8-K
Clearwater Paper Corp (CLW)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 15, 2022
CLEARWATER PAPER CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-34146 | 20-3594554 | ||||
|---|---|---|---|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) | 601 West Riverside, | Suite 1100 | 99201 | |
| --- | --- | --- | ||||
| Spokane, | WA | |||||
| (Address of principal executive offices) | (Zip Code) |
(509) 344-5900
(Registrant’s telephone number, including area code)
Not Applicable
(Former name of former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchanged on which registered |
|---|---|---|
| Common Stock, par value $0.0001 per share | CLW | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 15, 2022, Clearwater Paper Corporation (the “Company”) announced its results of operations for the fourth quarter and year ending December 31, 2021. A copy of the press release containing this announcement is furnished as Exhibit 99.1 hereto. In addition, a copy of the Company’s Fourth Quarter 2021 Earnings Release Materials is furnished as Exhibit 99.2 hereto.
In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), the following are disclosed the attached Adjusted EBITDA which is defined as earnings before interest expense, taxes, depreciation and amortization, other operating credits and charges, net and other non-operating items. Adjusted EBITDA margin, which is calculated by dividing Adjusted EBITDA from continuing operations by net sales and discloses Adjusted income from operations which is calculated by excluding from income from operations, other operating credits and charges, net, and adjusts for a normalized tax rate. Adjusted EBITDA and Adjusted income from operations are not a substitute for the GAAP measure of net income or other GAAP measures of operating performance.
The Company discloses Adjusted EBITDA in the attached because it is used as important supplemental measure of its performance and believes that similarly-titled measures are frequently used by securities analysts, investors and other interested persons in the evaluation of companies in its industry, some of which present similarly-titled measures when reporting their results. The Company uses Adjusted EBITDA to evaluate its performance as compared to other companies in its industry that have different financing and capital structures and/or tax rates. It should be noted that companies calculate similarly-titled measures differently and, therefore, as presented by the Company may not be comparable to similarly-titled measures reported by other companies. In addition, Adjusted EBITDA has material limitations as a performance measure because it excludes interest expense, income tax expense and depreciation and amortization which are necessary to operate the Company's business or which the Company otherwise incurred or experienced in connection with the operation of its business.
The Company believes that Adjusted income from operations, which excludes other operating credits and charges, net, adjusted for a normalized tax rate is a useful measure for evaluating our ability to generate earnings and that providing this measure will allow investors to more readily compare the earnings referred to in the press release to the Company's earnings for past and future periods. The Company believes that this measure is particularly useful where the amounts of the excluded items are not consistent between the periods presented. It should be noted that other companies may present similarly-titled measures differently and, therefore, as presented by the Company may not be comparable to similarly-titled measures reported by other companies. In addition, Adjusted income from operations has material limitations as a performance measure because it excludes items that are actually incurred or experienced in connection with the operations of the Company's business.
Item 9.01. Financial Statements and Exhibits
(d) Exhibit Index
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 15, 2022
CLEARWATER PAPER CORPORATION
| By: | /s/ Rebecca A. Barckley |
|---|---|
| Rebecca A. Barckley, Vice President, Corporate Controller | |
| (Principal Accounting Officer) |
Document
Exhibit 99.1
Clearwater Paper Reports Fourth Quarter and Year End 2021 Results
SPOKANE, Wash.--(BUSINESS WIRE)-- February 15, 2022 -- Clearwater Paper Corporation (NYSE:CLW), a premier supplier of quality consumer tissue and bleached paperboard today reported financial results for the fourth quarter and year ended December 31, 2021.
2021 FOURTH QUARTER HIGHLIGHTS
•Delivered solid performance due to continued strength in the paperboard business
•Managed through increased COVID related absences, supply chain disruptions and weather impacts
•Achieved net income of $10 million, or $0.56 per diluted share and Adjusted EBITDA of $56 million
•Net sales of $490 million, up 8% compared to the fourth quarter of 2020
•Net debt reduction of $37 million
2021 FULL YEAR HIGHLIGHTS
•Delivered strong performance due to robust demand for paperboard products and solid operational execution
•Net loss of $28 million, which includes an after-tax loss of $38 million associated with the closure of Neenah, Wisconsin tissue facility
•Adjusted EBITDA of $175 million
•Net sales of $1.8 billion
•Net debt reduction of $69 million
“Our performance was at the high end of our expectations with strong paperboard sales and greater stability in tissue demand,” said Arsen Kitch, president and chief executive officer. “Our paperboard business reported strong Adjusted EBITDA with increased pricing and sales volume. Tissue demand stabilized, and we are implementing previously announced price increases. Our continued focus on operating efficiencies, combined with higher pricing, is helping offset some of the significant cost inflation that we are experiencing in both of our businesses.”
OVERALL RESULTS
For the fourth quarter of 2021, Clearwater Paper reported net sales of $490 million, an 8% increase compared to net sales of $453 million reported in the fourth quarter of 2020. Net income for the fourth quarter of 2021 was $10 million, or $0.56 per diluted share, compared to net income in the fourth quarter of 2020 of $23 million, or $1.34 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net income in the fourth quarter of 2021 of $14 million, or $0.82 per diluted share, compared to fourth quarter 2020 adjusted net income of $25 million, or $1.45 per diluted share. Adjusted EBITDA for the quarter was $56 million compared to the fourth quarter of 2020 Adjusted EBITDA of $72 million.
For the full year 2021, Clearwater Paper reported net sales of $1.8 billion, a 5% decrease compared to net sales of $1.9 billion for 2020. Net loss for the full year was $28 million in 2021, or $1.67 per diluted share, compared to a net income for 2020 of $77 million or $4.61 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net income for 2021 of $17 million, or $1.03 per diluted share, compared to 2020 adjusted net income of $89 million, or $5.30 per diluted share. Adjusted EBITDA for 2021 was $175 million, compared to 2020 Adjusted EBITDA of $283 million.
Pulp and Paperboard Segment
Net sales in the Pulp and Paperboard segment were $261 million for the fourth quarter of 2021, up 19% compared to fourth quarter 2020 net sales of $220 million. Segment operating income for the fourth quarter of 2021 was $53 million compared to $34 million for the fourth quarter of 2020. Adjusted EBITDA for the segment was $62 million in the fourth quarter of 2021, compared to $43 million in the fourth quarter of 2020. The increase in operating income and Adjusted EBITDA was driven by higher sales prices which were partially offset by inflation.
