UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
_________________
CURRENT
REPORT
Pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of Report (Date of earliest
event reported): February
5, 2014
_________________
CLEARWATER
PAPER CORPORATION
(Exact
name of registrant as specified in its charter)
_________________
Delaware |
001-34146 |
20-3594554 |
(State or other jurisdiction |
(Commission File Number) |
(IRS Employer |
601 West Riverside Ave., Suite 1100
Spokane, WA 99201
(Address
of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (509) 344-5900
_________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On February 5, 2014, Clearwater Paper Corporation announced its results of operations and financial condition for the fourth quarter and full year results ending December 31, 2013. A copy of the press release containing this announcement is furnished as Exhibit 99.1 hereto. In addition, a copy of the Company’s Fourth Quarter and Full Year 2013 Supplemental Information is furnished as Exhibit 99.2 hereto.
The information in this Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits. | ||
99.1 | Press release issued by Clearwater Paper Corporation, dated February 5, 2014: | |
CLEARWATER PAPER REPORTS FOURTH QUARTER AND FULL YEAR 2013 RESULTS | ||
99.2 | Clearwater Paper Corporation Fourth Quarter and Full Year 2013 Supplemental Information, dated December 31, 2013 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: |
February 5, 2014 |
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CLEARWATER PAPER CORPORATION |
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By: |
/s/ Michael S. Gadd |
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Michael S. Gadd, Corporate Secretary |
EXHIBIT INDEX
Exhibit |
Description |
99.1 | Press release issued by Clearwater Paper Corporation, dated February 5, 2014: CLEARWATER PAPER REPORTS FOURTH QUARTER AND FULL YEAR 2013 RESULTS |
99.2 | Clearwater Paper Corporation Fourth Quarter and Full Year 2013 Supplemental Information, dated December 31, 2013 |
4
Exhibit 99.1
Clearwater Paper Reports Fourth Quarter and Full Year 2013 Results
SPOKANE, Wash.--(BUSINESS WIRE)--February 5, 2014--Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the fourth quarter and full year of 2013.
The company reported net sales of $470.2 million for the fourth quarter of 2013, compared to net sales of $462.7 million for the fourth quarter of 2012. Net earnings determined in accordance with generally accepted accounting principles, or GAAP, for the fourth quarter of 2013 were $82.9 million, or $3.87 per diluted share, compared to net earnings of $19.9 million, or $0.84 per diluted share, for the fourth quarter of 2012. The 2013 fourth quarter GAAP net earnings included a $59.7 million net benefit, comprised of a $62.8 million benefit from the release of reserves for uncertain tax positions, $1.0 million of after-tax expense associated with the mark-to-market impact of directors’ equity-based compensation and $2.1 million of after-tax expense associated with the closing of the company’s Thomaston, Georgia, converting and distribution facility. Excluding those items, fourth quarter 2013 adjusted net earnings were $23.1 million, or $1.09 per diluted share, compared to fourth quarter 2012 adjusted net earnings of $19.4 million, or $0.82 per diluted share.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, was $61.0 million for the fourth quarter of 2013. Adjusted EBITDA of $65.4 million was up 16.7% compared to fourth quarter 2012 Adjusted EBITDA of $56.1 million. The increase in EBITDA and Adjusted EBITDA was due primarily to approximately $7.0 million of contribution from our through-air-dried, or TAD, expansion.
"Strong fourth-quarter performance reflects the strength of the company’s team to succeed despite the high level of competition in the marketplace,” said president and chief executive officer Linda Massman. "The Pulp and Paperboard division also generated a record $43.2 million in Adjusted EBITDA.”
During the fourth quarter, the company completed its $100 million share buyback program. Under the program, the company repurchased 2.1 million shares at an average cost of $48.31 per share.
FOURTH QUARTER 2013 SEGMENT PERFORMANCE
Consumer Products
Net sales in the Consumer Products segment were $282.1 million for the fourth quarter of 2013, slightly higher than fourth quarter 2012 net sales of $280.6 million. This increase was primarily driven by increased TAD sales, partially offset by lower non-retail sales. Operating income decreased to $14.4 million from $22.9 million in the prior year period, driven by lower shipments, $3.1 million of costs related to the closure of the company’s Thomaston facility, higher pulp, energy, packaging and labor costs as well as increased depreciation year over year. Adjusted operating income of $17.5 million for the fourth quarter of 2013, after adjusting out $3.1 million of costs related to the Thomaston facility closure, was down $5.4 million from the same period in 2012.
Pulp and Paperboard
Net sales in the Pulp and Paperboard segment were $188.0 million for the fourth quarter of 2013, up 3.3% compared to fourth quarter 2012 net sales of $182.1 million. The increase was primarily due to stable volumes reflecting strong market backlogs and higher pricing in the fourth quarter of 2013 compared to the fourth quarter of 2012. Operating income for the quarter increased $11.4 million to $37.2 million, compared to $25.8 million for the fourth quarter of 2012, primarily due to improved sales mix and lower maintenance and fiber costs, partially offset by higher energy costs.
Taxes
The company’s GAAP tax rate for the fourth quarter of 2013 was a benefit of 206.5% compared to an expense of 30.2% in the fourth quarter of 2012. The benefit in 2013 is predominantly a result of the release of uncertain tax position reserves related to alternative fuel mixture tax credits. On an adjusted basis, the fourth quarter 2013 tax rate was approximately 26.6%. The company expects its annual GAAP and adjusted tax rates to be approximately 38% for 2014.
Note Regarding Use of Non-GAAP Financial Measures
In this press release, the company presents its results for the fourth quarters of 2013 and 2012, including EBITDA, Adjusted EBITDA, adjusted net earnings and adjusted net earnings per diluted share. These amounts are not in accordance with GAAP, and accordingly reconciliations to net earnings and net earnings per diluted share as determined in accordance with GAAP are included at the end of this press release. The company presents these 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.
CONFERENCE CALL INFORMATION
A live audio webcast and conference call will be held today, Wednesday, February 5, 2014, at 2 p.m. Pacific time (5 p.m. Eastern time). Investors may access the conference call by dialing 877-303-9241 (for U.S./Canada investors) or 760-666-3575 (for international investors). The audio webcast may be accessed on the company's website at http://ir.clearwaterpaper.com/events.cfm. An accompanying presentation including supplemental information will be available for downloading at the same site at 1:05 p.m. Pacific time (4:05 p.m. Eastern time). The webcast will be audio only. The company recommends that investors download the accompanying presentation prior to the call.
For those unable to participate in the call, an archived recording will be available through the Clearwater Paper Corporation website at www.clearwaterpaper.com under "Investor Relations" following the conference call.
ABOUT CLEARWATER PAPER
Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, machine-glazed tissue, bleached paperboard and pulp at 14 manufacturing locations in the U.S. and Canada. The company is a premier supplier of private label tissue to major retailers and wholesale distributors. This includes grocery, drug, mass merchants and discount stores. The company also produces bleached paperboard used by quality-conscious printers and packaging converters. Clearwater Paper's employees build shareholder value by developing strong customer relationships through quality and service.
