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| 8-K - CLEARWATER PAPER CORPORATION 8K - Clearwater Paper Corp | a50045921.htm |
| EX-99.2 - EXHIBIT 99.2 - Clearwater Paper Corp | a50045921ex99-2.htm |
Exhibit 99.1
Clearwater Paper Reports Third Quarter 2011 Results
Record Quarterly Net Sales of $501 Million
SPOKANE, Wash.--(BUSINESS WIRE)--October 27, 2011--Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the third quarter of 2011.
The company reported net earnings of $8.6 million, or $0.37 per diluted share, for the third quarter of 2011, compared to net earnings of $15.0 million, or $0.64 per diluted share, for the third quarter of 2010. The third quarter 2011 earnings before interest, taxes, depreciation and amortization, or EBITDA, was $46.2 million, compared to $40.3 million in the third quarter of 2010. Clearwater Paper acquired Cellu Tissue on December 27, 2010. The third quarter of 2011 includes Cellu Tissue's results, which is the primary reason for many of the variances between the 2011 and 2010 periods.
“We are pleased to surpass the $500 million milestone in quarterly net sales and are continuing our focus on managing expenses in this challenging cost environment,” said Gordon Jones, chairman, president and chief executive officer. “Both the integration of Cellu Tissue and the construction of our Shelby facility are on track, with meaningful contributions expected to begin in 2012.”
“We believe our investment in these growth areas of the business are putting us in a strong strategic position for the future and early customer reception is very positive,” added Jones.
As part of its previously announced share repurchase program, the company repurchased 291,600 shares of outstanding common stock at an average price of $34.30 per share during the third quarter of 2011. The company also effected a two-for-one stock split on August 26, 2011. All prior period share amounts have been adjusted to reflect the stock split.
THIRD QUARTER 2011 SEGMENT PERFORMANCE
Consumer Products
Net sales in the Consumer Products segment were $285.2 million for the third quarter of 2011, as compared to third quarter 2010 net sales of $143.9 million. The increase in net sales was primarily attributable to the inclusion of Cellu Tissue's operating results in the third quarter. Operating income for the third quarter of 2011 was $7.1 million, compared with operating income of $17.9 million for the third quarter of 2010. The decrease in operating income was primarily the result of higher operating costs.
- Tissue volume increased to 134,145 tons in the third quarter of 2011, as compared to 55,069 tons in the third quarter of 2010, with the increase primarily attributable to the addition of Cellu Tissue volumes. Including Cellu Tissue in our third quarter 2010 results would have resulted in pro forma volume of 135,102 tons. The decrease in 2011 tons versus 2010 pro forma tons sold by the combined company was primarily due to converting more parent rolls into finished cases, which results in a yield loss associated with the process of manufacturing finished cases.
- Net selling prices decreased to $2,126 per ton in the third quarter of 2011 versus $2,614 in the third quarter of 2010, due primarily to the inclusion of Cellu Tissue products in the total product mix for the 2011 period. On a pro forma basis, net selling prices were $2,051 in the third of quarter of 2010. Cellu Tissue's operations have a broader range of products and tissue grades than the legacy Clearwater Paper facilities.
- The decrease in operating income was primarily due to higher operating costs including transportation, wage and benefits, packaging materials and chemical costs.
Pulp and Paperboard
Net sales of $215.9 million in the Pulp and Paperboard segment for the third quarter of 2011 increased 3.3%, compared to third quarter 2010 net sales of $209.0 million. Operating income for the quarter rose 24.6% to $26.3 million, compared to $21.1 million for the third quarter of 2010. The increase was primarily due to higher net selling prices for paperboard and lower wood fiber costs, partially offset by higher chemical costs.
- Higher net sales for the 2011 quarter were driven by a 2.4% increase in paperboard pricing to $971 per ton and a 0.3% increase in paperboard volumes to 184,870 tons, each as compared to the third quarter of 2010.
- The increase in net sales was partially offset by a 1.4% decline in external pulp pricing to $684 per ton.
