SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the fourth quarter and full year of 2018.

The company reported net sales of $428.7 million for the fourth quarter of 2018, which was $8.0 million or 1.8% lower than net sales of $436.7 million for the fourth quarter of 2017. The decrease was primarily due to the sale of the company's mill in Ladysmith, Wisconsin in August 2018 and lower tissue shipments, partially offset by higher paperboard shipments and pricing. Net loss determined in accordance with generally accepted accounting principles, or GAAP, for the fourth quarter of 2018 was $187.8 million, or $11.39 loss per diluted share, compared to net earnings for the fourth quarter of 2017 of $80.9 million, or $4.88 per diluted share, which included a $70 million tax benefit related to the 2017 tax law changes.

The net loss included a $195.1 million non-cash goodwill impairment charge related to the consumer products business taken in the fourth quarter of 2018. The impairment charge relates to the goodwill arising out of the company's acquisition of Cellu Tissue Holdings, Inc. in 2010 and will not result in any cash expenditures or affect the company's cash position, cash flow from operating activities, liquidity position or availability under its credit facilities.

Excluding certain non-core items identified in the attached Reconciliation of Non-GAAP Financial Measures, fourth quarter 2018 adjusted net earnings were $7.4 million, or $0.45 per diluted share, compared to fourth quarter 2017 adjusted net earnings of $14.4 million, or $0.87 per diluted share.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, were $(149.7) million for the fourth quarter of 2018, compared to $52.2 million for the fourth quarter of 2017. Adjusted EBITDA for the quarter was $45.5 million, down 21.0% compared to fourth quarter 2017 Adjusted EBITDA of $57.5 million.

For the full year 2018, the company reported net sales of $1.7 billion, which was flat with 2017 net sales. Price increases in tissue and paperboard helped offset reduced tissue shipment volumes resulting primarily from the sale of the Ladysmith, Wisconsin mill and changes in customer orders. Net loss determined in accordance with GAAP for 2018 was $143.8 million, or $8.72 loss per diluted share, compared to net earnings of $97.3 million, or $5.88 per diluted share in 2017. The net loss in 2018 included the goodwill impairment charge described above, and net earnings in 2017 included the significant tax benefit described above. Excluding certain non-core items identified in the attached Reconciliation of Non-GAAP Financial Measures, 2018 adjusted net earnings were $42.0 million, or $2.55 per diluted share, compared to 2017 adjusted net earnings of $38.4 million, or $2.32 per diluted share.

EBITDA was $(0.9) million for full year 2018, compared to $177.3 million for 2017. Adjusted EBITDA for the year was $176.7 million compared to 2017 Adjusted EBITDA of $189.5 million.

“We are pleased to deliver solid fourth quarter results driven largely by the strong execution of our pulp and paperboard business,” said Linda K. Massman, president and chief executive officer. “Also, by executing against our strategic priorities, in 2018 we were able to successfully implement a regional consumer products operating model; accelerate the start-up of converting lines in Shelby, North Carolina; and complete the sale of a recycled tissue mill in Ladysmith, Wisconsin.”

“While the performance of our consumer products business continues to be impacted by an increasingly competitive market, we have made great progress across this business, and are encouraged by the improvements in our operating results. The strength of our longer-term fundamentals and the positive consumer trends for private label brands give us confidence that the company is well-positioned in a rapidly-evolving market.”

“Throughout 2019 we will be focused on two key areas - installing and operating the new paper machine at our Shelby plant; and optimizing our facilities and equipment to generate greater cash flow, increase our financial flexibility and pay down bank debt - all of which we expect will deliver significant value for our shareholders.”

FOURTH QUARTER2018SEGMENT PERFORMANCE

Consumer Products

Net sales in the Consumer Products segment were $212.7 million for the fourth quarter of 2018, down 9.3% compared to fourth quarter 2017 net sales of $234.7 million. This decrease was due to lower retail volumes and prices and the divestiture of the Ladysmith, Wisconsin mill in August 2018.

