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     172  0 Kommentare Clearwater Paper Reports Third Quarter 2018 Results

    Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the third quarter of 2018.

    The company reported net sales of $426.5 million for the third quarter of 2018, which was flat with net sales for the third quarter of 2017. Net earnings determined in accordance with generally accepted accounting principles, or GAAP, for the third quarter of 2018 were $34.4 million, or $2.08 per diluted share, compared to net earnings for the third quarter of 2017 of $0.9 million, or $0.05 per diluted share. The increase in net earnings was due primarily to a $22.9 million gain on the sale of the company's Ladysmith, Wisconsin manufacturing facility along with higher pricing and record shipment volumes in paperboard, improved operating efficiencies and lower selling, general and administrative expenses. Excluding certain non-core items identified in the attached Reconciliation of Non-GAAP Financial Measures, third quarter 2018 adjusted net earnings were $22.3 million, or $1.35 per diluted share, compared to third quarter 2017 adjusted net earnings of $5.3 million, or $0.32 per diluted share.

    Earnings before interest, taxes, depreciation and amortization, or EBITDA, were $71.0 million for the third quarter of 2018, compared to $31.3 million for the third quarter of 2017. Adjusted EBITDA for the quarter was $48.9 million, up 29.9% compared to third quarter 2017 Adjusted EBITDA of $37.6 million.

    “We exceeded our expectations for the third quarter due to record paperboard shipments and strong customer demand for paperboard,” said Linda K. Massman, president and chief executive officer. “We are also seeing positive results from the operating model improvements for our tissue business, resulting in lower transportation and warehousing costs.”

    “For the remainder of 2018, we are in the home stretch to complete our new paper machine, converting lines, and warehouse at our Shelby, North Carolina facility. We are also keenly focused on generating cash to pay down debt and optimizing our network of tissue assets to streamline costs and better meet the needs of our customers.”

    THIRD QUARTER 2018 SEGMENT PERFORMANCE

    Consumer Products

    Net sales in the Consumer Products segment were $211.6 million for the third quarter of 2018, down 9.1% compared to third quarter 2017 net sales of $232.9 million. This decrease was due to lower retail volumes and prices, the divestiture of the Ladysmith facility, and weaker product mix as reflected in a 7.4% reduction in retail converted case shipment volumes, partially offset by a 43.0% increase in non-retail parent roll shipments as the company works to replace lost converted case business in the second half of 2018.

    Operating income and margin for the third quarter of 2018 were $21.7 million and 10.2%, an increase of $17.2 million compared to operating income and margin of $4.5 million and 1.9% respectively, in the third quarter of 2017, that was primarily due to the gain on sale of the Ladysmith facility. After adjusting for certain non-core items identified in the attached Reconciliation of Non-GAAP Financial Measures, including the gain on the sale of Ladysmith, an adjusted operating loss of $1.0 million for the third quarter of 2018 was down from $10.3 million and 4.4% of adjusted operating income and margin, respectively, for the same period in 2017. Adjusted EBITDA for the segment was $13.4 million in the third quarter of 2018, down from $26.0 million in the third quarter of 2017. Those decreases were primarily due to lower average selling prices, the absorption of fixed costs over lower volumes of retail shipments, higher pulp costs and the divestiture of Ladysmith.

    Tissue Sales Volumes and Prices:

    • Total tissue volumes sold were 88,860 tons in the third quarter of 2018, a decrease of 1.8% compared to 90,502 tons in the third quarter of 2017. Converted product cases shipped were 11.8 million in the third quarter of 2018, 7.4% lower than the 12.7 million cases shipped in the third quarter of 2017.

    • Average tissue net selling prices decreased 7.5%, to $2,381 per ton in the third quarter of 2018, compared to $2,574 per ton in the third quarter of 2017, primarily due to the increased volume and percentage of non-retail parent rolls in the product mix.