Net sales in the Pulp and Paperboard segment were $946 million for 2021, an increase of 8% compared to 2020 net sales of
$877 million. Segment operating income for 2021 was $126 million compared to $125 million for 2020. Adjusted EBITDA for the segment was $161 million for 2021, compared to $161 million for 2020. The operating income and Adjusted EBITDA for the year was essentially flat as the higher sales prices were offset by higher maintenance outage costs and inflation.
Pulp and Paperboard Sales Volumes and Prices:
• Paperboard sales volumes were 211,503 tons in the fourth quarter of 2021, an increase of 3% compared to 206,232 tons in the fourth quarter of 2020. Paperboard sales volumes were 822,206 tons for the year ended 2021 which were relatively flat with 821,138 tons for the year ended 2020.
• Paperboard average net selling price increased 16% to $1,164 per ton for the fourth quarter of 2021, compared to $1,002 per ton in the fourth quarter of 2020. Paperboard average net selling price increased 8% to $1,088 per ton for the year ended 2021, compared to $1,008 per ton for the year ended 2020.
Consumer Products Segment
Net sales in the Consumer Products segment were $232 million for the fourth quarter of 2021, down 3% compared to the fourth quarter 2020 net sales of $239 million. In the fourth quarter of 2021, retail converted case shipments were 12.4 million cases, a decrease of 8% compared to the 13.5 million cases shipped in the fourth quarter of 2020. Segment operating loss for the fourth quarter of 2021 was $8 million compared to operating income of $28 million in the fourth quarter of 2020. Adjusted EBITDA for the segment was $8 million in the fourth quarter of 2021, down from $45 million in the fourth quarter of 2020. The decrease in operating income and Adjusted EBITDA was driven by lower sales volumes and higher input costs, primarily pulp and transportation.
Net sales in the Consumer Products segment were $835 million for the full year 2021, down 18% compared to 2020 net sales of $1,018 million. For 2021, retail converted case shipments were 46 million cases, a decrease of 21% compared to 58 million cases shipped for 2020. Segment operating income for 2021 was $4 million, compared to operating income of $111 million for 2020. Adjusted EBITDA for the segment was $69 million for 2021, down from $179 million for 2020. The decrease in operating income and Adjusted EBITDA was driven by lower sales volumes and higher input costs, primarily pulp and transportation.
Retail Tissue Sales Volumes and Prices:
• Retail tissue volumes sold were 79,491 tons in the fourth quarter of 2021, a decrease of 5% compared to 83,347 tons in the fourth quarter of 2020. Retail tissue volumes sold were 287,987 tons for the year ended of 2021, a decrease of 19% compared to 355,862 tons for 2020.
• Retail tissue average net selling prices increased 3% to $2,831 per ton in the fourth quarter of 2021, compared to $2,745 per ton in the fourth quarter of 2020. Retail tissue average net selling prices increased 1% to $2,771 per ton for 2021, compared to $2,742 per ton for 2020.
COMPANY OUTLOOK
"I am pleased with our achievements in 2021 as we performed well despite unpredictable tissue demand and a significant increase in inflation. For 2022, we are expecting continued strength in our paperboard markets, with tissue demand normalizing. While we are facing significant inflation and other supply chain disruptions, we believe that we are well positioned operationally and financially to continue to execute well into the first quarter and the rest of 2022," concluded Kitch.
WEBCAST INFORMATION
Clearwater Paper Corporation will discuss these results during an earnings conference call that begins at 2:00 p.m. Pacific Time today. A live webcast and accompanying supplemental information will be available on the company's website at http://ir.clearwaterpaper.com. A replay of today's conference call will be available on the website at http://ir.clearwaterpaper.com/investors/events-and-presentations beginning at 5:00 p.m. Pacific Time today.
ABOUT CLEARWATER PAPER
Clearwater Paper is a premier supplier of private brand tissue to major retailers, including grocery, club, mass merchants, and discount stores. In addition, the company produces bleached paperboard used by quality-conscious printers and packaging converters, and offers services that include custom sheeting, slitting, and cutting. Clearwater Paper's employees build shareholder value by developing strong relationships through quality and service.
USE OF NON-GAAP MEASURES
In this press release, the company presents certain non-GAAP financial information for the fourth quarter and full year 2021 and 2020, including adjusted net income (loss) and Adjusted EBITDA. Because these amounts are not in accordance with GAAP, reconciliations to net income (loss) as determined in accordance with GAAP are included in the tables at the end of this press release. The company presents these non-GAAP 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. In addition, the company uses Adjusted EBITDA: (i) as factors in evaluating management’s performance when determining incentive compensation, (ii) to evaluate the effectiveness of the company's business strategies, and (iii) because the company's credit agreement and the indentures governing the company's outstanding notes use metrics similar to Adjusted EBITDA to measure the company's compliance with certain covenants.
