Clearwater Paper reports Q2 financial results and announces sale of tissue business for US$1.06 billion

Clearwater Paper Corporation, a leading provider of bleached paperboard and consumer tissue, released its financial results for the second quarter and the first half of 2024, ending on June 30.

“We completed the acquisition of the Augusta facility in May, and our integration is on track. We are pleased with the quality of the assets and are committed to achieving our targeted synergies by the end of 2026”, stated Arsen Kitch, president and CEO of Clearwater Paper. Kitch also noted the strong performance of the company’s tissue business and anticipated a gradual recovery in paperboard market demand in the upcoming quarters.

On July 22, 2024, Clearwater Paper announced definitive agreements to sell its consumer products division, which includes its tissue business, to Sofidel America Corp. for US$1.06 billion, subject to customary adjustments. The transaction, pending regulatory approval and other closing conditions, is expected to be finalized in the fourth quarter of 2024. “We thoroughly explored strategic options for our tissue business and believe that Sofidel will be well-positioned to continue investing in these assets for long-term growth”, Kitch added. “This is a transformational time for Clearwater Paper, and we are looking forward to the next chapter of value creation as we continue our strategy to scale and grow our paperboard business”.

Financially, Clearwater Paper reported net sales of US$586 million for the second quarter of 2024, an increase from US$525 million in the same period of 2023. However, the company posted a net loss of US$26 million, or US$1.55 per diluted share, in contrast to a net income of US$30 million, or US$1.75 per diluted share, in the second quarter of 2023. The adjusted EBITDA for the second quarter of 2024 was US$35 million, down from US$71 million in the previous year.

For the first six months of 2024, Clearwater Paper’s net sales reached US$1.1 billion, reflecting a 3% increase compared to US$1 billion in the first half of 2023. Despite this, the company recorded a net loss of US$9 million, or US$0.52 per diluted share, compared to a net income of US$54 million, or US$3.15 per diluted share, in the first six months of 2023. Adjusted EBITDA for the first half of 2024 was US$97 million, down from US$137 million in the same period of the previous year.

In the Pulp and Paperboard segment, net sales were US$334 million for the second quarter of 2024, marking a 23% increase from US$272 million in the second quarter of 2023. Despite the increase in sales, the segment reported an operating loss of US$12 million, compared to an operating income of US$42 million in the same quarter of the previous year. Adjusted EBITDA for the segment was US$11 million in the second quarter of 2024, down from US$51 million in the second quarter of 2023. This decline was attributed to lower sales prices and the impacts of a planned major maintenance outage at the company’s Lewiston, Idaho facility. However, these were partially offset by lower wood costs and an insurance recovery related to a significant weather event at the Lewiston facility in the first quarter of 2024.

For the first half of 2024, net sales in the Pulp and Paperboard segment were US$578 million, a 5% increase from US$551 million in the first half of 2023. Segment operating income for the first six months was US$13 million, down from US$99 million in the same period of the previous year. Adjusted EBITDA for the segment was US$45 million, compared to US$118 million in the first half of 2023, with the decrease mainly driven by lower sales prices and the impacts of the planned major maintenance outage at the Lewiston facility, despite being partially offset by lower wood costs.