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Clearwater Paper Corp (CLW)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 delivered net sales of $391.8M, diluted EPS from continuing operations of $0.22, and Adjusted EBITDA of $39.9M, reflecting higher volume from the Augusta mill, lower fixed costs, and successful completion of the Cypress Bend outage .
  • Versus S&P Global consensus, revenue modestly missed ($391.8M vs $397.0M*) and EPS significantly missed ($0.22 vs $0.70*), while Adjusted EBITDA was essentially in line ($39.9M vs $40.1M*) .
  • Management guided Q3 Adjusted EBITDA to $10–$20M with flat shipments vs Q2, a $23–$25M Lewiston outage, ~5% lower production and minimal tariff impacts; FY25 assumptions maintained (revenue $1.5–$1.6B, capex $80–$90M, direct major maintenance $45–$50M, and $30–$40M cost reductions) .
  • Strategic focus remains on navigating oversupply through cost reductions and operational execution; medium-term catalysts include potential trade/tariff actions and product-line expansion (CUK/CRB, compostable/lightweight) to improve utilization and margins through the cycle .

Consensus values marked with * are retrieved from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • Cost actions tracking to plan: “on track to deliver a $30–$40M reduction this year… SG&A down nearly 14% vs last year to 6.7% of net sales,” and Adjusted EBITDA margin expanded to ~10% .
    • Volume and operations: Q2 sales volumes rose 12% YoY to 304,713 tons; production rose to 323,489 tons; Augusta integration benefits continued; Cypress Bend major maintenance completed in-line with ~$9M plan .
    • Capital allocation: $4M buybacks in Q2 and $18M since the authorization launch, with net leverage at ~1.9x, maintaining balance sheet flexibility .

  • What Went Wrong

    • Pricing headwinds persisted: average net selling price per ton down ~3% YoY to $1,182, consistent with broader market trends and oversupply .
    • Modest revenue and EPS miss vs consensus amid industry oversupply and pricing pressure; revenue $391.8M vs $397.0M*, EPS $0.22 vs $0.70* .
    • Industry utilization weakened to ~83% with new capacity ramping; management expects below-normal rates near term, contributing to continued margin pressure .

Consensus values marked with * are retrieved from S&P Global.

Financial Results

Quarter-on-Quarter and Year-on-Year

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($M)$387.1 $378.2 $391.8
Diluted EPS – Continuing Ops ($)$(1.17) $(0.36) $0.22
Adjusted EBITDA ($M)$9.5 $29.8 $39.9
Adjusted EBITDA Margin (%)2.5% 7.9% 10.2%
Paperboard Sales Vol. (tons)306,692 289,487 304,713
Net Sales Price per Ton ($/t)$1,177 $1,188 $1,182

Actual vs S&P Global Consensus – Q2 2025

MetricCompany ActualS&P Global Consensus*Surprise
Net Sales ($M)$391.8 $397.0*-$5.2M / -1.3%
Diluted EPS – Continuing Ops ($)$0.22 $0.70*-$0.48
Adjusted EBITDA ($M)$39.9 $40.1*-$0.2M

Consensus values marked with * are retrieved from S&P Global.

End-Market/Category Mix (Net Sales $M)

CategoryQ2 2024Q1 2025Q2 2025
Food service$134.7 $151.4 $166.1
Folding carton$147.6 $148.4 $147.6
Sheeting & distribution$41.2 $38.8 $39.9
Pulp and other$20.9 $39.6 $38.2
Total$344.4 $378.2 $391.8

Selected KPIs

KPIQ2 2024Q2 2025
SG&A as % of Net Sales8.8% 6.7%
Adjusted EBITDA Margin-2.5% 10.2%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($M)Q3 2025N/A$10–$20M New
ShipmentsQ3 2025N/AFlat vs Q2 2025 New
Production/cost absorptionQ3 2025N/ALower vs Q2 due to Lewiston outage New
Direct major maintenance – LewistonQ3 2025N/A$23–$25M New
Tariff impactQ3/FY 2025N/AMinimal in Q3; FY $1–$2M New/Specified
RevenueFY 2025~$1.5–$1.6B ~$1.5–$1.6B Maintained
Fixed cost reductionFY 2025$30–$40M (run-rate $40–$50M) $30–$40M (run-rate $40–$50M) Maintained
Direct major maintenance (total)FY 2025$45–$50M $45–$50M Maintained
Capital expendituresFY 2025$80–$90M $80–$90M Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Industry utilization/oversupplyFY24 utilization 85% and new capacity in 2025; taking cost actions for downcycle Utilization ~83% in Q2; expects below-normal near term due to new capacity Deteriorated sequentially
PricingFY24 pricing down; Q1’25 ASP -7% YoY Q2 ASP -3% YoY to $1,182/t Continued pressure
Cost reductionsPlan $30–$40M in 2025; 10% workforce reduction On track; SG&A 6.7% of sales; annualized run-rate $40–$50M Executing to plan
Maintenance/outagesPlanned major maintenance at Augusta in Q4’24 Q2 Cypress Bend completed (~$9M); Q3 Lewiston ($23–$25M) Heavy 2H25 outage cadence
Product portfolio expansionExploring CUK/CRB; sustainability grades Decision on CUK by YE; ~$50M, ~18 months; compostable certified; lightweight offer by 2026 Advancing options
Trade/tariffs2025 uncertainty re: tariffs Minimal Q3 impact; FY tariff ~$1–$2M Small near-term headwind
Capital allocationDelevered; buyback program $4M repurchased in Q2; total $18M to date; balance sheet priority maintained Ongoing, prudent

