Q4 2021 Canfor Corp and Canfor Pulp Products Inc Earnings Call
Okay.
Good morning, My name is Miranda and I will be your conference operator today.
Welcome to cancel and Canfor pulp fourth quarter analyst call.
All lines have been placed on mute to prevent any background noise.
During this call Canfor and Canfor pulp Chief Executive officer will be referring to slide presentation that is available on the Investor Relations section of the company's website.
Also 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 call over to Mr. Don Kayne, Canfor and Canfor pulp Chief Executive Officer.
Please go ahead Mr Kayne.
Okay. Thank you operator, and good morning, everyone and thanks for joining the cat four and Canfor pulp Q4, 2021 results conference call I will make a few comments before I turn things over to Pat Elliott, Our Chief Financial Officer of Canfor Corporation, and Canfor pulp and our senior Vice President of sustainability that will provide a more detailed overview of our performance.
In Q4 in addition to Pat.
We are joined by Kevin Pankratz, Senior Vice President of sales.
I want to start by recognizing all of our employees across the organization, who in the face of many challenges, including the pandemic and significant supply chain challenges our employees demonstrated exceptional resilience and dedication and they were key to our success in 2021.
We continued to deliver on our strategy during the year and I would like to highlight just a few key areas.
In October we announced our bold ambition to become a global leader in sustainability.
Like to thank everyone across the organization, who is contributing to setting and achieving our sustainability goals. This is a team effort and it's great to see the support is receiving from our employees one area of focus over the last few months has been working to develop our carbon targets, which we expect to announce in Q2.
We are pleased that forest products are increasingly being recognized for how they helped mitigate climate change as the world moves away from fossil fuel based products in October we announced our planned investment in our new biofuel plant in Prince George through our RBS joint venture and progress continues to be made towards construction of the facility.
In 2021, we continued our focus on global diversification and successfully executed on several strategic initiatives announcing plans to construct the state of the art Greenfield sawmills in Louisiana, completing a number of organic capital investments purchased an additional operation in Sweden and concluded an agreement for the purchase of <unk>.
Our western solid wood assets.
Since 2018, and including Miller Western Canfor has added $2 2 billion board feet, an annual production capacity to our $1 $2 billion of investments and acquisitions, which had been focused mostly in the U S South Europe and in Alberta.
A much more globally diversified operating footprint is ensuring that we are able to provide exceptional service to our global customers as we navigate the many challenges throughout the supply chain and this was evident in Q4, we are continuing to assess additional organic and value added external growth opportunities as we look to grow our lumber business globally.
<unk>.
In terms of our results our lumber business benefited from record high pricing and strong operational performance during 2021 with operating income of $2 $2 billion before adjusting items.
In the fourth quarter, our lumber business operating income before adjusted items was $273 million supported by continued strong results in Europe .
Spite extreme volatility experienced during the year lumber demand far exceeded available supply, resulting in unprecedented price increases and record high earnings for our lumber operations, while our operations benefited from favorable market conditions, we faced a number of significant challenges during the year, including extreme wildfires historic fly.
Adding the impact of COVID-19, along with the many supply chain issues as a result of these challenges as well as ongoing uncertainty associated with fiber supply in British Columbia, many of our sawmills, where on reduced operating schedules during the third and fourth quarter.
D C continues to be a challenging jurisdiction to operate in due to a smaller fiber basket as we enter the post mountain pine beetle era and.
In addition to significant uncertainty brought on by several new and proposed policy changes land use decisions and legal decisions.
A few weeks ago, we announced the difficult decision to permanently reduce the production capacity at our plateau facility to align production capacity with a sustainable fiber supply in the region.
We regret the impact this decision will have on our employees and we are committed to supporting those impacted through the transition, including providing drops to those who would like to stay with cat. Four we also announced $14 million investment in plateau to improved manufacturing flexibility and lumber recovery and better.
And the manufacturing capabilities of the plateau operation with existing fiber supply.
While these close closure decisions are difficult, we remain focused on enhancing value and maximizing returns from our fiber basket in British Columbia, ensuring our long term success of our operations with our footprint that are lies with available economically viable fiber.
We continue to work with government and our indigenous partners to ensure a sustainable globally competitive forest sector in BC and are pleased to announce our intent to sell our Mackenzie tenure to the Mcleod Lake Indian band and CK Dene nation, which provides an opportunity to grow the <unk> leadership in the forest economy and stewardship opportunities.
