Clearwater Paper (CLW) Q1 2025 Earnings Call April 29, 2025 09:42 PM ET Speaker0 Ladies and gentlemen, thank you for standing by. My name is Carmen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Clearwater Paper First Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. Would now like to turn the call over to Sloan ...

First Quarter Earnings Release Materials April 29, 2025 ARSEN KITCH President, Chief Executive Officer and Director SHERRI BAKER Senior Vice President and Chief Financial Officer Forward Looking Statements 2024 Was a Transformational Year For Clearwater Paper Completed acquisition of Augusta paperboard mill for $700M on May 1 Increased total SBS capacity to ~1.4M tons Balanced network to deliver lower landed costs and targeting synergies of $40-50M by end of 2026 Completed sale of tissue business for $1.06 ...

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $30 million for Q1 2025, at the high end of guidance, driven by strong operational performance and increased production and sales volumes, primarily due to the Augusta acquisition [6][24] - Net sales increased by 46% to $378 million compared to Q1 2024, largely attributed to the Augusta acquisition [6][24] - The company incurred a consolidated net loss of approximately $6 million from continuing operations, equating to $0.36 per diluted share [23] Business Line Data and Key Metrics Changes - The Augusta mill integration has been successful, with targeted volume and cost synergies expected by the end of 2026 [7] - Fixed cost structure was reduced by eliminating over 200 positions, representing around 10% of total roles, aiming for $30 to $40 million in savings for 2025 [7][18] Market Data and Key Metrics Changes - Industry shipments increased by 2% in Q1 2025 compared to Q1 2024, with demand projected to grow by 3% to 5% in 2025 [8][9] - Industry utilization rates improved to 88% in Q1 2025 from 84% in Q1 2024, but remain below the cross-cycle average of 90% to 95% [10] Company Strategy and Development Direction - The company aims to strengthen its position as a premier independent supplier of paperboard packaging products, investing in product development across three categories: compostable food service products, lightweight folding carton products, and alternative poly-free barrier technologies [13][14][15] - The company is exploring expansion into additional paperboard substrates, which make up approximately 50% of the paperboard market outside of SBS [16] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about medium to long-term industry prospects, expecting strong margins and cash flows through the cycle [34] - The company anticipates continued demand recovery, with internal utilization projected at around 85% and revenue expectations of approximately $1.5 to $1.6 billion for 2025 [29] Other Important Information - The company repurchased approximately $11 million of its shares in Q1 2025, totaling about $15 million since the new $100 million share buyback authorization [7][26] - The company is targeting a reduction in SG&A as a percentage of sales to 6% to 7% by year-end 2025 [25] Q&A Session Summary Question: What is the sense of what's happening with FPB imports recently? - Management noted that imports were up in 2024, with forecasts for a 5% decrease in imports and a 1% increase in exports for 2025 [38][39] Question: Can you clarify the geographic split of the $20 million to $25 million purchases from outside the US and Canada? - Approximately $80 million of imports are from Canada, with the remaining $20 million from other parts of the world, including potential exposure to China [40][41] Question: What are the criteria for evaluating M&A opportunities for expanding product offerings? - The company seeks strategic fit, quality assets, and a belief in the ability to win in the market when considering M&A [46][47] Question: What kind of costs are associated with the paper machine upgrades for lightweight folding carton products? - Upgrades will be on existing machines, with capital fitting within the previously stated capital range, focusing on mix shift rather than incremental revenue growth [48] Question: What is the expected impact of cost savings in Q2? - Management expects to see roughly double the amount of savings in Q2 compared to Q1, with incremental benefits ramping through the year [51]

Clearwater Paper (CLW) Q1 2025 Earnings Call April 29, 2025 05:00 PM ET Company Participants Sloan Bohlen - DirectorArsen Kitch - CEO, President & DirectorSherri Baker - Senior VP & CFOMatt McKellar - Vice President Operator Ladies and gentlemen, thank you for standing by. My name is Carmen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Clearwater Paper First Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any back ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 CLEARWATER PAPER CORPORATION (Exact name of registrant as specified in its charter) Delaware 20-3594554 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) For the quarterly period ended March 31, 2025 or ¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchan ...

