Clearwater Paper Reports Fourth Quarter 2012 Earnings Up
Feb. 20, 2013 - Clearwater Paper Corporation today reported financial results for the fourth quarter and full year of 2012.
The company reported net sales of $462.7 million for the fourth quarter of 2012, down slightly compared to $466.4 million for the fourth quarter of 2011 due primarily to the sale of the company’s Lewiston, Idaho sawmill in November 2011. Net earnings were $19.9 million, or $0.84 per diluted share, in the fourth quarter of 2012, compared to $11.5 million and $0.48, respectively, for the fourth quarter of 2011. Excluding $1.8 million in net after-tax charges related to the sale of the company’s sawmill, fourth quarter 2011 adjusted net earnings were $13.3 million, or $0.55 per diluted common share.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, was $56.3 million in the fourth quarter of 2012, up 7.8% compared to $52.2 million in the same quarter last year. Fourth quarter 2011 Adjusted EBITDA, which excludes $2.9 million in pre-tax adjustments associated with the sale of the company’s sawmill, was $55.1 million.
“I am pleased to report that Clearwater Paper has delivered on its financial and operational goals for the year. We reported record annual EBITDA of $224.7 million and Adjusted EBITDA of $227.8 million in 2012, and had our highest ever fourth quarter Adjusted EBITDA of $56.4 million,” said Linda Massman, president and chief executive officer. “Further, our new TAD tissue machine at Shelby, North Carolina started on time and below budget, and we realized net cost saving synergies of $31.0 million in 2012 associated with our acquisition of Cellu Tissue. We still have a lot of work to do to achieve our aggressive growth plan, but we believe we are well positioned to do so. Our employees are engaged and we’re all working towards the same goals.”
During the fourth quarter, the company repurchased 231,388 shares of its common stock at a total cost of $9.3 million which completed its $30 million share buyback program at an average share price of $35.15. In January 2013, in conjunction with the issuance of $275 million of new notes, the company announced that its Board of Directors approved a new common stock repurchase program of $100 million, which the company intends to complete in 2013.
FOURTH QUARTER 2012 SEGMENT PERFORMANCE
Net sales in the Consumer Products segment were $280.6 million for the fourth quarter of 2012, up 4.5% compared to fourth quarter 2011 net sales of $268.5 million. The increase in net sales was attributable to higher total volumes and converted cases shipped, led by a 17.9% increase in non-retail volumes that includes away-from-home, contract manufacturing, machine-glazed and parent roll tissue products. Prices also remained strong, with a 3.5% increase in retail prices compared to the same period in 2011, more than offsetting a drop in non-retail prices. Operating income increased 52.4% to $22.9 million compared to the fourth quarter of 2011, due to higher net sales and lower pulp costs.
- Total converted case sales increased by 836,111 cases to 13,302,350 cases in the fourth quarter of 2012 compared to the fourth quarter of 2011. Non-retail tissue sales volumes increased by 17.9% to 59,100 tons in the fourth quarter of 2012 compared to the same period in 2011.
- Average net selling prices for retail tissue increased to $2,723 per ton in the fourth quarter of 2012, compared to $2,630 per ton in the fourth quarter of 2011, due to the company’s improved retail mix. Net selling prices for non-retail tissue dropped 5.5% from fourth quarter 2011 to fourth quarter 2012 due mostly to lower parent roll prices.
- The company realized $31.0 million in net cost savings from synergies related to the Cellu Tissue acquisition in 2012, of which $10.4 million was realized during the fourth quarter of 2012, reaching the expected annual run rate of $35 to $40 million.
- The company’s new TAD paper machine at Shelby started producing tissue in December 2012, with immaterial net sales and volumes in the fourth quarter.
Pulp and Paperboard
Net sales in the Pulp and Paperboard segment were $182.1 million for the fourth quarter of 2012, down 8.0% compared to fourth quarter 2011 net sales of $197.9 million. The decrease was primarily due to the divestiture of the company’s sawmill late in the fourth quarter of 2011, which accounted for approximately $16 million of net sales in the fourth quarter of 2011. Operating income for the quarter increased 56.8% to $25.8 million, compared to $16.5 million for the fourth quarter of 2011. Excluding $15.4 million in costs associated with the sale of the Lewiston sawmill, operating income would have been $31.9 million for the fourth quarter of 2011.
- Paperboard volumes increased 2.6% to 190,339 tons in the fourth quarter of 2012 compared to the fourth quarter of 2011.
- Paperboard net sales decreased 1.0% to $178.2 million in the fourth quarter of 2012 compared to the fourth quarter of 2011 due primarily to a 3.5% decrease in net selling price per ton to $936 caused by market softness.
- External pulp net sales more than doubled to $3.9 million in the fourth quarter of 2012, compared to the fourth quarter of 2011 due to higher volumes, which more than offset lower pricing in 2012. Although external pulp sales increased in the quarter, the company continues to sell very little pulp externally as a result of increased internal consumption following the acquisition of Cellu Tissue and the construction of our new tissue machine at Shelby.
- Major maintenance costs were $2.0 million in the quarter compared to no major maintenance costs in the fourth quarter of 2011.
The company’s effective tax rate for the quarter was 30.2%, which was down significantly from 47.8% in the fourth quarter of 2011 due to the recognition of state tax credits and net benefits recognized for return to provision adjustments. The company expects its annual effective tax rate for 2013 to be approximately 40%.
Note Regarding Use of Non-GAAP Financial Measures
In this press release, the company presents its results for the fourth quarter of 2012 and 2011, including EBITDA and Adjusted EBITDA. The EBITDA and Adjusted EBITDA amounts are not in accordance with generally accepted accounting principles (GAAP) and accordingly reconciliations of EBITDA and Adjusted EBITDA to net earnings determined in accordance with GAAP are included at the end of this press release.
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. For further information visit: www.clearwaterpaper.com
SOURCE: Clearwater paper, Inc.