UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


ý			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2021~~March 31, 2022


¨			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 001-34146

CLEARWATER PAPER CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		20-3594554
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

601 West Riverside,	Suite 1100	99201
Spokane,	WA
(Address of principal executive offices)		(Zip Code)

(509) 344-5900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	CLW	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

The number of shares of common stock of the registrant outstanding as of ~~November 1, 2021~~April 27, 2022 was ~~16,689,336.~~16,887,380.

FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this report contains, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements ~~regarding capital expenditures;~~regarding; the impact of COVID-19 on our operations; ~~the impact of the closure of our Neenah, Wisconsin mill; inventory levels; our impairment loss calculation; liquidity; borrowing~~accounting standards; borrowings and credit facilities; strategic projects and related costs and benefits; cash flows; capital expenditures; disclosure controls; compliance with our loan and financing agreements; tax rates; operating costs; selling, general and administrative expenses; timing of and costs related to major maintenance, construction, and repairs; liquidity; debt repayment; benefit plan funding levels; stockholder equity; interest rate risk; expected inflation costs for 2022; interest expenses; and legal proceedings. Words such as “anticipate,” “expect,” “intend,” “plan,” “target,” “project,” “believe,” “schedule,” “estimate,” “may,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are based on management’s current expectations, estimates, assumptions and projections that are subject to change. Our actual results of operations may differ materially from those expressed or implied by the forward-looking statements contained in this report. Important factors that could cause or contribute to such differences in operating results include those risks discussed in Item 1A “Risk Factors” in our ~~2020~~2021 Form 10-K, as well as the following:

•impact of the COVID-19 pandemic on our operations, our suppliers' operations and our customer demand;

•competitive pricing pressures for our products, including as a result of increased capacity as additional manufacturing facilities are operated by our competitors and the impact of foreign currency fluctuations on the pricing of products globally;

•customer acceptance and timing and quantity of purchases of our tissue products, including the existence of sufficient demand for and the quality of tissue produced by our expanded Shelby, North Carolina operations;

•the loss of, changes in prices in regard to, or reduction in, orders from a significant customer;

•changes in the cost and availability of wood fiber and wood pulp;

•changes in transportation costs and disruptions in transportation services;

•changes in customer product preferences and competitors' product offerings;

•cyber-security risks;

•larger competitors having operational, financial and other advantages;

•consolidation and vertical integration of converting operations in the paperboard industry;

•our ability to successfully implement our operational efficiencies and cost savings strategies, along with related capital projects;

•changes in the U.S. and international economies and in general economic conditions in the regions and industries in which we operate;

•manufacturing or operating disruptions, including IT system and IT system implementation failures, equipment malfunctions and damage to our manufacturing facilities;

•~~cyber-security risks;~~

•changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs;

•labor disruptions;

•cyclical industry conditions;

•changes in expenses, required contributions and potential withdrawal costs associated with our pension plans;

•environmental liabilities or ~~expenditures;~~expenditures and climate change;

•reliance on a limited number of third-party suppliers for raw materials;

•our ability to attract, motivate, train and retain qualified and key personnel;

•our substantial indebtedness and ability to service our debt obligations and restrictions on our business from debt covenants and terms;

•changes in our banking relations and our customer supply chain financing;

•negative changes in our credit agency ratings; and

•changes in laws, regulations or industry standards affecting our business.

Forward-looking statements contained in this report present management’s views only as of the date of this report. Except as required under applicable law, we do not intend to issue updates concerning any future revisions of management’s views to reflect events or circumstances occurring after the date of this report. You are advised, however, to consult any further disclosures we make on related subjects in our quarterly reports on Form 10-Q and current reports on Form 8-K filed with the Securities and Exchange Commission, or SEC.

~~CLEARWATER PAPER CORPORATION~~

~~Index to Form 10-Q~~



		Table of Contents	Page Number

PART I.	FINANCIAL INFORMATION

ITEM 1.	Consolidated Financial Statements (Unaudited)

	Consolidated Balance Sheets	2

	Consolidated Statements of Operations	3

	Consolidated Statements of Comprehensive Income (Loss)	4

	Consolidated Statements of Cash Flows	5

	Consolidated Statements of Stockholders' Equity	6

	Notes to Consolidated Financial Statements	87

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1513

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	2219

ITEM 4.	Controls and Procedures	2320

PART II.	OTHER INFORMATION

ITEM 1.	Legal Proceedings	2421

ITEM 1A.	Risk Factors	2421





ITEM 6.	Exhibits	2521

~~SIGNATURES~~		26

Part I: Financial Information


ITEM 1.			Consolidated Financial Statements

CLEARWATER PAPER CORPORATION

Consolidated Balance Sheets

(Unaudited)


(In millions, except share data)	(In millions, except share data)	September 30, 2021		December 31, 2020		(In millions, except share data)	March 31, 2022		December 31, 2021
ASSETS
Assets						Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	27.8	$	35.9	Cash and cash equivalents	$	36.4	$	25.2
Receivables, net of allowance for current expected credit losses of $1.5 and $1.6 at September 30, 2021 and December 31, 2020		159.4		160.6
Receivables, net of allowance for current expected credit losses						Receivables, net of allowance for current expected credit losses	172.3		167.4
Inventories	Inventories	286.4		263.3		Inventories	281.8		277.7
Other current assets	Other current assets	10.0		15.2		Other current assets	17.0		16.9
Total current assets	Total current assets	483.6		474.9		Total current assets	507.5		487.2
Property, plant and equipment						Property, plant and equipment	2,963.2		2,961.5
Accumulated depreciation						Accumulated depreciation	(1,903.3)		(1,879.7)
Property, plant and equipment, net	Property, plant and equipment, net	1,109.6		1,191.5		Property, plant and equipment, net	1,059.9		1,081.8

Other assets, net	Other assets, net	124.9		134.0		Other assets, net	115.7		121.1
TOTAL ASSETS		$	1,718.1	$	1,800.4

LIABILITIES AND STOCKHOLDERS’ EQUITY
Total assets						Total assets	$	1,683.1	$	1,690.1
Liabilities and stockholders' equity						Liabilities and stockholders' equity
Current liabilities:	Current liabilities:					Current liabilities:
Current portion of long-term debt	Current portion of long-term debt	$	1.6	$	1.7	Current portion of long-term debt	$	1.6	$	1.6
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	255.2		243.1		Accounts payable and accrued liabilities	254.5		252.5
Total current liabilities	Total current liabilities	256.9		244.8		Total current liabilities	256.1		254.1
Long-term debt	Long-term debt	676.5		716.4		Long-term debt	617.7		637.6
Liability for pension and other postretirement employee benefits	Liability for pension and other postretirement employee benefits	81.7		80.5		Liability for pension and other postretirement employee benefits	72.8		73.6
Deferred tax liabilities and other long-term obligations	Deferred tax liabilities and other long-term obligations	211.3		237.6		Deferred tax liabilities and other long-term obligations	206.5		213.1
TOTAL LIABILITIES		1,226.5		1,279.3
Total liabilities						Total liabilities	1,153.2		1,178.3
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, par value $0.0001 per share, 5,000,000 authorized shares, 0 shares issued	Preferred stock, par value $0.0001 per share, 5,000,000 authorized shares, 0 shares issued	—		—		Preferred stock, par value $0.0001 per share, 5,000,000 authorized shares, 0 shares issued	—		—
Common stock, par value $0.0001 per share, 100,000,000 authorized shares, 16,687,328 and 16,573,246 shares issued		—		—
Common stock, par value $0.0001 per share, 100,000,000 authorized shares, 16,810,716 and 16,692,102 shares issued						Common stock, par value $0.0001 per share, 100,000,000 authorized shares, 16,810,716 and 16,692,102 shares issued	—		—
Additional paid-in capital	Additional paid-in capital	21.7		16.6		Additional paid-in capital	24.1		23.6
Retained earnings	Retained earnings	521.2		558.8		Retained earnings	547.3		530.7
Accumulated other comprehensive loss, net of tax	Accumulated other comprehensive loss, net of tax	(51.3)		(54.3)		Accumulated other comprehensive loss, net of tax	(41.4)		(42.6)
Total stockholders' equity	Total stockholders' equity	491.6		521.1		Total stockholders' equity	530.0		511.7
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	1,718.1	$	1,800.4
Total liabilities and stockholders' equity						Total liabilities and stockholders' equity	$	1,683.1	$	1,690.1

See accompanying Notes to the Consolidated Financial Statements.

