1 5 The accompanying notes are an integral part of these consolidated financial statements. (Unaudited) In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes—Improvements to Income Tax Disclosures (Topic 740), which requires enhanced disclosures primarily related to the rate reconciliation and disaggregation of income taxes paid. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permi ...

Financial Data and Key Metrics Changes - The company reported net sales of $513 million and adjusted EBITDA of $63 million for Q4 2023, significantly higher than the previous year's fourth quarter [11][26] - Net income for Q4 2023 was $17.6 million, with an adjusted net income per diluted share of $1.35, compared to $107.7 million net income for the full year [26][30] - The adjusted EBITDA margin improved to nearly 17% in Q4 2023, driven by higher pricing and lower input costs [25][27] Business Line Data and Key Metrics Changes - The tissue business saw adjusted EBITDA more than double from $18 million in Q4 2022 to $46 million in Q4 2023, with a margin of 17% [11][29] - The paperboard business delivered $37 million of adjusted EBITDA in Q4 2023, with a 15% margin, impacted by lower sales prices and natural gas disruptions [11][28] Market Data and Key Metrics Changes - Tissue demand remained strong, with private brand market share at 36%, while paperboard demand was soft, with shipments down 9% for the year [12][14] - Utilization rates for the tissue industry were reported at about 94% in Q4, indicating a healthy supply-demand balance [14] Company Strategy and Development Direction - The company aims to build a scaled, high-performing paperboard business, with the Augusta acquisition expected to add significant scale and growth capacity [7][10] - The company plans to evaluate strategic options for its tissue business while focusing on cash flow generation and deleveraging [10][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a gradual recovery in paperboard demand starting in Q1 2024, with a more meaningful recovery expected in the second half of 2024 [18][24] - The company anticipates adjusted EBITDA in the range of $53 million to $63 million for Q1 2024, despite a $13 million negative impact from severe weather [31][54] Other Important Information - The company reduced net debt by $32 million in Q4 2023, totaling almost $450 million since 2020 [12][30] - The Augusta acquisition is expected to contribute $140 million to $150 million of adjusted EBITDA by the end of 2026, with a peak leverage ratio anticipated between 3.5 times and 4 times post-acquisition [8][9] Q&A Session Summary Question: Can you provide more details on the cost synergies expected from the Augusta acquisition? - Management indicated that the bulk of synergies will come from volume, expecting the facility to be utilized at 70% to 80% in 2024, with a long-term goal of 95% utilization [37][46] Question: What are the assumptions behind the utilization projections for the Augusta facility? - Management noted that the projections are based on the book of business being acquired and the expected demand from converters in North America [62] Question: What impact did the severe cold weather event in January have on the business? - The event caused an estimated $13 million in negative impact due to equipment damage and downtime [54][70]

