CLW - Earnings call 4 2023 | Clearwater Paper Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Clearwater Paper Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. I will now hand today's call over to [ Kyle Nagarkar ], Investor Relations. Please go ahead, sir.

Unknown Executive

Thank you, operator. you XXXX Clearwater Earnings thank and Fourth and Year Full Conference afternoon, for Paper's joining Quarter Good Call.

Vice and Joining are me Baker, Officer; Arsen today Chief Senior Sherri Kitch, President Officer. on and Chief the President and call Financial Executive

quarter the the after with XXXX were of our XX-K. Financial yesterday's fourth released close, market results of for along filing shortly

You providing Relations outlook current the Investor the page clearwaterpaper.com. will our posted find at a presentation of supplemental company's information, including a website of slide on

provided information non-GAAP GAAP in afternoon's Additionally, in we forward-looking to our certain into remarks. it Slide will non-GAAP the note statements. by comparable incorporate be reconciliation A information to the in the prepared Rather on information this than of slide, website. information covering going and supplemental providing rereading Please discussion. included supplemental are X reference press of our this information release our is we

that, me Arsen. turn the call to over With let

Arsen Kitch

thank you today. for us Good afternoon, and joining

announcement update in our today's begin of facility Packaging. will We call, improving our Georgia On over paperboard we've significant becoming the our years, the more I from a progress the call pending few past manufacturing Graphic made last and a player strategic acquisition of that Augusta, mentioned operations and competitive of with businesses. our both

scale capacity of goal independent diversified to matched of mentioned strategic significant of a outstanding North our of business Augusta our well needs our is The converters. nature scaled, scale to capital-intensive fit. needed North I paperboard, supplier invest an premier we to and paperboard laid business will especially the a as converters that out paperboard strengthen It products also the in given add position our paperboard American and is America. to paperboard and growth high-performing acquisition is industry. believe that be grow, that able to building we and In

packaging XX American a market. We have attractiveness It of we North overall robust believe to million-ton is capitalize well growing also the and market sustainable the paperboard positioned that trends. consumer stated that is in on

softened cyclical industry, and of utilization second in fell, and in While to this the XXXX rates half demand and XXXX. we into demand recovering start this expect is year a

regarding end cost and contribute we you site upside the we're The synergies. $XXX of with is that facility million some expecting realized, If approach synergies, a will SBS multiple $XXX Let and post-synergy paperboard volume about employees. the million X.Xx. additional XXX,XXX Augusta with of tons details me XXX believe adjusted EBITDA to XXXX. the With well-invested acquisition provide Augusta capacity and talented of by to around

component underlying largest our annual $XX The to million synergies of expected is volume. million $XX

of a the tons about target up including be optimizing we believe to facility production to long-term across XXX,XXX XXXX There utilization that in expect are additional we XX% upside. XX% network, We cost synergies and efficiencies. to transportation and have procurement utilized savings expect XX% that assuming we rate, volume our to

was deleveraging X.Xx we to opportunity. coming around in us enabled is pursue Xx acquisition, we the end ratio XXXX, our XXXX. we leverage and peak from our sheet complete in between acquisition of At balance X.Xx, that significant this resulting by quarters. The strong ratio the the began expect After leverage flexibility our enabling to

record cycle, to and allocation. capital generation our will business through priority do in and track so normalized we're top given goal of X.Xx ability our the flow Our cash be of deleveraging confident the toward our disciplined

XXXX. adjusted track that The generated we side, with performance million tissue EBITDA more record $XXX a sales and $X outstanding business improvement. the of an strong business than has well-run On billion a in have in team in

and needs scale paperboard, tissue grow like our with customers. business in to Just invest our

that is and of customer consolidated needed the make can believe long-term consolidation large continue sizable with we these keep capacity up tissue that growth supplier manufacturers to base, landscape to in retailers. investments scaled fragmented the the to Given build

growth, strategic in overall, landscape we industry direction investment will will best we that including our on the customers evaluate our our we what's options for remain for business. and focused our that company Given and people. take, paperboard shareholders, Regardless our of tissue

We expect to regulatory subject in the and completing Augusta of quarter and acquisition look this transaction timing completion of are the year. The forward to second the approvals.

update in you progress on our We the months. coming will

X. shift our and full results. to turn year fourth to quarter focus Let's our XXXX Please Slide

focus in almost saw We $XX by a generation business. XXXX. cash and great our our million during costs you driven continued maintain our we on our execution, year, had net input As press lower tissue strong operational flow reduced in release, and by strength debt

