8-K
Clearwater Paper Corp (CLW)
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): August 4, 2021
CLEARWATER PAPER CORPORATION
(Exact name of registrant as specified in its charter)
| DE | 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 August 4, 2021, Clearwater Paper Corporation (the “Company”) announced its results of operations and financial condition for the second quarter ending June 30, 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 Second Quarter Supplemental Information 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 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.
The information in Item 2.02, including Exhibits 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibit Index
| Exhibit | Description |
|---|---|
| 99.1 | Press release issued by Clearwater Paper Corporation regarding the second quarter 2021 financial results |
| 99.2 | Supplemental financial information for the second quarter 2021 |
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 : August 4, 2021
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 Second Quarter 2021 Results
SPOKANE, Wash.--(BUSINESS WIRE)--August 4, 2021 --Clearwater Paper Corporation (NYSE:CLW), a premier supplier of quality tissue and bleached paperboard products, today reported financial results for the second quarter of 2021.
SECOND QUARTER HIGHLIGHTS
•Net loss of $52 million, or $3.10 per diluted share
•Adjusted EBITDA of $15 million
•Successfully completed planned major maintenance at the Lewiston, Idaho facility ($22 million Adjusted EBITDA impact)
•Announced closure of Neenah, Wisconsin tissue facility
•Continued to reduce net debt
“We performed better than our initial expectations for the quarter. In paperboard, we continue to experience strong demand and robust backlogs. Tissue demand bottomed out in April as consumers de-stocked pantries and retailers adjusted inventories. Our tissue orders have started to build back to more normal levels since then,” said Arsen Kitch, president and chief executive officer. “Our team executed well in the quarter, performed our largest maintenance outage at Lewiston, serviced strong SBS demand, closed our high cost Neenah tissue facility and took tissue production downtime to reduce inventory levels and mitigate pulp price inflation.”
OVERALL RESULTS
For the second quarter of 2021, Clearwater Paper reported net sales of $406 million, a 15% decrease compared to net sales of $481 million for the second quarter of 2020. Net loss for the second quarter of 2021 was $52 million, or $3.10 per diluted share, compared to net income for the second quarter of 2020 of $23 million, or $1.36 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net loss in the second quarter of 2021 of $18 million, or $1.07 per diluted share, compared to second quarter 2020 adjusted net income of $28 million, or $1.67 per diluted share. Adjusted EBITDA for the quarter was $15 million, compared to the second quarter of 2020 Adjusted EBITDA of $79 million. Additionally, Clearwater Paper incurred impairment and other closure costs associated with the recently announced closure of its Neenah, Wisconsin facility of $41.7 million.
For the first six months of 2021, Clearwater Paper reported net sales of $832 million, a 13% decrease compared to net sales of $958 million for the first six months of 2020. Net loss for the first six months of 2021 was $40 million, or $2.37 per diluted share, compared to net income for the first six months of 2020 of $33 million, or $1.99 per diluted share. On a non-GAAP basis, Clearwater Paper reported adjusted net loss in the first six months of 2021 of $6 million, or $0.37 per diluted share, compared to first six months of 2020 adjusted net income of $37 million, or $2.24 per diluted share. Adjusted EBITDA for the first six months was $69 million, compared to the first six months of 2020 Adjusted EBITDA of $134 million.
Pulp and Paperboard Products Segment
Net sales in the Pulp and Paperboard Products segment were $227 million for the second quarter of 2021, up 5% compared to second quarter 2020 net sales of $216 million. Segment operating income for the second quarter of 2021 was $13 million compared to $32 million for the second quarter of 2020. Adjusted EBITDA for the segment was $22 million in the second quarter of 2021, compared to $41 million in the second quarter of 2020. The decrease in operating income and Adjusted EBITDA was driven by higher maintenance costs due to the major planned maintenance outage at the Lewiston, Idaho location and higher input costs due to inflation which were partially offset by higher sales prices.
Net sales in the Pulp and Paperboard Products segment were $447 million for the first six months of 2021, up 2% compared to first six months of 2020 net sales of $440 million. Segment operating income for the first six months of 2021 was $38 million compared to $58 million for the first six months of 2020. Adjusted EBITDA for the segment was $56 million in the first six months of 2021, compared to $77 million in the first six months of 2020. The decrease in operating income and Adjusted EBITDA was driven by higher maintenance outage costs due to the at the Lewiston location which were partially offset with higher sales prices.
Paperboard Sales Volumes and Prices:
• Paperboard sales volumes were 200,551 tons in the second quarter of 2021, a decrease of 1% compared to 201,728 tons in the second quarter of 2020. Paperboard sales volumes were 407,263 tons in the first six months of 2021, a decrease of 1% compared to 409,644 tons in the first six months of 2020
• Paperboard average net selling price increased 5% to $1,058 per ton for the second quarter of 2021, compared to $1,009 per ton in the second quarter of 2020. Paperboard average net selling price increased 3% to $1,043 per ton for the first six months of 2021, compared to $1,011 per ton in the first six months of 2020.