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, including market competition and adjusted tax rates for 2014. These forward-looking statements are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, customer acceptance and timing of purchases of the company’s new TAD products and quantity; competitive pricing pressures for the company’s products, including as a result of increased capacity as additional manufacturing facilities are operated by the company’s competitors; difficulties with the optimization and realization of the benefits expected from the company’s new TAD paper machine and converting lines at North Carolina; the loss of business from a significant customer; manufacturing or operating disruptions, including IT system failures, equipment malfunction and damage to the company’s manufacturing facilities; changes in the cost and availability of wood fiber and wood pulp; changes in transportation costs and disruptions in transportation services; labor disruptions; changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs; changes in customer product preferences and competitors' product offerings; changes in expenses and required contributions associated with the company’s pension plans; environmental liabilities or expenditures; changes in the U.S. and international economies and in general economic conditions in the regions and industries in which the company operates; increased supply and pricing pressures resulting from increasing Asian paper production capabilities; cyclical industry conditions; reliance on a limited number of third-party suppliers for raw materials; inability to successfully implement the company’s expansion strategies; the company’s qualification to retain, or ability to utilize, tax credits associated with alternative fuels or cellulosic biofuels and the tax treatment associated with receipt of such credits; and other risks and uncertainties described from time to time in the company's public filings with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this press release and the company does not undertake to update any forward-looking statements.
For additional information on Clearwater Paper, please visit the company’s website at www.clearwaterpaper.com.
Clearwater Paper Corporation | ||||||||||||||||||||||||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||||||||||||||||||||||||
Unaudited (Dollars in thousands - except per-share amounts) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | For the Years Ended | |||||||||||||||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||
Net sales | $ | 470,159 | 100 | % | $ | 462,701 | 100 | % | $ | 1,889,830 | 100 | % | $ | 1,874,304 | 100 | % | ||||||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||||||||||||||
Cost of sales | (401,404 | ) | 85 | % | (396,428 | ) | 86 | % | (1,671,371 | ) | 88 | % | (1,607,872 | ) | 86 | % | ||||||||||||||||||||||
Selling, general and administrative expenses | (30,466 | ) | 6 | % | (30,793 | ) | 7 | % | (119,131 | ) | 6 | % | (121,045 | ) | 6 | % | ||||||||||||||||||||||
Total operating costs and expenses | (431,870 | ) | 92 | % | (427,221 | ) | 92 | % | (1,790,502 | ) | 95 | % | (1,728,917 | ) | 92 | % | ||||||||||||||||||||||
Income from operations | 38,289 | 8 | % | 35,480 | 8 | % | 99,328 | 5 | % | 145,387 | 8 | % | ||||||||||||||||||||||||||
Interest expense, net | (11,252 | ) | 2 | % | (7,021 | ) | 2 | % | (44,036 | ) | 2 | % | (33,796 | ) | 2 | % | ||||||||||||||||||||||
Debt retirement costs | - | - | - | - | (17,058 | ) | 1 | % | - | - | ||||||||||||||||||||||||||||
Earnings before income taxes | 27,037 | 6 | % | 28,459 | 6 | % | 38,234 | 2 | % | 111,591 | 6 | % | ||||||||||||||||||||||||||
Income tax benefit (provision) | 55,825 | 12 | % | (8,607 | ) | 2 | % | 68,721 | 4 | % | (47,460 | ) | 3 | % | ||||||||||||||||||||||||
Net earnings | $ | 82,862 | 18 | % | $ | 19,852 | 4 | % | $ | 106,955 | 6 | % | $ | 64,131 | 3 | % | ||||||||||||||||||||||
Net earnings per common share: | ||||||||||||||||||||||||||||||||||||||
Basic | $ | 3.91 | $ | 0.86 | $ | 4.84 | $ | 2.75 | ||||||||||||||||||||||||||||||
Diluted | 3.87 | 0.84 | 4.80 | 2.72 | ||||||||||||||||||||||||||||||||||
Average shares outstanding (in thousands): | ||||||||||||||||||||||||||||||||||||||
Basic | 21,188 | 23,181 | 22,081 | 23,299 | ||||||||||||||||||||||||||||||||||
Diluted | 21,401 | 23,532 | 22,264 | 23,614 | ||||||||||||||||||||||||||||||||||
Clearwater Paper Corporation | ||||||||||||||
Condensed Consolidated Balance Sheets | ||||||||||||||
Unaudited (Dollars in thousands) | ||||||||||||||
December 31, | December 31, | |||||||||||||
2013 | 2012 | |||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash | $ | 23,675 | $ | 12,579 | ||||||||||
Restricted cash | 1,500 | - | ||||||||||||
Short-term investments | 70,000 | 20,000 | ||||||||||||
Receivables, net | 158,874 | 154,143 | ||||||||||||
Taxes receivable | 10,503 | 20,828 | ||||||||||||
Inventories | 267,788 | 231,466 | ||||||||||||
Deferred tax assets | 37,538 | 17,136 | ||||||||||||
Prepaid expenses | 5,523 | 12,314 | ||||||||||||
Total current assets | 575,401 | 468,466 | ||||||||||||
Property, plant and equipment, net | 884,698 | 877,377 | ||||||||||||
Goodwill | 229,533 | 229,533 | ||||||||||||
Intangible assets, net | 40,778 | 47,753 | ||||||||||||
Pension assets | 4,488 | - | ||||||||||||
Other assets, net | 9,927 | 10,327 | ||||||||||||
TOTAL ASSETS | $ | 1,744,825 | $ | 1,633,456 | ||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued liabilities | $ | 190,648 | $ | 165,596 | ||||||||||
Current liability for pensions and other postretirement employee benefits | 8,778 | 9,137 | ||||||||||||
Total current liabilities | 199,426 | 174,733 | ||||||||||||
Long-term debt | 650,000 | 523,933 | ||||||||||||
Liability for pensions and other postretirement employee benefits | 109,807 | 204,163 | ||||||||||||
Other long-term obligations | 52,942 | 50,910 | ||||||||||||
Accrued taxes | 2,658 | 78,699 | ||||||||||||
Deferred tax liabilities | 124,898 | 60,124 | ||||||||||||
Stockholders' equity, excluding accumulated other comprehensive loss, net of tax | 663,187 | 656,587 | ||||||||||||
Accumulated other comprehensive loss, net of tax | (58,093 | ) | (115,693 | ) | ||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,744,825 | $ | 1,633,456 | ||||||||||
Clearwater Paper Corporation | ||||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||||
Unaudited (Dollars in thousands) | ||||||||||||||
For the Years Ended |
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2013 | 2012 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||
Net earnings | $ | 106,955 | $ | 64,131 | ||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | 90,272 | 79,333 | ||||||||||||
Non-cash adjustments to unrecognized taxes | (75,308 | ) | 3,275 | |||||||||||
