Clearwater Paper's Q4 net income surges to US$82.9M from US$19.9M in year-ago period, helped last quarter by US$59.7M net benefit that included US$62.8M from release of reserves from uncertain tax positions; net sales up 1.6% year-over-year, to US$470.2M

SPOKANE, Washington , February 5, 2014 (press release) –

Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the fourth quarter and full year of 2013.

The company reported net sales of $470.2 million for the fourth quarter of 2013, compared to net sales of $462.7 million for the fourth quarter of 2012. Net earnings determined in accordance with generally accepted accounting principles, or GAAP, for the fourth quarter of 2013 were $82.9 million, or $3.87 per diluted share, compared to net earnings of $19.9 million, or $0.84 per diluted share, for the fourth quarter of 2012. The 2013 fourth quarter GAAP net earnings included a $59.7 million net benefit, comprised of a $62.8 million benefit from the release of reserves for uncertain tax positions, $1.0 million of after-tax expense associated with the mark-to-market impact of directors’ equity-based compensation and $2.1 million of after-tax expense associated with the closing of the company’s Thomaston, Georgia, converting and distribution facility. Excluding those items, fourth quarter 2013 adjusted net earnings were $23.1 million, or $1.09 per diluted share, compared to fourth quarter 2012 adjusted net earnings of $19.4 million, or $0.82 per diluted share.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, was $61.0 million for the fourth quarter of 2013. Adjusted EBITDA of $65.4 million was up 16.7% compared to fourth quarter 2012 Adjusted EBITDA of $56.1 million. The increase in EBITDA and Adjusted EBITDA was due primarily to approximately $7.0 million of contribution from our through-air-dried, or TAD, expansion.

"Strong fourth-quarter performance reflects the strength of the company’s team to succeed despite the high level of competition in the marketplace,” said president and chief executive officer Linda Massman. "The Pulp and Paperboard division also generated a record $43.2 million in Adjusted EBITDA.”

During the fourth quarter, the company completed its $100 million share buyback program. Under the program, the company repurchased 2.1 million shares at an average cost of $48.31 per share.

FOURTH QUARTER 2013 SEGMENT PERFORMANCE

Consumer Products

Net sales in the Consumer Products segment were $282.1 million for the fourth quarter of 2013, slightly higher than fourth quarter 2012 net sales of $280.6 million. This increase was primarily driven by increased TAD sales, partially offset by lower non-retail sales. Operating income decreased to $14.4 million from $22.9 million in the prior year period, driven by lower shipments, $3.1 million of costs related to the closure of the company’s Thomaston facility, higher pulp, energy, packaging and labor costs as well as increased depreciation year over year. Adjusted operating income of $17.5 million for the fourth quarter of 2013, after adjusting out $3.1 million of costs related to the Thomaston facility closure, was down $5.4 million from the same period in 2012.

  • Total tissue sales volumes of 128,470 tons in the fourth quarter of 2013 were down 1.7% compared to the fourth quarter of 2012. Converted product cases shipped were 13.342 million, flat compared to the fourth quarter of 2012.
  • Average net selling prices increased 2.3% to $2,196 per ton in the fourth quarter of 2013, compared to the fourth quarter of 2012 due to improved mix from increased TAD sales.

Pulp and Paperboard

Net sales in the Pulp and Paperboard segment were $188.0 million for the fourth quarter of 2013, up 3.3% compared to fourth quarter 2012 net sales of $182.1 million. The increase was primarily due to stable volumes reflecting strong market backlogs and higher pricing in the fourth quarter of 2013 compared to the fourth quarter of 2012. Operating income for the quarter increased $11.4 million to $37.2 million, compared to $25.8 million for the fourth quarter of 2012, primarily due to improved sales mix and lower maintenance and fiber costs, partially offset by higher energy costs.

  • Paperboard sales volumes decreased 0.8% to 188,776 tons in the fourth quarter of 2013, compared to 190,339 tons in the fourth quarter of 2012.
  • Paperboard net selling prices increased 4.5% to $978 per ton compared to the fourth quarter of 2012 as a result of price increases implemented during the year.

Taxes

The company’s GAAP tax rate for the fourth quarter of 2013 was a benefit of 206.5% compared to an expense of 30.2% in the fourth quarter of 2012. The benefit in 2013 is predominantly a result of the release of uncertain tax position reserves related to alternative fuel mixture tax credits. On an adjusted basis, the fourth quarter 2013 tax rate was approximately 26.6%. The company expects its annual GAAP and adjusted tax rates to be approximately 38% for 2014.

Note Regarding Use of Non-GAAP Financial Measures

In this press release, the company presents its results for the fourth quarters of 2013 and 2012, including EBITDA, Adjusted EBITDA, adjusted net earnings and adjusted net earnings per diluted share. These amounts are not in accordance with GAAP, and accordingly reconciliations to net earnings and net earnings per diluted share as determined in accordance with GAAP are included at the end of this press release. The company presents these 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.

CONFERENCE CALL INFORMATION

A live audio webcast and conference call will be held today, Wednesday, February 5, 2014, at 2 p.m. Pacific time (5 p.m. Eastern time). Investors may access the conference call by dialing 877-303-9241 (for U.S./Canada investors) or 760-666-3575 (for international investors). The audio webcast may be accessed on the company's website at http://ir.clearwaterpaper.com/events.cfm. An accompanying presentation including supplemental information will be available for downloading at the same site at 1:05 p.m. Pacific time (4:05 p.m. Eastern time). The webcast will be audio only. The company recommends that investors download the accompanying presentation prior to the call.

For those unable to participate in the call, an archived recording will be available through the Clearwater Paper Corporation website at www.clearwaterpaper.com under "Investor Relations" following the conference call.

ABOUT CLEARWATER PAPER

Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, machine-glazed tissue, bleached paperboard and pulp at 14 manufacturing locations in the U.S. and Canada. The company is a premier supplier of private label tissue to major retailers and wholesale distributors. This includes grocery, drug, mass merchants and discount stores. The company also produces bleached paperboard used by quality-conscious printers and packaging converters. Clearwater Paper's employees build shareholder value by developing strong customer relationships through quality and service.

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