Q3 2020 Canfor Corp Earnings Call
Good morning, ladies and gentlemen, welcome to the Cat four and cat for pulp third quarter analyst call recording and transcript of the call will be available on can't force website. During this call cat four and cat four pulps, Chief financial officer will be referring to a slide.
A presentation that is available in the Investor Relations section of the company's website.
Also the company or the companies would like to point out that this call will include forward looking statements. So please refer to the press releases for the associated risks of such statements I would now like to turn the meeting over to Mr., Don pain can pour and canned for pulps Chief Executive Officer.
Oh. Please go ahead Mr. Kane.
Thanks, operator, and good morning, everyone.
Thank you for joining the CAD four in Cat <unk> Q3, 2020 results conference call I'll make a few comments before I turn things over to Alan nickel, our executive Vice President of Cadfour pulp operations, and Chief Financial Officer of Kemper Corporation, as well as cat there Paul.
Alan will provide a more detailed overview of our performance in Q3.
In addition to Alan and I, we're joined by Kevin Pankratz, Our senior Vice President of sales and marketing.
I would like to start by recognizing the exceptional efforts of our employees to ensure a safe work environment in the midst of a global pandemic their dedication their resilience and their hard work has been very impressive, particularly in view of the challenges people are no doubt spacing with the uncertainty and stress of the pandemic on everyone's lives.
<unk> financial results, we experienced in Q3 were not what anyone had expected, particularly during the early days of the pandemic.
Our industry has become more disciplined more responsive and more dynamic and we are well prepared and able to operate efficiently and effectively in this changing and new environment. We do believe that several of the trends. We've been we've seen emerging during the pandemic are going to be sustainable and will continue to positively impact our industry pre pandemic for me.
Many people that are homeless, primarily for shelter for sleeping and eating now the home is becoming an office a school and entertainment area and our recreation space. In addition to sleeping in eating people want their homes to be comfortable and are able to accommodate all of these additional activities. We see evidence of this in the strong ARR in DIY.
Wide demand and believe it will continue to evolve and increase in importance.
We're also seeing a shift from urban living to suburban and rural living as people buy more spacious single family homes and have greater flexibility to work from home. The strong housing starts are being supported by the low mortgage rates and desire to own a single family or multifamily low or mid rise home and increasing trends from urban high.
Hi, rise condo living to less Das housing and we see this worldwide. In addition, the age of phones has also increased significantly and have now reached levels not seen since World War II.
We were encouraged by the recent US housing data, which was led by strong demand for single family homes, which represented over 78% of the total housing starts have September. Additionally, excuse me. Additionally, both single family starts and building permits reached highs not seen since 2007.
Turning to our markets our lumber business generated record high adjusted operating income of $387 million and record revenues of $1.3 billion.
Record lumber prices disciplined cost management strong productivity and a return to more normalized operating rates contributed to our lumber segment results number.
Lumber prices increased rapidly as the quarter progressed, driven by unprecedented demand in the repair and remodel and treated lumber segments in North America, and Europe strong U.S. housing starts and low field inventories throughout the supply chain worldwide.
Demand from offshore markets was relatively stable during the quarter. However, they have not achieved price level seen in North America due to the typical lag in pricing these markets typically face.
Our outlook for the remainder of 2020 is a continuation of strong markets. Although we anticipate lumber prices will correct as it currently are through the fourth quarter due to typical seasonal demand reductions. During this period during the third quarter beat a completed its acquisition of three saw mills from Birch timber this acquisition.
Further improves our global diversification with approximately 22% of our production capacity now located in Europe. We continue to be very pleased with our acquisition as well as the national operation in South Carolina.
As of today, we have approximately 40% 44% of our production in British Columbia.
Our present in Alberta, 22% in Europe, and 30% in the United States results in our pulp business reflect the impact of extensive fiber related production downtime combined with weak global pulp markets stemming from the ongoing impact of over 19. Following extensive sawmill curtailments early in the second quarter Ken.
