Sign in

You're signed outSign in or to get full access.

CP

Clearwater Paper Corp (CLW)·Q1 2025 Earnings Summary

Executive Summary

  • Net sales were $378.2M (+46% YoY), with Adjusted EBITDA $29.8M (7.9% margin) at the high end of guidance, driven by Augusta volume, operational improvements, and fixed-cost reductions; paperboard ASP fell 7% to $1,188/ton, partially offset by higher volumes .
  • EPS from continuing operations was -$0.36; revenue modestly beat S&P Global consensus ($378.2M vs $376.0M*) while EPS missed (-$0.36 vs -$0.04*), reflecting price headwinds and non-GAAP “Other operating charges” of $11.8M *.
  • Management guided Q2 2025 Adjusted EBITDA to $35–$45M and maintained FY25 revenue of ~$1.5–$1.6B and ~85% utilization, with fixed cost reduction of $30–$40M and annual run-rate savings of $40–$50M; FY25 direct maintenance costs raised to $45–$50M .
  • Stock-relevant narrative: cost-reduction ramp (2x sequential savings into Q2), continued demand recovery and potential tariff-related domestic supply benefit, plus synergy capture from Augusta by end-2026; buybacks of $11M in Q1 continue capital return optionality .

What Went Well and What Went Wrong

What Went Well

  • “We delivered $30 million of adjusted EBITDA during the quarter, which was at the high end of our guidance range… driven by strong operational performance, increased production and sales volumes, primarily due to the Augusta acquisition” .
  • Fixed cost actions underway: “eliminating more than 200 positions… 10% of total roles… on track to deliver $30–$40 million of savings this year versus 2024” .
  • Integration: “successfully completed the integration of the Augusta mill… focused on fully capturing volume and cost synergies by the end of 2026” .

What Went Wrong

  • Pricing headwinds: paperboard average net selling price down 7% YoY to $1,188/ton; pricing impacted Adjusted EBITDA by -$9M YoY per CFO commentary .
  • Non-GAAP “Other operating charges” of $11.8M booked in the quarter, contributing to continuing operations loss and EPS miss vs consensus .
  • Industry still in downcycle: utilization at ~88% vs 90–95% balanced level; new capacity expected in Q2 keeps pricing/margins pressured near term .

Financial Results

Core Financials vs Prior Year and Prior Quarter

MetricQ1 2024Q4 2024Q1 2025
Net Sales ($USD Millions)$258.8 $387.1 $378.2
EPS (Continuing, Diluted) ($)-$0.12 -$1.17 -$0.36
Adjusted EBITDA ($USD Millions)$14.2 $9.5 $29.8
Adjusted EBITDA Margin (%)5.5% 2.5% 7.9%

Segment/Category Net Sales

Category ($USD Millions)Q1 2024Q4 2024Q1 2025
Food service$89.6 $174.0 $151.4
Folding carton$107.0 $143.5 $148.4
Sheeting & distribution$40.4 $36.9 $38.8
Pulp and other$21.8 $32.7 $39.6
Total$258.8 $387.1 $378.2

KPIs

KPIQ1 2024Q4 2024Q1 2025
Paperboard Volumes (tons)187,303 306,692 289,487
Net Sales Price per Ton ($/ton)$1,284 $1,177 $1,188

Sequential Trend (Q4 2024 → Q1 2025)

MetricQ4 2024Q1 2025Seq Change
Net Sales ($USD Millions)$387.1 $378.2 -$8.9M
Adjusted EBITDA ($USD Millions)$9.5 $29.8 +$20.3M
Paperboard Volumes (tons)306,692 289,487 -17,205
ASP ($/ton)$1,177 $1,188 +$11