CLEARWATER PAPER CORPORATION

Consolidated Statements of Operations

(Unaudited)


		Quarter Ended September 30,				Nine Months Ended September 30,					Quarter Ended March 31,
(In millions, except per-share data)	(In millions, except per-share data)	2021		2020		2021		2020		(In millions, except per-share data)	2022		2021
Net sales	Net sales	$	450.5	$	457.4	$	1,282.8	$	1,415.9	Net sales	$	488.2	$	425.9
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of sales	Cost of sales	398.2		378.6		1,160.9		1,198.3		Cost of sales	422.0		370.6
Selling, general and administrative expenses	Selling, general and administrative expenses	28.3		29.3		82.5		89.4		Selling, general and administrative expenses	32.8		27.8
Other operating charges, net	Other operating charges, net	10.2		0.3		55.1		11.9		Other operating charges, net	0.5		0.4
Total operating costs and expenses	Total operating costs and expenses	436.7		408.2		1,298.5		1,299.6		Total operating costs and expenses	455.3		398.8
Income (loss) from operations		13.8		49.2		(15.6)		116.2
Income from operations										Income from operations	32.9		27.1
Interest expense, net	Interest expense, net	(8.9)		(12.2)		(27.5)		(37.0)		Interest expense, net	(8.6)		(9.3)
Debt retirement costs										Debt retirement costs	(0.2)		—
Other non-operating expense	Other non-operating expense	(2.8)		(1.9)		(7.8)		(5.7)		Other non-operating expense	(1.4)		(2.5)
Debt retirement costs		(0.5)		(3.9)		(0.5)		(4.8)
Total non-operating expense	Total non-operating expense	(12.2)		(17.9)		(35.7)		(47.5)		Total non-operating expense	(10.3)		(11.8)
Income (loss) before income taxes		1.7		31.3		(51.4)		68.7
Income tax provision (benefit)		(0.3)		9.9		(13.8)		14.1
Net income (loss)		$	1.9	$	21.4	$	(37.6)	$	54.5
Income before income taxes										Income before income taxes	22.6		15.3
Income tax provision										Income tax provision	6.0		3.2
Net income										Net income	$	16.6	$	12.1

Net income (loss) per common share:
Net income per common share:										Net income per common share:
Basic	Basic	$	0.12	$	1.29	$	(2.25)	$	3.29	Basic	$	0.99	$	0.73
Diluted	Diluted	0.11		1.28		(2.25)		3.27		Diluted	0.97		0.71

Average shares of common stock used to compute net income per share: (in thousands)	Average shares of common stock used to compute net income per share: (in thousands)									Average shares of common stock used to compute net income per share: (in thousands)
Basic	Basic	16,687		16,595		16,689		16,581		Basic	16,728		16,647
Diluted	Diluted	16,971		16,783		16,689		16,689		Diluted	17,073		16,979

See accompanying Notes to the Consolidated Financial Statements.

CLEARWATER PAPER CORPORATION

Consolidated Statements of Comprehensive Income ~~(Loss)~~

(Unaudited)

Quarter Ended September 30, Nine Months Ended September 30,
(In millions) 2021 2020 2021 2020
Net income (loss) $ 1.9 $ 21.4 $ (37.6) $ 54.5
Other comprehensive income (loss):
Defined benefit pension and other postretirement employee benefits:
Net loss arising during the period, net of tax of $(1.0), $—, $(1.0), $— (2.8) — (2.8) —
Amortization of actuarial loss included in net periodic cost, net of tax of $0.7, $0.6, $2.0 and $1.9 2.0 1.8 5.8 5.5
Other comprehensive income (loss), net of tax (0.8) 1.8 3.0 5.5
Comprehensive income (loss) $ 1.1 $ 23.2 $ (34.6) $ 60.0


	Quarter Ended March 31,
(In millions)	2022		2021
Net income	$	16.6	$	12.1
Other comprehensive income:
Defined benefit pension and other postretirement employee benefits:
Amortization of actuarial loss included in net periodic cost, net of tax of $0.4 and $0.7	1.1		1.9
Other comprehensive income, net of tax	1.1		1.9
Comprehensive income	$	17.7	$	14.0

See accompanying Notes to the Consolidated Financial Statements.

CLEARWATER PAPER CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)


		Quarter Ended September 30,				Nine Months Ended September 30,					Quarter Ended March 31,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)	2022		2021
Cash flows from operating activities
Net income (loss)		$	1.9	$	21.4	$	(37.6)	$	54.5
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Operating activities										Operating activities
Net income										Net income	$	16.6	$	12.1
Adjustments to reconcile net income to net cash flows provided by operating activities:										Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization	Depreciation and amortization	25.9		27.7		79.6		83.5		Depreciation and amortization	25.4		26.8
Stock-based compensation expense		3.8		2.5		6.9		7.3
Deferred and other income taxes		2.4		12.8		(19.4)		23.5
Pension and other postretirement employee benefits		2.1		0.9		5.3		2.9
Debt retirement costs		0.5		3.9		0.5		4.8
Non-cash charges associated with mill closure		—		—		37.1		—
Equity-based compensation expense										Equity-based compensation expense	0.7		2.4
Deferred taxes										Deferred taxes	(2.2)		(0.4)
Defined benefit pension and other postretirement employee benefits										Defined benefit pension and other postretirement employee benefits	0.7		1.7
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:									Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(Increase) decrease in accounts receivable	(12.9)		12.8		(0.1)		(5.7)		(Increase) decrease in accounts receivable	(10.6)		25.7
(Increase) decrease in inventory		(3.5)		(21.0)		(28.3)		25.0
(Increase) decrease in other current assets		0.9		0.6		5.3		(4.8)
Increase in inventory										Increase in inventory	(4.2)		(29.7)
Increase in other current assets										Increase in other current assets	—		(0.2)
Increase (decrease) in accounts payable and accrued liabilities	Increase (decrease) in accounts payable and accrued liabilities	(4.8)		(5.7)		13.8		(14.4)		Increase (decrease) in accounts payable and accrued liabilities	13.9		(6.2)
Other, net	Other, net	—		(0.1)		1.4		(0.6)		Other, net	0.7		1.7
Net cash flows provided by operating activities	Net cash flows provided by operating activities	16.3		55.7		64.4		176.1		Net cash flows provided by operating activities	41.1		33.8
Cash flows from investing activities
Additions to property, plant and equipment		(8.9)		(9.7)		(29.9)		(27.5)
Investing activities										Investing activities
Additions to property, plant and equipment, net										Additions to property, plant and equipment, net	(7.9)		(11.1)
Net cash flows used in investing activities	Net cash flows used in investing activities	(8.9)		(9.7)		(29.9)		(27.5)		Net cash flows used in investing activities	(7.9)		(11.1)
Cash flows from financing activities
Borrowings of short-term debt		—		—		—		108.5
Repayments of short-term debt		—		—		—		(122.0)
Borrowings of long-term debt		—		275.0		—		275.0
Financing activities										Financing activities
Repayments of long-term debt	Repayments of long-term debt	(40.5)		(317.6)		(41.3)		(379.0)		Repayments of long-term debt	(20.4)		(0.4)
Payments for debt issuance costs		—		(4.3)		—		(4.3)
Taxes paid related to net share settlement of equity awards										Taxes paid related to net share settlement of equity awards	(1.5)		(1.6)
Proceeds from sale of stock under employee awards	Proceeds from sale of stock under employee awards	—		—		0.5		—		Proceeds from sale of stock under employee awards	—		0.5
Taxes paid related to net share settlement of equity awards		—		—		(1.7)		(0.7)
Other, net		—		0.2		—		—

Net cash flows used in financing activities	Net cash flows used in financing activities	(40.5)		(46.7)		(42.5)		(122.5)		Net cash flows used in financing activities	(21.9)		(1.4)
Increase (decrease) in cash, cash equivalents and restricted cash		(33.1)		(0.6)		(8.1)		26.1
Increase in cash, cash equivalents and restricted cash										Increase in cash, cash equivalents and restricted cash	11.2		21.2
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	62.0		49.2		36.9		22.4		Cash, cash equivalents and restricted cash at beginning of period	26.2		36.9
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	28.9	$	48.6	$	28.9	$	48.6	Cash, cash equivalents and restricted cash at end of period	$	37.5	$	58.2

Supplemental disclosures of cash flow information	Supplemental disclosures of cash flow information									Supplemental disclosures of cash flow information
Cash paid for interest, net of amounts capitalized	Cash paid for interest, net of amounts capitalized	$	15.9	$	19.5	$	34.6	$	43.6	Cash paid for interest, net of amounts capitalized	$	15.6	$	16.1
Cash paid (received) for income taxes	Cash paid (received) for income taxes	$	1.0	$	(4.7)	$	(8.3)	$	(6.9)	Cash paid (received) for income taxes	$	—	$	(8.4)

Cash, cash equivalents, and restricted cash	Cash, cash equivalents, and restricted cash									Cash, cash equivalents, and restricted cash
Cash and cash equivalents	Cash and cash equivalents	$	27.8	$	47.5	$	27.8	$	47.5	Cash and cash equivalents	$	36.4	$	57.1
Restricted cash included in Other assets, net		1.1		1.1		1.1		1.1
Restricted cash included in other assets, net										Restricted cash included in other assets, net	1.1		1.1
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	28.9	$	48.6	$	28.9	$	48.6	Total cash, cash equivalents and restricted cash	$	37.5	$	58.2

See accompanying Notes to the Consolidated Financial Statements.

