UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
_________________
CURRENT
REPORT
Pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of Report (Date of earliest
event reported): July
21, 2016
_________________
CLEARWATER
PAPER CORPORATION
(Exact
name of registrant as specified in its charter)
_________________
Delaware |
001-34146 |
20-3594554 |
(State or other jurisdiction |
(Commission File Number) |
(IRS Employer |
601 West Riverside Ave., Suite 1100
Spokane, WA 99201
(Address
of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (509) 344-5900
_________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On July 21, 2016, Clearwater Paper Corporation announced its results of operations and financial condition for the second quarter results ending June 30, 2016. A copy of the press release containing this announcement is furnished as Exhibit 99.1 hereto. In addition, a copy of the Company’s Second Quarter 2016 Supplemental Information is furnished as Exhibit 99.2 hereto.
The information in this Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
99.1 Press
release issued by Clearwater Paper Corporation, dated July 21, 2016:
CLEARWATER
PAPER REPORTS SECOND QUARTER 2016 RESULTS
99.2 Clearwater
Paper Corporation Second Quarter 2016 Supplemental Information
-------------------------------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: |
July 21, 2016 |
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CLEARWATER PAPER CORPORATION |
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By: |
/s/ Michael S. Gadd |
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Michael S. Gadd, Corporate Secretary |
EXHIBIT INDEX
Exhibit |
Description |
99.1 |
Press release issued by Clearwater Paper Corporation, dated July 21, 2016: CLEARWATER PAPER REPORTS SECOND QUARTER 2016 RESULTS |
99.2 |
Clearwater Paper Corporation Second Quarter 2016 Supplemental Information |
Exhibit 99.1
Clearwater Paper Reports Second Quarter 2016 Results
SPOKANE, Wash.--(BUSINESS WIRE)--July 21, 2016--Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the second quarter of 2016.
The company reported net sales of $436.7 million for the second quarter of 2016, down 1.8% compared to net sales of $444.6 million for the second quarter of 2015. Net earnings determined in accordance with generally accepted accounting principles, or GAAP, for the second quarter of 2016 were $20.9 million, or $1.21 per diluted share, compared to $15.6 million, or $0.81 per diluted share, for the second quarter of 2015. Excluding certain items identified in the attached reconciliations to GAAP, second quarter 2016 adjusted net earnings were $23.5 million, or $1.37 per diluted share, compared to second quarter 2015 adjusted net earnings of $14.2 million, or $0.74 per diluted share.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, was $62.2 million for the second quarter of 2016. Adjusted EBITDA for the quarter was $66.3 million, up 31.0% compared to second quarter 2015 Adjusted EBITDA of $50.7 million. The increase in EBITDA and Adjusted EBITDA was due primarily to the absence of scheduled major maintenance at the company’s Arkansas pulp and paperboard mill in the second quarter of 2016, compared to approximately $7 million incurred during the second quarter of 2015, lower input costs for energy, chemicals and employee benefits, and 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 during the second quarter of 2013 through the first quarter of 2015 timeframe, all of which was partially offset by lower paperboard pricing.
“Clearwater Paper delivered an outstanding second quarter in terms of net earnings and by exceeding the high end of our outlook for Adjusted EBITDA,” said Linda Massman, president and CEO. “Our strong performance was primarily driven by productivity improvements, lower input costs in the pulp and paperboard business and maintaining healthy inventory and customer service levels for consumer products. We completed a successful first half of 2016 by keeping a sharp focus on implementing strategic capital investments and operational efficiencies throughout the company.
“Through the second quarter, we have purchased 835,031 shares at an average price of $42.12, as part of our $100 million stock repurchase program we announced last December. Our stock repurchase program reflects our confidence in future cash generation capabilities and a commitment to return capital to shareholders,” said Massman.
SECOND QUARTER 2016 SEGMENT PERFORMANCE
Consumer Products
Net sales in the Consumer Products segment were $247.9 million for the second quarter of 2016, up 3.6% compared to second quarter 2015 net sales of $239.4 million. This increase was due to growth in total tissue volume and a richer product mix that included a 10.7% growth in retail tons sold.
On a GAAP basis, the segment had operating income of $18.5 million, compared to operating income of $17.0 million in the second quarter of 2015. Adjusted operating income of $19.1 million for the second quarter of 2016 was up $2.6 million compared to the same period in 2015, after adjusting for $0.5 million and $0.7 million of costs in the second quarters of 2016 and 2015, respectively, related to the previously announced Long Island, New York facility closure. 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 company’s former specialty tissue mills. The improved results in the most recent period were driven primarily by lower input costs for external pulp and energy, which were primarily offset by increased transportation costs due to customer mix.
Pulp and Paperboard
Net sales in the Pulp and Paperboard segment were $188.8 million for the second quarter of 2016, down 8.0% compared to second quarter 2015 net sales of $205.2 million. The decrease was primarily due to lower paperboard pricing. Operating income for the quarter increased $12.2 million to $40.0 million, compared to $27.8 million for the second quarter of 2015, primarily due to the absence of approximately $7 million of scheduled major maintenance costs at the Arkansas pulp and paperboard mill, lower input costs for chemicals, energy, employee benefits and transportation, and the previously discussed partial reimbursement of costs related to the recovery boiler at the Arkansas mill.
Taxes
The company's GAAP tax rate for the second quarter of 2016 was a provision of 36.3% compared to 35.8% in the second quarter of 2015. On an adjusted basis, the second quarter 2016 tax rate was 36.2%. The company expects its annual GAAP and adjusted tax rates to be approximately 37% for 2016.