Operating loss for the fourth quarter of 2018 was $193.6 million, compared to operating income and margin of $7.5 million and 3.2%, respectively, in the fourth quarter of 2017. The operating loss included the non-cash impairment charge described above that was recognized in the quarter. After adjusting for certain non-core items identified in the attached Reconciliation of Non-GAAP Financial Measures, adjusted operating income and margin were $0.9 million and 0.4% for the fourth quarter of 2018 compared to $11.5 million and 4.9% of adjusted operating income and margin, respectively, for the same period in 2017. Adjusted EBITDA for the segment was $15.7 million in the fourth quarter of 2018, down from $25.9 million in the fourth quarter of 2017. Those decreases were primarily due to lower average selling prices, unfavorable absorption of fixed costs over lower volumes of retail shipments, higher pulp costs and the divestiture of the company's Ladysmith, Wisconsin mill.

Tissue Sales Volumes and Prices:

  • Total tissue volumes sold were 80,980 tons in the fourth quarter of 2018, a decrease of 7.3% compared to 87,313 tons in the fourth quarter of 2017. Converted product cases shipped were 11.6 million in the fourth quarter of 2018, 8.2% lower than the 12.7 million cases shipped in the fourth quarter of 2017.
  • Average tissue net selling prices decreased 1.4% to $2,627 per ton in the fourth quarter of 2018, compared to $2,663 per ton in the fourth quarter of 2017.

Pulp and Paperboard

Net sales in the Pulp and Paperboard segment were $216.0 million for the fourth quarter of 2018, up 6.9% compared to fourth quarter 2017 net sales of $202.1 million. The increase was due to record shipment volumes and higher paperboard prices.

Operating income and margin for the fourth quarter of 2018 were $31.8 million and 14.7%, compared to $34.4 million and 17.0%, respectively, for the fourth quarter of 2017. Adjusted EBITDA for the segment was $41.5 million in the fourth quarter of 2018, compared to $44.2 million in the fourth quarter of 2017. The decrease was primarily due to higher wood fiber costs due to weather conditions, boiler maintenance, higher natural gas prices caused by a pipeline disruption which impacted the company's Lewiston, Idaho mill and a pulp disruption at the Idaho mill which necessitated a higher volume of purchased pulp.

Paperboard Sales Volumes and Prices:

  • Paperboard sales volumes were 218,322 tons in the fourth quarter of 2018, an increase of 3.9% compared to 210,098 tons in the fourth quarter of 2017.
  • Paperboard net selling prices increased 2.1% to $982 per ton for the fourth quarter of 2018, compared to $962 per ton in the fourth quarter of 2017.

Taxes

The company's consolidated GAAP tax rate and adjusted tax rate for the fourth quarter of 2018 were provisions of 2.4% and 37.9%, respectively, compared to a benefit of 333.2% and a provision of 39.9%, respectively, in the fourth quarter of 2017. On a GAAP basis, the net change to our effective tax rate in the fourth quarter of 2018 was primarily the result of recognizing benefits related to tax reform in 2017 and the goodwill impairment expense which did not have a corresponding tax impact. The company expects its GAAP and adjusted tax rate for 2019 to be approximately 25%.

Note Regarding Use of Non-GAAP Financial Measures

In this press release, the company presents certain non-GAAP financial information for the fourth quarters and full years of 2018 and 2017, including adjusted net earnings, adjusted net earnings per diluted share, EBITDA, adjusted EBITDA, adjusted operating income, adjusted operating margin and adjusted income tax rate provision and benefit. Because these amounts are not in accordance with GAAP, reconciliations to net (loss) earnings, net (loss) earnings per diluted share, operating (loss) income and income tax rate provision and benefit as determined in accordance with GAAP are included in the tables at the end of this press release. The company presents these non-GAAP amounts 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 EBITDA and Adjusted EBITDA: (i) as factors in evaluating management’s performance when determining incentive compensation, (ii) to evaluate the effectiveness of our business strategies, and (iii) because our credit agreement and the indentures governing our outstanding notes use metrics similar to EBITDA to measure our compliance with certain covenants.

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 at http://ir.clearwaterpaper.com. A replay of today's conference call will be available on the website at http://ir.clearwaterpaper.com/results.cfm beginning at 5:00 p.m. Pacific Time today.

