Financial Data and Key Metrics Changes - The company reported operating earnings of $0.25 per security for FY 2025, in line with guidance, and forecasts earnings and distributions for FY 2026 of $0.255 per security, reflecting a 2% growth over FY 2025 [4][5][31] - The net tangible assets (NTA) per security as of June 30, 2025, is $4.59, consistent with the previous half-year results, with minor impacts from swap movements [5][12] - The portfolio delivered a 3% like-for-like net property income growth, with 54% of income being CPI linked [5][10] Business Line Data and Key Metrics Changes - The portfolio consists of a diversified real estate portfolio valued at approximately $5.5 billion, with an occupancy level of 99.9% and a weighted average lease term (WALT) of 9.3 years [3][22] - The company completed $715 million of new interest rate hedging, with 89% of debt hedged as of June 30, 2025, and an average forecast hedging of 72% for FY 2026 [6][14] Market Data and Key Metrics Changes - The portfolio value is on average 18% higher in June 2025 compared to June 2020, driven by contracted and market rental growth [7] - The average cap rate of the portfolio is 5.4%, reflecting no change over the past twelve months [21] Company Strategy and Development Direction - The company aims to provide stable and secure income while targeting both income and capital growth through a diversified portfolio leased to corporate and government tenants [30] - Active curation and asset recycling are ongoing to enhance portfolio quality, with a focus on acquiring accretive strategic assets [14][30] Management's Comments on Operating Environment and Future Outlook - Management believes valuations have troughed and expects some cap rate compression and valuation growth in the coming period due to a lower interest rate environment [33][89] - The company is optimistic about tenant demand across various sectors, particularly in retail and industrial, with long leases in place [72] Other Important Information - The company has maintained net zero Scope one and Scope two emissions for assets under its operational control and has installed 8.9 megawatts of solar across its portfolio [28][29] - Moody's reaffirmed the company's Baa1 investment grade credit rating [7][13] Q&A Session Summary Question: Regarding acquisitions and balance sheet capacity - Management indicated that current gearing is within the target range and expressed confidence in future valuation growth due to expected interest rate cuts [33][89] Question: On the Department of Defense acquisition and market rents - Management is negotiating to extend the lease and sees potential for the property to become a long-term asset [36][52] Question: On cost of debt and margins - Average margins remain just under 1.5%, with no significant changes expected [42] Question: On acquisition opportunities and market conditions - Management noted that while there are limited high-quality long-term opportunities, they remain active in the sale and leaseback space [46] Question: On the ALE portfolio and rental expectations - Management believes the ALE portfolio remains under-rented and is confident in its value [84]

Financial Performance - FY25 operating EPS and DPS were 250 cents per security, in line with guidance[8] - FY26 operating EPS and DPS guidance is 255 cents per security, reflecting 2% annual growth[8] - Like-for-like net property income increased by 30%[8] - Operating expenses decreased by 153% from A$361 million to A$306 million[17] - Finance costs decreased by 167% from A$1086 million to A$905 million[17] Portfolio Highlights - Portfolio valuation is A$55 billion with a 93-year WALE and 999% occupancy[8] - 99% of the portfolio is leased to blue-chip tenants[8] - 54% of leases are NNN leases[8] - Like-for-like capital values across the portfolio are +18% higher in June 2025 compared to June 2020[11] Capital Management - 89% of debt was hedged as at 30 June 2025, with an average forecast hedging of 72% for FY26[10] - Balance sheet gearing is 314%, within the target range of 25% – 35%[10]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $40 million for Q2 2025, which was within the guidance range of $35 million to $45 million [4][21] - Net sales reached $392 million, reflecting a 14% increase year-over-year and a 4% increase compared to Q1 2025, primarily driven by the Augusta acquisition [4][20] - SG&A expenses decreased nearly 14% year-over-year to 6.7% of net sales, aligning with the company's target range of 6% to 7% [6][21] Business Line Data and Key Metrics Changes - The Foodservice business saw increased shipments, contributing to the overall sales growth [5] - The Augusta acquisition positively impacted net sales, marking the last quarter where year-over-year comparisons are affected by the acquisition timing [20] Market Data and Key Metrics Changes - Industry shipments of SBS decreased by 4.6% year-over-year and 3.4% sequentially, indicating mixed demand signals [7] - Industry utilization rates fell to 83.1% in Q2 2025, down from 84.7% in Q1 2025, reflecting new capacity startup by competitors [8] 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 entering CUK and CRB markets [14][15] - The company is focused on operational execution, cost reduction, and defending its market position to improve performance and margins [6][29] Management's Comments on Operating Environment and Future Outlook - Management noted that current demand softness is viewed as temporary, with expectations for a recovery in industry utilization rates to 90% to 95% in the medium to long term [12][13] - The company anticipates adjusted EBITDA for Q3 2025 to be in the range of $10 million to $20 million, influenced by maintenance costs and production volume reductions [24] Other Important Information - The company completed a major maintenance outage at its Cypress Bend mill at a cost of approximately $9 million, part of a larger $45 million capital project [5][6] - The company has repurchased approximately $4 million of shares in Q2 2025, totaling $18 million since the new authorization in November [6][23] Q&A Session Summary Question: Demand outlook and changes since the last update - Management indicated mixed demand signals with a 5% increase in shipments versus Q1, but overall industry shipments were down year-over-year [33] Question: Impact of maintenance costs on EBITDA guidance - Management confirmed that the increase in outage expenses and lower production volumes are key factors affecting the Q3 EBITDA guidance [40] Question: Factors influencing capacity utilization and shipments - Management highlighted that the Lewiston outage and demand stability are critical factors, with expectations for flat shipments in Q3 and potential slight increases in Q4 [43]

