Clearwater Paper : First Quarter 2025 First Quarter 2025 Presentation
CLW
April 29, 2025
President, Chief Executive Officer and Director
Senior Vice President and Chief Financial Officer
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 billion 1on November 1
Transforming Clearwater into a leading paperboard packaging supplier
Strengthened our position as a premier, independent supplier of paperboard packaging products to North American converters
Utilized ~$850 million of net proceeds from sale to pay down debt
A strong balance sheet with 1-2x net leverage ratio target across cycle
Paid down all credit facilities, except $275 million of 2028 notes with an interest rate of 4.75%
$100 million share repurchase authorization approved
Launched and executed a new share repurchase program
Repurchased $11M of shares in first quarter of 2025
3 1. Subject to customary adjustments
Clearwater is Well Positioned to Deliver Strong Returns Across the Cycle
Paperboard industry is cyclical, driven by supply and demand balance
Currently in downcycle as new capacity is added ahead of demand recovery
Across the cycle Adjusted EBITDA margins target of 13% to 14%
Delivering a 40-50% Adjusted EBITDA to free cash flow conversion rate1, or $100M+ per year
ADJUSTED EBITDA TARGET MARGINS
Cycle peak
(>G5% utilization,
50-60% FCF conversion)
Average across cycle
Near-term focus on reducing fixed cost structure by $30-40M in 2025; implemented 10% reductions in positions
Continued investment in assets to enhance competitiveness
Exploring growth opportunities to expand product offering through internal investments or acquisitions
Strong balance sheet to sustain the business and create strategic options across the cycle
(G0-G5% utilization,
40-50% FCF conversion)
Downcycle
(<85% utilization,
0-20% FCF conversion)
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1. Cash flow from operating activities adjusted for other operating charges less capital, divided by Adjusted EBITDA
Exploring Options to Expand Our Product Offering
Initiative
Post consumer recycled content
Status
Developed and in market
Objective
Provide options for converter customers to service sustainability driven Consumer Packaged Goods (CPG) and Ǫuick Service Restaurants (ǪSR) customers
Compostable plate
Developed and expected in market by year end
Enable our plate converter customers to meet demands of leading domestic retailers
Lightweight folding carton
Developing and expected in market in 2026
Offer alternatives to Folding Boxboard (FBB) imports with superior performance
Poly-free coatings / barriers
Continuing to develop options in addition to current offering
Meet current and future needs of sustainability driven cup converters looking for a poly-free offering
Beverage carrier grade (CUK)
Evaluating market potential and existing equipment capabilities
Enable independent converters to better compete with large integrated incumbents
Recycled paperboard grade (CRB)
Open to evaluating MCA Options
Provide a more complete paperboard offering to existing Solid Bleached Sulfate (SBS) customers
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INDUSTRY TRENDS
SBS PAPERBOARD SHIPMENTS IMPROVED IN Ǫ1'25, PROJECTED TO GROW IN 2025
Industry shipments1 up ~1% Ǫ1'25 vs Ǫ4'24 Shipments projected to grow by 3 to 5%2 in 2025
Domestic demand expected to recover to pre-COVID levels by end of 2025
BLEACHED PAPERBOARD NET EXPORTS ARE EXPECTED TO IMPROVE IN 2025
Imports forecasted to decrease by ~5%2 in 2025 vs. 2024 Exports forecasted to increase by ~1%2 in 2025 vs. 2024 Uncertainty around impact of tariffs on imports and exports
UTILIZATION RATES UP FROM Ǫ1'24 AND SEǪUENTIALLY, BUT BELOW THE CROSS CYCLE AVERAGE
Industry operating rates1 at 88% Ǫ1'25 vs. 84% Ǫ1'24
N.A. capacity2 remained largely unchanged New industry capacity being added in Ǫ2'252
Balanced market will have utilization rates between G0 and G5%2
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1. Based on data from AFCPA. 2. Based on data reported by RISI Fastmarkets and other industry sources.
Ǫ1 2025
Financial Summary
SIGNIFICANT GROWTH IN PAPERBOARD SALES VOLUME
NET SALES FROM CONTINUING OPERATIONS
$378M
NET LOSS FROM CONTINUING OPERATIONS
$6M
+46% increase in Ǫ1'25 vs. Ǫ1'24
Primarily due to Augusta acquisition
PARTIALLY OFFSET BY MARKET DRIVEN PRICE DECREASES
-4% decrease in Ǫ1'25 average pricing vs. Ǫ1'24
Consistent with industry trends
ADJUSTED EBITDA FROM CONTINUING OPERATIONS
$30M
ADJUSTED EBITDA MARGIN FROM CONTINUING OPERATIONS
8%
ADJUSTED EBITDA AT TOP END OF GUIDANCE RANGE
Strong operational performance, higher volumes, and improved cost structure
COMBINED WITH A STRONG BALANCE SHEET
Net leverage ratio at 1.5x
Repurchased $11M of shares, $15M since new $100M authorization in November of 2024
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See Appendix for Non-GAAP reconciliations
Ǫ1'25 VS Ǫ1'24 Adjusted EBITDA Results from Continuing Operations
($ in millions)
Lower paperboard market pricing as reported by RISI, partially offset by higher pricing on external pulp sales
Higher sales and production, primarily from Augusta acquisition
Improved operating performance and cost structure, partially offset by inflation
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Outlook and Assumptions for Ǫ2 and Full Year 2025
~5% growth in sales and production volumes vs Ǫ1'25 Additional benefits from fixed cost reduction efforts
$6 million lower energy expenses due to seasonality vs Ǫ1'25 Other input costs stable, no tariff impacts included in outlook
$7 to $9 million of planned major maintenance costs at Cypress Bend, AR mill
Capacity utilization at ~85%, with approximately $1.5 to $1.6B of revenue Full year benefit of Augusta sales volume
Improved mill operating performance offsetting lower pricing and inflation
$30-40M fixed cost reduction in 2025, $40-50M annual run rate benefit
$45-50M of total direct major maintenance cost (Ǫ2 Cypress Bend, Ǫ3 Lewiston, Ǫ4 Augusta)
$80-90M of capital expenditures, including large project carryover spend
G
1. As there is uncertainty in connection with calculating the adjustments necessary to prepare reconciliations from Adjusted EBITDA to the comparable GAAP financial measure, the Company is unable to reconcile the Adjusted EBITDA projections without unreasonable efforts. Therefore, no reconciliation is being provided at this time. These items could result in significant adjustments from the most comparable GAAP measure.
