ý
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Delaware
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20-3594554
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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601 West Riverside, Suite 1100
Spokane, Washington
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99201
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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¨
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Accelerated filer
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ý
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.0001 per share
|
CLW
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New York Stock Exchange
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Page Number
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PART I.
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ITEM 1.
|
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ITEM 2.
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||
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ITEM 3.
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||
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ITEM 4.
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PART II.
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ITEM 1.
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||
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ITEM 1A.
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ITEM 6.
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||
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ITEM 1.
|
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Consolidated Financial Statements
|
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Three Months Ended
|
||||||
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March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net sales
|
$
|
428,779
|
|
|
$
|
436,952
|
|
Costs and expenses:
|
|
|
|
||||
Cost of sales
|
(384,246
|
)
|
|
(392,433
|
)
|
||
Selling, general and administrative expenses
|
(30,171
|
)
|
|
(32,980
|
)
|
||
Total operating costs and expenses
|
(414,417
|
)
|
|
(425,413
|
)
|
||
Income from operations
|
14,362
|
|
|
11,539
|
|
||
Interest expense, net
|
(8,486
|
)
|
|
(8,020
|
)
|
||
Non-operating pension and other postretirement benefit costs
|
(1,314
|
)
|
|
(1,279
|
)
|
||
Earnings before income taxes
|
4,562
|
|
|
2,240
|
|
||
Income tax (provision) benefit
|
(725
|
)
|
|
360
|
|
||
Net earnings
|
$
|
3,837
|
|
|
$
|
2,600
|
|
Net earnings per common share:
|
|
|
|
||||
Basic
|
$
|
0.23
|
|
|
$
|
0.16
|
|
Diluted
|
0.23
|
|
|
0.16
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net earnings
|
$
|
3,837
|
|
|
$
|
2,600
|
|
Other comprehensive income:
|
|
|
|
||||
Defined benefit pension and other postretirement employee benefits:
|
|
|
|
||||
Amortization of actuarial loss included in net periodic cost, net of tax of $442 and $617
|
1,239
|
|
|
1,728
|
|
||
Amortization of prior service credit included in net periodic cost, net of tax of $- and $(110)
|
—
|
|
|
(309
|
)
|
||
Other comprehensive income, net of tax
|
1,239
|
|
|
1,419
|
|
||
Comprehensive income
|
$
|
5,076
|
|
|
$
|
4,019
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
12,160
|
|
|
$
|
22,484
|
|
Restricted cash
|
1,440
|
|
|
—
|
|
||
Receivables, net
|
168,093
|
|
|
145,519
|
|
||
Taxes receivable
|
6,981
|
|
|
6,301
|
|
||
Inventories
|
285,909
|
|
|
266,244
|
|
||
Other current assets
|
12,237
|
|
|
3,399
|
|
||
Total current assets
|
486,820
|
|
|
443,947
|
|
||
Property, plant and equipment, net
|
1,292,002
|
|
|
1,269,271
|
|
||
Operating lease right-of-use assets
|
77,479
|
|
|
—
|
|
||
Goodwill
|
35,074
|
|
|
35,074
|
|
||
Intangible assets, net
|
22,295
|
|
|
24,080
|
|
||
Other assets, net
|
14,608
|
|
|
15,746
|
|
||
TOTAL ASSETS
|
$
|
1,928,278
|
|
|
$
|
1,788,118
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term debt
|
$
|
212,216
|
|
|
$
|
120,833
|
|
Accounts payable and accrued liabilities
|
295,574
|
|
|
321,032
|
|
||
Current liability for pensions and other postretirement employee benefits
|
7,430
|
|
|
7,430
|
|
||
Total current liabilities
|
515,220
|
|
|
449,295
|
|
||
Long-term debt
|
671,484
|
|
|
671,292
|
|
||
Operating lease liabilities
|
72,647
|
|
|
—
|
|
||
Liability for pensions and other postretirement employee benefits
|
76,507
|
|
|
78,191
|
|
||
Other long-term obligations
|
33,859
|
|
|
38,977
|
|
||
Accrued taxes
|
3,111
|
|
|
2,785
|
|
||
Deferred tax liabilities
|
123,206
|
|
|
121,182
|
|
||
TOTAL LIABILITIES
|
1,496,034
|
|
|
1,361,722
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, par value $0.0001 per share, 5,000,000 authorized shares,
no shares issued
|
—
|
|
|
—
|
|
||
Common stock, par value $0.0001 per share, 100,000,000 authorized shares
-16,515,156 and 16,482,345 shares issued
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
7,175
|
|
|
6,403
|
|
||
Retained earnings
|
491,176
|
|
|
487,339
|
|
||
Accumulated other comprehensive loss, net of tax