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 implementation of announced price increases, inflation, supply chain disruptions, our expectations regarding the paperboard markets and the tissue markets, and operational and financial positions and ability to execute into the first quarter and 2022. 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: the impacts of the COVID-19 pandemic on our business and operations; competitive pricing pressures for the company’s products, including as a result of increased capacity, as additional manufacturing facilities are operated by the company’s competitors; the loss of, changes in prices in regard to, or reduction in, orders from a significant customer; changes in the cost and availability of wood fiber and wood pulp; changes in transportation costs and disruptions in transportation services; changes in customer product preferences and competitors' product offerings; larger competitors having operational and other advantages; customer acceptance and timing and quantity of purchases of the company’s tissue products, including the existence of sufficient demand for and the quality of tissue produced by the company’s expanded Shelby, North Carolina operations; consolidation and vertical integration of converting operations in the paperboard industry; the company’s ability to successfully implement its operational efficiencies and cost savings strategies, along with related capital projects, and achieve the expected operational or financial results of those projects, including from the continuous digester at the company’s Lewiston, Idaho facility; changes in the U.S. and international economies and in general economic conditions in the regions and industries in which the company operates; manufacturing or operating disruptions, including IT system and IT system implementation failures, equipment malfunctions and damage to the company’s manufacturing facilities; cyber-security risks; changes in costs for and availability of packaging supplies, chemicals, energy, and maintenance and repairs; labor disruptions; cyclical industry conditions; changes in expenses, required contributions, and potential withdrawal costs associated with the company’s pension plans; environmental liabilities or expenditures; reliance on a limited number of third-party suppliers for raw materials; the company’s ability to attract, motivate, train and retain qualified and key personnel; material weaknesses in the company’s internal control over financial reporting; the company’s substantial indebtedness and ability to service its debt obligations; restrictions on the company’s business from debt covenants and terms; negative changes in the company’s credit agency ratings; changes in laws, regulations or industry standards affecting the company’s business; and other risks and uncertainties described from time to time in the company's public filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2021. 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 based on new developments or changes in the company's expectations after the date of this press release
| Clearwater Paper Corporation | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated Statements of Operations | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||
| (In millions, except per share data) | 2021 | 2020 | 2021 | 2020 | |||||||
| Net sales | $ | 489.8 | $ | 452.9 | $ | 1,772.6 | $ | 1,868.6 | |||
| Costs and expenses: | |||||||||||
| Cost of sales | 429.1 | 376.1 | 1,590.0 | 1,574.4 | |||||||
| Selling, general and administrative expenses | 30.5 | 32.6 | 112.9 | 122.0 | |||||||
| Other operating charges, net | 2.6 | 2.1 | 57.7 | 14.0 | |||||||
| Total operating costs and expenses | 462.2 | 410.9 | 1,760.6 | 1,710.4 | |||||||
| Income from operations | 27.6 | 41.9 | 12.0 | 158.1 | |||||||
| Interest expense, net | (8.9) | (9.5) | (36.4) | (46.5) | |||||||
| Debt retirement costs | (0.5) | (1.1) | (1.0) | (5.9) | |||||||
| Other non-operating expense | (2.6) | (1.9) | (10.4) | (7.6) | |||||||
| Total non-operating expense | (12.0) | (12.4) | (47.7) | (59.9) | |||||||
| Income (loss) before income taxes | 15.6 | 29.5 | (35.7) | 98.2 | |||||||
| Income tax provision (benefit) | 6.1 | 7.0 | (7.7) | 21.1 | |||||||
| Net income (loss) | $ | 9.6 | $ | 22.6 | $ | (28.1) | $ | 77.1 | |||
| Net income (loss) per common share: | |||||||||||
| Basic | $ | 0.57 | $ | 1.36 | $ | (1.67) | $ | 4.65 | |||
| Diluted | 0.56 | 1.34 | (1.67) | 4.61 | |||||||
| Average shares outstanding (in thousands): | |||||||||||
| Basic | 16,761 | 16,597 | 16,767 | 16,569 | |||||||
| Diluted | 17,149 | 16,891 | 16,767 | 16,724 | |||||||
| Clearwater Paper Corporation | |||||||||||
| --- | --- | --- | --- | --- | |||||||
| Condensed Consolidated Balance Sheets | |||||||||||
| (Unaudited) | |||||||||||
| (In millions) | December 31, 2021 | December 31, 2020 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 25.2 | $ | 35.9 | |||||||
| Receivables, net | 167.4 | 160.6 | |||||||||
| Inventories | 277.7 | 263.3 | |||||||||
| Other current assets | 16.9 | 15.2 | |||||||||
| Total current assets | 487.2 | 474.9 | |||||||||
| Property, plant and equipment, net | 1,081.8 | 1,191.5 | |||||||||
| Other assets, net | 121.1 | 134.0 | |||||||||
| Total Assets | $ | 1,690.1 | $ | 1,800.4 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt | $ | 1.6 | $ | 1.7 | |||||||
| Accounts payable and accrued liabilities | 252.5 | 243.1 | |||||||||
| Total current liabilities | 254.1 | 244.8 | |||||||||
| Long-term debt | 637.6 | 716.4 | |||||||||
| Liability for pension and other postretirement employee benefits | 73.6 | 80.5 | |||||||||
| Deferred tax liabilities and other long-term obligations | 213.1 | 237.6 | |||||||||
| Total Liabilities | 1,178.3 | 1,279.3 | |||||||||
| Common Stock | — | — | |||||||||
| Paid in capital | 23.6 | 16.6 | |||||||||
| Retained earnings | 530.7 | 558.8 | |||||||||
| Accumulated other comprehensive loss, net of tax | (42.6) | (54.3) | |||||||||
| Total Stockholders' Equity | 511.7 | 521.1 | |||||||||
| Total Liabilities and Stockholders' Equity | $ | 1,690.1 | $ | 1,800.4 | |||||||