Company Overview - Clearwater Paper Corporation is one of the five largest producers of paperboard in North America, holding approximately 14% of the U.S. production capacity in 2024[16]. - In 2024, Clearwater Paper acquired a paperboard manufacturing facility in Augusta, Georgia for approximately $710.6 million[18]. - The company divested its tissue business for $1.06 billion in cash, marking a strategic shift in operations[18]. - Following the Tissue Divestiture, the company is now solely focused on the pulp and paperboard segment, increasing its exposure to industry-specific risks[55]. Product and Market Dynamics - The SBS paperboard segment is primarily used for folding cartons, food service applications, and commercial printing, with a focus on high-end products that yield attractive margins[20]. - Customer buying patterns typically result in lower sales volumes during the first and fourth quarters compared to the second and third quarters[31]. - Demand for paperboard products surged during the COVID-19 pandemic but has since declined, potentially leading to further production downtimes[57]. - The paperboard industry experienced significant weakness in 2023 and 2024 due to customer destocking after a period of high demand[168]. - For 2025, the company expects continued improvement in demand for SBS paperboard products, with industry publications suggesting a return to pre-COVID levels by the end of 2025[202]. Financial Performance - Net sales increased by 21.8% for the year ended December 31, 2024, reaching $1,383.6 million, primarily due to the inclusion of Augusta operations[184]. - Adjusted EBITDA from continuing operations decreased by 70.5% to $36.0 million for the year ended December 31, 2024[181]. - Gross profit declined by 62.1% for the year ended December 31, 2024, totaling $76.1 million, due to price decreases and higher costs from maintenance outages[191]. - The company reported a loss from continuing operations of $64.5 million for the year ended December 31, 2024, compared to a profit of $78.1 million in 2023[183]. - Cash generated from operations decreased to $61.4 million in 2024 from $190.7 million in 2023, driven by lower operating performance and changes in working capital[205]. Cost and Operational Challenges - Clearwater Paper's operations are significantly impacted by freight costs, energy consumption, and raw material prices[28][29]. - The company faces significant costs related to maintaining manufacturing equipment, which can disrupt operations and affect financial performance[68]. - The cost and availability of chemicals and energy are critical to the company's operations, with potential volatility affecting results[73]. - Transportation disruptions and increased freight costs could materially impact the company's ability to deliver products and manage costs[76]. - The company’s operating costs include raw materials, labor, and selling, general, and administrative expenses, managed through cost-saving initiatives[169]. Environmental and Regulatory Factors - Clearwater Paper aims to reduce Scope 1 and Scope 2 GHG emissions by 30% and Scope 3 emissions by 25% by 2030[41]. - The company is committed to expanding recyclable, compostable, or marine-degradable paperboard offerings to represent over 10% of total SBS cupstock manufacturing by 2030[41]. - Environmental regulations may lead to increased compliance costs and potential liabilities, impacting financial condition and cash flows[87]. - Climate change risks, including extreme weather events, could disrupt operations and supply chains, adversely affecting financial results[92]. Labor and Supply Chain Risks - Approximately 1,400 full-time employees are represented by unions under collective bargaining agreements, with potential labor disruptions impacting operations and financial results[80]. - A collective bargaining agreement for approximately 500 hourly employees at the Lewiston, Idaho facility will expire in August 2025, posing risks of strikes or other labor actions[81]. - The company relies on a limited number of third-party suppliers for raw materials, which could lead to increased costs and supply interruptions affecting financial results[83]. - The company relies on external sources of wood fiber, exposing it to price fluctuations and supply risks[70]. Debt and Financial Obligations - As of December 31, 2024, the company had approximately $275 million of outstanding indebtedness and availability of approximately $218 million under its Credit Agreement[117]. - The fixed charge coverage ratio was approximately 2.0x as of December 31, 2024, but could be affected by events beyond the company's control[124]. - Credit rating downgrades could increase borrowing costs and adversely affect the company's financial condition and results of operations[127]. - An increase in interest rates could negatively impact the company's cash flow and increase debt service obligations[128]. Strategic Initiatives and Future Outlook - The company is targeting $30 to $40 million in cost savings in 2025 across selling, general and administrative expenses and operations[202]. - The company expects cash paid for capital expenditures in 2025 to be approximately $80 million to $90 million[208]. - The company has a stock repurchase program authorized for up to $100 million, with $96.7 million remaining as of December 31, 2024[153]. - The company completed the acquisition of a paperboard manufacturing facility and associated business in Augusta, Georgia in 2024[166].

Company Overview - Clearwater Paper Corporation, based in Spokane, Washington, has been operating since the early 1900s and specializes in manufacturing and supplying paperboard packaging to converters across North America [1] Industry Focus - The mission of Grassroots Trading emphasizes providing objective, unbiased, and balanced research focused on small- to mid-cap companies, while also identifying potential opportunities in large- and mega-cap companies [1]