|
(66,109
|
)
|
|
(67,348
|
)
|
||
TOTAL STOCKHOLDERS' EQUITY
|
432,244
|
|
|
426,396
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
1,928,278
|
|
|
$
|
1,788,118
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net earnings
|
$
|
3,837
|
|
|
$
|
2,600
|
|
Adjustments to reconcile net earnings to net cash flows from operating activities:
|
|
|
|
||||
Depreciation and amortization
|
25,836
|
|
|
25,167
|
|
||
Equity-based compensation expense
|
828
|
|
|
781
|
|
||
Deferred taxes
|
914
|
|
|
(240
|
)
|
||
Other non-cash activity, net
|
(564
|
)
|
|
648
|
|
||
Changes in working capital, net
|
(62,131
|
)
|
|
1,244
|
|
||
Changes in taxes receivable, net
|
(680
|
)
|
|
1,463
|
|
||
Other, net
|
2,561
|
|
|
(803
|
)
|
||
Net cash flows from operating activities
|
(29,399
|
)
|
|
30,860
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Additions to property, plant and equipment
|
(71,588
|
)
|
|
(48,430
|
)
|
||
Other, net
|
—
|
|
|
768
|
|
||
Net cash flows from investing activities
|
(71,588
|
)
|
|
(47,662
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Borrowings on short-term debt
|
290,362
|
|
|
87,325
|
|
||
Repayments of borrowings on short-term debt
|
(198,979
|
)
|
|
(73,825
|
)
|
||
Other, net
|
(716
|
)
|
|
(365
|
)
|
||
Net cash flows from financing activities
|
90,667
|
|
|
13,135
|
|
||
Decrease in cash, cash equivalents, and restricted cash
|
(10,320
|
)
|
|
(3,667
|
)
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
24,947
|
|
|
16,738
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
14,627
|
|
|
$
|
13,071
|
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
||||
Cash paid for interest, net of amounts capitalized
|
$
|
15,147
|
|
|
$
|
13,927
|
|
Cash paid for income taxes
|
19
|
|
|
142
|
|
||
Cash received from income tax refunds
|
190
|
|
|
1,873
|
|
||
(Decrease) increase in accrued property, plant and equipment
|
(28,443
|
)
|
|
1,317
|
|
||
Other non-cash additions to property, plant and equipment
|
493
|
|
|
—
|
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Stockholders'
Equity
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance at December 31, 2017
|
|
16,448
|
|
|
$
|
2
|
|
|
$
|
1,161
|
|
|
$
|
618,254
|
|
|
$
|
(43,983
|
)
|
|
$
|
575,434
|
|
Net earnings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,600
|
|
|
—
|
|
|
2,600
|
|
|||||
Performance share, restricted stock unit, and stock option awards
|
|
13
|
|
|
—
|
|
|
1,267
|
|
|
—
|
|
|
—
|
|
|
1,267
|
|
|||||
Reclassification of the income tax effects of the Tax Cuts and Jobs Act
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,852
|
|
|
(12,852
|
)
|
|
—
|
|
|||||
Pension and other postretirement employee benefit plans, net
of tax of $507
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,419
|
|
|
1,419
|
|
|||||
Balance at March 31, 2018
|
|
16,461
|
|
|
$
|
2
|
|
|
$
|
2,428
|
|
|
$
|
633,706
|
|
|
$
|
(55,416
|
)
|
|
$
|
580,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at December 31, 2018
|
|
16,482
|
|
|
$
|
2
|
|
|
$
|
6,403
|
|
|
$
|
487,339
|
|
|
$
|
(67,348
|
)
|
|
$
|
426,396
|
|
Net earnings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,837
|
|
|
—
|
|
|
3,837
|
|
|||||
Performance share, restricted stock unit, and stock option awards
|
|
33
|
|
|
—
|
|
|
772
|
|
|
—
|
|
|
—
|
|
|
772
|
|
|||||
Pension and other postretirement employee benefit plans,
net of tax of $442 |
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,239
|
|
|
1,239
|
|
|||||
Balance at March 31, 2019
|
|
16,515
|
|
|
$
|
2
|
|
|
$
|
7,175
|
|
|
$
|
491,176
|
|
|
$
|
(66,109
|
)
|
|
$
|
432,244
|
|
(In thousands)
|
March 31, 2019
|
|
March 31, 2018
|
||||
Cash and cash equivalents
|
$
|
12,160
|
|
|
$
|
12,064
|
|
Restricted cash
|
1,440
|
|
|
—
|
|
||
Restricted cash included in other assets, net
|
1,027
|
|
|
1,007
|
|
||
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows
|
$
|
14,627
|
|
|
$
|
13,071
|
|
(In thousands)
|
March 31, 2019
|
|
December 31, 2018
|
||||
Pulp, paperboard and tissue products
|
$
|
176,788
|
|
|
$
|
159,499
|
|
Materials and supplies
|
90,470
|
|
|
86,892
|
|
||
Logs, pulpwood, chips and sawdust
|
18,651
|
|
|
19,853
|
|
||
|
$
|
285,909
|
|
|
$
|
266,244
|
|
|
Three Months Ended
|
||
(In thousands)
|
March 31, 2019
|
||
Operating lease costs
|
$
|
3,480
|
|
|
|
||
Finance lease costs:
|
|
||
Amortization of right-of-use assets
|
415
|
|
|
Interest on lease liabilities
|
472
|
|
|
Total finance lease costs
|
887
|
|
|
|
|
||
Variable lease costs
|
219
|
|
|
|
|
||
Total lease costs
|
$
|
4,586
|
|
|
Three Months Ended
|
||
(In thousands)
|
March 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
4,097
|
|
Operating cash flows from finance leases
|
472
|
|
|
Financing cash flows from finance leases
|
289
|
|
|
|
|
||
Right-of-use assets obtained in exchange for new lease liabilities:
|
|
||
Operating leases
|
$
|
75
|
|
Finance leases
|
493
|
|
(In thousands)
|
Classification
|
March 31, 2019
|
||
Lease ROU Assets
|
|
|
||
Operating lease assets
|
Operating lease right-of-use assets
|
$
|
77,479