| Clearwater Paper Corporation | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| Consolidated Statements of Cash Flows | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||
| (In millions) | 2021 | 2020 | 2021 | 2020 | |||||||
| Cash Flows from Operating Activities | |||||||||||
| Net income (loss) | $ | 9.6 | $ | 22.6 | $ | (28.1) | $ | 77.1 | |||
| Adjustments to reconcile net income (loss) to net cash flows provided by operating activities: | |||||||||||
| Depreciation and amortization | 25.4 | 27.5 | 105.0 | 111.0 | |||||||
| Equity-based compensation expense | 2.2 | 3.1 | 9.1 | 10.5 | |||||||
| Deferred taxes | 9.7 | 10.1 | (9.7) | 33.5 | |||||||
| Pension and other postretirement employee benefits | 1.9 | 1.0 | 7.2 | 3.8 | |||||||
| Amortization of deferred debt costs and debt retirement | 0.9 | 1.5 | 2.8 | 8.0 | |||||||
| (Gain) loss on sale or impairment associated with divested assets | (1.4) | — | 35.7 | (1.4) | |||||||
| Changes in operating assets and liabilities: | |||||||||||
| (Increase) decrease in accounts receivable | (5.2) | 11.8 | (5.3) | 6.1 | |||||||
| (Increase) decrease in inventory | 8.1 | (7.0) | (20.2) | 18.1 | |||||||
| Increase in other current assets | (7.0) | (6.4) | (1.7) | (11.2) | |||||||
| Increase (decrease) in accounts payable and accrued liabilities | (11.9) | 2.4 | 1.9 | (12.0) | |||||||
| Other, net | (0.2) | 4.3 | (0.2) | 3.4 | |||||||
| Net cash flows provided by operating activities | 32.1 | 70.9 | 96.4 | 247.0 | |||||||
| Cash Flows from Investing Activities | |||||||||||
| Additions to property, plant and equipment | (8.5) | (12.2) | (38.4) | (39.6) | |||||||
| Net proceeds from divested assets | 13.3 | — | 13.3 | — | |||||||
| Net cash flows provided by (used in) investing activities | 4.8 | (12.2) | (25.1) | (39.6) | |||||||
| Cash Flows from Financing Activities | |||||||||||
| Borrowings of short-term debt | — | — | — | 108.5 | |||||||
| Repayments of short-term debt | — | — | — | (122.0) | |||||||
| Borrowings of long-term debt | — | — | — | 275.0 | |||||||
| Repayments of long-term debt | (39.7) | (70.4) | (81.0) | (449.4) | |||||||
| Payments for debt issuance costs | — | (0.1) | — | (4.4) | |||||||
| Other, net | 0.2 | — | (1.1) | (0.7) | |||||||
| Net cash flows used in financing activities | (39.5) | (70.5) | (82.0) | (192.9) | |||||||
| Increase (decrease) in cash, cash equivalents and restricted cash | (2.6) | (11.7) | (10.7) | 14.4 | |||||||
| Cash, cash equivalents and restricted cash at beginning of period | 28.9 | 48.6 | 36.9 | 22.4 | |||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 26.2 | $ | 36.9 | $ | 26.2 | $ | 36.9 | |||
| Clearwater Paper Corporation | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| Segment Information | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||
| (In millions) | 2021 | 2020 | 2021 | 2020 | |||||||
| Segment net sales: | |||||||||||
| Pulp and Paperboard | $ | 261.3 | $ | 220.4 | $ | 946.0 | $ | 877.1 | |||
| Consumer Products | 231.8 | 238.9 | 835.0 | 1,018.5 | |||||||
| Eliminations | (3.3) | (6.4) | (8.4) | (27.0) | |||||||
| Total segment net sales | $ | 489.8 | $ | 452.9 | $ | 1,772.6 | $ | 1,868.6 | |||
| Operating income (loss): | |||||||||||
| Pulp and Paperboard | $ | 53.1 | $ | 33.7 | $ | 125.7 | 124.5 | ||||
| Consumer Products | (7.5) | $ | 27.6 | 4.0 | 110.6 | ||||||
| Corporate and eliminations | (15.3) | (17.3) | (60.1) | (63.0) | |||||||
| Other operating charges, net 1 | $ | (2.6) | (2.1) | (57.7) | (14.0) | ||||||
| Income from operations | $ | 27.6 | $ | 41.9 | $ | 12.0 | $ | 158.1 |
1 Other operating charges, net consist of amounts unrelated to ongoing core operating activities. Please refer to Note 9 within Clearwater Paper's Form 10-K filed with the SEC for the year ended December 31, 2021 for the detailed breakout of the annual amount.
Note: Certain amounts have been reclassified from the prior year presentation to reflect the realignment of Clearwater Paper’s baled pulp sales to record inter-segment sales at market price and the realignment of outside pulp sales to the producing segment.
| Clearwater Paper Corporation | ||||||||
|---|---|---|---|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures | ||||||||
| Adjusted EBITDA | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
| (In millions) | 2021 | 2020 | 2021 | 2020 | ||||
| Net income (loss) | $ | 9.6 | $ | 22.6 | $ | (28.1) | $ | 77.1 |
| Add back: | ||||||||
| Income tax provision (benefit) | 6.1 | 7.0 | (7.7) | 21.1 | ||||
| Interest expense, net | 8.9 | 9.5 | 36.4 | 46.5 | ||||
| Depreciation and amortization expense | 25.4 | 27.5 | 105.0 | 111.0 | ||||
| Other operating charges, net1 | 2.6 | 2.1 | 57.7 | 14.0 | ||||
| Other non-operating expense | 2.6 | 1.9 | 10.4 | 7.6 | ||||
| Debt retirement costs | 0.5 | 1.1 | 1.0 | 5.9 | ||||
| Adjusted EBITDA | $ | 55.6 | $ | 71.6 | $ | 174.6 | $ | 283.2 |
| Pulp and Paperboard segment income | 53.1 | $ | 33.7 | $ | 125.7 | $ | 124.5 | |
| Depreciation and amortization expense | 8.8 | 9.0 | 35.7 | 36.7 | ||||
| Adjusted EBITDA Pulp and Paperboard segment | $ | 61.9 | $ | 42.8 | $ | 161.4 | $ | 161.3 |
| Consumer Products segment income (loss) | $ | (7.5) | $ | 27.6 | $ | 4.0 | $ | 110.6 |
| Depreciation and amortization expense | 15.5 | 17.1 | 64.9 | 68.5 | ||||
| Adjusted EBITDA Consumer Products segment | $ | 8.0 | $ | 44.7 | $ | 69.0 | $ | 179.1 |
| Corporate and other expenses | $ | (15.3) | $ | (17.3) | $ | (60.1) | $ | (63.0) |
| Depreciation and amortization expense | 1.1 | 1.4 | 4.4 | 5.8 | ||||
| Corporate Adjusted EBITDA | $ | (14.3) | $ | (16.0) | $ | (55.7) | $ | (57.2) |
| Pulp and Paperboard segment | $ | 61.9 | $ | 42.8 | $ | 161.4 | $ | 161.3 |
| Consumer Products segment | 8.0 | 44.7 | 69.0 | 179.1 | ||||
| Corporate and other | (14.3) | (16.0) | (55.7) | (57.2) | ||||
| Adjusted EBITDA | $ | 55.6 | $ | 71.6 | $ | 174.6 | $ | 283.2 |
1 Other operating charges, net consist of amounts unrelated to ongoing core operating activities. Please refer to Note 9 within Clearwater Paper's Form 10-K filed with the SEC for the year ended December 31, 2021 for the detailed breakout of the annual amount.
