FALSE000144123600014412362023-10-302023-10-30

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): October 30, 2023
CLW Logo.jpg
CLEARWATER PAPER CORPORATION
(Exact name of registrant as specified in its charter)
DE001-3414620-3594554
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
601 West Riverside,Suite 1100 99201
Spokane,WA
(Address of principal executive offices) (Zip Code)
(509) 344-5900
(Registrant’s telephone number, including area code)
Not Applicable
(Former name of former address, if changed since last report)
 
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 (see General Instructions A.2. below):
☐    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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchanged on which registered
Common Stock, par value $0.0001 per shareCLWNew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02.     Results of Operations and Financial Condition.

On October 30, 2023, Clearwater Paper Corporation (the “Company”) announced its results of operations and financial condition for the third quarter ending September 30, 2023. A copy of the press release containing this announcement is furnished as Exhibit 99.1 hereto. In addition, a copy of the Company’s Third Quarter Supplemental Information is furnished as Exhibit 99.2 hereto.
In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), the following are disclosed in the attached Adjusted EBITDA which is defined as earnings before interest expense, taxes, depreciation and amortization, other operating credits and charges, net and other non-operating items. Adjusted net income which is calculated by excluding from net income, other operating credits and charges, net, and adjusts for a normalized tax rate. Adjusted EBITDA and Adjusted net income are not a substitute for the GAAP measure of net income or other GAAP measures of operating performance.
The Company discloses Adjusted EBITDA in the attached because it is used as an important supplemental measure of its performance and believes that similarly-titled measures are frequently used by securities analysts, investors and other interested persons in the evaluation of companies in its industry, some of which present similarly-titled measures when reporting their results. The Company uses Adjusted EBITDA to evaluate its performance as compared to other companies in its industry that have different financing and capital structures and/or tax rates. It should be noted that companies calculate similarly-titled measures differently and, therefore, as presented by the Company may not be comparable to similarly-titled measures reported by other companies. In addition, Adjusted EBITDA has material limitations as a performance measure because it excludes interest expense, income tax expense and depreciation and amortization which are necessary to operate the Company's business or which the Company otherwise incurred or experienced in connection with the operation of its business.
The Company believes that adjusted net income, which excludes other operating credits and charges, net, adjusted for a normalized tax rate is a useful measure for evaluating our ability to generate earnings and that providing this measure will allow investors to more readily compare the earnings referred to in the press release to the Company's earnings for past and future periods. The Company believes that this measure is particularly useful where the amounts of the excluded items are not consistent between the periods presented. It should be noted that other companies may present similarly-titled measures differently and, therefore, as presented by the Company may not be comparable to similarly-titled measures reported by other companies. In addition, adjusted net income has material limitations as a performance measure because it excludes items that are actually incurred or experienced in connection with the operations of the Company's business.
The information in Item 2.02, 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) Exhibit Index




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 : October 30, 2023
CLEARWATER PAPER CORPORATION
By:/s/ Rebecca A. Barckley
Rebecca A. Barckley, Vice President, Corporate Controller (Principal Accounting Officer)



Exhibit 99.1


Clearwater Paper Reports Third Quarter 2023 Results

SPOKANE, Wash.--(BUSINESS WIRE)--October 30, 2023 --Clearwater Paper Corporation (NYSE:CLW), a premier supplier of quality tissue and bleached paperboard products, today reported financial results for the third quarter and nine months ended September 30, 2023.
THIRD QUARTER HIGHLIGHTS
•Outstanding performance driven by strong operational results and continued market strength in tissue
•Net sales of $520 million, down 3% from the third quarter of last year
•Net income of $37 million, or $2.17 per diluted share
•Adjusted net income of $37 million, $6 million higher than the third quarter of last year
•Adjusted EBITDA of $81 million, $3 million higher than third quarter of last year
•Adjusted EBITDA margin at 15%, up from 14% during the third quarter of last year
•Redeeming 2025 notes in Q4 2023 with a combination of a new term loan, cash on hand, and drawing on existing ABL facility
•Repurchased $5 million of outstanding shares, with $10 million remaining under program
•Reduced net debt by $69 million from second quarter of this year, $416 million since 2020

“We had an outstanding third quarter which came in at the higher end of our expectations, driven by good operational performance in both businesses and continued strength in tissue. Demand remained strong in tissue, while we balanced paperboard supply and demand to manage inventory levels,” said Arsen Kitch, president and chief executive officer. “We continued to focus on our financial flexibility by reducing net debt by $69 million in the quarter, for a total reduction of $416 million since 2020.”

