Clearwater Paper Analysis

Clearwater produces solid bleach sulfate paperboard, consumer tissue products, lumber, and
hardwood and softwood pulp. The business is divided into two primary divisions: Its Pulp and
Paperboard segment manufactures paperboard (used to make packaging for foods, liquids,
pharmaceuticals, and toiletries) and pulp (consumed internally to make paperboard and tissues). A
Consumer Products arm produces a private label tissue, largely for grocery chains. The vast majority
of Clearwater sales are made in the US.

* Taken from Bloomberg Terminal with minor grammatical changes:

Only 2 customers, 20 suppliers:

Moody’s last updated mid-2019, Standard & Poor’s, mid-2020 (outlook) other ratings go back as
far as 2010:
 Value in $M's Weight %
Market Cap $ 468.89 37%
Short Term Debt $ 16.90 1%
Long Term Debt $ 770.70 61%
Pref. Equit 0%
Total $ 1,256.49

Cost of Equity 9%
RFR 2%
Beta 0.93
Equity Risk Premium 8%
Expected Market Return 10%

Cost of Debt 4%
RFR 2%
Default Spread 3%
1-Tax Rate 79%

WACC 6%

Multiple 10
EBITDA $ 223.20
Enterprise Value $ 2,246.59
Cash $ 35.90
Total Debt $ 787.60
Equity Value $ 1,494,891,386.34
Estimated Price $ 90.96
 $M's
Historical Current Year Forecasts
2016 2017 2018 2019 2020 2021 2022 2023
Revenues $ 1,734.76 $ 1,730.41 $ 1,724.22 $ 1,761.50 $ 1,868.60 $ 1,746.33 $ 1,898.00 1928.92216
Revenue Growth Rate 0% 0% 2% 6% -7% 9% 2%

EBIT $ 118.97 $ 87.35 $ 82.05 $ 51.70 $ 172.10 $ 61.00 $ 112.00 $ 106.59

EBIT Margin 7% FALSE 5% 3% 9% 3% 6% 6%

EBIT*(1-Tax) $ 96.36 $ 70.75 $ 66.46 $ 41.88 $ 139.40 $ 48.19 $ 88.48 $ 84.21

Tax Rate: 19% 19% 19% 19% 19% 21% 21% 21%

D&A $ 91.09 $ 104.99 $ 101.95 $ 130.60 $ 126.90 $ 101.67 $ 96.00 $ 116.61

D&A/Revenue 5% 6% 6% 7% 7% 6% 5% 6%

CAPEX $ (155.35) $ (199.75) $ (295.71) $ (140.10) $ (39.60) $ (166.67) $ (183.39) $ (179.12)

CAPEX/Revenue -9% -12% -17% -8% -2% -10% -10% -9%

Current Assets $ 446.50 $ 452.79 $ 443.95 $ 465.80 $ 474.90 $ 452.34 $ 492.24 $ 499.37
CA/Revenue 26% 26% 26% 26% 25% 26% 26% 26%

Current Liabilities $ 366.52 $ 419.25 $ 449.30 $ 280.40 $ 244.80 $ 253.38 $ 275.39 $ 279.88
CL/Revenue 21% 24% 26% 16% 13% 15% 15% 15%

NWC $ 79.98 $ 33.54 $ (5.35) $ 185.40 $ 230.10 $ 198.95 $ 216.85 $ 219.49

Change in NWC $ (46.44) $ (38.89) $ 190.75 $ 44.70 $ (31.15) $ 17.90 $ 2.64
Unlevered Cash Flow $ 32.10 $ 22.43 $ (88.41) $ (158.37) $ 182.00 $ 14.33 $ (16.81) $ 19.06

WACC 6% 6% 6%

Discounted Cash Flow $ 13.55 $ (15.02) $ 16.10

Share Price EBITDA

Multiple $ 201.44 $ 212.04 $ 223.20 $ 234.36 $ 246.07
9.025 $ 65.77 $ 71.59 $ 77.72 $ 83.85 $ 90.28
9.5 $ 71.59 $ 77.72 $ 84.17 $ 90.62 $ 97.39
10 $ 77.72 $ 84.17 $ 90.96 $ 97.75 $ 104.88
10.5 $ 83.85 $ 90.62 $ 97.75 $ 104.88 $ 112.36
11.025 $ 90.28 $ 97.39 $ 104.88 $ 112.36 $ 120.22

Gain/Loss EBITDA
Multiple $ 201.44 $ 212.04 $ 223.20 $ 234.36 $ 246.07
9.025 131% 151% 172% 194% 216%
9.5 151% 172% 195% 218% 241%
10 172% 195% 219% 243% 268%
10.5 194% 218% 243% 268% 294%
11.025 216% 241% 268% 294% 321%