Domtar (UFS) 5 Feb 192018 Q4 Earnings call transcript

Good day, ladies and gentlemen. Welcome to the Domtar Corporation Quarter Four 2018 Earnings Conference Call with Financial Analysts. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the meeting over to Mr. Nicholas Estrela. ahead. go Please

welcome XXXX and fourth and quarter Good call. to year earnings full morning, our

questions. Our they be President and division. today Michael and and prepared Officer. speakers Michael will with will Daniel Garcia Daniel will Executive and They after the and remarks, Buron, will Officer; from Chief Fagan our begin Senior paper supported from John Vice be and take pulp Financial John Chief which, by Williams, division President care personal

the be presentation and the website. During will you can Investors the slides, references to supporting call, made of find in this section

As are facts a a statements are outside invite you our the uncertainties, Domtar's number during historical subject are statements and call a control. with for to I that reminder, commissions all review the securities forward-looking of listing to on which not filings those. of based of risks made many

be find GAAP discussed, the well certain measures and morning's release our and non-U.S. as closest the presented to as on can will website. you measures of reconciliation this financial GAAP appendix Finally, in a

it to So I'll turn over with John. that,

Thank quarter cap a morning, morning, year everyone. you, solid Domtar. to for off a announced Nick, and we good great This

in before market strategic of pivotal our point and significant of items In business delivered a positioned well and market with create demand to standpoint from cash flexibility the support inflection actionable customers, an year. a viable long the reached road versus $XXX the We we the pulp with continue the in financial Domtar for In sits free terms were Domtar ended last $XXX was optionality today to a papers while declines. value to million future and performance, improvement of of a for EBITDA as assets flow million, business, demand year, sense communication provided papers, of XXXX XXXX with we shareholder can best long-term a on significant be in achievement increased paper proved the map timing good From results. in contributor a for performance, conversions. positioning we with meaningful visibility how great and term, communication where and investors our short-term the to our

XXXX, our at pricing, our volume our in business. performance and we expanded improved Looking in margins paper grew

partner selling As shut to strategic capitalized more we with grew our also customer from is improved year. long choice their will on and commitment the attractive and in Making that we than removed EBITDA be competitor and highly we opportunities specialty prior capacity grow supply absolute to XXXX capacity, light our our In our business the mix our to papers. the doubled the market, compared remain production for term. paper customers, in to announced our in will and maximize customers. of In current serve of environment customers uncoated market freesheet is pulp, our

Our we from average growth. selling global demand packaging tissue, driving global strong prices and trended hygiene as with benefited markets robust higher

for Domtar of business position pulp a future years, the as becoming Our grown market recent growing portfolio has vital in part our in markets. significantly we

optimize on Given production reliability segments. particularly helped margin control. programs. were in This several product in and and high market in a plan disciplined This in cost and annual growth with was objective These costs things drive mill performance. improvement Operationally, the under records is our and years business, extracting enhance driving to lower expansion. by teams the changes value our efficiencies return outlook mills, the investment across costs place the high efforts and and executing drive projects continuous customer the efficiencies improve with initiative over further in case of our our margin on driving three agile we've next at resulting through favorable network adjusting supported proposition to operational to and

care, personal trends remain favorable infant incontinence for focus adult and growth products Long-term we profitable a and transition a on was For business. building year. more XXXX continue to

conditions, headwinds market XXXX. position. and made drive pressure price difficult enhance including an our year improvement plan in raw a material some for with aggressive margin and adverse We've However, to competitive responded

Our actions rationalization streamlining across optimization reduction and have footprint. of manufacturing SG&A, our the included cost operations, SKU our

ability sales We returning customer we shareholders. cash maintain and our also realize to core to our new initiatives. fuel confident and of and growth capital in by exited deploying as benefits approach XXXX disciplined some will balanced we and businesses momentum investing a in our ramp-up accelerates to We're with to resources commercial generate

for As alternatives the markets. I business remarks, represents road growing world-class us longer of an our assets noted significant at further my needed. no We lever with positioning generating for de-risking important repurposing in our map our the opportunities identifying believe are by beginning Domtar they mills a paper of when clearly provide of our

assets to to and/or containerboard softwood with necessary individual pulp our production of when only conversion paper customers' our demands. balance the greenlight produce will We

new financial This me the Daniel forward quarter Moving frequency Daniel? and very on last and for comments we're with in we what XXXX accomplish pleased consolidated Domtar's for health and in before turn able year. results outlook. even versus for to in lows performance event further improved to establishes the all, XXXX. were record look to X% With by better call review let our frequency safety. fourth making to rate Domtar. our that, over All

