Clearwater Paper reports a “stronger than expected second quarter”, according to CEO
“We had a stronger than expected second quarter, with solid operational performance and lower than expected costs for key inputs such as pulp, energy, and transportation. Tissue demand remained strong” – Arsen Kitch
Clearwater Paper Corporation, a premier supplier of quality tissue and bleached paperboard products, reported financial results for the second quarter and six months ended June 30, 2023.
“We had a stronger than expected second quarter, with solid operational performance and lower than expected costs for key inputs such as pulp, energy, and transportation. Tissue demand remained strong, while paperboard was soft as consumer spending slowed and customers continued to manage inventories,” said Arsen Kitch, president and chief executive officer. “We continued to focus on cash flow generation and were able to reduce our net debt by $25 million and repurchase 263 thousand shares of our stock.”
OVERALL RESULTS
For the second quarter of 2023, Clearwater Paper reported net sales of $525 million compared to net sales of $526 million for the second quarter of 2022. Net income for the second quarter of 2023 was $30 million, or $1.75 per diluted share, compared to net income for the second quarter of 2022 of $15 million, or $0.86 per diluted share.
On a non-GAAP basis, the company reported adjusted net income in the second quarter of 2023 of $30 million, or $1.74 per diluted share, compared to second quarter 2022 adjusted net income of $19 million, or $1.11 per diluted share. Adjusted EBITDA for the second quarter of 2023 was $71 million, compared to the second quarter of 2022 Adjusted EBITDA of $63 million.
PULP AND PAPERBOARD SEGMENT
Net sales in the Pulp and Paperboard segment were $272 million for the second quarter of 2023, down 8% compared to second quarter 2022 net sales of $296 million. Segment operating income for the second quarter of 2023 was $42 million, compared to $52 million for the second quarter of 2022.
Adjusted EBITDA for the segment was $51 million in the second quarter of 2023, compared to $61 million in the second quarter of 2022. The decrease in operating income and Adjusted EBITDA was primarily driven by planned production downtime to manage inventories, higher maintenance costs and lower sales volumes, partially offset by higher sales prices.
CONSUMER PRODUCTS SEGMENT
Net sales in the Consumer Products segment were $254 million for the second quarter of 2023, up 9% compared to second quarter 2022 net sales of $232 million. Segment operating income for the second quarter of 2023 was $25 million compared to operating income of $3 million in the second quarter of 2022.
Adjusted EBITDA for the segment was $40 million in the second quarter of 2023, compared to $19 million in the second quarter of 2022. The increase in operating income and Adjusted EBITDA was driven by higher sales prices and lower input costs, primarily in freight and energy.
- Retail Tissue Sales Volumes and Prices:
Retail tissue volumes sold were 78,672 tons in the second quarter of 2023 compared to 76,604 tons in the second quarter of 2022. Retail tissue average net selling price increased 8% to $3,214 per ton in the second quarter of 2023, compared to $2,984 per ton in the second quarter of 2022.
COMPANY OUTLOOK
“We expect continued strength in our tissue business in the coming quarters, with projected strong demand and lower input costs driving improved margins. We also anticipate that our paperboard volumes will improve in the second half of this year as compared to the first half. We will continue our focus on cash flow generation through strong operating performance and managing inventories by matching supply with demand,” continued Kitch.
