Clearwater Paper Reports Second Quarter 2016 Results
"Our strong performance was primarily driven by productivity improvements, lower input costs in the pulp and paperboard business and maintaining healthy inventory and customer service levels for consumer products." – Linda Massman, President and CEO, Clearwater Paper.
July 21, 2016 - Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the second quarter of 2016.
The company reported net sales of $436.7 million for the second quarter of 2016, down 1.8% compared to net sales of $444.6 million for the second quarter of 2015. Net earnings determined in accordance with generally accepted accounting principles, or GAAP, for the second quarter of 2016 were $20.9 million, or $1.21 per diluted share, compared to $15.6 million, or $0.81 per diluted share, for the second quarter of 2015. Excluding certain items identified in the attached reconciliations to GAAP, second quarter 2016 adjusted net earnings were $23.5 million, or $1.37 per diluted share, compared to second quarter 2015 adjusted net earnings of $14.2 million, or $0.74 per diluted share.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, was $62.2 million for the second quarter of 2016. Adjusted EBITDA for the quarter was $66.3 million, up 31.0% compared to second quarter 2015 Adjusted EBITDA of $50.7 million. The increase in EBITDA and Adjusted EBITDA was due primarily to the absence of scheduled major maintenance at the company's Arkansas pulp and paperboard mill in the second quarter of 2016, compared to approximately $7 million incurred during the second quarter of 2015, lower input costs for energy, chemicals and employee benefits, and receipt of a net $2.8 million in partial reimbursement of previously incurred costs related to performance issues with the recovery boiler at the Arkansas mill during the second quarter of 2013 through the first quarter of 2015 timeframe, all of which was partially offset by lower paperboard pricing.
"Clearwater Paper delivered an outstanding second quarter in terms of net earnings and by exceeding the high end of our outlook for Adjusted EBITDA," said Linda Massman, president and CEO. "Our strong performance was primarily driven by productivity improvements, lower input costs in the pulp and paperboard business and maintaining healthy inventory and customer service levels for consumer products. We completed a successful first half of 2016 by keeping a sharp focus on implementing strategic capital investments and operational efficiencies throughout the company.
"Through the second quarter, we have purchased 835,031 shares at an average price of $42.12, as part of our $100 million stock repurchase program we announced last December. Our stock repurchase program reflects our confidence in future cash generation capabilities and a commitment to return capital to shareholders," said Massman.
SECOND QUARTER 2016 SEGMENT PERFORMANCE
Net sales in the Consumer Products segment were $247.9 million for the second quarter of 2016, up 3.6% compared to second quarter 2015 net sales of $239.4 million. This increase was due to growth in total tissue volume and a richer product mix that included a 10.7% growth in retail tons sold.
On a GAAP basis, the segment had operating income of $18.5 million, compared to operating income of $17.0 million in the second quarter of 2015. Adjusted operating income of $19.1 million for the second quarter of 2016 was up $2.6 million compared to the same period in 2015, after adjusting for $0.5 million and $0.7 million of costs in the second quarters of 2016 and 2015, respectively, related to the previously announced Long Island, New York facility closure. Also included in adjusted operating income for the second quarter of 2015 was the recognition of a $1.3 million net gain due to the settlement of the working capital escrow account associated with the sale of the company's former specialty tissue mills. The improved results in the most recent period were driven primarily by lower input costs for external pulp and energy, which were primarily offset by increased transportation costs due to customer mix.
Total tissue sales volumes of 99,123 tons in the second quarter of 2016 increased by 3.0% and converted product cases shipped were 13.2 million, up 0.8%, each compared to the second quarter of 2015.
Average tissue net selling prices increased 0.5% to $2,494 per ton in the second quarter of 2016, compared to the second quarter of 2015, due to improved product mix and a price increase introduced in the second half of 2015.
Pulp and Paperboard
Net sales in the Pulp and Paperboard segment were $188.8 million for the second quarter of 2016, down 8.0% compared to second quarter 2015 net sales of $205.2 million. The decrease was primarily due to lower paperboard pricing. Operating income for the quarter increased $12.2 million to $40.0 million, compared to $27.8 million for the second quarter of 2015, primarily due to the absence of approximately $7 million of scheduled major maintenance costs at the Arkansas pulp and paperboard mill, lower input costs for chemicals, energy, employee benefits and transportation, and the previously discussed partial reimbursement of costs related to the recovery boiler at the Arkansas mill.
Paperboard sales volumes decreased 2.9% to 199,132 tons in the second quarter of 2016, compared to the record level 204,983 tons in the second quarter of 2015.
Paperboard net selling prices decreased 4.9% to $948 per ton compared to the second quarter of 2015.
The company's GAAP tax rate for the second quarter of 2016 was a provision of 36.3% compared to 35.8% in the second quarter of 2015. On an adjusted basis, the second quarter 2016 tax rate was 36.2%. The company expects its annual GAAP and adjusted tax rates to be approximately 37% for 2016.
Note Regarding Use of Non-GAAP Financial Measures
In this press release, the company presents certain non-GAAP financial information for the second quarters of 2016 and 2015, including adjusted net earnings, adjusted net earnings per diluted share, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, adjusted operating income, and adjusted tax rate. Because these amounts are not in accordance with GAAP, reconciliations to net earnings, net earnings per diluted share, operating income and income tax provisions, as determined in accordance with GAAP, are included at the end of this press release. The company presents these non-GAAP amounts because management believes they assist investors and analysts in comparing the company's performance across reporting periods on a consistent basis by excluding items that the company does not believe are indicative of its core operating performance.
Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, bleached paperboard and pulp at manufacturing facilities across the U.S. In addition, the company produces bleached paperboard. To learn more, please visit: www.clearwaterpaper.com.
SOURCE: Clearwater Paper