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Summary of Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2024
Accounting Policies [Abstract] |
Significant Accounting Policies | Summary of Significant Accounting Policies NATURE OF OPERATIONS AND BASIS OF PRESENTATION We are a premier manufacturer and supplier of bleached paperboard focused on servicing independent converters in North America. We also offer services that include customer sheeting, slitting, and cutting. Prior to the completion of the sale of our tissue business, we manufactured and sold consumer and parent roll tissues to major retailers, including grocery, club and discount stores. On May 1, 2024, we completed the acquisition of a paperboard manufacturing facility and associated business in Augusta, Georgia. See Note 3, "Business Acquisition," for more information about the acquisition. On November 1, 2024, we completed the sale of our tissue business. This represents a strategic shift in our operations and financial results requiring discontinued operations accounting treatment associated with this division. For all periods presented, the operating results associated with our tissue business have been reclassified to discontinued operations and have been shown as income (loss) from discontinued operations on our Consolidated Statements of Operations. The assets and liabilities associated with this business have been reflected as current and long-term assets and liabilities of discontinued operations in the Consolidated Balance Sheets. Additionally, certain reclassifications have been made to our continuing business to reflect certain intercompany transactions between our tissue business and our remaining entity such as treatment of intercompany sales and cost inputs. For the years ended December 31, 2023 and 2022, the impact of this reclassification was an increase to net sales of $76.7 million and $65.1 million and an increase to cost of sales of $77.5 million and $65.7 million. See Note 4, "Discontinued Operations," for more information on the divestiture. Unless the context otherwise requires or unless otherwise indicated, references in this report to “Clearwater Paper Corporation,” “we,” “our,” “the Company” and “us” refer to Clearwater Paper Corporation and its subsidiaries. All dollar amounts are shown in millions, except share and per share amounts. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. Actual results may differ from those estimates. PRINCIPLES OF CONSOLIDATION These consolidated financial statements include the financial condition and results of operations of Clearwater Paper Corporation and its wholly-owned subsidiaries. All intercompany transactions and balances between operations within the Company have been eliminated. Certain amounts have been reclassified from prior year presentation for consistency. BUSINESS COMBINATIONS We apply the principles provided in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations, to determine whether an acquisition involves an asset or a business. In determining whether an acquisition should be accounted for as a business combination or asset acquisition, we first determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this is the case, the single identifiable asset or the group of similar assets is accounted for as an asset acquisition. If this is not the case, we then further evaluate whether the single identifiable asset or group of similar identifiable assets and activities includes, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. If so, the transaction is accounted for as a business combination. We account for business combinations using the acquisition method of accounting which requires that (i) identifiable assets acquired (including identifiable intangible assets) and liabilities assumed generally be measured and recognized at fair value as of the acquisition date and (ii) the excess of the purchase price over the estimated net fair value of identifiable assets acquired and liabilities assumed be recognized as goodwill, which is not amortized for accounting purposes but is subject to testing for impairment at least annually. We measure and recognize asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets. Goodwill is not recognized in an asset acquisition with any consideration in excess of net assets acquired allocated to acquired assets on a relative estimated fair value basis. Transaction costs are expensed in a business combination and transaction costs directly attributable to the acquisition are considered a component of the cost of the acquisition in an asset acquisition. See Note 3, "Business Acquisition," for additional information. DISCONTINUED OPERATIONS We present discontinued operations when there is a plan to dispose of a component of an entity or a group of components of an entity if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. In the period in which the component meets held-for-sale or discontinued operations criteria, the major assets and liabilities are reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinuing operations, less applicable income taxes, are reported as components of net income (loss) separate from the net income (loss) from continuing operations. Additionally, we have elected to allocate interest expense to discontinued operations related to debt that was not directly attributed to the division being disposed of. Interest expense was allocated based on a ratio of net assets of discontinued operations to the consolidated net assets plus consolidated debt. See Note 4, "Discontinued Operations," for further information. CASH AND CASH EQUIVALENTS We consider all highly liquid instruments with maturities of three months or less to be cash equivalents. ACCOUNTS RECEIVABLE Receivables consist of:
| December 31,
| 2024 |  | 2023
Trade accounts receivable | $ | 167.5 |  |  | $ | 85.2 |
Allowance for current expected credit losses | (1.6) |  |  | (1.2) |
Unbilled receivables | 5.3 |  |  | 4.1 |
Taxes receivable | 2.6 |  |  | 4.8 |
Other | 15.0 |  |  | 3.1 |
| $ | 188.7 |  |  | $ | 96.1 |
INVENTORIES Our inventories are stated at the lower of net realizable value or current cost using the average cost method.