Within their traditional territories.
Turning to Canfor pulp 2021 was more challenging, particularly in the second half of the year due to significant transportation delays related to the extreme weather in British Columbia, COVID-19 production downtime and weakness in the global pulp markets.
Before taking account of an asset impairment charge that Pat will speak to Canfor pulp had operating income of $32 million in 2021, with an operating loss of $41 million in the fourth quarter.
As a result of significant downtime associated with supply chain constraints as well as the ongoing repairs to north woods recovery boiler number one.
While pulp markets have improved significantly in early 2022, Canfor pulp continues to be impacted by ongoing supply chain challenges with our major maintenance on north was recovery boiler progressing as scheduled on time and on budget, we remain focused on improving operational reliability closely managing cost and.
<unk> fiber utilization going forward lash.
Lastly, I would like to thank Alan Nicholl, who after 14 years with Canfor will be leaving the company. This month and we will continue to serve as president and CEO of RBS and has taken on the role of managing director with lifestyle of holdings, our partner in the RBS joint venture.
I will now turn it over to Pat to provide an overview of our financial results.
Thanks, Don and good morning, everyone. The Canfor and Canfor pulp quarterly results were released yesterday afternoon and come together with an overview slide presentation in the Investor Relations section of the respective company's websites.
In my comments this morning, I'll speak to quarterly and annual financial highlights a summary of which is included in our overview slide presentation.
As Don has already mentioned 2021 was an exceptional year for <unk> in the face of significant weather and supply chain challenges. We saw the benefit of our diversification strategy with our global under platform generating unprecedented earnings during the year. We are pleased to have executed on a number of strategic initiatives during the year supported by our strong balance sheet and <unk>.
Record earnings.
Capital expenditures were approximately $430 million in 2021, which included $83 million of our Greenfield saw mill as well as various organic growth initiatives largely undertaken in the U S and Europe .
Our Greenfield mill is progressing well, but due to a challenging supply chain is slightly behind schedule and is anticipated to start up in early 2023.
We repurchased approximately $20 million of shares during the year and repaid over $420 million of term debt ending the year with net cash of $1 1 billion.
Looking ahead to 2022, we currently anticipate capital spending of approximately $430 million in the lumber segment and have just completed another restaurant acquisition yesterday for $420 million, including target working capital of $56 million.
For Canfor pulp, we are forecasting $70 million in spending, including approximately $30 million towards ongoing repairs to north woods recovery boiler number one.
In addition to an expanded capital program in 2022, we continue to look at several organic and external growth opportunities and plan to restart our share buyback program and anticipate moderate opportunistic use during the year.
Turning to our quarterly results our lumber segment generated operating income of $273 million in the fourth quarter before adjusting for an asset impairment charge of approximately $200 million.
Results in the fourth quarter benefited from continued strong earnings in Europe with our European operations contributing approximately 50% of our lumber segment earnings for the second consecutive quarter.
In 2021, EBITDA from our European operations was approximately $630 million in.
In North America, our results reflected the impact of reduced operating rates with production and shipment volumes well below the previous quarter due to significant supply chain challenges severe flooding in British Columbia, and reduced trucking availability in the U S South.
Log costs in Western Canada also reflected moderately higher market based stumpage.
While pricing in North America increased significantly as the quarter progressed offshore sales realizations declined following a record high prices experienced in Q3.
Due to timing of shipments versus orders the surge in lumber prices towards the end of the fourth quarter will largely be realized in early 2022.
As noted we reduced the net book value of both our lumber and pulp assets in British Columbia. Following an impairment test completed in accordance with Ifr S. This nearly $300 million charge reflects the right sizing of our balance sheet to reflect the reduced availability of fiber supply in certain regions in British Columbia.
<unk>, our pulp business excuse me had an operating loss of $41 million in the fourth quarter before adjusting for the asset impairment charge of $95 million.
Results in our pulp business reflected weaker global pulp market conditions as well as the impact of severe flooding in British Columbia, which crippled transportation networks and resulted in significant operational downtime during the quarter. In addition, canfor pulp announced extended capital rate related downtime at Northwood the rebuild of the lower portion of the recovery boiler number one.
Is going well and the mill is expected to return to full production at the end of Q1.
While global pulp markets have improved significantly in early 2022, Canfor pulp continues to be impacted by ongoing transportation challenges with a significant lag in sales realizations anticipated in the first quarter.
