UFS - Earnings call transcript Q4 2019

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Operator

Good day, ladies and gentlemen. Welcome to the Domtar Corporation Quarter Fourth 2019 Earnings Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the meeting over to Mr. Estrela. Nicholas ahead. go Please

Nicholas Estrela

welcome call. fourth and year and XXXX earnings to morning quarter our full Good

questions. today they be President and division. speakers Michael and and prepared Officer. Our Michael will with will Daniel Garcia Daniel will Executive and They after the and remarks, Buron, will Officer; from Chief Fagan our begin Senior Paper supported from John Vice be and take Pulp Financial John Chief which, by Williams, division; President Care Personal

the be presentation and the website. During will you can Investors the slides references to supporting call, made of find in this section

As are facts a a statements are outside invite you our the uncertainties, Domtar's number during historical subject are statements, and call a control. to for to I that reminder, Commissions all review the Securities forward-looking of listing to on which not filings those. of based of risks made many

be find measures discussed appendix as certain measures and release as website. and non-U.S. on GAAP closest presented the well our can will you in this to morning's financial GAAP of Finally, the reconciliation

John. I'll to it over So, with that, turn

John Williams

Thank full you, and year morning, Nik. review. financial comment remarks My after I'll quarter the Daniel's XXXX on fourth results on be And today will opening good the everyone.

whole, the on we continue to good our cash our to strategy as For year cash a shareholders. execute generated business flow and and return

to and in it execute adjusting changes well under market agile and costs extracting particularly and driving our things Our control, teams efficiencies. are on

million In operating before of cash terms items $XXX million of financial of and $XXX we performance, EBITDA delivered flow.

prices XXX,XXX of buybacks, sheet improved year market in higher our was to and allowed capacity. We in through return for our invest production related strategically Profitability Paper our to tons performance our of customers the took in were our the and for market year-over-year conditions short $XXX to approximately while announced demand. uncoated position our over to to million tons financial margin solid proactive expansion. free conditions. were challenging business permanent us the continuing responding or Our year dividends resulting We by XXX,XXX despite strong paper and in X% share of assets. cost market matching downtime shareholders closure our well

Our ability the reflects optionality uses paper creative as as agility market optionality quickly our find our asset half shown of decline, to identified can changing our of adjust repurposing as to conditions remaining that asset approximately and we've well paper of our demand base. We've the we for for team, capacity.

our this up reach XXXX strong and ramped our had and as improvement Pulp, specialty our improved We focused assets. improving bottom. of return importance winning projects demand with optimize tissue, on also continue of key fluff on further of with customer In efficiencies continuous Despite the challenging remained We're improving with pulp show to low projects. and business We underlying We're in growth volume increase our will improve pulp markets global competitiveness key year another appearing market plan prices the exit a that X%. cycle, track. we prices on an high very growth at time in with in smart in investments product and drive scale, markets. and performance to hygiene mix our customers across investments the

growing more an of pulp have machine investments. positioned vital future significantly Espanola of in part markets. Our a closure. we'll And scale Domtar market this with year the restart volume growth recent becoming the grown portfolio from The pulp Ashdown following additional business production for has years from paper we our expected in strategic as

our as of We schedule. executed on came focused restructuring our the care, and planned personal improving ahead In was savings margins. initiatives past in year our

our of SKU and business simplified We the stabilized portfolio. by rationalization focusing on customers and strategic to the profitability also improve

a the year the XXX year. we point As basis margin to exited for over XX% prior EBITDA improvements result,

Our performance since XXXX. best

our wins development business While of that and drive relationships achieve and growth important strategic we customer year. will infant the diaper some scale be plan, investing margin executing XXXX improvement will to on our profitability. focused future in up this

Turning to capital allocation.

continue flow reinforce to to our program future We through These we dividend initiatives and take cash confidence balanced approach our to buybacks. will and majority dividends our return a a to flows a to announced our be a shareholders million. reflect commitment with $XXX by generation increase cash buyback and free in XXXX, basis. cash returned of sustainable shareholders raised on In

and long-term us flexibility remain reward we and committed the opportunities to to fund both. Our gives growth financial shareholders position

best-performing in reduce investing and capabilities. cost structure our Mills, We're projects that our our support innovation strengthen

continue We solid a to opportunities. strategic which to foundation plan, a investment and clear a and on strong attractive build financial expand position have

With the on turn comments fourth further review that let call the me our to Daniel performance over making for before and XXXX Daniel? financial outlook. quarter