| December 31,
| 2024 |  | 2023
Logs, chips and sawdust | $ | 25.1 |  |  | $ | 22.1 |
Pulp | 6.9 |  |  | 4.7 |
Paperboard products | 123.4 |  |  | 77.4 |
Materials and supplies | 102.5 |  |  | 57.0 |
| $ | 258.0 |  |  | $ | 161.2 |
PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost, including assets acquired under finance lease obligations, and any interest costs capitalized, less accumulated depreciation. Depreciation of buildings, equipment and other depreciable assets is determined using the straight-line method. Estimated useful lives generally range from 10 to 40 years for land improvements, 10 to 40 years for buildings and improvements and 2 to 25 years for machinery and equipment (includes office and other equipment).
| December 31,
| 2024 |  | 2023
Land and land improvements | $ | 65.8 |  |  | $ | 45.1 |
Buildings and improvements | 232.4 |  |  | 179.4 |
Machinery and equipment | 1,942.6 |  |  | 1,341.1 |
Construction in progress | 87.6 |  |  | 43.0 |
Property, plant and equipment | 2,328.4 |  |  | 1,608.6 |
Less accumulated depreciation and amortization | (1,305.4) |  |  | (1,247.9) |
Property, plant and equipment, net | $ | 1,023.1 |  |  | $ | 360.7 |
At December 31, 2024 and 2023, included within property, plant and equipment, net were finance leases of $8.6 million and $0.0 million and associated accumulated depreciation amounts of $0.3 million and $0.0 million. Depreciation expense is included in our financials as follows:
| For The Years Ended December 31,
| 2024 | 2023 | 2022
Continuing operations | $ | 67.7 |  | $ | 38.6 |  | $ | 38.5 |
Discontinued operations | 30.0 |  | 57.9 |  | 62.6 |
Amortization of intangibles | 2.1 | 2.1 | 2.1
| $ | 99.8 |  | $ | 98.6 |  | $ | 103.3 |
PLANNED MAINTENANCE We recognize the cost of repair and maintenance activities in the period in which the activity is performed or goods are consumed under the direct expense method. We perform planned maintenance activities at our facilities periodically and associated expenses are included in cost of sales. LEASES Operating lease right-of-use (ROU) assets and liabilities are recognized at the commencement date of a lease based on the present value of lease payments over the lease term. Our leases may include options to extend or terminate the lease. These options to extend are included in the lease term when it is reasonably certain that we will exercise that option. Some leases have variable payments: however, because they are not based on an index or rate, they are not included in the ROU assets and lease liabilities. Variable payments for real estate leases primarily relate to common area maintenance, insurance, taxes and utilities. Variable payments for equipment, vehicles, and leases within supply agreements primarily relate to usage, repairs and maintenance. As the implicit rate is not readily determinable for most of our leases, we apply a portfolio approach using an estimated incremental borrowing rate to determine the initial present value of lease payments over the lease terms on a collateralized basis over a similar term, which is based on market and company specific information. We use our unsecured borrowing rate and risk-adjust that rate to approximate a collateralized rate. Leases having a lease term of twelve months or less are not recorded on the balance sheet and the related lease expense is recognized on a straight-line basis over the term of the lease. In addition, we have applied the practical expedient to account for the lease and non-lease components as a single lease component for all of our leases. See Note 6, "Leases" for further information. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
| December 31,
| 2024 | 2023
Trade payables | $ | 164.6 |  | $ | 89.1 |
Accrued compensation | 38.2 |  | 32.8 |
Operating lease liabilities | 11.1 |  | 8.5 |
Taxes payable | 50.8 |  | 1.2 |
Other | 55.0 |  | 63.8 |
| $ | 319.7 |  | $ | 195.5 |
Included in accounts payable and other accrued liabilities is $25.8 million and $13.0 million related to capital expenditures that had not yet been paid as of December 31, 2024 and 2023. We maintain a program with a financial institution to provide our vendors with an option to receive payments earlier than our standard payment terms. Vendors receive payments directly from the financial institution. We are obligated to repay the financial institution in the next billing cycle which is generally 35 to 60 days later than payment to the supplier. Amounts under this program were included in "Other" in the table above and payments made under this program are reflected as cash outflows for operating activities in the Consolidated Statements of Cash Flows. The roll forward of our outstanding obligations confirmed as valid under the program were as follows:
| December 31,
| 2024 | 2023
Supplier finance program obligations balance, beginning of the year | $ | 14.7 |  | $ | 14.5 |
Invoice amounts added during the year | 84.1 |  | 74.7 |
Invoice amounts paid during the year | (86.1) |  | (74.6) |
Supplier finance program obligations balance, end of year | $ | 12.7 |  | $ | 14.7 |