Is the rebuild of RV one approaches completion canfor pulp is focused on improving operational reliability, improving fiber yields and reducing and stabilizing manufacturing costs and with that Don I'll turn the call back over to you.
Alright, Thanks, Pat So operator were now able to take questions from analysts.
We will now take questions from the financial analysts.
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For your patients.
Your first question is going to be coming from Hammer Patel from CIBC capital markets. Please go ahead.
Hi, good morning.
Don your outlook was pointing to some some near term pressure in R&R.
I'm just curious what are you hearing from your home center customers about.
Maybe a full year basis in 2022, how do they see volumes playing out this year versus last year.
Yeah, Thanks, Sameer and I'll, let Kevin talk about that because we actually look quite promising actually for 2022, So what Kevin Kevin You go ahead Jared.
Maybe just a bit of a background. There we actually ended Q4 with some like beyond seasonal norm takeaways at the in the R&R statement, which was really encouraging and we actually saw that continue.
Year to date, so far so I would say year to date, we are experiencing basically very similar numbers to last year, and which is obviously encouraging and and it may be difficult to predict how it's going to go for the balance of the year as prices trend up but at current prices and current indicators, we're seeing today.
We're seeing pretty good takeaway.
Maybe Kevin you have a sense as to where inventories are in the channel.
I would say that they are improving we had obviously some real challenges early this year and struggling to keep up but we did and I think the BC transportation challenges are well documented but I think we're very fortunate that with our beta Swedish footprint, we were able to offset some of that pressure.
By increasing shipments from there into the eastern seaboard.
Great, Thanks, Kevin and Don I wanted to ask on <unk>.
Europe .
The war in Ukraine, and sanctions against Russia, do you see that effectively pushing Canadian producers out of China as trade flows readjust and are you seeing any.
Upward movement in product pricing yet.
And in Europe .
Yes for sure and as good good question, I think and I think first of all in China as it used to be a significant part of our business and while its still is down significantly from where it was at the peak rate. So, but if you just talk about the UK Ukraine situation real quickly.
View right now is first of all Russia is about 12% of the global softwood production first of all to start with it and of course, the most of that production or a good part of it is heavy to western Russia.
And Siberia will ships into China, and that will no doubt increase we think for sure.
But that's okay, what we're more we're more.
Thinking about the impacts in a positive way, we will be around a log supply to the baltics, which is a major region as well as the middle East North Africa, South Korea, all of those regions rely on rely on Russia for a lot of logs and thats going up probably dry up to some degree which creates opportunity here in Europe for us from a pricing point of view I mean, we think.
Our European business, there is going to be able to pick up a lot of that.
Lack of Russia supply into Europe . So we're looking we think that'll be beneficial we haven't really seen any price increases to speak of yet it's been more just maintaining where we're at but I mean, the real question is going to be down the road here, what kind of impact here over the next 234 months, but we do believe in a lease short term that it will be beneficial but to some day.
<unk>.
Potentially from a price point of view, just because of that lack of product coming in from Russia into.
Central Europe , right, but but that's that's kind of how we're seeing it now I guess the other thing we might say Kevin would be too is is that the European producers that were shipping into North America in a big way will probably revert back and try to fill that demand with Russia exiting Europe to some degree and that should help actually stabilized prices, even better here in North America.
Okay.
Okay, great. Thanks, that's all I had I'll get back in the queue.
Thanks.
Your next question will come from Sean Stewart with TD Securities. Please go ahead.
Thanks, Good morning, everyone.
And Pat I'll start with you can you give us context on specific asset.
That were written down in the provisions in lumber and pulp.
With those write downs this quarter.
Sean it's more of a general provision across the DC assets, we don't specify by by Mill site. So it's across the fleet and we basically look at a discounted cash flow over a number of years across that whole fleet and then we compare that back against the book value and not that that's the adjustment it's not as specific as I have no level adjustment.
Alright, thanks for that.
<unk>.
USS platform you guys referenced some timber cost inflation your competitors did as well.
Can you help us understand how much of this do you think is temporary related to weather or transportation.
Transportation disruption how much might be structural what are you thinking going forward for.
So that cost line item.
Yeah, well I think it's in the neighborhood of probably 5% is what we sort of guided before roughly what we see overall for this year, but largely the issues that we have is what you've outlined there weather wise trucking availability of trucking.