John, you, morning, and good Thank everyone.

in earnings compared third Slide the highlights net over per $XXX Adjusting the financial to $X.XX our for EBITDA quarter going X. $X.XX to quarter. quarter for share share of third the share by earnings for reported start to on of We in net for $X.XX $XXX prior compared fourth $X.XX per morning items, in this the compared quarter per of per the items quarter. earnings Let's share the quarter were the before amounted XXXX. to of million fourth million

to lower our due $XX were X. based $XX compensation. forecasted sales pulp amortization mostly income or was rate new quarter personal than the million our the market tax million while and Turning million earnings flat we when $XX quarter recorded and of quarter Depreciation the In the third reform. Consolidated due higher a of XX%, fourth the care to businesses. quarter, tax in the on in third rate tax tax higher than third variation to the SG&A mark compared of under to sales than expense the due an tax repatriation higher to of stock the finalization sequential Slide was to U.S.

cash to million quarter. in turning to in X. Cash statement while of the capital Slide flows activities from cash Now $XX flow amounted the $XXX flow fourth operating to This resulted amounted free $XXX, expenditure on provided million.

flow $XXX year, full from expenditures million $XXX to amounted XXXX. capital For in operating in of amounted flow to resulted cash activities and $XXX This free cash million. million,

$X million, higher $XX to lower $XX million X. productivity Slide other for the SG&A million higher exchange million, waterfall for $XX costs by lower costs $X These for mix costs $X partially to metal due million, quarterly lower items When for for $X volume the higher compared by for $XX offset Turning and for were million. EBITDA prices raw higher and $XX million, to third cost maintenance on quarter, increased million, favorable before rate selling million. of a

X% higher last in of on to segments, third to EBITDA paper period review when $XXX quarter X. to and when was third quarter and before our the the higher the In $XXX starting were Slide of compared segment, same items million pulp business million compared the X% compared year. Now the sales XXXX.

compared $XXX higher were versus X% or paper were Average prices Manufactured higher million grades lower on the X. flat quarter Our versus the EBITDA same than were to all shipment Sales paper our last last quarter quarter X% lower and last Slide estimated and the items also $XX business were per larger. versus was year, last paper period the for XX% while before quarter. third year. same transaction X% ton

business to shipments XX. before Let's year. a XX% same Sales increased XX% were the per was ton the Estimated margin. Average higher million and were $XX and item EBITDA on down versus turn $X prices quarter. X% Slide last quarter last versus the period pulp X% versus last year. quarter same pulp metric lower or quarter third third Pulp the the increased to when versus compared X%

inventory the quarter, last while inventory ton paper XX,XXX by to increased decreased ton. metric when by X,XXX compared pulp Our

personal and were Our quarter last year. on $XX care lower million, X% than last business Slide increased X% the XX. to compared when $X higher versus the period items before same was third quarter. million Sales EBITDA

XX the active are you'll the slightly year, at Finally, Slide some on XX for between expected With most our million our QX change find while amortization our from and items but is the for total depreciation increase consistent $XXX between key audit costs time our quarter. to spending maintenance, million with financial to $XXX for $XXX respect the will coming estimates be expected last through million with expected year. is being Capital this year year to be to million. $XXX of and schedule practice and quarterly

So with call that, to the I'll back John. review, this turn concludes financial my and

in So the of before best We year let's million, take a EBITDA ended a quarter note, one quarter. $XXX quarters strong of several the closer items at our look fourth on years. with four

cash quarter. also spending million a generated We flow over free in of $XXX capital high

of fiber underpinned which Our performance, results In facilities. our businesses. strong productivity impacted favorable costs solid pulp a quarter. our issues good business, cost and paper at I'm our market especially very wood by our and market several by performances with were driven some pleased paper despite availability conditions

following offset mix. remain We paper mix. average first seasonally slowdown announced implementation the the increases, improved a price strong. the the Our expect additional by communication in prices were quarter and quarter, and of price paper usual in seasonal our unfavorable and product customer remain steady slightly do volumes momentum partially backlogs Despite the higher

in several prices more use in end our continued NBSK North in total mills. amount see tonnage had year-end dynamics. of price while reached than prices when order were in of good while reductions compared outages some in we our paper tactical and to levels higher communication some our good production to offset first did momentum take supply sales marginal regions growth January facilities. fewer demand and continued a quarter wood expect volumes. We pulp, in to manage at for as at had China. In We pulp three a quarter maintenance record of solid markets increased fluff downtime Our most We America