OVERALL RESULTS
For the third quarter of 2023, Clearwater Paper reported net sales of $520 million compared to net sales of $539 million for the third quarter of 2022. Net income for the third quarter of 2023 was $37 million, or $2.17 per diluted share, compared to net income for the third quarter of 2022 of $21 million, or $1.21 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net income in the third quarter of 2023 of $37 million, or $2.19 per diluted share, compared to third quarter 2022 adjusted net income of $31 million, or $1.83 per diluted share. Adjusted EBITDA for the third quarter of 2023 was $81 million, compared to the third quarter of 2022 Adjusted EBITDA of $77 million.
For the first nine months of 2023, Clearwater Paper reported net sales of $1.6 billion, a slight increase compared to the first nine months of 2022. Net income for the first nine months of 2023 was $90 million, or $5.29 per diluted share, compared to net income for the first nine months of 2022 of $52 million, or $3.04 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net income in the first nine months of 2023 of $92 million, or $5.37 per diluted share, compared to the first nine months of 2022 adjusted net income of $68 million, or $3.96 per diluted share. Adjusted EBITDA for the first nine months of 2023 was $218 million, compared to the first nine months of 2022 Adjusted EBITDA of $199 million.
Pulp and Paperboard Segment
Net sales in the Pulp and Paperboard segment were $261 million for the third quarter of 2023, down 13% compared to third quarter 2022 net sales of $301 million. Segment operating income for the third quarter of 2023 was $43 million, compared to $64 million for the third quarter of 2022. Adjusted EBITDA for the segment was $52 million in the third quarter of 2023, compared to $73 million in the third quarter of 2022. The decrease in operating income and Adjusted EBITDA were primarily driven by lower sales volumes and sales prices, planned production downtime to manage inventories, partially offset by lower input costs, specifically in wood, energy and freight.


Net sales in the Pulp and Paperboard segment were $812 million for the first nine months of 2023, down 6% compared to net sales of $863 million in the first nine months of 2022. Segment operating income for the first nine months of 2023 was $142 million, compared to $166 million for the first nine months of 2022. Adjusted EBITDA for the segment was $170 million in the first nine months of 2023, compared to $194 million in the first nine months of 2022. The decrease in operating income and Adjusted EBITDA were driven primarily by lower sales volumes and planned production downtime to manage inventories partially offset by higher sales prices.
Pulp and Paperboard Sales Volumes and Prices:
• Paperboard sales volumes were 187,944 tons in the third quarter of 2023, a decrease of 10% compared to 208,298 tons in the third quarter of 2022. Paperboard sales volumes were 563,502 tons in the first nine months of 2023, a decrease of 10% compared to 625,557 tons in the first nine months of 2022.
• Paperboard average net selling price decreased 4% to $1,350 per ton for the third quarter of 2023, compared to $1,405 per ton in the third quarter of 2022. Paperboard average net selling price increased 5% to $1,401 per ton for the first nine months of 2023, compared to $1,334 per ton in the first nine months of 2022.
Consumer Products Segment
Net sales in the Consumer Products segment were $259 million for the third quarter of 2023, up 8% compared to third quarter 2022 net sales of $241 million. Segment operating income for the third quarter of 2023 was $31 million compared to operating income of $5 million in the third quarter of 2022. Adjusted EBITDA for the segment was $46 million in the third quarter of 2023, compared to $21 million in the third quarter of 2022. The increase in operating income and Adjusted EBITDA were driven by higher sales prices and lower input costs, primarily in pulp, freight, chemicals and energy.
Net sales in the Consumer Products segment were $761 million for the first nine months of 2023, up 9% compared to net sales of $696 million in the first nine months of 2022. Segment operating income for the first nine months of 2023 was $61 million compared to operating income of $10 million in the first nine months of 2022. Adjusted EBITDA for the segment was $105 million in the first nine months of 2023, compared to $57 million in the first nine months of 2022. The increase in operating income and Adjusted EBITDA were driven by higher sales prices partially offset by higher input costs, primarily in freight and energy costs.
Retail Tissue Sales Volumes and Prices:
• Retail tissue volumes sold were 80,588 tons in the third quarter of 2023, an increase of 5% compared to 76,938 tons in the third quarter of 2022. Retail tissue volumes sold were 236,108 tons in the first nine months of 2023, an increase of 3% compared to 228,968 tons in the first nine months of 2022.
• Retail tissue average net selling price increased 4% to $3,198 per ton in the third quarter of 2023, compared to $3,082 per ton in the third quarter of 2022. Retail tissue average net selling price increased 8% to $3,204 per ton in the first nine months of 2023, compared to $2,980 per ton in the first nine months of 2022.
COMPANY OUTLOOK
“We are optimistic that our strong performance in tissue will continue into next year, driven by stable demand and improved cost structure. We also expect a gradual recovery in paperboard volumes starting in 2024. The refinancing of our 2025 notes will improve our financial flexibility and position us to continue to invest in our business and take advantage of strategic opportunities as they arise,” continued Kitch.
WEBCAST INFORMATION
Clearwater Paper Corporation will discuss these results during an earnings conference call that begins at 2:00 p.m. Pacific Time today. A live webcast and accompanying supplemental information will be available on the company's website. A replay of today's conference call will be available on the website beginning at 5:00 p.m. Pacific Time today.
ABOUT CLEARWATER PAPER
Clearwater Paper is a premier supplier of private brand tissue to major retailers, including grocery, club, mass merchants, and discount stores. In addition, the company produces bleached paperboard used by quality-conscious printers and packaging converters, and offers services that include custom sheeting, slitting, and cutting. Clearwater Paper's employees build shareholder value by developing strong relationships through quality and service.
USE OF NON-GAAP MEASURES
In this press release, the company presents certain non-GAAP financial information for the third quarter and first nine months of 2023 and 2022, including adjusted income and Adjusted EBITDA. Because these amounts are not in accordance with GAAP, reconciliations to net income as determined in accordance with GAAP are included in the tables at the end of this press release. The company presents these non-GAAP metrics 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. In addition, the company uses Adjusted EBITDA: (i) as a factor in evaluating management’s performance when determining incentive compensation, (ii) to evaluate the effectiveness of the company's business strategies, and (iii) because the company's credit agreement and the indentures governing the company's outstanding notes use metrics similar to Adjusted EBITDA to measure the company's compliance with certain covenants.