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($)Q2 2025N/A$35–$45M New
Capacity Utilization (%)FY 2025~85% ~85% Maintained
Revenue ($)FY 2025~$1.5–$1.6B ~$1.5–$1.6B Maintained
Fixed Cost Reduction ($)FY 2025$30–$40M $30–$40M Maintained
Run-Rate Savings ($)Annual$40–$50M $40–$50M Maintained
Direct Major Maintenance ($)FY 2025$40–$50M $45–$50M (Q2 Cypress Bend $7–$9M; Q3 Lewiston $22–$24M; Q4 Augusta $15–$17M) Raised
Capex ($)FY 2025$80–$90M $80–$90M Maintained
Energy Costs ($)Q2 vs Q1 2025N/A~$6M lower seasonally in Q2 New
SG&A as % of SalesFY 2025Target 6–7% Target 6–7%; Q1 at 7.6% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2024)Previous Mentions (Q-1: Q4 2024)Current Period (Q1 2025)Trend
Industry cycle/utilizationDowncycle; target cross-cycle EBITDA margin 13–14%; SBS supply additions in 2025 Utilization 85% in 2024; new capacity coming in 2025 Utilization ~88%; balanced market 90–95% target Improving demand, still below balanced
Tariffs/macroDiscussed macro/pricing headwinds; avoided pricing specifics Tariff impacts likely passed to customers; primarily domestic supplier Potential net beneficiary; ~$100M imports (mostly Canada); minimal near-term impact; not included in outlook Watchful, potential positive
Product innovationLightweight, compostable, recycled content; investments in pulpers, barriers Exploring additional substrates (CUK/CRB); long-term options Compostable plates in-market by YE; lightweight carton in 2026; alternative poly-free barriers Execution progressing
Cost reductionPlanning stage; $50M+ annualized target; SG&A to ~6% 10% headcount cut; $30–$40M 2025 savings targeted Q2 savings ~2x Q1; ramp through year Accelerating
Capital allocationNet deleveraging; $100M buyback authorization Net leverage ~1.1x; opportunistic buybacks $11M repurchases in Q1; target 1–2x leverage Ongoing, opportunistic
Segment demandDemand recovery; foodservice robust Foodservice more robust than folding carton; sold out on extruded products Mix shift Q4→Q1: foodservice down sequentially; folding carton flat; no market slowdown indicated Mixed sequentially; demand improving

Management Commentary

  • “We delivered $30 million of adjusted EBITDA… driven by strong operational performance, increased production and sales volumes, primarily due to the Augusta acquisition and benefits from our cost reduction work” — Arsen Kitch .
  • “We took action to reduce our fixed cost structure by eliminating more than 200 positions… around 10% of total roles. We're on track to deliver $30 million to $40 million of savings this year versus 2024” — Arsen Kitch .
  • “In the second quarter, we expect to deliver $35 million to $45 million of adjusted EBITDA… approximately 5% growth in sales and production volumes versus the first quarter… $6 million decrease in seasonal energy costs” — Sherri Baker .

Q&A Highlights

  • Tariff exposure: ~$80M energy/raw materials from Canada; ~$20–$25M other imports; hypothetical 25% tariff ~+$25M annual cost, largely manageable; focus on pass-throughs and supplier diversification; potential net domestic demand benefit .
  • Mix/demand: Q4→Q1 mix shift (food service down, folding carton flat) likely timing; no specific market slowdown; expecting ~5% sequential volume growth in Q2 .
  • Product expansion: Lightweight folding carton likely achieved via existing machines; capital within normal ranges; initial focus on existing customer needs; compostable plates targeted by YE .
  • Cost savings cadence: Q2 savings roughly 2x Q1, ramping through year then plateau; Augusta synergies mainly volume-driven, contingent on cross-cycle margins .

Estimates Context

MetricQ3 2024Q4 2024Q1 2025
Revenue Consensus Mean ($USD Millions)$622.0*$473.0*$376.0*
Revenue Actual ($USD Millions)$393.3 $387.1 $378.2
EPS Consensus Mean ($)$0.29*-$0.33*-$0.04*
EPS Actual ($)$0.35 (total ops) $11.91 (total ops; gain on sale) -$0.36 (continuing ops)

Values retrieved from S&P Global.*

Implications:

  • Q1 2025 revenue beat modestly ($378.2M vs $376.0M*), while EPS missed (-$0.36 vs -$0.04*), reflecting price headwinds and non-core charges *.
  • Q4 2024 EPS comparison is distorted by the $307M gain on sale of the tissue business; continuing EPS was -$1.17 despite headline EPS of $11.91 .

Key Takeaways for Investors

  • Volume-led earnings resilience: Despite pricing pressure, Q1 Adjusted EBITDA rebounded to $29.8M with margin 7.9%, supported by Augusta volume and cost actions; guidance points to sequential EBITDA growth in Q2 .
  • Cost-reduction as near-term driver: Savings are inflecting (Q2 ≈2x Q1), with $30–$40M FY reductions and $40–$50M annual run-rate targeted; monitor SG&A trajectory toward 6–7% and execution across operations .
  • Pricing/macro risk persists: Industry still below balanced utilization and new capacity is ramping; expect continued price headwinds, but potential domestic supply tailwinds from tariffs could aid utilization and demand .
  • Cash allocation flexibility: Stronger balance sheet (target 1–2x net leverage) and ongoing buybacks ($11M in Q1) provide optionality, balanced against maintenance CapEx and planned outages ($45–$50M direct costs in 2025) .
  • Product pipeline: Compostable plates (YE’25) and lightweight folding carton (2026) broaden offering and address sustainability trends amid competitive pressure from FBB imports and integrated players .
  • Synergy capture path: Augusta integration complete; volume/cost synergies targeted by end-2026 with mid-cycle margin targets (13–14%) underscoring long-run FCF potential ($100M+) when utilization normalizes .