Management Commentary

  • “We delivered a strong second quarter that was in line with our expectations… $40 million of Adjusted EBITDA… net sales were $392 million, up 14% versus prior year, primarily driven by the Augusta acquisition” .
  • “Industry utilization rates fell to 83.1% in the second quarter… likely reflects the startup of new capacity… we expect SBS industry utilization rates to remain well below historical norms in the coming quarters” .
  • “We’re nearing completion of market and engineering studies on the potential entry into CUK… investment would be in the $50 million range and take around 18 months” .
  • “SG&A expenses were down nearly 14% versus last year to 6.7% of net sales… driven by our cost reduction initiatives and the completion of the Augusta integration” .

Q&A Highlights

  • Demand signals are mixed: shipments up ~5% sequentially at CLW with stable backlogs, while industry shipments were down; mgmt views softness as cyclical, not secular .
  • Q3 bridge: ~$15M sequential increase in outage expense (Lewiston $23–$25M vs Cypress Bend ~$9M in Q2), ~5% lower production (absorption), and modest tariff impact underpin $10–$20M Adjusted EBITDA guide .
  • Price trajectory: Q1–Q2 price stable; management avoids commenting on forward pricing; new capacity remains a watch item .
  • Shipments/utilization cadence: Flat from Q2 to Q3, potential seasonality in Q4; utilization pressured by major outages in 2H .

Estimates Context

  • Q2 2025 vs S&P Global consensus: revenue $391.8M vs $397.0M* (miss), EPS $0.22 vs $0.70* (miss), Adjusted EBITDA $39.9M vs $40.1M* (in line) .
  • Forward consensus and guidance: Q3 2025 EBITDA consensus ~$15.6M* sits within the company’s $10–$20M guide; mgmt’s explicit outage costs and absorption impacts suggest Street models should reflect lower production and higher maintenance in Q3, with recovery potential post-outage .
  • Target price consensus ~$30* on 2 estimates; estimate depth remains thin, increasing model dispersion risk.

Consensus values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Volume tailwinds are intact (Augusta, food service) but price remains the core headwind; mix/pricing inflection likely requires utilization improvement (tariffs/imports, capacity rationalization) .
  • Execution on cost reductions is visible (SG&A ratio, EBITDA margin improvement), providing partial offset to pricing pressure through the downcycle .
  • 2H25 is outage-heavy (Lewiston Q3; Augusta Q4), depressing production and absorption; Q3 guide embeds these headwinds explicitly—post-outage normalization is a near-term setup .
  • Strategic adjacency moves (CUK swing capability, CRB via M&A) could broaden addressable market without expanding overall capacity, improving asset flexibility and utilization through cycles .
  • Balance sheet remains a support (net leverage ~1.9x; selective buybacks), but management does not intend to lever for repurchases—cash preservation prioritized during outages .
  • Estimate revisions: Expect modest downward EPS revisions given Q2 miss and Q3 outage drag; FY framework maintained (revenue $1.5–$1.6B; capex/maintenance unchanged), anchoring medium-term modeling .
  • Stock catalysts: tariff/import developments, signs of utilization improvement, progress on CUK/CRB decision by YE, and margin expansion from cost actions and pricing stabilization .

Appendix: Sources Read in Full

  • Q2 2025 8-K 2.02 and Exhibit 99.1/99.2 (press release and supplemental) –.
  • Q2 2025 earnings call transcript –; corroborating alternate transcript –.
  • Other relevant Q2 press releases (timing/availability) .
  • Prior quarters for trend analysis: Q1 2025 8-K and exhibits –; Q4 2024 8-K and exhibits – –.

Consensus values marked with * are retrieved from S&P Global.