Q3 2020 Rayonier Advanced Materials Inc Earnings Call
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Good morning, and welcome to the Rainier advanced materials third quarter 2020 earnings conference call.
Today's presentation, all parties will be in a listen only mode.
In the presentation. The conference will be opened for questions with instructions to follow at that time.
As a reminder, this conference is being recorded.
Now, let's turn the call over to your host Mr., Mickey Walsh, Treasurer, and Vice President of Investor Relations for Rayonier advanced materials. Thank you Mr. Wilson you may begin.
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Thank you operator, and good morning, everyone. Welcome again to Rayonier advanced materials third quarter 2020 earnings conference call and webcast. Joining me on today's call are Paul Boynton, Our President and Chief Executive Officer, Mark This Molnar, our Chief Financial Officer, and senior Vice President of Finance and Frank Ruppert out our exact.
<unk>, Vice president of high purity and high yield cellulose businesses.
Our earnings release and presentation materials were issued last evening and are available on our website at rainy or a M dot com.
I like to remind you that in today's presentation. We will include forward looking statements made pursuant to the safe Harbor provisions of Federal Securities laws, our earnings release as well as our filings with the FCC lift some of the factors, which may cause actual results to differ materially from the forward looking statements. We may make they are also referenced on slide two.
And three of our presentation material today's presentation will also reference certain non-GAAP financial measures as noted on slide four of our presentation. We believe non-GAAP measures provide useful information for management and investors, but non-GAAP measure should not be considered an alternative to GAAP measures a reconciliation of these measures.
To their most directly comparable GAAP financial measures are included on slides 15 through 19 of our presentation I'd now like to turn the call over to Paul.
Thanks, Mickey and good morning, everyone.
I'm pleased with our strong third quarter results.
And I'm also proud of the way that we've been able to maintain safe and reliable operations across the company while accomplishing these results.
In markets, where we've seen robust recovery such as lumber, we increase productivity to capture incremental value.
Well in markets, where we experienced continued demand weakness such as newsprint, we flexed our production to reduce costs.
Financially, we see the benefit of these actions.
Overall as laid out on page five we delivered $55 million of adjusted EBITDA for the quarter compared to 36 million last year.
Our ongoing efforts to reduce costs along with actions taken in response to cope with 19 helped drive a 200% increase to gross margins and solid cash flows.
We saw significant cost improvements in our high purity cellulose segment, driven by increased productivity and reliability and lower cost of inputs.
These benefits were offset by lower CS volumes as expected and continued weakness in commodity viscose and fluff pulp prices.
Forest products lumber prices were a significant contributor to the positive quarterly results.
To take advantage of the strong lumber pricing the operations increased productivity by running extra or extended shifts for part of the quarter and we'll see this volume upside in our fourth quarter sales.
Paperboard remains stable positive contributor to EBITDA benefiting from lower input costs.
And why we saw ongoing weakness in our pulp and news print segment we.
We continue to offer <unk> optimize operations and our newsprint facility and minimize losses for the segment.
Also we continue to focus on lowering capex and working capital to drive liquidity.
In total as a result of our efforts, we generated $34 million or free cash flow flow through the end of September.
Now I'm going to ask Mark is to go into more detail on our quarterly results and then afterwards I'll provide an update on our key objectives for the year before opening up the call for questions Marcus.
Thank you Paul.
Starting with high purity cellulose on slide six third quarter sales decreased by $18 million driven by a 19% decline in commodity pricing and a 9% decline in CS volumes.
These factors were partially offset by an 18% increase in commodity sales volumes due to improved productivity from prior year, and a 2% increase to CS prices in line with expectations.
EBITDA for the segment was $36 million.
<unk> 5 million from a year ago.
[noise] commodity price declines were significantly offset by lower costs and improve productivity.
Improving reliability across our asset base is a specific goal for the company.
In particular, our Jesup, Georgia, and Fernandina Beach, Florida facilities.
Have improved overall operational efficiency this year.
Compared to the second quarter of 2020, EBITDA improved by $5 million, primarily from higher sales prices increased C. S sales volumes improved mix and overall lower costs.
Looking into the fourth quarter commodity viscose prices have improved from lows as we captured price increases in both October and November.
Our first price increases for viscose pulp in nearly two years.
