Clearwater Paper Powers Through Challenging First Quarter with Strong Adjusted EBITDA and Future-Focused Initiatives
In a testament to its resilience and strategic prowess, Clearwater Paper delivered a respectable first quarter 2026 performance, driven by a 5% increase in shipment volumes despite lower market pricing. Net sales came in at $5% below the prior year, with the company effectively navigating difficult operating conditions, including a weather event in the Southeast.
"We minimized costs, protected our assets, and were able to service customers with minimal disruptions," said Arsen Kitch, President and Chief Executive Officer, during the company's recent earnings conference call. "Our team has done an excellent job of navigating these challenging conditions."
Adjusted EBITDA for the quarter was a notable $2 million, slightly above guidance of break-even, and included approximately $15 million in weather-related impacts at the company's mills earlier in the quarter.
In a significant move to strengthen its position in the highly competitive market environment, Clearwater Paper launched Velura, a new lightweight folding carton paperboard brand engineered to compete with imported FBB. This strategic initiative demonstrates the company's commitment to innovation and adaptability.
Additionally, the company restructured its Cypress Bend mill, resulting in a reduction of approximately 20% of rolls at the mill. This action is expected to drive an annualized cost reduction of $8-$12 million, further solidifying Clearwater Paper's financial position.
The recent four-year labor agreement ratified by the Lewiston, Idaho union combines competitive wages and benefits for employees with significant flexibility in how the mill can operate. This agreement marks a positive step forward in employee-employer relations and will enable Clearwater Paper to optimize its operations.
On a more positive note, the company received $17.5 million in additional representation and warranty insurance proceeds during the first quarter, bringing the total to over $40 million. Clearwater Paper continues to pursue claims against $50 million of the remaining policy limit, demonstrating its determination to recover from past setbacks.
Industry conditions also presented opportunities for growth. SBS shipments were nearly flat in the first quarter of 2026 versus the prior year, but are forecasted to grow by 4% in 2026. This increase can be attributed, in part, to lower imports and substitution effects, as SBS is now the low-cost paperboard substrate on a per square foot basis.
Clearwater Paper's strategic restructuring of its Cypress Bend mill has helped reduce excess industry supply by approximately 50%. With recent changes in industry capacity, including RISI's forecasted additional net capacity reductions by the end of this year, industry operating rates are expected to exceed 90%, leading to improved margins for the company and the industry as a whole.