Is a big one which is really labor I guess overall, so all of those things have contributed to some of the some of that inflation that we're seeing here in <unk>, but really it's it varies a lot depending on the regions as well across the U S south so.
Overall, maybe a little bit of it's structural but theres a lot of it just strictly caused by some of those unusual events.
Okay. Thanks, Don.
Last question for now.
I know theres, a lot of moving pieces, but if you normalize for the Miller Western acquisition.
I'm just trying to gauge in Q1, how your western Canadian lumber.
Production is trending versus what you would've seen in Q4, it sounds like there's still a lot of challenges.
Getting into the mills getting product to market.
Can you give any sense of how thats trended versus what we just saw from the fourth quarter for you guys.
Go ahead I can take yes, I can take that I mean, clearly in BC in Q4, we had we're running our business at 80% in British Columbia for the most part and we took some Christmas downtime as well so right there youre going to have a big lift and then obviously, we can add the Alberta assets $630 million on an annualized basis.
Having some shipping challenges at <unk> I think we are going to build some inventory in the first quarter.
Hard to quantify that but I would say that we'd be up substantially quarter over quarter.
Okay, Alright, that's encouraging.
That's all I have for now thanks, guys.
Alright, Thanks, Sean.
Your next question will come from Mark Wilde from BMO. Please go ahead.
Good morning, Dan Kevin Pat.
Good morning, Mark.
To start off either done or.
Kevin can you give us some sense of what the inventories look like at your saw mills in Western Canada right now just given these transportation issues.
Yes.
For sure so maybe I'll just do it by by region, there a bit there mark So I think in Europe , it's actually all in balanced normal inventory levels.
Transportation to date has been quite fluid I would say the similar situation for the U S. South we were right in line, we haven't had the same challenges in Western Canada.
We are up for sure.
It's really struggling with the railcar supply is the biggest challenge trying to help offset that a little bit with trucks and.
And of course, the backup on the marine with containers. So we are up.
We're up we're definitely up above where we expected it probably going to take us that by the end of Q2 to get it back down to normalized levels.
Any way to quantify kind of what that increase might look like Kevin.
I am.
It's kind of fluid so I all I know, it's going to be up there Mark I can't really give a specific number.
Okay. Alright next question just.
It seemed like when I read through the MD&A there was.
Was more in there on the <unk>.
Longer term challenges of fiber supply, including for the pulp mills so.
So I'm wondering if you could just shed some more general light on your thinking around before existing pulp mills.
For sure I think I think mark talked about this a little bit and just in the context of B C fibers light period, not not release singling out necessary pulp pulp mills, particularly but just looking at overall fiber supply in British Columbia, We do believe there is going to continue to be pressure there on the downwards.
Direction here in terms of overall fiber supply and as a result of that probably another couple of billion board feet of lumber that is going to need to be.
Reduced here in British Columbia, just base effects. So thats due to a butyl is due to forest fires is due to policy just a bunch of different things.
I think we've mentioned that before.
In addition to that and as a result of that clearly is going to be less residual fiber as well, so theres going to be an impact year NBC over the next several years and it could be 123 years does but over that timeframe, we're going to see some challenges on some of the secondary manufacturing facilities I am sure. In addition to that.
Pulp mill or two perhaps but probably our view right now probably would be more like one depending on the size.
And that's kind of how we see it which is probably no surprise because that's kind of been what we've been seeing here for a while right.
Yeah.
Putting like trying to get too granular on this but just when we think about your own pulp footprint.
That you are putting a lot of capital into North Ward I think tells us that.
Is your view that mill is a long term asset is that fair.
Yes that is very fair.
And would it also be fair to say cellular when you used to report it separately seemed like it was only marginally profitable taken downtime right there right at that mill right now.
Probably the one that faces the greatest challenge in your view of your portfolio.
Yes.
Different type of <unk> versus <unk>. It clearly there are challenges there for sure from a fiber point of view, but also from a more importantly from a market point of view too and.
I think in both cases and so we.
But as it stands right now the six weeks that we've announced is the temporary downtime is still in place and we haven't made any further decisions over and above that going forward.
Yes, Okay, and then just turning to this whole fiber supply issue on the lumber side. When you were you've been quite proactive here you know you announced the plateau moves in.
In the midst of really good lumber markets.
Thank the sort of additional 2 billion board feet, you've talked about is that going to come easily or is that going to take.
