Clearwater Paper Corporation Q3 FY2025 earnings call

• Adjusted EBITDA of $18 million was towards the high end of the $10M to $20M guidance range. Year-to-date adjusted EBITDA from continuing operations was $87M, up from $26M last year, driven by fixed cost reductions and Augusta results.
• Net sales grew 2% q-o-q due to a 6% increase in shipment volumes, partly offset by lower market-driven pricing.
• Successfully completed all 3 planned major maintenance outages in 2025: Lewiston outage in Aug at $24M direct cost, Augusta outage in Oct at $16M direct cost; execution improved vs prior year.
• Fixed cost reduction initiatives tracking $50M savings for the year, exceeding original estimate of $30M to $40M.
• Industry trends: Competitor ramping SBS capacity, low utilization rates, potential supply rebalance via capacity reduction, tariffs, dollar weakness, or grade swings.
• CUK and CRB pricing dynamics vs SBS; exploring CUK swing capability at Cypress Bend mill with estimated $50M capital, 12-18 months lead time, potential 20%+ return.

Net sales were $399 million, up 1% year-over-year, driven by a 3% increase in paperboard shipment volumes partially offset by lower market pricing. Adjusted EBITDA was $18 million, towards the higher end of the guidance range of $10 million to $20 million. Year-to-date adjusted EBITDA from continuing operations stood at $87 million, up from $26 million during the same period last year, driven mostly by fixed cost reductions and 4 incremental months of Augusta results included in the P&L. There is no clear breakdown by distinct product segments but discussion around paperboard substrates like SBS, CUK, and CRB with their pricing and market dynamics.

• Q4 adjusted EBITDA guidance: $13M to $23M, lower shipments due to seasonality, cost savings mostly captured. SG&A as % of sales at 6.2% at lower end of targeted range.
• 2026: Revenue expected $1.45B to $1.55B, capacity utilization mid-80% range, expect carryover price changes, $65M to $75M capex, $20M+ working capital improvement, not expected to be net cash taxpayer next year.
• Long-term: If utilization returns to 90%-95%, expect adjusted EBITDA margins 13%-14%, free cash flow conversion 40%-50% assuming $1.8B to $1.9B net sales.

• Industry oversupply leading to low utilization rates and margin pressure.
• Potential for continued import competition despite tariffs and dollar weakness.
• Uncertainty in industry capacity rebalancing efforts.

Q: Decision to hold CUK swing capacity project; A: Project has long cash flow, prioritize maintaining a strong balance sheet and focusing on running SBS mills, targeting leverage in 1%-2% range and EBITDA margins 13%-14%.

Q: Market outlook for SBS, import relief; A: RISI forecasts first half net capacity reduction of 350,000 tons, European imports down, tariffs and dollar weakening helping domestic supply.

Q: 2026 maintenance schedule, Q4 EBITDA guidance variability; A: Maintenance schedule to be finalized, Q4 EBITDA range due to seasonality, energy, production.

Q: Working capital improvement; A: Primarily inventory reduction, to be achieved in second half of 2026, trade-off with fixed cost absorption.