|
|
Finance lease assets
|
Property, plant and equipment, net
|
16,695
|
|
|
Total lease ROU assets
|
|
$
|
94,174
|
|
|
|
|
||
Lease Liabilities
|
|
|
||
Current operating lease liabilities
|
Accounts payable and accrued liabilities
|
$
|
12,097
|
|
Current finance lease liabilities
|
Accounts payable and accrued liabilities
|
1,365
|
|
|
Total current lease liabilities
|
|
13,462
|
|
|
|
|
|
||
Non-current operating lease liabilities
|
Operating lease liabilities
|
72,647
|
|
|
Non-current finance lease liabilities
|
Other long-term obligations
|
21,692
|
|
|
Total non-current lease liabilities
|
|
94,339
|
|
|
|
|
|
||
Total lease liabilities
|
|
$
|
107,801
|
|
|
March 31, 2019
|
|
Weighted average remaining lease term (years)
|
|
|
Operating leases
|
7.4
|
|
Finance leases
|
11.3
|
|
|
|
|
Weighted average discount rate
|
|
|
Operating leases
|
4.9
|
%
|
Finance leases
|
8.3
|
%
|
(In thousands)
|
Operating
|
|
Finance
|
||||
2019 (excluding the three months ended March 31, 2019)
|
$
|
11,883
|
|
|
$
|
2,437
|
|
2020
|
15,929
|
|
|
3,175
|
|
||
2021
|
15,215
|
|
|
3,220
|
|
||
2022
|
14,348
|
|
|
3,128
|
|
||
2023
|
9,590
|
|
|
2,897
|
|
||
Thereafter
|
34,633
|
|
|
21,468
|
|
||
Total lease payments
|
101,598
|
|
|
$
|
36,325
|
|
|
Less interest portion
|
(16,854
|
)
|
|
(13,268
|
)
|
||
Total
|
84,744
|
|
|
$
|
23,057
|
|
(In thousands)
|
Operating
|
|
Capital
|
||||
2019
|
$
|
12,038
|
|
|
$
|
3,093
|
|
2020
|
11,421
|
|
|
3,062
|
|
||
2021
|
10,424
|
|
|
3,112
|
|
||
2022
|
9,489
|
|
|
3,019
|
|
||
2023
|
7,163
|
|
|
2,789
|
|
||
Thereafter
|
24,276
|
|
|
21,710
|
|
||
Total future minimum lease payments
|
$
|
74,811
|
|
|
$
|
36,785
|
|
Less interest portion
|
|
|
(13,887
|
)
|
|||
Present value of future minimum lease payments
|
|
|
$
|
22,898
|
|
|
March 31, 2019
|
||||||||||||
(Dollars in thousands, lives in years)
|
Weighted Average Useful
Life
|
|
Historical
Cost
|
|
Accumulated
Amortization
|
|
Net
Balance
|
||||||
Customer relationships
|
9.4
|
|
$
|
56,453
|
|
|
$
|
(36,978
|
)
|
|
$
|
19,475
|
|
Trade names and trademarks
|
7.4
|
|
6,786
|
|
|
(4,286
|
)
|
|
2,500
|
|
|||
Other intangibles
|
6.0
|
|
572
|
|
|
(252
|
)
|
|
320
|
|
|||
|
|
|
$
|
63,811
|
|
|
$
|
(41,516
|
)
|
|
$
|
22,295
|
|
|
|
|
|
|
|
|
|
||||||
|
December 31, 2018
|
||||||||||||
(Dollars in thousands, lives in years)
|
Weighted Average Useful
Life
|
|
Historical
Cost
|
|
Accumulated
Amortization
|
|
Net
Balance
|
||||||
Customer relationships
|
9.4
|
|
$
|
56,453
|
|
|
$
|
(35,469
|
)
|
|
$
|
20,984
|
|
Trade names and trademarks
|
7.4
|
|
6,786
|
|
|
(4,029
|
)
|
|
2,757
|
|
|||
Other intangibles
|
6.0
|
|
572
|
|
|
(233
|
)
|
|
339
|
|
|||
|
|
|
$
|
63,811
|
|
|
$
|
(39,731
|
)
|
|
$
|
24,080
|
|
(In thousands)
|
March 31, 2019
|
|
December 31, 2018
|
||||
Trade accounts payable
|
$
|
198,289
|
|
|
$
|
228,059
|
|
Accrued wages, salaries and employee benefits
|
29,549
|
|
|
41,426
|
|
||
Lease liabilities
|
13,462
|
|
|
—
|
|
||
Accrued account purchase agreement liabilities
|
12,664
|
|
|
4,885
|
|
||
Accrued utilities
|
8,561
|
|
|
6,934
|
|
||
Accrued taxes other than income taxes payable
|
7,789
|
|
|
6,243
|
|
||
Accrued discounts and allowances
|
7,230
|
|
|
8,143
|
|
||
Accrued interest
|
7,175
|
|
|
14,672
|
|
||
Other
|
10,855
|
|
|
10,670
|
|
||
|
$
|
295,574
|
|
|
$
|
321,032
|
|
(In thousands)
|
March 31, 2019
|
|
December 31, 2018
|
||||
Finance lease obligations, net of current portion
|
$
|
21,692
|
|
|
$
|
21,589
|
|
Deferred proceeds
|
4,350
|
|
|
4,511
|
|
||
Deferred compensation
|
3,912
|
|
|
2,585
|
|
||
Other
|
3,905
|
|
|
10,292
|
|
||
|
$
|
33,859
|
|
|
$
|
38,977
|
|
|
Three Months Ended March 31,
|
||||||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Pension Benefit Plans
|
|
Other Postretirement
Employee Benefit Plans
|
||||||||||||
Service cost
|
$
|
550
|
|
|
$
|
434
|
|
|
$
|
25
|
|
|
$
|
48
|
|
Interest cost
|
3,121
|
|
|
3,000
|
|
|
647
|
|
|
607
|
|
||||
Expected return on plan assets
|
(4,135
|
)
|
|
(4,254
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service cost (credit)
|
—
|
|
|
—
|
|
|
—
|
|
|
(419
|
)
|
||||
Amortization of actuarial loss (gain)
|
1,909
|
|
|
2,570
|
|
|
(228
|
)
|
|
(225
|
)
|
||||
Net periodic cost
|
$
|
1,445
|
|
|
$
|
1,750
|
|
|
$
|
444
|
|
|
$
|
11
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Basic weighted-average common shares outstanding
1
|
16,516,335
|
|
|
16,476,011
|
|
||
Incremental shares due to:
|
|
|
|
||||
Restricted stock units
|
33,651
|
|
|
27,261
|
|
||
Performance shares
|
13,300
|
|
|
65,469
|
|
||
Stock options
|
—
|
|
|
8,670
|
|
||
Diluted weighted-average common shares outstanding
|
16,563,286
|
|
|
16,577,411
|
|
||
|
|
|
|
||||
Basic net earnings per common share
|
$
|
0.23
|
|
|
$
|
0.16
|
|
Diluted net earnings per common share
|
0.23
|
|
|
0.16
|
|
||
|
|
|
|
||||
Anti-dilutive shares excluded from calculation
|
882,475
|
|
|
558,319
|
|
1
|
Basic average common shares outstanding include restricted stock awards that are fully vested, but are deferred for future issuance.