ABOUT CLEARWATER PAPER

Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, bleached paperboard and pulp at manufacturing facilities across the nation. The company is a premier supplier of private label tissue to major retailers and wholesale distributors, including grocery, drug, 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 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 market conditions and evolution, operating results, business fundamentals, consumer trends, the completion of the company's Shelby, North Carolina facility expansion, including installation and start-up of a new paper machine, priorities for 2019, performance of the company's Consumer Products business, optimization of facilities and equipment, ability of assets to generate future positive cash flows, debt reduction, shareholder value and expected tax rate for 2019. 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: competitive pricing pressures for products, including as a result of increased capacity as additional manufacturing facilities are operated by the company’s competitors; the loss of, changes in prices in regard to, or reduction in, orders from a significant customer; changes in customer product preferences and competitors' product offerings; the company’s ability to complete construction of its new tissue manufacturing operations in Shelby, North Carolina on time and within current cost expectations; customer acceptance and timing and quantity of purchases of the company’s tissue products, including the existence of sufficient demand for and the quality of tissue produced by its expanded Shelby, North Carolina operations when they are completed; consolidation and vertical integration of converting operations in the paperboard industry; the company’s ability to successfully implement its operational efficiencies and cost savings strategies, along with related capital projects, and achieve the expected operational or financial results of those projects, including from the continuous digester at its Lewiston, Idaho facility; changes in the cost and availability of wood fiber and wood pulp; changes in transportation costs and disruptions in transportation services; labor disruptions; changes in the U.S. and international economies and in general economic conditions in the regions and industries in which the company operates; manufacturing or operating disruptions, including IT system and IT system implementation failures, equipment malfunctions and damage to the company’s manufacturing facilities; changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs; larger competitors having operational and other advantages; cyclical industry conditions; changes in expenses, required contributions and potential withdrawal costs associated with the company’s pension plans; environmental liabilities or expenditures; cyber-security risks; reliance on a limited number of third-party suppliers for raw materials; the company’s ability to attract, motivate, train and retain qualified and key personnel; material weaknesses in the company internal controls over financial reporting; the company’s substantial indebtedness and ability to service its debt obligations; restrictions on the company’s business from debt covenants and terms; and changes in laws, regulations or industry standards affecting the company’s 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, 2017. 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 (Dollars in thousands - except per-share amounts)
     
Three Months EndedTwelve Months Ended
December 31,December 31,
 2018 201720182017
Net sales$428,707  100%$436,716  100%$1,724,218  100%$1,730,408  100%
Costs and expenses:  
Cost of sales 1(382,204)89%(375,458)86%(1,538,012)89%(1,530,341)88%
Selling, general and administrative expenses 1(27,161)6%(34,891)8%(112,988)7%(128,882)7%
Goodwill impairment(195,079)46%%(195,079)11%%
Gain on divested assets, net1,008  %  %23,952  1%  %
Total operating costs and expenses(603,436) 141%(410,349) 94%(1,822,127) 106%(1,659,223) 96%
(Loss) income from operations(174,729)41%26,3676%(97,909)6%71,1854%
Interest expense, net(7,330)2%(7,975)2%(30,620)2%(31,374)2%
Non-operating pension and other postretirement benefit (costs) income 1(1,233) %287  %(4,933) %1,143  %
(Loss) earnings before income taxes(183,292)43%18,6794%(133,462)8%40,9542%
Income tax (provision) benefit(4,480) 1%

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019-- 

62,245  14%(10,305) 1%56,385  3%
Net (loss) earnings$(187,772) 44%$80,924  19%$(143,767) 8%$97,339  6%
Net (loss) earnings per common share:
Basic$(11.39)$4.92$(8.72)$5.91
Diluted(11.39)4.88(8.72)5.88
Average shares outstanding (in thousands):
Basic16,49116,45816,48716,464
Diluted16,49116,56816,48716,556
 
1In 2018, the company adopted a new accounting standard that resulted in a change in the presentation of pension and postretirement benefit (costs) income other than service costs on a line outside of “(Loss) income from operations.” The corresponding prior period amounts have been reclassified to conform with the current period presentation.
 
 
Clearwater Paper Corporation
Condensed Consolidated Balance Sheets
Unaudited (Dollars in thousands)
  
December 31,December 31,
 20182017
ASSETS
Current assets:
Cash and cash equivalents$22,484$15,738
Receivables, net145,519142,065
Taxes receivable6,30120,282
Inventories266,244266,043
Other current assets3,399 8,661
Total current assets443,947 452,789
Property, plant and equipment, net1,269,2711,050,982
Goodwill35,074244,161
Intangible assets, net24,08032,542
Other assets, net15,746 21,778
TOTAL ASSETS$1,788,118 $1,802,252
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt$120,833$155,000
Accounts payable and accrued liabilities321,032256,621
Current liability for pensions and other postretirement employee benefits7,430 7,631
Total current liabilities449,295 419,252
Long-term debt671,292570,524
Liability for pensions and other postretirement employee benefits78,19172,469
Other long-term obligations38,97743,275
Accrued taxes2,7852,770
Deferred tax liabilities121,182 118,528
TOTAL LIABILITIES1,361,722 1,226,818
 