For pulp took a four week curtailment at the Intercon MPG pulp mills during the third quarter. In addition to scheduled maintenance downtime at Northwood and Taylor.
As you will have seen in our news releases, we have made the decision to replace the lower furnace for RV five at Northwood, which Alan will discuss further in his comments global softwood pulp demand is anticipated to improve slightly through the fourth quarter as markets continue to recover slowly from the economic impact of COVID-19 and elevate.
Inventory levels following the seasonally slower summer months.
I would also like to highlight that our 2019 sustainability report was released in September.
We are regularly regularly revisiting our corporate strategy and reassessing, our sustainability and SG reporting processes to ensure we are aligned with the best in class standards sustainability and SG are a top priority for the executive team and to demonstrate its importance pad Eliot's role has been expanded to senior Vice President.
Corporate finance and sustainability. In addition, this quarter, we filled a newly created position of director of environment, and sustainability, which is responsible for the development and advancement of our comprehensive sustainability strategy as we.
As we look forward to 2021, we will continue to focus on improving our balance sheet deploying capital internally that targets rapid payback and high return projects and consider external acquisitions that will improve our global diversification I will now turn it over to Alan to provide an overview of our financial results.
Thank you Don and good morning, everyone. The canned foreign capital quarterly results were released yesterday afternoon and come together with her overview slide presentation in the Investor Relations section of the respective companies websites.
My comments this morning ill briefly speak to quarterly financial highlights a brief summary of which is included in our overview slide presentation.
Our lumber segment reported operating income of $337 million for the third quarter compared to $107 million for the previous quarter. After.
After adjusting for a net expense of $51 million. The lumber segment generated operating income of $387 million up $327 million from the previous quarter.
A record high lumber business results reflected an unprecedented an unprecedented increase in north American lumber pricing as the quarter progressed with the significant surge in demand outpacing available supply following widespread industry curtailments earlier in the year as a risk.
As a result units sales realizations in North America saw substantial increases in the quarter.
In Europe unit sales realizations benefited from stronger demand a favorable geographic sales mix as well as a 5% weaker Canadian dollar with bills most business in Europe based on pricing negotiated quarterly in advance European prices are projected to show solid increases through the fourth quarter 2020.
Notwithstanding seasonal downtime the company's European lumber operations overall lumber unit manufacturing costs benefitted benefitted from stable log costs and a 36% increase in production through the quarter with substantially all mills operating at full capacity following the COVID-19 related production curtailments taken.
In the earlier part of the second quarter. In addition, lumber production reflected fetus September Onest acquisition of herbs timber.
Our pulp business reported an operating loss of $28 million in the third quarter compared to an operating loss of 6 million reported for the previous quarter.
Results for the current quarter reflected weak global pulp market conditions significant fiber related downtime as well as a previously deferred scheduled maintenance outage at Northwood. These factors being related to the ongoing impact of course at 19.
Pulp production was down 13% in the quarter, largely reflecting a four week curtailment at the Intercon PG pulp mills as well as the scheduled maintenance downtime at Northwood Ann Taylor's annual maintenance as well.
Pulp unit manufacturing costs were moderately higher than the previous quarter, principally reflecting the aforementioned lower production.
During Northwood scheduled outages the mills recovery boiler there number one was found to be in stable condition and maintenance was completed in one production line in early October rugs.
Regarding north goods recovery boiler number five previously announced capital upgrades to the upper fairness are progressing well early this.
Early this week management made the decision to extend the reach on RV five to enable the replacement of the lower furnace at an estimated cost of $30 million. This work will be undertaken in the fourth quarter and this is anticipated to result in approximately 60 to 70000 tons offer just Paul.
In conjunction with the upper furnace project. This lower furnace upgrade will ensure that our besides continued operation for another 15 to 20 years.
In light of the assessments made by management with regards to our B one an RV five the previously considered option of Super recovery boiler at an estimated cost of $400 million will not be required.
At the end of the third quarter Canfora, excluding con for pulp had net debt of $506 million with available liquidity of approximately $1 billion.
