Q1 2020 Earnings Call
Good morning, ladies and gentlemen, welcome to the transport and cancel first quarter analyst call.
According and transcript call will be available on time.
During this call can support in cancer, <unk>, Chief Financial Officer, well do a fun to watch slide presentation is available in the Investor Relations section the company's website.
Oh, so the companies like we now that this call will include forward looking statements.
The press releases for the associated risks such statements.
I'd now like Scott.
Mr. Donkey can fight in Tampa <unk>, Chief Executive Officer. Please go ahead Mr. Keith.
Hi, Thank you offered officer officer and good morning. Thank you for joining the cat four at Kemper Pulp Q1, 2020 results conference call I'll make a few comments before I turn things over to our nickel executive VP cancel pulp operations and Chief Financial Officer, Kemper Corporation capital, how long will provide a more detailed overview.
Our performance in Q1 as well so numerous initiatives under way to mitigate that you're actually this downturn I.
I would like to start by thanking our incredible employees were dealing with the unprecedented child, just oh the covert 19th.
What perseverance resilience and failing dedication to health and safety, while at the same time focusing on executing on our strategies.
The last several weeks organization has been almost exclusively focused on our cobot 19 response or talk to priorities are protecting the health of our employees and executing on our strategy to sustain the business for the long term.
In terms of our people we quickly implemented a cobot 19 actual plan will just continue to evolve. This plan includes implementing physical distancing measures, including at our facilities, having as many employees as possible work from home restricting all travel implementing cleaning and kinda washing protocols and implementing self isolation quarantine call.
She's.
As a result of the pandemic, we have had to take extended downtime across all of our operating regions with our sawmills in British Columbia impacted the most these are very difficult decisions as we know, they're having a significant impact on her employees contractors communities and customers, which we deeply regret.
Hi, crush organization, our employees are making a number of very difficult sacrifices to ensure we are removing as many discretionary cost as possible.
I also want to thank the federal and provincial governments you have provided additional support at this difficult time [noise].
Turning to our markets and beginning with lumber the company anticipates conditions will remain extremely volatile and challenging through the second quarter global lumber market demand in recent weeks has declined sharply in the weight of the closures non essential businesses and lock down to implemented in many parts of North America Europe.
Company currently anticipates, the North American home construction activity will remain at reduced levels will significant regional demand volatility.
Following a steep reduction in pricing from mid March through early April prices have stabilized somewhat in response to all material reduction in supply in recent weeks, we're anticipating that the second quarter, we'll have limited demand, particularly for April and early May looking further ahead to the second half of 2020, it is anticipated that supply and demand.
And balance will improve and support a modest improvement in prices later in the years [laughter] lumber prices to China are seeing more moderate declines in North America as art region has gradually returning to more normal business conditions. Following the early outbreak of the covert 19 pandemic well short term prices to Japan are anticipated to be in line.
The current quarter.
European lumber markets and pricing are also being materially impacted by aforementioned global economic downturn.
And the company currently anticipates market conditions are expected to remain challenging through the second quarter before improving later in the year.
Global softwood pulp demand is currently projected to be solid through the second quarter of 2020, particularly from China is that region continues to gradually recover from the pandemic well containment measures across Western Europe, and North America, our forecast away on market demand for printing and writing papers, well pulp and paper operations are designated as.
It's essential services are many regions. It is projected that supply disruptions will continue in various regions. As a result of the pronounced effects from Cowen 19 on various business sectors, including lumber manufacturers.
Current weakness in lumber markets is resulting in numerous sawmill curtailments in the BC interior and lower volumes of saw more residual chips available pulp mills. So this brings with it the risk of additional downtime and not only the company's operations, but also across the industry and with that I'll turn it over to Alan to talk about the quarter and some of the initiatives that we.
Underway to enhance our already solid liquidity position.
Well, thank you John and good morning, everyone.