Daniel Buron

and Thank John you, morning, everyone. good

morning quarter of this share reported net of quarter share the compared slide to earnings per on quarter highlights earnings of compared for the our Adjusting earnings net for financial per $X.XX in the prior third fourth before the X. over of going for were $X.XX fourth of items $X.XX by quarter. quarter start a share XXXX. per $X.XX the the per share to loss Let's We

$XXX amounted million quarter. in items million $XX to before the to EBITDA compared third

million earnings to businesses, sales paper and higher X. sales personal on offset partially than lower in the care pulp quarter sales Consolidated evaluation lower $XX and in our were sequential by third to the business. our Turning due slide

higher third of based stock reversal Depreciation was $X and higher due and quarter. third largely $XX the compared million the to accrual in quarter the mark-to-market third occurred that higher of incentive and amortization to compensation when quarter, million was the SG&A than

benefits recorded position, final related incurred expense be and loss SG&A earnings year. related of in year projects million mix credits credit the In tax to to we energy due benefit related million. the to quarter, of a tax certain tax $XXX prior on the of million As in fourth income additional the to reference, should point $XXX an recorded quarterly and between quarter, the $XX

while Now on expenditure of capital returning quarter. X. the million slide flow million. to to resulted $XXX $XX flow in cash $XX operating a to amount flows cash the from in million activities statement free Cash This amounted

year, operating resulting the and $XXX flow activities to a expenditures free full cash year. in for million amount from the to of For million cash capital amounted million $XXX flow $XXX

we of the quarter, X.X a approximately total paid dividend shares $XX During cash $XX and for repurchased in million consideration million million.

of of our buybacks. of an at X.X Under the repurchased $XXX we returned year, a million full repurchase and in stock shares XXXX. combination through total approximately stock to dividend program, shareholder For a million we've $XX.XX average price our

million December $XXX buyback program we and XXst, remaining outstanding. under had shares our XX.X add of million As

for Turning $XX the slide X. average to before due When EBITDA decreased higher for the million, by higher for compared million freight million, $X quarterly material $XX $X prices selling to offset $XX lower million. million; volume of These and raw $X item $XX and for million. lower higher to cost million quarter higher maintenance SG&A for million, $X for waterfall mix by on partially productivity cuts higher third were

year. item when to third X% in million before segment, the Pulp our quarter In XX% to quarter of last compared the slide lower the to when were lower was period X. Now starting the to on compared $XX EBITDA third same XXXX. business compared sales $XXX and and Paper review segment million

X% versus estimated were the Sales same the transaction year, last before year. versus and $XX below paper lower on X% price same X% lower last lower versus Average average. quarter. last shipment last XXXX and third business the $XX slightly prices lower entered Paper period quarter quarter paper than with slide were the the Our grades item ton fourth when We've quarter quarter million. EBITDA were to X% all our XX. for paper was lower Manufactured were while compared per

to the entered to and the lower pulp the turn provided Sales XXXX and business $XX by to EBITDA ton lower period customer third fourth slide compared same third down on Average agreements. same with metric period Let's the Pulp $XX versus decreased price up Estimated prices in versus were certain last XX. quarter. due year. when largely versus average year. were before versus Pulp pricing million. We've were item $XX last X% quarter quarter per the pulp negative quarter about lag XX% the the X% last was versus shipments X% lower

decreased Our by XX,XXX decrease XX,XXX paper metric inventory when inventory by tons. ton pulp compared last quarter, while to

X% personal Our $XX were X% and slide XX. on same lower Sales million, third lower before X% X% and higher lower the than higher were was care sorry last to to business item the period year. EBITDA versus quarter when last quarter quarter. -- when million $X compared versus last compared

the decrease for $XXX XX our to costs for to $XX the between amortization expected our practice coming spending you'll at between to is $XXX find year, is respect key this with $XXX With estimate time financial while consistent depreciation of million total for by our items and and million. some XX slide and expense $XXX Finally, million million. expected year. maintenance be maintenance, expected year to million the Capital on to are be

review. So this concludes my financial

turn back John? call that the With I'll John. to

John Williams

Daniel. you, Thank

Consistent on closer Let's of look billion. reported January on with We $X.X EBITDA the update before take of $XX items XXth. business a issued the we sales million at fourth quarter.