Deferred tax provision | 5,629 | 12,870 | ||||||||||||
Equity-based compensation expense | 10,960 | 9,703 | ||||||||||||
Employee benefit plans | 10,131 | 9,366 | ||||||||||||
Deferred issuance costs and discounts on long-term debt | 4,964 | 2,010 | ||||||||||||
Disposal of plant and equipment, net | 1,493 | 2,003 | ||||||||||||
Changes in working capital, net | (15,022 | ) | 61,281 | |||||||||||
Changes in taxes receivable, net | 10,325 | (10,828 | ) | |||||||||||
Excess tax benefits from equity-based payment arrangements | - | (15,837 | ) | |||||||||||
Changes in non-current accrued taxes, net | 569 | 960 | ||||||||||||
Funding of qualified pension plans | (15,050 | ) | (20,627 | ) | ||||||||||
Changes in restricted cash | (32 | ) | 769 | |||||||||||
Other, net | 471 | 284 | ||||||||||||
Net cash flows from operating activities | 136,357 | 198,693 | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||
Changes in short-term investments, net | (50,000 | ) | 35,001 | |||||||||||
Additions to plant and equipment | (90,593 | ) | (203,776 | ) | ||||||||||
Cash paid for acquisitions, net of cash acquired | - | (9,264 | ) | |||||||||||
Proceeds from sale of assets | - | 1,035 | ||||||||||||
Net cash flows from investing activities | (140,593 | ) | (177,004 | ) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||
Proceeds from long-term debt | 275,000 | - | ||||||||||||
Repayment of long-term debt | (150,000 | ) | - | |||||||||||
Purchase of treasury stock | (100,000 | ) | (18,650 | ) | ||||||||||
Payments for long-term debt issuance costs | (4,837 | ) | (2 | ) | ||||||||||
Payment of tax withholdings on equity-based payment arrangements | (4,831 | ) | (13,234 | ) | ||||||||||
Excess tax benefits from equity-based payment arrangements | - | 15,837 | ||||||||||||
Other, net | - | (1,500 | ) | |||||||||||
Net cash flows from financing activities | 15,332 | (17,549 | ) | |||||||||||
Increase in cash | 11,096 | 4,140 | ||||||||||||
Cash at beginning of period | 12,579 | 8,439 | ||||||||||||
Cash at end of period | $ | 23,675 | $ | 12,579 | ||||||||||
Clearwater Paper Corporation | ||||||||||||||||||||||||||||||||||||
Segment Information | ||||||||||||||||||||||||||||||||||||
Unaudited (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||
Three Months Ended | For the Years Ended | |||||||||||||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||||||
Segment net sales: | ||||||||||||||||||||||||||||||||||||
Consumer Products | $ | 282,147 | 60 | % | $ | 280,645 | 61 | % | $ | 1,149,692 | 61 | % | $ | 1,134,556 | 61 | % | ||||||||||||||||||||
Pulp and Paperboard | 188,012 | 40 | % | 182,056 | 39 | % | 740,138 | 39 | % | 739,748 | 39 | % | ||||||||||||||||||||||||
Total segment net sales | $ | 470,159 | 100 | % | $ | 462,701 | 100 | % | $ | 1,889,830 | 100 | % | $ | 1,874,304 | 100 | % | ||||||||||||||||||||
Operating income: | ||||||||||||||||||||||||||||||||||||
Consumer Products | $ | 14,415 | 38 | % | $ | 22,927 | 65 | % | $ | 52,799 | 53 | % | $ | 93,347 | 64 | % | ||||||||||||||||||||
Pulp and Paperboard | 37,167 | 97 | % | 25,802 | 73 | % | 95,781 | 96 | % | 103,910 | 71 | % | ||||||||||||||||||||||||
51,582 | 48,729 | 148,580 | 197,257 | |||||||||||||||||||||||||||||||||
Corporate | (13,293 | ) | 35 | % | (13,249 | ) | 37 | % | (49,252 | ) | 50 | % | (51,870 | ) | 36 | % | ||||||||||||||||||||
Income from operations | $ | 38,289 | 100 | % | $ | 35,480 | 100 | % | $ | 99,328 | 100 | % | $ | 145,387 | 100 | % | ||||||||||||||||||||
Clearwater Paper Corporation | |||||||||||||||||||||
Reconciliation of Consolidated Net Earnings to EBITDA and Adjusted EBITDA | |||||||||||||||||||||
Unaudited (Dollars in thousands) | |||||||||||||||||||||
Three Months Ended | For the Years Ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Net earnings | $ | 82,862 | $ | 19,852 | $ | 106,955 | $ | 64,131 | |||||||||||||
Add back: | |||||||||||||||||||||
Interest expense, net1 | 11,252 | 7,021 | 61,094 | 33,796 | |||||||||||||||||
Income tax (benefit) provision | (55,825 | ) | 8,607 | (68,721 | ) | 47,460 | |||||||||||||||
Depreciation and amortization expense | 22,688 | 20,856 | 90,272 | 79,333 | |||||||||||||||||
EBITDA2 | $ | 60,977 | $ | 56,336 | $ | 189,600 | $ | 224,720 | |||||||||||||
Directors' equity-based compensation expense | 1,392 | (337 | ) | 4,084 | 1,369 | ||||||||||||||||
Costs associated with Thomaston facility closure | 3,064 | - | 5,977 | - | |||||||||||||||||
Expenses associated with Metso litigation | - | 71 | - | 2,019 | |||||||||||||||||
Loss on sale of foam assets | - | - | - | 1,014 | |||||||||||||||||
Adjusted EBITDA3 | $ | 65,433 | $ | 56,070 | $ | 199,661 | $ | 229,122 | |||||||||||||
1 | Interest expense, net, for the year ended December 31, 2013 includes debt retirement costs of $17.1 million. | ||
2 | EBITDA is a non-GAAP measure that management uses as supplemental performance measures. The most directly comparable GAAP measure is net earnings. EBITDA is net earnings adjusted for net interest expense (including debt retirement costs), income taxes, and depreciation and amortization. It should not be considered as an alternative to net earnings computed under GAAP. | ||
3 | Adjusted EBITDA excludes the impact of the items listed that we do not believe are indicative of our core operating performance. | ||
Clearwater Paper Corporation | ||||||||||||||||||||||
Reconciliation of Operating Income (Loss) to Segment EBITDA and Segment Adjusted EBITDA | ||||||||||||||||||||||
Unaudited (Dollars in thousands) | ||||||||||||||||||||||
Three Months Ended | For the Years Ended | |||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||
Consumer Products | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Operating income | $ | 14,415 | $ | 22,927 | $ | 52,799 | $ | 93,347 | ||||||||||||||
Add back: | ||||||||||||||||||||||
Depreciation and amortization expense | 16,073 | 14,855 | 65,197 | 54,547 | ||||||||||||||||||
Segment EBITDA1 | $ | 30,488 | $ | 37,782 | $ | 117,996 | $ | 147,894 | ||||||||||||||
Loss on sale of foam assets | - | - | - | 1,014 | ||||||||||||||||||
Costs associated with Thomaston facility closure | 3,064 | - | 5,977 | - | ||||||||||||||||||
Segment Adjusted EBITDA2 | $ | 33,552 | $ | 37,782 | $ | 123,973 | $ | 148,908 | ||||||||||||||
Three Months Ended | For the Years Ended | |||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||
Pulp and Paperboard | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Operating income | $ | 37,167 | $ | 25,802 | $ | 95,781 | $ | 103,910 | ||||||||||||||
Add back: | ||||||||||||||||||||||
Depreciation and amortization expense | 6,071 | 5,566 | 23,266 | 23,113 | ||||||||||||||||||
Segment EBITDA1 | $ | 43,238 | $ | 31,368 | $ | 119,047 | $ | 127,023 | ||||||||||||||
Segment Adjusted EBITDA2 | $ | 43,238 | $ | 31,368 | $ | 119,047 | $ | 127,023 | ||||||||||||||
