Domtar (UFS) 11 Feb 212020 Q4 Earnings call transcript

Good day, ladies and gentlemen. Welcome to the Domtar Corporation Fourth Quarter and Full Year 2020 Results. At this time, all participants are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions].

call recorded. this reminder, a is being As Today XX, XXXX. is February like I meeting to over now to the turn would Mr. Nicholas Estrela. Please go ahead.

Thank everyone is medical to be hosting year morning, on and Interim and temporary quarter Financial call Officer President, Good Daniel full will Executive Vice call. XXXX you, and earnings today, Officer leave. Senior Chief the Chief our Orlando. fourth Buron, welcome, as John

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

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

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

a accompanying our reminder, in and and continuing XXXX. represent care release from discontinued paper as and be and of earnings the periods personal classified shipments. the for third-party Results were all are corporate to also presentation fourth operations shared care quarter presented as operations the Pulp of As segment services overhead. pulp investor results personal shipments considered to

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

and Nick, you, good Thank morning, everyone.

XXXX contracting but Board with our pleased allocation we history. pandemic on he's COVID-XX, on year. As impact the updates anything out. deal. to business, you asked this report the was have and giving he's accomplished restructuring program. suspension after of of Executive time, to is at colleagues great well health, of however, and resting and the I'm Domtar values and the downsizing ordinary I'm leave John on John's true Chief and resulted take while capital global home. we doing Domtar that recent a responsibilities, dramatic was paper and XXX leaving know, economy temporary on Domtar over an of The the stay a in me the in has to It significant on our unmatched and Throughout frequent our

resilience people, business. to company protect place changing market put improved and taking to to rigorous protocol and Our our our the of continuously operation prevention kept our and We disciplined them At our by core running for demonstrated consistent our teams action in support our efforts focus We adapting processes our on conditions. made stronger. COVID across the all communities. location were efficiently,

Our many changed managing ever safety day-to-day all active protocols also of the incident require and we course employees. recorded of our pandemic, operating In the lowest participation rate. procedure

ability a XX% In and our We our to base. year-over-year our of reduced to reduction half focusing the paper of across cost manufacturing in in permanent on XXXX. highest by leading some our removing reduction the nearly assets, cash XX% by second and second year-end. nearly idling by cost production we've of quarter, the XX% X% proud We've challenging response cost our quickly By employees' of of business the as partner are We really teams XXXX. reduced our reduced in inventory cash, paper, agility our customer. and reliable this to remained optionality as asset of costs by a maximized well our adjust capacity reflects our the and

books value care and mix full. on pulp, margin. focused to very and X% also capacity. paper our stayed mix. converted improve grew kept proposition strong our end-use demand In we've We the volume towel improve our XXXX in personal network to smaller Tissue, and throughout customer had market us allowed year customer Our pulp by to as order

our optimize win. personal and pulp to our We the provide investment customer performance across care, well during in executed continue our we and efficiency pandemic up assets. continued to projects In high-return on ramp essential and also to drive product

excellent business. year basis Profitability margin gain cost XX% and profitability, and work points. increased versus Our operating the teams XXX to and new did improve improved customer to prior of the profile improve structure

Now road with are our respect XXXX. strategic map, to in we our proud of accomplishments

business. First, we've sell the personal to agreement reached an care

capacity. of scale Second, linerboard we've of the preliminary launched fluff operation at study at line we advantage pulp conversion engineering our Kingsport, and for surplus the first taking linerboard initiated and a addition low-cost Ashdown, pulping a

reduction we align focus to on transformation cost accountability and performance. our even program a Third, to and announced for $XXX the establish million organization greater

X to We American agreement into a personal on Partners Industrial sell take to expand initiatives. Let an for the can to turn moment $XXX these business me care million.

