Thank you for standing by. My name is Danica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Clearwater Paper Second Quarter 2025 Earnings Call. [Operator Instructions]. I would now like to turn the call over to Sloan Bohlen, Investor Relations. Please go ahead.

Thank you, Danica, and thank you all for joining Clearwater Paper's Second Quarter 2025 Earnings Conference Call. Joining me on the call today are Arsen Kitch, President and Chief Executive Officer; and Sherri Baker, Senior Vice President and Chief Financial Officer. Financial results for the second quarter of 2025 were released shortly after today's market close. You will find a presentation of supplemental information, including a slide providing the company's current outlook posted on the Investor Relations page of our website at clearwaterpaper.com. Additionally, we will be hosting -- or we will be providing certain non-GAAP financial information in this afternoon's discussion. A reconciliation of the non-GAAP information to comparable GAAP information is included in the press release and in the supplemental information provided on our website. Please note Slide 2 of our supplemental information covering forward-looking statements. Rather than reading this slide, we will incorporate it by reference into our prepared remarks. And with that, let me turn the call over to Arsen.

Good afternoon, and thank you for joining us today. We delivered a strong second quarter that was in line with our expectations. This was driven by higher production volumes, increased shipments and continued benefits from our fixed cost reduction efforts. Let me share a few highlights before diving into industry conditions and our strategic initiatives. We delivered $40 million of adjusted EBITDA in the second quarter, which was right in the middle of our guidance range of $35 million to $45 million. Our net sales were $392 million, up 14% versus prior year, primarily driven by the Augusta acquisition and partly offset by lower market-driven pricing. Net sales were also up 4% versus the first quarter of this year, primarily driven by increased shipments in our food service business. Pricing remained relatively stable versus the first quarter, but was down approximately 3% versus prior year, reflecting broader market trends. We successfully completed the planned major maintenance outage at our Cypress Bend, Arkansas mill at a cost of approximately $9 million, which was in line with our estimates. As part of this outage, we completed the installation of a new emissions control device, replacing the original piece of equipment, which was installed in 1970s. This was a large capital project with a total cost of nearly $45 million. We continue to capture benefits from our fixed cost reduction efforts and are on track to deliver a $30 million to $40 million reduction this year versus 2024. SG&A expenses were down nearly 14% versus last year to 6.7% of net sales within our target range of 6% to 7%. This was driven by our cost reduction initiatives and the completion of the Augusta integration. And finally, we repurchased approximately $4 million of outstanding shares for a total of $15 million since the…

Thank you, Arsen. As we mentioned, we had a strong quarter with consolidated net income from continuing operations of $4 million or $0.22 per diluted share. At the top line, we achieved net sales of $392 million for the quarter, which represents a 4% increase compared to the first quarter of this year and a 14% increase compared to the second quarter of last year. This was driven by contributions from our Augusta acquisition, growth with existing and new customers, partly offset by lower market-driven SBS pricing. As to Augusta, this will be the last quarter where year-over-year comparisons are impacted by the timing of our acquisition. As a reminder, we completed the Augusta acquisition on May 1, 2024. Moving to adjusted EBITDA. We delivered $40 million, which was at the midpoint of our guidance range of $35 million to $45 million. This was up substantially compared to a negative $8.6 million of adjusted EBITDA last year. The resulting adjusted EBITDA margin was 10.2% in the quarter. Improved cost performance and lower major maintenance expenses more than offset lower pricing and higher input costs. We are well on track to deliver the $30 million to $40 million of cost savings in 2025 as outlined earlier this year. As part of those efforts, we reduced our Q2 SG&A as a percent of net sales to 6.7% compared to 8.8% a year ago. We maintain our view that these efforts are sustainable and can produce annualized savings in the range of $40 million to $50 million. These efforts, along with the cost and price leverage that exists in our business, drive our conviction in our long-term adjusted EBITDA and free cash flow outlook. Shifting now to our balance sheet and capital allocation. Excluding our cash tax payment of $57 million related to…

Thank you, Sherri. I'll summarize where we are today. We transformed Clearwater into a paperboard-focused company with 2 major strategic actions in 2024. We're now focused on strengthening our position as an independent supplier of paperboard packaging products to North American converters. We're looking at opportunities to expand our product portfolio, which may include new applications for our existing paperboard as well as new substrates. We have a well-invested asset base and a strong balance sheet that will help us persevere through this part of the industry cycle. We remain optimistic about the medium- to long-term prospects for our industry and our company. And as a result, we expect strong margins and cash flows through the cycle and aim to strategically deploy capital to create long-term shareholder value. Finally, I'd like to thank our people for their efforts to remain focused on operating safely and providing excellent service to our customers. I would also like to thank our customers for putting their trust in us and our shareholders for their continued interest. With that, we'll open it up to your questions.

