Exhibit 99.1
Clearwater Paper Reports Second Quarter 2015 Results
SPOKANE, Wash.--(BUSINESS WIRE)--July 30, 2015--Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the second quarter of 2015.
The company reported net sales of $444.6 million for the second quarter of 2015, down 10.9% compared to net sales of $498.8 million for the second quarter of 2014 primarily due to the sale of the company’s specialty mills in December 2014. Net earnings determined in accordance with generally accepted accounting principles, or GAAP, for the second quarter of 2015 were $15.6 million, or $0.81 per diluted share, compared to $12.5 million, or $0.61 per diluted share, for the second quarter of 2014. The 2015 second quarter GAAP net earnings included $1.0 million of after-tax benefit associated with the mark-to-market impact of directors’ equity-based compensation, $0.9 million of net after-tax gain associated with the settlement of a working capital escrow account established in connection with the sale of the company’s specialty mills, and $0.5 million of after-tax expense associated with the closure of the company’s Long Island, New York, converting and distribution facility. Excluding those items, second quarter 2015 adjusted net earnings were $14.2 million, or $0.74 per diluted share, compared to second quarter 2014 adjusted net earnings of $15.3 million, or $0.74 per diluted share.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, was $52.7 million for the second quarter of 2015. Adjusted EBITDA for the quarter was $50.7 million, down 11.6% compared to second quarter 2014 Adjusted EBITDA of $57.3 million. The decrease in EBITDA and Adjusted EBITDA was due primarily to costs associated with scheduled major maintenance at the company’s Arkansas pulp and paperboard mill and the sale of the company’s specialty tissue mills, partially offset by lower input costs for pulp, chemicals and natural gas.
"Clearwater Paper delivered strong results that exceeded the high end of our outlook for the second quarter of 2015," said Linda K. Massman, president and chief executive officer. "Our consumer products business has continued to demonstrate the ability to increase operating leverage, execute on its plan to improve efficiencies throughout the organization and expand its customer base. During the first half of the year, pulp and paperboard successfully completed major maintenance at both facilities within budget and brought these operations to a higher performance level, in addition to reaching record paperboard shipments in the second quarter."
Through July 29, 2015, the company has repurchased approximately 600,000 shares at an average price of $61.97 under the $100 million stock repurchase program authorized in December 2014.
SECOND QUARTER 2015 SEGMENT PERFORMANCE
Consumer Products
Net sales in the Consumer Products segment were $239.4 million for the second quarter of 2015, down 20% compared to second quarter 2014 net sales of $299.1 million. This decrease was due to the sale of the specialty tissue mills.
On a GAAP basis, the segment had operating income of $17.0 million, compared to operating income of $12.7 million in the second quarter of 2014. Adjusted operating income of $16.4 million for the second quarter of 2015 was up $1.5 million compared to the same period in 2014, after adjusting for $0.7 million and $2.2 million of costs in the second quarters of 2015 and 2014, respectively, related to previously announced facility closures. Also included in adjusted operating income for the second quarter of 2015 was the recognition of a $1.3 million net gain due to the settlement of the working capital escrow account associated with the sale of the specialty tissue mills. The improved results in the most recent period were driven primarily by a richer product mix, lower pricing for external pulp and increased usage of internally produced pulp, reduced energy costs, and lower planned maintenance expense, partially offset by the absence of operating income from the company’s former specialty mills.
- Total tissue sales volumes of 96,220 tons in the second quarter of 2015 declined by 28.6% and converted product cases shipped were 13.1 million, down 6.9%, each compared to the second quarter of 2014, largely due to the sale of the specialty mills.
- Average tissue net selling prices increased 12.0% to $2,482 per ton in the second quarter of 2015, compared to the second quarter of 2014, due to improved product mix after the sale of the specialty mills.