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: product demand, cost structure improvements, our expectations regarding the paperboard and tissue markets, operational and financial performance, the redemption of our notes, our financial flexibility, our continued investment in our business, our ability to take advantage of strategic opportunities as they arise, and our focus on cash flow generation and inventory management. 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 press release. Factors that could cause or contribute to such material differences in actual results include, but are not limited to: competitive pricing pressures for our products, including as a result of capacity additions, demand reduction and the impact of foreign currency fluctuations on the pricing of products globally; changes in the U.S. and international economies and in general economic conditions in the regions and industries in which we operate; manufacturing or operating disruptions, including equipment malfunctions and damage to our manufacturing facilities; the loss of, changes in prices in regard to, or reduction in, orders from a significant customer; changes in the cost and availability of wood fiber and wood pulp; changes in energy, chemicals, packaging and transportation costs and disruptions in transportation services impacting our ability to receive inputs or ship products to customers; reliance on a limited number of third-party suppliers, vendors and service providers required for the production of our products and our operations; changes in customer product preferences and competitors’ product offerings; cyber-security risks; larger competitors having operational, financial and other advantages; consolidation and vertical integration of converting operations in the paperboard industry; our ability to successfully execute capital projects and other activities to operate our assets, including effective maintenance, implement our operational efficiencies and realize higher throughput or lower costs; IT system disruptions and IT system implementation failures; labor disruptions; cyclical industry conditions; changes in expenses, required contributions and potential withdrawal costs associated with our pension plans; environmental liabilities or expenditures and climate change; our ability to attract, motivate, train and retain qualified and key personnel; our ability to service our debt obligations and restrictions on our business from debt covenants and terms; changes in our banking relations, or in our customer supply chain financing; negative changes in our credit agency ratings; changes in laws, regulations or industry standards affecting our business; and other risks and uncertainties described from time to time in the company’s public filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2022. 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 based on new developments or changes in the company’s expectations after the date of this press release.


Clearwater Paper Corporation
Consolidated Statements of Operations
(Unaudited)
Quarter Ended September 30,Nine Months Ended September 30,
(In millions, except per-share data)2023202220232022
Net sales$519.9 $538.8 $1,569.9 $1,553.3 
Costs and expenses:
Cost of sales427.4 454.8 1,314.6 1,332.0 
Selling, general and administrative expenses36.4 32.9 111.5 99.6 
Other operating charges, net1.8 2.2 2.4 8.5 
Total operating costs and expenses465.5 489.9 1,428.5 1,440.0 
Income from operations54.4 48.9 141.5 113.3 
Interest expense, net(6.9)(8.0)(22.0)(27.3)
Debt retirement costs— — — (0.5)
Other non-operating (expense) income0.1 (1.4)0.3 (4.3)
Total non-operating expense(6.8)(9.4)(21.7)(32.1)
Income before income taxes47.6 39.5 119.8 81.2 
Income tax provision11.0 18.9 29.6 29.3 
Net income$36.6 $20.6 $90.1 $51.9 
Net income per common share:
Basic$2.20 $1.23 $5.37 $3.09 
Diluted2.17 1.21 5.29 3.04 
Average shares outstanding (in thousands):
Basic16,682 16,754 16,800 16,777 
Diluted16,895 17,093 17,051 17,085 


Clearwater Paper Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
(In millions)September 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$110.2 $53.7 
Receivables, net173.0 188.8 
Inventories333.3 324.0 
Other current assets10.5 19.9 
Total current assets627.0 586.3 
Property, plant and equipment, net993.8 1,017.1 
Other assets, net116.2 100.1 
Total assets$1,737.0 $1,703.5 
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt$0.9 $0.9 
Accounts payable and accrued liabilities260.0 311.1 
Total current liabilities260.9 312.0 
Long-term debt564.8 564.9 
Liability for pension and other postretirement employee benefits56.9 58.2 
Deferred tax liabilities and other long-term obligations205.9 196.4 
Total liabilities1,088.4 1,131.5 
Stockholders' equity:
Common stock— — 
Additional paid-in capital15.1 28.5 
Retained earnings666.9 576.8 
Accumulated other comprehensive loss, net of tax(33.5)(33.3)
Total stockholders' equity648.5 572.1 
Total liabilities and stockholders' equity$1,737.0 $1,703.5 


