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What changed in Clearwater Paper Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Clearwater Paper Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+194 added−176 removedSource: 10-K (2023-12-31) vs 10-K (2022-12-31)

Top changes in Clearwater Paper Corp's 2023 10-K

194 paragraphs added · 176 removed · 153 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeGOVERNMENTAL For a discussion of the uncertainties and business risks associated with the environmental regulations, see Part I, Item 1A, "Risk Factors—Risks Related to Our Business Operations and the Markets in Which We Operate — We are subject to significant environmental regulations and environmental compliance expenditures, which could increase our costs and subject us to liabilities" including information regarding environmental matters under Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report, and which is incorporated herein by reference.
Biggest changeThe information contained in these sustainability reports is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report that we file with or furnish to the SEC. 5 GOVERNMENTAL For a discussion of the uncertainties and business risks associated with the environmental regulations, see Part I, Item 1A, "Risk Factors—Risks Related to Our Business Operations and the Markets in Which We Operate — We are subject to significant environmental regulations and environmental compliance expenditures, which could increase our costs and subject us to liabilities" including information regarding environmental matters under Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report, and which is incorporated herein by reference.
SBS paperboard is often manufactured with a clay coating to provide superior surface printing qualities. In general, the process of making paperboard begins by chemically cooking wood fiber to make pulp. The pulp is bleached to provide a white, bright pulp, which is formed into paperboard.
SBS paperboard is often manufactured with a clay coating to provide superior surface printing qualities. In general, the process of making SBS paperboard begins by chemically cooking wood fiber to make pulp. The pulp is bleached to provide a white, bright pulp, which is formed into paperboard.
The majority of our paperboard is sold to packaging converters in North America through sales managers located throughout the United States, with a smaller percentage channeled through distribution to commercial printers. We directly sell sheeted paperboard products to folding carton converters, merchants and commercial printers. Our principal methods of competing are product quality, customer service and price.
The majority of our paperboard is sold to packaging converters in North America through sales managers located throughout the United States, with a smaller percentage channeled through distribution to commercial printers. We sell sheeted paperboard products directly to folding carton converters, merchants and commercial printers. Our principal methods of competing are product quality, customer service and price.
The remaining pulp needs for our Consumer Products segment are supplied internally by our Pulp and Paperboard segment. 4 In addition to wood fiber, we utilize a significant amount of chemicals in the production of pulp and paper, including caustic, polyethylene, starch, sodium chlorate, latex and specialty process paper chemicals.
The remaining pulp needs for our Consumer Products segment are supplied internally by our Pulp and Paperboard segment. In addition to wood fiber, we utilize a significant amount of chemicals in the production of pulp and paper, including caustic, polyethylene, starch, sodium chlorate, latex and specialty process paper chemicals.
A portion of the chemicals used in our manufacturing processes, particularly in the pulp-making process, are petroleum-based or are impacted by petroleum prices. Freight Freight is a significant cost input for our business.
A portion of the chemicals 4 used in our manufacturing processes, particularly in the pulp-making process, are petroleum-based or are impacted by petroleum prices. Freight Freight is a significant cost input for our business.
We believe we accounted for 5% of the overall U.S. at-home market in 2022, including branded and private branded products, We sell tissue products through our own sales force and compete based on product quality, customer service and price. We deliver customer-focused business solutions by assisting in managing product assortment, category management and pricing and promotion optimization.
We believe we accounted for 5% of the overall U.S. at-home market in 2023, including branded and private branded products. We sell tissue products through our own sales force and compete based on product quality, customer service and price. We deliver customer-focused business solutions by assisting in managing product assortment, category management and pricing and promotion optimization.
We have voluntarily provided disclosure and established targets with respect to climate change. Satisfying these targets has increased and may continue to increase our capital and operational costs. Achievement of these targets is subject to various risks and uncertainties and there is no assurance that our actions or investments will meet investor expectations or any applicable legal standards regarding sustainability.
We have voluntarily provided disclosure and established targets with respect to climate change. Satisfying these targets has increased and may continue to increase our capital and operational costs. Achievement of these targets is subject to various risks and uncertainties and there is no assurance that our actions or investments will meet investor expectations or any applicable regulatory standards regarding sustainability.
We provide several channels for all employees to speak up, ask for guidance, and report concerns related to ethics or safety violations. We address employee concerns and take appropriate actions that uphold our core values. Human Capital Management Our approximately 3,000 employees are instrumental to delivering on our commitments to our customers and securing long term success for our organization.
We provide several channels for all employees to speak up, ask for guidance, and report concerns related to ethics or safety violations. We address employee concerns and take appropriate actions that uphold our core values. Human Capital Management Our approximately 3,100 employees are instrumental to delivering on our commitments to our customers and securing long term success for our organization.
Additional information regarding our GHG targets and strategy are available in our 2022 Sustainability Report, which we prepared in accordance with the Global Reporting Initiative (GRI) Standards Core Option. Our sustainability reports are available on our website at www.clearwaterpaper.com/sustainability.
Additional information regarding our GHG targets and strategy are available in our 2023 Sustainability Report, which we prepared in accordance with the Global Reporting Initiative (GRI) Standards Core Option. Our sustainability reports are available on our website at www.clearwaterpaper.com/sustainability.
We believe we are one of the five largest producers of bleached paperboard in North America with approximately 16% of the available U.S. production capacity in 2022. We also provide custom sheeting, slitting and cutting of paperboard products.
We believe we are one of the five largest producers of bleached paperboard in North America with approximately 16% of the available U.S. production capacity in 2023. We also provide custom sheeting, slitting and cutting of paperboard products.
Folding carton is the largest portion of the SBS category of the North America paperboard industry. Within the folding carton segment, there are varying qualities of SBS paperboard, as well as competing paperboard substrates that can be substituted for SBS.
Folding carton is the largest portion of the SBS category of the North American paperboard industry. Within the folding carton segment, there are varying qualities of SBS paperboard, as well as competing paperboard substrates that can be substituted for SBS.
Our failure to meet these climate targets could adversely impact our reputation which could adversely impact our business. Moreover, our voluntarily establishment and disclosure of these targets may put us at a competitive disadvantage.
Our failure to meet these climate targets could adversely impact our reputation which could adversely impact our business. Moreover, our voluntary establishment and disclosure of these targets may put us at a competitive disadvantage.
We apply these core values throughout our organization with key focus areas of safety and human capital management (including diversity, equity, and inclusion) as discussed below. Safety The health and safety of our employees is our highest priority. We aspire to achieve zero workplace injuries and provide a safe, open, and accountable work environment for our employees.
We apply these core values throughout our organization with key focus areas of safety and human capital management as discussed below. Safety The health and safety of our employees is our highest priority. We aspire to achieve zero workplace injuries and provide a safe, open, and accountable work environment for our employees.
Cup and plate category is primarily converted into packaging for premium ice cream, hot and cold cups used in quick service channels and commodity focus plates. Our cup and plate board is used in a mixture of premium and commodity applications.
The cup and plate category consists of paperboard primarily converted into packaging for premium ice cream, hot and cold cups used in quick service channels and commodity focus plates. Our cup and plate paperboard is used in a mixture of premium and commodity applications.
Our continuing efforts to incorporate climate risk and opportunity into our core business strategy and disclosure include: • Governance - Incorporating ESG issues, including climate-related topics, into quarterly Board meetings. • Strategy - Creating GHG targets intended to align to and be validated by the Science Based Targets initiative (SBTi). • Risk & Opportunity - Integrating climate change related risk into our enterprise risk management program, which provides a systematic approach to identifying and understanding risks to the company that might arise from changes in regulation and physical or operational events.
Our continuing efforts to incorporate climate risk and opportunity into our core business strategy and disclosure include: • Governance - Incorporating sustainability issues, including climate-related topics, into quarterly Board meetings. • Strategy - GHG targets validated by the Science Based Targets initiative (SBTi) and developed a roadmap to obtain reductions. • Risk & Opportunity - Integrating climate change related risk into our enterprise risk management (ERM) program, which provides a systematic approach to identifying and understanding risks to the company that might arise from changes in regulation and physical or operational events.
Sales for these segments for the last three years are included in the table below: Year Ended December 31, Increase (decrease) (In millions) 2022 2021 2020 2022-2021 2021-2020 Pulp and Paperboard $ 1,136.3 $ 946.0 $ 877.1 20.1 % 7.8 % Consumer Products 950.2 835.0 1,018.5 13.8 % (18.0) % Eliminations (6.4) (8.4) (27.0) (22.8) % (69.0) % $ 2,080.1 $ 1,772.6 $ 1,868.6 17.3 % (5.1) % Pulp and Paperboard Segment Our Pulp and Paperboard segment markets and manufactures bleached paperboard for the high-end segment of the packaging industry and is a leading producer of Solid Bleached Sulfate (SBS) paperboard.
Sales for these segments for the last three years are included in the table below: Year Ended December 31, Increase (decrease) (In millions) 2023 2022 2021 2023-2022 2022-2021 Pulp and Paperboard $ 1,063.7 $ 1,136.3 $ 946.0 (6.4) % 20.1 % Consumer Products 1,023.4 950.2 835.0 7.7 % 13.8 % Eliminations (4.3) (6.4) (8.4) (32.8) % (22.8) % $ 2,082.8 $ 2,080.1 $ 1,772.6 0.1 % 17.3 % Pulp and Paperboard Segment Our Pulp and Paperboard segment markets and manufactures bleached paperboard for the high-end segment of the packaging industry and is a leading producer of Solid Bleached Sulfate (SBS) paperboard.
Metrics & Targets • Committing to 2030 targets to reduce Scope 1 and Scope 2 GHG emissions by 30% and Scope 3 GHG emissions by 25%. • We are developing a new water conservation and effluent reduction target consistent with our understanding of the best available climate science. • We are also expanding our recyclable, compostable or marine-degradable grades to represent more than 10% of our total SBS cupstock manufacturing by 2030. • Additionally, the kraft paper manufacturing processes at our Idaho and Arkansas mills generate organic components from wood chips that we use as a renewable fuel to generate steam which is converted to electricity, reducing the need for external energy or fuel.
Metrics & Targets • Committing to 2030 targets to reduce Scope 1 and Scope 2 GHG emissions by 30% and Scope 3 GHG emissions by 25%. • Developing a new water conservation and effluent reduction target consistent with our understanding of the best available climate science. • Expanding our recyclable, compostable or marine-degradable grades to represent more than 10% of our total SBS cupstock manufacturing by 2030. • Generating renewable fuel from our organic residual wood fiber to generate steam which is converted to electricity, reducing the need for external energy or fuel at our Idaho and Arkansas mills.
Additionally, we procure a portion of our pulp requirements. Annually, we purchase approximately 315,000 short tons of pulp, the majority of which is bleached hardwood pulp, on the open market through long-term contracts or market transactions. Our Pulp and Paperboard segment purchases approximately 60,000 short tons and our Consumer Products segment purchases approximately 255,000 short tons.
Annually, we purchase approximately 310,000 short tons of pulp, the majority of which is bleached hardwood pulp, on the open market through long-term contracts or market transactions. Our Pulp and Paperboard segment purchases approximately 60,000 short tons and our Consumer Products segment purchases approximately 250,000 short tons.