Financial Performance & Targets - Clearwater reported Net Sales from continuing operations of $391.8 million in Q2 2025[10, 21] - Net income from continuing operations was $4 million[10] - Adjusted EBITDA from continuing operations reached $40 million with a 10% margin[10] - The company is targeting Adjusted EBITDA margins of 13% to 14% across the cycle, with a 40-50% Adjusted EBITDA to free cash flow conversion rate, or $100M+ per year[5] - Q3 2025 Adjusted EBITDA is projected to be $10 to $20 million[14] Market Trends & Outlook - Industry SBS shipments decreased by 3% in Q2 2025 compared to Q1 2025, while unmade SBS orders increased by 14%[8] - Demand growth of approximately 3% is projected for 2026[8] - Imports are forecasted to decrease by approximately 4% in 2025 compared to 2024, and exports are forecasted to decrease by approximately 2%[8] - Industry operating rates were at 83% in Q2 2025, down from 84% in Q2 2024[9] - The company assumes capacity utilization at approximately 85% for FY 2025, with revenue between $1.5 to $1.6 billion[14] Strategic Initiatives & Capital Allocation - Clearwater is focused on reducing its fixed cost structure by $30-40 million in 2025, with 10% reductions in positions[5] - The company repurchased $4 million of shares in Q2 2025, and $18 million since the new $100 million authorization in November 2024[11] - Capital expenditures are expected to be $80-90 million, including large project carryover spend[14] - The target leverage ratio is 1-2x[16]

[Forward-Looking Statements](index=2&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines forward-looking statements and potential risk factors that may cause actual results to differ materially from projections - The report contains forward-looking statements regarding future outlook, cost reduction efforts, asset dispositions, operations, borrowing, cash flows, capital expenditures, working capital, compliance, operating costs, SG&A, liquidity, and legal proceedings[6](index=6&type=chunk) - Actual results may differ materially due to factors such as the inability to realize benefits from the Augusta acquisition, purchase price adjustments from the consumer products division sale, competitive pricing, loss of significant customers, changes in preferences, industry consolidation, economic changes, increased regulation, manufacturing disruptions, changes in input costs, larger competitors, labor disruptions, reliance on third-party suppliers, cybersecurity risks, environmental liabilities (including PFAS), and ability to execute growth strategies[6](index=6&type=chunk)[8](index=8&type=chunk) [Part I. Financial Information](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited consolidated financial statements and management's discussion and analysis [Item 1. Consolidated Financial Statements (Unaudited)](index=5&type=section&id=ITEM%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Clearwater Paper Corporation's unaudited consolidated financial statements, including balance sheets, operations, cash flows, and detailed notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific dates, detailing assets, liabilities, and equity | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Total Assets | $1,640.7 | $1,679.2 | | Total Liabilities | $804.0 | $824.7 | | Total Stockholders' Equity | $836.7 | $854.6 | | Cash and Cash Equivalents | $46.7 | $79.6 | | Inventories, net | $283.9 | $258.0 | | Long-term debt | $328.5 | $281.6 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents the company's revenues, expenses, and net income or loss over specific reporting periods | Metric (in millions, except per-share data) | Q2 2025 | Q2 2024 | | :---------------------------------------- | :------ | :------ | | Net sales | $391.8 | $344.4 | | Cost of sales | $348.8 | $346.4 | | Income (loss) from continuing operations | $9.8 | $(46.9) | | Net income (loss) | $2.7 | $(25.8) | | Net income (loss) per share - basic | $0.17 | $(1.55) | | Metric (in millions, except per-share data) | H1 2025 | H1 2024 | | :---------------------------------------- | :------ | :------ | | Net sales | $770.0 | $603.2 | | Cost of sales | $690.3 | $571.9 | | Income (loss) from continuing operations | $(2.3) | $(43.7) | | Net income (loss) | $(3.6) | $(8.6) | | Net income (loss) per share - basic | $(0.22) | $(0.52) | [Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section details the company's net income or loss and other comprehensive income or loss components | Metric (in millions) | Q2 2025 | Q2 2024 | | :------------------- | :------ | :------ | | Net income (loss) | $2.7 | $(25.8) | | Comprehensive income (loss) | $2.7 | $(25.8) | | Metric (in millions) | H1 2025 | H1 2024 | | :------------------- | :------ | :------ | | Net income (loss) | $(3.6) | $(8.6) | | Comprehensive income (loss) | $(3.5) | $(8.7) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by operating, investing, and financing activities | Metric (in millions) | H1 2025 | H1 2024 | | :------------------- | :------ | :------ | | Net cash flows provided by (used in) operating activities | $(26.7) | $80.3 | | Net cash flows used in investing activities | $(55.6) | $(744.8) | | Net cash flows provided by financing activities | $49.3 | $662.1 | | Decrease in cash and cash equivalents | $(33.0) | $(2.4) | | Cash and cash equivalents at end of period | $46.7 | $39.6 | [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity accounts, including retained earnings and treasury stock | Metric (in millions) | Dec 31, 2024 | June 30, 2025 | | :------------------- | :----------- | :------------ | | Total Stockholders' Equity | $854.6 | $836.7 | | Retained Earnings | $880.8 | $877.3 | | Treasury Stock (amount) | $(3.3) | $(12.7) | | Common Stock (shares in thousands) | **16,568** | **16,568** | - The company repurchased **148,100 shares** of common stock for **$4.2 million** during the quarter ended June 30, 2025, and **380,000 shares** for **$10.9 million** during the six months ended March 31, 2025[16](index=16&type=chunk)[111](index=111&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the consolidated financial statements [Note 1. Description of Business and Basis of Presentation](index=11&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) This note describes Clearwater Paper Corporation's business and the basis for its financial statement presentation - Clearwater Paper Corporation is a premier manufacturer and supplier of bleached paperboard, primarily serving independent converters in North America, and offers custom sheeting, slitting, and cutting services[18](index=18&type=chunk) - The company sold its tissue (consumer products) operations during **2024**, and their results are now presented as discontinued operations in the Consolidated Statements of Operations[19](index=19&type=chunk) [Note 2. Recently Issued Accounting Standards](index=11&type=section&id=Note%202.%20Recently%20Issued%20Accounting%20Standards) This note outlines recently issued accounting standards and their anticipated impact on the company's disclosures - ASU **2024-03** (Disaggregation of Income Statement Expenses) is effective for fiscal years beginning after December **15**, **2026**, requiring disaggregated disclosure of certain expenses[20](index=20&type=chunk) - ASU No. **2023-09** (Income Taxes—Improvements to Income Tax Disclosures) is effective for annual periods beginning after December **15**, **2024**, requiring enhanced disclosures for rate reconciliation and disaggregation of income taxes paid[21](index=21&type=chunk) [Note 3. Business Acquisition](index=11&type=section&id=Note%203.%20Business%20Acquisition) This note details the acquisition of the Augusta paperboard manufacturing facility, including its purchase price allocation - On May **1**, **2024**, Clearwater Paper completed the acquisition of a paperboard manufacturing facility in Augusta, Georgia, for a final purchase price of **$708.2 million**[22](index=22&type=chunk)[23](index=23&type=chunk) | Item (in millions) | Final Purchase Price Allocation | | :----------------- | :------------------------------ | | Purchase price | $708.2 | | Total assets acquired | $725.9 | | Total liabilities assumed | $(30.5) | | Net assets acquired | $695.3 | | Goodwill | $12.9 | | Metric (in millions) | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :------------------- | :-------------------------- | :----------------------------- | | Net sales | $650.1 | $1,271.4 | | Net loss | $(23.2) | $(21.9) | [Note 4. Discontinued Operations](index=12&type=section&id=Note%204.%20Discontinued%20Operations) This note provides financial details on the company's tissue operations, now classified as discontinued operations - In November **2024**, the company sold its tissue operations, which are now classified as discontinued operations[25](index=25&type=chunk)[26](index=26&type=chunk) | Metric (in millions) | Q2 2025 | Q2 2024 | | :------------------- | :------ | :------ | | Net sales | $— | $252.8 | | Income (loss) from discontinued operations, net of tax | $(0.9) | $15.7 | | Metric (in millions) | H1 2025 | H1 2024 | | :------------------- | :------ | :------ | | Net cash provided by (used in) operating activities | $(2.0) | $103.1 | | Net cash used in investing activities | $— | $(5.9) | [Note 5. Fair Value Measurements](index=13&type=section&id=Note%205.%20Fair%20Value%20Measurements) This note explains the fair value measurements for financial instruments, including debt and short-term assets - Carrying amounts for cash, receivables, and payables approximate fair value due to their short-term maturity[28](index=28&type=chunk) | Debt Type (in millions) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | 2020 Notes, maturing 2028 | $260.7 | $258.9 | | ABL Credit Agreement | $47.0 | $— | | Total | $307.7 | $258.9 | [Note 6. Receivables](index=14&type=section&id=Note%206.%20Receivables) This note provides a breakdown of the company's various receivable types, including trade accounts and unbilled amounts | Receivable Type (in millions) | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Trade accounts receivable | $148.2 | $167.5 | | Allowance for current expected credit losses | $(1.8) | $(1.6) | | Unbilled receivables | $4.2 | $5.3 | | Taxes receivable | $8.4 | $2.6 | | Other | $6.9 | $15.0 | | Total | $165.9 | $188.7 | [Note 7. Inventories](index=14&type=section&id=Note%207.%20Inventories) This note details the composition of the company's inventories, including raw materials, pulp, and finished products | Inventory Type (in millions) | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | Logs, chips and sawdust | $22.3 | $25.1 | | Pulp | $9.4 | $6.9 | | Paperboard products | $141.6 | $123.4 | | Materials and supplies | $110.6 | $102.5 | | Total | $283.9 | $258.0 | [Note 8. Property, Plant and Equipment](index=14&type=section&id=Note%208.%20Property,%20Plant%20and%20Equipment) This note presents the company's property, plant, and equipment, net of accumulated depreciation and amortization | Asset Type (in millions) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Land and land improvements | $65.8 | $65.8 | | Buildings and improvements | $232.4 | $232.4 | | Machinery and equipment | $2,028.7 | $1,942.6 | | Construction in progress | $42.9 | $87.6 | | Total gross PPE | $2,369.8 | $2,328.4 | | Less accumulated depreciation and amortization | $(1,342.7) | $(1,305.4) | | Property, plant and equipment, net | $1,027.1 | $1,023.1 | [Note 9. Accounts Payable and Accrued Liabilities](index=14&type=section&id=Note%209.