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 For the quarterly period ended June 30, 2022 or ¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 001-34146 CLEARWATER PAPER CORPORATION (Exact name of registrant as specified in its charter) Delaware 20-3594554 (State or other ju ...

Clearwater Paper Corporation (NYSE:CLW) Q1 2022 Earnings Conference Call April 28, 2022 5:00 PM ET Company Participants Sloan Bohlen - Investor Relations Arsen Kitch - President and Chief Executive Officer Mike Murphy - Chief Financial Officer Conference Call Participants Adam Josephson - KeyBanc Capital Markets Mark Wilde - BMO Capital Markets Paul Quinn - RBC Capital Markets Operator Good day. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to t ...

[Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) Forward-looking statements in this report are subject to risks and uncertainties that may cause actual results to differ materially - Forward-looking statements cover areas including **COVID-19 impact**, **strategic projects**, **cash flows**, **capital expenditures**, **operating costs**, and **debt repayment**[2](index=2&type=chunk) - Key factors that could cause results to differ include **COVID-19 impacts**, **competitive pricing pressures**, **customer demand**, **costs and availability of raw materials and transportation**, **cyber-security risks**, **manufacturing disruptions**, and **debt covenants**[3](index=3&type=chunk) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Consolidated Financial Statements (Unaudited)](index=4&type=section&id=ITEM%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) Unaudited consolidated financial statements for Q1 2022 show increased net sales and net income, with a slight decrease in total assets and liabilities, leading to higher stockholders' equity [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets slightly decreased to $1,683.1 million due to reduced property, plant, and equipment, while total liabilities decreased to $1,153.2 million, leading to increased stockholders' equity Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $507.5 | $487.2 | | **Property, plant and equipment, net** | $1,059.9 | $1,081.8 | | **Total assets** | **$1,683.1** | **$1,690.1** | | **Total current liabilities** | $256.1 | $254.1 | | **Long-term debt** | $617.7 | $637.6 | | **Total liabilities** | **$1,153.2** | **$1,178.3** | | **Total stockholders' equity** | **$530.0** | **$511.7** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) In Q1 2022, net sales increased by 14.6% to $488.2 million, driving net income up to $16.6 million, or $0.97 per diluted share, compared to the prior year Q1 Operating Results (in millions, except per-share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | **Net sales** | $488.2 | $425.9 | | **Income from operations** | $32.9 | $27.1 | | **Net income** | $16.6 | $12.1 | | **Diluted EPS** | $0.97 | $0.71 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to $41.1 million in Q1 2022, while cash used in investing decreased and cash used in financing significantly increased due to debt repayments Q1 Cash Flow Summary (in millions) | Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | **Net cash from operating activities** | $41.1 | $33.8 | | **Net cash used in investing activities** | ($7.9) | ($11.1) | | **Net cash used in financing activities** | ($21.9) | ($1.4) | | **Increase in cash** | $11.2 | $21.2 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the prospective adoption of a new accounting standard, a reduction in debt fair value, an increased effective tax rate, and varied segment performance, with strong results in Pulp and Paperboard but weaker in Consumer Products - The company adopted **ASU 2021-10** for government assistance disclosures on January 1, 2022, with **no material impact**[22](index=22&type=chunk) - The effective tax rate for Q1 2022 was **26.6%**, higher than the **21%** U.S. federal statutory rate, primarily due to state taxes and nondeductible compensation[28](index=28&type=chunk) Segment Net Sales and Operating Income (in millions) | Segment | Q1 2022 Net Sales | Q1 2021 Net Sales | Q1 2022 Operating Income | Q1 2021 Operating Income | | :--- | :--- | :--- | :--- | :--- | | **Pulp and Paperboard** | $266.2 | $219.7 | $50.3 | $25.0 | | **Consumer Products** | $223.0 | $208.4 | $0.9 | $17.9 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 15% increase in Q1 2022 net sales, leading to higher net income and Adjusted EBITDA, driven by strong Pulp and Paperboard performance, while Consumer Products faced significant cost inflation despite price increases [Executive Summary](index=15&type=section&id=Executive%20Summary) In Q1 2022, net sales increased by 15% to $488.2 million, with net income rising to $16.6 million and Adjusted EBITDA increasing to $58.9 million Q1 2022 Key Financial Metrics (vs. Q1 2021) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | **Net Sales** | $488.2M | $425.9M | | **Net Income** | $16.6M | $12.1M | | **Adjusted EBITDA** | $58.9M | $54.3M | [Our Operating Results](index=17&type=section&id=Our%20Operating%20Results) Operating results varied by segment, with Pulp and Paperboard's operating income doubling due to higher pricing, while Consumer Products' operating income plummeted due to significant cost inflation despite price increases - **Pulp and Paperboard** operating income increased **100.8%** to **$50.3 million**, and Adjusted EBITDA rose **75.0%** to **$59.5 million**, driven by higher sales prices[56](index=56&type=chunk) - **Consumer Products** operating income decreased **94.8%** to **$0.9 million**, and Adjusted EBITDA fell **53.2%** to **$16.2 million**, primarily due to higher input costs[58](index=58&type=chunk)[59](index=59&type=chunk) - Corporate expenses increased to **$17.8 million** from **$15.5 million** year-over-year, mainly due to higher incentive compensation[60](index=60&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily from operations and its ABL credit facility, with Q1 2022 generating $41.1 million in operating cash and making $20.4 million in voluntary debt repayments - Net cash from operating activities was **$41.1 million** for Q1 2022, up from **$33.8 million** in Q1 2021[67](index=67&type=chunk) - The company made voluntary debt repayments of **$20.4 million** in Q1 2022[69](index=69&type=chunk) - Expected capital expenditures for 2022 are approximately **$60 million to $70 million**[68](index=68&type=chunk) - The ABL Credit Agreement provides a **$250 million** revolving loan commitment, with **no borrowings outstanding** as of March 31, 2022, and **$3.7 million** used for letters of credit[70](index=70&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is exposure to interest rate fluctuations on its **$30.0 million** variable-rate debt, including the Term Loan and ABL Credit Agreement - A one percentage point change in interest rates would result in an approximate **$0.3 million** annual effect on interest expense, based on **$30.0 million** of variable-rate debt outstanding[72](index=72&type=chunk) [Controls and Procedures](index=22&type=section&id=ITEM%204.