Good afternoon. My name is Brianna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Clearwater Paper Third Quarter 2023 Earnings Conference Call. Please note that this call is being recorded. All participants are in listen-only mode at this time. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, press star one again. Thank you. I will now turn the call over to Sloan Bohlen, Investor Relations. Please go ahead. Thank you, Brianna. Good afternoon, and thank you for joining Clearwater Paper's third quarter 2023 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 third quarter of 2023 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. A 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 are going to incorporate it by reference into our prepared remarks. With that, let me turn the call over to Arsen. Good afternoon, and thank you for joining us today. As you saw in our press release, we had an outstanding third quarter, driven by good operational execution, lower input costs, and continued strength in our tissue business. Slide 3 of our supplementals provides a summary of our consolidated results. We reported net sales of $520 million and adjusted EBITDA of $81 million in the quarter, which is at the higher end of our expectations and $3 million higher than the third quarter of last year. Our tissue business drove the improvement by more than doubling its adjusted EBITDA from $21 million in the third quarter of last year to $46 million this year. Our paperboard business delivered $52 million of adjusted EBITDA in the third quarter at a margin of 20%, even with the soft demand that we continue to experience. Let me share a few highlights with you. Prices increased in tissue as compared to the third quarter of 2022 and decreased in paperboard, which reflects market trends as reported by RISI. Lower input costs benefited both of our businesses as compared to the third quarter of 2022, particularly in fiber, energy, and freight. We had good operational performance across both businesses as we balanced supply and demand to manage our inventories. Tissue demand continued to be strong, while paperboard remained soft as destocking continued. We reduced net debt by $69 million in the quarter for a total of $416 million since 2020. Taking that $416 million net debt reduction and dividing it by the current share count equates to approximately $24 per share. We repurchased $5 million of shares during the quarter for a total of $20 million since 2022, with $10 million remaining on our buyback authorization. Finally, last Friday, we started the redemption of our 2025 notes with a combination of a new term loan using cash on hand and drawing on our existing ABL. This further strengthens our balance sheet, creates flexibility, and pushes any material debt maturities out to 2028. With that overview, let me turn to each of our segments and provide some additional details. We continued to be agile and adjusted our production to meet demand and manage our inventory levels. We took approximately 10% downtime on our paper machines to balance supply and demand during the quarter. Despite this downtime, the business performed well and generated a 20% Adjusted EBITDA margin in the quarter. As we noted over the last several quarters, demand began slowing late last year. That trend continued into the third quarter of this year. We believe that this softness is driven by a combination of a slowdown in consumer demand and inventory destocking across the value chain. Industry data reflects these trends, with a 9.7% decrease in operating rates and a 15.7% decrease in shipments year to date, 2023 versus 2022, as reported by AF&PA. As further evidence of this trend, RISI has now reported an $80 per ton decrease in folding carton prices in the third quarter, reflecting the first decrease in more than three years. As a reminder, approximately 35%-40% of our volume is now indexed to RISI, and it typically takes us up to two quarters for price changes under these arrangements to be reflected in our financials. If we apply an $80 per ton decrease across all our tons, the annualized impact could be greater than $60 million. These decreases are being partially offset with lower input costs and improved operational performance. We remain optimistic about the long-term prospects for paperboard, but given economic uncertainties, we foresee a gradual recovery starting next year. RISI is forecasting a 10.5% decrease in total SBS production this year versus 2022, followed by a 4.2% increase in 2024 and a 5.3% increase in 2025. Please turn to slide 5 for additional comments on tissue. The performance of our tissue business was very strong. Revenue improved by 8% year-over-year, driven by higher pricing and higher retail shipments. Adjusted EBITDA margin improved to 18% due to higher pricing and lower input costs, particularly in pulp, energy, and transportation. With roughly a quarter of our contracted customer volume tied to the RISI Pulp Index and with lower pulp costs, we're expecting a $4 million-$6 million headwind per quarter moving forward. Even with that impact, we're optimistic that we can retain most of the margin improvement captured as we head into 2024. Let's turn to some industry data. RISI recently reported that tissue capacity utilization is around 94% so far this year, which we believe represents a healthy supply and demand balance. This supports our view that tissue industry conditions are improving. Let's look at some of the high-level capacity trends that are driving these numbers. Between 2018 and 2020, nearly 450,000 tons of tissue capacity were added, primarily targeting the private branded space. That increased supply outpaced demand growth. Between 2021 and 2023, more than 180,000 tons of capacity were reduced. We now believe that around 300,000 tons of capacity will come online between 2024 and 2026, which roughly matches demand growth over that same time horizon. Given these dynamics, we're optimistic that our tissue business will perform well in the near to medium term. With that overview, let me introduce our new CFO, Sherri Baker. Sherri joined us in August and has hit the ground running. She brings