Clearwater Paper Corporation (NYSE:CLW) today reported
financial results for the fourth quarter and full year of 2011.
The company reported net earnings of $11.5 million, or $0.48 per
diluted share, for the fourth quarter of 2011, compared to net
earnings of $37.8 million, or $1.60 per diluted share, for the
fourth quarter of 2010. Excluding $1.8 million in after-tax charges
related to the sale of our Lewiston, Idaho sawmill on November 28,
2011, fourth quarter 2011 net earnings were $13.3 million, or $0.55
per diluted common share. Fourth quarter 2010 results included
$10.5 million in after-tax costs related to the Cellu Tissue
acquisition and a $27.1 million benefit from a Cellulosic Biofuel
Producer Credit. Excluding these items, fourth quarter 2010 net
earnings would have been $21.2 million, or $0.90 per diluted common
share.
Fourth quarter 2011 earnings before interest, taxes,
depreciation and amortization, or EBITDA, was $52.2 million,
compared to $34.6 million in the fourth quarter of 2010. Fourth
quarter 2011 Adjusted EBITDA, which excludes $2.9 million in
pre-tax adjustments associated with the sale of the sawmill, was
$55.1 million. Fourth quarter 2010 Adjusted EBITDA, which excludes
$17.2 million in pre-tax Cellu Tissue acquisition related expenses,
was $51.9 million.
"We reported record net sales of nearly $2 billion in 2011 and
remain excited about our growing tissue business,” said Gordon
Jones, chairman and chief executive officer. “Our new tissue
machine and additional converting lines at Shelby, North Carolina
are on budget and scheduled for start-up in December 2012.”
As part of the company's previously announced share buyback
program, during the fourth quarter the company repurchased 41,700
shares of outstanding common stock at an average price of $32.30
per share. Since announcing the $30 million share buyback
authorization on July 28, 2011, the company has repurchased 333,300
shares at a total cost of $11.3 million.
FOURTH QUARTER 2011 SEGMENT PERFORMANCE
Consumer Products
Net sales in the Consumer Products segment were $268.5 million
for the fourth quarter of 2011, as compared to fourth quarter 2010
net sales of $142.9 million. The increase in net sales was
predominately attributable to the inclusion of Cellu Tissue's
operating results for the full fourth quarter 2011 compared to
inclusion of only four days of operating results in fourth quarter
2010. Operating income for the fourth quarter of 2011 was $15.0
million, compared with operating income of $11.3 million for the
fourth quarter of 2010. Excluding $6.3 million in pre-tax Cellu
Tissue acquisition related costs, fourth quarter 2010 operating
income would have been $17.6 million.
- Tissue volume increased to 123,046 tons
in the fourth quarter of 2011, as compared to 55,626 tons in the
fourth quarter of 2010, with the increase predominantly
attributable to the addition of Cellu Tissue volumes. Including
Cellu Tissue in our fourth quarter 2010 results would have resulted
in pro forma volume of 132,673 tons. The decrease in fourth quarter
2011 tons versus 2010 pro forma tons sold by the combined business
was due to softness in our contract manufacturing and machine
glazed tissue markets. We also converted more parent rolls into
finished cases in 2011, which results in a yield loss associated
with the process of manufacturing converted cases, and curtailed
parent roll sales to build retail inventory to support customer
service needs.
- Net selling prices decreased to $2,182
per ton in the fourth quarter of 2011 as compared to $2,567 per ton
in the fourth quarter of 2010, due predominantly to the inclusion
of Cellu Tissue products in the total product mix for the 2011
period. The former Cellu Tissue operations have a broader range of
products and tissue grades than the legacy Clearwater Paper
facilities. On a pro forma basis, net selling prices increased 6.3%
versus fourth quarter 2010. This selling price improvement is the
result of a previously discussed price increase, the vast majority
of which was implemented in the fourth quarter of 2011, and a
direct result of our efforts to improve product mix.
