Clearwater Paper Reports Third Quarter 2018 Results

The company reported net sales of $426.5 million for the third quarter of 2018, which was flat with net sales for the third quarter of 2017. Net earnings determined in accordance with generally accepted accounting principles, or GAAP, for the third quarter of 2018 were $34.4 million, or $2.08 per diluted share, compared to net earnings for the third quarter of 2017 of $0.9 million, or $0.05 per diluted share. The increase in net earnings was due primarily to a $22.9 million gain on the sale of the company’s Ladysmith, Wisconsin manufacturing facility along with higher pricing and record shipment volumes in paperboard, improved operating efficiencies and lower selling, general and administrative expenses. Excluding certain non-core items identified in the attached Reconciliation of Non-GAAP Financial Measures, third quarter 2018 adjusted net earnings were $22.3 million, or $1.35 per diluted share, compared to third quarter 2017 adjusted net earnings of $5.3 million, or $0.32 per diluted share.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, were $71.0 million for the third quarter of 2018, compared to $31.3 million for the third quarter of 2017. Adjusted EBITDA for the quarter was $48.9 million, up 29.9% compared to third quarter 2017 Adjusted EBITDA of $37.6 million.

“We exceeded our expectations for the third quarter due to record paperboard shipments and strong customer demand for paperboard,” said Linda K. Massman, president and chief executive officer. “We are also seeing positive results from the operating model improvements for our tissue business, resulting in lower transportation and warehousing costs.”

“For the remainder of 2018, we are in the home stretch to complete our new paper machine, converting lines, and warehouse at our Shelby, North Carolina facility. We are also keenly focused on generating cash to pay down debt and optimizing our network of tissue assets to streamline costs and better meet the needs of our customers.”

Consumer Products
Net sales in the Consumer Products segment were $211.6 million for the third quarter of 2018, down 9.1% compared to third quarter 2017 net sales of $232.9 million. This decrease was due to lower retail volumes and prices, the divestiture of the Ladysmith facility, and weaker product mix as reflected in a 7.4% reduction in retail converted case shipment volumes, partially offset by a 43.0% increase in non-retail parent roll shipments as the company works to replace lost converted case business in the second half of 2018.

Operating income and margin for the third quarter of 2018 were $21.7 million and 10.2%, an increase of $17.2 million compared to operating income and margin of $4.5 million and 1.9% respectively, in the third quarter of 2017, that was primarily due to the gain on sale of the Ladysmith facility. After adjusting for certain non-core items identified in the attached Reconciliation of Non-GAAP Financial Measures, including the gain on the sale of Ladysmith, an adjusted operating loss of $1.0 million for the third quarter of 2018 was down from $10.3 million and 4.4% of adjusted operating income and margin, respectively, for the same period in 2017. Adjusted EBITDA for the segment was $13.4 million in the third quarter of 2018, down from $26.0 million in the third quarter of 2017. Those decreases were primarily due to lower average selling prices, the absorption of fixed costs over lower volumes of retail shipments, higher pulp costs and the divestiture of Ladysmith.

Tissue Sales Volumes and Prices:
• Total tissue volumes sold were 88,860 tons in the third quarter of 2018, a decrease of 1.8% compared to 90,502 tons in the third quarter of 2017. Converted product cases shipped were 11.8 million in the third quarter of 2018, 7.4% lower than the 12.7 million cases shipped in the third quarter of 2017.
• Average tissue net selling prices decreased 7.5%, to $2,381 per ton in the third quarter of 2018, compared to $2,574 per ton in the third quarter of 2017, primarily due to the increased volume and percentage of non-retail parent rolls in the product mix.

Pulp and Paperboard
Net sales in the Pulp and Paperboard segment were $214.8 million for the third quarter of 2018, up 11.0% compared to third quarter 2017 net sales of $193.6 million. The increase was due to record shipment volumes and higher paperboard prices.

Operating income and margin for the third quarter of 2018 were $38.3 million and 17.8%, compared to $14.7 million and 7.6%, respectively, for the third quarter of 2017. Adjusted EBITDA for the segment was $47.7 million in the third quarter of 2018, compared to $23.1 million in the third quarter of 2017. The improvement was primarily due to higher average selling prices and the absence of $21 million in major maintenance expense incurred in the third quarter of 2017, which more than offset increased costs for wood fiber in the Pacific Northwest and higher transportation costs.

Paperboard Sales Volumes and Prices:
• Paperboard sales volumes were 218,135 tons in the third quarter of 2018, an increase of 8.8% compared to 200,569 tons in the third quarter of 2017.
• Paperboard net selling prices increased 2.1% to $985 per ton for the third quarter of 2018, compared to $965 per ton in the third quarter of 2017.
more detail at: http://ir.clearwaterpaper.com/news-releases/news-release-details/clearwater-paper-reports-third-quarter-2018-results

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