CLW - Earnings call transcript Q4 2024 | Clearwater Paper Corporation

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. My name is Kevin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Clearwater Paper Fourth Quarter and Full Year 2020 Earnings Call. [Operator Instructions] I would now like to turn the call over to Sloan Bohlen, Head of Investor Relations. Please go ahead.

Sloan Bohlen

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

Joining the Senior Chief the after Executive Chief me today's President Officer. fourth Officer; Kitch, on Financial were and call quarter today market of Sherri released results close. Baker, Financial Vice XXXX and Arsen President for are shortly and

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

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

let to me over turn call And with that, the Arsen.

Arsen Kitch

and afternoon. going Thank you key across good I'm my for to remarks areas. X today us, joining structure

a of our accomplishments XXXX. in I'll summary First, major strategic provide

outlook performance, our discuss will turn near- our full including provide to I'll the our quarter that results priorities, on over and fourth quarter to outline conditions. including I and I XXXX. year fourth our industry long-term perspective on well our taking we're to Sherri actions cost for And lastly, our structure. Next, reduce current will call as then additional details as

increased levels. paperboard the XX% by our was major around footprint. in and The are to of May supplier We Augusta million of Augusta and closed February Within the packaging integrate of we we Clearwater to synergies believe assuming can year. start Clearwater capacity paperboard in overview the premier Let's our to in $XXX strategic utilization closing annual on of and months We $XXX once our to step announced that cross-cycle mill the We our adjusted the tissue geographic announced into acquisition, capture the contribute track paperboard sale X million business on with improved acquisition acquisition billion. this transaction North short to on X EBITDA independent an planned first of well America. acquisition Augusta planned the volume industry our This XXXX. our returns to for network. transform $X.XX of normalized facility accomplished Augusta last

X leading and proceeds Our sheet. tirelessly team the the to deals our I'm the short outstanding period worked for to improve proud net last our next for We of years sale position outcome utilize and Clearwater delever business, the of paperboard. of look future team our for forward our in significantly in accomplishments such our very tremendous several and chapter transform X story. over and these November to a to Clearwater. completed balance company time tissue this on These growth

The operational which of the of major weeks a quarter an recovering to X the events within led few did operations, operations maintenance Let facility. by environment, team year-end. our back some $XX our mill outstanding track was suffered The performance challenging discontinued tissue that adjusted month as particularly was was the delivered turn hurricane. Helene, mill We impacted total which took of operations very a outage fourth business. operating at higher quarter. disruptions. the planned a job EBITDA across me now of which to by followed on place of created and Augusta in then These and focus The million damage, costs included from Hurricane our Augusta

market continued the pricing utilization rates resulting with to pressure. market averages, below throughout XXXX, industry continued while demand lower discussed historical operate As has to in improve, gradually and we've margin

$XXX program, new X approximately a and of authorized year. million we February our repurchase share $X shares this Lastly, repurchased our through of million Board

industry market provide now on conditions. me comments some Let and

on start on to is in prospects Let's returning grow This long-term recover, data, paperboard shipments projected that Based various we're in by XXXX demand. XXXX. further based versus X% supports with view about industry to industry XXXX pre-code demand X% continues AF&PA X% increased publications, our and to We for levels. Demand the by packaging. to optimistic

XXX,XXX versus supply. be to by XXXX. global total driven to turn in is in XXXX, capacity improved although decreased competition. XX% let's added new by unchanged Now remained rates Net American North XX% and XXXX to increased forecasted in utilization industry supply approximately in tons exports XXXX. capacity largely Industry in

As will we've market between utilization rates and discussed previously, balanced we have believe XX% XX%. a

provide we're August help us fill me out long-term growth recently acquisition. that cost the that of synergies revenue an to supply structure. overview and customer actions a the taking We signed open with our should volume drive reduce with and you a capture from Let capacity major agreement our

several volume next this expect years. the ramp over gradually to We

incorporated our have that will into We assumptions this discuss moment. XXXX a in volume Sherri

we're SG&A to In million $XX operations. We're cost structure. and addition, $XX taking in cost savings to our targeting in million reduce actions XXXX across

in maintenance. major with a We're also a reductions This salaried spend and in including contractors, XX% reduction took company. the in areas, in eliminated and than action services positions more across step targeting hourly professional XXX January We all other positions roles.

year. expect ramp through We initiatives these the from to benefits

incorporated our have We the also all XXXX these of outlook. impact in actions

product Finally, customers. service to broaden to our ways to our we're better converter continuing offering explore

of focused to on content increasing our lightweighting recycled are a products We name and few. the compostability,

These and overall capital capital modest are have development require that fit expect deliver underway these will they that into We product our initiatives, investments our outlook. to efforts we to solutions near-term customers.

carrier are additional investments options. these well as grades, diversify to XX market substrates. This into take off We're or board. beverage longer-term white likely options months also include may paperboard execute. will that exploring efforts to We're and to to studies These XX top recycled kicking engineering explore larger as

we around by With demand our of the reiterating stable, this an would cyclical relatively an up by supply. view cycle, temporary average by is balance the in increasing a until a changes supply industry. and in expect exceed comments currently rates industry demand. XX% back in these cycle, XX% to operate down is believe rates can my utilization conclude me balance. greatly which impacted cycle, margins. And to and demand and We to while be SBS supply with being condition Let driven the across inherently XX% we in in come

As including that we operational the cost performance, within current our strengthening control, we're actions and improving focused navigate on offering. are our product our reducing environment,

financials. the Sherri to turn over me a review more let that, for in-depth call of With our

Sherri Baker

you, Thank Arsen.