While we the robust market some of signs Chinese already softwood sectors specialty have is soften, showing segments stabilization. market the and the seen tissue remain and of

lower for is the Our Chinese improved some stable personal In New expectation in in America. improvements and through growth up resulted ramp and results to also Sales from to increased overall care, volume price began two. operational demand optimistic volume costs. North we're quarter. customer quarter to while unit the cost recovery in and new by volume Europe efficiencies a third drove X% year-on-year Higher return for remain and Year

Although markets inflation, to material beginning underlying raw see remain we challenged do cost with the fundamentals improve.

infant and positive markets which to will solid is and value of in will a momentum the facilities, our fixed Greenville customers. closure, healthy adult the on year. across our year. margin is fundamentals near-term by had confident which driven Overall pulp absorption. and that demand diaper building finish our the will of initial focus paper Our improvement great and the strong the production, XXXX, the cost begin and steps portfolio. The We're relocation optimize execution for Waco first a reduce expected of and costs half we infant continue, improve in plan includes Delaware and our lines during These to

work Our improving targeted system the teams capital supported mill efficiency great and by to reliability, in do continue across spending.

our following ahead, from demand as will paper announced respond increase we closures. Looking the capacity customers to shipments our

improve to the the announced recently our of in continue of will prices paper across majority price wake grades. increases Our our

supply. fluff raw issues material expect Wood margin expected pulp customer the and year continued is to that and costs offset and steady anticipate improvement will to at remain partially our expected persist materials new raw into Personal sites. softwood cost cost plan through by inflation. and of increase. new will demand likely from balanced several wins, marginally We We care and will benefit due growth the availability freight, labor markets further early XXXX limited

questions. for So time for Nick thank and the turn your And support. I'll call you back to

John. Thanks,

both open want return we the time at for available be Carolyn, questions. So as ask and follow-ups and people questions lines for our Daniel ask as many to questions. as get few for I'd John can a to you possible. to a will queue participants the

[Operator George of first Instructions] with Bank Staphos And to we'll Merrill America go Lynch.

in I and how fundamentals more a recognizing we in why terms what John, of obviously your grades Michael, you - you some are the gives could continue quarter. bit filter your saw and should in guarantees less think color comfort remain - in the a more and business us no give there in commentary, bit we you first some the Chinese through more guess and, balance that commodity volatility back operations to from see life, maybe little or to markets

I be sold, because that and to bought to and of and mean, of fluff soft China and is available pulp course customers grades so the George, pulp I pulp you mostly was extent think that if those not in are paper there tissue our the grades for course our absorbent if are customers like, premise, customers the products. kind customers some of used grades was to was paper was

their adjusting inventory. was inventory on So We slight bought sort agents some expensive based having were strike. there of a perhaps buyers' think

we use you As don't know, agents.

China. have organization direct We in sales a

So as from can see, have moved have what's prices we're we real that on. bottom. you happy up slightly visibility of very Chinese And going the

nothing So still obviously I this the is an statistics. say, X% can that's at, view believe our economy there's mean, - inherent if you growing is

of settle the mid-term into to nothing will going. mind with our Chinese So New which see use And end inherently we is post pulp certainly Year products the wrong demand there's down. that

So there's with end use nothing inherently demand. problematic

related over. going one rate rate turn as first Recognizing we there right second and fluff I'll then bit run one for around into relatively and and see less pulp should and for year? materially And tissue again we it it guarantees, mix going where qualitative more are are no up maintenance us, sequentially quarter, as percentage and in that not give you. the a tissue, are to XQ overall in things And we to and the and move shipments adjusted, production? your low-XXs as the seeing quantify, to winding your should see that good be and a you Thank you do XQ? question some you maybe pulp consider now, benefit like of should improvement. this inflation of Are in productivity sounds if part of mix Could then volume, terms some waterfall how a above or you

first - I because you if think answer care. could I if So bit I meant can the last personal

that's what I to Yes, meant say...

tissue? Rather mean, than, I

XXXX, Customers top be line even came, had linear, So May but a I think personal stable. choppy on fairly care, certainly - improvement. in customers looks really we see it sales not went. the line, we though

we're now stable. much So more

obviously I materials think So raw benefit think see lot had to on we're lessen. the that a going tailwind year. We of that stability. will last We of

see care through. we yes, moving So improvement in personal

On quarter-to-quarter, not terms pulp about seeing. There actually of large quarter now That's numbers volumes are selling inventory. right probably out the think to side, very of we where one you're I the the use. in number the were was

be I as going help? to There an increase, very think little might a carry numbers you now. I we're Does it's it And at. think fluff pulp, rate to at of the run think on I going but the it's more much on is we're that see be yes, today. largely bit