Consumer Products Segment
Net sales in the Consumer Products segment were $181 million for the second quarter of 2021, down 33% compared to the second quarter 2020 net sales of $271 million. In the second quarter of 2021, converted case shipments totaled 10.2 million cases, a decrease of 36% compared to 16.0 million cases shipped in the second quarter of 2020. Segment operating loss for the second quarter of 2021 was $10 million compared to operating income of $37 million in the second quarter of 2020. Adjusted EBITDA for the segment was $7 million in the second quarter of 2021, down from $54 million in the second quarter of 2020. The decrease in operating income and Adjusted EBITDA was driven by higher input costs due to inflation and lower sales volume as customers and consumers continued to reduce their tissue inventory which led to lower orders.
Net sales in the Consumer Products segment were $389 million for the first six months of 2021, down 27% compared to the first six months of 2020 net sales of $534 million. In the first six months of 2021, converted case shipments totaled 21.8 million cases, a decrease of 30% compared to 31.2 cases shipped in the first six months of 2020. Segment operating income for the first six months of 2021 was $8 million compared to operating income of $51 million in the first six months of 2020. Adjusted EBITDA for the segment was $41 million in the first six months of 2021, down from $86 million in the first six months of 2020. The decrease in operating income and Adjusted EBITDA was driven by the same factors affecting the second quarter of 2021.
Retail Tissue Sales Volumes and Prices:
• Retail tissue volumes sold were 61,497 tons in the second quarter of 2021, a decrease of 36% compared to 95,432 tons in the second quarter of 2020. Retail volumes represented 89% of total volumes sold in the second quarter of 2021, a decrease from 94% in the second quarter of 2020. Retail tissue volumes sold were 132,259 tons in the first six months of 2021, a decrease of 29% compared to 186,223 tons in the first six months of 2020. Retail volumes represented 89% of total volumes sold in the first six months of 2021, a decrease from 93% in the first six months of 2020.
• Retail tissue selling prices increased 1% to $2,755 per ton in the second quarter of 2021, compared to $2,729 per ton in the second quarter of 2020. Retail tissue selling prices increased 1% to $2,757 per ton in the first six months of 2021, compared to $2,730 per ton in the first six months of 2020.
COMPANY OUTLOOK
“We executed well in the second quarter and are well positioned to realize strong cash flows and further reduce net debt in the latter half of 2021. Our paperboard business continues to perform well with favorable market dynamics, and our tissue demand is continuing to recover after a retailer and consumer drawdown of inventory. We are working to offset inflation across our business, including closing our high cost Neenah tissue facility and a continued focus on operational execution,” Kitch concluded.
WEBCAST INFORMATION
Clearwater Paper Corporation will discuss these results during an earnings conference call that begins at 2:00 p.m. Pacific Standard 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 https://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-branded tissue to major retailers and wholesale distributors, including grocery, drug, 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 second quarter and first six months of 2021 and 2020, including adjusted 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 product demand, backlogs, closure of Neenah Wisconsin facility, production downtime, cash generation, inventory levels, debt reduction, performance improvements, market conditions, and the company's ability to mitigate inflation costs. 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 impact of the COVID-19 pandemic on our business and operations, our suppliers' operations and our 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, financial 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 the company’s 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; 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 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 and restrictions on our business from debt covenants and terms; negative changes in our 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, 2020 and subsequently filed periodic reports on Form 10-Q. 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 June 30, | Six Months Ended June 30, | |||||||