Three Months Ended | For the Years Ended | |||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||
Corporate | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Operating loss | $ | (13,293 | ) | $ | (13,249 | ) | $ | (49,252 | ) | $ | (51,870 | ) | ||||||||||
Add back: | ||||||||||||||||||||||
Depreciation and amortization expense | 544 | 435 | 1,809 | 1,673 | ||||||||||||||||||
Segment EBITDA1 | $ | (12,749 | ) | $ | (12,814 | ) | $ | (47,443 | ) | $ | (50,197 | ) | ||||||||||
Expenses associated with Metso litigation | - | 71 | - | 2,019 | ||||||||||||||||||
Directors' equity-based compensation (benefit) expense | 1,392 | (337 | ) | 4,084 | 1,369 | |||||||||||||||||
Segment Adjusted EBITDA2 | $ | (11,357 | ) | $ | (13,080 | ) | $ | (43,359 | ) | $ | (46,809 | ) | ||||||||||
1 | Segment EBITDA is a non-GAAP measure that management uses to evaluate the cash generating capacity of the company. The most directly comparable GAAP measure is segment operating income. Segment EBITDA is segment operating income adjusted for depreciation and amortization. It should not be considered as an alternative to segment operating income computed under GAAP. | ||
2 | Segment Adjusted EBITDA excludes the impact of the items listed that we do not believe are indicative of our core operating performance. | ||
Clearwater Paper Corporation | |||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||
Unaudited (Dollars in thousands, except per-share amounts) | |||||||||||||||||||||
Three Months Ended | For the Years Ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
GAAP net earnings | $ | 82,862 | $ | 19,852 | $ | 106,955 | $ | 64,131 | |||||||||||||
Special items, after-tax1 : | |||||||||||||||||||||
Loss on sale of foam assets | - | - | - | 658 | |||||||||||||||||
Expenses associated with Metso litigation | - | 41 | - | 1,310 | |||||||||||||||||
Debt retirement costs | - | - | 10,781 | - | |||||||||||||||||
Directors' equity-based compensation expense | 976 | (194 | ) | 2,685 | 760 | ||||||||||||||||
Costs associated with Thomaston facility closure | 2,149 | - | 3,944 | - | |||||||||||||||||
Discrete tax items related to release of uncertain tax positions | (62,798 | ) | - | (67,457 | ) | - | |||||||||||||||
Discrete tax items related to AFMTC/CBPC credit conversions | (66 | ) | (306 | ) | (9,832 | ) | 6,398 | ||||||||||||||
Discrete tax items related to additional CBPC | - | - | (3,495 | ) | - | ||||||||||||||||
Adjusted net earnings2 | $ | 23,123 | $ | 19,393 | $ | 43,581 | $ | 73,257 | |||||||||||||
GAAP net earnings per diluted share | $ | 3.87 | $ | 0.84 | $ | 4.80 | $ | 2.72 | |||||||||||||
Special items, after-tax1 : | |||||||||||||||||||||
Loss on sale of foam assets | - | - | - | 0.03 | |||||||||||||||||
Expenses associated with Metso litigation | - | - | - | 0.05 | |||||||||||||||||
Debt retirement costs | - | - | 0.48 | - | |||||||||||||||||
Directors' equity-based compensation expense | 0.05 | (0.01 | ) | 0.12 | 0.03 | ||||||||||||||||
Costs associated with Thomaston facility closure | 0.10 | - | 0.18 | - | |||||||||||||||||
Discrete tax items related to release of uncertain tax positions | (2.93 | ) | - | (3.03 | ) | - | |||||||||||||||
Discrete tax items related to AFMTC/CBPC credit conversions | - | (0.01 | ) | (0.44 | ) | 0.27 | |||||||||||||||
Discrete tax items related to additional CBPC | - | - | (0.16 | ) | - | ||||||||||||||||
Adjusted net earnings per diluted share2 | $ | 1.09 | $ | 0.82 | $ | 1.96 | $ | 3.10 | |||||||||||||
1 | Tax effect was calculated using the estimated annual effective tax rate for the period presented. | ||
2 | Adjusted net earnings and Adjusted net earnings per diluted share exclude the impact of the items listed that we do not believe are indicative of our core operating performance. |
CONTACT:
Clearwater Paper Corporation
News media:
Matt Van
Vleet, 509-344-5912
or
CFO:
John Hertz, 509-344-5905
or
Investors:
IR
Sense
Sean Butson, 509-344-5906
Exhibit 99.2
Slide 1 (cover)Clearwater Paper Corporation Fourth Quarter and Full Year 2013 Supplemental Information Linda Massman President, Chief Executive Officer and Director John Hertz Senior Vice President, Finance and Chief Financial OfficerSlide 2 (Forward Looking Statement)This supplemental information contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding outlook for Q1 2014, outlook for 2014 fiscal year, production, product volumes shipped, product pricing and sales mix, pulp costs, wood fiber costs and supply, chemical costs, transportation costs, energy costs including natural gas, cost and timing of major maintenance and repairs, selling, general, and administrative expenses, corporate expenses, and our pro forma quarterly EBITDA run rate. These forward-looking statements are based on management’s current expectations, estimates, assumptions and projections that are subject to change. Our actual results of operations may differ materially from those expressed or implied by the forward-looking statements contained in this presentation. Important factors that could cause or contribute to such differences include the risks and uncertainties described from time to time in the company's public filings with the Securities and Exchange Commission, as well as the following: customer acceptance and timing of purchases of our new through-air-dried, or TAD, products and capacity; competitive pricing pressures for our products, including as a result of increased capacity as additional manufacturing facilities are operated by our competitors; difficulties with the optimization and realization of the benefits expected from our new TAD paper machine and converting lines in Shelby, North Carolina; the loss of business from a significant customer; manufacturing or operating disruptions, including equipment malfunction and damage to our manufacturing facilities caused by fire or weather-related events and IT system failures; changes in the cost and availability of wood fiber and wood pulp; changes in transportation costs and disruptions in transportation services; labor disruptions; changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs; changes in customer product preferences and competitors' product offerings; changes in expenses and required contributions associated with our pension plans; environmental liabilities or expenditures; changes in the U.S. and international economies and in general economic conditions in the regions and industries in which we operate; increased supply and pricing pressures resulting from increasing Asian paper production capabilities; cyclical industry conditions; reliance on a limited number of third-party suppliers for raw materials; inability to successfully implement our expansion strategies; inability to fund our debt obligations; restrictions on our business from debt covenants and terms; changes in laws, regulations or industry standards affecting our business; and our qualification to retain, or ability to utilize, tax credits associated with alternative fuels or cellulosic biofuels and the tax treatment associated with receipt of such credits. Forward-looking statements contained in this presentation present management’s views only as of the date of this presentation. