Clearwater Paper Corporation (NYSE:CLW) Q2 2020 Earnings Conference Call - Final Transcript

Aug 04, 2020 • 05:00 pm ET


Clearwater Paper Corporation (NYSE:CLW) Q2 2020 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by, and welcome to the Clearwater Papers Second Quarter 2020 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your host today, Investor Relations, Mr. Sloan Bohlen. Thank you. Please go ahead.

Sloan Bohlen

All right. Thank you. Good afternoon and thank you for joining Clearwater Paper's second quarter 2020 earnings conference call. Joining me on the call today are Arsen Kitch, President and Chief Executive Officer; and Mike Murphy, Chief Financial Officer. Financial results for the second quarter of 2020 will be released shortly after today's market close, or were released shortly after today's market close. You will find a presentation of supplemental information, including a slide providing the company's current outlook, which is posted on the Investor Relations page at our website,

Additionally, we will be providing certain non-GAAP financial information in this afternoon's discussion. A reconciliation of the non-GAAP information to comparable GAAP information is included in the press release or in the supplemental information provided on our website. Please note, slide two of our supplemental information covering forward-looking statements. Rather than rereading this slide, we are going to incorporate it by reference into our prepared remarks.

With that, let me turn the call over to Arsen.

Arsen Kitch

Good afternoon, and thank you for joining us today. Please turn to slide three. As you saw from our press release, Clearwater Paper had an outstanding quarter, driven by continued strength in our tissue business, stability in paperboard and excellent operational execution.

On a consolidated basis, the company reported net sales for the second quarter of $480 million and adjusted EBITDA of $79 million, which represents growth of approximately 6% and 78%, respectively, over last year. Our Consumer Products division drove results with both higher sales and production volumes to meet increased tissue demand. Lower input costs, particularly in pulp, were also a tailwind on a year-over-year basis. Together with our customers, we were able to rationalize our SKU offering, which increased throughput to meet elevated demand.

Our supply chain team worked closely with customers to fulfill orders with a depleted inventory position after the consumer-driven pantry loading in March. I will speak in more detail to industry conditions in a minute, and Mike will provide some additional context on operating leverage in his comments.

Another important update in the quarter is that we are at full production run rate for our new Shelby paper machine, which is on target with our mid-2020 expectation. We remain on track on track to achieve the full benefits of the Shelby investment, which include achieving full run rate on converting equipment, increased sales and supply chain benefits by the end of 2021. Overall, we continue to realize the benefit from the Shelby investment and are utilizing the resulting free cash flows to delever our balance sheet and increase value for equity