Q4 2019 Earnings Call
Ladies and gentlemen, thank you for standing by welcome to Suncoke fourth quarter, 2019 earnings and 2020 guidance called <unk>.
This time, all participants are in listen only mode. After the speakers presentations there'll be a question and answer session to ask the question. During recession, you want me to press Star one on your telephone.
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<unk> actual director of Investor Life Relations. Please go ahead Sir.
Good morning, and thank you for joining us this morning to discuss Suncoke Energy's fourth quarter and fully agree 19 earnings as well as 2020 guidance with me today, our microchip be president and Chief Executive Officer, and feel that senior Vice President and Chief Financial Officer, following management's prepared remarks, well open the carpet.
During.
This conference call is being webcast live on the Investor Relations section up or website and a replay will be available later today.
If you don't get to your questions on the clock today, please feel free to reach out to our Investor Relations team.
Before I turn things over to Mike, Let me remind you that the various remarks, we make on today's call regarding future expectations constitute forward looking statements. The cautionary language regarding forward looking statements. They know what else is he filing applied to the remoxy make today.
These documents are available on our website as our Reconsolidations to non-GAAP financial measures discussed on today's call with that I'll now turn things over to Mike.
Thank you Sean <unk>.
Good morning, Thank you for joining us on this morning's call today, we announced Suncoke Energy's fourth quarter and full year results and before I turn things over to say, who will review the results in detail.
To discuss a few highlights let.
Let me start, but first thanking all of our Suncoke employees for their contributions throughout the year.
The commitment and dedication of our team drove the foundational improvements in our core operations.
Do you see today.
On slide three you can see the key initiatives that we set out for 2019 and how we performed against these objectives, we delivered 247.9 million of adjusted EBITDA.
In 2019, which was well within our revised guidance range of 240 to 250 million.
This reflects the strong performance of our Coke operations and the significant contribution of our Indiana Harbor facility.
Domestic coke operations contributed close to 227 million of adjusted EBITDA in 2019, which exceeded the financial targets established at the beginning of the year I.
I'm pleased with the safe and efficient operations of our coke facilities as well as the successful execution of capital projects, specifically, Indiana Harbor rebuild project.
We successfully completed the last phase of this project in 2019 multiyear journey, the return the plants or profitability and nameplate production capacity.
In a harbor produced over 1 million tons of high quality Coke and on close to 25 million of adjusted EBITDA in 2019, thanks to the investments we made in enhancing the Indiana Harbor, we're well positioned to build on the strong foundation as we're now projecting that Indiana Harbor will double its adjusted EBITDA in 2000.
Awesome 20, and earn approximately $50 million.
During the year.
We also made strides and enhancing our corporate structure through the successful completion of the simplification transaction in second quarter.
This was a very important transaction for our company, which received tremendous support from SXC shareholders and has already created significant value for suncoke stakeholders.
And set the stage for additional long term value creation going forward. The transaction will continue to position us well, providing significant flexibility to allow us to execute against our strategic initiatives and return capital to shareholders.
[noise] well we have made.
Excellent progress during the year in strengthening our core operations in structure. We also faced significant industry headwinds in our logistics business, which we continue to navigate we've talked throughout 2019 of the challenges faced by our coal export customers and the impact the lower coal export prices and the key.
Finding domestic coal demand have had on our customers free cash flow and liquidity.
Murray Energy declared chapter 11 bankruptcy and rejected its contract with CMT in the fourth quarter.
Murray energy did not ship any meaningful volumes through the terminal in 2019 did not make any payments under its take or pay agreement.
The loss of this customer had a significant impact on our 2019 financial performance, resulting in a loss of approximately 30 million of EBITDA and accordingly, we adjusted our 2019 guidance in the third quarter to reflect this bankruptcy.
Our other coal export customer foresight energy exported slightly more than 5 million tons of coal through the convent facility and performed inline with our expectations in 2019.
