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].

Clearwater Paper Corporation (NYSE: CLW ) , based in Spokane, Washington, has been around in one form or another since the early 1900s. What they do, essentially, is manufacture and supply paperboard packaging to converters across North America. Which is to say, they're the ones responsible forThe mission of Grassroots Trading rests on the following principles: providing objective, unbiased, and balanced research, backed by solid data and completely void of emotional influences or preference for companies; ...

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]

| --- | --- | --- | |---------------------------------------------------|-------|-------| | | | | | Third Quarter Earnings Release Materials | | | | November 4, 2024 | | | | ARSEN KITCH | | | | President, Chief Executive Officer and Director | | | | SHERRI BAKER | | | | Senior Vice President and Chief Financial Officer | | | Forward Looking Statements 2 Cautionary Statement Regarding Forward Looking Statements This presentation of supplemental information contains, in addition to historical information, cer ...

Financial Performance - Net sales for Q3 2024 reached $393.3 million, a 41% increase from $278.9 million in Q3 2023[66] - The company reported a net loss from continuing operations of $10.7 million, or $0.64 per diluted share, compared to a profit of $14.9 million, or $0.88 per diluted share, in Q3 2023[66] - Adjusted EBITDA from continuing operations for Q3 2024 was $20.2 million, down 38% from $32.6 million in Q3 2023[70] - For the nine months ended September 30, 2024, net sales increased by 15% to $1.0 billion compared to $867.4 million in the same period of 2023[66] - The cost of sales for Q3 2024 was $363.2 million, a 59% increase from $228.3 million in Q3 2023[73] - Gross margin declined by 41% in Q3 2024, with a gross margin of $30.1 million compared to $50.7 million in Q3 2023[76] - Selling, general and administrative expenses increased by 12% in Q3 2024, totaling $31.6 million compared to $28.3 million in Q3 2023[77] - The company experienced a 63% decline in gross margin for the nine months ended September 30, 2024, compared to the same period in 2023[76] Operational Metrics - Paperboard shipments increased by 67.2% in Q3 2024, totaling 314,320 short tons compared to 187,944 short tons in Q3 2023[74] - The increase in retail sales volumes in the consumer products division was attributed to higher demand for private label products[80] Cash Flow and Investments - Net cash flows from operating activities for the nine months ended September 30, 2024, were $96.5 million, a decrease from $125.0 million for the same period in 2023, attributed to lower operating performance and higher interest payments related to the Augusta acquisition[84] - Net cash flows used in investing activities for the nine months ended September 30, 2024, were $791.8 million, significantly higher than $48.5 million in the prior year, primarily due to a $708.2 million acquisition of a paperboard manufacturing facility in Augusta, Georgia[85] - Net cash provided by financing activities during the nine months ended September 30, 2024, was $688.9 million, compared to a net cash outflow of $20.7 million in the same period of 2023[86] Debt and Credit Agreements - The Company has a Term Credit Agreement with a total commitment of $760 million, which includes a $270 million Term Revolver Facility and a $400 million Farm Credit Term Loan Facility, both fully drawn as of May 1, 2024[87] - The Company expects capital expenditures for 2024 to be approximately $100 million to $120 million[85] - As of September 30, 2024, the Company was in compliance with the covenants associated with its Term Credit Agreement and ABL Credit Agreement[89] - The Company has the option to prepay and reborrow under the Term Revolver Facility without premium or penalty, subject to certain conditions[88] - The Company’s ABL Credit Agreement includes a $375 million revolving loan commitment, maturing on November 7, 2027, with interest rates varying based on availability[88] - The Company recorded a decrease in net cash flows from operating activities due to increased interest payments related to debt incurred from acquisitions[84] - The Company may face challenges in maintaining compliance with its credit agreements if financial conditions deteriorate[89]

| --- | --- | --- | --- | --- | --- | |--------|-------|-------------------|----------------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | CLEARWATER PAPER | | | | | | | | | | | | | | CORPORATION | | | | | SECOND | | QUARTER EARNINGS | | | | | | | RELEASE MATERIALS | | | | | | | | AUGUST 6, 2024 | | | ARSEN KITCH President, Chief Executive Officer and Director SHERRI BAKER Senior Vice President and Chief Financial Officer FORWARD LOOKING STATEMENTS Cautionary Statement Regarding Forward L ...