| (In millions, except per-share data) | 2021 | 2020 | 2021 | 2020 | ||||
| Net sales | $ | 406.4 | $ | 480.6 | $ | 832.3 | $ | 958.5 |
| Costs and expenses: | ||||||||
| Cost of sales | 392.2 | 396.7 | 762.8 | 819.7 | ||||
| Selling, general and administrative expenses | 26.3 | 32.6 | 54.1 | 60.1 | ||||
| Other operating charges, net | 44.5 | 3.0 | 44.9 | 11.6 | ||||
| Total operating costs and expenses | 463.0 | 432.4 | 861.8 | 891.4 | ||||
| Income (loss) from operations | (56.6) | 48.2 | (29.5) | 67.0 | ||||
| Interest expense, net | (9.3) | (12.0) | (18.6) | (24.9) | ||||
| Other non-operating expense | (2.5) | (2.0) | (5.0) | (3.8) | ||||
| Debt retirement costs | — | (1.0) | — | (1.0) | ||||
| Total non-operating expense | (11.8) | (14.9) | (23.6) | (29.6) | ||||
| Income (loss) before income taxes | (68.4) | 33.2 | (53.1) | 37.3 | ||||
| Income tax provision (benefit) | (16.7) | 10.4 | (13.5) | 4.2 | ||||
| Net income (loss) | $ | (51.6) | $ | 22.8 | $ | (39.6) | $ | 33.1 |
| Net income (loss) per common share: | ||||||||
| Basic | $ | (3.10) | $ | 1.37 | $ | (2.37) | $ | 2.00 |
| Diluted | (3.10) | 1.36 | (2.37) | 1.99 | ||||
| Average shares outstanding (in thousands): | ||||||||
| Basic | 16,685 | 16,594 | 16,678 | 16,575 | ||||
| Diluted | 16,685 | 16,686 | 16,678 | 16,644 | ||||
| Clearwater Paper Corporation | ||||||||
| --- | --- | --- | --- | --- | ||||
| Condensed Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| (In millions) | June 30, 2021 | December 31, 2020 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 60.9 | $ | 35.9 | ||||
| Receivables, net | 144.0 | 160.6 | ||||||
| Inventories | 282.9 | 263.3 | ||||||
| Other current assets | 10.8 | 15.2 | ||||||
| Total current assets | 498.6 | 474.9 | ||||||
| Property, plant and equipment, net | 1,124.5 | 1,191.5 | ||||||
| Operating lease right-of-use assets | 58.1 | 63.5 | ||||||
| Goodwill and intangibles, net | 47.3 | 48.8 | ||||||
| Other assets, net | 22.4 | 21.7 | ||||||
| TOTAL ASSETS | $ | 1,750.9 | $ | 1,800.4 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 1.7 | $ | 1.7 | ||||
| Accounts payable and accrued liabilities | 254.1 | 243.1 | ||||||
| Total current liabilities | 255.9 | 244.8 | ||||||
| Long-term debt | 716.2 | 716.4 | ||||||
| Liability for pension and other postretirement employee benefits | 78.5 | 80.5 | ||||||
| Deferred tax liabilities and other long-term obligations | 212.3 | 237.6 | ||||||
| TOTAL LIABILITIES | 1,262.9 | 1,279.3 | ||||||
| Common stock | — | — | ||||||
| Paid in capital | 19.3 | 16.6 | ||||||
| Retained earnings | 519.2 | 558.8 | ||||||
| Accumulated other comprehensive loss, net of tax | (50.5) | (54.3) | ||||||
| TOTAL STOCKHOLDERS' EQUITY | 488.1 | 521.1 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,750.9 | $ | 1,800.4 | ||||
| Clearwater Paper Corporation | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Consolidated Statements of Cash Flows | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
| (In millions) | 2021 | 2020 | 2021 | 2020 | ||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | (51.6) | $ | 22.8 | $ | (39.6) | $ | 33.1 |
| Adjustments to reconcile net income (loss) to net cash flows provided by operating activities: | ||||||||
| Depreciation and amortization | 26.8 | 27.8 | 53.7 | 55.8 | ||||
| Stock-based compensation expense | 0.7 | 3.4 | 3.1 | 4.8 | ||||
| Deferred and other income taxes | (21.4) | 8.9 | (21.8) | 10.7 | ||||
| Pension and other postretirement benefit plans | 1.5 | 1.2 | 3.2 | 2.0 | ||||
| Non-cash charges associated with mill closure | 37.1 | — | 37.1 | — | ||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in accounts receivable | (12.9) | 18.8 | 12.8 | (18.5) | ||||
| (Increase) decrease in inventory | 4.9 | 5.1 | (24.8) | 46.1 | ||||
| (Increase) decrease in other current assets | 4.5 | 3.6 | 4.4 | (5.4) | ||||
| Increase (decrease) in accounts payable and accrued liabilities | 24.8 | 15.3 | 18.6 | (8.7) | ||||