A significant downturn in the market.
Ride that out of the out of the market just in your view.
I think clearly the downturn could if there was a serious downturn that would probably accelerate that in some areas for sure, but I think I mean again, we just got to kind of face the facts as an industry, there's going to be less fiber available going forward, which is going to be the bulk of the reason why.
Obviously low prices might accelerate that though like I said.
Okay, and then if we look past kind of the Monday closing on Miller Western.
Bill sitting on a lot of cash and you guys. It looks like youre going to generate a lot of cash in the first half of the year can you just give us.
Some sense for the priorities for the cash.
And then within the M&A bucket of priorities. If you could just give us some sense of.
Now what you might be most interested in from ballpark kind of a location and a market perspective.
Sure Mark I mean, as as Pat mentioned, we're basically between the Miller Western and some of the capital that we've identified for this year is close to $900 million that we're spending just with those two areas alone over and above that certainly we've got we got some projects. This year from a sustaining capital point of view.
It's underway as well as we've still got some ongoing organic capital projects that we have also we will continue to be working on this year and going forward as well.
We've got the Greenfield project of course going on at Deridder.
As we look forward here, maybe it could be some opportunity there for one or two or whatever more there to not only in the U S south that could be in Europe as well in.
In addition to that just on opportunities, though I think we also have been pretty clear and we haven't really changed other than maybe a bit more.
The U S. South for sure is a key area for us and it's going to we still believe it's a really really solid area, we'd like it down there as you know and that we see opportunities are going forward in Europe same thing I mean, Europe has been really really good.
Probably much better than we even expected and we always thought it was going to be good.
And then of course, Alberta, who handle those latest deal we really feel pretty fortunate we were able to get the Miller western assets, we like Alberta, we've always liked Alberta and.
That's a new growth area for us as well.
We're pretty pleased with so.
Okay, you've got a little position in engineered wood I'm just curious whether.
Are you thinking about.
Going beyond lumber and perhaps growing in the engineered wood area.
Yes for sure it's something that we look at regularly I know, Kevin and his group and Stephen and his group are looking at that on an ongoing basis, we we definitely like the position we Havent Glu lab in the south with the two mills, we have a large market share we have a fantastic product.
And we've had real frankly had lots of interest there from other companies interested in them, but we do believe it is a core business for us for the future and something that we can we can leverage and increase as we look forward.
Okay very good I'll turn it over thanks, Dan.
Okay No problem Cmos.
Yes.
Your next question comes from Paul Quinn with RBC. Please go ahead.
Yes.
Thanks, guys a couple.
Couple of questions one on the Capex budget of $500 million.
On the on the pulp and lumber side, if you could split that down between what is maintenance there, but it's strategic or project work.
Yes, sure, but maybe Pat do you want to.
So sorry, you're asking for maintenance versus sort of strategic fall within the bucket.
Yes.
So of the $4 30.
I don't know if thats, a $200 million are probably the sustaining capex on the lumber side and then on pulp.
It's probably 30 $30 million to $40 million there is a bigger number around RB one this year, but it's $30 to 40, Paul sort of sustaining capex.
Okay. So then if you've got 200 guys Danny on the lumber that extra two three that youre going to be spending whats left on <unk> is that about 80 million Bucks and whats the balance where you're spending the balance.
Yes, it's about $100 million.
Andrea that slipped a little bit more than $100 million Canadian Thats left.
And then just a number of sort of optimization projects throughout the fleet I mean.
We're investing in both sides of the border actually right now and you mentioned plateaus in investment. So there's a series of sort of smaller investments there Paul that its focused on continuing to optimize that.
Great assets, but theres nothing as large.
As the as the Greenfield in that in that mix.
Okay, and then congratulations on the potential sale of Mackenzie, if you're going to fiber supply chip chip agreement with the potential new owners there.
Not at this point, we don't but it's certainly something that we would be it will be investigating as we look forward, though but at this point we don't.
Okay, and then Europe you mentioned.
$630 million.
And EBITDA in 'twenty, one how do you see 22 here is that going to be pretty similar year.
It's shaping up to be pretty darn good year for sure.
So we'll see how it plays out here going forward Theres, obviously, a lot of geopolitical.
We've talked about here earlier that may have some influence but for the most part that business is solid it's very sound.
And the upside there and our view is definitely <unk>.