- Operating income in the fourth quarter
of 2011 when compared to 2010 was negatively impacted by higher
pulp, transportation, packaging and energy costs with the increase
predominantly attributable to the addition of Cellu Tissue.
- The first two lines at our Shelby
facilities contributed modest operating income in the fourth
quarter of 2011. We expect these two lines to contribute
approximately $8 million of operating income in 2012, which
includes approximately $2 million of depreciation.
- We estimate that the net cost savings
from synergies from the Cellu Tissue acquisition were approximately
$2.4 million in the fourth quarter of 2011. We anticipate achieving
between $15 and $20 million of cost savings from synergies in 2012
and expect the annual run rate cost savings from synergies to be in
the range of $35 to $40 million by the end of 2012.
Pulp and Paperboard
Net sales of $197.9 million for the fourth quarter of 2011 were
down 2.3%, compared to fourth quarter 2010 net sales of $202.6
million. Operating income for the quarter declined to $16.5
million, compared to $29.1 million for the fourth quarter of 2010.
Excluding $15.4 million in sawmill sale and related costs,
operating income would have been $31.9 million for the fourth
quarter of 2011. The company also made offsetting adjustments to
LIFO inventory reserves in connection with the sawmill sale, which
were accounted for at the corporate rather than the segment
level.
- Paperboard net sales were higher for
the quarter, driven by a 2.4% increase in paperboard pricing to
$970 per ton and a 4.8% increase in paperboard volumes to 185,487
tons, compared to the fourth quarter of 2010.
- Partially offsetting higher paperboard
net sales were reduced pulp sales due to increased transfers of
pulp to the Consumer Products segment for internal utilization.
External pulp sales decreased from 17,387 tons in the fourth
quarter of 2010 to 2,360 tons in the fourth quarter of 2011. Net
sales were also lower due to the sale of the sawmill in the fourth
quarter of 2011.
- The increase in operating income,
excluding the sawmill sale, was driven by higher paperboard sales,
partially offset by higher input costs for chemicals and wood fiber
in the fourth quarter of 2011 as compared to the same period of
2010.
Taxes
The effective tax rate for the fourth quarter of 2011, excluding
discrete items, was approximately 35.6%, compared to 35.8% in the
fourth quarter of 2010. The actual income tax rate for the fourth
quarter of 2011 was 47.8%, compared to a benefit of 213.1% in the
fourth quarter of 2010. Our 2010 effective rate included the
benefits from the Cellulosic Biofuel Producer Credit.
Note Regarding Use of Non-GAAP Financial
Measures
In this news release, the company presents its results for the
fourth quarter and full year of 2011 and 2010, including EBITDA and
Adjusted EBITDA. The EBITDA and Adjusted EBITDA amounts are not in
accordance with generally accepted accounting principles (GAAP) and
accordingly a reconciliation to net earnings determined in
accordance with GAAP is included at the end of this news
release.
CONFERENCE CALL INFORMATION
A live audio webcast and conference call will be held today,
Wednesday, February 22, 2012 at 2:00 p.m. Pacific time (5:00 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 after 1:00 p.m.
Pacific time (4:00 p.m. Eastern time). The webcast will be audio
only. Investors are recommended to 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 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 15 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 news release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 as amended, including statements regarding the expected
growth of the company’s tissue business, the expected contribution
of the first two converting lines at the company’s Shelby
facilities to the company’s financial results, the expected
delivery and budgeted cost relating to the company’s new tissue
machine and converting lines in Shelby, North Carolina, and
expected future cost savings from synergies relating to the
company’s Cellu Tissue acquisition. 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, difficulties with the completion
of the company’s new tissue manufacturing and converting
facilities, including the completion of the company’s new
through-air-dried paper machine; difficulties with the integration
process or the realization of the benefits expected from the
company's acquisition of Cellu Tissue; changes in raw material and
energy costs, including changes in the cost and availability of
wood fiber and wood pulp; changes in transportation costs and
disruptions in transportation services; the loss of large
customers; customers' product preferences; changes in the United
States and international economies; cyclical industry conditions;
competitive pricing pressure for the company's products; reliance
on a limited number of third-party suppliers of raw materials; an
inability to successfully implement our expansion strategies; labor
disruptions; unanticipated manufacturing disruptions; changes in
general and industry-specific laws and regulations; unforeseen
environmental liabilities or expenditures; 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 news
release and the company does not undertake to update any
forward-looking statements.