Stockholders' equity426,396 575,434
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,788,118 $1,802,252
 
 
Clearwater Paper Corporation
Consolidated Statements of Cash Flows
Unaudited (Dollars in thousands)
 
Twelve Months Ended
December 31,
 2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) earnings$(143,767)$97,339
Adjustments to reconcile net (loss) earnings to net cash flows from operating activities:
Goodwill impairment195,079
Depreciation and amortization101,953104,990
Equity-based compensation expense3,3143,620
Deferred taxes7,084(40,589)
Employee benefit plans(116)(4,371)
Deferred issuance costs on debt1,3561,199
Gain on divested assets(25,510)
Disposal of plant and equipment, net7264,053
Other non-cash adjustments, net1461,750
Changes in working capital, net of acquisition16,20021,761
Changes in taxes receivable, net13,980(10,573)
Other, net(1,546)(509)
Net cash flows from operating activities168,899 178,670 
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment(295,708)(199,748)
Proceeds from divested assets70,930
Other, net807 951 
Net cash flows from investing activities(223,971)(198,797)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock(4,875)
Borrowings on short-term debt569,650298,308
Repayments of borrowings on short-term debt(503,817)(278,308)
Payments for debt issuance costs(2,139)(134)
Payment of tax withholdings on equity-based payment arrangements(413)(1,127)
Net cash flows from financing activities63,281 13,864 
Increase (decrease) in cash, cash equivalents, and restricted cash8,209(6,263)
Cash, cash equivalents, and restricted cash at beginning of period16,738 23,001 
Cash, cash equivalents, and restricted cash at end of period$24,947 $16,738 
 
 
Clearwater Paper Corporation
Segment Information
Unaudited (Dollars in thousands)
  
Three Months EndedTwelve Months Ended
December 31,December 31,
 2018 20172018 2017
Segment net sales:    
Consumer Products$212,74350%$234,65654%$884,81251%$941,90754%
Pulp and Paperboard215,964  50%202,060  46%839,406  49%788,501  46%
Total segment net sales$428,707  100%$436,716  100%$1,724,218  100%$1,730,408  100%
 
Operating income (loss):
Consumer Products 1$513%$7,54629%$(2,731)3%$28,97341%
Goodwill impairment(195,079)112%%(195,079)199%%
Gain on divested assets1,008  1%  %23,952  24%  %
 (193,558) 111%7,546  29%(173,858) 178%28,973  41%
Pulp and Paperboard 131,800  18%34,354  130%130,426  133%97,360  137%
(161,758)41,900(43,432)126,333
Corporate 1(12,971) 7%(15,533) 59%(54,477) 56%(55,148) 77%
(Loss) income from operations$(174,729) 100%$26,367  100%$(97,909) 100%$71,185  100%
 
1In 2018, the company adopted a new accounting standard that resulted in a change in the presentation of pension and postretirement benefit (costs) income other than service costs on a line outside of “(Loss) income from operations.” The corresponding prior period amounts have been reclassified to conform with the current period presentation.
 
 
Clearwater Paper Corporation
Reconciliation of Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
Unaudited (Dollars in thousands)
 
 Three Months EndedTwelve Months Ended
December 31,December 31,
 2018 20172018 2017
Net (loss) earnings$(187,772)$80,924$(143,767)$97,339
Add back:
Interest expense, net7,3307,97530,62031,374
Income tax provision (benefit)4,480(62,245)10,305(56,385)
Depreciation and amortization expense 326,267 25,522 101,953 104,990 
EBITDA 1(149,695)52,176 (889)177,318 
 
Directors' equity-based compensation benefit(410)(363)(2,340)(2,833)
Goodwill impairment195,079195,079
Gain on divested assets, net 5(1,008)(23,952)
Reorganization related expenses associated with SG&A cost control measures5451,7836,9352,263
Consumer products reorganization related expenses981,048
Other844844
Costs associated with Oklahoma City facility closure 43,64911,055
Costs associated with Long Island facility closure2981,443
Manchester Industries acquisition related expenses220
Write-off of assets as a result of Warehouse Automation project   41 
Adjusted EBITDA 2$45,453 $57,543 $176,725 $189,507 
 
 
1

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--EBITDA is a non-GAAP measure that management uses to evaluate the cash generating capacity of the company. The most directly comparable GAAP measure is net earnings. EBITDA is net earnings adjusted for net interest expense, income taxes, and depreciation and amortization. It should not be considered as an alternative to net earnings computed under GAAP.