| Clearwater Paper Corporation | ||||||||
|---|---|---|---|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures | ||||||||
| Adjusted Net Income | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
| (In millions, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||
| Net income (loss) | $ | 9.6 | $ | 22.6 | $ | (28.1) | $ | 77.1 |
| Add back: | ||||||||
| Income tax provision (benefit) | 6.1 | 7.0 | (7.7) | 21.1 | ||||
| Income (loss) before income taxes | 15.6 | 29.5 | (35.7) | 98.2 | ||||
| Add back: | ||||||||
| Debt retirement costs | 0.5 | 1.1 | 1.0 | 5.9 | ||||
| Other operating charges, net | 2.6 | 2.1 | 57.7 | 14.0 | ||||
| Adjusted income before tax | 18.7 | 32.7 | 22.9 | 118.1 | ||||
| Normalized income provision (benefit) | 4.7 | 8.2 | 5.7 | 29.5 | ||||
| Adjusted net income | $ | 14.1 | $ | 24.6 | $ | 17.2 | $ | 88.6 |
| Weighted average diluted shares (in thousands) | 17,149 | 16,891 | 16,767 | 16,724 | ||||
| Adjusted income per share, diluted | $ | 0.82 | $ | 1.45 | $ | 1.03 | $ | 5.30 |
| Calculation of net debt: | December 31, 2021 | September 30, 2021 | December 31, 2020 | |||||
| Current portion of long-term debt | $ | 1.6 | $ | 1.6 | $ | 1.7 | ||
| Long-term debt | 637.6 | 676.5 | 716.4 | |||||
| Add back: | ||||||||
| Unamortized deferred debt costs | 4.8 | 5.6 | 6.9 | |||||
| Less: | ||||||||
| Financing leases | 19.1 | 19.5 | 20.8 | |||||
| Cash and cash equivalents | 25.2 | 27.8 | 35.9 | |||||
| Net debt | $ | 599.8 | $ | 636.4 | $ | 668.3 |
Clearwater Paper Corporation
Investors contact:
Sloan Bohlen
Solebury Trout
509.344.5906
News media:
Shannon Myers
509.344.5967
investorinfo@clearwaterpaper.com
q42021supplementals
CLEARWATER PAPER CORPORATION FOURTH QUARTER EARNINGS RELEASE MATERIALS FEBRUARY 15, 2022 ARSEN S. KITCH President, Chief Executive Officer And Director MICHAEL J. MURPHY Senior Vice President And Chief Financial Officer
Cautionary Statement Regarding Forward Looking Statements This presentation of supplemental information contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the impact of COVID-19 on consumer behavior and our business and operations; order patterns; consumer demand and industry trends, including in response to COVID-19, and other factors; production targets; backlogs and inventory overhang; impact of announced price increases; assumptions for Q1 2022 and full year 2022 and 2023, including maintenance outage impacts, operational factors, interest, capital, inflation, depreciation and amortization and income tax; our capital allocation objectives; our strategy, including achieving target level ratio, debt reduction, and prioritizing free cash flow; the closure of the Neenah facility and related costs and benefits; expectations regarding the paperboard markets and tissue markets; focus on sustainable coating and fiber alternative initiatives; contract renewal uncertainty; and future sales chain opportunities. These forward-looking statements are based on management’s current expectations, estimates, assumptions and projections that are subject to change. Our actual results of operations may differ materially from those expressed or implied by the forward-looking statements contained in this presentation. Important factors that could cause or contribute to such differences include the risks and uncertainties described from time to time in the company's public filings with the Securities and Exchange Commission, including but not limited to the following: impact of COVID-19 on our operations and our supplier’s operations and on customer demand; competitive pricing pressures for our products, including as a result of increased capacity as additional manufacturing facilities are operated by our competitors and the impact of foreign currency fluctuations on the pricing of products globally; the loss of, changes in prices in regard to, or reduction in, orders from a significant customer; changes in the cost and availability of wood fiber and wood pulp; changes in transportation costs and disruptions in transportation services; changes in customer product preferences and competitors' product offerings; larger competitors having operational and other advantages; customer acceptance and timing and quantity of purchases of our tissue products, including the existence of sufficient demand for and the quality of tissue produced by our expanded Shelby, North Carolina operations; consolidation and vertical integration of converting operations in the paperboard industry; our ability to successfully implement our operational efficiencies and cost savings strategies, along with related capital projects and restructuring activities, and achieve the expected operational or financial results of those projects; changes in the U.S. and international economies and in general economic conditions in the regions and industries in which we operate; manufacturing or operating disruptions, including IT system and IT system implementation failures, equipment malfunctions and damage to our manufacturing facilities; cyber-security risks; changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs; labor disruptions; cyclical industry conditions; changes in expenses, required contributions and potential withdrawal costs associated with our pension plans; environmental liabilities or expenditures; reliance on a limited number of third-party suppliers for raw materials; our ability to attract, motivate, train and retain qualified and key personnel; our substantial indebtedness and ability to service our debt obligations; restrictions on our business from debt covenants and terms; negative changes in our credit agency ratings; and