Clearwater Paper Corporation
Consolidated Statements of Cash Flows
(Unaudited)
Quarter Ended September 30,Nine Months Ended September 30,
(In millions)2023202220232022
Operating activities
Net income$36.6 $20.6 $90.1 $51.9 
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization24.4 26.2 73.8 77.4 
Equity-based compensation expense3.5 4.0 7.0 9.6 
Deferred taxes(4.4)(1.6)(7.3)(5.8)
Defined benefit pension and other postretirement employee benefits(0.4)0.7 (1.5)2.2 
Amortization of deferred debt costs and debt retirement0.3 0.5 0.9 1.8 
Loss on sale or impairment associated with assets0.3 1.2 1.4 5.8 
Increase (decrease) in cash from changes in operating assets and liabilities:
Accounts receivable23.6 4.2 7.9 (17.6)
Inventories6.9 (39.2)(10.1)(49.1)
Other current assets2.9 1.4 8.6 5.6 
Accounts payable and accrued liabilities(6.0)(4.4)(46.9)50.0 
Other, net0.4 (0.3)1.0 1.1 
Net cash flows provided by operating activities88.2 13.3 125.0 132.8 
Investing activities
Additions to property, plant and equipment, net(14.2)(6.7)(48.5)(19.9)
Net cash flows used in investing activities(14.2)(6.7)(48.5)(19.9)
Financing activities
Borrowings on short-term debt— — 12.0 — 
Repayments of borrowings on short-term debt— — (12.0)— 
Repayments of long-term debt(0.2)(25.3)(0.7)(80.8)
Taxes paid related to net share settlement of equity awards(0.1)— (4.7)(2.5)
Repurchases of common stock(5.0)(1.0)(15.1)(4.9)
Other, net(0.1)0.7 (0.2)0.7 
Net cash flows used in financing activities(5.5)(25.7)(20.7)(87.6)
Increase (decrease) in cash, cash equivalents and restricted cash68.5 (19.1)55.8 25.3 
Cash, cash equivalents and restricted cash at beginning of period41.7 70.6 54.4 26.2 
Cash, cash equivalents and restricted cash at end of period$110.2 $51.5 $110.2 $51.5 



Clearwater Paper Corporation
Segment Information
(Unaudited)
Quarter Ended September 30,Nine Months Ended September 30,
 (In millions)2023202220232022
Segment net sales:
Pulp and Paperboard$261.4 $300.8 $812.4 $862.8 
Consumer Products259.3 241.0 761.3 696.1 
Eliminations(0.8)(3.0)(3.8)(5.6)
Total segment net sales$519.9 $538.8 $1,569.9 $1,553.3 
Operating income (loss):
Pulp and Paperboard$42.7 $63.7 $141.8 $165.9 
Consumer Products31.4 5.2 60.6 9.6 
Corporate and eliminations(18.0)(17.8)(58.5)(53.8)
Other operating charges, net 1
(1.8)(2.2)(2.4)(8.5)
Income from operations$54.4 $48.9 $141.5 $113.3 
1Other operating charges, net consist of amounts unrelated to ongoing core operating activities. Please refer to Note 9 within Clearwater Paper's Form 10-Q filed with the SEC for the period end September 30, 2023 for the detailed breakout of this amount.




Clearwater Paper Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
(Unaudited)
Quarter Ended September 30,Nine Months Ended September 30,
(In millions)2023202220232022
Net income$36.6 $20.6 $90.1 $51.9 
Add back:
Income tax provision11.0 18.9 29.6 29.3 
Interest expense, net6.9 8.0 22.0 27.3 
Depreciation and amortization24.4 26.2 73.8 77.4 
Other operating charges, net1
1.8 2.2 2.4 8.5 
Debt retirement costs— — — 0.5 
Other non-operating (income) expense(0.1)1.4 (0.3)4.3 
Adjusted EBITDA$80.6 $77.3 $217.6 $199.2 
Pulp and Paperboard segment income$42.7 $63.7 $141.8 $165.9 
Depreciation and amortization9.4 9.3 27.9 27.8 
Adjusted EBITDA Pulp and Paperboard$52.1 $73.0 $169.6 $193.7 
Consumer Products segment income$31.4 $5.2 $60.6 $9.6 
Depreciation and amortization14.4 16.0 44.1 46.9 
Adjusted EBITDA Consumer Products$45.8 $21.2 $104.7 $56.6 
Corporate and other expenses$(18.0)$(17.8)$(58.5)$(53.8)
Depreciation and amortization0.6 0.9 1.8 2.6 
Adjusted EBITDA Corporate and other$(17.4)$(16.9)$(56.7)$(51.1)
Pulp and Paperboard segment$52.1 $73.0 $169.6 $193.7 
Consumer Products segment45.8 21.2 104.7 56.6 
Corporate and other(17.4)(16.9)(56.7)(51.1)
Adjusted EBITDA$80.6 $77.3 $217.6 $199.2 
1 Other operating charges, net consist of amounts unrelated to ongoing core operating activities. Please refer to Note 9 within Clearwater Paper's Form 10-Q filed with the SEC for the period end September 30, 2023 for the detailed breakout of this amount.