CLEARWATER PAPER CORPORATION

Consolidated Statements of Stockholders’ Equity

(Unaudited)


		Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity			Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(In millions, except share amounts which are in thousands)	(In millions, except share amounts which are in thousands)	Shares	Amount										(In millions, except share amounts which are in thousands)	Shares	Amount
Balance at December 31, 2019		16,515	$	—	$	9.8	$	481.7	$	(59.5)	$	432.0
Balance at December 31, 2020													Balance at December 31, 2020	16,572	$	—	$	16.6	$	558.8	$	(54.3)	$	521.1
Net income	Net income	—	—		—		10.3		—		10.3		Net income	—	—		—		12.1		—		12.1
Stock-based compensation expense	Stock-based compensation expense	—	—		1.3		—		—		1.3		Stock-based compensation expense	—	—		2.0		—		—		2.0
Issuance of shares under stock plans, net	Issuance of shares under stock plans, net	54	—		(0.7)		—		—		(0.7)		Issuance of shares under stock plans, net	105	—		(1.1)		—		—		(1.1)
Pension and OPEB, net of tax of $0.6		—	—		—		—		1.8		1.8
Balance at March 31, 2020		16,569	$	—	$	10.4	$	492.1	$	(57.7)	$	444.8
Net income		—	—		—		22.8		—		22.8
Stock-based compensation expense			—		1.4		—		—		1.4
Issuance of shares under stock plans, net		2	—		—		—		—		—
Pension and OPEB, net of tax of $0.6		—	—		—		—		1.8		1.8
Balance at June 30, 2020		16,571	$	—	$	11.8	$	514.8	$	(55.8)	$	470.8
Net income		—	—		—		21.4		—		21.4
Stock-based compensation expense		—	—		2.2		—		—		2.2
Issuance of shares under stock plans, net		1	—		—		—		—		—
Pension and OPEB, net of tax of $0.6		—	—		—		—		1.8		1.8
Balance at September 30, 2020		16,571	$	—	$	13.9	$	536.3	$	(54.0)	$	496.2
Pension and other postretirement employee benefits, net of tax of $0.7													Pension and other postretirement employee benefits, net of tax of $0.7	—	—		—		—		1.9		1.9
Balance at March 31, 2021													Balance at March 31, 2021	16,678	$	—	$	17.6	$	570.9	$	(52.4)	$	536.1

~~CLEARWATER PAPER CORPORATION~~

~~Consolidated Statements of Stockholders’ Equity~~

~~(Unaudited)~~


		Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity			Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(In millions, except share amounts which are in thousands)	(In millions, except share amounts which are in thousands)	Shares	Amount										(In millions, except share amounts which are in thousands)	Shares	Amount
Balance at December 31, 2020		16,572	$	—	$	16.6	$	558.8	$	(54.3)	$	521.1
Balance at December 31, 2021													Balance at December 31, 2021	16,692	$	—	$	23.6	$	530.7	$	(42.6)	$	511.7
Net income	Net income	—	—		—		12.1		—		12.1		Net income	—	—		—		16.6		—		16.6
Stock-based compensation expense	Stock-based compensation expense	—	—		2.0		—		—		2.0		Stock-based compensation expense	—	—		2.0		—		—		2.0
Issuance of shares under stock plans, net	Issuance of shares under stock plans, net	105	—		(1.1)		—		—		(1.1)		Issuance of shares under stock plans, net	119	—		(1.5)		—		—		(1.5)
Pension and OPEB, net of tax of $0.7		—	—		—		—		1.9		1.9
Balance at March 31, 2021		16,678	$	—	$	17.6	$	570.9	$	(52.4)	$	536.1
Net loss		—	—		—		(51.6)		—		(51.6)
Stock-based compensation expense		—	—		1.9		—		—		1.9
Issuance of shares under stock plans, net		7	—		(0.1)		—		—		(0.1)
Pension and OPEB, net of tax of $0.7		—	—		—		—		1.9		1.9
Balance at June 30, 2021		16,685	$	—	$	19.3	$	519.2	$	(50.5)	$	488.1
Net income		—	—		—		1.9		—		1.9
Stock-based compensation expense		—	—		2.4		—		—		2.4
Issuance of shares under stock plans, net		1	—		—		—		—		—
Pension and OPEB, net of tax of $(0.3)		—	—		—		—		(0.8)		(0.8)
Balance at September 30, 2021		16,687	$	—	$	21.7	$	521.2	$	(51.3)	$	491.6
Pension and other postretirement employee benefits, net of tax of $0.4													Pension and other postretirement employee benefits, net of tax of $0.4	—	—		—		—		1.1		1.1
Balance at March 31, 2022													Balance at March 31, 2022	16,811	$	—	$	24.1	$	547.3	$	(41.4)	$	530.0

See accompanying Notes to the Consolidated Financial Statements.

Clearwater Paper Corporation

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1 ~~BASIS OF PRESENTATION~~Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments) necessary to present fairly, in all material respects, the consolidated financial position, results of operations, stockholders' equity and cash flows for us and our subsidiaries for the interim periods presented. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. All dollar amounts are shown in millions, except per share.

NOTE 2 ~~RECENTLY ADOPTED AND NEW ACCOUNTING STANDARDS~~Recently Adopted and New Accounting Standards

Recently Adopted Accounting Standards

In ~~December 2019,~~November 2021, the ~~Financial Accounting Standards Board (FASB)~~FASB issued ~~Accounting Standards Update (ASU) 2019-12,~~ASU 2021-10, ~~Income Taxes~~Disclosures by Business Entities About Government Assistance (Topic ~~740) - Simplifying~~832), which requires disclosures about certain types of government assistance including the ~~Accounting for Income Taxes, which removes certain exceptions, such as~~nature of the ~~general methodology for calculating income taxes in~~assistance, related accounting policies, and the effect on an interim period when a year-to-date loss exceeds the anticipated loss for the year, and simplifies the accounting for income taxes in areas such as franchise tax (or similar tax) that is partially based on income.entity's financial statements. The new standard is effective for annual ~~and interim~~ periods beginning after December 15, ~~2020.~~2021 with prospective or retrospective adoption permitted. This ASU was adopted prospectively as of January 1, ~~2021~~2022 and did not have a material impact on our consolidated financial statements.

~~We reviewed all other new accounting pronouncements issued in the period and concluded that they are not applicable or not material to our business.~~

NOTE 3 ~~FAIR VALUE MEASUREMENTS~~Fair Value Measurements

Carrying amounts reported on the balance sheet for cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. From December 31, ~~2020~~2021 through March 31, 2022, we have made voluntary prepayments of principal of the Term Loan Credit Agreement of ~~$40.0~~$20.0 million.

The fair value of our debt is included in the following table:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Term loan maturing 2026, variable interest rate	Term loan maturing 2026, variable interest rate	$	88.9	$	129.6	Term loan maturing 2026, variable interest rate	$	29.8	$	49.8
2014 Notes, maturing 2025, fixed interest rate	2014 Notes, maturing 2025, fixed interest rate	$	324.0	$	325.1	2014 Notes, maturing 2025, fixed interest rate	303.4		324.6
2020 Notes, maturing 2028, fixed interest rate	2020 Notes, maturing 2028, fixed interest rate	$	282.6	$	285.3	2020 Notes, maturing 2028, fixed interest rate	255.4		278.9
							$	588.6	$	653.3

~~Fair Value of Nonfinancial Assets~~

We measure certain nonfinancial assets at fair value on a nonrecurring basis. These assets include inventory and property, plant and equipment that are written down to fair value when they are held for sale or determined to be impaired. During the second quarter of 2021, we announced the closure of our Neenah, Wisconsin tissue and converting operations and accordingly measured the inventory and property, plant and equipment at fair value on a nonrecurring basis based upon our expected proceeds from the related asset sales less applicable selling costs. This resulted in an impairment of $36.9 million in the first nine months of 2021.NOTE 4 Receivables

Receivables consist of:


	March 31, 2022		December 31, 2021
Trade accounts receivable	$	163.6	$	154.1
Allowance for current expected credit losses	(1.3)		(1.4)
Unbilled receivables	8.5		7.2
Taxes receivable	0.4		6.1

Other	1.1		1.4
	$	172.3	$	167.4

NOTE ~~4 RECEIVABLES~~5 Inventories

~~Receivables consist~~Our inventories are stated at the lower of net realizable value or current cost using the average cost method and consists of:

