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What changed in Clearwater Paper Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Clearwater Paper Corp's 2023 and 2024 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 2024 report.

+274 added−248 removedSource: 10-K (2025-02-24) vs 10-K (2023-12-31)

Top changes in Clearwater Paper Corp's 2024 10-K

274 paragraphs added · 248 removed · 169 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeSBS 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.
Biggest changeSBS paperboard is used for such products because it is manufactured using virgin fiber combined with the kraft bleaching process, which results in superior cleanliness, brightness and consistency. SBS paperboard is often manufactured with a clay coating to provide superior surface printing qualities. Folding carton is the largest portion of the SBS category of the North American paperboard industry.
We actively work to attract and retain the best-qualified talent by offering competitive benefits, including market-competitive compensation, healthcare, paid time off, parental leave, retirement benefits, tuition assistance, employee skills development and leadership development. We have deployed training and development programs across our organization to invest in the professional growth of our people.
We actively work to attract and retain the best-qualified talent by offering competitive pay and benefits, including market-competitive compensation, healthcare, paid time off, parental leave, retirement benefits, tuition assistance, employee skills development and leadership development. We have deployed training and development programs across our organization to invest in the professional growth of our people.
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.
Our failure to meet these climate targets could negatively 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.
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.
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 paperboard offerings 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.
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.
Additional information regarding our GHG targets and strategy are available in our 2024 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 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.
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 significant workplace injuries and fatalities (SIFs) and to provide a safe, open, and accountable work environment for our employees.
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.
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 2,200 employees are instrumental to delivering on our commitments to our customers and securing long term success for our organization.
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.
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 - establishing GHG reduction targets validated by the Science Based Targets initiative (SBTi) and developing a roadmap to achieve reductions based upon transformed business. • 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 4 might arise from changes in regulation and physical or operational events.
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.
We believe that a sustained commitment to 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.
Fuel prices, mileage driven and line-haul rates impact our freight costs for delivery of raw materials to our manufacturing facilities, internal inventory transfers and delivery of our finished products to customers. Energy We consume substantial amounts of energy, such as electricity, hog fuel, steam and natural gas.
Freight Freight is a significant cost input for our business. Fuel prices, miles driven and line-haul rates impact our freight costs for delivery of raw materials to our manufacturing facilities, internal inventory transfers and delivery of our finished products to customers. Energy We consume substantial amounts of energy, such as electricity, hog fuel, steam and natural gas.
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.
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.
The 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.
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 regulation and 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.
For a discussion of the uncertainties and business risks associated with employee relations, see Part I, Item 1A, "Risk Factors — Risks Related to Our Business Operations and the Markets in Which We Operate — Our business and financial performance may be harmed by future labor disruptions." 6
For a discussion of the uncertainties and business risks associated with employee relations, see Part I, Item 1A, "Risk Factors — Risks Related to Our Business Operations and the Markets in Which We Operate — Our business and financial performance may be harmed by future labor disruptions." WEBSITE Interested parties may access our periodic and current reports filed with the SEC, at no charge, by visiting our website, www.clearwaterpaper.com.
With the exception of our capability to supply just-in-time sheeting and narrow rolls, we do not produce converted paperboard end-products, so we are not simultaneously a supplier of and a competitor to our customers in key market segments, notably folding carton and cup.
Our food service paperboard is known for its cleanliness and printability, and is engineered for superior performance. With the exception of our capability to supply just-in-time sheeting and narrow rolls, we do not produce converted paperboard end-products, so we are not simultaneously a supplier of and a competitor to our customers.
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.
We continue to execute on these goals. 5 As of December 31, 2024, approximately 1,395 of our employees are covered under collective bargaining agreements. Unions represent hourly employees at our manufacturing sites.
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.
Sales and marketing 3 We utilize various methods for the sale and distribution of our 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.
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.
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.
In addition, customer buying patterns for our paperboard generally result in lower sales for certain grades of our Pulp and Paperboard segment during the first and fourth quarters, compared to the second and third quarters of a given year.
Seasonality Customer buying patterns for our paperboard generally result in lower sales volumes for certain grades during the first and fourth quarters, compared to the second and third quarters of a given year. CLIMATE CHANGE Climate change is an important issue to the public, governmental authorities and various other stakeholders, and is a priority for our business.
We focus on the high end of the folding carton category which requires a premium print surface and includes uses such as packaging for pharmaceuticals, cosmetics and other premium retail goods. This generally provides for differentiation resulting in margins that are more attractive than less demanding folding carton applications.
Within the folding carton segment, there are varying qualities of SBS paperboard, as well as competing paperboard substrates that can be substituted for SBS. We focus on the high end of the folding carton category which requires a premium print surface and includes uses such as packaging for pharmaceuticals, cosmetics and other premium retail goods.
WEBSITE Interested parties may access our periodic and current reports filed with the SEC, at no charge, by visiting our website, www.clearwaterpaper.com. In the menu select “Investor Relations,” then select “Financial Information & SEC Filings.” Information on our website is not part of this report.
In the menu select “Investor Relations,” then select “Financial Information & SEC Filings.” Information on our website is not part of this report. 6
SBS paperboard is a premium paperboard grade that is most frequently used to produce folding cartons, liquid packaging, cups and plates, blister and carded packaging, top sheet and commercial printing items. SBS paperboard is used for such products because it is manufactured using virgin fiber combined with the kraft bleaching process, which results in superior cleanliness, brightness and consistency.
Products SBS paperboard is a premium paperboard grade that is most frequently used to produce folding cartons (also includes blister and carded packaging and top sheet), food service (including liquid packaging, cups and plates) and commercial printing items.
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 own (or lease) and operate wood chipping facilities 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 in order to meet product specifications. We purchase approximately 88,000 short tons of pulp which supplements our internal production capabilities.
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.
We believe that our status as an independent, non-integrated supplier is core to our value proposition. Our manufacturing facilities and all other assets are located within the continental United States. We believe we are one of the five largest producers of paperboard in North America with approximately 14% of the available U.S. production capacity in 2024.
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ITEM 1. Business GENERAL We are a premier manufacturer and supplier of bleached paperboard and consumer and parent roll tissue. We supply bleached paperboard to quality-conscious printers and packaging converters, and offer services that include custom sheeting, slitting and cutting. We supply private branded tissue to major retailers, including grocery, club, mass merchants and discount stores.
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ITEM 1. Business GENERAL We are a premier manufacturer and supplier of Solid Bleached Sulfate (SBS) paperboard packaging products to independent converters in North America. We participate in a 10 million ton North American paperboard market, represented in three segments with a broad range of applications.
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BUSINESS SEGMENTS We have two business segments: Pulp and Paperboard and Consumer Products.
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SBS represents approximately half of the North American paperboard market with Coated Unbleached Kraft (CUK) and Coated Recycled Board (CRB) comprising the remaining portions. Our paperboard products are inherently sustainable, and we believe we are well positioned to capitalize on sustainability trends towards renewable and recyclable materials.
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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.
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We produce paperboard that is then converted and printed by independent converters and primarily used in folding carton and food service applications. Additionally, minor amounts of pulp are sold to outside customers. We strive to develop new products and innovative solutions to expand and diversify our paperboard portfolio.
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This segment produces hardwood and softwood pulp, which is primarily used as the basis for our paperboard products or transferred to our Consumer Products segment. Minor amounts of pulp are sold to outside customers.
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We also provide custom sheeting, slitting and cutting of paperboard products. Acquisition and Divestiture During 2024, through two transformational transactions, we repositioned Clearwater Paper Corporation to have a singular focus on the paperboard packaging industry. We may continue to pursue acquisitions in the future as a part of our overall growth strategy.
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Bleached pulp that is to be used as market pulp is dried and baled on a pulp drying machine, bypassing the paperboard machines. The various grades of paperboard are wound into rolls for converting to final end users. Liquid packaging and cup stock grades are coated in a separate operation to create a resistant and durable liquid barrier.
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During the second quarter of 2024, we acquired a paperboard manufacturing facility and associated business, located in Augusta, Georgia from Graphic Packaging International, LLC (Augusta Acquisition). We paid $700 million plus an adjustment for wood inventory and other assets, totaling approximately $710.6 million.
