Clearwater paper reports third quarter 2015 results
Spokane, wash.--(business wire)--clearwater paper corporation (nyse:clw) today reported financial results for the third quarter of 2015. the company reported net sales of $442.2 million for the third quarter of 2015, down 13.5% compared to net sales of $511.1 million for the third quarter of 2014 primarily due to the sale of the company’s specialty mills in december 2014. net earnings determined in accordance with generally accepted accounting principles, or gaap, for the third quarter of 2015 were $23.1 million, or $1.21 per diluted share, compared to $6.3 million, or $0.31 per diluted share, for the third quarter of 2014. the 2015 third quarter gaap net earnings included after-tax expenses of $1.3 million for non-routine legal expenses and settlement costs, a significant portion of which arose from a dispute involving one of the company’s closed facilities, and $1.3 million after-tax reorganization and facility closure costs, which were offset by an after-tax benefit of $1.3 million associated with the mark-to-market impact of directors’ equity-based compensation. excluding those items, third quarter 2015 adjusted net earnings were $24.4 million, or $1.28 per diluted share, compared to third quarter 2014 adjusted net earnings of $25.7 million, or $1.28 per diluted share. earnings before interest, taxes, depreciation and amortization, or ebitda, was $61.3 million for the third quarter of 2015. adjusted ebitda for the quarter was $63.2 million, down 12.1% compared to third quarter 2014 adjusted ebitda of $72.0 million. the decrease in ebitda and adjusted ebitda was due primarily to the sale of the company’s specialty mills, lower volume and pricing of commodity grade paperboard, higher planned maintenance costs at the company’s idaho and arkansas mills and contractual wage and benefit increases. these items were partially offset by lower input costs for chemicals, wood fiber and natural gas. "clearwater paper delivered solid third quarter results with market share gains in retail tissue, while our pulp and paperboard business remained very profitable despite some headwinds from commodity grade paperboard,” said linda k. massman, president and chief executive officer. “we generated an adjusted ebitda margin of 14.3%, our highest since the fourth quarter of 2010 and $1.28 of adjusted earnings per share equaled our record high set in the third quarter of 2014." the $100 million stock repurchase program, authorized in december 2014, was completed in october 2015. under the program, a total of 1,881,921 shares of common stock were repurchased at an average price of $53.13 per share. in the third quarter, 1,151,313 shares were purchased at an average price of $49.23 per share. third quarter 2015 segment performance consumer products net sales in the consumer products segment were $247.0 million for the third quarter of 2015, down 19.3% compared to third quarter 2014 net sales of $306.1 million. this decrease was due primarily to the sale of the specialty mills. on a gaap basis, the segment had operating income of $15.5 million, compared to operating income of $12.5 million in the third quarter of 2014. adjusted operating income of $16.7 million for the third quarter of 2015 was down from $17.9 million compared to the same period in 2014, after adjusting for $1.2 million of costs in the third quarter of 2015 of which $0.7 million was related to previously announced facility closures and $0.5 million of reorganization related expenses, and $5.4 million of costs in the third quarter of 2014, of which $4.8 million related to previously announced facility closures and $0.6 million related to costs associated with the optimization of the former specialty mills. the adjusted operating margin improvement from 5.9% in the third quarter of 2014 to 6.8% in the most recent period was driven primarily by a richer product mix, improved pricing, and lower input costs for natural gas and packaging, which were partially offset by higher pulp costs and higher transportation expense due to customer and product mix. total tissue sales volumes of 98,106 tons in the third quarter of 2015 declined by 27.4% and converted product cases shipped were $13.4 million, down 6.9%, each compared to the third quarter of 2014, largely due to the sale of the specialty mills. average tissue net selling prices increased 11.3% to $2,515 per ton in the third quarter of 2015, compared to the third quarter of 2014, primarily due to improved product mix after the sale of the specialty mills. pulp and paperboard net sales in the pulp and paperboard segment were $195.2 million for the third quarter of 2015, down 4.8% compared to third quarter 2014 net sales of $205.0 million. the decrease was due to lower demand and pricing pressure for commodity grade paperboard. operating income for the quarter decreased $8.2 million to $37.4 million, compared to $45.6 million for the third quarter of 2014, primarily due to higher planned maintenance and contractual wage and benefit increases. these factors were partially offset by lower polyethylene prices and improved wood fiber yields. paperboard sales volumes decreased 1.5% to 198,535 tons in the third quarter of 2015, compared to 201,609 tons in the third quarter of 2014. paperboard net selling prices decreased 3.6% to $979 per ton compared to the third quarter of 2014 as a result of lower demand and pricing pressure for commodity grades of paperboard. taxes the company's gaap tax rate for the third quarter of 2015 was a provision of 28.3% compared to 37.4% in the third quarter of 2014 due to non-cash adjustments resulting from a change in estimated realizable value for state level net operating loss carryforwards. on an adjusted basis, the third quarter 2015 tax rate was 28.5%. the company expects its annual gaap and adjusted tax rate to be approximately 33% for 2015. 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 2015 and 2014, including ebitda, adjusted ebitda, adjusted net earnings, adjusted net earnings per diluted share, adjusted operating income, and adjusted tax rate. because these amounts are not in accordance with gaap, reconciliations to net earnings, net earnings per diluted share 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 expected tax rate for 2015. 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 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, 2014. 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, september 30, september 30, 1 interest expense, net for the three and nine months ended september 30, 2014 includes debt retirement costs of $24.4 million. 2 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. 3 adjusted ebitda excludes the impact of the items listed that we do not believe are indicative of our core operating performance. september 30, september 30, 1 2 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. september 30, september 30, 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. 2 the adjusted income tax provision rate is defined as [adjusted income tax provision / (adjusted income tax provision + adjusted net earnings)].
