Clearwater Paper Reports Third Quarter 2022 Results

Clearwater Paper Corporation has reported financial results for the third quarter and nine months ended September 30, 2022.

THIRD QUARTER HIGHLIGHTS

Delivered strong performance in the quarter, with price realization helping offset inflation
Net sales of $539 million, up 20 percent compared to the third quarter of last year
Net income of $21 million, or $1.21 per diluted share
Adjusted EBITDA of $77 million
Continued to reduce net debt, with nearly $106 million reduced year to date

"We had an excellent third quarter, which exceeded our expectations with strong volumes, pricing and operational performance,” said Arsen Kitch, president and chief executive officer. “While paperboard demand and pricing remained strong, our tissue performance continued to improve with higher pricing helping to offset the impact of inflation.”

OVERALL RESULTS

For the third quarter of 2022, Clearwater Paper reported net sales of $539 million, a 20 percent increase compared to net sales of $450 million for the third quarter of 2021. Net income for the third quarter of 2022 was $21 million, or $1.21 per diluted share, compared to net income for the third quarter of 2021 of $2 million, or $0.11 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net income in the third quarter of 2022 of $31 million, or $1.83 per diluted share, compared to third quarter 2021 adjusted net income of $9 million, or $0.55 per diluted share. Adjusted EBITDA for the quarter was $77 million, compared to the third quarter of 2021 Adjusted EBITDA of $50 million.

For the first nine months of 2022, Clearwater Paper reported net sales of $1.6 billion, a 21 percent increase compared to net sales of $1.3 billion for the first nine months of 2021. Net income for the first nine months of 2022 was $52 million, or $3.04 per diluted share, compared to net loss for the first nine months of 2021 of $38 million, or $2.25 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net income in the first nine months of 2022 of $68 million, or $3.96 per diluted share, compared to first nine months of 2021 adjusted net income of $3 million, or $0.19 per diluted share. Adjusted EBITDA for the first nine months was $199 million, compared to the first nine months of 2021 Adjusted EBITDA of $119 million.

Impacting the first nine months of 2021, Clearwater Paper incurred impairment and other closure costs associated with the closure of the company's Neenah, Wisconsin facility of $47.1 million and as well as planned major maintenance at its paperboard facilities.

Pulp and Paperboard Products Segment

Net sales in the Pulp and Paperboard Products segment were $301 million for the third quarter of 2022, up 27 percent compared to third quarter 2021 net sales of $237 million. Segment operating income for the third quarter of 2022 was $64 million, compared to $35 million for the third quarter of 2021. Adjusted EBITDA for the segment was $73 million in the third quarter of 2022, compared to $43 million in the third quarter of 2021.

Net sales in the Pulp and Paperboard Products segment were $863 million for the first nine months of 2022, up 26 percent compared to net sales of $685 million in the first nine months of 2021. Segment operating income for the first nine months of 2022 was $166 million, compared to $73 million for the first nine months of 2021. Adjusted EBITDA for the segment was $194 million in the first nine months of 2022, compared to $99 million in the first nine months of 2021.

For both periods in 2022, the increase in operating income and Adjusted EBITDA was driven by higher sales prices and the absence of planned major maintenance, partly offset by higher input costs specifically related to chemicals, freight and energy.

Paperboard Sales Volumes and Prices:

Paperboard sales volumes were 208,298 tons in the third quarter of 2022 compared to 203,439 tons in the third quarter of 2021. Paperboard sales volumes were 625,557 tons in the first nine months of 2022 compared to 610,702 tons in the first nine months of 2021.

Paperboard average net selling price increased 28 percent to $1,405 per ton for the third quarter of 2022, compared to $1,102 per ton in the third quarter of 2021. Paperboard average net selling price increased 26 percent to $1,334 per ton for the first nine months of 2022, compared to $1,062 per ton in the first nine months of 2021.

Consumer Products Segment

Net sales in the Consumer Products segment were $241 million for the third quarter of 2022, up 13 percent compared to the third quarter 2021 net sales of $214 million. Segment operating income for the third quarter of 2022 was $5 million compared to operating income of $4 million in the third quarter of 2021. Adjusted EBITDA for the segment was $21 million in the third quarter of 2022, compared to $20 million in the third quarter of 2021. The increase in operating income and Adjusted EBITDA was driven by higher sales prices partly offset by higher input costs, specifically related to pulp, freight and energy.

Net sales in the Consumer Products segment were $696 million for the first nine months of 2022, up 15 percent compared to net sales of $603 million in the first nine months of 2021. Segment operating income for the first nine months of 2022 was $10 million compared to operating income of $12 million in the first nine months of 2021. Adjusted EBITDA for the segment was $57 million in the first nine months of 2022, compared to $61 million in the first nine months of 2021. The decrease in operating income and Adjusted EBITDA was driven by higher input costs, specifically related to pulp, energy and freight partly offset by higher sales prices.

Retail Tissue Sales Volumes and Prices:

Retail tissue volumes sold were 76,938 tons in the third quarter of 2022 compared to 76,237 tons in the third quarter of 2021. Retail tissue volumes sold were 228,968 tons in the first nine months of 2022, an increase of 10 percent compared to 208,496 tons in the first nine months of 2021.

Retail tissue selling prices increased 13 percent to $3,082 per ton in the third quarter of 2022, compared to $2,732 per ton in the third quarter of 2021. Retail tissue selling prices increased 8 percent to 2,980 per ton in the first nine months of 2022, compared to $2,748 per ton in the first nine months of 2021.

Company Outlook

“During previous periods of economic uncertainty demand for our products was relatively resilient. In today’s economic environment, our continued focus is on operational performance while offsetting the impact of inflation. We are continuing to improve our financial flexibility to take advantage of opportunities to create shareholder value,” concluded Kitch.

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