September 30, 2021 December 31, 2020
Trade accounts receivable $ 148.8 $ 139.0
Allowance for current expected credit losses (1.5) (1.6)
Unbilled receivables 7.7 5.1
Taxes receivable 2.9 16.0
Other 1.6 2.1
$ 159.4 $ 160.6


	March 31, 2022		December 31, 2021
Logs, chips and sawdust	$	13.6	$	13.7
Pulp	14.9		15.9
Paperboard and tissue products	152.3		148.0
Materials and supplies	101.0		100.1
	$	281.8	$	277.7

~~NOTE 5 INVENTORIES~~

~~Inventories consist of:~~

September 30, 2021 December 31, 2020
Logs, chips and sawdust $ 13.9 $ 17.2
Pulp 11.7 11.5
Paperboard and tissue products 162.7 137.0
Materials and supplies 98.1 97.7
$ 286.4 $ 263.3

NOTE 6 ~~ACCOUNTS PAYABLE AND ACCRUED LIABILITIES~~Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consists of:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Trade payables	Trade payables	$	171.4	$	143.4	Trade payables	$	173.0	$	168.3
Accrued compensation	Accrued compensation	31.9		41.7		Accrued compensation	31.1		29.3
Operating lease liabilities	Operating lease liabilities	16.1		15.3		Operating lease liabilities	16.0		16.1
Accrued interest	Accrued interest	4.8		12.6		Accrued interest	4.7		12.0
Accrued taxes other than income	Accrued taxes other than income	12.9		10.5		Accrued taxes other than income	13.9		10.9
Other accrued liabilities	Other accrued liabilities	18.2		19.6		Other accrued liabilities	15.8		15.8
		$	255.2	$	243.1		$	254.5	$	252.5

Included in accounts payable and accrued liabilities ~~is $8.9~~are $4.7 million and ~~$12.1~~$11.0 million related to capital expenditures that had not yet been paid as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~

2021.

NOTE 7 ~~INCOME TAXES~~Income Taxes

For interim periods, accounting standards require that income tax expense be determined by applying the estimated annual effective income tax rate to year-to-date results, unless this method does not result in a reliable estimate of year-to-date income tax expense. Each period, the income tax accrual is adjusted to the latest estimate and the difference from the previously accrued year-to-date balance is adjusted to the current quarter.

For the ~~nine months~~quarter ended ~~September 30, 2021,~~March 31, 2022, our income tax ~~expense reflects an income tax benefit of $13.8~~provision was $6.0 million as compared to ~~an income tax provision of $14.1~~$3.2 million in ~~the comparable period of 2020.~~2021. Our effective tax rate for the ~~first nine months of 2021 of 26.8%~~quarter ended March 31, 2022 was 26.6%, which varied from the U.S. federal statutory tax rate of 21% primarily due to the effects of state taxes and nondeductible compensation. Our effective tax rate for the ~~first nine months of 2020~~quarter ended March 31, 2021 approximated the statutory U.S. federal income tax rate of 21% ~~and included a $7.0 million benefit from the provisions of the Coronavirus Aid, Relief, and Economic Security Act.~~

NOTE 8 ~~OTHER OPERATING CHARGES~~Other Operating Charges

The major components of “Other operating charges, net” in the Consolidated Statements of Operations for the quarter ended March 31, 2022 and ~~nine months ended September 30,~~ 2021 ~~and 2020~~ are reflected in the table below and described in the paragraphs following the ~~table:~~table. These items are considered outside of our core operations.

Quarter Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Costs associated with mill closure $ 5.4 $ — $ 47.1 $ —
Reorganization and other expenses 3.4 — 7.3 3.4
Union settlement — — — 6.6
Gain on divested assets — — — (1.4)
Directors' equity-based compensation 1.4 0.3 0.6 2.5
Other — — — 0.8
$ 10.2 $ 0.3 $ 55.1 $ 11.9


	Quarter Ended March 31,
	2022		2021
Reorganization and other expenses	$	1.5	$	—
Mill closure costs	0.4		—
Directors' equity-based compensation expense	(1.4)		0.4
	$	0.5	$	0.4

~~2021~~

2022

During the ~~third~~first quarter of ~~2021,~~2022, we recorded ~~$10.2~~$0.5 million of expenses in "Other operating charges, net." The components of the expense include:

•expense of ~~$5.4 million associated with mill closure related to severance and other related closure costs;~~

•~~expense of $3.4~~$1.5 million related to reorganization and other expenses including consulting fees associated with our efforts to achieve long-term performance improvements,

•expense of $0.4 million associated with mill closure costs, and

•reversal of expense of $1.4 million relating to directors' equity based compensation which is remeasured each period based upon changes in our stock price.

~~During the second quarter of~~ 2021 ~~we recorded $44.5 million of expenses in "Other operating charges, net." The components of the expense include:~~

•expense of $41.7 million associated with mill closure including $36.9 million associated with the impairment of fixed assets and certain inventory and $4.9 million associated with severance and other related closure costs;

•~~expense of $4.0 million related to reorganization and other expenses including severance and consulting fees associated with our efforts to achieve long-term performance improvements, and~~

•~~reversal of expense of $1.1 million relating to directors' equity based compensation which is remeasured each period based upon changes in our stock price.~~

During the first quarter of 2021, we recorded $0.4 million of expenses in "Other operating charges, net." The components of the expense include:

•expense of $0.4 million relating to directors' equity based compensation which is remeasured each period based upon changes in our stock price.

~~2020~~

~~During the third quarter of 2020 we recorded $0.3 million of expenses in "Other operating charges, net." The components of the expenses include:~~

•~~expense of $0.3 million relating to directors' equity based compensation which is remeasured each period based upon changes in our stock price.~~

~~During the second quarter of 2020 we recorded $3.0 million of expenses in "Other operating charges, net." The components of the expenses include:~~

•~~expense of $0.6 million related to reorganization expenses (primarily related to corporate expenses), and~~

•~~expense of $1.9 million relating to directors' equity based compensation which is remeasured each period based upon changes in our stock price.~~

~~During the first quarter of 2020, we recorded $8.6 million of net expenses in "Other operating charges, net." The components of the expense included:~~

•~~expense of $2.8 million related to reorganization expenses (primarily related to corporate expenses);~~

•~~expense of $6.6 million associated with union settlement retroactive wage payments ($2.6 million associated with Consumer Products and $4.0 million associated with Pulp and Paperboard segments);~~

•~~gain of $1.4 million associated with the Ladysmith Consumer Products facility sale escrow release, and~~

•~~expense of $0.2 million relating to directors' equity based compensation which is remeasured each period based upon changes in our stock price~~

NOTE 9 ~~NON-OPERATING INCOME (EXPENSE)~~Non-Operating Expense

The components of “Non-operating expense” in the Consolidated Statements of Operations for the quarter ended March 31, 2022 and ~~nine months ended September 30,~~ 2021 ~~and 2020~~ are reflected in the table below:

Quarter Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Interest expense $ (8.5) $ (11.7) $ (26.9) $ (35.4)
Capitalized interest 0.1 — 0.2 —
Amortization of debt issuance costs (0.5) (0.5) (1.4) (1.7)
Interest income — — 0.6 —
Interest expense, net (8.9) (12.2) (27.5) (37.0)
Debt retirement costs (0.5) (3.9) (0.5) (4.8)
Non-operating pension and other postretirement employee benefits expense (2.8) (1.9) (7.8) (5.7)
Total non-operating expense $ (12.2) $ (17.9) $ (35.7) $ (47.5)

For the third quarter and nine months ended September 30, 2021, debt retirement costs consist of $0.5 million associated with the write off of deferred debt costs related to the voluntary prepayments of the Term Loan maturing in 2026. For the quarter and nine months ended September 30, 2020, we recorded $3.9 million and $4.8 million in debt retirement cost consisting of $1.2 million related to the write off unamortized debt cost along with the premium on debt redemption of $2.1 million associated with the redemption of the $275.0 million aggregate principle amount of 4.5% senior notes due in 2023 and $0.6 million in the third quarter of 2020 and $1.6 million on in the first nine months of 2020 associated with the prepayment of the Term Loan maturing in 2026.


