Clearwater Paper Corp
For the period ended Jun 30, 2025. Filed Jul 29, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Jul 29, 2025
CLW$13.27-4.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-04-29.
0001504337-25-000017
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-29.
0002011383-25-000020
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 41 previous paragraphs and 51 current paragraphs.
26 unchanged; 13 reworded; 11 added; 2 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
In 2024, planned major maintenance outages occurred at our Lewiston, Idaho facility and Cypress Bend, Arkansas facility in the second quarter and Augusta, Georgia facility in the fourth quarter. For the first half of 2025, we completed the planned major maintenance outages at our Cypress Bend, Arkansas facility in the second quarter of 2025. We expect to complete planned major maintenance outages at our Lewiston, Idaho facility in the third quarter of 2025 and at our Augusta, Georgia facility in the fourth quarter of 2025.
Current report
Cost of sales increased 1% for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 and due to the inclusion of the Augusta operations and timing of our planned major maintenance offset by higher inventory build. Input costs increased due to higher sales volume with higher costs on a per ton basis across energy and chemicals partially offset by lower fiber costs. Our labor and overhead decreased due to timing of our planned major maintenance outage and implementation of our cost reduction plan, offset by the absence of insurance proceeds received in the second quarter of 2024 related to the weather event that occurred in the first quarter of 2024. Depreciation increased due to inclusion of the Augusta operations. Supply chain costs increased due to higher volumes offset by lower freight costs per ton due to improved freight optimization related to our revised facility footprint.
Current report
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. We are currently evaluating OBBBA; however, it is not expected to have a material impact on the Company’s consolidated financial statements.
Current report
AUGUSTA ACQUISITION - REPRESENTATION AND WARRANTY INSURANCE CLAIM
Current report
On February 20, 2024, we and Graphic Packaging International, LLC (“GPK”), a wholly owned subsidiary of Graphic Packaging Holding Company, entered into an Asset Purchase Agreement (the “Purchase Agreement”), pursuant to which we acquired a paperboard manufacturing facility and associated business, located in Augusta, Georgia (Augusta). The acquisition was completed on May 1, 2024 and the purchase price was $700 million, subject to adjustments for inventory and other assets. The amount paid totaled approximately $710.6 million. Our consolidated statement of operations includes the operation of these assets from May 1, 2024 through June 30, 2025.
Current report
GPK made customary representations and warranties in the Purchase Agreement for a transaction of this nature relating to periods prior to, and as of, the closing of the acquisition. 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. We have notified the insurance carriers of alleged breaches of certain representations and warranties contained in the Purchase Agreement. In July 2025, we submitted our claims to the insurance carriers for losses arising of the alleged breaches. Although we believe that our claims are meritorious, no assurance can be given as to whether we will recover all, or any part, of the losses for which we have made such claims. No gains or receivables have been recognized related to this claim as of June 30, 2025.
Current report
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 report
ABL Credit Agreement
Current report
The Company is also party to a Credit Agreement, dated July 26, 2019, with JPMorgan Chase Bank, N.A., as administrative agent and several lenders, as amended on May 1, 2024 (as so amended, the “ABL Credit Agreement”) that includes a $375 million revolving loan commitment, subject to borrowing base limitations. The ABL Credit Agreement matures, on November 7, 2027. As of June 30, 2025, our borrowing base supported up to $245.1 million availability under the ABL of which we utilized $50.7 million, consisting of $47.0 million borrowings outstanding and $3.7 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 report
Under the ABL Credit Agreement, loans may bear interest based on SOFR or Alternative Base Rate, as applicable, plus, in each case, an applicable margin that is based on availability, as calculated under the ABL Credit Agreement that may vary from 1.25% per annum to 1.75% per annum in the case of SOFR loans and 0.25% per annum to 0.75% per annum in the case of annual base rate loans. In addition, a commitment fee based on unused availability is also payable which may vary from 0.25% per annum to 0.375% per annum.
Current report
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 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.
Removed paragraphs (2)
Previous report
During thequarter ended March 31, 2024, net cash used for financing activities was$27.6 million. We used $0.5 million to repurchase stock, $3.1 million in connection with income tax withholding requirements associated with our employee stock-based compensation plans, and repaid debt of $23.5 million, including $3.3 million in commitment fees.
Previous report
Credit Agreements
Reworded paragraphs (13)
Previous wording
The below financial information reflects reclassifications from previously reported information based upon discontinued operations. Historically, the Company has shown certain intercompany pulp costs as offsets as they represent intercompany transactions between our prior consumer products division and the pulp and paperboard manufacturing operations. Based upon discontinued operations treatment of the consumer products division, such transfers of pulp and other inputs have been recast to Net Sales on the condensed consolidated statement of operations.
