Clearwater Paper Reports 21.8% Increase in Net Sales, Faces $74 Million Net Loss

Clearwater Paper Corporation reported a significant increase in net sales for the fiscal year ending December 31, 2024, reaching $1.38 billion, a 21.8% rise from $1.14 billion in 2023. This growth was primarily attributed to the acquisition of a paperboard manufacturing facility in Augusta, Georgia, which contributed $341.3 million in net sales since its acquisition on May 1, 2024. However, the company experienced a net loss from continuing operations of $74 million, compared to a profit of $48.7 million in the previous year, reflecting challenges in pricing and increased operational costs.

The company's cost of sales surged by 39.8% to $1.31 billion, driven by the inclusion of Augusta's operations and higher input costs, despite a decrease in costs per ton due to deflation. Gross profit fell sharply by 62.1% to $76.1 million, impacted by planned maintenance outages and previously announced price decreases. Selling, general, and administrative expenses slightly decreased by 2.3% to $116.7 million, primarily due to lower incentive pay, although higher wages related to the Augusta acquisition offset some of these savings.

In a strategic move, Clearwater Paper divested its tissue business to Sofidel America Corp. for $1.06 billion in cash on November 1, 2024. This sale not only provided a substantial cash influx but also resulted in a gain of $307.2 million, significantly impacting the overall financial results for the year. The divestiture reflects a strategic shift towards focusing solely on the paperboard packaging industry, which Clearwater believes positions it well to capitalize on sustainability trends.

Operationally, Clearwater Paper reported a workforce of approximately 2,200 employees, with about 1,395 covered under collective bargaining agreements. The company aims to achieve $30 to $40 million in cost savings in 2025 through various restructuring initiatives, including reducing operational costs and enhancing product offerings. Looking ahead, Clearwater Paper anticipates a recovery in demand for its Solid Bleached Sulfate (SBS) paperboard products, although it acknowledges potential challenges from increased market capacity expected in the second quarter of 2025.

Overall, Clearwater Paper's financial performance in 2024 reflects a complex landscape of growth through acquisition, strategic divestiture, and ongoing operational challenges, with management focused on navigating these dynamics to enhance long-term profitability and market position.