Clearwater Paper Reports First Quarter 2015 Results
Clearwater Paper Corporation reported financial results for the first quarter of 2015.
The company reported net sales of $434.0 million for the first quarter of 2015, down 10.5% compared to net sales of $484.9 million for the first 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 first quarter of 2015 were $5.8 million, or $0.30 per diluted share, compared to $6.2 million, or $0.29 per diluted share, for the first quarter of 2014. The 2015 first quarter GAAP net earnings included $0.3 million of after-tax benefit associated with the mark-to-market impact of directors’ equity-based compensation, $0.4 million of after-tax expense associated with the closure of the company’s Long Island, New York, converting and distribution facility, and $1.2 million of after tax non-recurring costs associated with a new labor agreement. Excluding special items, first quarter 2015 adjusted net earnings were $6.9 million, or $0.36 per diluted share, compared to first quarter 2014 adjusted net earnings of $13.9 million, or $0.66 per diluted share.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, was $36.2 million for the first quarter of 2015. Adjusted EBITDA for the quarter was $37.9 million, down 30.7% compared to first quarter 2014 Adjusted EBITDA of $54.7 million. The decrease in EBITDA and Adjusted EBITDA was due primarily to scheduled major maintenance at the company’s Lewiston, Idaho, pulp and paperboard facility, lower paperboard shipment volume due to the labor slowdowns at the West Coast shipping ports, and the sale of the company’s specialty mills, which were partially offset by improved pricing for paperboard and higher sales of through-air-dried, or TAD products.
“Clearwater Paper delivered solid results that were in line with the updated outlook for the first quarter of 2015,” said president and chief executive officer Linda Massman. “We saw an increase in paperboard volumes off of seasonal levels and improvement to the cost structure of our Consumer Products business as a result of the supply chain optimization work that we started in 2014. Overall, we are starting to see positive results in our businesses with the increased focus on bringing efficiencies to every part of our operation.”
Under the $100 million stock repurchase program, authorized in December 2014, the company repurchased 599,495 shares of common stock at an average price of $61.97 per share during the first quarter of 2015.
FIRST QUARTER 2015 SEGMENT PERFORMANCE
Net sales in the Consumer Products segment were $235.2 million for the first quarter of 2015, down 17.9% from first quarter 2014 net sales of $286.5 million. This decrease was due to the sale of the specialty mills.
On a GAAP basis, the segment had operating income of $12.4 million, compared to an operating loss of $0.5 million in the prior year period. Adjusted operating income of $13.6 million for the first quarter of 2015, was up $4.9 million from $8.7 million for the same period in 2014, after adjusting for $0.6 million and $9.2 million of costs related to the facility closures in the first quarters of 2015 and 2014, respectively. In the first quarter of 2015 we also recognized $0.8 million in non-recurring costs associated with a new labor agreement. The higher results were driven primarily by increased sales of TAD products, reduced energy costs, lower pricing for external pulp, and reduced operating supplies and expenses, partially offset by the absence of operating income from the company’s former specialty mills.
– Total tissue sales volumes of 92,209 tons in the first quarter of 2015 were down 27.8% and converted product cases shipped were 13.0 million, down 3.1%, each compared to the first quarter of 2014, largely due to the sale of the specialty mills.
– Average tissue net selling prices increased 13.7% to $2,546 per ton in the first quarter of 2015, compared to the first quarter of 2014, due to improved product mix after the sale of the specialty mills and higher sales of TAD products.
Pulp and Paperboard
Net sales in the Pulp and Paperboard segment were $198.9 million for the first quarter of 2015, up slightly compared to first quarter 2014 net sales of $198.4 million. The slight increase was due to an increase in prices that mostly offset lower shipment volumes. Adjusted operating income for the quarter decreased $19.7 million to $17.1 million, after adjusting for non-recurring costs of $0.9 million associated with a new labor agreement, compared to $36.8 million for the first quarter of 2014, primarily due to approximately $15 million of scheduled major maintenance at the Lewiston, Idaho, pulp and paperboard facility, higher fiber costs due to wet weather in the Southeast and reduced operating schedules at northwest lumber mills, partially offset by lower energy costs due to less severe winter weather in both Idaho and Arkansas.
– Paperboard sales volumes decreased 4.5% to 191,635 tons in the first quarter of 2015, compared to 200,665 tons in the first quarter of 2014 partially due to labor slowdowns at West Coast shipping ports.
– Paperboard net selling prices increased 4.4% to $1,031 per ton compared to the first quarter of 2014 as a result of price increases implemented during the year and improved mix.
The company’s GAAP tax rate for the first quarter of 2015 was a provision of 22.8% compared to 36.4% in the first quarter of 2014. The fluctuation in the tax rate for the first quarter of 2015 was a result of the release of uncertain tax positions of approximately $1 million relating to statute of limitation expirations on certain federal tax credits. On an adjusted basis, the first quarter 2015 tax rate was 24.3%. The company expects its annual GAAP and adjusted tax rates to be approximately 36% for 2015.