Current wording
The below financial information reflects reclassifications from previously reported information based upon discontinued operations. Historically, the Company has shown certain intercompany pulp costs as offsets as they represent intercompany transactions between our prior consumer products division and the pulp and paperboard manufacturing operations. Based upon discontinued operations treatment of the consumer products division, such transfers of pulp and other inputs have been recast to Net sales on the condensed consolidated statement of operations for all periods shown.
Previous wording
Net sales increased 46% for the quarter ended March 31, 2025 compared to quarter ended March 31, 2024. This increase was driven by higher sales volume due to the Augusta operations offset by market driven price decreases and changes in our product mix.
Current wording
Net sales increased 14% and 28% for the quarter and six months ended June 30, 2025 compared to quarter and six months ended June 30, 2024. These increases were driven by higher sales volume due to the addition of the Augusta operations offset by market driven price decreases and changes in our product mix.
Previous wording
Costs included in our cost of sales include input costs (principally raw materials and energy), labor and overhead, 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, 2025 and 2024.
Current wording
Costs included in our cost of sales include input costs (principally raw materials and energy), labor and overhead, 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, 2025 and 2024.
Previous wording
Cost of sales increased 51% for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 due primarily to the inclusion of the Augusta operations. Input costs increased due to higher sales volume with reductions on a per ton basis across fiber, energy and chemicals due to the lack of weather related expenses which occurred during the first quarter of 2024, partially offset by inflation. Our labor and overhead increased due to the inclusion of the Augusta operations offset by lack of weather related expenses which occurred during the first quarter of 2024 and implementation of our cost reduction plan. Depreciation increased due to inclusion of Augusta operations. Supply chain costs increased due to higher volumes offset by lower freight costs per ton due to deflation.
Current wording
Cost of sales increased 21% for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due primarily to the inclusion of the Augusta operations partially offset by the timing of our planned major maintenance outage. Input costs increased due to higher sales volume with reductions on a per ton basis across fiber, energy and chemicals. Our labor and overhead increased due to the inclusion of the Augusta operations offset by timing of our major maintenance outage and implementation of our cost reduction plan. Depreciation increased due to inclusion of Augusta operations. Supply chain costs increased due to higher volumes offset by lower freight costs per ton due to improved freight optimization related to our revised facility footprint.
Previous wording
Gross profit increased 10% for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 due to improved operating performance, lack of a significant weather event and reduced costs due to planned cost reduction activities.
Current wording
Gross profit increased for thequarter and six months ended June 30, 2025 compared to the same periods in 2024 due to improved operating performance, reduced costs due to timing on our major maintenance outages and planned cost reduction activities, offset by lower sales prices.
Previous wording
Selling, general and administrative expenses increased 3% for the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 primarily as a result of additional sales costs associated with the Augusta acquisition offset by our planned cost reduction efforts.
Current wording
Selling, general and administrative expenses decreased 6% for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily as a result of our planned cost reductions offset by additional sales costs associated with the Augusta acquisition.
Previous wording
Operating income from continuing operations and Adjusted EBITDA from continuing operations increased for the quarter ended March 31, 2025 as compared to the quarter ended March 31, 2024 due to the lack of a significant weather event, deflation on our input costs and our planned cost reduction activities. Additionally, impacting operating income from continuing operations were the integration cost associated with the acquisition of the Augusta facility and severance and other costs associated with our planned cost reduction activities.
Current wording
Operating income from continuing operations and Adjusted EBITDA from continuing operations increased for the quarter ended June 30, 2025 as compared to the quarter ended June 30, 2024 and the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 due to timing of our major maintenance outage, lower input costs and our planned cost reduction activities, offset by lower sales pricing. Additionally, impacting operating income from continuing operations were the integration cost associated with the acquisition of the Augusta facility and severance and other costs associated with our planned cost reduction activities.
Previous wording
Looking forward to the second quarter of fiscal 2025, we expect sales volumes to be higher than in the first quarter. We expect energy costs to decrease in the second quarter due to seasonal trends and expect additional benefits from our fixed cost reduction efforts. In addition, we expect an increase in planned maintenance expense due to our annual outage at our Cypress Bend Arkansas mill.
Current wording
Looking forward to the third quarter of fiscal 2025, we expect sales volumes to be flat from the second quarter. We expect energy costs to decrease in the third quarter due to seasonal trends and expect additional benefits from our fixed cost reduction efforts. In addition, we expect an increase in planned major maintenance expense due to our annual outage at our Lewiston, Idaho mill.
