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Clearwater Paper Reports First Quarter 2016 Results

SPOKANE, Wash., Apr 28, 2016 (BUSINESS WIRE) -- Clearwater Paper Corporation CLW, +12.61% today reported financial results for the first quarter of 2016.

The company reported net sales of $437.2 million for the first quarter of 2016, up 0.7% compared to net sales of $434.0 million for the first quarter of 2015. Net earnings determined in accordance with generally accepted accounting principles, or GAAP, for the first quarter of 2016 were $18.4 million, or $1.05 per diluted share, compared to $5.8 million, or $0.30 per diluted share, for the first quarter of 2015. Excluding certain items identified in the attached reconciliations to GAAP, first quarter 2016 adjusted net earnings were $19.2 million, or $1.09 per diluted share, compared to first quarter 2015 adjusted net earnings of $6.9 million, or $0.36 per diluted share.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, was $58.9 million for the first quarter of 2016. Adjusted EBITDA for the quarter was $60.1 million, up 58.4% compared to first quarter 2015 Adjusted EBITDA of $37.9 million. The increase in EBITDA and Adjusted EBITDA was due primarily to higher shipment volumes in both paperboard and tissue, the absence of scheduled major maintenance at the company’s Lewiston, Idaho, pulp and paperboard facility, lower input costs for energy, chemicals, transportation, packaging supplies, and external pulp costs along with increased use of internally generated pulp, and improved absorption of fixed costs. These improvements were partially offset by lower paperboard pricing and a higher mix of both commodity grade paperboard and tissue parent roll sales in the quarter.

“Clearwater Paper got off to a strong start in 2016. We delivered first quarter results that met or exceeded the high end of our outlook ranges for net sales, operating margin, and EBITDA,” said Linda Massman, president and chief executive officer. “Our consumer products business produced an adjusted EBITDA margin of 13.3%, the highest in over three years and pulp and paperboard continues to perform well. I am especially pleased with approximately $8.0 million in savings from strategic capital and operational efficiency initiatives we achieved in the quarter.”

Under the $100 million stock repurchase program, authorized in December 2015, the company repurchased 709,366 shares of common stock at an average price of $38.99 per share during the first quarter of 2016.

FIRST QUARTER 2016 SEGMENT PERFORMANCE

Consumer Products

Net sales in the Consumer Products segment were $245.0 million for the first quarter of 2016, up 4.2% from first quarter 2015 net sales of $235.2 million. This increase was due to a 7.8% growth in total tissue volume, including 15.4% for non-retail tons, which includes parent rolls and 5.5% for retail tissue products.

On a GAAP basis, the segment had operating income of $18.4 million, compared to $12.4 million in the first quarter of 2015. Excluding certain items identified in the attached reconciliations to GAAP, adjusted operating income of $18.8 million for the first quarter of 2016, was up $5.2 million from $13.6 million for the same period in 2015. The higher results for the first quarter of 2016 were driven primarily by increased shipment volume, reduced energy costs, lower prices for external pulp along with higher usage of internally produced pulp, improved absorption of fixed costs resulting from higher production volumes and lower costs for packaging supplies.

  • Total tissue sales volumes of 99,385 tons in the first quarter of 2016 were up 7.8% and converted product cases shipped were flat at 13.0 million, compared to the first quarter of 2015, largely due to changes in product mix, new business awarded and expanded business with existing customers in 2015.
  • Average tissue net selling prices decreased 3.2% to $2,464 per ton in the first quarter of 2016, compared to the first quarter of 2015, due to a higher product mix of parent rolls.

Pulp and Paperboard

Net sales in the Pulp and Paperboard segment were $192.2 million for the first quarter of 2016, down 3.4% compared to first quarter 2015 net sales of $198.9 million. The decline was due to a 7.7% decrease in average sales price per ton and a higher mix of commodity grade paperboard, which more than offset a 5.1% increase in shipment volumes. Adjusted operating income for the quarter increased 106% to $35.2 million compared to $17.1 million for the first quarter of 2015. This was mainly due to the absence of $15.0 million of planned major maintenance at the Lewiston, Idaho pulp and paperboard facility in the first quarter of 2016, and lower input costs for wood fiber, natural gas, fuel, energy and polyethylene.

  • Paperboard sales volumes increased to 201,340 tons in the first quarter of 2016, compared to 191,635 tons in the first quarter of 2015, which was impacted by labor slowdowns at West Coast shipping ports.
  • Paperboard average net selling prices decreased 7.7% to $952 per ton compared to the first quarter of 2015 as a result of a price decrease announced by RISI early in 2015, and a stronger U.S. dollar causing increased European imports and a decrease in U.S. exports, which put pricing pressure on the commodity paperboard grades.

Taxes

The company's GAAP tax rate for the first quarter of 2016 was a provision of 38.8%. This compares to 22.8% in the first quarter of 2015, which was impacted by the release of uncertain tax positions of approximately $1 million relating to statute of limitation expirations on certain federal tax credits. On an adjusted basis, the first quarter 2016 tax rate was 38.7%. 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 first 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.

WEBCAST INFORMATION

Clearwater Paper Corporation will discuss these results during an earnings conference call that begins at 2:00 p.m. Pacific Time today. A live webcast and accompanying supplemental information will be available on the...


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