Welcome to Clearwater Paper Corporation’s Third Quarter 2015 Earnings Conference Call. As a reminder, this call is being recorded today, October 29, 2015. I would now like to turn the conference over to Ms. Robin Yim, Vice President, Investor Relations of Clearwater Paper. Please go ahead.

Thank you, Ben. Good afternoon, and thank you for joining Clearwater Paper’s third quarter 2015 earnings conference call. Joining me on the call today are Linda Massman, President and Chief Executive Officer; and John Hertz, Chief Financial Officer. Financial results for the third quarter were released shortly after today’s market close. You will find a presentation of supplemental information including an updated outlook slide providing the company’s current outlook as to certain costs, pricing, shipments, production, and other factors for the fourth quarter of 2015 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. A reconciliation of the non-GAAP information to comparable GAAP information is included in the press release or in the supplemental materials provided on our website. I would like to remind you that this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements are based on current expectations, estimates, assumptions, and projections that are subject to change, and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include those risks and uncertainties described from time to time in our filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2014, and Form 10-Q for the quarters ended March 31,2015 and June 30, 2015, as well as our earnings release and supplemental information. Any forward-looking statements are made only as of this date, and the company assumes no obligation to update any forward-looking statements. John Hertz will begin today’s call with a review of the financial results for the third quarter, and Linda Massman will provide an overview of the business environment and our outlook for the fourth quarter 2015. And then, we’ll open up for the call for the question-and-answer session. Now, I’ll turn the call over to John.

Thank you, Robin. Before I get into our third quarter 2015 results, I’d like to preface my comments by stating that throughout the rest of my remarks, I will be distinguishing between GAAP and non-GAAP or adjusted results. The adjusted results exclude certain charges and benefits that we believe are not indicative of our core operating performance. The reconciliation from GAAP to adjusted results is provided in the press release and supplemental slides posted on our website. For the third quarter of 2015, those items netted to $2 million pre-tax expense and are comprised of $2 million in legal expenses and settlement costs, primarily related to a closed converting and distribution facility, $1 million in reorganization-related costs to address the remaining strength of overhead from the sale of our specialty mill, and approximately $1 million in costs associated with the closed Long Island, New York converting the distribution facility. All of that was partially offset by $2 million benefit related to the mark-to-market adjustments to our outstanding director’s common stock units. So, with that, let’s get to the results. I’ll start by saying that I’m happy to report that our Q3 consolidated adjusted EBITDA margin of 14.3% is our best consolidated return since Q4 of 2010, and Q3 adjusted EBITDA dollar of $63 million came within the updated adjusted EBITDA outlook range that we provided on September 9. That performance, coupled with our capital allocation strategy over the last three years, enabled us to post $1.28 of adjusted EPS which equaled the Clearwater record last posted in Q3 of 2014. Now, getting to the specifics. Our third quarter net sales came in at $442 million. That is down 50 basis points versus the second quarter and just under our revised outlook of flat sequential sales, and that is due to…

Thanks, John. Hello, everyone, and thanks for joining us today. We delivered an adjusted EBITDA margin of 14.3% or $63 million, which was within our revised outlook range and is also our best consolidated performance since the fourth quarter of 2010. This strong performance coupled with our capital allocation strategy over the last three years enabled us to equal our best adjusted earnings per share performance of $1.28. We achieved these results by managing our cost aggressively and driving operational efficiency. In our consumer tissue business, our operating and EBITDA margins are relatively flat quarter-over-quarter, and our business remains solid. As we discussed previously, our retail tissue volumes were adversely impacted by the merger of the top five customer. In the third quarter, shipment volumes for this customer have normalized, albeit, at a reduced level. And we have been able to replace all of the reduced volume with incremental business at a mass retailer and a new grocery customer in the East. Total average tissue pricing per ton was higher than the second quarter due to a richer product mix of TAD and the recently implemented price increase. The new business volume has come on line faster than forecasted which required us to invest in filling our customers supply chain and distribution centers with sufficient inventory. We expect this investment to continue through the fourth quarter before normalizing in the first quarter of 2016. Our EBITDA of $31 million, was up slightly versus second quarter. Their margins remained stable quarter-to-quarter, as we maintain the operating efficiencies gained to date while working through new service requirements associated with the incremental volume we discussed. Compared to a year ago, our consumer products division improved adjusted EBITDA margin of 160 basis points to 12.5% in the third quarter despite the 19% drop in…

[Operator Instructions] Our first question is from James Armstrong of Vertical Research Partners. Your line is open, sir.

Good evening, and thanks for taking my question.

Hi, Jim.

Hi. My first question is simple. What was the share count at the end of the third quarter? You obviously bought a lot of stock back during the quarter, and I don’t think it was all reflected in the diluted numbers, so I’m just trying to get a handle on that.

Yeah. So you want – you don’t want a little bit. You want just the...

The basic, yeah. I just wanted to know how many shares you have outstanding at the end of the third quarter.

We’ll get back to you here in a second with that exact number. I don’t have it here in front of me.

That’s fine. Moving on, corporate expense was down a bit this quarter. What drove it, and is it likely to continue into 2016?

