Clearwater Paper 3rd Quarter Earnings Up Sharply
Oct. 29, 2009 - Clearwater Paper today reported net earnings for the third quarter ended Sept. 30, 2009 of $46.2 million, or $3.92 per diluted common share, compared to net earnings of $0.9 million, or $0.08 per diluted common share, for the third quarter of 2008. Net earnings for the third quarter of 2009, excluding $47.1 million of income from alternative fuel mixture tax credits, were $16.5 million, or $1.40 per diluted common share.
“Our third quarter results were excellent," said Gordon Jones, president, chief executive officer and director. "The outstanding performance of our Consumer Products segment and the stable performance of our Pulp and Paperboard segment continued the positive trends we have delivered throughout the year.
"Potentially higher commodity and promotional costs could impact our total performance, but we remain positive about our outlook," Jones added.
THIRD QUARTER 2009 SEGMENT PERFORMANCE
Operating income for the third quarter of 2009 was $32.1 million, compared with operating income of $11.1 million for the third quarter of 2008. Net sales of $140.2 million for the quarter were 7% higher than third quarter 2008 net sales of $130.6 million.
- The increase in net sales was driven by 5% higher volume and slightly higher net selling prices when compared to the third quarter of 2008. The segment shipped a record 52,778 tons of finished goods during the quarter. These tons represented 7.6 million cases of product shipped during the third quarter of 2009 versus 7.2 million cases shipped during the third quarter of 2008.
- Segment performance was driven by strong production in papermaking and converting coupled with lower input costs for pulp, freight, energy and packaging supplies.
Pulp and Paperboard
Operating income for the third quarter of 2009 was $57.7 million, compared to operating income of $0.4 million for the third quarter of 2008. Excluding the income recognized for the alternative fuel mixture tax credits, operating income for the third quarter of 2009 was $10.6 million. Net sales of $185.5 million for the quarter were 6% lower than the third quarter 2008 net sales of $196.3 million.
- Lower net sales for the quarter were the result of a 1% decline in paperboard shipments, a 1% decline in paperboard average net selling prices and a 24% decline in market pulp net selling prices compared to the same period in 2008. Partially offsetting the declines was a 15% increase in market pulp shipments to third parties.
- Operating income for the quarter was favorably affected by lower input costs for wood fiber, freight, chemicals and energy compared to the same quarter in 2008.
- Total maintenance costs were $2.7 million lower during the quarter compared to the same period in 2008, attributable to delaying the majority of our major maintenance downtime expense to coincide with our 2010 maintenance downtime schedule. This was partially offset by higher repair costs resulting from a power outage at our Lewiston, Idaho mill and also increased regular maintenance expense.
- The segment recorded $47.1 million of pre-tax income during the quarter related to the alternative fuel mixture tax credits. Through September 30, the company has recorded pre-tax income of $123.5 million and received cash of $87.4 million in connection with these tax credits.
Operating loss for the third quarter of 2009 was $4.2 million, compared to an operating loss of $1.6 million for the third quarter of 2008. Net sales of $21.3 million for the quarter were 9% lower than the third quarter 2008 net sales of $23.3 million.
- Overall lumber net selling prices fell by 31% in the third quarter 2009 compared to the third quarter of 2008, due to lower lumber prices and a lower percentage of higher-value cedar product sales. However, lumber net selling prices have sequentially improved since the beginning of 2009.
- Shipment volumes increased by 32% during the quarter compared to the same quarter in 2008.
- Saw log costs were lower in the quarter due to lower log prices and log mix, compared to the third quarter of 2008.
Corporate and Eliminations Expenses
Corporate and eliminations expenses for the third quarter of 2009 were $8.0 million compared to $5.4 million for the third quarter of 2008. The increase was primarily attributable to higher corporate administration expenses in 2009 associated with being an independent, publicly-traded company following the company’s spinoff from Potlatch Corporation, as well as higher incentive compensation related expenses.
The company’s effective income tax rate for the third quarter of 2009 was 36.9% compared to 26.4% for the same period last year. The tax provision for the third quarter of 2008 was calculated on a carve-out basis from Potlatch Corporation, whereas the 2009 tax provision is reflective of the company’s operations and tax attributes as a stand-alone entity.
Clearwater Paper Separation from Potlatch
This news release represents the third full quarter reporting for Clearwater Paper Corporation as a stand-alone company. Clearwater Paper Corporation was spun-off from Potlatch Corporation on December 16, 2008. Clearwater Paper is comprised of Potlatch’s former pulp-based manufacturing businesses and the Lewiston, Idaho, lumber mill.
ABOUT CLEARWATER PAPER
Clearwater Paper manufactures premium consumer tissue, high-quality bleached paperboard and wood products at six facilities across the country. The company is supplier of private label tissue to major retail grocery chains and also produces bleached paperboard used by quality-conscious printers and packaging converters.
Clearwater employs 2,400 people.
SOURCE: Clearwater Paper Corporation