%20Controls%20and%20Procedures) As of March 31, 2022, the CEO and CFO concluded that disclosure controls and procedures are effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures are effective in providing reasonable assurance of timely and accurate material information reporting[74](index=74&type=chunk) - No material changes occurred during the quarter affecting the company's internal control over financial reporting[75](index=75&type=chunk) [PART II. OTHER INFORMATION](index=23&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=23&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in various claims and litigation, but management does not expect their outcomes to have a material adverse effect on financial condition - The company does not expect legal proceedings, in aggregate, to materially adversely affect its financial condition[77](index=77&type=chunk) [Risk Factors](index=23&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K - No material changes from the risk factors disclosed in the **2021 Form 10-K** are reported[78](index=78&type=chunk) [Exhibits](index=23&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files - Exhibits filed include **Sarbanes-Oxley Section 302 and 1350 certifications**, along with **XBRL instance documents** and related files[78](index=78&type=chunk)

Financial Data and Key Metrics Changes - For Q4 2021, the company reported net sales of $490 million, adjusted net income of $9 million, and adjusted EBITDA of $56 million, which was at the high end of expectations [5][6] - For the full year 2021, net sales were nearly $1.8 billion, adjusted net income was $17 million, and adjusted EBITDA was $175 million [5][6] - The company maintained liquidity of $265 million at the end of the quarter and reduced net debt by $37 million during the quarter, totaling a $69 million reduction for the year [8][30] Business Line Data and Key Metrics Changes - The paperboard business experienced strong demand, leading to implemented price increases across the SBS portfolio [6][12] - Tissue business demand stabilized, with Q4 volume similar to Q3, shipping 12.4 million cases in Q4, slightly higher than 12.3 million cases in Q3 [22][23] - Adjusted EBITDA for the paperboard division reached a record $61.9 million in Q4, benefiting from price increases and favorable mix improvements despite inflationary pressures [25][26] Market Data and Key Metrics Changes - The U.S. tissue market was approximately 10.6 million tons in 2020, with the at-home market accounting for about 7.6 million tons [20] - The private-branded tissue market has grown more quickly than the branded market, with private brands now representing over 30% of total tissue share in the U.S. [47][48] - The company noted that the top five retailers now account for nearly 70% of all private-branded tissue demand, indicating significant industry consolidation [21] Company Strategy and Development Direction - The company is focused on operating efficiencies and price increases to offset cost inflation, particularly in the tissue segment [7][40] - The paperboard division is positioned to benefit from favorable market dynamics, with a commitment to sustainability and product innovation [16][19] - The company is evaluating its tissue asset footprint to ensure competitiveness and is open to consolidation opportunities in the industry [61][93] Management's Comments on Operating Environment and Future Outlook - Management expects inflation and supply chain disruptions to continue impacting operations in 2022, with a projected adjusted EBITDA range of $48 million to $56 million for Q1 2022 [32][34] - The company anticipates annual pricing benefits of $120 million to $140 million in 2022, but expects cost inflation to be a significant headwind [35][36] - Management remains optimistic about the long-term outlook for both the paperboard and tissue businesses, citing strong demand and sustainability trends [42][48] Other Important Information - The company has updated its investor handout with refreshed information on Clearwater Paper and the industries in which it competes [11] - Major maintenance outages are expected to impact adjusted EBITDA in 2023, with significant capital expenditures anticipated for recovery boiler work [38][39] Q&A Session Summary Question: Impact of 2022 shift mix in the bleached board business - Management noted strength in the food service category from a pricing standpoint, expecting a less pronounced negative impact compared to previous years [51] Question: Strategy to counter European boxboard producer - Management emphasized the complexity and risk of conversions, maintaining a positive outlook on the paperboard business due to demand outstripping supply [53][54] Question: Activity levels in January and February - Strong demand in paperboard continues, while tissue sales in January were in line with Q4, indicating normalization [56][57] Question: Supply-demand challenges in the tissue market - Management acknowledged the need for industry consolidation to improve scale and cost positions, expressing willingness to participate in such opportunities [60][61] Question: Major contract renewals in tissue - Approximately 50% of the business is up for renewal this year, which is higher than the typical 25% [76] Question: Major maintenance in 2023 - A significant project is planned for the recovery boiler at the Lewiston mill, addressing the end of useful life of certain components [77] Question: Challenges in implementing price increases in tissue - Pricing is driven by supply and demand dynamics, with negotiations being critical as customers have alternative suppliers [80] Question: Cash flow expectations for 2022 - The company expects to be a cash taxpayer this year, with some offsetting liabilities related to payroll tax repayments [89]