    Pulp and Paperboard

    Net sales in the Pulp and Paperboard segment were $214.8 million for the third quarter of 2018, up 11.0% compared to third quarter 2017 net sales of $193.6 million. The increase was due to record shipment volumes and higher paperboard prices.

    Operating income and margin for the third quarter of 2018 were $38.3 million and 17.8%, compared to $14.7 million and 7.6%, respectively, for the third quarter of 2017. Adjusted EBITDA for the segment was $47.7 million in the third quarter of 2018, compared to $23.1 million in the third quarter of 2017. The improvement was primarily due to higher average selling prices and the absence of $21 million in major maintenance expense incurred in the third quarter of 2017, which more than offset increased costs for wood fiber in the Pacific Northwest and higher transportation costs.

    Paperboard Sales Volumes and Prices:

    • Paperboard sales volumes were 218,135 tons in the third quarter of 2018, an increase of 8.8% compared to 200,569 tons in the third quarter of 2017.

    • Paperboard net selling prices increased 2.1% to $985 per ton for the third quarter of 2018, compared to $965 per ton in the third quarter of 2017.

    Taxes

    The company's consolidated GAAP tax rate and adjusted tax rate for the third quarter of 2018 were a provision of 9.6% and a benefit of 39.5%, respectively. That compares to GAAP and adjusted tax rate benefits of 138.7% and 17.9% in the third quarter of 2017. The tax rate for the third quarter of 2018 included a tax benefit of $10 million associated with an alternative energy production tax credit recorded in the quarter. The tax rate for 2017 reflected $2 million of similar alternative energy credits in addition to a tax benefit due to a pre-tax loss in the third quarter of 2017.

    Note Regarding Use of Non-GAAP Financial Measures

    In this press release, the company presents certain non-GAAP financial information for the third quarters 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 earnings, net earnings per diluted share, operating 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 network optimization of tissue assets, transportation and warehousing costs, completion of the Shelby, North Carolina expansion, cash generation, debt repayment and the replacement of lost converted tissue case sales. 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 the company's 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 regards to, or a reduction in orders from, a significant customer; changes in customer product preferences and competitors' product offerings; the company's ability to successfully implement its operational efficiencies and cost savings strategies, including related capital projects; the company's ability to achieve the expected operational or financial results of its capital projects, including from the continuous digester at the Lewiston facility; the company's ability to complete construction of its new tissue manufacturing and converting 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 the expanded Shelby, North Carolina operations when completed; changes in the U.S. and international economies and in general economic conditions in the regions and industries in which the company operates; labor disruptions; changes in transportation costs and disruptions in transportation services; changes in the cost and availability of wood fiber and wood pulp; 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; cyclical industry conditions; changes in expenses and required contributions 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 service its debt obligations; restrictions on the company’s business from debt covenants and terms; 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 Ended Nine Months Ended
    September 30, September 30,
      2018     2017 2018 2017
    Net sales $ 426,460   100 % $ 426,504   100 % $ 1,295,511   100 % $ 1,293,692   100 %
    Costs and expenses:
    Cost of sales1 (376,221 ) 88 % (386,762 ) 91 % (1,155,808 ) 89 % (1,154,883 ) 89 %
    Selling, general and administrative expenses1 (26,283 ) 6 % (34,582 ) 8 % (85,827 ) 7 % (93,991 ) 7 %

    Gain on divested assets, net

    22,944   5 %   % 22,944   2 %   %
    Total operating costs and expenses (379,560 ) 89 % (421,344 ) 99 % (1,218,691 ) 94 % (1,248,874 ) 97 %
    Income from operations 46,900 11 % 5,160 1 % 76,820 6 % 44,818 3 %
    Interest expense, net (7,547 ) 2 % (7,683 ) 2 % (23,290 ) 2 % (23,399 ) 2 %
    Non-operating pension and other postretirement benefit (costs) income1 (1,234 ) % 291   % (3,700 ) % 856   %
    Earnings (loss) before income taxes 38,119 9 % (2,232 ) 1 % 49,830 4 % 22,275 2 %
    Income tax (provision) benefit (3,675 ) 1 % 3,095   1 % (5,825 ) % (5,860 ) %
    Net earnings $ 34,444   8 % $ 863   % $ 44,005   3 % $ 16,415   1 %
    Net earnings per common share:
    Basic $ 2.09 $ 0.05 $ 2.67 $ 1.00
    Diluted 2.08 0.05 2.66 0.99
    Average shares outstanding (in thousands):
    Basic 16,487 16,458 16,493 16,466
    Diluted 16,564 16,567 16,573 16,573
    1   In the first quarter of 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 “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)
         