Clearwater Paper Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Quarter Ended September 30,Nine Months Ended September 30,
(In millions, except per share data)2023202220232022
Adjusted income:
Net income$36.6 $20.6 $90.1 $51.9 
Add back:
Income tax provision11.0 18.9 29.6 29.3 
Income before income taxes47.6 39.5 119.8 81.2 
Add back:
Debt retirement costs— — — 0.5 
Other operating charges, net1.8 2.2 2.4 8.5 
Adjusted income before tax$49.4 $41.6 $122.2 $90.2 
Normalized income tax provision12.3 10.4 30.5 22.5 
Adjusted income$37.0 $31.2 $91.6 $67.6 
Weighted average diluted shares (thousands)16,895 17,093 17,051 17,085 
Adjusted income per diluted share$2.19 $1.83 $5.37 $3.96 
September 30, 2023June 30, 2023March 31, 2023December 31, 2022
Calculation of net debt:
Current portion of long-term debt$0.9 $0.9 $0.9 $0.9 
Long-term debt564.8 564.8564.9564.9 
Add back:
Unamortized deferred debt costs2.8 3.03.23.4 
Less:
Cash and cash equivalents110.2 41.716.753.7 
Net debt$458.3 $527.0 $552.3 $515.5 







Clearwater Paper Corporation

Investors contact:
Sloan Bohlen
Solebury Strategic Communications
509-344-5906
investorinfo@clearwaterpaper.com

News media:
Jules Joy, Director, Corporate Communications
509-344-5967
Julia.joy@clearwaterpaper.com





CLEARWATER PAPER CORPORATION THIRD QUARTER EARNINGS RELEASE MATERIALS OCTOBER 30, 2023 ARSEN KITCH President, Chief Executive Officer and Director SHERRI BAKER Senior Vice President and Chief Financial Officer

 
Cautionary Statement Regarding Forward Looking Statements This presentation of supplemental information contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, including statements regarding order patterns; product demand and industry trends; production targets; impact of inflation of raw material and energy; assumptions for Q4 2023 and full year 2023, including maintenance outage impacts, operational factors, interest, capital, lower input costs, depreciation and amortization and income tax; our capital allocation priorities; our strategy, including achieving target leverage ratio and maintaining liquidity; expectations regarding the paperboard and tissue markets; inventory management; the redemption of our notes; our financial flexibility; and repurchases under existing share buyback authorization. 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, including but not limited to the following: competitive pricing pressures for our products, including as a result of capacity additions, demand reduction and the impact of foreign currency fluctuations on the pricing of products globally; the loss of, changes in prices in regard to, or reduction in, orders from a significant customer; changes in the cost and availability of wood fiber and wood pulp; changes in energy, chemicals, packaging and freight costs and disruptions in transportation services impacting our ability to receive inputs or ship products to customers; changes in customer product preferences and competitors' product offerings; larger competitors having operational, financial and other advantages; consolidation and vertical integration of converting operations in the paperboard industry; changes in the U.S. and international economies and in general economic conditions in the regions and industries in which we operate; manufacturing or operating disruptions, including equipment malfunctions and damage to our manufacturing facilities; cyber-security risks; our ability to successfully execute capital projects and other activities to operate our assets, including effective maintenance, implement our operational efficiencies and realize higher throughput or lower costs; IT system disruptions and IT system implementation failures; labor disruptions; cyclical industry conditions; changes in expenses, required contributions and potential withdrawal costs associated with our pension plans; environmental liabilities or expenditures and climate change; reliance on a limited number of third-party suppliers, vendors and service providers required for the production of our products and our operations; our ability to attract, motivate, train and retain qualified and key personnel; ability to service our debt obligations and restrictions on our business from debt covenants and terms; changes in our banking relations, or in our customer supply chain financing; negative changes in our credit agency ratings; and changes in laws, regulations or industry standards affecting our business. 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 or to retract future revisions of management's views based on events or circumstances occurring after the date of this presentation. Non-GAAP Financial Measures This presentation includes certain financial measures that are not calculated in accordance with GAAP, including Adjusted EBITDA, Adjusted Income, Adjusted income per diluted share, free cash flow and net debt. The Company’s management believes that the presentation of these financial measures provides useful information to investors because these measures are regularly used by management in assessing the Company’s performance. These financial measures should be considered in addition to results prepared in accordance with GAAP but should not be considered substitutes for or superior to GAAP results. In addition, these non-GAAP financial measures may not be comparable to similarly-titled measures utilized by other companies, since such other companies may not calculate such measure in the same manner as we do. A reconciliation of these measures (Adjusted EBITDA, Adjusted Income, Adjusted income per diluted share, free cash flow and net debt) to the most relevant GAAP measure is available in the appendix of this presentation. FORWARD LOOKING STATEMENTS © Clearwater Paper Corporation 2023 2

 
Overall • Net sales $520 million, down 3% versus Q3 2022 • Net income $37 million, up $16 million versus Q3 2022 • Adjusted net income $37 million, up $6 million versus Q3 2022 • Adjusted EBITDA $81 million, up $3 million versus Q3 2022 Pulp and Paperboard • SBS prices down versus Q3 2022 • Soft demand from continued de-stocking • Consumer Products • Tissue prices increased versus Q3 2022 • Strong operational performance and reduced input costs • Demand for private branded products remained strong Capital Structure • Continued to maintain strong financial flexibility • Repurchased $5 million of stock, $20 million since 2022, with $10 million remaining authorized under our stock repurchase program • Reduced net debt $69 million from Q2 2023, $416 million since 2020 • Redeeming 2025 notes in Q4 2023 with a combination of a new term loan, cash on hand, and drawing on existing ABL facility Q3 2023 BUSINESS HIGHLIGHTS © Clearwater Paper Corporation 2023 3