The accounted for on capital <unk> quarterly results were released Wednesday afternoon come together with or over a few slide presentation in the Investor Relations section of our respective companies' websites in my comments. This morning, I'll speak briefly to quarterly financial highlights Sionyx My understand mentioned on a number of initiatives at the company has put into place.
In response to the corporate 19 pandemic.
Brief summary, which is included in our overview slide presentation.
Segment reported an operating loss of $89 million foods first quarter off 2020, compared to an operating loss of $27 million for the previous quarter.
Results included a net you the expense of $44 million 63 million dollar inventory write down provision that reflected a steep decline in lumber prices towards the ended the quarter and into early April.
After adjusting for these items the lumber segment generated operating income of $19 million.
Number segment results benefited from moderately higher <unk> higher sales realizations in North America, reflecting strong U.S. housing activity earlier in the quarter as well as continued solid results generated by the company's European operations on an annualized rate of $90 million into quarter.
However, as Dawn mentioned these positives were overshadowed by the rapid deterioration in global lumber market conditions in March I say affects equipped with 19 spread globally, resulting in significant price declines thereafter.
Our pulp business reported operating income of $6 million for the first quarter compared to an operating loss of $24 million reported in the previous quarters.
Results for the current quarter reflected a solid operating performance as well as an 11 million dollar recovery of a previously recorded inventory write downs application.
Shipments were up 9% in the quarter, reflecting a 4% increase in pulp production as well as a modest improvement in purchasing from China, particularly for tissue.
Pulp unit manufacturing costs reflected this improved productivity on slightly lower fiber costs in the quarter.
As Tom mentioned in response to the unprecedented challenges presented by 219. The company has undertaken a series of measures to mitigate the financial impacts from deteriorating little bit lumber demand.
These include extensive capacity reductions across all of our operations reduced capital spending for both the lumber on pulp businesses as well as numerous initiatives put into place to support both companies financial positions through the pandemic.
At the end as the first quarter accounted for excluding Kepware pulse had net death of approximately $1 billion and available liquidity a $400 million.
For pulp ended the first quarter with net debt of $43 million, what's available liquidity of approximately $100 million.
Looking ahead can force cashless forecast to benefit from a seasonal reduction at working capital in the second quarter.
The receipt of approximately $125 million as tax refunds over the balance of Twentytwenty.
This combined with the reduced capital spending on the suspension of all non essential overhead will improve the company's liquidity and hope to serve a solid balance sheet position.
For pulp business, recognizing the material challenging a material challenges facing the global economy under supply disruptions, resulting from the extensive saw mill downtime that Don mentioned kind for pulse board of directors have decided to suspend the quarterly dividends for the foreseeable future as part of its clashed preservation afterwards.
That's all I'll turn the call back over to you.
Yeah. Thanks, Alan So operator, we're we're now prepared to answer any questions at the analyst may have.
Thank you.
We will now take questions from financial analysts.
The other question. Please press star one on your telephone keypad. If you are using speakerphone facelift <unk> and then press star one.
If at any time, you us to cancel your question. Please press star Chip.
Please press Star one now if you have a question there will be up if possible participants I just have to questions. Thank you for your patience.
Your first question comes from Hamir Patel offense legacy capital markets. Please go ahead.
Good morning.
On.
Alberta give a six month a interest free deferral of stumpage dues are you seeing any signs that a b C may a implement a similar program.
Yeah, I think thanks Amir I you know, we're looking at several opportunities and British Columbia around on the stumpage side I clearly that would be one of the one of the options and alternatives that we are.
Looking out and I've had conversations about so a little too early to two to tell you the results of that yet.
We will see some positive responses on on a few issues and possibly got one as well.
Great and thank you so senses to what you're seeing in that repair and remodel channel. It seems like perhaps that's maybe held up the best.
How why if you just remind us how the pricing mechanism works so that book of business.