INPUT COSTS During 2022, we saw significant increases in costs across our businesses. Raw Materials Wood fiber is our principal raw material, which consists of chips, sawdust and logs. We own and operate a wood chipping facility which we believe bolsters our wood fiber position and provides short-term and long-term cost savings.
INPUT COSTS Raw Materials Wood fiber is our principal raw material, which consists of chips, sawdust and logs. We own and operate a wood chipping facility which we believe bolsters our wood fiber position and provides short-term and long-term cost savings. Additionally, we procure a portion of our pulp requirements.
We purchase a significant portion of our natural gas and electricity under supply contracts, most of which are between a specific facility and a specific local provider. Under most of these contracts, the providers have agreed to provide us with our requirements for a particular type of energy at a specific facility.
We purchase a significant portion of our natural gas and electricity under supply contracts. Under most of these contracts, the providers have agreed to provide us with our requirements for a particular type of energy at a specific facility and have pricing mechanisms that adjust or set prices based on current market conditions.
We believe that a sustained commitment to diversity, equity and inclusion makes us a stronger organization. We are dedicated to fostering and sustaining an environment where our teammates are valued for their unique backgrounds, knowledge, skills, and experiences.
We believe that a sustained commitment to diversifying and fairly treating all of our employees makes us a stronger and more competitive organization. We are dedicated to fostering and sustaining an environment where our teammates are valued for their unique backgrounds, knowledge, skills, and experiences. We continue to execute on these goals.
Most of these contracts have pricing mechanisms that adjust or set prices based on current market conditions. SEASONALITY Our Consumer Products segment can experience a decrease in shipments during the fourth quarter as a result of retail holiday promotions.
SEASONALITY Our Consumer Products segment can experience a decrease in shipments during the fourth quarter as a result of retail holiday promotions.
We are currently in the process of executing of a multiple year diversity, equity and inclusion plan dedicated to prioritizing and furthering our efforts. As of December 31, 2022, approximately 1,250 of our employees are covered under collective bargaining agreements. Unions represent hourly employees at two of our manufacturing sites.
As of December 31, 2023, approximately 1,270 of our employees are covered under collective bargaining agreements. Unions represent hourly employees at two of our manufacturing sites.
Removed
The information contained in these sustainability 5 reports is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report that we file with or furnish to the SEC.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFurthermore, customers could choose to use types of paperboard that we do not produce or could rely on alternative materials, such as plastic, for their products.
Biggest changeIn addition, as a result of increased sales by foreign suppliers into the Asian and European markets, we expect domestic manufacturers to seek to increase their sales in the United States to offset displaced overseas sales. Furthermore, existing and potential customers could choose to use alternative materials that we do not produce, such as substitute paperboard products and plastic.
For example, it could: • make it more difficult for us to satisfy our obligations under our notes and Credit Agreement; • increase our vulnerability to adverse economic and general industry conditions, including interest rate fluctuations, because a portion of our borrowings, including those under the Credit Agreement, are and will continue to be at variable rates of interest; • require us to dedicate a substantial portion of our cash flows from operations to payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures or other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and industry; • place us at a disadvantage compared to competitors that may have proportionately less debt; • limit our ability to obtain additional debt or equity financing due to applicable financial and restrictive covenants in our debt agreements; and • increase our cost of borrowing.
For example, it could: • make it more difficult for us to satisfy our obligations under our notes and Credit Agreements; • increase our vulnerability to adverse economic and general industry conditions, including interest rate fluctuations, because a portion of our borrowings, including those under the Credit Agreements, are and will continue to be at variable rates of interest; • require us to dedicate a substantial portion of our cash flows from operations to payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures or other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and industry; • place us at a disadvantage compared to competitors that may have proportionately less debt; • limit our ability to obtain additional debt or equity financing due to applicable financial and restrictive covenants in our debt agreements; and • increase our cost of borrowing.
The provisions in our certificate of incorporation and bylaws include, among other things, the following: 17 • a classified Board of Directors with three-year staggered terms; • the ability of our Board of Directors to issue shares of preferred stock and to determine the price and other terms, including preferences and voting rights, of those shares without stockholder approval; • stockholder action can only be taken at a special or regular meeting and not by written consent; • advance notice procedures for nominating candidates to our Board of Directors or presenting matters at stockholder meetings; • removal of directors only for cause; • allowing only our Board of Directors to fill vacancies on our Board of Directors; and • supermajority voting requirements to amend our bylaws and certain provisions of our certificate of incorporation.
The provisions in our certificate of incorporation and bylaws include, among other things, the following: • a classified Board of Directors with three-year staggered terms; • the ability of our Board of Directors to issue shares of preferred stock and to determine the price and other terms, including preferences and voting rights, of those shares without stockholder approval; • stockholder action can only be taken at a special or regular meeting and not by written consent; • advance notice procedures for nominating candidates to our Board of Directors or presenting matters at stockholder meetings; • removal of directors only for cause; • allowing only our Board of Directors to fill vacancies on our Board of Directors; and • supermajority voting requirements to amend our bylaws and certain provisions of our certificate of incorporation.
In addition, under the Credit Agreement, a monthly fixed charge maintenance covenant would become applicable during an event of default or if availability, as calculated under the Credit Agreement, is at any time less than or equal to the greater of (i) 10.0% of the lesser of the borrowing base and the maximum $275 million of current revolving loan commitments (such lesser amount, the “Line Cap”) and (ii) $19 million.
In addition, under the ABL Credit Agreement, a monthly fixed charge maintenance covenant would become applicable during an event of default or if availability, as calculated under the ABL Credit Agreement, is at any time less than or equal to the greater of (i) 10.0% of the lesser of the borrowing base and the maximum $275 million of current revolving loan commitments (such lesser amount, the “Line Cap”) and (ii) $19 million.
If any of these financial institutions experiences financial difficulties or is otherwise unable 14 to honor the terms of our supply chain financing arrangements, we may experience material financial losses due to the failure of such arrangements or a lack of access to our funds, any of which could have an adverse impact upon our operating results, financial condition and cash flows.
If any of these financial institutions experiences financial difficulties or is otherwise unable to honor the terms of our supply chain financing arrangements, we may experience material financial losses due to the failure of such arrangements or a lack of access to our funds, any of which could have an adverse impact upon our operating results, financial condition and cash flows.
If we were to stop entering into these supply chain financing arrangements, our operating results, financial condition and cash flows could be adversely impacted by delays or failures in collecting trade receivables. However, by entering into these arrangements, and by engaging these financial institutions for banking services, we are exposed to additional risks.
If we were to stop entering into these supply chain financing arrangements, our operating results, financial condition and cash flows could be adversely impacted by delays or failures in collecting trade receivables. 15 However, by entering into these arrangements, and by engaging these financial institutions for banking services, we are exposed to additional risks.
Events of default are separately defined in each credit agreement or indenture, but include events such as failure to make payments when due, breach of covenants, default under certain other indebtedness, failure to satisfy judgments in excess of a threshold amount, certain insolvency events and the occurrence of a change of control (as defined in the Credit Agreement).
Events of default are separately defined in each credit agreement or indenture, but include events such as failure to make payments when due, breach of covenants, default under certain other indebtedness, failure to satisfy judgments in excess of a threshold amount, certain insolvency events and the occurrence of a change of control (as defined in the Credit Agreements).
For example, in 2022, we experienced both difficulties in procuring sufficient transportation for intercompany and external shipments as well as significant increases in freight costs due to a number of factors. 8 The costs of these transportation services are also affected by geopolitical, economic and weather-related events.
For example, in 2022, we experienced both difficulties in procuring sufficient transportation for intercompany and external shipments as well as significant increases in freight costs due to a number of factors. The costs of these transportation services are also affected by geopolitical, economic and weather-related events.
We have not been able in the past, and may not be able in the future, to pass along part or all of any fuel price increases to customers. If we are unable to increase our prices because of increased fuel or freight costs, our gross margins may be materially adversely affected.
We have not been able in the past, and may not be able in the future, to pass along part or all of any fuel price increases to 9 customers. If we are unable to increase our prices because of increased fuel or freight costs, our gross margins may be materially adversely affected.
We rely on information technology in critical areas of our operations, and a disruption relating to such technology could harm our financial condition. 10 We use information technology, or IT, systems in various aspects of our operations, including enterprise resource planning, management of inventories, manufacturing, supply chain and customer sales.
We rely on information technology in critical areas of our operations, and a disruption relating to such technology could harm our financial condition. We use information technology, or IT, systems in various aspects of our operations, including enterprise resource planning, management of inventories, manufacturing, supply chain and customer sales.
In addition, we rely on key executive and management personnel to manage our business efficiently and effectively. The loss of any of our key personnel could adversely affect our results of operations, cash flows and financial condition. Effective succession planning is also important to our long-term success.
In addition, we rely on key executive and management personnel to manage our business efficiently and effectively. The 18 loss of any of our key personnel could adversely affect our results of operations, cash flows and financial condition. Effective succession planning is also important to our long-term success.
Our results of operations and cash flows may be materially adversely affected in a period of prolonged and significant market weakness. We are not able to predict market conditions or our ability to sustain pricing and production levels during periods of weak demand.
Our results of operations and cash flows may be materially adversely affected in a period of prolonged and significant market weakness. We are not able to predict market conditions or our ability to 11 sustain pricing and production levels during periods of weak demand.
There are various limitations on our ability to incur the full $275 million of commitments under the Credit Agreement and borrowings under our Credit Agreement are limited by a specified borrowing base consisting of a percentage of eligible accounts receivable and inventory, less customary reserves.
There are various limitations on our ability to incur the full $275 million of commitments under our ABL Credit Agreement and borrowings under our ABL Credit Agreement are limited by a specified borrowing base consisting of a percentage of eligible accounts receivable and inventory, less customary reserves.
If we were to withdraw partially or completely from a multiemployer plan that is underfunded, we would be liable for a proportionate share of that plan’s unfunded vested benefits as required by law. This is called a withdrawal liability.
If we were to withdraw partially or completely from a multiemployer plan that is underfunded, we would be liable for a 13 proportionate share of that plan’s unfunded vested benefits as required by law. This is called withdrawal liability.
Additionally, wood pellet facilities or fluff pulp facilities can increase demand and prices for wood fiber. If we and our pulp suppliers are unable to obtain wood fiber at favorable prices or at all, our costs will increase and our operations and financial results may be harmed.
Additionally, wood pellet and pulp facilities can increase demand and prices for wood fiber. If we and our pulp suppliers are unable to obtain wood fiber at favorable prices or at all, our costs will increase and our operations and financial results may be harmed.
In addition, because of their size and resources, these companies may foresee market trends more accurately than we do and develop new technologies that render our products less attractive or obsolete.
In addition, because of their size and resources, these companies may foresee 10 market trends more accurately than we do and develop new technologies that render our products less attractive or obsolete.
These companies are 9 far larger than us, have more sales, marketing and research and development resources than we do, and enjoy significant cost advantages due to economies of scale.