 
Industry (SBS) • Shipments, production, and operating rates decreased YTD Q3 2023 versus YTD Q3 2022 based on AF&PA data • Shipments (in tons) decreased 15.7% • Production decreased 12.9% • Operating rates decreased 94.6% to 84.9% • RISI reported $80 per ton decrease in folding carton pricing in Q3 of 2023 Clearwater Paper • Demand and order backlogs continued to be soft during Q3 • Strong operational performance as we managed supply to meet demand • Approximately 10% of planned capacity downtime in the quarter to manage inventories • Price remained higher YTD 2023 versus 2022, but seeing a decline in Q3 2023 versus Q2 2023 and Q3 2022 BUSINESS UPDATE – PULP AND PAPERBOARD SOFT DEMAND LEADING TO CAPACITY DOWNTIME, LOWER MARKET PRICING © Clearwater Paper Corporation 2023 4

 
Industry • Consumers shifting to private brands with economic uncertainty and inflation • Private brand market share continued at a high of 36%1 • Nearly 94% capacity utilization YTD August 2023 based on RISI data Clearwater Paper • Strong demand with Q3 2023 shipments of 13.0 million cases compared to 12.6 million cases in Q3 2022 and 12.8 million cases in Q2 2023 • Outstanding operational performance continued • Strong service levels with high on-time performance rates • Lower input costs in pulp, energy and freight as compared to Q2 2023 • Continued to benefit from previously announced price increases BUSINESS UPDATE – CONSUMER PRODUCTS SHIPMENTS STRENGTHENED; PRICES INCREASED © Clearwater Paper Corporation 2023 5 1 Circana panel data for dollar share as of September 2023

 
© Clearwater Paper Corporation 2023 FINANCIAL PERFORMANCE ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 6 2023 2022 2023 2022 Net sales 519.9$ 538.8$ 1,569.9$ 1,553.3$ Cost of sales 427.4 454.8 1,314.6 1,332.0 Selling, general and adminstrative 36.4 32.9 111.5 99.6 Other operating charges, net 1.8 2.2 2.4 8.5 Income from operations 54.4 48.9 141.4 113.3 Non-operating expense (6.8) (9.4) (21.7) (32.1) Income tax provision 11.0 18.9 29.6 29.3 Net income 36.6$ 20.6$ 90.1$ 51.9$ Diluted income per share 2.17$ 1.21$ 5.29$ 3.04$ Adjusted income per share 2.19$ 1.83$ 5.37$ 3.96$ Adjusted EBITDA 80.6$ 77.3$ 217.6$ 199.2$ Quarter Ended Sept 30, Nine Months Ended Sept 30,

 
© Clearwater Paper Corporation 2023 SEGMENT PROFIT AND LOSS AND ADJUSTED EBITDA ($ IN MILLIONS) 2023 2022 2023 2022 Net Sales Pulp and Paperboard 261.4$ 300.8$ 812.4$ 862.8$ Consumer Products 259.3 241.0 761.3 696.1 Eliminations (0.8) (3.0) (3.8) (5.6) 519.9$ 538.8$ 1,569.9$ 1,553.3$ Operating Income Pulp and Paperboard 42.7$ 63.7$ 141.8$ 165.9$ Consumer Products 31.4 5.2 60.6 9.6 Corporate and other (18.0) (17.8) (58.5) (53.8) Other operating charges, net (1.8) (2.2) (2.4) (8.5) 54.4$ 48.9$ 141.5$ 113.3$ Adjusted EBITDA Pulp and Paperboard 52.1$ 73.0$ 169.6$ 193.7$ Consumer Products 45.8 21.2 104.7 56.6 Corporate and other (17.4) (16.9) (56.7) (51.1) 80.6$ 77.3$ 217.6$ 199.2$ Quarter Ended Sept 30, Nine Months Ended Sept 30, 7

 
PULP AND PAPERBOARD Q3 2023 RESULTS Q3 2023 VS. Q3 2022 ADJUSTED EBITDA ($ IN MILLIONS) © Clearwater Paper Corporation 2023 8 Lower market pricing as reported by RISI Reduced operating schedules and lower shipments Lower fiber, energy, and chemical costs

 
CONSUMER PRODUCTS Q3 2023 RESULTS Q3 2023 VS. Q3 2022 ADJUSTED EBITDA ($ IN MILLIONS) © Clearwater Paper Corporation 2023 9 Lower pulp, chemicals, freight and other input costs Benefits from previously announced price increases

