Clearwater Paper Corp

Previous wording

We recorded net sales of $586.4 million for the quarter ended June 30, 2024 compared to $524.6 million for the quarter ended June 30, 2023. We recorded a net loss for the quarter ended June 30, 2024 of $25.8 million, or $1.55 per diluted share, compared to net income of $29.7 million or $1.75 per diluted share for the quarter ended June 30, 2023. We recorded Adjusted EBITDA for the quarter ended June 30, 2024 of $35.3 million compared to $71.5 million for the quarter ended June 30, 2023.

Current wording

We recorded net sales of $393.3 million for the quarter ended September 30, 2024 compared to $278.9 million for the quarter ended September 30, 2023. We recorded a net loss from continuing operations for the quarter ended September 30, 2024 of $10.7 million, or $0.64 per diluted share, compared to income from continuing operations of $14.9 million or $0.88 per diluted share for the quarter ended September 30, 2023. We recorded Adjusted EBITDA from continuing operations for the quarter ended September 30, 2024 of $20.2 million compared to $32.6 million for the quarter ended September 30, 2023.

Previous wording

We recorded an increase of 3% in net sales to $1.1 billion for the six months ended June 30, 2024 compared to $1 billion for the six months ended June 30, 2023. We recorded a net loss for the six months ended June 30, 2024 of $8.6 million, or $0.52 per diluted share, compared to net income of $53.5 million or $3.15 per diluted share for the six months ended June 30, 2023. We recorded Adjusted EBITDA for the six months ended June 30, 2024 of $96.8 million compared to $137.2 million for the six months ended June 30, 2023.

Current wording

We recorded an increase of 15% in net sales to $1.0 billion for the nine months ended September 30, 2024 compared to $867.4 million for the nine months ended September 30, 2023. We recorded loss from continuing operations for the nine months ended September 30, 2024 of $54.4 million, or $3.27 per diluted share, compared to income from continuing operations of $51.4 million or $3.01 per diluted share for the nine months ended September 30, 2023. We recorded Adjusted EBITDA from continuing operations for the nine months ended September 30, 2024 of $25.9 million compared to $107.1 million for the nine months ended September 30, 2023.

Previous wording

We account for business combinations using the acquisition method of accounting which requires that (i) identifiable assets acquired (including identifiable intangible assets) and liabilities assumed generally be measured and recognized at fair value as of the acquisition date and (ii) the excess of the purchase price over the net fair value of identifiable assets acquired and liabilities assumed be recognized as goodwill, which is not amortized for accounting purposes but is subject to testing for impairment at least annually. We measure and recognize asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets. Goodwill is not recognized in an asset acquisition with any consideration in excess of net assets acquired allocated to acquired assets on a relative estimated fair value basis. Transaction costs are expensed in a business combination and transaction costs directly attributable to the acquisition are considered a component of the cost of the acquisition in an asset acquisition. See Note 3, "Business Acquisition," in the Notes to Consolidated Financial Statements included in Item 1 of this report for additional information.

Current wording

We account for business combinations using the acquisition method of accounting which requires that (i) identifiable assets acquired (including identifiable intangible assets) and liabilities assumed generally be measured and recognized at fair value as of the acquisition date and (ii) the excess of the purchase price over the estimated net fair value of identifiable assets acquired and liabilities assumed be recognized as goodwill, which is not amortized for accounting purposes but is subject to testing for impairment at least annually. We measure and recognize asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets. Goodwill is not recognized in an asset acquisition with any consideration in excess of net assets acquired allocated to acquired assets on a relative estimated fair value basis. Transaction costs are expensed in a business combination and transaction costs directly attributable to the acquisition are considered a component of the cost of the acquisition in an asset acquisition. See Note 3, "Business Acquisition," in the Notes to Consolidated Financial Statements included in Item 1 of this report for additional information.

Previous wording

In evaluating our business, we utilize several non-GAAP financial measures. A non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so excluded or included under applicable GAAP guidance. In this report on Form 10-Q, we disclose overall and segment earnings from operations before interest expense, net, non-operating pension and other post employment benefit costs, income tax expense, depreciation and amortization, other operating charges, net, and debt retirement costs as Adjusted EBITDA which is a non-GAAP financial measure. Adjusted EBITDA is not a substitute for the GAAP measure of net income or for any other GAAP measures of operating performance.

