Exhibit 99.1
Clearwater Paper Reports Second Quarter 2017 Results
SPOKANE, Wash.--(BUSINESS WIRE)--August 2, 2017--Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the second quarter of 2017.
The company reported net sales of $429.7 million for the second quarter of 2017, down 1.6% compared to net sales of $436.7 million for the second quarter of 2016. Net earnings determined in accordance with generally accepted accounting principles, or GAAP, for the second quarter of 2017 were $8.0 million, or $0.48 per diluted share, compared to net earnings of $20.9 million, or $1.21 per diluted share, for the second quarter of 2016. The decrease in net earnings was due primarily to a planned bi-annual major maintenance outage at the Company's Arkansas mill in the second quarter of 2017 and higher input costs for energy, pulp, chemicals, and packaging supplies. Excluding certain non-core items identified in the attached Reconciliation of Non-GAAP Financial Measures, second quarter 2017 adjusted net earnings were $7.9 million, or $0.48 per diluted share, compared to second quarter 2016 adjusted net earnings of $23.5 million, or $1.37 per diluted share.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, was $45.7 million for the second quarter of 2017 compared to $62.2 million for the second quarter of 2016. Adjusted EBITDA for the quarter was $45.0 million, down 32.1% compared to second quarter 2016 Adjusted EBITDA of $66.3 million. The $21.3 million decrease in adjusted EBITDA was primarily a result of the same major maintenance and higher input costs affecting GAAP net earnings in the second quarter of 2017.
"We achieved solid second quarter results that were in line with our quarterly outlook,” said Linda K. Massman, president and chief executive officer. “The positive impacts to the quarter included higher prices and a stronger sales mix for paperboard, which were offset by higher external pulp pricing and lower consumer product shipment volumes, as parent rolls were used to build needed inventory.
I am also pleased to share that our previously disclosed strategic projects remain on time and within budget, and we continue to believe this will position us to more efficiently partner with and meet the needs of our customers in the future,” said Massman.
SECOND QUARTER 2017 SEGMENT PERFORMANCE
Consumer Products
Net sales in the Consumer Products segment were $231.9 million for the second quarter of 2017, down 6.5% compared to second quarter 2016 net sales of $247.9 million. This decrease was due to lower parent roll sales resulting from the shutdown of two higher cost paper machines at the Neenah, Wisconsin mill at the end of 2016 and a 1.7% decrease in retail tons sold.
Consumer Products had operating income of $10.5 million in the second quarter of 2017, compared to operating income of $18.5 million in the second quarter of 2016. After adjusting for certain non-core items identified in the attached Reconciliation of Non-GAAP Financial Measures, adjusted operating income of $11.8 million for the second quarter of 2017 was down from $19.1 million in the same period in 2016. Consumer Products operating margin decreased to 4.5% in the second quarter of 2017 from 7.5% in the second quarter of 2016. The adjusted operating margin decreased from 7.7% in the second quarter of 2016 to 5.1% in the second quarter of 2017 due to higher input costs for transportation, pulp, natural gas, and packaging supplies, partially offset by lower wage and benefit costs resulting from the implementation of warehouse automation, and the previously mentioned shutdown at the Neenah mill.
• Total tissue sales volumes of 91,450 tons in the second quarter of 2017 decreased by 7.7% and converted product cases shipped were 12.7 million, down 3.9%, each compared to the second quarter of 2016.
• Average tissue net selling prices increased 1.6% to $2,533 per ton in the second quarter of 2017, compared to the second quarter of 2016.
Pulp and Paperboard
Net sales in the Pulp and Paperboard segment were $197.8 million for the second quarter of 2017, up 4.8% compared to second quarter 2016 net sales of $188.8 million. The increase was primarily due to higher paperboard shipment volume, which includes sales from the operations of the former Manchester Industries acquired in December 2016. Operating income for the quarter decreased $18.4 million to $21.6 million, compared to operating income of $40.0 million for the second quarter of 2016, primarily due to approximately $9 million in major maintenance at the Arkansas mill and higher input costs for natural gas, electricity, chemicals and pulp and higher wages and benefits due to annual increases. In addition, second quarter 2016 operating income included the receipt of a net $2.8 million in partial reimbursement of previously incurred costs related to performance issues with the recovery boiler at the Arkansas mill.