quarter shipments the certain paper in slower destocking channels. with demand during further Our some remain seasonally and challenged

fourth to demand with market and reduce better outages result, supply As Operationally, downtime the number several a to customer quarter included a we related locations. inventory. took major of at further balance our our

its the work consistently planned a the outage went We of The attention through quarter. at in Espanola. will operations prolonged boiler our bank the complete fourth pre up now and second is We and at after initiated also generator focus stabilized the pressure did start quality startup testing recovery producing anticipate outages on and challenging boiler NBSK. now major Espanola

elevated were for our the unfavorable outages Although costs guidance, the in the led productivity of quarter level with impact. line to maintenance

cost in we higher four elevated and was for quarter, is period. quarter energy current which addition, a typically in higher remain In to the costs seasonally expect

demand Looking ahead business, recent our supply and closures be for to inputs. to our with balanced lower expect customer due capacity paper our more we

our also quarter to books one. run rate and order operating in a we in at January Our picked expect operations up higher paper

while in from medium days we in pulp to XX improving. the business, XX by average record decline September. several supported fundamentals we down are and continue December We to Based were levels to trend to high fundamentals channels, across see, limited positively in June. demand long for and In softwood fluff and And for market pulp inventory on in global softwood but market days grades XX days demand currently expansion. good growth expect prices see a term, capacity what the down

startup and year. a solid by strong last driven in Personal to four operating increased when highest in North America. finish had continue in our levels asset year progress at quarter we make year solid EBITDA SKU repositioning coupled to in sales quarter the strong four performance activities a since with despite to customer In to profitability. Care, Europe, XXXX. enhance EBITDA margin which XX%. also a The ending improve decisions, and will portfolio continuing further quarter had the compared We

our performance within notably solid adult Our momentum reflection a based good is business strong and sales of incontinence. demand in

retail through XXXX. the first We expect quarter, also a for we shipments in to diaper new to quarter late of the which up infant continue began customer ramp

In margin good mix. Europe, of we to mostly the and achieved the a momentum favorable sales due performance product year strongest

XXXX. We this in expect to build momentum on

of Our value focus to profitability and customers. commitment our and the deliver building on business. We're margin our improvement developing grow partnerships scaling term to strategic to the near be continues for

$XXX return repurchases On shareholders million we dividends. and of capital to of allocation, million share of $XX million $XX consisting

to shape sheets while carry value. and flexibility out sustainable investments initiatives our in balance maintaining commitment the These and growth which will long-term growth and to Our capital help will shareholders. small to returning strategy build for our on assets, allow good best our deliver

pulp Looking costs. expected the and due pulp lower businesses volumes Espanola to increase of productivity Pulp while with planned the our trend to market and XXXX, Ashdown to will paper maintenance higher Paper ahead will demand, Both are Mills. from volumes benefit

margin business and improvement customer to following from care personal sales new is benefit wins. higher Our expected

to materials increase. costs Finally, freight, raw marginally overall we labor anticipate including and

time to support. turn Nick questions. for and So for thank And you back the call your I'll

Nicholas Estrela

you, Thank John.

and So possible. people will both the time available you get for a as Daniel for to ask as a up queue return line John as questions the participants our to follow-ups questions. and want be ask Cassidy, can questions. to I'd we many open for few at

Operator

[Operator Instructions]

question from Citi. comes first Anthony of Pettinari Our

AnthonyPettinari

and see market wondering to that's with conditions some conditions I Hi. you And in long-term regards current specifically how the improving of China we Good the of want guess signs John, morning. talked market to fundamentals in the market to what's firmness business? kind talk about on more and impacting if term understand in could right now Coronavirus. about near positive I kind you of kind December your just going and January, and softwood. seem in of was

JohnWilliams

Yes. Certainly.

So let's briefly. the Coronavirus talk

As go work to you to people the extension. a start Xth on one-week is kind back which know, February of

to begin we'll really means. then think more understand what I about this

view is adult about we doesn't for sell Our you overall of it anything in tissue, continents. into much demand baby if the which products think it mean terms diapers, pulp i.e. underlying

think this I there. our customer. like actually some get Where to get still can port, can see get don't if any at work. logistics providing issues may product not store and is but the slowdown you seen to we to it people have point I

won't they their be production inventory in if till are in Xth. the largely course, of down, So working after they production,

know still use we'll pretty We to products. as this up tons own said in see more tons. dramatic I amount our growth not got good. then but some fundamentals confident but of think We're more customer it's pretty a mix. the sell We've are end think I in I year,

announced We So that about put seen, if I feel price that. a together, good pretty increase. obviously, we've we've all

trough mid So, long off in. come good momentum pricing term we ourselves as term, kind overall, we I of found this think that

AnthonyPettinari

potential to maybe remarks being And helpful. think your talked container terms able conversion about versus any half attractiveness That's capacity. of in relative of update we thinking XXXX repurpose kind opportunities. And in And board pulp I think about Okay. as you're about your conversions. then how about of paper you