Yeah for sure American you're accurate air for sure I'm you know you know the our business has been surprisingly resilient a you know submit regionally based go I will say as it was all over North America, but certainly there is a areas where it's really done well.
In our own.
From our own standpoint, it's a it's up about 20% a quarter over quarter, so pretty significant and so were we are there's one area that we're pleased with and and feel good about it is that on our side.
So that's.
No. We don't at this stage at least we think that a you know should continue going forward, we've heard some pretty positive.
On a positive.
Results there from from some of our customers in that deal I speak DIY space. So so definitely.
Pretty decent looking picture there in terms of the pricing mechanism there the way I think pretty much everybody is the same that we just haven't agreed upon premium that we oh over and above a random like prices to reflect the a high quality product that we.
Hi quality product in the merchandising that we have to do for those products.
And it reflects significant premium.
As result of that.
Okay, great. Thanks, Don that that's helpful.
When I was wondering it but you know in the financials and the cobot 19 resection.
There was some mention that depending on the duration and intensity S that pandemic it could affect the valuation if your long lived assets.
How should we think about to mixed conditions that you know what cause or write downs of your mill carrying values.
Yeah. Good good morning, Yeah, No I think I think what you saw and not Sachin really is what would typically be expected in the risks and uncertainties.
Yeah, I mean, I think for for and I, we were not concerned about that but clearly if that's the situation were telling for that.
Our mills were dying for significant longer and we had to in some cases indefinitely idle mills and those would be the sorts of triggered a sense would clearly want us to have a closer look a potential impairment, it's not something today that were particularly concerned but it's just more that we put it in this part of that to separate disclosure.
Okay, Great and Alan what's what's your sense as to the absolute bare bones capex up the business. If we did have a prolonged period of the week to week markets.
Yeah, No I I guess your question here I mean, I think what we're guiding to 2020 is probably close to their bonds I think we could maybe a tick a little bit she has a little bit off in terms of our lumber business or the old my operating colleagues will probably take issue with that but I think we could probably take a little bit off that but I think.
What we thought in there today, which is close to 65 billion lumber and 25 million for pulp is a is pretty much close to the bottom.
Great. That's that's all I have thanks.
Right. Thank you.
Thank you. The next question comes from sites do it from TD Securities. Please go ahead.
Thanks, Good morning, everyone on a couple of questions.
I mean, you're you're expressing I guess confidence in your your liquidity position I'm a couple of your competitors did expand available liquidity one of them heading into pandemic and one of them more recently.
Are you guys pursuing any initiatives to further increase liquidity with additional borrowing capacity and.
More generally speaking can you speak to concert on on your Covenant headroom.
As we go through the next few quarters.
You know for sure Sean Good morning, So I think as I said in my opening comments I think we feel that we have ample liquidity here to see us through this sun dynamic impact sent me today I think we're guiding to north of $450 million liquidity by the end of to second quarter.
Clearly contingent upon a certain things are maturing materializing as we expect them to but it seemed time, we are looking out a couple of near term opportunities just a top up our liquidity and it gives a little bit more of an extra cushion. If you will and so we hope to have news and updates on that.
Before before we get to them that this quarter.
Okay, and then I suppose one of the other bright spots through relative bright spots for lumber demand is Asia right now.
Can you give us a sense over the next couple of quarters, how much incremental.
Western Canadian volume, you think you can move into Asia, and maybe the better way to ask it is what was the percentage of volume heading there prior to the pandemic and how do you think that can trends into the summer.
Yeah for sure well maybe terms it first of all in Japan.
Oh talk with Japan, that's been consistent Sean it's been.
Going into the year strong in the quarter and you know based sold out through the second quarter and a you know based on production levels and whatnot. So we're pretty well at this point anyway, we're confident that China will continue relatively flat most of the <unk>, Japan is with Oh, similar customer base and mostly end users and this.
It's pretty consistent notwithstanding that they're going to the rest from elevated concerns in Japan around cobot 19, as you will be aware of and so we're watching that very closely but at this time.