• Paperboard sales volumes increased 4.0% to 207,152 tons in the second quarter of 2017, compared to 199,132 tons in the second quarter of 2016.
• Paperboard net selling prices increased 0.7% to $955 per ton compared to the second quarter of 2016.
Taxes
The company's consolidated GAAP tax rate and adjusted tax rate for the second quarter of 2017 was a provision of 33.0%, compared to 36.3% and 36.2%, respectively, in the second quarter of 2016. The company expects its GAAP and adjusted tax rate for 2017 to be approximately 34% plus or minus two percentage points.
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 2017 and 2016, including adjusted net earnings, adjusted net earnings per diluted share, EBITDA, adjusted EBITDA, adjusted operating income, adjusted operating margin, adjusted income tax provision and adjusted tax rate. Because these amounts are not in accordance with GAAP, reconciliations to net earnings, net earnings per diluted share, operating income, income tax provision and tax rate 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.
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, and offers services that include custom sheeting, slitting and cutting. 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 statements regarding the timing, benefits and costs of strategic and operational efficiency projects, customer relationships, cost structure and the company's expected tax rate for 2017. 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 execute on its growth and expansion strategies; unanticipated construction delays involving the company's planned new tissue manufacturing operations in Shelby, NC; 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 and timing and quantity of purchases of the company's tissue products, including the existence of sufficient demand for and the quality of tissue produced at the company's recently announced Shelby facility expansion when it becomes operational; changes in the U.S. and international economies and in general economic conditions in the regions and industries in which the company operates; the loss of or changes in prices in regards to a significant customer; the company's ability to successfully implement its operational efficiencies and cost savings strategies; changes in customer product preferences and competitors' product offerings; manufacturing or operating disruptions, including IT system and IT system implementation failures, equipment malfunction and damage to the company's manufacturing facilities; changes in transportation costs and disruptions in transportation services; changes in the cost and availability of wood fiber and wood pulp; labor disruptions; cyclical industry conditions; changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs; environmental liabilities or expenditures; the company’s ability to realize the expected benefits of its Manchester Industries acquisition; changes in expenses and required contributions associated with the company's pension plans; cyber-security risks; reliance on a limited number of third-party suppliers for raw materials; the company’s inability to service its debt obligations; restrictions on the company’s business from debt covenants and terms; changes in laws, regulations or industry standards affecting the company’s 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, 2016. 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.
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| 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, |
| | | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
| Net sales | | | $ | 429,663 | | 100 | % | | $ | 436,671 | | 100 | % | | $ | 867,188 | | 100 | % | | $ | 873,875 | | 100 | % |
| Costs and expenses: | | | | | | | | | | | | | |
| Cost of sales | | | (380,733 | ) | 89 | % | | (361,851 | ) | 83 | % | | (767,763 | ) | 89 | % | | (730,498 | ) | 84 | % |