So I think it’s a combination of two things, James. One is that some of the reorganization activity we took to get rid of the stranded overhead, and that portion of it will sustain. We did take a number of steps as it relates to really putting the cramp on discretionary spending and that kind of thing in the quarter that will continue into the fourth quarter. But thinking about that long term as continuing is probably not the case.

Okay. And then on the consumer products side, some of the branded producers spoke of lower pricing but you then said that the promotional activity has come off, at least, 14% or still at elevated levels. Could you give us a little more color about what you’re seeing in the market? Do you think that we’re kind of stable at this levels for the foreseeable future?

Well. It’s kind of – I mean, it still is from a historical perspective, accelerated high levels. It is down 14%, we were glad to see that. It was down last quarter a little bit, too. So, we’re glad to see this trend but it’s still at elevated levels. And so, we watch and hope that trend continues.

Okay. And then lastly could you remind us of the downtime scheduled for 2016, is this the skip year or could you remind us of which quarters will be impacted?

Yeah. So, we’ll just have one major maintenance in our Houston facility and that will happen in Q3.

Perfect. Thank you very much.

Thank you. Our next question is from Steve Chercover of D.A. Davidson. Your line is open.

Thanks. Good afternoon.

Hi, Steve.

Yeah. I also want to ask about the tissue pricing situation. If you could strip out your mix improvement, would your realizations have trended down similar to the major branded competitor that suggested prices are down 2%?

No. I think, Steve, as far – if everything were to stay the same from a mix perspective versus last quarter, you would seen the impact of our price increase and you would have seen 1% to 2% of price increase for our book of business, if mix had stayed the same.

So, that price increase was specific to private label.

Yes.

Got you.

Yeah.

Okay. And then we heard that the RISI forecast for operating rates is 95% to 96%. And you added – actually deferred maintenance. So, are you pretty much sold out now on Shelby?

Yes. We are.

So the objective, going forward, is to improve operations and presumably mix, or do you contemplate further growth?

Yeah. I mean, it still is from a converting standpoint, both from a machine output as well as we’ve got the Las Vegas line coming on here at the beginning of next year. We will have more converting capacities that will allow us to grow in cases versus parent rolls.

Okay. Well, how many – can you give us the volume of parent rolls that you’re selling currently?

13,000?

50,000.

50,000? 50,000 a year.

Parent rolls to third parties.

Okay. Thanks. And then, is it safe to say that you’re going to authorize a new $100 million share repurchase?

I’m going to give you my same answer I give every time this year which is we discuss that with our board in December. And in terms of capital allocation, stock buyback will be on the table, dividend will be on the table, and it will be a discussion based on facts and circumstances at that time.

So, do I recall correctly that you’ve gone through three of these programs so far?

Actually, four. There was a smaller one if you go back four years. But it’s three years in a row we’ve had $100 million buyback.

Okay. And finally, I’m not sure if you said this, John. But what was your expected tax rate when you revised the guidance in early September?

Well, we didn’t really talk about tax rate specifically when we revise, but inherent in that was what we said at the beginning of the quarter which was 36% plus or minus.

Okay. That’s it for me. Thank you very much.

Sure.

Thank you. [Operator Instructions] Our next question is from Paul Quinn of RBC Capital Markets. Your line is open, sir.

Yeah. Thanks. Good afternoon. Just a question on paperboard markets. Could you give us kind of color on the amount of imports coming in to North America from outside principally Europe? What have you seen on the China situation? And flipping it over on the export side out of North America, are we seeing any material drop on the exports as well?

Yeah. Hey, Paul. This is John. So to the one part of your question most of what we’ve seen from the import perspective is from Europe and it’s generally speaking from one of the major suppliers in Europe. You can kind of look at the recent SEC filings and look at what their shipment rates were to North America. If you go back a couple of years versus where they are now, and you can see that they are elevated from where they were a couple of years ago. China has not really been the issue, we see a little bit of that on the West Coast. But really, in terms of what we talked about in our earnings call today, that was more about coming from Europe. And then export U.S., exports have slowed down, 6% I think is what our data says.

Okay. Then, capacity additions to the market outside of North America, where have we seen machine started up in 2016 and 2017?

Well, we talked about the one in Europe. It’s going to be a course in Sweden, I believe. And then, there was some discussion I wanted down in South America which I know a little bit less about.

Okay. And just your expectation on the effects on the North American market. I mean, I guess it’s a hard thing to quantify, given the exchange rates and all of that stuff. But do you think it’s going to have a grand impact going forward or less of an impact?

Well, I mean, if you look at what RISI says, in the near term through 2016, it was not going to have too much of an impact, we don’t think. And then, we’ll just have to see what the market does after that.

All right. That’s all I had. Best of luck. Thanks.

Thanks, Paul.

Thank you. Ladies and gentlemen, that does conclude our question-and-answer session. At this time, I will turn the call over to Ms. Massman for any closing or additional remarks.

Yeah. Thank you for participating on today’s call. On a final note, we will be at the Bank of America, Merrill Lynch Leveraged Finance Conference in December, and we hope to see you there. And thank you everybody for your time.