| Other, net | (0.1) | 1.8 | 1.4 | 0.4 | ||||
| Net cash flows provided by operating activities | 14.3 | 108.6 | 48.1 | 120.4 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Additions to property, plant and equipment | (9.9) | (7.3) | (21.1) | (17.8) | ||||
| Net cash flows used in investing activities | (9.9) | (7.3) | (21.1) | (17.8) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Borrowings of short-term debt | — | 20.0 | — | 108.5 | ||||
| Repayments of short-term debt | — | (73.5) | — | (122.0) | ||||
| Repayments of long-term debt | (0.4) | (60.4) | (0.8) | (61.5) | ||||
| Proceeds from sale of stock under employee awards | — | — | 0.5 | — | ||||
| Taxes paid related to net share settlement of equity awards | (0.1) | — | (1.7) | (0.7) | ||||
| Other, net | — | — | — | (0.2) | ||||
| Net cash flows used in financing activities | (0.5) | (113.9) | (2.0) | (75.8) | ||||
| Increase (decrease) in cash, cash equivalents and restricted cash | 3.8 | (12.6) | 25.0 | 26.7 | ||||
| Cash, cash equivalents and restricted cash at beginning of period | 58.2 | 61.8 | 36.9 | 22.4 | ||||
| Cash, cash equivalents and restricted cash at end of period | $ | 62.0 | $ | 49.2 | $ | 62.0 | $ | 49.2 |
| Clearwater Paper Corporation | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Segment Information | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
| (In millions) | 2021 | 2020 | 2021 | 2020 | ||||
| Segment net sales: | ||||||||
| Pulp and Paperboard | $ | 227.4 | $ | 216.5 | $ | 447.2 | $ | 439.6 |
| Consumer Products | 180.7 | 271.3 | 389.0 | 533.8 | ||||
| Eliminations | (1.7) | (7.2) | (3.9) | (15.0) | ||||
| Total segment net sales | $ | 406.4 | $ | 480.6 | $ | 832.3 | $ | 958.5 |
| Operating income (loss): | ||||||||
| Pulp and Paperboard | $ | 13.0 | $ | 32.0 | $ | 38.0 | $ | 58.2 |
| Consumer Products | (10.0) | 36.8 | 7.9 | 51.4 | ||||
| Corporate and eliminations | (15.0) | (17.6) | (30.5) | (31.0) | ||||
| Other operating charges, net 1 | (44.5) | (3.0) | (44.9) | (11.6) | ||||
| Income (loss) from operations | $ | (56.6) | $ | 48.2 | $ | (29.5) | $ | 67.0 |
1 Other operating charges, net consist of amounts unrelated to ongoing core operating activities. Please refer to Note 8 within Clearwater Paper's Form 10-Q filed with the SEC for the period end June 30, 2021 for the detailed breakout of this amount.
Note: Certain amounts have been reclassed 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 June 30, | Six Months Ended June 30, | |||||||
| (In millions) | 2021 | 2020 | 2021 | 2020 | ||||
| Net income (loss) | $ | (51.6) | $ | 22.8 | $ | (39.6) | $ | 33.1 |
| Add back: | ||||||||
| Income tax provision (benefit) | (16.7) | 10.4 | (13.5) | 4.2 | ||||
| Interest expense, net | 9.3 | 12.0 | 18.6 | 24.9 | ||||
| Depreciation and amortization expense | 26.8 | 27.8 | 53.7 | 55.8 | ||||
| Other operating charges, net1 | 44.5 | 3.0 | 44.9 | 11.6 | ||||
| Other non-operating expense | 2.5 | 2.0 | 5.0 | 3.8 | ||||
| Debt retirement costs | — | 1.0 | — | 1.0 | ||||
| Adjusted EBITDA | $ | 14.8 | $ | 78.9 | $ | 69.1 | $ | 134.3 |
| Pulp and Paperboard income | $ | 13.0 | $ | 32.0 | $ | 38.0 | $ | 58.2 |
| Depreciation and amortization | 9.0 | 9.2 | 18.0 | 18.5 | ||||
| Pulp and Paperboard Adjusted EBITDA | $ | 22.0 | $ | 41.2 | $ | 56.0 | $ | 76.7 |
| Consumer Products income (loss) | $ | (10.0) | $ | 36.8 | $ | 7.9 | $ | 51.4 |
| Depreciation and amortization | 16.8 | 17.1 | 33.5 | 34.4 | ||||
| Consumer Products Adjusted EBITDA | $ | 6.7 | $ | 53.9 | $ | 41.4 | $ | 85.8 |
| Corporate expenses | $ | (15.0) | $ | (17.6) | $ | (30.5) | $ | (31.0) |
| Depreciation and amortization | 1.0 | 1.4 | 2.2 | 2.9 | ||||
| Corporate Adjusted EBITDA | $ | (14.0) | $ | (16.2) | $ | (28.3) | $ | (28.2) |
| Pulp and Paperboard | $ | 22.0 | $ | 41.2 | $ | 56.0 | $ | 76.7 |
| Consumer Products | 6.7 | 53.9 | 41.4 | 85.8 | ||||
| Corporate | (14.0) | (16.2) | (28.3) | (28.2) | ||||
| Adjusted EBITDA | $ | 14.8 | $ | 78.9 | $ | 69.1 | $ | 134.3 |
1 Other operating charges, net consist of amounts unrelated to ongoing core operating activities. Please refer to Note 8 within Clearwater Paper's Form 10-Q filed with the SEC for the period end June 30, 2021 for the detailed breakout of this amount.