- Major maintenance expense of $3.1 million was incurred in the third quarter of 2011, compared to $4.0 million in the third quarter of 2010.
Taxes
The actual income tax rate for the third quarter of 2011 was 40.7%, compared to an actual rate of 39.3% for the third quarter of 2010. The estimated annual effective tax rate for 2011, without discrete items, is expected to be approximately 34.2%.
Note Regarding Use of Non-GAAP Financial Measures
In this press release, the company presents its results for the third quarter of 2011 and 2010, including EBITDA. The EBITDA amounts are not in accordance with generally accepted accounting principles (GAAP) and accordingly a reconciliation of EBITDA to net earnings determined in accordance with GAAP is included at the end of this press release.
CONFERENCE CALL INFORMATION
A live audio webcast and conference call will be held today, Thursday, October 27, 2011 at 8 a.m. Pacific time (11 a.m. Eastern time). Investors may access the conference call by dialing 877-303-9241 (for U.S./Canada investors) or 760-666-3575 (for international investors). The audio webcast may be accessed on the company's website at http://ir.clearwaterpaper.com/events.cfm. An accompanying presentation including supplemental information will be available for downloading at the same site at 7 a.m. Pacific time (10:00 a.m. Eastern time). The webcast will be audio only. Investors are recommended to download the accompanying presentation prior to the call.
For those unable to participate in the call, an archived recording will be available through the Clearwater Paper Corporation website www.clearwaterpaper.com under "Investor Relations" following the conference call.
ABOUT CLEARWATER PAPER
Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, machine glazed tissue, bleached paperboard, pulp and wood products at 15 manufacturing locations in the U.S. and Canada. The company is a premier supplier of private label tissue to major retailers and wholesale distributors. This includes grocery, drug, mass merchants and discount stores. The company also produces bleached paperboard used by quality-conscious printers and packaging converters. Clearwater Paper's 4,000 employees build shareholder value by developing strong customer partnerships through quality and service.
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 the company’s management of expenses, the integration of Cellu Tissue, the construction of the company’s Shelby facility, the expected contribution of the Cellu Tissue integration and Shelby facility completion to the company’s future results, the company’s strategic position in the future, and the company’s estimated annual effective tax rate for 2011. 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, the company's ability to successfully implement its expansion strategies; difficulties with the integration process or the realization of the benefits expected from the company's acquisition of Cellu Tissue; the company's ability to complete, or significant delays in the construction of, its new facilities; competition from larger producers; customers' product preferences; changes in the United States and international economies; changes in raw material and energy costs; cyclical industry conditions; competitive pricing pressure for the company's products; changes in freight costs and disruptions in transportation services; unanticipated manufacturing disruptions; changes in general and industry-specific laws and regulations; unforeseen environmental liabilities or expenditures; labor disruptions; and other risks and uncertainties described from time to time in the company's public filings with the Securities and Exchange Commission. 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.
For additional information on Clearwater Paper, please visit our website at www.clearwaterpaper.com.
