Paper and paper product manufacturer
Clearwater Paper Corporation
) recently revised its guidance for the second quarter of 2014 to
better reflect the current market conditions. The narrowed guidance
further had a bearish effect on the share prices and pulled the
stock down by 1.0% in after-hours trading to $63.43.
Clearwater Paper currently expects second-quarter revenues to be up
3.4% sequentially compared with first-quarter 2014, marginally down
from the previous expectations of 3.5% growth. Operating margin is
expected to vary within 6-7%, down from 6-8% expected earlier.
The reduced guidance is primarily due to some operational issues at
the Arkansas pulp and paperboard facility of the company, resulting
in low yields despite high energy and chemical consumption. Lower
production levels have also more than offset the record shipments
from its Lewiston pulp and paperboard facility. To add to the woes
of higher production costs and lower shipment volumes, inclement
weather conditions in southeastern U.S. have further driven fiber
prices up to adversely affect the operating margins.
Earlier in Feb 2014, Clearwater Paper announced the permanent
closure of its manufacturing facility in Long Islands, New York to
reduce operating costs. Although the company acknowledged the
severity of the decision, which affected around 155 employees, it
maintained that the compromise was the best possible alternative to
sustain profitable operations. With the closure of this tissue
converting and distribution facility, manufacturing process was
centered on other low-cost facilities.
Clearwater Paper expects the operational issues in the Arkansas
facility to continue till the next scheduled maintenance in March
2015. Consequently, the company expects a $1 million cost headwind
each quarter through the first quarter of 2015.
Clearwater manufactures and sells pulp-based products such as
consumer tissue, away-from-home tissue, parent roll tissue, machine
glazed tissue, and bleached paperboard. The company has 13
manufacturing facilities across the U.S. and Canada.
Clearwater currently has a Zacks Rank #4 (Sell). Other players in
the industry worth mentioning include
Tupperware Brands Corporation
), each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
UNILEVER PLC (UL): Free Stock Analysis Report
CLEARWATER PAPR (CLW): Free Stock Analysis
TUPPERWARE BRND (TUP): Free Stock Analysis
UNILEVER N V (UN): Free Stock Analysis Report
To read this article on Zacks.com click here.