Q3 2022 Venator Materials PLC Earnings Call
Good day and welcome to the Ventas for materials third quarter 2022 earnings Conference call.
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I would now like to turn the conference over to Kate Robertson Investor Relations. Please go ahead.
Thank you Betsy and good morning, everyone I'm, Kate Robinson, Investor Relations authentic, Ontario, welcome to Venice.
For 2022 earnings call joining us on the call today are Simon Turner, President and CEO and Ted <unk>.
Executive Vice President and CFO .
This morning, we released our earnings for the third quarter 2022 via press release and posted the release and accompanying slides to our website called <unk> Dot com.
During this call we may make statements about our projections or expectations for the future. All such statements are forward looking and while they reflect our current expectations. They involve risks and uncertainties and are not guarantees of future performance.
You should review our annual report on form 20-F for the year ended December 31st 2021.
Quarterly reports on form 6K, and other filings with the SEC for more information regarding the factors that could cause actual results to differ materially from these projections or expectations.
We do not plan on publicly updating or revising any forward looking statements during the quarter.
We will also refer to non-GAAP financial measures such as EBITDA adjusted EBITDA adjusted net income free cash flow and net debt you can find reconciliations to the most directly comparable GAAP financial measures in our earnings release, which has been posted to our website at www Dot Venezuela.
Dot com.
I would now like to turn the call over to Simon.
Thank you Kate and welcome everyone to our third quarter 2022 earnings call.
Beginning on slide three.
Macro economic uncertainty increased throughout the third quarter, and we experienced a meaningful reduction in demand for our tier two products sold in Europe and APAC.
Energy market prices reached record highs and other cost inflation continued to increase.
Total company adjusted EBITDA in the third quarter was a negative $8 million compared to $61 million in the second quarter and $48 million in the prior year period.
Turning to slide four titanium dioxide segment.
Adjusted EBITDA for our <unk> segment was negative 5 million in the third quarter of 2022 compared to $49 million in the second quarter and $54 million in the prior year period.
The third quarter started with weak demand in APAC, followed by softening demand in Europe .
The decline in demand accelerated throughout the quarter and we exited the quarter with weak demand in both regions.
Demand declined across most end markets principally as a result of low consumer confidence in China Zero Covid policy and contrast, North American sales volumes remained healthy throughout the quarter.
In local currency average selling prices increased 1% sequentially and 19% compared to the prior year period.
We continue to hold monthly pricing reviews, with our customers as part of our customer tailored approach.
We have seen a decline in Chinese <unk> exports globally throughout the third quarter and exports to Europe are at the lowest level seen for many years.
Throughout the third quarter energy continue to be volatile and market rates reached record highs compared to the second quarter, the higher energy cost coupled with significantly lower volumes drove a negative EBITDA result for our chairman <unk> facilities.
In the near term visibility into product demand remains limited.
By region, we see APAC is the weakest market with Europe next on North America the strongest despite.
Despite healthy North American demand throughout the third quarter, we have seen signs of softening in the fourth quarter.
Based on our current order book and the demand environment, We expect Tio two fourth quarter sales volumes to be lower than the third quarter by up to 20% compared to the third quarter in.
In the fourth quarter more than 50% of our energy usage is under fixed contracts with the remains a subject to market rates.
In response to the meaningful decline in demand, we implemented a range of strong mitigation actions during the fourth quarter, we have further moderated certain manufacturing facilities, including temporarily stopping production.
Ed again and choose pick Germany manufacturing facilities.
In Germany, we are utilizing government furlough schemes to help mitigate the impact of the unabsorbed fixed costs.
Looking ahead to 2023, we expect to see demand starting to recover during the first quarter and progressing in the second quarter.
We also expect to see some relief on the cost of raw materials and energy costs lower due to government relief schemes from the European countries in which we operate.
Once the government energy released schemes are enacted we expect the benefit to provide significant offset to the roll off of our 2022 energy hedges.
I would like to provide a status update on our <unk> facility in Italy.
As a reminder, our scardino facility generates gypsum is a byproduct of the manufacturing process, which has been landfilled on sites and also transported for use in the reclamation of an EMI fall Macquarie owned and operated by third parties during the second.
Second quarter, we suspended two thirds of the production from the sites to preserve our remaining available landfill capacity.
By combining the remaining capacity at the Mantione Reclamation project currently approved onsite landfill capacity and capacity are yet to be approved third party commercial landfill. We believe we have capacity for gypsum storage into the second quarter of 2023 at the current one stream operating rates.