And Pettinari we'll Anthony Citi. go to with next

convert you the year a it's gets late John, outlined to assume map mills. last safe And four white GP closure, given road back your maybe the paper bit. timeline pushed probably to

to you how your here. just So to the point broad attractive have? balance just any a of thoughts down you is freesheet to Or EBITDA Are debt market maybe think wondering is a X allocation capital and you kind sheet turn, more inefficient? given where about getting

certainly. Yes,

ourselves, shareholders. remind cash last I of about years the to XX% XX mean, So back to free think I given in just we've

wish reward we shareholders. continue to to So

than promise very go XX% still shareholders. to back much that will more think I is our

There's why though, and So reasons there's increase doubt there's year, dividend. Yes, attractive in see... an - sorry see no you I an mean, question you there that's no that. behind that are this CapEx

both going cost So plan to our we individual how pulp we're drive as in great mill a have really our now pulp by productivity to and and business. business

said in supplier. recall, historically, of sort I've a we you - a reluctant way, As pulp were

we've it. of Now best one our got think running leaders I

does but mean of we've one you'll that increased that to forward. plan CapEx slightly in the plan. clear We have not of for very going in really blow order 'XX see water minute in sort capital is a terms out of behavior, to That drive historical

to out cost And than downtime like then you do more seems in increased in due called wood tactical but XQ it paper they inventories typically XQ.

wondered if just So that can explain dynamic. you

be mix, to that's of Yes, partly sort honest.

other a grades we on on had inventory reasonable wood wood a of downtime take so we we increase So some need, our anything to here but levels. more than grades the sometimes tight to were bit side, and got woods so of bit than if there, just we've

in that meaningful, what was So there. to Wasn't we be were honest. that involved

And with our next Goldman Sachs. Maguire Brian question comes from

something used target personal in it care, the was to $XXX EBITDA think around you neighborhood from John, I businesses, of million fluff pulp. growth

the Pacific couple in repurposing it Is in in wondering, that still sort Just thoughts not the you And of the years. for of news might updated road any it? do next map like of seems light the on kick have place? that target and timeline Georgia

Yes, let to sure. me But help.

business when And not of strong the by over time you we're going now plan pulp. certainly, in over making the on fluff the personal I know mean, we'll fluff think certainly that from obviously, give containerboard mean, far - get you what fluff objective. pulp away pulp, see on we're care, earnings. making we're I I at time I mean, I don't So But we at we're the closer. conversion, to look earnings if size really you look our what

if earnings we when few assets the you nothing you but it, those have one if in next compare our not already Now years conversions. containerboard to of course, make remember from has those that paper to like we're making money we're earning to

So terms longer time, ourselves white mind, on some But paper to ago. that perhaps guess the of the extent. slightly were months in of the find my runway it which has already will of shift say its than - with few might is shift to one over thinking now profile, earnings we business course, I we a

then And of a pricing question the dynamics. on sort just

in they seen in the We've think the other declines U.S. already in just markets, the little here But the the wondered you weakness bit how impacting China. quarter most about in those Europe. China up mentioned and were declines offsetting in a fourth You markets. of of

you wondering you where if those in declines and markets just Or and think prices go from not do here? in movements about discrete that you're Just how markets additional they so price expecting any China. lag they're think

never to pricing. I I speculate like Yes, mean, about

So which are mean, that you other. don't A the quite pulp you sell one of lag facts I a certainly very in, don't there's lot based won't. contract But in in I kick if often business Canada we like mechanisms or mind, specific way is and give or our and the domestically you I'll U.S. pricing facts. kick and with the straightforward. very if the

don't that something weakness will American pricing. as dramatically impact North So really I the Chinese perceive

next, with And we'll go to Steve Chercover Davidson.

if product you first any to question that brands - the forgive that GP My might be Are with associated missed available it. me there I were make?

one of knowledge. cut it my a lot brand private would to of but it most was size. and label, would most be they be of been - would There it have used No

- have that But you from clients, companies, safe say it's former had say inquiries to the

obviously not I days such base. mean, a is know to the shock customer much is time. you so that Well, very - XX

we've sure over we loyal them. had absolutely for have To been and we been make long customers those is certain been we've who've those clearly term what the making looking customers supplying be really supply to keep So us to frank, doing volume. that

generate our are chain of our But - increasing volume. to make And, some export supply how of actually maintain Now moves to perhaps some priority mills is there our we I to base. current reducing in business some number slightly. more would can productivity customer one our it put our

shortages can appropriate. seems if you fill do on not And fluff side, certainly currently, that there's foresee And line? side pulp any down that on you growth the the perhaps then the much