We also expect commodity sales to be significantly higher in the fourth quarter due to shipping delays and strong production realized in the third quarter.
Turning to slide seven.
Sales in our forest product segment increased $38 million from the third quarter of 2019, driven by a 62% increase in lumber prices and a 7% increase in volumes even.
EBITDA for the segment.
Improved $32 million from prior year, driven by the higher sales prices.
As a reminder, EBITDA results include $8 million from lumber duties paid in the quarter since.
Since the start of softwood lumber duties on shipments into the U.S. in 2017.
We have deposited a total of $80 million of duties and accumulated $3 million of interest on the deposits.
In prior trade disputes Canadian producers have historically recovered all or a vast majority of these duties upon resolution.
The next steps in the process will come later this month.
The tariffs are expected to decline from 20% to 8%.
When the preliminary determination is finalized.
And the revised duties become effective around December onest.
Looking forward, we expect strong sales volumes in the quarter as our efforts to increase productivity should be realized in this period.
Prices for lumber have trailed off from peak levels in September, but still remain at historically high levels.
Turning to slide eight.
Paperboard segment sales declined $7 million as sales volumes fell 8% and prices declined 4% due to increased competition in our end markets. Meanwhile.
Meanwhile, EBITDA for the segment health.
Held steady at 7 million as lower raw material costs offset the decline in sales.
This segment has been modest impacts from Covidien team and looking ahead, we expect general stability.
Turning to our pulp and newsprint segment on slide nine sales.
Sales declined $8 million from prior year due.
Due to a 20% decline in newsprint prices and a 50% decline in newsprint volumes as demand for newsprint remains weak.
This was partially offset by an increase in high yield prices up 7% and volumes up 9% as pulp prices stabilized.
EBITDA for the segment decreased by $3 million to a 4 million dollar loss driven by the weakness in newsprint sales, partially offset by lower costs.
Looking forward, we are starting to see sales price increases for pulp well input costs have remained stable.
We're also keeping an eye on further actions in China, including.
The full ban on recycled pulp in January historically, this has had a positive impact on our high yield pulp demand.
In newsprint, we continue to adapt our assets to match market demand as a reminder, we have two operating lines at our newsprint facility and can toggle or production to meet customer needs.
We have also developed a new product in Capex casing targeting targeting the quick service restaurant market.
This new Enviro smart bag is renewable recyclable and compostable as a product.
It is early days for the product, but it should help our mill developed and improved product mix overtime.
Turning to slide 10 on a consolidated basis operating income was $17 million for the quarter.
$25 million from prior year.
The significant improvements in the lumber markets drove the majority of the pricing benefits.
With offsets to volumes and mix.
Our ongoing focus on reducing costs generated an additional $21 million of benefits compared to the prior quarter.
SGN, a and other costs increased 7 million, primarily due to currency fluctuations and an insurance settlement that benefited 2019.
Turning to slide 11.
Total debt remained at $1.1 billion, while our gross secured leverage ratio declined to 4.0 times compared to a covenant requirement of not more than 6.65 times.
The interest coverage ratio ended the quarter at 2.4 times compared to a covenant of 1.4 times.
With $147 million of LTM Covenant EBITDA.
We currently maintain is 39% cushion through the covenant.
Along with the strong operating results for the quarter, we increased liquidity to $196 million, including $83 million of cash $97 million available on our revolving credit facility and 16 million from our factoring facility in France.
Liquidity improved 30 million from the prior quarter, driven by $41 million of free cash flow in the quarter.
With that I'd now like to turn the call back over to Paul.
Hey, Thanks Marcus.
Looking at page 12, we note that we entered 2020 with a number of financial goals.
Coal did 19 challenged our ability to meet these goals, but our team adapted with three fourths of the year behind US we remain on track to meet or exceed most of our targets.
Our top priority of course was to remain in compliance with our financial covenants.
As we saw koby 19, creating uncertainty in our end markets. Our team worked with our lenders to secure an amendment to the covenants to ensure compliance and increased liquidity to manage through the pandemic as of today, we are operating with a comfortable margin versus the covenants.
Second we targeted $50 million of cost improvements in our operations.
Through nine months, we've captured 14 million of these savings primarily through improvements in procurement and logistics plus incremental operational improvements in our manufacturing facilities.
Third we targeted $10 million to $15 million of savings from corporate costs.
