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Thank you for standing by. My name is Celine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Clearwater Paper Second Quarter 2024 Earnings Call -- Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Sloan Bohlen, Investor Relations. Please go ahead.

Thank you, Celine. Good afternoon. And thank you for joining Clearwater Papers second quarter 2024 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 2024 were released shortly after today’s market close, along with the filing of our 10-Q. 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 providing certain non-GAAP information in this afternoon’s discussion. The 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 rereading this slide, we’re going to incorporate it by reference into our prepared remarks. With that, let me turn the call over to Arsen.

Thank you, everyone, for joining us and good afternoon. Let me start with a few comments regarding our recent strategic announcements. As we previously discussed, we believe that both of our businesses require scale to be able to grow and invest, especially given the capital-intensive nature of our industry. We took a big step in that direction in our Paperboard business by acquiring the Augusta facility from Graphic Packaging. That acquisition closed on May 1st, and we’re in the process of integrating the facility into our network and starting to capture synergies. We took another major step by announcing the agreement to sell our Tissue business to Sofidel America, which is expected to close in the fourth quarter of this year, subject to satisfaction of customary closing conditions, including regulatory approval. We believe that these are transformational and strategic steps for Clearwater Paper. We’re focused on strengthening our position as a premier independent supplier of Paperboard Products to North American converters. The divestiture of our Tissue business will allow us to strengthen our balance sheet and position us for future internal and external investments to grow and diversify our Paperboard portfolio. We believe that these strategic moves will allow us to continue to grow our business and create long-term value for our shareholders. Let me summarize a few key deal points from the announced divestment. We agreed to sell our Tissue business to Sofidel America for cash totaling $1.06 billion. We expect net proceeds from the sale to be approximately $850 million, which we intend to use to repay existing debt and meaningfully to leverage our balance sheet. The transaction includes our Tissue facilities in Shelby, North Carolina, Las Vegas, Nevada, Elwood, Illinois, and the Tissue manufacturing facility at our Lewiston, Idaho site. As many of you know, our Lewiston site also houses a Paperboard facility, including a Pulp mill, two paper machines and other assets that we are retaining. As part of the proposed transaction, we will be entering into a site-sharing agreement with Sofidel in Lewiston. This will include a lease of the land and facilities and a services and use agreement. Sofidel will also hire our Lewiston Tissue employees at close. We believe that we have come to a good agreement that will allow both companies to operate effectively on the Lewiston site. We look forward to a strong partnership with Sofidel and Lewiston in the years to come. Through this transformation, we’re building a Paperboard system that supports the growth of converter customers across North America. As part of this growth, we will look at opportunities to expand our product offering, which may include additional Paperboard Products and substrates. We will evaluate internal investments in our assets and external opportunities that are a good strategic fit for our network. Our goal is to build on our position as a scaled Paperboard Packaging supplier in North America with a compelling product offering, outstanding service and a consistent track record of value creation for our shareholders. The Augusta acquisition and the expected sale of our Tissue business are both significant and transformational transactions for our company. Accomplishing both over a six-month period is a momentous feat for our team. I’m pleased with the progress that we’re making and excited about the next chapter of the Clearwater Paper story. Let me now briefly turn to our second quarter highlights before Sherri dives into the details. We reported net sales of $586 million, which were up 12% from the second quarter of last year. This was primarily driven by incremental volume from the Augusta acquisition. Adjusted EBITDA was $35 million, which was $36 million below the second quarter of last year, primarily driven by the impact from the planned major maintenance outage at our Lewiston facility. Let’s continue with a few highlights from our Paperboard business. These can be found on Pages 3 and 4 of our supplementals. Net sales were up 23% versus last year. This was driven by a 46% increase in shipment volume, primarily due to the Augusta acquisition, offset by a 14% decline in pricing, which is largely consistent with what has been reported previously by RISI. Adjusted EBITDA for the Paperboard segment was at $11 million, which included $9 million in insurance recoveries tied to the weather event that impacted us in the first quarter of this year. The decrease in adjusted EBITDA versus the prior year was driven by the planned major maintenance outage in Lewiston, with a negative impact of approximately $32 million for the quarter. The outage proved to be more challenging than we expected and we’re now anticipating total impact to be more than $40 million versus our original estimate of $30 million to $35 million. Beginning in 2025, we will move all of our Paperboard facilities to an annual outage schedule, which is a common practice in the industry. We believe that this will lead to smaller, more predictable, and more manageable maintenance outages, and improve our overall operating performance over the course of the year. We’ll provide additional information regarding our 2025 outage schedule early next year. Finally, let me provide you with some market insights. Based on the most recent AFMPA data, SBS industry shipments improved sequentially by about 1% between the first and second quarters of this year. Industry operating rates remained flat at around 84% as inventory levels dropped. While we’re seeing a gradual recovery, it is proving to be slower than expected. Industry publications are forecasting a continued demand recovery into the second half of this year and into 2025. While recovery has been somewhat slow, we remain bullish on the long-term market fundamentals. We believe that Paperboard is well-positioned for growth given consumer preferences and overall sustainability trends. A bright spot in the market today is food service, with solid and growing demand. Our backlogs have grown and we’re becoming capacity constrained. As a result, we’re implementing a previously announced price increase to our customers for these grades, including plate and cup stock. Let me now provide a brief overview of our quarter for Tissue. This can be found on Slides 3 and 5. The Tissue business continued to perform at an outstanding level. Second quarter revenues were flat compared to last year at $253 million, with 4% volume growth offset by 3% lower cost index-based contractual pricing. We continue to deliver strong operating performance that helped offset sequential increases in pull prices. Adjusted EBITDA for Tissue was $41 million in the second quarter, with a margin of 16.4%. This is the fifth sequential quarter of margins above 15%. As we previously stated, we expect to maintain much of the margin improvement that we achieved in 2023 into 2024. I’m deeply appreciative of the work that our Tissue team has done over the last several years to deliver sustained improvements in operating and financial performance. With that, let me turn the call to Sherri for additional details on our financial results.

