Executive Summary

Net sales of $399.0M (+1% YoY) and adjusted EBITDA of $17.8M; GAAP diluted EPS from continuing operations was -$3.34 due to a $48M goodwill impairment; adjusted loss per share was -$0.51 .
Results vs consensus: revenue beat ($399.0M vs $387.9M*), adjusted EBITDA beat ($17.8M vs $15.6M*), but EPS missed (-$3.34 vs -$0.53*), driven by the non-cash goodwill impairment; adjusted EPS (-$0.51) was closer to expectations *.
Q4 guidance introduced: adjusted EBITDA $13–$23M; seasonally lower shipments, 3–4% lower production, and ~$16M Augusta outage costs embedded .
Medium-term setup: management reiterated initial FY 2026 assumptions—revenue $1.45–$1.55B, mid-80% utilization, capex $65–$75M, and >$20M working capital improvements; expects to be a non-cash taxpayer in 2026 .
Execution drivers: higher shipments (+6% q/q), improved production, and fixed cost reduction tracking to ~$50M in 2025; Lewiston outage completed at ~$24M direct cost, Augusta outage in October at ~$16M .

What Went Well and What Went Wrong

What Went Well

Shipments and production execution: “We delivered an adjusted EBITDA of $18 million, toward the high end of our guidance range... Net sales grew by 2% versus the prior quarter, driven by a 6% increase in shipment volumes” .
Cost actions: “We’ve largely captured the run rate benefits of our fixed cost reduction initiatives... tracking to around $50 million in savings for the year” .
Outage execution: “Our Lewiston team also did an outstanding job completing the major maintenance outage as planned” .

What Went Wrong

Industry downcycle and pricing pressure: SBS oversupply pressured pricing; paperboard ASP -3% YoY to $1,160/ton; adjusted EBITDA down vs Q2 due to outage timing and lower prices .
EPS miss driven by non-cash goodwill impairment: $48M impairment (tax-affected ~$45M) tied to lower market cap vs higher book after tissue divestiture .
Cost absorption and energy variability headwinds into Q4: 3–4% lower production reduces absorption; energy swings are mill/location dependent .

Financial Results

Consolidated Performance vs Prior Quarters

Metric	Q1 2025	Q2 2025	Q3 2025
Net Sales ($USD Millions)	$378.2	$391.8	$399.0
Diluted EPS – Continuing Ops ($)	-$0.36	$0.22	-$3.34
Adjusted EBITDA ($USD Millions)	$29.8	$39.9	$17.8
Adjusted EBITDA Margin (%)	7.9%	10.2%	4.5%

Year-over-Year (Q3)

Metric	Q3 2024	Q3 2025
Net Sales ($USD Millions)	$393.3	$399.0
Diluted EPS – Continuing Ops ($)	-$0.64	-$3.34
Adjusted EBITDA ($USD Millions)	$20.9	$17.8

Segment/Channel Net Sales

Segment ($USD Millions)	Q3 2024	Q2 2025	Q3 2025
Food Service	$142.1	$166.1	$182.0
Folding Carton	$182.1	$147.6	$143.0
Sheeting & Distribution	$41.6	$39.9	$37.9
Pulp and Other	$27.5	$38.2	$36.1
Total Net Sales	$393.3	$391.8	$399.0

Operating KPIs

KPI	Q1 2025	Q2 2025	Q3 2025
Paperboard Sale Volumes (tons)	289,487	304,713	324,198
Paperboard Production Volumes (tons)	290,223	323,489	319,615
Net Sales Price per Ton ($)	$1,188	$1,182	$1,160

Non-GAAP Adjustments

Adjusted EPS and adjusted EBITDA exclude goodwill impairment, “other operating charges, net,” non-operating items, and use normalized tax for adjusted EPS; reconciliation provided in Q3 materials .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA ($M)	Q4 2025	N/A	$13–$23	Introduced
Shipments	Q4 2025	N/A	Slightly lower vs Q3	Introduced
Production	Q4 2025	N/A	3–4% lower vs Q3	Introduced
Major Maintenance (Augusta)	Q4 2025	N/A	~$16M direct cost	Introduced
Revenue ($B)	FY 2026	N/A	$1.45–$1.55	Introduced
Capacity Utilization	FY 2026	N/A	Mid-80% range	Introduced
Capex ($M)	FY 2026	N/A	$65–$75	Introduced
Working Capital ($M)	FY 2026	N/A	>$20 improvement (inventory)	Introduced
Cash Taxes	FY 2026	N/A	Not a net cash taxpayer	Introduced
Net Leverage Target	Across Cycle	1–2x	1–2x (maintained)	Maintained
Major Maintenance (Total Direct)	FY 2025	$45–$50M	$45–$50M (maintained)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
SBS Oversupply & Utilization	Q1: Utilization 88% with new capacity expected; balanced cycle 90–95% . Q2: Industry at ~83%; new capacity ramping .	Persistent oversupply; competitor ramp may add ~10% supply; without changes, low-80% utilization by year-end .	Deterioration vs cycle norms; planning for prolonged downcycle.
Pricing vs Substrates (CUK/CRB)	Q1: Price headwinds; stable q/q . Q2: Pricing correlated across substrates .	CUK priced ~$50/ton above SBS; CRB ~$120/ton below SBS; management expects reversion in correlations .	Monitoring substitution dynamics; potential SBS demand support.
Cost Reduction	Q1: $30–$40M in 2025; 10% headcount reduction . Q2: Tracking $30–$40M, run-rate $40–$50M .	Tracking to ~$50M savings in 2025, exceeding original plan .	Positive acceleration.
Outage Cadence	Q1: Annual cadence intended to lower/outage cost . Q2: Cypress Bend ~$7–$9M; Lewiston $23–$25M planned .	Lewiston completed ($24M); Augusta completed ($16M); potential earlier Lewiston timing in 2026 .	Execution improved; schedule smoothing.
Capital Allocation & Leverage	Q1: Target 1–2x leverage; buybacks opportunistic . Q2: Buybacks $4M in Q2; liquidity strong .	Net leverage 2.7x; liquidity $455M; buybacks $2M in Q3; cautious on CUK capex .	Balanced sheet focus heightened.
Product Portfolio Expansion	Q1: Compostable plates, lightweight folding carton, poly-free barriers; exploring CUK/CRB . Q2: CUK investment ~$50M/18 months under study .	CUK project on hold despite >20% return; portfolio expansion continues (e.g., lightweight FC H1’26) .	Strategic optionality preserved; capex prudence.
Tariffs/Imports	Q1: Could be net beneficiary; ~700–800k tons imports . Q2: Minimal tariff impact in outlook .	European FBB imports down ~10% YTD; tariffs and FX could pressure imports .	Potential tailwind building.
2026 Outlook	Q1: Mid-cycle targets (13–14% EBITDA margin) . Q2: RBC forecasting price increases H1’26 .	FY 2026 assumptions formalized; non-cash taxpayer; working capital focus .	Visibility improving.