| Selling, general and administrative expenses | | | (29,265 | ) | 7 | % | | (34,655 | ) | 8 | % | | (59,202 | ) | 7 | % | | (65,450 | ) | 7 | % |
| Total operating costs and expenses | | | (409,998 | ) | 95 | % | | (396,506 | ) | 91 | % | | (826,965 | ) | 95 | % | | (795,948 | ) | 91 | % |
| Income from operations | | | 19,665 | | 5 | % | | 40,165 | | 9 | % | | 40,223 | | 5 | % | | 77,927 | | 9 | % |
| Interest expense, net | | | (7,673 | ) | 2 | % | | (7,396 | ) | 2 | % | | (15,716 | ) | 2 | % | | (15,039 | ) | 2 | % |
| Earnings before income taxes | | | 11,992 | | 3 | % | | 32,769 | | 8 | % | | 24,507 | | 3 | % | | 62,888 | | 7 | % |
| Income tax provision | | | (3,955 | ) | 1 | % | | (11,905 | ) | 3 | % | | (8,955 | ) | 1 | % | | (23,578 | ) | 3 | % |
| Net earnings | | | $ | 8,037 | | 2 | % | | $ | 20,864 | | 5 | % | | $ | 15,552 | | 2 | % | | $ | 39,310 | | 4 | % |
| Net earnings per common share: | | | | | | | | | | | | | |
| Basic | | | $ | 0.49 | | | | $ | 1.22 | | | | $ | 0.94 | | | | $ | 2.27 | | |
| Diluted | | | 0.48 | | | | 1.21 | | | | 0.94 | | | | 2.26 | | |
| Average shares outstanding (in thousands): | | | | | | | | | | | | | |
| Basic | | | 16,457 | | | | 17,066 | | | | 16,471 | | | | 17,293 | | |
| Diluted | | | 16,590 | | | | 17,234 | | | | 16,612 | | | | 17,386 | | |
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| Clearwater Paper Corporation |
| Condensed Consolidated Balance Sheets |
| Unaudited (Dollars in thousands) |
| | | | | |
| | | June 30, | | December 31, |
| | | | 2017 | | 2016 |
| ASSETS | | | | | |
| Current assets: | | | | | |
| Cash and cash equivalents | | | $ | 8,519 | | | $ | 23,001 | |
| Receivables, net | | | 130,805 | | | 147,074 | |
| Taxes receivable | | | 5,479 | | | 9,709 | |
| Inventories | | | 243,313 | | | 258,029 | |
| Other current assets | | | 7,866 | | | 8,682 | |
| Total current assets | | | 395,982 | | | 446,495 | |
| Property, plant and equipment, net | | | 991,061 | | | 945,328 | |
| Goodwill | | | 244,283 | | | 244,283 | |
| Intangible assets, net | | | 36,513 | | | 40,485 | |
| Other assets, net | | | 10,750 | | | 7,751 | |
| TOTAL ASSETS | | | $ | 1,678,589 | | | $ | 1,684,342 | |
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| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | |
| Current liabilities: | | | | | |
| Borrowings under revolving credit facilities | | | $ | 108,000 | | | $ | 135,000 | |
| Accounts payable and accrued liabilities | | | 224,177 | | | 223,699 | |
| Current liability for pensions and other postretirement employee benefits | | | 7,821 | | | 7,821 | |
| Total current liabilities | | | 339,998 | | | 366,520 | |
| Long-term debt | | | 570,139 | | | 569,755 | |
| Liability for pensions and other postretirement employee benefits | | | 79,442 | | | 81,812 | |
| Other long-term obligations | | | 40,776 | | | 41,776 | |
| Accrued taxes | | | 2,567 | | | 2,434 | |
| Deferred tax liabilities | | | 162,081 | | | 152,172 | |
| TOTAL LIABILITIES | | | 1,195,003 | | | 1,214,469 | |
| | | | | |
| Stockholders' equity, excluding accumulated other comprehensive loss, net of tax | | | 534,812 | | | 521,626 | |
| Accumulated other comprehensive loss, net of tax | | | (51,226 | ) | | (51,753 | ) |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | | | $ | 1,678,589 | | | $ | 1,684,342 | |
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| Clearwater Paper Corporation |
| Consolidated Statements of Cash Flows |
| Unaudited (Dollars in thousands) |
| | | |
| | | Six Months Ended |
| | | June 30, |
| | | | 2017 | | 2016 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | |
| Net earnings | | | $ | 15,552 | | | $ | 39,310 | |
| Adjustments to reconcile net earnings to net cash flows from operating activities: | | | | | |
| Depreciation and amortization | | | 53,612 | | | 43,174 | |
