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]