|
|
Three Months Ended March 31,
|
||||||
(In thousands)
|
2019
|
|
2018
|
||||
Restricted stock units
|
$
|
502
|
|
|
$
|
422
|
|
Performance shares
|
334
|
|
|
533
|
|
||
Stock options
|
342
|
|
|
535
|
|
||
Total employee equity-based compensation expense
|
$
|
1,178
|
|
|
$
|
1,490
|
|
|
Three Months Ended
|
|||||
|
March 31, 2019
|
|||||
|
Number of
Shares Subject to Award |
|
Average Fair
Value of Award Per Share |
|||
Restricted stock units
|
127,135
|
|
|
$
|
27.13
|
|
Performance shares
|
140,536
|
|
|
27.11
|
|
|
March 31,
|
|
December 31,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
||||||||
(In thousands)
|
Amount
|
|
Value
|
|
Amount
|
|
Value
|
||||||||
Cash, cash equivalents, and restricted cash (Level 1)
|
$
|
14,627
|
|
|
$
|
14,627
|
|
|
$
|
24,947
|
|
|
$
|
24,947
|
|
Borrowings under revolving credit facilities (Level 2)
|
202,000
|
|
|
201,943
|
|
|
100,000
|
|
|
99,909
|
|
||||
Other short-term debt (Level 1)
|
10,216
|
|
|
10,216
|
|
|
20,833
|
|
|
20,833
|
|
||||
Long-term debt (Level 2)
|
675,000
|
|
|
644,798
|
|
|
675,000
|
|
|
612,546
|
|
|
Three Months Ended March 31,
|
||||||
(In thousands)
|
2019
|
|
2018
|
||||
Segment net sales:
|
|
|
|
||||
Consumer Products
|
$
|
223,336
|
|
|
$
|
238,842
|
|
Pulp and Paperboard
|
205,443
|
|
|
198,110
|
|
||
Total segment net sales
|
$
|
428,779
|
|
|
$
|
436,952
|
|
|
|
|
|
||||
Earnings (loss) before income taxes:
|
|
|
|
||||
Consumer Products
1
|
$
|
1,271
|
|
|
$
|
1,629
|
|
Pulp and Paperboard
1
|
29,388
|
|
|
26,154
|
|
||
|
30,659
|
|
|
27,783
|
|
||
Corporate
1
|
(16,297
|
)
|
|
(16,244
|
)
|
||
Income from operations
|
14,362
|
|
|
11,539
|
|
||
Interest expense, net
|
(8,486
|
)
|
|
(8,020
|
)
|
||
Non-operating pension and other postretirement benefit (costs) income
|
(1,314
|
)
|
|
(1,279
|
)
|
||
Earnings before income taxes
|
$
|
4,562
|
|
|
$
|
2,240
|
|
|
|
|
|
||||
Depreciation and amortization:
|
|
|
|
||||
Consumer Products
|
$
|
14,771
|
|
|
$
|
14,297
|
|
Pulp and Paperboard
|
9,485
|
|
|
9,429
|
|
||
Corporate
|
1,580
|
|
|
1,441
|
|
||
Total depreciation and amortization
|
$
|
25,836
|
|
|
$
|
25,167
|
|
1
|
Income from operations for the Consumer Products, Pulp and Paperboard and Corporate segments for the three months ended March 31, 2018 include
$1.4 million
,
$0.3 million
and
$3.4 million
, respectively, of expenses associated with our selling, general and administrative cost control measures.
|
|
Three Months Ended March 31,
|
||||||
(In thousands)
|
2019
|
|
2018
|
||||
Primary geographical markets:
|
|
|
|
||||
United States
|
$
|
414,769
|
|
|
$
|
420,820
|
|
Other countries
|
14,010
|
|
|
16,132
|
|
||
Total net sales
|
$
|
428,779
|
|
|
$
|
436,952
|
|
|
|
|
|
||||
Major products:
|
|
|
|
||||
Retail tissue
|
$
|
204,585
|
|
|
$
|
219,842
|
|
Paperboard
|
203,025
|
|
|
198,110
|
|
||
Non-retail tissue
|
18,469
|
|
|
16,959
|
|
||
Other
|
2,700
|
|
|
2,041
|
|
||
Total net sales
|
$
|
428,779
|
|
|
$
|
436,952
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Guarantor
|
|
|
|
|
||||||||
(In thousands)
|
Issuer
|
|
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
Net sales
|
$
|
412,395
|
|
|
$
|
67,540
|
|
|
$
|
(51,156
|
)
|
|
$
|
428,779
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
(367,800
|
)
|
|
(59,518
|
)
|
|
43,072
|
|
|
(384,246
|
)
|
||||
Selling, general and administrative expenses
|
(26,245
|
)
|
|
(3,926
|
)
|
|
—
|
|
|
(30,171
|
)
|
||||
Total operating costs and expenses
|
(394,045
|
)
|
|
(63,444
|
)
|
|
43,072
|
|
|
(414,417
|
)
|
||||
Income from operations
|
18,350
|
|
|
4,096
|
|
|
(8,084
|
)
|
|
14,362
|
|
||||
Interest expense, net
|
(8,385
|
)
|
|
(101
|
)
|
|
—
|
|
|
(8,486
|
)
|
||||
Non-operating pension and other postretirement benefit costs
|
(1,314
|
)
|
|
—
|
|
|
—
|
|
|
(1,314
|
)
|
||||
Earnings before income taxes
|
8,651
|
|
|
3,995
|
|
|
(8,084
|
)
|
|
4,562
|
|
||||
Income tax provision
|
(1,806
|
)
|
|
(852
|
)
|
|
1,933
|
|
|
(725
|
)
|
||||
Equity in income of subsidiary
|
3,143
|
|
|
—
|
|
|
(3,143
|
)
|
|
—
|
|
||||
Net earnings
|
$
|
9,988
|
|
|
$
|
3,143
|
|
|
$
|
(9,294
|
)
|
|
$
|
3,837
|
|
Other comprehensive income, net of tax
|
1,239
|
|
|
—
|
|
|
—
|
|
|
1,239
|
|
||||
Comprehensive income
|
$
|
11,227
|
|
|
$
|
3,143
|
|
|
$
|
(9,294
|
)
|
|
$
|
5,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
(In thousands)
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
Net sales
|
$
|
455,177
|
|
|
$
|
46,213
|
|
|
$
|
(64,438
|
)
|
|
$
|
436,952
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
(412,957
|
)
|
|
(40,360
|
)
|
|
60,884
|
|
|
(392,433
|
)
|
||||