Through the first three quarters Weve recognized $3 million of the savings as planned.
We expect incremental improvement to put us in the target range in the coming quarter.
Next we sought to reduce capital expenditures by $10 million to $15 million to increase liquidity, while still investing in critical areas across our assets.
Through the first nine months, we spent $43 million or capex or $38 million lower than the comparable prior year period.
For the fourth quarter, we expect increased spending is still remain below our targeted level.
Lastly, we set a goal of improving working capital by $25 million.
To date, we've captured $13 million of that goal.
Additionally, we expect the tax refund in the fourth quarter, now estimated to be $33 million or $2 million above our prior comment.
Additionally, we anticipate another $22 million cash tax refund in 2021.
So despite the challenges of 2020, our overall focus on costs has led us to capture $109 million of cost reductions, including a number of one time benefits, resulting from production curtailments and other discrete actions.
Year to date again, we generated $34 million of free cash flow.
We have pretty previously discussed that COVID-19, pandemic, keeping our earnings well below our potential but.
We believe that we're well positioned for the current recovery as discussed on page 13.
As the industry leader and owner or five of the eight global manufacturing lines dedicated to cellulose specialties. We are uniquely positioned to service our customers with industry, leading product diversity and technical knowledge, including two world class research facilities in the us and in France.
And the unmatched security of supply.
We have a broad and diversified portfolio of natural based products focused on sustainably delivering quality and value to our customers.
We have a strong global leadership team focused on executing our strategy by reducing costs, improving cash flows increasing productivity and reliability and developing new products and new markets.
As we just demonstrated we have taken decisive actions in the challenging market conditions to control costs and improve liquidity.
This provides us with the financial flexibility to manage through the cycle and position us well for the improving markets.
Lumber markets provided a nice boost to third quarter earnings, but our team did a great job of increasing volumes to ensure that we took advantage of the stronger markets.
Pulp markets are just beginning to show signs of recovery and we remain poised to capitalize on them.
In other segments like newsprint and corporate we remain focused on controlling costs and improving our cash.
We know that we're going to be long term winners in our markets and we're taking the actions today to ensure that we are able to capitalize on our full potential. We are fortunate to have quality assets and employees that have allowed us to operate through the pandemic. Unlike many of our competitors.
We know that we are leveraged to commodity pulp prices, which are starting to show signs of recovery.
We have previously discussed $80 million to $95 million of potential upside by returning fluff and viscose prices to the five year average.
We know that we're going to capture this value as the market returns and were confident that were emerge a stronger more resilient company.
So with that operator, let's let's turn the call over to questions.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your time.
Thank you Todd.
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Our first question comes from the line of John Babcock with Bank of America. Please proceed with your question.
Hey, good morning, everyone and thanks for taking my questions starting out I was wondering if you could talk about obviously generate a really good cash during the quarter and it seems like you are pretty well positioned for the fourth quarter as well. So on that point I was wondering if you could talk about how you plan on deploying that cash whether its debt reduction investments in your assets or elsewhere.
Yeah, good morning as Marcus.
As we said previously.
Well continue to be prudent with the deployment of capital.
Within Capex and certainly remain focused on addressing our overall leverage.
And that would include staying close to capital markets and making sure that we're conscious of any avenues to address our maturities that are coming up.
Okay.
And then you know next with regards to the newsprint business. Obviously, you have two lines there and are working to.
It's actually fell off those assets as much as possible.
Clearly you've entered the bag business I was wondering if you might give us some sense as to how far you might be able to scale up that bag business potentially how big it is now and.
Also if there are other products that you might be able to produce there that could help keep those assets busy.
Yes, John Hey, good morning, Thanks for your questions on the on newsprint right. We've got a great asset low cost asset in Capex casing, we've talked about there's two lines there were operationally moving back and forth between the two lines.
Just kind of address the market situation and we're currently running on one line and we plan to optimize in the near term around that one line effectively we're really playing a sales mix opportunity, where we've kind of really reduced our export which is much much lower value to the company and taking advantage of that have more north American.
Demand.
The bank opportunity is real we've got quite a few different trials going on out there in the marketplace, but it's also early John So I would say, it's too early to make a call on how that's going to drive value for the business, but we do believe its real value and we look forward to kind of giving you updates to that going forward.