Removed
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.
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For more information, see Note 3, "Business Acquisition," in the Notes to the Consolidated Financial Statements included herein under "Item 8. Financial Statements and Supplementary Data." During the fourth quarter of 2024, we sold our tissue business (formerly Consumer Products segment), which manufactured private branded tissue products, to Sofidel America Corp, a wholly owned subsidiary of Sofidel S.p.A.
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Liquid packaging paperboard is used in rigid containers including juice, milk and wine sold in supermarket retail channels. Our liquid packaging paperboard is known for its cleanliness and printability, and is engineered for long-lived performance due to its three-ply, softwood construction.
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We received $1.06 billion in cash less adjustments for working capital, indebtedness and transaction expenses. For more information, see "Note 4 Discontinued Operations" in the Notes to the Consolidated Financial Statements included herein under "Item 8.
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Our reputation for producing liquid packaging meets the most demanding standards for paperboard quality and cleanliness, where consumers have a particular tendency to associate blemish-free, vibrant packaging with the cleanliness, quality and freshness of the liquids contained inside.
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Financial Statements and Supplementary Data." This divestiture represents a strategic shift in our operations and financial results resulting in discontinued operations accounting treatment associated with this division. All prior periods have been recast to reflect the discontinued operations.
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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.
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This generally provides for differentiation resulting in margins that are more attractive than less demanding folding carton applications. Food service paperboard includes both liquid packaging and cup and plate categories. This includes rigid containers including juice, milk and wine sold in retail channels, premium ice cream, hot and cold cups used in quick service channels and paper plates.
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Other applications include carded packaging for blister board alternatives (e.g., batteries and lip stick) and bleached bristols which are used to produce premium printing heavyweight paper grades used in commercial application. Bristols 3 can be clay coated on one side or both sides for applications such as brochures, presentation folders and paperback book covers.
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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. Competition We compete with other manufacturers of paperboard, including unbleached and recycled grades, both domestically and internationally.
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Of the five largest SBS paperboard producers in the United States, we are the only producer that does not convert SBS paperboard into folding cartons, cups, plates or liquid packaging end-use products.
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Paperboard manufacturers also compete with plastic manufacturers as well as other primary and secondary packaging materials on the basis of product performance, price, quality and customer service. Raw Materials Wood fiber is our principal raw material, which consists of chips, sawdust and logs.
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We can convert paperboard parent rolls to flat sheets and narrow rolls, which expands our in-market service capabilities and allows us to support small and mid-sized folding carton converters that buy sheeted paperboard to convert into packaging end-products.
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While we produce the majority of our own energy needs by utilizing carbon neutral biomass, we also purchase a portion of our natural gas and electricity under supply contracts.
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Providing a service platform in this way expands the key folding carton segment of our business and does not compete with our customers in other key market segments. We utilize various methods for the sale and distribution of our paperboard.
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Product Development Our product development resources works directly with our sales and marketing personnel to understand long-term consumer and retailer trends with a goal of creating relevant new paperboard solutions. These innovative solutions seek to provide customers with differentiated packaging to meet consumer preferences.
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Consumer Products Segment Our Consumer Products segment sells and produces a complete line of at-home tissue products. Our integrated manufacturing and converting operations and geographic footprint enable us to deliver a broad range of cost-competitive products with brand equivalent quality to our customers. We also sell minor amounts of parent rolls.
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Our development efforts include, but are not limited to, light weight paperboard options that do not sacrifice print quality and strength; developing compostable food service products including innovations in biodegradable barriers and coatings; and continued investment in alternative fibers with up to 35% of post-consumer recycled content.
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Prior to the closure of our Neenah, Wisconsin facility in July 2021, we sold away from home (AFH) products and performed limited contract manufacturing. The U.S. at-home tissue segment consists of bath, paper towels, facial and napkin products categories. Each category is further distinguished according to quality segments: ultra, premium, value and economy.
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The 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.
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As a result of manufacturing process improvements and consumer preferences, the majority of at-home tissue sold in the United States is ultra and premium quality. At-home tissue producers are comprised of companies that manufacture branded tissue products, private branded tissue products, or both. Branded tissue suppliers manufacture, market and sell tissue products under their own nationally branded labels.
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Private branded tissue producers manufacture tissue products for retailers to sell as their store brand. We estimate that private brands comprise approximately one third of the total U.S. tissue market.
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We believe that we are the only U.S. consumer tissue manufacturer that solely produces a full line of quality private branded tissue products for large retail trade channels with a national footprint. We believe we are able to offer products that match the quality of leading national brands, but generally at lower prices.
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We sell a combination of ultra and premium products as well as compete with value categories. Value grade products utilizing recycled fiber are also produced for customers who wish to further diversify their product portfolio. We utilize independent companies to routinely test our product quality.
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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.
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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.
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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.
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SEASONALITY Our Consumer Products segment can experience a decrease in shipments during the fourth quarter as a result of retail holiday promotions.
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CLIMATE CHANGE Climate change is an important issue to the public, governmental authorities and various other stakeholders, and is a high priority issue for our business.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe currently only produce SBS paperboard. If demand for SBS paperboard does not increase commensurate with the increased SBS and FBB supply, resulting in lower capacity utilization, the price of SBS and FBB paperboard could be materially and adversely effected.
Biggest changeIf demand does not increase commensurate with supply, it could result in lower capacity utilization and effect the price of SBS, which could materially and adversely affect our results of operations and cash flows. Substitution amongst paperboard grades could have an adverse effect on our financial results. We currently manufacture only SBS paperboard.
Increased regulatory activity at the state, federal and international level is possible regarding climate change as well as other emerging environmental issues associated with our manufacturing sites and products, such as water quality standards or dam breaching for purposes of aiding salmon recovery in the Pacific Northwest or recycling.
Increased regulatory activity at the state, federal and international level is possible regarding climate change as well as other emerging environmental issues associated with our manufacturing sites and products, such as water quality standards, dam breaching for purposes of aiding salmon recovery in the Pacific Northwest, or recycling.
One of the multiemployer pension plans to which we contribute, the IAM National Pension Fund, or IAM NPF, elected to be certified to be in “critical status” for the plan year beginning January 1, 2019.
One of the multiemployer pension plans to which we contribute, the IAM National Pension Fund, or IAM NPF, elected to be certified in “critical status” for the plan year beginning January 1, 2019.
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.
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 operations, cash flows and financial condition, and the trading price of our common stock.
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 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 • enter into sale and lease-back transactions.
In addition, chemical suppliers that use petroleum-based products in the manufacture of their chemicals may, due to supply shortages and cost increases, ration the amount of chemicals available to us, and therefore we may not be able to obtain at favorable prices the chemicals we need to operate our business, if we are able to obtain them at all.
In addition, 10 chemical suppliers that use petroleum-based products in the manufacture of their chemicals may, due to supply shortages and cost increases, ration the amount of chemicals available to us, and therefore we may not be able to obtain at favorable prices the chemicals we need to operate our business, if we are able to obtain them at all.
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.
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. We may be subject to operational and financial climate change risks.
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.
Additionally, our debt agreements limit the use of the proceeds from certain dispositions; as a result, we may not be 16 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.
If we fail to attract, motivate, train and retain qualified personnel, or if we experience excessive turnover, we may experience declining sales, manufacturing delays or other inefficiencies, increased recruiting, training and relocation costs and other difficulties, which may negatively impact our results of operations, cash flows and financial condition.
If we fail to attract, motivate, train and retain qualified personnel, or if we experience excessive turnover, we may 18 experience declining sales, manufacturing delays or other inefficiencies, increased recruiting, training and relocation costs and other difficulties, which may negatively impact our results of operations, cash flows and financial condition.
The amount and timing of environmental expenditures is difficult to predict, and, in some cases, liability may be imposed without regard to contribution or to whether we knew of, or caused, the release of hazardous substances. We are required to comply with environmental laws and the terms and conditions of multiple environmental permits.