These companies are far larger than us, have more sales, marketing and research and development resources than we do, and enjoy significant cost advantages due to economies of scale.
The amount of withdrawal liability assessable to us if we were to withdraw in a future year is difficult to predict and largely beyond our control.
The amount of withdrawal liability, if any, assessable to us if we were to withdraw in a future year is difficult to predict and largely beyond our control.
All of this could materially reduce the cash we would have available for business and other needs. 13 Our pension and health care costs are subject to numerous factors that could cause these costs to change. In addition to our pension plans, we provide health care benefits to certain of our current and former salaried and hourly employees.
All of this could materially reduce the cash we would have available for business and other needs. 14 Our pension and health care costs are subject to numerous factors that could cause these costs to change. In addition to our pension plans, we provide health care benefits to certain of our current and former salaried and hourly employees.
Despite our current indebtedness levels, we may still incur significant additional indebtedness. Incurring more indebtedness could increase the risks associated with our substantial indebtedness. We may be able to incur substantial additional indebtedness, including additional secured indebtedness, in the future. The terms of the Credit Agreement restrict but do not prohibit us from doing so.
Despite our current indebtedness levels, we may still incur significant additional indebtedness. Incurring more indebtedness could increase the risks associated with our substantial indebtedness. We may be able to incur substantial additional indebtedness, including additional secured indebtedness, in the future. The terms of the Credit Agreements restrict but do not prohibit us from doing so.
If we default under the Credit Agreement, or other indebtedness, we may not be able to service our debt obligations. In the event of a default under the Credit Agreement or other indebtedness, lenders could elect to declare all amounts borrowed, together with accrued and unpaid interest and other fees, to be due and payable.
If we default under our Credit Agreements, or other indebtedness, we may not be able to service our debt obligations. In the event of a default under our Credit Agreements or other indebtedness, lenders could elect to declare all amounts borrowed, together with accrued and unpaid interest and other fees, to be due and payable.
In addition, our agreements with our customers, including our largest customers, are not exclusive and generally do not contain minimum volume purchase commitments. Our relationship with our largest and most important customers will depend on their needs for quality products and services, and our ability to continue to meet these needs at competitive prices.
Our agreements with our customers, including our largest customers, are not exclusive and generally do not contain minimum volume purchase commitments. Our relationship with our largest and most important customers will depend on their needs for quality products and services, and our ability to continue to meet these needs at competitive prices.
During 2022, interest and inflation rates have increased significantly relative to recent years, although the impacts have been felt to different extents and the far extent of such increases remains to be seen. These increasing rates may materially affect our prices and the demand for our products.
During 2023, interest and inflation rates have increased significantly relative to recent years, although the impacts have been felt to different extents and the far extent of such increases remains to be seen. These increasing rates may materially affect our prices and the demand for our products.
We cannot assure you that our business will generate sufficient cash flows from operations or that future borrowings will be available to us under our Credit Agreement in an amount sufficient to enable us to pay our indebtedness, including our outstanding notes, or to fund our other liquidity needs.
We cannot assure you that our business will generate sufficient cash flows from operations or that future borrowings will be available to us under our Credit Agreements in an amount sufficient to enable us to pay our indebtedness, including our outstanding notes, or to fund our other liquidity needs.
We cannot assure you that we will be able to refinance any of our indebtedness, including our Credit Agreement and our outstanding notes, on commercially reasonable terms or at all.
We cannot assure you that we will be able to refinance any of our indebtedness, including our Credit Agreements and our outstanding notes, on commercially reasonable terms or at all.
Several significant investments in paperboard manufacturing facilities in North America and globally have been announced which could significantly increase the production and supply of SBS and FBB paperboard. One competitor has announced the first meaningful investment in FBB paperboard production in the North American market, which could have a cost of production advantage over SBS producers.
Several significant investments in paperboard manufacturing facilities in North America and globally have been announced which could significantly increase the production and supply of SBS and Folding Boxboard, or FBB, paperboard. One competitor has announced the first meaningful investment in FBB paperboard production in the North American market, which could have a cost of production advantage over SBS producers.
An increased supply of or demand for any of these products could cause us to lower our prices or lose sales to competitors, either of which could have a material adverse effect on our results of operations and cash flows.
An increased supply of or demand for any of these alternative materials could cause us to lower our prices or lose sales to competitors, either of which could have a material adverse effect on our results of operations and cash flows.
Our Arkansas pulp and paperboard facility relies on whole log chips for a significant portion of its wood fiber, the supply of which can be negatively affected by regional demand from other paper or wood product manufacturing facilities as well as adverse weather conditions.
Our Arkansas pulp and paperboard facility relies on whole log chips for a significant portion of its wood fiber, the supply of which can be negatively affected by regional demand from other paper or wood product manufacturing facilities as well as adverse weather conditions and reductions in logging companies.
Our ability to generate cash depends on many factors beyond our control, and we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful. As of December 31, 2022, we had approximately $569 million of outstanding indebtedness, and we could incur substantial additional indebtedness in the future.
Our ability to generate cash depends on many factors beyond our control, and we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful. As of December 31, 2023, we had approximately $468 million of outstanding indebtedness, and we could incur substantial additional indebtedness in the future.
Our Credit Agreement contains various covenants that limit our discretion in the operation of our business by restricting our ability to: • undergo a change in control; • sell assets; • pay dividends and make other distributions; • make investments and other restricted payments; • redeem or repurchase our capital stock; • incur additional debt and issue preferred stock; • guarantee indebtedness; • create liens; • consolidate, merge or sell substantially all of our assets; • enter into certain transactions with our affiliates; • engage in new lines of business; and • enter into sale and lease-back transactions.
Our Credit Agreements contain various covenants that limit our discretion in the operation of our business by restricting our ability to: • undergo a change in control; • sell assets; • pay dividends and make other distributions; • make investments, capital expenditures and other restricted payments; • redeem or repurchase our capital stock; • incur additional debt and issue preferred stock; • guarantee indebtedness; • create liens; • consolidate, merge or sell substantially all of our assets; • enter into certain transactions with our affiliates; • engage in new lines of business; and 16 • enter into sale and lease-back transactions.
Our Consumer Products segment sources a significant portion of its wood pulp requirements from external suppliers, which exposes us to price fluctuation. For 2022, we sourced 70% of our Consumer Product segment pulp requirements (or 30% overall) of our pulp from external sources. Pulp prices can, and have, changed significantly from one period to the next.
Our Consumer Products segment sources a significant portion of its wood pulp requirements from external suppliers, which exposes us to price fluctuation. In 2023, we sourced 70% of our Consumer Product segment pulp requirements (or 30% overall) of our pulp from external sources. Pulp prices can, and have, changed significantly from one period to the next.
Based on information available to us, as well as information provided by PIUMPF, and reviewed by our actuarial consultant, we estimate that, as of December 31, 2022, the withdrawal liability payments that we would be required to make to PIUMPF were we to completely withdraw in 2022 would be approximately $5.7 million per year on a pretax basis.
Based on information available to us, as well as information provided by PIUMPF, and reviewed by our actuarial consultant, we estimate that, as of December 31, 2023, the withdrawal liability payments that we would be required to make to PIUMPF were we to have completely withdrawn in 2023 would be approximately $5.7 million per year on a pretax basis.
If the AFD exit fee were held to be legally enforceable, and if we were to elect to withdraw in some future year, the amount of our AFD exit fee liability at the time of our withdrawal would be material and subject to a variety of factors including without limitation the nature and timing of a withdrawal, the solvency or insolvency of PIUMPF at the time of the withdrawal, the level of contributions to the plan made by other contributing employers before our withdrawal, whether any employers that had withdrawn in the intervening years had made AFD exit fee payments, and the effect of funding provided under ARPA.
If the AFD exit fee were held to be legally enforceable, and if we were to withdraw in a future year, the amount of our AFD exit fee liability at the time of our withdrawal would be material and subject to a variety of factors, including without limitation, the nature and timing of a withdrawal, the financial health of PIUMPF at the time of the withdrawal, the level of contributions to the plan made by other contributing employers before our withdrawal, whether any employers that had withdrawn in the intervening years had made AFD exit fee payments, and the effect of funding provided under ARPA.
For the plan years beginning January 1, 2015 through January 1, 2022, PIUMPF was certified to be in “critical and declining status” under the Multiemployer Pension Reform Act of 2014. The number of employers participating in PIUMPF fell from 135 during 2012 to 44 in 2021. We are the largest contributing employer remaining in PIUMPF.
For the plan years beginning January 1, 2015 through January 1, 2023, PIUMPF was certified to be in “critical and declining status” under the Multiemployer Pension Reform Act of 2014. The number of employers participating in PIUMPF fell from 135 during 2012 to 43 in 2022. We are the largest contributing employer participating in PIUMPF.
Our failure to comply with the covenants contained in our Credit Agreement or the indentures governing our outstanding notes, including as a result of events beyond our control, could result in an event of default that could cause repayment of the debt to be accelerated.
Our failure to comply with the covenants contained in our Credit Agreements or the indenture governing our outstanding notes, including as a result of events beyond our control, could result in an event of default that could cause repayment of the debt to be accelerated.
If we are not able to comply with the covenants and other requirements contained in the indentures governing our outstanding notes, our Credit Agreement or our other debt instruments, an event of default under the relevant debt instrument could occur.
If we are not able to comply with the covenants and other requirements contained in the indenture governing our outstanding notes, our Credit Agreements or our other debt instruments, an event of default under the relevant debt instrument could occur.
If the covenant trigger were to occur, we would be required to satisfy and maintain on the last day of each quarter a fixed charge coverage ratio of at least 1.1x for the preceding four quarter period for which financial statements had been delivered. As of December 31, 2022, our fixed charge coverage ratio was approximately 2.68x.
If the covenant trigger were to occur, we would be required to satisfy and maintain on the last day of each quarter a fixed charge coverage ratio of at least 1.1x for the preceding four quarter period for which financial statements had been delivered. As of December 31, 2023, our fixed charge coverage ratio was approximately 3.85x.
Additionally, our debt agreements limit the use of the proceeds from any disposition; as a result, we may not be allowed, under these documents, to use proceeds from such dispositions to satisfy all current debt service obligations. Our Credit Agreement contains various covenants that limit our discretion in the operation of our business.
Additionally, our debt agreements limit the use of the proceeds from certain dispositions; as a result, we may not be allowed, under these documents, to use proceeds from such dispositions to satisfy all current debt service obligations. Our Credit Agreements contain various covenants that limit our discretion in the operation of our business.
Consequently, we will continue to be subject to risks under environmental laws that impose liability for historical releases of hazardous substances and to liability for other potential violations of environmental laws or permits at existing sites or ones for which we have indemnity obligations.
Consequently, we will 12 continue to be subject to risks under environmental laws that impose liability for historical releases of hazardous substances and to liability for other potential violations of environmental laws or permits at existing sites or ones for which we have indemnity obligations. We may be subject to operational and financial climate change risks.
We may be subject to operational and financial climate change risks 11 Extreme, weather-related events caused by climate change, such as prolonged, extreme high or low temperatures, extreme storms, floods and decreased or curtailed water supplies, could result in physical damage to our facilities and operations. Such events may also result in supply chain disruptions and increased costs.
