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Clearwater Paper Reports Strong First Quarter 2020 Results

Arsen Kitch "Our financial results for the first quarter of 2020 significantly benefited from an increase in demand for our products, particularly in our Consumer Products segment, and strong operational execution by our teams." – Arsen Kitch, President and CEO, Clearwater Paper.

May 5, 2020 - Clearwater Paper Corporation today reported financial results for the first quarter of 2020.

HIGHLIGHTS

  • Rapidly implemented health and safety measures and protocols to maintain consistent operations during the COVID-19 outbreak
  • Delivered strong performance in the quarter due to solid execution to meet increased demand for essential tissue and paperboard products in response to COVID-19 pandemic
  • First quarter net income of $10 million, or $0.62 per diluted share and Adjusted EBITDA of $55 million
  • Sixth consecutive quarter of sequential sales growth for the Consumer Products segment
  • First quarter operating cash flow up $42 million versus the first quarter of 2019 driven by working capital changes
  • Available liquidity, including cash on hand, of $234.4 million based upon the March 31, 2020 balance sheet

"We remain focused on two priorities — the health and safety of our employees and continuing to safely operate our facilities to meet the needs of our customers," said Arsen S. Kitch, president and chief executive officer. "Our financial results for the first quarter of 2020 significantly benefited from an increase in demand for our products, particularly in our Consumer Products segment, and strong operational execution by our teams."

OVERALL RESULTS

For the first quarter of 2020, Clearwater Paper reported net sales of $478 million, an 11% increase compared to net sales of $429 million for the first quarter of 2019. Net income for the first quarter of 2020 was $10 million, or $0.62 per diluted share, compared to net income for the first quarter of 2019 of $4 million, or $0.23 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net income in the first quarter 2020 of $10 million, or $0.57 per diluted share, compared to first quarter 2019 adjusted net income of $3 million, or $0.19 per diluted share. Adjusted EBITDA for the quarter was $55 million, compared to first quarter 2019 Adjusted EBITDA of $40 million.

Consumer Products

Net sales in the Consumer Products segment were $266 million for the first quarter of 2020, up 19% compared to first quarter 2019 net sales of $223 million. In the first quarter of 2020, converted case shipments reached 15.2 million cases, an increase of 23.4% compared to 12.3 million cases shipped in the first quarter of 2019, based upon the increased demand as a result of changes in consumer behavior in response to the COVID-19 pandemic and incremental demand based upon new customer programs.

Segment operating income for the first quarter of 2020 was $14 million, compared to operating income of $1 million in the first quarter of 2019. Adjusted EBITDA for the segment was $32 million in the first quarter of 2020, up from $16 million in the first quarter of 2019. The increase in operating income and Adjusted EBITDA was primarily due to increased shipment volumes, and reductions in costs due to lower external pulp prices and freight costs partially offset by the continued start up costs associated with the Shelby expansion.

Tissue Sales Volumes and Prices:

  • Total tissue volumes sold were 99,793 tons in the first quarter of 2020, a increase of 16,171 tons or 19% compared to 83,622 tons in the first quarter of 2019. Retail volumes represented 91% of total volumes sold in the first quarter of 2020, an increase from 88% in the first quarter of 2019.
  • Average tissue net selling prices decreased 2% to $2,625 per ton in the first quarter of 2020, compared to $2,667 per ton in the first quarter of 2019.

Pulp and Paperboard

Net sales in the Pulp and Paperboard segment were $212 million for the first quarter of 2020, up 3% compared to first quarter 2019 net sales of $205 million. The increase was due to increased volume with a positive mix partially offset by lower pricing.

Segment operating income and margin for the first quarter of 2020 were $26 million and 12%, compared to $29 million and 14%, respectively, for the first quarter of 2019. Adjusted EBITDA for the segment was $36 million in the first quarter of 2020, compared to $39 million in the first quarter of 2019. The decrease in operating income and Adjusted EBITDA was primarily driven by a public utility disruption at our Cypress Bend facility caused by a weather event which was offset by the higher sales volumes.

Paperboard Sales Volumes and Prices:

  • Paperboard sales volumes were 211,296 tons in the first quarter of 2020, an increase of 4% compared to 202,834 tons in the first quarter of 2019.
  • Paperboard average net selling price decreased 0.2% to $999 per ton for the first quarter of 2020, compared to $1,001 per ton in the first quarter of 2019.

COMPANY OUTLOOK

"For the upcoming quarter, our primary focus will remain on the health and safety of our employees while we continue to operate our facilities and service customers. Demand for tissue products is expected to remain elevated as consumers shift to at-home consumption and retailers continue to focus on keeping their shelves stocked. We are also closely monitoring economic conditions and assessing the impact on our business for the balance of the year,” Kitch concluded.

About Clearwater Paper

Clearwater Paper Corporation (NYSE:CLW) 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, and offers services that include custom sheeting, slitting and cutting. www.clearwaterpaper.com.

SOURCE: Clearwater Paper Corporation