For several key accomplishes transaction Domtar, objectives. this

portfolio. milestone our a on and in in Domtar our and optimized our portfolio pulp industry-leading an The First, it more business transaction and building company. ongoing focus lead to provides capital packaging and transformation a also significant future is resources invest with to will paper,

we debt million. approximately reduce by proceeds, expect the to $XXX With

liquidity will us resiliency growth, in and important be maximize and to sheet balance position value strong Our for flexibility creation. will pillar an and providing

buy of also shares. back about $XXX plan million to We

program delivering As in shareholders. preserve buyback our Today, to This our demonstrates our suspended announced commitment cash. our future in you recall, decision to will value we we that Domtar program. we to resuming confidence stock our early capital allocation are XXXX and

of reduction realize of rate the business the of priority for run constantly cost rightsizing we've a our including XXXX. complexity. launched our reduction that our annual is to XXXX, We and to track the manufacturing support million by full functions. work XXXX. on of lower optimization, program Completing and savings costs cost reduced of cost a execution entails $XXX series initiatives, terms third we the In In of quarter end reduction, are of

the of mill structure into on growing entry announcement help goals. to are not accountable the on on Kingsport initiative containerboard. organization empowered, and and build more entertainment agile Our organization conversion other. strategic deliver packaging In a will confirmed portfolio They and create choices will our strategies. reinforce our productivity we us This with market the each and XXXX, of our financial

We and commercial for and in an team experienced have place processes operational conversion, business asset competent responsible strategies, readiness.

strategy. procurement a establishing also fiber are comprehensive We

paper identified Kingsport. number supplier supply enable low-cost significant recovered will locations effectively and XXXX. bring made utilize XXX withstand cost of team a The fiber great the chain us over efficient to This very We to model backhauls in have a recovery has progress allow will to mill. for supply to with paper

startup. Our major had bus we entry equipment packaging XXXX converters is significant announcing on customers. is and have our interest the schedule from a in space, end-use order, the project and for into Since independent

Kingsport opportunity on the to also potential market containerboard Our long-term North of and and healthy our commercial a to pipeline. we for and create with is portfolio the conversion focus preparation shareholder centerpiece we have value position of a mills. of group around The customer on pulp America XXXX are a packaging. continue and have launch focused our going expand Overall, road focusing low-cost efforts a our well-invested growth by in forward. we map leading With paper, significant and clear paper paper,

have the includes a growing product and best also industry in the customer grades. We rich portfolio that

growth and and pulp, and in challenging we returns focused We high increases, even our towel markets. business In as attractive hygiene can the that tissue yield cash-generative are segment, capacity the highest environment. on most have a global including solid

the with with and finally, first drive we competitive a market enter quartile. differentiated have further our pulp a investments asset the our And asset strategic competitive potential mills also will containerboard to and go-to-market very through towards We strategy. highly increase performance

quarter to quarter at quarter results of of slide $X.XX for share compared loss $X.XX the $X.XX XXXX. of discontinued fourth our third for financial to operations include of in third per this now the fourth per The compared per for an reported XXXX. QX share beginning a of the quarter from Looking results per $X.XX share loss share a morning of We X. net loss after-tax net earnings

items to million million third in of the restructuring per to share to to $XX fourth EBITDA continuing items from EBITDA program. were million Including the quarter. the costs $XX of a our of prior the quarter, quarter. million and compared of per the recorded $XX In personal the compared in cost continuing fourth $XXX $X.XX was operation depreciation item related reduction before earnings $X.XX loss fourth Our $XX quarter. million amounted in before before in operations accelerated we share care, quarter from results

the amortization fourth to benefit was and to were X. on sales was million. in and when $X earnings $XX of recorded Depreciation income the slide Consolidated the tax valuation million an compared $X quarter. Turning million SG&A quarter. lower sequential $XX In we quarter, the lower third than higher million third