JohnWilliams

happy Sure. question. that answer Yes. I'm to

the So by as sheets. in free which market we've i.e. uncoated always we're we driven said operate

year January, is assumption So I year last time. in actually a better. correct. took much took to and And be market this anything if We balance I closure. we be and the how has demand think think supply about lot obviously repurposing our that of seen at we feel performing that context a certainly We of actually will down look is

having clarity look the think still need, closer at will a but we that pulp we both though when to I offer have feeling see optionality in bit and we So said we we those and think as we container more in still had conversions, we have. get that board choices

Operator

Our George next of America. Staphos Bank question comes from of

GeorgeStaphos

on behavior. what I free sheet commentary wanted morning. Good to you it for is on customer the in Everyone. piggyback HI. a Thanks bit seeing had detail. you're How uncoated going? and changes the demand

that I think I seen mentioned you've bit Then to pickup color in a Anthony's put a of little little You a bit question, had possible? extent of on January. Could couple follow-ons. you to more

JohnWilliams

Sure.

me of I So Can time We I the think bubble pardon largely find to closure going if product and bubble that's a am long taken inventory number GP. lot I get a So to home. been long that think now get And inventory a came really, price. paper, over. to paper of get attractive That built just that our people premise product was an has in. term, dramatic paper? a recall, not, you to from around am going has caused no,

And more so perhaps than balance been. a we have supply of we're into sort back demand

I think at look imports when you have reduced. how

a seen me we've at actually number seen because go I that domestic in give time accounts a product. number of going who large is not have base Also customers move. sure to supply I'm We've to now the moment felt elsewhere of

terms get others just domestic to to imports. challenges of the Some supply to because us supply buying in of some of chain wanting

terms of place, we So we're than more in I settled much been. supply have George, think a demand in

GeorgeStaphos

se globally market last customers the crashed think extent of non producers because those destocking but be that pricing. a John. And favorable meant paper integrated year, have in more your that you some of do some getting pulp destocking. they I the really know that US also which were per may to factor it wouldn't producers seen

was all. all market think an at or that You the at really effect not in

JohnWilliams

impact me a paper bit from was of could for actually there buyer, bit little of a non of to now pulp make an there's thinking well a margin. integrated produce bit think I who the room

I ramp that think up back up as again becomes open pricing momentum attractive pulp to starts less do. I'll in get and a its and to much So thing back

GeorgeStaphos

what I'll Understood. away year for queue. in or to outlining you that, good be project maintenance go comment, on do but this schedule the question again last are implications year. spending terms obviously this we versus you give forward for for going always maintenance carry back was recognize guidance are My other not us because this some year had the to year I Thank of And of could take should level year. as into Can just last this going the but you're in just up the on down. it to what XXXX. with year, next reduction

JohnWilliams

Well.

working hard right. about yes, answer. major nine we we think would shuts to say So, XXXX have is last current is year premise I had level as year Actually eight. a maintenance I this this

to do number. going perhaps course just forward of last good if of pretty would is always number more But as sense George. we little a weren't it's So our A we what there to find various I work in bit so to there year when discoveries. had but got is of expecting indications correct we're reasonable take is a say, we this

Operator

Our from Markets. of next question comes Josephson KeyBanc Adam Capital

AdamJosephson

morning, my commentary your about if $XX improving? Good in prices some agreements. talking you average you customer jives morning, attributed I how there? And exactly everyone. you're that the if John. Can questions. or just Thanks softwood lags what on about John elaborate with you fourth-quarter certain I poll think that to you And exit appreciate fundamentals Daniel, were it. heard Daniel, I for Good taking mentioned below correctly.

JohnWilliams

separate couldn't I take. that due me actually to anywhere today fact Daniel the let land in are and Adam, places I yesterday.

take me let So it.

--essentially contracts, a is have those are have if certain where contracts would constructed We curve I of real in the time, we bell guess, curve I kind customer way there's bell pricing of that say is delayed.

downward at pricing things upward the the price kind to level of is off delayed delayed tail movement and So of is movement end. of

you've those but it what contractual a the that you beginning which the --at first seen So of said the on seen in agreements, in fourth didn't based quarter, in reset see you've contracts quarter. just decline couple the of is

to public pulp differently our really took of So what's you data. what slightly the shifted that's view just how if imagine driven you this might prices

AdamJosephson

softwood was John, be to both? clear or just or fluff, And that

JohnWilliams

both. of Bit

AdamJosephson

Bit of both, okay.

