Investment Thesis
Clearwater Paper is in acute financial distress with deteriorating profitability (-$12.8M net loss, down 110% YoY) and zero revenue growth despite $360M in annual revenue. The company's negative interest coverage ratio (-2.2x) indicates inability to service $273.8M in debt from operations, while negative free cash flow of -$8.6M combined with minimal cash reserves of $36.5M creates imminent refinancing and covenant violation risks.
Strengths
- Current ratio of 2.61x provides near-term liquidity to meet short-term obligations
- Moderate leverage with debt-to-equity of 0.34x means balance sheet not yet critically overleveraged
- Positive stockholders' equity of $813.8M provides nominal downside cushion before insolvency
Risks
- Negative net income of -$12.8M with 110% YoY decline indicates severe operational deterioration
- Negative free cash flow of -$8.6M with near-zero operating cash flow ($500K) despite $360M revenue signals inability to generate cash
- Negative interest coverage ratio (-2.2x) means company cannot service debt payments from operating income, creating default risk
- Flat revenue growth (0% YoY) combined with 4.1% gross margins shows business model under extreme stress in commodity industry
- Minimal cash position of $36.5M relative to $273.8M long-term debt creates refinancing vulnerability
- Negative operating margins (-2.9%) indicate core business operations are unprofitable
Key Metrics to Watch
- Operating cash flow inflection point and return to positive territory
- Interest coverage ratio recovery above 1.5x minimum threshold
- Revenue growth resumption and gross margin expansion above 6%
- Free cash flow trajectory and cash burn rate vs. available liquidity
- Debt covenant compliance and any refinancing announcements
Financial Metrics
Revenue
360.3M
Net Income
-12.8M
EPS (Diluted)
$-0.80
Free Cash Flow
-8.6M
Total Assets
1.6B
Cash
36.5M
Profitability Ratios
Gross Margin
4.1%
Operating Margin
-2.9%
Net Margin
-3.6%
ROE
-1.6%
ROA
-0.8%
FCF Margin
-2.4%
Balance Sheet & Liquidity
Current Ratio
2.61x
Quick Ratio
1.26x
Debt/Equity
0.34x
Debt/Assets
48.2%
Interest Coverage
-2.21x
Long-term Debt
273.8M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T12:52:59.203207 |
Data as of: 2026-03-31 |
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