And as you normally have a fairly solid order file that normally extends out there quite a long ways compared to other markets I. So that's support from our standpoint, we're pretty comfortable there with with Japan, but watching it closely in terms of China has been Oh.
ER positive surprises you articulate it's a business you know going into the year, we would've expected that we would have done.
20% to 25% of our business or you know they have been much more active now with their recovery from what was 19. So you know I heard of others and.
Even to a greater degree than ourselves, but it's.
If you use 25% as a base I think theres or it's reasonable to expect that we could get we could increase at another 10%. If we chose to Oh. So it is a is in one way a bit of a backstop. It also is a bit of an additional opportunities that we think we have to assure ourselves against a additional weakness in North America.
Great. Thanks, Don I will get back in acute okay. Thanks.
Thank you. The next question comes from Michael LD from BMO. Please go ahead.
Good morning, Dan Good morning, Alan Marty or Loren anymore.
Just to start off I, I wondered that Don or Alan a any update to kind of the Q2 production schedules that you've you've put out there.
Yeah, I think maybe Alan I'll, just touch on out here and you can talk about pulp as well, but but in terms of on the lumber side clearly we're watching it real closely I know that you're referring probably to the analysis that we made up until may want it what's going to happen not beyond that currently we're watching it very closely I think I alluded to in the.
Early part of the conversation here that we're seeing some areas that are a bit better than our than what we would expect but it's the you know that the decisions around that we haven't made them yet we are looking at hopefully and possibly making a little adjustments there going forward, but as you can appreciate us extremely dynamic and and we want to make sure that we make the decision.
We got some sustainability there too in terms of increasing.
Couple of quick things, maybe on that Mark do you might find helpful. Here is that first of all.
Right now the supply and demand is extremely sensitive and we're watching that carefully also because we know that we don't want to tip, but in the wrong direction. There are internal analysis and analytics that we do a is that we figure that 2020 demand overall will be down about 6 billion feet, that's what our numbers.
Show Us with all the with as a result took over 19.
On the supply side, though we think there's a corresponding decreases there there's going to be probably pretty close to that if not a bit more napa certainly in that neighborhood as well. So we figure that you know as me over the next loves to three here that we're going to be in relative balance so to speak. So that's why were taken all a very cautious approach here in terms of.
Well when you have to increase production levels, but certainly it is something that we're looking at on a daily and weekly basis.
That's helpful.
[laughter].
I wondered that Alan do you want say anything about the upsides yeah, no due just to add to that so I think as dawn straight lined in his comments clearly the pulp business is it's a very much dependent on that so mill operating rates and so clearly we're not immune.
From some of the challenges that we've seen impacting us almost particularly MPC and so we're we're tracking that very closely guided to the downtime at north, which which just started yesterday and that'll be for three weeks or just over three weeks, but we are watching it closely similar to what Don outline for the the saw mills.
Mark.
Okay, and then just staying on pulp Alan I wondered if you can just to help us and thinking about sort of medium term b C fiber supplies and what that implies for kind of pulp mill capacity in DC view for for example, do you have adequate supply.
For your four mills, you know if we look out over the next two to three years.
[noise] Yeah, no fine. Thanks, Smart I mean, I think a as you may recall at our last conference call I made reference to the fact that we've been successful procuring additional supply boats and on the saw mill sides in Selmo, So sixtyl chip side and annotated more wholesale chips as well so we feel that we're we're pretty good.
There I mean things are tight and I think every producer today quite frankly would say that things are tight and all of us recognize that as an industry. We don't have an abundance of fiber, but oh, we are watching that position very closely we clearly I think are going to be impacted by extensive curtailments, but then I think we're not.
And in that regard.
Looking at markets, it's clearly hard to call it and that's probably unhelpful to speculate too far.
But right now where we feel it's just we got a reasonable balance.