$XX of adjusted in the in million was business, November by the we we previous decline delivered divested of As down from from tissue fourth EBITDA driven the quarter fewer earlier, contributions million Arsen on months X. mentioned This $XX which year. X

higher lower The mill was by other sources of and decline volumes pricing. addition partly input and our costs. at mill from the offset and lower paperboard major Augusta of the Augusta This production were maintenance sales expenses the

additional results months contribution cost from of also Augusta result and driven versus paperboard volume impact full As was acquisition $XXX our of the adjusted these as change our predominantly $XX EBITDA pricing. million year turn was million, The from deflation. headwinds year-over-year fewer was to XXXX down XXXX, we lowered operations total a business some in partly lower offsetting from a results X the tissue $XXX million in input by from XXXX.

tissue of generated the of completion divestiture the significant With we our business, value.

debt. proceeds recognized net a utilized of contributing to $XXX million QX, of to gain and approximately million significantly year the net $XXX of We on our business our sheet We sale the in delever balance our the reduce full significantly meaningfully income.

XXXX, full reduced due of $XXX we and we and of million have as net XXXX leverage a million notes outstanding X.Xx. $XXX debt For year year-end, by net ratio of in

outlook quarter we the $XX deliver adjusted the first EBITDA. of of our $XX for million to first Turning In million expect to to XXXX. quarter,

and maintenance outage match not continue in to We demand. costs meet we'll quarter, will major incur the to supply first planned

took We positions as $X as the with paperboard $X be mentioned, a higher Arsen initial costs in quarter cost pricing including to expect we actions across and January, only to tissue quarter million usage. And first the in approximately XX% due in reduction our reduce full all will business no fixed company. a impact. million higher This our seasonal also energy to in

savings throughout year. the expect these the ramp from actions to We

assumptions. XXXX, year making are full For following the we

We that is but capacity absorbs continued with to recovery forecasted demand the as expect utilization online in new a industry rates QX. beginning remaining come low

a Our billion we XX% approximately internal utilization around and of benefit billion year to incremental as be full with rate projected volume. Augusta of is from to revenue expected $X.X sales $X.X

offset We mill are improved operating and headwinds. pricing that performance expecting will inflation

We that we are less and disruptions impact events other also experienced in XXXX. weather-related from expecting operational

rate. should that million $XX of to improved annual $XX with $XX we million manufacturing actions overall translate reduction performance, targeting In fixed addition to to million run to million cost $XX an are

As lead to maintenance we costly an will annual outage smaller, which migrating believe are predictable less previously and outages. announced, more to major we patents,

expect QX. We the costs to $XX bulk Listen outage in coming of incur of $XX with Augusta cost to the QX million in and million from

large complete million $XX annual million projects additional will million capital our we this which projected expect of carryover $XX to expenditures that from of our We million, $XX to $XX year. spend maintenance includes plus CapEx

with we produce mid-cycle XX% recovery As XX% cycle stated free the of than more XX% $XXX in margins our Arsen which deliver to cash noted would conversion remain flow and annual in ability quarter, in confident flows. range to XX% last we market free and and a cash million to

capital of a close brief overview will our philosophy. I allocation with

million goal capital. over replacement million to million assets. episodic long maintenance which note could $XX add approximately $XX $XX the common of another which is to to Our Please year excludes these will expenditures large average term. our that are and of require on increments. per large $XX million strategic improve first or annual additional the performance projects, This maintain and

Cypress with in communicate We emissions just the Lewiston project projects boiler the will and time, of we project recovery in did large these XXXX. Bend like in ahead

with below Second, strategic temporarily maintain that range balance to net strong sheet aim may go with leverage or to We above to cycle. ratio Xx provide we X a the of through a flexibility. us

shareholders return a the to provides it reinvesting business. when aim we better than Third, in return capital to

Let for the me remarks. closing now Arsen over turn to back call

Arsen Kitch

supplier you, in We're independent North Clearwater into products of Sherri. Thank a transform as are transactions XXXX major American an I'll our completed paperboard strengthening to we focused today. that converters. where position packaging on strategic X We now focused paperboard summarize company.

expand We include well product substrates. will look for as offering, existing paperboard for to new as may which our new opportunities applications

balance well-invested asset strong a medium for sheet base the the of about industry and We industry to have weather prospects optimistic that remain a We long-term help company. us our will and our part cycle. this

and long-term deploy capital strong strategically to and margins a flows create we As result, to the value. aim cash cycle expect through shareholder

safely operating on would thank to our providing our us to Finally, thank change this in and to of and their shareholders our continued like open putting efforts trust their it I their like to focused time for your during transition. for customers in I'd customers excellent that, for With we'll to questions. people interest. service remain our up also

