Yahoo Finance Clearwater Paper Corp (CLW) Q1 2024 Earnings Call Transcript Highlights: Strong Performance and ...
Net Sales: $496 million
Adjusted EBITDA: $62 million
Tissue Business Adjusted EBITDA: Increased from $19 million to $46 million
Paperboard Business Adjusted EBITDA: $34 million with a 14% margin
Net Income: $17 million
Net Income Per Diluted Share: $1.02
Adjusted Net Income Per Diluted Share: $1.43
Free Cash Flow: $41 million
Net Debt Reduction: Reduced by an additional $33 million
Leverage Ratio: 1.38 times
Stock Repurchase: $1 million to offset shareholder dilution
Release Date: April 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you give us a sense of how we should expect the maintenance CapEx at Augusta to trend on a run rate basis? And can you quantify the partial insurance recovery for the event at Lewiston? A: Arsen Kitch, President and CEO, noted that it's premature to provide guidance on Augusta's financials until the acquisition closes and they have a better understanding of its integration. Sherri Baker, CFO, mentioned that the total impact of the Lewiston event was $15 million to $17 million, with a $4 million deductible. They expect some insurance recovery in Q2.
Q: How are tissue pricing trends expected to evolve, given the current market conditions? A: Arsen Kitch explained that the slight decrease in tissue prices was mainly due to contracts tied to the RISI pulp index, which had been decreasing. He emphasized that market conditions for tissue remain strong with high utilization rates, suggesting robust demand.
Q: Is there still about a three-month lag in how pulp price changes impact your results? And what are the expectations for leverage following the Augusta acquisition? A: Arsen Kitch confirmed a roughly three-month lag for pulp price impacts due to manufacturing and inventory processes. Sherri Baker added that they anticipate peak leverage to be between 3.5 to 4 times post-acquisition.
Q: Do you expect any impact on your cost of residuals from recent softwood lumber mill closures in Montana? A: Arsen Kitch indicated that while specific data wasn't immediately available, the closures are unlikely to significantly impact their costs as they operate in a residual market in the Northwest, which benefits from higher lumber mill operating rates.
Q: Can you discuss the current trends in the paperboard market and any specific end market strengths or weaknesses? A: Arsen Kitch observed a recovery in the paperboard market, with no specific end market comments. He noted positive trends in utilization and shipments, expecting full production capacity utilization for the remainder of the year, barring the planned major outage.
Q: What are the expectations for labor negotiations given the upcoming expiration of the collective bargaining agreement at Cypress Bend? A: Arsen Kitch chose not to speculate on the outcomes but expressed confidence in maintaining a constructive dialogue with the union, reflecting historically good relations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