As a result of the lower demand environment, we may further reduce production of our squarely new facility.
During this time, we continue our efforts to work with Italian government authorities for the authorization of continued gypsum disposal.
We remain hopeful that authorizations will be granted otherwise we may be compelled to close the site entirely.
We continue to explore all options to avoid that outcome.
Turning to slide five in our performance additives segments.
Our performance additives segment delivered $9 million of adjusted EBITDA in the third quarter of 2022, compared with $19 million in the prior quarter and $5 million in the prior year period.
This segment has performed well under challenging conditions sales volumes decreased 6% sequentially and 8% compared to the prior year period, primarily due to lower construction demand within our color pigments business, we have seen similar regional demand trends in performance additives as with tier two however, the bits.
This has been more resilient to the macro environment.
Energy and raw material cost inflation continued to be a headwind during the third quarter and were partially partially offset.
The average selling price up 3% in local currency sequentially.
Notwithstanding a healthy demand environment for our CMO additives products, we expect a significant decline in sales volumes as we have temporarily suspended production at our <unk>, Germany co two in functional additives facility in response to lower demand and high energy cost.
We continue our monthly pricing reviews with customers to mitigate the ongoing impact of energy and raw material cost inflation.
This morning, we announced that we have signed a definitive agreement to divest the iron oxide business from within color pigments to Cathay industries for an enterprise value of $140 million. We believe that cafe will be an excellent long term strategic owner for the business going forward.
The transaction is expected to close by the end of the first quarter in 2023.
The iron oxide business represents the majority of the color pigments business, we will continue to own and operate the ultramarine blue and drives elements of the business in the near term. This transaction will bolster our liquidity and allow us to focus on our strategic process.
Turning to slide six.
We are implementing cost austerity measures across our business in response to the challenging business environment by the end of 2024, we expect actions to be in place to deliver the full cost reduction program benefits to deliver $50 million EBITDA compared to 2022.
These actions, which permanently reduce cost include reduction of SG&A head count and discretionary spend lower manufacturing fixed costs in manufacturing improvements, we expect cash cost to deliver the program of approximately 30 million spread over the next couple of years.
I will now pass the call over to Kurt to discuss our adjusted EBITDA bridges. Thanks, Simon Let's go ahead and turn to slide number seven.
Our total adjusted EBITDA decreased by $69 million compared to the prior quarter. The decrease was due to a meaningful decline in sales volumes primarily from within our tier two segment. We also saw higher energy and raw material costs, which were partially offset by lower manufacturing.
Lower manufacturing fixed costs.
Price mix was a benefit of $1 million as we continue monthly price discussions with their customers.
Compared to the prior year, our total adjusted EBITDA decreased by $56 million, we successfully offset higher cost of goods sold that resulted primarily from higher energy costs with higher selling prices. However, the impact from the combination of lower sales volumes was overwhelming.
Turning to slide eight and our cash flow considerations.
Liquidity at the end of the third quarter totaled 278 million. This consisted of $45 million in cash and $233 million available under our ABL facility.
We are aggressively taking actions to preserve cash and bolster our liquidity.
Throughout the quarter, we Opportunistically took advantage of the strong U S dollar and through multiple transactions monetize and re entered into new cross currency swaps.
This resulted in a $16 million cash benefit in the quarter and a $24 million benefit year to date.
We reduced our expected 2022 capital expenditures by $20 million to $70 million, which primarily represents maintenance spend.
We have intensified efforts to manage our working capital in response to weaker demand, we have moderated certain manufacturing facilities, which should lead to lower finished goods inventory levels in the fourth quarter. We have also reviewed <unk> feedstock shipments with our suppliers and aligned remaining.
In 2022 shipments to our expected production levels.
Importantly, we expect working capital to be a source of liquidity in the fourth quarter as we reduced our inventory levels.
During October we completed a $51 million sale leaseback transaction of our iron oxide color pigments.
Facility in Los Angeles, California, and collected cash of approximately $42 million in net proceeds after $9 million of withholding taxes and expenses.
In addition earlier today, we entered into a definitive agreement to sell our iron oxide business from within our color pigments business to cafe industries for an enterprise value of $140 million.
In addition to these transactions we continue to look for other ways to unlock value from within our business.
I will turn the time back over to Simon.
Thanks Curt.
Business conditions were challenging throughout the third quarter due to weak <unk> demand in Europe , and APAC and visibility into near term product demand is low.
Based on our current order book demand weakness continued into the fourth quarter in Europe , and APAC and we have started to see some softening in North America.
