Clearwater Paper Corp (CLW) Business

ITEM 1. Business

GENERAL

Clearwater Paper is recognized as a leading manufacturer and supplier of Solid Bleached Sulfate (SBS) paperboard packaging products, serving independent converters throughout North America. We participate in the North American paperboard market, which encompasses approximately 10 million tons and is divided into three principal substrates, each offering a diverse array of applications. SBS constitutes nearly fifty percent of the market, while Coated Unbleached Kraft (CUK) and Coated Recycled Board (CRB) comprise the remaining substrates.

The paperboard products produced are inherently sustainable, aligning with prevailing trends that favor renewable and recyclable materials. We believe we are strategically positioned to benefit from the increasing emphasis on sustainability within the industry. 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 regularly pursue the development of new products and innovative solutions, with the objective of expanding and diversifying our paperboard portfolio. Our status as an independent, non-integrated supplier is considered fundamental to our value proposition, distinguishing us within the competitive landscape of the paperboard packaging industry.

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 11% of the available production capacity in 2025. We also provide custom sheeting and slitting of paperboard products.

Acquisition and Divestiture

Throughout 2024, we underwent two significant transactions that focused our strategy exclusively on the paperboard packaging sector. Looking ahead, we expect to consider further acquisitions or other arrangements that may be considered as part of our broader growth objectives.

In May 2024, we completed the purchase of a paperboard manufacturing facility and associated business, located in Augusta, Georgia from Graphic Packaging International, LLC. We paid $700 million plus an adjustment for wood inventory and other assets, totaling approximately $710.6 million. 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."

Subsequently, in October 2024, our tissue business, previously reported as the Consumer Products segment and focused on producing private label tissue items, was divested to Sofidel America Corp, a wholly owned subsidiary of Sofidel S.p.A.. 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. Financial Statements and Supplementary Data."

Share Repurchases

In November 2024, the Board of Directors authorized an additional share repurchase program to allow us to purchase up to $100 million of our issued and outstanding shares of common stock through open market purchases, privately negotiated transactions and Rule 10b5-1 plans. The previous $100 million share repurchase program was authorized in December 2015 and was completed in October 2024. At December 31, 2025, we had $79.5 million under the share repurchase program available for repurchases.

The following table presents the Company's share repurchases under the two share repurchase programs for the years ended December 31, 2025, 2024, and 2023:

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Products

SBS Overview

SBS paperboard is a premium paperboard grade that is most frequently used to produce folding cartons (also includes blister, carded packaging and top sheet), food service (including liquid packaging, cups and plates) and commercial printing items. As reported by Fastmarket RISI (October 2025), U.S. SBS production is estimated to be 40% folding carton, 56% food service and 4% other. 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. SBS paperboard is often manufactured with a clay coating to provide superior surface printing qualities.

Typically, the process of making paperboard starts with the chemical processing of wood fibers to make pulp. This pulp is then bleached, resulting in bright, white pulp that is subsequently formed into paperboard. The various grades of paperboard are wound into rolls for converting to final end users. For liquid packaging and cup stock grades, a separate procedure applies a polyethylene coating, which serves as a durable and moisture-resistant barrier.

Folding Carton

Folding carton paperboard includes blister, carded packaging and top sheet. 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. This generally provides for differentiation resulting in margins that are more attractive than less demanding folding carton applications.

Food Service

Food service paperboard includes liquid packaging, and cup and plate categories. This includes rigid containers such as juice, milk and wine sold in retail channels, premium ice cream, hot and cold cups used in quick service channels and paper plates. 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.

Sales and Marketing

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. 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. 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.

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Raw Materials

Wood fiber is our principal raw material, which consists of chips, sawdust and logs. 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 5% of our annual pulp requirements externally which supplements our internal production capabilities.

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.

Energy

We consume substantial amounts of energy, such as electricity, hog fuel, steam and natural gas. 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. 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.

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.

Product Development

Our product development resources work 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. Our development efforts include, but are not limited to, light weight folding carton paperboard that do not sacrifice print quality and strength; developing compostable food service products including innovations in biodegradable barriers and coatings; options for unbleached paperboard (CUK) and continued investment in alternative fibers with up to 35% of post-consumer recycled content.

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. Our continuing efforts to incorporate climate risk and opportunity into our core business strategy and disclosure include the following actions:

Governance

We periodically incorporate sustainability topics, including climate-related issues, into quarterly Board meetings to ensure oversight and accountability.

Strategy

We have established greenhouse gas (GHG) reduction targets validated by the Science Based Targets initiative (SBTi) and developed a roadmap to achieve these reductions through business transformation.

Risk & Opportunity

Climate-related risks are integrated into our Enterprise Risk Management (ERM) program, providing a systematic approach to identifying and assessing potential impacts from regulatory changes, physical risks, and operational disruptions.

We have voluntarily provided disclosure and established targets with respect to climate change. Satisfying these targets has increased and may continue to increase our capital and operational costs. Achievement of

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these targets is subject to various risks and uncertainties and there is no assurance that our actions or investments will meet investor expectations or any applicable regulatory standards regarding sustainability. 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

•GHG Emissions: Reduce Scope 1 and Scope 2 emissions by 30% and Scope 3 emissions by 25% by 2030.

•Water Conservation: Develop new targets for water conservation and effluent reduction aligned with the best available climate science.

•Sustainable Products: Expand recyclable, compostable, or marine-degradable paperboard offerings to represent 10%+ of total SBS cup stock production by 2030.

•Renewable Energy: Generate renewable fuel from organic residual wood fiber to produce steam and electricity, reducing reliance on external energy sources at our mills.

Additional information regarding our GHG targets and strategy are available in our 2025 Sustainability Summary, 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. 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.

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.

HUMAN CAPITAL

Our core values of Commitment, Collaboration, Communication, Courage, and Character are the foundation that define our culture and guide our operations to ensure that we protect, develop, and support our most critical stakeholders – our employees, customers, and communities. 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 have a dedicated Environmental, Health and Safety (EH&S) team that is tasked with promoting safe working practices, monitoring incidents, and working to reduce risks to our employees. Our EH&S team compiles and publishes regular safety results and leverages this information to implement enhanced safety procedures and training across our operations. 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 1,900 employees are instrumental to delivering on our commitments to our customers and securing long term success for our organization. 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.

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

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are valued for their unique backgrounds, knowledge, skills, and experiences. We continue to execute on these goals.

As of December 31, 2025, approximately 1,263 of our employees are covered under collective bargaining agreements. Unions represent hourly employees at our manufacturing sites. One of our union agreements associated with our Lewiston, Idaho facility expired in the third quarter of 2025. Our relationship with this union remains good and we are negotiating a new agreement. 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. In the menu select “Investor Relations,” then select “Financial Information & SEC Filings.” Information on our website is not part of this report.