	Quarter Ended March 31,
	2022		2021
Interest expense	$	(8.2)	$	(9.2)
Amortization of debt issuance costs	(0.4)		(0.5)
Interest income	—		0.3
Interest expense, net	(8.6)		(9.3)

Debt retirement costs	(0.2)		—
Non-operating pension and other postretirement employee benefits expense	(1.4)		(2.5)
Total non-operating expense	$	(10.3)	$	(11.8)

NOTE 10 ~~PENSION AND POSTRETIREMENT EMPLOYEE BENEFIT PLANS~~Retirement Plans and Postretirement Benefits

The following table details the components of net periodic cost of our company-sponsored pension and other postretirement employee benefit plans for the periods presented:


		Quarter Ended September 30,				Nine Months Ended September 30,					Quarter Ended March 31,
Pension Benefit Plans	Pension Benefit Plans	2021		2020		2021		2020		Pension Benefit Plans	2022		2021
Service cost	Service cost	$	0.4	$	0.5	$	1.4	$	1.7	Service cost	$	0.5	$	0.5
Interest cost	Interest cost	2.1		2.6		6.3		7.8		Interest cost	2.2		2.1
Expected return on plan assets	Expected return on plan assets	(2.6)		(3.8)		(7.9)		(11.3)		Expected return on plan assets	(2.8)		(2.6)
Amortization of actuarial loss	Amortization of actuarial loss	2.5		2.4		7.7		7.4		Amortization of actuarial loss	1.5		2.6
Net periodic cost	Net periodic cost	$	2.4	$	1.7	$	7.4	$	5.6	Net periodic cost	$	1.5	$	2.5


		Quarter Ended September 30,				Nine Months Ended September 30,					Quarter Ended March 31,
Other Postretirement Employee Benefit Plans	Other Postretirement Employee Benefit Plans	2021		2020		2021		2020		Other Postretirement Employee Benefit Plans		2022		2021
Service cost	Service cost	$	0.2	$	—	$	0.3	$	0.1	Service cost		$	0.1	$	—
Interest cost	Interest cost	0.6		0.6		1.5		1.8		Interest cost		0.5		0.5
Amortization of actuarial loss		0.2		—		0.2		—
Net periodic cost	Net periodic cost	$	1.0	$	0.7	$	2.0	$	1.8	Net periodic cost		$	0.6	$	0.5

119

We record the service component of net periodic cost (benefit) as part of "Cost of sales" and "Selling, general, and administrative expenses," while the non-service components of net periodic cost (benefit) are recorded to "Other non-operating expense" on our Consolidated Statements of Operations. For the quarter ~~and nine months~~ ended ~~September 30,~~March 31, 2022 and 2021, we recorded ~~$0.6~~$0.5 million and ~~$1.5~~$0.4 million to "Cost of sales" and less than $0.1 million and $0.2 million to "Selling, general, and administrative expenses." For the quarter and nine months ended September 30, 2020, we recorded $0.3 million and $1.1 million to "Cost of sales" and $0.2 million and $0.7$0.1 million to "Selling, general, and administrative expenses."

NOTE 11 ~~ACCUMULATED OTHER COMPREHENSIVE LOSS~~Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, net of tax, is comprised of the following:

Pension Plan Adjustments Other Post Retirement Employee Benefit Plan Adjustments Total
Balance at December 31, 2019 $ (67.8) $ 8.3 $ (59.5)
Amounts reclassified from accumulated other comprehensive loss 5.5 — 5.5
Balance at September 30, 2020 $ (62.4) $ 8.3 $ (54.0)
Balance at December 31, 2020 $ (54.5) $ 0.2 $ (54.3)
Other comprehensive loss before reclassifications — (2.8) (2.8)
Amounts reclassified from accumulated other comprehensive loss 5.7 0.2 5.8
Balance at September 30, 2021 $ (48.9) $ (2.4) $ (51.3)


	Pension Plan Adjustments		Other Post Retirement Employee Benefit Plan Adjustments		Total
Balance at December 31, 2020	$	(54.5)	$	0.2	$	(54.3)

Amounts reclassified from accumulated other comprehensive loss	1.9		—		1.9
Balance at March 31, 2021	$	(52.6)	$	0.2	$	(52.4)

Balance at December 31, 2021	$	(42.8)	$	0.3	$	(42.6)
Amounts reclassified from accumulated other comprehensive loss	1.1		—		1.1

Balance at March 31, 2022	$	(41.7)	$	0.3	$	(41.4)

NOTE 12 ~~STOCKHOLDERS' EQUITY~~Stockholders' Equity

Common Stock Plans

We have stock-based compensation plans under which restricted stock awards and stock options are outstanding or granted subject to time or performance vesting requirements. At ~~September 30, 2021,~~March 31, 2022, approximately ~~1.1~~0.8 million shares were available for future issuance under our current plan.

Quarter Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Total stock-based compensation expense
(selling, general and administrative and other operating charges, net)
$ 3.8 $ 2.5 $ 6.9 $ 7.3
Income tax benefit related to stock-based compensation $ 1.0 $ 0.6 $ 1.8 $ 1.9
Impact on cash flow due to taxes paid related to net share settlement of equity awards and proceeds from sale of stock under employee awards $ — $ — $ 1.2 $ 0.7


	Quarter Ended March 31,
	2022		2021
Total stock-based compensation expense (selling, general and administrative and other operating charges, net)	$	0.7	$	2.4
Income tax benefit related to stock-based compensation	$	0.2	$	0.6
Impact on cash flow due to taxes paid related to net share settlement of equity awards	$	1.5	$	1.6

At ~~September 30, 2021, $14.1~~March 31, 2022, there was $17.5 million of total unrecognized compensation cost related to ~~unvested~~outstanding restricted stock ~~units and performance awards had not yet been recognized.~~unit awards.

During the ~~nine months~~quarter ended ~~September 30, 2021,~~March 31, 2022, we granted ~~179,528~~208,922 restricted stock units (time vesting) at an average grant date fair value of ~~$35.68~~$29.21 per share and ~~68,070~~103,067 restricted stock units (performance vesting) at an average grant date fair value of ~~$39.79~~$30.55 per share.

1210

NOTE 13 ~~EARNINGS PER SHARE~~Earnings per Share

Basic income per share is based on the weighted-average number of shares of common stock outstanding. Diluted income per share is based upon the weighted-average number of shares of common stock outstanding plus all potentially dilutive securities that were assumed to be converted into common shares at the beginning of the period under the treasury stock method. This method requires the effect of potentially dilutive common stock equivalents be excluded from the calculation of diluted earnings per share for the periods in which net losses are reported because the effect is anti-dilutive.

Quarter Ended September 30, Nine Months Ended September 30,
(In thousands) 2021 2020 2021 2020
Basic weighted-average common shares outstanding 16,687 16,595 16,689 16,581
Incremental shares due to:
Stock-based awards 186 188 — 107
Performance shares 98 — — —
Diluted weighted-average common shares outstanding 16,971 16,783 16,689 16,689
.


	Quarter Ended March 31,
(In thousands)	2022	2021
Basic weighted-average common shares outstanding	16,728	16,647
Incremental shares due to:
Stock-based awards	229	238
Performance shares	116	94
Diluted weighted-average common shares outstanding	17,073	16,979

Anti-dilutive shares excluded from the calculation were ~~0.3~~0.4 million and ~~0.4~~0.2 million for the quarter ended ~~September 30, 2021~~March 31, 2022 and ~~2020 and 0.6 million and 0.6 million for the nine months ended September 30, 2021 and 2020.~~2021.

NOTE 14 ~~SEGMENT INFORMATION~~Segment Information

We operate in two segments: Pulp and Paperboard and Consumer Products. Our business units have been aggregated into these two segments based upon the similarity of economic characteristics, customers and distribution methods. Our results of operations are summarized below for each of these segments separately. Segment information was prepared in accordance with the same accounting principles as those described in Note 1 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. Certain amounts have been reclassified from the prior year presentation to reflect the realignment of Clearwater Paper’s baled pulp sales to record inter-segment sales at market price and the realignment of outside pulp sales to the producing segment.2021.