We expect sales volumes in the fourth quarter to be lower than the third quarter, which will result in lower fourth quarter EBITDA.
Additionally, energy continues to be volatile in Europe .
Given the uncertainty ahead.
We are focusing our actions on those within our control and we have implemented a comprehensive range of actions to manage those areas.
Firstly, we moderate at certain manufacturing facilities and reduced orders for raw materials to control inventory levels, we have reduced cost of our manufacturing facilities, where possible and we are utilizing government furlough schemes to reduce unabsorbed fixed costs.
We have implemented a robust global cost reduction program, which will deliver $50 million of annualized savings by the end of 2024.
These savings will result from lower SG&A costs, lower manufacturing fixed cost improvements from a range of actions at our manufacturing facilities.
While we expect energy volatility to continue we operating countries, which are announced government energy relief schemes. In 2023, we expect these schemes to provide a significant offset to the exploration of our 2022 energy hedges.
In order to bolster liquidity, we monetized approximately $24 million through most of the cross currency swap transactions and we recently completed the sale leaseback transactions of $51 million and we signed an agreement to sell our iron oxide business to cafe for $140 million of enterprise value.
As Curt mentioned, we continue to look for other opportunities to unlock value from within our business.
Although we expect lower EBITDA in the fourth quarter as a result of the meeting actions, we expect cash flow to be positive as a result of working capital receipts released and proceeds received from the sale leaseback transaction.
Additionally, we have engaged alvarez and marsal to advise us on a range of operational and financial actions and objectives to reduce costs improve liquidity and to optimize our operational footprint. We believe engaging these advisors will enable <unk> to deliver the optimal results under these challenging operating conditions.
And with that I would like to open the call for questions.
Okay.
We will now begin the question and answer session.
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At this time, we will pause momentarily to assemble our roster.
The first question today comes from David <unk> with <unk> with Deutsche Bank. Please go ahead.
Thank you good morning.
I encourage you on the condo program can probably would probably a little more details on the SG&A savings as it is it things bucket of the $50 million in savings.
Yes, I mean I think fits.
As you rightly point out David as the majority of the $50 million and so over half of the savings.
And fixed cost in nature SG&A in central indirect.
Obviously that comprised of a number of areas.
One of the areas clearly is look across the entire business.
What we need as a company too.
Navigate through this very challenging period.
And also it does contemplate some actions taken.
As a result of the.
Sale, we announced today of the iron oxide business. This in some of those numbers are baked into the savings.
Actual head count and savings reduction, which predominantly head count.
Come from the full range of function.
<unk> across the enterprise.
Very good and Curt just a couple of cash flow questions. How much working capital release do you expect in Q4 and what's the expected net cash proceeds from the iron oxide sale.
Good question Dave.
First of all.
The amount of work.
Capital release in the fourth quarter, it's largely going to be contingent on what happens with our sales volumes right and so.
We think that it will be tens of millions of dollars.
And as we've indicated we think that will help us.
In connect in combination with the sale leaseback proceeds to be cash positive in the fourth quarter, but I think to think about working capital release in the tens of millions of dollars for the fourth quarter.
For the cash proceeds on the.
The disposition of the iron oxide business.
There are a number of cash adjustments that will need to take place at closing.
But you ought to think about the cash benefit as pretty close to that.
That enterprise value.
Thank you very much.
The next question comes from Josh Spector with UBS. Please go ahead.
Yeah, Hi, Thanks for taking my question just on the $25 billion Cogs increase sequentially.
Should we think about that is mostly energy and.
And kind of just wondering if we saw three Q have gas prices in Europe are energy prices similar today.
What would the results have been in that environment versus what you actually saw.
Yes, so the $25 million cost youre talking about quarter on quarter there.
We picked up yes. So that's right that is primarily energy costs that we were picking up in the third quarter compared to the second quarter.
And as we indicated we have been encouraged.
Bye.
The government support schemes, particularly in Europe that have been announced to help mitigate energy costs, particularly in 2023.
Looking forward into the next year.
Okay. Thanks, and just on the liquidity side with the revolver capacity you have I mean, if you had two quarters of negative EBITDA this quarter next quarter.
Is that going to impact any of your access to that liquidity.
So let's be clear, we said, we would be cash positive in the fourth quarter, primarily on the back of a working capital release as well as having received the proceeds from the sale leaseback transaction in October which was subsequent to.
This is a third quarter close right.
So we expect to be cash positive in the fourth quarter.
