Welcome to the SWM's Fourth Quarter and Full Year 2014 Earnings Conference Call. Hosting the call today from SWM is Frédéric Villoutreix, Chairman and Chief Executive Officer. He is joined by Jeff Cook, Executive Vice President and Chief Financial Officer; Steve Dunmead, Chief Operating Officer; and Mark Chekanow, Director of Investor Relations. Today's call is being recorded and will be available for replay later this afternoon. The dial-in number is (855) 859-2056, and the pin number is 75016264. [Operator Instructions] It is now my pleasure to turn the floor over to Mr. Chekanow. Sir, you may begin.

Thank you, Sam. Good morning, I am Mark Chekanow, Director of Investor Relations at SWM. Thank you for joining us to discuss SWM's Fourth Quarter and Full Year 2014 Earnings Results. On today's call, Frédéric will share some high-level comments about our fourth quarter and full year performance, 2015 outlook and strategic priorities; and Steve will provide details on our operations; and Jeff will take you through a detailed review of our financial results and 2015 financial guidance. We'll then take your questions. Before we begin, I would like to remind you that the comments included in today's conference call include forward-looking statements. Actual results may differ materially from the results suggested by these comments for a number of reasons, which are discussed in more detail in our Securities and Exchange Commission Filings, including our quarterly report on Form 10-Q, and our annual report on form 10-K. Certain financial measures discussed during this call exclude restructuring and impairment expenses, results of discontinued operations, noncash amortization expenses, start-up costs of a new mill, accelerated depreciation of assets in Brazil, tax valuation allowances and purchase accounting adjustments and are, therefore, non-GAAP financial measures. Reconciliations of these measures to the closest GAAP measures are included in the appendix of this presentation. I will now turn the call over to Frédéric. Frédéric P. Villoutreix: Thank you, Mark, and good morning, everyone. Late yesterday, we released our fourth quarter and full year earnings, and this morning we will present our financial results and business updates. I would like to begin the call by quickly reviewing our financial performance and providing some color on the key factors that impacted our results over the course of 2014 and our outlook for 2015. During 2014, we faced some significant headwinds in our tobacco businesses, certainly more than anticipated.…

Thank you, Frédéric. I'll now walk through our volume trends and operational developments, beginning on Slide 6. Tobacco paper volumes in the fourth quarter, including CTM, our paper joint venture in China, were essentially unchanged. As mentioned, in reaction to weak volumes in early 2014, we took on lower margin paper business to maintain mill efficiencies. However, the relative volume strength of conventional cigarette paper and commodity-type nontobacco paper during the fourth quarter did carry a substantial negative mix impact. For the full year of 2014, total tobacco paper volume, including CTM, was down 6.1%. LIP was down 4.7% for the full year, with more than half of that decline due to the unfavorable comparisons in 2013, associated with the previously disclosed customer restocking after Hurricane Sandy. The overall reduction in volume was due to a combination of smoking attrition, some onetime inventory corrections and a small loss of share in certain non-LIP products. Looking forward to 2015, we expect to see better asset utilization and mix due to regaining some of the lost share and the benefits of our restructuring and capacity rationalization activities. Recon segment volumes were down 35% in the fourth quarter, due in part to a strike at our RTL mill in France. The strike was due to labor dispute over the terms and condition of plant headcount reductions. It lasted 4 weeks and ended in mid-December. We estimate that absent the interruption, the 2014 year-over-year decline in Recon volume would have been in the mid-20% range, consistent with previous expectations. 2014 was a very challenging year for RTL, affected by an industry-wide inventory overhang of Recon product as well as the impact of blend reformulations by certain customers. However, we expect stabilization in 2015, with segment volumes expected to grow modestly due in part to…

Thank you, Steve. Fourth quarter net sales decreased 7.5% from the year-ago period. While currency movements had been favorable in previous quarters in 2014, the recent sharp decline in the euro created a headwind in the fourth quarter. On a constant currency basis, fourth quarter revenues were down 3.3%. As said, the currency and business interruption impacts mentioned by Steve, sales would have been essentially flat versus last year. DelStar contributed $30 million of net sales in the fourth quarter. For the full year 2014, net sales were up 2.8%, with DelStar delivering $127.4 million of revenue. Fourth quarter Paper segment revenue, which includes nontobacco paper, but excludes sales from our Chinese JV, was down 14.3%. The negative mix shift discussed earlier in the call, lower LIP pricing and a weaker euro were the key drivers. For the full year, Paper segment net sales were down 8.7%. The Recon Segment fourth quarter net sales decline of 36% was in line with the volume performance. For the full year, Recon Segment net sales were down 24.2%, as mix and price both had positive impacts. The DelStar business was acquired late in the fourth quarter of 2013, with year-ago results including only a 2-week stub period. For comparison purposes, DelStar revenue grew approximately 10% year-over-year. Revenue contributions from the 2 acquisitions executed in the closing days of 2014 were immaterial to the segment results. As you can see on Slide 10, adjusted operating profit was down $13.1 million versus the year-ago quarter. Fourth quarter results suffered from mix, volume and pricing, combined with the associated impact of reduced fixed cost absorption. In addition, we saw the remnants of cost inefficiencies associated with a line rebuild in France, that is now complete. All told, fourth quarter operating profits were weak on several fronts.…

