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1. Company Snapshot

1.a. Company Description

Clearwater Paper Corporation manufactures and supplies bleached paperboards, and consumer and parent roll tissues in the United States and internationally.It operates through two segments, Pulp and Paperboard, and Consumer Products.The Pulp and Paperboard segment offers folding cartons, liquid packaging, cups and plates, blister and carded packaging products, top sheet and commercial printing items, and softwood pulp products, as well as custom sheeting, slitting, and cutting of paperboard products.


It sells its products to packaging converters, folding carton converters, merchants, and commercial printers.The Consumer Products segment provides a line of at-home tissue products, including bath tissues, paper towels, facial tissues, and napkins; recycled fiber value grade products; and away-from-home tissues.This segment sells its products to retailers and wholesale distributors, including grocery, club, mass merchants, and discount stores.


Clearwater Paper Corporation was incorporated in 2005 and is headquartered in Spokane, Washington.

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1.b. Last Insights on CLW

Clearwater Paper Corporation's recent performance was negatively impacted by high debt levels and declining EBITDA. Despite strong Q4 2024 earnings, the company's financial flexibility remains constrained due to its debt burden. Additionally, the strategic divestment of the tissue business, while improving financial flexibility, may also lead to a decline in revenue. Furthermore, the company's focus on paperboard manufacturing may not be enough to offset the decline in other segments.

1.c. Company Highlights

2. Clearwater Paper's Q3 2025 Earnings: Navigating Industry Oversupply

Clearwater Paper reported adjusted EBITDA of $18 million, towards the high end of the guidance range of $10 million to $20 million. Net sales grew by 2% versus the prior quarter, driven by a 6% increase in shipment volumes, partly offset by lower market-driven pricing. The company's year-to-date adjusted EBITDA from continuing operations stands at $87 million, up from $26 million during the same period last year. The actual EPS came out at -$0.51, beating estimates of -$0.53. Revenue growth was modest, and the company faced margin pressure due to industry oversupply.

Publication Date: Nov -12

📋 Highlights
  • Q3 Adjusted EBITDA Performance:: Achieved $18 million, nearing the upper end of the $10–$20 million guidance range, with year-to-date adjusted EBITDA from continuing operations at $87 million (up from $26 million in the prior year).
  • Maintenance Outages & Cost Savings:: Completed three major maintenance outages, including $24 million in Lewiston and $16 million in Augusta, while fixed cost reductions are tracking $50 million in savings (exceeding initial $30–$40 million estimates).
  • Industry Oversupply & Margin Pressure:: SBS utilization rates expected to drop to the low 80% range by year-end, requiring ~350,000 tons of net capacity reduction in H1 2026 to rebalance supply and demand.
  • Capital Project Decision Hold:: Paused $50 million CUK swing capability project due to balance sheet prioritization, despite potential 20% returns, to defend SBS market share and maintain financial strength.
  • Q4 Guidance & Seasonality Impact:: Anticipates adjusted EBITDA of $13–$23 million, with a $500/ton absorption impact due to seasonal production declines, leading to a flat Q4 compared to Q3 earnings.

Operational Highlights

The company successfully completed all three planned major maintenance outages for 2025, with the Lewiston outage completed in August at a direct cost of $24 million and the Augusta outage completed in October at a direct cost of $16 million. Fixed cost reduction initiatives are tracking to around $50 million in savings for the year, exceeding the original estimate of $30 million to $40 million. As Arsen Kitch noted, "summertime is a normal seasonality uptick for food service, and they saw strength in this area, with their team competing well and filling capacity."

Industry Dynamics and Outlook

The industry is experiencing oversupply, primarily in SBS, with utilization rates expected to be in the low 80% range by year-end. This has led to margin pressure, and the company believes the industry will rebalance supply with demand in the medium to long term. Potential paths to recovery include a net capacity reduction of approximately 350,000 tons in the first half of 2026, tariffs, and a weakening dollar putting pressure on imports, and industry participants swinging capacity to other grades.

Valuation and Growth Prospects

Analysts estimate next year's revenue growth at -1.5%. With a P/S Ratio of 0.19 and EV/EBITDA of 12.5, the stock appears to be undervalued. However, the company's ROE is 17.18%, indicating decent profitability. The Net Debt / EBITDA ratio is 1.64, suggesting a manageable debt burden. In an environment where utilization rates return to 90% to 95%, the company expects 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 in free cash flow per year.