| Clearwater Paper Corporation | |||||||||||||||||||||||||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||||||||||||||||||||||||
| Unaudited (Dollars in thousands - except per-share amounts) | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||||||||||||||||||
| Net sales | $ | 501,125 | 100 | % | $ | 352,927 | 100 | % | $ | 1,461,582 | 100 | % | $ | 1,027,408 | 100 | % | |||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||||||
| Cost of sales | (448,927 | ) | 90 | % | (303,542 | ) | 86 | % | (1,297,205 | ) | 89 | % | (891,921 | ) | 87 | % | |||||||||||||||||||||||
| Selling, general and administrative expenses | (26,815 | ) | 5 | % | (20,886 | ) | 6 | % | (81,655 | ) | 6 | % | (59,124 | ) | 6 | % | |||||||||||||||||||||||
| Total operating costs and expenses | (475,742 | ) | 95 | % | (324,428 | ) | 92 | % | (1,378,860 | ) | 94 | % | (951,045 | ) | 93 | % | |||||||||||||||||||||||
| Income from operations | 25,383 | 5 | % | 28,499 | 8 | % | 82,722 | 6 | % | 76,363 | 7 | % | |||||||||||||||||||||||||||
| Interest expense, net | (12,100 | ) | 2 | % | (3,819 | ) | 1 | % | (34,425 | ) | 2 | % | (12,236 | ) | 1 | % | |||||||||||||||||||||||
| Other, net | 1,290 | - | - | - | 585 | - | - | - | |||||||||||||||||||||||||||||||
| Earnings before income taxes | 14,573 | 3 | % | 24,680 | 7 | % | 48,882 | 3 | % | 64,127 | 6 | % | |||||||||||||||||||||||||||
| Income tax provision | (5,928 | ) | 1 | % | (9,692 | ) | 3 | % | (20,710 | ) | 1 | % | (28,113 | ) | 3 | % | |||||||||||||||||||||||
| Net earnings | $ | 8,645 | 2 | % | $ | 14,988 | 4 | % | $ | 28,172 | 2 | % | $ | 36,014 | 4 | % | |||||||||||||||||||||||
| Net earnings per common share: | |||||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.38 | $ | 0.65 | $ | 1.23 | $ | 1.57 | |||||||||||||||||||||||||||||||
| Diluted | 0.37 | 0.64 | 1.19 | 1.52 | |||||||||||||||||||||||||||||||||||
| Average shares outstanding (in thousands): | |||||||||||||||||||||||||||||||||||||||
| Basic | 22,865 | 22,958 | 22,976 | 22,944 | |||||||||||||||||||||||||||||||||||
| Diluted | 23,591 | 23,583 | 23,692 | 23,616 | |||||||||||||||||||||||||||||||||||
| All common share and per share amounts have been adjusted for the two-for-one stock split effected in the form of a stock dividend distributed on August 26, 2011. | |||||||||||||||||||||||||||||||||||||||
| Clearwater Paper Corporation | ||||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||||
| Unaudited (Dollars in thousands) | ||||||||||||||
| September 30, | December 31, | |||||||||||||
| 2011 | 2010 | |||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash | $ | 21,071 | $ | 18,928 | ||||||||||
| Restricted cash | 500 | 3,637 | ||||||||||||
| Short-term investments | 85,001 | 126,095 | ||||||||||||
| Receivables, net | 182,954 | 153,335 | ||||||||||||
| Taxes receivable | 12,382 | 10,354 | ||||||||||||
| Inventories | 225,356 | 228,321 | ||||||||||||
| Deferred tax assets | 35,345 | 37,374 | ||||||||||||
| Prepaid expenses | 6,482 | 11,415 | ||||||||||||
| Total current assets | 569,091 | 589,459 | ||||||||||||
| Property, plant and equipment, net | 707,064 | 654,456 | ||||||||||||
| Goodwill | 229,533 | 229,533 | ||||||||||||
| Intangible assets, net | 51,331 | 56,400 | ||||||||||||
| Other assets | 13,673 | 15,488 | ||||||||||||
| $ | 1,570,692 | $ | 1,545,336 | |||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable and accrued liabilities | $ | 185,547 | $ | 184,604 | ||||||||||
| Current portion of long-term debt | - | 760 | ||||||||||||
| Current liability for pensions and other postretirement employee benefits | 9,749 | 9,749 | ||||||||||||
