Clearwater Paper Reports Third Quarter 2020 Results

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SPOKANE, Wash. -- Clearwater Paper Corporation (NYSE:CLW), a premier supplier of quality tissue and bleached paperboard products, today reported financial results for the third quarter and first nine months of 2020.

THIRD QUARTER HIGHLIGHTS

  • Delivered strong performance due to elevated demand for tissue products, steady demand for paperboard, and solid operational execution
  • Net income of $21 million, or $1.28 per diluted share and Adjusted EBITDA of $77 million
  • Net debt reduction of over $40 million and refinancing of 2023 notes with new 2028 notes

"We remain committed to 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 third quarter, we achieved strong results due to continued elevated demand and production in tissue, although at lower levels than the earlier phases of the COVID-19 pandemic, stable paperboard performance and benign input costs.”

OVERALL RESULTS

For the third quarter of 2020, Clearwater Paper reported net sales of $457 million, a 3% increase compared to net sales of $445 million for the third quarter of 2019. Net income for the third quarter of 2020 was $21 million, or $1.28 per diluted share, compared to net loss for the third quarter of 2019 of $11 million, or $0.66 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net income in the third quarter of 2020 of $27 million, or $1.59 per diluted share, compared to third quarter 2019 adjusted net loss of $11 million, or $0.68 per diluted share. Adjusted EBITDA for the quarter was $77 million, compared to the third quarter of 2019 Adjusted EBITDA of $32 million.

For the first nine months of 2020, Clearwater Paper reported net sales of $1.4 billion, a 7% increase compared to net sales of $1.3 billion for the first nine months of 2019. Net income for the first nine months of 2020 was $55 million, or $3.27 per diluted share, compared to net loss for the first nine months of 2019 of $8 million, or $0.46 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net income in the first nine months of 2020 of $64 million, or $3.81 per diluted share, compared to the first nine months of 2019 adjusted net loss of $6 million, or $0.34 per diluted share. Adjusted EBITDA for the first nine months of 2020 was $212 million, compared to the first nine months of 2019 Adjusted EBITDA of $116 million.

Consumer Products Segment

Net sales in the Consumer Products segment were $248 million for the third quarter of 2020, up 9% compared to the third quarter 2019 net sales of $229 million. In the third quarter of 2020, converted case shipments reached 14.5 million cases, an increase of 10% compared to 13.2 million cases shipped in the third quarter of 2019. Segment operating income for the third quarter of 2020 was $31 million compared to operating loss of $4 million in the third quarter of 2019. Adjusted EBITDA for the segment was $48 million in the third quarter of 2020, up from $15 million in the third quarter of 2019. The increase in operating income and Adjusted EBITDA was primarily due to increased production and shipment volumes from continued elevated demand, which drove improvement in fixed cost absorption. The segment also realized benefits from lower external pulp prices.

Net sales in the Consumer Products segment were $789 million for the first nine months of 2020, up 17% compared to the first nine months 2019 net sales of $676 million. In the first nine months of 2020, converted case shipments reached 45.7 million cases, an increase of 20% compared to 38.0 million cases shipped in the first nine months of 2019. Segment operating income for the first nine months of 2020 was $82 million, compared to operating loss of $8 million in the first nine months of 2019. Adjusted EBITDA for the segment was $134 million in the first nine months of 2020, up from $43 million in the first nine months of 2019.

Tissue Sales Volumes and Prices:

  • Total tissue volumes sold were 90,091 tons in the third quarter of 2020, an increase of 4% compared to 86,408 tons in the third quarter of 2019. Retail volumes represented 96% of total volumes sold in the third quarter of 2020, an increase from 92% in the third quarter of 2019. Total tissue volumes sold were 291,128 tons in the first nine months of 2020, an increase of 15% compared to 252,828 tons in the first nine months of 2019. Retail volumes represented 94% of total volumes sold in the first nine months of 2020, an increase from 91% in the first nine months of 2019.
  • Average tissue net selling prices increased 3% to $2,726 per ton in the third quarter of 2020, compared to $2,635 per ton in the third quarter of 2019. Average tissue net selling prices increased to $2,672 per ton in the first nine months of 2020, compared to $2,664 per ton in the first nine months of 2019.

Paperboard Products Segment

Net sales in the Paperboard Products segment were $209 million for the third quarter of 2020, down 3% compared to third quarter 2019 net sales of $217 million. The decrease in sales was due to lower sales volume and pricing partially offset with a positive mix. Segment operating income for the third quarter of 2020 was $33 million compared to $17 million for the third quarter of 2019. Adjusted EBITDA for the segment was $42 million in the third quarter of 2020, compared to $28 million in the third quarter of 2019. The improvement in segment operating income and Adjusted EBITDA is primarily due to no planned major outage in the third quarter of 2020 versus a planned outage at our Lewiston, Idaho facility in 2019.

Net sales in the Paperboard Products segment were $627 million for the first nine months of 2020, down 4% compared to the first nine months 2019 net sales of $650 million. Segment operating income for the first nine months of 2020 was $92 million compared to $80 million for the first nine months of 2019. Adjusted EBITDA for the segment was $119 million in the first nine months of 2020, compared to $110 million in the first nine months of 2019. The improvement in segment operating income and Adjusted EBITDA is primarily due to no planned major outage in the first nine months of 2020 versus a planned outage at our Lewiston, Idaho facility in 2019.

Paperboard Sales Volumes and Prices:

  • Paperboard sales volumes were 211,820 tons in the third quarter of 2020, a decrease of 1% compared to 214,537 tons in the third quarter of 2019. Paperboard sales volumes were 630,526 tons in the first nine months of 2020, a decrease of 2% compared to 642,559 tons in the first nine months of 2019.
  • Paperboard average net selling price decreased 2% to $982 per ton for the third quarter of 2020, compared to $1,004 per ton in the third quarter of 2019. Paperboard average net selling price decreased 1% to $988 per ton for the first nine months of 2020, compared to $1,003 per ton in the first nine months of 2019.

COMPANY OUTLOOK

"For the fourth quarter, our primary focus will remain on our top priorities - the health and safety of our employees while we continue to operate our facilities and service customers. Demand for tissue products is expected to soften relative to the third quarter of 2020 as retail in-stock conditions and inventories have improved. We are also closely monitoring economic conditions and assessing the impact on our business for the balance of the year,” Kitch concluded.

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Source: Clearwater Paper