Welcome to Clearwater Paper Corporation's First Quarter 2014 Earnings Conference Call. As a reminder, this conference call is being recorded today April 23, 2014. I’d now like to turn the conference over to Mr. John Hertz, Chief Financial Officer of Clearwater Paper. Please go ahead sir.

Thank you, Saeed. Good afternoon, and welcome to Clearwater Paper's first quarter 2014 conference call. Before we get started, I wanted to take the opportunity to introduce Robin Yim, our new Vice President of Investor Relations. Robin has over 25 years of experience in industrial relations, treasury, and banking. We are fortunate to have Robin on the Clearwater Paper team and she looks forward to meeting you. I also want to thank Sean Butson for his four years of investor relations support to Clearwater Paper. We wish him well in his future endeavors. With that, I will now turn the call over to Rob.

Thank you, John, and good afternoon, everyone. I’m very happy to be here. And while I have the opportunity to meet some of you, I’m definitely looking forward to meeting everyone. So with that, let’s get started. Our press release this afternoon includes details regarding our first quarter results, and you'll find a presentation of supplemental information posted on the Investor Relations area 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 Web site. I'd 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, 2013 Any forward-looking statements are made only as of this date and the Company assumes no obligation to update any forward-looking statement. In addition to John Hertz, Linda Massman, our President and CEO is also on the call today. John will begin with a review of the financial results for the first quarter and Linda will provide an overview of the business environments and our outlook for the second quarter of 2014. And then, we will open up the call for the question-and-answer session. Now, I’ll turn the call over to John.

Thank you, Robin. Before I get to our first quarter 2014 results, I’ll start with little housekeeping. We are providing both GAAP results and results that are adjusted to exclude certain charges and benefits that we believe are not indicative of our core operating performance. For the first quarter of 2014, those include $9 million of cost associated with the closure of our Long Island, New York and Thomaston, Georgia, converting facilities and $3 million of expense related to the mark-to market adjustments to our outstanding directors common stock units. First quarter net sales came in at $485 million. That’s up 3% versus the fourth quarter. That is above our updated outlook that we provided on March 18, due primarily to a stronger than expected 6% increase in paperboard shipment volumes. Excluding pulp sales, consolidated price mix improved slightly while consolidated volumes grew 4%. This is Q1 2013 net sales were up 5% and higher tissue prices and higher paperboard prices and volumes. First quarter adjusted gross profit of $63 million or a 13% margin, which excludes the Thomaston and Long Island shutdown costs was down 230 basis points from the fourth quarter due primarily to $9 million in higher energy and transportation costs associated with the extremely cold winter in the Midwest and East as well as $3 million of increased external pulp, and wood fiber cost. Adjusted SG&A expense which excludes the mark-to-market expenses was $30 million or 6.3% of first quarter net sales, which is up approximately $1 million from Q4 ’13 due to higher compensation costs related to 2014 profit dependent accruals. Adjusted corporate expense -- expenses was $13 million of the SG&A spend in the first quarter and at the high-end of our outlook, and also due to the to higher compensation costs as we…

Thanks John. Hello everyone and thanks for joining us today. Our first quarter adjusted operating profit margin of $33 million or 6.7% with roughly inline with the updated outlook that we provided in March. Upside in terms of volume and pricing was fully offset by incremental costs associated with the bad weather experience during the quarter. As we began the second quarter, so far we’ve seen natural gas prices decline to the mid $4 range, but we’ve not seen reductions in transportation costs due to the tight carrier environment which we expect will continue through the balance of the second quarter. There were a number of positive sales developments in the quarter. In the consumer products business, we completed negotiations with several key customers. And I’m very pleased to tell you that not only have we solidified long-term supplier positions, we’re partnering closely with our customers to grow private label sales. Additionally, we were awarded business at a number of new customers and are seeing incrementally positive momentum at several customers in non-grocery channel. On the Pulp and Paperboard side, shipment volumes increased 6.3% quarter-over-quarter to approximately 201,000 tons which is near record level. And the favorable pricing environment continues to hold. Now I will discuss our view of the market environment and our outlook for each of our business segment starting with the Consumer Products business. According to IRI worldwide data, the total tissue market has measured in cases was down .3% compared to Q4 ’13. Total private label declined by 1.3%. Clearwater Paper is down 0.8%, while brands grew 0.1% over this period. This trend is inline with an ad tracking database that we subscribe too and their reports show advertising and promotional activity by the brands are up approximately 65% from the prior year. Our first quarter…

Thank you. (Operator Instructions) And our first question comes from James Armstrong from Vertical Research. Your line is open, please go ahead.

Good day, and thanks for taking my question.

Hi, James.