Quarter Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Segment net sales:
Pulp and Paperboard $ 237.5 $ 217.2 $ 684.6 $ 656.8
Consumer Products 214.2 245.9 603.2 779.7
Eliminations (1.2) (5.6) (5.0) (20.6)
Total segment net sales $ 450.5 $ 457.4 $ 1,282.8 $ 1,415.9
Operating income (loss):
Pulp and Paperboard $ 34.6 $ 32.6 $ 72.6 $ 90.8
Consumer Products 3.7 31.5 11.5 82.9
Corporate and eliminations (14.3) (14.6) (44.8) (45.6)
Other operating charges, net (10.2) (0.3) (55.1) (11.9)
Income (loss) from operations $ 13.8 $ 49.2 $ (15.6) $ 116.2


	Quarter Ended March 31,
	2022		2021
Segment net sales:
Pulp and Paperboard	$	266.2	$	219.7
Consumer Products	223.0		208.4
Eliminations	(1.1)		(2.2)
Net sales	$	488.2	$	425.9

Operating income (loss):
Pulp and Paperboard	$	50.3	$	25.0
Consumer Products	0.9		17.9
Corporate and eliminations	(17.8)		(15.5)
Other operating charges, net	(0.5)		(0.4)
Income from operations	$	32.9	$	27.1

1311

Net sales, classified by major products were as follows:


		Quarter Ended September 30,				Nine Months Ended September 30,					Quarter Ended March 31,
		2021		2020		2021		2020			2022		2021
Major products:	Major products:									Major products:
Paperboard	Paperboard	$	224.1	$	207.4	$	648.8	$	621.7	Paperboard	$	254.3	$	212.4
Retail tissue	Retail tissue	208.3		238.6		572.9		747.0		Retail tissue	216.6		195.1
Non-retail tissue		5.7		6.9		30.1		31.0
Away-from-home tissue 1										Away-from-home tissue 1	—		6.5
Pulp	Pulp	8.4		8.1		23.9		30.1		Pulp	8.3		3.5
Other	Other	5.1		2.1		12.2		6.7		Other	10.1		10.6
Eliminations	Eliminations	(1.2)		(5.6)		(5.0)		(20.6)		Eliminations	(1.1)		(2.2)
Total net sales	Total net sales	$	450.5	$	457.4	$	1,282.8	$	1,415.9	Total net sales	$	488.2	$	425.9

1 In the third quarter of 2021, we exited our away-from-home business with the shutdown of our Neenah, Wisconsin site.

1412


ITEM 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included herein and our audited Consolidated Financial Statements and Notes thereto for the ~~fiscal~~ year ended December 31, ~~2020,~~2021, as well as the information under the heading “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” that are part of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

OVERVIEW

Executive Summary

We recorded ~~a decrease~~an increase of 2%15% in net sales to ~~$450.5~~$488.2 million for the quarter ended ~~September 30, 2021~~March 31, 2022 compared to ~~$457.4~~$425.9 million for the quarter ended ~~September 30, 2020.~~March 31, 2021. We recorded net income for the quarter ended ~~September 30, 2021~~March 31, 2022 of ~~$1.9~~$16.6 million, or ~~$0.11~~$0.97 per diluted share, compared to net income of ~~$21.4~~$12.1 million or ~~$1.28~~$0.71 per diluted share in the quarter ended ~~September 30, 2020.~~March 31, 2021. We recorded Adjusted EBITDA for the quarter ended ~~September 30, 2021~~March 31, 2022 of ~~$49.9~~$58.9 million compared to ~~$77.2~~$54.3 million in the quarter ended ~~September 30, 2020.~~

We recorded a decrease of 9% in net sales to $1.3 billion for the nine months ended September 30, 2021 compared to $1.4 billion for the nine months ended September 30, 2020. We recorded net loss for the nine months ended September 30, 2021 of $37.6 million, or $2.25 per diluted share, compared to net income of $54.5 million or $3.27 per diluted share in the nine months ended September 30, 2020. We recorded Adjusted EBITDA for the nine months ended September 30, 2021 of $119.0 million compared to $211.5 million in the nine months ended September 30, 2020.

~~Announced Mill Closure~~

During the second quarter of 2021, we announced the closure of our Neenah, Wisconsin, tissue and converting operations. The Neenah Mill includes three tissue machines and ten tissue converting lines. The closure will reduce our total annual tissue and tissue converting production capacities by approximately 54,000 and 70,000 tons. During the first nine months of 2021, we recorded $47.1 million of impairment and other closure costs related to the closure of the Neenah mill. The primary components of the charge include an impairment to property plant and equipment of $31.6 million, a write-down to inventory of $5.3 million and $10.3 million of cash expenses for our employees and other closure costs.March 31, 2021.

See discussion on segment level results regarding net sales, operating results and Adjusted EBITDA in “Our Operating Results” below.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with GAAP requires our management to select and apply accounting policies that best provide the framework to report our results of operations and financial position. The selection and application of those policies requires management to make difficult, subjective and complex judgments concerning reported amounts of revenue and expenses during the reporting period and the reported amounts of assets and liabilities at the date of the financial statements. As a result, it is possible that materially different amounts would be reported under different conditions or using different assumptions.

~~Impairment of Long-Lived Assets~~

We monitor our long-lived assets for impairment indicators on an ongoing basis in accordance with GAAP. If impairment indicators exist, we perform the required impairment analysis by comparing the undiscounted cash flows expected to be generated from the long-lived assets to the related net book values. If the net book value exceeds the undiscounted cash flows, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived assets. Fair value is estimated based upon a combination of market and cost approaches, as appropriate.

Our impairment loss calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values. We do not believe a material change in the estimates or assumptions that we use to calculate long-lived asset impairments is likely. However, if actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material.

~~Customer Program costs~~

Customer programs and incentives are a common practice in our businesses. Our businesses incur customer program costs to obtain favorable product placement, to promote sales of products and to maintain competitive pricing. Customer program costs and incentives, including rebates and promotion and volume allowances, are accounted for as a reduction in net sales at the time the program is initiated and/or the revenue is recognized. The costs include, but are not limited to, volume allowances and rebates, promotional allowances, and cooperative advertising programs. These costs are recorded at the later of the time of sale or the implementation of the program based on management’s best estimates. Our estimates are based on historical and projected experience for each type of program or customer. Volume allowances are accrued based on our estimates of customer volume achievement and other factors incorporated into customer agreements, such as new products, new store allowances and merchandising support. We review accruals for these rebates and allowances, and adjust accruals when circumstances indicate (typically as a result of a change in volume expectations). As of ~~September 30, 2021 and December~~March 31, ~~2020, we had $8.8 million and $10.5 million accrued as customer rebates.~~

~~As of September 30, 2021, other than the items mentioned above,~~2022 there have been no significant changes with regard to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

2021.

NON-GAAP MEASURES

In evaluating our business, we utilize several non-GAAP financial measures. A non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so excluded or included under applicable GAAP guidance. In this report on Form 10-Q, we disclose overall and segment ~~earnings~~income (loss) from operations before interest expense, net, ~~non-operating pension and~~ other ~~postretirement benefit~~non-operating costs, taxes, depreciation and amortization, debt retirement costs, other operating charges, net, and Adjusted EBITDA which is a non-GAAP financial measure. Adjusted EBITDA is not a substitute for the GAAP measure of net income (loss) or for any other GAAP measures of operating performance.

We have included Adjusted EBITDA on a consolidated and segment basis in this report because we use them as important supplemental measures of our performance and believe that they are 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 also 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. Our Adjusted EBITDA measures have material limitations as performance measures because they exclude interest expense, income tax ~~(benefit) expense~~provision 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. In addition, we exclude other income and expense items which are outside of our core operations.

1613

The following table provides our Adjusted EBITDA for the periods presented, as well as a reconciliation to net income and segment operating income.

Quarter Ended September 30, Nine Months Ended September 30,
(In millions) 2021 2020 2021 2020
Net income (loss) $ 1.9 $ 21.4 $ (37.6) $ 54.5
Income tax provision (benefit) (0.3) 9.9 (13.8) 14.1
Interest expense, net 8.9 12.2 27.5 37.0
Depreciation and amortization 25.9 27.7 79.6 83.5
Other operating charges, net 10.2 0.3 55.1 11.9
Other non-operating expense 2.8 1.9 7.8 5.7
Debt retirement costs 0.5 3.9 0.5 4.8
Adjusted EBITDA $ 49.9 $ 77.2 $ 119.0 $ 211.5
Pulp and Paperboard segment income $ 34.6 $ 32.6 $ 72.6 $ 90.8
Depreciation and amortization 8.9 9.2 26.9 27.6
Adjusted EBITDA Pulp and Paperboard segment $ 43.5 $ 41.8 $ 99.5 $ 118.5
Consumer Products segment income $ 3.7 $ 31.5 $ 11.5 $ 82.9
Depreciation and amortization 15.9 17.1 49.4 51.4
Adjusted EBITDA Consumer Products segment $ 19.6 $ 48.5 $ 60.9 $ 134.3
Corporate and other expense $ (14.3) $ (14.6) $ (44.8) $ (45.6)
Depreciation and amortization 1.1 1.5 3.3 4.4
Adjusted EBITDA Corporate and other $ (13.1) $ (13.1) $ (41.4) $ (41.3)
Pulp and Paperboard segment $ 43.5 $ 41.8 $ 99.5 $ 118.5
Consumer Products segment 19.6 48.5 60.9 134.3
Corporate and other (13.1) (13.1) (41.4) (41.3)
Adjusted EBITDA $ 49.9 $ 77.2 $ 119.0 $ 211.5


	Quarter Ended March 31,
(In millions)	2022		2021
Net income	$	16.6	$	12.1
Income tax provision	6.0		3.2
Interest expense, net	8.6		9.3
Depreciation and amortization	25.4		26.8
Other operating charges, net	0.5		0.4
Debt retirement costs	0.2		—
Other non-operating expense	1.4		2.5
Adjusted EBITDA	$	58.9	$	54.3

Pulp and Paperboard segment income	$	50.3	$	25.0
Depreciation and amortization	9.3		9.0
Adjusted EBITDA Pulp and Paperboard segment	$	59.5	$	34.0

Consumer Products segment income	$	0.9	$	17.9
Depreciation and amortization	15.3		16.8
Adjusted EBITDA Consumer Products segment	$	16.2	$	34.7

Corporate and other expense	$	(17.8)	$	(15.5)
Depreciation and amortization	0.9		1.1
Adjusted EBITDA Corporate and other	$	(16.9)	$	(14.4)

Pulp and Paperboard segment	$	59.5	$	34.0
Consumer Products segment	16.2		34.7
Corporate and other	(16.9)		(14.4)
Adjusted EBITDA	$	58.9	$	54.3

1714

OUR OPERATING RESULTS

Our results of operations for each of our segments are discussed below. See Note 14 "Segment Information" of the Notes to the Consolidated Financial Statements included in Item 1 of this report for further information regarding our segments.