Positive for sure and so, but obviously it depends a bit on price and what prices do here back half of the year more we're not concerned at all about Q1 and Q2, there because they basically lock their business and as you know quite a bit longer than they do in North America right. So it's the back half of the year and every case that we always.
A little more.
<unk> is a pressure.
Great we have a pretty good.
View on North American lumber prices, maybe you can help us out with what's happening in Europe with a little bit more granularity given our are muted.
Muted outlook.
Sure Kevin why don't you take a stab there Paul so I mean, it's there's a lot of different markets that they serve their rate like I think visa alone. There was about 44 different countries, but the big one is obviously the UK market and we did see softness in Q4 and early into Q1, but we are anticipating.
It's a modest increases in Q1, but more material increases in Q2, because they basically didnt really replenished a lot of inventory.
In that in that Q1 periods. So.
Could price it would be in that 10% 10, 10 plus percent means their pump and also central Europe for the for the same reasons. So that's more of a Q2 guidance and then like Don said on the back half.
A lot of risks and uncertainties are obviously with the Ukraine situation that could be short term potentially tighter supply with also have corresponding inflationary pricing by the longer term impact whether its supply chain and logistical challenges all of that is just a few hundred millions, but maybe guidance, maybe kept bringing and moderating in the back half.
Okay. Thanks for that and just last one on capital allocation a lot of your peers had been buying back shares.
Look, particularly.
Inexpensive and just wondering why why you don't see camp our shares as a buy right now.
Pat's going to buy a few go ahead, yes. So we did mentioned in my comments, Paul we are going to restart buyback when we shut it off in the fall because we were working on another restaurant deal.
Yes, I mean, we will continue to have I think a small program and when we we acknowledged the value that sits in our shares right now and we will continue to.
Selectively acquire some of those and we'll start that again here before too long.
Alright, that's all I had thanks guys.
Hi, Paul.
Your next question comes from Mark <unk> from BMO. Please go ahead.
Yes, just a couple of follow ons, one one I wonder if you could help us at all with just sort of the.
The Q1 flow through from both lumber prices and pulp prices I think when you talked about Paul.
You suggested that there were going to be some delays in these higher pulp prices rolling through I assume because of kind of transportation delays.
Yeah on the pulp side I mean, I think we've seen more than a 45 day lag in the pricing.
Pending on the markets it can be almost double that I think and on the lumber I think we mentioned in our comments, we really did not realize any of the upswing in the price in the fourth quarter that the bulk of that's going to be Q1, a lot, particularly north in Canada or offshore market has actually trended down after having a record high court price in Q3, So we will see all of those prices.
Move up relatively entered into January we will be realizing those on lumber it will take to February and March before we realize them realize those in pulp.
Okay and then one other question I'm just curious given your non integrated experience now which is growing in the southern U S and in Sweden.
Is this.
<unk> any rethink on sort of the need for vertical integration in Western Canada.
Well.
Maybe they'll get the last part of that I didn't really catch that if the vertical integration in western Canada versus this out.
Yes, I mean, basically you operate on a non integrated basis between kind of lumber index and the.
Chip, where the chips go in both the south and in Sweden in Western Canada, Youre kind of integrated in midyear supplying your residual chips to your pulp mill, So I just wonder.
Given the experience in the south given the experience in Sweden does that make you rethink the strategy in Western Canada at all.
Yes, I don't think so I mean, none of this stage I mean general pattern is there anything you want to add to that.
Yes, the procurement in DC is different right down in the south in Sweden.
Tenure management in.
I think even just the way the stands are here mix stands having that pulp and lumber business together has created significant fiber synergies over the years in Canada and the U S. It's a different procurement strategy that we employ so I mean.
I think we've always saw the benefit of the integrated business and I mean, even if we werent, even if we werent the owners of the pulp business Mark I think we have.
A strong fiber supply arrangement with the whole business because it's symbiotic if you've followed me. So I think we're always going to be tight.
Okay.
Okay.
To be clear the Miller western.
Residuals those will continue to flow to the lower western pulp mill was that.
Is that a safe assumption.
Sure.
Yes, Okay, alright, very good I'll turn it over.
Sure.
Thank you there are no further questions I'll now turn it over to John Kane for closing comments. Please go ahead. Thanks operator.
Alright, thanks, Thanks, operator, and thanks, everyone for joining the call and we look forward to talking to at the end of Q1.
Thanks again.
That concludes our conference call for today.
You may disconnect your lines.