look - this the so fluff demand at you the - have of growth, see pulp and feminine particularly hygiene the Unquestionably, people end volume you'll so, mean, - X% - absorbent by are think as baby you hygiene products that I at is products, adopt Fem-Hy, look know, and growth fast side, go Well, use adult obviously if these demand markets I driven to more. on diapers. adult side diapers those X%, the in to diaper

view on remains pulp on the our pulp fluff strong. fluff very is So runway that

fluff to so you? competitors acknowledges that any And made on Did one your a speak. they of that in have mistake impact

was. no idea have what I mistake the

go to TD we'll Sean Next, Securities. with Steuart

Steve's questions point following gap. GP on the Couple with filling

more expecting capacity. year it of load or Your shipments? guiding shipments, a you you us in incremental stated full less your based to hire this XXXX give volume like looks in Can on ran you're sense paper XXXX of terms

back where the certainly Well, margin tons. not to a to But system we to export Europe there's I us. but we're us, we because for that of into for it it, of all the the XX,XXX think number sort moves volume opportunity I - XX,XXX you some exact of squeeze enhancement and wouldn't know bring the our around of is plan give mean, world shipping some on

furnish. dry we'll And

And we'll furnish dry a bit.

Some the past. maintenance in were downtime that not

to XXX,XXX XXX,XXX tons. maybe So

more you're go incremental on year detail the you're go And into the going to spending. the - Maybe of second going on optimization this some spending, there into pulp capital I question, incremental a it's gather be expected CapEx bit the returns just the to that discretionary initiatives. discretionary

effective done mills great out Let year to four need the have the more us just the talk be but market give because macro me mil-to-mil really to it to what may micro obviously want. to work productivity you three do roadmap we a in and I they on really around setting drive enable probably some about pulp we our don't cost - to if

already volatile of would within place five competitive position and what better sort mills our are give in years cost make not know, very can pulp an all projects that even of drive make you a really to certain we us the marketplace. return we to So these we're regardless of state to mean, all of a - the all certain I is make money know market the making

that going. So in that's increase where is CapEx

course, of you those mills. So pulp know market

it's going So can it's be Ashdown Dryden be mills. - of certain drive to to Kamloops; make to it's that going - certain productivity to those really going be Plymouth; make and course we in to

And our Mark next Connelly with we'll take question Stephens. from

This is Ashish Mark. for

dig to on September is wanted just a average wanted exited seems came with on higher that that said in you then white but mix? by little a with if in the for bit things expected you in it of where regard. is further to at December, Just quarter of you how hike? how of And about in paper we think you think give just be said the had than to $XX us Xst just higher. hike, sense all call like I the also pricing pricing. much the I'm and third that a that $XX to hike September around Daniel, think could kind sense then - the were for kind I you had quarter dead $XX for wondering and was get the

answer So question. of the the let's first part

QX. it makes the in right, explanation You're that

amount. used we impact have that that We've a remember may smaller You this manage year. been in a able QX significant mix to to to

significantly XXXX. the will the of mix if or poor our improved in mix price you improved we've So

on but the limited in versus improvement pleased we've had prior year, mix So the QX comment when very impact mix so spoke, And QX. the the with price seen. And last QX. we that made a happen in year, increase, we there a last three one still we're portion that so one - was a we when to and implementation it last in actually month the was was very expecting

and we're without a the a in late announced, bit increase will probably price QX. increase price that QX, benefit of in in us quarter give and just were was we little improvement the new that price further mostly So expecting

pulp more price. just That's - and mechanisms. helpful. you the on than Pulp of there's really lag trying little been this terms list a and to in then to difference your bit more at versus how thought. a historical pricing see think you kind - of thinking And contracts than get all? where if and expected your we up give spot of kind realizations. a That's off comments on little in and we bit about just kind volatility ended focused rolling contracts And of there those about made in just in you when the better might about or where seen some clarity still XXXX coming in - we've Can us some are

So supplier the I in about the I and no, is in delay the think base to the But on unfold. not have protect to how short down of want thing terms I because to don't way answer on lag events way pricing because mechanisms. those essentially, mean, the just extent in the that them think some major and protect mechanisms will accounts up North of America

for the quarters at major of the the prices the were United So the up. is some actually where I paid States, wasn't based increase think in prices erode typically on to what point you're prices you inclined impact. to them if versus margin prior because continue getting the that an available that's is probably in accounts very going like the the slightly to that And contract their that see supplier maybe quarter

quarter You versus quarter well in see might four. one

three, terms quite - month of ready rough a are think Now you could these and almost in - complicated formulas. four so

about think month accounts. or up or could delay three You of four down major with the some

their want so a they all they there's it. they know if security contract opportunity because to But of volume, course, they'll Now, spot supply. suppliers their don't of major they because stay get take with

together, of So kind Does mechanism. because everything put it's moves the more all those anticipates when you slowly contracts than help? pricing that of one that driving slightly

to And BMO Capital for next go question, Mark we'll our Wilde with Markets.

