Ladies and gentlemen, thank you for standing by and welcome to the Wausau Paper 2013 Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, instructions will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded. I’d now like to turn the call over to our host, Mr. Perry Grueber. Please go ahead sir.

Thank you, Brad. Good morning, everyone. Thank you for joining us. I’m pleased to be here today with Hank Newell, our President and Chief Executive Officer; and Sherri Lemmer, our Chief Financial Officer. On today’s call, we will review second quarter operating results, progress on the strategic repositioning and the tissue expansion. After our prepared remarks, we will look forward to your questions. This call is being webcast, and slides are provided to summarize key elements of the presentation. Our webcast viewer should allow you to download these slides and yesterday’s earnings release, both of which are also available from the Investor section of our website at wausaupaper.com. Statements made during this presentation, other than those that refer to past results, are forward-looking statements made pursuant to the Safe Harbor provisions of the Securities Reform Act of 1995. Such statements, including those concerning expected performance, capital market transactions, future earnings or dividends, involve risks and uncertainties that may cause results to differ materially from the expectations set forth during this discussion. Among other things, these risks and uncertainties include the risks and assumptions described in Item 1A and Item 7 of the company’s Form 10-K for the year ended December 31, 2012. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Additionally, our presentation refers to certain non-GAAP financial measures. A reconciliation of these measures to GAAP is provided in the appendix of this presentation. There you’ll also find a variety of other summary presentations and data points you might find useful. I’ll now turn the call over to Hank Newell, our President and Chief Executive Officer. Hank?

Thank you, Perry. Good morning. Earlier this year, we announced our plan to narrow the focus for our company to tissue. The strategic repositioning of Wausau Paper included the intent to divest our specialty paper business, realign and reduce overall staffing and SG&A cost, and to continue to invest and accelerate growth in our tissue business. We outlined new return on capital targets for the company that included achieving a 15% return on capital by the second half of 2014 and established a new long-term return on capital goal of 18%. In June, we completed the sale of the specialty paper business. Wausau Paper is now 100% focused on tissue. Our vision is to be the leading provider of paper-based, environmentally sensitive brands and solutions to the markets we serve. We participate in the world market for tissue. Our focus is the away from home tissue market primarily in North America, which is the market of approximately 2.5 million tons. We expect the North American market to continue to grow between 1% to 2% a year. Wausau Paper has approximately an 8% share, and we expect our gross strategy over the next five years to achieve a 6% compound annual growth rate. Our value proposition is driven by green leadership, our strategic orientation, and the equity we have in our customer relations. We uniquely view the distributor as our customer and strategic partner. We provide enablers such as controlled use, proprietary dispensing, supported by proprietary converting and strong end market sales support. And over the coming quarters, a full portfolio of 100% recycled products. We are implementing a branding strategy that expands our green leadership, repositions our legacy product lines and introduces premium, 100% recycled products, in a quality range that provides complete market access to all end user segments.…

Thank you, Hank, and good morning. To follow-up on Hank’s discussion, in the second quarter of 2013, we made significant progress on two key elements of our strategic repositioning initiative. On June 26th, we closed the sale of a specialty paper business, netting day one cash of approximately $105 million. Total cash proceeds of the transaction remain subject to certain post closing adjustments like the final settlement on net working capital. The sale excluded the assets of the close Brainerd, Minnesota facility with the process to separately sell that facility underway. As a result of the sale, we recorded a pretax impairment charge of approximately $64 million in the second quarter related to the write-down of property, plant, and equipment of the Mosinee and Rhinelander, Wausau Paper mills. In addition, we recognized an adjustment to our provision for income taxes of approximately $12.4 million net of federal tax benefit. Approximately $12 million of the amount recognized related to certain state income tax carryforwards that will likely not be able to be utilized to offset taxable income in the future. Following the sale, our balance of approximately $39 million of income tax carryforwards, net of federal tax benefit were be used to reduce cash taxes paid. These carryforwards include the remaining cellulosic biofuels credit carryforward of approximately $13 million. And we’ve strengthen the long-term position of our balance sheet by eliminating a portion of the obligation for other post retirement benefits. The reduction attributable to the transaction was approximately $37 million. For Tissue, as Hank mentioned the rollout of the new Greenfield certified double nature premium product line is underway. The launch officially commenced on May 20th, with 16 new products covering tissue, roll, and folded towel available in the away from home market in the second quarter. While we had…

Thank you, Hank. Thank you, Sherri. That concludes the formal comment portion of today’s call. Brad, will you poll for any questions please?

(Operator Instructions). And your first question come from Mike Roxland with Bank of America.

Hi. Good morning. Congrats on completing the transaction.

Good morning, Mike.

Good morning, Mike. Thanks.

Just wanted to find out from you, what’s going on with the strategic product categories, the volumes related to that. Why are they flat this quarter? They were down 3%, is that really still due to customer de-stocking?