Sales Performance - Pulp and Paperboard segment sales increased by 7.8% to $946.0 million in 2021 from $877.1 million in 2020, while Consumer Products segment sales decreased by 18.0% to $835.0 million from $1,018.5 million[14]. - Total sales for the company decreased by 5.1% to $1,772.6 million in 2021 from $1,868.6 million in 2020[14]. - The Consumer Products segment held a 6% share of the overall U.S. at-home tissue market in 2021[21]. - Consumer Products segment sales decreased by 18.0% to $835.0 million in 2021 from $1,018.5 million in 2020, driven by lower consumer demand due to the lessening impact of COVID-19[109]. - The pulp and paperboard business saw higher sales prices in 2021, partially offset by major maintenance in operations[93]. Financial Performance - For the year ended 2021, the company reported net sales of $1.8 billion, down from $1.9 billion in 2020, with a net loss of $28.1 million or $1.67 per diluted share compared to a net income of $77.1 million or $4.61 per diluted share in 2020[93]. - Adjusted EBITDA for 2021 was $174.6 million, a decrease from $283.2 million in 2020, primarily due to reduced demand for retail tissue and higher costs for pulp, energy, and transportation[93]. - Operating income for the Consumer Products segment fell by 96.3% to $4.0 million in 2021 compared to $110.6 million in 2020, reflecting higher input costs and reduced sales volumes[109]. - The company reported a net loss of $28.1 million for the year 2021, compared to a net income of $77.1 million in 2020[140]. - The comprehensive loss for the year 2021 was $16.3 million, compared to a comprehensive income of $82.3 million in 2020[142]. Cost and Expenses - Total operating costs and expenses increased to $1,760.6 million in 2021 from $1,710.4 million in 2020, reflecting a rise of 2.9%[140]. - The company experienced increased price and promotion competition in its consumer products business, which decreased gross margins[40]. - Anticipated inflation in raw materials, freight, and energy costs is projected to be between $90 million and $100 million for the year ending December 31, 2022[22]. - The total production capacity for tissue converting is 377,000 tons, with the company producing 390,000 tons of tissue parent rolls across its facilities[78]. Debt and Financing - As of December 31, 2021, the company had approximately $644 million in outstanding debt, including $300 million in 2014 Notes and $275 million in 2020 Notes[62]. - The company has a substantial amount of indebtedness, which could negatively affect its financial condition and ability to secure future financing[61]. - The fixed charge coverage ratio was approximately 3.56x as of December 31, 2021, indicating strong cash flow relative to fixed charges[68]. - The company prepaid $79 million of principal under the Term Loan Credit Agreement in 2021, maintaining a first lien secured leverage ratio of 0.24x[121]. - The ABL Credit Agreement includes covenants that limit the company's operational flexibility, potentially hindering growth opportunities[66]. Operational Risks - The company relies on a limited number of third-party suppliers for raw materials, which could affect pricing and availability[40]. - The ongoing integration of new facilities in North Carolina involves risks that could adversely affect business operations[40]. - Transportation disruptions in 2021 led to difficulties in procuring sufficient transportation and significant increases in transportation costs[40]. - The pulp and paperboard business is subject to cyclical market conditions, which may lead to production downtime and lost revenue[50]. - Competitors with greater financial resources may negatively impact the company's market position and pricing strategies[45]. Employee and Labor Relations - Approximately 42% of the company's employees are covered under collective bargaining agreements as of December 31, 2021[36]. - Approximately 42% of full-time employees were represented by unions as of December 31, 2021, posing a risk of labor disruptions[50]. - The company faces challenges in attracting and retaining qualified personnel, which could negatively impact operations and financial performance[73]. Environmental and Regulatory Compliance - The company faces significant environmental compliance costs and potential liabilities due to evolving regulations, particularly related to greenhouse gas emissions and water quality standards[54]. - Increased regulatory activity regarding climate change could necessitate significant expenditures or operational changes for the company[54]. - Extreme weather events related to climate change have previously caused operational disruptions, such as the curtailment of natural gas supply to the Arkansas mill in 2021[55]. Pension and Retirement Obligations - The company contributed approximately $5.7 million to multiemployer pension plans in 2021, with potential future increases in contributions that could reduce cash available for business needs[58]. - As of December 31, 2021, the company’s salary pension plan was underfunded by $7.4 million, which may require future contributions, impacting cash flow[60]. - The pension benefit obligation was measured at $310.1 million as of December 31, 2021[132]. Market Conditions - The U.S. tissue market is segmented into at-home and away-from-home categories, with the at-home segment representing over 70% of market sales in 2021[97]. - The company anticipates that demand for tissue products will normalize and approach pre-COVID-19 levels as consumers return to away-from-home activities[97]. - The company experienced significant volatility in demand and pricing due to macroeconomic conditions and the impact of the COVID-19 pandemic on the paperboard industry[96].

Clearwater Paper Corporation (NYSE:CLW) Q3 2021 Earnings Conference Call November 2, 2021 5:00 PM ET Company Participants Sloan Bohlen - Investor Relations Arsen Kitch - President and Chief Executive Officer Mike Murphy - Chief Financial Officer Conference Call Participants Adam Josephson - KeyBanc Mark Wilde - BMO Capital Markets Paul Quinn - RBC Capital Markets Adam Josephson - KeyBanc Operator Ladies and gentlemen, thank you for standing by and welcome to the Clearwater Paper Third Quarter 2021 Earnings ...