| Total current liabilities | 195,296 | 195,113 | ||||||||||||
| Long-term debt, net of current portion | 523,638 | 538,314 | ||||||||||||
| Liability for pensions and other postretirement employee benefits | 180,036 | 187,116 | ||||||||||||
| Other long-term obligations | 35,726 | 23,369 | ||||||||||||
| Accrued taxes | 73,884 | 72,011 | ||||||||||||
| Deferred tax liabilities | 71,599 | 61,064 | ||||||||||||
| Stockholders' equity, excluding accumulated other comprehensive loss, net of tax | 587,856 | 566,701 | ||||||||||||
| Accumulated other comprehensive loss, net of tax | (97,343 | ) | (98,352 | ) | ||||||||||
| $ | 1,570,692 | $ | 1,545,336 | |||||||||||
| Clearwater Paper Corporation | ||||||||||||||||||||||||||||||||||||||
| Segment Information | ||||||||||||||||||||||||||||||||||||||
| Unaudited (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||||||||||||
| 2011 | 2010 (1) | 2011 | 2010 (1) | |||||||||||||||||||||||||||||||||||
| Segment net sales: | ||||||||||||||||||||||||||||||||||||||
| Consumer Products | $ | 285,237 | 57 | % | $ | 143,938 | 41 | % | $ | 823,607 | 56 | % | $ | 427,134 | 42 | % | ||||||||||||||||||||||
| Pulp and Paperboard | 215,888 | 43 | % | 208,989 | 59 | % | 637,975 | 44 | % | 600,274 | 58 | % | ||||||||||||||||||||||||||
| Total segment net sales | $ | 501,125 | 100 | % | $ | 352,927 | 100 | % | $ | 1,461,582 | 100 | % | $ | 1,027,408 | 100 | % | ||||||||||||||||||||||
| Operating income (loss): | ||||||||||||||||||||||||||||||||||||||
| Consumer Products | $ | 7,075 | 28 | % | $ | 17,891 | 63 | % | $ | 27,758 | 34 | % | $ | 69,521 | 91 | % | ||||||||||||||||||||||
| Pulp and Paperboard | 26,266 | 103 | % | 21,073 | 74 | % | 76,370 | 92 | % | 35,816 | 47 | % | ||||||||||||||||||||||||||
| 33,341 | 38,964 | 104,128 | 105,337 | |||||||||||||||||||||||||||||||||||
| Corporate and eliminations | (7,958 | ) | 31 | % | (10,465 | ) | 37 | % | (21,406 | ) | 26 | % | (28,974 | ) | 38 | % | ||||||||||||||||||||||
| Income from operations | $ | 25,383 | 100 | % | $ | 28,499 | 100 | % | $ | 82,722 | 100 | % | $ | 76,363 | 100 | % | ||||||||||||||||||||||
|
(1) Prior period net sales and segment operating income have been adjusted to reflect our change in accounting for intersegment pulp transfers. Commencing January 1, 2011, rather than recording the intersegment transfer of pulp through net sales, the costs of pulp are transferred from the Pulp and Paperboard segment to the Consumer Products segment. |
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| Clearwater Paper Corporation | ||||||||||||||||||||
| Reconciliation of Consolidated Net Earnings to EBITDA | ||||||||||||||||||||
| Unaudited (Dollars in thousands) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
| Net earnings | $ | 8,645 | $ | 14,988 | $ | 28,172 | $ | 36,014 | ||||||||||||
| Add back: | ||||||||||||||||||||
| Interest expense, net | 12,100 | 3,819 | 34,425 | 12,236 | ||||||||||||||||
| Income tax provision | 5,928 | 9,692 | 20,710 | 28,113 | ||||||||||||||||
| Depreciation and amortization | 19,569 | 11,780 | 57,108 | 35,507 | ||||||||||||||||
| EBITDA | $ | 46,242 | $ | 40,279 | $ | 140,415 | $ | 111,870 | ||||||||||||
| Cellu Tissue acquisition related expenses | - | 3,106 | - | 3,106 | ||||||||||||||||
| Adjusted EBITDA | $ | 46,242 | $ | 43,385 | $ | 140,415 | $ | 114,976 | ||||||||||||
CONTACT:
Clearwater Paper Corporation
News media:
Matt Van
Vleet, 509-344-5912
or
CFO:
Linda Massman, 509-344-5905
or
Investors:
IR
Sense
Sean Butson, 509-344-5906