After taking a kind a fetus acquisition of berg's liquidity improved by approximately $345 million during the quarter, reflecting significant cash earnings combined with favorable working capital movements.
As of September Thirtyth, Tom Ford has paid cumulative constituted deposits of approximately $550 million and is currently anticipating material reduction of approximately 15% in the company's cost Judy deposit rate towards the end of the fourth quarter. Upon finalization of the Ritz off the first period of a few.
Council pulp ended the third quarter with net debt of $19 million and available liquidity of approximately $130 million.
Excluding capitalized major maintenance, we currently anticipate Twentytwenty capital spending of approximately $125 million in the lumber segment and approximately $75 million for con for pulp, including the RFP type work currently being undertaken with us.
With regard to 2021, we are currently anticipating capital spending of approximately $200 million for lumber on approximately 60 million for pulp and without Donald turn the call back to you.
Thanks, Alan So operator, we'll now take questions from.
From analysts.
Thank you.
We will now take questions from financial analysts.
If you have a question. Please press star one on your telephone keypad, if you're using a speaker phone. Please lift your receiver and then please press star one if at any time you wish to cancel your question. Please press Star two again. Please press star one now if you have a question there will be.
A brief pause while participants register for questions.
Thank you for your patience and one moment for your first question.
Okay. So the first question is from Sean Stewart from TD Securities Sean. Please go ahead.
Thanks, Good morning, everyone.
Good morning, a couple of question good morning.
Our questions.
Just for Don or Kevin.
A little more context on the the current lumber price correction, we're seeing in North America, and I guess, specifically you mentioned some seasonal elements to it but.
But can you speak to which end markets, you've seen some relative weakness or I guess at least a deceleration in growth over the last five weeks or so.
For sure Sean maybe Kevin why don't you give Sean an update on that I know you're doing a lot of work around that sure. Good morning sign Yeah I mean.
The price decline that we deemed it was pretty much anticipated and largely due with seasonality. We are off some of the peak demand items like in the our in our segment, which were actually pretty significant that we saw in the summer and in June. So we have seen a little bit reduced demand there.
And then quite frankly that the the inventories have gradually started to rebuild into the system, but are still quite lean and and so we just in that that balance that we're seeing now.
Okay. Thanks for that detail and then a question on Europe, specifically probably.
Probably flying under the radar a little bit, but we were impressed by the margin expansion.
This quarter.
Price realizations are up a little bit and first part of the question is how much of that is attributable to moving incremental volume into North America, and then we saw it and ups.
And apparent reduction in unit costs this quarter.
Any details you can give us with respect to factors that contributed to that trend as well.
I guess first of all in the market or on on on the mill nets like you've talked about they're a bit Sean I mean, yes. They were up for sure not to the degree that you would have expected or not expected, but we've seen in North America for sure just because I know you're aware of this but in terms of the lag that we see typically in Europe, but you know that some of the real benefits of some of.
The increases that we're seeing in North America, but also in Europe as well.
To a similar extent actually we will and we'll see you don't see a lot more inflation there on on market price. This year as we go into Q4, because the business is always lagging for sure right. So and then on the cost side I mean, you know that.
Even with the with a reduction in production and in July due to the fact that we as we take three weeks of downtime, they're roughly we took an extra week. This year. We took some those at least four weeks instead of three which is unusual but at the time, we thought that was prudent just based on where where things were going but but.
Clearly as you look forward into August and September they may some terrific progress there for sure and conversion costs in overall costs along the way.
And is there anything you want to add to that.
Good point on I think the only other thing I would add Sean is that the other business units that are part of Fito, where we're operating kind of lower rates. During the period. So that was another factor that would expand the lower unit costs.
Thanks for that Alan I'll get back in the queue. Thanks, very much guys.
Your next question comes from Hamir Patel from CBC capital Amir. Please go ahead.
Hi, good morning.
Hi, Thanks, So some slides from your presentation you may have done earlier in the month that talking about.