Selling, general and administrative expenses
|
(27,632
|
)
|
|
(5,348
|
)
|
|
—
|
|
|
(32,980
|
)
|
||||
Total operating costs and expenses
|
(440,589
|
)
|
|
(45,708
|
)
|
|
60,884
|
|
|
(425,413
|
)
|
||||
Income from operations
|
14,588
|
|
|
505
|
|
|
(3,554
|
)
|
|
11,539
|
|
||||
Interest expense, net
|
(7,929
|
)
|
|
(91
|
)
|
|
—
|
|
|
(8,020
|
)
|
||||
Non-operating pension and other postretirement benefit costs
|
(1,279
|
)
|
|
—
|
|
|
—
|
|
|
(1,279
|
)
|
||||
Earnings before income taxes
|
5,380
|
|
|
414
|
|
|
(3,554
|
)
|
|
2,240
|
|
||||
Income tax (provision) benefit
|
(382
|
)
|
|
(13
|
)
|
|
755
|
|
|
360
|
|
||||
Equity in earnings of subsidiary
|
401
|
|
|
—
|
|
|
(401
|
)
|
|
—
|
|
||||
Net earnings
|
$
|
5,399
|
|
|
$
|
401
|
|
|
$
|
(3,200
|
)
|
|
$
|
2,600
|
|
Other comprehensive income, net of tax
|
1,419
|
|
|
—
|
|
|
—
|
|
|
1,419
|
|
||||
Comprehensive income
|
$
|
6,818
|
|
|
$
|
401
|
|
|
$
|
(3,200
|
)
|
|
$
|
4,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
(In thousands)
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
12,160
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,160
|
|
Restricted cash
|
1,440
|
|
|
—
|
|
|
—
|
|
|
1,440
|
|
||||
Receivables, net
|
148,494
|
|
|
19,599
|
|
|
—
|
|
|
168,093
|
|
||||
Taxes receivable
|
6,965
|
|
|
4
|
|
|
12
|
|
|
6,981
|
|
||||
Inventories
|
241,746
|
|
|
47,136
|
|
|
(2,973
|
)
|
|
285,909
|
|
||||
Other current assets
|
11,988
|
|
|
249
|
|
|
—
|
|
|
12,237
|
|
||||
Total current assets
|
422,793
|
|
|
66,988
|
|
|
(2,961
|
)
|
|
486,820
|
|
||||
Property, plant and equipment, net
|
1,217,402
|
|
|
74,600
|
|
|
—
|
|
|
1,292,002
|
|
||||
Operating lease right-of-use assets
|
72,161
|
|
|
5,318
|
|
|
—
|
|
|
77,479
|
|
||||
Goodwill
|
35,074
|
|
|
—
|
|
|
—
|
|
|
35,074
|
|
||||
Intangible assets, net
|
784
|
|
|
21,511
|
|
|
—
|
|
|
22,295
|
|
||||
Intercompany (payable) receivable
|
(56,409
|
)
|
|
53,436
|
|
|
2,973
|
|
|
—
|
|
||||
Investment in subsidiary
|
178,444
|
|
|
—
|
|
|
(178,444
|
)
|
|
—
|
|
||||
Other assets, net
|
13,473
|
|
|
3,793
|
|
|
(2,658
|
)
|
|
14,608
|
|
||||
TOTAL ASSETS
|
$
|
1,883,722
|
|
|
$
|
225,646
|
|
|
$
|
(181,090
|
)
|
|
$
|
1,928,278
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
||||||||
Short-term debt
|
$
|
212,216
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
212,216
|
|
Accounts payable and accrued liabilities
|
271,005
|
|
|
24,557
|
|
|
12
|
|
|
295,574
|
|
||||
Current liability for pensions and
other postretirement employee benefits
|
7,430
|
|
|
—
|
|
|
—
|
|
|
7,430
|
|
||||
Total current liabilities
|
490,651
|
|
|
24,557
|
|
|
12
|
|
|
515,220
|
|
||||
Long-term debt
|
671,484
|
|
|
—
|
|
|
—
|
|
|
671,484
|
|
||||
Operating lease liabilities
|
68,742
|
|
|
3,905
|
|
|
—
|
|
|
72,647
|
|
||||
Liability for pensions and
other postretirement employee benefits
|
76,507
|
|
|
—
|
|
|
—
|
|
|
76,507
|
|
||||
Other long-term obligations
|
33,859
|
|
|
—
|
|
|
—
|
|
|
33,859
|
|
||||
Accrued taxes
|
2,238
|
|
|
873
|
|
|
—
|
|
|
3,111
|
|
||||
Deferred tax liabilities
|
107,997
|
|
|
17,867
|
|
|
(2,658
|
)
|
|
123,206
|
|
||||
TOTAL LIABILITIES
|
1,451,478
|
|
|
47,202
|
|
|
(2,646
|
)
|
|
1,496,034
|
|
||||
Stockholders’ equity excluding
accumulated other comprehensive loss |
498,353
|
|
|
178,444
|
|
|
(178,444
|
)
|
|
498,353
|
|
||||
Accumulated other comprehensive loss, net of tax
|
(66,109
|
)
|
|
—
|
|
|
—
|
|
|
(66,109
|
)
|
||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
1,883,722
|
|
|
$
|
225,646
|
|
|
$
|
(181,090
|
)
|
|
$
|
1,928,278
|
|
|
|
|
|
|
|
|
|
||||||||
(In thousands)
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
22,484
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,484
|
|
Receivables, net
|
127,952
|
|
|
17,567
|
|
|
—
|
|
|
145,519
|
|
||||
Taxes receivable
|
16,634
|
|
|
41
|
|
|
(10,374
|
)
|
|
6,301
|
|
||||
Inventories
|
222,960
|
|
|
48,361
|
|
|
(5,077
|
)
|
|
266,244
|
|
||||
Other current assets
|
3,346
|
|
|
53
|
|
|
—
|
|
|
3,399
|
|
||||
Total current assets
|
393,376
|
|
|
66,022
|
|
|
(15,451
|
)
|
|
443,947
|
|
||||
Property, plant and equipment, net
|
1,192,716
|
|
|
76,555
|
|
|
—
|
|
|
1,269,271
|
|
||||
Goodwill
|
35,074
|
|
|
—
|
|
|
—
|
|
|
35,074
|
|
||||
Intangible assets, net
|
1,045
|
|
|
23,035
|
|
|
—
|
|
|
24,080
|
|
||||
Intercompany (payable) receivable
|
(62,846
|
)
|
|
57,769
|
|
|
5,077
|
|
|
—
|
|
||||
Investment in subsidiary
|
175,301
|
|
|
—
|
|
|
(175,301
|
)
|
|
—
|
|
||||
Other assets, net
|
14,839
|
|
|
2,618
|
|
|
(1,711
|
)
|
|
15,746
|
|
||||
TOTAL ASSETS
|
$
|
1,749,505
|
|
|
$
|
225,999
|
|
|
$
|