| Clearwater Paper Corporation | ||||||||
|---|---|---|---|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
| (In millions, except per-share data) | 2021 | 2020 | 2021 | 2020 | ||||
| Adjusted Net Income (Loss): | ||||||||
| Net income (loss) | $ | (51.6) | $ | 22.8 | $ | (39.6) | $ | 33.1 |
| Add back: | ||||||||
| Income tax provision (benefit) | (16.7) | 10.4 | (13.5) | 4.2 | ||||
| Income (loss) before income taxes | (68.4) | 33.2 | (53.1) | 37.4 | ||||
| Add back: | ||||||||
| Debt retirement costs | — | 1.0 | — | 1.0 | ||||
| Other operating charges, net | 44.5 | 3.0 | 44.9 | 11.6 | ||||
| Adjusted income (loss) before tax | (23.8) | 37.2 | $ | (8.2) | $ | 49.9 | ||
| Normalized income tax provision | (6.0) | 9.3 | (2.0) | 12.5 | ||||
| Adjusted net income (loss) | $ | (17.9) | $ | 27.9 | $ | (6.1) | $ | 37.4 |
| Weighted average diluted shares (thousands) | 16,685 | 16,686 | 16,678 | 16,644 | ||||
| Adjusted income (loss) per diluted share | $ | (1.07) | $ | 1.67 | $ | (0.37) | $ | 2.24 |
| June 30, 2021 | March 31, 2021 | December 31, 2020 | ||||||
| Calculation of Net Debt: | ||||||||
| Current portion long-term debt | $ | 1.7 | $ | 1.7 | $ | 1.7 | ||
| Long-term debt | 716.2 | 716.3 | 716.4 | |||||
| Add back: | ||||||||
| Unamortized deferred debt costs | 6.4 | 6.6 | 6.9 | |||||
| Less: | ||||||||
| Financing leases | 20.0 | 20.4 | 20.8 | |||||
| Cash | 60.9 | 57.1 | 35.9 | |||||
| Net Debt | $ | 643.3 | $ | 647.1 | $ | 668.4 |
Clearwater Paper Corporation
Investors contact:
Sloan Bohlen
Solebury Trout
509.344.5906
News media:
Shannon Myers
509.344.5967
investorinfo@clearwaterpaper.com
q22021supplementals
CLEARWATER PAPER CORPORATION SECOND QUARTER EARNINGS RELEASE MATERIALS AUGUST 4, 2021 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 COVID19, and other factors; backlogs and inventory overhang; impact of price increases; assumptions for Q3 2021 and full year 2021, including maintenance outage impacts, operational factors, interest, capital, inflation, depreciation and amortization and income tax; the operational and financial benefits from the Shelby expansion; and the indefinite closure of the Neenah facility and related costs and benefits . 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 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 and Net debt) to the most relevant GAAP measure is available in the appendix of this presentation. FORWARD LOOKING STATEMENTS © Clearwater Paper Corporation 2021 2
Overall • Net loss $52 million, including $31 million (after tax) associated with Neenah closure • Adjusted net loss $18 million • Adjusted EBITDA $15 million Pulp and Paperboard • Continued strong customer demand • SBS prices increased • Successfully completed major maintenance outage Consumer Products • Inventory destocking at retailers and consumers impacted sales • Initial recovery in demand after April • Reduced production to reduce inventory • Announced closure of Neenah, Wisconsin facility Capital Structure • Liquidity remained strong at $297 million • Reduced net debt by $4 million Q2 2021 BUSINESS HIGHLIGHTS © Clearwater Paper Corporation 2021 3
Industry • We estimate ~2/3 of industry demand is driven by recession resilient end-market segments, such as food packaging and other consumer goods • ~1/3 of demand is exposed to discretionary end-market segments, including food service, commercial print, luxury packaging, etc. • Fastmarkets RISI reflected market price increases • Folding carton grades: $50/ton, collectively in March and April, $50/ton in June and $30/ton in July • Cup stock and food service: $20/ton in April, $30/ton in June and $50/ton in July Clearwater Paper • Demand and order backlogs remain strong • Impact of previously announced price increases • Implementation and impact on financials can take up to two quarters • Greater growth in food service is expected to be a negative mix shift • Major maintenance outage in Lewiston completed on-time and on budget BUSINESS UPDATE – PULP AND PAPERBOARD DIVERSIFIED RANGE OF END-MARKET PRODUCTS AND FLEXIBILITY IN OUR SUPPLY CHAIN PROVIDED OVERALL STRONG RESULTS © Clearwater Paper Corporation 2021 4
