Clearwater Paper Reports Fourth Quarter, Full Year 2011 Results
Feb. 22, 2012 - Clearwater Paper Corporation today reported financial results for the fourth quarter and full year of 2011.
The company reported net earnings of $11.5 million, or $0.48 per diluted share, for the fourth quarter of 2011, compared to net earnings of $37.8 million, or $1.60 per diluted share, for the fourth quarter of 2010. Excluding $1.8 million in after-tax charges related to the sale of our Lewiston, Idaho sawmill on November 28, 2011, fourth quarter 2011 net earnings were $13.3 million, or $0.55 per diluted common share. Fourth quarter 2010 results included $10.5 million in after-tax costs related to the Cellu Tissue acquisition and a $27.1 million benefit from a Cellulosic Biofuel Producer Credit. Excluding these items, fourth quarter 2010 net earnings would have been $21.2 million, or $0.90 per diluted common share.
Fourth quarter 2011 earnings before interest, taxes, depreciation and amortization, or EBITDA, was $52.2 million, compared to $34.6 million in the fourth quarter of 2010. Fourth quarter 2011 Adjusted EBITDA, which excludes $2.9 million in pre-tax adjustments associated with the sale of the sawmill, was $55.1 million. Fourth quarter 2010 Adjusted EBITDA, which excludes $17.2 million in pre-tax Cellu Tissue acquisition related expenses, was $51.9 million.
"We reported record net sales of nearly $2 billion in 2011 and remain excited about our growing tissue business,” said Gordon Jones, chairman and chief executive officer. “Our new tissue machine and additional converting lines at Shelby, North Carolina are on budget and scheduled for start-up in December 2012.”
As part of the company's previously announced share buyback program, during the fourth quarter the company repurchased 41,700 shares of outstanding common stock at an average price of $32.30 per share. Since announcing the $30 million share buyback authorization on July 28, 2011, the company has repurchased 333,300 shares at a total cost of $11.3 million.
FOURTH QUARTER 2011 SEGMENT PERFORMANCE
Net sales in the Consumer Products segment were $268.5 million for the fourth quarter of 2011, as compared to fourth quarter 2010 net sales of $142.9 million. The increase in net sales was predominately attributable to the inclusion of Cellu Tissue's operating results for the full fourth quarter 2011 compared to inclusion of only four days of operating results in fourth quarter 2010. Operating income for the fourth quarter of 2011 was $15.0 million, compared with operating income of $11.3 million for the fourth quarter of 2010. Excluding $6.3 million in pre-tax Cellu Tissue acquisition related costs, fourth quarter 2010 operating income would have been $17.6 million.
- Tissue volume increased to 123,046 tons in the fourth quarter of 2011, as compared to 55,626 tons in the fourth quarter of 2010, with the increase predominantly attributable to the addition of Cellu Tissue volumes. Including Cellu Tissue in our fourth quarter 2010 results would have resulted in pro forma volume of 132,673 tons. The decrease in fourth quarter 2011 tons versus 2010 pro forma tons sold by the combined business was due to softness in our contract manufacturing and machine glazed tissue markets. We also converted more parent rolls into finished cases in 2011, which results in a yield loss associated with the process of manufacturing converted cases, and curtailed parent roll sales to build retail inventory to support customer service needs.
- Net selling prices decreased to $2,182 per ton in the fourth quarter of 2011 as compared to $2,567 per ton in the fourth quarter of 2010, due predominantly to the inclusion of Cellu Tissue products in the total product mix for the 2011 period. The former Cellu Tissue operations have a broader range of products and tissue grades than the legacy Clearwater Paper facilities. On a pro forma basis, net selling prices increased 6.3% versus fourth quarter 2010. This selling price improvement is the result of a previously discussed price increase, the vast majority of which was implemented in the fourth quarter of 2011, and a direct result of our efforts to improve product mix.
- Operating income in the fourth quarter of 2011 when compared to 2010 was negatively impacted by higher pulp, transportation, packaging and energy costs with the increase predominantly attributable to the addition of Cellu Tissue.
- The first two lines at our Shelby facilities contributed modest operating income in the fourth quarter of 2011. We expect these two lines to contribute approximately $8 million of operating income in 2012, which includes approximately $2 million of depreciation.
- We estimate that the net cost savings from synergies from the Cellu Tissue acquisition were approximately $2.4 million in the fourth quarter of 2011. We anticipate achieving between $15 and $20 million of cost savings from synergies in 2012 and expect the annual run rate cost savings from synergies to be in the range of $35 to $40 million by the end of 2012.
Pulp and Paperboard
Net sales of $197.9 million for the fourth quarter of 2011 were down 2.3%, compared to fourth quarter 2010 net sales of $202.6 million. Operating income for the quarter declined to $16.5 million, compared to $29.1 million for the fourth quarter of 2010. Excluding $15.4 million in sawmill sale and related costs, operating income would have been $31.9 million for the fourth quarter of 2011. The company also made offsetting adjustments to LIFO inventory reserves in connection with the sawmill sale, which were accounted for at the corporate rather than the segment level.
- Paperboard net sales were higher for the quarter, driven by a 2.4% increase in paperboard pricing to $970 per ton and a 4.8% increase in paperboard volumes to 185,487 tons, compared to the fourth quarter of 2010.
- Partially offsetting higher paperboard net sales were reduced pulp sales due to increased transfers of pulp to the Consumer Products segment for internal utilization. External pulp sales decreased from 17,387 tons in the fourth quarter of 2010 to 2,360 tons in the fourth quarter of 2011. Net sales were also lower due to the sale of the sawmill in the fourth quarter of 2011.
- The increase in operating income, excluding the sawmill sale, was driven by higher paperboard sales, partially offset by higher input costs for chemicals and wood fiber in the fourth quarter of 2011 as compared to the same period of 2010.
The effective tax rate for the fourth quarter of 2011, excluding discrete items, was approximately 35.6%, compared to 35.8% in the fourth quarter of 2010. The actual income tax rate for the fourth quarter of 2011 was 47.8%, compared to a benefit of 213.1% in the fourth quarter of 2010. Our 2010 effective rate included the benefits from the Cellulosic Biofuel Producer Credit.
Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, machine glazed tissue, bleached paperboard and pulp at 15 manufacturing locations in the U.S. and Canada. The company is a premier supplier of private label tissue to major retailers and wholesale distributors. This includes grocery, drug, mass merchants and discount stores. The company also produces bleached paperboard used by quality-conscious printers and packaging converters.
SOURCE: Clearwater Paper Corp.