Clearwater Paper Reports 46% Increase in Net Sales but Faces $6.3 Million Net Loss in Q1 2025

Clearwater Paper Corporation reported a significant increase in net sales for the first quarter of 2025, reaching $378.2 million, a 46% rise from $258.8 million in the same period of 2024. This growth was primarily driven by higher sales volumes from the recently acquired Augusta operations, despite facing market-driven price decreases and shifts in product mix. However, the company experienced a net loss of $6.3 million, compared to a net income of $17.2 million in the prior year, reflecting challenges in operational performance and increased costs.

The company's cost of sales surged by 51% to $341.5 million, up from $225.5 million a year earlier, largely due to the inclusion of the Augusta operations. Input costs, labor, and overhead expenses all rose significantly, with input costs increasing by 45.8% and labor and overhead costs rising by 45.7%. The gross margin improved slightly to 10% from 12.9%, attributed to better operating performance and reduced costs from planned cost reduction activities. Selling, general, and administrative expenses saw a modest increase of 3%, totaling $28.9 million.

In terms of strategic developments, Clearwater Paper completed the acquisition of a paperboard manufacturing facility in Augusta, Georgia, on May 1, 2024, for $708.2 million. This acquisition is expected to enhance the company's production capabilities and market reach. Additionally, Clearwater has initiated a cost reduction plan, anticipating severance costs between $5 million to $7 million by the end of 2025, as part of efforts to streamline operations following the divestiture of its tissue operations.

Operationally, Clearwater Paper's total assets decreased to $1.63 billion as of March 31, 2025, down from $1.68 billion at the end of 2024. The company reported a decrease in cash and cash equivalents to $44.0 million, down from $79.6 million. The employee headcount remained stable, with no significant changes reported. The company also noted a decrease in accounts payable and accrued liabilities, reflecting improved cash management practices.

Looking ahead, Clearwater Paper anticipates higher sales volumes in the second quarter of 2025, driven by seasonal trends and the benefits of ongoing cost reduction efforts. The company expects energy costs to decline and plans to increase maintenance expenses due to an annual outage at its Cypress Bend Arkansas mill. While recent U.S. tariffs on imports may pose challenges, Clearwater does not foresee a significant impact on its financial results for the fiscal year. The company remains focused on leveraging its operational efficiencies and strategic acquisitions to enhance its market position.