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. Forward-Looking StatementsSlide 3 (2013 Highlights)2013 Highlights Annual Adjusted EBITDA1 of $200 million – 10.6% of net sales –Fourth quarter Adjusted EBITDA1 of $65 million (2nd highest in our history) and 13.9 % Adjusted EBITDA margin Diluted adjusted net earnings per common share1 of $1.96 Completed $100 million share buyback Refinanced 10 5/8% debt with 4 1/2% debt Consumer Products –Record retail case shipments –Closure of Thomaston site and relocation of converting assets ahead of plan –Shelby paper machine production at expected run rates at year end –TAD bath shipments were approximately 80% of expected full run rate in December Pulp and Paperboard –Record paperboard production and shipments –Strong paperboard market conditions in 2013 led to strong backlogs continuing into 2014 –Fourth quarter record Segment Adjusted EBITDA margin1,2 at 23% 2 1 Non-GAAP measure – See definition and reconciliation to GAAP. Segment Adjusted EBITDA margin is defined as Segment Adjusted EBITDA divided by Segment net sales.Slide 4 (Financial Summary)Financial Summary (Unaudited) 1 Non-GAAP measure – See definition and reconciliation to GAAP. 2 Adjusted gross profit margin is defined as Adjusted gross profit divided by Net sales. 3 Adjusted EBITDA margin is defined as Adjusted EBITDA divided by Net sales. Q1'12Q2'12Q3'12Q4'12Q1'13Q2'13Q3'13Q4'13201120122013Net sales$ 457,798$ 473,572$ 480,233$ 462,701$ 460,824$ 471,002$ 487,845$ 470,159$ 1,927,973$ 1,874,304$ 1,889,830Adjusted gross profit1$ 54,722$ 76,040$ 70,411$ 66,273$ 46,798$ 57,494$ 48,325$ 71,819$ 240,848$ 267,446$ 224,436Adjusted gross profit margin 1,212.0%16.1%14.7%14.3%10.2%12.2%9.9%15.3%12.5%14.3%11.9%Adjusted selling, general and administrative expense1($28,501)($29,249)($28,848)($31,059)($30,660)($27,908)($27,405)($29,074)($121,044)($117,657)($115,047)Adjusted operating income (loss)1$ 26,221$ 46,791$ 41,563$ 35,214$ 16,138$ 29,586$ 20,920$ 42,745$ 119,804$ 149,789$ 109,389Consumer Products26,27126,71018,45322,92710,30715,82815,16217,47942,80694,36158,776Pulp and Paperboard11,65832,00134,44925,80217,55324,77216,28937,167108,232103,91095,781Corporate (11,708)(11,920)(11,339)(13,515)(11,722)(11,014)(10,531)(11,901)(31,234)(48,482)(45,168)Interest expense, net($9,728)($9,147)($7,900)($7,021)($10,982)($11,094)($10,708)($11,252)($44,809)($33,796)($44,036)Other, net- - - - - - - - $284- - Adjusted income tax provision1($6,693)($14,670)($12,573)($8,800)($2,713)($6,913)($3,776)($8,370)($30,462)($42,736)($21,772)Adjusted net earnings1$ 9,800$ 22,974$ 21,090$ 19,393$ 2,443$ 11,579$ 6,436$ 23,123$ 44,817$ 73,257$ 43,581Depreciation and amortization expense19,54819,73019,19920,85622,15123,25322,18022,68876,93379,33390,272Adjusted EBITDA1$ 45,769$ 66,521$ 60,762$ 56,070$ 38,289$ 52,839$ 43,100$ 65,433$ 196,848$ 229,122$ 199,661Consumer Products39,43639,96231,72837,78226,39932,85831,16433,55293,308148,908123,973Pulp and Paperboard17,66938,01239,97431,36823,21230,55022,04743,238134,305127,023119,047Corporate(11,336)(11,453)(10,940)(13,080)(11,322)(10,569)(10,111)(11,357)(30,765)(46,809)(43,359)Adjusted EBITDA margin1,310.0%14.0%12.7%12.1%8.3%11.2%8.8%13.9%10.2%12.2%10.6%Diluted adjusted net earnings per common share1$ 0.42$ 0.97$ 0.89$ 0.82$ 0.11$ 0.51$ 0.29$ 1.09$ 1.87$ 3.10$ 1.96Debt to rolling four quarter total Adjusted EBITDA12.6 2.4 2.3 2.3 2.9 3.1 3.4 3.3 2.7 2.3 3.3 (Dollars in thousands - except per-share amounts)Twelve Months Ended December 31,Slide 5 (2013 vs. 2012 Consolidated Adjusted EBITDA1 Bridge 1)$150,000 $170,000 $190,000 $210,000 $230,000 $250,000 $270,000Adj. EBITDA1(000's)2013 vs. 2012 Consolidated Adjusted EBITDA1 Bridge 1 Non-GAAP measure – See definition and reconciliation to GAAP. Price/Mix Higher paperboard pricing Volume Higher paperboard shipments partially offset by lower non-retail and conventional retail tissue shipments TAD Expansion EBITDA contribution from TAD Expansion Wood Fiber Lower wood pricing External Pulp Higher hardwood and softwood pulp pricing CPD Transition Costs Higher external paper purchases TAD bathroom tissue converting operations below expectations Higher transportation costs due to sales by region Chemicals Significantly higher pricing on most petroleum-based chemicals Packaging Supplies Higher pricing on corrugated boxes and poly wrap Energy Increases in natural gas pricing and electric rates Maintenance Lower CPD maintenance expense offset by higher Arkansas outage costs Arkansas Q2’13 Disruptions Recovery boiler issues and unplanned electrical outage Wages & Benefits Wage increases and higher benefits costs SG&A Lower profit-dependent accruals $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000 $70,000 $75,000 $80,000Adj. EBITDA1(000's)5 Q4’13 vs. Q3’13 Consolidated Adjusted EBITDA1 Bridge Price/Mix Primarily due to lower non-retail tissue pricing and mix Volume Seasonally lower paperboard and tissue shipments TAD Expansion Incremental EBITDA contribution from TAD Expansion Wood Fiber Slightly lower wood pricing External Pulp Lower pulp pricing, primarily in hardwood CPD Transition Costs Improved converting and paper machine efficiencies and reduced internal transportation costs CPD Cost Savings Realized targeted operating efficiencies and savings Chemicals Lower pricing for chemicals, slightly offset by higher polyethylene pricing Maintenance Outage Idaho outage in Q3-none in Q4 SG&A Higher IT spending related to our ERP upgrade 1 Non-GAAP measure – See definition and reconciliation to GAAP.Slide 6 (Q4’13 vs. Q4’12 Consolidated Adjusted EBITDA1 Bridge)$30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000 $70,000 $75,000 $80,000Adj. EBITDA1(000's)Q4’13 vs. Q4’12 Consolidated Adjusted EBITDA1 Bridge 1 Non-GAAP measure – See definition and reconciliation to GAAP. Price/Mix Increased paperboard pricing Volume Lower paperboard, conventional retail and non-retail tissue shipment tons TAD Expansion EBITDA contribution from TAD Expansion Wood Fiber Lower wood pricing External Pulp Higher pulp pricing for hardwood and softwood Chemicals Pricing increases for polyethylene and chemicals Packaging Supplies Higher pricing on corrugated boxes Energy Increases in natural gas pricing and electric rates higher Maintenance Less scheduled maintenance in 2013 Wages and Benefits Increased wages and higher benefits costs Purchased Paper Decreased purchases due to fewer regional demand issues Transportation Lower internal costs as regional demands met closer to customer External Converting Reduced need to meet regional demand challenges SG&A Lower executive retirement expenses and profit-dependent accruals Slide 7Key Segment Results – Consumer Products (Unaudited) 7 1 Includes away-from-home (AFH), contract, machine-glazed (MG) and parent roll tissue products. 