Clearwater Paper Corporation

Good day and thank you for standing by. Welcome to the Clearwater Paper 2Q22 earnings call. All lines have been placed on mute to prevent any background noise. Should you require assistance, please press star zero on your telephone keypad and an operator will assist you. During today's call, there will be a question and answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. I will now turn the conference over to Sloan Bolin, Investor Relations. Please go ahead.

Thank you, Sarah. Good afternoon, and thank you for joining Clearwater Paper's second quarter 2022 earnings conference call. Joining me on the call today are Arsene Kitsch, President and Chief Executive Officer, and Mike Murphy, Chief Financial Officer. Financial results for the second quarter of 2022 were released shortly after today's market closed, 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 two 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. And with that, let me turn the call over to Arsene.

Good afternoon and thank you for joining us. Please turn to slide three. We had an outstanding second quarter that came in at the top end of our outlook range. On a consolidated basis, we reported net sales of $526 million, which were 30% higher than prior year. Adjusted net income was $19 million and adjusted EBITDA was $63 million. Let me share a few highlights. Strong paperboard demand continued and prices increased. Tissue demand was also strong as consumers turned to private brands to help offset the impact of inflation. We successfully renewed key tissue customer agreements that were expiring this year and captured price increases. Inflation remained a headwind across most of our input costs, particularly in pulp, fiber, chemicals, energy, and freight. In addition to price increases, we continued to improve our operating performance, which mitigated the impact of rising costs. We reduced net debt by $68 million in the quarter and almost $100 million in the first six months of the year. And as a result, we achieved our debt leverage target. And finally, we repurchased $4 million worth of shares with $26 million remaining on the authorization. With that, let's discuss some additional details about both of our businesses. Please turn to slide four for a few comments on our paperboard business. The industry continued to experience strong demand across its end markets with higher SPS pricing as reported by RSEI. Since the beginning of 2021, RSEI has reported price increases for the US market that total $450 per ton. $250 of that was in 2021, $100 in the first quarter of 2022, and another $100 in the second quarter of 2022. As a reminder, it typically takes us up to two quarters for price changes to be reflected in our financials. It is also worth noting that our portfolio includes additional grades and price mechanisms that are not reflected in RSEI. While perceived economic uncertainty is impacting consumer behavior, we continue to see strong backlogs across our business. June orders remain strong as demand continue to outstrip supply. We will discuss the outlook for both of our businesses later in our prepared remarks. Now please turn to slide five for some additional comments on our tissue business. We're seeing increased demand for private branded tissue products as consumers are becoming more value oriented. Private-branded share of the tissue market climbed to over 35% in June, which is an all-time high. We shipped 12.6 million cases in the second quarter, considerably higher than the 10.2 million cases shipped in the second quarter of last year, and 600,000 cases higher than the first quarter of this year. I mentioned previously that over half of our tissue volume was up for renewal this year. Our sales team has done a wonderful job working closely with our customers to renew and extend key agreements while securing new volume. In addition, the team has done a great job implementing previously announced price increases to help offset inflation. With these moves, we have substantially reduced renewal risk in 2022 and 2023 while positioning our business for success in the years to come. As discussed in previous quarters, Both of our businesses continue to see substantial inflation. In addition to price increases, we continued our focus on improving our operating and supply chain performance. That focus on pricing and productivity is helping to offset the inflationary headwinds that we cannot control. I will now ask Mike to discuss our second quarter results in more detail. Thank you, Arson.