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

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

X. quarter, $XX higher to raw million compared Turning to costs partially maintenance the $X increased and $X due and item exchange higher selling $X productivity of on higher million. for the mix for slide volume million, quarterly When lower $XX $X unfavorable by for third lower lower $X EBITDA for for lower for costs $X freight lower were million. foreign million rate offset for million, by to million SG&A million, material before waterfall million, million, other $X These for prices $X and costs

were versus X% lower XX% same versus slide shipments quarter Our X% ton last year. last the mix. prices EBITDA to were item year. X. paper higher to when lower quarter customer were before million. the product compared on the and was grades were due same last business when period third Estimated than XX% paper transaction lower Average Sales paper Manufactured $XXX and per quarter and compared $X to the last for quarter our all lower

Let's versus third before quarter turn quarter EBITDA versus shipment last higher the versus to the ton was $XX period Estimated X% XX% last were per XX% were business last Pulp the compared a higher X% negative slide year. to same on when higher third pulp than quarter. higher $X pulp X. metric and same decreased prices and item period the year. the Average the million. Sales

XX now. page at look Let's

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

will coming maintenance, XX you items should maintenance our our spending million expected to $XXX slide and decrease be to for year. Capital respect pulp includes on the Kingsport million. between by some estimate find strategic key With total investment for usual, cost $XXX million the are business. and our to and some year As XX, financial the and $XX million costs conversion $XXX related to in for

Before the fourth on additional me let outlook, the I quarter. color provide discuss some

business Other a had we and across strong paper with quarter. Office line was medical shipments steady activity channels. in recover, Our performance internal the prior all was security, and to stable supply paper grade. with in total continued food,

the fourth mix. which in exports We and reduced quarter, improved also flex ton our

we've system addition, productivity and the low period maintenance year-to-date seasonally replenish the last we've In relatively over in our average. of Strong mill with level This seize current paper first a performance. in to few cost used is Huron ahead by and of XXXX. quarters. inventory resulted paper the the good Pricing half quarter. core mill of plan to stable the the slower our seen in the utilization capacity scheduled in remained trend mills operation Port end that paper continued consistent The

XXX,XXX and In and as in supply balance. half substantially are XXXX, strong the performance decreasing. program. cost QX, maintenance unplanned level to shipped price and few one quarterly in items. other demand demand pulp been producer recovery announced year. cost In we the large over weeks. second key Chinese a China of history. highest strong our to in and market global year dynamics had stock in the at of to we that attributable continue improve, customers. over in market finish to driven ports and as QX Inventory we've in did continue a portion grades reduction in downtime pulp of are a business, increases our maintenance to mills lower best their pulp several we the recent Supply personal also well the improving business, the are had the low, We transferring We volume support to believe tons last care increased by as The few has Demand and our of

the on Europe performance months. Our of sales incontinence good the following products summer of increased North impact America a adult performance strong in softer and seasonal in

reflects performance business and core good in sales the demand. Our solid momentum

XXXX. the Now let's review for outlook

could uncertain return be to to in As we've noted school. largely the and in unforeseeable due outlook prior our impacts. linked changes quarters, market especially to office recovery by and paper, upon from pandemic-related In demand impacted dependent pandemic, the condition, remains

vaccination as accelerate to to offices start should confidence to and demand increase progresses, people year the As school. greater return and gain

our company our challenging keeping allowed on with forward of I'm in moderate. personal team the XXXX We improve, The care expect focus operations should is sale cost to quarter the the expected of to met inflation work despite be proud that move strategy in near-term us times. business to accordance the first We've to in close safe. last of goals will XXXX, we while management gradually many pulp approval and reduction, in customer. and approval challenges results, next regulatory we'll an improve term. and weeks. for especially the the agile, are changes remaining year, partner to of expecting received company We and while the strong Europe in closing, of in have reliable cash despite continue long XXXX, we've In North cost the couple believe our the American achieved these market

pandemic, well customer. serve market improves, and to and market opportunities capture the the world as positioned and emerge starts to from are our As we to our

are in Domtar, a forward turn call I to process will of to progress transforming multiyear back the Nick? Thank look we XXXX. in and We you. more Nick.