| Equity-based compensation expense | | | 403 | | | 7,716 | |
| Deferred tax provision | | | 7,891 | | | 8,674 | |
| Employee benefit plans | | | (2,183 | ) | | (2,561 | ) |
| Other, net | | | 1,267 | | | 259 | |
| Changes in working capital, net | | | 23,742 | | | (13,394 | ) |
| Changes in taxes receivable, net | | | 4,229 | | | 14,107 | |
| Other, net | | | (914 | ) | | (870 | ) |
| Net cash flows from operating activities | | | 103,599 | | | 96,415 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | |
| Additions to plant and equipment | | | (85,709 | ) | | (57,394 | ) |
| Other, net | | | 417 | | | 250 | |
| Net cash flows from investing activities | | | (85,292 | ) | | (57,144 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | |
| Purchase of treasury stock | | | (4,875 | ) | | (35,168 | ) |
| Borrowings on revolving credit facilities | | | 117,000 | | | 477,169 | |
| Repayments of borrowings on revolving credit facilities | | | (144,000 | ) | | (477,169 | ) |
| Other, net | | | (914 | ) | | (318 | ) |
| Net cash flows from financing activities | | | (32,789 | ) | | (35,486 | ) |
| (Decrease) increase in cash and cash equivalents | | | (14,482 | ) | | 3,785 | |
| Cash and cash equivalents at beginning of period | | | 23,001 | | | 5,610 | |
| Cash and cash equivalents at end of period | | | $ | 8,519 | | | $ | 9,395 | |
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| Clearwater Paper Corporation |
| Segment Information |
| Unaudited (Dollars in thousands) |
| |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
| Segment net sales: | | | | | | | | | | | | | |
| Consumer Products | | | $ | 231,912 | | 54 | % | | $ | 247,912 | | 57 | % | | $ | 474,335 | | 55 | % | | $ | 492,930 | | 56 | % |
| Pulp and Paperboard | | | 197,751 | | 46 | % | | 188,759 | | 43 | % | | 392,853 | | 45 | % | | 380,945 | | 44 | % |
| Total segment net sales | | | $ | 429,663 | | 100 | % | | $ | 436,671 | | 100 | % | | $ | 867,188 | | 100 | % | | $ | 873,875 | | 100 | % |
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| Operating income (loss): | | | | | | | | | | | | | |
| Consumer Products | | | $ | 10,534 | | 54 | % | | $ | 18,544 | | 46 | % | | $ | 16,723 | | 42 | % | | $ | 36,934 | | 47 | % |
| Pulp and Paperboard | | | 21,595 | | 110 | % | | 40,032 | | 100 | % | | 48,843 | | 121 | % | | 75,195 | | 96 | % |
| | | 32,129 | | | | 58,576 | | | | 65,566 | | | | 112,129 | | |
| Corporate1 | | | (12,464 | ) | 63 | % | | (18,411 | ) | 46 | % | | (25,343 | ) | 63 | % | | (34,202 | ) | 44 | % |
| Income from operations | | | $ | 19,665 | | 100 | % | | $ | 40,165 | | 100 | % | | $ | 40,223 | | 100 | % | | $ | 77,927 | | 100 | % |
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| 1 | | | Corporate expenses for the three and six months ended June 30, 2017 include $0.1 million and $0.2 million of expenses associated with the acquisition of Manchester Industries, respectively. Operating results subsequent to the acquisition of Manchester Industries are included in the Pulp and Paperboard segment. |
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| Clearwater Paper Corporation |
| Reconciliation of Non-GAAP Financial Measures |
| EBITDA and Adjusted EBITDA |
| Unaudited (Dollars in thousands) |
| | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | | 2017 | | 2016 | | 2017 | | 2016 |
| Net earnings | | | $ | 8,037 | | | $ | 20,864 | | | $ | 15,552 | | | $ | 39,310 |
| Add back: | | | | | | | | | |
| Interest expense, net | | | 7,673 | | | 7,396 | | | 15,716 | | | 15,039 |
| Income tax provision | | | 3,955 | | | 11,905 | | | 8,955 | | | 23,578 |
| Depreciation and amortization expense3 | | | 26,055 | | | 22,024 | | | 53,612 | | | 43,174 |
| EBITDA1 | | | $ | 45,720 | | | $ | 62,189 | | | $ | 93,835 | | | $ | 121,101 |
| | | | | | | | | |
