Clearwater Paper Q3 2024 Earnings Report

Clearwater Paper EPS Results

• Actual EPS: -$0.64
• Consensus EPS: $0.29
• Beat/Miss: Missed by -$0.93
• One Year Ago EPS: N/A

Clearwater Paper Revenue Results

• Actual Revenue: $393.30 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Clearwater Paper Announcement Details

• Quarter: Q3 2024
• Date: 11/4/2024
• Time: After Market Closes
• Conference Call Date: Monday, November 4, 2024
• Conference Call Time: 5:00PM ET

Clearwater Paper (NYSE:CLW) is an independent manufacturer of premium tissue and pulp and paperboard products for private-label and commercial customers in North America. The company operates through two core segments: Consumer Products, which produces bathroom tissue, paper towels and other away-from-home tissue products under private-label contracts; and Pulp & Paperboard, which supplies bleached paperboard used in folding cartons, foodservice packaging and specialty paper applications.

The Consumer Products segment services retail grocers, warehouse clubs, online merchants and janitorial distributors, leveraging multiple converting facilities to produce roll and folded tissue items for both household and institutional use. The Pulp & Paperboard segment operates bleaching and finishing operations, delivering high-brightness pulp and premium board grades to packaging converters and brand owners who seek sustainable, food-contact-approved solutions. Clearwater Paper emphasizes operational efficiency and environmental responsibility, maintaining recycling and energy-recovery initiatives across its mill network.

Headquartered in Spokane, Washington, Clearwater Paper was established as a publicly traded company in 2008 following a spin-off from Potlatch Corporation. Since its inception, the company has expanded its manufacturing footprint to include facilities in Idaho, Arkansas, Minnesota, Wisconsin and Ontario, Canada, supporting a broad geographic customer base. Clearwater Paper’s integrated supply chain model enables it to manage wood procurement, pulping, bleaching and converting processes under one operating structure.

Under the leadership of President and Chief Executive Officer Ronald S. Casey, Clearwater Paper continues to focus on innovation in product development and sustainable fiber sourcing. The company’s customer-centric approach and commitment to quality have positioned it as a key supplier to retail chains, foodservice operators and industrial distributors across North America.

Clearwater Paper Q3 2024 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: In Q3, Clearwater Paper delivered $64 million of adjusted EBITDA, hitting the midpoint of guidance despite a $5 million impact from Hurricane Helene.
• Positive Sentiment: The company closed the sale of its tissue business for $1.06 billion, expected to net ~$850 million in cash to fully repay credit facilities.
• Positive Sentiment: Clearwater’s Board approved a $100 million share repurchase program, aiming to buy back stock when it trades at a discount to intrinsic value.
• Negative Sentiment: For Q4, Clearwater forecasts just $20 million–$30 million of adjusted EBITDA due to only one month of tissue results and a major maintenance outage costing $15 million–$20 million.
• Positive Sentiment: Across the cycle, the company targets 13%–14% adjusted EBITDA margins and more than $100 million of annual free cash flow, supporting long-term shareholder value.

Presentation

[Operator]

Thank you for standing by, and welcome to the Clearwater Paper Third Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. I'd now like to turn the call over to Mr. Sloan Bohlen, Investor Relations. You may begin.

[Sloan Bohlen, Head of Investor Relations at Clearwater Paper Corporation]

Thank you, Rob, and good afternoon, and thanks everyone for joining Clearwater Paper's Third Quarter 2024 Earnings Conference Call. Joining me on the call today are Arsen Kitch, President and Chief Executive Officer, and Sherri Baker, Senior Vice President and Chief Financial Officer. Financial results for the Third Quarter 2024 were released shortly after today's market close, along with the filing of our 10-Q. You will find a presentation of supplemental information, including a slide providing the company's current outlook, posted on the investor relations page of our website at clearwaterpaper.com. Additionally, we will be providing certain non-GAAP information in this afternoon's discussion. The reconciliation of the non-GAAP information to comparable GAAP information is included in the press release and in the supplemental information provided on our website. Please note slide two of the supplemental information covering forward-looking statements.