Financial Data and Key Metrics Changes - The company reported net sales of $406 million for Q2 2021 and adjusted EBITDA of $15 million, which was better than expectations [5][20] - The net loss for Q2 2021 was $52 million, with a diluted net loss per share of $3.10 and an adjusted loss per share of $1.07 [20][21] - Liquidity at the end of the quarter was $297 million, and net debt was reduced by $4 million [8][26] Business Line Data and Key Metrics Changes - The paperboard business experienced strong demand, leading to implemented price increases across the SBS portfolio [6][10] - The tissue business saw a decline in shipments, with 10.2 million cases shipped in Q2, down approximately 36% year-over-year and 13% sequentially [16][24] - The major maintenance outage in the paperboard business impacted adjusted EBITDA by $22 million [12][22] Market Data and Key Metrics Changes - The U.S. tissue market is traditionally split into 2/3 at-home and 1/3 away-from-home, with total demand around 10 million tons per year [13] - Retailer shipments of finished goods bottomed out in April, indicating a recovery period beginning in May [15][16] - The company expects tissue shipments to grow by 10% to 15% in Q3 relative to Q2 [30] Company Strategy and Development Direction - The company is focused on reducing costs and improving cash flow, particularly in the tissue business, while also maximizing production in the paperboard segment [39][44] - The closure of the Neenah tissue mill is part of a strategy to exit the away-from-home market and reduce overall costs [18][35] - The company is planning to shift some capital projects to 2022 to accommodate strong paperboard demand [33][77] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment remains challenging due to inflation and competitive pressures, but they are optimistic about long-term growth in both business segments [40][43] - The company anticipates continued recovery in tissue demand and expects to manage production levels to align with market needs [30][39] - Management highlighted the importance of monitoring consumer and channel trends, especially in light of the Delta variant [81] Other Important Information - The company expects input cost inflation to be between $60 million and $70 million for 2021, primarily driven by pulp prices [34] - The anticipated financial impact from raw material inflation is expected to increase in the coming quarters [24][29] Q&A Session Summary Question: What are the inflation expectations for the year? - Management indicated that inflation expectations have slightly improved due to offsetting factors in pulp and freight costs [46] Question: Can we expect further price increases in SBS? - Management confirmed that sequential improvements in SBS pricing are expected from Q3 to Q4 [47] Question: How does the company view the tissue market post-COVID? - Management believes that the current year reflects a more normal baseline for tissue demand compared to the COVID-impacted year [49] Question: What is the outlook for tissue shipment volumes? - Management expects tissue shipment volumes to grow by 10% to 15% in Q3 compared to Q2 [30][67] Question: How is the company managing inventory levels? - Management stated that inventory levels are still higher than desired, but they are actively working to reduce them [62] Question: What is the status of the Neenah site closure? - The closure is expected to improve the overall cost structure and avoid losses associated with the site [35][18] Question: What are the expectations for capital expenditures? - Management indicated that capital expenditures have been reduced this year, with a focus on scrutinizing spending [76][77]

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 For the quarterly period ended June 30, 2021 or ¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 001-34146 CLEARWATER PAPER CORPORATION (Exact name of registrant as specified in its charter) Delaware 20-3594554 (State or other ju ...

Financial Data and Key Metrics Changes - The company reported net sales of $426 million and adjusted EBITDA of $54 million for Q1 2021, indicating strong financial performance despite challenges [5][18] - Net income for the first quarter was $12 million, with diluted net income per share at $0.71 and adjusted income at $0.69 per share [18] Business Line Data and Key Metrics Changes - The paperboard business experienced strong demand, particularly in the folding carton segment, leading to announced price increases across the SBS product portfolio [5][10] - The tissue business faced lower orders and shipments, with a nearly 20% decline in overall tissue dollar sales compared to Q4 2020, attributed to consumer de-stocking and elevated inventory levels [6][15] Market Data and Key Metrics Changes - The U.S. tissue market is traditionally split into 2/3 at-home and 1/3 away-from-home consumption, with total demand around 10 million tons per year [13] - The company estimates an excess inventory of over a month between consumers and retailers, impacting tissue demand and shipments [14][15] Company Strategy and Development Direction - The company is focused on implementing price increases in the paperboard business and managing costs in the tissue segment to address inflation and lower demand [30][32] - A transformation effort has been launched to improve core operations, supported by a consulting firm, aimed at achieving the company's full potential over the next several years [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant cost inflation and a temporary decrease in tissue demand, with expectations of a mid double-digit decline in tissue volume year-over-year for 2021 [27][28] - The company remains optimistic about long-term consumption growth in the tissue market, projecting a growth rate of 1% to 2% per year [15][28] Other Important Information - The company reduced net debt by $21 million using free cash flows generated during Q1 2021, maintaining a strong balance sheet with liquidity of $282.7 million [7][23] - The planned maintenance outage at the Lewiston mill is expected to impact earnings by $21 to $24 million, consistent with prior expectations [25] Q&A Session Summary Question: What is the expected timeline for the SBS pricing increase to take effect? - Management indicated it would take about two quarters to fully implement the price increase [36][37] Question: How will lower sales and production cuts impact the second quarter? - Management provided a breakdown of expected costs, indicating a significant impact from production cuts and lower sales [40] Question: What strategies are being implemented to mitigate rising costs in tissue? - The company is working with customers on pricing adjustments and product changes to address rising costs [41][42] Question: How is the company positioned regarding the recent acquisition of a large independent carton producer? - Management stated that their exposure to the acquired producer is limited and emphasized strong relationships with independent converters [44] Question: Is the downtime in Q2 sufficient to clear the inventory overhang? - Management noted uncertainty regarding the exact amount of overhang but indicated that the downtime is aimed at matching demand and reducing inventory [46][47] Question: What is the company's philosophy regarding quarterly guidance? - Management explained that due to significant changes in business conditions, they are providing expectations rather than specific guidance [54][56] Question: What is the current focus on capital allocation? - The company is prioritizing debt reduction, targeting a leverage ratio of 2.5x, with no expectation to achieve that this year [60][61]