Pulp and Paperboard


		Quarter Ended September 30,								Nine Months Ended September 30,									Quarter Ended March 31,
(Dollars in millions, except per ton amounts)	(Dollars in millions, except per ton amounts)	2021			2020			Increase (decrease)		2021			2020			Increase (decrease)		(Dollars in millions, except per ton amounts)	2022			2021			Increase (decrease)
Sales:	Sales:																	Sales:
Paperboard	Paperboard	$	224.1		$	207.4		8.1	%	$	648.8		$	621.7		4.4	%	Paperboard	$	254.3		$	212.4		19.7	%
Pulp	Pulp	8.4			8.1			4.0	%	23.9			30.1			(20.7)	%	Pulp	8.3			3.5			140.1	%
Other	Other	4.9			1.8			179.2	%	12.0			5.1			137.6	%	Other	3.6			3.9			(6.2)	%
		$	237.5		$	217.2		9.3	%	$	684.6		$	656.8		4.2	%		$	266.2		$	219.7		21.2	%

Operating income	Operating income	$	34.6		$	32.6		6.1	%	$	72.6		$	90.8		(20.0)	%	Operating income	$	50.3		$	25.0		100.8	%
Operating margin	Operating margin	14.6		%	15.0		%			10.6		%	13.8		%			Operating margin	18.9		%	11.4		%

Adjusted EBITDA	Adjusted EBITDA	$	43.5		$	41.8		4.1	%	$	99.5		$	118.5		(16.0)	%	Adjusted EBITDA	$	59.5		$	34.0		75.0	%
Adjusted EBITDA margin	Adjusted EBITDA margin	18.3		%	19.2		%			14.5		%	18.0		%			Adjusted EBITDA margin	22.4		%	15.5		%

Shipments (short tons)		203,439			205,262			(0.9)	%	610,702			614,906			(0.7)	%
Sales price (per short ton)		$	1,102		$	1,010		9.1	%	$	1,062		$	1,011		5.0	%
Paperboard shipments (short tons)																		Paperboard shipments (short tons)	201,356			206,712			(2.6)	%
Paperboard sales price (per short ton)																		Paperboard sales price (per short ton)	$	1,263		$	1,028		22.9	%

Sales volumes decreased ~~slightly~~ in our Pulp and Paperboard segment for the quarter ~~and nine month periods~~ ended ~~September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in the prior year based upon ~~reduced production due to~~ our planned maintenance ~~outages.~~outage at our Lewiston facility which reduced sales volume availability. Sales prices increased for the quarter ~~and nine month periods~~ ended ~~September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in the prior year due to the impacts of our announced price increases and changes in product mix.

During the first quarter of 2021, we realized significant cost increases due to a major winter and ice storm in the south. This event resulted in a $6.5 million increase in costs both in terms of natural gas as well as shortages and price increases from several raw material providers. A similar event did not occur in 2022.

Overall, the increase in operating income and Adjusted EBITDA for the quarter ended ~~September 30, 2021~~March 31, 2022 as compared to the same period in the prior year ~~was~~were driven by higher sales prices offset by inflation specifically related to chemicals, freight and ~~energy and~~energy.

Consumer Products


	Quarter Ended March 31,
(Dollars in millions, except per unit)	2022			2021			Increase (decrease)
Sales:
Retail tissue	$	216.6		$	195.1		11.0	%
Away-from-home 1	—			6.5			(100.0)	%
Other	6.4			6.7			(4.0)	%
	$	223.0		$	208.4		7.0	%

Operating income	$	0.9		$	17.9		(94.8)	%
Operating margin	0.4		%	8.6		%

Adjusted EBITDA	$	16.2		$	34.7		(53.2)	%
Adjusted EBITDA margin	7.3		%	16.6		%

Shipments (short tons)
Retail	75,426			70,762			6.6	%
Away-from-home 1	—			3,454			(100.0)	%
Other	5,073			5,969			(15.0)	%
	80,499			80,185			0.4	%

Sales price (per short ton)
Retail	$	2,872		$	2,758		4.1	%

1 In the third quarter of 2021, we exited our ~~maintenance outage at~~away-from-home business with the shutdown of our ~~Cypress Bend, Arkansas facility. Overall, the decrease~~Neenah, Wisconsin site.

Sales volumes increased in our ~~operating income and Adjusted EBITDA~~Consumer Products segment for the ~~nine month period~~quarter ended ~~September 30, 2021 as~~March 31, 2022 compared to the same period in the prior year ~~was driven by inflation and our planned maintenance shutdowns at our Lewiston, ID and Cypress Bend, Arkansas facilities in the second quarter of 2021 which was partially offset by higher sales prices.~~

~~Consumer Products~~

Quarter Ended September 30, Nine Months Ended September 30,
(Dollars in millions,
except per unit) 2021 2020 Increase (decrease) 2021 2020 Increase (decrease)
Sales:
Retail tissue $ 208.3 $ 238.6 (12.7) % $ 572.9 $ 747.0 (23.3) %
Non-retail tissue 5.7 6.9 (17.9) % 30.1 31.0 (2.8) %
Other 0.2 0.3 n.m. 0.2 1.6 n.m.
$ 214.2 $ 245.9 (12.9) % $ 603.2 $ 779.7 (22.6) %
Operating income $ 3.7 $ 31.5 (88.3) % $ 11.5 $ 82.9 (86.1) %
Operating margin 1.7 % 12.8 % 1.9 % 10.6 %
Adjusted EBITDA $ 19.6 $ 48.5 (59.7) % $ 60.9 $ 134.3 (54.6) %
Adjusted EBITDA margin 9.1 % 19.7 % 10.1 % 17.2 %
Shipments (short tons)
Retail 76,237 86,292 (11.7) % 208,496 272,515 (23.5) %
Non-retail 5,741 3,799 51.1 % 22,609 18,613 21.5 %
81,978 90,091 (9.0) % 231,104 291,128 (20.6) %
Cases (in thousands) 12,255 14,507 (15.5) % 34,104 45,727 (25.4) %
Sales price (per short ton)
Retail $ 2,732 $ 2,766 (1.2) % $ 2,748 $ 2,741 0.3 %
Non-retail $ 988 $ 1,820 (45.7) % $ 1,333 $ 1,665 (19.9) %

~~n.m. - not meaningful~~

as consumer demand stabilized as consumer buying patterns returned to pre-COVID level. Sales ~~volumes decreased~~prices increased in our Consumer Products segment for the quarter ~~and nine month periods~~ ended ~~September 30, 2021~~March 31, 2022 compared to the same periods in the prior year as consumer demand slowed due to the lessening impact of COVID-19. Sales prices changed in our Consumer Products segment for the quarter and nine month periods ended September 30, 2021 compared to the same periodsperiod in the prior year due primarily to ~~changes~~pricing increases implemented to offset inflation, primarily transportation costs. There was no away-from-home business in ~~product mix. We saw an increase in our non-retail business related to increases in parent rolls sales offset by reductions in our away from home business~~the current quarter due to the ~~announced~~ closure of our Neenah, Wisconsin ~~facility. Sales prices in this category decreased~~facility in the ~~periods due to a higher percentage~~third quarter of ~~parent rolls sales which is generally sold at a lower price.~~2021.

Overall, the decrease in operating income and Adjusted EBITDA for the quarter ~~and nine month periods~~ ended ~~September 30, 2021~~March 31, 2022 compared to the same periods in the prior year was driven by higher input costs, primarily pulp ~~reduced operations to balance supply~~ and ~~demand and lower~~transportation partially offset by higher sales ~~volumes due to lessening impacts of COVID-19.~~prices.

