Clearwater Paper Corporation operates as a producer of private label tissue and paperboard products in North America. The company manufactures consumer tissue, away-from-home tissue (AFH), parent rolls (non-converted tissue product), machine-glazed tissue, bleached paperboard and pulp at 14 manufacturing locations in the U.S. and Canada. Its private label consumer tissue products - facial and bath tissue, paper towels and napkins - are used primarily at-home and are principally sold to major retailers and wholesale distributors, which include grocery, drug, mass-merchant and discount stores. The company’s paperboard is sold primarily in the high-end segment of the packaging industry, which demands construction and print surfaces for graphics. Its products are made primarily from wood fiber pulp. Segments The company operates through two segments, Consumer Products, and Pulp and Paperboard. Consumer Products This segment manufactures and sells a line of at-home tissue products, as well as AFH products. In bathroom tissue, the majority of the company’s sales are two-ply ultra and premium products, including through-air-dried (TAD) tissue products. In paper towels, it produces and sells ultra quality TAD towels, as well as premium and value towels. In the facial category, the company sells ultra-lotion three-ply and a line of two-ply premium products, as well as value facial tissue. In napkins, it manufactures ultra two- and three-ply dinner napkins, as well as premium and value one-ply luncheon napkins. Recycled fiber value grade products are also available to customers who wish to further diversify their product portfolio. The company manufactures and sells a line of AFH products to customers with commercial and industrial tissue needs. Products include conventional one- and two-ply bath tissue, two-ply paper towels, hard wound towels, and dispenser napkins. Tissue parent rolls that the company manufactures to requested specifications and do not convert are sold to third-party converters or brokers for conversion into various end products, including at-home tissue products and absorbent products used to produce liners for diapers, feminine care products, surgical waddings, and other medical and sanitary disposable products. The company also manufactures and sells machine-glazed tissue products, including wax paper products for retail food wrappers and machine-glazed tissue parent rolls for third-party converters. The company’s consumer products are manufactured on 21 paper machines in its facilities located throughout the U.S. and in Ontario, Canada. Parent rolls from these paper machines are then converted and packaged at its converting facilities located across the U.S. Three of the company’s paper machines, located in Nevada, North Carolina and Ontario produce TAD tissue that it converts into national brand towels and/or bath tissue. In 2013, through multi-outlet channels, which include grocery, drug, dollar, super and club stores, as well as military purchasing, the company sold approximately 34% of the total private label tissue products in the U.S. When only considering private label tissue products sold in grocery stores, it sold approximately 65% of the total private label tissue products sold in the U.S. for 2013. The company sells private label tissue products through its own sales force based on product quality, customer service and price. It delivers customer-focused business solutions by assisting in managing product assortment, category management, and pricing and promotion optimization. Pulp and Paperboard This segment manufactures and markets bleached paperboard for the high-end segment of the packaging industry, and produces solid bleach sulfate (SBS) paperboard. This segment also produces hardwood and softwood pulp, which is primarily used as the basis for the company’s paperboard products, and slush pulp, which it supplies to its Consumer Products segment. This segment operates facilities in Idaho, which has two paperboard machines, and Arkansas, which has one paperboard machine. The company’s overall pulp and paperboard production consists primarily of folding carton, liquid packaging, cup, plate, commercial printing grades, and hardwood and softwood pulp. Folding carton board is used in pharmaceuticals, cosmetics, and other premium packaging, such as those that incorporate foil and holographic lamination. The company also sells cup stock and plate stock grades for use in food service products. A majority of its sales in this area consist of premium clay coated cup stock grades used for high-end food packaging, such as premium ice cream. Its pulp mills are capable of producing approximately 856,000 tons of pulp on an annual basis. The company utilizes various methods for the sale and distribution of its paperboard and softwood pulp. The majority of its paperboard is sold to packaging converters domestically through sales offices located throughout the U.S., with a smaller percentage channeled through distribution to commercial printers. The majority of its international paperboard sales are conducted through sales agents. Strategy The company’s long-term strategy is to grow the size and scope of its consumer products business and optimize the profitability of that business, as well as that of its paperboard business. Seasonality The company’s Consumer Products segment experiences some drop in shipments during the fourth quarter (year ending December 2013) as a result of decreased consumer demand, retail brand holiday promotions, and end of year inventory management by non-retail customers. In addition, customer buying patterns for its paperboard result in lower sales for the company’s Pulp and Paperboard segment during the first and fourth quarters, when compared to second and third quarters of a given year.
clearwater paper corp (CLW:New York)
601 West Riverside Avenue
Spokane, WA 99201
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