Lewiston sales X quarter of last consolidated paperboard year EBITDA net of our adjusted the quarter, $XXX million which in within results. and than of our of Slide provides million significantly at we range fourth maintenance our and a $XX our is mill. reported higher major We completed the summary when

doubling the than adjusted million Our year in more of fourth this million its $XX drove business year. from by tissue $XX the improvement last quarter EBITDA to

of and disruption business significantly curtailed operations to delivered natural quarter in with our at a $XX million the facility. continued gas adjusted fourth Our Lewiston EBITDA paperboard soft demand

to compared of both Lower market highlights balance Let across of RISI. and XXXX reported paperboard, we me in our trends fourth decreased to performance costs share increased input reflects in as demand to businesses businesses by which you. our inventories. both operational of manage particularly energy the a fourth few XXXX, tissue fiber, as compared our had and supply Prices and We as with as business the benefited good quarter freight. in quarter

on to overview, XXXX our with quarter buyback turn some $XX a me the strong, be authorization. details. for to With and of remaining provide million repurchased million of of total quarter that of total continued our since for XXXX. We debt the during demand $X a in net million million almost while by reduced since $XX $XXX We shares soft. $X let each million segments paperboard and remained Tissue additional

our supplemental X our with begin Let's on paperboard materials. business Slide of

broader and the rates fourth Operating trends. data, by full down dipped on XXXX industry down to Based were versus under for of XX% trends, another of at shipments Reflecting per in per and quarter. on XX% and decreases in in year $XX second fourth February see these the XX% last quarter ton year, ton year. AF&PA XX% XXXX about this Let's half focusing start $XX the price were reported the in about year. of we

year demand. While took during balance to of paper industry we the in XXXX. remains our down machines approximately with on averages QX outperform soft, the demand XXXX our flat versus for X% quarter We QX shipments downtime and XX% supply and did

during quarter due unplanned disruption a downtime facility event In our to approximately in Lewiston us gas That supplies in impacted natural $X addition, experienced the negatively we million. by to also November.

we this in my for We're year. remain long-term forecasting optimistic about earlier the paperboard. As first the gradual sequential a quarter in prospects starting I mentioned demand of improvement remarks, in

in more We second XXXX a and next recovery meaningful expect the of year. half

Please X for tissue. turn to Slide additional comments on

healthy Let's RISI, XX% Private trends. demand due inflation. remained all-time in Circana and start nearly economic based reported QX balance. with market a by at which industry and Utilization about high uncertainty rates brands are shift on to XX% a brand broader supply some were to panel of at continuing believe Consumers private represents share we as to data.

and XXXX conditions discussed been have tons XXXX, data between view tissue our of while XXXX. between stable. the previously, tons than than of in capacity be As that more All we've industry capacity supports XXX,XXX more and added XXX,XXX announced to were XXXX this removed remain

turn performance in the to Let's our quarter.

doubling. more with Our year-over-year than by EBITDA and X% adjusted strong business growing remained revenue very

by Our team. margin improvement as operational our that input adjusted EBITDA was we We lower strong XX%, optimistic XXXX. remain by driven we into much can that retain execution higher nearly pricing, head of costs and margin

our results. call With to Sherri cover that, I'll financial to turn the over

Sherri Baker

Arsen. you, Thank

XXXX fourth Let's adjusted the net per by income XXXX, reported of and income shows share turning cover $X.XX quarter in consolidated income the and per income net performance $XX.X $X.XX. financial Slide quarter The XX. fourth XXXX. In the of of we diluted million, to for diluted our of quarter statement net results fourth share summary of

$XXX.X income million, diluted net reported For the and income per year, share. per income adjusted income full of share per we net $X.XX $X.XX net of of

on lower we in X.X% the improvement consolidated profitability. operating are year rose a healthy results in to Slide The of to XX. on performed with a well segment XX.X% costs fourth the driving margin performance EBITDA outage. strong very last compared corresponding Adjusted impact and of basis if input as major The XX% in quarter business about exclude quarter the the or

business EBITDA impacted our a for as quarter XX year-over-year The we EBITDA business. adjusted results, quarter XXXX. $XX On and market-related paperboard quarter planned lower comparison in mix sales with by impact in Slide price offset million than basis, major delivered a and of between year-over-year the in XX% volume of periods negligible of margin. our the negatively which The of the adjusted input of was costs. more in was Lewiston downtime lower XXXX the fourth had outage fourth took is

the shows lower a mix, year. third costs. this price volumes It XX reflects sales the of Slide higher quarter appendix quarter to sequential comparison the in of fourth and the lower and

delivered primarily partially on unfavorable due operating These match a cost for freight offset of favorable for supply reduced is energy. EBITDA pricing full and The On margin. adjusted $XXX offset XX by the with higher schedules Slide to EBITDA were basis, mix year full and our year paperboard a million XX% adjusted paperboard inputs, year a and business. demand. to comparison business was by of

for adjusted year-over-year Slide comparison of is business. EBITDA tissue XX our the

from The the discussed, in Arsen $XX and announced previously input lower delivered As with a business we are adjusted price XX% increases million of EBITDA quarter margin. costs. benefiting

on saw from those pulp to As as our lower the through the noted statement. income quarter, in this benefit we prices flow fourth slide,