Although there was no impact on 2019 resolved foresight energy remains challenged by both market conditions and its capital structure.
Foresight is currently exploring potential restructuring alternatives, which is likely to impact our relationship going forward and it's something we're planning for in our expectations for 2020.
We'll discuss 2020 guidance a bit later in the presentation, but our expectation today based on our assessment of the situation and discussions with our customer is that both volumes and rate per ton will be lower in 2020.
Notwithstanding the current challenges we continue to believe and the potential of our CMC business are highly focused on exploring opportunities for way to maximize our operations and diversify the products. We can move in order to secure new customers on incremental volume through the facility.
And as we think about the totality of our business. We're very pleased with the strength of our core operations, which allowed us to drive robust cash flows for the year well above our revised guidance strong cash flows provided us the ability to weather the challenges facing our industry, while also aggressively pursuing a balanced yet opportunistic.
Approach to capital allocation in 19.
They will go into more detail on this but at a high level, we've made tremendous progress on our capital allocation initiatives for the year, reducing our debt investing in our assets on returning meaningful capital to our shareholders.
With that.
I'll turn it over to fair to review, our fourth quarter and full year results.
Thanks, Mike and good morning, everyone turning to slide for the fourth quarter net loss attributable to SXC was two cents per share down five cents versus the fourth quarter of 28 team.
On a GAAP basis, our full year 2019, net loss attributable to FX C. was $1.98 cents per share, reflecting a two dollar and 27 cents per share impairment related charge, we recorded to logistics goodwill and long lived assets at C.M.T. in the third quarter.
Excluding these non cash charges adjusted net income attributable to SXC was 29 cents per share, which was down 11 cents versus full year 2018, mainly driven to lower operating performance at our logistics segment due to a coal customer bankruptcy console.
Today did adjusted EBITDA for the fourth quarter, 2019 was $50.8 million down 15.1 million versus the fourth quarter of 2018.
The decrease was mainly driven by lower volumes in our logistic segment.
On a full year basis, we delivered adjusted EBITDA of $247.9 million down $15.3 million versus full year 2018, there was a meaningful improvement in our domestic coke business year over year, mainly from higher volumes at Indiana Harbor, and lower outage impact at granite City did.
2019 results were significantly impacted by the bankruptcy of our coal customer in the logistics segment as mentioned previously by Mike.
Turning to slide five and looking further at our fourth quarter adjusted EBITDA performance.
Fourth quarter 2019, adjusted EBITDA was $50.8 million compared to $65.9 million. In Q4 2018. We finished the final phase of Indiana Harbor oven rebuild project in November and the facility is back to its name plate capacity of 1.2 million tons. The Coke segment performed.
Since was comparable quarter over quarter in terms of our logistic segment, we saw lower throughput volumes at both C.M.T. and care team.
As discussed the bankruptcy of one of our coal customers.
Along with the challenging coal export markets continue to impact CMT.
Our domestic logistics terminals also saw reduced volumes, owing to lower energy prices.
Turning to corporate another quarter over quarter increased an expense was primarily due to the timing of employee related expenses as well as higher legacy costs.
Looking at full year adjusted EBITDA performance on slide six.
On a full year basis 2019, adjusted EBITDA was $247.9 million down $15.3 million compared to the prior year. Our Coke segment delivered strong operational performance with higher sales from Indiana Harbor, and lower outage impact at granite city.
Indiana Harbor production increased by almost 100000 tons and adjusted EBITDA improved by approximately $10 million.
Domestic Coke segment delivered full year, adjusted EBITDA of approximately $227 million, which was above our full year domestic coke guidance.
In total across our Coke segment, adjusted EBITDA was up 7% or approximately $16 million year over year to nearly $243 million.
This was offset by 30 million dollar year over year decline in our logistics business as result of the chapter 11 bankruptcy of Marine and energy.
Finally, our corporate and other segment was unfavorable by $1.7 million, primarily due to higher legacy costs.