significant experience building and leading finance teams and an extensive background in strategic, financial, and operational decision-making. I'm looking forward to working with Sherri to continue our focus on strengthening our company and creating shareholder value. Thank you, Arsen. I am excited to be joining the Clearwater Paper team and look forward to working with you, our board, and our people to continue improving our performance, growing the business, and creating shareholder value. Let's cover our financial performance in the third quarter by turning to slide 6. The consolidated summary income statement shows results for the third quarter of 2023 and 2022. In the third quarter of 2023, we reported net income of $36.6 million, net income per diluted share of $2.17, and adjusted net income per diluted share of $2.19. The corresponding segment results are on slide 7. The business performed very well on a consolidated basis, with lower input costs and strong operating performance driving a healthy improvement in profitability. Adjusted EBITDA margin rose to 15.5% in the quarter as compared to 14.3% last year. Slide 8 is a year-over-year comparison of segment income and adjusted EBITDA for our paperboard business. The business delivered $52 million of adjusted EBITDA in the quarter with a 20% margin. On a year-over-year basis, lower sales and production volumes impacted cost absorption, which was partially offset by lower input costs. Slide 14 in the appendix shows a sequential comparison of the third quarter to the second quarter of this year. It reflects a lower sales price and mix, flattening volumes, and reduced costs. Slide 9 is a year-over-year comparison of segment income and adjusted EBITDA for our tissue business. As Arsen discussed, we are benefiting from previously announced price increases, higher volumes, and lower input cost. The business delivered $46 million of Adjusted EBITDA in the quarter with an 18% margin. As noted on this slide, in the third quarter, we saw the benefit from lower pulp price as it flowed through to our income statement. Slide 15 in the appendix shows a sequential comparison of the third quarter to the second quarter of this year. It reflects the benefits that we are seeing from lower input costs, particularly in pulp. Slide 10 outlines our capital structure. Our balance sheet remains very strong and our liquidity improved quarter over quarter, now totaling $370 million. During the third quarter, we generated $74 million in free cash flow and reduced net debt by $69 million versus the second quarter. On a year-to-date basis, we generated $76 million in free cash flow. Since 2020, we have reduced our net debt by over $416 million. We announced last Friday the addition of a new revolving term loan with borrowing capacity of $270 million. The initial draw on this facility is $150 million. We will use these funds along with cash on hand and drawing on our existing ABL to extinguish our 2025 notes. This new agreement extends any debt maturities to 2028. Given the redemption process for the existing 2025 notes, we will fully extinguish the 2025 notes in late November. The initial draw on the facility is fixed for one year at 9.13%. The revolving credit covenants are similar to our existing ABL, and the loan is secured by plant, property, and equipment. With this new agreement in place, we have strengthened our balance sheet and improved our financial flexibility. At the end of the third quarter, our net debt to EBITDA ratio was at 1.8 x. We used free cash flows to repurchase $5 million of our stock during the quarter. That translated into over 150,000 shares repurchased at an average price of $33.36 per share. Since we reinstituted the program back in 2022, we have repurchased 614,000 shares at an average price of $32.70 per share. We have roughly $10 million left on our share repurchase authorization. Let's now move to slide 11 for an outlook on the fourth quarter of 2023, as well as some updates to our full year expectations. With the expected impact of lower market pricing for paperboard, continued soft paperboard demand, and a planned major maintenance outage in our Arkansas mill, we expect Adjusted EBITDA in the range of $60 million-$70 million in the fourth quarter. For full year 2023, we expect Adjusted EBITDA in the range of $278 million-$288 million. This is up from Adjusted EBITDA of $227 million in 2022, driven by fewer major maintenance outages, improved operating performance, higher pricing, and lower input costs. Lastly, our other key assumptions for the full year remain unchanged. Interest expense should be in the $28 million-$30 million range. Depreciation and amortization expense should be $97 million-$100 million. Capital expenditures should be between $70 million and $80 million, which includes approximately $9 million on our Lewiston recovery boiler tube replacement project and $11 million on the precipitator replacement in Arkansas. As a reminder, the recovery boiler project will require approximately $40 million of total spend, while the precipitator is projected to require $45 million. Finally, our tax rate should be in the mid-20% range. Let me now turn the call back over to Arsen. Thanks, Sherri. We have previously discussed our prioritization for capital allocation to create shareholder value. Slide 12 is the framework for our approach. Our top priority is sustaining our assets, followed by maintaining a strong balance sheet, and finally, evaluating value creating opportunities, including returning capital to shareholders. I would like to now spend a few minutes sharing some thoughts about the broader strategy for both of our businesses. To start, operating performance matters greatly in both segments and is critical to meet customer needs. We have made significant progress over the past few years, improving our operations and becoming a more competitive player in both of our businesses. But given the capital-intensive nature of our industry, we believe that scale is needed to be able to invest and grow. In paperboard, we believe that we're uniquely positioned to become a supplier of choice to independent converters across multiple substrates