    September 30, December 31,
      2018 2017
    ASSETS
    Current assets:
    Cash and cash equivalents $ 76,150 $ 15,738
    Restricted cash 1,080
    Receivables, net 139,170 142,065
    Taxes receivable 6,748 20,282
    Inventories 263,274 266,043
    Other current assets 6,105   8,661
    Total current assets 492,527   452,789
    Property, plant and equipment, net 1,206,168 1,050,982
    Goodwill 230,153 244,161
    Intangible assets, net 25,865 32,542
    Other assets, net 25,382   21,778
    TOTAL ASSETS $ 1,980,095   $ 1,802,252
     
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
    Borrowings under revolving credit facilities $ 100,000 $ 155,000
    Accounts payable and accrued liabilities 341,075 256,621
    Current liability for pensions and other postretirement employee benefits 7,631   7,631
    Total current liabilities 448,706   419,252
    Long-term debt 671,100 570,524
    Liability for pensions and other postretirement employee benefits 67,759 72,469
    Other long-term obligations 37,788 43,275
    Accrued taxes 2,839 2,770
    Deferred tax liabilities 123,778   118,528
    TOTAL LIABILITIES 1,351,970   1,226,818
     
    Stockholders' equity 628,125   575,434
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,980,095   $ 1,802,252
     
     
    Clearwater Paper Corporation
    Consolidated Statements of Cash Flows
    Unaudited (Dollars in thousands)
     
    Nine Months Ended
    September 30,
      2018     2017
    CASH FLOWS FROM OPERATING ACTIVITIES
    Net earnings $ 44,005 $ 16,415
    Adjustments to reconcile net earnings to net cash flows from operating activities:
    Depreciation and amortization 75,686 79,468
    Equity-based compensation expense 2,845 2,523
    Deferred taxes 3,930 14,602
    Employee benefit plans 102 (2,999 )
    Gain on divested assets (25,510 )
    Disposal of plant and equipment, net 128 3,755
    Other non-cash adjustments, net 899 874
    Changes in working capital, net 7,402 43,846
    Changes in taxes receivable, net 13,534 (4,869 )
    Other, net (1,922 ) (1,439 )
    Net cash flows from operating activities 121,099   152,176  
    CASH FLOWS FROM INVESTING ACTIVITIES
    Additions to property, plant and equipment (174,034 ) (136,650 )
    Proceeds from divested assets 70,930
    Other, net 807   753  
    Net cash flows from investing activities (102,297 ) (135,897 )
    CASH FLOWS FROM FINANCING ACTIVITIES
    Purchase of treasury stock (4,875 )
    Borrowings on revolving credit facilities 322,454 185,000
    Repayments of borrowings on revolving credit facilities (277,454 ) (210,000 )
    Other, net (853 ) (927 )
    Net cash flows from financing activities 44,147   (30,802 )
    Increase (decrease) in cash, cash equivalents, and restricted cash 62,949 (14,523 )
    Cash, cash equivalents, and restricted cash at beginning of period 16,738   23,001  
    Cash, cash equivalents, and restricted cash at end of period $ 79,687   $ 8,478  
     
     
    Clearwater Paper Corporation
    Segment Information
    Unaudited (Dollars in thousands)
         