| Directors' equity-based compensation (benefit) expense | | | $ | (1,483 | ) | | $ | 3,610 | | | $ | (2,933 | ) | | $ | 4,336 |
| Manchester Industries acquisition related expenses | | | 105 | | | — | | | 220 | | | — |
| Costs associated with Oklahoma City facility closure | | | 275 | | | — | | | 2,349 | | | — |
| Costs associated with Long Island facility closure | | | 365 | | | 533 | | | 831 | | | 965 |
| Write-off of assets as a result of Warehouse Automation project | | | 41 | | | — | | | 41 | | | — |
| Adjusted EBITDA2 | | | $ | 45,023 | | | $ | 66,332 | | | $ | 94,343 | | | $ | 126,402 |
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| 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 (including debt retirement costs), 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. |
| 3 | | | Depreciation and amortization expense for the three months ended June 30, 2017 includes accelerated depreciation of $0.3 million associated with the Long Island facility and $0.2 million as a result of the warehouse automation project. In addition to these amounts, depreciation and amortization for the six months ended June 30, 2017 also includes $3.7 million of accelerated depreciation associated with the Oklahoma City facility closure. |
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| Clearwater Paper Corporation |
| Reconciliation of Non-GAAP Financial Measures |
| Adjusted Net Earnings and Adjusted Net Earnings Per Diluted Common Share |
| Unaudited (Dollars in thousands, except per-share amounts) |
| |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | | 2017 | | 2016 | | 2017 | | 2016 |
| GAAP net earnings | | | $ | 8,037 | | | $ | 20,864 | | | $ | 15,552 | | | $ | 39,310 |
| Special items, after-tax1: | | | | | | | | | |
| Directors' equity-based compensation (benefit) expense | | | (988 | ) | | 2,335 | | | (1,945 | ) | | 2,800 |
| Manchester Industries acquisition related expenses | | | 70 | | | — | | | 146 | | | — |
| Costs associated with Oklahoma City facility closure | | | 183 | | | — | | | 3,969 | | | — |
| Costs associated with Long Island facility closure | | | 440 | | | 345 | | | 748 | | | 622 |
| Write-off of assets as a result of Warehouse Automation project | | | 27 | | | — | | | 27 | | | — |
| Accelerated depreciation of assets as a result of Warehouse Automation project | | | 161 | | | — | | | 161 | | | — |
| Adjusted net earnings2 | | | $ | 7,930 | | | $ | 23,544 | | | $ | 18,658 | | | $ | 42,732 |
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| GAAP net earnings per diluted share | | | $ | 0.48 | | | $ | 1.21 | | | $ | 0.94 | | | $ | 2.26 |
| Special items, after-tax1: | | | | | | | | | |
| Directors' equity-based compensation (benefit) expense | | | (0.06 | ) | | 0.14 | | | (0.12 | ) | | 0.16 |
| Manchester Industries acquisition related expenses | | | 0.01 | | | — | | | 0.01 | | | — |
| Costs associated with Oklahoma City facility closure | | | 0.01 | | | — | | | 0.24 | | | — |
| Costs associated with Long Island facility closure | | | 0.03 | | | 0.02 | | | 0.04 | | | 0.04 |
| Write-off of assets as a result of Warehouse Automation project | | | — | | | — | | | — | | | — |
| Accelerated depreciation of assets as a result of Warehouse Automation project | | | 0.01 | | | — | | | 0.01 | | | — |
| Adjusted net earnings per diluted share2 | | | $ | 0.48 | | | $ | 1.37 | | | $ | 1.12 | | | $ | 2.46 |
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| 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. |
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| Clearwater Paper Corporation |
| Reconciliation of Non-GAAP Financial Measures |
| Segment EBITDA, Adjusted EBITDA, EBITDA Margin and Adjusted EBITDA Margin |
| Unaudited (Dollars in thousands) |
| | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | | 2017 | | 2016 | | 2017 | | 2016 |
| Consumer Products: | | | | | | | | | |