Extreme weather-related events caused by climate change, such as prolonged, extreme high or low temperatures, extreme storms, floods and decreased or curtailed water supplies, could result in physical damage to our facilities and operations. Such events may also result in supply chain disruptions and increased costs.
If we lose one or more of our large customers or if we experience a significant decline in the level of purchases by any of them, we may not be able to quickly replace the lost business volume and our operating results and business could be harmed.
If we lose one or more of our large customers or if we experience a significant decline in the level of purchases by any of them, we may not be able to quickly replace the lost business volume and our operating results and business could be harmed. Increases in paperboard supply could adversely affect our operating results and financial condition.
As of December 31, 2022, availability under the Credit Agreement was approximately $264.3 million or 97% of the Line Cap. However, it is possible that availability, as calculated under the Credit Agreement, could fall below the minimum threshold in a future period.
As of December 31, 2023, availability under the ABL Credit Agreement was approximately $235.3 million or 86% of the Line Cap. However, it is possible that availability, as calculated under the ABL Credit Agreement, could fall below the minimum threshold in a future period.
As a plan in critical and declining status, PIUMPF has adopted a rehabilitation plan. That plan purports to require a withdrawing employer to make an additional, lump-sum payment - above and beyond the statutory withdrawal liability - based on the employer’s share of PIUMPF’s accumulated funding deficiency, or AFD.
That rehabilitation plan purports to require a withdrawing employer to make an additional, lump-sum payment — above and beyond the statutory withdrawal liability — based on the employer’s share of PIUMPF’s accumulated funding deficiency, or AFD.
The amount of our annual contributions to these plans is negotiated with the union representing our employees covered by a plan. In 2022, we contributed approximately $5.7 million to these plans.
The amount of our annual contributions to these plans is negotiated with the union representing our employees covered by each plan. In 2023, we contributed approximately $5.8 million to these plans.
Therefore, since we currently have no plans to withdraw from PIUMPF, we have not recognized any liability associated with a withdrawal from PIUMPF in our consolidated financial statements.
We currently have no plans to withdraw from IAM NPF and have not recognized any liability associated with a withdrawal from IAM NPF in our consolidated financial statements.
We have historically sold a majority of our consumer tissue products through retail grocery stores. These and other traditional retail outlets are facing increasingly intense competition from supercenters, club stores, wholesale grocers, drug, dollar, variety and specialty stores.
We have historically sold a majority of our consumer tissue products through retail grocery stores. These and other traditional retail outlets are facing increasingly intense competition from supercenters, club stores, wholesale grocers, drug, dollar, variety and specialty stores. In response to this competition, there has been consolidation among retail grocery stores in particular.
We incur significant expenses to maintain our manufacturing equipment and any interruption in the operations of our facilities may harm our operating performance. We regularly incur significant expenses to maintain our manufacturing equipment and facilities. The machines and equipment that we use to produce our products are complex, interdependent, have many parts and some are run on a continuous basis.
We regularly incur significant expenses to maintain our manufacturing equipment and facilities. The machines and equipment that we use to produce our products are complex, interdependent, have many parts and some are run on a continuous basis.
The decision whether to continue to participate in these multiemployer plans does not rest solely with us; rather, it is negotiated as part of the collective bargaining agreements with labor unions that participate in these plans. There are risks associated with both continuing to participate in multiemployer plans and with withdrawing from multiemployer plans.
The decision whether to continue to participate in these multiemployer plans does not rest solely with us; rather, it is negotiated as part of the collective bargaining agreements with labor unions that participate in these plans.
After giving effect to borrowing base limitations and issuance of letters of credit, we had availability of approximately $264.3 million under the Credit Agreement as of December 31, 2022. Our significant amount of debt could have important consequences.
After giving effect to borrowing base limitations, drawings outstanding and issuance of letters of credit, we had availability of approximately $235.3 million under our ABL Credit Agreement (as defined below) as of December 31, 2023. Our significant amount of debt could have important consequences.
These scheduled shutdowns of facilities result in decreased sales and increased costs in the periods in which they occur and could result in unexpected operational issues during the restart of a facility or in future periods as a result of changes to equipment and operational and mechanical processes made during the shutdown period.
These scheduled shutdowns of facilities result in decreased sales and increased costs in the periods in which they occur and could result in unexpected operational issues during the restart of a facility or in future periods as a result of changes to equipment and operational and mechanical processes made during the shutdown period. 8 Unexpected production disruptions could cause us to shut down or curtail operations at any of our facilities.
Our Pulp and Paperboard business has historically been affected by cyclical market conditions. We may be unable to sustain pricing in the face of weaker demand, and weaker demand may in turn cause us to take production downtime. In addition to lost revenue from lower shipment volumes, production downtime causes unabsorbed fixed manufacturing costs due to lower production levels.
We may be unable to sustain pricing in the face of weaker demand, and weaker demand may in turn cause us to take production downtime. In addition to lost revenue from lower shipment volumes, production downtime causes unabsorbed fixed manufacturing costs due to lower production levels.
We are exposed to risks related to our arrangements with respect to supply chain financing and banking arrangements. We enter into supply chain financing arrangements with financial institutions to sell certain of our trade receivables without recourse.
We enter into supply chain financing arrangements with financial institutions to sell certain of our trade receivables without recourse.
If and when the fixed charge coverage ratio were to be tested, our ability to meet the minimum fixed charge coverage ratio could be affected by events beyond our control, and we cannot assure you that we would meet this ratio at such time. A breach of any of these covenants could result in a default under the Credit Agreement.
If and when the fixed charge coverage ratio were to be tested, our ability to meet the minimum fixed charge coverage ratio could be affected by events beyond our control, and we cannot assure you that we would meet this ratio at such time.
As of December 31, 2022, we had approximately $569 million face value of debt outstanding, collectively which is related to our $300 million 2014 Notes, $275 million 2020 Notes, Credit Agreement (as defined below) and finance leases.
As of December 31, 2023, we had approximately $468 million face value of debt outstanding, collectively which is related to our $275 million 2020 Notes, Credit Agreements (as defined below) and finance leases. We had availability of approximately $120 million under our PCA Credit Agreement (as defined below) as of December 31, 2023.
Although our indebtedness does not include any triggers that would increase existing borrowing rates if there were a ratings downgrade, actual or anticipated changes or downgrades, including any announcement that our ratings are under review for a downgrade or have been assigned a negative outlook, could increase our future borrowing costs, which could in turn adversely affect our results of operations, cash flows and financial condition, and the trading price of our common stock.
Credit ratings are subject to ongoing evaluation by credit rating agencies and may be lowered, suspended or withdrawn entirely by a rating agency or placed on a “watch list” for a possible downgrade or assigned a “negative outlook.” Although our indebtedness does not include any triggers that would increase existing borrowing rates if there were a ratings downgrade, actual or anticipated changes or downgrades, including any announcement that our ratings are under review for a downgrade or have been assigned a negative outlook, could increase our future borrowing costs, which could in turn adversely affect our results of 17 operations, cash flows and financial condition, and the trading price of our common stock.
As of December 31, 2022, approximately 1,250 of our full-time employees were represented by unions under collective bargaining agreements. As these agreements expire, we may not be able to negotiate extensions or replacement agreements on terms acceptable to us. In 2023, a collective bargaining agreement for hourly employees at our Lewiston facility, which affects approximately 30 employees, will expire.
As of December 31, 2023, approximately 1,270 of our full-time employees were represented by unions under collective bargaining agreements. As these agreements expire, we may not be able to negotiate extensions or replacement agreements on terms acceptable to us.
The changing retail landscape also requires that we develop and maintain relationships with a wider variety of retailers and retail channels to succeed in this dynamic environment, which can decrease our supply network efficiency and increase our costs. Consolidation in the North American paperboard and converting industry may adversely affect our business.
The changing retail landscape also requires that we develop and maintain relationships with a wider variety of retailers and retail channels to succeed in this dynamic environment, which can decrease our supply network efficiency and increase our costs. Our business and financial performance may be harmed by future labor disruptions.
Any failure to reach an agreement with one of the unions may result in strikes, lockouts, work slowdowns, stoppages or other labor actions, any of which could have a material adverse effect on our operations and financial results.
In July 2024, a collective bargaining agreement for hourly employees at our Cypress Bend facility, which affects approximately 270 employees, will expire. Any failure to reach an agreement with one of the unions may result in strikes, lockouts, work slowdowns, stoppages or other labor actions, any of which could have a material adverse effect on our operations and financial results.
Based on information available to us, as well as information provided by IAM NPF, and reviewed by our actuarial consultant, we estimate that, as of December 31, 2022, the withdrawal liability payment that we would be required to make to IAM NPF were we to completely withdraw in 2022 would be a single payment of approximately $4.0 million on a pretax basis.
Based on information available to us, as well as information provided by IAM NPF, and reviewed by our actuarial consultant, we estimate that, as of December 31, 2023, we would be obligated to pay a single sum withdrawal liability payment of approximately $5.3 million on a pretax basis if we were to have completely withdrawn from IAM NPF in 2023.
RISKS RELATED TO OUR BUSINESS OPERATIONS AND THE MARKETS IN WHICH WE OPERATE Increases in tissue supply, particularly in the premium and ultra categories, could adversely affect our operating results and financial condition.
Increases in tissue supply, particularly in the premium and ultra categories, could adversely affect our operating results and financial condition.
We recognize tax benefits of uncertain tax positions when we believe the positions are more likely than not of being sustained upon a challenge by the relevant tax authority.
U.S. federal, state and local, are extremely complex and subject to varying interpretations. We recognize tax benefits of uncertain tax positions when we believe the positions are more likely than not of being sustained upon a challenge by the relevant tax authority.
In connection with our U.S. federal tax return for 2022, we expect to take a tax deduction related to a worthless stock loss (creating net operating loss) in connection with the dissolution of one of our subsidiaries, Cellu-Tissue.
In connection with our U.S. federal tax return for 2022, we took a tax deduction related to a worthless stock loss (creating net operating loss) in connection with the dissolution of one of our subsidiaries, Cellu-Tissue. During 2023, we entered into a post-filing agreement process with the U.S. tax authorities to resolve this position expediently.
We currently have no plans to withdraw from IAM NPF and have not recognized any liability associated with a withdrawal from IAM NPF in our consolidated financial statements. 12 The other multiemployer pension plan to which we contribute, the PACE Industry Union-Management Pension Fund, or PIUMPF, was certified to be in “critical status” for the plan year beginning January 1, 2010 and continued to be in critical status through the plan year beginning January 1, 2014.
The other multiemployer pension plan to which we contribute, the PACE Industry Union-Management Pension Fund, or PIUMPF, was certified to be in “critical status” for the plan year beginning January 1, 2010 and continued to be in critical status through the plan year beginning January 1, 2014.
We do not believe PIUMPF’s purported imposition of this AFD exit fee on withdrawing employers is legally enforceable. However, we are aware that one large employer that withdrew from PIUMPF has recognized a liability for payment of an AFD exit fee amount and that other withdrawing employers have paid some amounts in respect to the AFD exit fee.