Hi. My first question is on the Paperboard side, those were -- the shipment levels out of the Paperboard segment continue to be very high. Do you think that those shipment levels are sustainable or said another way; do you believe that you’re -- what is your annual Paperboard capacity?

James, this is John. So, we’re coming off seasonally low first quarter and going into stronger second and third quarter. So for that reason we do expect volumes to continue to go up. The market is very strong. From a capacity standpoint -- from a production capacity standpoint I think 210,000 on a quarterly basis -- on a go forward basis.

197?

197, James.

So, you’re running slightly above your capacity, so you’re pulling inventory out of the system. Would that be the right way to think about it?

Yes.

Yes.

Okay. And then switching gears, what do you think is -- is it just promotional activity that’s causing the private label market share to decline slightly Q1 versus Q4, and do you believe that your retail market penetration will improve as the year progresses?

Yes, I think it's probably a lot to do with the promotional activity we’re seeing, but keep in mind those market share numbers are going to kind of move around quarter-over-quarter depending on what's going on. I think we’re generally on track with the overall tissue category growth and how much we grow is going to be depending on what happens in the competitive market from a promotional activity.

Okay. And then lastly, the sales volumes were down in the quarter and I assume a good chunk of that was due to weather. How much of this do you expect to get back as we go into Q2 and maybe into Q3?

James, I would say just talking about it from a cost side of the equation, so we had about $9 million between energy and transportation. And as Linda said from a transportation standpoint we’re not necessarily seeing that release here in the second quarter yet as they continue -- that kind of have to work through the issues that the cold weather presented. We are seeing the benefit of our decrease in our energy spending. I think with natural gas down at mid $4 per dollar range, so we would expect to probably see $4 million to $5 million of benefit related to the -- on the energy side, but no benefit on the transportation side.

Yes. And then on volumes, do you expect any volume recovery that you might have missed because of the heavy snow in the north-east in the first quarter?

I think we -- having the outlook in our supplemental material on the consumer product side is about 3% to 5% higher on the shipment volumes. Some of that might be kind of getting back some of that volume from the first quarter, but probably not a lot of it.

Okay, that helps. Thank you very much.

Thanks, James.

Thank you. Our next question comes from Steven Chercover from D.A. Davidson. Your line is open, please go ahead.

Thanks. Good afternoon. I had also two volume related questions. First of all on Paperboard, is part of the reason that the volumes are up year-over-year due to that consignment arrangement that you entered into a year ago?

No, not really. I would say it's a function of a strong market, but it's also a function of our teams performing very well with regard to Paperboard production. I mean we actually have set some internal records as of late and have the inventory to probably a strong market.

But I would say that, kind of that increment that we saw that was even more than we thought when we updated you in March. A lot of that came from situations where it was consigned inventories, so even in the light of tight transportation, that’s why they were able to. It's going to be up 6% versus the 1%.

Okay. The volume in the first quarter is not sustainable. So where do your inventories stand?

I think we are pretty normal inventory levels and we’re actually expected to go a little bit seasonally higher on shipments in Q2, I mean so that’s expected to go up about 2% to 3%.

We have made in the last quarter, six months pretty significant production efficiency improvement particularly in Arkansas. And so that’s keeping us from being in a tight inventory position on the Paperboard side.

Okay. And on tissue, the fact that your volume is down year-over-year, is that a function of cannibalization of your conventional product?

Well I would say one is weather, it’s called a third. Two is, the promotional activity by the brand. And then year-over-year if you go back to last year, we’re actually in a position where the brands was pretty much stepping out of promotional activity and the retailers were asking us to step in, and so we kind of have the opposite happening right now. So, that’s an impact as well. And we had a piece of business in the dollar segment last year that was well contributed to some of the operational issues that we saw that we -- we walked away from that business versus where we are right now.

Why do you think that the brands have resumed their promotional activity? Are they just tired of [ph] [receiving] share?

Yes, Steve I can’t comment on what the brands are doing, but I can tell you that, we have launched a really good private label product that competes well with some of the favored bath and towel products out there.

Are you able to divulge any of the new customers that you’ve secured over the last few months?

Not willing to divulge that, no.

All right, well still got to try. Okay, I think that was it. Thank you.

Thank you.

Thank you. (Operator Instructions) Ladies and gentlemen this does conclude our question-and-answer session. At this time I’d like to turn the call over to Ms. Massman for any closing, additional remarks.

Yes, thank you, Saeed. Well we have many challenges ahead in 2014. We also are very excited about our business prospects and opportunities to increase the level of efficiency in running our business. Thank you for joining us today and for your continued interest in Clearwater Paper. On a final note, we’ll be presenting at the Goldman Sachs, Basic Materials Conference on May 20th in New York and hope to see you there.