Thank you, Daniel.

So that, up open line to it I'll with move for the Orlando to questions. over

our from Pettinari you question Anthony we first will Instructions] Citi. Thank [Operator And take with

wanted quarter-to-date over Randy And side. in so, This fluff for by a XQ? the just the actually or particular realization pretty Anthony. the can softwood competitors our on announcements particularly -- month you to driving on less sitting We've side, focus there then last so in additionally, in wouldn't on pulp on some pulp I anything touch aggressive just bit? versus affect is pulp seen Toth fluff the but how softwood side? that strength Is pricing

right. All

development. share That's bit That's me let recent good little definitely a a So on that. of question. part the

price a series pulp we've increases. So announced of

think night, from I actually the us. leg yesterday capture the of or last month March, -- the

North again ton depending grades. pulp America China, total, the on in $XXX, $XXX depending grades. think And $XXX, $XXX per to So we've in it's between in I price increased our on between and

we'll believe see those So price we the of increases. benefit

As immediate always, month always. has net next impact is price in a a China is more P&L. our and China

obligation will So quickly. around some in North I bit think always and Plus, a the XX%, it's is XX% on impact on little contractual before in announcement there our implemented rather discount, of XXXX the the average. that are delay discount, America, P&L. the U.S.

$XX strong, QX exited our and price pulp so shipment you January So, where a with far, increase ton. I in can versus share that our we were by about

then And pass Can side. just just how staying you maybe us pulp Understood. on on operations the update Okay. pulp at down are running.

in planned had bales specifically switch to expectations mix from Ashdown for you previously, think to XXXX? still I hardwood bales on Is that then your in XQ. And pace? maybe softwood just

in the done. Good ramping mean, question. is to Good. mode. softwood The in I full Okay. conversion we're still Ashdown

we're but not So speed, the soon, will at well. be going it's we

bale. do will annual the a And more can produce of but softwood ones, of about normal tons should that per capacity year less which Ashdown do in softwood a that dryer bales. the So pulp also tons line, XXX,XXX XXX,XXX fluff or XXX,XXX with pulp is of other

will of obligations serve But conditions. we call best you net our always mean, the mix is the spot contractual have tons mill. it, or the where picking mill on when customer. so I open on want we're whatever sold market ton, we'll obviously kind So for to there's depend

of ton of mill do swing will the So bit, little the XXX,XXX fluff set to is bale. softwood ton XXX,XXX but mix a and

Connelly from come next Our Inc. question Mark will with Stephens

understand bit and means Rider favorable I us you on weaker? what is usually in want -- what And that help want drove Mark. off on John to the is just mix which for start a QX? paper. off This QX, just and start for Could better

Yes.

That action, taking permanent summer as actually proactive work be up by of to mix. on took a downtime that last of of our We probably significant lot recall you bit XX%. lack pleasure. little us our ended reduction order Our to a allowed a capacity

I mill with seen pricing prime paper net So and in of you've way the in a we versus, performance mean, exports our in American versus terms grades. less, QX lower good with That business and sold have in what what Flexon we you, call explains than in to North what years. lot a bit we're of do using been kind for was more many, Normally, is and and many a is this export and flex to also, -- QX we've QX bit time able -- a weaker year. sometimes of us always that QX avoid this but

system in our well, So actually very QX worked almost full.

grade, downtime took in a but niche I just think we over of kind works rest lack the the ton of system a X,XXX full. or actually of more X,XXX

realization realization very we're -- So QX. in with the price the pleased

just of moving personal CapEx give other great. idea us versus parts, you number? then and in growth Okay, And could XXXX's gone with maintenance care normal an

