Clearwater Paper, a supplier of private label tissue products, has reported financial results for the third quarter of 2018.
The company reported net sales of $426.5 million for the third quarter of 2018, which was flat with net sales for the third quarter of 2017.
Net earnings determined in accordance with generally accepted accounting principles, or GAAP, for the third quarter of 2018 were $34.4 million, or $2.08 per diluted share, compared to net earnings for the third quarter of 2017 of $0.9 million, or $0.05 per diluted share.
The increase in net earnings was due primarily to a $22.9 million gain on the sale of the company’s Ladysmith, Wisconsin manufacturing facility along with higher pricing and record shipment volumes in paperboard, improved operating efficiencies and lower selling, general and administrative expenses. Excluding certain non-core items identified in the attached Reconciliation of Non-GAAP Financial Measures, third quarter 2018 adjusted net earnings were $22.3 million, or $1.35 per diluted share, compared to third quarter 2017 adjusted net earnings of $5.3 million, or $0.32 per diluted share.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, were $71.0 million for the third quarter of 2018, compared to $31.3 million for the third quarter of 2017. Adjusted EBITDA for the quarter was $48.9 million, up 29.9% compared to third quarter 2017 Adjusted EBITDA of $37.6 million.
Clearwater Paper president and CEO Linda Massman said: “We exceeded our expectations for the third quarter due to record paperboard shipments and strong customer demand for paperboard.
“We are also seeing positive results from the operating model improvements for our tissue business, resulting in lower transportation and warehousing costs.”
“For the remainder of 2018, we are in the home stretch to complete our new paper machine, converting lines, and warehouse at our Shelby, North Carolina facility. We are also keenly focused on generating cash to pay down debt and optimizing our network of tissue assets to streamline costs and better meet the needs of our customers.”
Net sales in the Consumer Products segment were $211.6 million for the third quarter of 2018, down 9.1% compared to third quarter 2017 net sales of $232.9 million. This decrease was due to lower retail volumes and prices, the divestiture of the Ladysmith facility, and weaker product mix as reflected in a 7.4% reduction in retail converted case shipment volumes, partially offset by a 43.0% increase in non-retail parent roll shipments as the company works to replace lost converted case business in the second half of 2018.
Net sales in the Pulp and Paperboard segment were $214.8 million for the third quarter of 2018, up 11.0% compared to third quarter 2017 net sales of $193.6 million. The increase was due to record shipment volumes and higher paperboard prices.
The company’s consolidated GAAP tax rate and adjusted tax rate for the third quarter of 2018 were a provision of 9.6% and a benefit of 39.5%, respectively. That compares to GAAP and adjusted tax rate benefits of 138.7% and 17.9% in the third quarter of 2017.
The tax rate for the third quarter of 2018 included a tax benefit of $10 million associated with an alternative energy production tax credit recorded in the quarter. The tax rate for 2017 reflected $2 million of similar alternative energy credits in addition to a tax benefit due to a pre-tax loss in the third quarter of 2017.
Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, bleached paperboard and pulp at manufacturing facilities across the nation. The company is a premier supplier of private label tissue to major retailers and wholesale distributors, including grocery, drug, mass merchants and discount stores.
Source: Company Press Release