John, I'd closure. the of like - on this back pending to questions couple to come

then to And from the big about The there out market XX we last had months, we time of the years had within ago everybody everybody of first and lessons five Are and slug closure is big another more cautious. bullish. the like in very any drop a get learned capacity industry to about six had got this?

I is management. theory Well, apply think one customer revenge of the don't

be your have I in So think to approach. you balanced

you I to a I is Mark, also loyal the your that time think to the here I around. think remain make this customers. difference have difference duties think,

have who time can't to some the certainly people flooded in we a approach. And I those time. So think of in flood just previous this take balanced

numbers, paper doubt But no way careful, to be exactly are this have point. same think that's ludicrously high there's in we're prices time at historical no and our what and approach going at there's to we and be. versus watchful Now measured I the

have, mill And can question from and a I existing this the from low close pulp asset for mill based pulp what they're we and But buying Atlanta big player John, tell other want look to large company. speak at operation. their this in to and and current opting tissue a start a the owner yet if I that's down, down is cost and both containerboard, and the don't then you I going it's

mean, the it or I economics mill. a attractiveness conversion doing plans be does not. us They pulp about big the the containerboard? they've that they're of in got So tell own could your anything and and

Right. think I mean, the in if you guess, pulp and paper Domtar, are we business. I about

- they've decisions here make Coke speak allocation their you as assuming, a Industries, is of say, for its I different no We they're businesses. If to idea and in capital and to mill you made decided like has own whole I this They is for going invest. raft saying, well, I'm a think detail. them. decision about looks make a we're I and while challenges in just Mark, know they had just decision weren't it that cannot these terms. all going have think, the I the they've of

containerboard, think I for the moving realize look at we when into time the us are would implications I are, there returns returns. attractive by over

numbers. particularly So our it I think don't impacts

those seem have of But runway, you built markets... I'm what see kind they mean, saying? into in John, a both I end to of

I agree.

ton pulp Because huge a they're containerboard they're guy. million a and fluff player X

agree. I

imagine Mark, be they've that you, know, that view I they with can't choice. I just mean, I to don't I I made frank. choice. honest think, mean, is why made to my be

I understand to can your conversion a point, standpoint. but uncoated an from think absolutely don't really I standpoint, understand from I freesheet

kind the Last you're you element but like China market, just help question sitting everything, does a pulp that the inventory understand I it how Can over walked just there lot of globally, thinking kind of had, about around seem of and pulp there's John, European we've equation? on out ports. in us the including

Europe, ability about chain the to in ourselves to tell. customers through on accounts we're do calling agents. to Yes, much I certainly. inventory opposed know about I and think in supply those don't as actually that I truth our business our because mean, think our We to them

entirety. about Chinese XXXX get Year, the I - and I think don't sit think past New our we'll stock here its to in feel clarity. and have - I think I in really about really get to talking system, and that But I'm certainly

potential for two the a may we beginning. is think have strong. very at underlying there's the a shock - little still I But demand or

So tons this year start through million is year and of one work to going to And stock that million issues will assuming the X.X every we way have tons any its always goes wrong. X no that. capacity there's stuff

I through that pretty think straightforwardly. that inventory work So will

having tariffs, are And any these Chinese effect? are they

fluff It's No. it's XX% far. comes not X% Southeast think - obviously, recall it's I largely. of the fluff so global nearly so in the if - not. I Actually XX% - pulp States, from I pulp one and mean, United the

next to Adam Capital Josephson Markets. KeyBanc go we'll And with

one a XXXX. the month opposite on given benefit, sequential in the has stock through Should first obviously we you was move just or comp. just the reversed expect the course XQ Daniel, to The stock in based $XX stock in the fourth quarter. of for necessarily? That the not million sequentially happen

I impact. think I first in is the $X $X should million in mean, per you rough is rule similar share something expect a quarter.