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 2016 and 2015, including adjusted net earnings, adjusted net earnings per diluted share, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, adjusted operating income, and adjusted tax rate. Because these amounts are not in accordance with GAAP, reconciliations to net earnings, net earnings per diluted share, operating income and income tax provisions, 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 stock repurchase program, cash flow generation, return of capital to shareholders and expected tax rate for 2016. 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; 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 customer product preferences and competitors’ product offerings; the loss of or changes in prices in regards to a significant customer; cyclical industry conditions; changes in the cost and availability of wood fiber and wood pulp; inability to successfully implement the company’s operational efficiencies and expansion strategies; changes in transportation costs and disruptions in transportation services; customer acceptance, timing and quantity of purchases of the company’s tissue products; changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs; environmental liabilities or expenditures; labor disruptions; manufacturing or operating disruptions, including IT system and IT system implementation failures, equipment malfunction and damage to the company’s manufacturing facilities; 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; 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, 2015. 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, | |||||||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 436,671 | 100 | % | $ | 444,558 | 100 | % | $ | 873,875 | 100 | % | $ | 878,584 | 100 | % | ||||||||||||||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||||||||||||||||||||||
Cost of sales | (361,851 | ) | 83 | % | (384,347 | ) | 86 | % | (730,498 | ) | 84 | % | (774,179 | ) | 88 | % | ||||||||||||||||||||||||||||||
Selling, general and administrative expenses | (34,655 | ) | 8 | % | (28,138 | ) | 6 | % | (65,450 | ) | 7 | % | (57,095 | ) | 6 | % | ||||||||||||||||||||||||||||||
Total operating costs and expenses | (396,506 | ) | 91 | % | (412,485 | ) | 93 | % | (795,948 | ) | 91 | % | (831,274 | ) | 95 | % | ||||||||||||||||||||||||||||||
Income from operations | 40,165 | 9 | % | 32,073 | 7 | % | 77,927 | 9 | % | 47,310 | 5 | % | ||||||||||||||||||||||||||||||||||
Interest expense, net | (7,396 | ) | 2 | % | (7,774 | ) | 2 | % | (15,039 | ) | 2 | % | (15,556 | ) | 2 | % | ||||||||||||||||||||||||||||||
Earnings before income taxes | 32,769 | 8 | % | 24,299 | 5 | % | 62,888 | 7 | % | 31,754 | 4 | % | ||||||||||||||||||||||||||||||||||
Income tax provision | (11,905 | ) | 3 | % | (8,702 | ) | 2 | % | (23,578 | ) | 3 | % | (10,400 | ) | 1 | % | ||||||||||||||||||||||||||||||
Net earnings | $ | 20,864 | 5 | % | $ | 15,597 | 4 | % | $ | 39,310 | 4 | % | $ | 21,354 | 2 | % | ||||||||||||||||||||||||||||||
Net earnings per common share: | ||||||||||||||||||||||||||||||||||||||||||||||
Basic | $ | 1.22 | $ | 0.82 | $ | 2.27 | $ | 1.11 | ||||||||||||||||||||||||||||||||||||||
Diluted | 1.21 | 0.81 | 2.26 | 1.10 | ||||||||||||||||||||||||||||||||||||||||||
Average shares outstanding (in thousands): | ||||||||||||||||||||||||||||||||||||||||||||||
Basic | 17,066 | 19,082 | 17,293 | 19,205 | ||||||||||||||||||||||||||||||||||||||||||
Diluted | 17,234 | 19,294 | 17,386 | 19,384 | ||||||||||||||||||||||||||||||||||||||||||
Clearwater Paper Corporation | |||||||||||||||||||
Condensed Consolidated Balance Sheets | |||||||||||||||||||
Unaudited (Dollars in thousands) | |||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||
2016 | 2015 | ||||||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 9,395 | $ | 5,610 | |||||||||||||||
Restricted cash | 2,270 | 2,270 | |||||||||||||||||
Short-term investments | — | 250 | |||||||||||||||||
Receivables, net | 143,061 | 139,052 | |||||||||||||||||
Taxes receivable | 744 | 14,851 | |||||||||||||||||
Inventories | 248,934 | 255,573 | |||||||||||||||||
Other current assets | 7,659 | 9,331 | |||||||||||||||||
Total current assets | 412,063 | 426,937 | |||||||||||||||||
Property, plant and equipment, net | 881,975 | 866,538 | |||||||||||||||||
Goodwill | 209,087 | 209,087 | |||||||||||||||||
Intangible assets, net | 17,517 | 19,990 | |||||||||||||||||
Pension Assets | 1,555 | 596 | |||||||||||||||||
Other assets, net | 4,535 | 4,221 | |||||||||||||||||
TOTAL ASSETS | $ | 1,526,732 | $ | 1,527,369 | |||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Accounts payable and accrued liabilities | $ | 208,292 | $ | 220,368 | |||||||||||||||
Current liability for pensions and other postretirement employee benefits | 7,559 | 7,559 | |||||||||||||||||
Total current liabilities | 215,851 | 227,927 | |||||||||||||||||
Long-term debt | 569,371 | 568,987 | |||||||||||||||||
Liability for pensions and other postretirement employee benefits | 86,465 | 89,057 | |||||||||||||||||
Other long-term obligations | 42,873 | 46,738 | |||||||||||||||||
Accrued taxes | 1,516 | 1,676 | |||||||||||||||||
Deferred tax liabilities | 127,762 | 118,118 | |||||||||||||||||