Markets and I noticed you kind of highlighted a potential to redefine the north American pricing model. So just wondering if you could speak more to.
What you think the opportunity there is to maybe move away from.
The sort of random lengths week to week pricing with there'll be some year your customers.
Yes, I'll, let Kevin has been doing a ton of work on that but just a real high level I mean, we see this as a real opportunity. If you look at what's going on in Europe for a long time, and we've always been watching that and as one of the one of the reasons of many that we are interested in Europe moving forward. Overall you also see in Asia, two is more sustainable more predictable.
More more pricing those being kind of count on for the future at profitable levels and so we've been addressing that for a long time is how can we stabilized earnings and how can we get away as much as we can from oil pricing based on right away or random links itself as Kevin and his guys and he will give you some detail on aperture. He's got some examples but clearly we see that as.
As a big opportunity I think I think what's really maybe accelerated some of our customers views on moving to that type of model two in North America, which has been encouraging is they're looking at their procurement policy procurement strategies themselves and they are now for the first time in some cases starting to recognize.
So you know honestly, if you really look at it as we look forward here, we need to improve some of the communication and partnerships that we have with our suppliers and more be focused on help stabilize pricing and demand and supply themselves as well. So we're we're seeing a lot more cooperation Kevin than we've ever seen right animal human.
Give me, maybe home or a little bit of detail, we're not yet totally at Premier League matured and has huge run up that we saw in Q3.
Compensation was less about price and more about availability just because they did not have the wood to complete jobs and projects. So we definitely saw a change in behavior with certain statements.
Like I can speak to like the like the Trust guide the MSR like where they want to lock into more longer monthly or longer type pricing arrangement, we've done a bit of that we've done business with.
Other statements be treated even our European Swedish volume.
Volume coming into the US weve entered into some longer term agreement, it's a bit of a newer concept for some of the folks but definitely more part of the conversation than it was say two years ago. So it's just some small examples of what we're seeing.
Okay.
No doubt the some other say some of the key segments that we deal with were hurt pretty bad here with lack of supply during the critical period here and what we spent.
Kevin our marketing group spend it on a effort here to try to do all we can do to make sure. Our key strategic customers were were in stock as best we could handle through that period, but thats really like I said at the start and we are really accelerated how the rethinking about their procurement policy.
Thanks, I think gone and so its really helpful.
That's really helpful and thoughts and maybe for next year do you have a sense then as to maybe what percent of your maybe.
Maybe north American volumes.
Might have shifted or arch, arguing and shift to.
Maybe more of a longer term pricing terms.
Kevin what do you have an order of magnitude of in that.
Jeez, we're just in the early stages on that are you talking about the longer term pricing here.
Yes, yes.
Yes.
It could be into that 15% to 20% range.
As a start.
Okay, Great no thats. Thanks, that's very helpful.
Just a final question for me.
And I was curious to get your thoughts on if we see a new administration. The US next year that maybe wants to make that work.
What do you what do you think that could mean for the soft lumber dispute.
Yes.
Good question I think I'll merely argue now and I've talked to a lot of.
Stakeholders in the U.S. side, a boat that to where we are and where we think we might be going here, but for the I think personally might I think that we're a ways away here from any kind of resolution of no matter what is in the running in the background here I think that there's there's so much at this stage in particular with coal and the concern around that.
With some of the geopolitical issues that we're all aware of worldwide and so forth that that.
Our view and certainly the U.S. coalitions view is that this is a couple of years away a couple of years away from from any kind of resolution probably at this stage now that could change, but I, but but certainly it's not on the radar screen, but call. It. The key coalition guys from from certainly that I've heard and of course, we ourselves as an industry.
Create Canada have had a few false starts over the last two or three years and we typically get into a situation situation.
We are where we seem to be negotiating with ourselves and we're not prepared to do that anymore. I mean, we think we're in a good position, we know that work even more we've always been 100% confident with that were solid here, even more so now and so we will probably but like I said it will take we think is going to be a couple of years away. There is no. There is no incentive.