    Three Months Ended Nine Months Ended
    September 30, September 30,
      2018     2017 2018     2017
    Segment net sales:
    Consumer Products $ 211,642 50 % $ 232,916 55 % $ 672,069 52 % $ 707,251 55 %
    Pulp and Paperboard 214,818   50 % 193,588   45 % 623,442   48 % 586,441   45 %
    Total segment net sales $ 426,460   100 % $ 426,504   100 % $ 1,295,511   100 % $ 1,293,692   100 %
     
    Operating income (loss):
    Consumer Products1 $ (1,269 ) 3 % $ 4,525 88 % $ (3,244 ) 4 % $ 21,427 48 %
    Gain on divested assets 22,944 49 % % 22,944 30 % %
    Pulp and Paperboard1 38,280   82 % 14,735   286 % 98,626   128 % 63,006   141 %
    59,955 19,260 118,326 84,433
    Corporate1 (13,055 ) 28 % (14,100 ) 273 % (41,506 ) 54 % (39,615 ) 88 %
    Income from operations $ 46,900   100 % $ 5,160   100 % $ 76,820   100 % $ 44,818   100 %
    1   In the first quarter of 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 “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 Ended Nine Months Ended
    September 30, September 30,
      2018   2017 2018   2017
    Net earnings $ 34,444 $ 863 $ 44,005 $ 16,415
    Add back:
    Interest expense, net 7,547 7,683 23,290 23,399
    Income tax provision (benefit) 3,675 (3,095 ) 5,825 5,860
    Depreciation and amortization expense3 25,342   25,856   75,686   79,468  
    EBITDA1 $ 71,008   $ 31,307   $ 148,806   $ 125,142  
     
    Gain on divested assets, net $ (22,944 ) $ $ (22,944 ) $
    Directors' equity-based compensation expense (benefit) 769 463 (1,930 ) (2,470 )
    Reorganization related expenses associated with SG&A cost control measures 210 480 6,390 480
    Consumer products reorganization related expenses 158 950
    Other (338 )
    Costs associated with Oklahoma City facility closure4 5,057 7,406
    Costs associated with Long Island facility closure 314 1,145
    Manchester Industries acquisition related expenses 220
    Write-off of assets as a result of Warehouse Automation project       41  
    Adjusted EBITDA2 $ 48,863   $ 37,621   $ 131,272   $ 131,964  
    1  

    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

    Adjusted EBITDA excludes the impact of the items listed that the Company does not believe are indicative of its core operating performance.

    3 Depreciation and amortization expense for the three months ended September 30, 2017 includes accelerated depreciation of $0.3 million associated with the closed Long Island facility and $0.1 million as a result of the warehouse automation project. In addition, depreciation and amortization for the nine months ended September 30, 2017 includes $3.7 million of accelerated depreciation 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.
    4 Costs associated with the Oklahoma City facility closure for both the three and nine months ended September 30, 2017 include $4.3 million of loss on the writedown of assets to their held for sale value.
     
    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 Ended Nine Months Ended
    September 30, September 30,
      2018     2017 2018 2017
    GAAP net earnings $ 34,444 $ 863 $ 44,005 $ 16,415
    Adjustments, after-tax1:
    Gain on divested assets, net (12,680 ) (12,680 )
    Directors' equity-based compensation expense (benefit) 524 306 (1,480 ) (1,639 )
    Reorganization expenses associated with SG&A cost control measures 143 317 4,767 317
    Consumer products reorganization related expenses 108 694
    Other (250 )
    Impact of state tax rate changes (676 )
    Costs associated with Oklahoma City facility closure 3,338 7,307
    Costs associated with Long Island facility closure 402 1,150
    Accelerated depreciation of assets as a result of Warehouse Automation project 79 240
    Manchester Industries acquisition related expenses 146
    Write-off of assets as a result of Warehouse Automation project       27  
    Adjusted net earnings2 $ 22,289   $ 5,305   $ 34,630   $ 23,963  
     