%20Accounts%20Payable%20and%20Accrued%20Liabilities) This note details the company's accounts payable and accrued liabilities, including trade payables and compensation | Liability Type (in millions) | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | Trade payables | $162.9 | $164.6 | | Accrued compensation | $24.3 | $38.2 | | Operating lease liabilities | $11.8 | $11.1 | | Taxes payable | $— | $50.8 | | Other | $59.6 | $55.0 | | Total | $258.5 | $319.7 | - Included in accounts payable and accrued liabilities are **$15.5 million** and **$25.8 million** related to unpaid capital expenditures as of June 30, 2025, and December 31, 2024, respectively[32](index=32&type=chunk) [Note 10. Income Taxes](index=15&type=section&id=Note%2010.%20Income%20Taxes) This note explains the company's income tax provision or benefit and the factors affecting its effective tax rate - For the six months ended June 30, 2025, the company recognized an income tax provision of **$0.1 million** on loss from continuing operations, compared to a benefit of **$14.1 million** in the same period of **2024**[35](index=35&type=chunk) - The effective tax rate for H1 **2025** varied from the U.S. federal statutory tax rate of **21.0%** primarily due to state taxes, nondeductible compensation, and a change in the state valuation allowance[35](index=35&type=chunk) [Note 11. Debt](index=15&type=section&id=Note%2011.%20Debt) This note provides details on the company's debt instruments, including interest rates, principal amounts, and maturities | Debt Type (in millions) | Interest Rate (June 30, 2025) | Principal (June 30, 2025) | Total (June 30, 2025) | Principal (Dec 31, 2024) | Total (Dec 31, 2024) | | :---------------------- | :---------------------------- | :------------------------ | :-------------------- | :----------------------- | :------------------- | | 2020 Notes, maturing 2028 | **4.75%** | $275.0 | $273.4 | $275.0 | $273.2 | | ABL Credit Agreement | **5.7%** | $47.0 | $47.0 | $— | $— | | Finance leases | N/A | $8.7 | $8.7 | $9.1 | $9.1 | | Total debt | | $330.7 | $329.1 | $284.1 | $282.2 | - The PCA Credit Agreement (term revolver commitment of **$264.6 million**) matures on May **1**, **2029**, with no outstanding balance as of June **30**, **2025**[37](index=37&type=chunk) - The ABL Credit Agreement has a **$375.0 million** revolving loan commitment, maturing on November **7**, **2027**[39](index=39&type=chunk) [Note 12. Other Operating Charges](index=16&type=section&id=Note%2012.%20Other%20Operating%20Charges) This note details various other operating charges, including acquisition-related costs, integration, and cost reduction plans | Charge Type (in millions) | Q2 2025 | Q2 2024 | | :------------------------ | :------ | :------ | | Acquisition related costs | $— | $10.1 | | Integration costs | $0.9 | $1.9 | | Cost reduction plan | $0.8 | $— | | Loss on sale or impairment associated with assets | $3.1 | $0.7 | | Directors' equity-based compensation expense | $0.9 | $2.0 | | Other | $1.5 | $— | | Total | $7.1 | $14.6 | - Total other operating charges, net, decreased from **$14.6 million** in Q2 **2024** to **$7.1 million** in Q2 **2025**, primarily due to lower acquisition-related costs and a decrease in directors' equity-based compensation expense, partially offset by new cost reduction plan expenses and higher asset impairment losses[42](index=42&type=chunk)[44](index=44&type=chunk) [Note 13. Non-Operating Expense](index=17&type=section&id=Note%2013.%20Non-Operating%20Expense) This note outlines non-operating expenses, primarily focusing on net interest expense and pension-related costs | Expense Type (in millions) | Q2 2025 | Q2 2024 | | :------------------------- | :------ | :------ | | Interest expense | $(3.9) | $(9.9) | | Amortization of debt issuance costs | $(0.6) | $(0.5) | | Interest income | $0.5 | $0.8 | | Interest expense, net | $(3.9) | $(9.6) | | Non-operating pension and other postretirement employee benefits | $(0.3) | $0.3 | | Total non-operating expense | $(4.2) | $(9.3) | - Total non-operating expense decreased from **$(9.3) million** in Q2 **2024** to **$(4.2) million** in Q2 **2025**, primarily driven by a reduction in net interest expense[45](index=45&type=chunk) [Note 14. Retirement Plans and Postretirement Benefits](index=17&type=section&id=Note%2014.%20Retirement%20Plans%20and%20Postretirement%20Benefits) This note details the net periodic costs associated with the company's retirement plans and postretirement benefits | Component (in millions) | Q2 2025 | Q2 2024 | | :---------------------- | :------ | :------ | | Service cost | $0.8 | $0.6 | | Interest cost | $3.0 | $3.0 | | Expected return on plan assets | $(3.3) | $(3.9) | | Amortization of actuarial loss | $0.2 | $— | | Net periodic cost | $0.6 | $(0.3) | | Component (in millions) | Q2 2025 | Q2 2024 | | :---------------------- | :------ | :------ | | Service cost | $— | $0.1 | | Interest cost | $0.6 | $0.7 | | Amortization of actuarial gain | $(0.1) | $(0.1) | | Net periodic cost | $0.5 | $0.6 | [Note 15. Accumulated Other Comprehensive Loss](index=18&type=section&id=Note%2015.%20Accumulated%20Other%20Comprehensive%20Loss) This note presents the components of accumulated other comprehensive loss, including pension and postretirement adjustments | Component (in millions) | Dec 31, 2024 | June 30, 2025 | | :---------------------- | :----------- | :------------ | | Pension Plan Adjustments | $(47.8) | $(47.5) | | Other Post Retirement Employee Benefit Plan Adjustments | $13.4 | $13.2 | | Total | $(34.5) | $(34.4) | [Note 16. Stockholders' Equity](index=18&type=section&id=Note%2016.