SPOKANE, Wash.--(BUSINESS WIRE)--
Clearwater Paper Corporation (NYSE:CLW) today announced plans to
build a new tissue machine and related converting equipment for
producing premium and ultra-premium grades of private label tissue
products at a site adjacent to the company's existing facility in
Shelby, North Carolina.
"Clearwater Paper's customers are requiring more premium and
ultra-premium products, which we are addressing with the new capacity.
These high growth segments have increased 3.5 times faster than the
overall tissue market, and we are committed to growing with our
strategic customers and positioning ourselves to add new customers,"
said Linda K. Massman, president and CEO. "We believe this new capacity
will reinforce our leadership in the private label tissue business and
will be a significant driver of operating earnings growth while
strengthening the quality of our manufacturing assets."
After an extensive analysis of the anticipated market growth, costs and
financial returns of a new paper machine, the company will install a
200-inch Valmet NTT tissue machine and related converting equipment. The
new tissue machine will produce a variety of high-quality private label
premium and ultra-premium bath, paper towel and napkin products. At full
production capacity, the new tissue machine is expected to produce
approximately 70,000 tons of tissue products annually.
The estimated cost for the project includes approximately $283 million
for the tissue machine, converting equipment and buildings, and
approximately $57 million for the purchase and expansion of an existing
warehouse that will consolidate all southeastern warehousing in Shelby.
Clearwater Paper projects that the construction of the new facility will
be completed in early 2019 and fully operational in 2020. Assuming the
paper machine is fully sold out, it is expected to contribute an
incremental $55 to $65 million of EBITDA based on $38 to $48 million of
estimated operating income and approximately $17 million of estimated
depreciation. The expected internal rate of return (IRR) for this
project is 11 percent.
"Companies like Clearwater Paper know that North Carolina is a wonderful
place to do business thanks to our skilled workforce, strong
infrastructure and prime location," said North Carolina Governor Roy
Cooper. "We want companies looking to expand to come to North Carolina
because there's no better place to invest and grow."
"We expect the new tissue facility will be built on time and within
budget, consistent with our first Shelby facility that was announced in
June 2010 and commenced operations in late 2012. Our experience in
Shelby, North Carolina, has been exceptional and we continue to enjoy
the region's outstanding transportation infrastructure,
business-friendly community, and overall quality of life," said Pat
Burke, group president. "For those same reasons and a competitive
incentive program from the City of Shelby, Cleveland County and the
State of North Carolina, we are pleased to announce the company's newest
state-of-the-art tissue machine will be built in Shelby."
The company expects to fund the project with cash flow from operations
and its revolving line of credit. It is expected that capital will be
deployed over the next 30 months with approximately one-third deployed
in 2017, approximately two thirds in 2018 and any remaining amount in
2019.
Clearwater Paper intends to start construction during the second quarter
of this year. Converting and warehouse operations are expected to be
completed during the second half of 2018, and the tissue machine is
expected to be completed during the first quarter of 2019.
ABOUT CLEARWATER PAPER
Clearwater Paper manufactures quality consumer tissue, away-from-home
tissue, parent roll tissue, bleached paperboard and pulp at
manufacturing facilities across the nation. The company is a premier
supplier of private label tissue to major retailers and wholesale
distributors, including grocery, drug, mass merchants and discount
stores. In addition, the company produces bleached paperboard used by
quality-conscious printers and packaging converters, and offers services
that include custom sheeting, slitting and cutting. Clearwater Paper's
employees build shareholder value by developing strong customer
partnerships through quality and service.
FORWARD-LOOKING STATEMENT
This press release contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 as
amended, including statements regarding the initiation and completion of
the newly announced tissue manufacturing, converting and warehousing
facilities in Shelby, North Carolina, the company's growth strategy and
expansion plans, market share, product offerings, production capacity,
product demand, customer base, capital costs, incremental EBITDA,
operating income, return on the investment, incentives, revenue and
operational growth, operating margins, quality of assets and sources and
allocation of the capital costs. These forward-looking statements are
based on current expectations, estimates, assumptions and projections
that are subject to change, and actual results may differ materially
from the forward-looking statements. Factors that could cause actual
results to differ materially include, but are not limited to, the
company's ability to execute on its growth and expansion strategies;
unanticipated construction delays involving the company's planned new
tissue manufacturing, converting and warehousing facilities in Shelby,
North Carolina; competitive pricing pressures for the company's
products, including as a result of increased capacity as additional
manufacturing facilities are operated by the company's competitors;
customer acceptance and timing and quantity of purchases of the
company's tissue products, including the existence of sufficient demand
for and the quality of tissue produced at the company's newly announced
Shelby facility when it becomes operational; changes in the U.S. and
international economies and in general economic conditions in the
regions and industries in which the company operates; the loss of or
changes in prices in regards to a significant customer; the company's
ability to successfully implement its operational efficiencies and cost
savings strategies; changes in customer product preferences and
competitors' product offerings; manufacturing or operating disruptions,
including IT system and IT system implementation failures, equipment
malfunction and damage to the company's manufacturing facilities;
changes in transportation costs and disruptions in transportation
services; changes in the cost and availability of wood fiber and wood
pulp; labor disruptions; cyclical industry conditions; changes in costs
for and availability of packaging supplies, chemicals, energy and
maintenance and repairs; environmental liabilities or expenditures;
changes in expenses and required contributions associated with the
company's pension plans; cyber-security risks; reliance on a limited
number of third-party suppliers for raw materials; the company's
inability to service its debt obligations; restrictions on the company's
business from debt covenants and terms; changes in laws, regulations or
industry standards affecting the company's business; and other risks and
uncertainties described from time to time in the company's public
filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the year ended December 31, 2015.
The forward-looking statements are made as of the date of this press
release and the company does not undertake to update any forward-looking
statements based on new developments or changes in the company's
expectations.
VENDORS AND SUPPLIERS
Commercial inquiries should be directed to: Shelby2@clearwaterpaper.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170208005995/en/
Clearwater Paper Corporation
News media:
Matt Van Vleet,
509-344-5912
Vice President, Public Affairs
or
Investors:
Robin
S. Yim, 509-344-5906
Vice President, Investor Relations
Source: Clearwater Paper Corporation
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