Nevertheless, we are aware that one large employer that withdrew from PIUMPF prior to PIUMPF’s receipt of ARPA funds has recognized a liability for payment of an AFD exit fee amount and that other withdrawing employers have paid some amounts in respect to the AFD exit fee. There have been lawsuits in federal courts challenging PIUMPF’s AFD exit fee.
As a result, the price of these residual wood fibers is affected by operating levels in both the pulp and paper and lumber industries, which in the case of the latter is impacted by regional new home construction. During the past decade, many sawmills in the western United States have closed or curtailed operations or their operations have been consolidated.
As a result, the price of these residual wood fibers is affected by operating levels in both the pulp and paper and lumber industries, which in the case of the latter is impacted by regional new home construction as well as home remodeling and repairs.
Any increase in manufacturing capacity by any of these or other producers could result in overcapacity in the pulp and paperboard industry, which could cause downward pressure on pricing. Increases in paperboard supply could adversely affect our operating results and financial condition.
Any increase in manufacturing capacity by any of these or other producers could result in overcapacity in the pulp and paperboard industry, which could cause downward pressure on pricing. Substitution amongst paperboard grades could have an adverse effect on our financial results. We currently manufacture only SBS paperboard.
RISK RELATED TO OUR EMPLOYEE PLANS We may be required to pay material amounts under multiemployer pension plans; the plans in which we participate are in “critical and declining” or “critical” financial status and this subjects us to potential liabilities, particularly if we withdraw from a plan. We contribute to two multiemployer pension plans.
RISKS RELATED TO OUR EMPLOYEE PLANS We may be required to pay material amounts to multiemployer pension plans; our participation subjects us to potential liabilities, which could be significant, if we withdraw from a plan in the future. We contribute to two multiemployer pension plans.
Events beyond our control could affect our ability to meet these financial tests, and we cannot assure you that we will meet them.
A breach of any of these covenants could result in a default under the ABL Credit Agreement. Events beyond our control could affect our ability to meet these financial tests, and we cannot assure you that we will meet them.
Any prolonged disruption in operations at any of our facilities could cause significant lost production, which would have a material adverse effect on our results of operations.
Those startup periods could range from several days to several weeks, depending on the reason for the shutdown and other factors. Any prolonged disruption in operations at any of our facilities could cause significant lost production, which would have a material adverse effect on our results of operations.
A loss of paperboard customers or sales as a result of consolidations and integrations could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our business and financial performance may be harmed by future labor disruptions.
A loss of paperboard customers or sales as a result of consolidations and integrations could have a material adverse effect on our business, financial condition, results of operations and cash flows. We incur significant expenses to maintain our manufacturing equipment and any interruption in the operations of our facilities may harm our operating performance.
When capacity utilization is low, pricing and margins could be further depressed by increases in our input costs and increased buying power from our retail customers, many of which have and continue to consolidate. Cyclical industry conditions have in the past affected and may continue to adversely affect the operating results and cash flows of our Pulp and Paperboard business.
When capacity utilization is low, pricing and margins could be further depressed by increases in our input costs and increased buying power from our retail customers, many of which have and continue to consolidate. Changing retail purchasing patterns have increased the need to increase operating efficiencies and diversify our customer base and sales channels.
We could suffer adverse tax and other financial consequences if taxing authorities do not agree with our tax positions. We are periodically subject to a number of tax examinations by state and U.S. federal taxing authorities. U.S. federal, state and local, are extremely complex and subject to varying interpretations.
Significantly higher interest rates may also, among other things, reduce the availability and increase the cost of obtaining new debt and refinancing existing indebtedness. We could suffer adverse tax and other financial consequences if taxing authorities do not agree with our tax positions. We are periodically subject to a number of tax examinations by state and U.S. federal taxing authorities.
We are exposed to floating interest rate risk under the Credit Agreement, which could cause the Company’s debt service obligations to increase significantly. We are exposed to market risk from changes in interest rates. We have the ability to select the Secured Overnight Funding Rate (SOFR) as a benchmark rate at which outstanding obligations under the Credit Agreement are based.
An increase in interest rates could have a negative effect on our business. We have the ability to select the Secured Overnight Funding Rate (SOFR) as a benchmark rate at which outstanding obligations under the Credit Agreements are based. SOFR is a floating rate, subject to a minimum rate set in the Credit Agreements.
These restrictions on our ability to operate our business at our discretion could materially harm our business by, among other things, limiting our ability to take advantage of financing, merger and acquisition and other corporate opportunities, or to borrow in order to fund further capital expenditures. 15 When (and for as long as) availability, as calculated, under the Credit Agreement is less than a specified amount for a certain period of time, funds deposited into deposit accounts used for collections will be transferred on a daily basis into a blocked account with the administrative agent and applied to prepay loans under the Credit Agreement.
If and when (and for as long as) availability, as calculated, under the ABL Credit Agreement is less than a specified amount for a certain period of time, funds deposited into deposit accounts used for collections would be transferred on a daily basis into a blocked account with the administrative agent and applied to prepay loans under the ABL Credit Agreement.
In addition, the production of FBB paperboard could result in the displacement of demand for SBS in the North American and export markets, which could adversely affect the demand and market price for SBS paperboard Changing retail purchasing patterns have increased the need to increase operating efficiencies and diversify our customer base and sales channels.
In addition, the production of FBB paperboard could result in the displacement of demand for SBS in the North American and export markets, which could adversely affect the demand and market price for SBS paperboard. Consolidation in the North American paperboard and converting industry may adversely affect our business.
We expect that all other things being equal, the use of ARPA funds will reduce PIUMPF’s AFD exit fee over an extended time-period.
We expect that all other things being equal, the use of ARPA funds will reduce PIUMPF’s AFD exit fee over an extended time-period. Since we currently have no plans to withdraw from PIUMPF, we have not recognized any liability associated with a withdrawal from PIUMPF in our consolidated financial statements.
Damage or disruptions we may incur because of climate-related risks could have a material adverse effect on our manufacturing and sales operations, results of operations and financial condition. In addition, we may underestimate the costs, complexity and time required to develop and implement mitigation efforts to address potential climate change impacts.
The ability to harvest the wood fiber used in our manufacturing operations may be limited, and prices could become volatile, because of variations in weather, wildfires, and climate conditions. Damage or disruptions we may incur because of climate-related risks could have a material adverse effect on our manufacturing and sales operations, results of operations and financial condition.
In addition, the indentures governing our notes do not prevent us from incurring certain other liabilities that do not constitute secured indebtedness. If new debt or other liabilities are added to our current debt levels, the related risks that we and our subsidiaries now face could intensify.
If new debt or other liabilities are added to our current debt levels, the related risks that we and our subsidiaries now face could intensify. We are exposed to risks related to our arrangements with respect to supply chain financing and banking arrangements.
The loss of, or a significant reduction in, orders from, or changes in prices in regard to, any of our large customers could adversely affect our operating results and financial condition. We derive a substantial amount of revenues from a concentrated group of customers. Our top 10 customers accounted for 48% of sales in 2022.
We are not able to predict market conditions or our ability to sustain pricing and production levels during periods of weak demand. The loss of, or a significant reduction in, orders from, or changes in prices in regard to, any of our large customers could adversely affect our operating results and financial condition.
After giving effect to borrowing base limitations and issuance of letters of credit, we had availability of approximately $264.3 million under the Credit Agreement as of December 31, 2022. In addition, the Credit Agreement allows us to issue additional secured term loans and/or notes under certain circumstances, which would be guaranteed by our subsidiary guarantors.
We had availability of approximately $120 million under our PCA Credit Agreement as of December 31, 2023. After giving effect to borrowing base limitations and issuance of letters of credit, we had availability of approximately $259.0 million under the Credit Agreement as of December 31, 2023.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation Products Owned or Leased Las Vegas, Nevada TAD tissue, Tissue converting Owned Lewiston, Idaho Tissue, Tissue converting, Pulp and Paperboard Owned Shelby, North Carolina TAD tissue, NTT Tissue, Tissue converting Owned/Leased Elwood, Illinois Tissue converting Leased Cypress Bend, Arkansas Pulp and Paperboard Owned Mendon, Michigan Paperboard sheeting Leased Wilkes-Barre, Pennsylvania Paperboard sheeting Leased Dallas, Texas Paperboard sheeting Leased Richmond, Virginia Paperboard sheeting Leased Hagerstown, Indiana Paperboard sheeting Leased Columbia City, Oregon Chip shipment Leased Clarkston, Washington Wood chipping Owned Production Capacities Information regarding currently operating production capacities is based on annual, normal operating rates and normal production mixes under current market conditions, taking into account known constraints.
Biggest changeLocation Products Owned or Leased Las Vegas, Nevada TAD tissue, Tissue converting Owned Lewiston, Idaho Tissue, Tissue converting, Pulp and Paperboard Owned Shelby, North Carolina TAD tissue, NTT Tissue, Tissue converting Owned/Leased Elwood, Illinois Tissue converting Leased Cypress Bend, Arkansas Pulp and Paperboard Owned Mendon, Michigan Paperboard sheeting Leased Wilkes-Barre, Pennsylvania Paperboard sheeting Leased Dallas, Texas Paperboard sheeting Leased Richmond, Virginia Paperboard sheeting Leased Hagerstown, Indiana Paperboard sheeting Leased Production Capacities Information regarding currently operating production capacities is based on annual, normal operating rates and normal production mixes under current market conditions, taking into account known constraints.
(In tons) Tissue Parent Rolls Tissue converting Pulp 1 Paperboard Sheeted Paperboard Las Vegas, Nevada 44,000 74,000 Lewiston, Idaho 190,000 90,000 590,000 480,000 Shelby, North Carolina 156,000 150,000 Elwood, Illinois 63,000 Cypress Bend, Arkansas 314,000 360,000 Mendon, Michigan 50,000 Wilkes-Barre, Pennsylvania 41,000 Dallas, Texas 29,000 Richmond, Virginia 34,000 Hagerstown, Indiana 37,000 390,000 377,000 904,000 840,000 191,000 1 Pulp is consumed internally either within our Paperboard operations or is transferred to our Tissue operations.
