Clearwater Paper Corp

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 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.

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 (benefit), 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

The following table reconciles our Net loss to Adjusted EBITDA from continuing operations for the periods presented.

Current wording

The following table reconciles our Net income (loss) to Adjusted EBITDA from continuing operations for the periods presented.

Previous wording

Net sales decreased 5% for the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025 with increased sales volume to existing customers more than offset by market driven price decreases and changes in our product mix.

Current wording

Net sales decreased 4% and 5% for the quarter and six months ended June 30, 2026 compared to the quarter and six months ended June 30, 2025. These decrease primarily resulted from market driven price decreases and changes in our product mix offset by increases in sales volume to existing customers. Additionally, pulp sales declined for the quarter and six months ended June 30, 2026 compared to same periods in 2025 due to the planned major maintenance outage at our Lewiston facility which limited our pulp production capability.

Previous wording

Costs included in our cost of sales include input costs (principally raw materials and energy), labor and overhead and supply chain costs (principally freight and outside warehousing). The table below provides the details of our cost of sales for the quarters ended March 31, 2026 and 2025.

Current wording

Costs included in our cost of sales include input costs (principally raw materials and energy), labor and overhead and supply chain costs (principally freight and outside warehousing). The table below provides the details of our cost of sales for the quarters and six months ended June 30, 2026 and 2025.

Previous wording

Cost of sales increased 6% for the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025 due to price spikes in natural gas and other adverse impacts associated with the cold weather events that occurred early in the first quarter of 2026. Input costs were relatively flat with minor increases in chemicals and energy. Our labor and overhead increased due to higher maintenance costs associated with the weather events. Supply chain costs increased due to higher volumes and higher freight costs per ton because of inefficiencies due to the weather events. Other cost increased due to inventory reductions in the first quarter of 2026 which was driven by lower production which was caused by weather events.

Current wording

Cost of sales increased 8% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Input costs decreased due to lower production related to the planned major maintenance outage in the second quarter of 2026 and the weather event in the first quarter of 2026 offset by per unit increases in chemicals. Our labor and overhead increased due to higher maintenance costs associated with the planned major maintenance outage and the weather event. Supply chain costs increased due to higher sales volumes and higher freight costs per ton due to inflation. Other costs increased due to inventory reductions driven by lower production caused by the planned major maintenance and weather events.

Previous wording

Selling, general and administrative expenses decreased 29% for the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025 primarily as a result of our planned cost reduction efforts.

Current wording

Selling, general and administrative expenses decreased 19% and 24% for the quarter and six months ended June 30, 2026 primarily as a result of our planned cost reduction efforts.

Previous wording

Operating income from continuing operations decreased for the quarter ended March 31, 2026 as compared to the quarter ended March 31, 2025 due to the weather event and lower sales prices, offset by higher sales volumes and insurance recovery. For the quarter ended March 31, 2026, Adjusted EBITDA from continuing operations decreased as compared to the quarter ended March 31, 2025 due to the weather event and lower sales prices, offset by higher sales volumes.

Current wording

Operating income from continuing operations decreased for the quarter ended June 30, 2026 as compared to the quarter ended June 30, 2025 due to the planned major maintenance outage at our Lewiston, Idaho facility and lower sales prices, offset by higher sales volumes and insurance recovery. For the quarter ended June 30, 2026, Adjusted EBITDA from continuing operations decreased as compared to the quarter ended June 30, 2025 due to the planned major maintenance outage at our Lewiston, Idaho facility and lower sales prices, offset by higher sales volumes.

Previous wording

Looking forward to the second quarter of fiscal 2026, we expect operating costs to be higher due to our planned major maintenance outage at our Lewiston, Idaho facility and increases in petroleum based input costs, including chemicals, energy and transportation related costs.

Current wording

Looking forward to the third quarter of fiscal 2026, we expect operating costs to be lower due to the absence of a planned major maintenance outage offset by expected increases in petroleum based input costs, including chemicals and transportation related costs.

Previous wording

In connection with our acquisition of our Augusta, Georgia mill from Graphic Packaging International, LLC, a wholly owned subsidiary of Graphic Packaging Holding Company, we obtained representation and warranty insurance, subject to exclusions, a policy limit of $105 million, and certain other terms and conditions, to cover losses resulting from a breach of these representations and warranties. During 2025, we notified the insurance carriers of alleged breaches of certain representations and warranties contained in the Purchase Agreement. During the quarter ended March 31, 2026, we received a partial settlement of $17.5 million related to these claims, of which $5.6 million was related to reimbursable costs and recorded within "Cost of sales" and $11.9 million related to other breaches and reported within "Other operating charges, net" in our Consolidated Statements of Operations. As of March 31, 2026, we have $50 million remaining under our policy limit. Although we believe that our claims are meritorious, no assurance can be given as to whether we will recover additional proceeds related to these claims.