And yes, we do have a couple of other opportunities that the team is working on up there as well expand some new product opportunities.
I'd, just say you know, let's say.
Turn to this and we'll give you updates as we go forward, but too early to say how is going to drive value in different different than what we have today.
Thanks for that.
And next on the duty front clearly.
It looks like they might come down from around 20% to around 8% can you just remind me logistically. How this works. So I mean, I guess first of all just on timing when that might come down, but but then also would reference materials get any sort of refunds associated with what.
With that have passed deposits because of that reduction or.
Should we not expect any sort of cash inflow from that.
Yes, its markets again so.
The way to look at the duties is.
The preliminary determination will be confirmed so we should see a 60% reduction in the duty rate on deposits going forward, so that new rate of 8% and that addresses 2017 and 18 duties that were then overpaid.
There will be no.
Refunds of duties given if you follow the past duty file these duties will remain in place and we'll continue to accumulate until their final resolution of an ultimate agreement.
So we will get validation that there was most likely an overpayment for those periods, but there won't be any cash with the department of Commerce.
Yes, Thanks, and then last question before I turn it over I was just wondering if you might be able to provide some color as far as how the contract negotiations are progressing in cellulose specialties.
Yes, John.
You know I as always since our policy not to comment on CS negotiations volume and or pricing until the fourth quarter earnings call in February for competitive reasons. So we're in the middle of many discussions for the 2021 supply agreements with customers.
And many of them will be finalized over the next two months in fact, most of them or all of them will be finalized over the next two months.
I would say the limited travel due to co bid is making the discussions go a bit slower as all customer meetings or virtual at this point.
And we'll likely to can you continue to be so through the remainder of the year, but stay tuned in on the first quarter call. We'll give you some some.
Some insights into how those negotiations finalized over the next couple of months.
Appreciate all the color thanks, guys.
Thanks, John.
Thank you. Our next question comes from the line of Steve Chercover with D.A. Davidson. Please proceed with your question. Thanks, Good morning, everyone.
So to start I'm I'm intrigued to how the extra or extended shifts in lumber will flow into Q4 sales like did you accumulate inventory and if so why wouldnt you sell every stick that you made when the market was on fire in the third quarter.
Yes, great Great question.
Steve look we we did just as you noted there right, we extended a shifts and added shifts.
To the extent possible through the third quarter. If you remember when we talked at the last.
Last quarterly call, we talked about we were probably doing orders six weeks out in lumber at that point in time right. So if you think about wrapping up the quarter in September.
We were probably already sold through October at that point in time, So we were.
Realizing September peak sales and capturing them into October sales so.
It's going to give us a strong start to fourth quarter sales, London and Weve noted, obviously prices have come down considerably, but they have stabilized in futures now we're sitting above cash. So we feel good about where the equilibrium is sitting today.
And again, we should get the benefit a lot of benefit on another strong sales quarter because of the fact that we've kind of sold out the little bit further than we would normally would.
Into the quarter from from quarter three into quarter four.
So I mean could EBITDA abhi.
Similar to what.
So what you generated in Q3 or you would still be prudent to put it down a wee bit.
Well, we won't give EBITDA guidance, but Steve we've noted that volume will be stronger and pricing should be also strong as well and you can kind of do your math if you.
We said look we kind of sold out October in the September timeframe and factor in the balance of the the market indices, there you're going to see another strong quarter in lumber.
Okay. So lets Steve Marcus just just to add on the volumes. If you look at the lumber volumes sequentially, we were up call. It 2% and then if you compare it to last year almost 7%. So we did drive some some good volumes just to kind of build on Paul's comments.
Thank you.
Switching gears I know the cobot his create demand for cellulose specialties, but did the mill rationalization initiatives that you discussed during your your Investor day back in 2019 did they generate the benefits that you expected both.
Operationally and also in the context of.
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Market perception.
Where are your clients new your capabilities were.
Yeah. So.
The short answer is yes, they did generate the savings that we have we track those very closely in regards to all of our integration and transformation savings over the past several years. So we benefited from moving grades to where they were most efficiently produced in many cases.
And where we had better logistics prices. So we did see real benefits from.
Some of those movements in addition.
Last year.
2019.
We saw some modest price improvement, 1% to 2% coming into this year set for the year.