I to the and made through spent paper be significantly business and very less to -- flow hard between go and I the actually in mean, million million, XXXX, to We've be and to I cash should decision of the maintenance mean work in in able mean, pandemic Domtar ready mean, $XXX year. per to, We because unknown be the $XXX business some pulp the impact. I maximize storm. postpone CapEx entire the to

So million. normally, million, I $XXX mean, $XXX

year think, year-over-year, million in $XXX shareholder about number CapEx. the of maintenance next of there's I

question next with come Sean Securities. our will Steuart TD from And

Daniel. give you're can time the on a investments investments line thinking detail of if of those you investments Wondering, bit more implementation? in strategic couple of A pulp. for questions, and scale Specific

for created I X business -- mean, is I pulp pulp of This tons. X we've I core kind is external a our think our mean, around ago, mean, million all years I road map that is a capacity assets. Domtar. for

a over need business we that that's improve So time. to

road one their that costs. a of had the asset X were years, different ago, debottlenecking one reducing X by we map So and years projects

and same pause we year And -- for take So is propose next I discussed year reason XXXX of resuming took in the next is kind -- earlier. actually, that. we're we

to couple I part I that we're to our kind share. improve projects share going would And say, our just, our pulp I a but normal, of of can and and think So But to have improve it's cost also plan mean, position throughput. it's in I of want I business. profitability to long-term that improve

Okay.

and referred but it annual prepared of do and QX in percentage the you results, an on a in have I run rate, have this, question, years to comments, your you targeting were might Second of the up any if you're annual in the or How the rather. QX a couple showed of million end XXXX, savings that, results? much cost $XXX over of in by missed

the for question. you Thank

I think it's a great information to share.

functions. cost-saving One threefold. paper savings, portfolio or the and capacity, were the Huron. of if the front-loaded. That We've third closure of big asset. was announced Our manufacturing our closed the portion was Kingsport portfolio rightsizing cost our the partially the And saving you was the closed assets of rightsizing will. leg was rightsize or end Port support at A of SG&A year. We've

We've we'll this in shut Ashdown. think last actually. quarter, close I the machine also paper

So portion let's fixed a those was all big costs. linked remove to,

savings of front-loaded. a the lot So were

rate the around So XX%. as $XXX run of year-end, is million our of

still next change final rationalization we XX% rest is needs A so to year. the change extract Huron. capture that to processes, be [mill] that closure their Port there's the or rightsizing synergies. differently do So where capacity portion stuff, support need can those is we in function still still of the The with it

from hear will KeyBanc. we Josephson next, with And Adam

recovery. are well. my And wish to and a your John, and families best wanted you speedy hope just I very

he's listening. I'm sure

probably you wishing well. he So heard him --

your projects you've Kingsport call? I Good. then Daniel, what mentioned last Very Can Ashdown, progress just and the X in talk capabilities the decision that once on And you at year. large think you're and on take about the may. Kingsport sometime a you make update at if just process good. since you John you on on call whether basically deciding that rather of made to Ashdown, to expected on this have last

update on if you well, can? So appreciate an would that as

All right.

according is everything to plan. Kingsport, So going

point, phase the for in applied and spring. will -- And obtained continue demolition we're that X, construction. months. should the We've X to be So at start the X into we'll environmental demolition next that X permits in

do aspect or is OCC first the The OCC the warehouse. will plan and first the construction

should backhaul discussion And same procurement, of a are actually making the is At paper and of shipping ability So very commercial months. progress The we prepared big to in progress potential still linerboard, lot if actually efficient market interest. provider. so as certain X chain. in see supply terms in on very a credit my think I remarks, And with their the recovered that recovery extent. paper location we will. the you positive X, after to I've helping it's the discussion, in bit of time, in we're our shared A

time we're is is think industry where going through or I linerboard is or a the containerboard short the going supply. through in

have good us is than in of a the So more for And will there great. good like example live business with independent suffering time are be and average. the why that a we less them aligning