[Forward-Looking Statements](index=2&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines the company's forward-looking statements, which are subject to various risks and may differ from actual results - The report contains forward-looking statements regarding **capital expenditures**, **product demand**, **COVID-19 impact**, **inventory levels**, **input costs**, **major maintenance**, and **other operational and financial expectations**. These statements are based on management's current expectations and are subject to change, with actual results potentially differing materially due to various **risk factors**[2](index=2&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 detailed notes [ITEM 1. Consolidated Financial Statements](index=4&type=section&id=ITEM%201.%20Consolidated%20Financial%20Statements) This section presents the company's unaudited consolidated financial statements and detailed notes for the specified periods [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's consolidated balance sheets, detailing assets, liabilities, and equity at specific dates Consolidated Balance Sheet Summary | (In millions) | March 31, 2021 | December 31, 2020 | | :------------------------------------- | :------------- | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $57.1 | $35.9 | | Receivables, net | $134.9 | $160.6 | | Inventories | $293.1 | $263.3 | | Total current assets | $500.4 | $474.9 | | Property, plant and equipment, net | $1,173.2 | $1,191.5 | | TOTAL ASSETS | $1,803.9 | $1,800.4 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Current portion of long-term debt | $1.7 | $1.7 | | Accounts payable and accrued liabilities | $233.5 | $243.1 | | Total current liabilities | $235.3 | $244.8 | | Long-term debt | $716.3 | $716.4 | | TOTAL LIABILITIES | $1,267.8 | $1,279.3 | | TOTAL STOCKHOLDERS' EQUITY | $536.1 | $521.1 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $1,803.9 | $1,800.4 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents the company's consolidated statements of operations, detailing revenues, expenses, and net income Consolidated Statements of Operations Summary | (In millions, except per-share data) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net sales | $425.9 | $477.9 | | Cost of sales | $370.6 | $423.0 | | Selling, general and administrative expenses | $27.8 | $27.5 | | Total operating costs and expenses | $398.8 | $459.1 | | Income from operations | $27.1 | $18.8 | | Interest expense, net | $(9.3) | $(12.8) | | Income before income taxes | $15.3 | $4.1 | | Income tax provision (benefit) | $3.2 | $(6.2) | | Net income | $12.1 | $10.3 | | Net income per common share: | | | | Basic | $0.73 | $0.62 | | Diluted | $0.71 | $0.62 | [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section presents the company's consolidated statements of comprehensive income (loss), including net income and other comprehensive income Consolidated Statements of Comprehensive Income (Loss) Summary | (In millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :---------------------------------------------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $12.1 | $10.3 | | Other comprehensive income, net of tax (Amortization of actuarial loss) | $1.9 | $1.8 | | Comprehensive income | $14.0 | $12.1 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's consolidated statements of cash flows, detailing cash movements from operating, investing, and financing activities Consolidated Statements of Cash Flows Summary | (In millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :---------------------------------------------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash flows provided by operating activities | $33.8 | $11.7 | | Net cash flows used in investing activities | $(11.1) | $(10.5) | | Net cash flows provided by (used in) financing activities | $(1.4) | $38.1 | | Increase in cash, cash equivalents and restricted cash | $21.2 | $39.3 | | Cash, cash equivalents and restricted cash at end of period | $58.2 | $61.8 | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section presents the company's consolidated statements of stockholders' equity, detailing changes in equity components Consolidated Statements of Stockholders' Equity Summary | (In millions, except share amounts in thousands) | Balance at Dec 31, 2020 | Net Income | Stock-based Comp. Expense | Issuance of Shares | Stock Option Exercise | Amortization of Actuarial Loss | Balance at Mar 31, 2021 | | :----------------------------------------------- | :---------------------- | :--------- | :------------------------ | :----------------- | :-------------------- | :----------------------------- | :---------------------- | | Common Shares | 16,572 | — | — | 92 | 13 | — | 16,678 | | Additional Paid-In Capital | $16.6 | — | $2.0 | $(1.6) | $0.5 | — | $17.6 | | Retained Earnings | $558.8 | $12.1 | — | — | — | — | $570.9 | | Accumulated Other Comprehensive Loss | $(54.3) | — | — | — | — | $1.9 | $(52.4) | | Total Stockholders' Equity | $521.1 | $12.1 | $2.0 | $(1.6) | $0.5 | $1.9 | $536.1 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining the basis of presentation, accounting policies, and financial account breakdowns [NOTE 1 Basis of Presentation](index=10&type=section&id=NOTE%201%20BASIS%20OF%20PRESENTATION) This note provides detailed information on basis of presentation - The **unaudited consolidated financial statements** are prepared in accordance with **Form 10-Q instructions** and include **all necessary normal recurring adjustments**. **Interim results are not necessarily indicative of full-year results** and should be read in conjunction with the 2020 Form 10-K[24](index=24&type=chunk) [NOTE 2 Recently Adopted and New Accounting Standards](index=10&type=section&id=NOTE%202%20RECENTLY%20ADOPTED%20AND%20NEW%20ACCOUNTING%20STANDARDS) This note provides detailed information on recently adopted & new accounting standards - The company adopted **ASU 2019-12**, 'Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes,' effective January 1, 2021, which **did not have a material impact** on the consolidated financial statements[25](index=25&type=chunk) [NOTE 3 Fair Value Measurements](index=10&type=section&id=NOTE%203%20FAIR%20VALUE%20MEASUREMENTS) This note provides detailed information on fair value measurements Fair Value of Debt Instruments | Debt Instrument | March 31, 2021 | December 31, 2020 | | :-------------------------------- | :------------- | :---------------- | | Term loan maturing 2026 (variable) | $129.0 | $129.6 | | 2014 Notes maturing 2025 (fixed) | $316.9 | $325.1 | | 2020 Notes maturing 2028 (fixed) | $276.0 | $285.3 | [NOTE 4 Receivables](index=10&type=section&id=NOTE%204%20RECEIVABLES) This