Guidance and Future Plans

For the fourth quarter, the company expects adjusted EBITDA of $13 million to $23 million, with slightly lower paperboard shipments due to seasonality. The company also provided initial assumptions for 2026, including revenue of around $1.45 billion to $1.55 billion, a capacity utilization rate in the mid-80% range, and capital expenditures of $65 million to $75 million. The company is exploring adding CUK swing capability to one of its SBS machines, with an estimated capital requirement of approximately $50 million and a potential return of over 20%.

3. NewsRoom

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Brandywine Global Investment Management LLC Acquires Shares of 70,020 Clearwater Paper Corporation $CLW

Nov -25

Source: defenseworld.net

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Clearwater Paper Corporation (CLW) Q3 2025 Earnings Call Transcript

Oct -28

Source: seekingalpha.com

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Clearwater Paper Reports Third Quarter 2025 Results

Oct -28

Source: businesswire.com

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Clearwater Paper: Reiterating Buy Despite A Soft Q3 Guide

Oct -17

Source: seekingalpha.com

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Clearwater Paper Announces Availability and Timing of Third Quarter 2025 Earnings Conference Call and Webcast

Oct -14

Source: businesswire.com

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Clearwater Paper Announces Upcoming Investor Conference Participation

Sep -09

Source: businesswire.com

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Clearwater Paper (CLW) Q2 Revenue Up 14%

Jul -30

Source: fool.com

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Clearwater Paper Corporation (CLW) Q2 2025 Earnings Call Transcript

Jul -29

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Pulp and Paperboard

Expected Growth: 4.5%

Growing demand for sustainable packaging, increasing e-commerce sales, and rising need for specialty papers drive the growth of pulp and paperboard market. Clearwater Paper Corporation's focus on innovative products and operational efficiency will further boost the segment's growth.

Consumer Products

Expected Growth: 4.5%

Growing demand for sustainable and eco-friendly products, increasing consumer preference for premium and ultra-premium products, and expansion of online sales channels are expected to drive the growth of Clearwater Paper Corporation's Consumer Products segment.

Eliminations

Expected Growth: 4.5%

Consolidated financial statements of Clearwater Paper Corporation are driven by the elimination of intercompany transactions and balances, resulting in a forecasted CAGR of 4.5%. This growth is fueled by the increasing demand for sustainable paper products, cost savings from intercompany eliminations, and improved operational efficiency.

7. Detailed Products

Consumer Tissue

Clearwater Paper Corporation offers a wide range of consumer tissue products, including bathroom tissue, paper towels, and facial tissues, designed for everyday use in households and commercial settings.

Parent Roll Tissue

The company provides parent roll tissue products, which are large rolls of tissue paper used as raw material for converters and manufacturers to produce finished tissue products.

Pulp and Paperboard

Clearwater Paper Corporation produces pulp and paperboard products, including recycled paperboard, containerboard, and kraft paper, used in packaging and printing applications.

Wood Products

The company offers wood products, including lumber and timber, used in construction, furniture, and other wood products manufacturing.

8. Clearwater Paper Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Clearwater Paper Corporation is medium due to the availability of alternative products such as digital media and recycled paper products.

Bargaining Power Of Customers

The bargaining power of customers for Clearwater Paper Corporation is low due to the company's strong brand presence and limited buyer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Clearwater Paper Corporation is medium due to the presence of multiple suppliers and the company's moderate dependence on them.

Threat Of New Entrants

The threat of new entrants for Clearwater Paper Corporation is low due to the high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Clearwater Paper Corporation is high due to the presence of several established players in the industry, leading to intense competition.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 41.71%
Debt Cost 6.50%
Equity Weight 58.29%
Equity Cost 6.50%
WACC 6.50%
Leverage 71.56%

11. Quality Control: Clearwater Paper Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 3.1

Quality: 7.5

Yield: 10.0

Momentum: 4.0

Volatility: 10.0

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Quality: 5.4

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Quality: 4.5

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Clearwater Paper

A-Score: 4.1/10

Value: 9.3

Growth: 4.7

Quality: 5.9

Yield: 0.0

Momentum: 1.0

Volatility: 3.7

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Value: 9.0

Growth: 1.9

Quality: 1.8

Yield: 8.0

Momentum: 1.0

Volatility: 2.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

17.97$

Current Price

17.97$

Potential

-0.00%

Expected Cash-Flows