(187,386
|
)
|
|
$
|
1,788,118
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
||||||||
Short-term debt
|
$
|
120,833
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
120,833
|
|
Accounts payable and accrued liabilities
|
299,715
|
|
|
31,691
|
|
|
(10,374
|
)
|
|
321,032
|
|
||||
Current liability for pensions and
other postretirement employee benefits
|
7,430
|
|
|
—
|
|
|
—
|
|
|
7,430
|
|
||||
Total current liabilities
|
427,978
|
|
|
31,691
|
|
|
(10,374
|
)
|
|
449,295
|
|
||||
Long-term debt
|
671,292
|
|
|
—
|
|
|
—
|
|
|
671,292
|
|
||||
Liability for pensions and
other postretirement employee benefits
|
78,191
|
|
|
—
|
|
|
—
|
|
|
78,191
|
|
||||
Other long-term obligations
|
38,977
|
|
|
—
|
|
|
—
|
|
|
38,977
|
|
||||
Accrued taxes
|
1,918
|
|
|
867
|
|
|
—
|
|
|
2,785
|
|
||||
Deferred tax liabilities
|
104,753
|
|
|
18,140
|
|
|
(1,711
|
)
|
|
121,182
|
|
||||
TOTAL LIABILITIES
|
1,323,109
|
|
|
50,698
|
|
|
(12,085
|
)
|
|
1,361,722
|
|
||||
Stockholders’ equity excluding
accumulated other comprehensive loss |
493,744
|
|
|
175,301
|
|
|
(175,301
|
)
|
|
493,744
|
|
||||
Accumulated other comprehensive loss, net of tax
|
(67,348
|
)
|
|
—
|
|
|
—
|
|
|
(67,348
|
)
|
||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
1,749,505
|
|
|
$
|
225,999
|
|
|
$
|
(187,386
|
)
|
|
$
|
1,788,118
|
|
|
|
|
|
|
|
|
|
||||||||
(In thousands)
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
||||||||
Net earnings
|
$
|
9,988
|
|
|
$
|
3,143
|
|
|
$
|
(9,294
|
)
|
|
$
|
3,837
|
|
Adjustments to reconcile net earnings to net
cash flows from operating activities:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
22,763
|
|
|
3,073
|
|
|
—
|
|
|
25,836
|
|
||||
Equity-based compensation expense
|
828
|
|
|
—
|
|
|
—
|
|
|
828
|
|
||||
Deferred taxes
|
2,251
|
|
|
(1,337
|
)
|
|
—
|
|
|
914
|
|
||||
Other non-cash activity, net
|
(569
|
)
|
|
5
|
|
|
|
|
|
(564
|
)
|
||||
Changes in working capital, net
|
(73,447
|
)
|
|
930
|
|
|
10,386
|
|
|
(62,131
|
)
|
||||
Changes in taxes receivable, net
|
9,669
|
|
|
37
|
|
|
(10,386
|
)
|
|
(680
|
)
|
||||
Other, net
|
2,666
|
|
|
(105
|
)
|
|
—
|
|
|
2,561
|
|
||||
Net cash flows from operating activities
|
(25,851
|
)
|
|
5,746
|
|
|
(9,294
|
)
|
|
(29,399
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
||||||||
Additions to property, plant and equipment
|
(71,309
|
)
|
|
(279
|
)
|
|
—
|
|
|
(71,588
|
)
|
||||
Net cash flows from investing activities
|
(71,309
|
)
|
|
(279
|
)
|
|
—
|
|
|
(71,588
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
||||||||
Borrowings on short-term debt
|
290,362
|
|
|
—
|
|
|
—
|
|
|
290,362
|
|
||||
Repayments of borrowings on short-term debt
|
(198,979
|
)
|
|
—
|
|
|
—
|
|
|
(198,979
|
)
|
||||
Investment (to) from parent
|
(3,827
|
)
|
|
(5,467
|
)
|
|
9,294
|
|
|
—
|
|
||||
Other, net
|
(716
|
)
|
|
—
|
|
|
—
|
|
|
(716
|
)
|
||||
Net cash flows from financing activities
|
86,840
|
|
|
(5,467
|
)
|
|
9,294
|
|
|
90,667
|
|
||||
Decrease in cash, cash equivalents, and restricted cash
|
(10,320
|
)
|
|
—
|
|
|
—
|
|
|
(10,320
|
)
|
||||
Cash, cash equivalents, and restricted cash at beginning of period
|
24,947
|
|
|
—
|
|
|
—
|
|
|
24,947
|
|
||||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
14,627
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,627
|
|
|
|
|
|
|
|
|
|
||||||||
(In thousands)
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
||||||||
Net earnings
|
$
|
5,399
|
|
|
$
|
401
|
|
|
$
|
(3,200
|
)
|
|
$
|
2,600
|
|
Adjustments to reconcile net earnings to net
cash flows from operating activities:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
19,958
|
|
|
5,209
|
|
|
—
|
|
|
25,167
|
|
||||
Equity-based compensation expense
|
781
|
|
|
—
|
|
|
—
|
|
|
781
|
|
||||
Deferred taxes
|
(119
|
)
|
|
(121
|
)
|
|
—
|
|
|
(240
|
)
|
||||
Other non-cash activity, net
|
655
|
|
|
(7
|
)
|
|
—
|
|
|
648
|
|
||||
Changes in working capital, net
|
4,661
|
|
|
(3,109
|
)
|
|
(308
|
)
|
|
1,244
|
|
||||
Changes in taxes receivable, net
|
1,462
|
|
|
1
|
|
|
—
|
|
|
1,463
|
|
||||
Other, net
|
(902
|
)
|
|
99
|
|
|
—
|
|
|
(803
|
)
|
||||
Net cash flows from operating activities
|
31,895
|
|
|
2,473
|
|
|
(3,508
|
)
|
|
30,860
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
||||||||
Additions to property, plant and equipment
|
(47,670
|
)
|
|
(760
|
)
|
|
—
|
|
|
(48,430
|
)
|
||||
Other, net
|
761
|
|
|
7
|
|
|
|
|
|
768
|
|
||||
Net cash flows from investing activities
|
(46,909
|
)
|
|
(753
|
)
|
|
—
|
|
|
(47,662
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
||||||||
Borrowings on short-term debt
