Clearwater Paper Q2 Earnings Call Highlights

Clearwater Paper Q2 Earnings Call Highlights

Clearwater Paper reported a difficult second quarter: continuing-operations net loss was $21 million, or $1.33 per share, and adjusted EBITDA was negative $8 million. Lower pricing, a $22 million Lewiston maintenance outage, and roughly $5 million in Iran-related costs outweighed an 8% increase in shipments. Market conditions and pricing are improving: the company announced two $60-per-ton SBS price increases and expects $50 million to $60 million in annualized EBITDA benefit once fully implemented, with $10 million to $20 million expected in the second half of 2026. Clearwater expects a stronger second half while reducing costs and debt: third-quarter adjusted EBITDA guidance is $20 million to $30 million, and the company maintained 2026 revenue guidance of $1.4 billion to $1.5 billion. It also reduced net debt by $59 million in the quarter, expects positive 2026 free cash flow, and projects $8 million to $12 million in annual savings from Cypress Bend restructuring.

Clearwater Paper NYSE: CLW reported a second-quarter net loss from continuing operations of $21 million, or $1.33 per diluted share, as lower market pricing and a major maintenance outage outweighed higher shipment volumes and insurance recoveries. Net sales totaled $375 million in the quarter. Shipment volumes rose 8% from a year earlier, while market pricing declined 9%, as measured by the RISI index. Adjusted EBITDA was negative $8 million, within the company’s guidance range.

Chief Executive Officer Arsen Kitch said the company completed a major maintenance outage at its Lewiston, Idaho, facility in June, on time and on target, with direct costs of about $22 million. He also cited higher-than-expected transportation costs, partly tied to the Iran conflict, as a pressure on quarterly results.

Costs and balance-sheet actions Chief Financial Officer Sherri Baker said the Iran conflict added roughly $5 million in chemical and transportation costs during the second quarter compared with the first quarter. Clearwater expects another $3 million to $5 million of pressure in the third quarter and estimated that the conflict could reduce full-year results by $20 million to $25 million. Oil-derived chemicals, particularly polyethylene, have experienced cost pressure, while transportation expenses have been affected by fuel prices and driver shortages, Baker said. The company expects some supply-chain improvement during the fourth quarter. Clearwater reduced net debt by $59 million during the quarter and by $50 million year to date. The improvement was driven by a $26 million cash tax refund received in the second quarter, $15 million in insurance proceeds and lower net working capital. The company has recovered $55.5 million under representation and warranty insurance related to its Augusta acquisition, including $32.5 million recovered year to date. About $25 million remains available under the policy’s $105 million limit, and Clearwater said it will continue pursuing a final settlement. Baker said the company expects positive free cash flow for 2026, supported by insurance recoveries, tax refunds and a targeted $20 million to $30 million reduction in working capital. Clearwater is also working with its existing bank partners to extend debt maturities before its credit facilities become current.

Pricing and paperboard-market conditions Kitch said Clearwater is seeing “meaningful green shoots” in solid bleached sulfate, or SBS, market conditions. Company SBS shipment volumes were up 6% year to date, while industry imports declined 11%, according to management’s comments. RISI has reported approximately 300,000 tons of reduced SBS production across the industry since the start of the year. RISI forecasts SBS operating rates will ...