note provides detailed information on receivables Receivables Breakdown | Receivables Component | March 31, 2021 | December 31, 2020 | | :------------------------------------- | :------------- | :---------------- | | Trade accounts receivable | $121.5 | $139.0 | | Allowance for current expected credit losses | $(1.6) | $(1.6) | | Unbilled receivables | $8.1 | $5.1 | | Taxes receivable | $4.8 | $16.0 | | Other | $2.1 | $2.1 | | **Total Receivables** | **$134.9** | **$160.6** | [NOTE 5 Inventories](index=11&type=section&id=NOTE%205%20INVENTORIES) This note provides detailed information on inventories Inventories Breakdown | Inventory Component | March 31, 2021 | December 31, 2020 | | :-------------------------------- | :------------- | :---------------- | | Logs, chips and sawdust | $14.9 | $17.2 | | Pulp | $20.1 | $11.5 | | Paperboard and tissue products | $159.7 | $137.0 | | Materials and supplies | $98.3 | $97.7 | | **Total Inventories** | **$293.1** | **$263.3** | [NOTE 6 Accounts Payable and Accrued Liabilities](index=11&type=section&id=NOTE%206%20ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20LIABILITIES) This note provides detailed information on accounts payable & accrued liabilities Accounts Payable and Accrued Liabilities Breakdown | Accounts Payable Component | March 31, 2021 | December 31, 2020 | | :------------------------------------- | :------------- | :---------------- | | Trade payables | $151.9 | $143.4 | | Accrued compensation | $30.3 | $41.7 | | Operating lease liabilities | $15.6 | $15.3 | | Accrued interest | $5.4 | $12.6 | | Accrued taxes other than income | $13.4 | $10.5 | | Other accrued liabilities | $16.9 | $19.6 | | **Total Accounts Payable and Accrued Liabilities** | **$233.5** | **$243.1** | - Included in accounts payable and accrued liabilities are **$8.5 million** and **$12.1 million** related to capital expenditures that had not yet been paid as of March 31, 2021 and December 31, 2020, respectively[30](index=30&type=chunk) [NOTE 7 Income Taxes](index=11&type=section&id=NOTE%207%20INCOME%20TAXES) This note provides detailed information on income taxes Income Tax Provision (Benefit) | Income Tax | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Income tax provision (benefit) | $3.2 | $(6.2) | | Effective tax rate (2020) | **Comparable to statutory** | **Varied from 21% due to $7.3M CARES Act benefit** | [NOTE 8 Other Operating Charges](index=11&type=section&id=NOTE%208%20OTHER%20OPERATING%20CHARGES) This note provides detailed information on other operating charges Other Operating Charges, Net | Other Operating Charges | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Reorganization expenses | — | $2.8 | | Union settlement | — | $6.6 | | Gain on divested assets | — | $(1.4) | | Directors' equity-based compensation expense | $0.4 | $0.2 | | Other | — | $0.4 | | **Total Other Operating Charges, net** | **$0.4** | **$8.6** | - The **significant decrease in other operating charges** from **$8.6 million** in Q1 2020 to **$0.4 million** in Q1 2021 was **primarily due to the absence of reorganization expenses and union settlement retroactive wage payments in 2021, which were present in 2020**[35](index=35&type=chunk) [NOTE 9 Non-Operating Income (Expense)](index=12&type=section&id=NOTE%209%20NON-OPERATING%20INCOME%20%28EXPENSE%29) This note provides detailed information on non-operating income (expense) Non-Operating Income (Expense) Details | Non-Operating Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Interest expense | $(9.2) | $(12.2) | | Amortization of debt issuance costs | $(0.5) | $(0.6) | | Interest income | $0.3 | — | | **Interest expense, net** | **$(9.3)** | **$(12.8)** | | Non-operating pension and other postretirement employee benefits expense | $(2.5) | $(1.9) | | **Total non-operating expense** | **$(11.8)** | **$(14.7)** | [NOTE 10 Pension and Postretirement Employee Benefit Plans](index=12&type=section&id=NOTE%2010%20PENSION%20AND%20POSTRETIREMENT%20EMPLOYEE%20BENEFIT%20PLANS) This note provides detailed information on pension & postretirement employee benefit plans Net Periodic Pension and Postretirement Costs | Pension Benefit Plans | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Service cost | $0.5 | $0.6 | | Interest cost | $2.1 | $2.6 | | Expected return on plan assets | $(2.6) | $(3.7) | | Amortization of actuarial loss | $2.6 | $2.4 | | **Net periodic cost** | **$2.5** | **$1.9** | | Other Postretirement Employee Benefit Plans Net periodic cost | $0.5 | $0.6 | - The **service component of net periodic cost** is recorded in **'Cost of sales'** and **'Selling, general, and administrative expenses,'** while **non-service components** are recorded in **'Other non-operating expense.'**[39](index=39&type=chunk) [NOTE 11 Accumulated Other Comprehensive Loss](index=13&type=section&id=NOTE%2011%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) This note provides detailed information on accumulated other comprehensive loss Accumulated Other Comprehensive Loss Adjustments | (In millions) | Pension Plan Adjustments | Other Postretirement Employee Benefit Plan Adjustments | Total | | :---------------------------------------------------------------------------------------------------- | :----------------------- | :----------------------------------------------------- | :------ | | Balance at December 31, 2020 | $(54.5) | $0.2 | $(54.3) | | Amounts reclassified from accumulated other comprehensive loss | $1.9 | — | $1.9 | | **Balance at March 31, 2021** | **$(52.6)** | **$0.2** | **$(52.4)** | [NOTE 12 Stockholders' Equity](index=13&type=section&id=NOTE%2012%20STOCKHOLDERS%27%20EQUITY) This note provides detailed information on stockholders' equity Stockholders' Equity Related Items | Stockholders' Equity Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :---------------------------------------------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Total stock-based compensation expense | $2.4 | $1.5 | | Income tax benefit related to stock-based compensation | $0.6 | $0.4 | | Impact on cash flow due to taxes paid related to net share settlement of equity awards and proceeds from sale of stock under employee awards | $1.1 | $0.7 | - As of March 31, 2021, **approximately 1.1 million shares** were available for future issuance under the current stock plan, and **$17.4 million** of compensation cost related to unvested restricted stock units and performance awards had not yet been recognized[41](index=41&type=chunk) [NOTE 13 Earnings Per Share](index=14&type=section&id=NOTE%2013%20EARNINGS%20PER%20SHARE) This note provides detailed information on earnings per share Earnings Per Share Calculation | (In thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Basic weighted-average common shares outstanding | 16,647 | 16,555 | | Incremental shares due to: | | | | Stock-based awards | 238 | 60 | | Performance shares | 94 | — | | **Diluted weighted-average common shares outstanding** | **16,979** | **16,615** | - Anti-dilutive shares excluded from the calculation were **0.2 million** and **0.9 million** for the three months ended March 31, 2021 and 2020, respectively[43](index=43&type=chunk) [NOTE 14 Segment