| Net sales | | | $ | 231,912 | | | $ | 247,912 | | | $ | 474,335 | | | $ | 492,930 | |
| Operating income | | | 10,534 | | | 18,544 | | | 16,723 | | | 36,934 | |
| Depreciation and amortization expense5 | | | 16,292 | | | 14,203 | | | 34,534 | | | 27,962 | |
| Consumer Products EBITDA1 | | | $ | 26,826 | | | $ | 32,747 | | | $ | 51,257 | | | $ | 64,896 | |
| Costs associated with Long Island facility closure | | | 365 | | | 533 | | | 831 | | | 965 | |
| Costs associated with Oklahoma City facility closure | | | 275 | | | — | | | 2,349 | | | — | |
| Write-off of assets as a result of Warehouse Automation project | | | 41 | | | — | | | 41 | | | — | |
| Consumer Products Adjusted EBITDA2 | | | $ | 27,507 | | | $ | 33,280 | | | $ | 54,478 | | | $ | 65,861 | |
| Consumer Products EBITDA margin3 | | | 11.6 | % | | 13.2 | % | | 10.8 | % | | 13.2 | % |
| Consumer Products Adjusted EBITDA margin4 | | | 11.9 | % | | 13.4 | % | | 11.5 | % | | 13.4 | % |
| Pulp and Paperboard6: | | | | | | | | | |
| Net sales | | | $ | 197,751 | | | $ | 188,759 | | | $ | 392,853 | | | $ | 380,945 | |
| Operating income | | | 21,595 | | | 40,032 | | | 48,843 | | | 75,195 | |
| Depreciation and amortization expense | | | 8,356 | | | 6,449 | | | 16,461 | | | 12,816 | |
| Pulp and Paperboard EBITDA1 | | | $ | 29,951 | | | $ | 46,481 | | | $ | 65,304 | | | $ | 88,011 | |
| Pulp and Paperboard Adjusted EBITDA2 | | | $ | 29,951 | | | $ | 46,481 | | | $ | 65,304 | | | $ | 88,011 | |
| Pulp and Paperboard EBITDA margin3 | | | 15.1 | % | | 24.6 | % | | 16.6 | % | | 23.1 | % |
| Pulp and Paperboard Adjusted EBITDA margin4 | | | 15.1 | % | | 24.6 | % | | 16.6 | % | | 23.1 | % |
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| 1 | | | Segment EBITDA is segment operating income adjusted for depreciation and amortization. |
| 2 | | | Segment Adjusted EBITDA excludes the impact of the items listed that we do not believe are indicative of our core operating performance. |
| 3 | | | Segment EBITDA margin is defined as Segment EBITDA divided by Segment Net sales. |
| 4 | | | Segment Adjusted EBITDA margin is defined as Segment Adjusted EBITDA divided by Segment Net sales. |
| 5 | | | Depreciation and amortization expense for the Consumer Products segment for the three months ended June 30, 2017 includes accelerated depreciation of $0.3 million associated with the Long Island facility and $0.2 million as a result of the warehouse automation project. In addition to these amounts, depreciation and amortization expense for the six months ended June 30, 2017 also includes $3.7 million of accelerated depreciation associated with the Oklahoma City facility closure. |
| 6 | | | With the exception of $0.1 million and $0.2 million of acquisition related expenses that are included in the Corporate segment for the three and six months ended June 30, 2017, respectively, results for Manchester Industries subsequent to the December 16, 2016 acquisition are included in the Pulp and Paperboard segment. |
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| Clearwater Paper Corporation |
| Reconciliation of Non-GAAP Financial Measures |
| Segment Adjusted Operating Income and Operating Margin |
| Unaudited (Dollars in thousands) |
| |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | | 2017 | | 2016 | | 2017 | | 2016 |
| Consumer Products: | | | | | | | | | |
| Net sales | | | $ | 231,912 | | | $ | 247,912 | | | $ | 474,335 | | | $ | 492,930 | |
| Operating income | | | 10,534 | | | 18,544 | | | 16,723 | | | 36,934 | |
| Costs associated with Long Island facility closure3 | | | 661 | | | 533 | | | 1,127 | | | 965 | |
| Costs associated with Oklahoma City facility closure4 | | | 275 | | | — | | | 6,012 | | | — | |
| Write-off of assets as a result of Warehouse Automation project | | | 41 | | | — | | | 41 | | | — | |