Pulp and Paperboard
Net sales in the Pulp and Paperboard segment were $205.2 million for the second quarter of 2015, up 2.8% compared to second quarter 2014 net sales of $199.6 million. The increase was primarily due to stronger seasonal shipments. Operating income for the quarter decreased $5.9 million to $27.8 million, compared to $33.6 million for the second quarter of 2014, primarily due to approximately $7 million of scheduled major maintenance costs at the Arkansas pulp and paperboard mill, weaker pricing, and higher volumes of purchased pulp due to the major maintenance outage in Arkansas. These factors were partially offset by lower polyethylene prices and reduced chemical usage due to capital improvements at the Arkansas recovery boiler, lower natural gas prices and slightly lower transportation costs.
- Paperboard sales volumes increased 4.6% to a record 204,983 tons in the second quarter of 2015, compared to 195,924 tons in the second quarter of 2014.
- Paperboard net selling prices decreased 2.0% to $997 per ton compared to the second quarter of 2014 as a result of a product mix shift toward non-extruded products and quality related rebates that were limited in volume and scope.
Taxes
The company’s GAAP tax rate for the second quarter of 2015 was a provision of 35.8% compared to 44.4% in the second quarter of 2014. The higher rate in 2014 was a result of the net impact of changes related to amendments to state tax returns and state tax rate changes. On an adjusted basis, the second quarter 2015 tax rate was 36.2%. The company expects its annual GAAP and adjusted tax rates to be approximately 36% for 2015.
Note Regarding Use of Non-GAAP Financial Measures
In this press release, the company presents certain non-GAAP financial information for the second quarters of 2015 and 2014, including EBITDA, Adjusted EBITDA, adjusted net earnings, adjusted net earnings per diluted share, and adjusted operating income. Because these amounts are not in accordance with GAAP, reconciliations to net earnings and net earnings per diluted share as determined in accordance with GAAP are included 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.
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 http://ir.clearwaterpaper.com/results.cfm beginning at 5:00 p.m. Pacific Time today.
ABOUT CLEARWATER PAPER
Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, bleached paperboard and pulp at manufacturing facilities across the nation. The company is a premier supplier of private label tissue to major retailers and wholesale distributors, including grocery, drug, mass merchants and discount stores. In addition, the company produces bleached paperboard used by quality-conscious printers and packaging converters. Clearwater Paper’s 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 the company’s improving operational efficiencies, expanding customer base and expected tax rate for 2015. 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 the company’s products, including as a result of increased capacity as additional manufacturing facilities are operated by the company’s competitors; customer acceptance, timing and quantity of purchases of the company’s new through-air-dried, or TAD products, or other tissue products; the loss of or changes in prices in regards to a significant customer; changes in transportation costs and disruptions in transportation services; manufacturing or operating disruptions, including IT system failures, equipment malfunction and damage to the company’s manufacturing facilities; changes in the U.S. and international economies and in general economic conditions in the regions and industries in which the company operates; changes in the cost and availability of wood fiber and wood pulp; labor disruptions; changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs; changes in customer product preferences and competitors’ product offerings; increased supply and pricing pressures resulting from increasing Asian paper production capabilities; cyclical industry conditions; changes in expenses and required contributions associated with the company’s pension plans; reliance on a limited number of third-party suppliers for raw materials; cyclical industry conditions; inability to successfully implement the company’s operational efficiencies and expansion strategies; 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, 2014. 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.