%20Stockholders'%20Equity) This note details changes in stockholders' equity, including stock-based compensation and restricted stock unit awards | Metric (in millions) | Q2 2025 | Q2 2024 | | :------------------- | :------ | :------ | | Total stock-based compensation expense | $2.5 | $4.7 | | Income tax provision related to stock-based compensation | $0.5 | $1.0 | - As of June **30**, **2025**, there was **$12.3 million** of total unrecognized compensation costs related to outstanding restricted stock unit awards[49](index=49&type=chunk) - During the six months ended June **30**, **2025**, the company granted **196,128 time-vesting restricted stock units** at an average fair value of **$28.35** per share and **190,914 performance-vesting restricted stock units** at an average fair value of **$31.02** per share[50](index=50&type=chunk) [Note 17. Earnings (Loss) per Share](index=19&type=section&id=Note%2017.%20Earnings%20(Loss)%20per%20Share) This note provides the calculation of basic and diluted earnings per share, including weighted-average shares outstanding | Metric (in thousands) | Q2 2025 | Q2 2024 | | :-------------------- | :------ | :------ | | Basic weighted-average common shares outstanding | **16,220** | **16,661** | | Diluted weighted-average common shares outstanding | **16,241** | **16,661** | - Shares excluded from diluted EPS computation were **0.3 million** and **0.4 million** for Q2 and H1 **2025**, respectively, and **0.4 million** for Q2 and H1 **2024**, due to being antidilutive or not meeting performance conditions[53](index=53&type=chunk) [Note 18. Cost Reduction Plan](index=19&type=section&id=Note%2018.%20Cost%20Reduction%20Plan) This note outlines the company's cost reduction plan, including expected severance costs and incurred expenses - In early **2025**, the company announced a cost reduction plan following the sale of its tissue operations, expecting **$5 million** to **$7 million** in employee severance costs by the end of **2025**[54](index=54&type=chunk) - During Q2 and H1 **2025**, severance expenses of **$1 million** and **$5.1 million**, respectively, were incurred under this plan[54](index=54&type=chunk) | Item (in millions) | Amount | | :----------------- | :----- | | Balance at December 31, 2024 | $— | | Employee severance charges | $5.1 | | Cost paid or otherwise settled | $(4.5) | | Balance at June 30, 2025 | $0.5 | [Note 19. Segment Disclosure](index=19&type=section&id=Note%2019.%20Segment%20Disclosure) This note clarifies the company's single operating segment structure and provides net sales by product line - The company operates as a single operating segment, with the Chief Operating Decision Maker (CODM) evaluating performance and allocating resources on a consolidated basis[56](index=56&type=chunk) | Product Line (in millions) | Q2 2025 | Q2 2024 | | :------------------------- | :------ | :------ | | Food service | $166.1 | $134.7 | | Folding carton | $147.6 | $147.6 | | Sheeting and distribution | $39.9 | $41.2 | | Pulp and other | $38.2 | $20.9 | | Total net sales | $391.8 | $344.4 | | Expense Type (in millions) | Q2 2025 | Q2 2024 | | :------------------------- | :------ | :------ | | Input cost | $174.5 | $145.9 | | Labor and overhead | $128.0 | $134.7 | | Supply chain costs | $39.0 | $35.7 | | Selling, general and administrative expenses | $24.4 | $29.2 | | Depreciation and amortization | $23.5 | $17.2 | | Interest expense, net | $3.9 | $9.6 | | Non-significant expenses | $(7.0) | $28.5 | | Income tax provision (benefit) | $1.9 | $(14.6) | | Income (loss) from continuing operations | $3.6 | $(41.6) | [Note 20. Insurance Recovery](index=20&type=section&id=Note%2020.%20Insurance%20Recovery) This note details insurance proceeds received for a natural gas disruption at the Lewiston facility in Q1 2024 - During Q1 **2024**, the Lewiston, Idaho facility experienced a natural gas disruption[60](index=60&type=chunk) - Of the proceeds, **$0.9 million** was allocated to discontinued operations and **$9.3 million** to continuing operations, recorded within 'Cost of sales'[60](index=60&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, critical accounting policies, non-GAAP measures, operating results, outlook, and liquidity [Critical Accounting Policies and Estimates](index=21&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section confirms no material changes to critical accounting policies and estimates from the prior annual report - The preparation of financial statements requires management to make subjective judgments and estimates[62](index=62&type=chunk)[63](index=63&type=chunk) [Non-GAAP Measures](index=21&type=section&id=NON-GAAP%20MEASURES) This section defines and reconciles non-GAAP financial measures, specifically Adjusted EBITDA from continuing operations - The company uses Adjusted EBITDA from continuing operations as a non-GAAP financial measure to evaluate performance, believing it is useful for investors to compare with other industry companies[64](index=64&type=chunk)[65](index=65&type=chunk) - Adjusted EBITDA from continuing operations excludes interest expense, income tax expense, depreciation and amortization, and other non-core operating charges, and may not be comparable to similarly titled measures reported by other companies[64](index=64&type=chunk)[65](index=65&type=chunk) | Metric (in millions) | Q2 2025 | Q2 2024 | | :------------------- | :------ | :------ | | Net income (loss) | $2.7 | $(25.8) | | Income (loss) from continuing operations | $3.6 | $(41.6) | | Adjusted EBITDA from continuing operations | $39.9 | $(8.6) | | Metric (in millions) | H1 2025 | H1 2024 | | :------------------- | :------ | :------ | | Net income (loss) | $(3.6) | $(8.6) | | Income (loss) from continuing operations | $(2.3) | $(43.7) | | Adjusted EBITDA from continuing operations | $69.6 | $5.6 | [Operating Results from Continuing Operations](index=22&type=section&id=OPERATING%20RESULTS%20FROM%20CONTINUING%20OPERATIONS) This section analyzes the company's net sales, cost of sales, gross margin, and other operating expenses from ongoing activities | Metric (in millions) | Q2 2025 | Q2 2024 | % Change | | :------------------- | :------ | :------ | :------- | | Net sales | $391.8 | $344.4 | **14%** | | Cost of sales | $348.8 | $346.4 | **1%** | | Gross margin | $43.0 | $(2.0) | nm | | Income (loss) from continuing operations | $9.8 | $(46.9) | nm | | Adjusted EBITDA from