Thank you, Arsen. I’ll begin on Slides 6 and 7 with a review of our income statement and segment results. In the second quarter, we had a consolidated net loss of $26 million or $1.55 per diluted share. Adjusted loss per share for the quarter was $0.51 per diluted share. As Arsen mentioned, our adjusted EBITDA was at $35 million, driven by strong results in Tissue, an insurance recovery from the weather event in Q1 and contributions from the Augusta acquisition. This was offset by the planned Lewiston major maintenance outage and lower Paperboard pricing. Paperboard delivered $11 million of adjusted EBITDA, while Tissue delivered $41 million. As a reminder, our guidance range was $23 million to $33 million, which excluded contribution from Augusta. Moving to Slide 8, let’s review our year-over-year performance in Paperboard. Lower pricing had a nearly $26 million impact. As we previously discussed, this is consistent with publicly reported industry-wide trends. Partly offsetting the pricing decrease was higher sales volume, primarily driven by the Augusta acquisition and a modest recovery in demand. The planned major maintenance outage had approximately a $32 million impact in the is reflected in lower production and higher maintenance costs. This was partly offset by a $9 million insurance recovery from the severe weather event that we experienced in the first quarter. Moving to Slide 9, let’s review our year-over-year performance in Tissue. As Arsen mentioned, pricing was slightly lower, driven by cost-index-based contractual pricing adjustments and a higher mix of lower-priced conventional products. This was more than offset by higher shipments and lower costs. Our utilization rates remained high and overall operating performance was very strong. Pulp pricing in the second quarter was lower than the second quarter of last year, but higher sequentially versus the first quarter. We are expecting Pulp to be a headwind in the third and fourth quarters of this year, but we are confident that we can maintain much of the margin improvement achieved in 2023. Industry publications indicate that Pulp prices have peaked and may start easing in the coming quarters with improved supply and demand dynamics. Turning to our capital structure on Slide 10, we ended the second quarter with liquidity totaling $224 million and a debt-to-adjusted EBITDA leverage ratio of 3.58 times. As Arsen mentioned, the sale of our Tissue business is expected to generate net proceeds of approximately $850 million, which will allow us to significantly deleverage our balance sheet. We are evaluating our view on the appropriate leverage target for a standalone Paperboard business in a higher interest rate environment. We previously stated that our leverage target was 2.5 times across the cycle, but we now believe that we will need to operate with a lower leverage ratio. We will discuss this further in upcoming earnings calls as we complete the sale of our Tissue business. We have a proven track record of generating free cash flows and paying down debt. This remains our focus in the near-term as we believe that a strong balance sheet is needed to enable us to take advantage of strategic opportunities in the future. We also repurchased approximately $3 million of our stock during the quarter as part of our ongoing efforts to offset dilution from employee equity grants. Lastly, let’s turn to our outlook for the third quarter and full year 2024 on Slide 11. As Arsen mentioned, we are anticipating a continued recovery in Paperboard demand in the third quarter, higher production volumes and a lower outage cost impact. We expect Tissue performance to remain strong with some impact from higher Pulp prices. With all those components, we believe that third quarter adjusted EBITDA will be in the range of $58 million to $68 million. Please note that our third quarter guidance assumes that we will continue to operate the Tissue business for the entire quarter. Full year 2024 operational assumptions now account for Augusta from May 1st through the end of the year. This includes higher volumes, synergies and a major maintenance outage in Augusta in the fourth quarter. Full year 2024 assumptions also include the higher outage costs that we experienced in Lewiston during the second and third quarters. Please note that our full year assumptions do not include the impact of the Tissue divestiture. Other 2024 assumptions have also been updated with the Augusta acquisition. This includes higher cash interest expense due to additional debt, higher depreciation expense and higher cash CapEx. Augusta cash CapEx is expected to be $25 million to $30 million from May 1st to December 31st. This includes the planned completion of an environmental compliance project at the mill which was known to us during the acquisition. We previously stated that we expect ongoing repair and maintenance CapEx to be in the range of $60 million to $70 million excluding large projects. This included our two legacy Paperboard mills and our Tissue business. With the Augusta acquisition and the planned divestiture of Tissue, we now expect our ongoing maintenance CapEx to be in the $70 million to $80 million range excluding large maintenance and strategic capital projects. With that, let me turn the call back to Arsen.