Theres no real nothing being done right now I guess bottom line.
Fair enough. Thanks, Don that so that's all I had I'll I'll turn it over.
Your next question comes from Paul Quinn from RBC capital markets. Paul. Please go ahead.
Yes, thanks very much longer.
Recently with the lag in lumber prices on the way up in North America and just.
But Q4 should be pretty good for even with prices coming down, but just want to try to understand.
What you expect in Asia that commentary says.
Expecting higher pricing, but it's not going to be anywhere near that sort of that.
That rise that we saw from Q2 to Q3 right.
Sure Kevin you talked to share.
Yes, Paul So maybe I'll just break on aged just a little bit there first so China I Wouldnt expect we have already seen some modest price increases there throughout the month, because we sell on a monthly to bimonthly basis over there and our indications are that we'll see some modest price increases nowhere near what we saw in the U.S. and still a ways to go but I think the more.
Tearful increases what we thought was in Japan, It was quite that quite significant and and we expect that trend to potentially continue into Q1.
Okay, Great and then just looking at your net debt I mean, you get a little bit over 300 million here my model sort of predicting debt free by mid 21 here.
Given our forecast what is.
What is that.
This is a priority for capital allocation at this point.
Yes, I think you know for sure Paul Let me for starters I mean, we.
Been a good few months here and got us in pretty solid position as you as you mentioned there compared to what we certainly expected going into this year and and even even towards the end of the first quarter, but those are no longer paused up but we always have in the back of our minds, where we were six months ago to but but regardless our number one priority will continue to be as it's always been as to make sure that.
The existing mills that we are capitalized for the extent they need to be to keep up the level of efficiency that we think we need to have in all areas that we operate at two so that we know what we're going to be at least from that point of view be competitive for starters number one number two will be organic capital and we've been we've got we've had a fairly aggressive organic capital.
Plan the last several years here and in the South and Thats still underway and still moving along well. So we'll continue to look next at additional organic opportunities and and there are some there is one or two that we're looking at in Sweden of course, and there's there's one or two.
High return projects that we're looking at as well potentially here in the U.S, So and no doubt they will be probably be sum. It all up one or two also in numbers, Colombia. So that's second really.
Really and then last one of course is M&A opportunities and I think on that.
I would just say that we don't we're we're getting lots of interest there is lots of folks that typically in these good markets you get a lot of the ones that we're operators that are willing we'd like to sell and capitalize on and that's good we're not impressive the course and or else are very high multiples on them as well at this time so so our.
Right now we're we're looking of course, we will continue to keep our eyes out, particularly in Europe and in the U.S. So.
But at this stage is nothing pending.
And certainly if there is opportunities arise we will look at them, but right now we're.
We're going to continue to improve our balance sheet and really focused hard on disciplined around that and.
And see how the early part of next year, how that looks and what what the trend starting are starting to look like going forward.
Okay, and then maybe just follow up on that you know in a little bit over 50% of Kemper Colt is that does that go against the canfora sort of diversification strategy. If you. If you were to acquire any more of that.
No I don't know.
Not really I mean from our standpoint, I mean, you guys probably tired of hearing me say the same thing, but I'll say it again anyway as I mean, we get the double the ownership that we havent counted for pulp we like that we like that diversification that we have with the pulp business is linked in pretty good for our business for sure and we can we also like the kind of the ownership position that.
We're in currently and we have no plans to change out and we're at the stage anyway. We're currently.
With the way that structure right now.
Okay, and then just last question the recovery.
Recovery boiler number five there at Northwood that $30 million fix that's 15 to 20 year extension you Gotta.
You got to guarantee on that and where does that come from.
Go ahead.
I think that might be overstating it Paul I mean, not that is reflective of managements.
Best estimates working obviously with the number of experts in the field, but the sense is that right.
These extensive reach.
Replacements, if you will and upgrades in the upper part of the furnace, we're really re purposing that RP five and there's a real sense of quiet confidence here that we're going to be able to put behind some of the some of the issues that we faced over the last couple of years.