 
© Clearwater Paper Corporation 2023 CAPITAL STRUCTURE AND ALLOCATION Capital structure summary • Ample liquidity • No material near-term debt maturities • Corporate/Issuer ratings: Ba2/BB- Capital allocation • Repurchased 150,294 shares at an average price of $33.36 per share in Q3 2023 • Reduced net debt by $69 million from Q2 2023 and $416 million from December 2019 • Leverage ratio as of September 2023 is 1.8x • Redeeming 2025 notes in Q4 2023 with a combination of a new term loan, cash on hand, and drawing on our existing ABL facility $0.0 $0.0 $270.0 $0.0 $0.0 $275.0 2023 2024 2025 2026 2027 2028 Scheduled Debt Maturity Profile ($ in millions)2 Liquidity Profile ($ in millions)1 ABL Availability $263.5 Less Utilization (3.5) Plus Unrestricted Cash 110.2 Liquidity $370.2 1. ABL availability based on borrowing base calculations and consolidated balance sheet as of September 30, 2023, maximum capacity is $275 million 2. This chart excludes finance leases as of September 30, 2023. Current debt maturities include $270 million of 5.375% notes due 2025 and $275 million of 4.75% notes due 2028. 10

 
OUTLOOK FOR Q4 AND 2023 OVERALL ASSUMPTIONS © Clearwater Paper Corporation 2023 Q4 2023: $60 to $70 million of Adjusted EBITDA • Lower PPD pricing as reported by RISI • Planned major maintenance outage at our Arkansas paperboard mill 2023: $278 to $288 million of Adjusted EBITDA • $42 million benefit due to fewer major maintenance outages and better operating performance • Stability in tissue volumes, soft paperboard demand • Higher pricing and lower input costs • Tissue margin recovery 2023 Other • Interest expense: $28 to $30 million, excluding debt extinguishment costs • Depreciation and amortization expense: $97 to $100 million • CAPEX: $70 to $80 million • Taxes: effective rate ~ 25 - 26% 11

 
CAPITAL ALLOCATION PRIORITIES © Clearwater Paper Corporation 2023 • Invest capital to sustain current asset base • $60 to $70 million per year outside of major projects Sustain the business Preserve financial flexibility Enhance value DISCIPLINED APPROACH TO CAPITAL ALLOCATION 1 2 3 12 • Reduce leverage to increase flexibility • Target net leverage ratio around 2.5x through a cycle • Support financing of future value creating options • Invest capital to improve asset base • Opportunistic acquisitions • Share buybacks to offset dilution and opportunistically add value

 
APPENDIX © Clearwater Paper Corporation 2023 13

 
PULP AND PAPERBOARD SEQUENTIAL QUARTER RESULTS Q3 2023 VS. Q2 2023 ADJUSTED EBITDA © Clearwater Paper Corporation 2023 14 ($ IN MILLIONS) Lower market pricing as reported by RISI Lower fiber and chemical costs

 
CONSUMER PRODUCTS SEQUENTIAL QUARTER RESULTS Q3 2023 VS. Q2 2023 ADJUSTED EBITDA ($ IN MILLIONS) © Clearwater Paper Corporation 2023 15 Lower pulp and other raw material costs

 
KEY SEGMENT INFORMATION 1. Includes both retail and away-from-home (AFH) cases. AFH was exited in Q3, 2021 Q3’2021 Q4’2021 Q1’2022 Q2’2022 Q3’2022 Q4’2022 Q1’2023 Q2’2023 Q3’2023 Pulp and Paperboard Sales ($ millions) $237.5 $261.3 $266.2 $295.8 $300.8 $273.5 $278.8 $272.3 $261.4 Adjusted EBITDA ($ millions) $43.5 $61.9 $59.5 $61.2 $73.0 $26.7 $66.2 $51.3 $53.1 Paperboard shipments (short tons) 203.4 211.5 201.4 215.9 208.3 189.0 189.4 186.2 187.9 Paperboard sales price ($/short ton) $1,102 $1,164 $1,263 $1,332 $1,405 $1,429 $1,441 $1,413 $1,350 Consumer Products Sales ($ millions) $214.2 $231.8 $223.0 $232.1 $240.9 $254.1 $248.3 $253.6 $259.3 Adjusted EBITDA ($ millions) $19.6 $8.0 $16.2 $19.1 $21.2 $17.6 $19.2 $39.7 $45.8 Shipments Retail (short tons in thousands) 76.2 79.4 75.4 76.6 76.9 80.8 76.8 78.7 80.5 Non-Retail (short tons in thousands) 5.7 6.2 5.1 2.6 2.3 2.2 1.0 0.1 1.4 Converted Products (cases in millions)1 12.3 12.4 12.0 12.6 12.6 13.0 12.7 12.8 13.0 Sales Price ($ per short ton) Retail $2,732 $2,831 $2,872 $2,984 $3,082 $3,095 $3,201 $3,214 $3,198 Production Converted Products (cases in millions) 11.4 11.9 12.2 12.1 12.9 12.3 12.7 12.6 12.9 © Clearwater Paper Corporation 2023 16