Management Commentary

“We delivered an adjusted EBITDA of $18 million… driven by higher shipments, improved production, and continued execution of our fixed cost reduction efforts.” — Arsen Kitch, CEO .
“These savings are helping us offset some of the margin pressure that we’re facing during this industry down cycle.” — Arsen Kitch, CEO .
“We expect revenue of around $1.45 to $1.55 billion and a capacity utilization rate in the mid-80% range… capital expenditures of $65 to $75 million… and more than $20 million in working capital improvements.” — Sherri Baker, CFO .
“We remain confident… we expect to achieve cross-cycle adjusted EBITDA margins of 13 to 14%, resulting in free cash flow conversion of 40 to 50% or over $100 million per year.” — Arsen Kitch, CEO .

Q&A Highlights

CUK project decision deferred: Despite >20% estimated returns and ~$50M capex, management prioritized leverage and balance sheet resilience; will revisit as conditions improve .
Imports relief and tariffs: European imports down ~10% YTD; tariffs and weaker USD could further reduce imports, aiding domestic utilization and pricing .
Outage scheduling and costs: 2026 Lewiston outage may be moved earlier for safety/manageability; Q4 Augusta outage costs ~$16M .
Q4 EBITDA range variability: Driven by seasonality, energy price volatility, and production/absorption sensitivity; 1,000 tons swing can move earnings notably .
Working capital: >$20M inventory reduction targeted in 2H 2026; trade-off between absorption and cash release .

Estimates Context

Metric	Q3 2025 Consensus	Q3 2025 Actual	Surprise
Revenue ($USD)	$387.9M*	$399.0M	+$11.1M; +2.9% (beat)
Adjusted EBITDA ($USD)	$15.6M*	$17.8M	+$2.2M (beat)
Diluted EPS – Continuing Ops ($)	-$0.53*	-$3.34	-$2.81 (miss; driven by goodwill impairment)

Forward Consensus	Q4 2025
Revenue ($USD)	$393.0M*
Adjusted EBITDA ($USD)	$18.15M*
Diluted EPS – Continuing Ops ($)	-$0.43*
# of Estimates (EPS/Revenue)	2 / 1*

Values retrieved from S&P Global*

Implications: The revenue and EBITDA beats reflect stronger shipments (food service strength) and cost actions; the EPS miss was explained by the non-cash goodwill impairment ($48M, ~$45M tax-adjusted), which is excluded from adjusted EPS .

Key Takeaways for Investors

Mix shift and pricing: Food service strength offset folding carton softness; pricing remains pressured amid SBS oversupply—watch substrate pricing gaps (CUK>SBS; CRB<SBS) and potential reversion supporting SBS demand .
Cost execution is the swing factor: ~$50M fixed cost reductions in 2025 are cushioning margins; further benefits limited near term, so production/absorption and energy will drive quarterly variability .
Q4 setup: Seasonally softer shipments, 3–4% lower production, and ~$16M Augusta outage embedded; trade the range with energy/production sensitivity and any tariff/import headlines .
2026 trajectory: Initial assumptions point to stabilization and groundwork for recovery; watch industry capacity rationalization (~350k tons forecast) and pricing moves in H1’26 per RBC .
Capital discipline: CUK project deferred; management prioritizes leverage (target 1–2x) and liquidity ($455M), but maintains strategic optionality for portfolio expansion .
Non-GAAP clarity: Adjusted results exclude goodwill impairment and other items; adjusted EBITDA at the upper end of guidance in Q3 validates operational progress despite market headwinds .
Near-term catalysts: Tariff/import developments, substrate pricing convergence, and any announced capacity reductions could accelerate margin recovery and re-rate the stock narrative .

Appendix: Additional Data Points

Cash from operations $33.9M in Q3; liquidity $455M; net leverage 2.7x; buybacks $2M in Q3, $20M since authorization .
Lewiston outage direct cost ~$24M; Augusta outage ~$16M .
Paperboard ASP trends: $1,188 (Q1), $1,182 (Q2), $1,160 (Q3); YoY -3% in Q3 .
Adjusted EPS reconciliation framework and normalized tax rate (25%) detailed in Q3 materials .

Clearwater Paper Corp (CLW)·Q3 2025 Earnings Summary