So I as progress. know we'll share And as think we and on the you commercial updating more side, we're keep we more. also making interesting can

we're still I a second question Ashdown? configuration. at Ashdown, different leg us the that engineering -- to producer. study. want We're your is element be looking handful still mean, Key of think we for I low-cost the was in a of

cannot quartile. needs side towards first very make on it well well that. something, of -- ourselves to the conversion the first actually do quartile so I cluster, So in the working we're the financial within that end. left convince do positioned, at won't we What sense we're a positioned first won't the mean if by And we or still we mean, I

we're process. So that in

think the you alluded the candidate the need have year, towards should we John decide the of think that information is shared a know of we for the answer mean, I'm work Ashdown repeat we'll end if conversion. that. we year. just good this decision-ready. that I going think I We that to be fact what I to to next that the

the about two liquidity? and it? open tender given the Dutch And it. be you timing guess, thinking That's how timing the market about I on the repurchase? Will nature And do an A of Can are of the just terms and great. questions. you how talk it other you'll of it buyback One in buyback. it the around

terms of any decision repurchase, share that the tool tender different accelerated all Unfortunately, repurchase mean, yet. on no what's we haven't best tools. I mean, open the still and our decision. We're all market the a we're of mean, -- is in I I exploring of there's made to of toolkit, close and still what we'll likely in most make our we efficient have this our But I start discussed. of in in that with with we're aiming couple variation discussion and analyzing to three terms stock It's just a we remaining way we're the that Board repurchase actually going benefit that. how the the to going after of transaction tools indifferent very sizable tools. and mean, accommodation, is that's our shareholders. where weeks of at we're our repurchase in the terms that's and can

the cetera? lockdowns you when would in what on a about difficult for be be QX, difficult neutral in quarter comps easy to demand kind one Obviously, the how And comp for And persist? comps and second think. long And the EBIT last easy et expect off. what you again, this the because would the demand year. in be paper How first are expectation Just year outlook your thereafter, thinking given of one reasonable I XQ, fell in obviously will will that's -- I the very the demand appreciate just that. comparisons quarter be then it'll then

is what a I firm mean, mean, question. good that. actually the is tough have flat I think, seeing is reviewer of a in at calling a look I more of it's months. you overall view market. at X%, very with, look I the optimistic PPP being point in compared think North we a look the think than to XX [indiscernible] if XX% a it that you because to It's X% is results should if for if improvement think little pandemic year-over-year, One forecast bit are the mean, was about at I to a offers. mean, couple America. There's longer bit January normal a review year, shipments own I shipment its in last lasting month, what it, at decline. of And demand we're paper I I the [indiscernible] less.

So more And there's office, schools to that at closer not lot a working still people of it's not are running the XX%. full.

a bit mirror. more going paper We're returning terms XX% piece believe of claim shows cautiously people were consumption done that as when optimistic year kind in study see will being that people home. probably little we in of consumption. office, we've out as additional as there's prior much COVID them. So that of our different to rear at be of a of that they the progresses, should And Actually, that come the that's those to to are the to we asked work

our if portion So it's a back come will that true, of the decline way. we've seen last year

mean, overall, So I confident. we're I mean,

decision a we'll system. see of utilization close assets Our year, our volume belief own portfolio going And efficient our late a have to very, in think to of because last capacity increase. we're I and high is very

Best of luck in the quarter.

come Bank will of from And our next Wilde question Montreal. Mark with

paper areas could pulp want costs just of rapidly rising ultimately on paper One this I I two focus on. the business, market. freesheet, is imports in got of really American of to in then question your think whether North the want we impact I out. a weaker impact the both dollar have to has of an these start terms uncoated on also but just U.S.

absorb U.S. the we've Chinese announced those China, there's change, also currency. to the U.S. transaction help that Chinese talk price of than the increase That's say markets about going first. higher market weaker in way, little you're net-net are portion the versus the you been increases point the for being in think the dollar a has seen But that I those dollar. it I other to bit will a currency where good mean, pulp is by increases. a raising can Let's financed what by

everywhere. to So an slowly or economy pulp longer through. yes, issue little for But from rise bit be China. creating I think, And a supply real that the there's little I price mean, for plus, bit demand currency is there's to pulp I might America starting is in the think The this is a a of go of North that chain prices. bringing also pulp in transporting Asia explanation a

we not. paper, with are right changes the I to not think in large imports expecting -- for I there we're don't currency or as movement see now. As mean, speak not U.S.