EBITDA full prior lower for a of $XXX year year On of results. freight tissue year is the and with the of shipments costs, impacted double basis, adjusted The comparison increasing XX that delivered XX% EBITDA Slide production full million for margin, business which adjusted positively pricing, is along with business. a all our a year. our

the that freight a reflects input quarter and costs, this shows year. lower comparison of energy. It we seeing are benefits XX of in to fourth the from quarter third pulp, Slide particularly sequential the

XX Slide capital our outlines structure.

our Our balance improved strong, and quarter-over-quarter, very million. now liquidity remains sheet $XXX totaling

flow. During and Since our debt an in have a free additional by the net free flow million net reduced in fourth $XXX cash generated reduced million. cash million. almost $XX generated debt year-to-date we we $XXX XXXX, basis, our quarter, we million On by $XX

was X.Xx. We of the during XX,XXX repurchased an That to million flow per $X at translated the debt-to-EBITDA quarter, fourth price average the share. of net cash free almost stock repurchase of our At shares approximately end $XX.XX into our used ratio quarter.

repurchase on We authorization. million roughly left have our $X share

$XXX with of continue fund secured on impact facility expect our hand. the term from mitigate draws share ABL million cash intend We our of debt, new We loan existing the dilution grants of to shares on and to additional to to the to and acquisition buy back employees. Augusta facilities

quarter outlook an now estimated Let's move weather in first well XX to That had updates Slide year demand January by expectations. and Lewiston an million impact. some on to severe is We as being our as a that increasing paperboard impact of XXXX our negative partially experienced production. at for $XX mill full event the offset

we We variables, adjusted million $XX those quarter. are in the expecting continued of to $XX range in strong million performance EBITDA the in first With tissue. expect

full with stable margins to maintain tissue the XXXX, For year in expect we strong volumes.

in of board expect in the a rebound demand XXXX. also second half We

we cost by maintenance impact additional $XX million. million and do and adjusted planned negatively negatively to to EBITDA $XX Lewiston major by at is million price expect $XX impact expected us an $XX to million to Our

$XXX million key expense Finally, million Interest acquisition. and $XX range, unchanged remain for should $XX depreciation $XXX to should and amortization be replacement replacement $XX for the should million account the tube be million take Lewiston million do our year announced our includes to $XX million. assumptions expense in recovery be full $XX into precipitator for $XX the the between million Augusta which in expenditures other Arkansas. boiler Capital million and and not project

tax our total in X projected require of spend, $XX the should $XX And the require project a will approximately the As precipitator million Recovery reminder, is rate million. while be mid-XX% range. to finally, Boiler

call Let Arsen. back to turn over the me now

Arsen Kitch

expected the Paper. a the Upon is expected The Sherri. team will talented for Thanks, welcome Augusta big Augusta strategic to completion acquisition of Clearwater step the very Clearwater we Paper. transaction,

on our will We against expectations. focus creation and delivering integration value successful

to best is the a mills business. of and existing build to bring Our paperboard stronger our Augusta goal together

the meets objective converter scaled long-term substrates. across to Our needs diversified that to build to intend a opportunistically at and is continue look business paperboard customers. our of assets paperboard We multiple

our in We will to to feasibility also existing expand assets the of continue product evaluate investing offering. our

run, long our focus additional and we deleveraging cash balance the at we're opportunities generating the sheet. While term, to look in going near in flows to medium on

back proven the expect a track cross-cycle to doing to and just of that We by be our record XXXX. target of end X.Xx of have

We up our for wrap continue would financial by like also customers continued through a people to for me I in our and thanking delivered market their navigated Let conditions support. our to prioritize us trust our challenging strong outstanding results, and XXXX. for their placing shareholders customers. thank

With your questions. prepared and remarks take that, we will our end

Operator

Your is [Operator of Instructions] RBC Matthew Capital. first line the question McKellar from with

Matthew McKellar

prices today you're Augusta for Arsen congrats Maybe rates be of us able would for? seen are here. the rate a move facility based Are what the and like on bit annual we've the the EBITDA you transaction. run SBS on SBS utilization to Sherri, start and expecting lower off, to a pricing for give little generation where sense

Arsen Kitch

million we And was and in that Listen, $XXX a was, EBITDA XXXX there prices. volume. XXXX. in course, That believe of

a expecting in are that carryover pricing you're but lower a referring that volume. expecting We we're in to, recovery

So should offset long the X the each in run other.

