Clearwater Paper Completes $1.76 Billion Strategic Transformation, Eyes 2026 Market Recovery

SPOKANE, WA – Clearwater Paper Corporation has executed a sweeping strategic transformation valued at $1.76 billion, repositioning itself as North America's premier independent paperboard packaging supplier through a major divestiture and strategic acquisition, according to the company's November 2025 investor presentation.

Strategic Overhaul Nets $1.76B in Transactions

The Spokane-based manufacturer completed the sale of its consumer tissue business for $1.06 billion on November 1, 2024, immediately deploying approximately $850 million of net proceeds to strengthen its balance sheet. Just six months earlier, in May 2024, the company acquired the Augusta Paperboard Mill in Georgia for $700 million, expanding its solid bleach sulfate paperboard capacity to approximately 1.4 million tons.

The twin moves represent a decisive shift toward focused paperboard operations, eliminating the tissue business entirely while tripling down on packaging materials for independent converters across North America.

"We're transforming Clearwater into a leading paperboard packaging supplier," the company stated in its presentation, noting it now ranks among the top three paperboard suppliers in North America with $1.6 billion in trailing twelve-month revenue through September 2025.

Balance Sheet Strengthens as Leverage Drops

The financial restructuring has dramatically improved Clearwater's leverage position, with net debt-to-EBITDA falling from 3.7x at year-end 2021 to 2.7x by Q3 2025. The company now maintains $455 million in total liquidity with no near-term debt maturities beyond $275 million in 2028 notes carrying a 4.75% interest rate.

The company has also launched a $100 million share repurchase program, executing approximately $21 million in buybacks through September 30, 2025, since the program's November 1, 2024 inception.

Management has established a target leverage ratio of 1-2x net debt-to-EBITDA, positioning the company to weather industry cycles while maintaining capacity for strategic investments.

Company Targets Independent Converter Market

Clearwater's strategic focus centers on serving independent converters, companies that purchase paperboard and convert it into final packaging for consumer goods and foodservice applications. This segment represents 45% of the North American paperboard market, according to management estimates.

The company operates three mills in Lewiston, Idaho; Cypress Bend, Arkansas; and Augusta, Georgia, with over 90% pulp integration and approximately 1.4 million tons of capacity. The geographically balanced network is designed to deliver the lowest landed costs to customers, with the Augusta acquisition expected to generate $40-50 million in synergies by year-end 2026.

Industry Faces Oversupply; Recovery Forecast for 2026

The paperboard industry is currently experiencing oversupply pressures, with operating rates declining to 87% in Q3 2025 from 89% the previous year following new capacity additions. However, industry analysts at RISI are forecasting significant improvement.

RISI projects a 350,000-ton net capacity reduction in Q1 2026, with operating rates expected to climb to 94%—within the balanced market range of 90-95% utilization. Demand is projected to grow approximately 3% in 2026 following modest shipment growth expected in 2025.

European imports of folding boxboard are already down 10% year-to-date through July compared to the prior year, while overall imports are forecasted to decrease roughly 6% in 2025 versus 2024, according to industry data cited in the presentation.

Cost Cuts and Workforce Reduction Underway

Facing near-term market headwinds, Clearwater has implemented a 10% workforce reduction and is targeting $30-40 million in fixed cost reductions for 2025. The company employs 1,950 people and is headquartered in Spokane, Washington.

Despite current pressures, management maintains an optimistic long-term outlook, projecting adjusted EBITDA margins of 13-14% across the cycle with 40-50% free cash flow conversion rates, translating to over $100 million annually in free cash flow generation.

Sustainability Goals Target 30% Emission Reduction

Clearwater has established ambitious sustainability targets, including a goal to reduce Scope 1 and 2 emissions by 30% by 2030. The company currently meets approximately 55% of its energy needs from renewable sources, including biomass and black liquor, and treats and returns roughly 93% of its water to the environment.

The company is also targeting 10%+ of cupstock products to be recyclable, compostable, or marine-degradable materials by 2030. Product innovations already in market include post-consumer recycled content and BPI-certified compostable plates at two locations, with poly-free coatings and lightweight folding carton alternatives in development.

Product Expansion Plans Include Lightweight Alternatives

The company is developing a lightweight folding carton expected to enter the market in the first half of 2026, offering alternatives to folding boxboard imports. Clearwater is also continuing to develop poly-free coating and barrier options to meet demands from sustainability-driven cup converters.

Management has completed technical feasibility studies on unbleached paperboard grades but has placed that decision on hold. The company remains open to evaluating M&A opportunities in recycled paperboard to provide a more complete offering to existing solid bleach sulfate customers.

Annual maintenance capital expenditure runs $70-80 million, excluding large replacement projects, with additional investments planned for product diversification and strategic growth initiatives.

Market Position and Outlook

Clearwater now serves a broad and diverse set of independent converters across North America, competing in a 10 million-ton North American paperboard market where solid bleach sulfate represents approximately 5 million tons of available supply.

The company's presentation emphasized its strategic advantages: no channel conflict with converter customers, a geographically advantaged footprint of high-quality assets, and strong pulp integration exceeding 90% across approximately 1.4 million tons of pulp capacity.

Management's investor presentation outlined clear capital allocation priorities: maintaining long-term asset performance, diversifying the product portfolio, pursuing opportunistic M&A aligned with strategic priorities, and returning capital to shareholders through buybacks while maintaining the target leverage ratio.

About Clearwater Paper Corporation

Clearwater Paper Corporation (NYSE: CLW) is a premier supplier of solid bleach sulfate paperboard to independent converters in North America. The company operates three mills with five paper machines across Lewiston, Idaho; Cypress Bend, Arkansas; and Augusta, Georgia, with approximately 1.4 million tons of annual SBS paperboard capacity. Headquartered in Spokane, Washington, Clearwater employs 1,950 people and generated $1.6 billion in trailing twelve-month revenue through September 2025.