So I significant consumption going supplier. from and imports domestic have a to impact don't think the coming in it's paper

terms So in of I is neutral think our paper business. this

Okay.

pulp that Asia fact producers, the costs is and effect market? any will the have up in of think paper don't you So ripple in going production domestic kind back Europe raising into and

on I impact to action expensive, uncoated going U.S. to pulp of market stopping producing. producer start price terms I If an think freesheet be the too may think paper take that's on have have impact But pulp or to don't consumption. in increasing going it's actually an in the

Okay.

just, had sale quantify business? I going question other tax the from those? personal benefits you The of you could are are, have to the is loss some if care you And

small be loss. capital a a going There's to It's loss.

you only against can only it use capital gains. it's -- So

we profits. can But going to we'll it's something it's add loss, not gains, normal against have operational So do something when capital that therefore, we're not the benefit.

actually now, for difficulty if fact the slip in those last because does just right next like you it the sense this feel commitment commitments could, to the tight make getting people tight market? expect difficult over in. now volume start one they little you start the to the so Okay. make volume up? months is at have might the a have one, that they if that more do right. just commitments commitments containerboard very to you All Kingsport a market And XX Do get any expect of have And you'll time When I the up.

of become the afraid too to thing at that's one touching and our give I ask mean, on you're think because have customer economics us. it been business. a committed our sensible are to potential going time, I I point. And the committing the early same to that known we the of mean beginning. commitment to much of would too don't same since that we, want for is side,

current if before were to some situation, right you kind year-end, before to year. it's commitment now. have mean, commit it's the I lose-lose So But a our of intention

Again, reception progressing So discussions are very is great. well.

I of big risk of customer lesson is that projects but is they to they'd they're potential issue we discussion the think learned facing. that a supply lot do, have with in a good one the had like

our is independent grow we view to as also. producer, going further linerboard, box we're in So investing further see growing and the

it's us for win-win and a So think for them. I

Instructions] Staphos [Operator America. next George of from comes with our question Bank And

apologize call late, I if of is already the joined covered. some this I so

topic just First to question, on raised. Mark want that I piggyback the actually

obviously was net the of some Latin -- ton million is to there's integrated did products. freesheet, was tighten up do the surprised the recognizing will integrated any the X.X of market, time, you last how pulp it producers that coverage and the about pickup production forth. our you and America, might vertically that of improve a production tons swing lot ultimately other and think you to you time uncoated relative that the time get not in back of in swing in from commercial in swinging discussion U.S. a much for year if given pulp these help that a So both show markets paper up overall pulp but see I'm more outlook, at

couple else had anything that And that front? share in on you follow-ons So then would I of pulp. a

it the you America, if mean, might impact. at have imported total at the But margin, think I look it's not I North an in high. paper Again,

in yes, U.S., a a fail being they because I to reduced have mover. that too see pulp a going expensive, being the little impact. is it's it's shipping small But So bit start to

So Is a don't think mover? big the yes. it margin, I so. at

here. I it. horse I the don't to Okay. dead want appreciate beat

the customers' or this big a way part -- some grade on companies, itself. to low paper trying what as one that that of another? gives view pulp where larger at there's fluff view customers and their low, you we're obviously some the their from grade then the equation, the is producers is recognizing between believe they increases? about What's difference relatively you're hearing this low to moment And the other and inventories Second your through really, and in on of And this view of recognizing inventory are morning and levels. several and that customer based they at push are intelligence, thing are your harder really inventories line relatively

a the ports that long we're to low. more said. bit We're inventory chain or at thing mean, supply And or now. be little that just hearing seems in is complex earlier I less of the same the bit the you reduced. share. right Inventory to more Asia little China We a hearing being also are I've kind that mentioned

inventory maybe that -- have can to -- you guess you assume I a are people chain supply small given issue. a trying their replenish So create and the even to think buffer there's