Stockholders' equity, excluding accumulated other comprehensive loss, net of tax | 537,616 | 530,414 | |||||||||||||||||
Accumulated other comprehensive loss, net of tax | (54,722 | ) | (55,548 | ) | |||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,526,732 | $ | 1,527,369 | |||||||||||||||
Clearwater Paper Corporation | |||||||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||||||
Unaudited (Dollars in thousands) | |||||||||||||||||||
Six Months Ended
June 30, |
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2016 | 2015 | ||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||||
Net earnings | $ | 39,310 | $ | 21,354 | |||||||||||||||
Adjustments to reconcile net earnings to net cash flows from operating activities: | |||||||||||||||||||
Depreciation and amortization | 43,174 | 41,640 | |||||||||||||||||
Equity-based compensation expense | 7,716 | 2,019 | |||||||||||||||||
Deferred tax provision (benefit) | 8,674 | (2,480 | ) | ||||||||||||||||
Employee benefit plans | (2,561 | ) | 1,438 | ||||||||||||||||
Deferred issuance costs on long-term debt | 419 | 446 | |||||||||||||||||
Disposal of plant and equipment, net | — | 272 | |||||||||||||||||
Non-cash adjustments to unrecognized taxes | (160 | ) | (979 | ) | |||||||||||||||
Changes in working capital, net | (13,394 | ) | 29,309 | ||||||||||||||||
Changes in taxes receivable, net | 14,107 | 1,255 | |||||||||||||||||
Excess tax benefits from equity-based payment arrangements | (148 | ) | (1,459 | ) | |||||||||||||||
Funding of qualified pension plans | — | (3,179 | ) | ||||||||||||||||
Other, net | (722 | ) | (1,726 | ) | |||||||||||||||
Net cash flows from operating activities | 96,415 | 87,910 | |||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||
Changes in short-term investments, net | 250 | (10,000 | ) | ||||||||||||||||
Additions to plant and equipment | (57,394 | ) | (55,538 | ) | |||||||||||||||
Proceeds from sale of assets | — | 507 | |||||||||||||||||
Net cash flows from investing activities | (57,144 | ) | (65,031 | ) | |||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||
Purchase of treasury stock | (35,168 | ) | (37,148 | ) | |||||||||||||||
Borrowings on revolving credit facility | 477,169 | — | |||||||||||||||||
Repayments of revolving credit facility borrowings | (477,169 | ) | — | ||||||||||||||||
Payment of tax withholdings on equity-based payment arrangements | (466 | ) | (3,048 | ) | |||||||||||||||
Excess tax benefits from equity-based payment arrangements | 148 | 1,459 | |||||||||||||||||
Other, net | — | (8 | ) | ||||||||||||||||
Net cash flows from financing activities | (35,486 | ) | (38,745 | ) | |||||||||||||||
Increase (decrease) in cash and cash equivalents | 3,785 | (15,866 | ) | ||||||||||||||||
Cash and cash equivalents at beginning of period | 5,610 | 27,331 | |||||||||||||||||
Cash and cash equivalents at end of period | $ | 9,395 | $ | 11,465 | |||||||||||||||
Clearwater Paper Corporation | ||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | ||||||||||||||||||||||||||||||||||||||||||||||
Unaudited (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||||||||||||||||||||
Segment net sales: | ||||||||||||||||||||||||||||||||||||||||||||||
Consumer Products | $ | 247,912 | 57 | % | $ | 239,391 | 54 | % | $ | 492,930 | 56 | % | $ | 474,567 | 54 | % | ||||||||||||||||||||||||||||||
Pulp and Paperboard | 188,759 | 43 | % | 205,167 | 46 | % | 380,945 | 44 | % | 404,017 | 46 | % | ||||||||||||||||||||||||||||||||||
Total segment net sales | $ | 436,671 | 100 | % | $ | 444,558 | 100 | % | $ | 873,875 | 100 | % | $ | 878,584 | 100 | % | ||||||||||||||||||||||||||||||
Operating income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||
Consumer Products | $ | 18,544 | 46 | % | $ | 17,032 | 53 | % | $ | 36,934 | 47 | % | $ | 29,427 | 62 | % | ||||||||||||||||||||||||||||||
Pulp and Paperboard | 40,032 | 100 | % | 27,754 | 87 | % | 75,195 | 96 | % | 43,948 | 93 | % | ||||||||||||||||||||||||||||||||||
58,576 | 44,786 | 112,129 | 73,375 | |||||||||||||||||||||||||||||||||||||||||||
Corporate | (18,411 | ) | 46 | % | (12,713 | ) | 40 | % | (34,202 | ) | 44 | % | (26,065 | ) | 55 | % | ||||||||||||||||||||||||||||||
Income from operations | $ | 40,165 | 100 | % | $ | 32,073 | 100 | % | $ | 77,927 | 100 | % | $ | 47,310 | 100 | % | ||||||||||||||||||||||||||||||
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, | |||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||
Net earnings | $ | 20,864 | $ | 15,597 | $ | 39,310 | $ | 21,354 | ||||||||||||||||||
Add back: | ||||||||||||||||||||||||||
Interest expense, net | 7,396 | 7,774 | 15,039 | 15,556 | ||||||||||||||||||||||
Income tax provision | 11,905 | 8,702 | 23,578 | 10,400 | ||||||||||||||||||||||
Depreciation and amortization expense | 22,024 | 20,632 | 43,174 | 41,640 | ||||||||||||||||||||||
EBITDA1 | $ | 62,189 | $ | 52,705 | $ | 121,101 | $ | 88,950 | ||||||||||||||||||
Directors' equity-based compensation expense (benefit) | $ | 3,610 | $ | (1,457 | ) | $ | 4,336 | $ | (1,927 | ) | ||||||||||||||||
Costs associated with Long Island facility closure | 533 | 735 | 965 | 1,289 | ||||||||||||||||||||||