changes in laws, regulations or industry standards affecting our business. Forward-looking statements contained in this presentation present management’s views only as of the date of this presentation. We undertake no obligation to publicly update forward-looking statements, to retract future revisions of management's views based on events or circumstances occurring after the date of this presentation. Non-GAAP Financial Measures This presentation include certain financial measures that are not calculated in accordance with GAAP, including Adjusted EBITDA, Adjusted Income, Adjusted income per share, free cash flow and net debt. The Company’s management believes that the presentation of these financial measures provides useful information to investors because these measures are regularly used by management in assessing the Company’s performance. These financial measures should be considered in addition to results prepared in accordance with GAAP but should not be considered substitutes for or superior to GAAP results. In addition, these non-GAAP financial measures may not be comparable to similarly-titled measures utilized by other companies, since such other companies may not calculate such measure in the same manner as we do. A reconciliation of these measures (Adjusted EBITDA, Adjusted Income, Adjusted income per share, free cash flow and net debt) to the most relevant GAAP measure is available in the appendix of this presentation. FORWARD LOOKING STATEMENTS © Clearwater Paper Corporation 2022 2
Overall • Net income $9 million for Q4, net loss of $28 million for 2021 • Adjusted net income $14 million for Q4, $17 million for 2021 • Adjusted EBITDA $56 million for Q4, $175 million for 2021 • Net proceeds on asset sales of $13 million Pulp and Paperboard • Continued strong customer demand • SBS prices increased in Q4 and throughout 2021 Consumer Products • Inflation pressures, partially offset by price increases • Demand stabilized in Q4, after volatile year due to COVID impact Capital Structure • Liquidity remained strong at $265 million • Reduced net debt by $37 million in Q4, $69 million for the year Q4 AND FULL YEAR 2021 BUSINESS HIGHLIGHTS © Clearwater Paper Corporation 2022 3
Industry • Order backlogs remain strong • Fastmarkets RISI reported market price increases of $250/ton in 2021 • Folding carton: Q1’21 $20/ton, Q2’21 $100/ton, Q3’21 $80/ton and Q4’21 $50/ton • Cup stock and food service: Q2’21 $100/ton, Q3’21 $100/ton and Q4’21 $50/ton • Fastmarkets RISI reported an additional market price increase of $50/ton in January 2022 • Positive mix shift during COVID, which is likely to revert to historical levels • Folding carton has benefited from shift to at home consumption • Shift back to food service is expected as economy recovers Clearwater Paper • Demand and order backlogs remain strong • Continued expected benefit of previously announced price increases, which can take up to two quarters to implement BUSINESS UPDATE – PULP AND PAPERBOARD PRICING DRIVING OVERALL STRONG RESULTS © Clearwater Paper Corporation 2022 4
• Sustainable forest certifications for fiber supply in place for over a decade • Recent launch of products with recycled fiber content • ReMagine with up to 30% recycled content for folding carton applications • NuVo with up to 35% recycled content for cup applications • Focus on developing more sustainable coating applications with Jan 2022 launch of BioPBS • Compostable coating relative to current application • Focus on cup and food service applications • Future initiatives are focused on more sustainable coating and fiber alternatives PULP AND PAPERBOARD – SUSTAINABLE PRODUCTS © Clearwater Paper Corporation 2022 5 PRODUCT INNOVATION WITH FOCUS ON SUSTAINABILITY 2008 2012 2016 2020 2022 FSC COC Certification NuVo 35% PCR Cupstock ReMagine 30% PCR Folding Carton SFI COC Certification NuVo With BioPBS Develop products for a sustainable, circular economy that meet our converter operator and customer needs
Industry • COVID has led to demand and inventory distortions in 2020 and 2021 • Per RISI in 2020, US demand ~10.6 million tons • ~1 to 2% annual growth, slightly greater than population growth • ~70% at home (pre-COVID ~2/3 at home) • At home: ~ 7.6 million ton demand with ~2/3 branded and ~1/3 private branded • Private branded demand is ~2.5 million, growing faster than branded • Private branded capacity additions outpacing historical demand growth • Club and mass merch share of tissue sales has grown at expense of grocery Clearwater Paper • Q4 2021 shipments were 12.4 million cases compared to 13.9 million in Q4 2020, 12.3 million in Q3 2021 • Inflation persists, previously announced price increases are being implemented • Production increased relative to Q3 2021 but still below capacity and Q4 2020 levels • Monitoring channel and customer trends to determine altered consumer buying patterns • We are more concentrated in grocery and less in club/mass-merch versus industry BUSINESS UPDATE – CONSUMER PRODUCTS RETAIL TISSUE SHIPMENTS STABILIZED IN Q4 2021 © Clearwater Paper Corporation 2022 6 1. Based upon RISI Outlook for World Tissue Business April 2021
© Clearwater Paper Corporation 2022 FINANCIAL PERFORMANCE ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 1. Includes impairment and other costs associated with the Neenah, Wisconsin facility closure and other items. Refer to Clearwater Paper 10-K filed with the SEC on February 15, 2022 for further details. 2021 2020 2021 2020 Net sales 489.8$ 452.9$ 1,772.6$ 1,868.6$ Cost of sales 429.1 376.1 1,590.0 1,574.4 Selling, general and adminstrative 30.5 32.6 112.9 122.0 Other operating charges, net 1 2.6 2.1 57.7 14.0 Income from operations 27.6 41.9 12.0 158.1 Non-operating expense (12.0) (12.4) (47.7) (59.9) Income tax provision (benefit) 6.1 7.0 (7.7) 21.1 Net income (loss) 9.6$ 22.6$ (28.1)$ 77.1$ Diluted income (loss) per share 0.56$ 1.34$ (1.67)$ 4.61$ Adjusted income per share 0.82$ 1.45$ 1.03$ 5.30$ Adjusted EBITDA 55.6$ 71.6$ 174.6$ 283.2$ Quarter Ended Dec 31, Year Ended Dec 31, 7
