N@N

Clearwater Paper Reports Second Quarter 2011 Results

^{Published on 2011-07-28 04:10:56 - Market Wire}
 

SPOKANE, Wash.--([ BUSINESS WIRE ])--Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the second quarter of 2011.

"Second quarter results were solid after considering the significant cost pressures for many of our inputs"

The company reported net earnings of $13.9 million, or $1.17 per diluted share, for the second quarter of 2011, compared to net earnings of $20.6 million, or $1.75 per diluted share, for the second quarter of 2010. The second quarter 2011 earnings before interest, taxes, depreciation and amortization, or EBITDA, was $52.4 million, compared to $49.2 million in the second quarter of 2010. EBITDA in the second quarter of 2011 includes $9.1 million of Cellu Tissue integration-related expenses and tissue expansion costs related to Shelby.

Clearwater Paper acquired Cellu Tissue Holdings, Inc. on December 27, 2010. The second quarter of 2011 includes Cellu Tissuea™s results, which is the primary reason for many of the variances on a year-over-year basis.

aSecond quarter results were solid after considering the significant cost pressures for many of our inputs,a said Gordon Jones, chairman, president and chief executive officer. aWe continue to make good progress on integrating Cellu Tissue and on increasing the value we expect this acquisition to bring to Clearwater Paper. As a result, we are pleased to increase our estimated net annual synergies from $15-$20 million to $35-$40 million, expected to be achieved by the end of 2012.

aAdditionally, we recently celebrated the grand opening of our converting and distribution facility at Shelby, North Carolina, with the start-up of the first two converting lines,a added Jones.

The company also separately announced today a 2-for-1 stock split in the form of a stock dividend and the Board of Directora™s approval of a $30 million stock repurchase program.

SECOND QUARTER 2011 SEGMENT PERFORMANCE

Consumer Products

Net sales in the Consumer Products segment were $269.1 million for the second quarter of 2011, as compared to second quarter 2010 net sales of $145.4 million. The increase in net sales was primarily attributable to the inclusion of Cellu Tissue's operating results for the full quarter. Operating income for the second quarter of 2011 was $6.9 million, compared with operating income of $25.6 million for the second quarter of 2010. The decrease in operating income was primarily the result of increased operating costs, including $9.1 million of integration-related expenses and Shelby expansion costs, as well as $1.1 million in depreciation and amortization expense associated with acquisition accounting.

• Tissue volume increased to 128,762 tons in the second quarter of 2011, as compared to 55,486 tons in the second quarter of 2010, with the increase primarily attributable to the addition of Cellu Tissue volumes. Including Cellu Tissue in our second quarter 2010 results would have resulted in pro forma volume of 138,065 tons. The decrease in pro forma tons sold by the combined company was primarily due to converting more parent rolls into finished cases, which results in a yield loss associated with the process of manufacturing finished cases.
• Net selling prices decreased to $2,088 per ton in the second quarter of 2011 versus $2,620 in the second quarter of 2010, due primarily to the inclusion of Cellu Tissue products in the total product mix for the 2011 period. Cellu Tissuea™s operations had a broader range of products and tissue grades than the legacy Clearwater Paper facilities. On a pro forma basis, net selling prices were $2,026 in the second quarter of 2010.
• Operating costs were comparatively higher in all categories as a result of the inclusion of Cellu Tissuea™s operations in our results. Cost increases that had the biggest impact on the decline in operating income were salaries and wages associated with our Shelby expansion, relocation and severance costs associated with the acquisition of Cellu Tissue and retroactive pay related to labor contracts. In addition, we saw higher costs in packaging supplies, transportation due to higher oil prices, pulp, depreciation and amortization due to acquisition accounting and additional repair and maintenance expense associated with the Cellu Tissue facilities.

Pulp and Paperboard

Net sales of $225.5 million for the second quarter of 2011 were up 13.6%, compared to second quarter 2010 net sales of $198.5 million. Operating income for the quarter rose to $34.5 million, compared to $22.7 million for the second quarter of 2010.

• Higher net sales for the quarter were driven by a 10.4% increase in paperboard pricing and a 7.3% increase in paperboard volumes to 201,991 tons, compared to the second quarter of 2010.
• The increase in net sales was partially offset by an 8.4% decline in external pulp pricing to $718 per ton and a 16.3% decline in external pulp volumes to 11,140 tons, largely due to increased internal consumption of pulp.
• No major maintenance expense was included in either second quarter 2011 or 2010.

Taxes

The actual income tax rate for the second quarter of 2011 was 38.3%, compared to an actual rate of 38.0% for the second quarter of 2010. The estimated annual effective tax rate for 2011, without discrete items, is expected to be approximately 35.2%.

Note Regarding Use of Non-GAAP Financial Measure

In this press release, the company presents its results for the second quarter of 2011 and 2010, including EBITDA. The EBITDA amounts are not in accordance with generally accepted accounting principles (GAAP) and accordingly a reconciliation of EBITDA to net earnings determined in accordance with GAAP is included at the end of this press release.

CONFERENCE CALL INFORMATION

A live audio webcast and conference call will be held today, Thursday, July 28, 2011 at 8 a.m. Pacific time (11 a.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 7 a.m. Pacific time (10:00 a.m. Eastern time). The webcast will be audio only. Investors are recommended to 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 [ www.clearwaterpaper.com ] under "Investor Relations" following the conference call.

ABOUT CLEARWATER PAPER

Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent rolltissue, machine glazed tissue, bleached paperboard, pulp and wood products at 15 manufacturing locations in the U.S. and Canada. The company is a premier supplier of private label tissue to major retailers and wholesale distributors, which include grocery, drug, mass merchants and discount stores. The company also produces bleached paperboard used by quality-conscious printers and packaging converters. Clearwater Paper's more than 4,000 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 statements regarding the integration of Cellu Tissue, our estimated net annual synergies relating to the acquisition of Cellu Tissue, the stock split, the stock repurchase program, expected results and the companya™s estimated tax rate. 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, fluctuations and volatility in the companya™s stock price; risks and uncertainties arising from difficulties with the integration process or the realization of the benefits expected from the acquisition of Cellu Tissue; the company's ability to complete its new facilities; customers' product preferences; market acceptance of product price increases and competitive pricing pressure for the company's products; changes in the United States and international economies; changes in raw material and energy costs; cyclical industry conditions; loss of a large customer; changes in the Alternative Fuel Mixture Tax Credit or Cellulosic Biofuel Producer Credit regulations and the company's eligibility for such tax credits; changes in transportation costs and disruptions in transportation services; unanticipated manufacturing disruptions; changes in general and industry-specific laws and regulations; unforeseen environmental liabilities or expenditures; labor disruptions; and other risks and uncertainties described from time to time in the company's public filings with the Securities and Exchange Commission. 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.