Optimized Capital Allocation Approach Supports Value Creation
Investing to maintain the long-term performance of our assets
$70-80M
EXPECTED ANNUAL MAINTENANCE CAPEX, EXCLUDING LARGE REPLACEMENT PROJECTS
Utilizing free cash flow (FCF) to deleverage our balance sheet
1-2x
TARGET LEVERAGE RATIO
Evaluating capital investments to diversify product portfolio
Opportunistic M&A to support strategic priorities
Return capital to shareholders through share buybacks
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Optimistic About Long-Term Value Creation
Sharp focus on improving and growing our paperboard business
Meaningfully de-levered balance sheet with proceeds from tissue sale
Focus on growing our position as a premier independent paperboard packaging supplier to North American converters
Well invested asset base to support future growth
High quality paperboard assets well positioned across the U.S. to efficiently service North American converters
Strong legacy of prioritizing sustainability
Focused on expanding product portfolio through internal investment and opportunistic M&A
Focused on optimizing business to deliver free cash flows
Driving improvement in operational performance
Consistently investing to maintain competitiveness of our assets
Strategically deploy capital to create long-term shareholder value
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Appendix
Financial Performance
($ IN MILLIONS, UNAUDITED)
Ǫuarter Ended
March 31, 2025
December 31, 2024
March 31, 2024
Net sales
$ 378.2
$ 387.1
$ 258.8
Costs and expenses:
Cost of sales
341.5
372.4
225.5
Selling, general and administrative expenses
28.9
26.7
28.1
Other operating charges, net
11.8
3.7
6.0
Total operating costs and expenses
382.2
402.8
259.6
Total income (loss) from operations
(4.0)
(15.7)
(0.8)
Total non-operating expense
3.6
(13.6)
(0.9)
Total income (loss) from operations before income taxes
(7.7)
(29.3)
(1.7)
Income tax provision (benefit)
(1.8)
(9.7)
0.5
Total income (loss) from operations
(5.9)
(19.6)
(2.1)
Income from discontinued operations, net of tax
(0.4)
218.7
19.3
Net income
$ (6.3)
$ 199.1
$ 17.2
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Reconciliation of Adjusted EBITDA
($ IN MILLIONS, UNAUDITED)
Ǫuarter Ended
March 31, 2025
December 31, 2024
March 31, 2024
Net income (loss) $ (6.3)
Add (deduct):
Less: Income from discontinued operations, net of tax (0.4)
$ 199.1
218.8
$ 17.2
19.3
Income from continuing operations (5.9)
(19.6)
(2.1)
Income tax provision (benefit) (1.8)
(9.7)
0.5
Interest expense, net 3.3
5.3
1.2
Depreciation and amortization expense 22.0
21.5
9.0
Other operating charges, net 11.8
3.7
6.0
Other non-operating expense (income) 0.3
(0.7)
(0.3)
Debt retirement costs -
9.1
-
Adjusted EBITDA from continuing operations 29.8
9.5
14.2
Adjusted EBITDA Margin 7.9%
2.5%
5.5%
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Ǫ4'24 VS Ǫ1'25 Adjusted EBITDA Results from Continuing Operations
($ in millions)
Cost reduction initiatives and no planned major maintenance
Lower paperboard production and sales volumes
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Key Metrics
Ǫuarter Ended
March 31, 2025
December 31, 2024
March 31, 2024
Food service
$ 151.4
$
174.0
$ 89.6
Folding carton
148.4
143.5
107.0
Sheeting & distribution
38.8
36.9
40.4
Pulp and other
39.6
32.7
21.8
Net sales
378.2
$ 387.1
$ 258.8
Input cost (raw materials & energy)
$ 168.4
$
165.9
$ 115.5
Labor and overhead
117.1
148.3
80.4
Supply chain costs (principally freight)
36.3
38.7
26.2
Depreciation
21.0
20.7
8.0
Other
(1.3)
(1.2)
(4.7)
Cost of sales
$ 341.5
$ 372.4
$ 225.5
Total paperboard volumes
289,487
306,692
187,303
Net sales price per ton
$ 1,188
$ 1,177
$ 1,284
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Disclaimer
Clearwater Paper Corporation published this content on April 29, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 30, 2025 at 00:26 UTC.