Okay, well last one for me on that score I wondered if you guys can just walk us through kind of demand pricing and cost trends over feed up and particularly sort of where things are right now versus a kind as a first quarter numbers.
Yeah, I can let me start without Alan I think first of all in Europe, I will say that we're you know after after the first quarter we are.
Definitely satisfied and actually Oh.
Feel good about their results in Q1 from our European operations clearly a January as you might remember was off we got off to a little bit of a rough start there because of weather was so serious there and also there was a lot about rhetoric around Brexit and so forth in a lot of speculation to stop work, but.
Basically rebounded quite well in February March.
Well, there's been some impact and in some of the UK business in particular its it even there. It's been a is probably I would say are guys say it was a bit better than what we would have expected, particularly again on the home center side it'll be iwai side.
And so in Chile, and the other thing about over there in Europe because of the product mix that we manufacture over there you got lot of alternative markets that you can go too which is what weve been able to do there relatively well for sure. So in terms of the operational performance.
And you know as a result, a cold at night team, we really haven't had any really impacts at all we've got we're running about 80% of our our production.
Right now we've got two mills that are curtailed all the rest are running 100% capacity.
And we haven't had really any issues from an <unk>.
Absenteeism point of view or.
Coordinating impact point of view at this stage and they are running very well and the other thing I would say in Europe, just to fill out the fill out all the variables here Mark is around log costs and one thing and I think we spoke about this before Alan or I have is that you know the one thing in Europe is they're very responsive to market.
Prices so when market prices are under pressure or we see any kind of a deflation on on.
Lower prices, you typically see a corresponding albeit a bit of a lag a reduction in log costs and that's what we're seeing a again and so.
So that's you know that helps to preserve the margins that are you know that your eye that your that you're forecasting. So so overall I you know I would have to say that in Europe at this point its living up to what we expect that and.
And we spend a relatively positive here and we expect that Dick to continue at this stage at least going forward.
Okay. So down for much you said that is this sort of 18% drop just year over year that you flagged in the release.
He is not corresponding to kind of a similar drop if you like 1800 Bips in your margins over in Sweden is that correct that's correct.
It did I hear you say that the run rate in the first quarter Firvida equated to about $90 million a year.
No I didn't I Didnt say that yeah, I, what I said was.
Unless you read that somewhere I don't I'm, sorry, if you look at our I thought I heard a 90 million in the commentary. So yes, so down maybe I can jump in there. So so so mark what we're guiding to there's obviously Q1 extrapolate it there and I think the point was to convey that again a year from our perspective is still.
For me, well and delivering very solid returns so apologies for any confusion cost.
Okay, Alright sounds good I'll turn it over and jump back into queue. Thanks Mark.
Thank you spend the next question comes from Paul Quinn from RBC Capital markets. Please go ahead.
Yes.
This call online mobile and so all in our question you mentioned a there's a difference regionally maybe you could go through a which of the regions that are stronger than that you're seeing on and we were worthy errors a week.
Yeah, I think yeah, that's for sure Paul that right now that's certainly the south East continues to be a takeaway there is a relatively strong certainly the Midwest as it's been has been good California is picking up somewhat although we don't do a lot of business. There. It's definitely give me a little bit better probably the slow.
Just area is certainly obviously the northeast that whole area would be the at least but certainly the Midwest the southeast those are big.
She big markets for out well for lumber period, but certainly for us and that's where we've seen most of it I was still a little bit slower dollar let deep south.
Maybe but yes overall, that's kind of how we would look out of California was really top at the beginning but it's starting to come back a bit as is our Washington, Oregon.
Okay, then keep on the new home so what do you all lead customers, saying about how they're looking at 2020 at this point.
Yeah, I think you know our from our standpoint, we're glad we're forecasting appeal.
Millions starts this year and that's you know that basically that's as a result of some of the analytics that we do but also in conversation that we have with a lot about national builders or whatnot and you know there's theres a lot of initiatives out there I mean, clearly you know there's that's the one segment where.
