Q2 2024 Clearwater Paper Corp Earnings Call

Unknown Executive: Multiple gap information is included in the press release and in the supplemental information provided on our website. Please note slide 2 of our supplemental information covering forward-looking statements. Rather than re-reading this slide, we're going to incorporate it by reference into our prepared remarks. With that, I'm going to turn the call over to Arsen.

Unknown Executive: will gap information is included in the press release and in the supplemental information provided on our website.

Included in the press release and in the supplemental information provided on our website. Please note slide two of our supplemental information covering forward looking statements rather than rereading. This slide we're going to incorporate it by reference into our prepared remarks with that let me turn the call over to art.

Unknown Executive: Please note slide two of our supplemental information covering forward-looking statements. Rather than rereading this slide, we're going to incorporate it by reference into our prepared remarks.

Arsen Kitch: With that, let me turn the call over to Arsen.

Arsen Kitch: Thank you, everyone, for joining us, and good afternoon. Let me start with a few comments regarding our recent strategic announcements. As we previously discussed, we believe that both our businesses require our scale to be able to grow and invest, especially given the capital intents of nature of our industry. We took a big step in that direction in our paperboard business by acquiring the Augusta facility from Graphic Packaging. That acquisition closed on May 1st, and we're in the process of integrating the facility into our network and starting to capture synergies. We took another major step by announcing the agreement to sell our tissue business to Soffa, the America, which is expected to close in the fourth quarter of this year, subject to satisfaction of customer closing conditions, including regulatory approval.

Arsen Kitch: Thank you, everyone, for joining us, and good afternoon. Let me start with a few comments regarding our recent strategic announcements. As we previously discussed, we believe that both of our businesses require scale to be able to grow and invest. Especially given the capital-intensive nature of our industry, we took a big step in that direction in our paperboard business by acquiring the Augusta facility from Graphic Packaging. That acquisition closed on May 1st, and we're in the process of integrating the facility into our network and starting to capture Synergy.

Art: Thank you everyone for joining us and good afternoon, let me start with a few comments regarding our recent strategic announcements as.

Arsen Kitch: We took another major step by announcing the agreement to sell our tissue business to Soffitel America, which is expected to close in the fourth quarter of this year, subject to the satisfaction of customary closing conditions, including regulatory approval.

Art: As we previously discussed we believe that both of our businesses requires scale to be able to grow and invest.

Art: Especially given the capital intensive nature of our industry.

Art: We took a big step in that direction in our paperboard business by acquiring the Augusta facility from graphic packaging that acquisition closed on May one and we're in the process of integrating the facility into our network and starting to capture synergies.

We took another major step by announcing the agreement to sell our tissue business to soften <unk> America, which is expected to close in the fourth quarter of this year subject to satisfaction of customary closing conditions, including regulatory approval.

Arsen Kitch: We believe that these are transformational and strategic steps for Clearwater Paper. We're focused on strengthening our position as a premier independent supplier of paperboard products to North American converters. The divestiture of our tissue business will allow us to strengthen our balance sheet and position us for future internal and external investments to grow and diversify our paperboard portfolio. We believe that these strategic moves will allow us to continue to grow our business and create long-term value for our shareholders.

Arsen Kitch: We believe that these are transformational and strategic steps for Clearwater Paper. We're focused on strengthening our position as a premier independent supplier of paperboard products to North American converters. The divestiture of our tissue business will allow us to strengthen our balance sheet and position us for future internal and external investments to grow and diversify our paperboard portfolio. We believe that these strategic moves will allow us to continue to grow our business and create long-term value for our shareholders.

Art: We believe that these are transformational and strategic steps for Clearwater paper.

Art: We're focused on strengthening our position as a premier independent supplier of paperboard products to North American converters the.

Arsen Kitch: Let me summarize a few key deal points from the announced divestment. We agreed to sell our tissue business to Soffa, the America, for cash totaling $1.06 billion. We expect net proceeds from the sale to be approximately $850 million, which we intend to use to repay existing debt and meaningfully deliver a jaw balance sheet. The transaction includes our tissue facilities in Shelby, North Carolina; Las Vegas, Nevada; Elwood, Illinois; and the tissue manufacturing facility at our Lewis and Idaho site. As many of you know, our Lewis and site also houses a paperboard facility, including a pulp mill, two paper machines, and other assets that we are retaining.