Costs associated with labor agreement | — | — | — | 1,730 | ||||||||||||||||||||||
Gain associated with the sale of the specialty mills | — | (1,331 | ) | — | (1,462 | ) | ||||||||||||||||||||
Adjusted EBITDA2 | $ | 66,332 | $ | 50,652 | $ | 126,402 | $ | 88,580 | ||||||||||||||||||
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 | ||||||||||||||||||||||||
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, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
GAAP net earnings | $ | 20,864 | $ | 15,597 | $ | 39,310 | $ | 21,354 | ||||||||||||||||
Special items, after-tax1: | ||||||||||||||||||||||||
Directors' equity-based compensation expense (benefit) | 2,335 | (998 | ) | 2,800 | (1,323 | ) | ||||||||||||||||||
Costs associated with Long Island facility closure | 345 | 504 | 622 | 887 | ||||||||||||||||||||
Costs associated with labor agreement | — | — | — | 1,197 | ||||||||||||||||||||
Gain associated with the sale of the specialty mills | — | (912 | ) | — | (1,003 | ) | ||||||||||||||||||
Adjusted net earnings2 | $ | 23,544 | $ | 14,191 | $ | 42,732 | $ | 21,112 | ||||||||||||||||
GAAP net earnings per diluted share | $ | 1.21 | $ | 0.81 | $ | 2.26 | $ | 1.10 | ||||||||||||||||
Special items, after-tax1: | ||||||||||||||||||||||||
Directors' equity-based compensation expense (benefit) | 0.14 | (0.05 | ) | 0.16 | (0.07 | ) | ||||||||||||||||||
Costs associated with Long Island facility closure | 0.02 | 0.03 | 0.04 | 0.05 | ||||||||||||||||||||
Costs associated with labor agreement | — | — | — | 0.06 | ||||||||||||||||||||
Gain associated with the sale of the specialty mills | — | (0.05 | ) | — | (0.05 | ) | ||||||||||||||||||
Adjusted net earnings per diluted share2 | $ | 1.37 | $ | 0.74 | $ | 2.46 | $ | 1.09 | ||||||||||||||||
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. | ||
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, | |||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||
Consumer Products: | ||||||||||||||||||||||||||
Net sales | $ | 247,912 | $ | 239,391 | $ | 492,930 | $ | 474,567 | ||||||||||||||||||
GAAP operating income | 18,544 | 17,032 | 36,934 | 29,427 | ||||||||||||||||||||||
Depreciation and amortization expense | 14,203 | 13,438 | 27,962 | 26,415 | ||||||||||||||||||||||
Consumer Products EBITDA1 | $ | 32,747 | $ | 30,470 | $ | 64,896 | $ | 55,842 | ||||||||||||||||||
Costs associated with Long Island facility closure | 533 | 735 | 965 | 1,289 | ||||||||||||||||||||||
Costs associated with labor agreement | — | — | — | 814 | ||||||||||||||||||||||
Gain associated with the sale of the specialty mills | — | (1,331 | ) | — | (1,462 | ) | ||||||||||||||||||||
Consumer Products Adjusted EBITDA2 | $ | 33,280 | $ | 29,874 | $ | 65,861 | $ | 56,483 | ||||||||||||||||||
Consumer Products EBITDA margin3 | 13.2 | % | 12.7 | % | 13.2 | % | 11.8 | % | ||||||||||||||||||
Consumer Products Adjusted EBITDA margin4 | 13.4 | % | 12.5 | % | 13.4 | % | 11.9 | % | ||||||||||||||||||
Pulp and Paperboard: | ||||||||||||||||||||||||||
Net sales | $ | 188,759 | $ | 205,167 | $ | 380,945 | $ | 404,017 | ||||||||||||||||||
GAAP operating income | 40,032 | 27,754 | 75,195 | 43,948 | ||||||||||||||||||||||
Depreciation and amortization expense | 6,449 | 6,737 | 12,816 | 14,048 | ||||||||||||||||||||||
Pulp and Paperboard EBITDA1 | $ | 46,481 | $ | 34,491 | $ | 88,011 | $ | 57,996 | ||||||||||||||||||
Costs associated with labor agreement | — | — | — | 916 | ||||||||||||||||||||||
Pulp and Paperboard Adjusted EBITDA2 | $ | 46,481 | $ | 34,491 | $ | 88,011 | $ | 58,912 | ||||||||||||||||||
Pulp and Paperboard EBITDA margin3 | 24.6 | % | 16.8 | % | 23.1 | % | 14.4 | % | ||||||||||||||||||
Pulp and Paperboard Adjusted EBITDA margin4 | 24.6 | % | 16.8 | % | 23.1 | % | 14.6 | % | ||||||||||||||||||
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. | ||
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, | |||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||
Consumer Products: | ||||||||||||||||||||||||||
Net sales | $ | 247,912 | $ | 239,391 | $ | 492,930 | $ | 474,567 | ||||||||||||||||||
GAAP operating income | 18,544 | 17,032 | 36,934 | 29,427 | ||||||||||||||||||||||
Costs associated with Long Island facility closure | 533 | 735 | 965 | 1,289 | ||||||||||||||||||||||
Costs associated with labor agreement | — | — | — | 814 | ||||||||||||||||||||||
Gain associated with the sale of the specialty mills | — | (1,331 | ) | — | (1,462 | ) | ||||||||||||||||||||
Consumer Products Adjusted operating income1 | $ | 19,077 | $ | 16,436 | $ | 37,899 | $ | 30,068 | ||||||||||||||||||
Consumer Products operating margin | 7.5 | % | 7.1 | % | 7.5 | % | 6.2 | % | ||||||||||||||||||
Consumer Products Adjusted operating margin2 | 7.7 | % | 6.9 | % | 7.7 | % | 6.3 | % | ||||||||||||||||||
Pulp and Paperboard: | ||||||||||||||||||||||||||
Net sales | $ | 188,759 | $ | 205,167 | $ | 380,945 | $ | 404,017 | ||||||||||||||||||
GAAP operating income | 40,032 | 27,754 | 75,195 | 43,948 | ||||||||||||||||||||||
Costs associated with labor agreement | — | — | — | 916 | ||||||||||||||||||||||
Pulp and Paperboard Adjusted operating income1 | $ | 40,032 | $ | 27,754 | $ | 75,195 | $ | 44,864 | ||||||||||||||||||