RETIREMENT PLANS AND POSTRETIREMENT BENEFITS We are required to use actuarial methods and assumptions in the valuation of defined benefit obligations and other postretirement obligations and the determination of expense. Differences between actual and expected results or changes in the values of the obligations and plan assets are not recognized in earnings as they occur but, rather, systematically and gradually over subsequent periods. See Note 12, "Retirement Plans and Postretirement Benefits," for further information. INCOME TAXES Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in our consolidated financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, we reassess these probabilities and record any changes in the consolidated financial statements as appropriate. See Note 8, "Income Taxes," for further information. REVENUE RECOGNITION We enter into contracts that can include various combinations of paperboard products, which are generally distinct and accounted for as separate performance obligations. Generally, revenue is recognized at a point in time upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when title and the risk of loss have passed, usually this is upon receipt at our customer's destination. We have elected to treat shipping and handling costs as a fulfillment cost. We expense incremental direct costs of obtaining a contract (sales commissions) when incurred because the amortization period is generally 12 months or less. We maintain consignment inventory at a limited number of customer locations. For consigned inventory, we recognize revenue upon transfer of control, which is often in advance of invoicing the customer. These amounts are classified as unbilled receivables in the above detail of accounts receivable. We provide for trade promotions, customer cash discounts and other deductions, which are considered variable consideration and recorded as a reduction to net sales. Returns and credits are estimated at contract inception and updated at the end of each reporting period as additional information becomes available. Revenue, net of returns and credits, is only recognized to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Judgment associated with forecasted volumes is required to determine the most probable amount of variable consideration to apply as a reduction to net sales. Revenue is recognized net of any taxes collected from customers. For more information on the disaggregation of revenue by primary geographical market and major product line, see Note 18, "Segment Disclosure." OTHER OPERATING CHARGES, NET We classify significant amounts unrelated to ongoing core operating activities as “Other operating charges, net” in the Consolidated Statements of Operations. Such items include, but are not limited to, amounts related to facility closures and related gain (loss) on sale and impairment, restructuring charges (including severance charges), charges to establish and maintain litigation or environmental reserves, gains or losses from settlements with governmental or other organizations, acquisition, integration and divestiture related costs and cash settled equity-based compensation to our directors. Due to the nature of these items, amounts in the statement of operations can fluctuate from year to year. The determination of which items are considered significant and unrelated to core operations is based upon management’s judgment. See Note 10, "Other Operating Charges, net" for a discussion of specific amounts in 2024, 2023 and 2022. ACCOUNTS RECEIVABLE ARRANGEMENT Prior to the sale of our tissue business, we maintained an uncommitted supply-chain financing program with a global financial institution. Under this program, a specific customer's trade accounts receivable may be acquired, without recourse, by the institution at a discounted rate. For the years ended December 31, 2024 and 2023, we sold $261.6 million and $257.5 million of receivables. The proceeds from these sales of receivables are included within operating activities in our Consolidated Statements of Cash Flows. For the years ended December 31, 2024, 2023, and 2022 factoring expense on the sale of receivables was $3.4 million, $3.7 million, and $1.8 million and was included Selling, general and administrative expense within our Income (loss) from discontinued operations in our Consolidated Statements of Operations. ENVIRONMENTAL AND ASSET RETIREMENT OBLIGATIONS We estimate our environmental and asset retirement obligations based on various assumptions and judgments, the specific nature of which varies in light of the particular facts and circumstances surrounding each liability. These estimates typically reflect assumptions and judgments as to the probable nature, magnitude and timing of required investigation, remediation and monitoring activities and the probable cost of these activities. We have accrued only for specific costs related to environmental matters that we have determined are probable and for which an amount can be reasonably estimated. For asset retirement obligations, the liability is accreted to its settlement value and, where appropriate, the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, we recognize a gain or loss for any difference between the settlement amount and the liability recorded. Our asset retirement obligation is included in "Deferred tax liabilities and other long-term obligations" in the Consolidated Balance Sheets. Our asset retirement obligation reflects the estimated present value of our obligations for capping, closure and post closure cost with respect to landfills, asbestos remediation and other ongoing environmental monitoring. The following table represents the activity associated with our asset retirement obligations.
| December 31,
| 2024 |  | 2023
Beginning balance | $ | 2.0 |  |  | $ | 1.9 |
Liabilities acquired | 2.9 |  |  | — |
Accretion expense | 0.2 |  |  | 0.1 |
Payments | (0.1) |  |  | (0.1) |
Ending balance | $ | 5.0 |  |  | $ | 2.0 |
TREASURY STOCK Under our 2024 stock repurchase authorization, we repurchase shares of common stock and such shares are recorded at cost as treasury stock and result in a reduction of shareholders' equity in the Consolidated Balance Sheets. We use the weighted-average cost method for determining the cost of shares reissued. The difference between the cost of the treasury shares and the reissuance value is added to or deducted from additional paid-in capital. If additional paid in capital is exhausted, amounts will be deducted directly from retained earnings upon reissuance.

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