| Clearwater Paper Corporation | ||||||||||||||||||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||||||||||||||||||
| Unaudited (Dollars in thousands - except per-share amounts) | ||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||||||
| Net sales | $ | 444,558 | 100 | % | $ | 498,759 | 100 | % | $ | 878,584 | 100 | % | $ | 983,679 | 100 | % | ||||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||||||||||
| Cost of sales | (384,347 | ) | 86 | % | (434,111 | ) | 87 | % | (774,179 | ) | 88 | % | (860,740 | ) | 88 | % | ||||||||||||||||
| Selling, general and administrative expenses | (28,138 | ) | 6 | % | (31,565 | ) | 6 | % | (57,095 | ) | 6 | % | (65,079 | ) | 7 | % | ||||||||||||||||
| Impairment of assets | - | - | - | - | - | - | (4,259 | ) | - | |||||||||||||||||||||||
| Total operating costs and expenses | (412,485 | ) | 93 | % | (465,676 | ) | 93 | % | (831,274 | ) | 95 | % | (930,078 | ) | 95 | % | ||||||||||||||||
| Income from operations | 32,073 | 7 | % | 33,083 | 7 | % | 47,310 | 5 | % | 53,601 | 5 | % | ||||||||||||||||||||
| Interest expense, net | (7,774 | ) | 2 | % | (10,688 | ) | 2 | % | (15,556 | ) | 2 | % | (21,422 | ) | 2 | % | ||||||||||||||||
| Earnings before income taxes | 24,299 | 5 | % | 22,395 | 4 | % | 31,754 | 4 | % | 32,179 | 3 | % | ||||||||||||||||||||
| Income tax provision | (8,702 | ) | 2 | % | (9,942 | ) | 2 | % | (10,400 | ) | 1 | % | (13,500 | ) | 1 | % | ||||||||||||||||
| Net earnings | $ | 15,597 | 4 | % | $ | 12,453 | 2 | % | $ | 21,354 | 2 | % | $ | 18,679 | 2 | % | ||||||||||||||||
| Net earnings per common share: | ||||||||||||||||||||||||||||||||
| Basic | $ | 0.82 | $ | 0.61 | $ | 1.11 | $ | 0.91 | ||||||||||||||||||||||||
| Diluted | 0.81 | 0.61 | 1.10 | 0.90 | ||||||||||||||||||||||||||||
| Average shares outstanding (in thousands): | ||||||||||||||||||||||||||||||||
| Basic | 19,082 | 20,256 | 19,205 | 20,614 | ||||||||||||||||||||||||||||
| Diluted | 19,294 | 20,517 | 19,384 | 20,870 | ||||||||||||||||||||||||||||
| Clearwater Paper Corporation | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| Unaudited (Dollars in thousands) | |||||||||
| June 30, | December 31, | ||||||||
| 2015 | 2014 | ||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash | $ | 11,465 | $ | 27,331 | |||||
| Restricted cash | 2,270 | 1,500 | |||||||
| Short-term investments | 60,000 | 50,000 | |||||||
| Receivables, net | 141,090 | 135,169 | |||||||
| Inventories | 248,280 | 286,626 | |||||||
| Deferred tax assets | 20,839 | 21,760 | |||||||
| Prepaid expenses | 7,869 | 4,191 | |||||||
| Total current assets | 491,813 | 526,577 | |||||||
| Property, plant and equipment, net | 823,672 | 810,987 | |||||||
| Goodwill | 209,087 | 209,087 | |||||||
| Intangible assets, net | 22,473 | 24,956 | |||||||
| Pension assets | 8,098 | 4,738 | |||||||
| Other assets, net | 7,394 | 9,583 | |||||||
| TOTAL ASSETS | $ | 1,562,537 | $ | 1,585,928 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable and accrued liabilities | $ | 214,701 | $ | 215,826 | |||||
| Current liability for pensions and other postretirement employee benefits | 7,915 | 7,915 | |||||||
| Total current liabilities | 222,616 | 223,741 | |||||||
| Long-term debt | 575,000 | 575,000 | |||||||
| Liability for pensions and other postretirement employee benefits | 114,835 | 118,464 | |||||||
| Other long-term obligations | 50,779 | 56,856 | |||||||
| Accrued taxes | 1,717 | 2,696 | |||||||
| Deferred tax liabilities | 110,289 | 111,634 | |||||||
| Stockholders' equity, excluding accumulated other comprehensive loss, net of tax | 554,963 | 568,400 | |||||||
| Accumulated other comprehensive loss, net of tax | (67,662 | ) | (70,863 | ) | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,562,537 | $ | 1,585,928 | |||||