the So be the whatever able is impact the of believe what for to is on QX. closure stock you price XXst, March assess you'll

to On got with asked Can quarter said increase us increase, you're last help of in earlier your one exit quarterly purposes? the that you average freesheet prices, fall flowing just prices how still the been, we would remainder to through versus if just for and price? then your exit price you've of were you is what help that. of factor And about what kind Daniel modeling more the have were me

ton calculation, probably because less portfolio. year QX very I the And full Probably the do was of left mean, increase. there's think I average versus have last Quarter-end mean, - $X, to if in - a ton similar. at improvement I'll but $X I than $XX the per you look

the So that would increase. sequential be

been containerboard I'm seen And a John, Okay. for moment John, on on medium export given you've been containerboard particularly there's markets, export there been falling profound markets demand, - of there's that that prices, about your - the domestic attractiveness thinking in seeming deteriorating flattening then, containerboard all bloated weakness has that's developing? inventories. affect American the market, export or in the at long-term sure North Does

is It the think don't I sort by it's it point of But - long GDP mean, it and driven term. this not attractive its has still inconceivable my of commerce that course by it view an to only done. lows, mean, it won't changes I seems Well, I grow. its in and think I growth of driven it market. that's at it's continue highs time. of to growth me always has sort

- now it in bit. That's does, it's always what market think I so as And that return a it right does. and softened will

our it my change dramatically. thinking mind to So doesn't really

our as supply remarks, closure the now and the very market, in and quite ability right with we've dynamics our to I feel core them earlier customers with our prepared said I frankly said GP think the in business obviously, competitively. in we as confident my and share

had felt So, a announcement more that the do perhaps closure? we we we feel than yes. of little obviously prior answer is runway I that the to we to think have

John, the just, you In are just extent the where different us different of freesheet the because five versus Can based happened to And on to ago. other back just the help much significant how this duties? it important, words, the how comparing - those because existence to five of precisely years duties of which about are duties? now situation is - differences is Mark's how the question with situation you think current what

I one, grades is closure although - a it's large this is that go think number channels. on particular is it's different. the - focused I very This kind down mean, of

quite like it's a issue. not certain actually So market in focused it's wide They're channels.

quite are I consolidated, The people prices think actually importers after market. now That's have I freesheet. a markets. at much much uncoated who - have European - excuse moved market in market market's producing happening domestic have on been better offshore the Look dramatically. up think me

where I them. So the a swathes some a actually prevent capacity idea of that looking crazy home marketplaces those is the of there's little obviously a like time, imported duties the last for they think of I bit And, in think myth.

So I'm not here. being naive

I in imports, And be but do I will competitively. I don't think on see an do is increase you to will which we best, wildly it's customers dramatic. think also think what our focus just going supplying we

Chip with And next we'll go to Dillon Research. Vertical

like dividend. like share X:X down John, need you net it the a got we keep you last dry feel I your we terms in to And program good good Or $X though is take even also up that repurposing years happened it leverage buybacks? Should something to one, you powder saw even any of what down what X:X? like five anything from very is your went a First moving cash and still year to 'XX. CapEx after would that really a by ago that debt of a chain? experience Looks is you've do see lot had expect leverage. mean, looks or guys six the about with

we're seize - leverage. one - arise. if the We we're First it's we our we I like to now us. we opportunities like of all, mean, flexibility like giving able or

right the we're we like leverage now. So at

of dividend not. and of should I terms in have at dividend resume a to around have and to our cash tools shareholders cash resume our and to we'll definitely the our that and XX% a But return part balanced flow our shareholders. more share at our healthy capital to we or approach Shareholder we have that's than to of look the Annual with return mean, commitment think we discussion to buyback I remains allocation, the look Board to

of And I eight do of sorry, it eight pretty nine nine, impressive. out that know the that last so so that's - times, you've out raised years

Yes.

the f-word, understood as sure softwood one the you either pulp containerboard equal all and again with fluff I beginning then, you repurposing And just the make that or John, would be mentioned that in and to than that five or your then regard to used SBNK. greater letters I'm you here

Yes, we do.

you As repurposing. about think

do. We

have - four think might a the numbers. on mill to thing - on me you program know last the program. then pulp And I is I and prep The year

an equal? so, in. it's average year that, sort $XXX think for year this of be I year million an being around or all Will all or average above things

Average.

About average, say. I would

year And two? this three is year or

Year two.

question Markets. Our from RBC comes next Paul Capital Quinn with

the is it program? Is increase $XX cost? in the costs that pulp is The million to in 'XX, increase this - maintenance for

There's little activity. a more bit

you an As that moved month XX we've schedule. recall to

bit expecting expensive bit days I a expensive. bit We're of will rest inflation. as be steel little more a more shut is mean, a So there's of little will, the inflation. is if you more and Labor always.

able to been beat years. over six inflation five, we've the So last

maintenance bit year. a we'll on think our next little of have I inflation

color on breakdown to Is any that that's that maintenance basis helpful. the both really going paper of how And through a can costs, way affect pulp it's you and quarters? give on some the quarterly there us

a pulp a I QX. maintenance $X maintenance give QX, small For less so I see the breakdown bit paper the give here. you you I'll result, for a you more more maintenance It's in guess and million at - update. and certainly between Actually, maintenance, paper. pulp can to - a small more in have And look million at I'll QX bit $X

guided. that that there anything And on million, then conversions? just Is million you CapEx $XXX $XXX XXXX there for in budget,

No.