[Sloan Bohlen, Head of Investor Relations at Clearwater Paper Corporation]

Rather than rereading this slide, we're going to incorporate it by reference into our prepared remarks, and with that, let me turn the call over to Arsen.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

Thank you for joining us today, and good afternoon. Given our recent strategic announcements, I'm going to start my comments with a few highlights for the Third Quarter and then spend the bulk of my time discussing our industry fundamentals, our strategy, and what you can expect from us in the long run. Sherri will then cover our Third Quarter results as well as our financial outlook, including initial expectations for 2025. Let's start with a few highlights. We had a very good Third Quarter overall, delivering $64 million of Adjusted EBITDA. This was in the middle of our guidance range of $58-$68 million. We would have been above the high end of the range without the approximately $5 million of negative impact from Hurricane Helene, which affected our Augusta, Georgia, paperboard facility, as well as the Shelby, North Carolina, tissue mill.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

The Augusta facility was down for roughly six days, but there was no significant damage to our equipment. As you saw in our press release last Friday, we closed on the sale of our tissue business on November 1st. As a reminder, we sold this business to Sofidel for $1.06 billion. We expect to net approximately $850 million in cash from the sale after taxes and other transaction expenses, and we use the proceeds to pay down all our outstanding credit facilities. We retained our 2028 notes with an outstanding principal balance of $275 million and a rate of 4.75%. Finally, our board approved a $100 million share repurchase program. We intend to buy back shares when they trade at a sufficient discount to what we believe to be our inherent value. Now, let's turn to an overview of our strategy.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

With the sale of the tissue business, we're transforming Clearwater into a premier paperboard packaging supplier focused on servicing independent converters in North America. We're now able to sharpen our focus on growing and improving our paperboard business. We will do this by driving operational and cost improvements, as well as finding ways to become more relevant to our customers by expanding our product range. To put our strategy into perspective and to address many of the questions that we get from shareholders, I'll share our view on the paperboard industry structure and how we fit in. We compete in an approximately 10 million-ton North American paperboard market, which is made up primarily of three substrates. The first and the largest of the substrates is solid bleached sulfate paperboard, or SBS. There's approximately 5 million tons of SBS supply available in North America.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

This is the highest quality paperboard with superior print quality and performance. It is used primarily in consumer packaging and food service applications. The second substrate is coated unbleached kraft, or CUK. In North America, there's about 2.5 million tons of CUK supply. This substrate is known for its strength and is used primarily in beverage carrier applications. Think beer and soda packaging. The third substrate is coated recycled board, or CRB, with approximately 2.5 million tons of supply in North America. This is the only substrate that is made of recycled fiber and is used primarily in lower-cost consumer packaging applications. A good end product example is a generic cereal box. Paperboard demand has historically been relatively stable, showing only limited sensitivity to economic fluctuations.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

Growth has historically tracked close to GDP, and we believe that sustainability trends are a tailwind as customers and consumers look to move away from plastics and towards renewable fiber-based packaging. Supply has also been historically stable, but capacity changes come in large increments. For example, a new paper machine could have more than 500,000 tons of new capacity and cost north of $500 million. A single new machine can add nearly 10% to SBS industry supply and 20% to CUK, or CRB. Imports and exports have long played a role in this industry, with approximately 2 million tons exported and 1 million tons imported annually. Imports fluctuate depending on market pricing in North America, shipping costs, and supply and demand balances across the globe. While imports have an impact on the market, North American converters have shown a preference for the quality and security of domestic paperboard supply.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