Operator

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

Matthew McKellar

Maybe that help time us sense get new the ramp-up first starting over or it's years. starting with looks those I nurse be recognize -- meaningful you mentioned. several agreements like? a you to better ramp could it how the to But that are volumes of of just shape incremental curve supposed what with able

Arsen Kitch

Yes.

into incorporated we were with the part of This assumptions. So volume set that acquisition. our we Augusta assumption contemplating was our 'XX

XXX,XXX us to years tons full, capacity with we ramp, of which you was approximately our So XX% but Augusta it Matthew, mill several the it's enough provides synergies. if provide And volume to capture out us should open purchased to when recall, going Augusta, and take XXX,XXX approximately fill capacity. open with to

bit it I So like of could of provides this run. you the over long idea what think a look an

Matthew McKellar

in helpful. Okay. your of X kind And there. remarks maybe other just cleanup That's opening

about XXXX million performance you're year-over-year. offset your, inflation to improving I dimensionalize operating $XX in million much think, to expecting the headwinds assumptions, help you $XX pricing talked You of and is initial as kind

way. assumptions mill now benefits I guess, we're expecting, your I'm system? understanding the make your about you I initial how parts message in Or to, Are wanted correct you thinking that run around to I wanted guess, Just moving versus just incremental make the sure sure here.

Arsen Kitch

I think to think there's X about. probably areas

improving think first area the performance. I is operational

fewer last is As Lewiston capture mean disruptions year million next talked price and major will we Hard experienced cost $XX come took but we're that offset those the the savings. hopefully, $XX headwinds. to hard in improvement some XXXX. of actions to third million about to those you it's large I $XX of in cost reductions having here set that -- mentioned, we that predict, million last And X we Augusta. in the events The of to January and pursuing. we also to weather quarter. should events due that bucket imagine And $XX million such like did to from,

X think we're I are expecting buckets versus 'XX those in So of the that XXXX. improvement

Matthew McKellar

headcount That's very does show and you Are expecting from in those with QX? reductions in sticking start Maybe those QX? other to helpful. cost really that much fixed Or initiatives benefit savings. up

Sherri Baker

happening a It be, will see that It of through the, I'd say, of QX. second the Great. modest would amount ramp QX half year. in the say, start you'll to the with in savings really more I'd the bulk

Matthew McKellar

be? yourself then there's grades the the lot you other helpful. and would Union? high-level also of a If I apply applies see if European and Okay. on up recyclical against That's we bit parts are but lot backing there Or they what to of you change impact the return, ambiguity, think helpful. little competing a And then SBS in and realize I SBS would here. how the exon be tariffs consider just just thinking tariffs market and thoughts any U.S. of Canada moving mean, tariffs your do a

Arsen Kitch

Yes.

about our export X pulp me good Mexico us. it and talk be We some impact into could from chemicals a Canada. do We of some Canada So potentially how little let examples. and into bit purchased would supplies

potentially on impact from will pulp it suppliers suppliers. would come us there but costs higher from will feel, So primarily an and chemical be we that our passed to

to would cost it's customers. hard scenario it's to on of But predict increases that tariffs would those these those be impacted how be pass tariffs. -- in all our flows goal to Our the kind and by

impact about which Clearwater. cost think we to We're supplier. a would primarily customers. then pass to on us, higher how that's our It's So domestic on we

hard predict be some that flow to the what paperboard, look could but there of really like. So would in global impact it's

Matthew McKellar

in. put in some Okay. balance against now. That's options And fair. to And if that Obviously, of is could your X their recognize I the you I place more great sheet considering get are have capital medium a the get where Or But you do versus today, November? more capital think the room about term. done thinking stock maybe $X share are on repurchases that how have aggressive the you is allocation? million option to for you some since

Arsen Kitch

of when at think our along all discount they we'd value be what to think sufficient intrinsic I is opportunistic said we we buyers our trade shares a what is.

also investing in our we buyback strong I our this But maintain in and assets assets a are our maintain strong again, top balance investing competitiveness remains the sheet. to balance we adjustments priorities program. Our and it's but priority -- top X XXXX, we'll maintaining And see as investment, cash really into to share sheet. back view generation make to flow their a our as think an

Matthew McKellar

comments started call plates? things -- any common trends do differences any carton Any what on demand Okay. you across out That's in versus has could X how year seeing, looking folding And other great. saw versus if here where to maybe here? at I trend just the more, you're

Arsen Kitch

Yes.

is think a having but maybe conversations the this are with we're our anecdotal, bit I positive. customers little

expecting be our they're a better more tell demand. than some our think food folding would to year service that 'XX. I I than also demand of you robust is carton 'XX

close to extruded couple essentially of being up our being to are our we out. especially I'd machines, on In on products, several out, being fact, machines a think -- call of we sold pretty what on are close we're sold so

of recover. So some really depends we're demand helpful on seeing to but continue the signs it category,

Operator

concludes that gentlemen, please for you And participating, And your are ladies lines. disconnect time. conference thank call. ask questions that, with further no and There your that you at and this

Clearwater Paper (CLW) 13 Feb 252024 Q4 Earnings call transcript