2 Includes retail, AFH, contract and MG tissue case products. 3 Non-GAAP measure – See definition and reconciliation to GAAP. 4 Segment Adjusted EBITDA margin is defined as Segment Adjusted EBITDA divided by Segment net sales. Q1'12Q2'12Q3'12Q4'12Q1'13Q2'13Q3'13Q4'1320122013 Shipments Non-Retail (short tons)153,343 60,481 64,731 59,100 55,235 57,012 61,222 57,774 237,655 231,243 Retail (short tons) 75,425 72,497 74,117 71,633 77,361 75,045 72,427 70,696 293,672 295,529 Total Tissue Tons128,768 132,978 138,848 130,733 132,596 132,057 133,649 128,470 531,327 526,772 Converted Products (cases in thousands)213,117 13,505 13,752 13,302 13,781 14,021 13,990 13,342 53,675 55,135 Sales PriceNon-Retail ($/short ton)1$ 1,470$ 1,486$ 1,450$ 1,448$ 1,432$ 1,475$ 1,504$ 1,467$ 1,466$ 1,470Retail ($/short ton) 2,645 2,665 2,687 2,723 2,661 2,740 2,773 2,792 2,674 2,740 Total Tissue$ 2,158$ 2,129$ 2,110$ 2,147$ 2,149$ 2,194$ 2,192$ 2,196$ 2,134$ 2,183Segment net sales ($ in thousands)$ 277,830$ 283,122$ 292,959$ 280,645$ 284,902$ 289,708$ 292,935$ 282,147$ 1,134,556$ 1,149,692Segment Adjusted EBITDA3 ($ in thousands)$ 39,436$ 39,962$ 31,728$ 37,782$ 26,399$ 32,858$ 31,164$ 33,552$ 148,908$ 123,973Segment Adjusted EBITDA margin3,414.2%14.1%10.8%13.5%9.3%11.3%10.6%11.9%13.1%10.8%Twelve Months Ended December 31,Slide 8Retail 54% MG 14% AFH 6% Parent Rolls 22% Other 4% CLW Q3’13 By Segment (% of Tons) Clearwater Paper Tissue Shipments and U.S. Retail Tissue Market Retail 55% MG 15% AFH 6% Parent Rolls 23% Other 1% CLW Q4’13 By Segment (% of Tons) U.S. Retail Tissue Market Category Private Label Brands Total Total Retail Tissue Share (Equivalent Cases) 27% 73% 100% % Change 2013 vs. 2012 8.7% 2.8% 4.3% Data Source: IRI Worldwide US Multi-outlet for Total Retail - 52 Weeks Ending 1/5/14. 8Slide 9Current Quarter vs Prior Quarter $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000Adj. EBITDA1(000's)9 Q4’13 vs. Q3’13 Consumer Products Adjusted EBITDA1 Bridge Price/Mix Primarily due to lower non-retail tissue pricing Volume Decreased conventional retail and non-retail shipment tons TAD Expansion Incremental EBITDA contribution from TAD Expansion External Pulp Lower pulp pricing, primarily in hardwood CPD Transition Costs Improved converting and paper machine efficiencies and reduced internal transportation costs Cost Savings Realized targeted operating efficiencies and savings 1 Non-GAAP measure – See definition and reconciliation to GAAP.Slide 10Key Segment Results – Pulp and Paperboard (Unaudited) 10 1 Non-GAAP measure – See definition and reconciliation to GAAP. 2 Segment Adjusted EBITDA margin is defined as Segment Adjusted EBITDA divided by Segment net sales. Q1'12Q2'12Q3'12Q4'12Q1'13Q2'13Q3'13Q4'1320122013 ShipmentsPaperboard (short tons)182,198 193,285 195,097 190,339 186,350 190,518 199,408 188,776 760,919 765,052 Sales PricePaperboard ($/short ton)$ 968$ 975$ 948$ 936$ 935$ 946$ 973$ 978$ 956$ 958Segment net sales ($ in thousands)$ 179,968$ 190,450$ 187,274$ 182,056$ 175,922$ 181,294$ 194,910$ 188,012$ 739,748$ 740,138Segment Adjusted EBITDA1 ($ in thousands)$ 17,669$ 38,012$ 39,974$ 31,368$ 23,212$ 30,550$ 22,047$ 43,238$ 127,023$ 119,047Segment Adjusted EBITDA margin1,210.0%20.2%21.6%17.6%13.3%17.0%11.3%23.0%17.5%16.2%Twelve Months EndedDecember 31,Slide 11Clearwater Paper Paperboard Shipments and U.S. Paperboard Market U.S. Paperboard Production Category Clearwater Paper Other Total Domestic SBS1 Market Share 14% 86% Folding 19% 81% Food Service2 14% 86% Liquid Packaging 6% 94% Data Source: American Forest and Paper Association Solid Bleached Domestic Production - Dec. YTD 2013. Folding 52% Food Service2 37% Liquid Pkg 11% CLW Q4’13 By Segment (% of Tons) Folding 59% Food Service2 30% Liquid Pkg 11% CLW Q3’13 By Segment (% of Tons) 1 Solid Bleached Sulfate. 2 Food Service includes Cup, Plate, Dish and Tray products. 11Slide 12Q4’13 vs. Q3’13 Pulp and Paperboard Adjusted EBITDA1 Bridge 1 Non-GAAP measure – See definition and reconciliation to GAAP. Price/Mix Full realization of prior quarter’s price increases Volume Seasonally lower shipment tons Wood Fiber Lower wood pricing Maintenance Outage Idaho outage in Q3-none in Q4 Chemicals Lower pricing for chemicals, slightly offset by higher polyethylene pricing 12 Current Quarter vs Prior Quarter $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000Adj. EBITDA1(000's)Slide 13Clearwater Paper Cross Cycle Financial Model 13 1 Includes Corporate Adjusted SG&A percentage of net sales of 2.5%. Net sales100%Gross profit % of net sales17.0%SG&A1 % of net sales6.0%Operating profit % of net sales11.0%Net income % of net sales5.0%EBITDA % of net sales15.0%Slide 14 2014 Outlook (Compared to 2013)1 Consumer Products Paperboard Corporate Production volumes Paper and converting production up Production up Shipment volumes Slightly higher retail cases, retail tons, and non-retail tons Volumes up Price/Mix Increased TAD bathroom tissue mix partially offset by conventional mix Slightly Higher with Announcements Pulp/Wood Fiber costs Lower external pulp costs Stable Chemical costs Stable Stable Transportation costs Slightly lower Stable Energy costs Slightly higher Slightly higher Maintenance & Repairs Stable Lower due to no maintenance outages ($20M) SG&A Slightly higher Stable $44-50M 1 This information is based upon management’s current expectations and estimates, which are in part based on market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actual results may differ materially from the information set forth above. See “Forward-Looking Statements” on page 1.Slide 15First Quarter 2014 Outlook (Compared to Q4’13)1 Consumer Products Paperboard Corporate Production volumes Paper production down (1-2%) and converting production up (1-3%) Production slightly up (1-2% higher) Shipment volumes Higher retail cases, retail tons, and non-retail tons (1-3% higher tons) Stable Price/Mix TAD bathroom tissue mix increase (0-1% higher) Slightly Higher with Announcements (0-1% higher) Pulp/Wood Fiber costs Slightly higher ($.5M-$1M higher) Slightly higher ($1.5M-$3M higher) Chemical costs Stable Stable Transportation costs Stable Stable Energy costs Slightly higher ($1M-$3M higher) Slightly higher ($1M-$3M higher) Maintenance & Repairs Slightly higher ($1M) Stable SG&A Slightly higher ($1M) Stable 2014 expected run rate of $11M-$13M 1 This information is based upon management’s current expectations and estimates, which are in part based on market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actual results may differ materially from the information set forth above. See “Forward-Looking Statements” on page 1. 