Let's now turn to industry structure. There are two kinds of paperboard suppliers. The first is an integrated supplier that manufactures paperboard and converts that paperboard into packaging. The second is an independent supplier that manufactures paperboard but has no downstream converting. Clearwater is the latter, an independent supplier that is focused on servicing independent converters. Integration rates vary by substrate, but we estimate that 55% of paperboard in North America is integrated, while 45% is non-integrated. SBS is the least integrated of these substrates, with an integration rate of approximately 30% based on our estimates. While integrated suppliers have a stated strategy to increase their levels of integration, we believe that independent converters will continue to play a vital and long-term role in the market. Independent converters offer agility, flexibility, and a higher level of service than the integrated suppliers.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

They're more effective at servicing small to medium-sized customers and are often a critical secondary supplier to large CPG and food service companies that are unwilling to commit 100% of their business to large integrated players. Clearwater has a strong position within this industry structure. We have an excellent geographic footprint, with our Lewiston, Idaho mill covering the western part of the U.S., our Cypress Bend, Arkansas mill covering the central part of the U.S., our Georgia mill covering the east. These mills have a capacity of approximately 1.4 million tons of SBS and can produce around 1.4 million tons of pulp. We also have five sheeting and distribution facilities as part of our Manchester Industries business that provide additional services to some of our smaller customers. We believe that our assets are well invested and that we have a strong reputation in the industry for quality and service.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

We're dedicated to independent converters and have no channel conflict. We strive to create long-term strategic partnerships with converters that drive growth for both sides. Let's continue by discussing our point of view on the cyclicality of our industry. We operate in an inherently cyclical industry driven by the supply and demand balance. With demand being relatively stable and growing, this balance is largely driven by changes in supply. In a down cycle, capacity additions outpace demand growth, resulting in industry utilization rates below 85% with falling margins. This part of the cycle can lead to high-cost assets being uncompetitive and not reinvestable. At the midpoint of the cycle, which is typically the steady state of our industry, supply and demand are balanced with utilization rates of 90%-95%. Margins at this part of the cycle are healthy and allow for reinvestment in the business.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

In an up cycle, demand exceeds supply with utilization rates exceeding 95%, leading to better margins. This can lead to additional capacity being added and more imports. SBS is currently in a down cycle for two reasons. First, COVID drove unprecedented demand growth in SBS, followed by inventory destocking and a slowdown in consumer spending. In addition, there's new SBS capacity announced for 2025, which is likely to continue this down cycle until there's a better supply and demand balance in the industry. Even as we experience this cyclical downturn, we remain confident in long-term industry fundamentals of paperboard packaging in North America, and we believe that we're well positioned for growth given our customer preferences and consumer-driven sustainability trends. I'd like to circle back to focus on our strategy and potential next steps for growth.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

As I mentioned earlier, we're transforming Clearwater into a premier independent supplier of paperboard packaging products to North American converters. We've taken two big steps this year to execute that strategy with the acquisition of the Augusta SBS facility and the sale of our tissue business. The proceeds from the tissue sale have been used to significantly deleverage our balance sheet. With our strong balance sheet, we believe that we're well positioned to weather the current SBS down cycle, continue to invest in our assets, and broaden our product offering, whether through organic investments in our existing network or opportunistic acquisitions. Given consumer preferences for fiber-based packaging, we see significant growth potential that requires innovation and investment. We're partnering with our converter customers to develop new products and deliver innovative solutions that consumers are looking for. In particular, we're looking to address three market trends.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

First, customers are interested in lighter-weight paperboard options without sacrificing print quality and strength. Second, customers are looking for compostable solutions, particularly in food service. This requires innovation in barriers and coatings to make them biodegradable. And third, customers are interested in the inclusion of alternative fibers in paperboard, such as post-consumer recycled content. Practically speaking, we're not looking at greenfield builds. Let me get a bit more specific and provide some examples of the internal projects that we're exploring. We're looking at investments to increase the amount of mechanical and recycled pulp that we can consume on our paper machines. This can help us deliver a lighter-weight sheet that competes with imported folding boxboard, as well as a viable alternative to some of the higher-quality CRB offerings.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