|
87,325
|
|
|
—
|
|
|
—
|
|
|
87,325
|
|
||||
Repayments of borrowings on short-term debt
|
(73,825
|
)
|
|
—
|
|
|
—
|
|
|
(73,825
|
)
|
||||
Investment from (to) parent
|
(1,788
|
)
|
|
(1,720
|
)
|
|
3,508
|
|
|
—
|
|
||||
Other, net
|
(365
|
)
|
|
—
|
|
|
—
|
|
|
(365
|
)
|
||||
Net cash flows from financing activities
|
11,347
|
|
|
(1,720
|
)
|
|
3,508
|
|
|
13,135
|
|
||||
Decrease in cash, cash equivalents, and restricted cash
|
(3,667
|
)
|
|
—
|
|
|
—
|
|
|
(3,667
|
)
|
||||
Cash, cash equivalents, and restricted cash
at beginning of period
|
16,738
|
|
|
—
|
|
|
—
|
|
|
16,738
|
|
||||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
13,071
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,071
|
|
•
|
competitive pricing pressures for our products, including as a result of increased capacity as additional manufacturing facilities are operated by our competitors;
|
•
|
the loss of, changes in prices in regard to, or reduction in, orders from a significant customer;
|
•
|
changes in customer product preferences and competitors' product offerings;
|
•
|
our ability to complete construction of our new tissue manufacturing operations in Shelby, North Carolina on time and within current cost expectations;
|
•
|
customer acceptance and timing and quantity of purchases of our tissue products, including the existence of sufficient demand for and the quality of tissue produced by our expanded Shelby, North Carolina operations when they are completed;
|
•
|
consolidation and vertical integration of converting operations in the paperboard industry;
|
•
|
our ability to successfully implement our operational efficiencies and cost savings strategies, along with related capital projects, and achieve the expected operational or financial results of those projects, including from the continuous digester at our Lewiston, Idaho facility;
|
•
|
changes in the cost and availability of wood fiber and wood pulp;
|
•
|
changes in transportation costs and disruptions in transportation services;
|
•
|
labor disruptions;
|
•
|
changes in the U.S. and international economies and in general economic conditions in the regions and industries in which we operate;
|
•
|
manufacturing or operating disruptions, including IT system and IT system implementation failures, equipment malfunctions and damage to our manufacturing facilities;
|
•
|
changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs;
|
•
|
larger competitors having operational and other advantages;
|
•
|
cyclical industry conditions;
|
•
|
changes in expenses, required contributions and potential withdrawal costs associated with our pension plans;
|
•
|
environmental liabilities or expenditures;
|
•
|
cyber-security risks;
|
•
|
reliance on a limited number of third-party suppliers for raw materials;
|
•
|
our ability to attract, motivate, train and retain qualified and key personnel;
|
•
|
material weaknesses in our internal control over financial reporting;
|
•
|
our substantial indebtedness and ability to service our debt obligations;
|
•
|
restrictions on our business from debt covenants and terms; and
|
•
|
changes in laws, regulations or industry standards affecting our business.
|
Cost of sales
|
|
|
|||||||||||||||
|
Three Months Ended March 31,
|
|
|
||||||||||||||
(Dollars in thousands)
|
2019
|
|
2018
|
|
|
||||||||||||
|
Cost
|
|
Percentage of
Sales
|
|
Cost
3
|
|
Percentage of
Sales
|
|
Cost Variance
|
||||||||
Wages and benefits
|
$
|
65,552
|
|
|
15.3
|
%
|
|
$
|
70,452
|
|
|
16.1
|
%
|
|
$
|
(4,900
|
)
|
Purchased pulp
|
50,680
|
|
|
11.8
|
|
|
48,254
|
|
|
11.0
|
|
|
2,426
|
|
|||
Transportation
1
|
49,059
|
|
|
11.4
|
|
|
54,806
|
|
|
12.5
|
|
|
(5,747
|
)
|
|||
Chemicals
|
39,351
|
|
|
9.2
|
|
|
42,674
|
|
|
9.8
|
|
|
(3,323
|
)
|
|||
Chips, sawdust and logs
|
38,087
|
|
|
8.9
|
|
|
38,427
|
|
|
8.8
|
|
|
(340
|
)
|
|||
Packaging and operating supplies
|
35,993
|
|
|
8.4
|
|
|
37,970
|
|
|
8.7
|
|
|
(1,977
|
)
|
|||
Energy
|
29,566
|
|
|
6.9
|
|
|
21,882
|
|
|
5.0
|
|
|
7,684
|
|
|||
Depreciation
|
22,435
|
|
|
5.2
|
|
|
21,722
|
|
|
5.0
|
|
|
713
|
|
|||
Maintenance and repairs
2
|
15,392
|
|
|
3.6
|
|
|
18,650
|
|
|
4.3
|
|
|
(3,258
|
)
|
|||
|
346,115
|
|
|
80.7
|
|
|
354,837
|
|
|
81.2
|
|
|
(8,722
|
)
|
|||
Other operating costs
|
38,131
|
|
|
8.9
|
|
|
37,596
|
|
|
8.6
|
|
|
535
|
|
|||
Total cost of sales
|
$
|
384,246
|
|
|
89.6
|
%
|
|
$
|
392,433
|
|
|
89.8
|
%
|
|
$
|
(8,187
|
)
|
1
|
Includes internal and external transportation costs.
|
2
|
Excludes related labor costs.
|
3
|
Certain 2018 operating costs were reclassified to conform to the 2019 presentation.