In summary, while we're very pleased with the progress we made in our domestic Coke segment in 2019. It was a very challenging year for us and the logistic segment and we know we have work to do to secure new customers and additional volume at CMT.
Turning to our capital deployment on slide seven as Mike highlighted we generated very strong operating cash flow of approximately $182 million, which was above our full year revise guidance range of $150 million to $160 million.
This robust cash flow generation allowed us to make tremendous progress on our capital deployment initiatives.
Capex of approximately $110 million during the year was below our guidance yet delivered outsized returns and operational improvements driven by investments like the $35 million related to our Indiana Harbor oven rebuild initiative.
We made strong progress strengthening our balance sheet as during the year, we spent $55 million cash to reduce debt outstanding by approximately $58 million. This includes repurchasing $50 million based value SXCP senior notes at a discount.
We remain focused on further strengthening the balance sheet and maintaining a leverage ratio consistent with our long term target of three times.
We also returned significant capital to our shareholders in 2019.
As discussed during last quarter's call, we initiated a share repurchase program in August under which we repurchased approximately 6.3 million shares were $36.3 million in the second half of 29 team.
Going forward, we will remain disciplined and opportunistic on future share repurchases.
We also declared and paid a dividend of six cents per share in the fourth quarter in total.
We ended 2019 with a cash balance of approximately $97 million and strongly liquidity of approximately $340 million setting the stage for continued progress against our capital allocation priorities in 2020.
At this time I would like to turn the call back over to Mike to share our views on steel and coal market before I run through our guidance expectations for 2020, Mike. Thanks Bye.
Before we review our 2020 guidance I wanted to provide a few brief thoughts on the overall market and where we see things as we enter the new year.
They will demand and capacity utilization remained stable in 2019, however, downward pressure on price impact the profitability of steel producers Hot roll benchmark price at a lower $470 per short ton earlier in the year before rebounding to $600 per short ton at the end of year.
Looking forward to 2020, we expect to see stable steel demand.
Industrial construction and energy sectors with automotive slightly lower we believe the coke market will remain oversupplied and do not foresee a meaningful change and coal demand or coke supply in 2020.
These market dynamics, certainly factor into our current contract negotiations. However, steel markets are cyclical and our business is based on long term supply and demand fundamentals and accordingly on long term contractual commitments.
Looking beyond 2020, we believe that Suncoke is well positioned for long term success.
We have the youngest domestic coke facilities in the NAFTA region and continue to invest in our facilities to ensure that they operate safely and efficiently.
We have leading technology with outstanding environmental performance and our recognized as the EPA Mack standard.
We reliably produce a very high quality product, although we continue to see market share shift from integrated steel producers. So yes, we believe that the rate of coke supply exiting the market in the longer term will be greater than the reduction in coal demand due to the shift in market share from integrated steel producers also.
Developments in the steel market have created the potential to economically produced pig iron for consumption, but yes.
The production of pig iron the of domestic blast furnaces will require coke, which could create opportunities for suncoke.
Longer term, we believe that Suncoke will continue to provide high quality coal to our existing customers. Additionally, as we look beyond our existing customers. We may produce coke for alternative uses such as Coke for foundry application.
On the thermal coal export side.
The market appears challenged again in 2020 with Apiay to prices in the low to mid Fiftys proton.
Well fully repositioning CMT is going to be a multiyear undertaking it will be one of our top priorities from Two Q2 020.
In the short term, we are aggressively pursuing new opportunities by adding new customers and new products. We don't expect these activities will offset the loss of large anchor customers.
In order to achieve the economies of scale as well as operate optimal inefficiently. Our goal is to anchor the facility to handle products on a large bulk scale basis. The past this anchor commodity was coal.
It can continue to be call or the terminal could be reconfigured to handle all completely different bulk commodity we're exploring all opportunities to optimize the facility both in 2020 and for the longer term.
Now I'll turn it over to say to review our 2020 adjusted EBITDA guidance. Thanks, Mike turning to Slide 10, we expect 2020 adjusted EBITDA to be between 235 in $245 million.