When I see the biggest impact.
Based on facts on that we know that however, there's a lot of initiatives and there's a lot of work being done by the national builders through subsidize mortgage rates and several other initiatives that they're looking at to try to preserve as much as they possibly can and keep that I've also other business going but if you talk to the national builders I would I would say that we would be.
You know that was 1 million kind of areas probably on average pretty consistent.
Okay, and then more maybe just overall uncoated 19, how has it affected your operations. So far I have you do you get in number of people that attested to have yet to shut operations for any time.
Yeah, I, let became number and pulp.
Yeah. So we don't get all we we've.
Clearly, it's the impact we haven't really we've got a few cases for sure you know between Oh, I got one or two and Sweden, then one or two in the U.S. so but.
That's it actually extensive that we've done but what we've really put in place right from the start significant amount of work in terms of trying to preserve the health of our people rights, we put a number of policy that place around social physical distancing piece, particularly and try and quick keeping us sites clean if theres any suspicion.
Okay any area.
Got it down a little clean it up a little do whatever we need to do so we we think and we've done a lot out ourselves Chuck with a lot of we've done it actually don't survey of the whole company and really to understand what level. We're out there at it and everybody else is pretty positive. There. So we haven't really you know that's been pretty good we haven't really suffered anything from a standpoint of increased absent <unk>.
For the most bar probably the biggest issue as people are concerned about the longer term and unlike most things. We go through you know when is it going to and rate so, but other or not it's more of a personal thing and so if you just look at the business. So I.
I think we we've done a terrific job our HR group at all the folks have done a really good job kinda working our way through this.
Best, especially one can.
You know in Europe, it's been really not really any impact at all.
You asked were still you know the mills that are running are running we haven't had really a lot of issues there and yeah. So [laughter]. So you know so overall, obviously a lot of concern a lot of a lot of after you had shed a lot of stress as result of it.
But we're trying to communicate like we've never communicated before and keeping everybody up to speed on what we're doing and recognizing that everybody at this stage of the games make a sacrifices and were extremely appreciative of that.
And we understand that stress is putting everybody under right. So.
Anyway, that's got a long winded.
Paul, but that's got to how we're going to try to operate through this deal right now.
Well I'm going to then maybe just a last question Alan on the Pope sat here you know it looks like a tissue demand.
Is out I don't know how much of that as a full floor, but a it looks like papers, you know well off the cliff here and specialties could sort of a mixed bag. Maybe you can remind is done on your sort of percentage that you know those three main end use buckets. A you know in in terms of your cold pulp shipments.
No I think I think you summarized it well there Paul I think I think just.
Tissue was very good for us it's still very good is moderating a little bit normalizing. If you will I think printing and writing has been hit hard as you correctly say so in terms of answering your question I think close to 50% of our product basis is what we call specialties and a good third is or.
Or is tissue, so printing and writing obviously is a much smaller percentage of our portfolio.
Which is slightly despite assigned quite quite frankly, so our product mix.
Sooner and mix has helped to insulate us again some of it.
We're seeing from that segment.
Yes.
Okay go ahead, that's like US good luck.
Thanks.
Thank you next question is a follow up from Mike wealthy from BMO. Please go ahead.
Yeah, I got three solitaire, one first Don just any.
Kind of thought you'd want to offer on the sort of how the cobot thing has has played out.
Over in Sweden, where they've clearly had a little different model then a than most of the other western countries. How you think that's worked or not worked effectively.
Yeah it interesting.
That is that we'll situations quite interesting because as you outlined there mark they've taken a bit of a different <unk>, especially early on I think you know now.
Talking to our folks from Sweden, or spending a bit more off there's been more focused now on particularly on the social additional saying I know physical distance or whatever you want to call. It no no question compared to what it was a couple of three four weeks ago, but still though if you really look at it. They are you know you've talked to them there they definitely have a bit of a different model. They they definitely have.