| Accelerated depreciation of assets as a result of Warehouse Automation project | | | 241 | | | — | | | 241 | | | — | |
| Consumer Products Adjusted operating income1 | | | $ | 11,752 | | | $ | 19,077 | | | $ | 24,144 | | | $ | 37,899 | |
| Consumer Products operating margin | | | 4.5 | % | | 7.5 | % | | 3.5 | % | | 7.5 | % |
| Consumer Products Adjusted operating margin2 | | | 5.1 | % | | 7.7 | % | | 5.1 | % | | 7.7 | % |
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| Pulp and Paperboard5: | | | | | | | | | |
| Net sales | | | $ | 197,751 | | | $ | 188,759 | | | $ | 392,853 | | | $ | 380,945 | |
| Operating income | | | 21,595 | | | 40,032 | | | 48,843 | | | 75,195 | |
| Pulp and Paperboard Adjusted operating income1 | | | $ | 21,595 | | | $ | 40,032 | | | $ | 48,843 | | | $ | 75,195 | |
| Pulp and Paperboard operating margin | | | 10.9 | % | | 21.2 | % | | 12.4 | % | | 19.7 | % |
| Pulp and Paperboard Adjusted operating margin2 | | | 10.9 | % | | 21.2 | % | | 12.4 | % | | 19.7 | % |
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| 1 | | | Segment Adjusted operating income excludes the impact of the items listed that we do not believe are indicative of our core operating performance. |
| 2 | | | Segment Adjusted operating margin is defined as Segment Adjusted operating income divided by Segment Net sales. |
| 3 | | | Costs associated with the Long Island facility closure for the three months ended June 30, 2017 includes accelerated depreciation of $0.3 million. |
4 | | | Costs associated with the Oklahoma City facility closure for the six months ended June 30, 2017 include $3.7 million of accelerated depreciation. |
5 | | | With the exception of $0.1 million and $0.2 million of acquisition related expenses that are included in the Corporate segment for the three and six months ended June 30, 2017, respectively, results for Manchester Industries subsequent to the December 16, 2016 acquisition are included in the Pulp and Paperboard segment. |
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| Clearwater Paper Corporation |
| Reconciliation of Non-GAAP Financial Measures |
| Adjusted Income Tax Provision |
| Unaudited (Dollars in thousands) |
| |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | | 2017 | | 2016 | | 2017 | | 2016 |
| GAAP income tax provision | | | $ | (3,955 | ) | | $ | (11,905 | ) | | $ | (8,955 | ) | | $ | (23,578 | ) |
| Special items, tax impact: | | | | | | | | | |
| Directors' equity-based compensation benefit (expense) | | | 495 | | | (1,275 | ) | | 988 | | | (1,536 | ) |
| Manchester Industries acquisition related expenses | | | (35 | ) | | — | | | (74 | ) | | — | |
| Costs associated with Oklahoma City facility closure | | | (92 | ) | | — | | | (2,043 | ) | | — | |
| Costs associated with Long Island facility closure | | | (221 | ) | | (188 | ) | | (379 | ) | | (343 | ) |
| Write-off of assets as a result of Warehouse Automation project | | | (14 | ) | | — | | | (14 | ) | | — | |
| Accelerated depreciation of assets as a result of Warehouse Automation project | | | (80 | ) | | — | | | (80 | ) | | — | |
| Adjusted income tax provision1 | | | $ | (3,902 | ) | | $ | (13,368 | ) | | $ | (10,557 | ) | | $ | (25,457 | ) |
| Adjusted income tax provision rate1,2 | | | 33.0 | % | | 36.2 | % | | 36.1 | % | | 37.3 | % |
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| 1 | | | Adjusted income tax provision and Adjusted income tax provision rate exclude the impact of the items listed that we do not believe are indicative of our core operating performance. |
| 2 | | | The Adjusted income tax provision rate is defined as [Adjusted income tax provision / (Adjusted income tax provision + Adjusted net earnings)]. |
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CONTACT:
Clearwater Paper Corporation
(News media)
Matt Van Vleet, 509.344.5912
or
(Investors)
Robin S. Yim, 509.344.5906