Current wording

In connection with our acquisition of our Augusta, Georgia mill from Graphic Packaging International, LLC, a wholly owned subsidiary of Graphic Packaging Holding Company, we obtained representation and warranty insurance, subject to exclusions, a policy limit of $105 million, and certain other terms and conditions, to cover losses resulting from a breach of these representations and warranties. During 2025, we notified the insurance carriers of alleged breaches of certain representations and warranties contained in the Purchase Agreement. During the six months ended June 30, 2026 we received proceeds of $32.5 million, of which $9.2 million was related to reimbursable costs and recorded within "Cost of sales" and $23.3 million related to other breaches and reported within "Other operating charges, net" in our Consolidated Statements of Operations. As of June 30, 2026, we have $25.0 million remaining under our policy limit. Although we believe that our claims are meritorious, no assurance can be given as to whether we will recover additional proceeds related to these claims.

Previous wording

Net cash flows provided by operating activities for the quarter ended March 31, 2026 were $0.5 million compared to $1.5 million for the quarter ended March 31, 2025. This decrease was driven by lower operating performance offset by insurance recoveries of $17.5 million and income tax refunds of $4 million. Accounts receivable and accounts payable agings as of March 31, 2026 have remained relatively consistent with balances as of December 31, 2025.

Current wording

Net cash flows provided by operating activities for the six months ended June 30, 2026 were $69.5 million compared to cash used by operating activities of $26.7 million for the six months ended June 30, 2025. This increase was driven by insurance recoveries of $32.5 million, income tax refunds of $30 million and targeted inventory reductions offset by lower operating performance. Accounts receivable and accounts payable agings as of June 30, 2026 have remained relatively consistent with balances as of December 31, 2025.

Previous wording

Net cash flows used in investing activities for the quarter ended March 31, 2026 were $9.1 million compared to $32.7 million in the same period of the prior year related to capital expenditures. Included in "Accounts payable and accrued liabilities" on our Consolidated Balance Sheets were $6.9 million and $16.6 million related to unpaid capital expenditures at March 31, 2026 and 2025.

Current wording

Net cash flows used in investing activities for the six months ended June 30, 2026 were $18.7 million compared to $55.6 million in the same period of the prior year related to capital expenditures. Included in "Accounts payable and accrued liabilities" on our Consolidated Balance Sheets were $13.3 million and $15.5 million related to unpaid capital expenditures at June 30, 2026 and 2025.

Previous wording

During the quarter ended March 31, 2026, net cash provided by financing activities was $14.3 million. We borrowed $15.0 million under our credit agreements. We used $0.5 million in connection with income tax withholding requirements associated with our employee stock-based compensation plans.

Current wording

During the six months ended June 30, 2026, net cash provided by financing activities was $13.9 million. We borrowed $15.0 million under our credit agreements. We used $0.6 million in connection with income tax withholding requirements associated with our employee stock-based compensation plans.

Previous wording

During the quarter ended March 31, 2025, net cash used in financing activities was $4.4 million. We used $10.9 million to repurchase stock and $2.3 million in connection with income tax withholding requirements associated with our employee stock-based compensation plans. Additionally, as of March 31, 2025, we collected $8.9 million in cash related to the transition services agreement which was remitted during the second quarter of 2025.

Current wording

During the six months ended June 30, 2025, net cash provided by financing activities was $49.3 million. We borrowed $65.0 million and repaid $18.3 million on our ABL. We used $15.1 million to repurchase stock and $2.3 million in connection with income tax withholding requirements associated with our employee stock-based plans. Additionally, as of June 30, 2025, we had collected $20.1 million in cash related to the transition services agreement which was remitted during the third quarter of 2025.

Previous wording

We are party to a Credit Agreement, dated July 26, 2019, with JPMorgan Chase Bank, N.A., as administrative agent and several lenders (which may be amended from time to time, the “ABL Credit Agreement”) consists of a $375 million revolving loan commitment, subject to borrowing base limitations. The ABL Credit Agreement matures on November 7, 2027. As of March 31, 2026, our eligible receivables and inventory supported up to $213.3 million availability under the ABL of which we utilized $82.5 million, consisting of $79.0 million borrowings outstanding and $3.5 million under letters of credit. Borrowings under the ABL Credit Agreement are subject to mandatory prepayment in certain circumstances. We may also increase commitments under the ABL Credit Agreement in an aggregate principal amount of up to $100 million, subject to obtaining commitments from any participating lenders and certain other conditions. We may, at our option, prepay and reborrow any borrowings under the ABL Credit Agreement, in whole or in part, at any time and from time to time without premium or penalty (except in certain circumstances).