You know a lot of trusting their government and what they're doing around it there and so I'm you know one as a result, it out we really haven't seen you know arc has allowed our mills to run the ones that are running there.
Operations, all all but two so essentially at 100%.
Absenteeism has been very minimal.
At all and a you know you probably saw recently Volvo now sit there up Mailback operating again, which is bags as you know there there are big company, there and its symbolic as well. So you know from their standpoint. They are very very confident that they are they're taking a different attack, but they do think gets the at this stage anyway I.
The right one as it's essentially a modified approach than what we've got a here in North America for sure.
Yes, so anyway, that's you know that's try to.
What we see right now and so far it seems to be a work.
Okay next I want to discover too to lumber you know you mentioned how sensitive the a the whole businesses to kind of supply demand balance I I wondered if you could give us some sense of.
How you see take away right now, but also sort of how you see kind of inventory in the channel because it it has seen for the last four to six weeks like there must be a heck of a lot of inventory coming out of the channel because it didn't sound like anybody was taken away anything from the mills.
Yet there was still quite a bit of construction activity going on.
Yeah, I think that's that's accurate I mean, I first of all the takeaway I I mentioned on there aren't our side, it's been pretty consistent I'm pretty solid, particularly at some other regions that I indicated.
One of the other those questions, but yes on the yard our size the takeaway spin definitely solid in terms of the.
Overall inventory in the channel I think you definitely that it's not a stressed at all I think it's going to be stress from a standpoint, no. Because if you look at all that downtime. That's taken place you know you did the premium products in particular that most of the home centers or and the treated guys are looking for two of them.
Successful areas. They all want to high end product definitely as we so when you start to take away production.
Corresponding increase impact on prime product recoveries and so that's why we would say on terms overall inventory, it's pretty tight and it's going to going to get tighter in our view of particularly if demand stays kind are relatively close to where we spoke we're seeing today I'll give you switch over to the two and better side.
You know clearly with the pros being you know what was being down a bit more obviously are down a fair bit you would think that would have an impact, but there's a lot to a better production doubt you we figure across North American market. Overall production is down 25% that wouldn't be are kinda gas and I said, that's that's across everywhere and whether.
As the U.S. northwestern examples of.
Seven or eight mills completely down there's lots of <unk>.
Our production out right, so, even though that too and better I think is relatively tight also.
Okay last one for me as I, you know it misses that kind of a sensitive one I appreciate but it's really difficult period for kind of workers for communities up in the BC interior I just wonder if we just left politics aside.
Are there any ways in which sort of if the industry was more consolidated it might make that process.
Of kind of rationalization and restructuring.
Easier or more rapid down.
Yeah, I mean, I I think you know.
Argue continues to be it has again for a long time before long before well, which started was held a rationalization still has to continue to take place in British Columbia, and its do 100% or not 100%, but close to it due to the pipe beautiful end up and what were you know weve faced for a long time. There. So we you know our view still.
It continues to be either you know there needs to be more production coming out regardless of Coca 19 over the long term here and that's that just based on facts. We don't have the fiber going forward like we had in the past and you know we've got a bit as Bruce beautiful in certain parts of the province to this adding to that problem, we've had forest fires.
Growth industries back in a week either right. So you know you combine all those things in the last couple of three years and it's not hard to conclude that there's going to be need it.
Or rationalization, Florida, or just a little more rationalization across a British Columbia.
Okay very good thanks.
Okay.
Thanks Mark.
Thank you there no further questions I will now turn it over for closing comments.
Alright, Thanks, operator, and I appreciate everyone participating in the call here and all of you up please stay safe and we certainly look forward to speaking with you at the end of a end of Q2. So thanks, a lot for your support Kepware and we'll look at Kemper pulp and we'll talk to you soon thanks.
Ladies and gentlemen, this concludes the conference call for today, we thank you for participating ask that you. Please disconnect your lines.