Arsen Kitch: Let me summarize a few key deal points from the announced divestment. We agreed to sell our tissue business to Soffitil America for cash totaling $1.06 billion. We expect net proceeds from the sale to be approximately $850 million, which we intend to use to repay existing debt and meaningfully de-leverage our balance sheet.

Arsen Kitch: The transaction includes our tissue facilities in Shelby, North Carolina, Las Vegas, Nevada, Elwood, Illinois, and the tissue manufacturing facility at our Lewiston, Idaho, site. As many of you know, our Lewiston site also houses a paperboard facility, including a pulp mill, two paper machines, and other assets that we are retaining. As part of the proposed transaction, we will be entering into a site-sharing agreement with Soffitel in Lewiston. This will include a lease of the land and facilities and a services and use agreement.

Arsen Kitch: As part of the proposed transaction, we will be entering into a site sharing agreement with Soffa Del in Lewiston. This will include a lease of the land and facilities and a services and use agreement. Soffa Del will also hire our Lewis and tissue employees at close. We believe that we have come to a good agreement that will allow both companies to operate effectively on the Lewis and Site. We look forward to a strong partnership with Soffa Del in Lewiston in the years to come.

Arsen Kitch: Safida will also hire our Lewiston Tissue employees at close. We believe that we have come to a good agreement that will allow both companies to operate effectively on the Lewiston site. We look forward to a strong partnership with Saffodil and Lewiston in the years to come. Through this transformation, we're building a paperboard system that supports the growth of converter customers across North America. As part of this growth, we will look at opportunities to expand our product offering, which may include additional paperboard products and substrates. We will evaluate internal investments in our assets and external opportunities that are a good strategic fit for our network.

Arsen Kitch: Through this transformation, we're building a paperboard system that supports the growth of converter customers across North America. As part of this growth, we will look at opportunities to expand our product offering, which may include additional paperboard products and substrates. We will evaluate internal investments in our assets and external opportunities that are a good strategic fit for our network. Our goal is to build on our position as a scaled paperboard packaging supply in North America with a compelling product offering, outstanding service, and a consistent track record of value creation for our shareholders.

Arsen Kitch: Our goal is to build on our position as a scaled paperboard packaging supplier in North America with a compelling product offering, outstanding service, and a consistent track record of value creation for our shareholders. The August acquisition and the expected sale of our tissue business are both significant and transformational transactions for our company. Accomplishing both over a six-month period is a momentous feat for our team. I'm pleased with the progress that we're making and excited about the next chapter of the Clearwater Paper story. Let me now briefly turn to our second quarter highlights before Sherri dives into the details.

Arsen Kitch: The Augusta acquisition and the expected sale of our tissue business are both significant and transformational transactions for our company. Completion both over six month period is a momentous feat for our team. I'm pleased with the progress that we're making and excited about the next chapter of the Clearwater Paper story.

Arsen Kitch: Let me now briefly turn to our second quarter highlights before Sherri dives into the details. We reported net sales of $586 million, which were up 12% from the second quarter of last year. This was primarily driven by incremental volume from the Augusta acquisition. Adjusted EBITDA was 35 million, which was 36 million below the second quarter of last year, primarily driven by the impact from the planned major maintenance outage at our Lewis and Facility.

Arsen Kitch: We reported net sales of $586 million, which were up 12% from the second quarter of last year. This was primarily driven by incremental volume from the August acquisition. Adjusted EBITDA was $35 million, which was $36 million below the second quarter of last year, primarily driven by the impact of the planned major maintenance outage at our Lewiston facility. Let's continue with a few highlights from our paperboard business. These can be found on pages three and four of our Supplement.