Domestic coke will contribute an incremental $16 million to $20 million in 2020 based on the strong foundation of improved performance efficiency, we have built at Indiana Harbor.
The improvement in the domestic coke operations will be more than offset by decrease in the logistics business.
As Mike just mentioned, we anticipate that the coal market conditions will remain challenged and expect that both coal export volumes through CMT as well as the rate per ton will be lower in 2020.
Our coal export customer foresight energy is in the process of negotiating with its creditors and exploring restructuring alternative.
As a result, we anticipate entering into negotiations with foresight to establish a new logistics contract going forward.
This is something we have factored into our 2020 guidance as it includes our best estimate of export volumes and rate.
Lastly, we expect our corporate another segment to be down slightly due to higher employee related costs and incremental legacy cost as compared to 2019.
Moving on to slide 11.
In 2020, we expect our domestic coke adjusted EBITDA will be will be between 243 in $247 million or 56 to $57 on a per ton basis.
The domestic Coke business has delivered adjusted EBITDA growth over the last few years, which is the result of the successful oven rebuild program at Indiana Harbor with the completion of the rebuild project in 2019, we expect at Indiana Harbor will operate at nameplate capacity of 1.2 million ton.
The anticipated increase in production, coupled with improved operating performance well positioned Indiana Harbor to achieve record annual adjusted EBITDA of approximately $50 million in 2020.
Our 2020 projections also include lower yield gains across our domestic coke fleet from lower met coal prices.
As a reminder, while we do pass through the cost of coal to our customers, we generate incremental adjusted EBITDA due to better than contract yield performance the value of which is impacted by coal prices.
As compared to 2019 lower met coal prices in 2020 will reduce the anticipated yield game by $5 million to $7 million.
Lastly, we expect 2020 coke production to be approximately 4.3 million tons, which is approximately 130000 tons higher than 2019 moving onto slide 12, 2020 logistics adjusted EBITDA is expected to be between 17 and $20 million is significant decrease versus 29.
Team in 2018 due to the ongoing customer an industry challenges we mentioned.
As we discussed during the third quarter Mary rejected our contract and while we intend to pursue all of our remedies in bankruptcy court, we do not anticipate any coal export volumes from Murray and 2020.
Additionally, based on market conditions, and ongoing discussions with foresight energy, we're projecting 3.6 million tons of export volumes through CMT.
We're also projecting a reduced rate per ton in 2020. These factors have significantly in.
Reduce the empties adjusted EBITDA and we are projecting CMT is adjusted EBITDA to be between seven and $9 million in 2020.
Well the challenges facing our logistic customers and the market are outside of our control we're not satisfied where we are in our aggressively pursuing initiatives to bring a new customers additional volumes and new products at CMG.
PMT is a state of the art facility, which is a low cost and efficient operator and has the physical.
Ladies footprint suitable for repositioning we believe in the long term potential of CMT and are working hard to better utilize the facility and we look forward to updating you on the progress of these efforts throughout the year.
This will take time and as such our guidance for 2020 is a realistic in sober view it existing market and customer condition.
I care T., we expect 2020 volumes will be lower than 2019 with lower end market demand for both met and thermal coal.
Moving to the 2020 guidance summary on slide 13.
This slide provides a view of 2019 actual performance across many metrics as well as well as a summary of our 2020 guidance.
Once again, we expect adjusted EBITDA to be between 235 in $245 million, our Coke operations are performing well and the completion of the Indiana Harbor rebuild project will meaningfully increase adjusted EBIT EBITDA by $25 million in 2020.
Unfortunately, this is not enough to offset the loss from our logistics volumes are operating cash flow is anticipated to be between 170 and $185 million in 2020, consistent with 2019.
And with the completion of the Indiana Harbor rebuild project you can see that our capex requirements have decreased significantly.
We anticipate that Capex in 2020 will be between 70 and $80 million.