Current wording

We are party to a Credit Agreement, dated July 26, 2019, with JPMorgan Chase Bank, N.A., as administrative agent and several lenders (which may be amended from time to time, the “ABL Credit Agreement”) that consists of a $375 million revolving loan commitment, subject to borrowing base limitations. The ABL Credit Agreement matures on November 7, 2027. As of June 30, 2026, our eligible receivables and inventory supported up to $197.7 million availability under the ABL Credit Agreement of which we utilized $82.8 million, consisting of $79.0 million borrowings outstanding and $3.8 million under letters of credit. Borrowings under the ABL Credit Agreement are subject to mandatory prepayment in certain circumstances. We may also increase commitments under the ABL Credit Agreement in an aggregate principal amount of up to $100 million, subject to obtaining commitments from any participating lenders and certain other conditions. We may, at our option, prepay and reborrow any borrowings under the ABL Credit Agreement, in whole or in part, at any time and from time to time without premium or penalty (except in certain circumstances).

Previous wording

The ABL Credit Agreement also contains a financial covenant, which requires us to maintain a consolidated fixed charge coverage ratio of not less than 1.10x to 1.00x, provided that the financial covenant under the ABL Credit Agreement is only applicable during an event of default or if availability, as calculated under the ABL Credit

Current wording

The ABL Credit Agreement also contains a financial covenant, which requires us to maintain a consolidated fixed charge coverage ratio of not less than 1.10x to 1.00x, provided that the financial covenant under the ABL Credit

Previous wording

Agreement, is at any time less than or equal to the greater of (i) 10.0% of the lesser of the borrowing base and the maximum $375 million of current revolving loan commitments and (ii) $25 million.

Current wording

Agreement is only applicable during an event of default or if availability, as calculated under the ABL Credit Agreement, is at any time less than or equal to the greater of (i) 10.0% of the lesser of the borrowing base and the maximum $375 million of current revolving loan commitments and (ii) $25 million.

Previous wording

We are party to an amended and restated credit agreement dated as of May 1, 2024 with AgWest Farm Credit, PCA, as administrative agent and several lenders (which may be amended from time to time, the “PCA Credit Agreement”) that consists of a term revolver commitment in the amount of $264.6 million and which is subject to an annual reduction of 2% of the commitments then in effect. As of March 31, 2026, we had no borrowings on the term revolver. We may increase term revolver commitments under the PCA Credit Agreement in an aggregate amount of up to $60.0 million, subject to obtaining commitments from any participating lenders and certain other conditions. The PCA Credit Agreement matures on May 1, 2029, subject to a springing maturity beginning on the day that is 91 days prior to the maturity of the Company’s 2020 Notes if the outstanding principal amount of the 2020 Notes plus $50.0 million is at any time during such 91 day period greater than the sum of our available borrowing liquidity and unrestricted cash.

Current wording

We are party to an amended and restated credit agreement dated as of May 1, 2024 with AgWest Farm Credit, PCA, as administrative agent and several lenders (which may be amended from time to time, the “PCA Credit Agreement”) that consists of a term revolver commitment in the amount of $259.3 million and which is subject to an annual reduction of 2% of the commitments then in effect. As of June 30, 2026, we had no borrowings on the term revolver. We may increase term revolver commitments under the PCA Credit Agreement in an aggregate amount of up to $60.0 million, subject to obtaining commitments from any participating lenders and certain other conditions. The PCA Credit Agreement matures on May 1, 2029, subject to a springing maturity beginning on the day that is 91 days prior to the maturity of the Company’s 2020 Notes if the outstanding principal amount of the 2020 Notes plus $50.0 million is at any time during such 91 day period greater than the sum of our available borrowing liquidity and unrestricted cash.

Previous wording

Under the PCA Credit Agreement, loans generally may bear interest based on SOFR or the administrative agent’s fixed rate, as applicable, plus, in each case, an applicable margin of 3.65% per annum. We may receive patronage dividends under the PCA Credit Agreement. Patronage dividends are distributions of profits from banks in the farm credit system. Patronage dividends, which are generally made in cash, are accrued as earned and recorded as a reduction to interest expense.

Current wording

Under the PCA Credit Agreement, loans generally may bear interest based on SOFR or the administrative agent’s fixed rate, as applicable, plus, in each case, an applicable margin of 3.64% per annum. We may receive patronage dividends under the PCA Credit Agreement. Patronage dividends are distributions of profits from banks in the farm credit system. Patronage dividends, which are generally made in cash, are accrued as earned and recorded as a reduction to interest expense.