We're also exploring adding unbleached pulping capabilities to diversify our product offering and deliver a beverage carrier grade that effectively competes with CUK. We're continuing to invest in our NuVo ReMagine brands, which are high-quality folding carton and cup offerings with up to 35% post-consumer recycled content. We're developing biodegradable barriers and coatings to deliver a compostable solution to our customers. These are just some of the options that we're assessing to diversify and grow our business. In addition to internal investments, we will consider opportunistically acquiring assets that are a good fit for our network. We recognize that these acquisition opportunities are infrequent and difficult to predict. Let me wrap up my comments by summarizing what you can expect from us through the industry cycle.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

In a down cycle, we're targeting Adjusted EBITDA margins around 8%-10% and up to a 20% Adjusted EBITDA to free cash flow conversion ratio. In an up cycle, we expect Adjusted EBITDA margins to exceed 16% with a 60%-70% free cash flow conversion ratio. Across the cycle, we're targeting Adjusted EBITDA margins of 13%-14% and a 40%-50% free cash flow conversion ratio. At a 90%-95% utilization rate, this assumes revenues of approximately $1.8 billion and includes the capture of Augusta synergies, which are primarily volume-driven. These assumptions translate into more than $100 million of annual free cash flows across the cycle. Based on our cross-cycle expectations, we expect our business to generate significant free cash flows in the long run, giving us the opportunity to create value through investments or returning capital to shareholders.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

With that, Sherri is going to discuss our third-quarter results, our outlook, and capital allocation priorities moving forward.

[Sherri Baker, SVP and CFO at Clearwater Paper Corporation]

Thank you, Arsen. As Arsen mentioned earlier, we had a very good third quarter with Adjusted EBITDA at $64 million. The impact from Hurricane Helene was around $5 million. Without the hurricane, we would have been above the high end of our guidance range at $58-$68 million. Paperboard delivered $42 million of Adjusted EBITDA in the third quarter, up from $11 million in the second quarter, but down from $53 million last year. Sequential results improved with one additional month of Augusta operations and lower major maintenance outage impact. Year-over-year results were down largely due to market pricing. Demand recovery continues with AF&PA reporting industry SBS shipments up 2.4% in Q3 of this year versus the prior quarter and up 2.5% year-to-date 2024 versus 2023.

[Sherri Baker, SVP and CFO at Clearwater Paper Corporation]

Our customers are also telling us that they are optimistic about growth in 2025. While we believe that a recovery is underway, industry shipments remain below pre-COVID levels, with a continued recovery expected into 2025 and 2026. Tissue delivered $41 million of adjusted EBITDA in the third quarter, flat versus the second quarter and up slightly versus last year. The team again delivered strong operating performance, offsetting pulp headwinds. Shipments grew as private brands continued to gain share, hitting 38% in the third quarter. As a reminder, we will have one month of tissue results in our fourth quarter, after which we'll be reporting on a paperboard-only business. Let's now turn to our outlook for the fourth quarter as compared to the third quarter.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

With only one month of tissue in the fourth quarter, we expect to have $25 million-$30 million less Adjusted EBITDA due to the sale of that business. We have a major maintenance outage planned in Augusta in the fourth quarter, which we estimate will cost us approximately $15 million-$20 million. Partly offsetting both is that we will not have a maintenance outage impact at our Lewiston mill and expect improved operating performance. With these key variables and assumptions, we are expecting $20 million-$30 million of Adjusted EBITDA in the fourth quarter. Beyond the fourth quarter, we are targeting an Adjusted EBITDA margin of 8%-10% in 2025. This assumes the following: a continued demand recovery, but with SBS in a continued down cycle as the industry absorbs new capacity that is announced to come online in 2025.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

We currently estimate that our capacity utilization rates will be around 85%, which will translate into approximately $1.5-$1.6 billion of revenue. Price and cost is projected to have a negative impact of $40-$50 million. To help offset this, we will reduce our overall fixed cost structure by approximately 10% and target a 6% SG&A spend as percent of sales. These actions should translate into more than $50 million of annual run rate cost savings by the end of 2025. As previously announced, we will move to an annual major maintenance outage cadence at all of our mills. We expect to incur $40-$50 million of direct major maintenance expenses next year, with the bulk of spending taking place in Lewiston in Q2 and Augusta in Q4. This annual cadence is expected to lead to smaller, less costly, and more predictable outages.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