Yes, sorry, I meant EBITDA negative so would you have any issue with trailing leverage or some springing covenant if the trailing leverage starts to get too high.
No no no concern in the fourth quarter.
Okay. Thank you.
The next question comes from Vincent Andrews with Morgan Stanley . Please go ahead.
Hi, guys. This is will hang on for Vincent Thanks for taking my question.
Can you talk can you give a little color on how you've seen the order book.
Thats may be since September on a month to month basis, and then what kind of sequential volume trends are you factoring in in 2000.
20%.
Lower sequential volume in the fourth quarter.
Yes look.
Yes, we know kennesaw breaks it out by month, but clearly we saw this trend originating in Asia, but spreading into Europe .
Falling through the third quarter as we look into.
Into our fourth quarter I think the following comments probably apply.
In the fourth quarter.
Typically you would expect to seasonal step down in.
Sales volumes from the third quarter that would be a double digit percentage in most years.
I think that so the way to think about it is the balanced probably is continued destocking.
Within the fourth quarter, which we think sort of earnings.
At the end of the fourth quarter and there is some sort of feedback from customers.
And around the fourth quarter.
And that probably should help you get a sort of profile of feel for how we see it progressing from the third quarter.
Into the fourth quarter and I think we said we are as high as <unk>.
20% and frankly not that much difference across the applications groups.
I think there is some evidence that.
In the in the third quarter, we did see some of the sales loss magnified by positioning.
<unk> plastics, and inks, where we considered probably overweight within within the industry.
Got it. Thank you and then and then looking at the long term I guess, what kind of needs to happen from maybe a cost or demand standpoint for you to consider bringing curtailed capacity.
To be back on line and then I guess.
Kind of where the cost considerations for you when you bring that facility as well.
Yes, I mean look it's I want to emphasize very clearly that what we see today is not much I mean visibility is severely constrained and limited for us.
Clearly with this reduction in demand coming up so quickly in the severe level, we've had to really make sure that we manage our working capital inventories both on the final products and raw materials, which I think we've remarked upon.
We had a preexisting constraint in skull, it's the issue well aware, we talked about a number of times now that's running at one stream we have to factor that in.
And in Germany, which was sort of the worst affected area.
We've taken the decision to moderate so.
Fast slew of capacity moderated in a short period of time to get us to stay in control and proactive on our inventory. So that's an important point as we look forward into next year of course generically what we need is demand recovery, we do expect demand recovery to start in the first quarter.
If destocking has ended and we get the typical step up for Q2, <unk>, we would expect to see the stock demand recovery, but beyond that the profile of demand recovery very tough to call and I don't think we were in a position to be able to call that but clearly as we worked through the issues and Scotty you know thats going forward.
Tom.
The situation around what runs from our capacity standpoint, and I think as we've remarked upon in the call. We have we have contracted with Alvarez <unk> marsal to come in on how plus look at full cost caption asset optimization possibilities, we might have and we are still digging into that and.
<unk> nine is probably too early to sort of opine on that but fundamentally we will come back to the.
The profile of demand recovery that we see.
Predominantly in Europe , but also elsewhere.
Got it thank you.
Thank you.
The next question comes from Arun Viswanathan with RBC capital markets. Please go ahead.
Great. Thanks for taking my question I, just wanted to delve in a little bit more to the volume decline you discussed sequentially. So.
I think.
Did that your customers are indicating that destocking will be done and.
Yes.
Winding down in Q4.
Could you just elaborate on that what are you hearing specifically and I guess are there any differences by region you'd noted that APAC is the weakest sorry inventories I guess most bloated there if.
We can start there.
Yes, the pattern is different by region.
There's no doubt about.
One has to recognize some tier two that the majority of our sales are in Europe .
And our plants as well of course, so feedback we've had from a whole range of European customers suggest that destocking would be done by year end.
And I think as I said that that comes across each of the each of the major applications group I think we sort of felt.
<unk> hit quite hard in <unk>.
For the reason that we lodge in Europe , as a region and we overweight in plastics and inks.
And of course, we took swift action on production to try and manage inventories as well but.
Europe .
It's pretty clear to us the feedback I think the picture elsewhere.
Is it mix, we don't have the biggest window into China, We said that number of times, we quite small there we'd like to think that demand picks up, particularly as we encounter Chinese new year here.
We get through some of these COVID-19 restrictions and the like.
Hard to tell in Asia, but what we can tell you is that we had seen a pretty solid sort of demand profile in North America in the third quarter and we have seen some evidence of softening in the fourth.