Industry • Pre-COVID: ~10 million ton demand with ~2/3 at-home, ~1/3 away from home • Initial COVID reaction: shift to at-home demand and consumer pantry stocking in 2020 • Current COVID phase: reverting towards historical sales and consumption levels • Away from home consumption recovering • Inventory destocking at consumers and retailers began late in Q1 2021 and bottomed out in Q2 2021 • Consumer purchases bottomed out in March per IRI panel data • Shipments to retailers bottomed out in April per Fastmarkets RISI Clearwater Paper • Q2 2021 shipments were 10.2 million cases compared to16.0 million in Q2 2020, 12.5 million Q2 2019, and 11.7 million in Q1 2021 • Lowest shipment month was April with 3.1 million cases • Order patterns increasing into Q3 2021 • Q2 2021 production was curtailed to reduce inventory and meet demand • Monitoring channel and customer trends to determine altered consumer buying patterns • Indefinitely closed Neenah to reduce Clearwater Paper’s cost position, exit away from home category BUSINESS UPDATE – CONSUMER PRODUCTS RETAIL TISSUE SHIPMENTS BOTTOMED IN Q2 2021 © Clearwater Paper Corporation 2021 5
© Clearwater Paper Corporation 2021 FINANCIAL PERFORMANCE ($ 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-Q filed with the SEC on August 4, 2021 for further details. 2021 2020 2021 2020 Net sales 406.4$ 480.6$ 832.3$ 958.5$ Cost of sales 392.2 396.7 762.8 819.7 Selling, general and adminstrative 26.3 32.6 54.1 60.1 Other operating charges, net1 44.5 3.0 44.9 11.6 Income from operations (56.6) 48.2 (29.5) 67.0 Non-operating expense (11.8) (14.9) (23.6) (29.6) Income tax provision (benefit) (16.7) 10.4 (13.5) 4.2 Net income (loss) (51.6)$ 22.8$ (39.6)$ 33.1$ Diluted income per share (3.10)$ 1.36$ (2.37)$ 1.99$ Adjusted income per share (1.07)$ 1.67$ (0.37)$ 2.24$ Adjusted EBITDA 14.8$ 78.9$ 69.1$ 134.3$ Quarter Ended June 30, Six Months Ended June 30, 6
© Clearwater Paper Corporation 2021 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-Q filed with the SEC on August 4, 2021, for further details. 2021 2020 2021 2020 Net Sales Pulp and Paperboard 227.4$ 216.5$ 447.2$ 439.6$ Consumer Products 180.7 271.3 389.0 533.8 Eliminations (1.7) (7.2) (3.9) (15.0) 406.4$ 480.6$ 832.3$ 958.5$ Operating Income Pulp and Paperboard 13.0$ 32.0$ 38.0$ 58.2$ Consumer Products (10.0) 36.8 7.9 51.4 Corporate and other (15.0) (17.6) (30.5) (31.0) Other operating charges, net1 (44.5) (3.0) (44.9) (11.6) (56.6)$ 48.2$ (29.5)$ 67.0$ Adjusted EBITDA Pulp and Paperboard 22.0$ 41.2$ 56.0$ 76.7$ Consumer Products 6.7 53.9 41.4 85.8 Corporate and other (14.0) (16.2) (28.2) (28.2) 14.8$ 78.9$ 69.1$ 134.3$ Quarter Ended June 30, Six Months Ended June 30, 7
PULP AND PAPERBOARD RESULTS Q2 2021 VS. Q2 2020 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) 1. Estimated cost $22 million Higher pricing with favorable mix Major outage1 and input costs © Clearwater Paper Corporation 2021 8
CONSUMER PRODUCTS RESULTS Q2 2021 VS. Q2 2020 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Lower sales and production volumes Higher input costs partially offset by reduced SG&A © Clearwater Paper Corporation 2021 9
© Clearwater Paper Corporation 2021 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 • Targeted business improvements and maintenance capital • Normalized $60 million / year $0.0 $0.0 $0.0 $0.0 $300.0 $129.3 $0.0 $275.0 2021 2022 2023 2024 2025 2026 2027 2028 Scheduled Debt Maturity Profile ($ in millions)2 Liquidity Profile ($ in millions)1 ABL Availability $239.2 Less Utilization (3.6) Plus Unrestricted Cash 60.9 Liquidity $296.5 1. ABL availability based on borrowing base calculations and consolidated balance sheet as of June 30, 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 June 30, 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. 10