Arsen Kitch: Let's continue with a few highlights from our paperboard business. These can be found on pages three and four of our supplementals. Net sales were up 23% versus last year. This was driven by a 46% increase in ship and volume, primarily due to the Augusta acquisition, offset by a 14% decline in pricing, which is largely consistent with what has been reported previously by RISI. Adjusted EBITDA for the paperboard segment was at 11 million, which included 9 million in insurance recoveries tied to the weather event that impacted us in the first quarter of this year. The decrease in adjusted EBITDA versus the prior year was driven by the planned major maintenance outage in Lewis and with a negative impact of approximately 32 million for the quarter.

Arsen Kitch: Net sales were up 23% versus last year. This was driven by a 46% increase in shipment volume, primarily due to the Augusta acquisition, offset by a 14% decline in pricing, which is largely consistent with what has been reported previously by REES. Adjusted EBITDA for the paperboard segment was at $11 million, which included $9 million in insurance recoveries tied to the weather event that impacted us in the first quarter of this year.

Arsen Kitch: The decrease in adjusted EBITDA versus the prior year was driven by the planned major maintenance outage in Lewiston, with a negative impact of approximately $32 million for the quarter. However, the outage proved to be more challenging than we expected, and we're now anticipating a total impact of more than $40 million versus our original estimate of $30 to $35 million.

Arsen Kitch: The outage proved to be more challenging than we expected, and we're now anticipating total impact to be more than 40 million dollars versus our original estimate of 30 to 35 million. Beginning in 2025, we will move all of our paperboard facilities to an annual outage schedule, which is a common practice in the industry. We believe that this will lead to smaller, more predictable, and more manageable maintenance outages, and improve our overall operating performance over the course of the year.

Arsen Kitch: Beginning in 2025, we will move all of our paperboard facilities to an annual outer schedule, which is a common practice in the industry. We believe that this will lead to smaller, more predictable, and more manageable maintenance outages and improve our overall operating performance over the course of the year. We'll provide additional information regarding our 2025 outreach schedule early next year. Finally, let me provide you with some market insights. Based on the most recent AFMPA data, SBS industry shipments improved sequentially by about 1% between the first and second quarters of this year.

Arsen Kitch: We'll provide additional information regarding our 2025 outage schedule early next year.

Arsen Kitch: Finally, let me provide you with some market insights. Based on the most recent AFMPA data, SBS industry shipments improved sequentially by about 1% between the first and second quarters of this year. Industry operating rates remain flat at around 84% as inventory levels dropped. While we're seeing gradual, gradual recovery, it is proving to be slower than expected. Industry publications are forecasting a continued demand recovery into the second half of this year and into 2025. While recovery has been somewhat slow, we remain bullish on the long-term market fundamentals. We believe that paperboard is well positioned for growth given consumer preferences and overall sustainability trends.

Finally, let me provide you with some market insights.

Art: Based on the most recent <unk> data SBS industry shipments improved sequentially by about 1% between the first and second quarters of this year.

Art: Industry operating rates remained flat at around 84% as inventory levels dropped.

Arsen Kitch: While we're seeing a gradual recovery, it is proving to be slower than expected. Industry publications are forecasting continued demand recovery into the second half of this year and into 2025. A bright spot in the market today is food service, with solid and growing demand. However, our backlogs have grown, and we're becoming capacity constrained. As a result, we're implementing a previously announced price increase for these grades, including plate and cup stocks. With that, let me turn the call over to Sherri for additional details on our financial results.

Art: While we're seeing gradual a gradual recovery it is proving to be slower than expected.

Art: Industry publications are forecasting a continued demand recovery into the second half of this year and into 2025.

Art: While recovery has been somewhat slow we remain bullish on the long term market fundamentals, we believe that paperboard is well positioned for growth given consumer preferences.

Art: And overall sustainability trends.

Arsen Kitch: A bright spot in the market today is food service, with solid and growing demand. Our backlogs have grown, and we're becoming capacity constrained. As a result, we're implementing a previously announced price increase to our customers for these grades, including plate and cup stock.

Art: A bright spot in the market today is foodservice with solid and growing demand our backlogs have grown and we're becoming capacity constrained as a result, we're implementing our previously announced price increase to our customers for these grades including plate and Cup stock.

