Clearwater paper reports second quarter 2017 results
Spokane, wash.--(business wire)--clearwater paper corporation (nyse:clw) today reported financial results for the second quarter of 2017. the company reported net sales of $429.7 million for the second quarter of 2017, down 1.6% compared to net sales of $436.7 million for the second quarter of 2016. net earnings determined in accordance with generally accepted accounting principles, or gaap, for the second quarter of 2017 were $8.0 million, or $0.48 per diluted share, compared to net earnings of $20.9 million, or $1.21 per diluted share, for the second quarter of 2016. the decrease in net earnings was due primarily to a planned bi-annual major maintenance outage at the company's arkansas mill in the second quarter of 2017 and higher input costs for energy, pulp, chemicals, and packaging supplies. excluding certain non-core items identified in the attached reconciliation of non-gaap financial measures, second quarter 2017 adjusted net earnings were $7.9 million, or $0.48 per diluted share, compared to second quarter 2016 adjusted net earnings of $23.5 million, or $1.37 per diluted share. earnings before interest, taxes, depreciation and amortization, or ebitda, was $45.7 million for the second quarter of 2017 compared to $62.2 million for the second quarter of 2016. adjusted ebitda for the quarter was $45.0 million, down 32.1% compared to second quarter 2016 adjusted ebitda of $66.3 million. the $21.3 million decrease in adjusted ebitda was primarily a result of the same major maintenance and higher input costs affecting gaap net earnings in the second quarter of 2017. "we achieved solid second quarter results that were in line with our quarterly outlook,” said linda k. massman, president and chief executive officer. “the positive impacts to the quarter included higher prices and a stronger sales mix for paperboard, which were offset by higher external pulp pricing and lower consumer product shipment volumes, as parent rolls were used to build needed inventory. i am also pleased to share that our previously disclosed strategic projects remain on time and within budget, and we continue to believe this will position us to more efficiently partner with and meet the needs of our customers in the future,” said massman. second quarter 2017 segment performance consumer products net sales in the consumer products segment were $231.9 million for the second quarter of 2017, down 6.5% compared to second quarter 2016 net sales of $247.9 million. this decrease was due to lower parent roll sales resulting from the shutdown of two higher cost paper machines at the neenah, wisconsin mill at the end of 2016 and a 1.7% decrease in retail tons sold. consumer products had operating income of $10.5 million in the second quarter of 2017, compared to operating income of $18.5 million in the second quarter of 2016. after adjusting for certain non-core items identified in the attached reconciliation of non-gaap financial measures, adjusted operating income of $11.8 million for the second quarter of 2017 was down from $19.1 million in the same period in 2016. consumer products operating margin decreased to 4.5% in the second quarter of 2017 from 7.5% in the second quarter of 2016. the adjusted operating margin decreased from 7.7% in the second quarter of 2016 to 5.1% in the second quarter of 2017 due to higher input costs for transportation, pulp, natural gas, and packaging supplies, partially offset by lower wage and benefit costs resulting from the implementation of warehouse automation, and the previously mentioned shutdown at the neenah mill. • total tissue sales volumes of 91,450 tons in the second quarter of 2017 decreased by 7.7% and converted product cases shipped were 12.7 million, down 3.9%, each compared to the second quarter of 2016. • average tissue net selling prices increased 1.6% to $2,533 per ton in the second quarter of 2017, compared to the second quarter of 2016. pulp and paperboard net sales in the pulp and paperboard segment were $197.8 million for the second quarter of 2017, up 4.8% compared to second quarter 2016 net sales of $188.8 million. the increase was primarily due to higher paperboard shipment volume, which includes sales from the operations of the former manchester industries acquired in december 2016. operating income for the quarter decreased $18.4 million to $21.6 million, compared to operating income of $40.0 million for the second quarter of 2016, primarily due to approximately $9 million in major maintenance at the arkansas mill and higher input costs for natural gas, electricity, chemicals and pulp and higher wages and benefits due to annual increases. in addition, second quarter 2016 operating income included the receipt of a net $2.8 million in partial reimbursement of previously incurred costs related to performance issues with the recovery boiler at the arkansas mill. • paperboard sales volumes increased 4.0% to 207,152 tons in the second quarter of 2017, compared to 199,132 tons in the second quarter of 2016. • paperboard net selling prices increased 0.7% to $955 per ton compared to the second quarter of 2016. taxes the company's consolidated gaap tax rate and adjusted tax rate for the second quarter of 2017 was a provision of 33.0%, compared to 36.3% and 36.2%, respectively, in the second quarter of 2016. the company expects its gaap and adjusted tax rate for 2017 to be approximately 34% plus or minus two percentage points. note regarding use of non-gaap financial measures in this press release, the company presents certain non-gaap financial information for the second quarters of 2017 and 2016, including adjusted net earnings, adjusted net earnings per diluted share, ebitda, adjusted ebitda, adjusted operating income, adjusted operating margin, adjusted income tax provision and adjusted tax rate. because these amounts are not in accordance with gaap, reconciliations to net earnings, net earnings per diluted share, operating income, income tax provision and tax rate 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. 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 the timing, benefits and costs of strategic and operational efficiency projects, customer relationships, cost structure and the company's expected tax rate for 2017. 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, the company's ability to execute on its growth and expansion strategies; unanticipated construction delays involving the company's planned new tissue manufacturing operations in shelby, nc; 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; 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 at the company's recently announced shelby facility expansion when it becomes operational; changes in the u.s. and international economies and in general economic conditions in the regions and industries in which the company operates; the loss of or changes in prices in regards to a significant customer; the company's ability to successfully implement its operational efficiencies and cost savings strategies; changes in customer product preferences and competitors' product offerings; manufacturing or operating disruptions, including it system and it system implementation failures, equipment malfunction and damage to the company's manufacturing facilities; changes in transportation costs and disruptions in transportation services; changes in the cost and availability of wood fiber and wood pulp; labor disruptions; cyclical industry conditions; changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs; environmental liabilities or expenditures; the company’s ability to realize the expected benefits of its manchester industries acquisition; changes in expenses and required contributions associated with the company's pension plans; cyber-security risks; reliance on a limited number of third-party suppliers for raw materials; the company’s inability 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, 2016. 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. 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 (including debt retirement costs), income taxes, and depreciation and amortization. it should not be considered as an alternative to net earnings computed under gaap. adjusted ebitda excludes the impact of the items listed that we do not believe are indicative of our core operating performance. adjusted net earnings and adjusted net earnings per diluted share exclude the impact of the items listed that we do not believe are indicative of our core operating performance. segment ebitda is segment operating income adjusted for depreciation and amortization. segment adjusted ebitda excludes the impact of the items listed that we do not believe are indicative of our core operating performance. segment ebitda margin is defined as segment ebitda divided by segment net sales. segment adjusted ebitda margin is defined as segment adjusted ebitda divided by segment net sales. segment adjusted operating income excludes the impact of the items listed that we do not believe are indicative of our core operating performance. segment adjusted operating margin is defined as segment adjusted operating income divided by segment net sales. 4 5 36.1 adjusted income tax provision and adjusted income tax provision rate exclude the impact of the items listed that we do not believe are indicative of our core operating performance. the adjusted income tax provision rate is defined as [adjusted income tax provision / (adjusted income tax provision + adjusted net earnings)].