Financial Data and Key Metrics - Net sales for Q2 2024 were $586 million, up 12% YoY, primarily driven by incremental volume from the Augusta acquisition [8] - Adjusted EBITDA was $35 million, down $36 million YoY, mainly due to a planned major maintenance outage at the Lewiston facility [8] - Consolidated net loss was $26 million or $1.55 per diluted share, with an adjusted loss per share of $0.51 [13] - Liquidity at the end of Q2 was $224 million, with a debt-to-adjusted EBITDA leverage ratio of 3.58 times [16] Business Line Performance - Paperboard net sales increased 23% YoY, driven by a 46% increase in shipment volume due to the Augusta acquisition, offset by a 14% decline in pricing [9] - Paperboard adjusted EBITDA was $11 million, including $9 million in insurance recoveries, but impacted by a $32 million maintenance outage cost [9] - Tissue revenues were flat YoY at $253 million, with 4% volume growth offset by 3% lower cost index-based pricing [11] - Tissue adjusted EBITDA was $41 million, with a margin of 16.4%, marking the fifth consecutive quarter above 15% [12] Market Data and Key Metrics - SBS industry shipments improved sequentially by 1% between Q1 and Q2 2024, with operating rates flat at 84% [10] - Food service demand is strong, leading to capacity constraints and the implementation of price increases for certain grades [11] - Pulp pricing was lower YoY but higher sequentially, with expectations of it being a headwind in Q3 and Q4 2024 [15] Company Strategy and Industry Competition - The company is focusing on becoming a premier independent supplier of Paperboard Products in North America, with plans to expand product offerings and substrates [7] - The acquisition of the Augusta facility and the planned divestiture of the Tissue business are seen as transformational steps to strengthen the balance sheet and position for future growth [5][6] - The company aims to move all Paperboard facilities to an annual outage schedule starting in 2025 to improve operational performance [10] Management Commentary on Operating Environment and Future Outlook - Management remains bullish on long-term market fundamentals for Paperboard, citing consumer preferences and sustainability trends [11] - The company expects continued recovery in Paperboard demand in Q3, with higher production volumes and lower outage costs [19] - Full-year 2024 assumptions include higher volumes and synergies from Augusta, as well as higher outage costs from Lewiston [20] Other Important Information - The company repurchased approximately $3 million of its stock during Q2 to offset dilution from employee equity grants [17] - Ongoing maintenance CapEx is expected to be $70 million to $80 million, excluding large projects, following the Augusta acquisition and Tissue divestiture [21] Q&A Session Summary Question: Growth and Diversification of Paperboard Portfolio - The company aims to provide a more complete offering to converters, including lightweight products, other substrates, and different coatings, depending on customer needs and market opportunities [23][25] Question: Maintenance and CapEx Implications - The major maintenance outage at Lewiston was more challenging than expected, but no material changes to future CapEx outlook are anticipated [26] - The total impact of the outage is expected to exceed $40 million, with the majority reflected in Q3 guidance [27] Question: Annual Maintenance Cycles - The company plans to finalize details on annual maintenance cycles in the coming quarters, with a likely focus on Q2 for Lewiston and Q4 for Augusta [28] Question: Corporate Expense Run Rate in 2025 - The company expects to maintain SG&A expenses at 6% to 6.5% of sales, with further updates provided in future quarters [29]

Financial Performance - Net sales for Q2 2024 were $586.4 million, a 11.8% increase from $524.6 million in Q2 2023[58] - The company reported a net loss of $25.8 million, or $1.55 per diluted share, compared to a net income of $29.7 million, or $1.75 per diluted share in the same quarter last year[58] - Adjusted EBITDA for Q2 2024 was $35.3 million, down 50.7% from $71.5 million in Q2 2023[58] - For the first half of 2024, net sales increased by 3% to $1.1 billion compared to $1 billion in the first half of 2023[58] - The company recorded a net loss of $8.6 million for the first half of 2024, compared to a net income of $53.5 million in the same period last year[58] - Adjusted EBITDA for the first half of 2024 was $96.8 million, a decrease of 29.4% from $137.2 million in the first half of 2023[58] Segment Performance - Paperboard segment net sales increased by 26.1% to $331.5 million in Q2 2024 compared to $263.0 million in Q2 2023[66] - Paperboard shipments increased by 46.4% to 272,585 short tons in Q2 2024 compared to 186,160 short tons in Q2 2023[66] - Operating income for the paperboard segment was a loss of $12.2 million in Q2 2024, a decrease of 129.1% from an income of $42.0 million in Q2 2023[66] - The company experienced a significant decrease in sales prices in the Pulp and Paperboard segment due to previously announced price decreases and changes in product mix[66] - Retail tissue net sales for the quarter ended June 30, 2024, were $252.0 million, a decrease of 0.3% compared to $252.8 million in the prior year[68] - Operating income for the quarter increased by 9.7% to $27.4 million from $25.0 million in the same period last year[68] - Adjusted EBITDA for the quarter was $41.4 million, reflecting a 4.3% increase from $39.7 million year-over-year[68] Cash Flow and Investments - Net cash flows provided by operating activities for the six months ended June 30, 2024, were $80.3 million, compared to a cash outflow of $36.9 million in the same period of 2023[74] - Net cash flows used in investing activities for the six months ended June 30, 2024, were $744.8 million, including $708.2 million for the acquisition of a paperboard manufacturing facility[75] - Net cash provided by financing activities for the six months ended June 30, 2024, was $662.1 million, primarily from the issuance of long-term debt[76] Corporate Expenses and Outlook - Corporate expenses for the quarter were $17.7 million, down from $20.1 million in the same period last year[70] - Retail sales volumes in the Consumer Products segment increased due to higher demand for private label products[69] - The company expects capital expenditures to be approximately $120 million to $140 million during 2024[75] Debt and Financing - The Term Credit Agreement includes a term revolver loan commitment of $270 million, with $150 million borrowed as of October 27, 2023[77] - The Company has a $150 million borrowing under the Term Revolver Facility with an all-in interest rate of 9.13%[78] - The Term Loan Facilities require mandatory prepayments of 50% of quarterly excess cash flows, less any voluntary prepayments[78] - The Company must maintain a maximum consolidated leverage ratio of 4.50 to 1.00 until the first fiscal quarter ending at least 15 months after May 1, 2024[78] - Under the ABL Credit Agreement, the Company has a $375 million revolving loan commitment, maturing on November 7, 2027[79] - The ABL Credit Agreement requires a consolidated fixed charge coverage ratio of not less than 1.10x to 1.00x during an event of default[79] - The Company is currently in compliance with the covenants associated with both the Term Credit Agreement and the ABL Credit Agreement as of June 30, 2024[79] - Interest rates for loans under the Term Loan Facilities may vary between 1.75% and 4.25% based on the Company's consolidated leverage ratio[78] - The Company may increase commitments under the ABL Credit Agreement by up to $100 million, subject to conditions[78] - The Company is required to maintain a minimum current ratio of not less than 1.25 to 1.00 under the Term Credit Agreement[78] Market Risk - There have been no significant developments regarding the Company's exposure to market risk for the quarter ended June 30, 2024[81]