Corporate expenses

Corporate expenses for the quarter ~~and nine months~~ ended ~~September 30, 2021~~March 31, 2022 were ~~$14.3 million and $44.8~~$17.8 million compared to ~~$14.6 million and $45.6~~$15.5 million in the same ~~periods~~period in the prior year. The ~~reduction~~increase between periods is primarily related to the ~~lower~~higher incentive compensation based upon ~~lower~~higher than expected operating results. 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.

Other operating charges

See Note 8 "Other operating charges" of the Notes to the Consolidated Financial Statements included in Item 1 of this report for additional information.

Interest expense

Interest expense for the quarter ~~and nine months~~ ended ~~September 30, 2021~~March 31, 2022 compared to the same ~~periods~~period in the prior year was lower by ~~$3.3 million and $9.6~~$0.7 million due to lower debt outstanding. See Note 9 "Non-operating ~~income (expense)"~~expense" of the Notes to the Consolidated Financial Statements included in Item 1 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. 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.

2017

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity are existing cash balances, cash generated by our operations and our ability to borrow under such credit facilities as we may have in effect from time to time. Our principal uses of liquidity are paying the costs and expenses associated with our operations, servicing outstanding indebtedness and making capital expenditures. We may also from time to time prepay or repurchase outstanding indebtedness (including by issuing new indebtedness subject to market conditions to refinance such outstanding indebtedness) or stock or acquire assets or businesses that are complementary to our operations.

Operating Activities

Net cash flows provided by operating activities for the ~~nine months~~quarter ended ~~September 30, 2021~~March 31, 2022 were ~~$64.4~~$41.1 million compared to ~~$176.1~~$33.8 million infor the ~~first nine months of 2020.~~quarter ended March 31, 2021. This ~~decrease~~increase was driven by ~~lower~~increased net income and ~~increases~~changes in ~~inventory.~~working capital. Accounts receivable and accounts payable agings have remained relatively consistent with balances as of December 31, ~~2020.~~2021.

Investing Activities

During the ~~nine months~~quarter ended ~~September 30, 2021,~~March 31, 2022, net cash flows used in investing activities were ~~$29.9~~$7.9 million compared to ~~$27.5~~$11.1 million in the prior year period. Included in the quarter ended March 31, 2022 is $2.4 million refund associated with a capital project placed in service in prior years. Included in "Accounts payable and accrued liabilities" on our Consolidated Balance Sheets was ~~$8.9~~$4.7 million and ~~$4.6~~$8.5 million related to capital expenditures that had not yet been paid at ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

Throughout ~~2021,~~2022, we expect cash paid for capital expenditures to be approximately ~~$42~~$60 million to ~~$47~~$70 million.

Financing Activities

Net cash flows used by financing activities were ~~$42.5~~$21.9 million for the ~~nine months~~quarter ended ~~September 30, 2021~~March 31, 2022 as compared to $~~122.5~~1.4 million for the same period of ~~2020.~~2021. The change was driven by ~~lower~~an increase in voluntary debt ~~repayment~~repayments in the ~~nine months~~quarter ended ~~September 30, 2021~~March 31, 2022 as compared to the corresponding period of ~~2020.~~2021.

~~Credit Agreements~~

ABL Credit Agreement

The ABL Credit Agreement matures on July 26, 2024 and includes a $250 million revolving loan commitment, subject to borrowing base limitations based on a percentage of applicable eligible receivables and eligible inventory. Based upon our Consolidated Balance Sheet as of ~~September 30, 2021,~~March 31, 2022, our ~~borrowings~~borrowing base supported up to ~~$246.4~~$250.0 million of availability under the line, of which no borrowings were outstanding and ~~$3.9~~$3.7 million was utilized to issue letters of credit. We may, at our option, prepay 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 also contains a financial covenant, which requires us to maintain a consolidated fixed charge coverage ratio of not less than 1.10 to 1.00, provided that the financial covenant under the ABL Credit Agreement is only applicable when unused availability falls below $25 million. As of ~~September 30, 2021,~~March 31, 2022, our fixed charge coverage ratio was approximately ~~4.10x.~~3.93x.

2118


ITEM 3.			Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our exposure to market risks on financial instruments includes interest rate risk on our Term Loan credit agreement and ABL Credit Agreement. As of ~~September 30, 2021,~~March 31, 2022, there were ~~$89.3~~$30.0 million in borrowings outstanding under our credit agreements. The reference interest rate applied to borrowings under the Credit Agreements is adjusted, at our option, at one, two, three, or six month intervals for LIBOR-based borrowings (or daily in the case of alternative based rate borrowings). A one percentage point increase or decrease in interest rates, based on outstanding credit facilities' borrowings of ~~$89.3~~$30.0 million, would have an approximate ~~$0.9~~$0.3 million annual effect on interest expense.

2219


ITEM 4.			Controls and Procedures

As of ~~September 30, 2021,~~March 31, 2022, our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) have carried out, with the participation of our Disclosure Committee and management, an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Act). Based upon this evaluation, the CEO and CFO have concluded that our disclosure controls and procedures are effective to provide reasonable assurance that material information required to be disclosed by us in reports we file under the Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and that information required to be disclosed by us in the reports we file or submit under the Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2021~~March 31, 2022 that has materially affected, or is likely to materially affect, our internal control over financial reporting.

2320

Part II


ITEM 1.			Legal Proceedings

We may from time to time be involved in claims, proceedings and litigation arising from our business and property ownership. We believe, based on currently available information, that the results of such proceedings, in the aggregate, will not have a material adverse effect on our financial condition.


ITEM 1A.			Risk Factors

There are no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. See Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, entitled “Risk Factors.”


~~ITEM 2.~~			~~Unregistered Sale of Equity Securities~~

~~None.~~


~~ITEM 3.~~			~~Defaults Upon Senior Securities~~

~~None.~~


~~ITEM 4.~~			~~Mine Safety Disclosures~~

~~None.~~


~~ITEM 5.~~			~~Other Information~~

~~None.~~

ITEM 6. Exhibits


EXHIBIT NUMBER						DESCRIPTION

3131**						~~Rule 13a-14(a)/15d-14(a) Certifications.~~Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32**						~~Furnished statements~~Certification of the Chief Executive Officer and Chief Financial Officer ~~under~~pursuant to 18 U.S.C Section 1350.

~~10.1~~ 1						~~Amendment to the Clearwater Paper Corporation Annual Incentive Plan, effective September 27, 2021~~

101.INS						XBRL Instance Document

101.SCH						XBRL Taxonomy Extension Schema.

101.CAL						XBRL Taxonomy Extension Calculation Linkbase.

101.DEF						XBRL Taxonomy Extension Definition Linkbase.

101.LAB						XBRL Taxonomy Extension Label Linkbase.

101.PRE						XBRL Taxonomy Extension Presentation Linkbase.

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


**			In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibit 32 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.
1			~~Management contact or compensatory plan, contract or arrangement~~

2521

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CLEARWATER PAPER CORPORATION

(Registrant)

~~November 2, 2021~~April 28, 2022

By:

/s/ ARSEN S. KITCH

Arsen S. Kitch

President, Chief Executive Officer and Director (Principal Executive Officer)

~~November 2, 2021~~April 28, 2022

By:

/s/ MICHAEL J. MURPHY

Michael J. Murphy

Senior Vice President, Finance and Chief Financial Officer (Principal Financial Officer)

2622


	Quarter Ended September 30,								Nine Months Ended September 30,
(Dollars in millions, except per unit)	2021			2020			Increase (decrease)		2021			2020			Increase (decrease)
Sales:
Retail tissue	$	208.3		$	238.6		(12.7)	%	$	572.9		$	747.0		(23.3)	%
Non-retail tissue	5.7			6.9			(17.9)	%	30.1			31.0			(2.8)	%
Other	0.2			0.3			n.m.		0.2			1.6			n.m.
	$	214.2		$	245.9		(12.9)	%	$	603.2		$	779.7		(22.6)	%

Operating income	$	3.7		$	31.5		(88.3)	%	$	11.5		$	82.9		(86.1)	%
Operating margin	1.7		%	12.8		%			1.9		%	10.6		%

Adjusted EBITDA	$	19.6		$	48.5		(59.7)	%	$	60.9		$	134.3		(54.6)	%
Adjusted EBITDA margin	9.1		%	19.7		%			10.1		%	17.2		%

Shipments (short tons)
Retail	76,237			86,292			(11.7)	%	208,496			272,515			(23.5)	%
Non-retail	5,741			3,799			51.1	%	22,609			18,613			21.5	%
	81,978			90,091			(9.0)	%	231,104			291,128			(20.6)	%

Cases (in thousands)	12,255			14,507			(15.5)	%	34,104			45,727			(25.4)	%

Sales price (per short ton)
Retail	$	2,732		$	2,766		(1.2)	%	$	2,748		$	2,741		0.3	%
Non-retail	$	988		$	1,820		(45.7)	%	$	1,333		$	1,665		(19.9)	%