| Clearwater Paper Corporation | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| Unaudited (Dollars in thousands) | ||||||||
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2015 | 2014 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net earnings | $ | 21,354 | $ | 18,679 | ||||
| Adjustments to reconcile net earnings to net cash flows from operating activities: | ||||||||
| Depreciation and amortization | 41,640 | 44,246 | ||||||
| Equity-based compensation expense | 2,019 | 6,910 | ||||||
| Impairment of assets | - | 4,259 | ||||||
| Deferred tax (benefit) provision | (2,480 | ) | 9,857 | |||||
| Employee benefit plans | 1,438 | 979 | ||||||
| Deferred issuance costs and discounts on long-term debt | 446 | 949 | ||||||
| Disposal of plant and equipment, net | 272 | 422 | ||||||
| Non-cash adjustments to unrecognized taxes | (979 | ) | - | |||||
| Changes in working capital, net | 29,309 | 14,818 | ||||||
| Changes in taxes receivable, net | 1,255 | 3,663 | ||||||
| Excess tax benefits from equity-based payment arrangements | (1,459 | ) | - | |||||
| Funding of qualified pension plans | (3,179 | ) | (8,889 | ) | ||||
| Other, net | (1,726 | ) | (980 | ) | ||||
| Net cash flows from operating activities | 87,910 | 94,913 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Changes in short-term investments, net | (10,000 | ) | 11,000 | |||||
| Additions to plant and equipment | (55,538 | ) | (32,612 | ) | ||||
| Proceeds from sale of assets | 507 | 619 | ||||||
| Net cash flows from investing activities | (65,031 | ) | (20,993 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Purchase of treasury stock | (37,148 | ) | (74,322 | ) | ||||
| Payment of tax withholdings on equity-based payment arrangements | (3,048 | ) | (792 | ) | ||||
| Excess tax benefits from equity-based payment arrangements | 1,459 | - | ||||||
| Other, net | (8 | ) | - | |||||
| Net cash flows from financing activities | (38,745 | ) | (75,114 | ) | ||||
| Decrease in cash | (15,866 | ) | (1,194 | ) | ||||
| Cash at beginning of period | 27,331 | 23,675 | ||||||
| Cash at end of period | $ | 11,465 | $ | 22,481 | ||||
| Clearwater Paper Corporation | |||||||||||||||||||||||||||||
| Segment Information | |||||||||||||||||||||||||||||
| Unaudited (Dollars in thousands) | |||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||||||
| Segment net sales: | |||||||||||||||||||||||||||||
| Consumer Products | $ | 239,391 | 54 | % | $ | 299,130 | 60 | % | $ | 474,567 | 54 | % | $ | 585,638 | 60 | % | |||||||||||||
| Pulp and Paperboard | 205,167 | 46 | % | 199,629 | 40 | % | 404,017 | 46 | % | 398,041 | 40 | % | |||||||||||||||||
| Total segment net sales | $ | 444,558 | 100 | % | $ | 498,759 | 100 | % | $ | 878,584 | 100 | % | $ | 983,679 | 100 | % | |||||||||||||
| Operating income (loss): | |||||||||||||||||||||||||||||
| Consumer Products | $ | 17,032 | 53 | % | $ | 12,705 | 38 | % | $ | 29,427 | 62 | % | $ | 12,182 | 23 | % | |||||||||||||
| Pulp and Paperboard | 27,754 | 87 | % | 33,635 | 102 | % | 43,948 | 93 | % | 70,411 | 131 | % | |||||||||||||||||
| 44,786 | 46,340 | 73,375 | 82,593 | ||||||||||||||||||||||||||
| Corporate | (12,713 | ) | 40 | % | (13,257 | ) | 40 | % | (26,065 | ) | 55 | % | (28,992 | ) | 54 | % | |||||||||||||
| Income from operations | $ | 32,073 | 100 | % | $ | 33,083 | 100 | % | $ | 47,310 | 100 | % | $ | 53,601 | 100 | % | |||||||||||||
| Clearwater Paper Corporation | ||||||||||||||||
| Reconciliation of Consolidated Net Earnings to EBITDA and Adjusted EBITDA | ||||||||||||||||