The amount and timing of environmental expenditures is difficult to predict, and, in some cases, liability may be imposed without regard to contribution or to whether we knew of, or caused, the release of hazardous substances. 12 We are required to comply with environmental laws and the terms and conditions of multiple environmental permits.
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.
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.
The cost of chemicals and energy needed for our manufacturing processes significantly affects our results of operations and cash flows. We use a variety of chemicals in our manufacturing processes, including petroleum-based polyethylene and certain petroleum-based latex chemicals. Prices for these chemicals have been and are expected to remain volatile.
The cost and availability of chemicals and energy needed for our manufacturing processes significantly affects our results of operations and cash flows. We use a variety of chemicals in our manufacturing processes, including petroleum-based polyethylene and certain petroleum-based latex chemicals. Prices for these chemicals have been and are expected to remain volatile.
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.
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.
Network, system, application and data breaches could result in operational disruptions or information misappropriation, which could result in lost sales, production interruption, business delays, negative publicity, and could have a material adverse effect on our business, results of operations and financial condition.
Network, system, application and data breaches could result in operational disruptions or information misappropriation, which could result in lost sales, production interruption, financial losses, business delays, negative publicity, and could have a material adverse effect on our business, results of operations and financial condition.
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.
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 withdrawal liability.
We expect increased competition in North America from both foreign and domestic manufacturers. We have experienced, and expect to continue to experience, increased direct sales by foreign competitors into the markets in which we compete.
We expect increased competition in North America from both foreign and domestic manufacturers. We have experienced, and expect to continue to experience, increased direct sales by foreign competitors in the markets in which we compete.
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.
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, 2024, the withdrawal liability payments that we would be required to make to PIUMPF were we to have completely withdrawn in 2024 would be approximately $5.7 million per year on a pretax basis.
For example, in the fourth quarter of 2023, we were forced to partially shutdown parts of our mill and curtail production at our Idaho facility due to damage to a natural gas pipeline that supplied the region. Any facility shutdowns may be followed by prolonged startup periods, regardless of the reason for the shutdown.
For example, in the fourth quarter of 2023, we were forced to partially shut down parts of our mill and curtail production at our Idaho facility due to damage to a natural gas pipeline that supplied the region. Any facility shutdowns may be followed by prolonged startup periods, regardless of the reason for the shutdown.
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.
For example, in 2022, we experienced both difficulties in procuring sufficient transportation for 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.
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 relationships 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.
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.
There are various limitations on our ability to incur the full $375 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.
In 2023, we experienced increased price competition in our paperboard business along with a significant drop in demand due to market conditions. This competition and the decline in demand has resulted in a decrease in our paperboard revenue and gross margins and adversely affected our financial condition.
In 2024, we experienced increased price competition in our paperboard business along with a significant drop in demand due to market conditions. This competition and the decline in demand has resulted in a decrease in our paperboard revenue and gross margins and adversely affected our financial condition.
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.
As a result, the price of these residual wood fibers is affected by operating levels in both the pulp and paperboard and lumber industries, which in the case of the latter is impacted by regional new home construction as well as home remodeling and repairs.
If demand for SBS paperboard declines as a result of customer or consumer demand for these substitute products, we may lose business or may not be able to grow our existing paperboard business, and we may be forced to sell at lower margins, all of which could negatively affect our financial condition and results of operations.
If demand for SBS paperboard declines as a result of customer or consumer preference for these substitute products, or more generally, we may lose business or may not be able to grow our existing paperboard business, and we may be forced to sell at lower margins, all of which could negatively affect our financial condition and results of operations.
In particular, the pulp and paper industry in the United States is subject to several performance based rules associated with effluent and air emissions as a result of certain of its manufacturing processes.
In particular, the pulp and paperboard industry in the United States is subject to several performance based rules associated with effluent and air emissions as a result of certain of its manufacturing processes.
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.
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 $375 million of current revolving loan commitments (such lesser amount, the “Line Cap”) and (ii) $25 million.
Wood fiber pricing is subject to regional market influences, and our cost of wood fiber may increase in the areas our pulp and paperboard facilities are located due to market shifts in those regions. For example, much of the wood fiber we use in our pulp manufacturing process in Lewiston, Idaho, is the by-product of sawmill operations.
Wood fiber pricing is subject to regional market influences, and our cost of wood fiber may increase in the areas our facilities are located due to market shifts in those regions. For example, much of the wood fiber we use in our pulp manufacturing process at our Lewiston, Idaho facility, is the by-product of sawmill operations.
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.
The amount of our annual contributions to these plans is negotiated with the union representing our employees covered by each plan. In 2024, we contributed approximately $5.8 million to these plans.
Our ability to successfully compete in the pulp and paperboard industry is influenced by a number of factors, including manufacturing capacity, general economic conditions and the availability and demand for paperboard substitutes. Our Pulp and Paperboard business competes with WestRock, Georgia-Pacific, Graphic Packaging, Pactiv Evergreen and other international producers, most of whom are much larger than us.
Our ability to successfully compete in the pulp and paperboard industry is influenced by a number of factors, including manufacturing capacity, general economic conditions and the availability and demand for paperboard substitutes. Our business competes with Smurfit Westrock, Georgia-Pacific, Graphic Packaging, Sappi and other international producers, most of whom are much larger than us.
In addition, the success of the acquisition will depend, in part, on our ability to realize the anticipated benefits from the acquisition, including anticipated revenue, customer growth and cost structure and production scale benefits. The integration process will be complex, costly and time-consuming.
In addition, the success of the acquisition will depend, in part, on our ability to realize the anticipated benefits from the acquisition, including anticipated revenue, customer growth and cost structure and production scale benefits. The integration process has been and will continue to be complex, costly and time-consuming.
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 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, 2024, we had approximately $275 million of outstanding indebtedness, and we could incur substantial additional indebtedness in the future.
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.
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 could be material and would be 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, the success of the potential legal challenges we could raise and the effect of funding provided under ARPA.
As consumer activity leveled out, our customers are deployed their inventories to address their paperboard needs, leading to an overall decline in paperboard demand and prices in 2023. If this trend continues, we may experience further decline in paperboard demand, we may be unable to 7 sustain pricing, and we may need to take production downtime.
As consumer activity leveled out, our customers deployed their inventories to address their paperboard needs, leading to an overall decline in paperboard demand and prices in 2023 and 2024. If this trend continues, we may experience a further decline in paperboard demand, we may be unable to sustain pricing, and we may need to take production downtime.
Disruptions could occur due to any number of circumstances, including prolonged power outages, mechanical or process failures, shortages of raw materials, natural catastrophes, disruptions in the availability of transportation, labor disputes, cyber-attacks and malware, terrorism, changes in or non-compliance with environmental or safety laws, and the lack of availability of services from any of our facilities' key suppliers.
Disruptions could occur due to any number of circumstances, including prolonged power outages, mechanical or process failures, faults in aging equipment, shortages of raw materials, natural catastrophes, disruptions in the availability of transportation, labor disputes, cyber-attacks and malware, terrorism, changes in or non-compliance with environmental or safety laws, and the lack of availability of services from any of our facilities key suppliers.
The occurrence of an event of default could have serious consequences to our financial condition and results of operations, and could cause us to become bankrupt or insolvent. To service our substantial indebtedness, we must generate significant cash flows.
The occurrence of an event of default could have serious consequences to our financial condition and results of operations and could cause us to become bankrupt or insolvent. To service our existing and future indebtedness, we must generate cash flows.
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.
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, 2024, our fixed charge coverage ratio was approximately 2.0x.
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.
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, 2024, we would be obligated to pay a single sum withdrawal liability payment of approximately $4.9 million on a pretax basis if we were to have completely withdrawn from IAM NPF in 2024.
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 Arkansas and Augusta pulp and paperboard facilities rely on whole log chips for a significant portion of their 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.
Any inability by us to integrate and manage the Mill Facility in a timely and efficient manner, any inability to achieve anticipated revenues, cost savings or other anticipated benefits from the acquisition in the time frame we anticipate or any unanticipated required increases in capital spending could adversely affect our business, financial condition, results of operations or liquidity.