For additional information on Clearwater
Paper, please visit our website at
www.clearwaterpaper.com.
Clearwater Paper Corporation Consolidated Statements of Operations
Unaudited (Dollars in thousands - except per-share amounts)
Three Months Ended Twelve Months Ended December 31, December
31, 2011
2010 2011
2010 Net sales $ 466,391
100 % $ 345,557 100 % $
1,927,973 100 % $ 1,372,965 100
% Costs and expenses: Cost of sales (405,325 ) 87 % (281,883 ) 82 %
(1,702,530 ) 88 % (1,173,804 ) 85 % Selling, general and
administrative expenses (28,343 ) 6 %
(41,270 ) 12 % (109,998 ) 6 %
(100,394 ) 7 % Total operating costs and expenses
(433,668 ) 93 % (323,153 )
94 % (1,812,528 ) 94 %
(1,274,198 ) 93 % Income from operations 32,723 7 % 22,404 6
% 115,445 6 % 98,767 7 % Interest expense, net (10,384 ) 2 %
(10,335 ) 3 % (44,809 ) 2 % (22,571 ) 2 % Other, net
(301 ) - - -
284 - - -
Earnings before income taxes 22,038 5 % 12,069 3 % 70,920 4
% 76,196 6 % Income tax (provision) benefit (10,536 )
2 % 25,717 (7 %) (31,246
) 2 % (2,396 )
-
Net earnings $ 11,502 2 % $ 37,786
11 % $ 39,674 2 % $ 73,800
5 % Net earnings per common share: Basic $ 0.51 $
1.65 $ 1.73 $ 3.22 Diluted 0.48 1.60 1.66 3.12 Average shares
outstanding (in thousands): Basic 22,728 22,958 22,914 22,947
Diluted 23,782
23,693 23,952
23,670 All common share
and per share amounts have been adjusted for the two-for-one stock
split effected in the form of a stock dividend distributed on
August 26, 2011. Clearwater Paper Corporation Consolidated Balance
Sheets Unaudited (Dollars in thousands)
December 31, December 31,
2011
2010 ASSETS Current assets: Cash $ 8,439 $ 18,928
Restricted cash 769 3,637 Short-term investments 55,001 126,095
Receivables, net 176,189 153,335 Taxes receivable 10,000 10,354
Inventories 244,071 228,321 Deferred tax assets 39,466 37,374
Prepaid expenses 11,396 11,415
Total current assets 545,331 589,459 Property, plant and
equipment, net 735,566 654,456 Goodwill 229,533 229,533 Intangible
assets, net 49,748 56,400 Other assets, net 11,140
15,488 $ 1,571,318
$ 1,545,336 LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable and accrued
liabilities $ 144,631 $ 184,604 Current portion of long-term debt -
760 Current liability for pensions and other postretirement
employee benefits 9,861 9,749
Total current liabilities 154,492 195,113 Long-term debt,
net of current portion 523,694 538,314 Liability for pensions and
other postretirement employee benefits 215,932 187,116 Other
long-term obligations 48,474 23,369 Accrued taxes 74,464 72,011
Deferred tax liabilities 69,358 61,064 Stockholders' equity,
excluding accumulated other comprehensive loss, net of tax 600,169
566,701 Accumulated other comprehensive loss, net of tax
(115,265 ) (98,352 ) $ 1,571,318
$ 1,545,336 Clearwater Paper Corporation
Segment Information Unaudited (Dollars in thousands)
Three Months Ended
Twelve Months Ended December 31, December 31, 2011
2010 (1)
2011 2010 (1)