15Slide 16$197 $40$14$17$16$12$240$40$200 $160 $180 $200 $220 $240 $260 $280 $300Adj. EBITDA1 (Millions)Path To $300M+ Adj. EBITDA1 (@2011 Pricing/Cost Structure) 2013 Status 16 1 Non-GAAP measure – See definition and reconciliation to GAAP. 2 In September 2012 we announced a $300 million adjusted EBITDA target for 2014, which was based on 2011 prices and input costs. This table shows percentage changes in certain price and input costs between 2011 and 2013. Price & Input Costs 2013 vs. 2011 % Change2 Paperboard Pricing/Mix 2.7% External Pulp 7.5% Wood Fiber 7.2% Natural Gas 6.3% Chemicals 8.0% Diesel Fuel 2.2% 2011 Adj. EBITDA1 2013 Adj. EBITDA1 2012/2013 Cost Savings Programs - Wood Products Sale - Idaho Chipping Acquisition - PM Projects - Chip Screening - Energy Projects 2013 vs. 2011 All Other Impacts - Arkansas Boiler Disruption - Higher Maintenance Outage Costs 2013 Adj. EBITDA1 @ 2011 Price & Cost StructureSlide 17$65 $5$5-$8$75-$78 $40 $45 $50 $55 $60 $65 $70 $75 $80Q4'13 Adj. EBITDATAD Expansion Shipments(incremental to Q4'13baseline TAD Tissue EBITDA of$7M)Cost Savings Programs Pro Forma QuarterlyRun Rate(Expected in Q3'14)Adj. EBITDA2 (Millions)21Bridge to Pro Forma $75 Million Quarterly Run Rate1 1 Assumes no change in prices or input costs from Q4’13. This information is based upon management’s current expectations and estimates, which are in part based on market and industry data. Many factors are outside the control of management, including particularly input costs for commodity products, and actual results may differ materially from the information set forth above. See Forward-Looking Statements” on page 1. 2 Non-GAAP measure – See definition and reconciliation to GAAP. 17 Thomaston closure $2-$3M Paper machine projects $1-$2M Arkansas recovery upgrade $1M No Outage in ’14. Go forward “straight-line” quarterly outage run rate $1-$2MSlide 18Adjusted Gross Profit & Adjusted SG&A Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 Gross profit defined as net sales minus cost of sales. 2 Adjusted gross profit and adjusted selling, general and administrative expenses excludes the impact of the items listed that we do not believe are indicative of our core operating performance. 18 (Dollars in thousands)Q1'12Q2'12Q3'12Q4'12Q1'13Q2'13Q3'13Q4'13201120122013Gross profit1$ 54,722$ 75,026$ 70,411$ 66,273$ 46,615$ 56,481$ 46,608$ 68,755$ 225,443$ 266,432$ 218,459 Lewiston, Idaho sawmill sale related adjustments- - - - - - - - 15,405 - - Costs associated with Thomaston facility closure- - - - 183 1,013 1,717 3,064 - - 5,977 Loss on sale of foam assets- 1,014 - - - - - - - 1,014 - Adjusted gross profit2$ 54,722$ 76,040$ 70,411$ 66,273$ 46,798$ 57,494$ 48,325$ 71,819$ 240,848$ 267,446$ 224,436Selling, general and administrative expenses($29,074)($30,529)($30,649)($30,793)($34,132)($26,767)($27,766)($30,466)($109,998)($121,045)($119,131) Lewiston, Idaho sawmill sale related adjustments- - - - - - - - (12,522) - - Expenses associated with Metso litigation990 958 - 71 - - - - - 2,019 - Directors' equity-based compensation (benefit) expense(417) 322 1,801 (337) 3,472 (1,141) 361 1,392 1,476 1,369 4,084 Adjusted selling, general and administrative expenses2($28,501)($29,249)($28,848)($31,059)($30,660)($27,908)($27,405)($29,074)($121,044)($117,657)($115,047)Twelve Months Ended December 31,Slide 19Segment Adjusted Operating Income (Loss) Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 Adjusted operating income (loss) excludes the impact of the items listed that we do not believe are indicative of our core operating performance. 19 (Dollars in thousands)Q1'12Q2'12Q3'12Q4'12Q1'13Q2'13Q3'13Q4'13201120122013Consumer Products Operating income$ 26,271$ 25,696$ 18,453$ 22,927$ 10,124$ 14,815$ 13,445$ 14,415$ 42,806$ 93,347$ 52,799 Costs associated with Thomaston facility closure- - - - 183 1,013 1,717 3,064 - - 5,977 Loss on sale of foam assets- 1,014 - - - - - - - 1,014 - Adjusted Consumer Products operating income1$ 26,271$ 26,710$ 18,453$ 22,927$ 10,307$ 15,828$ 15,162$ 17,479$ 42,806$ 94,361$ 58,776Pulp and Paperboard Operating Income$ 11,658$ 32,001$ 34,449$ 25,802$ 17,553$ 24,772$ 16,289$ 37,167$ 92,827$ 103,910$ 95,781 Lewiston, Idaho sawmill sale related adjustments- 1,014 - - - - - - 15,405 1,014 - Adjusted Pulp and Paperboard operating income1$ 11,658$ 32,001$ 34,449$ 25,802$ 17,553$ 24,772$ 16,289$ 37,167$ 108,232$ 103,910$ 95,781Corporate Operating loss($12,281)($13,200)($13,140)($13,249)($15,194)($9,873)($10,892)($13,293)($20,188)($51,870)($49,252) Lewiston, Idaho sawmill sale related adjustments- - - - - - - - (12,522) - - Expenses associated with Metso litigation990 958 - 71 - - - - - 2,019 - Directors' equity-based compensation (benefit) expense(417) 322 1,801 (337) 3,472 (1,141) 361 1,392 1,476 1,369 4,084 Adjusted Corporate operating loss1($11,708)($11,920)($11,339)($13,515)($11,722)($11,014)($10,531)($11,901)($31,234)($48,482)($45,168)Twelve Months Ended December 31,Slide 20Adjusted Net Earnings & Diluted Adjusted Earnings per common share Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 All non-tax items are tax effected at the expected annual rate for that period. 2 Adjusted net earnings and Diluted adjusted net earnings per common share exclude the impact of the items listed that we do not believe are indicative of our core operating performance. 20 (Dollars in thousands - except per-share amounts)Q1'12Q2'12Q3'12Q4'12Q1'13Q2'13Q3'13Q4'13201120122013 GAAP net earnings (loss)$ 3,726$ 21,489$ 19,064$ 19,852($882)$11,658$13,317$ 82,862$ 39,674$ 64,131$ 106,955 Special items, after tax:1 Lewiston, Idaho sawmill sale related adjustments- - - - - - - - 1,612 - - Loss on sale of foam assets- 658 - - - - - - - 658 - Expenses associated with Metso litigation647 622 - 41 - - - - - 1,310 - Debt retirement costs- - - - 10,781 - - - - - 10,781 Directors' equity-based compensation (benefit) expense(273) 209 1,018 (194) 2,194 (706) 221 976 825 760 2,685 Costs associated with Thomaston facility closure- - - - 116 627 1,052 2,149 - - 3,944 Discrete tax items related to release of uncertain tax positions- - - - - - (4,659) (62,798) 2,610 - (67,457) Discrete tax items related to credit conversions5,700 (4) 1,008 (306) (9,766) - - (66) 96 6,398 (9,832) Discrete tax items related to additional CBPC- - - - - - (3,495) - - - (3,495) Adjusted net earnings2$ 9,800$ 22,974$ 21,090$ 19,393$ 2,443$ 11,579$ 6,436$ 23,123$ 44,817$ 73,257$ 43,581Diluted net earnings (loss) per common share$ 0.16$ 0.91$ 0.80$ 0.84($0.04)$0.52$0.60$ 3.87$ 1.66$ 2.72$ 4.80 Special