Pulp and Paperboard operating margin | 21.2 | % | 13.5 | % | 19.7 | % | 10.9 | % | ||||||||||||||||||
Pulp and Paperboard Adjusted operating margin2 | 21.2 | % | 13.5 | % | 19.7 | % | 11.1 | % | ||||||||||||||||||
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. | ||
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, | |||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||
GAAP income tax provision | $ | (11,905 | ) | $ | (8,702 | ) | $ | (23,578 | ) | $ | (10,400 | ) | ||||||||||||||
Special items, after-tax: | ||||||||||||||||||||||||||
Directors' equity-based compensation (expense) benefit | (1,275 | ) | 459 | (1,536 | ) | 604 | ||||||||||||||||||||
Costs associated with Long Island facility closure | (188 | ) | (231 | ) | (343 | ) | (402 | ) | ||||||||||||||||||
Costs associated with labor agreement | — | — | — | (533 | ) | |||||||||||||||||||||
Gain associated with the sale of the specialty mills | — | 419 | — | 459 | ||||||||||||||||||||||
Adjusted income tax provision1 | $ | (13,368 | ) | $ | (8,055 | ) | $ | (25,457 | ) | $ | (10,272 | ) | ||||||||||||||
Adjusted income tax provision rate1,2 | 36.2 | % | 36.2 | % | 37.3 | % | 32.7 | % | ||||||||||||||||||
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)]. |
||
CONTACT:
Clearwater Paper Corporation
News media
Matt Van
Vleet, 509-344-5912
or
Investors
Robin Yim, 509-344-5906
Exhibit 99.2
Clearwater Paper CorporationSECOND quarter 2016Supplemental Information Linda Massman President, Chief Executive Officer and DirectorJohn HertzSenior Vice President Finance and Chief Financial Officer 7/21/16
Forward-Looking Statements This presentation of supplemental information contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding financial models; the costs, timing and benefits associated with strategic capital investments and operational improvements; segment, corporate and consolidated outlook for Q3 2016 and fiscal year 2016; production; product volumes shipped; product pricing and sales mix; pulp and wood fiber costs and supply; chemical costs; operational and packaging supply costs; transportation costs; energy costs; cost and timing of major maintenance and repairs; cost of wages and benefits; selling, general, and administrative expenses; corporate expenses; estimated Q3 2016 and fiscal year 2016 EBITDA and adjusted EBITDA; and segment maintenance expense for 2016. These forward-looking statements are based on management’s current expectations, estimates, assumptions and projections that are subject to change. Our actual results of operations may differ materially from those expressed or implied by the forward-looking statements contained in this presentation. Important factors that could cause or contribute to such differences include the risks and uncertainties described from time to time in the company's public filings with the Securities and Exchange Commission, as well as the following: competitive pricing pressures for our products, including as a result of increased capacity as additional manufacturing facilities are operated by our competitors in North America and abroad;changes in the U.S. and international economies and in general economic conditions in the regions and industries in which we operate;changes in customer product preferences and competitors' product offerings;the loss of or changes in prices in regards to a significant customer;cyclical industry conditions;changes in the cost and availability of wood fiber and wood pulp;inability to successfully implement our operational efficiencies and expansion strategies;changes in transportation costs and disruptions in transportation services;customer acceptance in North America and abroad, timing and quantity of purchases of our tissue products;changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs;environmental liabilities or expenditures;labor disruptions;manufacturing or operating disruptions, including IT system and IT system implementation failures, equipment malfunction and damage to our manufacturing facilities;changes in expenses and required contributions associated with our pension plans;reliance on a limited number of third-party suppliers for raw materials;inability to fund our debt obligations;restrictions on our business from debt covenants and terms; andchanges in laws, regulations or industry standards affecting our business.Forward-looking statements contained in this presentation present management’s views only as of the date of this presentation. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. 1
second Quarter financial highlights $437 million net sales, flat VS. Q1’16$40 million gaap operating income, up 6% vs. Q1’16$66 million adjusted EBitda1, up 10% VS. q1’16, above high end of our outlook of $56 to $64 millionDiluted gaap eps of $1.21, record high Adjusted diluted eps of $1.371PPD GAAP operating margin at 21.2%, PPD adjusted ebitda margin1 at 24.6%, 300 basis point improvement in ppd adjusted ebitda margin1 vs. q1’16$9 million of operating income and adjusted ebitda1 benefit achieved from strategic capital and operational efficiency initiatives in q2’16, $27 million total operating income and $28 million total adjusted ebitda1 since q1’15 2 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure.