[Operator Instructions] Our first question comes from Dan Jacome of Sidoti & Company. Daniel Andres Jacome - Sidoti & Company, Inc.: Just a couple of quick ones. I guess, on the South Korea LIP, was there any way to have maybe foreseen this a little bit better? Any nuance there would be helpful. Frédéric P. Villoutreix: Not really, let me explain why. I think, the expectation was for the governance to clarify with standards of compliance in the late fourth quarter, early 2015. And this has not been made public yet. So that's probably the largest unknown at this stage. Daniel Andres Jacome - Sidoti & Company, Inc.: Okay. Because I know you had been talking about it for the last few quarters, so it looks like the incremental earnings contribution is going to be nominal, is what you're saying? Frédéric P. Villoutreix: That's what we have built in our guidance at this stage. Daniel Andres Jacome - Sidoti & Company, Inc.: Okay. Okay. And then, on the LIP patent struggle or what you want to call it. I know -- keeping in mind you have to keep the details kind of limited, is this -- any nuance there will be helpful. I mean is this similar to what happened in 2011? Are you going to -- is there going to -- are you going to be seeking some sort of royalty stream or anything you could talk about there would really help us? Frédéric P. Villoutreix: I think it is somewhat similar to 2011 except now we are looking at Europe as opposed to the U.S. market. I think, right now, we cannot provide lot more details, as the infringement action is not filed publically at this stage. So -- but I think, the way I look at it is, obviously, the European markets adopted LIP in 2011. It takes time to build base, but as importantly, now several years of potential impact can be assessed. So that's an important element. Daniel Andres Jacome - Sidoti & Company, Inc.: Got you. And so it's not -- I don't know if you can speak to this, it's not the same competitor that you worked within 2011, and had a settlement with. It's a new player -- or I mean it's another party? Frédéric P. Villoutreix: Yes, it is a different party. In a sense that we have a global license agreement with the particular company that you referred to. And obviously, I think, right now, what we have said over the past 3, 4 years is that, both us and Delfor have certainly maintained share and so it's not a question of us being necessarily on the defensive. It's really looking more at opportunities to leverage our intellectual property in a better way.

The one thing I would add, Dan, is that, I mean, from a cost standpoint, I don't think it's going to be nearly what the company incurred several years ago. But -- and the costs that we do anticipate are factored into our guidance. Daniel Andres Jacome - Sidoti & Company, Inc.: Okay. That was my next question. It's already in guidance, and it's going to be modest. I guess, and then, it looks like you take the midpoint of your 2 ranges there scenario A, scenario B. It looks like even organically, you're growing to be -- you're going to be growing earnings again. But you also mentioned, you're really not happy with the high end. So maybe, making taking that $3.70, and you definitely -- it sounds like you have several levers to pull here. But just wondering, have you guys internally with the stock kind of sort of flat here and your 10% earnings yield and you can borrow at 2%. Have you guys started reconsidering, maybe, stock repurchases? Or is that still off the table?

We haven't. There's no authorization there at this point right now. I mean, we always take a balanced look at how much we return to shareholders versus keeping dry power for internal growth and potential acquisitions. We've returned a lot over the last several years. Just in 2014 alone, we returned over 70% of free cash flow. So -- but at this point, nothing on the table.

Our next question comes from Alex Ovshey of Goldman Sachs.

Couple of questions for you. On the RTL segment level, could you be able to talk about how volumes have trended so far in 2015? And where virgin tobacco prices are? And whether you see any impact from where prices for virgin tobacco is relative to RTL in 2015?

So -- Alex, this is Steve. From how things are stacking up so far and the way that the contract negotiations worked out, I think, we're in line with what we're giving from a guidance standpoint. So we're expecting a modest increase from the base business, and part of that is due to some shifting due to the strike in the fourth quarter. From a virgin tobacco standpoint, the prices are still low, but any impact from that's been factored into our guidance.

And then, would you be able to update us on how you actually see the smoking attrition rates in the U.S. and Europe? So from your point of view, what is the latest trend right now that you're seeing in Europe and U.S.? Frédéric P. Villoutreix: I think, it has been improving in 2014. And the recent communication from key customers in both the U.S. and Europe will trend towards continued improvements. And going back to normalized attrition rate, and possibly, even slightly lower attrition rates than historical past. So that's, I would say, if that materialized, probably it would be a little bit of upside for us.

Okay. Got it, Frédéric. And then, on the restructuring side, clearly, a lot of thought and effort is being put behind this. Can you maybe help us size what the benefit will be for the company in '15? It seems it will potentially move into '16 as well, maybe, some range of potential outcomes in terms of the benefit there?