Matthew -- your first question comes from Matthew McKellar with RBC.

Just first here, it looks like you're expecting modest growth at an industry level in 2025, which I guess would imply a better back half for demand. Are you seeing that year-over-year improvement in demand in the market today? And is the uptick in unmade SBS orders a signal of that? And then I guess more broadly, I guess the demand outlook has softened a little bit. your expectations around net imports seems to soften a little bit as well. Could you just walk us through what's changed around your outlook at an industry level since your last update?

That's a great question, Matt. So I think we're getting mixed demand signals in Q2. So if you look at our data, our shipments were up by about 5% versus Q1 and our backlogs are stable. Industry shipments were down sequentially, and they were down year-over- year and they're down year-to-date, but backlogs are up 14% versus the first quarter. So a lot of mixed signals. What we are hearing from our customers that there really isn't a serious demand issue. There's just some near-term economic uncertainty that's really hard to decipher. We're comfortable with where we are. I know some of the industry forecasts have come down a bit this year from, call it, maybe mid-single digits to low single digits, maybe even below 1%. But it's hard for me to point to a specific driver of these forecast changes. From an import perspective, as we mentioned before, our industry imports about 500,000 or 600,000 tons of bleached paperboard and probably another a couple of hundred thousand tons of finished goods and exports over 800,000 tons. I think there is a scenario where these tariffs and trade investigations and antidumping duties could impact that -- those imports -- could impact those 700,000 or 800,000 tons of imports and could drive up domestic capacity utilization.

Are you at all surprised that imports haven't dropped a little further just given how much change in FX we've seen over the past while here, probably in particular?

So that's -- so tariffs and FX changes. So it's hard to tell what's happening in those markets. It represents, call it, 10% and we're just talking bleached paperboard imports. It's hard to know what the importers are thinking and what their plans are. But I do think between tariffs and an exchange rate and unfavorable exchange rate for them, I'd be surprised if there is no impact.

That's fair. I guess next for me, just thinking sequentially, you did $40 million in Q2 for EBITDA, maintenance costs at Lewiston, maybe $25 million, call it. That bridges you to the midpoint of the range. You, of course, would have had -- I think it was $9 million you called out maintenance cost at Cypress Bend in Q2. I guess, I would have thought you'd had a little bit more benefit from cost reduction efforts in the Q3 as well. So just thinking about that Q3 guide, are the other moving parts here just that lower production and fixed cost absorption issues you called out that aren't in the $23 million, $25 million of costs quoted for Lewiston? Or what are the other kind of incremental pressures here on either price or cost that is sort of embedded in your outlook?

Yes, that's -- you've got it exactly right. So you've got roughly, call it, $15 million of sequential increase in outage expense. We did not call out the absorption impact, but we expect to see about 5% lower production volume. So that would be the other piece that you would have to factor in. And then the third piece is a modest amount of tariff impact. So those would be the 3 big pieces.

Okay. And aside from tariffs, really nothing else around kind of incremental pressure on price or other kind of costs that's worth calling out here?

Yes. From a price perspective, we saw a stable Q1 to Q2 price. We tend not to comment on future-looking prices.

Okay. How do you think about the most important swing factors that could either take you to the top or bottom end of that range? Is that mostly Lewiston startup? Or are there other factors that you'd be looking to there?

I think the Lewiston outage startup, this is a large outage that, frankly, last year cost us more than we expected. So there's a lot of focus on executing that outage well and starting up well. Demand, we're counting on demand being stable. There's -- I don't see any reason why that would not be the case. And of course, we're still watching the impact of the new capacity coming online from a competitor.

Great. And then last for me, you're guiding to flat shipments sequentially, but still capacity utilization of around 85% for 2025. I guess based on year-to-date results in that guide, is it fair for us to assume that shipments could be up a little bit sequentially in Q4?

Yes. So I think if you look at our capacity utilization, we have 2 major outages in Q3 and Q4. So I think that drives down capacity utilization. We built some inventory, as you can tell from our balance sheet in preparation for the Lewiston outage. So Q2 to Q3, we're expecting flat. Q4, sometimes there's some seasonality impact, maybe slightly lower shipments, but that's varied over the years.

Thank you, everyone. That concludes our Q&A. I appreciate you all joining. You may now disconnect.