Thanks, Sherri. The first half of 2024 has proven to be transformational for Clearwater Paper and we couldn’t be more excited about the future. Looking ahead, our priorities for the balance of 2024 include driving strong operational performance, executing the divestiture of our Tissue business, and continuing the integration of the Augusta acquisition. I would like to thank our people for their continued focus on safety, strong operating performance and servicing our customers. This time of transformational change can be challenging, but we’re fully committed to supporting all of you as we open this next chapter of the Clearwater Paper story. With that, we will end our prepared remarks and take your questions.

Thank you. [Operator Instructions] And your first question comes from the line of Matthew McKellar with RBC Capital Markets. Please go ahead.

Thanks very much. Good afternoon, Arsen and Sherri. Thanks for taking my questions. First, I’d like to ask if you could provide a little bit of color to the Consumer Products sale. I think you’ve noted that you want to grow and diversify your Paperboard Product portfolio. I think your balance sheet should be in a pretty reasonable range, although it sounds like you want to bring that leverage target down a bit. But how should we think about how you’ll evaluate your options when it comes to growth going forward?

I think you’ve got to start with what we’re trying to do, which is to build that premier independent supplier of Paperboard Packaging to converters in North America. Right now, we are providing SBS. These converters use other substrates and other products. So we will look at opportunities, both internal and external, to have a more complete offering to our converters, whether it’s lightweight products, other substrates, different coatings and so on. We want to make sure that we’re providing all the products that our customers need to succeed and win in the market. So it will really depend on what that product strategy is and what opportunities we have available.

Would it be fair to think that you’d prefer to grow into other substrates as opposed to continuing to grow in SBS?

Our customers purchase a variety of substrates and products. So we’re part of their answer today. We’d like to be a bigger part of answer in the future and have a more complete offering. We have outstanding SBS assets. Right now we have three assets that are well-positioned across the country. I think we were able to offer SBS to our customers today and that we’re pretty happy with our assets. So we’ll be looking at other products and other substrates in the future.

Okay. Thanks very much for that. Next is turning to maintenance. You completed a major plan maintenance at Lewiston Q2. I think you mentioned it was a bit more challenging than you expected. With that, were there any findings through that maintenance process that would have implications for CapEx levels over the next few years?

No. We discovered a few things during the outage that we addressed that was part of the cost equation. Frankly, we had operational challenges ramping the Pulp mill after the outage. We’re still addressing that as we speak. We’re still ramping and working through those issues. But no, nothing that comes to mind that would materially change our outlook on capital in the future.

Okay. Thanks. And I just want to make sure, excuse me, I understood the comments around $40 million correctly. Did I understand that it was a $32 million impact to the quarter and then you’re expecting that incremental $8 million to be specific to Q3?

I think what we said is it’s greater than $40 million impact here in Q3. We are still in the process of ramping the mill. So the final cost is yet to be determined, but the whole thing will be north of $40 million. We’ve done our best to incorporate the total outage cost into the Q3 guidance. So that’s in there. But if something changes materially, we’ll update you after Q3.

Okay. Thanks for that. Maybe just sticking with the maintenance item. It sounds like you’re planning to go to annual maintenance cycles. You’re going to be ready to talk about that a bit more at the start of 2025. I mean, is it a fair placeholder to think of your downtime next year as being Q2 at Lewiston again and Q4 at Augusta or what should our expectations, I guess, be around those cycles as we wait for the detail?

We’ll work through those. It really depends on -- a lot of it depends on our ability to get contractors in place and also weather at these locations. But it’s probably a fair assumption that we would look to do something similar as we did this year, although we will finalize that here in the coming quarters.

Okay. Thanks. And then just some of the changes in the business now that you’ve acquired Augusta and that the Tissue sale should close by year-end, how should we think about where you end up in 2025 in terms of a run rate corporate expense?

Yeah. It’s a good question.

Yeah. So, Matt, I think, what we’re going to be doing is, we’re going to be looking at this really from, I’ll call it, a run rate of what we typically run, which is in the call it 6% to 6.5% of sales from an SG&A perspective. So, as we’re moving forward, we will continue to try and right-size those expenses and we’ll update you in the coming quarters as we continue to evaluate that cost structure.

Okay. Great. That’s all from me. I’ll turn it back. Thank you.