continuing operations | $39.9 | $(8.6) | nm | | Metric (in millions) | H1 2025 | H1 2024 | % Change | | :------------------- | :------ | :------ | :------- | | Net sales | $770.0 | $603.2 | **28%** | | Cost of sales | $690.3 | $571.9 | **21%** | | Gross margin | $79.6 | $31.4 | **154%** | | Income (loss) from continuing operations | $5.8 | $(47.6) | nm | | Adjusted EBITDA from continuing operations | $69.6 | $5.6 | nm | [Net Sales](index=22&type=section&id=NET%20SALES) This section analyzes the company's revenue performance, including volume and pricing trends - Net sales increased by **14%** for Q2 **2025** and **28%** for H1 **2025** compared to the prior year periods, primarily driven by higher sales volume from the Augusta operations, partially offset by market-driven price decreases and changes in product mix[70](index=70&type=chunk) | Metric | Q2 2025 | Q2 2024 | % Change | | :----- | :------ | :------ | :------- | | Paperboard shipments (short tons) | **304,713** | **272,585** | **11.8%** | | Paperboard sales price (per short ton) | $1,182 | $1,216 | **(2.8)%** | [Cost of Sales](index=22&type=section&id=COST%20OF%20SALES) This section details the direct costs associated with producing goods sold, including input, labor, and supply chain expenses - Cost of sales increased **1%** for Q2 **2025** and **21%** for H1 **2025**, primarily due to the inclusion of Augusta operations and timing of planned major maintenance, partially offset by higher inventory build and cost reduction plan implementation[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) | Component (in millions) | Q2 2025 | Q2 2024 | % Change | | :---------------------- | :------ | :------ | :------- | | Input cost | $174.5 | $145.9 | **19.6%** | | Labor and overhead | $128.0 | $134.7 | **(4.9)%** | | Supply chain costs | $39.0 | $35.7 | **9.4%** | | Depreciation and amortization | $21.8 | $16.1 | **35.2%** | | Total Cost of Sales | $348.8 | $346.4 | **0.7%** | - Input costs increased due to higher sales volume and higher per-ton costs for energy and chemicals, partially offset by lower fiber costs[74](index=74&type=chunk) [Gross Margin](index=23&type=section&id=GROSS%20MARGIN) This section discusses the company's profitability after accounting for the cost of goods sold - Gross profit increased for both Q2 and H1 **2025** compared to the same periods in **2024**, driven by improved operating performance, reduced costs from major maintenance timing, and planned cost reduction activities, despite lower sales prices[76](index=76&type=chunk) [Selling, General and Administrative Expenses](index=23&type=section&id=SELLING,%20GENERAL%20AND%20ADMINISTRATIVE%20EXPENSES) This section analyzes non-production operating expenses, including sales, marketing, and administrative costs - SG&A expenses decreased **14%** for Q2 **2025** and **6%** for H1 **2025**, primarily due to planned cost reduction efforts[77](index=77&type=chunk)[78](index=78&type=chunk) [Other Operating Charges](index=23&type=section&id=OTHER%20OPERATING%20CHARGES) This section details various non-recurring or specific operating charges impacting the company's financial results - Refer to Note **12** for detailed information on other operating charges[79](index=79&type=chunk) [Overall Income from Continuing Operations and Adjusted EBITDA](index=23&type=section&id=OVERALL%20INCOME%20FROM%20CONTINUING%20OPERATIONS%20AND%20ADJUSTED%20EBITDA) This section summarizes the company's operating income and Adjusted EBITDA from continuing operations - Operating income and Adjusted EBITDA from continuing operations increased for both Q2 and H1 **2025**, attributed to major maintenance timing, lower input costs, and cost reduction activities, partially offset by lower sales pricing[80](index=80&type=chunk) - Operating income was also impacted by integration costs from the Augusta acquisition and severance/other costs from the cost reduction plan[80](index=80&type=chunk) [Potential Impairments](index=24&type=section&id=POTENTIAL%20IMPAIRMENTS) This section discusses the periodic review of assets for disposition or reorganization, which may lead to impairment charges - The company periodically reviews assets for disposition or reorganization, which may lead to impairment charges if estimated net sales proceeds are less than previous estimates of undiscounted future net cash flows[81](index=81&type=chunk) [Outlook](index=24&type=section&id=OUTLOOK) This section provides the company's expectations for future performance, including sales volumes, costs, and regulatory impacts - For Q3 **2025**, sales volumes are expected to be flat, energy costs are projected to decrease seasonally, and additional benefits from fixed cost reduction efforts are anticipated[82](index=82&type=chunk) - New U.S. tariffs (**10% universal**, **35% for Canada**, **30% for Mexico** effective August **1**, **2025**) are being evaluated, but are not currently expected to have a material impact on fiscal **2025** financial results, excluding potential retaliatory tariffs[83](index=83&type=chunk) - The One Big Beautiful Bill Act (OBBBA), signed July **4**, **2025**, makes permanent **100% bonus depreciation**, domestic research cost expensing, and business interest expense limitation[84](index=84&type=chunk) [Augusta Acquisition - Representation and Warranty Insurance Claim](index=24&type=section&id=AUGUSTA%20ACQUISITION%20-%20REPRESENTATION%20AND%20WARRANTY%20INSURANCE%20CLAIM) This section details the Augusta acquisition and the company's submission of representation and warranty insurance claims - The company acquired the Augusta, Georgia paperboard manufacturing facility on May **1**, **2024**, for approximately **$710.6 million**[85](index=85&type=chunk) - Clearwater Paper obtained representation and warranty insurance (**$105 million** policy limit) for the Augusta acquisition and has submitted claims in July **2025** for alleged breaches of representations and warranties by the seller, Graphic Packaging International, LLC[86](index=86&type=chunk) - No gains or receivables related to this claim have