Welcome to Clearwater Paper Corporation's First Quarter 2016 Earnings Conference Call. As a reminder, this call is being recorded today, April 28, 2016. 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, Chrystal. Good afternoon and thank you for joining Clearwater Paper’s first quarter 2016 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 first quarter were released shortly after today’s market close. You will find presentation of supplemental information, including an updated outlook slides providing the company’s current expectations and estimates as to certain costs, pricing, shipment, production and other factors for the second quarter of 2016 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, 2015. Any forward-looking statements are made only as today's 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 first quarter and Linda Massman will provide an overview of the business environment and our outlook for the second quarter of 2016. And then we’ll open up the call for the question-and-answer session. Now I’ll turn the call over to John.

Thank you, Robin. I am pleased to report a very good quarter which came in at the high end of our Q1 EBITDA outlook rate. Before I get to the results, I'd like to preface my comments by stating that throughout the rest of my remark, I'll 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 our press release and supplemental materials posted on our website. For the first quarter of 2016 those items netted to a $1.2 million charge and include approximately $750,000 from the mark-to-market adjustments to our outstanding directors' common stock unit and approximately $450,000 associated with the closed Long Island New York facility. So with that let's get to our results. Our first quarter net sales came in at $437 million, up 1.3% versus the fourth quarter. That is just about the high end of the outlook range of flat to up 1% that we provided in our Q4, 2015 earnings call. Tissue shipment volumes increased 3.4% versus Q4. The impact of that volume increase was partially offset by a lower paperboard average sales price versus Q1, 2015 net sales were up 70 basis points. First quarter adjusted gross profit of $69 million, or 15.8% margin was up 20 basis points from fourth quarter due to a lower input costs for transportation and energy and better absorption of fixed cost on higher production volume, which was partially offset by a planned water wash at our Lewiston pulp and paperboard facility. Adjusted SG&A expense was $30 million or 6.9% a first quarter net sales which was flat with Q4, 2015. Adjusted corporate expense was $15 million of the…

Thanks, John. Hello, everyone. And thanks for joining us today. I am also very pleased with our strong start to 2016 with consolidated first quarter results that were across the board at the high end of our outlook ranges for the quarter. Our consumer products business continue to improve, shipment volumes picked up and more importantly operating efficiency and profitability continually strengthened through the first quarter. The quarterly adjusted EBITDA margin of $13.3% is a highest in more than three years. For the Pulp and Paperboard business, shipment volumes remain solid and as expected pricing through the first quarter were lower than average 2015 level. Our Paperboard backlogs are similar to levels at this time last year which includes the seasonal pickup as we enter the second quarter. We've made excellent progress with our strategic capital investments in the first quarter. The multi-year pulp digester and optimization project remain on schedule and within budget. The excavation is completed and the foundation is under construction. Our engineering team recently inspected the digester vessel which is under construction and progressing within inspect. Regarding warehouse automation. Installation and startup at our Shelby, North Carolina facility is on schedule and made a modest contribution to our operating efficiency gains in the quarter. The laser guided vehicles are up and running 24x7 and fully operational in paper handling, storage and retrievable. Work is also well underway on our next step to automate our case storage and shipping operation. Warehouse automation installation for our Las Vegas plant is also on schedule with phase implementation to begin in the latter half of the second quarter. We also completed installation of our high -speed bath and towel converting equipment in Las Vegas which did start up on April 1 as planned and it is exceeding start up expectation.…

[Operator Instructions] And our first question comes from Paul Quinn from RBC Capital Markets. Your line is now open.

Yes. Thanks very much and good afternoon. Just curious as to what the real difference between your guidance. It looks like your higher than expected tissue shipments and you cited the increased volume to your four biggest customers. Do you think that was -- that volume got actually sold by the customers in the quarter or you are going to see a push back in Q2 from that?

No. I think it will be sold by the customers.

Okay. And then just on the negatives on the tissue price mix. Why was that down quarter-over-quarter versus a guide that was positive?

There was couple of elements to that. One is the mix of parent rolls. We had more parent rolls, there is higher or lower price putting on that. And then within the retail cases a mix kind of to some of our higher volume customers where there is volume discount pricing.

Okay. And then just asking question on around the brand promotion. Just so I understand that it sounds like the brands gain market share in Q1 here and you are siding really on the digital side to get your ad track and you are showing the promotional on I guess ad volume could be down. How do you track that digital and what would you say -- so the breakdown in term of brand and promotional dollars between normal ad and digital ad?