Additionally, we estimate that our free cash flow will be between 104 and $114 million in 2020 with that I'll turn it back to Mike.
Okay.
I would like to direct your attention to slide 14.
Which lays out our capital allocation framework and priorities. The slide should look familiar to you as it is consistent with our discussion in the third quarter.
Creating value for shareholders is the goal of our management team and the board and our solid cash flow allowed us to return meaningful capital to shareholders through share repurchase plan initiated in early August and the declaration of a dividend of six cents in the fourth quarter.
We have repurchased approximately 6.8 million shares so far including 4.2 million shares in the fourth quarter. As a reminder, our board authorized a new $100 million for future share repurchases, which we expect to execute opportunistically balanced against the capital needs of the business.
And our goal of improving our balance sheet position.
Towards that goal of improving our leverage position, we extinguished approximately 58 million of debt, which included repurchasing $50 million face value 2025 senior notes at a discount.
We ended the year with a gross leverage ratio of 3.23 times, while we expect this level. So naturally fluctuate over the course of the year, we will work to maintain loveridge consistent with our stated goal gross leverage ratio of 3.0 times.
We continue to make high impact investments in our operations as demonstrated by our investment in the Indiana Harbor rebuild project, which is a very high return on capital we will continue to monitor M&A opportunities.
Well, we have been and we'll continue to be disciplined in our evaluation and consideration of opportunities. We're focused on providing long term value creation for our shareholders and are mindful that it is not in the shareholders interest for our company to sacrifice long term value creation for short term marginal gains in 2000.
Team, we demonstrated our resolve and commitment to creating value for our shareholders, while balancing the needs of our business. We will continue to deploy this framework in 2020.
Wrapping up on slide 15, 2020 will be a busy year for organization, we have a great foundation from which to build as always safety and operational performance is top of mind for our organization are off this will focus on successfully executing against our operating and capital plan in 2020.
We will continue to pursue opportunities to optimize our asset base, specifically as it relates to convent Marine terminal.
Repositioning CMT is a critical undertaking for Suncoke, we will work diligently towards that goal in 2020 pursuing opportunities to add new customers and new products.
Recapturing lost earnings potential from this facility will be a multiyear process and progress in 2020 will be the first stuff and that journey, we have significant coal contracts expiring at the end of 2020.
Successfully navigating through these contract renewals is another key initiative for organization and for the long term success of Suncoke energy, we're in discussions with our customers and we'll keep our investors and stakeholders informed throughout the year.
In total.
We're optimistic for 2020 and see tremendous potential to build on the strength of our core cokemaking franchise to meet our financial targets deliver against our capital allocation priorities and create value for shareholders.
With that let's go ahead and open the call for today.
Thank you as a reminder, if you would like to ask a question. Please press star followed by the number one on your telephone keypad, we'll pause for just a moment to compile the Q and a roster.
Your first question comes from Matthew Fields from Bank of America Merrill Lynch. Your line is open.
Hey, Mike.
Two questions for me one one on the logistic side.
I appreciate all the detail in the guidance.
It looks like you're taking a very conservative view on the CMT.
Contribution in 2020 just to reiterate.
Because I don't.
I heard it all you're assuming in your 2020 guidance no tons from Murray and 3.6 million tons from fore sight.
What you are projecting to be some kind of reduced rate given a re negotiated contract that we don't know we don't know about yet.
Matthew.
Thanks, Your recital is correct, although you use the word conservative.
To begin your your question we.
I believe we're taking a realistic view us not to be overly conservative or aggressive so, but your recitals tons and.
In fact, the Maria's Noah no volumes is correct.
Okay, great. Thank you.
And then.
Just on the capital allocation policy.
Sort of getting to 3.0 times gross debt.
Based on your guidance would assume that you have to.
When you pay about $65 million to $95 million of of debt by the end of 2020.
Yep.
Is that kind of the direction that's towards ranking about.