been recognized as of June **30**, **2025**, and there is no assurance of recovery[86](index=86&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section analyzes the company's ability to meet short-term and long-term financial obligations and fund operations - Principal liquidity sources include existing cash, cash from operations, and credit facilities[88](index=88&type=chunk) - Principal uses of liquidity are operating costs, debt servicing, and capital expenditures, with potential for debt/share repurchases or asset/business acquisitions[89](index=89&type=chunk) [Operating Activities](index=25&type=section&id=Operating%20Activities) This section details cash flows generated or used by the company's primary business operations - Net cash flow used in operating activities for H1 **2025** was **$26.7 million**, a decrease from **$80.3 million** provided in H1 **2024**[90](index=90&type=chunk) [Investing Activities](index=25&type=section&id=Investing%20Activities) This section outlines cash flows related to the acquisition and disposal of long-term assets and investments - Net cash flows used in investing activities for H1 **2025** were **$55.6 million**, significantly lower than **$744.8 million** in H1 **2024**, which included the Augusta acquisition[91](index=91&type=chunk) - Cash paid for capital expenditures is expected to be approximately **$80 million** to **$90 million** for **2025**[92](index=92&type=chunk) [Financing Activities](index=25&type=section&id=Financing%20Activities) This section describes cash flows from debt, equity, and dividend transactions affecting the company's capital structure - Net cash provided by financing activities for H1 **2025** was **$49.3 million**, including **$65.0 million** in ABL borrowings, **$18.3 million** in debt repayments, **$15.1 million** for stock repurchases, and **$2.3 million** for stock-based compensation tax withholdings[93](index=93&type=chunk) - In H1 **2024**, net cash provided by financing activities was **$662.1 million**, primarily from **$723.5 million** in long-term debt issuance for the Augusta acquisition, offset by debt repayments and stock repurchases[94](index=94&type=chunk) [ABL Credit Agreement](index=25&type=section&id=ABL%20Credit%20Agreement) This section details the company's Asset-Based Lending credit agreement, including commitments, utilization, and covenants - The ABL Credit Agreement provides a **$375 million** revolving loan commitment, maturing November **7**, **2027**[95](index=95&type=chunk) - Interest rates on ABL loans are based on SOFR or Alternative Base Rate plus an applicable margin (**1.25%-1.75%** for SOFR, **0.25%-0.75%** for ABR), plus a commitment fee on unused availability (**0.25%-0.375%**)[96](index=96&type=chunk) - The ABL Credit Agreement includes a financial covenant requiring a consolidated fixed charge coverage ratio of not less than **1.10x to 1.00x**, applicable under specific conditions (event of default or low availability)[97](index=97&type=chunk) - As of June **30**, **2025**, the company was in compliance with ABL covenants and expects to remain so, but acknowledges risks if financial conditions deteriorate[98](index=98&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms no significant developments regarding market risk exposure during the quarter ended June 30, 2025 - No significant developments regarding market risk exposure occurred during the quarter ended June **30**, **2025**[100](index=100&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section confirms effective disclosure controls and procedures, noting the integration of Augusta operations' financial controls - The CEO and CFO concluded that disclosure controls and procedures were effective as of June **30**, **2025**, providing reasonable assurance that material information is recorded, processed, summarized, and reported timely[101](index=101&type=chunk) - Financial controls for the Augusta Pulp and Paperboard operations were integrated as of May **1**, **2025**, following the expiration of a one-year exemption from Section **404** requirements[103](index=103&type=chunk) - Except for the Augusta acquisition integration, there have been no other material changes in internal control over financial reporting during Q2 **2025**[103](index=103&type=chunk) [Part II. Other Information](index=28&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides additional information on legal proceedings, risk factors, equity sales, and other disclosures [Item 1. Legal Proceedings](index=28&type=section&id=ITEM%201.%20Legal%20Proceedings) This section discloses ongoing legal proceedings, including an environmental lawsuit, which the company intends to vigorously defend - The company is a defendant in an environmental lawsuit filed February **5**, **2025**, in Georgia, alleging PFAS contamination from its Augusta mill (acquired May **2024**)[105](index=105&type=chunk)[107](index=107&type=chunk) - The lawsuit seeks monetary damages and equitable/injunctive relief related to PFAS in the plaintiff's source water supply[106](index=106&type=chunk) - The company believes it has meritorious defenses and intends to vigorously defend the matter, not expecting a material adverse effect on its financial condition from current proceedings in aggregate[104](index=104&type=chunk)[107](index=107&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=ITEM%201A.%20Risk%20Factors) This section confirms no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the **2024** Annual Report on Form **10-K**[108](index=108&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's stock repurchase program and shares repurchased during the second quarter of 2025 - The Board of Directors approved a new stock repurchase program on October **31**, **2024**, authorizing up to **$100 million** of common stock repurchases, with no expiration date[108](index=108&type=chunk)[109](index=109&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) | | :------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------------------- | | April 1, 2025 to April 30, 2025 | — | $— | $85.8 | | May 1, 2025 to May 31, 2025 | **48,200** | $29.39 | $84.4 | | June 1, 2025 to June 30, 2025 | **99,900** | $28.35 | $81.6 | | Total | **148,100** | $28.69 | | [Item 5. Other Information](index=28&type=section&id=ITEM%205.