Clearwater Paper Reports 41% Sales Growth, Net Loss in Q3 2024 Amid Acquisition and Cost Pressures

Clearwater Paper Corporation reported significant financial developments in its 10-Q filing for the quarter ended September 30, 2024. The company achieved net sales of $393.3 million for the quarter, a substantial increase from $278.9 million in the same period of 2023, marking a 41% rise. For the nine months ended September 30, 2024, net sales reached $996.5 million, up 15% from $867.4 million in the prior year.

Despite the increase in sales, Clearwater Paper experienced a net income of $5.8 million for the third quarter of 2024, a sharp decline from $36.6 million in the same quarter of 2023. For the nine-month period, the company reported a net loss of $2.8 million, compared to a profit of $90.1 million in the previous year. The decline in profitability was attributed to lower sales prices, increased costs from a planned maintenance outage, and higher sales and marketing expenses related to the recent acquisition of a paperboard manufacturing facility in Augusta, Georgia.

The acquisition, completed on May 1, 2024, involved a total estimated fair value of net assets acquired at $708.2 million, funded through significant borrowings. This strategic move aimed to enhance Clearwater Paper's position as a leading independent supplier of paperboard products. However, the acquisition also contributed to a notable increase in long-term debt, which rose to $1,143.3 million as of September 30, 2024, compared to $439.9 million at the end of 2023.

Total current assets increased to $731.9 million from $564.1 million, driven by a rise in receivables and inventories, which reached $172.7 million and $264.6 million, respectively. Conversely, total current liabilities also rose to $412.1 million from $286.0 million, reflecting the financial impact of the acquisition.

The company’s cash and cash equivalents decreased to $35.5 million from $42.0 million at the end of 2023, while net cash flows provided by operating activities for the nine months ended September 30, 2024, were $96.5 million, down from $125.0 million in the prior year. The increase in cash flows used in investing activities to $791.8 million was primarily due to the acquisition costs.

In addition to these financial metrics, Clearwater Paper signed a binding agreement on July 21, 2024, to sell its consumer products division to Sofidel America for $1.06 billion, which will be reflected as discontinued operations in future reports. This divestiture is expected to streamline operations and focus on core business areas.