(In tons) Tissue Parent Rolls Tissue converting Pulp 1 Paperboard Sheeted Paperboard Las Vegas, Nevada 44,000 74,000 Lewiston, Idaho 190,000 90,000 520,000 480,000 Shelby, North Carolina 156,000 150,000 Elwood, Illinois 63,000 Cypress Bend, Arkansas 320,000 340,000 Mendon, Michigan 50,000 Wilkes-Barre, Pennsylvania 41,000 Dallas, Texas 29,000 Richmond, Virginia 34,000 Hagerstown, Indiana 37,000 390,000 377,000 840,000 820,000 191,000 1 Pulp is consumed internally either within our Paperboard operations or is transferred to our Tissue operations. 20
Removed
Minor amounts (18,000 tons in 2022) are sold to external parties. 19

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−1 removed4 unchanged
Biggest changeDecember 31, 2017 2018 2019 2020 2021 2022 Company Name / Index Clearwater Paper Corporation $ 100.00 $ 53.68 $ 47.05 $ 83.15 $ 80.77 $ 83.28 Russell 2000 Index 100.00 88.99 111.70 134.00 153.85 122.41 S&P MidCap 400® Index (excluding members of the GICS® Financials sector) 100.00 86.13 110.80 124.63 154.63 130.72 S&P 600 SmallCap Index 100.00 91.52 112.37 125.05 158.59 133.06
Biggest changeDecember 31, 2018 2019 2020 2021 2022 2023 Company Name / Index Clearwater Paper Corporation $ 100.00 $ 87.65 $ 154.90 $ 150.47 $ 155.15 $ 148.22 Russell 2000 Index 100.00 125.53 150.58 172.90 137.56 160.85 S&P MidCap 400® Index (excluding members of the GICS® Financials sector) 100.00 128.99 145.12 182.31 156.43 183.91 S&P 600 SmallCap Index 100.00 122.78 136.64 173.29 145.39 168.73
The comparison assumes $100 was invested on December 31, 2017, in our common stock and in the indices and assumes dividends were reinvested. The stock performance shown on the graph represents historical stock performance and is not necessarily indicative of future stock price performance.
The comparison assumes $100 was invested on December 31, 2018, in our common stock and in the indices and assumes dividends were reinvested. The stock performance shown on the graph represents historical stock performance and is not necessarily indicative of future stock price performance.
PERFORMANCE GRAPH The graph below compares the cumulative total stockholder return of our common stock for the period beginning December 31, 2017 and ending December 31, 2022, with the cumulative total return during such period of the Russell 2000® Index, the S&P MidCap 400® Index (excluding those companies classified as members of the GICS® Financials sector) and the S&P 600 Small Cap Index.
PERFORMANCE GRAPH The graph below compares the cumulative total stockholder return of our common stock for the period beginning December 31, 2018 and ending December 31, 2023, with the cumulative total return during such period of the Russell 2000® Index, the S&P MidCap 400® Index (excluding those companies classified as members of the GICS® Financials sector) and the S&P 600 Small Cap Index.
SALES OF UNREGISTERED SECURITIES None. DIVIDENDS We have not paid any cash dividends. We will continue to review whether payment of a cash dividend on our common stock in the future best serves the company and our stockholders.
DIVIDENDS We have not paid any cash dividends. We will continue to review whether payment of a cash dividend on our common stock in the future best serves the company and our stockholders.
The cumulative return for those indexes is listed below. 21 This comparison assumes $100 was invested on December 31, 2017, in our common stock and in the indices and assumes dividends were reinvested.
The cumulative return for those indexes is listed below. 22 This comparison assumes $100 was invested on December 31, 2018, in our common stock and in the indices and assumes dividends were reinvested.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities MARKET FOR OUR COMMON STOCK Our common stock is traded on the New York Stock Exchange under the symbol "CLW." HOLDERS As of February 10, 2023, there were approximately 615 registered holders of our common stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities MARKET FOR OUR COMMON STOCK Our common stock is traded on the New York Stock Exchange under the symbol "CLW." HOLDERS As of February 16, 2024, there were approximately 575 registered holders of our common stock.
ISSUER PURCHASES OF EQUITY SECURITIES On December 15, 2015, we announced that our Board of Directors had approved a stock repurchase program authorizing the repurchase of up to $100 million of our common stock. During 2022, we repurchased 149,860 shares for approximately $5.0 million, at at average price per share of $33.16.
ISSUER PURCHASES OF EQUITY SECURITIES On December 15, 2015, we announced that our Board of Directors had approved a stock repurchase program authorizing the repurchase of up to $100 million of our common stock. As of December 31, 2023, we had up to $6.9 million of authorization remaining.
Removed
As of December 31, 2022, we had up to $24.9 million of authorization remaining. No shares were acquired during the fourth quarter ended December 31, 2022.
Added
The following table reflects our shares repurchased during the fourth quarter of 2023. None of the shares in this table were repurchased directly from any of our officers or directors.
Added
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program October 1, 2023 to October 31, 2023 29,500 $ 35.74 29,500 $ 8.7 November 1, 2023 to November 30, 2023 28,300 $ 35.33 28,300 $ 7.7 December 1, 2023 to December 31, 2023 20,993 $ 36.11 20,993 $ 6.9 Total 78,793 $ 35.69 78,793 SALES OF UNREGISTERED SECURITIES None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

33 edited+9 added−7 removed20 unchanged
Biggest changeSegment sales, operating income and Adjusted EBITDA for the Pulp and Paperboard segment were as follows: For The Years Ended December 31, Increase (decrease) (In millions, except per unit and paperboard shipments) 2022 2021 2020 2022-2021 2021-2020 Sales: Paperboard $ 1,104.8 $ 894.9 $ 828.0 23.4 % 8.1 % Pulp 19.0 34.8 41.4 (45.5) % (15.9) % Other 12.6 16.2 7.6 (22.5) % 112.1 % $ 1,136.3 $ 946.0 $ 877.1 20.1 % 7.9 % Operating income $ 183.5 $ 125.7 $ 124.5 45.9 % 0.9 % Operating margin 16.1 % 13.3 % 14.2 % Adjusted EBITDA $ 220.4 $ 161.4 $ 161.3 36.6 % 0.1 % Adjusted EBITDA margin 19.4 % 17.1 % 18.4 % Paperboard shipments (short tons) 814,556 822,206 821,138 (0.9) % 0.1 % Paperboard sales price (short tons) $ 1,356 $ 1,088 $ 1,008 24.6 % 8.0 % Sales volumes in our Pulp and Paperboard segment for the year ended December 31, 2022 were down slightly compared to 2021 primarily due to reduced volumes in the fourth quarter resulting from operations and a weather event at our Cypress Bend facility.
Biggest changeSegment sales, operating income and Adjusted EBITDA for the Pulp and Paperboard segment were as follows: For The Years Ended December 31, Increase (decrease) (In millions, except per unit and paperboard shipments) 2023 2022 2021 2023-2022 2022-2021 Sales: Paperboard $ 1,033.6 $ 1,104.8 $ 894.9 (6.4) % 23.4 % Pulp 20.8 19.0 34.8 9.4 % (45.5) % Other 9.4 12.6 16.2 (25.2) % (22.5) % $ 1,063.7 $ 1,136.3 $ 946.0 (6.4) % 20.1 % Operating income $ 169.1 $ 183.5 $ 125.7 (7.9) % 45.9 % Operating margin 15.9 % 16.1 % 13.3 % Adjusted EBITDA $ 206.4 $ 220.4 $ 161.4 (6.4) % 36.6 % Adjusted EBITDA margin 19.4 % 19.4 % 17.1 % Pulp shipments (short tons) 34,084 25,647 50,679 32.9 % (49.4) % Pulp sales price $ 609 $ 740 $ 687 (17.7) % 7.6 % Paperboard shipments (short tons) 751,520 814,556 822,206 (7.7) % (0.9) % Paperboard sales price (short tons) $ 1,375 $ 1,356 $ 1,088 1.4 % 24.6 % Paperboard sales volumes in our Pulp and Paperboard segment for the year ended December 31, 2023 decreased due to weaker demand as customers rebalance inventory levels.
The agreement also contains a financial covenant, which requires us to maintain a consolidated fixed charge coverage ratio of not less than 1.10x to 1.00x, provided that the financial covenant under the ABL Credit Agreement is only applicable during an event of default or if availability, as calculated under the Credit Agreement, is at any time less than or equal to the greater of (i) 10% of the Line Cap and (ii) $19 million.
The ABL Credit Agreement also contains a financial covenant, which requires us to maintain a consolidated fixed charge coverage ratio of not less than 1.10x to 1.00x, provided that the financial covenant under the ABL Credit Agreement is only applicable during an event of default or if availability, as calculated under the ABL Credit Agreement, is at any time less than or equal to the greater of (i) 10% of the Line Cap and (ii) $19 million.
Our Adjusted EBITDA measures have material limitations as performance measures because they exclude interest expense, income tax (benefit) expense and depreciation and amortization which are necessary to operate our business or which we otherwise incur or experience in connection with the operation of our business.
Our Adjusted EBITDA measures have material limitations as performance measures because they exclude interest expense, net, income tax (benefit) expense and depreciation and amortization which are necessary to operate our business or which we otherwise incur or experience in connection with the operation of our business.
Throughout the preparation of the financial statements, we employ significant judgments in the application of accounting principles and methods. We believe that the accounting estimates discussed below represent the accounting estimates requiring the exercise of judgment where a different set of judgments could result in the greatest changes to reported results.
Throughout the preparation of the financial statements, we employ significant judgments in the application of accounting principles and methods. We believe that the accounting estimates discussed below represent the accounting 24 estimates requiring the exercise of judgment where a different set of judgments could result in the greatest changes to reported results.
We operate in two business segments, pulp and paperboard and consumer products. These business segments are described in greater detail in Item 8, Note 15, "Segment Information" of to the consolidated financial statements.
We operate in two business segments, pulp and paperboard and consumer products. These business segments are described in greater detail in Item 8, Note 15, "Segment Information" of the Notes to the Consolidated Financial Statements.
We reviewed the development, selection and disclosure of our critical accounting estimates with the Audit Committee of our Board of Directors. For 2022, these significant accounting estimates and judgments include: Retirement Plans and Postretirement Benefits We have a number of defined benefit pension plans in the United States covering many of our employees.
We reviewed the development, selection and disclosure of our critical accounting estimates with the Audit Committee of our Board of Directors. For 2023, these significant accounting estimates and judgments include: Retirement Plans and Postretirement Benefits We have a number of defined benefit pension plans in the United States covering many of our employees.
These gains and losses are driven by differences in actual experience or changes in the assumptions that are beyond our control, such as changes in interest rates and the actual return on pension plan assets. 24 Non-GAAP Financial Measures In evaluating our business, we utilize several non-GAAP financial measures.
These gains and losses are driven by differences in actual experience or changes in the assumptions that are beyond our control, such as changes in interest rates and the actual return on pension plan assets. 25 Non-GAAP Financial Measures In evaluating our business, we utilize several non-GAAP financial measures.
The following table illustrates the estimated impact on hypothetical pension obligations and expenses that would have resulted from a 25 basis point reduction in two key assumptions for the year ended December 31, 2022: (In millions) Statements of Operations Balance Sheets Discount rate $ (0.2) $ 5.1 Expected long term rate of return $ 0.7 $ — It is not possible to forecast or predict whether there will be actuarial gains and losses in future periods, and if required, the magnitude of any such adjustment.
The following table illustrates the estimated impact on hypothetical pension obligations and expenses that would have resulted from a 25-basis point reduction in two key assumptions for the year ended December 31, 2023: (In millions) Statements of Operations Balance Sheets Discount rate $ — $ 5.0 Expected long term rate of return $ 0.7 $ — It is not possible to forecast or predict whether there will be actuarial gains and losses in future periods, and if required, the magnitude of any such adjustment.
A discussion of the earliest year may be found in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10‑K filed on February 15, 2022. Overview of Business We are a premier manufacturer and supplier of bleached paperboard and consumer and parent roll tissue.