© Clearwater Paper Corporation 2022 SEGMENT PROFIT AND LOSS AND ADJUSTED EBITDA ($ IN MILLIONS) 1. Includes impairment and other costs associated with Neenah, Wisconsin and other items. Refer to Clearwater Paper 10-K filed with the SEC on February 15, 2022, for further details. 2021 2020 2021 2020 Net Sales Pulp and Paperboard 261.3$ 220.4$ 946.0$ 877.1$ Consumer Products 231.8 238.9 835.0 1,018.5 Eliminations (3.3) (6.4) (8.4) (27.0) 489.8$ 452.9$ 1,772.6$ 1,868.6$ Operating Income Pulp and Paperboard 53.1$ 33.7$ 125.7$ 124.5$ Consumer Products (7.5) 27.6 4.0 110.6 Corporate and other (15.3) (17.3) (60.1) (63.0) Other operating charges, net 1 (2.6) (2.1) (57.7) (14.0) 27.6$ 41.9$ 12.0$ 158.1$ Adjusted EBITDA Pulp and Paperboard 61.9$ 42.8$ 161.4$ 161.3$ Consumer Products 8.0 44.7 69.0 179.1 Corporate and other (14.3) (16.0) (55.7) (57.2) 55.6$ 71.6$ 174.6$ 283.2$ Quarter Ended Dec 31, Year Ended Dec 31, 8
PULP AND PAPERBOARD RESULTS Q4 2021 VS. Q4 2020 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Higher pricing with favorable mix Higher input costs including energy, chemicals and transportation © Clearwater Paper Corporation 2022 9
PULP AND PAPERBOARD RESULTS 2021 VS. 2020 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Higher pricing with favorable mix Higher input costs and planned major maintenance1 © Clearwater Paper Corporation 2022 10 1 Estimated impact of planned major maintenance outage was $27 million
CONSUMER PRODUCTS RESULTS Q4 2021 VS. Q4 2020 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Lower sales and production volumes Higher input costs partially offset by benefits from Neenah consolidation © Clearwater Paper Corporation 2022 11 Favorable mix with targeted price increases
CONSUMER PRODUCTS RESULTS 2021 VS. 2020 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Lower sales and production volumes Higher input costs partially offset by benefits from Neenah closure © Clearwater Paper Corporation 2022 12 Favorable mix
© Clearwater Paper Corporation 2022 CAPITAL STRUCTURE AND ALLOCATION Capital structure: supportive and stable • Ample liquidity • No material near-term debt maturities • Corporate/Issuer ratings: Ba2/BB- Capital allocation objectives: • Utilize free cash flow to reduce debt • Target net debt to Adjusted EBITDA ratio of 2.5x, expect achievement by 2023 • Typical maintenance and business improvement capital investments of $60 million/year $0.0 $0.0 $0.0 $300.0 $50.0 $0.0 $275.0 2022 2023 2024 2025 2026 2027 2028 Scheduled Debt Maturity Profile ($ in millions)2 Liquidity Profile ($ in millions)1 ABL Availability $243.6 Less Utilization (3.6) Plus Unrestricted Cash 25.2 Liquidity $265.2 1. ABL availability based on borrowing base calculations and consolidated balance sheet as of December 31, 2021, and utilization includes ABL borrowing of $0 million and outstanding letters of credit of $3.6 million. 2. This chart excludes finance leases as of December 31, 2021 and assumes that the 2025 notes are repaid or refinanced at least 91 days prior to their maturity. Current debt maturities include $300 million of 5.375% notes due 2025; Term Loan due 2026; and $275 million of 4.75% notes due 2028. 13
OUTLOOK FOR Q1 AND 2022 OVERALL ASSUMPTIONS © Clearwater Paper Corporation 2022 Q1 2022: $48 to $56 million of Adjusted EBITDA • Positive impact of previously announced price increases in paperboard and tissue • Raw material inflation impacting Adjusted EBITDA by $5 to $7 million relative to Q4 2021 • Lewiston headbox outage and other maintenance, expected to impact Adjusted EBITDA by $3 to $4 million 2022 Operational Assumptions vs. 2021 • Price/mix - $120 to $140 million impact from previously announce price increases • Volume – stability in paperboard, recovery in tissue, with some uncertainty due to contract renewals and new sales opportunities • Inflation – raw material, freight and energy inflation expected impact of $90 to $100 million 2022 Other • Interest expense: $33 to $35 million • Depreciation and amortization expense: $101 to $104 million • CAPEX: $60 to $70 million • Taxes: Effective rate 22 to 23% 14
Pulp and Paperboard • Diversified range of end-market products, well-invested national footprint • Focused on non-integrated customers with strong service and quality commitment • Well positioned for trends towards sustainable packaging and food service products Consumer Products • Leading private-brand provider with national scale and superior supply chain performance • Shift to private-brands continues with long runway • Tissue is need-based and economically resilient Near-term strategy is to prioritize free cash flow, reduce debt • Expected to achieve target leverage ratio of 2.5x by 2023 • Current capital allocation is focused on: • Sustaining our asset base • Debt reduction • Prioritize high return cost reduction and business performance projects • Maintaining a strong and flexible balance sheet is a key priority • Future capital allocation planning is shareholder value focused CLEARWATER PAPER VALUE PROPOSITION WELL POSITIONED ACROSS TWO ATTRACTIVE BUSINESSES © Clearwater Paper Corporation 2022 16
APPENDIX © Clearwater Paper Corporation 2022 16