Financial Summary (GAAP basis)(Unaudited) 3
financial Summary (adjusted
basis)(Unaudited) 1 Non-GAAP measure – See Appendix for the definition
and reconciliation to the most comparable GAAP measure.2 Adjusted gross
profit margin is defined as Adjusted gross profit divided by Net sales.3
Adjusted operating margin is defined as Adjusted operating income
divided by Net sales.4 Adjusted EBITDA margin is defined as Adjusted
EBITDA divided by Net sales.5 This information is based upon
management’s current expectations and estimates, which are in part based
on market and industry data. Many factors are outside the control of
management, including particularly input costs for commodity products,
and actual results may differ materially from the information set forth
above. See “Forward-Looking Statements” on page 1.6 Non-GAAP measure –
See page 18 for the reconciliation to the most comparable GAAP
measure... 4
Q2’16 vs. Q1’16Consolidated Adjusted EBITDA1 Bridge 5 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. Price/mix Higher mix of retail tissue sales, partly offset by lower paperboard pricing volume Lower tissue parent roll shipments and lower demand in paperboard commodity grades transportation Higher due to paperboard customer mix chemicals Lower usage and pricing energy Lower natural gas prices, higher internal electricity generation Wages & benefits Lower benefits expense SG&A Higher profit dependent compensation accruals Arkansas boiler reimbursement Partial reimbursement of costs previously incurred related to Arkansas recovery boiler issues from Q2’13 through Q1’15
Q2’16 vs. Q2’15Consolidated Adjusted EBITDA1 Bridge 6 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. Price/Mix Lower paperboard pricing, partly offset by a higher mix of retail tissue sales Volume Higher retail tissue shipments, partly offset by lower paperboard shipments Pulp/wood fiber Lower external pulp pricing Chemicals Lower pricing Energy Lower natural gas and other energy pricing maintenance Major maintenance at Arkansas in Q2’15, no major maintenance expense in Q2’16 Wages & Benefits Lower benefits expense SG&A Higher profit dependent compensation accruals Arkansas boiler reimbursement Partial reimbursement of costs previously incurred related to Arkansas recovery boiler issues from Q2’13 through Q1’15 6
Strategic investment and operational improvement scorecard as of Q2’16 7 Strategic plan announced in Q1’15, expected capex of $237-$249 millionExpected to yield a $97-$127 million operating income increase by 2018Expected to yield a $115-$145 million Adjusted EBITDA1 increase by 2018In addition, assume an annual $10-$15 million of margin pressure Continuous Digester3 Warehouse Automation4 Other Projects5 Operational Improvements TOTAL STRATEGIC CAPEX $148-$158 $40-$42 $49 $0 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure2 Based on Q1’15 prices, input costs, and market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actual results may differ materially from the information set forth above. See “Forward-Looking Statements” on page 1.3 The Continuous Digester is expected to be completed in Q4’17.4 2015 and YTD Q2’16 Adjusted EBITDA contributions were $0.6M and $0.8M, respectively.5 2015 and YTD Q2’16 Adjusted EBITDA contributions were $0.4M and $1.0M, respectively.. 1 1 FULL RUN-RATE EXPECTED IMPACT (MILLIONS $)2 ADJUSTED EBITDA1 $23-$28 OPERATING INCOME $21-$26 7
Key Segment Results – Consumer Products (Unaudited) 8 1 Includes away-from-home (AFH), contract and parent roll tissue products. 2 Includes retail, AFH, and contract tissue case products. 3 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. 4 Non-GAAP measure – Segment Adjusted EBITDA margin is defined as Segment Adjusted EBITDA divided by Segment net sales. Q1'15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Consumer Products Cross-Cycle Financial Model Shipments Non-Retail (short tons)1 21,107 24,744 21,250 23,077 24,358 20,028 Retail (short tons) 71,102 71,476 76,856 73,004 75,027 79,095 Total Tissue Tons 92,209 96,220 98,106 96,081 99,385 99,123 Converted Products (cases in thousands)2 13,025 13,125 13,375 12,624 12,990 13,229 Sales Price Non-Retail ($/short ton)1 $1,475 $1,430 $1,530 $1,448 $1,477 $1,496 Retail ($/short ton) $2,864 $2,846 $2,787 $2,805 $2,784 $2,747 Total Tissue ($/short ton) $2,546 $2,482 $2,515 $2,479 $2,464 $2,494 Segment net sales ($ in thousands) $235,176 $239,391 $247,039 $238,288 $245,018 $247,912 Segment GAAP operating income ($ in thousands) $12,395 $17,032 $15,521 $10,756 $18,390 $18,544 Segment GAAP operating margin 5.3% 7.1% 6.3% 4.5% 7.5% 7.5% Segment Adjusted EBITDA3 ($ in thousands) $26,609 $29,874 $30,791 $25,591 $32,581 $33,280 Segment Adjusted EBITDA margin4 11.3% 12.5% 12.5% 10.7% 13.3% 13.4% 17.0%
Clearwater Paper Tissue Shipmentsand U.S. Retail Tissue Market 9 U.S. Retail Tissue Market ($) (MultiOutlet)1 Category Private Label BRANDS Total Total RetailTissue Share ($) 24% 76% 100% % ChangeQ2’16 vs. Q1’16 0.5% (0.5)% -% 1 Data Source: IRI Worldwide data through June 19, 2016. 9
Price/Mix Shipment volumes External Pulp Chemical costs Op. & Pkg. Supplies Transportation costs Energy costs Maintenance SG&A Q2’16 OutlookVersus Q1’16 3-5% higher 2-4% lower Cost / shipped ton: stable Cost / shipped ton: stable Cost / shipped ton: stable Cost / shipped ton: stable Cost / shipped ton: stable Stable Higher Q2’16 ActualVersus Q1’16 5% higher 1% lower Cost / shipped ton: stable Cost / shipped ton: stable Cost / shipped ton: stable Cost / shipped ton: stable Cost / shipped ton: stable Stable Higher Price/mix Higher mix of retail sales volume Lower parent roll shipments, partly offset by higher retail shipments Wages & benefits Lower benefit expense SG&A Higher profit dependent compensation accruals Q2’16 vs. Q1’16Consumer Products Adjusted EBITDA1 Bridge 10 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. Previous Outlook vs. Segment Actual 1 10