All right.
Thanks, very much great quarter good luck.
[music].
Your next question.
Question comes from Mike, while from Bank of Montreal, or sorry, Mark Wilde from Bank of Montreal Mark. Please go ahead.
Thanks Congratulations.
On a very good quarter I think all of us caught all of us off guard.
Thanks, Don to start off I Wonder just going back to Paul's capital allocation question.
One of the other options would be to buyback some style and I'm not suggesting you go whole hog on this but the stock is more.
He is more than 40% below where you were buying two years ago.
On the implied value of the company right now is a lot lower on a on a per unit of capacity base. Then a lot of the acquisitions that you've done so why why not have.
Elements of share repurchase in the in the capital allocation strategy.
Yeah, Thanks, Mark and it's a it's a good question and I, probably should have mentioned that too when I did talk to Paul's question, but I mean, it's certainly something that we have on the list is just not a priority for us at this stage I mean, we we've always and we're going to continue down This road and I'll, let Alan comment further maybe on some specifics, but we know number.
Irwin and especially in our industry and with technology changing at that level and the rates that they are we need to continue to make sure first and foremost in our mills are competitive.
Competitive and efficient to the degree that need to be on a worldwide basis, because it's even more pressure now than it used to be on that because everyone around the world, we're competing with and they're all focused part.
So thats the first thing and then in terms of organic capital and de risking capital that we do spend in terms of increasing production at least.
In the right areas and the right products and so forth that that's clearly an area that we feel is got the least amount of risk for sure going forward.
We've been pretty successful at it. So we certainly think Thats a high priority, we're going to continue to do that and so and then of course M&A and as I mentioned two so on the list would be that Alan but maybe you can give mark a little more detail because I know you and.
Your group and perhaps been a fair bit of time trying to price in the right order and so yes, I know I think Don said, it well Mark I mean today, we are clearly seeing the benefits of diversification and that's that's where what don's headline clearly kind of box set up and it's not just the share buyback is off the radar screen, but clearly it is on the list.
It is something that we will revisit from time to time I would also add that clearly if you go back six months things have changed radically from from uptime and so so much volatility so much uncertainty. So we do have a more conservative sounds generally.
Given another few quarters from a clearly.
Looking at our options more closely including share buyback, but its further down the list.
Yeah, just just to be pull all along I mean, I'm not suggesting that you go hog on US I think it's smart to continue to invest in productivity. Just when you look at the history of the industry on things like share repurchases. They welcome Ben time, really poorly and Weve got kind of a situation in the market.
Right now where your prospects actually look pretty good too a lot of us and your shares don't reflect that so it just seems to me there is an opportunity to put some element of your cash flow to work on the repurchase so my two cents worth.
The other thing the other thing I wanted to follow up on just the boiler rebuild at northwest.
Can you just give us a little more of a sense of what went handle this because it it seems like based on the avail avoided capital here of that Super boiler. This almost looks like a no brainer.
No brain what else might have been involved in the equation.
They were not thinking about.
Yes, I don't think this too much that they are not thinking about mark I mean I think.
If you go back it two months ago, certainly the options that we were looking at included.
You bet.
Revenue recovery boiler and replacing the two that we have there currently or re purpose in the other two over time.
Clearly at the time pull market additions were significantly more favorable as well.
So that was one of the reasons. So we are looking at both those options I think it's fair to say when we've actually looked at this and we got a new VP of pulp as well, that's that's really been bringing some fresh perspective to this as well. We've we've recognized that we are better served by repurchasing RMB five say I'd.
Line and also continue just to monitor and.
And for regular repair if you will for RMB five, but we're encouraged by our Beefier RP bumps or I should say, our b ones looking on I think said earlier by doing what we're planning to do in RMB. Five we think we find a a less expenses solution, but one that also provides us with the assurance right.
Operation that we've been looking for.
Clearly, we don't get that off.