PULP AND PAPERBOARD SEQUENTIAL QUARTER RESULTS Q4 2021 VS. Q3 2021 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Lower major maintenance outages offset by higher input costs Favorable mix and higher pricing © Clearwater Paper Corporation 2022 18
CONSUMER PRODUCTS SEQUENTIAL QUARTER RESULTS Q4 2021 VS. Q3 2021 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Improved production and demand Higher input costs in pulp, transportation and energy © Clearwater Paper Corporation 2022 19 Favorable mix with targeted price increases
KEY SEGMENT INFORMATION 1. Includes both retail and away-from-home (AFH) cases. AFH was exited in Q3, 2021. AFH cases totaled 2.0 million in 2019, 1.5 million in 2020 and 0.8 million in 2021. 2. Non-retail includes away-from-home and parent rolls. Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Pulp and Paperboard Sales ($ millions) $212.1 $235.4 $223.6 $214.3 $223.1 $216.5 $217.2 $220.4 $219.7 $227.4 $237.5 $261.3 Adjusted EBITDA ($ millions) $38.9 $42.9 $28.2 $44.0 $35.5 $41.2 $41.8 $42.8 $34.0 $22.0 $43.5 $61.9 Shipments (short tons) 197.8 220.6 210.5 199.1 207.9 201.7 205.3 206.2 206.7 200.6 203.4 211.5 Sales price ($/short ton) $1,024 $ 1,023 $ 1,021 $ 1,023 $ 1,013 $ 1,009 $ 1,010 $ 1,002 $1,028 $1,058 $1,102 $1,164 Consumer Products Sales ($ millions) $223.1 $222.8 $227.9 $228.7 $262.5 $271.3 $245.9 $238.9 $208.4 $180.7 $214.2 $231.8 Adjusted EBITDA ($ millions) $16.0 $12.4 $14.7 $20.7 $31.9 $53.9 $48.5 $44.7 $34.7 $6.7 $19.6 $8.0 Shipments Retail (short tons in thousands) 73.4 76.2 79.5 79.7 90.8 95.4 86.3 83.3 70.8 61.5 76.2 79.4 Non-Retail (short tons in thousands) 10.3 6.6 6.9 8.4 9.0 5.8 3.8 6.5 9.4 7.4 5.7 6.2 Converted Products (cases in millions)1 12.3 12.5 13.2 13.3 15.2 16.0 14.5 13.9 11.7 10.2 12.3 12.4 Sales Price ($ per short ton) Retail $2,789 $ 2,764 $ 2,707 $ 2,698 $ 2,732 $ 2,729 $ 2,766 $ 2,745 $ 2,758 $2,755 $2,732 $2,831 Non-Retail2 $1,799 $ 1,851 $ 1,805 $ 1,590 $ 1,548 $ 1,746 $ 1,820 $ 1,552 $ 1,404 $1,508 $988 $1,054 Production Converted Products (cases in millions) 12.4 12.8 12.9 13.6 13.9 15.9 15.3 13.9 13.5 9.6 11.4 11.9 © Clearwater Paper Corporation 20212 20
RECONCILIATION OF ADJUSTED EBITDA ($ IN MILLIONS) Sept 30, 2021 2020 2021 2021 2020 Net income (loss) $ 9.6 $ 22.6 $ 1.9 $ (28.1) $ 77.1 Income tax provision (benefit) 6.1 7.0 (0.3) (7.7) 21.1 Interest expense, net 8.9 9.5 8.9 36.4 46.5 Depreciation and amortization expense 25.4 27.5 25.9 105.0 111.0 Other operating charges, net 2.6 2.1 10.2 57.7 14.0 Other non-operating expense 2.6 1.9 2.8 10.4 7.6 Debt retirement costs 0.5 1.1 0.5 1.0 5.9 Adjusted EBITDA $ 55.6 $ 71.6 $ 49.9 $ 174.6 $ 283.2 Pulp and Paperboard segment income $ 53.1 $ 33.7 $ 34.6 $ 125.7 $ 124.5 Depreciation and amortization 8.8 9.0 8.9 35.7 36.7 Adjusted EBITDA Paperboard segment $ 61.9 $ 42.8 $ 43.5 $ 161.4 $ 161.3 Consumer Products segment income $ (7.5) $ 27.6 $ 3.7 $ 4.0 $ 110.6 Depreciation and amortization 15.5 17.1 15.9 64.9 68.5 Adjusted EBITDA Consumer Products segment $ 8.0 $ 44.7 $ 19.6 $ 69.0 $ 179.1 Corporate and other expense $ (15.3) $ (17.3) $ (14.3) $ (60.1) $ (63.0) Depreciation and amortization 1.1 1.4 1.1 4.4 5.8 Adjusted EBITDA Corporate and other $ (14.3) $ (16.0) $ (13.1) $ (55.7) $ (57.2) Pulp and Paperboard segment $ 61.9 $ 42.8 $ 43.5 $ 161.4 $ 161.3 Consumer Products segment 8.0 44.7 19.6 69.0 179.1 Corporate and other (14.3) (16.0) (13.1) (55.7) (57.2) Adjusted EBITDA $ 55.6 $ 71.6 $ 49.9 $ 174.6 $ 283.2 Dec 31, Dec 31, Quarter Ended Year Ended © Clearwater Paper Corporation 2022 21
© Clearwater Paper Corporation 2022 RECONCILIATION OF ADJUSTED INCOME ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2021 2020 2021 2020 Net income (loss) 9.6$ 22.6$ (28.1)$ 77.1$ Add back: Income tax provision (benefit) 6.1 7.0 (7.7) 21.1 Income (loss) before income taxes 15.6 29.5 (35.7) 98.2 Add back: Debt retirement costs 0.5 1.1 1.0 5.9 Other operating charges, net 2.6 2.1 57.7 14.0 Adjusted income before tax 18.7 32.7 23.0 118.1 Normalized income tax provision (benefit) 4.7 8.2 5.7 29.5 Adjusted income 14.1$ 24.6$ 17.2$ 88.6$ Weighted average diluted shares (thousands) 17,149 16,891 16,767 16,724 Adjusted income per diluted share 0.82$ 1.45$ 1.03$ 5.30$ Year Ended Dec 31,Quarter Ended Dec 31, 22
ADDITIONAL RECONCILIATIONS Net Debt Mar 31, 2020 June 30, 2020 Sept 30, 2020 Dec 31, 2020 Mar 31, 2021 June 30, 2021 Sept 30, 2021 Dec 31, 2021 Cash $ 60.8 $ 48.2 $ 47.5 $ 35.9 $ 57.1 $ 60.9 $ 27.8 $ 25.2 Current debt 58.1 1.6 1.7 1.7 1.7 1.7 1.6 1.6 Long term debt 883.9 827.9 785.5 716.4 716.3 716.2 676.5 637.6 add: Deferred debt costs 7.7 6.4 8.2 6.9 6.6 6.4 5.6 4.8 less: Financing leases (22.0) (21.6) (21.2) (20.8) (20.4) (20.0) (19.5) (19.1) Subtotal 927.7 814.3 774.2 704.2 704.2 704.3 664.2 624.9 Net debt $ 866.9 $ 766.1 $ 726.7 $ 668.4 $ 647.1 $ 643.3 $ 636.4 $ 599.8 Free Cash Flow Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Cash from operations $ 11.7 $ 109.0 $ 55.7 $ 70.8 $ 33.8 $ 14.8 $ 16.3 $ 32.1 Additions to property, plant and equipment, net of proceeds from sales (10.5) (7.3) (9.7) (12.2) (11.1) (10.5) (8.9) 4.8 Free cash flow $ 1.2 $ 101.7 $ 46.0 $ 58.6 $ 22.7 $ 4.3 $ 7.4 $ 36.9 ($ IN MILLIONS) © Clearwater Paper Corporation 2022 23
MAJOR MAINTENANCE SCHEDULE ($ IN MILLIONS) 1. This information is based upon management’s current expectations and estimates, as well as historical averages. Many factors are outside the control of management, and actual results may differ materially from the information set forth above. See “Forward-Looking Statements” on page 2. Idaho $10 $22 $20 $17 $5 $7 $30 $24 $27 $35 - $40 2017 2018 2019 2020 2021 2022 e 2023e Q1 Q2 Q3 Q4 Total $25 - $30 1 © Clearwater Paper Corporation 2022 24 1