So thing. we're hearing the same

currency, So of issue we plus price explaining little -- hard there's earlier, and additional the bit a that increases definitely chain that a as seen. of supply said the are positive we've consumption,

sustain be a lower where of at be to on you of maybe think in just good though chatted said all a these least number guess, business have perhaps on place by of a being given return for inventories it and And whatever capital actually your that's it once want in a is to being return commodity just seems grades. you was led your customers I be. a pricing now and that last has we've price see? a they what opposed the higher was cycle. to over if fluff, high in of are as I the great to by Chinese about than the clear, would in, last as were markets, in average, been be again business what be North And American you like why growth. that and the this fluff been and market, went to to that in guys, cost commodity the we The even can around still Yes. their had price third terms the cost. this is but the been that's above the relatively it's return you volatility the some It's of you a that topic. in you've calls happening are increases a years of is profitability, not times, capital consideration Even companies couple seeing for from in cost by but today this one question Why comments terms the where of below will your we're seeing movement quarter, dragged than

There's U.S. requiring fluff as fluff And situation that of of prior can and fluff I some the an we've also, do one. a swing discussed fluff. were we shared do of can the application SBSK capacity both earlier. you little think as is think southeast a of interesting I producer I in in that the lot kind bit -- less calls

baby a confident created So kind event a you of will. that in in that of onetime demand, if feminine long you to And I a time, adult if term, will, oversupply, still there still diaper, But diapers was think for dip, fluff that of over kind in. kind continue we're highly grow. And is hygiene, a high-quality we're we're producer. this will business confident

from Capital with come RBC question Markets. Quinn our And will Paul next

And [indiscernible]. Asia, pulp shipments that sale by and your But North on into couple haven't of expect you because change Just questions pulp any personal maybe down just done a the Europe in with could breaking you geography, that America? whether us you remind enough care?

at the what's rest no, shipping Europe and the our of seeing, the not mean, Asia we're have in see to Asia production in the a in mean, And half China XX% in you're planning business our are XXXX consider care we're sales. is, going in portion third-party of our We're of America. change in kind large to North through is about and and that first, a I now as shift. remarks, prepared you're sales Nick personal -- mentioned I one big in

to show sell We our be same our X at So higher. to we're care mean, that's personal were the tons. capacity Overall, XXX,XXX to XXX,XXX external to We'll million selling continue [indiscernible] around going the it. tons But level. business. I number to will is

-- very quarter close to I in should expect, you what you should after XXX we quarter. see mean, So should was QX

for apologize I new my associate that. That's Okay. there.

XXs, pricing. on in discount America? to to mentioned was brings placing back it North Just way up I in XX% but Any net North to try to of basis industry in the that discussion in XX% America, question high another move it maybe is pulping? That the ideal just mean, I a the that question, thought you

mean, XX% mean, all the a hard stop. restart finds when that, impression have great. you a of agree if discussion. be you, almost point. gives I definitely to commodity It It's if this with part impossible at It would very a vicious kind that this definitely is circle. the be complexity. the I we'll It's is I But some is -- less. discount, adding expensive someone It's of to it's way

I'll And call turn or to back in there Estrela are additional no questions further queue. over closing the remarks. for Nicholas

Thank you, Orlando.

have great release So XXXX you first X, XXXX. and May results our quarter day. for we listening, will on a Thursday, Thank

call. participation. gentlemen, today's you this concludes And for ladies We thank your and

now may disconnect. You