I should say clearly one doesn't get all of the productivity and efficiency benefits that one might get little Brown, you order, but those are more than offset the fact as I mentioned.
Okay. All right I'll just also related to pull Alan can you talk about the adequacy of fiber for the poor hold most going forward.
No for sure I think we.
We have to do some have to have to take some fairly significant courses of actions sidelined.
But we are in a very good position from a fiber perspective right now.
Mark we feel that were well served for a good while here and certainly no issues getting through the winter and through the first part of next year and so we will continue to work hard to make sure that are fiber situation is positive.
Clearly, we're motivated to drive our costs are full of chips done and to find us much EPS on a residual chips. This week as we can and clearly we are benefiting on the ladder from the full operating rates at the saw mills as well.
Okay, and then Bob Udell. Thank you.
I don't think you answered the question about.
Due to shipments into North America, and what those were in the third quarter a little on what.
What we should expect going forward I think when you bought beat up.
You talked about maybe two to 300 million board feet, some 200 million board feet coming into the North American markets from data going forward.
Yes, Kevin Yes.
The numbers there, yes, I mean, we were up.
About three up 5% there Mark and then quite frankly, I think looking at Q4.
There is still significant demand and inventory shortages in Europe, but just UK and European markets that are via focused so I think we'll be somewhat stable consistent going forward, but with it definitely wasn't increased participating in those high demand and high priced market that we saw in Q3, but I do see for us anyway.
Little bit of baby repatriation back, but not to a significant degree, but we were up in Q3.
Okay last one from me Tom I wondered if you might just talk a little bit about.
About the the acquisition by Denver holds down in Florida, you don't know if you'll look at that it seems like a very innovative all company over in Austria does a lot of stuff I think also what kind of mass timber construction. So just implications of them moving into the North American market.
At the same time that you're moving over into the European market.
Yeah, I mean to me I know those guys well in that fellow that excuse me the fellas, leaving that they're now.
He was a big part of Klausner for many many many years Dolby.
He was one of the guys at initially going this going back several years 15 years or more even responsible for bringing klausner Fritz closer when he went into the north American market into that market here and so he is well. These any live here. He moved from Austria moved into North Americans lift here for 10 or 15 years now so as well.
He is well aware of the North American market. He's got good contacts in North America, and so forth. So again to me if you're that particular company. It is an opportunity there the guy that they have on the ground that they there is really there president in North America, but lots of experience in North America rare for a European to have that and I think he's probably the guide.
Convinced them to do it and so they can go and really for us it really doesnt impact us too much I mean, I think what youre going to see from them is much more focus on more commodity type rage, there and.
I don't I don't and I know that we I think we all do the log quality and that particular early area isn't isn't a significant advantage is more directed to the commodity type products and so thats fine because we're not we're not interested in that market ourselves right. As you know and we've talked about Watson and so were we just look at it will be probably a.
Bit more commodity.
On the commodity two by four and wider on the market, but we don't see it as a big issue for ourselves either in sourcing logs.
And causing inflation that we don't expect or increased competition for products were manufactured already ourselves. We are so it is kind of a non event frankly.
Okay sounds good I'll turn it over.
Alright, thanks, Thanks, Mark good production.
One more question from Hamir Patel from CBC capital Amir. Please go ahead.
Thanks, I just had one follow up Bob you disclosed the sale of the pull aboard always be plant.
Is that was that was that sold us dollars a functioning always be pressed and is it expected to.
Pretty so as to be in the future.
Yes, I guess just on that or we plan to it we're not it's not going to be.
Yes.
We will see additional production will be from that plant in British Columbia, It will be re purpose elsewhere period, so and when and to what extent.
I have no idea stage for it what that might be out there.
Okay.
Thanks, Seth Thanks on that so thats all I had.
Okay, alright, thanks Claire.
There are no further questions at this time. Please proceed.
Alright, thanks, operator, and thanks to everyone for joining the call. This morning, we appreciate all your support and we look forward to talking to you.
Early in the new year, Thank you very much.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.