American Forest & Paper Association President and CEO Donna Harman issued the following statement regarding a trilateral trade agreement between the United States, Mexico and Canada: “AF&PA supports a modernized trade agreement between the United States, Mexico and Canada and is encouraged that negotiations have produced a positive result. We are one of the largest manufacturing sectors in America where $9.6 billion (45 percent) of our pulp and paper products are exported to our neighbors on our northern and southern borders supporting 52,000 direct and many more indirect American jobs. While we are disappointed that investor-state dispute settlement was not retained in its entirety for all manufacturers, we will be reviewing the accord’s details to ensure that the agreement preserves and improves the market access that has benefitted our industry and its workers. We look forward to working with Congress in the coming weeks.”
Clearwater Paper Corporation (NYSE: CLW), a premier supplier of quality tissue and bleached paperboard products, today announced a preliminary update to the company’s previous outlook for second quarter 2020 Adjusted EBITDA of $45 to $55 million.
Due to demand, production, and cost trends in April and May that were more favorable than previously anticipated, the company now expects Adjusted EBITDA for the second quarter of 2020 to be in the range of $71 to $77 million. A reconciliation of the updated Adjusted EBITDA outlook range to expected net income for the second quarter of 2020 is included in the table at the end of this press release.
In addition, in connection with its fourth quarter of 2019 earnings call, the company provided its outlook expectations for certain revenue and cost components for the full year of 2020. Due to anticipated performance in the second quarter of 2020, the company now believes that it will, in the aggregate, outperform the previous full-year expectations. The company will provide greater details regarding its performance and results for the second quarter of 2020 on its upcoming earnings call on August 4, 2020.
“We 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 S. Kitch, president and chief executive officer. “Through April and May, we continued to see strong tissue demand with shipments up nearly 30% versus 2019 averages. While order pace is starting to normalize in June, we anticipate that our production in the second quarter will exceed expectations and match increased demand, which would drive an improvement in overall cost structure. In addition, our paperboard business is expected to remain stable in the second quarter, with strength in our core market segments offsetting recessionary impacts,” Kitch concluded.
The company is on track with ramping tissue production at its Shelby, North Carolina expansion, with the paper machine approaching its full run-rate targets. While the company expects to continue to explore the optimization of its pulp assets at the Lewiston, Idaho plant, it now believes that the pulp optimization project will not produce future incremental financial benefits as previously anticipated.
The company intends to continue using free cash flows to pay down debt, either through optional repayments or open market repurchases, including the company’s bank debt, senior notes maturing in 2023 and 2025, or both.