2

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--Adjusted EBITDA excludes the impact of the items listed that the company does not believe are indicative of its core operating performance.

3Depreciation and amortization expense for the twelve months ended December 31, 2017 includes $3.7 million of accelerated depreciation associated with the Oklahoma City facility closure, $0.6 million associated with the closed Long Island facility and $0.4 million as a result of the warehouse automation project.
4Costs associated with the Oklahoma City facility closure for both the three and twelve months ended December 30, 2017 include $3.2 million of expenses associated with the execution of a sublease for the facility. Costs associated with the Oklahoma City facility closure for the twelve months ended December 31, 2017 also include $4.3 million of loss on the write-down of assets to their held for sale value.
5The "Gain on divested assets, net” amounts for the three and twelve months ended December 31, 2018, are associated with the sale of the company’s Ladysmith, Wisconsin facility in the third quarter of 2018. The gain in the fourth quarter of 2018 is the result of the settlement of a working capital contingency associated with the sale.
 
 
Clearwater Paper Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted Net Earnings and Adjusted Net Earnings Per Diluted Common Share
Unaudited (Dollars in thousands, except per-share amounts)
   
Three Months EndedTwelve Months Ended
December 31,December 31,
 2018 201720182017
GAAP net (loss) earnings$(187,772)$80,924$(143,767)$97,339
Adjustments, after-tax 1:
Directors' equity-based compensation benefit(337)(242)(1,817)(1,881)
Goodwill impairment195,079195,079
Gain on divested assets, net 3(828)(13,508)
Reorganization expenses associated with SG&A cost control measures4471,1895,2141,506
Consumer products reorganization related expenses80774
Other693693
Impact of state tax rate changes(676)
Federal tax rate change 4(70,055)(70,055)
Costs associated with Oklahoma City facility closure2,4349,741
Costs associated with Long Island facility closure1991,349
Accelerated depreciation of assets as a result of Warehouse Automation project240
Manchester Industries acquisition related expenses146
Write-off of assets as a result of Warehouse Automation project   27 
Adjusted net earnings 2$7,362 $14,449 $41,992 $38,412 
 
GAAP net (loss) earnings per diluted share$(11.39)$4.88$(8.72)$5.88
Adjustments, after-tax 1:
Directors' equity-based compensation benefit(0.02)(0.01)(0.11)(0.11)
Goodwill impairment11.8311.83
Gain on divested assets, net 3(0.05)(0.82)
Reorganization expenses associated with SG&A cost control measures0.030.070.320.09
Consumer products reorganization related expenses0.010.05
Other0.040.04
Impact of state tax rate changes(0.04)
Federal tax rate change 4(4.23)(4.23)
Costs associated with Oklahoma City facility closure0.150.59
Costs associated with Long Island facility closure0.010.08
Accelerated depreciation of assets as a result of Warehouse Automation project0.01
Manchester Industries acquisition related expenses0.01
Write-off of assets as a result of Warehouse Automation project    
Adjusted net earnings per diluted share 2$0.45 $0.87 $2.55 $2.32 
 
1Tax effect was calculated using the estimated annual effective tax rate for the period presented.
2

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--Adjusted net earnings and Adjusted net earnings per diluted share exclude the impact of the items listed that the company does not believe are indicative of its core operating performance.

3The "Gain on divested assets, net” amounts for the three and twelve months ended December 31, 2018, are associated with the sale of the company’s Ladysmith, Wisconsin facility in the third quarter of 2018. The gain in the fourth quarter of 2018 is the result of the settlement of a working capital contingency associated with the sale.
4The federal tax rate change in 2017 is primarily due to the remeasurement of deferred tax liabilities following passage of the Tax Cuts and Jobs Act in December 2017.
 