Although we did see some lower volumes as we exited some lower margin business over the timeframe there.
As I answered.
Answered John's question, we're not going to give any outlook into C.S. negotiations for competitive reasons as to how that goes into next year, but overall the repositioning of the mill assets have allowed them to move to run more effectively and efficiently, which generated some real opportunities there and for the most part the customers.
That.
Trials and moved with US have done so successfully so all in a good good effort.
Okay. Thanks, Frank So my follow on has nothing to do with the negotiations, but in the press release page. One you mentioned that this goes in high yield.
Markets are starting to see signs of economic recovery.
Give us just delay of the wins in acetate ethers.
No I can tell you more about this goes.
Well, Paul, but I am not going to comment on any of the CS volumes or pricing.
So this goes that you're referring to is that commodity viscose for the t. shirt, yeah levers tire cord nope.
No. This is commodity viscous going into to the textile applications. So this is a you know what we run the fluff and viscose commodities that we run that commodity viscose.
It's up for the first time in 24 months in October. So this is the the charts that you've seen us put up before that started to drop when the Trump tariffs on textiles out of China were put into place in may of 2019 and accelerate in September as those tariffs one.
Up to 25% Dave.
They went from roughly 900 ish dollar level down to $600 and sat at $600 $605 for effectively the entire year until October.
Through October and November we've seen better demand as the apparel demand has picked up post co bid better downstream demand for the spinners and the apparel manufacturers and as a result over the two months, we've seen effectively a 10% price increase.
Probably half and half in October and November and we think the dynamics in those markets remains strong as we enter into next year with the most analyst.
Having their increases over last year up roughly $100 a ton.
But those I would say are dated and we're seeing more price momentum in the west coast market than those analysts had anticipated in the fourth quarter.
So I would look for those analysts that do cover the viscous market.
GAAP and others to have different perspectives, maybe more bullish perspectives as we enter 2021.
Okay. So you are really making no comments whatsoever on what's going on.
Specialty cellulose.
And let me just the only thing I. The only thing I'll tell you about about specialty cellulose is just kind of our markets in general.
Steve So I'm happy to say that but.
I I mean, as we've looked at this year acetate tow has been resilient throughout the year.
But.
Industrial applications did see declines right and we've talked about that I would say the automotive end markets for filtration entire card court were hit very hard in the first half of the year.
Weve spot, we'd finally seem to find stability and.
And we are seeing improving customer forecasts, albeit from a depressed level in the fourth quarter. So some healing there in that segment as things stabilize either.
Theres for construction, which go into plastering and cement remains a bit of a wildcard there's varying opinions depending on each customers geographic mix product portfolio in general outlook.
But we don't envision further deterioration and likely expect that the market to improve while the construction ethers market to improve going forward, while ethers for food and pharma have remained relatively steady so.
Thats kind of the current state and the best we can see on that on the demand side of it without getting into specifics in regards to negotiations and customers.
Got you, Okay last odd ball 100.
Isn't selection the other day and there might be a change in in this situation I honestly don't know but.
Assuming there was do you expect that would make things better or worse with respect to your tariffs in China and also the 80 million Bucks that are being held hostage on the lumber side.
Look Steve I know you don't know and I don't know I think it's too early to say, where this all goes and the impact to the business you could you could lay out scenarios that are plus and minuses on both outcomes. So I think right now we we stay tight obviously the conditions we've been operating in for the last couple of years with the tariffs is Frank just note.
Haven't been positive to the company and regardless of the outcome, we hope those conditions improve going forward.
Makes sense, okay. Thanks, guys stay safe.
Yes, Thanks, Steve.
Thank you. Our next question comes from the line of Paul Quinn with RBC capital markets. Please proceed with your question.
Yeah. Thanks, good morning, guys.
Hi, Paul.
Just on that specialty pricing that was up there.
13, 48 up 3% quarter over quarter into it that on mix or is that on a contracted volumes.
Yeah, so well.
Let me just step back and it's all on contracted volume and then the mix up that contracted volume changes over the course of the year. So.
One way to think about this is that.
All of our pricing cellulose specialties gets set.
By the end of the year than the previous year.
That has a relatively.
There is a range of prices depending on.
End markets and the.
The specific products and what you see during the course of the year or two things one is.
Going into 20, the 1% to 2% increase that we were able to negotiate slowing through the.