Any inability by us to integrate and manage the Augusta Facility, any inability to achieve anticipated revenues, cost savings or other anticipated benefits from the acquisition in the time frame we anticipate or any unanticipated required increases in capital spending could adversely affect our business, financial condition, results of operations or liquidity.
We may be unable to identify future suitable strategic capital or building projects or acquisition targets. In addition, we may be unable to achieve anticipated benefits or cost savings from construction projects or acquisitions in the timeframe we anticipate, or at all.
We may be unable to identify future suitable strategic capital or building projects or may be unable to achieve anticipated benefits or cost savings from construction projects in the timeframe we anticipate, or at all.
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.
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 42 in 2023. We were the largest contributing employer participating in PIUMPF in 2024.
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.
In August 2025, a collective bargaining agreement for hourly employees at our Lewiston, Idaho facility, which affects approximately 500 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.
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 of December 31, 2024, availability under the ABL Credit Agreement was approximately $218 million or 10% % 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.
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.
The provisions in our certificate of incorporation and bylaws include, among other things, the following: • a classified Board of Directors with staggered terms (which shall cease to be classified after the 2027 annual meeting); • 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 (except for directors elected following the 2025 annual meeting); and • supermajority voting requirements to amend our bylaws and certain provisions of our certificate of incorporation.
We may fail to attract, motivate, train and retain qualified personnel, including key personnel. Our ability to effectively run our business depends on our ability to attract, motivate, train and retain employees with the skills necessary to understand and adapt to the competitive markets in which we operate.
Our ability to effectively run our business depends on our ability to attract, motivate, train and retain employees with the skills necessary to understand and adapt to the competitive markets in which we operate.
We are also subject to Delaware laws that could have similar effects. One of these laws prohibits us from engaging in a business combination with a significant stockholder unless specific conditions are met.
We are also subject to Delaware laws that could have similar effects. One of these laws prohibits us from engaging in a business combination with a significant stockholder unless specific conditions are met. 19 ITEM 1B. Unresolved Staff Comments None.
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.
As 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.
The potential risks associated with our efforts to integrate the Mill Facility operations and business include, among others: ▪ failure to implement effectively our business plan for the addition of the operations and business into our existing systems; ▪ unanticipated issues in integrating financial, manufacturing, logistics, information, communications and other systems; ▪ failure to retain key employees; ▪ failure to retain key customers; ▪ inconsistencies in standards, controls, procedures and policies, including internal control and regulatory requirements under the Sarbanes-Oxley Act of 2002; and ▪ unanticipated issues, expenses and liabilities.
The potential risks associated with our efforts to integrate the Augusta Facility operations and business include, among others: ▪ failure to implement effectively our business plan for the addition of the operations and business into our existing systems; ▪ unanticipated issues in integrating financial, manufacturing, logistics, information, information technology, communications and other systems; ▪ failure to retain key employees; ▪ failure to retain key customers; ▪ increased working capital needs, which could require additional debt and result in higher interest; ▪ inconsistencies in standards, controls, procedures and policies, including internal control and regulatory requirements under the Sarbanes-Oxley Act of 2002; and ▪ unanticipated issues, expenses and liabilities.
Our Pulp and Paperboard segment experienced a surge in demand during and following the COVID-19 pandemic due to increased packaging and other usage of paperboard needed to address substantially higher consumer activity. In response to this demand, our customers added to their paperboard inventories.
For example, demand for our paperboard products surged during and following the COVID-19 pandemic, due to increased packaging and other usage of paperboard needed to address substantially higher consumer activity. In response to this demand, our customers added to their paperboard inventories.
Further, the integration of the Mill Facility requires the focused attention of our management team, including a significant commitment of their time and resources. The need for our management to focus on integration matters could have a material and adverse impact on our sales and operating results.
Further, the integration of the Augusta Facility requires the focused attention of our management team, including a significant commitment of their time and resources, which may divert management’s attention from other business concerns. The need for our management to focus on integration matters could have a material and adverse impact on our sales and operating results.
The ongoing consolidation of paperboard and paperboard converting businesses, including through the acquisition and integration of such converting businesses by larger competitors of ours, could result in a loss of customers and sales in our pulp and paperboard business.
Consolidation in the North American paperboard and converting industry may adversely affect our business. The ongoing consolidation of paperboard and paperboard converting businesses, including through the acquisition and integration of such converting businesses by competitors of ours, could result in a loss of customers and sales.
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.
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.
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.
After giving effect to borrowing base limitations and issuance of letters of credit, we had availability of approximately $218 million under the Credit Agreement as of December 31, 2024.
Recessed global economic conditions and a strong U.S. dollar could affect our business in a number of ways, including causing declines in global demand for consumer tissue and paperboard, and increased competition from foreign manufacturers in the U.S. market.
U.S. and global economic conditions and currency exchange rates have a significant impact on our business and financial results. Recessed global economic conditions and a strong U.S. dollar could affect our business in a number of ways, including causing declines in global demand for paperboard, and increased competition from foreign manufacturers in the U.S. market.
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.
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. 17 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.
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.
During 2024, interest and inflation rates increased significantly relative to recent years, although the impacts were felt to different extents, and the far extent of such increases remains to be seen. Increasing rates may materially affect our prices and the demand for our products. We may fail to attract, motivate, train and retain qualified personnel, including key personnel.
We cannot be certain that our current suppliers will continue to provide us with the quantities of these raw materials that we require or will continue to satisfy our anticipated specifications and quality requirements.
Limitations on the availability of, and subsequent increases in, the costs of raw materials could have an adverse effect on our financial results. We cannot be certain that our current suppliers will continue to provide us with the quantities of these raw materials that we require or will continue to satisfy our anticipated specifications and quality requirements.
Were we to withdraw from PIUMPF, these liabilities would be in addition to the pension contributions we would have to make to any new pension plan adopted or contributed to by us to replace PIUMPF.
Were we to withdraw from PIUMPF, these liabilities would be in addition to the pension contributions we would have to make to any new pension plan adopted or contributed to by us to replace PIUMPF. All of this could materially reduce the cash we would have available for business and other needs.
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.
Our pension and health care costs are subject to numerous factors that could cause these costs to change. 15 In addition to our pension plans, we provide health care benefits to certain of our current and former salaried and hourly employees.
RISKS RELATED TO OUR BUSINESS OPERATIONS AND THE MARKETS IN WHICH WE OPERATE Post-pandemic industry and market conditions adversely affected and may continue to adversely affect the operating results and cash flows of our Pulp and Paperboard business.
RISKS RELATED TO OUR BUSINESS OPERATIONS AND THE MARKETS IN WHICH WE OPERATE Difficult industry and market conditions may adversely affect the operating results and cash flows of our business. Difficult industry and market conditions may adversely affect our utilization rates due to decreases in product demand.
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.
Several significant investments in paperboard manufacturing facilities in North America and globally have been announced, which could significantly increase the production and supply of Solid Bleached Sulfate (SBS) and Folding Boxboard (FBB) paperboard in the market.
In 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.
In 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.
Shipments of products and raw materials may be delayed or disrupted due to weather conditions, labor shortages or strikes, regulatory actions or other events. If our transportation providers are unavailable or fail to deliver our products in a timely manner, we may incur increased costs and we may be unable to manufacture and deliver our products on a timely basis.
If our transportation providers are unavailable or fail to deliver our products in a timely manner, we may incur increased costs and we may be unable to manufacture and deliver our products on a timely basis.
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. Our Pulp and Paperboard business has historically been affected by cyclical market conditions.
Cyclical industry conditions have in the past affected and may continue to adversely affect the operating results and cash flows of our business. Our 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.
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 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. 14 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.
Our dependence on a limited number of third-party suppliers, and the challenges we may face in obtaining adequate supplies of raw materials, involve several risks, including limited control over pricing, availability, quality and delivery schedules. Limitations on the availability of, and subsequent increases in, the costs of raw materials could have an adverse effect on our financial results.
We rely on a limited number of third-party suppliers, vendors and service providers required for the production of our 11 products and our operations. Our dependence on a limited number of third-party suppliers, and the challenges we may face in obtaining adequate supplies of raw materials, involve several risks, including limited control over pricing, availability, quality and delivery schedules.