%20Other%20Information) This section confirms no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by officers or directors - No officers or directors adopted or terminated Rule **10b5-1** or non-Rule **10b5-1** trading arrangements during Q2 **2025**[113](index=113&type=chunk) [Item 6. Exhibits](index=30&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed, including CEO/CFO certifications, stock incentive plan amendments, and XBRL documents - Exhibits include certifications (CEO/CFO), an amendment to the **2017** Stock Incentive Plan, and XBRL documents[114](index=114&type=chunk) [Signatures](index=31&type=section&id=Signatures) This section contains the signatures of the President, CEO, and CFO, certifying the report on July 29, 2025 - The report was signed by Arsen S. Kitch (President, CEO, and Director) and Sherri J. Baker (SVP, CFO) on July **29**, **2025**[119](index=119&type=chunk)

Group 1 - The article maintains a neutral rating on Clearwater Paper Corporation (NYSE: CLW), indicating that this stance has been accurate compared to peers [1] - The company emphasizes strong oversight and understanding of its paper companies, suggesting a focus on operational transparency and management [1] Group 2 - There is no indication of any stock or derivative positions held by the analyst in the companies mentioned, reflecting an unbiased perspective [2] - The article expresses personal opinions of the author without any compensation from the companies discussed, reinforcing the independence of the analysis [2]

Company Overview - Clearwater Paper's 2023 sales reached $2.1 billion[13, 27], with adjusted EBITDA of $281 million[13, 27] - The company operates through two segments: Paperboard (51% of sales, 58% of adjusted EBITDA) and Consumer Products (49% of sales, 42% of adjusted EBITDA) in 2023[13] - Clearwater Paper reduced net debt by $89 million in 2023 and $450 million since 2020[27] Paperboard Segment - The Paperboard segment's net sales were $1.064 billion in 2023[38], with an adjusted EBITDA margin of 19%[38] - The company has 840,000 tons of SBS (solid bleached sulfate) paperboard capacity[38] and holds a 15% market share[38] - Industry-wide SBS shipments decreased by 15.5%, and production decreased by 13.7% in 2023[53] Consumer Products Segment - The Consumer Products segment's net sales were $1.023 billion in 2023[65], with an adjusted EBITDA margin of 15%[65] - The company has 390,000 tons of annual paper capacity[65] and holds a 6% US market share[65] - Private brand share is at approximately 36% of at-home demand[67, 72] Augusta Acquisition - Clearwater Paper intends to acquire the Augusta manufacturing facility for $700 million[60] - The Augusta facility has approximately 600,000 tons of capacity[57, 60], projected to be 70-80% utilized in 2024[60] - The acquisition is expected to increase Clearwater Paper's paperboard capacity by approximately 70% to 1.4 million tons[60]

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 [5][22] - Net sales increased by 46% to $378 million compared to Q1 2024, largely attributed to the Augusta acquisition [5][22] - The company experienced a net loss of approximately $6 million from continuing operations, equating to $0.36 per diluted share [22] Business Line Data and Key Metrics Changes - The integration of the Augusta mill is ongoing, with targeted volume and cost synergies expected by the end of 2026 [6] - The company reduced its fixed cost structure by eliminating over 200 positions, representing around 10% of total roles, aiming for $30 to $40 million in savings for 2025 [6][17] 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 [7][8] - Industry utilization rates improved to 88% in Q1 2025 from 84% in Q1 2024, although still below the cross-cycle average of 90% to 95% [9] Company Strategy and Development Direction - The company aims to strengthen its position as a premier independent supplier of paperboard packaging products, focusing on product development in compostable food service products, lightweight folding cartons, and alternative poly-free barrier technologies [12][16] - The company is exploring expansion into additional paperboard substrates, which represent approximately 50% of the paperboard market outside of SBS [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about medium to long-term industry prospects, expecting strong margins and cash flows through the cycle [32] - The company anticipates a continued demand recovery, with internal utilization projected at around 85% and revenue expectations of approximately $1.5 to $1.6 billion for 2025 [26][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 [6][25] - The company is targeting $30 to $40 million in fixed cost reductions for 2025, with expected annual run rate savings of $40 to $50 million [16][28] Q&A Session Summary Question: What is the current status of FPB imports and exposure to tariffs? - Management noted that imports were up in 2024, with forecasts for a 5% decrease in imports and a 1% increase in exports for 2025, suggesting potential benefits from local supply dynamics due to tariffs [38][39] Question: Can you explain the shift in paperboard sales mix and outlook for Q2? - The shift in sales mix was primarily due to the inclusion of Augusta, with expectations for volume growth in Q2 [42][43] Question: What criteria will the company use for evaluating M&A opportunities? - The company will look for strategic fit, quality assets, and the ability to win in the market when considering M&A [46] Question: What are the expected cost savings and synergies from Augusta? - The company expects to see roughly double the amount of cost savings in Q2 compared to Q1, with significant volume synergies already being realized from the Augusta integration [50][51]

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]