And.
There is a number of customers.
Delaying or pushing off orders.
Again, no fixed pattern to it.
By segment, but.
It's a different sort of dynamic to the one we had already seen in Europe .
And then just as a follow up on Ti Tim could you.
Got it.
Pricing outlook.
I know raws.
Maybe starting to moderate a little bit.
The industry great.
<unk>.
Potentially lower pricing as we go into 'twenty three.
What are you guys seeing.
Pricing perspective, how should we think about that thanks.
Yes, I mean look I think there's no doubt that in the fourth quarter, there will be some energy and.
Raw material moderation.
We are halfway through I mean.
We should remind ourselves pretty volatile so I think everything I would caveat with the fact that volatility is there even in the near term but.
Assuming there is some relief in the fourth quarter.
I think theres no doubt about it there have been some selective price.
Adjustments in the different regions, particularly in Asia and in Europe .
But I'm hopeful that we can still target to hold onto our contribution margins as best we can as we as we go through to the fourth.
I think that's underscored by the fact that the industry has we have very high cost structures, we know others have high cost structures because of <unk>.
Raw material energy inflation, which has been a pattern for us over the last three to four years, but very bad of course in the last six to 12 months.
So I think that takes you to a point where for US unit pricing remains elevated but im not saying there won't be some give here as we see some relief in energy.
Thanks.
The next question comes from John Mcnulty with BMO capital markets. Please go ahead.
Yes. Thanks for taking my question. So I guess the first one would just be on the German plants can you help us to understand what the cost is going to be on those plans in terms of just kind of the I don't know I guess I'd call. It stranded cost with them still in the portfolio, but but but ramped down just so we can kind of think about how that impacts <unk> and how it might disappear.
When things are better next year.
Yes, why don't I go ahead, and take that I mean, I think that as we think about the moderation of the German facilities and keep in mind and Simon address this in his prepared remarks, we have been accessing.
Government furlough schemes in order to offset.
What I believe youre, calling stranded costs.
We think about those as unabsorbed fixed costs at manufacturing facilities, but for the most part the government relief schemes can offset up to 70%.
The costs the company.
We will contribute a certain amount and then while the employee.
Sits at home they also.
Tribute.
Or forgo a portion of their our their salary so.
As it relates to the German facilities, I mean, because of because those furlough schemes are available.
It is.
More conducive to moderate those facilities and then also bolster.
That's the epicenter of where we are really feeling high energy costs as well so.
Hopefully that's helped got it yes no.
That's definitely helpful and then as far as running scar Lino now where it sounds like it's down like two thirds or so from kind of normal ops I guess why isn't that one at least temporarily kind of put on the side or or mothballed or whatever it is it just the <unk>.
There are some specialty products that youre, making there that need to you still need to kind of meet the customer demand or I guess why why wouldn't now be a good time to take that one down at least temporarily.
Yes, I mean look there's a couple of issues that I mean, clearly there are products made on that site.
Very valued in this industry and some of the inks products for instance come out on that side. So I think thats an important factor.
These plants always better when they have some element of them running I mean mothballing is something that.
While we have done in the past in total terms, we don't really like doing it we have done it but we don't really like doing it.
We locked in the negotiations there.
With our.
With our local authorities.
But I think the other thing we should tell you is that while we.
Has been on one stream for a while.
We will actually.
Take down.
That plant may be for some period.
During this fourth quarter as well to manage all manage our total working capital needs. So I wouldn't call it multiples.
We don't have access to quite the same legislative systemic industry help in Italy that we do in Germany. Although there is a sort of varian scheme that we are closely examining.
That's probably the puts and takes of that situation.
Got it and then maybe just one last question. So I know you have.
Energy hedges in place through the end of the year I believe you still do.
Is there anything you can do to monetize those at this point like where if you do run an asset down and you don't necessarily need the energy you thought you needed is there a way to essentially sell or unwind those hedges and create some value that way.
Yes, there is an opportunity to do that and we have done that.
Already.
Got it.
Okay. Thanks, very much for the color.
The next question comes from Matthew Deyoe with Bank of America. Please go ahead.
Good morning, everyone.
Alright.
Kevin I believe you said.
So what are you going to do is bigger are idled right now.
Correct me, if I'm wrong, I think you said, but how much does.
How should the cost to restart those facilities next year, and how does that kind of flow through on a reporting basis.
When you say startup you mean sort of one time special startup costs is that what you mean, yeah. Just as you as you were trying to as operations from idle to producing again, what does that look like from a cost perspective, yes, I mean look there would be some sort of inefficiencies as you ramp up but by and large we don't think of that as a large.