During production downtimes, we not only experience lost revenue from lower shipment volumes, but are also forced to continue to incur our fixed manufacturing costs which are not absorbed by our lower production levels. Our results of operations and cash flows may be materially adversely affected in a period of prolonged and significant market weakness.
In addition to lost revenue from lower shipment volumes, production downtime causes unabsorbed fixed manufacturing costs due to lower production levels. Our results of operations and cash flows may be materially adversely affected in a period of prolonged 9 and significant market weakness.
TRANSACTION RISK FACTORS The expansion of our business through the acquisition of a paperboard manufacturing facility and associated business may not be completed or proceed as anticipated. Our long-term growth strategy involves strengthening our position as a premier, independent supplier of paperboard products to North American converters.
TRANSACTION RISK FACTORS We may not realize the expected benefits of the acquisition of the Augusta Facility because of integration difficulties or other challenges. Our long-term growth strategy involves strengthening our position as a premier, independent supplier of paperboard products to North American converters.
These payments generally would continue for 20 years with an estimated present value of approximately $73 million on a pre-tax basis. Were we voluntarily to withdraw from PIUMPF, we could be subject to substantial payments in addition to the withdrawal liability payments described above. As a plan in critical and declining status, PIUMPF has adopted a rehabilitation plan.
Were we voluntarily to withdraw from PIUMPF, we could be subject to substantial payments in addition to the withdrawal liability payments described above. As a plan in critical and declining status, PIUMPF has adopted a rehabilitation plan.
We depend on external sources of wood pulp and wood fiber for a significant portion of our tissue production, which exposes our business and results of operations to potentially significant fluctuations in the price of market pulp and wood fiber.
We depend on external sources of wood fiber which exposes our business and results of operations to potentially significant supply and price fluctuations. Wood fiber is the principal raw material used to create wood pulp, which in turn is used to manufacture our pulp and paperboard products.
For example, in both 2020 and 2021, extreme weather events resulted in the curtailment of operations at our Arkansas mill and in the first quarter of 2024 extreme cold and related natural gas supply issues resulted in the shutdown and damage to our Lewiston, Idaho mill.
For example, in the first quarter of 2024, extreme cold and related natural gas supply issues resulted in the shutdown of our Lewiston, Idaho mill and in the fourth quarter of 2024, impacts from Hurricane Helene resulted in the temporary suspension of operations at our Augusta, Georgia facility.
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 have not been able in the past, and may not be able in the future, to pass part or all of any fuel price increases through to customers. Any increased fuel or freight costs, in circumstances where we cannot raise the price of our products, could have a material adverse effect on our gross margins.
In addition, our Credit Agreements allow us to obtain additional secured revolving loan commitments under our ABL Credit Agreement under certain circumstances, which would be guaranteed by our subsidiary guarantors. In addition, the indenture governing our notes does not prevent us from incurring certain other liabilities that do not constitute secured indebtedness.
In addition, our Credit Agreements allow us to obtain additional secured revolving loan commitments under our ABL Credit Agreement and additional term revolver commitments under our PCA Credit Agreement, in each case, under certain circumstances, which would be guaranteed by our subsidiary guarantors.
We must perform routine maintenance on our equipment and will have to periodically replace a variety of parts such as motors, pumps, pipes and electrical parts. In addition, our pulp and paperboard facilities require periodic shutdowns to perform major maintenance, during which we may discover additional maintenance or equipment issues that need to be addressed.
In addition, our facilities require periodic shutdowns to perform major maintenance, during which we may discover additional maintenance or equipment issues that need to be addressed.
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.
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. We had availability of approximately $270 million under our PCA Credit Agreement as of December 31, 2024.
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 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 must perform routine maintenance on our equipment and have to periodically replace a variety of parts such as motors, pumps, pipes and electrical parts.
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.
As these agreements expire, we may not be able to negotiate extensions or replacement agreements on terms acceptable to us.
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.
In addition, the indenture governing our notes does 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.
Significant changes in any of these factors may adversely impact our cash flows, financial condition and results of operations.
Significant changes in any of these factors may adversely impact our cash flows, financial condition and results of operations. RISKS RELATED TO OUR INDEBTEDNESS Despite our current indebtedness levels, we may still incur significant additional indebtedness. Incurring more indebtedness could increase the risks associated with our substantial indebtedness.
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.
A loss of 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 products are vulnerable to declines in demand due to a shift in consumer preference for competing, sustainable materials which may have an adverse effect on our business.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur programs are regularly evaluated by external experts with the results of those reviews reported to the senior leadership team and the Board. We also actively engage with key vendors, industry participants, and intelligence communities as part of our continuing efforts to evaluate and enhance the effectiveness of our information security policies and procedures. 19
Biggest changeOur programs are regularly evaluated by external experts with the results of those reviews reported to the senior leadership team and the Board of Directors. We also actively engage with key vendors, industry participants, and intelligence communities as part of our continuing efforts to evaluate and enhance the effectiveness of our information security policies and procedures.
ITEM 1C. Cybersecurity Our cybersecurity program is managed by our Chief Information Officer (CIO), whose team is responsible for leading enterprise-wide information technology strategy, policy, standards, architecture, and processes. The CIO provides regular reports to our Board, Chief Executive Officer and other members of our senior leadership team.
ITEM 1C. Cybersecurity Our cybersecurity program is managed by our Chief Information Officer (CIO), whose team is responsible for leading enterprise-wide information technology strategy, policy, standards, architecture, and processes. The CIO provides regular reports to our Board of Directors, Chief Executive Officer and other members of our senior leadership team.
These reports include updates on our cyber risks and threats, the status of projects to strengthen our information security systems, assessments of the information security program, and the emerging threat landscape. Assessing, identifying and managing cybersecurity related risks are integrated into our overall ERM process.
These reports include updates on our cyber risks and threats, the status of projects to strengthen our information security systems, assessments of the information security program, and the emerging threat landscape. Assessing, identifying and managing cybersecurity related risks are integrated into our overall enterprise risk management (ERM) process.
Added
During 2024, we did not experience any cybersecurity threats that had a material impact or are reasonably likely to materially affect our business, results of operations or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident.
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Please see our "Risk Factors" in item 1A in this report for more information. 20

Item 2. Properties

Properties — owned and leased real estate

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Biggest change(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
Biggest change(In tons) Market Pulp Paperboard Sheeted Paperboard Augusta, Georgia 600,000 Lewiston, Idaho 90,000 480,000 Cypress Bend, Arkansas 340,000 Wilkes-Barre, Pennsylvania 41,000 Dallas, Texas 29,000 Mendon, Michigan 50,000 Richmond, Virginia 34,000 Hagerstown, Indiana 37,000 90,000 1,420,000 191,000 21
Removed
Location 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.
Added
Location Products Owned or Leased Augusta, Georgia Paperboard Owned Lewiston, Idaho Pulp and Paperboard Owned Cypress Bend, Arkansas Paperboard Owned Wilkes-Barre, Pennsylvania Paperboard sheeting Leased Dallas, Texas Paperboard sheeting Leased Mendon, Michigan Paperboard sheeting Leased Richmond, Virginia 1 Paperboard sheeting Leased Hagerstown, Indiana Paperboard sheeting Leased 1 In the fourth quarter of 2024, we announced the permanent closure of our Richmond, Virginia sheeting operations.
Added
As market conditions warrant, we will be relocating existing equipment to a new location. 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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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In November 2023, the United States Environmental Protection Agency (EPA) alleged that the Company had violated the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and Emergency Planning and Community Right-to-Know Act (EPCRA) by failing to timely report certain chlorine releases that occurred at the Company’s facility in Lewiston, Idaho in 2019, 2020, and 2021 to the National Response Center and State Response Center.
Added
Although the Company reported each of the releases to the respective response centers, the EPA alleged that the Company should have reported sooner. In June 2024, the Company, without admitting any wrongdoing, settled the matter with the EPA and paid a $322,088 civil penalty.