 
RECONCILIATION OF ADJUSTED EBITDA ($ IN MILLIONS) June 30, 2023 2022 2023 2023 2022 Net income $ 36.6 $ 20.6 $ 29.7 $ 90.1 $ 51.9 Income tax provision 11.0 18.9 10.2 29.0 29.3 Interest expense, net 6.9 8.0 7.5 22.0 27.3 Depreciation and amortization expense 24.4 26.2 24.6 73.8 77.4 Other operating charges, net 1.8 2.2 (0.4) 2.4 8.5 Other non-operating expense (0.1) 1.4 (0.1) (0.3) 4.8 Adjusted EBITDA $ 80.6 $ 77.3 $ 71.5 $ 217.6 $ 199.2 Pulp and Paperboard segment income $ 42.7 $ 63.7 $ 42.0 $ 141.8 $ 165.9 Depreciation and amortization 9.4 9.3 9.3 27.9 27.8 Adjusted EBITDA Paperboard segment $ 52.1 $ 73.0 $ 51.3 $ 169.6 $ 193.7 Consumer Products segment income $ 31.4 $ 5.2 $ 25.0 $ 60.6 $ 9.6 Depreciation and amortization 14.4 16.0 14.7 44.1 46.9 Adjusted EBITDA Consumer Products segment $ 45.8 $ 21.2 $ 39.7 $ 104.7 $ 56.6 Corporate and other expense $ (18.0) $ (17.8) $ (20.1) $ (58.5) $ (53.8) Depreciation and amortization 0.6 0.9 0.6 1.8 2.6 Adjusted EBITDA Corporate and other $ (17.4) $ (16.9) $ (19.5) $ (56.7) $ (51.1) Pulp and Paperboard segment $ 52.1 $ 73.0 $ 51.3 $ 169.6 $ 193.7 Consumer Products segment 45.8 21.2 39.7 104.7 56.6 Corporate and other (17.4) (16.9) (19.5) (56.7) (51.1) Adjusted EBITDA $ 80.6 $ 77.3 $ 71.5 $ 217.6 $ 199.2 September 30, September 30, Nine Months EndedQuarter Ended © Clearwater Paper Corporation 2023 17

 
© Clearwater Paper Corporation 2023 RECONCILIATION OF ADJUSTED INCOME ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2023 2022 2023 2022 Net income 36.6$ 20.6$ 90.1$ 51.9$ Add back: Income tax provision 11.0 18.9 29.6 29.3 Income before income taxes 47.6 39.5 119.7 81.2 Add back: Debt retirement costs - - - 0.5 Other operating charges, net 1.8 2.2 2.4 8.5 Adjusted income before tax 49.4 41.6 122.1 90.2 Normalized income tax provision 12.3 10.4 30.5 22.5 Adjusted income 37.0$ 31.2$ 91.6$ 67.6$ Weighted average diluted shares (thousands) 16,895 17,093 17,051 17,085 Adjusted income per diluted share 2.19$ 1.83$ 5.37$ 3.96$ Nine Months Ended September 30,Quarter Ended September 30, 18

 
ADDITIONAL RECONCILIATIONS Net Debt Dec 31, 2021 Mar 31, 2022 June 30, 2022 Sept 30, 2022 Dec 31, 2022 Mar 31, 2023 June 30, 2023 Sept 30, 2023 Cash $ 25.2 $ 36.4 $69.5 $50.8 $53.7 $16.7 $41.7 $110.2 Current debt 1.6 1.6 1.0 1.0 0.9 0.9 0.9 0.9 Long term debt 637.6 617.7 589.9 564.9 564.9 564.9 564.8 564.6 add: Deferred debt costs 4.8 4.4 3.8 3.6 3.4 3.2 3.0 3.0 Subtotal 642.4 623.7 594.7 569.5 569.2 569.0 568.7 568.5 Net debt $ 617.2 $587.3 $525.2 $518.7 $515.5 $552.3 $527.0 $458.3 Free Cash Flow Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Cash from operations $ 32.1 $41.1 $78.5 $13.3 $17.4 $(9.1) $46.0 $88.2 Additions to property, plant and equipment, net of proceeds from sales 4.8 (7.9) (5.4) (6.7) (13.5) (21.5) (12.8) (14.2) Free cash flow $ 36.9 $33.2 $73.1 $6.6 $3.9 $(30.6) $33.2 $74.0 ($ IN MILLIONS) © Clearwater Paper Corporation 2023 19

 
$2 $10 $22 $4 $20 $17 $5 $7 $28 $30 $24 $27 $5 - $7 $30 - $35 2017 2018 2019 2020 2021 2022 2023e 2024e Q1 Q2 Q3 Q4 Total $34 MAJOR MAINTENANCE SCHEDULE ADJUSTED EBITDA IMPACT ($ IN MILLIONS) 1. This information is based upon management’s current assumptions and estimates. 2. See “Forward-Looking Statements” on page 2. 1,2 © Clearwater Paper Corporation 2023 20 1

 
v3.23.3
Cover
Oct. 30, 2023
Document Information [Line Items]  
Document Type 8-K
Document Period End Date Oct. 30, 2023
Entity Registrant Name CLEARWATER PAPER CORPORATION
Entity Incorporation, State or Country Code DE
Entity File Number 001-34146
Entity Tax Identification Number 20-3594554
Entity Address, Address Line One 601 West Riverside,
Entity Address, Address Line Two Suite 1100
Entity Address, Postal Zip Code 99201
Entity Address, State or Province WA
Entity Address, City or Town Spokane,
City Area Code 509
Local Phone Number 344-5900
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.0001 per share
Trading Symbol CLW
Security Exchange Name NYSE
Entity Emerging Growth Company false
Entity Central Index Key 0001441236
Amendment Flag false
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