Financial Data and Key Metrics Changes - In Q4 2024, the company reported $21 million of adjusted EBITDA, a decline from $63 million in the previous year, primarily due to two fewer months of contributions from the divested tissue business and increased maintenance expenses at the Augusta mill [25][26] - For the full year 2024, adjusted EBITDA was $182 million, down from $281 million in 2023, largely driven by a $90 million impact from lower paperboard pricing [26][27] - The company recognized a gain of $307 million from the sale of the tissue business, significantly contributing to full-year net income and allowing for a $199 million reduction in net debt [28] Business Line Data and Key Metrics Changes - The Augusta acquisition increased paperboard capacity by approximately 70%, expected to contribute $140 million to $150 million of annual adjusted EBITDA once synergies are realized [9][10] - The divestiture of the tissue business was completed on November 1, 2024, allowing the company to focus solely on paperboard operations [10][25] Market Data and Key Metrics Changes - Industry shipments increased by 4% in 2024 compared to 2023, with projected growth of 3% to 5% in 2025, indicating a recovery towards pre-COVID levels [15] - Industry utilization rates improved to 85% in 2024 from 82% in 2023, although net exports decreased by approximately 250,000 tons due to increased global supply [16] Company Strategy and Development Direction - The company aims to strengthen its position as an independent supplier of paperboard packaging products and is exploring opportunities to expand its product offerings, including new applications and substrates [38] - Actions are being taken to reduce costs by targeting $30 million to $40 million in savings across SG&A and operations, including a 10% reduction in workforce [19][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term prospects for paperboard packaging, despite current market challenges, and expects improved operational performance to offset pricing and inflation headwinds [23][32] - The company anticipates a continued demand recovery in 2025, with internal utilization rates projected at around 85% [31] Other Important Information - A new $100 million share repurchase program was authorized, with approximately $9 million repurchased as of February 7, 2025 [14] - Capital expenditures for 2025 are expected to be between $80 million and $90 million, including maintenance CapEx and carryover from large projects [34] Q&A Session Summary Question: Can you provide more details on the new agreements and their expected volume ramp-up? - Management indicated that the new agreements are incorporated into 2025 volume assumptions and will take several years to ramp up, potentially filling 150,000 to 200,000 tons of open capacity [46] Question: How do you expect operational performance to offset pricing and inflation headwinds? - Management outlined three areas of improvement: operational performance, fewer disruptions from weather events, and targeted cost reductions of $30 million to $40 million [52] Question: What benefits do you expect from headcount reductions in Q1? - Management expects modest benefits in Q1, with more significant savings ramping up in Q2 and the bulk occurring in the second half of the year [54] Question: How would potential tariffs impact the SBS market? - Management noted that while there would be higher costs from suppliers, the impact is hard to predict, and the goal would be to pass those costs onto customers [59] Question: What is the company's stance on share repurchases given the current stock price? - Management stated that they would be opportunistic in share repurchases but prioritize investing in assets and maintaining a strong balance sheet [61] Question: How is demand trending at the start of the year compared to Q4? - Management reported positive customer conversations and noted that food service demand is more robust than folding carton demand, indicating hopeful signs of recovery [65]

Fourth Quarter and Full Year Earnings Release Materials February 13, 2025 ARSEN KITCH President, Chief Executive Officer and Director SHERRI BAKER Senior Vice President and Chief Financial Officer Forward Looking Statements Cautionary Statement Regarding Forward Looking Statements This presentation of supplemental information contains, in addition to historical information, certain "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of th ...

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $64 million for Q3 2024, which was within the guidance range of $58 million to $68 million, impacted negatively by approximately $5 million due to Hurricane Helene [7][32] - The sale of the tissue business for $1.06 billion is expected to net approximately $850 million in cash after taxes and expenses, which will be used to pay down outstanding credit facilities [8][9] - The board approved a $100 million share repurchase program to buy back shares when they trade at a sufficient discount to inherent value [9] Business Line Data and Key Metrics Changes - Paperboard delivered $42 million of adjusted EBITDA in Q3 2024, up from $11 million in Q2 but down from $53 million year-over-year [32] - Tissue delivered $41 million of adjusted EBITDA in Q3, flat compared to Q2 and slightly up from last year, with private brands gaining market share [34] Market Data and Key Metrics Changes - Industry SBS shipments increased by 2.4% in Q3 2024 compared to the previous quarter and 2.5% year-to-date versus 2023 [33] - Despite the recovery, industry shipments remain below pre-COVID levels, with expectations for continued recovery into 2025 and 2026 [33] Company Strategy and Development Direction - The company is transforming into a premier paperboard packaging supplier focused on servicing independent converters in North America following the sale of its tissue business [9][23] - The strategy includes driving operational improvements, expanding product range, and addressing market trends such as lighter weight paperboard and compostable solutions [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term industry fundamentals despite the current down cycle in SBS, driven by supply-demand imbalances and new capacity coming online in 2025 [22][38] - The company targets adjusted EBITDA margins of 8% to 10% in 2025, with a focus on cost reductions and maintaining a strong balance sheet [36][40] Other Important Information - The company plans to incur $40 million to $50 million in direct major maintenance expenses next year, with a shift to an annual maintenance outage cadence expected to improve operating performance [37] - The company aims to maintain a net leverage ratio of 1x to 2x through the cycle, lower than the previous target of 2.5x [40] Q&A Session Summary Question: Can you provide details on investments for lighter weight products? - Management indicated that investments would be small-to-medium sized, measured in millions, aimed at improving pulpers to incorporate additional pulp streams [46][47] Question: What are the expectations for cost reductions? - Management targets a 10% reduction in fixed costs and a 6% SG&A spend as a percentage of sales, estimating annualized savings of over $50 million [50][51] Question: Will there be an impact from Hurricane Helene in Q4? - Management confirmed an additional $2 million to $3 million impact from the hurricane in Q4, which is included in the guidance [54]