Key Segment Results – Pulp and Paperboard(Unaudited) 11 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure.2 Non-GAAP measure – Segment Adjusted EBITDA margin is defined as Segment Adjusted EBITDA divided by Segment net sales. Pulp and PaperboardCross-Cycle Financial Model Q1’15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Shipments Paperboard (short tons) 191,635 204,983 198,535 201,580 201,340 199,132 Sales Price Paperboard ($/short ton) $1,031 $997 $979 $956 $952 $948 Segment net sales ($ in thousands) $198,850 $205,167 $195,183 $193,307 $192,186 $188,759 Segment GAAP operating income ($ in thousands) $16,194 $27,754 $37,446 $39,467 $35,163 $40,032 Segment GAAP operating margin 8.1% 13.5% 19.2% 20.4% 18.3% 21.2% Segment Adjusted EBITDA1 ($ in thousands) $24,421 $34,491 $44,220 $46,268 $41,530 $46,481 Segment Adjusted EBITDA margin2 12.3% 16.8% 22.7% 23.9% 21.6% 24.6% 19.0% 11
Clearwater Paper Paperboard Shipments and U.S. Paperboard Market 12 U.S. Paperboard Production3 Category Clearwater Paper Other Total Domestic SBS1 Market Share 15% 85% Folding 20% 80% Food Service2 16% 84% Liquid Packaging 4% 96% 1 Solid Bleached Sulfate.2 Food Service includes cup, plate, dish and tray products.3 Data Source: American Forest and Paper Association Solid Bleached Domestic Production – June YTD 2016. 12
Price/Mix Shipment volumes Wood Fiber Chemical costs Op. & Pkg. Supplies Transportation costs Energy costs Maintenance SG&A Q2’16 OutlookVersus Q1’16 1-3% lower 1-3% higher Cost / shipped ton: slightly higher Cost / shipped ton: stable Cost / shipped ton: stable Cost / shipped ton: stable Cost / shipped ton: lower Higher Stable Q2’16 ActualVersus Q1’16 2% lower 1% lower Cost / shipped ton: stable Cost / shipped ton: lower Cost / shipped ton: stable Cost / shipped ton: slightly higher Cost / shipped ton: lower Stable Stable Price/mix Slightly lower paperboard pricing volume Lower demand in commodity grades chemicals Lower usage and pricing energy Lower natural gas prices, higher internal electricity generation transportation Higher due to customer mix Arkansas boiler reimbursement Partial reimbursement of costs previously incurred related to Arkansas recovery boiler issues from Q2’13 through Q1’15 Q2’16 vs. Q1’16 Pulp and Paperboard Adjusted EBITDA1 Bridge 13 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. Previous Outlook vs. Segment Actual 1 1 13
Projected 2016 pulp and paperboard maintenance expense of $68 million (Direct and indirect costs) 14
Clearwater Paper Cross-Cycle Financial Model 15 1 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. 15
Adjusted Return on Invested Capital1(Unaudited) 16 1 Adjusted Return on Invested Capital (Adjusted ROIC) is defined as [Net Earnings + Interest Expense] / [Tangible Stockholders’ Equity6 + Debt – Excess (Deficit) Cash6] adjusted for non-recurring discrete items. Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure.2 2013 Adjusted ROIC Net Earnings was adjusted to remove a benefit of $67.5 million from discrete tax items relating to release of uncertain tax positions.2013 Adjusted ROIC Interest Expense includes debt retirement costs of $17.1 million.3 2014 Adjusted ROIC Net Earnings was adjusted to remove a loss associated with the optimization and sale of the specialty mills totaling $37.0 million after-tax.2014 Adjusted ROIC Interest Expense includes debt retirement costs of $24.4 million. 4 2015 Adjusted ROIC Net Earnings was adjusted to remove a gain associated with the sale of the specialty mills totaling $0.9 million after-tax.5 LTM Ending 6/30/16 Adjusted ROIC Net Earnings was adjusted to remove a loss associated with the sale of the specialty mills totaling $0.1 million after-tax.6 Rolling Adjusted ROIC Average is the average percentage of each annual and prior years’ Adjusted ROIC values. 16
third quarter 2016 Outlook(Compared to Q2’16)1 Arrows represent adjusted ebitda2 impact 17 Consumer products Pulp and Paperboard Corporate Revenue change Higher0-1% higher Lower0-1% lower Shipment volume impact on ADJUSTED EBITDA2 Lower2-4% lower Stable Price/mix impact on ADJUSTED EBITDA2 Higher:5-10% higher Lower: 3–5% lower Pulp/Wood Fiber Costs Cost/shipped ton:higher Cost/shipped ton:higher Chemical Costs Cost/shipped ton:stable Cost/shipped ton:slightly higher Op. & Pkg. Supplies Cost/shipped ton:stable Cost/shipped ton:stable Transportation Costs Cost/shipped ton:stable Cost/shipped ton:stable Energy Costs Cost/shipped ton:slightly higher Cost/shipped ton:slightly higher Maintenance & Repairs Stable Major outage at Idaho, higher maintenance at Arkansas due to timing of water wash impact on P&L SG&A Stable Stable Stable 1 This information is based upon management’s current expectations and estimates, which are in part based on market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actual results may differ materially from the information set forth above. See “Forward-Looking Statements” on page 1.2 Non-GAAP measure – See Appendix for the definition and reconciliation to the most comparable GAAP measure. 17
Q3’16 Outlook1Reconciliation of Non-GAAP Financial Measures (Unaudited) 18 1 This information is based upon management’s current expectations and estimates, which are in part based on market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actual results may differ materially from the information set forth above. See “Forward-Looking Statements” on page 1.2 EBITDA is a non-GAAP measure that management uses as a supplemental performance measure. The most directly comparable GAAP measure is net earnings (loss). 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.3 Adjusted EBITDA excludes the impact of the items listed that we do not believe are indicative of our core operating performance. 18