John with Tumazos Independent Tumazos Very Research. John to next go We'll

embark With in XXXX, debt very the lot you around a earnings nice of a repaid project. of for $XXX gains money wanted million you on prospects have if the to and walking

something to in could special integrate the two, larger With project think be easily billion the personal years the or option containerboard Or for you've there missed a or do could care shares or or rising, for dividend you down $X.X be that buybacks? boat four there six road? a

to earlier. said still move from is Domtar on balance we've grow mean, flexibility what echo I businesses. declining journey we that like I'll businesses have the think its I we to our in sheet.

dividends. And we we is So an if Investors at and say, tools are have frame. opportunity look for can shareholders basis having it sure is ability yearly looking have we the balance that mean, on available have actually to that the We'll rest, dividend, the don't as I our healthy we to just that our discussion a May on making the that's Board seize can seize. we're the cash can opportunity. and bad flexibility upon of sheet special with the time we'll do part returning around buy having for We And at back. it. too

Instructions] America [Operator Lynch. Bank of And Merrill Staphos with to go George we'll

Thanks for pulp is guess I business. my the question first within taking the just specifically follow-on. maintenance around CapEx

the that investments obviously, - like you as you're any made So, money are John, the I not on the no as thought leaving are matter heard business you you as as cycle say making that that to can. much being I you're assure the and table, possible pulp that much

Yes.

are phrase XX projects way on leave terms money costs is and month out of and basis? the reliability which it the the one larger than table. counter alignments in splitting that more this projects in - - improving to not projects take XQ not there Are or mills the my normal project-wise coming it That's driving relatively, specific then together going and maintenance, may of the there the yours. the And by be areas anything can fixed just and bit schedule? that spike is the at is and little where cost hairs. aimed Or reliability on the variable a you Are forward is

Sure.

on talk - that. the let let So pulp plan, me me to

some with can obviously We've projects of balancing the terms we've think targeted we in there on, challenges and going benefit have well. so output a So some but you've some more we right reliability some pay place word, mill which and run where with - and - the the just - I got investment more issues. the wrong had energy - we reliability issues there's can reliability, debottlenecking always is

the So to three maintenance those it frank. that is The the are of be just of falls one. way kind focuses

the I'm type see large if large second we move mill maintenance the what are here versus projects maintenance quarter you'll But usually a not So thinking are disproportionate third do. around. falls quarter sitting that there in to

last what to to question the my know I degree answer hate and because some almost certainty And and ultimately to with ask looks hard any to it's it like. again future

look have of do to in uncoated do as you on happening You before pulp said do or further a even for make always have three good runway supply/demand and Thanks earlier toward of what guys. we what but know the here don't out you going that freesheet. here really a get calls the a counter being you to conversion then in to what's containerboard and up comes that because luck the later the would been because assess terms like for quarter, for might couple, more next in the the - probably on really risks potentially, window now. some the perhaps be that decision years question of is from - out cycle pushed that conversion that the time How mean you'll result macro which it pushing cycle you the

blue kind of in days? be have horizon. a I we years? we on cycle? and to we what debate a To the cycle remain till is keep super Is So, thinking what that eye we three Are it agile XX years? can mean, it I these Is years? an I in face. honest, our were think it the mean, in Is do is five

that a look the - I they be us competitive being space. how think in can earnings convert we at from is to if the the space, asset reasonable where in at look our in there's potential and we competitive base thing we we for ability from look containerboard market a are, our

And competitive. question, how there's question. approach that's we I Then technical going and So market we premise. the our the there's the think do be can do in then course it of

answered questions. we've think those I most of

pretty what we my feeling do. I confident mind, we that come to So to away know need

I'm runway However, make our say certain unhappy gives frankly balance and actually allows not to get choices. in we sheet that keep events which us more about, us keep And that as conspiring that happen. we business flexible things to that start quite core

[Operator turn Instructions] for any further remarks. speakers And additional questions. back to it closing appears over we things no our or I'll have

Carolyn. you, Thank

Wednesday, XXXX quarter have We release results XXXX. a on Thank day. great will you the our Xst, for and May listening first

Thank call. And everyone, for that conference your today's participation. conclude you, will

You may now disconnect.