Yes, that's right around okay. Okay.
And that eats up if you if you're 100 100 and honored and four to 114 of free cash flow that kind of assumes that two thirds or higher of free cash flow sort of slated for debt holders.
Over shareholders in 2020.
Yes, that's correct.
Okay. Thanks very much.
Good luck in 2020.
Thank you.
Your next question comes from Daniel Scott from Clarkson. Your line is open.
Hey, good morning, guys just back on the the four sites topic as those renegotiation discussions already begun I mean at 3.6 seems like a fairly specific number.
We are in discussions with foresight, yes.
Okay, and there's no other counterparties right now that's the only.
On track at the moment.
Correct.
Okay, Great and then as far as I'm looking at I applaud the effort diversifying your customer base for the logistics business is there a potential significant capital expenditure that would need to be made at the port to change it fundamentally from a coal handling facility to something else or is that is that not currently contemplated.
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A range of scenarios, that's a possibility in a stress a possibility if there were.
To be a requirement for significant capital expenditures we would.
Only undertake.
The type of capital expenditure if in fact, we had a long term commitment from a very high credit quality customer. So that would counterparty would have to display very very good.
Credit profile on the the term of the contract would have to do such to allow us to not only fully recover the capital costs, but also earn a good return for our shareholders on that deployment.
Perfect Thats going to be my my third question. Thanks, very much guys sure. Thank you.
Your next question comes from Matt Vittorioso from Jefferies. Your line is open.
Thanks for taking my questions just a couple of quick ones.
I guess, maybe just your high level thoughts on the long term.
Leverage target three times.
If you look at sort of where the what the equity is done.
Seems like that.
Hi, guys a higher loan to value. Then then maybe did take a year ago is there any consideration for reducing that long term leverage target just given that the equity market seems to be.
Putting less value on the overall enterprise.
Oh, yeah. Thanks Thats. Good question, we've said in the past and reiterate now it's three times or lower.
We would look too.
Achieve I think three times is.
Something that we see is.
Kind of a minimum we'd like to get to and.
Given the.
The cash flows we expect ought to generate this year it seems a reasonable target for us to be pursuing at this point.
Yes, thanks sense and then.
One more high level question I guess just.
You know convent, obviously, you guys spent I think 400 million to buy that asset a while back coal markets have changed.
Stuff happens.
Just just given the expectation for something like 10 million of EBITDA This year.
Im just wondering it is there a scenario where that asset is worth more to someone else or.
Is that a saleable asset is I'm just trying to understand is there a scenario where.
Selling convent actually is better value to shareholders than trying to turn it around that makes sense.
So that's one question and one we ask ourselves.
As we always look too.
Slide maximum value to shareholders, so while on the one hand.
We're looking and working.
Diligently to reposition the asset utilizing all of our.
Capabilities knowledge of markets.
It could be that in certain circumstances, there's no strategic that finds more value in their portfolio than what we might find in ours.
If that were to be the case, we would certainly entertain the sale.
I would say however.
This asset is a very very high quality assets, a spade discussed earlier and so well designed it's very very efficient very low cost very well managed the team down there as exceptional so.
This isn't.
The kind of asset where you think about.
Turning it around because its a.
Under invested is.
Capitalized properly, it's not positioned well the management teams not strong it's all a quite the contrary, but if somebody.
Were to find that in their overall logistics platform, there so a whole and convent would fill at.
We'd certainly entertain that so.
Okay. Thanks, guys.
As a reminder, if you'd like to ask a question. Please press star followed by the number one.
Next question comes from Lucas pipes from B. Riley FBR. Your line is open.
Hey, good morning, everyone. This is Lucas.
We look as I want to see.
Good morning, I wanted to ask about capital spending.
If I recall correctly I think you said something like 60 million run rate.
In the past this year is a little bit higher than that can you breakout.
Where are you spending capital and what potentially that Delta is.
The one Nate.
Capex of 60 million. Thank you.