Market Demand and Pricing - The company's Pulp and Paperboard segment experienced a surge in demand during and following the COVID-19 pandemic, but demand and prices declined in 2023 due to customers deploying their inventories[92] - The company's top 10 customers accounted for 54% of sales in 2023, and increased price competition and a significant drop in demand adversely affected its paperboard revenue and gross margins[120] - The company's ability to sustain pricing and production levels during periods of weak demand is uncertain, and prolonged market weakness could materially adversely affect its results of operations and cash flows[101] - Pulp and paperboard sales decreased by 6.4% in 2023 compared to 2022, with sales dropping from $1,136.3 million to $1,063.7 million[216] - Paperboard shipments decreased by 7.7% in 2023, with 751,520 short tons shipped compared to 814,556 short tons in 2022[216] - The U.S. tissue industry saw a 7-8% increase in parent roll sales prices industry-wide in 2023 compared to the prior year[208] Competition and Market Position - The company's Pulp and Paperboard business competes with larger competitors such as WestRock, Georgia-Pacific, and Graphic Packaging, and any increase in manufacturing capacity by these or other producers could result in overcapacity and downward pressure on pricing[99] - The company's Consumer Products segment faces increased competition from private label tissue products, with several new tissue paper machines and converting assets completed or announced, leading to a substantial increase in tissue supply in the North American market[100] - The company's ability to compete is influenced by factors such as manufacturing capacity, general economic conditions, and the availability and demand for paperboard substitutes, including non-paper-based packaging and other grades of paperboard[99] - The company faces intense competition from larger competitors with greater financial resources, lower costs, and better access to raw materials[125] Supply Chain and Raw Materials - In 2023, the company sourced 70% of its Consumer Product segment pulp requirements (or 30% overall) from external suppliers, exposing it to significant price fluctuations[94] - The company's wood fiber supply is subject to regional market influences, and the price of wood fiber in the Pacific Northwest is expected to remain volatile, potentially increasing costs and harming operations and financial results[94] - The company relies on a limited number of third-party suppliers, which poses risks related to pricing, availability, quality, and delivery schedules[123] - Chemical and energy costs significantly impact the company's operations and cash flows, with prices for petroleum-based chemicals expected to remain volatile[123] Financial Performance and Debt - The company had approximately $468 million face value of debt outstanding as of December 31, 2023, with availability of $120 million under its PCA Credit Agreement and $235.3 million under its ABL Credit Agreement[111] - Net income for 2023 was $107.7 million, a significant increase from $46.0 million in 2022 and a loss of $28.1 million in 2021[241] - Net cash flows from operating activities in 2023 were $190.7 million, up from $150.2 million in 2022 and $96.4 million in 2021[241] - Capital expenditures for property, plant, and equipment in 2023 were $73.7 million, compared to $33.5 million in 2022 and $38.4 million in 2021[241] - Total cash, cash equivalents, and restricted cash at the end of 2023 were $42.0 million, down from $54.4 million in 2022 and $26.2 million in 2021[241][246] - The company repurchased $17.9 million of common stock in 2023 under its stock repurchase program[252] - The company completed an initial draw of $150 million under the PCA Credit Agreement in Q4 2023, with a total revolving term loan commitment of $270 million[254] - Long-term fixed-rate debt maturing in 2028 is $425.0 million, with an average interest rate of 6.94%[256] - The company expects to remain in compliance with its Credit Agreements, which require a consolidated fixed charge coverage ratio of not less than 1.10x to 1.00x[254] Operational Risks and Disruptions - The company's operations are exposed to risks from unexpected production disruptions, such as prolonged power outages, mechanical failures, and natural catastrophes, which could cause significant lost production and material adverse effects on results of operations[94] - The company's IT systems are critical to operations, and disruptions could harm manufacturing, sales, and financial performance[131] - Extreme weather events caused by climate change could damage facilities, disrupt supply chains, and increase costs[134] Environmental and Regulatory Compliance - The company is subject to significant environmental regulations, which could lead to increased compliance costs and operational restrictions[132] Pension and Tax Considerations - The company contributed approximately $5.8 million to multiemployer pension plans in 2023, with potential for increased future contributions[137] - The company received a $26 million tax refund in 2022 but has fully reserved for the benefit due to uncertainty over its tax position[145] Consumer Products Segment Performance - Retail tissue sales increased by 9.0% in 2023, reaching $1,016.2 million compared to $932.3 million in 2022[219] - Adjusted EBITDA for the Consumer Products segment increased by 102.7% in 2023, reaching $150.5 million compared to $74.2 million in 2022[219] Capital Expenditures and Commitments - The company expects cash paid for capital expenditures in 2024 to be approximately $90 million to $100 million[224] - The company has $48.2 million in purchase commitments associated with capital expenditures, all payable within 12 months[226] Corporate Expenses and Wages - Corporate expenses increased to $78.3 million in 2023, up from $71.1 million in 2022, primarily due to business improvement projects and higher wages[220] Interest Rate and Debt Service Risks - The company is exposed to risks from rising interest rates, which could increase debt service obligations and borrowing costs[145] Pulp Shipments and Production - Pulp shipments increased by 32.9% in 2023, with 34,084 short tons shipped compared to 25,647 short tons in 2022[216]

Financial Data and Key Metrics Changes - The company reported net sales of $520 million and adjusted EBITDA of $81 million for Q3 2023, which is $3 million higher than Q3 2022 [16] - Adjusted EBITDA margin rose to 15.5% in Q3 2023 compared to 14.3% in the previous year [26] - Net income for Q3 2023 was $36.6 million, with adjusted net income per diluted share of $2.19 [43] Business Line Data and Key Metrics Changes - The tissue business saw adjusted EBITDA more than double from $21 million in Q3 2022 to $46 million in Q3 2023, with an adjusted EBITDA margin of 18% [17][40] - The paperboard business delivered $52 million of adjusted EBITDA in Q3 2023 at a margin of 20%, despite soft demand [17][44] Market Data and Key Metrics Changes - Industry data indicated a 9.7% decrease in operating rates and a 15.7% decrease in shipments year-to-date 2023 compared to 2022 [20] - RISI forecasts a 10.5% decrease in total SBS production for 2023, followed by a 4.2% increase in 2024 and a 5.3% increase in 2025 [21] Company Strategy and Development Direction - The company emphasizes the need for consolidation in the tissue industry to achieve scale for long-term investments [5][32] - The strategy includes exploring additional paperboard products and potential acquisitions to enhance offerings for independent converters [71][72] Management's Comments on Operating Environment and Future Outlook - Management expects a gradual recovery in the paperboard market starting in 2024, driven by the end of destocking [2][56] - The company remains optimistic about long-term prospects for both tissue and paperboard despite current economic uncertainties [21][37] Other Important Information - The company reduced net debt by $69 million in Q3 2023, totaling a reduction of $416 million since 2020 [18][28] - Capital expenditures are projected to be between $70 million and $80 million, including significant projects in recovery boiler and precipitator replacements [30][50] Q&A Session Summary Question: Expectations for recovery in the paperboard business - Management indicated that recovery is expected to start in 2024, but the timing remains uncertain [56][77] Question: Timeline for investments in paperboard product development - The company aims to be a leader in the independent converter market and is exploring product development and acquisition opportunities [78][79] Question: Confidence in maintaining tissue margins amid pulp price fluctuations - Management expressed confidence in retaining most margin improvements despite expected headwinds from lower pulp costs [81][86] Question: Future growth of private branded products - The company believes there is potential for private branded products to gain market share, although growth may not be consistent [90][92]