    GAAP net earnings per diluted share $ 2.08 $ 0.05 $ 2.66 $ 0.99
    Adjustments, after-tax1:
    Gain on divested assets, net (0.76 ) (0.78 )
    Directors' equity-based compensation expense (benefit) 0.03 0.02 (0.09 ) (0.10 )
    Reorganization expenses associated with SG&A cost control measures 0.01 0.02 0.29 0.02
    Consumer products reorganization related expenses 0.01 0.04
    Other (0.02 )
    Impact of state tax rate changes (0.04 )
    Costs associated with Oklahoma City facility closure 0.20 0.44
    Costs associated with Long Island facility closure 0.02 0.07
    Accelerated depreciation of assets as a result of Warehouse Automation project 0.01 0.02
    Manchester Industries acquisition related expenses       0.01  
    Adjusted net earnings per diluted share2 $ 1.35   $ 0.32   $ 2.09   $ 1.45  
    1   Tax effect was calculated using the estimated annual effective tax rate for the period presented.
    2

    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.

     
    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 Ended Nine Months Ended
    September 30, September 30,
      2018     2017 2018     2017
    Consumer Products:
    Net sales $ 211,642 $ 232,916 $ 672,069 $ 707,251
    Operating income5 21,675 4,525 19,700 21,427
    Depreciation and amortization expense6 14,447   16,073   42,964   50,607  
    Consumer Products EBITDA1,5 $ 36,122   $ 20,598   $ 62,664   $ 72,034  
    Gain on divested assets, net (22,944 ) (22,944 )
    Reorganization related expenses associated with SG&A cost control measures 87 1,746
    Consumer products reorganization related expenses 158 950
    Costs associated with Oklahoma City facility closure7 5,057 7,406
    Costs associated with Long Island facility closure 314 1,145
    Write-off of assets as a result of Warehouse Automation project       41  
    Consumer Products Adjusted EBITDA2,5 $ 13,423   $ 25,969   $ 42,416   $ 80,626  
    Consumer Products EBITDA margin3 17.1 % 8.8 % 9.3 % 10.2 %
    Consumer Products Adjusted EBITDA margin4 6.3 % 11.1 % 6.3 % 11.4 %
    Pulp and Paperboard
    Net sales $ 214,818 $ 193,588 $ 623,442 $ 586,441
    Operating income5 38,280 14,735 98,626 63,006
    Depreciation and amortization expense 9,316   8,328   28,106   24,789  
    Pulp and Paperboard EBITDA1,5 $ 47,596   $ 23,063   $ 126,732   $ 87,795  
    Reorganization related expenses associated with SG&A cost control measures 71     454    
    Pulp and Paperboard Adjusted EBITDA2,5 $ 47,667   $ 23,063   $ 127,186   $ 87,795  
    Pulp and Paperboard EBITDA margin3 22.2 % 11.9 % 20.3 % 15.0 %
    Pulp and Paperboard Adjusted EBITDA margin4 22.2 % 11.9 % 20.4 % 15.0 %
    1  

    Segment EBITDA is segment operating income adjusted for depreciation and amortization.

    2

    Segment Adjusted EBITDA excludes the impact of the items listed that the Company does not believe are indicative of its core operating performance.

    3

    Segment EBITDA margin is defined as Segment EBITDA divided by Segment Net sales.

    4

    Segment Adjusted EBITDA margin is defined as Segment Adjusted EBITDA divided by Segment Net sales.

    5 In the first quarter of 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 “Income from operations.” The corresponding prior period amounts have been reclassified to conform with the current period presentation.
    6 Consumer Products depreciation and amortization expense for the three months ended September 30, 2017 includes accelerated depreciation of $0.3 million associated with the Long Island facility and $0.1 million as a result of the warehouse automation project. Depreciation and amortization expense for the nine months ended September 30, 2017 includes $3.7 million of accelerated depreciation 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.