| Unaudited (Dollars in thousands) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net earnings | $ | 15,597 | $ | 12,453 | $ | 21,354 | $ | 18,679 | ||||||||
| Add back: | ||||||||||||||||
| Interest expense, net | 7,774 | 10,688 | 15,556 | 21,422 | ||||||||||||
| Income tax provision | 8,702 | 9,942 | 10,400 | 13,500 | ||||||||||||
| Depreciation and amortization expense | 20,632 | 22,015 | 41,640 | 44,246 | ||||||||||||
| EBITDA1 | $ | 52,705 | $ | 55,098 | $ | 88,950 | $ | 97,847 | ||||||||
| Directors' equity-based compensation (benefit) expense | $ | (1,457 | ) | $ | (36 | ) | $ | (1,927 | ) | $ | 2,781 | |||||
| Costs associated with Long Island facility closure | 735 | 1,843 | 1,289 | 10,275 | ||||||||||||
| Adjustments associated with sale of the specialty mills | (1,331 | ) | - | (1,462 | ) | - | ||||||||||
| Costs associated with labor agreement | - | - | 1,730 | - | ||||||||||||
| Costs associated with Thomaston facility closure | - | 374 | - | 1,124 | ||||||||||||
| Adjusted EBITDA2 | $ | 50,652 | $ | 57,279 | $ | 88,580 | $ | 112,027 | ||||||||
| 1 | EBITDA is a non-GAAP measure that management uses to evaluate the cash generating capacity of the company. The most directly comparable GAAP measure is net earnings. EBITDA is net earnings adjusted for net interest expense, income taxes, and depreciation and amortization. It should not be considered as an alternative to net earnings computed under GAAP. | |
| 2 | Adjusted EBITDA excludes the impact of the items listed that we do not believe are indicative of our core operating performance. | |
| Clearwater Paper Corporation | ||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||
| Unaudited (Dollars in thousands, except per-share amounts) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| GAAP net earnings | $ | 15,597 | $ | 12,453 | $ | 21,354 | $ | 18,679 | ||||||||
| Special items, after-tax1: | ||||||||||||||||
| Directors' equity-based compensation (benefit) expense | (998 | ) | (23 | ) | (1,323 | ) | 1,779 | |||||||||
| Costs associated with Long Island facility closure | 504 | 1,193 | 887 | 6,587 | ||||||||||||
| Adjustments associated with sale of the specialty mills | (912 | ) | - | (1,003 | ) | - | ||||||||||
| Costs associated with labor agreement | - | - | 1,197 | - | ||||||||||||
| Costs associated with Thomaston facility closure | - | 242 | - | 722 | ||||||||||||
| Discrete tax items related to state tax rate changes | - | 1,388 | - | 1,388 | ||||||||||||
| Adjusted net earnings2 | $ | 14,191 | $ | 15,253 | $ | 21,112 | $ | 29,155 | ||||||||
| GAAP net earnings per diluted share | $ | 0.81 | $ | 0.61 | $ | 1.10 | $ | 0.90 | ||||||||
| Special items, after-tax1: | ||||||||||||||||
| Directors' equity-based compensation (benefit) expense | (0.05 | ) | - | (0.07 | ) | 0.09 | ||||||||||
| Costs associated with Long Island facility closure | 0.03 | 0.06 | 0.05 | 0.32 | ||||||||||||
| Adjustments associated with sale of the specialty mills | (0.05 | ) | - | (0.05 | ) | - | ||||||||||
| Costs associated with labor agreement | - | - | 0.06 | - | ||||||||||||
| Costs associated with Thomaston facility closure | - | 0.01 | - | 0.03 | ||||||||||||
| Discrete tax items related to state tax rate changes | - | 0.07 | - | 0.07 | ||||||||||||
| Adjusted net earnings per diluted share2 | $ | 0.74 | $ | 0.74 | $ | 1.09 | $ | 1.40 | ||||||||
| 1 | Tax effect was calculated using the estimated annual effective tax rate for the period presented. | |
| 2 | Adjusted net earnings and Adjusted net earnings per diluted share exclude the impact of the items listed that we do not believe are indicative of our core operating performance. |
CONTACT:
Clearwater Paper Corporation
News media:
Matt Van Vleet, 509-344-5912
or
Investors:
Robin Yim, 509-344-5906