Current wording

In evaluating our business, we utilize several non-GAAP financial measures. A non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so excluded or included under applicable GAAP guidance. In this report on Form 10-Q, we disclose overall and segment earnings from operations before interest expense, net, non-operating pension and other post employment benefit costs, income tax expense, depreciation and amortization, other operating charges, net, and debt retirement costs as Adjusted EBITDA from continuing operations which is a non-GAAP financial measure. Adjusted EBITDA from continuing operations is not a substitute for the GAAP measure of net income or for any other GAAP measures of operating performance.

Previous wording

We have included Adjusted EBITDA on a consolidated and business segment basis in this report because we use it as important supplemental measures of our performance and believe that it is frequently used by securities analysts, investors and other interested persons in the evaluation of companies in our industry, some of which present Adjusted EBITDA when reporting their results. We use Adjusted EBITDA to evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates. It should be noted that companies calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA measures may not be comparable to Adjusted EBITDA reported by other companies. Our Adjusted EBITDA measures have material limitations as performance measures because they exclude interest expense, net, income tax (benefit) expense and depreciation and amortization which are necessary to operate our business or which we otherwise incur or experience in connection with the operation of our business. In addition, we exclude other income and expense items which are outside of our core operations.

Current wording

We have included Adjusted EBITDA from continuing operations on a consolidated basis in this report because we use it as an important supplemental measure of our performance and believe that it is frequently used by securities analysts, investors and other interested persons in the evaluation of companies in our industry, some of which present Adjusted EBITDA when reporting their results. We use Adjusted EBITDA from continuing operations to evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates. It should be noted that companies calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA from continuing operations measure may not be comparable to Adjusted EBITDA reported by other companies. Our Adjusted EBITDA from continuing operations measure has material limitations as a performance measure because it excludes interest expense, net, income tax (benefit) expense and depreciation and amortization which are necessary to operate our business or which we otherwise incur or experience in connection with the operation of our business. In addition, we exclude other income and expense items which are outside of our core operations.

Previous wording

The following table provides our Adjusted EBITDA for the periods presented, as well as a reconciliation to net income and segment operating income.

Current wording

The following table provides our Adjusted EBITDA from continuing operations for the periods presented and a reconciliation to net income (loss).

Previous wording

Sales volumes in our Pulp and Paperboard segment increased for the quarter and six months ended June 30, 2024 compared to the same period in the prior year due the inclusion of the Augusta operations (see Note 3, "Business Acquisition," in our Notes to our Consolidated Financial Statements). Sales prices decreased in our Pulp and Paperboard segment for the quarter and six months ended June 30, 2024 compared to the same period in the prior year due to previously announced price decreases and changes in our product mix.

Current wording

Sales increased 41% for the quarter ended September 30, 2024 compared to the same period in the prior year and 15% for the nine months ended September 30, 2024 compared to the same period in the prior year due the inclusion of the Augusta operations (see Note 3 Business Acquisition in our Notes to our Consolidated Financial Statements). This increase was driven by higher sales volume offset by decreases in sales prices due to previously announced price decreases and changes in our product mix.

Previous wording

Retail sales volumes in our Consumer Products segment increased for the quarter and six months ended June 30, 2024 compared to the same period in the prior year due to the increased demand for private label versus branded products. Retail sales prices decreased in our Consumer Products segment for the quarter and six months ended June 30, 2024 compared to the same period in the prior year due to changes in our product mix and reductions resulting from contract pricing indexed to certain cost inputs.

Current wording

Retail sales volumes in our consumer products division increased for the quarter and nine months ended September 30, 2024 compared to the same period in the prior year due to the increased demand for private label versus branded products. Retail sales prices decreased in our consumer products division for the quarter and nine months ended September 30, 2024 compared to the same period in the prior year due to changes in our product mix and reductions resulting from contract pricing indexed to certain cost inputs.