 
Clearwater Paper Corporation
Reconciliation of Non-GAAP Financial Measures
Segment EBITDA, Adjusted EBITDA, EBITDA Margin and Adjusted EBITDA Margin
Unaudited (Dollars in thousands)
  
Three Months EndedTwelve Months Ended
December 31,December 31,
 2018 20172018 2017
Consumer Products:
Net sales$212,743$234,656$884,812$941,907
Operating (loss) income 5(193,558)7,546(173,858)28,973
Depreciation and amortization expense 614,820 14,400 57,784 65,007 
Consumer Products EBITDA 1,5$(178,738)$21,946 $(116,074)$93,980 
Gain on divested assets, net 7(1,008)(23,952)
Goodwill impairment195,079195,079
Reorganization related expenses associated with SG&A cost control measures241201,98720
Consumer products reorganization related expenses981,048
Costs associated with Oklahoma City facility closure 83,64911,055
Costs associated with Long Island facility closure2981,443
Write-off of assets as a result of Warehouse Automation project   41 
Consumer Products Adjusted EBITDA 2,5$15,672 $25,913 $58,088 $106,539 
Consumer Products EBITDA margin 3(84.0)%9.4%(13.1)%10.0%
Consumer Products Adjusted EBITDA margin 47.4%11.0%6.6%11.3%
Pulp and Paperboard
Net sales$215,964$202,060$839,406$788,501
Operating income 531,80034,354130,42697,360
Depreciation and amortization expense9,692 9,685 37,798 34,474 
Pulp and Paperboard EBITDA 1,5$41,492 $44,039 $168,224 $131,834 
Reorganization related expenses associated with SG&A cost control measures6 132 460 132 
Pulp and Paperboard Adjusted EBITDA 2,5$41,498 $44,171 $168,684 $131,966 
Pulp and Paperboard EBITDA margin 319.2%21.8%20.0%16.7%
Pulp and Paperboard Adjusted EBITDA margin 419.2%21.9%20.1%16.7%
 
1

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--Segment EBITDA is segment operating income adjusted for depreciation and amortization.

2

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--Segment Adjusted EBITDA excludes the impact of the items listed that the company does not believe are indicative of its core operating performance.

3

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--Segment EBITDA margin is defined as Segment EBITDA divided by Segment Net sales.

4

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--Segment Adjusted EBITDA margin is defined as Segment Adjusted EBITDA divided by Segment Net sales.

5In 2018, the company adopted a new accounting standard that resulted in a change in the presentation of pension and postretirement benefit (costs) income other than service costs on a line outside of “(Loss) income from operations.” The corresponding prior period amounts have been reclassified to conform with the current period presentation.
6Consumer Products depreciation and amortization expense for the twelve months ended December 31, 2017 includes accelerated depreciation of $3.7 million associated with the Oklahoma City facility closure, $0.6 million associated with the Long Island facility and $0.4 million as a result of the warehouse automation project.
7The "Gain on divested assets, net” amounts for the three and twelve months ended December 31, 2018, are associated with the sale of the company’s Ladysmith, Wisconsin facility in the third quarter of 2018. The gain in the fourth quarter of 2018 is the result of the settlement of a working capital contingency associated with the sale.
8Costs associated with the Oklahoma City facility closure for both the three and twelve months ended December 31, 2017 include $3.2 million of expenses associated with the execution of a sublease for the facility. Costs associated with the Oklahoma City facility closure for the twelve months ended December 31, 2017 also include $4.3 million of loss on the write-down of assets to their held for sale value.
 
 
Clearwater Paper Corporation
Reconciliation of Non-GAAP Financial Measures
Segment Adjusted Operating Income and Operating Margin
Unaudited (Dollars in thousands)
   
Three Months EndedTwelve Months Ended
December 31,December 31,
 2018 201720182017
Consumer Products:
Net sales$212,743$234,656$884,812$941,907
Operating (loss) income 3(193,558)7,546(173,858)28,973
Goodwill impairment195,079195,079
Gain on Divested Assets, net 4(1,008)(23,952)
Reorganization related expenses associated with SG&A cost control measures241201,98720
Consumer products reorganization related expenses981,048
Costs associated with Oklahoma City facility closure 53,64914,718
Costs associated with Long Island facility closure 62982,034
Accelerated depreciation of assets as a result of Warehouse Automation project361
Write-off of assets as a result of Warehouse Automation project   41 
Consumer Products Adjusted operating income 1,3$852 $11,513 $304 $46,147 
Consumer Products operating margin(91.0)%3.2%(19.6)%3.1%
Consumer Products Adjusted operating margin 20.4%4.9%%4.9%
 
