CLW

Clearwater Paper is a textbook cyclical caught at the bottom of its cycle. Reported revenue rose 12.4% to $1.56B in FY2025, but that top-line growth is misleading — it reflects the 2024 Augusta, Georgia acquisition, not organic strength. Underneath, the business collapsed: net income swung from +$196M in FY2024 to -$18.6M in FY2025, operating income was -$42.1M, and diluted EPS fell to -$1.15. Management is blunt about why: 'During 2025, the paperboard industry saw significant weakness due to increasing supply,' with a large new SBS/FBB facility beginning production in 2025 and demand failing to keep pace. This is not a company-specific stumble — it is an industry-wide oversupply squeeze on a producer that, by its own admission, 'manufacture[s] only SBS paperboard,' leaving it with zero product diversification to cushion the blow.

The balance sheet is adequate but visibly weakening under the strain. Equity of $825M against $763M of liabilities gives a manageable 0.92x liabilities/equity, and retained earnings remain a healthy $862M. But cash fell 61% to just $30.7M, long-term debt rose 22.7% to $346M, and the cash engine is sputtering: operating cash flow dropped 80% to $12.3M while capex ran at $88.8M — implying roughly $76M of negative free cash flow that is being funded with debt and drawn-down cash. Notably, the company still paid $17.2M for buybacks (up 72%) during a loss-making, cash-burning year, a questionable capital-allocation choice when liquidity is this thin.