Yes, Alex, if you take the restructuring actions that we took in 2014, on a full year basis, they should be in excess of $8 million. And we would expect incremental improvement '14 over '15 due to the full year wraparound effect and some other things that are anticipated, more than half of that showing up in '15.

Okay. Got it, Steve. On the royalty side, maybe we missed it, but I didn't see a number in the press release. Can you talk about what the royalty number was for the company? And any thoughts around how should we be thinking about that number in '15?

I think from a royalty standpoint what we saw in '14 was fairly similar to what we saw in '13. Going forward it's pretty much driven by attrition in the market. So obviously with attrition in more mature markets going down, that will be impacted as well.

Okay. Got it. So just sort of a decline consistent with the attrition. Okay. On DelStar you pointed to looking at deals that are larger than the 2 that you closed. Frédéric, would you be able to put some numbers around what's sort of a sweet spot in terms of revenue that you're hopeful to be able to acquire in the DelStar business? Frédéric P. Villoutreix: Sure. First of all, I think, just to be clear, I mean, the 2 acquisitions we made in December are very important to our strategic plan to build a large filtration platform, but as we noted are on the smaller end. I think it's not a question of size, it's not the #1 criteria. I mean, it's really the fit. The potential for growth. As we obviously, invested a lot of time looking at opportunities within the filtration, medical area and as well as some specialty paper and the movement [ph] that we can drive some direct synergies from our legacy assets. I think that there are some high-quality prospects of more meaningful size. Timing is key, discipline on valuation is also key, and none of that will be jeopardized, but we want to continue to focus on those larger targets knowing that our leverage, as we mentioned, is also very low at the moment.

Make sense. And just last question. Can you talk about what your EPS guidance implies for the free cash flow number in '15, and/or just some -- if there's changes in terms of some of the key moving items in the cash flow line in '15 versus '14?

Yes, I mean, I think the free cash flow, we don't provide specific guidance on it. But I think, it will be in line with the EPS number, given all the pluses and minuses that are in there. And there's no unusual outlays of anything that we're expecting in 2015. So I think you can see it pretty much in line with the EPS year-over-year.

[Operator Instructions] Our next question is a follow-up from Dan Jacome of Sidoti & Company. Daniel Andres Jacome - Sidoti & Company, Inc.: Just a quick follow-up. Housekeeping. On the China RTL, can you -- what was -- I think, I may have missed it. What is the revenue -- the incremental revenue for 2015 off that again?

Yes, we account for the joint ventures on an equity income basis, so there wouldn't be any impact on our revenue. So it will be down kind of just below EBIT, where we show income from equity affiliates. Daniel Andres Jacome - Sidoti & Company, Inc.: Right. I am just trying to back in to how you get to the, you said, $0.16. I mean, what's the incremental tonnage?

From the incremental tonnage, we are looking for at least around 15,000-or-so metric tons this year. The total capacity of that line would be upwards of about 30,000. Daniel Andres Jacome - Sidoti & Company, Inc.: 30,000 is the stretch goal for the out year?

Yes, that's the capacity... Frédéric P. Villoutreix: Dan, what we said is our goal is within 2 years to ramp-up to full capacity. So we started in late, let's say fourth quarter of 2014. So the plan is to remain to be at near full capacity of 30,000 tons in the latter part of 2016. And so you can imagine a somewhat linear progression, where maybe a little bit more tilted up front. We are progressing faster in 2015, filling the capacity than in '16. Daniel Andres Jacome - Sidoti & Company, Inc.: Got you. Okay. Maybe, I should brush up on my...

We'll provide you on earnings improvement -- we expect to provide earnings improvement in '16 over '15. Daniel Andres Jacome - Sidoti & Company, Inc.: Yes, I know. That's what I've been assuming as well. And then, on the LIP, I don't want to get myself in hot water here, but what gives you the confidence that you sort of -- the LIP pricing historically has been so robust that it's going to come back? Is there anything that you could give us? I mean, is there customer discussions or just sort of reversion to the mean?

Yes, Dan, for years, because we were the technology and innovation leader, we've commanded a premium in the marketplace. And coming in 2013 -- at the end of '13, moving into '14, and '14 moving into '15, our prices have come down more in line with the market. We're still getting the slight premium, but we've got to earn that from a service and a quality, and hopefully, further innovation standpoint. But we pretty much know where the market is. And we're coming in much more in line with the markets. So we would expect that the pressure moving forward will be somewhat less.

[Operator Instructions] And I'm showing no further questions. I'd like to turn the call back to management for any closing comments. Frédéric P. Villoutreix: Thank you, Sam, and thank you, all, for attending the call. We certainly appreciate your interest in SWM. Mark, Jeff, and I will be in our offices today, and if you have any follow-up questions, please give us a call. Have a nice day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. And you may all disconnect. Everyone, have a wonderful day.