I we the think to transaction, what once at a better of we'll idea give XXXX be Augusta. like looks complete able

Matthew McKellar

the us with we you whether to number? to increases expect the be synergies then including color that CapEx a on achieve the expect synergies to you'd those how cadence And can acquisition by Understood. maybe give you more price any associated on bridge when and achieved Okay. and or would be 'XX cost bit the

Arsen Kitch

Yes.

of volume. expecting really So this. let the me we're start The from with coming synergies bulk are

see to back historical XX% in to rates. utilized going be to to utilization, we long the the XX% we So run, In expect XXXX. mill XX% is which should believe is run

of Augusta. XXX,XXX that would have So that at imply about tons volume upside we

should bulk from volume come of synergies So lift. the that those

on And in historical depending the ton, probably that you are in if cycle. range paperboard $XXX you look per to at $XXX it's Clearwater EBITDA where

like come these is synergies, and what think, the get side. the that, procurement commercial 'XX, end in to secondary 'XX. to synergies are focus talk I And modest But our transportation. not so of going network the more this cadence synergies the by to about We're of I left. things XXXX. bulk is the volume happens to on expect from There think, in prepared we optimization, of

we have through I market going some but to be say to think that dependent acquisition. that the the expecting, more of on we'll recovery as is we're progress

Matthew McKellar

downtime carton a cup on of of you talked those or anything market level behind around would factors? outperformed utilization you've to health paperboard a be Okay. And projection then just portfolio, what's thinking although to plates softer than XX% market for through any completeness, of XX% expect other where the bit you've a relative think that give you in you'd you seen us bit whether little the assumptions, the recently. color concentrate in But 'XX, folding the when versus bit economic given about there's expect and the just own could what across I or your demand

Arsen Kitch

question. great a it's Yes,

with mill. I refers the to that business acquiring we're book the mostly think of it

of the -- book believe mill time XX% up that's the we so into XXXX. will that business So acquisition to we fill the at XX% complete that

So having really, upside in capturing additional and volume that the some us additional is market. wins

hoping So and more the we're the indicative acquisition. it's mill to book that how part really business going as of retain of of loaded be to is the

Matthew McKellar

just and Augusta. production with customer [ sticking sense. evaluating that know That historically which to ] I additional add talked all looking you Sure. facility. substrates I folding a your And Maybe value you'd that about or work might paperboard had existing makes attractive guess know give of some some portfolio? proposition at to in? Is can most complementary of your done interested us more broadly, that then substrates the Graphic I sense find you something you at boxboard could at be

Arsen Kitch

That's a great question.

they're the the is do think run, looking a believe focus in to it paperboard. will that what in what going North weight what market what place need long for that that on there the In America, we it lighter and I they be converters is for. we're do is

We'll explore products to the those explore So we're also in other to our or future. complementary may SBS that going want need customers options.

substrates our Beyond other SBS, as purchase customers well.

of sense a cash at make is us we years this that acquisitions continue make focusing where generation So the that can the intent saying of us back to been and deleveraging take can several we've potential other to back last really put be we paperboard. point, we that are at flow will grow. going position goal us get And opportunities. to spot can we Matthew, what substrates But is with look is And in where get a our transformational of is spot this for on we can the to to those to into acquisition. deleveraging into we the advantage

Matthew McKellar

Maybe QX? Great. outlook It any view out? versus stronger you'd sounds seen 'XX broadly. being pick That markets to your little call that and And year? to be you what's you Are imports sequentially that zoom there as material see pickup makes out more we'll just then a half end like of here. in sense. in informing a weaker it to QX you And talk how expect of just expect for bit your you've play for or folding out maybe factor the a improved boxboard the whether meaningfully second of demand can paperboard

Arsen Kitch

Okay.

