Clearwater Paper(CLW) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Consolidated Financial Statements (Unaudited) Presents unaudited consolidated financial statements for Clearwater Paper Corporation as of September 30, 2022, highlighting improved financial performance Consolidated Balance Sheets Total assets increased slightly to $1,703.6 million, while total liabilities decreased to $1,134.4 million, boosting stockholders' equity to $569.2 million Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Total current assets | $570.2 | $487.2 | | Property, plant and equipment, net | $1,023.1 | $1,081.8 | | Total assets | $1,703.6 | $1,690.1 | | Liabilities & Equity | | | | Total current liabilities | $295.1 | $254.1 | | Long-term debt | $564.9 | $637.6 | | Total liabilities | $1,134.4 | $1,178.3 | | Total stockholders' equity | $569.2 | $511.7 | Consolidated Statements of Operations Q3 2022 net sales increased 19.6% to $538.8 million, with net income surging to $20.6 million, and nine-month net income reaching $51.9 million Q3 and Nine Months Operating Results (in millions, except per-share data) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $538.8 | $450.5 | $1,553.3 | $1,282.8 | | Income (loss) from operations | $48.9 | $13.8 | $113.3 | $(15.6) | | Net income (loss) | $20.6 | $1.9 | $51.9 | $(37.6) | | Diluted EPS | $1.21 | $0.11 | $3.04 | $(2.25) | Consolidated Statements of Cash Flows Net cash from operating activities more than doubled to $132.8 million for the nine months, while financing activities used $87.6 million Nine Months Cash Flow Summary (in millions) | Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $132.8 | $64.4 | | Net cash used in investing activities | $(19.9) | $(29.9) | | Net cash used in financing activities | $(87.6) | $(42.5) | | Increase (decrease) in cash | $25.3 | $(8.1) | Notes to Consolidated Financial Statements Detailed notes cover segment performance, income tax calculations, and account breakdowns, highlighting strong growth in Pulp and Paperboard Segment Net Sales (in millions) | Segment | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Pulp and Paperboard | $300.8 | $237.5 | $862.8 | $684.6 | | Consumer Products | $241.0 | $214.2 | $696.1 | $603.2 | Segment Operating Income (Loss) (in millions) | Segment | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Pulp and Paperboard | $63.7 | $34.6 | $165.9 | $72.6 | | Consumer Products | $5.2 | $3.7 | $9.6 | $11.5 | | Corporate and eliminations | $(17.8) | $(14.3) | $(53.8) | $(44.8) | | Other operating charges, net | $(2.2) | $(10.2) | $(8.5) | $(55.1) | - The effective tax rate for the nine months ended September 30, 2022 was 36.1%, compared to 26.8% for the same period in 2021. The variance from the 21% federal statutory rate is primarily due to state taxes, adjustments related to a tax audit, and nondeductible compensation[28] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A highlights a 20% increase in Q3 net sales driven by pricing, with Adjusted EBITDA rising to $77.3 million and operating cash flow doubling Reconciliation of Net Income to Adjusted EBITDA (in millions) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $20.6 | $1.9 | $51.9 | $(37.6) | | Adjusted EBITDA | $77.3 | $49.9 | $199.2 | $119.0 | - Pulp and Paperboard segment sales prices increased 27.5% per short ton in Q3 2022 vs Q3 2021, driving a 67.9% increase in the segment's Adjusted EBITDA[56][57] - Consumer Products segment's retail sales prices increased 12.8% per short ton in Q3 2022 vs Q3 2021. However, for the nine-month period, the segment's Adjusted EBITDA decreased by 7.2% due to higher input costs, primarily pulp and freight, which offset the price increases[59] - Net cash from operating activities for the first nine months of 2022 was $132.8 million, a significant increase from $64.4 million in the same period of 2021, driven by improved operating performance[68] Quantitative and Qualitative Disclosures About Market Risk Market risk exposure to interest rates is minimal as of September 30, 2022, due to full repayment of the Term Loan and no ABL borrowings - As of September 30, 2022, the Term Loan Credit Agreement was fully repaid and no borrowings were outstanding under the ABL Credit Agreement, minimizing interest rate risk[73] Controls and Procedures CEO and CFO concluded disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal controls - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2022[75] - No changes occurred during the quarter that materially affected, or are likely to materially affect, the company's internal control over financial reporting[76] PART II. OTHER INFORMATION Legal Proceedings Management believes ongoing legal proceedings will not materially adversely affect the company's financial condition - The company does not expect legal proceedings to have a material adverse effect on its financial condition[78] Risk Factors No material changes were reported to the risk factors previously disclosed in the 2021 Form 10-K - No material changes from the risk factors disclosed in the 2021 Form 10-K were reported[79] Unregistered Sales of Equity Securities and Use of Proceeds The company's stock repurchase program had $24.9 million remaining authorization, with 30,532 shares repurchased in Q3 2022 - As of September 30, 2022, $24.9 million remained available for repurchase under the company's stock repurchase program[79] Share Repurchases in Q3 2022 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2022 | 30,052 | $33.93 | | August 2022 | 480 | $35.02 | | September 2022 | — | — | | Total Q3 | 30,532 | $33.95 | Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files - Exhibits filed include Section 302 and Section 1350 certifications, as well as XBRL interactive data files[82]