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In April 2024, the EPA alleged the Company violated the Risk Management Program (RMP) under Section 112r of the Clean Air Act by failing to sufficiently implement certain RMP elements for its pulp bleach system at the Company’s facility in Lewiston, Idaho. In February 2025 we reached a settlement with the EPA, resulting in an agreed civil penalty of $440,393.
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The Company did not admit any wrongdoing in connection with the settlement.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe repurchase program authorizes purchases of our common stock from time to time through open market purchases, negotiated transactions or other means, including accelerated stock repurchases and 10b5-1 trading plans in accordance with applicable securities laws and other restrictions. We have no obligation to repurchase stock under this program and may suspend or terminate the program at any time.
Biggest changeThis plan replaced the previously approved plan and terminated any remaining authorization under the original plan. The repurchase program authorizes purchases of our common stock from time to time through open market purchases, negotiated transactions or other means, including accelerated stock repurchases and 10b-5-1 trading plans in accordance with applicable securities laws and other restrictions.
We measure our relative corporate performance for purposes of performance-based equity awards issued to our executive officers against a specific index. Each year, an index is established to apply to performance-based equity awards issued in that year.
We measure our relative corporate performance for purposes of performance-based equity awards issued to our executive 23 officers against a specific index. Each year, an index is established to apply to performance-based equity awards issued in that year.
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.
The comparison assumes $100 was invested on December 31, 2019, 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.
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.
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 19, 2025, there were approximately 542 registered holders of our common stock.
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.
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.
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.
PERFORMANCE GRAPH The graph below compares the cumulative total stockholder return of our common stock for the period beginning December 31, 2019 and ending December 31, 2024, with the cumulative total return during such period of the S&P 600 Small Cap Index, the S&P MidCap 400, and the Russell 2000 Index.
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.
ISSUER PURCHASES OF EQUITY SECURITIES Our Board of Directors approved a new stock repurchase program on October 31, 2024 authorizing the repurchase of up to $100 million of our common stock. As of December 31, 2024, we had up to $96.7 million of authorized repurchases remaining.
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.
This comparison assumes $100 was invested on December 31, 2019, in our common stock and in the indices and assumes dividends were reinvested.
We currently measure our relative performance, for purposes of performance-based equity awards, against the S&P MidCap 400® Index (excluding those companies classified as members of the GICS® Financials sector) or the S&P 600 Small Cap Index.
We currently measure our relative performance, for purposes of performance-based equity awards, against the S&P 600 Small Cap Index, the S&P MidCap 400, and the Russell 2000 Index. The cumulative return for the Company and those indexes is listed below.
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.
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, 2024 to October 31, 2024 1 23,000 $ 27.43 23,000 $ — November 1, 2024 to November 30, 2024 7,821 $ 27.23 7,821 $ 99.8 December 1, 2024 to December 31, 2024 115,000 $ 26.99 115,000 $ 96.7 Total 145,821 $ 27.07 145,821 1.
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.
We have no obligation to repurchase stock under this program and may suspend or terminate the program at any time. The authorization has no expiration date. The following table reflects our shares repurchased during the fourth quarter of 2024. None of the shares in this table were repurchased directly from any of our officers or directors.
December 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
December 31, 2019 2020 2021 2022 2023 2024 Company Name / Index Clearwater Paper Corporation $ 100.00 $ 176.73 $ 171.68 $ 177.01 $ 169.10 $ 139.37 Russell 2000 Index 100.00 119.96 137.74 109.59 128.14 142.93 S&P MidCap 400® Index (excluding members of the GICS® Financials sector) 100.00 114.87 142.87 120.91 141.11 154.08 S&P 600 SmallCap Index 100.00 111.29 141.13 118.41 137.42 149.37 ITEM 6. [Reserved] 24
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These shares were purchases under the prior repurchase program authorized in 2015. This authorization was cancelled and replaced with the 2024 authorization as of October 31, 2024 SALES OF UNREGISTERED SECURITIES None. DIVIDENDS We have not paid any cash dividends.

Item 7. Management's Discussion & Analysis

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

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Biggest changeIncluded 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.
Biggest changeDuring 2023 we used $73.7 million in cash for investing activities, as compared to $33.5 million in cash for investing activities in 2022. In both years, cash used for investing activities was related to capital expenditures. 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.
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.
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.
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.
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. 26 Non-GAAP Financial Measures In evaluating our business, we utilize several non-GAAP financial measures.
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.
At December 31, 2024, 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.
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.
We may also increase the revolving commitments under the ABL Credit Agreement in an aggregate amount of up to $100 million, subject to obtaining commitments from any participating lenders and certain other conditions.
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.
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, 2024: (In millions) Statements of Operations Balance Sheets Discount rate $ — $ 4.6 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.
In this report on Form 10-K, we disclose overall and segment earnings (loss) from operations before interest expense, net, non-operating pension and other post employment benefit costs, income tax (benefit) expense, depreciation and amortization, other operating charges, net, and debt retirement costs as Adjusted EBITDA which is a non-GAAP financial measure.
In this report on Form 10-K, we disclose income (loss) from operations before interest expense, net, non-operating pension and other post employment benefit costs, income tax expense, depreciation and amortization, other operating charges, net, and debt retirement costs as Adjusted EBITDA from continuing operations which is a non-GAAP financial measure.
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.
The 31 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) 10.0% the Line Cap (as defined above) and (ii) $25 million.
We use Adjusted EBITDA to evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates. It should be noted that companies calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA measures may not be comparable to Adjusted EBITDA reported by other companies.
We use Adjusted EBITDA from continuing operations to evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates. It should be noted that companies calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA from continuing operations measure may not be comparable to Adjusted EBITDA reported by other companies.
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.
Any such prepayments, repurchases or acquisitions may be commenced, suspended, discontinued, or resumed, and the method or methods of effecting any such prepayments or repurchases may be changed at any time or from time to time without prior notice. Operating Activities During 2024, we generated $61.4 million of cash from operations, as compared to $190.7 million in 2023.
Adjusted EBITDA is not a substitute for the GAAP measure of net income or for any other GAAP measures of operating performance.
Adjusted EBITDA from continuing operations is not a substitute for the GAAP measure of net income or for any other GAAP measures of operating performance.
Because a determination to dispose or reorganize particular assets may require management to make assumptions regarding the transaction structure of the disposition or reorganization and to estimate the net sales proceeds, which may be less than previous estimates of undiscounted future net cash flows, we may be required to record impairment charges in connection with decisions to dispose of assets.
Because a determination to dispose or reorganize particular assets may require management to make assumptions regarding the transaction structure of the disposition or reorganization and to estimate the net sales proceeds, which may be less than previous estimates of undiscounted future net cash flows, we may be required to record impairment charges in connection with decisions to dispose of assets. 2025 OPERATIONS For 2025, we expect a continued improvement in demand for SBS paperboard products.
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
There can be no assurance that we will be able to remain in compliance with the Credit Agreements. See Note 9, "Debt," to the Notes to Consolidated Financial Statements included in Item 8 of this report for additional information. 32
Business Environment and Trends Pulp and paperboard sales The paperboard industry is affected by macro-economic conditions around the world and has historically experienced cyclical market conditions. As a result, prices for products and sales volumes have historically been volatile. Product pricing is significantly affected by the relationship between supply and demand for our products.
Significant Factors That Impact Our Business and Results of Operations The paperboard industry is affected by macro-economic conditions around the world and has historically experienced cyclical market conditions. As a result, prices for products and sales volumes have historically been volatile. Product pricing is significantly affected by the relationship between supply and demand for our products.
We have included Adjusted EBITDA on a consolidated and business segment basis in this report because we use it as important supplemental measures of our performance and believe that it is frequently used by securities analysts, investors and other interested persons in the evaluation of companies in our industry, some of which present Adjusted EBITDA when reporting their results.
We have included Adjusted EBITDA from continuing operations in this report because we use it as an important supplemental measure of our performance and believe that it is frequently used by securities analysts, investors and other interested persons in the evaluation of companies in our industry, some of which present Adjusted EBITDA when reporting their results.
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).
We may, at our option, prepay and reborrow any borrowings under the PCA Credit Agreement, in whole or in part, at any time and from time to time without premium or penalty (except in certain circumstances).