We are also expecting this cadence to improve our overall operating performance and reliability. As Arsen mentioned, we are confident about the long-term prospects for our company, and we expect the market cycle to recover once supply and demand comes back into balance. Across the cycle, we are targeting to deliver 13%-14% Adjusted EBITDA margin, which should translate into a 40%-50% Free Cash Flow conversion ratio and more than $100 million in annual Free Cash Flows. While we cannot predict the exact timing of recovery, we will actively manage our cost structure to reflect the current market reality. I'll wrap up my comments with a brief discussion of our capital allocation philosophy. First, our goal is maintaining and improving the performance of our assets, which will require approximately $70-$80 million of annual maintenance capital.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

This excludes large strategic or replacement projects, which could add another $10 million-$20 million per year on average over the long term. Please note that these additional expenditures are episodic and come in large increments. We will communicate these large projects ahead of time, just like we did with the recovery boiler project in Lewiston and the emissions project in Cypress Bend. Second, we aim to maintain a strong balance sheet with a net leverage ratio of one to two times through the cycle. This is lower than our previous target of 2.5 times, given our smaller size and a single-segment cyclical business. We may temporarily go above that range for strategic reasons or below that range to provide us with flexibility. Third, we aim to reinvest capital into our business or return it to shareholders, depending on which option provides the best return.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

Reinvesting in the business may include organic investments or M&A. Returning capital to shareholders will most likely come through share repurchases, such as the one that we announced today. With that, I'll pass it back to Arsen for closing remarks.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

Thank you, Sherri. Let me summarize where we are today. We're pleased that we closed on the sale of our tissue business, which has allowed us to significantly deleverage our balance sheet. With the sale of tissue, we're strengthening our position as a premier independent supplier of paperboard packaging products to North American converters. We have a well-invested asset base and a strong reputation for service and quality. We have a strong history of supporting our independent customers regardless of market conditions, and we're committed to helping them win. We continue to strengthen the sustainability of both the products we produce and how we produce them.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

We're optimistic about the medium to long-term prospects for our industry and our company. As a result, we expect strong margins and cash flows through the cycle and aim to strategically deploy capital to create long-term shareholder value. Finally, I'd like to thank all our people for their efforts to remain focused on operating safely and providing excellent service to our customers during this time of transition. I'd like to especially thank our tissue team for building an outstanding business and managing through this time of change. With that, we'll open it up to your questions.

[Operator]

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

[Operator]

Your first question comes from a line of Matthew McKellar from RBC Capital Markets. Your line is open.

[Matthew McKellar, VP and Equity Research Analyst at RBC Capital Markets]

Hi, good afternoon. Thanks for taking my questions. Appreciate all the detail with results, and congratulations on closing the tissue sale. Thank you, Matt. First, certainly, you talked about potential investments, potentially using more mechanical and recycled pulp consumption, I believe, to arrive at a lighter-weight product to compete with folding boxboard. Can you just provide a bit more color on what these investments would mean in terms of dollars and timelines, and then maybe more broadly speak to what a lighter-weight product in the portfolio would mean for your ability to meet customer preferences and potentially drive higher utilization levels of time? Thanks.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

Good questions, Matt. So I think there's two questions in there. One is around the scale of these investments.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

From including these types of additional pulps into our system, I would say these are small to medium-sized investments. I won't give a specific number out there, but measured in millions of dollars, it's essentially improving our pulpers to make sure that we can add these pulp streams into our paper machines. So these particular projects aren't massive in nature. Folding Boxboard offers a lighter-weight product, and it does have some trade-offs on performance. So it can include up to 30% or more of this mechanical pulp. And we are looking at products that include mechanical pulp but maintain the quality of SBS. So our goal is to deliver a lighter-weight product that matches the current quality and printability of SBS. I hope that helps.

