Clearwater Paper's Q2 2025: Navigating Contradictions in Demand, Tariffs, and Capacity Utilization

Industry demand and economic uncertainty, impact of tariffs and exchange rates on imports, demand and market conditions, capacity utilization and inventory management, and impact of tariffs on imports are the key contradictions discussed in Clearwater Paper Corporation's latest 2025Q2 earnings call.



Strong Financial Performance in Q2:
- Clearwater Paper reported adjusted EBITDA of $40 million in Q2, within its guidance range of $35 million to $45 million.
- Growth was driven by higher production volumes, increased shipments, and benefits from fixed cost reduction efforts.

Industry Conditions and Demand Uncertainty:
- Industry shipments of SBS decreased by 4.6% year-over-year and 3.4% sequentially in Q2, based on AF&PA data.
- Mixed demand signals are reflective of broader economic uncertainty, with stable backlogs and shipments up 5% year-over-year.

Capacity Utilization and Oversupply Concerns:
- Industry utilization rates fell to 83.1% in Q2, primarily due to new capacity start-up, which is well below historical norms.
- Oversupply is a major factor in the industry down cycle, with potential recovery through reduced capacity or import shifts.

Strategic Initiatives and Product Offering Expansion:
- Clearwater Paper is focused on expanding its product offering to include CUK or unbleached paperboard and CRB or recycled paperboard.
- The company is nearing completion of market and engineering studies on potential entry into CUK, with a decision expected by year-end.