.2 |
|
1 Other operating 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 September 30, 2023 for the detailed breakout of this amount. |
Clearwater Paper Corporation |
|||||||||||||
Reconciliation of Non-GAAP Financial Measures |
|||||||||||||
(Unaudited) |
|||||||||||||
|
|
|
|
||||||||||
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||
(In millions, except per share data) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
||||||||
Adjusted income: |
|
|
|
|
|
||||||||
Net income |
$ |
36.6 |
$ |
20.6 |
|
$ |
90.1 |
$ |
51.9 |
||||
Add back: |
|
|
|
|
|
||||||||
Income tax provision |
|
11.0 |
|
|
18.9 |
|
|
|
29.6 |
|
|
29.3 |
|
Income before income taxes |
|
47.6 |
|
|
39.5 |
|
|
|
119.8 |
|
|
81.2 |
|
|
|
|
|
|
|
||||||||
Add back: |
|
|
|
|
|
||||||||
Debt retirement costs |
|
— |
|
|
— |
|
|
|
— |
|
|
0.5 |
|
Other operating charges, net |
|
1.8 |
|
|
2.2 |
|
|
|
2.4 |
|
|
8.5 |
|
Adjusted income before tax |
$ |
49.4 |
|
$ |
41.6 |
|
|
$ |
122.2 |
|
$ |
90.2 |
|
Normalized income tax provision |
|
12.3 |
|
|
10.4 |
|
|
|
30.5 |
|
|
22.5 |
|
Adjusted income |
$ |
37.0 |
|
$ |
31.2 |
|
|
$ |
91.6 |
|
$ |
67.6 |
|
|
|
|
|
|
|
||||||||
Weighted average diluted shares (thousands) |
|
16,895 |
|
|
17,093 |
|
|
|
17,051 |
|
|
17,085 |
|
|
|
|
|
|
|
||||||||
Adjusted income per diluted share |
$ |
2.19 |
|
$ |
1.83 |
|
|
$ |
5.37 |
|
$ |
3.96 |
|
|
|
|
|
|
|
||||||||
|
September 30, 2023 |
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 |
|
$ |
0.9 |
|
Long-term debt |
|
564.8 |
|
|
564.8 |
|
|
|
564.9 |
|
|
564.9 |
|
Add back: |
|
|
|
|
|
||||||||
Unamortized deferred debt costs |
|
2.8 |
|
|
3.0 |
|
|
|
3.2 |
|
|
3.4 |
|
Less: |
|
|
|
|
|
||||||||
Cash and cash equivalents |
|
110.2 |
|
|
41.7 |
|
|
|
16.7 |
|
|
53.7 |
|
Net debt |
$ |
458.3 |
|
$ |
527.0 |
|
|
$ |
552.3 |
|
$ |
515.5 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20231030158659/en/
Clearwater Paper Corporation
Investor contact:
Sloan Bohlen
Solebury Strategic Communications
509-344-5906
investorinfo@clearwaterpaper.com
Media contact:
Jules Joy, Director, Corporate Communications
509-344-5967
Julia.joy@clearwaterpaper.com
Source: Clearwater Paper Corporation
FAQ
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