Pulp and Paperboard:
Net sales$215,964$202,060$839,406$788,501
Operating income 331,80034,354130,42697,360
Reorganization related expenses associated with SG&A cost control measures6 132 460 132 
Pulp and Paperboard Adjusted operating income 1,3$31,806 $34,486 $130,886 $97,492 
Pulp and Paperboard operating margin14.7%17.0%15.5%12.3%
Pulp and Paperboard Adjusted operating margin 214.7%17.1%15.6%12.4%
 
1

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--Segment Adjusted operating income excludes the impact of the items listed that the company does not believe are indicative of its core operating performance.

2

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--Segment Adjusted operating margin is defined as Segment Adjusted operating income divided by Segment Net sales.

3

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--In 2018, the company adopted a new accounting standard that resulted in a change in the presentation of pension and postretirement benefit (costs) income other than service costs on a line outside of “(Loss) income from operations.” The corresponding prior period amounts have been reclassified to conform with the current period presentation.

4The "Gain on divested assets, net” amounts for the three and twelve months ended December 31, 2018, are associated with the sale of the company’s Ladysmith, Wisconsin facility in the third quarter of 2018. The gain in the fourth quarter of 2018 is the result of the settlement of a working capital contingency associated with the sale.
5Costs associated with the Oklahoma City facility closure for both the three and twelve months ended December 31, 2017 include $3.2 million of expenses associated with the execution of a sublease for the facility. Costs associated with the Oklahoma City facility closure for the twelve months ended December 31, 2017 also include $4.3 million of loss on the write-down of assets to their held for sale value, as well as $3.7 million of accelerated depreciation.
6Costs associated with the Long Island Facility closure include $0.6 million of accelerated depreciation for the twelve months ended December 31, 2017.
 
 
Clearwater Paper Corporation
Reconciliation of Non-GAAP Financial Measures
Adjusted Income Tax Provision
Unaudited (Dollars in thousands)
   
Three Months EndedTwelve Months Ended
December 31,December 31,
 2018 201720182017
GAAP income tax (provision) benefit$(4,480)$62,245$(10,305)$56,385
Adjustments, tax impact:
Directors' equity-based compensation (expense) benefit73121523952
Gain on divested assets, net18010,444
Reorganization related expenses associated with SG&A cost control measures(98)(594)(1,721)(757)
Federal tax rate change 3(70,055)(70,055)
Consumer products reorganization related expenses(18)(274)
Other(151)(151)
Impact of state tax reform(676)
Costs associated with Oklahoma City facility closure(1,215)(4,977)
Manchester Industries acquisition related expenses(74)
Costs associated with Long Island facility closure(99)(686)
Write-off of assets as a result of Warehouse Automation project(14)
Accelerated depreciation of assets as a result of Warehouse Automation project   (121)
Adjusted income tax benefit (provision) 1$(4,494)$(9,597)$(2,160)$(19,347)
Adjusted income tax rate 1,237.9%39.9%4.9%33.5%
 
1

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--Adjusted income tax benefit (provision) and Adjusted income tax rate exclude the impact of the items listed that the company does not believe are indicative of its core operating performance.

2

SPOKANE, Wash.--(BUSINESS WIRE)--Mar 12, 2019--The Adjusted income tax rate is defined as [Adjusted income tax benefit (provision)/(Adjusted income tax benefit (provision) + Adjusted net earnings)].

3The federal tax rate change in 2017 is primarily due to the remeasurement of deferred tax liabilities following passage of the Tax Cuts and Jobs Act in December 2017.
 

View source version on businesswire.com:https://www.businesswire.com/news/home/20190312005812/en/

CONTACT: Clearwater Paper Corporation

(News media)

Shannon Myers

509.344.5967

or

(Investors)

Robin S. Yim

Vice President, Investor Relations

509.344.5906

KEYWORD: UNITED STATES NORTH AMERICA WASHINGTON

INDUSTRY KEYWORD: NATURAL RESOURCES FOREST PRODUCTS RETAIL SUPERMARKET

SOURCE: Clearwater Paper Corporation

Copyright Business Wire 2019.

PUB: 03/12/2019 04:05 PM/DISC: 03/12/2019 04:05 PM

http://www.businesswire.com/news/home/20190312005812/en

Copyright Business Wire 2019.

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