items, after tax:1 Lewiston, Idaho sawmill sale related adjustments- - - - - - - - 0.07 - - Loss on sale of foam assets- 0.03 - - - - - - - 0.03 - Expenses associated with Metso litigation0.03 0.03 - - - - - - - 0.05 - Debt retirement costs- - - - 0.47 - - - - - 0.48 Directors' equity-based compensation (benefit) expense(0.01) 0.01 0.04 (0.01) 0.10 (0.03) 0.01 0.05 0.03 0.03 0.12 Costs associated with Thomaston facility closure- - - - 0.01 0.03 0.05 0.10 - - 0.18 Discrete tax items related to release of uncertain tax positions- - - - - - (0.21) (2.93) 0.11 - (3.03) Discrete tax items related to credit conversions0.24 - 0.04 (0.01) (0.43) - - - - 0.27 (0.44) Discrete tax items related to additional CBPC- - - - - - (0.16) - - - (0.16) Diluted adjusted net earnings per common share2$ 0.42$ 0.97$ 0.89$ 0.82$ 0.11$ 0.51$ 0.29$ 1.09$ 1.87$ 3.101.96 Twelve Months Ended December 31,Slide 21Adjusted Income Tax Provision Reconciliation of Non-GAAP Financial Measure (Unaudited) 1 Adjusted income tax provision excludes the impact of the items listed that we do not believe are indicative of our core operating performance. 21 (Dollars in thousands)Q1'12Q2'12Q3'12Q4'12Q1'13Q2'13Q3'13Q4'13201120122013 GAAP income tax (provision) benefit($12,194)($13,861)($12,798)($8,607)$14,675($6,962)$5,183$ 55,825($31,246)($47,460)$68,721 Special items, tax impact: Lewiston, Idaho sawmill sale related adjustments- - - - - - - - (1,271) - - Loss on sale of foam assets- (356) - - - - - - - (356) - Expenses associated with Metso litigation(343) (336) - (30) - - - - - (709) - Debt retirement costs- - - - (6,277) - - - - - (6,277) Directors' equity-based compensation benefit (expense)144 (113) (783) 143 (1,278) 435 (140) (416) (651) (609) (1,399) Costs associated with Thomaston facility closure- - - - (67) (386) (665) (915) - - (2,033) Discrete tax items related to release of uncertain tax positions- - - - - - (4,659) (62,798) 2,610 - (67,457) Discrete tax items related to credit conversions5,700 (4) 1,008 (306) (9,766) - - (66) 96 6,398 (9,832) Discrete tax items related to additional CBPC- - - - - - (3,495) - - - (3,495) Adjusted income tax provision1($6,693)($14,670)($12,573)($8,800)($2,713)($6,913)($3,776)(8,370)$ ($30,462)($42,736)($21,772)Twelve Months Ended December 31,Slide 22EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 EBITDA is a non-GAAP measure that management uses as supplemental performance measures. The most directly comparable GAAP measure is net earnings. EBITDA is net earnings adjusted for net interest expense (including debt retirement costs), income taxes, and depreciation and amortization. It should not be considered as an alternative to net earnings computed under GAAP. 2 Interest expense, net for first quarter 2013 includes debt retirement costs of $17.1 million. 3 Adjusted EBITDA excludes the impact of the items listed that we do not believe are indicative of our core operating performance. 22 (Dollars in thousands)Q1'12Q2'12Q3'12Q4'12Q1'13Q2'13Q3'13Q4'13201120122013 Earnings before interest, income taxes, and depreciation & amortization (EBITDA)1 GAAP net earnings (loss)$ 3,726$ 21,489$ 19,064$ 19,852($882)$ 11,658$ 13,317$ 82,862$ 39,674$ 64,131$ 106,955 Interest expense, net29,7289,1477,9007,02128,04011,09410,70811,25244,80933,79661,094 Income tax provision (benefit)12,19413,86112,7988,607(14,675)6,962(5,183)(55,825)31,24647,460(68,721) Depreciation and amortization expense19,54819,73019,19920,85622,15123,25322,18022,68876,93379,33390,272 EBITDA1$ 45,196$ 64,227$ 58,961$ 56,336$ 34,634$ 52,967$ 41,022$ 60,977$ 192,662$ 224,720$ 189,600 Lewiston, Idaho sawmill sale related adjustments- - - - - - - - 2,883 - - Loss on sale of foam assets- 1,014 - - - - - - - 1,014 - Expenses associated with Metso litigation990 958 - 71 - - - - - 2,019 - Directors' equity-based compensation (benefit) expense(417) 322 1,801 (337) 3,472 (1,141) 361 1,392 1,476 1,369 4,084 Costs associated with Thomaston facility closure- - - - 183 1,013 1,717 3,064 - - 5,977 Adjusted EBITDA3$ 45,769$ 66,521$ 60,762$ 56,070$ 38,289$ 52,839$ 43,100$ 65,433$ 197,021$ 229,122$ 199,661Twelve Months Ended December 31,Slide 23Segment EBITDA & Adjusted EBITDA Reconciliation of Non-GAAP Financial Measures (Unaudited) 1 Segment EBITDA is a non-GAAP measure that management uses as supplemental performance measures. The most directly comparable GAAP measure is segment operating income. Segment EBITDA is segment operating income adjusted for depreciation and amortization. It should not be considered as an alternative to segment operating income computed under GAAP. 2 Segment Adjusted EBITDA excludes the impact of the items listed that we do not believe are indicative of our core operating performance. 23 (Dollars in thousands)Q1'12Q2'12Q3'12Q4'12Q1'13Q2'13Q3'13Q4'13201120122013Consumer Products Operating income$ 26,271$ 25,696$ 18,453$ 22,927$ 10,124$ 14,815$ 13,445$ 14,415$ 42,806$ 93,347$ 52,799 Other, net- - - - - - - - 111 - - Depreciation and amortization expense13,165 13,252 13,275 14,855 16,092 17,030 16,002 16,073 50,391 54,547 65,197 Segment EBITDA1$ 39,436$ 38,948$ 31,728$ 37,782$ 26,216$ 31,845$ 29,447$ 30,488$ 93,308$ 147,894$ 117,996 Loss on sale of foam assets- 1,014 - - - - - - - 1,014 - Costs associated with Thomaston facility closure- - - - 183 1,013 1,717 3,064 - - 5,977 Segment Adjusted EBITDA2$ 39,436$ 39,962$ 31,728$ 37,782$ 26,399$ 32,858$ 31,164$ 33,552$ 93,308$ 148,908$ 123,973Pulp and Paperboard Operating income$ 11,658$ 32,001$ 34,449$ 25,802$ 17,553$ 24,772$ 16,289$ 37,167$ 92,827$ 103,910$ 95,781 Depreciation and amortization expense6,011 6,011 5,525 5,566 5,659 5,778 5,758 6,071 26,073 23,113 23,266 Segment EBITDA1$ 17,669$ 38,012$ 39,974$ 31,368$ 23,212$ 30,550$ 22,047$ 43,238$ 118,900$ 127,023$ 119,047 Lewiston, Idaho sawmill sale related adjustments- - - - - - - - 15,405 - - Segment Adjusted EBITDA2$ 17,669$ 38,012$ 39,974$ 31,368$ 23,212$ 30,550$ 22,047$ 43,238$ 134,305$ 127,023$ 119,047Corporate Operating loss($12,281)($13,200)($13,140)($13,249)($15,194)($9,873)($10,892)($13,293)($20,188)($51,870)($49,252) Depreciation and amortization expense372 467 399 435 400 445 420 544 469 1,673 1,809 Segment EBITDA1($11,909)($12,733)($12,741)($12,814)($14,794)($9,428)($10,472)($12,749)($19,719)($50,197)($47,443) Lewiston, Idaho sawmill sale related adjustments- - - - - - - - (12,522) - - Expenses associated with Metso litigation990 958 - 71 - - - - - 2,019 - Directors' equity-based compensation (benefit) expense(417) 322 1,801 (337) 3,472 (1,141) 361 1,392 1,476 1,369 4,084 Segment Adjusted EBITDA2($11,336)($11,453)($10,940)($13,080)($11,322)($10,569)($10,111)($11,357)($30,765)($46,809)($43,359)Twelve Months Ended December 31,Slide 24For more information: www.clearwaterpaper.com 24
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