Information](index=14&type=section&id=NOTE%2014%20SEGMENT%20INFORMATION) This note provides detailed information on segment information Segment Net Sales and Operating Income | (In millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | **Segment net sales:** | | | | Consumer Products | $208.4 | $262.5 | | Pulp and Paperboard | $219.7 | $223.1 | | Eliminations | $(2.2) | $(7.8) | | **Total segment net sales** | **$425.9** | **$477.9** | | **Operating income:** | | | | Consumer Products | $17.9 | $14.6 | | Pulp and Paperboard | $25.0 | $26.2 | | Corporate and eliminations | $(15.5) | $(13.4) | | Other operating charges, net | $(0.4) | $(8.6) | | **Income from operations** | **$27.1** | **$18.8** | Major Products Net Sales | Major Products Net Sales (In millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Retail tissue | $195.1 | $248.0 | | Paperboard | $212.4 | $210.7 | | Non-retail tissue | $13.2 | $13.9 | | Pulp | $3.5 | $10.9 | | Other | $3.9 | $2.1 | | Eliminations | $(2.2) | $(7.8) | | **Total net sales** | **$425.9** | **$477.9** | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of financial condition, operating results, future expectations, and liquidity for the period [Overview](index=16&type=section&id=OVERVIEW) This section provides an executive summary, outlines critical accounting policies, and defines non-GAAP measures [Executive Summary](index=16&type=section&id=Executive%20Summary) This section provides a high-level summary of the company's key financial performance metrics for the period Key Financial Metrics Summary | Financial Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change (%) | | :----------------- | :-------------------------------- | :-------------------------------- | :--------- | | Net Sales | $425.9 million | $477.9 million | (11)% | | Net Income | $12.1 million | $10.3 million | 17.5% | | Diluted EPS | $0.71 | $0.62 | 14.5% | | Adjusted EBITDA | $54.3 million | $55.4 million | (2.0)% | [Critical Accounting Policies and Estimates](index=16&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section addresses the company's critical accounting policies and estimates, noting any significant changes - There have been **no significant changes** to the critical accounting policies and estimates disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020[50](index=50&type=chunk) [Non-GAAP Measures](index=16&type=section&id=Non-GAAP%20Measures) This section defines and reconciles non-GAAP financial measures used by management to assess performance - **Adjusted EBITDA** is used as a supplemental measure of performance, defined as earnings (loss) from operations before interest expense, net, non-operating pension and other postretirement benefit costs, taxes, depreciation and amortization, and other operating charges, net[51](index=51&type=chunk) Adjusted EBITDA Reconciliation | (In millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :---------------------------------------------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $12.1 | $10.3 | | Income tax provision (benefit) | $3.2 | $(6.2) | | Interest expense, net | $9.3 | $12.8 | | Depreciation and amortization | $26.8 | $28.0 | | Other operating charges, net | $0.4 | $8.6 | | Other non-operating expense | $2.5 | $1.9 | | **Adjusted EBITDA** | **$54.3** | **$55.4** | | Adjusted EBITDA Consumer Products segment | $34.7 | $31.9 | | Adjusted EBITDA Pulp and Paperboard segment | $34.0 | $35.5 | | Adjusted EBITDA Corporate and other | $(14.4) | $(11.9) | [Our Operating Results](index=18&type=section&id=OUR%20OPERATING%20RESULTS) This section details the operating performance and financial results of the company's business segments [Consumer Products Segment](index=18&type=section&id=Consumer%20Products%20Segment) This section analyzes the financial performance of the Consumer Products segment, including sales, operating income, and Adjusted EBITDA Consumer Products Segment Performance | (Dollars in millions, except per unit) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Increase (decrease) (%) | | :------------------------------------- | :-------------------------------- | :-------------------------------- | :---------------------- | | Sales | $208.4 | $262.5 | (20.6)% | | Operating income | $17.9 | $14.6 | 22.6% | | Operating margin | 8.6% | 5.6% | | | Adjusted EBITDA | $34.7 | $31.9 | 8.8% | | Adjusted EBITDA margin | 16.6% | 12.1% | | | Shipments (short tons) | 80,185 | 99,793 | (19.6)% | | Retail sales price (per short ton) | $2,758 | $2,732 | 1.0% | | Non-retail sales price (per short ton) | $1,404 | $1,548 | (9.3)% | - **Sales volumes decreased** due to **slowing consumer demand and customer inventory rebalancing** following COVID-19 panic buying in 2020. **Operating income and Adjusted EBITDA increased** due to **lower input costs (packaging, chemical) and improved operating efficiencies**, despite **lower sales volume**[56](index=56&type=chunk) [Pulp and Paperboard Segment](index=19&type=section&id=Pulp%20and%20Paperboard%20Segment) This section analyzes the financial performance of the Pulp and Paperboard segment, including sales, operating income, and Adjusted EBITDA Pulp and Paperboard Segment Performance | (Dollars in millions, except per ton amounts) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Increase (decrease) (%) | | :-------------------------------------------- | :-------------------------------- | :-------------------------------- | :---------------------- | | Sales | $219.7 | $223.1 | (1.5)% | | Operating income | $25.0 | $26.2 | (4.4)% | | Operating margin | 11.4% | 11.7% | | | Adjusted EBITDA | $34.0 | $35.5 | (4.1)% | | Adjusted EBITDA margin | 15.5% | 15.9% | | | Shipments (short tons) | 206,712 | 207,916 | (0.6)% | | Sales price (per short ton) | $1,028 | $1,013 | 1.5% | - **Sales volumes decreased slightly** due to **product availability issues from weather-related production interruptions**. **Sales prices increased due to changes in product mix and initial impacts of a recently announced price increase**. **Operating income and Adjusted EBITDA decreased due to significant cost increases from a major winter storm**, including **higher natural gas and raw material costs**, **partially offset by higher sales prices**[58](index=58&type=chunk) [Corporate expenses](index=19&type=section&id=Corporate%20expenses) This section details the company's corporate overhead expenses not directly attributable to business segments Corporate Expenses Summary | Corporate Expenses (In millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------- | :-------------------------------- | :-------------------------------- | | Corporate expenses | $15.5 | $13.4 | - Corporate expenses primarily consist of **overhead costs** such as wages, benefits, professional fees, insurance, and other expenses for corporate functions not directly associated with business operations[59](index=59&type=chunk) [Other operating charges](index=19&type=section&id=Other%20operating%20charges) This section provides details on other operating charges, including non-recurring or unusual expenses - Refer to Note 8 for detailed information on other operating charges, which were significantly lower in Q1 2021 compared to Q1 2020[60](index=60&type=chunk) [Interest