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.
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 and 2024, the paperboard industry saw significant weakness due to customer destocking after a lengthy period of constrained supply given high demand coupled with increasing supply.
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.
Our Adjusted EBITDA from continuing operations measure has material limitations as a performance measure because it excludes 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.
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.
We are also party to an asset-based loan credit agreement (which may be amended from time to time, the “ABL Credit Agreement,” and together with the PCA Credit Agreement, the “Credit Agreements”)) that consists of a $375 million revolving loan commitment, subject to borrowing base limitations. Borrowings under the ABL Credit Agreement are subject to mandatory prepayment in certain circumstances.
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.
Commitments As of December 31, 2024, we have purchase commitments of $102.6 million, of which $53.4 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.
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.
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). The ABL Credit Agreement matures on November 7, 2027.
Actual results may differ materially from those discussed in these forward-looking statements due to a number of factors, including those set forth in the section entitled “Risk Factors” and elsewhere in this report.
Actual results may differ materially from those discussed in these forward-looking statements due to a number of factors, including those set forth in the section entitled “Risk Factors” and elsewhere in this report. Overview of Business We are a premier manufacturer and supplier of Solid Bleached Sulfate (SBS) paperboard packaging products to independent converters.
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.
This decrease was driven by lower operating performance and changes in working capital. Accounts receivable and accounts payable agings have remained relatively consistent with balances as of December 31, 2023. During 2023, we generated $190.7 million in cash from operations, as compared to $150.2 million in 2022.
Net actuarial gains and losses occur when actual experience differs from any of the assumptions used to value defined benefit plans or when assumptions change as they may each year.
We account for the consequences of our sponsorship of these plans using assumptions to calculate the related assets, liabilities and expenses recorded in our financial statements. Net actuarial gains and losses occur when actual experience differs from any of the assumptions used to value defined benefit plans or when assumptions change as they may each year.
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.
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.
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.
Pulp sales volumes increased for the year ended December 31, 2023 as we managed our paperboard production resulting in additional pulp to be sold.
Additionally, we used $17.9 million for common stock repurchases under our stock repurchase program during the year ended December 31, 2023.
The increase was due to higher debt repayments in 2023 driven by improved operating results which provided additional available cash to fund debt repayments. Additionally, we used $17.9 million for common stock repurchases under our stock repurchase program during the year ended December 31, 2023.
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.
Other operating charges See Note 10, "Other Operating Charges, net" of the Notes to the Consolidated Financial Statements included in Item 8 of this report for additional information.
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.
Operating income decreased predominately due to lower sales prices offset by lower input costs, primarily in pulp, freight and energy costs. For the year ended December 31, 2023 as compared to the year ended December 31, 2022, retail sales volumes in our tissue business increased due to the increased demand for private label versus branded products.
Benefit accruals under most of our defined benefit pension plans in the United States were frozen prior to January 2014. We account for the consequences of our sponsorship of these plans using assumptions to calculate the related assets, liabilities and expenses recorded in our financial statements.
Financial Statements and Supplementary Data.” Retirement Plans and Postretirement Benefits We have a number of defined benefit pension plans in the United States covering many of our employees. Benefit accruals under most of our defined benefit pension plans in the United States were frozen prior to January 2014.
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.
We reviewed the development, selection and disclosure of our critical accounting estimates with the Audit Committee of our Board of Directors. For 2024, these significant accounting estimates and judgments include: Business Acquisitions We use the acquisition method of accounting for acquired businesses.
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.
Additionally, we have $35.6 million, all of which is payable within 12 months, in purchase commitments associated with capital expenditures. Credit Agreements We are party to an amended and restated credit agreement (which may be amended from time to time, the “PCA Credit Agreement”) that consists of a term revolver commitment in the amount of $270 million.
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.
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. Additionally, our operations, as do all pulp and paperboard manufacturing operations, require regular planned maintenance outages. During 2024, we incurred planned maintenance outages at our Lewiston, Idaho and our Augusta, Georgia facilities.
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.
Retail sales prices increased in our tissue business due to previously announced price increases and improved product mix. Operating income increased due to higher volumes and pricing and lower freight costs.
The increase between years is primarily related to costs associated with business improvement projects including information technology and other projects and higher wages.
Selling, general and administrative expenses increased 8.5% for the year ended December 31, 2023 compared the year ended December 31, 2022 primarily related to costs associated with business improvement projects including information technology and other projects and higher wages partially offset by lower incentives due to lower operating performance.
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.
Operating income from continuing operations and Adjusted EBITDA from continuing operations decreased for the year ended December 31, 2023 as compared to the year ended December 31, 2022 due to lower sales volume and planned production downtime to manage inventory and increase costs associated with business improvement projects.
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.
We repaid $931.1 million of long-term debt. Additionally, we used $5.6 million for debt issuance costs and $10.0 million to repurchase stock under our stock repurchase program during the year ended December 31, 2024. Net cash flows used in financing activities were $129.4 million for 2023 as compared to $88.6 million for 2022.
Removed
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.
Added
We believe we are well positioned to capitalize on sustainability trends towards renewable and recyclable materials. We focus on food service and folding carton markets and provide limited distribution and sheeting services. Additionally, we sell minor amounts of pulp to outside customers. We believe our status as an independent, non-integrated supplier is core to our value proposition.
Removed
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.
Added
We strive to develop new products and innovative solutions to expand and diversify our paperboard portfolio. In 2024, our business and production capabilities, we completed the acquisition of a paperboard manufacturing facility and associated business in Augusta Georgia. Reclassification of Our Tissue Operations In 2024, we completed the sale of our tissue operations.
Removed
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.
Added
This sale represents a strategic shift in our operations and financial results requiring discontinued operations accounting treatment for this division. The financial information presented below reflects reclassifications from previously reported information based upon discontinued operations.
Removed
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.
Added
Historically, we have shown certain intercompany pulp costs as offsets to cost of sales as they represented intercompany transactions between the tissue operations and the pulp and paperboard manufacturing operations. Based upon discontinued operations treatment, such transfers of pulp and other inputs have been recast to Net Sales on the Consolidated Statements of Operations.
Removed
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.
Added
During 2023, we incurred a planned maintenance outage at our Cypress Bend, Arkansas facility. During 2022, we incurred a planned maintenance outage at our Lewiston, Idaho facility. Starting in 2025, we plan to move to annual outages for each of our facilities.
Removed
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.
Added
Under the acquisition method of accounting, we allocated the purchase consideration to the tangible assets acquired and liabilities assumed based on their estimated fair values on the date of the acquisition. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill.
Removed
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.
Added
The estimates used to determine the fair value of long-lived assets can be 25 complex and require significant judgments. Therefore, we use information available to us to make fair value determinations and often engage independent valuation specialists, when necessary, to assist in the fair value determination of significant, acquired long-lived assets.
Removed
Segment 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.
Added
The determination of fair value requires estimates about discount rates, growth and retention rates, expected future cash flows and other future events that are judgmental in nature. While we use our best estimates and assumptions as a part of the purchase price allocation process, our estimates are inherently uncertain and subject to refinement.
Removed
Pulp sales prices declined for the year ended December 31, 2023 compared to the prior year due to change in commodity pulp prices.
Added
As a result, during the measurement period, which may be up to one year from the acquisition date, we are permitted to record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.
Removed
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.
Added
Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of income.
Removed
Our integrated manufacturing and converting operations and geographic footprint enable us to deliver a broad range of cost-competitive products with brand equivalent quality to our customers.
Added
On May 1, 2024, we completed the acquisition of a paperboard manufacturing facility and associated business, located in Augusta, Georgia (Augusta) from Graphic Packaging International, LLC for cash of $708 million. Augusta’s results of operations have been included in our financial results since the acquisition date.
Removed
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.
Added
We allocated the fair value of purchase consideration transferred to the tangible assets acquired and liabilities assumed based on their estimated fair values on the date of the acquisition. We identified that the acquired assets were assigned a fair value of $695 million. The majority of these assets were property, plant and equipment valued using the replacement cost method.