[Matthew McKellar, VP and Equity Research Analyst at RBC Capital Markets]

Yeah, that's great.

[Matthew McKellar, VP and Equity Research Analyst at RBC Capital Markets]

And maybe to kind of follow up on that one, I think there is a comment, too, about an unbleached product that would potentially compete with CUK. Would this be to take advantage of, I guess, a spread in price that kind of exists between CUK and SBS, or do you also see CUK is growing faster over time? And then would you have the ability, I guess, to pivot and swing production back and forth, potentially between grades?

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

Yeah, we're in an exploratory stage on this. There is not much of a CUK supply to the independent market, so we see an opportunity with that offering. Again, we're exploring that grade. It's a way for us to diversify our production mix, especially at some of our facilities where geographically we may have an advantage. So we're in exploratory stages on that. More on that to come.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

We just wanted to provide a flavor of the types of things we're looking at.

[Matthew McKellar, VP and Equity Research Analyst at RBC Capital Markets]

Okay, thanks. That's helpful. Maybe just switching gears here on your actions to reduce fixed costs, could you maybe just provide a bit more color on kind of what the major items might be there and what your expectations are around cadence of those cost savings being realized through either the balance of 2024 and probably through 2025 in particular, please?

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

Yeah, so what we mentioned is two things. We're going to be targeting about a 10% fixed cost reduction and getting SG&A to about 6% of net sales. I'm going to estimate between SG&A and our fixed costs, we're probably $500-$600 million of spend. So we're targeting $50-plus million of annualized savings. Again, we're in the planning stages of that, so I don't want to commit to a specific cadence.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

But fair to say we want to capture as much of those savings as possible next year, thinking maybe as high as $30-$40 million next year of savings that are baked into our 2025 outlook.

[Matthew McKellar, VP and Equity Research Analyst at RBC Capital Markets]

Okay, that's helpful. And around your outlook, I think on the last call you talked about maybe potentially taking some price and cup and plate stock. Could you provide any color on how successful that was and what price improvements, if any, may be embedded in your expectations for Q4 in 2025?

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

No, Matt, we shy away from commenting on pricing actions and on earnings calls, so we'll stay away from that. I think our expectations are embedded into our Q4 guidance as well as the 2025 outlook. I think what we mentioned is approximately $40-$50 million of negative price cost impact next year.

[Arsen Kitch, President, CEO and Director at Clearwater Paper Corporation]

So that's between price and cost, and I think that accounts for what we see as a continued down cycle in SBS.

[Matthew McKellar, VP and Equity Research Analyst at RBC Capital Markets]

Okay, thanks. That's helpful. And last one for me, just on the hurricane and maybe the port strikes, I think you talked about an impact from Helene to your Q3 result. Should we think about there being an impact embedded in your Q4 guide as well? And apologies if I missed that. And then around the short-lived port strikes on the East Coast, do those drive any sort of disruption in the paperboard market that we should be thinking about? Probably just around Q4 specifically. Thanks.

[Sherri Baker, SVP and CFO at Clearwater Paper Corporation]

Yeah, Matt, I can answer that. So on the hurricane, the $5 million was specific to the Q3.

[Sherri Baker, SVP and CFO at Clearwater Paper Corporation]

You're probably looking at another $2 million-$3 million in the fourth quarter, which would be embedded in our guidance and no impact from any of the labor issues that were going on in the ports. So no impact to us from that.

[Matthew McKellar, VP and Equity Research Analyst at RBC Capital Markets]

Okay. Thanks very much. I'll turn it back.

[Operator]

If any of you would like to ask a question, press star one on your telephone keypad. And there are no further questions. This does conclude today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Arsen Kitch, President, CEO and Director
• Sherri Baker, SVP and CFO
• Sloan Bohlen, Head of Investor Relations

Analysts

• Matthew McKellar, VP and Equity Research Analyst at RBC Capital Markets