ARSEN KITCH President, Chief Executive Officer and Director CLEARWATER PAPER CORPORATION FORWARD LOOKING STATEMENTS Non-GAAP Financial Measures Overall SHERRI BAKER Senior Vice President and Chief Financial Officer This presentation of supplemental information contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, including statements regarding order patterns; product demand and industry trend ...

2022 | --- | --- | --- | --- | --- | --- | |----------------------------------------------------------------------------------------|--------------------|-----------------------------------|----------------------------|-----------------------------------------------|---------------------------------| | Interest expense | Quarter \n2023 \n$ | Ended September \n \n(7.4) $ | 30, \n2022 \n(8.0) $ | Nine Months Ended \n2023 \n(22.6) $ | September 30, \n2022 \n(26.6) | | Amortization of deferred debt costs | | (0 ...

SECOND QUARTER EARNINGS RELEASE MATERIALS AUGUST 1, 2023 BECKY BARCKLEY Corporate Controller and Interim Chief Financial Officer Cautionary Statement Regarding Forward Looking Statements Non-GAAP Financial Measures © Clearwater Paper Corporation 2023 2 Overall • Net income $30 million • Adjusted EBITDA $71 million, up $8 million versus Q2 2022 • SBS prices increased from Q2 2022 Consumer Products CLEARWATER PAPER CORPORATION ARSEN S. KITCH President, Chief Executive Officer And Director FORWARD LOOKING STAT ...

Clearwater Paper Corporation (NYSE:CLW) Q2 2023 Earnings Conference Call August 1, 2023 5:00 PM ET Company Participants Sloan Bohlen – Investor Relations Arsen Kitch – President and Chief Executive Office Becky Barckley – Corporate Controller and Interim Chief Financial Officer Conference Call Participants Paul Quinn – RBC Capital Markets Operator Thank you for standing by. My name is Dina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Clearwater Paper’s ...

Form 10-Q ITEM 5. Other Information 22 CLEARWATER PAPER CORPORATION Consolidated Statements of Comprehensive Income (Unaudited) | --- | --- | --- | --- | --- | --- | --- | --- | |-------------------------------------------------------------------------------------------|-------------------|----------------|-------|------------------------------|-------------------|----------------------------------------|------------------------------| | (In millions, except share amounts which are in thousands) | Common \n ...

Financial Performance - Net sales increased by 8% to $525.4 million for the quarter ended March 31, 2023, compared to $488.2 million for the same quarter in 2022[44] - Net income for the quarter ended March 31, 2023, was $23.8 million, or $1.40 per diluted share, up from $16.6 million, or $0.97 per diluted share, in the prior year[44] - Adjusted EBITDA for the quarter ended March 31, 2023, was $65.7 million, compared to $58.9 million for the same quarter in 2022, reflecting an increase of 11.3%[52] Segment Performance - In the Pulp and Paperboard segment, sales increased by 4.7% to $278.8 million, with operating income rising by 13.6% to $57.1 million[55] - The Consumer Products segment saw sales rise by 11.4% to $248.3 million, with operating income increasing by 353.3% to $4.2 million[58] Expenses and Cash Flow - Corporate expenses for the quarter ended March 31, 2023, were $20.4 million, up from $17.8 million in the same period last year, primarily due to business process improvement projects[60] - Net cash flows used in operating activities for the quarter ended March 31, 2023, were $9.1 million, a decrease from $41.1 million in the same quarter of 2022[67] - Net cash flows used in investing activities for the quarter ended March 31, 2023, were $21.5 million, compared to $7.9 million in the prior year[68] - During the quarter ended March 31, 2023, net cash used for financing activities was $6.3 million, including $1.7 million for stock repurchases[69] Capital Expenditures - The company expects cash paid for capital expenditures in 2023 to be approximately $70 million to $80 million[68]