OUTLOOK FOR 2021 - ASSUMPTIONS © Clearwater Paper Corporation 2021 Q3 2021 Operational: $40 to $48 million of Adjusted EBITDA • Lower major maintenance outage impact, net benefit $17 to $19 million • Positive impact of previously announced price increases in paperboard • Increased tissue sales sequentially • Raw material inflation impacting EBITDA sequentially by $9 to $13 million relative to Q2 2021 • Realize benefits of Neenah closure FY 2021 Operational • Impact of previously announced price increases in paperboard • Planned major maintenance outages $25 to $27 million impact to Adjusted EBITDA • Tissue sales and production volumes down significantly year over year due to destocking • Raw material inflation impact of $60 to $70 million, with pulp representing over half the total • Realize benefits of Neenah closure FY 2021 Other • Interest expense: $36 to $38 million • Depreciation and amortization expense: $104 to $108 million • CAPEX: $50 to $55 million • Taxes: Effective rate 26-27% 11
Pulp and Paperboard • Diversified range of end-market products, well-invested national footprint • Focused on non-integrated customers with strong service and quality commitment • Well positioned for trends towards sustainable packaging and food service products Consumer Products • Leading private-brand provider with national scale and superior supply chain performance • Shift to private-brands continues with long runway • Tissue is need-based and economically resilient Near-term Strategy is to prioritize free cash flow, reduce debt • Deliver benefits from Shelby investment • Operational improvements • Manage working capital • Prudent capital allocation CLEARWATER PAPER VALUE PROPOSITION WELL POSITIONED ACROSS TWO ATTRACTIVE BUSINESSES © Clearwater Paper Corporation 2021 12
APPENDIX © Clearwater Paper Corporation 2021 13
PULP AND PAPERBOARD SEQUENTIAL QUARTER RESULTS Q2 2021 VS. Q1 2021 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) 1. 1 Estimated cost $22 million Major maintenance, absence of weather event, input costs1 Favorable mix and higher pricing © Clearwater Paper Corporation 2021 14
CONSUMER PRODUCTS SEQUENTIAL QUARTER RESULTS Q2 2021 VS. Q1 2021 SEGMENT ADJUSTED EBITDA ($ IN MILLIONS) Reduced demand Higher input costs partially offset by lower SG&A © Clearwater Paper Corporation 2021 15
KEY SEGMENT INFORMATION 1. Note: 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 Pulp and Paperboard Sales ($ millions) $212.1 $235.4 $223.6 $214.3 $223.1 $216.5 $217.2 $220.4 $219.7 $227.4 Adjusted EBITDA ($ millions) $38.9 $42.9 $28.2 $44.0 $35.5 $41.2 $41.8 $42.8 $34.0 $22.0 Shipments (short tons) 197.8 220.6 210.5 199.1 207.9 201.7 205.4 206.2 206.7 200.6 Sales price ($/short ton) $1,024 $ 1,023 $ 1,021 $ 1,023 $ 1,013 $ 1,009 $ 1,009 $ 1,002 $1,028 $1,058 Consumer Products Sales ($ millions) $223.1 $222.8 $227.9 $228.7 $262.5 $271.3 $245.9 $238.9 $208.4 $180.7 Adjusted EBITDA ($ millions) $16.0 $12.4 $14.7 $20.7 $31.9 $53.9 $48.5 $44.7 $34.7 $6.7 Shipments Retail (short tons in thousands) 73.4 76.2 79.5 79.7 90.8 95.4 86.3 83.3 70.8 61.5 Non-Retail (short tons in thousands) 10.3 6.6 6.9 8.4 9.0 5.8 3.8 6.5 9.4 7.4 Converted Products (cases in millions) 12.3 12.5 13.2 13.3 15.2 16.0 14.5 13.9 11.7 10.2 Sales Price ($ per short ton) Retail $2,789 $ 2,764 $ 2,707 $ 2,698 $ 2,732 $ 2,729 $ 2,766 $ 2,745 $ 2,758 $2,755 Non-Retail1 $1,799 $ 1,851 $ 1,805 $ 1,590 $ 1,548 $ 1,746 $ 1,820 $ 1,552 $ 1,404 $1,508 Production Converted Products (cases in millions) 12.4 12.8 12.9 13.6 13.9 15.9 15.3 13.9 13.5 9.6 © Clearwater Paper Corporation 2021 16