Arsen Kitch: Let me now provide a brief overview of our quarter for tissue. This can be found on slides three and five. The tissue business continued to perform at an outstanding level. 2nd quarter revenues were flat compared to last year, 253 million, with 4% volume growth offset by 3% lower cost index-based contractual pricing. We continue to deliver strong operating performance that helps offset sequential increases in poll prices. Adjusted EBITDA for tissue, a 41 million in the 2nd quarter, with a margin of 16.4%. This is the 5th sequential quarter of margins about 15%. As we previously stated, we expect to maintain much of the margin improvement that we achieved in 2023 into 2024.

Speaker Change: Let me now provide a brief overview of our quarter for tissue.

Art: This can be found on slides three and five <unk>.

Art: The tissue business continued to perform at an outstanding level.

Art: Second quarter revenues were flat compared to last year at $253 million with 4% volume growth offset by 3% lower cost index based contractual pricing.

Art: We continued to deliver strong operating performance that helped offset sequential increases in pulp prices.

Art: Adjusted EBITDA for tissue was $41 million in the second quarter with a margin of 16, 4%.

Arsen Kitch: I'm deeply appreciative of the work that our tissue team has done over the last several years to deliver sustained improvements in operating and financial performance.

Sherri Baker: With that, let me turn the call to Sherri for additional details and our financial results. Thank you, Arsen. I'll begin on slide 6 and 7 with a review of our income statement and segment results. In the 2nd quarter, we had a consolidated net loss of $26 million or $1.55 per diluted share. Adjusted loss per share for the quarter was 51 cents per diluted share. As Arsen mentioned, our adjusted EBITDA was at 35 million, driven by strong results in tissue and insurance recovery from the weather event in Q1 and contributions from the Augusta acquisition. This was offset by the planned Lewis and major maintenance outage and lower paperboard pricing.

Sherri Baker: Adjusted loss per share for the quarter was 51 cents per diluted share. As Arsen mentioned, our adjusted EBITDA was at $35 million, driven by strong results in tissue and insurance recovery from the weather event in Q1 and contributions from the Augusta acquisition. Colt pricing in the second quarter was lower than the second quarter of last year but higher sequentially versus the first quarter.

Sherri Baker: Paperboard delivered 11 million of adjusted EBITDA, while tissue delivered 41 million. As a reminder, our guidance range was 23 to 33 million, which excluded contribution from Augusta.

Sherri Baker: Moving to slide 8, let's review our year-over-year performance in paperboard. Lower pricing had a nearly $26 million impact. As we previously discussed, this is consistent with publicly reported industry-wide trends. Partly offsetting the pricing decrease was higher sales volume, primarily driven by the Augusta acquisition, and a modest recovery in demand. The planned major maintenance outage had approximately a $32 million impact in the quarter, which is reflected in lower production and higher maintenance costs. This was partly offset by a $9 million insurance recovery from the severe weather event that we experienced in the first quarter.

Sherri Baker: Moving to slide 9, let's review our year-over-year performance in tissue. As Arsen mentioned, the pricing was slightly lower, driven by cost index-based contractual pricing adjustments and a higher mix of lower-priced conventional products. This was more than offset by higher shipments and lower cost. Our utilization rates remained high, and overall operating performance was very strong. Polk pricing in the second quarter was lower than the second quarter of last year, but higher sequentially versus the first quarter. We are expecting Polk to be a headwind in the third and fourth quarters of this year, but we are confident that we can maintain much of the margin improvement achieved in 2023.

Sherri Baker: Industry publications indicate that Polk prices have peaked and may start using in the coming quarters with improved supply and demand dynamics.

Sherri Baker: Turning to our capital structure on slide 10, we ended the second quarter with liquidity totaling 224 million and a debt-to-adjusted EBITDA leverage ratio of 3.58 times. As Arsen mentioned, the sale of our tissue business is expected to generate net proceeds of approximately $850 million, which will allow us to significantly deliver our balance sheet. We are evaluating our view on the appropriate leverage target for a standalone paperboard business and a higher interest rate environment. We previously stated that our leverage target was 2.5 times across the cycle, but we now believe that we will need to operate with a lower leverage ratio.