Good morning, Lucas. This is they I think what we've said in the past is on average you're going to be between 65 in $75 million over the long term period and and given years, you may have an increase and and that's spending depending on the timing of certain projects and so this is really within kind of that range.
Right that we're thinking hearing in 20 in 2020, there is a significant decrease versus 2019, given the completion of Indiana Harbor as was the completion of the gas sharing project at granite City. What we see is is just normal ongoing maintenance capital that is.
Anticipated to be spent there is a significant.
Portion, that's going to be expended on her six a and that's just to maintain the back end up our plans to ensure that we are in compliance. That's part of a multiyear program you've seen that same type of Capex and in 19, an 18 related to those projects.
Theres also some some equipment purchases here in 2019, and 2020 that we're contemplating but there isn't anything very you know a large project that stands out it's just normal recurring maintenance capex and it really is just the timing of that on the long term horizon.
That's a that's very helpful. Thank you and then.
Looking at slide 14.
And your capital allocation priorities.
M&A made made from let's take a again should we be thinking of as kind of it being lost and water here or.
Are there may be more concrete projects on the M&A side that you might be looking at thank you very much.
No look like it's fair to prioritize the way you outlined as we'd indicated earlier now the three times leverage is a priority for the company and as we also discussed earlier in the call.
This year's cash flows.
You know really are significantly tied up in that undertaking to maintain proper leveraging our company. So M&A is.
Taking a back seat at this point in time relative to our our desire to to reach that three times.
That's very helpful. I appreciate that and best of luck. Thank you.
Thank you. Thank you.
Your next question comes from Peter Fall from men Gulf Partners. Your line is open.
Hi, This is Nathaniel August on her Peter Thank you for taking my question.
Obviously stock price performance for shareholders has been extremely disappointing over a multiyear period and when we looked at it we trace it back to at least a three major errors that were made by the company.
The acquisition or CMT for more than $400 million.
The acquisition of disease, or Coke facility, which appears to have been a complete write off.
Very disadvantageous contract was signed at Indiana Harbor that caused significant earnings shortfalls at the company in quite a bit of Capex there.
And when we treatment decisions back we see that both of the independent Board members, who are up for election. This year, we're likely to voted in favor for each of these three transactions and so my question to you is can you make a case for why shareholders should vote in favor of those two board members as opposed to with holding their votes enforcing the an upgrade on the board and better outcomes for sure.
Others.
Oh.
Sure Nathaniel.
We believe quite strongly that.
We have a board that saw quite complementary nature, there's a good set of skills.
Of course since these decisions were made the board has refreshed itself, there's probably at least three new board members, which is nearly half of our board.
Since that point in time so.
We continue to refresh and.
Build upon the skills that are current norbord and well continue to do that that's for sure. The Governor Independent Board members. Each one of them approved each one of these decisions, which were extraordinarily detriment to shareholders and in my opinion I can't see a compelling reason to vote for any of them.
Not sure I second I'll use.
My second question is that your stock trades at four times free cash flow and you seem intends to repurchase that were repaid debt instead.
Why not direct more cash towards buybacks.
As we take a very long view.
We believe given the cyclical nature of our business given the customer concentration that.
They're gonna be in heavy manufacturing that's exposed to business cycles, a long view, where you over lover yourself can cause nothing but harm for shareholders were disappointed in the share price on the sectors, certainly traded well off but we're not going to to undertake something in the short term that could cause real harm in the law.
Long term, while we over lover ourselves.
During the share buyback, we don't have the opportunity to invest and maintain our facilities properly and you're in the long term downward spiral and we're just not going to do that.
On this business for a long long time, I've seen what happens to companies to find themselves in overlevered positions at its never good for shareholders are stakeholders for communities for employees, just not something we're going to do.
We have no further questions I turn the call back over to the presenters for closing remarks.
And thank you everyone for joining us on our call this morning and.
As always your continued interest in some talk look forward to after talking to awesome. Thanks again.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.