Clearwater Paper Second Quarter 2014 Earnings Up on Sales, Pricing
An increase in net sales in the Consumer Products segment was primarily driven by increased TAD sales and slightly higher non-retail sales.
July 23, 2014 - Clearwater Paper Corporation (CLW) today reported financial results for the second quarter of 2014.
The company reported net sales of $498.8 million for the second quarter of 2014, up 5.9% compared to net sales of $471.0 million for the second quarter of 2013.
Net earnings determined in accordance with generally accepted accounting principles, or GAAP, for the second quarter of 2014 were $12.5 million, or $0.61 per diluted share, compared to $11.7 million, or $0.52 per diluted share, for the second quarter of 2013. The 2014 second quarter GAAP net earnings include $1.4 million of after-tax expense associated with the closure of the company’s Thomaston, Georgia, and Long Island, New York, converting and distribution facilities and $1.4 million of expense from the net impact of changes related to amendments to state tax returns and state tax rate changes. Excluding those items, second quarter 2014 adjusted net earnings were $15.3 million, or $0.74 per diluted share, compared to second quarter 2013 adjusted net earnings of $11.6 million, or $0.51 per diluted share.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, was $55.1 million for the second quarter of 2014. Adjusted EBITDA for the quarter was $57.3 million, up 8.4% compared to second quarter 2013 Adjusted EBITDA of $52.8 million. The increase in EBITDA and Adjusted EBITDA was due primarily to strong paperboard markets and pricing as well as increased contribution from the company’s through-air-dried, or TAD, expansion.
"The Pulp and Paperboard and Consumer Products divisions both delivered solid results in the second quarter," said Linda K. Massman, president and chief executive officer. "In Consumer Products, we hit record TAD product sales with strong customer momentum going forward. Continued demand for our paperboard products also remains strong giving us a positive outlook for the remainder of the year."
On February 5, 2014, the company announced that the Board of Directors had approved a new stock repurchase program authorizing the repurchase of up to $100.0 million of the company’s common stock. During the second quarter, the company repurchased 0.7 million shares of common stock at a total cost of $45.0 million. Through July 22, the company repurchased 1.3 million shares of common stock at an average price of $62.21 per share under this repurchase program.
SECOND QUARTER 2014 SEGMENT PERFORMANCE
Net sales in the Consumer Products segment were $299.1 million for the second quarter of 2014, up 3.2% compared to second quarter 2013 net sales of $289.7 million. This increase was primarily driven by increased TAD sales and slightly higher non-retail sales. On a GAAP basis, the segment had operating income of $12.7 million, compared to operating income of $14.8 million in the prior year period. Adjusted operating income of $14.9 million for the second quarter of 2014 was down $0.9 million compared to the same period in 2013, after adjusting for costs related to the Thomaston and Long Island facility closures totaling $2.2 million and $1.0 million in the second quarters of 2014 and 2013, respectively. The lower results in the most recent period were driven primarily by approximately $2 million in higher energy costs partially offset by lower depreciation costs due to the facility closures.
Total tissue sales volumes of 134,841 tons in the second quarter of 2014 were up 2.1% compared to the second quarter of 2013. Converted product cases shipped were 14.1 million, up slightly compared to the second quarter of 2013.
Average tissue net selling prices increased 1.0% to $2,217 per ton in the second quarter of 2014, compared to the second quarter of 2013, due to improved mix from increased TAD sales.
Pulp and Paperboard
Net sales in the Pulp and Paperboard segment were $199.6 million for the second quarter of 2014, up 10.1% compared to second quarter 2013 net sales of $181.3 million. The increase was primarily due to strong shipments supported by strong market backlogs and higher pricing in the second quarter of 2014 compared to the second quarter of 2013. Operating income for the quarter increased $8.8 million to $33.6 million, compared to $24.8 million for the second quarter of 2013, primarily due to improved volume and pricing coupled with lower raw materials costs partially offset by higher maintenance costs.
Paperboard sales volumes increased 2.8% to 195,924 tons in the second quarter of 2014, compared to 190,518 tons in the second quarter of 2013. Paperboard net selling prices increased 7.5% to $1,017 per ton compared to the second quarter of 2013 as a result of price increases implemented during the year and improved mix.
The company’s GAAP tax rate for the second quarter of 2014 was 44.4% compared to 37.4% in the second quarter of 2013. The higher rate in 2014 was a result of the net impact of changes related to amendments to state tax returns and state tax rate changes. On an adjusted basis, the second quarter 2014 tax rate was 38% and the company expects its annual GAAP and adjusted tax rate to be approximately 38% for 2014.
Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, machine-glazed tissue, bleached paperboard and pulp at 13 manufacturing locations in the U.S. and Canada. The company also produces bleached paperboard used by quality-conscious printers and packaging converters. To learn more, please visit www.clearwaterpaper.com
SOURCE: Clearwater Paper Corporation