Clearwater Paper Reports Fourth Quarter and Full Year 2015 Results
OREANDA-NEWS Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the fourth quarter and full year of 2015.
The company reported net sales of $431.6 million for the fourth quarter of 2015, down 8.6% compared to net sales of $472.3 million for the fourth quarter of 2014 due primarily to the sale of the company's specialty mills in December 2014. Net earnings determined in accordance with generally accepted accounting principles, or GAAP, for the fourth quarter of 2015 were $11.6 million, or $0.65 per diluted share, compared to a net loss of $27.2 million, or ($1.39) per diluted share, for the fourth quarter of 2014. Excluding $1.8 million of adjustments for non-core items, after tax, listed in the accompanying schedules, fourth quarter 2015 adjusted net earnings were $13.3 million, or $0.75 per diluted share, compared to fourth quarter 2014 adjusted net earnings of $15.0 million, or $0.77 per diluted share.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, was $58.2 million for the fourth quarter of 2015. Adjusted EBITDA of $58.9 million was up 8.0% compared to fourth quarter 2014 Adjusted EBITDA of $54.5 million. Excluding the specialty mills contribution to adjusted EBITDA in the fourth quarter of 2014, the increase in EBITDA and Adjusted EBITDA was due primarily to higher paperboard shipment volumes, lower manufacturing input costs and lower planned maintenance, all of which were partially offset by lower paperboard pricing and increases in wages and benefits.
"We delivered solid performance in 2015 with $211 million of Adjusted EBITDA," said Linda Massman, president and chief executive officer. "These results were achieved by aggressively managing costs and driving operational efficiencies throughout our manufacturing and distribution network, in a year that included planned major maintenance and no sales from the specialty mills."
"Our 2016 priorities are a continued focus on optimizing efficiency in the tissue business and expanding our customer mix for paperboard while leveraging our investments to improve operations, investing in our team and exceeding customer expectations," said Massman.
On December 15, 2015, the company announced that the Board of Directors had approved a new stock repurchase program authorizing the repurchase of up to $100.0 million of the company's common stock.
FOURTH QUARTER 2015 SEGMENT PERFORMANCE
Net sales in the Consumer Products segment were $238.3 million for the fourth quarter of 2015, 18.3% lower than fourth quarter 2014 segment net sales of $291.6 million. This decrease was primarily due to the sale of the specialty mills in December 2014.
The segment had operating income of $10.8 million compared to an operating loss of $30.7 million in the fourth quarter of 2014, which included a $40.2 million loss on the sale of the specialty mills. Adjusted operating income of $11.5 million for the fourth quarter of 2015 was down $1.8 million compared to $13.3 million for the prior year period, after adjusting for pre-tax non-core items, listed in the accompanying schedules, in the fourth quarters of 2015 and 2014. Adjusted operating margin improved slightly to 4.8% in the fourth quarter, up from 4.6% for the same period in 2014.
- Total tissue sales volumes of 96,081 tons in the fourth quarter of 2015 were down 26.2% and converted product cases shipped were 12,624 million, down 7.2% compared to the fourth quarter of 2014 primarily due to the sale of the specialty mills.
- Average net selling prices increased 10.8% to $2,479 per ton in the fourth quarter of 2015, compared to the fourth quarter of 2014, due to improved product mix resulting from the sale of the specialty mills.
Pulp and Paperboard
Net sales in the Pulp and Paperboard segment were $193.3 million for the fourth quarter of 2015, up 6.5% compared to fourth quarter 2014 net sales of $180.7 million. The increase was primarily due to customer inventory restocking and the absence of labor issues at West Coast shipping ports that occurred in the fourth quarter of 2014. Operating income for the quarter increased $11.3 million or 40.2% to $39.5 million, compared to $28.2 million for the fourth quarter of 2014. Adjusted operating income of $39.6 million for the fourth quarter of 2015 was up $8.4 million or 26.9% from the same period in 2014 after adjusting for pre-tax non-core items listed in the accompanying schedules.
- Paperboard sales volumes increased 14.2% to 201,580 tons in the fourth quarter of 2015, compared to 176,467 tons in the fourth quarter of 2014.
- Paperboard net selling prices decreased 6.0% to $956 per ton compared to the fourth quarter of 2014 as a result of price decreases in commodity grade solid bleached sulfate, or SBS, during the second half of 2015.
The company's GAAP tax rate for the fourth quarter of 2015 was 59.5%, compared to 5.1% in the fourth quarter of 2014. The fourth quarter tax rate was negatively impacted 21.1% by a number of discrete items, including a decrease in the value of foreign tax credits due to logistical changes in foreign shipments, a decrease in the value of state tax credits and a reduction in the benefit from the manufacturing deduction due to the passage of the tax extenders law in December 2015, and tax provision to tax return adjustments related to prior year state returns filed or amended in the fourth quarter. The annual tax rate for 2015 on an adjusted basis was 37.9%. On an adjusted basis, the fourth quarter 2015 tax rate was 54.4% compared to 34.2% for the fourth quarter of 2014.
Note Regarding Use of Non-GAAP Financial Measures
In this press release, the company presents certain non-GAAP financial information for the fourth quarters of 2015 and 2014, including adjusted net earnings, adjusted net earnings per diluted share, EBITDA, Adjusted EBITDA, adjusted operating income, adjusted operating margin, and adjusted tax rate. Because these amounts are not in accordance with GAAP, reconciliations to operating income, net earnings (loss) and net earnings (loss) per diluted share as determined in accordance with GAAP are included 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 believes are not indicative of its core operating performance.