Clearwater Paper Corporation (NYSE:CLW) today reported financial
results for the third quarter ended September 30, 2009. The company
reported net earnings for the third quarter of 2009 of $46.2
million, or $3.92 per diluted common share, compared to net
earnings of $0.9 million, or $0.08 per diluted common share, for
the third quarter of 2008. Net earnings for the third quarter of
2009, excluding $47.1 million of income from alternative fuel
mixture tax credits were $16.5 million, or $1.40 per diluted common
share.
“Our third quarter results were excellent. The
outstanding performance of our Consumer Products segment and the
stable performance of our Pulp and Paperboard segment continued the
positive trends we have delivered throughout the year. Potentially
higher commodity and promotional costs could impact our total
performance but we remain positive about our outlook,” said
Gordon Jones, president, chief executive officer and director.
THIRD QUARTER 2009 SEGMENT PERFORMANCE
Consumer Products
Operating income for the third quarter of 2009 was $32.1
million, compared with operating income of $11.1 million for the
third quarter of 2008. Net sales of $140.2 million for the quarter
were 7% higher than third quarter 2008 net sales of $130.6
million.
- The increase in net sales was
driven by 5% higher volume and slightly higher net selling prices
when compared to the third quarter of 2008. The segment shipped a
record 52,778 tons of finished goods during the quarter. These tons
represented 7.6 million cases of product shipped during the third
quarter of 2009 versus 7.2 million cases shipped during the third
quarter of 2008.
- Segment performance was driven
by strong production in papermaking and converting coupled with
lower input costs for pulp, freight, energy and packaging
supplies.
Pulp and Paperboard
Operating income for the third quarter of 2009 was $57.7
million, compared to operating income of $0.4 million for the third
quarter of 2008. Excluding the income recognized for the
alternative fuel mixture tax credits, operating income for the
third quarter of 2009 was $10.6 million. Net sales of $185.5
million for the quarter were 6% lower than the third quarter 2008
net sales of $196.3 million.
- Lower net sales for the quarter
were the result of a 1% decline in paperboard shipments, a 1%
decline in paperboard average net selling prices and a 24% decline
in market pulp net selling prices compared to the same period in
2008. Partially offsetting the declines was a 15% increase in
market pulp shipments to third parties.
- Operating income for the quarter
was favorably affected by lower input costs for wood fiber,
freight, chemicals and energy compared to the same quarter in
2008.
- Total maintenance costs were
$2.7 million lower during the quarter compared to the same period
in 2008, attributable to delaying the majority of our major
maintenance downtime expense to coincide with our 2010 maintenance
downtime schedule. This was partially offset by higher repair costs
resulting from a power outage at our Lewiston, Idaho mill and also
increased regular maintenance expense.
- The segment recorded $47.1
million of pre-tax income during the quarter related to the
alternative fuel mixture tax credits. Through September 30, the
company has recorded pre-tax income of $123.5 million and received
cash of $87.4 million in connection with these tax credits.
Wood Products
Operating loss for the third quarter of 2009 was $4.2 million,
compared to an operating loss of $1.6 million for the third quarter
of 2008. Net sales of $21.3 million for the quarter were 9% lower
than the third quarter 2008 net sales of $23.3 million.
- Overall lumber net selling
prices fell by 31% in the third quarter 2009 compared to the third
quarter of 2008, due to lower lumber prices and a lower percentage
of higher-value cedar product sales. However, lumber net selling
prices have sequentially improved since the beginning of 2009.
- Shipment volumes increased by
32% during the quarter compared to the same quarter in 2008.
- Saw log costs were lower in the
quarter due to lower log prices and log mix, compared to the third
quarter of 2008.
Corporate and Eliminations
Expenses
Corporate and eliminations expenses for the third quarter of
2009 were $8.0 million compared to $5.4 million for the third
quarter of 2008. The increase was primarily attributable to higher
corporate administration expenses in 2009 associated with being an
independent, publicly-traded company following the company’s
spinoff from Potlatch Corporation, as well as higher incentive
compensation related expenses.
Tax Rate
The company’s effective income tax rate for the third quarter of
2009 was 36.9% compared to 26.4% for the same period last year. The
tax provision for the third quarter of 2008 was calculated on a
carve-out basis from Potlatch Corporation, whereas the 2009 tax
provision is reflective of the company’s operations and tax
attributes as a stand-alone entity.
Clearwater Paper Corporation
Separation from Potlatch Corporation
This news release represents the third full quarter reporting
for Clearwater Paper Corporation as a stand-alone company.
Clearwater Paper Corporation was spun-off from Potlatch Corporation
on December 16, 2008. Clearwater Paper is comprised of Potlatch’s
former pulp-based manufacturing businesses and the Lewiston, Idaho,
lumber mill.
Note Regarding Use of Non-GAAP
Financial Measure
In this press release, the company presents its net earnings for
the third quarter of 2009, excluding income from alternative fuel
mixture tax credits. This amount is not in accordance with
generally accepted accounting principles (GAAP) and accordingly a
reconciliation of this amount to net earnings determined in
accordance with GAAP is included at the end of this press
release.
CONFERENCE CALL INFORMATION
A live audio Web cast and conference call will be held today,
Thursday, October 29, 2009 at 8 a.m. Pacific time (11 a.m. Eastern
time). Investors may access the conference call by dialing
877-879-6207 (for U.S./Canada investors) or 719-325-4791 (for
international investors). The audio Web cast may be accessed on the
company’s Web site at http://ir.clearwaterpaper.com/events.cfm. An
accompanying presentation will be available for downloading at the
same site at 7 a.m. Pacific time (10:00 a.m. Eastern time). The Web
cast 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 Web site www.clearwaterpaper.com under “Investor
Relations” following the conference call.
