Clearwater Paper Corporation has reported financial results for the second quarter of 2012.
The company reported net earnings of $21.5 million, or $0.91 per diluted share, for the second quarter of 2012, compared to net earnings of $13.9 million, or $0.59 per diluted share, for the second quarter of 2011.
Second quarter 2012 earnings before interest, taxes, depreciation and amortization, or EBITDA, was $64.2 million, compared to $52.4 million in the second quarter of 2011. Second quarter 2012 Adjusted EBITDA, which excludes approximately $1.0 million of legal expenses related to the attempt to enjoin delivery of the TAD tissue machine to the company's Shelby, North Carolina facility and a $1.0 million loss associated with the sale of legacy Cellu Tissue foam manufacturing assets, was $66.2 million.
"Strong Consumer Products and Pulp and Paperboard results produced record quarterly EBITDA," said Gordon Jones, chairman and chief executive officer. "In addition, cost savings synergies from our Cellu Tissue acquisition came in ahead of our estimates in the first two quarters of 2012, and our new paper machine facility in Shelby remains on budget and on time, with production expected to begin by year end."
The company repurchased 238,482 shares at a total cost of $7.5 million during the second quarter pursuant to its previously announced $30 millionshare buyback program. Since announcing the program in July 2011, the company has repurchased 571,782 shares at a total cost of $18.8 million for an average share price of $32.91.
SECOND QUARTER 2012 SEGMENT PERFORMANCE
Net sales in the Consumer Products segment increased 5.2% to $283.1 million for the second quarter of 2012, as compared to second quarter 2011 net sales of $269.1 million, as a result of higher net selling prices and an increase in volumes. The $25.7 million of operating income for the second quarter of 2012 was approximately 275% higher as compared with the second quarter of 2011, primarily due to higher net sales and lower external pulp costs. Operating income for the second quarter of 2012 included a $1.0 million loss on the sale of legacy Cellu Tissue foam manufacturing assets.
- Tissue sales volume increased 3.3% to 132,978 tons in the second quarter of 2012 compared to the second quarter of 2011 due to consistent retail sales and increased parent roll sales.
- Net selling prices increased 2.0% to $2,129 per ton in the second quarter of 2012 compared to the second quarter of 2011 due to the segment's retail price increase that was implemented in the fourth quarter of 2011 and the first quarter of 2012, as well as sales mix improvements.
- The company has increased its expected 2012 cost savings from synergies related to the Cellu Tissue acquisition from $20 million to $28 million, with $6.7 million realized in the second quarter of 2012, and still expects that its annual run rate of cost savings from these synergies will be in the range of $35 to $40 million by the end of 2012.
Pulp and Paperboard
Net sales of $190.5 million for the second quarter of 2012 were down 15.5%, compared to second quarter 2011 net sales of $225.5 million. The decrease in net sales was primarily due to the sale of the company's Lewiston, Idaho sawmill in November 2011. In addition, there was a reduction in the sale of external pulp due to increased internal usage and lower paperboard volumes relative to the second quarter of 2011. Operating income for the quarter declined 7.1% to $32.0 million, compared to $34.5 million for the second quarter of 2011, primarily due to the decline in sales volumes partially offset by lower pulp, energy and transportation costs.
- Paperboard volumes declined 4.3% to 193,285 tons versus a record second quarter of 2011.
- Pulp net sales of $2.1 million were down $5.9 million versus the second quarter of 2011 due primarily to the increased internal usage of pulp produced by the company and a 30% decline in pulp sales prices.
The actual income tax rate for the second quarter of 2012 was 39.2%, compared to 38.3% in the second quarter of 2011. Excluding discrete items, the effective tax rate in the second quarter of 2012 was approximately 35.3%. The estimated annual effective tax rate for 2012, excluding discrete items, is expected to be approximately 35.1%.
Note Regarding Use of Non-GAAP Financial Measures
In this press release, the company presents its results for the second quarter of 2012 and 2011, including EBITDA and Adjusted EBITDA. The EBITDA and Adjusted EBITDA amounts are not in accordance with generally accepted accounting principles (GAAP) and accordingly reconciliations of EBITDA and Adjusted EBITDA to net earnings determined in accordance with GAAP are included at the end of this press release.
Source: Clearwater Paper Corporation
CONFERENCE CALL INFORMATION
A live audio webcast and conference call will be held today, Wednesday, July 25, 2012, at 2 p.m. Pacific time (5 p.m. Eastern time). Investors may access the conference call by dialing 877-303-9241 (for U.S./Canada investors) or 760-666-3575 (for international investors). The audio webcast may be accessed on the company's website at http://ir.clearwaterpaper.com/events.cfm. An accompanying presentation including supplemental information will be available for downloading at the same site at 1 p.m. Pacific time (4 p.m. Eastern time). The webcast will be audio only. Investors are recommended to download the accompanying presentation prior to the call.
For those unable to participate in the call, an archived recording will be available through the Clearwater Paper Corporation website www.clearwaterpaper.com under "Investor Relations" following the conference call.