Previous wording
On April 2, 2025, the U.S. announced a new universal baseline tariff of 10%, plus an additional country-specific tariff for select trading partners, on all U.S. imports. The recently announced tariffs exempt imports that are compliant with the United States-Mexico-Canada trading agreement (USMCA), which includes certain of our raw materials (a portion of our chemicals, pulp and energy) imported from Canada. We are evaluating our other expenditures to assess the impact of the recent tariff announcements, but do not currently expect them to have a significant impact on our fiscal 2025 financial results Given the timing and uncertainty of tariffs, including potential retaliatory tariffs, we have not included any impact from potential tariffs in our outlook above.
Current wording
On April 2, 2025, the U.S. announced a new universal baseline tariff of 10% on imports from nearly all trading partners, excluding Canada and Mexico, plus an additional country-specific tariff for select trading partners, which were suspended until August 1, 2025. The U.S. has also imposed tariffs of 25% on certain imports from Canada and Mexico, subject to exemptions for goods that comply with the rules of origin of the United States-Mexico-Canada trading agreement (USMCA). These exemptions apply to certain of our raw materials (a portion of our chemicals, pulp and energy) imported from Canada. In July 2025, it was announced an intention to increase tariffs on Canada and Mexico to 35% and 30%, respectively, to be effective August 1. We are evaluating our other expenditures to assess the impact of the recent tariff announcements, but do not currently expect them to have a significant impact on our fiscal 2025 financial results. Given the timing and uncertainty of tariffs and other trade restrictions, including potential retaliatory tariffs, we have not included any material impact from potential tariffs in our outlook above.
Previous wording
Net cash flows provided by operating activities for the quarter ended March 31, 2025 were $1.5 million compared to net cash flows provided by operating activities of $59.2 million for the quarter ended March 31, 2024. This decrease was driven by lower operating performance due to the divestiture of our tissue operations which are included in discontinued operations in the first quarter of 2024 and reduced cash flows from remaining operations due to market weakness and lower pricing environment. Accounts receivable and accounts payable agings as of March 31, 2025 have remained relatively consistent with balances as of December 31, 2024.
Current wording
Net cash flow used in operating activities for the six months ended June 30, 2025 were $26.7 million compared to net cash flows provided by operating activities of $80.3 million for the six months ended June 30, 2024. This decrease was driven by lower operating performance due to the divestiture of our tissue operations which are included in discontinued operations in the first six months of 2024 and reduced cash flows from remaining operations due to market weakness and lower pricing environment. Additionally, during the second quarter of 2025, we paid $57.2 million related to our 2024 income tax liability primarily related to the sale of our Tissue operations in 2024. Accounts receivable and accounts payable agings as of June 30, 2025 have remained relatively consistent with balances as of December 31, 2024.
Previous wording
Net cash flows used in investing activities for quarter ended March 31, 2025 were $32.7 million compared to $18.5 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 was $16.6 million and $10.3 million related to unpaid capital expenditures at March 31, 2025 and 2024.
Current wording
Net cash flows used in investing activities for six months ended June 30, 2025 were $55.6 million compared to $744.8 million in the same period of the prior year related to capital expenditures and the acquisition of our Augusta, Georgia facility. Included in "Accounts payable and accrued liabilities" on our Consolidated Balance Sheets was $15.5 million and $35.1 million related to unpaid capital expenditures at June 30, 2025 and 2024.
Previous wording
During thequarter 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 will be remitted during the second quarter of 2025.
Current wording
During thesix 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 compensation plans. Additionally, as of June 30, 2025, we had collected $20.1 million in cash related to the transition services agreement which will be remitted during the third quarter of 2025.
Previous wording
At March 31, 2025, we were in compliance with the covenants in the Credit Agreements, and based on our current financial projections, we expect to remain in compliance. However, if our financial position, results of operations or market conditions deteriorate, we may not be able to remain in compliance. There can be no assurance that we will be able to remain in compliance with the Credit Agreements.
Current wording
At June 30, 2025, we were in compliance with the covenants associated with our ABL Credit Agreement, and based on our current financial projections, we expect to remain in compliance. However, if our financial position, results of operations or market conditions deteriorate, we may not be able to remain in compliance. There can be no assurance that we will be able to remain in compliance with our ABL Credit Agreement or other credit agreements.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Selling, general and administrative expenses decreased 14% for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 primarily as a result of our planned cost reduction efforts.