and product categories. To do that, we will explore offering additional paperboard products such as lightweight FBB, white top, poly-free cup stock, additional recycled grades, and other products that meet the needs of our customers. We're currently conducting engineering studies to evaluate the feasibility of investing in our existing assets to expand our product offering. We may also be opportunistic buyers of paperboard mill assets across SBS and other substrates. Our long-term goal is to build a scaled, high-performing, and diversified paperboard business that is well-matched to the needs of independent paperboard converters in North America. In tissue, we believe that consolidation is needed, given the consolidated customer landscape and the fragmented supplier base. The top three or four retailers in the U.S. now account for more than half of the private branded tissue market. Given the size and demands of these customers, private branded tissue manufacturers need scale to deliver the right combination of cost, quality, and service. In addition, manufacturers need scale to be able to make sizable, long-term investments in new capacity to keep up with the growth of these retailers. We believe that recent improvements in the tissue industry could facilitate the creation of a scaled, private branded tissue manufacturer. As we stated previously, we're willing to participate in this consolidation under the right market conditions and appropriate values. To be clear, any internal or external investment decisions will be balanced with our goal of maintaining a strong balance sheet and financial flexibility through the cycle. We're gonna continue to be disciplined allocators of capital, and we'll seek the right opportunities to create value across both of our businesses. In summary, we have spent significant efforts over the last several years improving our operating performance, especially in areas that matter most to our customers. We have also greatly improved our financial position by focusing on cash flow generation and debt reduction. We are now well-positioned to look at all strategic options for our company to grow and create value for our shareholders. Let me close by thanking our people for all that they do to keep our operations running safely and efficiently. I would also like to thank our customers for placing their trust in us and our shareholders for their continued support. With that, we will end our prepared remarks and take your questions. At this time, I would like to remind everyone, in order to ask a question, please press star one. Your first question comes from Matthew McKellar with RBC Capital Markets. Your line is open. Hi, thanks very much. Just like to start with the paperboard business. It sounds like you're expecting a gradual recovery in that business starting in 2024. Maybe you could provide a bit of color on whether that's early in 2024, whether we see that recovery start later in the year. But it sounds like we shouldn't see much of a change in shipments quarter over quarter in Q4. Can you talk a bit about whether conditions in the paperboard market have sort of improved or worsened through the quarter? And to kind of start progressing through October here, are there any specific areas of strength or weakness by end market you'd call out? And then what are your customer conversations like at this point, and what gives you confidence in a recovery that starts sort of in 2024? Thanks. Yeah. Thanks, Matthew. So if you look at volume Q2 to Q3, we're flattish. We're actually maybe up slightly in volume, but I think conditions remained stable in Q3, throughout Q3, and we're seeing similar conditions here as we start Q4. We're not seeing a material recovery just yet. You know, the market, the SBS production and demand is down. So if you look at, you know, if you look at RISI numbers, you know, they're showing a 10% decline this year. We believe that a lot of it is driven by destocking. So at some point, the destocking will come to an end, and we'll start seeing a gradual recovery back to 2022 levels. If you look at RISI, they're forecasting 4% production increase next year and 5% in 2025, so it may take some time to recover. At this point, we're not prepared to project whether that happens in Q1 or Q2, but we do believe that recovery will start next year. You know, if you look in the long run, there's some favorable trends in SBS, sustainability trends. The markets are inherently stable, and if you look at the end-use application. So we do think once we get through this destocking, that the market will start recovering gradually, and our production and volumes will start gradually recovering in 2024. Great. Thanks for that. If we could stick with paperboard, is there any additional color you can provide on sort of the timeline and maybe amount of investments you're contemplating as it relates to product development in the paperboard business? And then maybe as you think across what could be out there in terms of acquisition opportunities, what might be complementary to your portfolio? Yeah, so we're looking at the independent converting independent converter market out there and see what their needs are in the long run. You know, not just SBS, but other applications, other paperboard applications. So whether it's lighter weight products like FBB, more recycled grades and other products as well. So our aim is to develop products that cover the spectrum for those independent converters. We've started the work. The work will continue into next year, so we don't have any definitive time horizons for when we'll make decisions. And so we're gonna continue to work through next year. In terms of potential acquisition targets, as you know, Matthew, these are episodic. So what's important to us is the right strategic fit, the right quality asset, and the right valuation for those assets. So we'll look at opportunities as they come up, but they have to be a good fit for our network. But we do see ourselves as a leader in that independent converter market. We wanna build a company that provides for the needs of those independent converters. They're an important part of the broader