Sherri Baker: We will discuss this further on upcoming earnings calls as we complete the sale of our tissue business. We have a proven track record of generating free cash flows and paying down debt. This remains our focus in the near term, as we believe that a strong balance sheet is needed to enable us to take advantage of strategic opportunities in the future. We also repurchased approximately $3 million of our stock during the quarter as part of our ongoing efforts to offset dilution from employee equity grants.

Sherri Baker: Lastly, let's turn to our outlook for the third quarter and full year 2024 on slide 11. As Arsen mentioned, we are anticipating a continued recovery and paperboard demand in the third quarter, higher production volumes, and a lower outage cost impact. We expect tissue performance to remain strong, with some impact from higher pulp prices. With all those components, we believe that third quarter adjusted EBITDA will be in the range of 58 to 68 million. Please note that our third quarter guidance assumes that we will continue to operate the tissue business for the entire quarter. Full year 2024 operational assumptions now account for Augusta from May 1 through the end of the year.

Sherri Baker: This includes higher volumes, synergies, and a major maintenance outage in Augusta in the fourth quarter. Full year 2024 assumptions also include a higher outage cost that we experienced in Lewiston during the second and third quarters. Please note that our full-year assumptions do not include the impact of the tissue divestiture. Other 2024 assumptions have also been updated with the Augusta acquisition. This includes higher cash interest expense due to additional debt, higher depreciation expense, and higher cash capex. Augusta cash capex is expected to be $25 to $30 million from May 1 to December 31. This includes the plan completion of an environmental compliance project at the mill, which was known to us during the acquisition.

Sherri Baker: We previously stated that we expect ongoing repair and maintenance capex to be in the range of 60 to 70 million, excluding large projects. This included our two legacy paperboard mills and our tissue business. With the Augusta acquisition and the planned divestiture of tissue, we now expect our ongoing maintenance capex to be in the 70 to 80 million range, excluding large maintenance and strategic capital projects.

Sherri Baker: We previously stated that we expect ongoing repair and maintenance CapEx to be in the range of $60 to $70 million, excluding large projects. This included our two legacy paperboard mills and our tissue business. With the Augusta acquisition and the planned divestiture of tissue, we now expect our ongoing maintenance CapEx to be in the $70 to $80 million range, excluding large maintenance and strategic capital projects.

Arsen Kitch: With that, let me turn the call back to Arson. Thanks, Sherry. The first half of 2024 has proven to be transformational for Clear Water Paper, and we couldn't be more excited about the future. Looking ahead, our priorities for the balance of 2024 include driving strong operational performance, executing the divestiture of our tissue business, and continuing the integration of the Augusta acquisition. I would like to thank our people for their continued focus on safety, strong operating performance, and servicing our customers.

Sherri Baker: I would like to thank our people for their continued focus on safety, strong operating performance, and serving our customers.

Art: Among operating performance and servicing our customers.

Arsen Kitch: This time of transformational change can be challenging, but we're fully committed to supporting all of you as we open this next chapter of the Clear Water Paper story. With that, we will under prepare remarks and take your questions. Thank you.

Speaker Change: This time of transformational change can be challenging, but we're fully committed to supporting all of you as we open. This next chapter of the Clearwater paper's story.

Speaker Change: With that we will end our prepared remarks and take your questions.

Speaker Change: Thank you presented I will begin the question and answer session. If you have dialed in and would like to ask a question.

Unknown Executive: We will now begin the question and answer session.

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Matthew Mckellar: And your first question comes from the line of Matthew McKellar, read RBC Capital Markets. Please go ahead.

Speaker Change: And your first question comes from the line of Matthew Mccullough Lee RBC capital markets. Please go ahead.

Speaker Change: Thanks, very much good afternoon, our fiduciary thanks for taking my questions.

Speaker Change: First I'd like to ask if you could provide a little bit of color on your strategic priorities. After you close the consumer product sale. Thank you.

Speaker Change: You've noted that you want to grow and diversify your paperboard product portfolio I think your balance sheet should be in a pretty reasonable range. Although it sounds like you want to bring that leverage target down a bit but.

