Clearwater Paper Reports Second Quarter 2020 Results

Clearwater Paper Corporation (“Clearwater Paper” or the “company”),a premier supplier of quality tissue and bleached paperboard products, reported financial results for the second quarter and first six months of 2020.

Second Quarter Highlights

– Delivered strong performance due to continued elevated demand for tissue products and solid operational execution

– Net income of $23 million, or $1.36 per diluted share, and Adjusted EBITDA of $79 million

– Net debt reduction of over $100 million and liquidity improved to $264 million

“We continue to 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 Kitch, president and chief executive officer. “In the second quarter, we achieved a quarterly record Adjusted EBITDA due to elevated demand and production in tissue, stable paperboard performance and lower input costs, which resulted in strong free cash flow used to reduce our net debt.”

 

For the second quarter of 2020, Clearwater Paper reported net sales of $480 million, a 6% increase compared to net sales of $452 million for the second quarter of 2019. Net income for the second quarter of 2020 was $23 million, or $1.36 per diluted share, compared to net loss for the second quarter of 2019 of $0.4 million, or $0.03 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net income in the second quarter of 2020 of $28 million, or $1.67 per diluted share, compared to second quarter 2019 adjusted net income of $2 million, or $0.15 per diluted share. Adjusted EBITDA for the quarter was $79 million, compared to the second quarter of 2019 Adjusted EBITDA of $44 million.

For the first six months of 2020, Clearwater Paper reported net sales of $958 million, a 9% increase compared to net sales of $881 million for the first six months of 2019. Net income for the first six months of 2020 was $33 million, or $1.99 per diluted share, compared to net income for the first six months of 2019 of $3 million, or $0.21 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net income in the first six months of 2020 of $37 million, or $2.24 per diluted share, compared to the first six months of 2019 adjusted net income of $6 million, or $0.34 per diluted share. Adjusted EBITDA for the first six months of 2020 was $134 million, compared to the first six months of 2019 Adjusted EBITDA of $84 million.

Consumer Products Segment

Net sales in the Consumer Products segment were $275 million for the second quarter of 2020, up 23% compared to the second quarter 2019 net sales of $224 million. In the second quarter of 2020, converted case shipments reached 16.0 million cases, an increase of 28% compared to 12.5 million cases shipped in the second quarter of 2019. Segment operating income for the second quarter of 2020 was $37 million compared to operating loss of $5 million in the second quarter of 2019. Adjusted EBITDA for the segment was $54 million in the second quarter of 2020, up from $12 million in the second quarter of 2019. The increase in operating income and Adjusted EBITDA was primarily due to increased production and shipment volumes from elevated demand which drove improvement in fixed cost absorption. The company also realized benefits from lower external pulp prices and freight costs.

Net sales in the Consumer Products segment were $541 million for the first six months of 2020, up 21% compared to the first six months 2019 net sales of $448 million. In the first six months of 2020, converted case shipments reached 31.2 million cases, an increase of 26% compared to 24.8 million cases shipped in the first six months of 2019. Segment operating income for the first six months of 2020 was $51 million, compared to operating loss of $4 million in the first six months of 2019. Adjusted EBITDA for the segment was $85 million in the first six months of 2020, up from $28 million in the first six months of 2019.

Tissue Sales Volumes and Prices:

– Total tissue volumes sold were 101,244 tons in the second quarter of 2020, an increase of 22% compared to 82,798 tons in the second quarter of 2019. Retail volumes represented 94% of total volumes sold in the second quarter of 2020, an increase from 92% in the second quarter of 2019. Total tissue volumes sold were 201,037 tons in the first six months of 2020, an increase of 21% compared to 166,420 tons in the first six months of 2019. Retail volumes represented 93% of total volumes sold in the first six months of 2020, an increase from 90% in the first six months of 2019.

– Average tissue net selling prices decreased 1% to $2,672 per ton in the second quarter of 2020, compared to $2,691 per ton in the second quarter of 2019. Average tissue net selling prices decreased 1% to $2,649 per ton in the first six months of 2020, compared to $2,679 per ton in the first six months of 2019.

Paperboard Products Segment

Net sales in the Paperboard Products segment were $205 million for the second quarter of 2020, down 10% compared to second quarter 2019 net sales of $228 million. The decrease in sales was due to lower sales volume with a positive mix partially offset by lower pricing. Segment operating income for the second quarter of 2020 was $32 million compared to $34 million for the second quarter of 2019. Adjusted EBITDA for the segment was $41 million in the second quarter of 2020, compared to $43 million in the second quarter of 2019.

Net sales in the Paperboard Product segment were $418 million for the first six months of 2020, down 4% compared to the first six months 2019 net sales of $433 million. Segment operating income for the first six months of 2020 was $59 million compared to $63 million for the first six months of 2019. Adjusted EBITDA for the segment was $77 million in the first six months of 2020, compared to $82 million in the first six months of 2019.

Paperboard Sales Volumes and Prices:

– Paperboard sales volumes were 207,410 tons in the second quarter of 2020, a decrease of 8% compared to 225,188 tons in the second quarter of 2019 partially due to a one-time increase in the second quarter of 2019 based upon the treatment of our consigned inventory. Paperboard sales volumes were 418,706 tons in the first six months of 2020, a decrease of 2% compared to 428,022 tons in the first six months of 2019.

– Paperboard average net selling price decreased 2% to $984 per ton for the second quarter of 2020, compared to $1,004 per ton in the second quarter of 2019. Paperboard average net selling price decreased 1% to $991 per ton for the first six months of 2020, compared to $1,003 per ton in the first six months of 2019.

Company Outlook

“For the upcoming quarter, our primary focus will remain 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 at elevated levels due to COVID-19 but slowly normalize as retail in-stock conditions and inventories continue to improve. We are also closely monitoring economic conditions and assessing the impact on our business for the balance of the year,” Kitch concluded.

For the full second quarter results, click here.

About Clearwater Paper

Clearwater Paper 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. Clearwater Paper’s employees build shareholder value by developing strong relationships through quality and service.

Contact:

Shannon Myers – News Media – investorinfo@clearwaterpaper.com – (509) 344-5967

Source: Clearwater Paper Corporation