SPOKANE, Wash. - Clearwater Paper Corporation (NYSE:CLW) announced its financial outcomes for the third quarter and the first nine months of 2024, with a notable increase in net sales but a decline in net income and adjusted EBITDA compared to the same period last year.
The company completed the sale of its tissue business on November 1, 2024, which is now reflected as discontinued operations in its financial statements. The focus remains on the paperboard segment and corporate expenses as continuing operations.
For the third quarter, Clearwater Paper reported net sales from continuing operations at $393 million, marking a 41% rise from the prior year, largely due to added volume from the Augusta facility. Total operations netted $644 million in sales, up 24% year-over-year. However, the company experienced a net loss from continuing operations of $11 million, or $0.64 per diluted share, a downturn from the net income of $15 million, or $0.88 per diluted share, in the previous year.
The net income from total operations stood at $6 million, or $0.35 per diluted share, compared to $37 million, or $2.17 per diluted share, in the third quarter of the prior year. Adjusted EBITDA from total operations was $64 million, a decrease from $81 million in the same quarter last year.
President and CEO Arsen Kitch remarked on the strong third quarter despite the impact of Hurricane Helene on their facilities in Georgia and North Carolina. The company is now poised to focus on building a premier paperboard company servicing North American independent converters.
Clearwater Paper also announced a new $100 million share repurchase authorization, which replaces the previous one. The repurchases will be made at the company's discretion based on business and market conditions, with no set expiration date for the authorization.
For the first nine months of 2024, Clearwater Paper reported a 10% increase in net sales from total operations, reaching $1.7 billion. However, the company faced a net loss of $3 million, or $0.17 per diluted share, compared to a net income of $90 million, or $5.29 per diluted share, during the same period in 2023. The drop in adjusted EBITDA from total operations to $160 million from $218 million was mainly due to lower sales prices and the impact of a major maintenance outage at its Lewiston, Idaho facility, partially mitigated by lower input costs.
Despite challenging conditions in the solid bleached sulfate (SBS) industry, the company remains confident in the long-term fundamentals of paperboard packaging and is taking steps to reduce costs and improve cash flows.
The information in this article is based on a press release statement from Clearwater Paper Corporation.
In other recent news, Clearwater Paper Corporation completed its asset sale to Sofidel America Corp. for approximately $1.06 billion. This transaction included the sale of Clearwater Paper Tissue and specific assets of the company's consumer product division facility in Lewiston, Idaho. The company reported an adjusted EBITDA of $61.5 million for Q1 2024, exceeding RBC Capital Markets' estimate, and net sales of $496 million, largely driven by its tissue business.
RBC Capital Markets has adjusted its stance on Clearwater Paper, upgrading the stock from Sector Perform to Outperform, despite lowering the price target to $37.00 from the previous $48.00. The firm's analysts noted the potential for industry capacity rationalization or conversion, suggesting a possible improvement in market dynamics for Clearwater Paper.
In other strategic moves, Clearwater Paper invested $23 million in a new facial tissue converting line at its Shelby, North Carolina plant. This development, along with the recent asset sale and performance, are part of Clearwater Paper's ongoing efforts to shape its trajectory and strengthen its market position.
InvestingPro Insights
Clearwater Paper Corporation's recent financial performance aligns with several key insights from InvestingPro. The company's stock has been under pressure, with InvestingPro data showing a significant 50.61% decline in the three-month price total return. This drop correlates with the company's reported net loss and decreased adjusted EBITDA in the third quarter.
Despite these challenges, InvestingPro Tips highlight that Clearwater Paper's management has been aggressively buying back shares, which is consistent with the company's announcement of a new $100 million share repurchase authorization. This move suggests management's confidence in the company's long-term prospects, even as they navigate current industry headwinds.
The company's valuation metrics also present an interesting picture. With a P/E ratio (adjusted) of 6.37 for the last twelve months and a price-to-book ratio of 0.64, Clearwater Paper appears to be trading at relatively low valuations. An InvestingPro Tip notes that the current valuation implies a strong free cash flow yield, which could be attractive to value-oriented investors.
It's worth noting that InvestingPro offers 10 additional tips for Clearwater Paper, providing a more comprehensive analysis for investors looking to delve deeper into the company's prospects.
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