RECONCILIATION OF ADJUSTED EBITDA ($ IN MILLIONS) March 31, 2021 2020 2021 2021 2020 Net income (loss) $ (51.6) $ 22.8 $ 12.1 $ (39.6) $ 33.1 Income tax provision (benefit) (16.7) 10.4 3.2 (13.5) 4.2 Interest expense, net 9.3 12.0 9.3 18.6 24.9 Depreciation and amortization expense 26.8 27.8 26.8 53.7 55.8 Other operating charges, net 44.5 3.0 0.4 44.9 11.6 Other non-operating expense 2.5 2.0 2.5 5.0 3.8 Debt retirement costs - 1.0 - - 1.0 Adjusted EBITDA $ 14.8 $ 78.9 $ 54.3 $ 69.1 $ 134.4 Pulp and Paperboard segment income $ 13.0 $ 32.0 $ 25.0 $ 38.0 $ 58.2 Depreciation and amortization 9.0 9.2 9.0 18.0 18.5 Adjusted EBITDA Paperboard segment $ 22.0 $ 41.2 $ 34.0 $ 56.0 $ 76.7 Consumer Products segment income $ (10.0) $ 36.8 $ 17.9 $ 7.9 $ 51.4 Depreciation and amortization 16.8 17.1 16.8 33.5 34.4 Adjusted EBITDA Consumer Products segment $ 6.7 $ 53.9 $ 34.7 $ 41.4 $ 85.8 Corporate and other expense $ (15.0) $ (17.6) $ (15.5) $ (30.5) $ (31.0) Depreciation and amortization 1.0 1.4 1.1 2.2 2.9 Adjusted EBITDA Corporate and other $ (14.0) $ (16.2) $ (14.4) $ (28.3) $ (28.2) Pulp and Paperboard segment $ 22.0 $ 41.2 $ 34.0 $ 56.0 $ 76.7 Consumer Products segment 6.7 53.9 34.7 41.4 85.8 Corporate and other (14.0) (16.2) (14.4) (28.3) (28.2) Adjusted EBITDA $ 14.8 $ 78.9 $ 54.3 $ 69.1 $ 134.3 June 30, June 30, Three Months Ended Six Months Ended © Clearwater Paper Corporation 2021 17
© Clearwater Paper Corporation 2021 RECONCILIATION OF ADJUSTED INCOME ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2021 2020 2021 2020 Net income (51.6)$ 22.8$ (53.1)$ 33.1$ Add back: Income tax provision (16.7) 10.4 - 4.2 Income before income taxes (68.4) 33.2 (53.1) 37.4 Add back: Debt retirement costs - 1.0 - 1.0 Other operating charges, net 44.5 3.0 44.9 11.6 Adjusted net income before tax (23.8) 37.2 (8.2) 49.9 Normalized income tax provision (benefit) (6.0) 9.3 (2.0) 12.5 Adjusted income (17.9)$ 27.9$ (6.1)$ 37.4$ Weighted average diluted shares (thousands) 16,685 16,686 16,678 16,644 Adjusted income per diluted share (1.07)$ 1.67$ (0.37)$ 2.24$ Six Months Ended June 30,Quarter Ended June 30, 18
ADDITIONAL RECONCILIATIONS Net Debt Mar 31, 2020 June 30, 2020 Sept 30, 2020 Dec 31, 2020 Mar 31, 2021 June 30, 2021 Cash $ 60.8 $ 48.2 $ 47.5 $ 35.9 $ 57.1 60.9 Current debt 58.1 1.6 1.7 1.7 1.7 1.7 Long term debt 883.9 827.9 785.5 716.4 716.3 716.2 add: Deferred debt costs 7.7 6.4 8.2 6.9 6.6 6.4 less: Financing leases (22.0) (21.6) (21.2) (20.8) (20.4) (20.0) Subtotal 927.7 814.3 774.2 704.2 704.2 704.3 Net debt $ 866.9 $ 766.1 $ 726.7 $ 668.3 $ 647.1 $ 643.3 Free Cash Flow Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Cash from operations $ 11.7 $ 109.0 $ 55.7 $ 70.8 $ 33.8 $14.8 Additions to property, plant and equipment (10.5) (7.3) (9.7) (12.2) (11.1) (10.5) Free cash flow $ 1.2 $ 101.7 $ 46.0 $ 58.6 $ 22.7 $ 4.3 ($ IN MILLIONS) © Clearwater Paper Corporation 2021 19
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 $7 $10 $18 $20 $17 $7 $22 $18 $30 None $24 None $25 - $27 $25 - $30 2015 2016 2017 2018 2019 2020 2021e 2022e Q1 Q2 Q3 Q4 Total 1 1 © Clearwater Paper Corporation 2021 20
KEY COMMODITY CONSUMPTION VOLUMES 1 Approximated annual volume and expense amounts are based on historical average consumption and management's current expectations and estimates with respect to future volumes, and these amounts may be significantly influenced by general market conditions and other factors outside of our control. These estimates exclude commodity usage in our Neenah, WI location. Actual results may differ materially from the information set forth above. See "Forward-Looking Statements" on page. COGS Input Unit of Measure Approximate Annual Volume1 (in millions) Purchased Pulp Ton 0.3 Fiber Bone Dry Ton 1.7 Diesel Gallon 10 Electric MWh 0.95 Natural Gas MMBTU 9.5 Polyethylene Pound 30 Caustic Pound 90 Chlorate Pound 30 © Clearwater Paper Corporation 2021 21