Previous wording

Operating income and Adjusted EBITDA increased for the quarter ended June 30, 2024 compared to the same period in the prior year predominately due to higher volumes and lower raw material costs partially offset by lower sales prices. The increase in operating income and Adjusted EBITDA for the six months ended June 30, 2024 compared to the same period in the prior year was driven by lower input costs, primarily in pulp, freight and energy costs.

Current wording

Operating income and Adjusted EBITDA increased for the quarter ended September 30, 2024 compared to the same period in the prior year predominately due to higher volumes offset by lower sales prices and higher input costs. The increase in operating income and Adjusted EBITDA for the nine months ended September 30, 2024 compared to the same period in the prior year was driven by lower input costs, primarily in pulp, freight and energy costs.

Previous wording

Net cash flows provided by operating activities for the six months ended June 30, 2024 were $80.3 million compared to net cash flows used in operating activities of $36.9 million for the six months ended June 30, 2023. This increase was driven by increases in trade accounts payable compared to the six months ended June 30, 2023 due to the timing of the planned major outages that occurred in the second quarter of 2024 and the fourth quarter of 2022. Accounts receivable and accounts payable agings as of June 30, 2024 have remained relatively consistent with balances as of December 31, 2023.

Current wording

Net cash flows provided by operating activities for the nine months ended September 30, 2024 were $96.5 million compared to net cash flows provided by operating activities of $125.0 million for the nine months ended September 30, 2023. This decrease was driven by lower operating performance and higher interest payments related to the debt incurred associated with the Augusta acquisition. Accounts receivable and accounts payable agings as of September 30, 2024 have remained relatively consistent with balances as of December 31, 2023.

Previous wording

Net cash flows used in investing activities for six months ended June 30, 2024 were $744.8 million compared to $34.3 million in the same period of the prior year. This amount includes $708.2 million associated with the acquisition of a paperboard manufacturing facility and associated business, located in Augusta, Georgia (Augusta) from Graphic Packaging International, LLC (the “Augusta Acquisition”). Included in "Accounts payable and accrued liabilities" on our Consolidated Balance Sheets was $35.1 million and $14.0 million related to unpaid capital expenditures at June 30, 2024 and 2023.

Current wording

Net cash flows used in investing activities for nine months ended September 30, 2024 were $791.8 million compared to $48.5 million in the same period of the prior year. This amount includes $708.2 million associated with the acquisition of a paperboard manufacturing facility and associated business, located in Augusta, Georgia. Included in "Accounts payable and accrued liabilities" on our Consolidated Balance Sheets was $25.5 million and $16.5 million related to unpaid capital expenditures at September 30, 2024 and 2023.

Previous wording

During 2024, we expect cash paid for capital expenditures to be approximately $120 million to $140 million.

Current wording

During 2024, we expect cash paid for capital expenditures to be approximately $100 million to $120 million.

Previous wording

During thesix months ended June 30, 2024, net cash provided by financing activities was$662.1 million. We received net proceeds of $723.5 million from the issuance of long-term debt related to the business acquisition. We used $4.5 million for debt issuance costs, $3.5 million to repurchase stock, and repaid debt of $50.5 million.

Current wording

During thenine months ended September 30, 2024, net cash provided by financing activities was$688.9 million. We received net proceeds of $753.5 million from the issuance of long-term debt related to the business acquisition and to cover short term cash requirements. We used $4.9 million for debt issuance costs, $6.0 million to repurchase stock, and repaid debt of $50.9 million.

Previous wording

During thesix months ended June 30, 2023, net cash used for financing activities was$15.3 million. We used $10.1 million to repurchase stock though our share repurchase program and $4.6 million in connection with income tax withholding requirements associated with our employee stock-based compensation plans. Additionally, we borrowed and repaid $12.0 million on our ABL Credit Agreement to cover short term cash requirements.

Current wording

During thenine months ended September 30, 2023, net cash used for financing activities was$20.7 million. We used $15.1 million to repurchase stock though our share repurchase program and $4.7 million in connection with income tax withholding requirements associated with our employee stock-based compensation plans. Additionally, we borrowed and repaid $12.0 million on our ABL Credit Agreement to cover short term cash requirements.