ABOUT CLEARWATER PAPER
Clearwater Paper Corporation manufactures premium consumer
tissue, high-quality bleached paperboard and wood products at six
facilities across the country. The company is a premier supplier of
private label tissue to major retail grocery chains and also
produces bleached paperboard used by quality-conscious printers and
packaging converters. Clearwater Paper’s 2,400 employees build
shareholder value by developing strong customer partnerships
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 statements regarding future company
and segment operating and financial performance, input costs,
maintenance costs and schedules and alternative fuel mixture tax
credits. 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,
changes in the United States and international economies; changes
in raw material and energy costs; cyclical industry conditions;
loss of a large consumer products segment customer; changes in the
alternative fuel mixture tax credit regulations and the company’s
eligibility for such tax credits; competitive pricing pressure for
the company’s products; changes in freight costs and disruptions in
transportation services; unanticipated manufacturing disruptions;
changes in general and industry-specific laws and regulations;
unforeseen environmental liabilities or expenditures; labor
disruptions; inability to refinance or pay indebtedness; inability
to implement corporate strategies; 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.
Clearwater Paper Corporation Statements of Operations Unaudited
(Dollars in thousands - except per-share amounts)
Quarter Ended Nine Months Ended
September 30, September 30,
2009
2008
2009
2008
Net sales $ 331,484 $ 328,697 $
935,089 $ 952,122 Costs and expenses: Cost of
sales 282,485 314,216 795,152 896,169 Selling, general and
administrative expenses 18,627
10,060 52,655 33,992
301,112
324,276 847,807
930,161 Alternative fuel mixture tax credits
47,137 - 123,510
-
Earnings before interest, debt
retirement costs and income taxes
77,509 4,421 210,792 21,961 Interest expense, net (4,277 ) (3,250 )
(11,271 ) (9,750 ) Debt retirement costs -
- (6,250 ) -
Earnings before income taxes 73,232 1,171 193,271 12,211
Income tax provision 27,023 309
57,967 4,127 Net
earnings $ 46,209 $ 862 $
135,304 $ 8,084 Net earnings per common share:
Basic $ 4.07 $ 0.08 $ 11.91 $ 0.71 Diluted 3.92 0.08 11.54 0.71
Average shares outstanding (in thousands): Basic 11,362 11,355
11,359 11,355 Diluted 11,780 11,355 11,729 11,355 Clearwater Paper
Corporation Condensed Balance Sheets Unaudited (Dollars in
thousands)
September 30,
December 31,
2009 2008
Assets Current assets: Cash $ 2,649 $ 3,218
Restricted cash 750 - Short-term investments 146,003 10,800
Receivables, net 110,367 104,030 Taxes receivable 69,715 -
Inventories 145,604 154,351 Deferred tax assets 14,772 14,772
Prepaid expenses 5,304
2,408 Total current assets 495,164
289,579 Land 4,729 4,729 Plant and equipment, at cost less
accumulated depreciation 366,182 385,138 Other assets
7,213 3,820
$ 873,288
$ 683,266 Liabilities and Stockholders' Equity
Current liabilities: Notes payable $ - $ 50,000 Note payable to
Potlatch - 100,000 Accounts payable and accrued liabilities 110,470
116,471 Current liability for pensions and other
postretirement employee benefits 9,086
9,086 Total current liabilities 119,556 275,557 Long-term
debt 148,241 - Liability for pensions and other postretirement
employee benefits 225,144 221,649 Other long-term obligations 4,623
3,234 Accrued taxes 52,267 - Deferred taxes 1,539 1,837 Accumulated
other comprehensive loss (121,699 ) (126,149 ) Stockholders' equity
excluding accumulated other comprehensive loss 443,617
307,138 $ 873,288 $ 683,266
Clearwater Paper Corporation Segment Information Unaudited (Dollars
in thousands) Quarter Ended Nine Months
Ended September 30, September 30,
2009
2008
2009
2008 Segment net sales:
Consumer Products $ 140,190
$ 130,633 $ 415,692 $
376,529 Pulp and Paperboard: Paperboard 166,940 171,104
458,820 485,409 Pulp 18,515 24,965 54,307 73,158
Other 7 210
78 604
185,462 196,279
513,205 559,171 Wood Products
21,344 23,340
50,343 73,746 346,996 350,252
979,240 1,009,446 Elimination of intersegment sales
(15,512 ) (21,555 ) (44,151 )
(57,324 ) Total segment net sales $ 331,484
$ 328,697 $ 935,089
$ 952,122 Operating income (loss): Consumer Products
$ 32,080 $ 11,067 $ 93,398 $ 21,630 Pulp and Paperboard (1) 57,706
350 153,834 17,231 Wood Products (4,244 )
(1,574 ) (14,885 )
(9,634 ) 85,542 9,843 232,347
29,227 Corporate and eliminations (8,033 )
(5,422 ) (21,555 ) (7,266 )
Earnings before interest, debt retirement costs and income taxes $
77,509 $ 4,421 $ 210,792
$ 21,961 (1) Operating income for the quarter and
nine months ended September 30, 2009, for the Pulp and Paperboard
segment included $47.1 million and $123.5 million, respectively,
associated with alternative fuel mixture tax credits. Clearwater
Paper Corporation Reconciliation of Non-GAAP Financial Measures
Unaudited (Dollars in thousands, except per-share amounts)
Quarter Ended
September 30, 2009 GAAP net earnings $ 46,209 Special
item, after-tax: Alternative fuel mixture tax credits
29,744 Net earnings, excluding special item $
16,465 GAAP net earnings per diluted share $ 3.92
Special item, after-tax: Alternative fuel mixture tax
credits 2.52 Net earnings per diluted share,
excluding special item $ 1.40 Diluted average shares
outstanding (in thousands)
11,780
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