Yes. So Paul I'd say it is a lot easier to track the traditional ad that you would see in printed form. And so when we refer to the in-store promotion that is really more anecdotal given how often we are out in the field and in the store and see what's being promoted. So we rely heavily on our sales team to report back to us as to what they are seeing out in the stores.

Okay. And then just lastly you mentioned looks like higher maintenance in Q2 but I think you said it pushing out some of the stuff in Lewiston to Q2. Why was it move to Q2?

We just got -- we had a couple things we are doing in Lewiston in operationally because what happen if we go on at this stage didn't make sense to actually do that in the first quarter and we simply going to do that in the second quarter.

Thank you. And our next question comes from James Armstrong from Vertical Research Partners. Your line is now open.

Good afternoon. Thanks for taking my question. First on the branded tissue, to dig into that a little more. Is there any evidence of anything more than just heavy promotional activity at/or is it just promotion and it doesn't seemed to be moving much on price?

I think I'll characterize it as promotion and ways of driving some marketing to get consumers to try the branded product. I am not seeing a lot on price. I mean ultimately all ends up in price but I'd say it's more driven by promotion.

Okay. That helps. And then switching to bleached board. There is a lot of worry in the market right now. What are you seeing in terms of imports or further competition in your bleached board business?

Yes. I would say with regard to the market, general market conditions the market is okay, not overly robust but fairly stable and with regards specifically to imports, I don't think we have much of an update above and beyond what we've been talking about for the last couple of quarters. We are seeing a bit of ivory board out west, we are seeing a little bit of Scandinavian board out east. Nothing is having a material impact. I say it is just consistent with what we've been expecting.

Okay. And then lastly with all the projects going on do you believe working capital will be a source or a use to fund this year?

I think with the initiatives we have around -- we have strong initiatives around the payable side of the equation and now we have got stronger initiatives around inventory. So and planning on working capital be in source at the end of the year.

Thank you. And our next question comes from Steven Chercover from D. A. Davidson. Your line is now open.

Thanks. And forgive me if these are kind of along the same line of questioning. But so would you say then that your increased sales of jumbo rolls are a function of your productivity outpace in the demand through the current channels?

Well, no, I think I mean there are always opportunities to sell the parent rolls and we had stronger productions so we had more parent rolls available. So I don't think it's really anything more in that.

So you are doing well with your top four customers. So I guess you can't pressure them if you are already happy with their off tick.

Right.

Yes.

Okay. So the parent rolls are basically early felt?

Yes. Exactly. I mean it's kind of opportunistic and depends on facts and circumstance which quarter is to whether we are up or down.

And we indicated all kind of come back in balance in Q2 with more so --

The jobbers who take this I mean do they turn around and kind of undermine your own markets in due course?

I would say that there is always possibility but I would say our sales team is pretty careful about where we are placing those parent rolls so that we can try to minimize that impact as much as possible. But ultimately papers going to get where it is going to go so we don't kill too many brains deals on that one.

And I'd say the large majority of our parent rolls sales are undervalue into the segment. So I guess that's lesser the concern on our part for that segment.

Okay. And it's probably way premature to start thinking of tissue the way people have been harping on container board but there is also some new machines on the horizon. Do you ever get to the point where you will consider even throttling back your production just sort of to sure that it doesn't undermine price?

I say that we keep a pretty tight look at our supply chain and from time to time we will do that to keep everything in balance and order. But overall I think what we said we release the balance of this year. The capacity coming online really should be pretty balanced market.

And one this comment is primarily focused on the converting Cyprus paper machine.

Got it. Okay. Thanks. And then the paperboard and the questions been somewhat asked but your current guidance, does that reflect a $20 per ton drop in pulp and paper we just published.

It does.

Yes. It does.

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

Thank you. We believe another strong quarter is underway. And I'd like to thank you for joining us today and for your continued interest in Clearwater Paper. On a final note, we will be at the following conference in the second quarter. Goldman Sach's leveraged Finance Conference in California on May 16. And their Basic Materials Conference on May 18 in New York. We will be at the Macquarie's, Emerging Leaders Conference on June 2 in New York. Deutsche Bank Industrial and Materials Summit on June 8 in Chicago. And Citibank Small and Mid-Cap Conference on June 9 in New York. And we hope to see you there. Thank you.

Ladies and gentlemen, that does conclude the Clearwater Paper first quarter 2016 earnings conference call. We do appreciate your participation. Thank you and have a great day.