Oct 26, 2026 earnings call — Price hikes, Augusta mill disruptions, and refinancing
Completed debt refinancing, extending maturities by 5 years to 2031.
Revenue $0.4B (est $0.4B) · EPS $-0.23 (est $-0.15)
Key quotes
"We will need to invest additional capital dollars in the mill to address asset conditions that were not easily identifiable through a typical diligence process and were not accurately represented to us during the sale."
"In total, our first $60 price increase is expected to result in more than $70 million in annual benefit, which started flowing through our financial results during the third quarter."
"We closed the transaction in September with our partners in the Farm Credit System."
Analyst Q&A 5
CUK size, CRB demand, RWI, interest
Q (Michael Roxland · Truist): He asked how big CUK could be and timing to reach that. He also asked about CRB demand and spreads, the Augusta reps and warranties problems, and how much interest expense to expect.
A: CUK will be produced at Cypress Bend and will let the mill swing between SBS and CUK, but actual ramp and ultimate volumes are unclear until launch. Management said independent converters welcome a third supplier for CUK. They said the RWI policy limit is about $105 million and they allocated $9.5 million of RWI recoveries to offset Q3 losses. They said interest expense on a go-forward basis is probably in the range of $25 million, with a smaller amount in '26.
"Until we launch the product, and we're in the market, it's hard to tell what the ramp is going to look like and what ultimately we're going to sell." — Arsen Kitch (CEO)
CapEx next year and maintenance plan
Q (Sean Steuart · TD Cowen): He asked if CapEx will increase next year (especially for Augusta) and how long they can stay below the $70 million to $80 million maintenance level. He also asked for a maintenance expense guide for next year and to reconcile interest expense expectations.
A: They said delaying the Augusta outage pushed some capital into 2027 and they will spend that capital in 2027, so next year's capital will be higher than this year though they are not forecasting a number yet. For maintenance, they expect roughly $12 million to $15 million in Q1 for Augusta and another $7 million to $10 million later, Lewiston similar to this year in the low $20 million range, Cypress Bend about $6 million to maybe $7 million or $8 million, and overall "somewhere in the $50-ish million range for next year." Sherri reiterated the go-forward interest expense expectation is about $25 million and this year will be closer to $20 million.
"But I would expect we're probably somewhere in the $50-ish million range for next year." — Arsen Kitch (CEO)
Augusta recourse and EBITDA gap
Q (George Staphos · BofA): He asked whether they have any other recourse regarding Augusta and how its current EBITDA performance compares to expectations. He also asked about maintenance and incremental pricing benefits.
A: They said they are done with the RWI claim and recovered $73 million of the $105 million policy limit, and they will review facts and options but gave no further details. The biggest gap versus expectations was market price declines since early 2024; the mill itself is performing about 10% to 15% below needed production levels, and in the long run they expect Augusta to contribute about $150 million of EBITDA once fixed. On pricing, they said the first price increase delivered $15 million to $20 million this year, the full increase is worth about $70 million annualized, the first increase should deliver another $50 million to $55 million next year, and a fully recognized second increase could add another $30 million to $40 million.
"I would say the mill is probably performing somewhere in the 10% to 15% below what it needs to from a production standpoint right now across the last several quarters." — Arsen Kitch (CEO)
Cypress Bend machine use and SG&A
Q (Matthew McKellar · RBC): He asked whether they will restart a second line at Cypress Bend for CUK or run volumes on the existing machine, and how that affects mix. He also asked if the current SG&A run rate is sustainable.
A: They said Cypress Bend has one paper machine and the plan is to campaign and swing that machine between SBS and CUK, fitting CUK volumes into the schedule; if CUK is 20% to 30% of addressable demand that's about 50,000 to 100,000 tons and the goal is to get the mill to roughly 300-some-odd thousand tons of capacity used. On SG&A they said the lower run rate is fairly sustainable given cost focus, aside from any cost of living or incentive changes.
"So our intent is to create swing capacity and to campaign the machine between the 2 grades." — Arsen Kitch (CEO)
Cypress Bend full vs smaller CUK fix
Q (George Staphos · BofA): He asked what they found and what the smaller, less costly CUK implementation will allow versus the full $60 million project. He wanted to know what they can and cannot do.
A: They said the smaller capital approach will still produce a high-quality CUK that matches the two largest players. The trade-off versus the $60 million solution is speed and total available capacity: the $60 million solution would allow the mill to run CUK at current speeds, while the smaller investment will limit speed and may raise product costs, but they believe the trade-off is worth it to launch the product and fill open capacity.
"The $60 million solution would enable the mill to run on CUK at its current speeds." — Arsen Kitch (CEO)