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CLEARWATER PAPER CP Reports Operating Results (10-Q)

November 05, 2010 | About:

CLEARWATER PAPER CP (NYSE:CLW) filed Quarterly Report for the period ended 2010-09-30.

Clearwater Paper Cp has a market cap of $954.7 million; its shares were traded at around $83.42 with a P/E ratio of 16.5 and P/S ratio of 0.8. CLW is in the portfolios of John Keeley of Keeley Fund Management, Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

On September 16, 2010, we announced our agreement to acquire Cellu Tissue Holdings, Inc., or Cellu Tissue, for approximately $518 million, including equity value of approximately $247 million and net debt of approximately $271 million. Cellu Tissue is an Alpharetta, Georgia-based integrated manufacturer of tissue products and reported $511.3 million in net sales for the fiscal year ended February 28, 2010.

On June 10, 2010, we announced our decision to build new tissue manufacturing facilities in Shelby, North Carolina as part of our plans to expand our Consumer Products segment in the Eastern United States. This site will include a Through-Air-Dried, or TAD, paper machine and is currently expected to have seven converting lines capable of producing ultra grades of private label tissue products. We have estimated the project will cost approximately $260 million to $280 million. Of that amount, we expect to incur approximately $12 million of the project costs, and potentially an additional $6 to $8 million in connection with an advance payment on the TAD paper machine, in 2010. Substantially all of the remainder amounts will be spent in 2011 and 2012.

Major equipment maintenance and repair in our Pulp and Paperboard segment also requires maintenance shutdowns generally lasting up to one week per year at our Idaho facility and up to one week approximately every 18 months at our Arkansas facility, which increases costs and may reduce net sales in the quarters in which the major maintenance shutdowns occur. In March 2010 we had machine downtime of eight days at our Idaho pulp and paperboard mill due to scheduled major maintenance costing $16.9 million. In the third quarter of 2010, we had two days of machine downtime during scheduled major maintenance at our Arkansas pulp and paperboard mill and spent $4.0 million. Major maintenance and repair costs are expected to be approximately $2 to $3 million for the remainder of 2010.

months ended September 30, 2010, we spent $7.6 million and $23.1 million, respectively, on capital expenditures compared to $4.8 million and $14.5 million, respectively, in the same periods in 2009. Our capital expenditures for 2010 are expected to be between $40 million and $45 million, including an estimated $12 million associated with our North Carolina TAD paper machine and tissue converting lines. We may also spend an additional $6 to $8 million in connection with an advance payment on the TAD paper machine in 2010.

In the nine months ended September 30, 2010, we did not record any income in connection with the alternative fuel mixture tax credit related to black liquor due to the termination of the tax credit for such use at the end of 2009. During the nine months ended September 30, 2010, we received $99.5 million from the Federal Government, of which $83.2 million related to the alternative fuel mixture tax credit earned in 2009.

Excluding the alternative fuel mixture tax credit of $47.1 million recorded in the third quarter of 2009, operating income increased $21.8 million in the third quarter of 2010 compared to the same period in 2009. The increase in operating income was largely attributable to higher net sales and was partially offset by higher wood fiber, chemical, maintenance and transportation costs.

Read the The complete Report

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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