    7

    Costs associated with the Oklahoma City facility closure for both the three and nine months ended September 30, 2017 include $4.3 million of loss on the writedown 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 Ended Nine Months Ended
    September 30, September 30,
      2018     2017 2018 2017
    Consumer Products:
    Net sales $ 211,642 $ 232,916 $ 672,069 $ 707,251
    Operating income3 21,675 4,525 19,700 21,427
    Gain on Divested Assets, net (22,944 ) (22,944 )
    Reorganization related expenses associated with SG&A cost control measures 87 1,746
    Consumer products reorganization related expenses 158 950
    Costs associated with Oklahoma City facility closure 4 5,057 11,069
    Costs associated with Long Island facility closure5 610 1,736
    Accelerated depreciation of assets as a result of Warehouse Automation project 120 361
    Write-off of assets as a result of Warehouse Automation project       41  
    Consumer Products Adjusted operating (loss) income1,3 $ (1,024 ) $ 10,312   $ (548 ) $ 34,634  
    Consumer Products operating margin 10.2 % 1.9 % 2.9 % 3.0 %
    Consumer Products Adjusted operating margin2 (0.5 )% 4.4 % (0.1 )% 4.9 %
     
    Pulp and Paperboard:
    Net sales $ 214,818 $ 193,588 $ 623,442 $ 586,441
    Operating income3 38,280 14,735 98,626 63,006
    Reorganization related expenses associated with SG&A cost control measures 71     454    

    Pulp and Paperboard Adjusted operating income1,3

    $ 38,351   $ 14,735   $ 99,080   $ 63,006  
    Pulp and Paperboard operating margin 17.8 % 7.6 % 15.8 % 10.7 %
    Pulp and Paperboard Adjusted operating margin2 17.9 % 7.6 % 15.9 % 10.7 %
    1  

    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

    Segment Adjusted operating margin is defined as Segment Adjusted operating income divided by Segment Net sales.

    3 In the first quarter of 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 “Income from operations.” The corresponding prior period amounts have been reclassified to conform with the current period presentation.
    4 Costs associated with the Oklahoma City facility closure for both the three and nine months ended September 30, 2017 include $4.3 million of loss on the writedown of assets to their held for sale value, as well as $3.7 million of accelerated depreciation for the nine months ended September 30, 2017.
    5 Costs associated with the Long Island Facility closure include $0.3 million and $0.6 million of accelerated depreciation for the three and nine months ended September 30, 2017, respectively.
     
    Clearwater Paper Corporation
    Reconciliation of Non-GAAP Financial Measures
    Adjusted Income Tax Provision
    Unaudited (Dollars in thousands)
             
    Three Months Ended Nine Months Ended
    September 30, September 30,
      2018     2017 2018 2017
    GAAP income tax (provision) benefit $ (3,675 ) $ 3,095 $ (5,825 ) $ (5,860 )
    Adjustments, tax impact:
    Gain on divested assets, net 10,264 10,264
    Directors' equity-based compensation (expense) benefit (245 ) (157 ) 450 831
    Reorganization related expenses associated with SG&A cost control measures (67 ) (163 ) (1,623 ) (163 )
    Consumer products reorganization related expenses (50 ) (256 )
    Other 88
    Impact of state tax reform (676 )
    Costs associated with Oklahoma City facility closure (1,719 ) (3,762 )
    Manchester Industries acquisition related expenses (74 )
    Costs associated with Long Island facility closure (208 ) (586 )
    Write-off of assets as a result of Warehouse Automation project (14 )
    Accelerated depreciation of assets as a result of Warehouse Automation project   (41 )   (121 )
    Adjusted income tax benefit (provision)1 $ 6,315   $ 807   $ 2,334   $ (9,749 )
    Adjusted income tax rate1,2 39.5 % 17.9 % 7.2 % 28.9 %
    1  

    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

    The Adjusted income tax rate is defined as [Adjusted income tax benefit (provision)/(Adjusted income tax benefit (provision) + Adjusted net earnings)].



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    Clearwater Paper Reports Third Quarter 2018 Results Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the third quarter of 2018. The company reported net sales of $426.5 million for the third quarter of 2018, which was flat with net sales for …