Clearwater Paper Reports Third Quarter 2021 Results

Clearwater Paper Corporation, a premier supplier of quality tissue and bleached paperboard products, reported financial results for the third quarter of 2021.

The highlights were:

• Net income of $2 million, or $0.11 per diluted share
• Adjusted EBITDA of $50 million
• Reduced net debt by $7 million in the quarter and $32 million for the first nine months of 2021
• Closed Neenah, Wisconsin tissue facility
• Completed planned major maintenance at Cypress Bend, Arkansas facility
• Tissue demand recovery and paperboard price increases

“We exceeded our expectations in the third quarter with higher tissue demand, continued strength in our paperboard business, and solid operational execution,” said Arsen Kitch, president and chief executive officer. “Our performance improved relative to the second quarter with higher paperboard pricing, greater tissue volumes, and lower planned major maintenance outage expense, partly offset by increased inflation pressure.”

OVERALL RESULTS

For the third quarter of 2021, Clearwater Paper reported net sales of $450 million, a 2% decrease compared to net sales of $457 million for the third quarter of 2020. Net income for the third quarter of 2021 was $2 million, or $0.11 per diluted share, compared to net income for the third quarter of 2020 of $21 million, or $1.28 per diluted share.

On a non-GAAP basis, Clearwater Paper reported adjusted net income in the third quarter of 2021 of $9 million, or $0.55 per diluted share, compared to third quarter 2020 adjusted net income of $27 million, or $1.59 per diluted share. Adjusted EBITDA for the quarter was $50 million, compared to the third quarter of 2020 Adjusted EBITDA of $77 million.

For the first nine months of 2021, Clearwater Paper reported net sales of $1.3 billion, a 9% decrease compared to net sales of $1.4 billion for the first nine months of 2020. Net loss for the first nine months of 2021 was $38 million, or $2.25 per diluted share, compared to net income for the first nine months of 2020 of $55 million, or $3.27 per diluted share.

On a non-GAAP basis, Clearwater Paper reported adjusted net income in the first nine months of 2021 of $3 million, or $0.19 per diluted share, compared to first nine months of 2020 adjusted net income of $64 million, or $3.81 per diluted share. Adjusted EBITDA for the first nine months of 2021 was $119 million, compared to the first nine months of 2020 Adjusted EBITDA of $211 million.

PULP AND PAPERBOARD PRODUCTS SEGMENT

Net sales in the Pulp and Paperboard Products segment were $237 million for the third quarter of 2021, up 9% compared to third quarter 2020 net sales of $217 million. Segment operating income for the third quarter of 2021 was $35 million compared to $33 million for the third quarter of 2020. Adjusted EBITDA for the segment was $43 million in the third quarter of 2021, compared to $42 million in the third quarter of 2020. The increase in operating income and Adjusted EBITDA was driven by higher sales prices offset by inflation and higher maintenance outage costs.

Net sales in the Pulp and Paperboard Products segment were $685 million for the first nine months of 2021, up 4% compared to first nine months of 2020 net sales of $657 million. Segment operating income for the first nine months of 2021 was $73 million compared to $91 million for the first nine months of 2020. Adjusted EBITDA for the segment was $99 million in the first nine months of 2021, compared to $118 million in the first nine months of 2020. The decrease in operating income and Adjusted EBITDA was driven by higher maintenance outage costs and inflation which was partially offset with higher sales prices.

Paperboard Sales Volumes and Prices:

Paperboard sales volumes were 203,439 tons in the third quarter of 2021, a decrease of 1% compared to 205,262 tons in the third quarter of 2020. Paperboard sales volumes were 610,702 tons in the first nine months of 2021, a decrease of 1% compared to 614,906 tons in the first nine months of 2020

Paperboard average net selling price increased 9% to $1,102 per ton for the third quarter of 2021, compared to $1,010 per ton in the third quarter of 2020. Paperboard average net selling price increased 5% to $1,062 per ton for the first nine months of 2021, compared to $1,011 per ton in the first nine months of 2020.

CONSUMER PRODUCTS SEGMENT

Net sales in the Consumer Products segment were $214 million for the third quarter of 2021, down 13% compared to the third quarter 2020 net sales of $246 million. In the third quarter of 2021, converted case shipments totaled 12.3 million cases, a decrease of 16% compared to 14.5 million cases shipped in the third quarter of 2020. Segment operating income for the third quarter of 2021 was $4 million compared to operating income of $32 million in the third quarter of 2020. Adjusted EBITDA for the segment was $20 million in the third quarter of 2021, down from $49 million in the third quarter of 2020. The decrease in operating income and Adjusted EBITDA was driven by higher input costs due to inflation and lower sales volume as COVID demand impacts have lessened.

Net sales in the Consumer Products segment were $603 million for the first nine months of 2021, down 23% compared to the first nine months of 2020 net sales of $780 million. In the first nine months of 2021, converted case shipments totaled 34.1 million cases, a decrease of 25% compared to 45.7 million cases shipped in the first nine months of 2020. Segment operating income for the first nine months of 2021 was $12 million compared to operating income of $83 million in the first nine months of 2020. Adjusted EBITDA for the segment was $61 million in the first nine months of 2021, down from $134 million in the first nine months of 2020. The decrease in operating income and Adjusted EBITDA was driven by the same factors affecting the third quarter of 2021.

Retail Tissue Sales Volumes and Prices:

Retail tissue volumes sold were 76,237 tons in the third quarter of 2021, a decrease of 12% compared to 86,292 tons in the third quarter of 2020. Retail tissue volumes sold were 208,496 tons in the first nine months of 2021, a decrease of 23% compared to 272,515 tons in the first nine months of 2020.

Retail tissue selling prices decreased 1% to $2,732 per ton in the third quarter of 2021, compared to $2,766 per ton in the third quarter of 2020. Retail tissue selling prices were $2,748 per ton in the first nine months of 2021, compared to $2,741 per ton in the first nine months of 2020.