2016 OUTLOOK1
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) 19 1 This
information is based upo
management’s current
expectations and estimates, which are in part based on market and
industry data. Many factors are outside the control of management,
including particularly input costs for commodity products, and actual
results may differ materially from the information set forth above. See
“Forward-Looking Statements” on page 1. 2 EBITDA is a non-GAAP measure
that management uses as a supplemental performance measure. The most
directly comparable GAAP measure is net earnings (loss). 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. 3
Adjusted EBITDA excludes the impact of the items listed that we do not
believe are indicative of our core operating performance. (Dollars in
thousands) FROM TO Earnings before interest, income taxes, and
depreciation & amortization (EBITDA)2 GAAP net earnings $56,000 $61,000
Interest expense, net $30,000 $30,000 Income tax provision $32,000
$35,000 Depreciation and amortization expense $86,000 $88,000 EBITDA2
$204,000 $214,000 Directors' equity-based compensation expense $4,300
$4,300 Costs associated with Long Island facility closure $1,700 $1,700
Adjusted EBITDA3 OUTLOOK TWELVE MONTHS ENDING DECEMBER 31, 2016 RANGE OF
ESTIMATE$210,000 $220,000 19
BRIDGE TO Q3’16 ADJUSTED EBITDA OUTLOOK1,2 20 1 This information is based upon management’s current expectations and estimates, which are in part based on market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actual results may differ materially from the information set forth above. See “Forward-Looking Statements” on page 1.2 Non-GAAP measure – See prior slides for the definition and reconciliation to the most comparable GAAP measure. 2016 Adjusted EBITDA Outlook1,2: $210-$220 Million 20
Appendix 21
Adjusted Gross Profit& Adjusted SG&AReconciliation of Non-GAAP Financial Measures (Unaudited) 22 1 Gross profit is defined as net sales minus cost of sales.2 Adjusted gross profit and Adjusted selling, general and administrative expenses exclude the impact of the items listed that we do not believe are indicative of our core operating performance. 22
Segment Adjusted Operating Income (Loss)Reconciliation of Non-GAAP Financial Measures (Unaudited) 23 1 Adjusted operating income (loss) excludes the impact of the items listed that we do not believe are indicative of our core operating performance. 23
Adjusted Net Earnings & Adjusted Net Earnings per Diluted common shareReconciliation of Non-GAAP Financial Measures (Unaudited) 24 1 All non-tax items are tax effected at the expected annual rate for that period.2 Adjusted net earnings and Adjusted net earnings per diluted common share exclude the impact of the items listed that we do not believe are indicative of our core operating performance. 24
Adjusted Income Tax ProvisionReconciliation of Non-GAAP Financial Measure (Unaudited) 25 1 Adjusted income tax provision excludes the impact of the items listed that we do not believe are indicative of our core operating performance. 25
EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures (Unaudited) 26 1 EBITDA is a non-GAAP measure that management uses as a supplemental performance measure. The most directly comparable GAAP measure is net earnings (loss). EBITDA is net earnings (loss) 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 (loss) 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. 26
EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures (Unaudited) 27 1 EBITDA is a non-GAAP measure that management uses as a supplemental performance measure. The most directly comparable GAAP measure is net earnings (loss). EBITDA is net earnings (loss) 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 (loss) 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. 27
Segment EBITDA & Adjusted EBITDA Reconciliation of Non-GAAPFinancial Measures (Unaudited) 28 1 Segment EBITDA is a non-GAAP measure that management uses as a supplemental performance measure. The most directly comparable GAAP measure is segment operating income (loss). Segment EBITDA is segment operating income (loss) adjusted for depreciation and amortization. It should not be considered as an alternative to segment operating income (loss) computed under GAAP. 2 Segment Adjusted EBITDA excludes the impact of the items listed that we do not believe are indicative of our core operating performance. 28
Return on Invested Capital, Tangible Stockholders’ Equity & Excess Cash Reconciliation of Non-GAAP Financial Measures (Unaudited) 29 1 Non-GAAP measure.2 Tangible stockholders' equity is defined as stockholders’ equity less Goodwill and Intangible assets, net.3 Excess cash is defined as the sum of Cash and Short-term investments less Operating cash1,4.4 Operating cash is defined as a minimum amount of available cash deemed by management to be sufficient to avoid operating disruptions due to a mismatch of cash inflows and outflows during an accounting period.Note: Balance sheet items are as of the end of each period presented. 29
Reconciliation of GAAP to Non-GAAP: Strategic investments1 30 1 Based on Q1’15 prices, input costs, and market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actual results may differ materially from the information set forth above. See “Forward-Looking Statements” on page 1.2 Non-GAAP measure – See Appendix for the definition. 30
For more information:www.clearwaterpaper.com 31
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