expense](index=19&type=section&id=Interest%20expense) This section details the company's interest expense, net, and its impact on financial results - Interest expense for the three months ended March 31, 2021, was **$3.5 million lower** than the prior year period, **primarily due to lower debt outstanding**[61](index=61&type=chunk) [Potential impairments](index=19&type=section&id=Potential%20impairments) This section discusses the company's policy and considerations regarding potential asset impairment charges - The company periodically reviews possible dispositions or reorganizations of assets, which may require recording **impairment charges** if **estimated net sales proceeds are less than previous estimates of undiscounted future net cash flows**[62](index=62&type=chunk)[63](index=63&type=chunk) [Expectations for the Second Quarter of 2021](index=20&type=section&id=Expectations%20for%20the%20Second%20Quarter%20of%202021) This section outlines management's financial and operational expectations for the upcoming second quarter of 2021 - In the Consumer Products segment, **significant declines in customer order patterns are expected to continue** in Q2 2021 due to **high customer and consumer inventory levels** from 2020's COVID-19 panic buying, leading to **reduced production**[64](index=64&type=chunk) - Both segments are expected to face **significant cost inflation**, particularly in **pulp prices**, as well as **chemicals, packaging, and freight**[64](index=64&type=chunk) - A **major planned maintenance outage** in Q2 2021 is anticipated to **impact Adjusted EBITDA by approximately $21 million to $24 million**[64](index=64&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section analyzes the company's liquidity position, cash flow generation, and capital resources [Operating Activities](index=21&type=section&id=Operating%20Activities) This section details cash flows generated from the company's primary operating activities Cash Flow from Operating Activities | Cash Flow from Operating Activities (In millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash flows provided by operating activities | $33.8 | $11.7 | - The increase in net cash flows from operating activities was **primarily driven by a net reduction in working capital**[67](index=67&type=chunk) [Investing Activities](index=21&type=section&id=Investing%20Activities) This section details cash flows used in the company's investing activities, primarily capital expenditures Cash Flow from Investing Activities | Cash Flow from Investing Activities (In millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash flows used in investing activities | $11.1 | $10.5 | - Cash paid for capital expenditures is expected to be **approximately $55 million to $60 million** for the full year 2021[68](index=68&type=chunk) [Financing Activities](index=21&type=section&id=Financing%20Activities) This section details cash flows provided by or used in the company's financing activities, including debt and equity transactions Cash Flow from Financing Activities | Cash Flow from Financing Activities (In millions) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash flows provided by (used in) financing activities | $(1.4) | $38.1 | - The shift from cash provided to cash used in financing activities was **primarily due to the absence of borrowings in the first three months of 2021 compared to the corresponding period in 2020**[69](index=69&type=chunk) [Credit Agreements](index=21&type=section&id=Credit%20Agreements) This section provides an overview of the company's credit agreements and compliance with financial covenants - The ABL Credit Agreement, maturing on July 26, 2024, includes a **$250 million** revolving loan commitment. As of March 31, 2021, **$229.2 million** was available under the line, with no outstanding borrowings and **$3.6 million** utilized for letters of credit[70](index=70&type=chunk) - The company's consolidated fixed charge coverage ratio was approximately **5.46x** as of March 31, 2021, well above the covenant requirement of **1.10 to 1.00**[70](index=70&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to market risks, specifically focusing on interest rate risk associated with its financial instruments [Interest Rate Risk](index=22&type=section&id=Interest%20Rate%20Risk) This section details the company's exposure to interest rate fluctuations and their potential impact on financial results - As of March 31, 2021, the company had **$129.3 million** in borrowings outstanding under its credit agreements. A **one percentage point** increase or decrease in interest rates would result in an approximate **$1.3 million** annual effect on interest expense[72](index=72&type=chunk) [ITEM 4. Controls and Procedures](index=23&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Disclosure Controls and Procedures](index=23&type=section&id=Disclosure%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures - As of March 31, 2021, the CEO and CFO concluded that the company's disclosure controls and procedures were **effective** in providing reasonable assurance that material information is recorded, processed, summarized, and reported in a timely manner[74](index=74&type=chunk) [Changes in Internal Control Over Financial Reporting](index=23&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting - There were **no changes** in internal control over financial reporting during the three months ended March 31, 2021, that materially affected, or are likely to materially affect, the company's internal control over financial reporting[75](index=75&type=chunk) [PART II. Other Information](index=24&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part presents other required information not included in the financial statements, such as legal proceedings and risk factors [ITEM 1. Legal Proceedings](index=24&type=section&id=ITEM%201.%20Legal%20Proceedings) This section addresses the company's involvement in legal claims, proceedings, and litigation - The company believes that the results of current legal proceedings, in the aggregate, will **not have a material adverse effect** on its financial condition[77](index=77&type=chunk) [ITEM 1A. Risk Factors](index=24&type=section&id=ITEM%201A.%20Risk%20Factors) This section refers to the risk factors that could affect the company's business and financial results - There are **no material changes** from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020[78](index=78&type=chunk) [ITEM 6. Exhibits](index=25&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q - Exhibits include Rule 13a-14(a)/15d-14(a) Certifications, furnished statements of the CEO and CFO under 18 U.S.C Section 1350, and various XBRL Taxonomy Extension documents[80](index=80&type=chunk) [Signatures](index=26&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q, certifying its accuracy and completeness - The report is duly signed on behalf of Clearwater Paper Corporation by **Arsen S. Kitch**, **President, Chief Executive Officer and Director**, and **Michael J. Murphy**, **Senior Vice President, Finance and Chief Financial Officer**, on **May 5, 2021**[82](index=82&type=chunk)[83](index=83&type=chunk)