Matthew Mckellar: The balance sheet should be a pretty reasonable range, although it sounds like you want to bring that leverage target down a bit. But how should we think about how you'll evaluate your options when it comes to growth going forward?

Speaker Change: How should we think about how you'll evaluate your options when it comes to growth going forward.

Arsen Kitch: I think you got to start with what we're trying to do, which is to build that premiere independence supplier of paperware packaging to converters in North America. Right now we are providing SBS. These converters use other substrates and other products, so we will look at opportunities both internal and external to have a more complete offering to our converters, whether it's lightweight products, other substrates, different coatings, and so on. We want to make sure that we're providing all the products that our customers need to succeed and win in the market. So it will really depend on what that product strategy is and what opportunities we have available.

Speaker Change: And I think you've got to start with what we're trying to do which is to build that premier independent supplier.

Speaker Change: Paperboard packaging to converters in North America.

Speaker Change: Right now we are providing SBS.

Speaker Change: <unk> converters use other substrates and other products. So we will look at opportunities both internal and external to to have a more complete offering to our converters, whether it's lightweight products other substrates different coatings and so on.

Speaker Change: We want to make sure that we're providing all the products that our customers need to succeed and win and win in the market. So it will really depend on what that product strategy is and what opportunities we have available.

Arsen Kitch: Would it be fair to think that you'd prefer to grow into other substrates as opposed to continuing to grow an SBS? Our customers purchase a variety of substrates and products, so we're part of their answer today. We'd like to be a bigger part of their answer in the future. An offer, a more complete offering. We have outstanding SBS assets right now. We have three assets that are well positioned across the country. I think we were able to offer SBS to our customers today, and that we're pretty happy with our assets. So we'll be looking at other products and other substrates in the future.

Speaker Change: But it would it be fair to think that you would prefer to grow into other substrates as opposed to continuing to grow in SBS.

Speaker Change: No.

Speaker Change: Our customers purchase.

Variety of substrates and products.

Speaker Change: So we're part of their answer today, and we'd like to be a bigger part of the answer and in.

Speaker Change: In the future.

Speaker Change: And offer have a more complete complete offering.

Speaker Change: Have outstanding SBS assets right now, we have three or three assets that are well positioned across across the country.

Speaker Change: I think we.

Speaker Change: We're able to offer SBS to our customers today and that we're pretty happy with our assets. So we'll be looking at other products and other substrates in the future.

Matthew Mckellar: Okay, thanks very much for that.

Speaker Change: Okay. Thanks, very much for that.

Matthew Mckellar: Next is turning to maintenance. You've completed a major plan maintenance in Q2. I think you mentioned there's a bit more challenging than you expected with that. Were there any findings through that maintenance process that would have implications for capex levels over the next few years? No, we discovered a few things during the outage that we addressed that was part of the cost equation. You know, frankly, we had operational challenges ramping the pulp mill after the outage where we're still addressing that as we speak. Speak, we're still we're still ramping and working through those issues. But no, nothing that comes to mind; it would materially change our outlook on capital in the future.

Speaker Change: Next just turning to maintenance you've completed a major planned maintenance at Louis in Q2.

Speaker Change: Thank you mentioned is it more challenging.

Speaker Change: <unk>.

That were there any findings through that maintenance process that would have implications for capex levels over the next few years.

Speaker Change: No we discovered a few things during the outage that we that we address that was part of the cost equation frankly, we had.

Speaker Change: Operational challenges ramping the pulp mill after the outage work, we're still addressing that as we speak speak we're still we're still ramping and working through those issues, but nothing that comes to mind that would materially change our outlook on capital in the future.

Matthew Mckellar: Okay, thanks.

Speaker Change: Okay, Thanks, and just want to make sure excuse me I understood.

Matthew Mckellar: I just want to make sure, excuse me, I understood the comments around $40 million correctly. Did I understand that it was a $32 million impact at the quarter, and then you're expected that incremental $8 million to be specific to Q3? Anywhere we said is it's greater than 40 million impact here in Q3. We are still in the process of ramping the mill. So the final cost is yet to be determined, but it's that the whole thing will be north of $40 million. We've done our best to incorporate the total outage cost into the Q3 guidance.