Removed
Corporate expenses primarily consist of corporate overhead such as wages and benefits, professional fees, insurance and other expenses for corporate functions including certain executive officers, public company costs, information technology, financial services, environmental and safety, legal, supply management, human resources and other corporate functions not directly associated with the business operations.
Added
This method is based on the replacement cost of comparable assets at the time of the acquisition adjusted for depreciation and economic and functional obsolescence of the asset. The Company believes the estimates are based on reasonable assumptions, but which are inherently uncertain. The remainder of the purchase price was allocated to working capital assets (primarily inventory) and goodwill.
Removed
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.
Added
As a result, actual results may differ from the assumptions and judgments used to determine fair value of the assets acquired, which could result in material impairment losses in the future. Additional information regarding our acquisitions is included in "Note 3 - Business Acquisition" in the Notes to Consolidated Financial Statements included herein under “Item 8.
Added
In addition, we exclude other income and expense items which are outside of our core operations. The following table provides our Adjusted EBITDA from continuing operations for the periods presented and a reconciliation to net income.
Added
For The Years Ended December 31, (In millions) 2024 2023 2022 Net income $ 196.3 $ 107.7 $ 46.0 Less: income (loss) from discontinued operations, net of tax 270.3 59.0 (6.7) Income (loss) from continuing operations (74.0) 48.7 52.7 Add (deduct): Income tax provision (benefit) (27.1) 16.9 29.2 Interest expense, net 29.2 9.5 11.2 Depreciation and amortization expense 69.8 40.7 40.6 Inventory revaluation on acquired business 6.8 — — Other operating charges, net 24.0 3.2 3.2 Other non-operating (income) expense (1.8) (0.1) 5.7 Debt retirement costs 9.1 3.1 0.5 Adjusted EBITDA from continuing operations $ 36.0 $ 122.0 $ 143.1 27 OPERATING RESULTS FROM CONTINUING OPERATIONS The financial information below reflects reclassifications from previously reported information based upon discontinued operations.
Added
Historically, the Company has shown certain intercompany pulp costs as offsets as they represent intercompany transactions between our tissue business and the pulp and paperboard manufacturing operations. Based upon discontinued operations treatment, such transfers of pulp and other inputs have been recast to Net Sales on the Consolidated Statements of Operations.
Added
For The Years Ended December 31, Increase (decrease) 2024 2023 2022 2024-2023 2023-2022 Net Sales $ 1,383.6 $ 1,136.0 $ 1,195.0 21.8 % (4.9) % Cost of Sales 1,307.5 935.3 982.5 39.8 % (4.8) % Gross Profit 76.1 200.7 212.5 (62.1) % (5.6) % Selling, general and administrative expenses 116.7 119.4 110.0 (2.3) % 8.5 % Other operating charges, net (1) 24.0 3.2 3.2 nm — % Income (loss) from continuing operations $ (64.5) $ 78.1 $ 99.3 (182.6) % (21.3) % Adjusted EBITDA from continuing operations $ 36.0 $ 122.0 $ 143.1 (70.5) % (14.7) % (1) See Note 10, "Other operating charges," of the Notes to the Consolidated Financial Statements included in Item 8 of this report for additional information.
Added
Net Sales Net sales increased 21.8% for the year ended December 31, 2024 compared to December 31, 2023 due the inclusion of the Augusta operations (see Note 3, "Business Acquisition" of the Notes to the Consolidated Financial Statements included in Item 8 of this report for additional information).
Added
This increase was driven by higher sales volume offset by decreases in sales prices due to previously announced price decreases and changes in our product mix. Net sales decreased 4.9% for the year ended December 31, 2023 compared to December 31, 2022 due to weaker demand as customers rebalanced inventory levels.
Added
For The Years Ended December 31, Increase (decrease) 2024 2023 2022 2024-2023 2023-2022 Paperboard shipments (short tons) 1,080,898 751,520 814,556 43.8 % (7.7) % Paperboard sales price (per short ton) $ 1,210 $ 1,375 $ 1,356 (12.0) % 1.4 % Pulp shipments (short tons) 101,429 140,284 124,844 (27.7) % 12.4 % Pulp sales price (short tons) $ 581 $ 607 $ 556 (4.3) % 9.3 % Cost of sales Costs included in our cost of sales include input costs (principally raw materials and energy), labor and overhead, supply chain costs (principally freight and outside warehousing).
Added
The table below provides the details of our cost of sales for the years ended December 31, 2024, 2023 and 2022. 28 For The Years Ended December 31, Increase (decrease) 2024 2023 2022 2024-2023 2023-2022 Input cost (raw materials and energy) $ 615.0 $ 494.5 $ 515.7 24.4 % (4.1) % Labor and overhead 482.2 302.7 298.7 59.3 % 1.3 % Supply chain costs (principally freight) 140.1 105.3 119.5 33.0 % (11.9) % Other 4.4 (3.3) 12.9 (233.4) % (125.3) % Depreciation and amortization 65.9 36.1 35.6 82.7 % 1.2 % Cost of Sales $ 1,307.5 $ 935.3 $ 982.5 39.8 % (4.8) % Cost of sales increased 39.8% for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to the inclusion of the Augusta operations.
Added
Input costs increased due to higher sales volume with reductions on a per ton basis across fiber, energy and chemicals due to deflation. Our labor and overhead increased due to the inclusion of the Augusta operation as well as planned annual maintenance at both our Lewiston, Idaho and our Augusta, Georgia facilities.
Added
Depreciation increased due to the inclusion of the Augusta operations. Supply chain cost increased due to higher volumes offset by lower freight costs per ton due to deflation. Cost of sales decreased 4.8% from the year ended December 31, 2023 compared to the year ended December 31, 2022 due to lower volumes offset by higher inflation.
Added
Input costs on a per ton basis increased due to higher fiber and chemical costs on a per ton basis offset by lower energy costs. Our labor and overhead increased due to inflation. Supply chain cost decreased due to lower volumes offset by lower freight costs per ton due to deflation.
Added
Gross profit Gross profit declined 62.1% for the year ended December 31, 2024 compared to the year ended December 31, 2023 due to previously announced price decreases and higher costs due to our planned major maintenance outage at our Lewiston, Idaho and Augusta, Georgia facilities offset by lower input costs due to deflation.
Added
Gross profit declined 5.6% for the year ended December 31, 2023 compared to the year ended December 31, 2022 due to reduced sales volumes and planned production downtime to manage inventory partially offset by deflation in input and supply chain costs.
Added
Selling, general and administrative Selling, general and administrative expenses decreased 2.3% for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily as a result of lower incentive pay due to lower operational performance partially offset by higher wages and benefits related to additional sales costs associated with the Augusta acquisition.
Added
Overall income from continuing operations and Adjusted EBITDA Operating income from continuing operations and Adjusted EBITDA from continuing operations decreased for the year ended December 31, 2024 as compared to the year ended December 31, 2023 due to lower sale prices and planned major maintenance at both our Lewiston and Augusta facilities partially offset by higher volume.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed0 unchanged
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
Biggest changeQuantitative Information about Market Risk Expected Maturity Date (In millions) 2025 2026 2027 2028 2029 Thereafter Total Long-term debt: 1 Fixed rate $ — $ — $ — $ 275.0 $ — $ — $ 275.0 Variable rate $ — $ — $ — $ — $ — $ — $ — Average interest rate — % — % — % 4.75 % — % — % 4.75 % Fair value at December 31, 2024 $ 258.9 1 Excludes finance lease liabilities. 33
The interest rates applied to borrowings on our ABL Credit Agreement are adjusted often and therefore react quickly to any movement in the general trend of market interest rates. Foreign Currency Risk We have minimal foreign currency exchange risk. Nearly all of our international sales are denominated in U.S. dollars.
The interest rates applied to borrowings on both Credit Agreements are adjusted often and therefore react quickly to any movement in the general trend of market interest rates. Foreign Currency Risk We have minimal foreign currency exchange risk. Nearly all of our international sales are denominated in U.S. dollars.
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.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk Our exposure to market risk on financial instruments is limited to our Credit Agreements. As of December 31, 2024, there were no borrowings outstanding under our Credit Agreements.

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