Clearwater paper reports third quarter 2016 results
Spokane, wash.--(business wire)--clearwater paper corporation (nyse:clw) today reported financial results for the third quarter of 2016. the company reported net sales of $435.3 million for the third quarter of 2016, down 1.6% compared to net sales of $442.2 million for the third quarter of 2015. net earnings determined in accordance with generally accepted accounting principles, or gaap, for the third quarter of 2016 were $0.9 million, or $0.05 per diluted share, compared to $23.1 million, or $1.21 per diluted share, for the third quarter of 2015. excluding certain items identified in the attached reconciliations to gaap, third quarter 2016 adjusted net earnings were $2.4 million, or $0.14 per diluted share, compared to third quarter 2015 adjusted net earnings of $24.4 million, or $1.28 per diluted share. the decrease in net earnings was due primarily to $18.0 million of pre-tax planned major maintenance at the company’s lewiston, idaho pulp and paperboard facility, lower paperboard pricing and shipments, $3.5 million of pre-tax net costs incurred from an unplanned power outage at the lewiston facility, a $3.5 million pre-tax settlement charge associated with a pension lump sum buyout, and contractual wage increases. these items were partially offset by higher productivity and lower input costs for transportation, chemicals and natural gas. earnings before interest, taxes, depreciation and amortization, or ebitda, was $32.0 million for the third quarter of 2016 compared to $61.3 million for the third quarter of 2015. adjusted ebitda for the quarter was $34.3 million, down 45.7% compared to third quarter 2015 adjusted ebitda of $63.2 million. "clearwater paper achieved third quarter financial results at the high end of our outlook with increased retail sales volumes in consumer products that helped to mitigate continued challenging paperboard market conditions,” said linda k. massman, president and chief executive officer. “the team’s outstanding focus on implementing our strategic capital projects and operational efficiencies also contributed to our results." “through the third quarter, we have purchased approximately 1.1 million shares at an average price of $46.91 as part of our $100 million stock repurchase program we announced last december. our stock repurchase program reflects our confidence in future cash generation capabilities and a commitment to return capital to shareholders,” said massman. third quarter 2016 segment performance consumer products net sales in the consumer products segment were $253.3 million for the third quarter of 2016, up 2.5% compared to third quarter 2015 net sales of $247.0 million. this increase was due to market share gains, which resulted in growth of total tissue volume and a richer product mix that included a 7.0% increase in retail tons sold. on a gaap basis, the segment had operating income of $17.2 million in the third quarter of 2016, compared to operating income of $15.5 million in the third quarter of 2015. adjusted operating income of $15.9 million for the third quarter of 2016 was down from $16.7 million compared to the same period in 2015, after adjusting for a $1.8 million net gain in the third quarter of 2016 resulting from the release of an indemnity escrow related to the sale of the company’s former specialty tissue mills, $0.5 million and $0.7 million of costs in the third quarters of 2016 and 2015, respectively, related to the previously announced long island, new york facility closure, and $0.5 million of reorganization related expenses in the third quarter of 2015. the adjusted operating margin declined from 6.8% in the third quarter of 2015 to 6.3% in the most recent period due to higher maintenance and wage costs which were partially offset by higher shipment volumes, a richer product mix and lower transportation costs. total tissue sales volumes of 100,600 tons in the third quarter of 2016 increased by 2.5% and converted product cases shipped were 13.8 million, up 3.0%, each compared to the third quarter of 2015. average tissue net selling prices increased by a modest 0.04% to $2,516 per ton in the third quarter of 2016, compared to the third quarter of 2015. pulp and paperboard net sales in the pulp and paperboard segment were $182.0 million for the third quarter of 2016, down 6.8% compared to third quarter 2015 net sales of $195.2 million. the decrease was primarily due to lower paperboard shipments and pricing. operating income for the quarter decreased $27.4 million to $10.0 million, compared to $37.4 million for the third quarter of 2015, primarily due to $18.0 million of planned major maintenance at the lewiston, idaho mill, $3.5 million of net costs incurred from an unplanned power outage at the lewiston facility, and contractual wage increases. these factors were partially offset by lower input costs for polyethylene, natural gas, and transportation. paperboard sales volumes decreased 1.1% to 196,271 tons in the third quarter of 2016, compared to 198,535 tons in the third quarter of 2015. paperboard net selling prices decreased 5.3% to $927 per ton compared to the third quarter of 2015. taxes the company's gaap tax rate for the third quarter of 2016 was a provision of 48.8% compared to 28.3% in the third quarter of 2015 due to a low level of pre-tax income in the period. on an adjusted basis, the third quarter 2016 tax rate was 41.4%. the company expects its annual gaap and adjusted tax rate to be approximately 36% plus or minus two percentage points for 2016. 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 2016 and 2015, including ebitda, adjusted ebitda, adjusted net earnings, adjusted net earnings per diluted share, adjusted operating income, adjusted operating margin and adjusted tax rate. because these amounts are not in accordance with gaap, reconciliations to net earnings, net earnings per diluted share, operating income and adjusted tax rate as determined in accordance with gaap are included 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. 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 the company's stock repurchase program, cash flow generation, return of capital to shareholders and expected tax rate for 2016. 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; changes in the u.s. and international economies and in general economic conditions in the regions and industries in which the company operates; changes in customer product preferences and competitors’ product offerings; the loss of or changes in prices in regards to a significant customer; cyclical industry conditions; changes in the cost and availability of wood fiber and wood pulp; inability to successfully implement the company’s operational efficiencies and expansion strategies; changes in transportation costs and disruptions in transportation services; customer acceptance, timing and quantity of purchases of the company’s tissue products; changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs; environmental liabilities or expenditures; labor disruptions; manufacturing or operating disruptions, including it system and it system implementation failures, equipment malfunction and damage to the company’s manufacturing facilities; changes in expenses and required contributions associated with the company’s pension plans; reliance on a limited number of third-party suppliers for raw materials; 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, 2015. 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. nine months endedseptember 30, 1 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 we do not believe are indicative of our core operating performance. 1 2 1 2 3 4 1 2 1 2