Speaker Change: The comments around $40 million correctly did I understand that it was a $32 million impact for the quarter, and then youre expecting that incremental $8 million to be specific to Q3.

Speaker Change: I think what we said is it's greater than $40 million impact here in Q and Q3.

Speaker Change: We are still in the process of ramping the mill so the.

Speaker Change: The final cost is yet to be determined but it's the whole thing will be north of $40 million, we've done our best to incorporate.

Speaker Change: The total outage cost into the Q3 Q3 guidance. So that's in there, but if something changes materially we'll update you after Q3.

Matthew Mckellar: So that's in there. But if something changes materially, we'll update you after Q3. Okay, thanks for that.

Speaker Change: Okay. Thanks for that.

Matthew Mckellar: Maybe just sticking with the maintenance item. It sounds like you're planning to go to annual maintenance cycles. You're going to be ready to talk about that a bit more at the start of 2025. I mean, is it a fair placeholder to think of, you know, your downtime next year as being queued to it, losing again, and queued forward Augusta, or what should our expectations, I guess, be around those cycles as we wait for the details. You know, we'll work through those. It really depends on a lot of it depends on our ability to get contractors in place, and also weather at these locations.

Speaker Change: Maybe just sticking.

Unknown Executive: Sticking with the maintenance item. It sounds like you plan to go to annual maintenance cycles.

Speaker Change: Sticking with the maintenance item it sounds like you're planning to go to annual maintenance cycles.

Speaker Change: Is it going to be ready to talk about that a bit more at the start of 2025.

Speaker Change: I mean is it a fair placeholder to think of.

Speaker Change: Your downtime next year as being Q2 at Louis It again in Q4 at Augusta or what should our expectations I guess be around those cycles as we await the P&L of.

Speaker Change: The detail.

Speaker Change: We'll work through those it really depends on a lot of it depends on our ability to get contractors in place and also weather.

Speaker Change: At these locations but.

Matthew Mckellar: But it's probably a fair assumption that we would look to do something similar as we did this year, although we will finalize that here in the coming quarters. Okay, thanks.

Speaker Change: It's probably a fair assumption that we would look to do something similar as we did this year, although we will finalize that here in the coming in the coming quarters.

Speaker Change: Okay. Thanks, and then just as some of the changes in the business now.

Matthew Mckellar: And then just some of the changes in the business. Now that you've acquired Augusta, and the issue sales should close by your end. How should we think about where you end up in 2025 in terms of a run rate corporate expense? Yeah, that's good. It's a good question. Yeah. So Matt, I think what we're going to be doing is we're going to be looking at this really from I'll call it a run rate of what we typically run, which is in the call it six to six and a half percent of sales from an S&I perspective.

Speaker Change: Now that you've acquired Augusta.

Speaker Change: This tissues sales should.

Speaker Change: Close by year end, how should we think about where you end up in 2025 in terms of a run rate corporate expense.

Speaker Change: Yes, it's good it's a good.

Speaker Change: Good question.

Ryan: I think what we're going to be doing is is we're going to be looking at this really from I'll call. It a run rate of what we said there'll be Ryan, which isn't that call. It six to six 5% of sales.

Speaker Change: Sales from an SG&A perspective, so as we're moving forward, we will continue to try and right size those expenses and we will update you in the coming quarters as we continue to evaluate their cost structure.

Matthew Mckellar: So, as we're moving forward, we will continue to try and write size as expenses, and we'll update you in the coming quarters as we continue to evaluate that cost structure. Okay, great. That's all for me. I'll turn it back. Thank you.

Speaker Change: Okay great.

Speaker Change: That's all from me I'll turn it back thank you.

Speaker Change: Yeah.

Unknown Executive: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may please wait.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for Tony.

Speaker Change: Disconnect.

Speaker Change: Please wait the conference will begin shortly.

Operator: Please wait; the conference will begin shortly.

Unknown Executive: The conference will begin shortly. All right.

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