I think it’s a function of a number of pieces, fundamentally as we manage the higher than expected growth in our support categories and moderated the rate at which we rolled out, double nature. We constrained ourselves in our ability to deliver the growth in strategic products. So I think we’ve worked our way through that. As we look at our order profiles here in July, we’re on a plan to see a significant improvement in our composition as we move through the balance of the year. And I think if we were to think about what would have we expect to see for strategic composition as we move into the fourth quarter? We would expect to see it return to being something north of 50% and targeting 50% to 54% by the fourth quarter. So I think it’s just Q2’s transition and getting to that targeted run rate by the fourth quarter is a real important dimension of our margin improvement.

Got it; would it be fair to say then in July that you’ve seen that the shift start to take effect, in terms of you’ve sold it for the month of July and now it’s almost on the month. But where we stand today that you start to produce or sell more strategic products versus the support product, and so you’ve made that transition?

Yeah. So in the third quarter, the primary driver of improvement will be operational. And then throughout the third quarter, we’ll continue to see improvement in the mix with the full benefit of the mix being seen in the fourth quarter. So yes, you’re seeing improvement, but we’re still in the process of introducing those strategic products to our distributors.

Gotcha; I think you outlined that expecting case growth of 4% to 5% in the second half. Can you just give us an update as to where you are? Where we stand to the given July trends, relative to that expectation?

So I think July trends are consistent with what our view is to be able to deliver 4% to 5% growth in the second half and beyond pace to achieve our 6% case growth rate in the fourth quarter.

So basically you’ve seen that in acceleration relative to the first half. In the first half, there were some transition issues and qualification issues, but July is trending inline with your view of 4% to 5% case growth?

Yeah. Mike, we’re pleased with our progress in July.

Okay. Last question and then I’ll just turn it over. What’s happening with Brainerd, I think Sherri mentioned that you’re looking to sell it? I think you also mentioned on the last earnings calls. Have you had any interest in the mill and have to retain bankers to market the mill, what’s going on with that?

We are doing this on our own. I think we’ve got a pretty deep understanding of the potential buyers here. Optimistically, we would hope to sell the mill to someone that can continue to operate it. We have to do that within the confines of our non-compete agreement. We’re making progress and we’re optimistic that we’ll get something done here before the end of the year.

Thanks very much. Good luck for the quarter.

Thanks Mike.

(Operator Instructions) And our next question comes from Ketan Mamtora with Deutsche Bank.

Hi, everyone. Thanks for the details in the presentation. Couple of quick questions; for Q2, you had total Company EBITDA of $8.8 million. Can you tell us what the corporate line was in that and the comparable number for the second quarter of 2012?

So again from a overall perspective going forward, we’re reporting to you those elements that we believe are important as we move through the quarters, which we’re focusing again on Company EBITDA margin. Looking at the prior year, I believe that was contained within the release at around an adjusted EBITDA margin of $13 million for the second quarter.

Okay. And then Hank, can you remind us you mentioned about the corporate run rate by year-end? Sorry, I missed that.

I’m sorry I didn’t understand.

On the corporate line, I think you gave some targets in terms of the run rate number by year end. I missed that number.

Yeah, so I think it’s really a question of we’re targeting a $13 million reduction in overall salaried and SG&A costs. We expect to be at about an $8 million run rate on that $13 million by the end of the year and should have accomplished the full run rate by mid-year or next year.

Got it, okay. And then can you give us some sense of sort of margin differential among the three grades as you launch these products?

So really what we’re looking for from a strategic and support. And I think this will answer your question. As we look at our strategic versus support, it’s probably 2:1 ratio with respect to the results that you see selling a strategic versus support type category.

Okay. And so as I would understand DublNature and Artisan would be strategic and EcoSoft would be a support?

So what I think strategic will be, all those products sold through this proprietary dispensing plus those products that are based on our ATMOS substrate. So there is an element of EcoSoft that goes through proprietary dispensing.

Got it, okay. And then couple of quick ones; on the pension underfunded liability, pro forma for the sale of paper. What would that number be even as of end of 2012?

If we look at where we ended, I can give you where we ended the quarter after we did our transaction.

Okay.

Our pension liability was about $94 million.

Got it.

And that compared to the $88 million we had at the end of the year, obviously recognizing some of these impacts with respect to the sale.

Got it, okay. And then what would be your expectation of purchase of (inaudible) in the outside market on a go forward basis?

So I think that as we communicated before in 2013, we expected approximately 40,000 tons with more than half of that in the first half, and then metering out if we move to the second half and then for 2014, probably half that rate.

Got it, okay. Thanks very much.

Thank you.

(Operator Instructions) And no further questions at this time.

Okay. Thank you, Brad. We anticipate releasing third quarter earnings, the afternoon of Monday October 28 and look forward to our next scheduled conference call set for 10 a.m. Eastern, the following morning Tuesday October 29. We appreciate your taking part in today’s discussion and your interest in Wausau Paper. Thank you very much.

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