A discussion of the earliest year may be found in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10‑K filed on February 14, 2023. Overview of Business We are a premier manufacturer and supplier of bleached paperboard and consumer and parent roll tissue.
At December 31, 2022, we were in compliance with the ABL Credit Agreement, and based on our current financial projections, we expect to remain in compliance. However, if our financial position, results of operations or market conditions deteriorate, we may not be able to remain in compliance.
At December 31, 2023, we were in compliance with the covenants in the Credit Agreements, and based on our current financial projections, we expect to remain in compliance. However, if our financial position, results of operations or market conditions deteriorate, we may not be able to remain in compliance.
In operating our business, we seek to: • grow our portfolio of products through innovation, category development and commercial execution, • leverage our cost and financial discipline to fund growth and improve margins, and • allocate capital in value-creating ways.
In operating our business, we seek to: • grow our portfolio of products through organic growth, acquisitions and commercial execution, • leverage our cost and financial discipline to fund growth and improve margins, and • allocate capital in value-creating ways.
There can be no assurance that we will be able to remain in compliance with our ABL Credit Agreement. See Note 7, "Debt" to the Notes to Consolidated Financial Statements included in this report for additional information. 30
There can be no assurance that we will be able to remain in compliance with the Credit Agreements. See Note 7, "Debt" to the Notes to Consolidated Financial Statements included in this report for additional information. 31
Any such repurchases may be commenced, suspended, discontinued or resumed, and the method or methods of effecting any such repurchases may be changed at any time or from time to time without prior notice. Operating Activities During 2022, we generated $150.2 million of cash from operations, as compared to $96.4 million in 2021.
Any such prepayments, repurchases or acquisitions may be commenced, suspended, discontinued, or resumed, and the method or methods of effecting any such repurchases may be changed at any time or from time to time without prior notice. Operating Activities During 2023, we generated $190.7 million of cash from operations, as compared to $150.2 million in 2022.
In addition, we exclude other income and expense items which are outside of our core operations. 25 The following table provides our Adjusted EBITDA reconciliation for the last three years: For The Years Ended December 31, (In millions) 2022 2021 2020 Net income (loss) $ 46.0 $ (28.1) $ 77.1 Income tax provision (benefit) 27.0 (7.7) 21.1 Interest expense, net 34.6 36.4 46.5 Depreciation and amortization expense 103.3 105.0 111.0 Other operating charges, net 9.7 57.7 14.0 Other non-operating expense 5.7 10.4 7.6 Debt retirement costs 0.5 1.0 5.9 Adjusted EBITDA $ 226.9 $ 174.6 $ 283.2 Pulp and Paperboard segment income $ 183.5 $ 125.7 $ 124.5 Depreciation and amortization 37.0 35.7 36.7 Adjusted EBITDA Pulp and Paperboard segment $ 220.4 $ 161.4 $ 161.3 Consumer Products segment income $ 11.3 $ 4.0 $ 110.6 Depreciation and amortization 62.9 64.9 68.5 Adjusted EBITDA Consumer Products segment $ 74.2 $ 69.0 $ 179.1 Corporate and other expense $ (71.1) $ (60.1) $ (63.0) Depreciation and amortization 3.4 4.4 5.8 Adjusted EBITDA Corporate and other $ (67.7) $ (55.7) $ (57.2) Pulp and Paperboard segment $ 220.4 $ 161.4 $ 161.3 Consumer Products segment 74.2 69.0 179.1 Corporate and other (67.7) (55.7) (57.2) Adjusted EBITDA $ 226.9 $ 174.6 $ 283.2 26 OUR OPERATING RESULTS Pulp and Paperboard Segment Our Pulp and Paperboard segment markets and produces bleached paperboard to quality-conscious printers and packaging converters, and offers services that include custom sheeting, slitting and cutting.
In addition, we exclude other income and expense items which are outside of our core operations. 26 The following table provides our Adjusted EBITDA reconciliation for the last three years: For The Years Ended December 31, (In millions) 2023 2022 2021 Net income (loss) $ 107.7 $ 46.0 $ (28.1) Income tax provision (benefit) 36.4 27.0 (7.7) Interest expense, net 30.0 34.6 36.4 Depreciation and amortization expense 98.6 103.3 105.0 Other operating charges, net 5.3 9.7 57.7 Other non-operating (income) expense (0.1) 5.7 10.4 Debt retirement costs 3.1 0.5 1.0 Adjusted EBITDA $ 281.0 $ 226.9 $ 174.6 Pulp and Paperboard segment income $ 169.1 $ 183.5 $ 125.7 Depreciation and amortization 37.4 37.0 35.7 Adjusted EBITDA Pulp and Paperboard segment $ 206.4 $ 220.4 $ 161.4 Consumer Products segment income $ 91.7 $ 11.3 $ 4.0 Depreciation and amortization 58.8 62.9 64.9 Adjusted EBITDA Consumer Products segment $ 150.5 $ 74.2 $ 69.0 Corporate and other expense $ (78.3) $ (71.1) $ (60.1) Depreciation and amortization 2.4 3.4 4.4 Adjusted EBITDA Corporate and other $ (75.9) $ (67.7) $ (55.7) Pulp and Paperboard segment $ 206.4 $ 220.4 $ 161.4 Consumer Products segment 150.5 74.2 69.0 Corporate and other (75.9) (67.7) (55.7) Adjusted EBITDA $ 281.0 $ 226.9 $ 174.6 27 OUR OPERATING RESULTS Pulp and Paperboard Segment Our Pulp and Paperboard segment markets and produces bleached paperboard to quality-conscious printers and packaging converters, and offers services that include custom sheeting, slitting and cutting.
Retail sales prices increased in our Consumer Products segment for the year ended December 31, 2022 compared to the prior year due primarily to our previously announced price increases.
Retail sales prices increased in our Consumer Products segment for the year ended December 31, 2023 compared to the prior year due primarily to our previously announced price increases and improved product mix.
We may also increase commitments under the ABL Credit Agreement in an aggregate principal amount of up to $100 million, subject to obtaining commitments from any participating lenders and certain other conditions. This agreement contains certain customary representations, warranties, and affirmative and negative covenants.
We may also increase commitments under the ABL Credit Agreement in an aggregate principal amount of up to $100 million, subject to obtaining commitments from any participating lenders and certain other conditions.
Included in accounts payable and accrued liabilities was $15.7 million related to capital expenditures that had not yet been paid at December 31, 2022. In 2023, we expect cash paid for capital expenditures to be approximately $70 million to $80 million.
Included in accounts payable and accrued liabilities was $13.0 million related to capital expenditures that had not yet been paid at December 31, 2023. In 2024, we expect cash paid for capital expenditures to be approximately $90 million to $100 million.
Segment sales, operating income and Adjusted EBITDA for the Consumer Products segment were as follows: For The Years Ended December 31, Increase (decrease) (In millions, except per unit) 2022 2021 2020 2022-2021 2021-2020 Sales: Retail tissue $ 932.3 $ 797.9 $ 975.7 16.8 % (18.2) % Away-from-home 1 — 16.3 32.0 (100.0) % (49.0) % Other 18.0 20.8 10.8 (13.6) % 93.1 % $ 950.2 $ 835.0 $ 1,018.5 13.8 % (18.0) % Operating income $ 11.3 4.0 110.6 179.0 % (96.3) % Operating margin 1.2 % 0.5 % 10.9 % Adjusted EBITDA $ 74.2 $ 69.0 $ 179.1 7.6 % (61.5) % Adjusted EBITDA margin 7.8 % 8.3 % 17.6 % Shipments (short tons) Retail 309,735 287,987 355,862 7.6 % (19.1) % Away-from-home 1 — 7,839 15,081 (100.0) % (48.0) % Other 12,185 20,973 10,030 (41.9) % 109.1 % Sales price (per short ton) Retail $ 3,010 $ 2,771 $ 2,742 8.6 % 1.1 % 1 In the third quarter of 2021, we exited our away-from-home business with the shutdown of our Neenah, Wisconsin site.
Segment sales, operating income and Adjusted EBITDA for the Consumer Products segment were as follows: For The Years Ended December 31, Increase (decrease) (In millions, except per unit and shipments) 2023 2022 2021 2023-2022 2022-2021 Sales: Retail tissue $ 1,016.2 $ 932.3 $ 797.9 9.0 % 16.8 % Away-from-home 1 — — 16.3 — % (100.0) % Other 7.2 18.0 20.8 (59.8) % (13.6) % $ 1,023.4 $ 950.2 $ 835.0 7.7 % 13.8 % Operating income $ 91.7 11.3 4.0 713.5 % 179.0 % Operating margin 9.0 % 1.2 % 0.5 % Adjusted EBITDA $ 150.5 $ 74.2 $ 69.0 102.7 % 7.6 % Adjusted EBITDA margin 14.7 % 7.8 % 8.3 % Shipments (short tons) Retail 317,582 309,735 287,987 2.5 % 7.6 % Away-from-home 1 — — 7,839 — % (100.0) % Other 4,802 12,185 20,973 (60.6) % (41.9) % Sales price (per short ton) Retail $ 3,200 $ 3,010 $ 2,771 6.3 % 8.6 % 1 In the third quarter of 2021, we exited our away-from-home business with the shutdown of our Neenah, Wisconsin site.
Other operating charges See Note 8, "Other Operating Charges, net" of the Notes to the Consolidated Financial Statements included in Item 8 of this report for additional information. 28 Interest expense, net Interest expense for the year ended December 31, 2022 was $34.6 million compared to $36.4 million for the period ended December 31, 2021.
Other operating charges See Note 8, "Other Operating Charges, net" of the Notes to the Consolidated Financial Statements included in Item 8 of this report for additional information. 29 Interest expense, net Interest expense for the year ended December 31, 2023 was $30.0 million compared to $34.6 million in the prior year due to lower debt outstanding.
Overall, the increase in operating income and Adjusted EBITDA for the year ended December 31, 2022 as compared to the prior year was driven by higher sales prices, partially offset by inflation and higher outage costs. 27 Consumer Products Segment Our Consumer Products segment sells and manufactures a complete line of at-home tissue products and sold minor amounts of AFH products prior to the closure of our Neenah, Wisconsin facility in July 2021.
Overall, the decrease in operating income and Adjusted EBITDA for the year ended December 31, 2023 as compared to the prior year was driven by lower sales volumes and planned production downtime to manage inventory partially offset by lower input costs due to deflation, specifically in freight and energy costs. 28 Consumer Products Segment Our Consumer Products segment sells and manufactures a complete line of at-home tissue products and sold minor amounts of AFH products prior to the closure of our Neenah, Wisconsin facility in July 2021.
Overall, operating income and Adjusted EBITDA for the year ended December 31, 2022 compared to the prior year increased due to higher sales volume and pricing partially offset by higher input costs, primarily in pulp and packaging costs. Corporate expenses Corporate expenses were $71.1 million in 2022 as compared to $60.1 million in 2021.
Overall, operating income and Adjusted EBITDA for the year ended December 31, 2023 compared to the prior year increased due to higher sales volumes and pricing and lower input costs, specifically related to freight costs. Corporate expenses Corporate expenses were $78.3 million in 2023 as compared to $71.1 million in 2022.