|
|
Three Months Ended March 31,
|
||||||||||||
(Dollars in thousands)
|
2019
|
|
2018
|
||||||||||
Net sales
|
$
|
428,779
|
|
|
100.0
|
%
|
|
$
|
436,952
|
|
|
100.0
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
(384,246
|
)
|
|
89.6
|
|
|
(392,433
|
)
|
|
89.8
|
|
||
Selling, general and administrative expenses
|
(30,171
|
)
|
|
7.0
|
|
|
(32,980
|
)
|
|
7.5
|
|
||
Total operating costs and expenses
|
(414,417
|
)
|
|
96.7
|
|
|
(425,413
|
)
|
|
97.4
|
|
||
Income from operations
|
14,362
|
|
|
3.3
|
|
|
11,539
|
|
|
2.6
|
|
||
Interest expense, net
|
(8,486
|
)
|
|
2.0
|
|
|
(8,020
|
)
|
|
1.8
|
|
||
Non-operating pension and other postretirement benefit costs
|
(1,314
|
)
|
|
0.3
|
|
|
(1,279
|
)
|
|
0.3
|
|
||
Earnings before income taxes
|
4,562
|
|
|
1.1
|
|
|
2,240
|
|
|
0.5
|
|
||
Income tax (provision) benefit
|
(725
|
)
|
|
0.2
|
|
|
360
|
|
|
0.1
|
|
||
Net earnings
|
$
|
3,837
|
|
|
0.9
|
%
|
|
$
|
2,600
|
|
|
0.6
|
%
|
|
|
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(Dollars in thousands - except per ton amounts)
|
2019
|
|
2018
|
||||
Net sales
|
$
|
223,336
|
|
|
$
|
238,842
|
|
Operating income
|
1,271
|
|
|
1,629
|
|
||
Percent of net sales
|
0.6
|
%
|
|
0.7
|
%
|
||
|
|
|
|
||||
Shipments (short tons)
|
|
|
|
||||
Retail
|
73,356
|
|
|
80,971
|
|
||
Non-retail
|
10,266
|
|
|
11,236
|
|
||
Total tissue tons
|
83,622
|
|
|
92,207
|
|
||
Converted products cases (in thousands)
|
12,320
|
|
|
13,262
|
|
||
|
|
|
|
||||
Sales price (per short ton)
|
|
|
|
||||
Retail
|
$
|
2,789
|
|
|
$
|
2,715
|
|
Non-retail
|
1,799
|
|
|
1,509
|
|
||
Total tissue
|
$
|
2,667
|
|
|
$
|
2,568
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(Dollars in thousands - except per ton amounts)
|
2019
|
|
2018
|
||||
Net sales
|
$
|
205,443
|
|
|
$
|
198,110
|
|
Operating income
|
29,388
|
|
|
26,154
|
|
||
Percent of net sales
|
14.3
|
%
|
|
13.2
|
%
|
||
|
|
|
|
||||
Paperboard shipments (short tons)
|
202,834
|
|
|
206,309
|
|
||
Paperboard sales price (per short ton)
|
$
|
1,001
|
|
|
$
|
960
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(In thousands)
|
2019
|
|
2018
|
||||
Net earnings
|
$
|
3,837
|
|
|
$
|
2,600
|
|
Interest expense, net
|
8,486
|
|
|
8,020
|
|
||
Income tax provision (benefit)
|
725
|
|
|
(360
|
)
|
||
Depreciation and amortization expense
|
25,836
|
|
|
25,167
|
|
||
EBITDA
|
$
|
38,884
|
|
|
$
|
35,427
|
|
Directors' equity-based compensation benefit
|
(350
|
)
|
|
(709
|
)
|
||
Reorganization related expenses associated with SG&A cost control measures
|
—
|
|
|
5,104
|
|
||
Non-operating pension and other postretirement benefit costs
1
|
1,314
|
|
|
1,279
|
|
||
Adjusted EBITDA
|
$
|
39,848
|
|
|
$
|
41,101
|
|
1
|
In 2018, we adopted Accounting Standards Update 2017-07,
Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
, which requires all net periodic pension and postretirement costs other than service cost to be presented on a line outside of operating income. Beginning in the first quarter of 2019, we are excluding these non-operating costs from the calculation of Adjusted EBITDA. The corresponding prior period amounts have been reclassified to conform with the current period presentation.
|
|
|
|
|
|
|
|
|
(In thousands)
|
2019
|
|
2018
|
||||
Net cash flows from operating activities
|
$
|
(29,399
|
)
|
|
$
|
30,860
|
|
Net cash flows from investing activities
|
(71,588
|
)
|
|
(47,662
|
)
|
||
Net cash flows from financing activities
|
90,667
|
|
|
13,135
|
|
ITEM 4.
|
|
Controls and Procedures
|
ITEM 1.
|
|
Legal Proceedings
|
ITEM 1A.
|
|
Risk Factors
|
EXHIBIT
NUMBER
|
|
DESCRIPTION
|
10(i)
*
|
|
|
|
|
|
10(ii)
*
|
|
|
|
|
|
(31)
|
|
|
|
|
|
(32)**
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase.
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase.
|
*
|
Management contract or compensatory plan, contract or arrangement.
|
|
|
**
|
In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibit 32 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.
|
|
|
|
|
|
|
|
|
CLEARWATER PAPER CORPORATION
|
|
|
|
|
(Registrant)
|
|
|
|
|
||
|
|
|
|
|
May 8, 2019
|
|
By
|
/s/ ROBERT G. HRIVNAK
|
|
|
|
|
|
Robert G. Hrivnak
|
|
|
|
|
Senior Vice President, Finance and
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Duly Authorized Officer; Principal
|
|
|
|
|
Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
May 8, 2019
|
|
By
|
/s/ ROBERT N. DAMMARELL
|
|
|
|
|
|
Robert N. Dammarell
|
|
|
|
|
Vice President, Corporate Controller
|
|
|
|
|
(Duly Authorized Officer; Principal
|
|
|
|
|
Accounting Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Kevin J Hunt
|
|
Kevin J. Hunt
Chair of the Compensation Committee
of the Board of Directors
|
|
|
|
/s/ Linda Massman
|
|
Linda K. Massman
|
|
|
|
1.
|
I have reviewed this report on Form 10-Q of Clearwater Paper Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
Date: May 8, 2019
|
|
|
|
/s/ LINDA K. MASSMAN
|
|
|
|
|
Linda K. Massman
|
|
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-Q of Clearwater Paper Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
Date: May 8, 2019
|
|
|
|
/s/ ROBERT G. HRIVNAK
|
|
|
|
|
Robert G. Hrivnak
|
|
|
|
|
Senior Vice President, Finance and Chief Financial Officer
|
(1)
|
the Quarterly Report of the Company on Form 10-Q for the period ended
March 31, 2019
, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ LINDA K. MASSMAN
|
Linda K. Massman
|
President and Chief Executive Officer
|
May 8, 2019
|
(1)
|
the Quarterly Report of the Company on Form 10-Q for the period ended
March 31, 2019
, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ ROBERT G. HRIVNAK
|
Robert G. Hrivnak
|
Senior Vice President, Finance and Chief Financial Officer
|
May 8, 2019
|