Segment net sales: Consumer Products $ 268,526 58 % $ 142,913 41 %
$ 1,092,133 57 % $ 570,047 42 % Pulp and Paperboard
197,865 42 % 202,644 59 %
835,840 43 % 802,918 58 %
Total segment net sales $ 466,391 100 % $
345,557 100 % $ 1,927,973 100 %
$ 1,372,965 100 % Operating income: Consumer
Products $ 15,048 46 % $ 11,270 50 % $ 42,806 37 % $ 80,791 82 %
Pulp and Paperboard (2) 16,457 50 %
29,053 130 % 92,827 80 %
64,869 66 % 31,505 40,323 135,633
145,660 Corporate and eliminations (2) 1,218 4
% (17,919 ) 80 % (20,188 ) 17 %
(46,893 ) 47 % Income from operations $
32,723 100 % $ 22,404 100 % $ 115,445
100 % $ 98,767 100 %
(1) Prior period net sales and segment
operating income have been adjusted to reflect our change in
accounting for intersegment pulp transfers. Commencing January 1,
2011, rather than recording the intersegment transfer of pulp
through net sales, the costs of pulp are transferred from the Pulp
and Paperboard segment to the Consumer Products segment.
(2) Results for Pulp and Paperboard for
2011 included additional expenses associated with the sale of the
Lewiston, Idaho sawmill, which were partially offset by LIFO
inventory reserve and other adjustments recorded at the corporate
level.
Clearwater Paper Corporation Reconciliation of Consolidated Net
Earnings to EBITDA and Adjusted EBITDA Unaudited (Dollars in
thousands) Three Months Ended Twelve
Months Ended December 31, December 31, 2011
2010 2011 2010 Net earnings $ 11,502 $ 37,786 $ 39,674 $
73,800 Add back: Interest expense, net 10,384 10,335 44,809 22,571
Income tax provision (benefit) 10,536 (25,717 ) 31,246 2,396
Depreciation and amortization expense 19,825
12,221 76,933 47,728 EBITDA
$ 52,247 $ 34,625 $ 192,662 $ 146,495
Lewiston, Idaho sawmill sale adjustments 2,883 - 2,883 -
Cellu Tissue acquisition related expenses - 17,248 - 20,354
Adjusted EBITDA
$ 55,130 $ 51,873 $ 195,545 $ 166,849
Clearwater Paper Corporation
Reconciliation of Non-GAAP Financial Measures Unaudited (Dollars in
thousands, except per-share amounts)
Three Months Ended Twelve Months Ended December 31, December
31, 2011 2010 2011 2010 GAAP net
earnings $ 11,502 $ 37,786 $ 39,674 $ 73,800 Special items,
after-tax: Lewiston, Idaho sawmill sale and related adjustments
1,759 - 1,759 - Cellulosic Biofuel Producer Credit - (27,087 ) -
(27,087 ) Patient Protection and Affordable Care Act - (106 ) -
3,099 Cellu Tissue acquisition related expenses -
10,521 - 12,416 Net
earnings, excluding special items $ 13,261 $ 21,114 $
41,433 $ 62,228 GAAP net earnings per diluted
share $ 0.48 $ 1.60 $ 1.66 $ 3.12 Special items, after-tax:
Lewiston, Idaho sawmill sale and related adjustments 0.07 - 0.07 -
Cellulosic Biofuel Producer Credit - (1.14 ) - (1.14 ) Patient
Protection and Affordable Care Act - (0.01 ) - 0.13 Cellu Tissue
acquisition related expenses - 0.44
- 0.52 Net earnings per diluted share,
excluding special items $ 0.55 $ 0.89 $ 1.73 $
2.63
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