While we have seen some lessening effects in the latter portion of 2022, we expect the higher cost environment will continue in 2023. 23 Critical Accounting Policies and Significant Estimates A discussion of our significant accounting policies and significant accounting estimates and judgments is presented in Note 1, "Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements in Item 8 of this report.
Critical Accounting Policies and Significant Estimates A discussion of our significant accounting policies and significant accounting estimates and judgments is presented in Note 1, "Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements in Item 8 of this report.
The ABL Credit Agreement includes a $275 million loan commitment, subject to borrowing base limitations. Borrowings under the ABL Credit Agreement are subject to mandatory prepayment in certain circumstances.
We are also party to an ABL Credit Agreement (as amended, the “ABL Credit Agreement,” and together with the PCA Credit Agreement, the “Credit Agreements”) that includes a $275 million revolving loan commitment, subject to borrowing base limitations. Borrowings under the ABL Credit Agreement are subject to mandatory prepayment in certain circumstances.
Tissue sales The U.S. tissue industry is affected by macro-economic factors in the U.S. The U.S. tissue industry has experienced an increase in ultra and premium tissue products as industry participants have added or improved through-air-dried, or TAD, or equivalent production capacity as well as added conventional tissue capacity.
The U.S. tissue industry has experienced an increase in ultra and premium tissue products as industry participants have added or improved through-air-dried, or TAD, or equivalent production capacity as well as added conventional tissue capacity. As reported by RISI, US Tissue Monthly Data (December 2023), parent roll sales prices have increased 7-8% industry wide in 2023 over the prior year.
Overview of 2022 Results • Net sales of $2.1 billion, an increase of 17.3% from 2021 with Pulp and Paperboard net sales increasing 20.1% and Consumer Products net sales increasing 13.8%. • Net income was $46.0 million in 2022 or $2.68 per diluted share compared to a net loss of $28.1 million or $1.67 per diluted share in 2021.
Overview of 2023 Results • Net sales of $2.1 billion, consistent with 2022 with Pulp and Paperboard net sales decreasing 6% and Consumer Products net sales increasing 8%. • Net income was $107.7 million in 2023 or $6.30 per diluted share compared to a net income of $46.0 million or $2.68 per diluted share in 2022. • Adjusted EBITDA was $281.0 million in 2023 compared to $226.9 million in 2022.
This increase was driven by improved operating performance offset by higher net cash tax payments and changes in working capital. Accounts receivable and accounts payable agings have remained relatively consistent with balances as of December 31, 2021.
This increase was driven by improved operating performance and changes in working capital. Accounts receivable and accounts payable agings have remained relatively consistent with balances as of December 31, 2022. Investing Activities During 2023 we used $73.7 million in cash for investing activities, as compared to $33.5 million for capital expenditures.
Based on our current analysis of the provisions, we do not believe this legislation will have a material impact on our consolidated financial statements. Potential impairments We review from time to time possible dispositions or reorganization of various assets in light of current and anticipated economic and industry conditions, our strategic plan and other relevant factors.
See Note 9, "Non-Operating Expense" of the Notes to the Consolidated Financial Statements included in Item 8 of this report for additional information. Potential impairments We review from time-to-time possible dispositions or reorganization of various assets in light of current and anticipated economic and industry conditions, our strategic plan and other relevant factors.
We manage these costs through cost saving and productivity initiatives, sourcing programs, and pricing actions. To remain competitive on our operating structure, we continue to work on programs to expand our profitability. In 2022, our results were impacted by a significant increase in our costs, particularly for pulp, chemicals and freight.
Operating Costs Our operating costs include raw materials, labor and selling, general and administrative expenses. We manage these costs through cost saving and productivity initiatives, sourcing programs, and pricing actions. To remain competitive on our operating structure, we continue to work on programs to expand our profitability.
Retail sales volumes increased in our Consumer Products segment for the year ended December 31, 2022 compared to the prior year as consumer demand stabilized due to consumer buying patterns returning to pre-COVID levels as well as several new customer programs.
Retail sales volumes increased in our Consumer Products segment for the year ended December 31, 2023 compared to the prior year due to the increased demand for private label versus branded products.
The increase was due to $50.0 million to prepay our term loan credit agreement in full, $30.0 million in open market purchases of our 2014 Notes, and $5.0 million used for common stock repurchases under our stock repurchase program during the year ended December 31, 2022. 29 Commitments As of December 31, 2022, we have purchase commitments of $129.0 million, of which $107.1 million is payable within 12 months, related to contracts with natural gas and electricity providers, contracts for the purchase of chemicals and pulp, and contracts associated with IT services that are legally binding on us and specify fixed or minimum quantities.
Commitments As of December 31, 2023, we have purchase commitments of $67.7 million, of which $41.7 million is payable within 12 months, related to contracts with natural gas and electricity providers, contracts for the purchase of chemicals and pulp, and contracts associated with IT services that are legally binding on us and specify fixed or minimum quantities. 30 Additionally, we have $48.2 million, all of which is payable within 12 months, in purchase commitments associated with capital expenditures.
Product supply in the industry is influenced primarily by fluctuations in available manufacturing production, which tends to increase during periods when prices remain strong. Starting in 2021, changes in global supply of paperboard and increases in demand due to COVID-19 pandemic, contributed to increased prices for paperboard products.
Product supply in the industry is influenced primarily by fluctuations in available manufacturing production, which tends to increase during periods when prices remain strong. During 2023, the paperboard industry saw significant weakness due to customer destocking after a lengthy period of constrained supply given high demand. Tissue sales The U.S. tissue industry is affected by macro-economic factors in the U.S.
Financing Activities Net cash flows used in financing activities were $88.6 million for 2022 as compared to $82.0 million for 2021.
Financing Activities Net cash flows used in financing activities were $129.4 million for 2023 as compared to $88.6 million for 2022. The increase was due to higher debt repayments in 2023 driven by improved operating results resulting in additional available cash to fund debt repayments.
Sales prices for the year ended December 31, 2022 compared to the prior year increased significantly due to the impacts of our previously announced price increases. During the fourth quarter of 2022, we completed our planned major maintenance at our Lewiston facilities whereas in 2021, this outage occurred in the second quarter.
Pulp sales volumes increased for the year ended December 31, 2023 as we manage our paperboard production resulting in additional pulp available to be sold. Paperboard sales prices for the year ended December 31, 2023 compared to the prior year increased due to the impacts of our previously announced price increases offset by changes in product mix.
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Results in 2021 include net charges of $50 million ($39.2 million after tax) associated with the closure of our Neenah, Wisconsin tissue operations. • Adjusted EBITDA was $226.9 million in 2022 compared to $174.6 million in 2021.
Added
In 2022, our results were impacted by a significant increase in our costs, particularly for pulp, chemicals and freight. During 2023, our results benefited from lower pricing for pulp, freight and energy.
Removed
Many consumers have returned to pre-COVID-19 away from home activities in 2022 which has stabilized demand for tissue. As reported by RISI, US Tissue Monthly Data (December 2022), parent roll sales prices have increased 7- 8% industry wide in 2022 over the prior year. Operating Costs Our operating costs include raw materials, labor and selling, general and administrative expenses.
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Pulp sales prices declined for the year ended December 31, 2023 compared to the prior year due to change in commodity pulp prices.
Removed
The increase between years is primarily related to higher incentive compensation based upon higher than expected operating results.
Added
The increase between years is primarily related to costs associated with business improvement projects including information technology and other projects and higher wages.
Removed
The decrease is due to lower debt outstanding, partially offset by a one-time increase of $2.2 million associated with our finance leases. See Note 9, "Non-Operating Expense" of the Notes to the Consolidated Financial Statements included in Item 8 of this report for additional information.
Added
Additionally, during the year ended December 31, 2023, in connection with the retirement of the 2014 Notes, we incurred debt retirement costs of $3.1 million which included $0.4 million related to the write off of unamortized debt costs along with the premium on debt redemption of $2.7 million.
Removed
Inflation Reduction Act of 2022 On August 2022, the U.S. enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy.
Added
Additionally, we used $17.9 million for common stock repurchases under our stock repurchase program during the year ended December 31, 2023.
Removed
Investing Activities During 2022 we used $33.5 million in cash for investing activities, as compared to $38.4 million for capital expenditures partially offset by $13.3 million of proceeds from divested assets during 2021. Included in 2022 is a $2.4 million refund associated with a capital project placed in service in prior years.
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Credit Agreements We are party to The Credit Agreement (as the same may be amended from time to time, the “PCA Credit Agreement”) that consists of a revolving term loan commitment in the amount of $270 million. We completed an initial draw of $150 million during the fourth quarter of 2023.
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Additionally, we have $26.5 million, all of which is payable within 12 months, in purchase commitments associated with capital expenditures. Credit Agreements During the year ended December 31, 2022, we fully prepaid all amounts outstanding under our term loan credit agreement that was originally incurred in 2019.
Added
The obligations under the PCA Credit Agreement are secured by liens on substantially all of our personal property assets and each of our domestic subsidiaries that are guarantors of the PCA Credit Agreement. Borrowings under the PCA Credit Agreement are subject to mandatory prepayment in certain circumstances.
Added
We may, at our option, prepay and reborrow any borrowings under the PCA Credit Agreement, in whole or in part, at any time (or with respect to our initial $150 million drawing, after the first year) and from time to time without premium or penalty (except in certain circumstances).
Added
We may, at our option, prepay and reborrow any borrowings under the ABL Credit Agreement, in whole or in part, at any time and from time to time without premium or penalty (except in certain circumstances). Both Credit Agreements contain customary representations, warranties, and affirmative and negative covenants.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed1 unchanged
Biggest changeQuantitative Information about Market Risk Expected Maturity Date (In millions) 2023 2024 2025 2026 2027 Thereafter Total Long-term debt: 1 Fixed rate $ — $ — $ 270.0 $ — $ — $ 275.0 $ 545.0 Revolving credit facility $ — $ — $ — $ — $ — $ — $ — Average interest rate — % — % 5.38 % — % — % 4.75 % — % Fair value at December 31, 2022 $ 504.3 1 Excludes finance lease liabilities. 31
Biggest changeQuantitative Information about Market Risk Expected Maturity Date (In millions) 2024 2025 2026 2027 2028 Thereafter Total Long-term debt: 1 Fixed rate $ — $ — $ — $ — $ 425.0 $ — $ 425.0 Revolving credit facility $ — $ — $ — $ 20.0 $ — $ — $ 20.0 Average interest rate — % — % — % 6.71 % 6.94 % — % 6.86 % Fair value at December 31, 2023 $ 425.7 1 Excludes finance lease liabilities. 32
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk Our exposure to market risk on financial instruments is limited to our ABL Credit Agreements. As of December 31, 2022, there were no borrowings outstanding under our ABL Credit Agreement.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk Our exposure to market risk on financial instruments is limited to our ABL Credit Agreements. As of December 31, 2023, there was $20.0 million outstanding under our ABL Credit Agreement.

Other CLW 10-K year-over-year comparisons