paperboard market, and it's our intent to be the supplier of choice. Okay, thanks very much. And then just switching over to tissue, you touched on it, and we've seen pulp pricing come down a lot over the last year, and I think you talked about kind of competitive dynamics and what's going on with the pricing to some extent there. But any additional color you can provide, and it sounded like you're looking to retain most of the economics you've captured. But just, you know, what you're seeing there from competitors and what you expect price to do here, if pulp stays where it is over the next couple of quarters, would be great. Thanks. You know, Matthew, we tend to stay away from commenting on pricing projections. What I would tell you is, in this market, supply and demand drives, drive price. And as we mentioned in our comments, we think there's a pretty good, healthy supply and demand balance, so that's driving pretty good utilization rates in the industry. So if you look back at 2018 through 2020, there's quite a bit of supply added to the private branded market, which we think outpaced demand growth. If you look at 2021 through 2023, there's actually a net reduction in capacity, and then, you know, if you look out over the next three years, we think that the supply additions will roughly match with demand growth. So we think we're in a different and a better tissue market at this point. But I'll refrain from commenting on future pricing. In terms of pulp, we did mention in our prepared remarks that about a quarter of our volume does have a pulp cost component that's tied to RISI. So we are expecting some headwinds here in the coming quarters, $4 million-$6 million per quarter due to lower pulp costs. But if you look at our margin improvement over the last several quarters, we believe that we'll be able to retain most of that margin improvement, at least in the near to medium term. So we think the conditions are better in tissue today than they were over the last several years, if you set COVID aside. Okay, thank you. And then maybe just to drill down on one point there, do you expect a shift in private branded product consumption or sort of the market share there? Do you expect that shift to slow from here, given that overall inflationary pressures for consumers seem to have sort of eased? Should we expect that trend to stabilize, or do you expect sort of further share gains by private branded product from here? You know, we're right around 36% right now, which was roughly the same as we had last quarter. If you go back to 2019, it was less than 32%, and if you go back 10 years, it was quite a bit less than that. So we've seen private branded share grow regardless of economic conditions through ups and downs in the economic cycle. So we do think that there's more runway for private branded share. If you look at some European countries, they're north of 50%. We're now at 36%. So do I think it's gonna be consistent growth quarter after quarter? No. But I think if you look at over the long haul, I do think private brands—we believe that private brands will pick up additional share over the next several years. Okay, thanks very much. I'll get back in the queue. Thanks, Matthew. ... Our next question comes from Paul Quinn with RBC Capital Markets. Your line is open. Yeah, thanks very much. Good afternoon. I just wanted to tag team off Matt's question on the tissue side. You know, it sounds decent at 18% EBITDA margin, but is that the best this business can be? I mean, if we go back a couple of years, you guys really struggled in the business, and it seems like the pulp, you know, now is sort of bottoming, turning the other way. You know, you're definitely gonna have that cost headwind. Just wondering how confident you are of holding that margin. Yeah. So we'll avoid talking about future margin projections, Paul, but I do think that we can retain the bulk of that margin that we picked up here over the last several quarters. If you go back, you know, outside of COVID, you know, we were probably in that mid- to high-single-digit EBITDA margin. You know, we've done a lot of work on our system with our assets and our supply chain and our production and our customers. We think we're better positioned operationally, regardless of what happens with pulp prices. Although obviously, those are providing a nice tailwind for our margins. You know, but pulp is hard to predict, Paul. We've been through, you know... We talked about this at length over the years. It's hard to predict. We don't see, you know, global demand fundamentals to drive up pulp price here in the near to medium term, although, you know, we've all been wrong. But we do think our business is fundamentally in a much better place than it was a few years ago, and pulp prices will do what they do. Okay. And is there, you know, some product on the tissue side that you're missing or that you'd love to have more of? Is there, you know, just trying to just figure out your business going forward? Yeah, you know, Paul, we cover all quality tiers and product segments nationally, so that's what makes us somewhat unique in this industry. You know, historically, the ultra segment has grown faster than the conventional and the value segments. Our Shelby investment plays to that, and we've placed a lot of those tons in the ultra space. But I think we're pretty well covered in terms of quality and products. What I did mention in my comments is, I think in the long run, what's needed in this industry is that consolidation that is, you know, where scale players are able to invest in the business in the long run, to add capacity, to grow low-cost capacity. But I think it requires scale. We are a smaller tissue player, and those investments are large, and they take many years to achieve the kinds of return that we would need to see. So we're not all that well positioned to make those big investments at this point, which is why we think that consolidation is needed. All right. I get you. Thanks very much. Best of luck. Thanks, Paul. There are no further questions at this time. This will conclude our conference call. Thank you for joining us today. You may now disconnect.