Clearwater Paper Corp. 10-Q Summary: Q2 2026
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026, for Clearwater Paper Corporation (CLW), a manufacturer of bleached paperboard. The company operates as a single segment focused on servicing independent converters in North America. As of July 27, 2026, there were 16,127,764 shares of common stock outstanding.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Net Sales | $374.8M | $391.8M | $735.1M | $770.0M |
| Net Income (Loss) | $(21.5M) | $2.7M | $(34.3M) | $(3.6M) |
| Diluted EPS | $(1.33) | $0.17 | $(2.13) | $(0.22) |
| Adjusted EBITDA | $(8.2M) | $39.9M | $(6.4M) | $69.6M |
| Operating Cash Flow (YTD) | $69.5M | $(26.7M) | ||
| Cash & Equivalents | $95.4M | $46.7M | ||
| Total Debt | $362.2M | $347.4M |
Material Changes vs. Prior Period
- Revenue Decline: Net sales decreased 4% in Q2 and 5% YTD compared to 2025. This was driven by market-driven price decreases (paperboard prices down 9% Q2, 8% YTD) and lower pulp sales due to a planned maintenance outage at the Lewiston facility. Volume increased 8% for paperboard but pulp shipments dropped 25%.
- Profitability Deterioration: The company reported a net loss of $21.5M in Q2 2026 versus a profit of $2.7M in Q2 2025. Cost of sales increased 10% due to higher labor/overhead from maintenance outages and increased supply chain costs, despite lower input costs.
- Insurance Recoveries: Significant non-operating income was recognized from representation and warranty insurance claims related to the Augusta acquisition. The company received $11.4M in Q2 and $23.3M YTD, recorded in "Other operating charges, net."
- Cash Flow Improvement: Operating cash flow turned positive at $69.5M YTD, driven by insurance recoveries ($32.5M) and tax refunds ($30M), offsetting lower operating performance.
Guidance, Outlook, and Risks
- Outlook: Management expects Q3 2026 operating costs to be lower due to the absence of major maintenance outages, though this may be offset by rising petroleum-based input costs (chemicals, transportation).
- Maintenance Schedule: A planned major maintenance outage is anticipated at the Cypress Bend facility in Q4 2026. A reduced-scope outage is planned for the Augusta facility in Q4 2026, followed by another in Q1 2027.
- Capital Expenditures: Expected cash paid for CapEx in 2026 is projected between $65M and $75M.
- Liquidity: The company maintains $197.7M in borrowing availability under its ABL Credit Agreement, with $79.0M currently utilized. Management believes current resources are adequate for the next 12 months.
- Risks: Key risks include ongoing PFAS-related litigation involving the Augusta facility, potential asset impairments, and the ability to realize expected benefits from the Augusta acquisition. The company is also facing competitive pricing pressures and cyclical industry conditions.
Investor Verification Checklist
- Insurance Claim Status: Verify the remaining $25.0M policy limit and the likelihood of recovering additional proceeds from the Augusta acquisition insurance claim.
- Maintenance Impact: Monitor the timing and cost impact of the upcoming Q4 2026 maintenance outages at Cypress Bend and Augusta.
- Debt Covenants: Confirm continued compliance with the fixed charge coverage ratio covenant (1.10x to 1.00x) under the ABL Credit Agreement, especially given the recent operating losses.
- PFAS Litigation: Track developments in the environmental lawsuit regarding PFAS contamination at the Augusta facility, which could result in significant liabilities.
- Cost Reduction Plan: Assess the effectiveness of the ongoing restructuring and cost-reduction initiatives in stabilizing margins amidst rising input costs.