Cost side, some of the sort of restarting of the plants.
As demand returns of course, we'd be looking we'd be looking to do them.
I think perhaps another way to think about that is it can take a week or so to bring those facilities back up.
And get them ramped up.
One to two weeks to get those ramped up to full production levels.
So maybe that's a way to think about kind of cost at least in terms of the timeframe.
Yes, that's very helpful context, Thank you Kurt and I guess.
You had to close Scott.
I know you kind of mentioned something that you don't want to do but if there is no.
Solution on the.
On the gypsum.
What was the.
Closing and remediation costs and all of that ends up looking like for <unk>.
Sure.
Well look we sadly have closed a number of clients over the many years I've certainly been in this business what I can tell you about the scardino situation. We're not there yet we don't want to get there we're going to fight very hard not to get the.
Should we eventually get there then.
No.
The all up closure costs would be at the low end I think we set of.
Our past experience of closing these types of sites.
The types of spend items would be very similar to previous times.
And I would urge you not to think of this in the same sort of order of magnitude for instance is the pori situation, which was a very unique specific set of circumstances.
Understood. Thank you.
The next question comes from Roger Spitz with Bank of America. Please go ahead.
It's very much an iron oxide would you be possible to provide us the LTM Q3 2000 2022.
<unk> pro forma EBITDA.
For that business.
Former Fitzgerald, Yeah, Roger Ross Angeles.
Sure sure we don't have the carve out financials for the fourth quarter of 2021, which is why we used an average EBITDA 2020 in 2021 to give you a sense for what that what that EBITDA looks like I think.
It's pretty representative of what the EBITDA has done certainly here recently.
But listen we think that that's a good business.
We certainly think there is growth potential for Cathay.
And we think that they will be good owners.
Of that business going forward and we think they have a real good probability of growing those earnings and taking advantage of a lot of the cost savings that we've taken out here over the last year or so.
Got it and can you speak about what do you have any.
Active process or perhaps any potentially soon to be active process to sell other assets out of.
The performance.
<unk>.
Yes, I mean, I think you heard us on the call today indicate that we will continue to look for other opportunities to unlock value within the business.
But the iron oxide process took quite a while over a year.
To get here and so these off in time.
Oftentimes takes take quite a quite.
Quite a bit of time, but.
I think we have shown a willingness to be opportunistic where we can create value for stakeholders and we'll continue to do so.
Thank you very much.
The next question comes from Jami Rubin with Goldman Sachs. Please go ahead.
Good morning, guys. Thank you for the time I guess to kind of follow up on Roger's question.
Right.
Is this sale leaseback transaction that you announced earlier this quarter kind of implicated in the iron oxide business. So should we kind of be thinking about.
Net impact on the EV, you're receiving or is that kind of two separate businesses and unrelated.
No. They are entirely related with one another so the sale leaseback of our Los Angeles facility is part of the iron oxide business. So you can think about our monetization.
Yes.
The sale at $140 million plus.
A 50 million sale lease back.
Gets you to $190 million.
Of enterprise value that that we will have monetize when we get to closing.
Okay. Thank you and then.
You mentioned on the call just kind of thinking about proceeds as bolstering liquidity can you just kind of talk a little bit about what that means is that generally keeping excess cash on the balance sheet. So just kind of navigate some of the volatility that you've spoken about or do you think there is opportunities to kind of proactively address part of your capital structure.
I think I'll start with coming due in 2024 here.
Yes, I think in the near term we're focused on liquidity.
So we'll keep any excess cash on the balance sheet.
Certainly as we get through the near term and then we will explore opportunities to to address the capital structure after that.
Okay. Thank you and then one final one for me.
The kind of cost to achieve on the new $50 million cost savings plan was announced a $30 million can you kind of give us an update on the remaining kind of non revenue generating costs that you had talked about last quarter. So there's $70 million between restructuring pension in pori any kind of change in that number after today.
Not much change, we'll spend a little bit more kind of here within the next couple of years.
In order to fund this this new program, but if you look out over the next two to three years. Then we will still have that 70 million structural reduction in cash uses.
Okay. Thank you very much.
Thank you.
Okay.
This concludes our question and answer session I would like to turn the conference back over to Simon Turner, President and CEO for any closing remarks.
Okay, well, thanks, everyone for joining our third quarter 2020 earnings call. Please feel free to reach out to the case with any additional questions you might have thank you once again.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.