questions tackle miss one, I'll of I there, X all to I if think try me let X there's know. so them,

sense, and makes had the I I food better softness carton. would held is first seen and is around up some has we've in XXXX. others. have SBS one portions folding cartons better up think and is which higher-end think used in folding than applications have say those That I more service 'XX market the this of than So are holding

recovery, the refer demand or consumer we of customer converter our demand, say terms demand In to we demand. when either

inventory we And it. have I think had end a was in with that they're substantial. working XXXX, but that way their saw discussions our XXXX as I hangover build and through the inventory really at they of still of in XXXX customers,

what we as normalized through expecting customers is are And so from XXXX. to more our happen we progress a pattern ordering

those in the as demand well We're some strengthening hoping of for for paperboard. applications consumer higher-end

things drive So those will are I the think that a recovery. X

'XX I into the gradual end of in to strengthening quarters at couple XXXX. be going of think the it's next into and and

Matthew McKellar

that know I yes, And there. Great. a question was multipart

last folding pretty material there -- are just your for What a I factor are in on boxboard think seeing part I the imports you mean, was outlook 'XX? that?

Arsen Kitch

Thanks for reminding me.

So at listen, look were imports actually the data, if 'XX versus in XXXX. you down

They're If 'XX year-over-year. XXX,XXX bump you XX% historical in maybe or look in by flat data, right, down those they that and they were up around we've I mean XXX,XXX, tons. XX%, XX,XXX, XX% projecting at XX,XXX being RISI that tons almost by averages seen. about are

commentary what been what time. out And But many we'd they've this know of been imports we're rate years been here, imports. the about here. at is so and about there seeing, expect they're some I They've certainly, there's for from here

So important. is I this don't think

Matthew McKellar

into we at Last substantial that, Should helpful. an I point? supplier on essentially guess, this really intend mean, off see option That's one Is growing by understand, independent Okay. confirming yesterday that And paperboard. table strategic to paperboard? don't a your you in remain firmly the that operations announcement I way. yourself pretty of converting is you

Arsen Kitch

term, in medium -- for to I right. the absolutely think I think that's near

we're the to I the independent supplier. committed independent and the converters to think we're --

and that's sweet value think for think grow. our customers, have years. And of of room proposition our many to we it's think and we a spot plenty great we I been set

to be long And to we the customers can run. going those our think there for we're strengths. So play we in

be the So yes, North to American supplier that converters. independent to focus our is

Matthew McKellar

switching tissue. like ask options Great. Maybe just about there. to to your I'd exploring next, over process of just

particular, in think your your process business, how tissue previously you've this even exploring options for Are businesses. to I any for options might at reviewing been advanced share time you would both for the of on Lewiston the both for pretty then or And a given an candid that be able how products? point might mill the you sale work provide be given what indication for color expectations produces any could your line in site, value?

Arsen Kitch

If paperboard it's a time back, lines talked step think we or focus on to I Yes, jumping little about growth. on expectations. we premature our be

operate said consolidation and may given I've scale that have fantastic tissue industry demand well. well look need We business We need We'll those a business of the supply as before, be the options. And really the in it landscape. operating But does one business. business. at the all very options, does

Clearwater we'll largest right It's a I've for said thing shareholders, Lewiston people. before, is we'll do And the thing our great our right for customers site. It's and in So multiple site, Paper. That the yes, our has in site. biggest do categories there. product the critical site producing to

I we're So be any to any specific there, about thinking obviously talking paths. it's about implications think premature but

Matthew McKellar

Sure.

to I last $XX That's correctly heard was that event from Okay. for number. I confirm weather me. One the fair in want January million enough. one for just QX cold extreme the the impact that

embedded understand, that in insurance might applied have maybe what is you could Just interruption against want I What business to any exactly be and occurred in whether that? time? that guess,

Arsen Kitch

and financial So the start what's piece. with grab can let then me Sherri embedded

of So it's One a -- is there's damage. things: X combination equipment

period mill cold, happened, goes cold down extensive it an freeze and the it the in damage. of extended very Lewiston for When causes when kind time. of So was that

is So repairing and just part damage equipment. it of equipment

The other back was to take have mill get to we part that running. the downtime and up

you take insurance question? the was $XX don't So Sherri, why million. together, And that

Sherri Baker

included. have not and So would that we million we recovery assumed offset, have that would deductible any the have $X in of to a we we numbers

able So would that we we an be that any guidance the achieve provided. to will offset recovery be to

Arsen Kitch

with working companies. our it's obviously we've insurance And we're -- --

I that to see. the recovery we'll is X% XX% it's that imply minus So want don't

that figure recovery well asset our equipment of as and insurance options. So have with would out There's through to both like. look business we'll portion insurance as an company what center

through. work we what that's to have So

Operator

joining [Operator further Thank there this questions. Instructions] for time, you call. no At today's are

disconnect now lines. You your may

Clearwater Paper (CLW) 21 Feb 242023 Q4 Earnings call transcript