The the sales as we go through the year. The other piece of it is the mix piece, which is higher or lower.
Higher or lower prices based on what is actually sold.
On a contractual basis in the quarter. So it's more about the customer order patterns any deviation from that 1% to 2% is more about the customer order patterns in any given quarter than it is about any fundamental changes in the market.
Okay. That's helpful Frank and while I got you.
Anything of note on the product innovation side in specialties.
Prices out there.
We have out of our TARDIS facility, the highest intrinsic viscosity ethers.
Out of the solving wood pulp.
In the World and we're the only one that makes these levels of viscosity torn knowledge and we are looking to take that viscosity and compete against the cotton lint component of the market.
Which is fairly big and so it will take time and cotton Lint will still have significant uses because of its its applications, but there is a middle ground, where both cotton lint fluff mix and ethers pulps are both use.
Both capable and so we're working very closely.
Very hard to penetrate that cotton lint market with some of these recently developed products.
Okay, Great and then maybe dislike clicking on and they'll number side, what what's the sustainability of this the the increase the lumber production them when they take a look at sort of the shipment volumes you know year over year, it's not that impressive. So so what are you doing any of those are you running overtime or are you just running every meal at two ship basically.
Yeah. It it depends on the on the mill, Paul and how we did that talk about the sustainability of those higher levels I would say, they're not I think our production levels are gonna be really relatively consistent year over year and again keep in mind. We took some considerable downtime in the April may timeframe, a month to two months depending on the facility.
So these were really you know again extended shifts elimination of breaks and and things like that and really just kind of focus around that third quarter for a period of time.
As well so I think both the investments as well as just kind of the focus on day to day blocking tackling from the team out there. It's been excellent we're pleased with the outcome.
Okay.
Okay, great. Thanks, and good luck with everything.
Alright, Thanks Amy.
Thank you as a reminder, if you would like to ask a question at this time. Please press star one on your telephone keypad. Our next question comes from the lineup territory mess around with Bahrenburg. Please proceed with your question.
Thank you good morning, So I just wanted to go back to some comments I believe Frank mate about news is of your product. So is it for your cellular specialty products. So some of your customers are obviously using it for some emerging textiles applications as opposed to.
The two so my question is when they do that does that change anything at your AD and is that a different product that you shipped to them and it is there any difference on the pricing site.
So without getting into the pricing side of it in particular paradox I would say it is a different product.
It is a product that is valued both for its application and use but as well as its ability to it's sustainability characteristics. So as the textile market continues to move towards more sustainable solutions are products that go into those.
This is a big focus of ours. This isn't this is a trend that is going to continue to go this way.
Over time and as Paul pointed out.
The removal of.
Petroleum based item.
Items is going to continue through the through the supply chain, which will leave cellulose opportunities will broaden cellulose opportunities in the marketplace.
And especially at the where it goes to the consumer end markets consumer this as a consumer poll.
Which is not going to go away for greener and better sustainable solutions.
On things that they they they purchase.
Got it.
Very interesting and then lastly added industry question on how you Paul sorry, I'm not supercluster the news flow there, but I think you mentioned some changes in China happening regarding the use of recycled fiber recycled pulp. It can you just elaborate as to what's going on in that market and Uh huh.
When do you think that could impact pricing.
Pricing in the industry because of those changes.
Yeah. Good morning, its Marcus the if you look at the Chinese market for coated board.
Those producers use sorted office paper in the production of that product.
And given given the band they would look to replace that with recycled pulp, but those options from what we're hearing are limited. So the next available fiber. If you look at the continuum of fiber that they might use would be high yield and we've seen that in the past but.
But when you see these shifts in where there are sourcing their fiber they come and look for high yield.
So it's certainly a potential opportunity here that we see.
Got it thanks, guys. That's all I got thank you. Thanks.
Thanks production.
Thank you. It appears we have no additional questions at this time, so I'd like to pass the floor back to management for any additional closing comments.
Yes. Thank you operator and look we're appreciate everybody's time today, we're pleased with our third quarter results and we look forward to driving shareholder value as we continue to do our cost takeout initiatives and we participate in these rising commodity markets. So again, thanks, everybody for your time. This morning look forward to giving you an update in the near future.
Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation and you may disconnect your lines at this time.