On market, down and year. XXXX, the free obviously, sheet market was normal John, for the last amount at

have easing have comps presidential there's demand you that's So boost a in for you case. been that has worth. to and yours in which election the solid been Historically, whatever

So do to less not the or necessarily. the of than decline market expect X% you long-term X%

JohnWilliams

not be that X% We're that. Iowa X% of but everything planning if We're to the very it's looks for for to Caucus; going different. planning like course

AdamJosephson

Understood.

buybacks what terms of in really Just timing pre of led to inventories and had that's you throughout the of the the the And elevated them, announcement. year. obviously the half second

during stock. period these So difficulties waiting this market rather to some out get then than into those inventory why when okay, stock figured buyback now so buyback having say, got just you're go and much out that we'll the cleared we and

JohnWilliams

just no timing. on Adam, think Well, I I there's perfect the mean time

was we very you at for shareholders. and I to way still look on return we think we've compelling the money were our paying, price a it price stock the if felt paid average to

trick missed in got a we I point to feel that don't your So case. a that

AdamJosephson

Right.

be of you was seen think really Okay. box flat years a quite past. the conversions foreseeable from bit machines you the conversions. Do growth potential could to the particular demand anymore. not significant you have think we're year, your US about how, it's remaining And paper and impact a market market grow And growth future? the deceleration And economy you've e-commerce a And view about what I in we've your by discussion of talked John, as actually just Just if a one, for about what talked actually last last in box saying light slowing. will was converted. half

JohnWilliams

good I we sort benchmark. Certainly. mean a industrial think production of pretty No. is

So not production. but GDP industrial

whether around, for European really things experience that So mean see what my telling as proxy. but my or days were we industrial that's difference not I I been to a growth. was in production ran to that as a was Obviously, us these do that moves better going number when eight mind e-commerce of years a could space business to has the but GDP

Operator

next comes of Our from Maguire question Brian Goldman Sachs.

BrianMaguire

Good morning, guys.

that to tie seems need downtime as XXX,XXX come very a want bit little been conversion week, different market but, the XXXX should capacity a capacity many gets the ones your of it's but clearing The together of out take you going I mentioned question maybe have First perspective economic couple inventories with lot asked, paper a better. that have that to like little in tons premise from maybe it think a a it already as bit a out more took to market. of little just is probably Riverdale guys that still of that

that as conversions end option. in on the I board doing container over for so. about kind million fund talked least $XXX conversion to been enough still one the mean have guess at of I spent there with you which would range being bottom an roughly buybacks or of You XXXX, attractive

a elevated kind out. able have you spot bit flows some will going capacity a paper the I looks conversion and little what's to with for this be great guess do be as arose EBITDA plan your The aggressive opposed demand into might conversion some the XXXX pulp on to in given markets. in a then the XXXX a still need paper aren't to ahead take something if you CapEx go that? to soft go point bit decision and in given buyback a we obviously; And should read time. fund with at ahead of in to cash How would an at

fund conversion do on just had you that So a it around kind if today? of how to read question timing. would we of you And kind should into what

JohnWilliams

long was well, Brian, it question. Okay. a

to answer me Let it. try

the conversions means you are see think we free see we way how on of have by demand utilization. to in how this I sheet based us terms driven we see to asset is uncoded and So what that

So we're our We'll we'll take then very to as our at we take shot. careful look progress always that. downtime

to by that downtime much was year. obviously that the we we have fact inventory running based to motivated You were in four, feeling the needed with that reduce we on about quarter were remind marketplace positive in stock the earlier of the took yourself because some just too we how our

think that's I So important.

So conversion doesn't kind in free look could at of choices you board doing stand actually in alone as the a choices, preclude from where decision. have we It would container time. And pulp, of context think we sensible if kind our not around only us something demand. do we stands alone uncoated in of some the which sheet midterm

to would but think of mills and quite grades for may pretty we in paper are some terms lightweight some have them we different we of we of a terms about choices in where that be full, in something other our have we want them frankly, doing we which So mean papers. carefully and marketplaces slightly keep presence. And keep there full

that in for fact think that pulp capacity think always was fluff drives years I open pulp fluff lot uncoated market. Ashdown two strong. felt that challenged. time And I was a and of course when us We us most really very is of free demand of going timing things to attractiveness to at these conversion So the a pricing be challenge. together, you if a And of it's sheet put all an the

is when year a make this it. So investment we third

uncoated the pretty have in Ashdown optionality I we've year, we think we're shot although this we be in a reason time and last taken is that is feel free sheet great our still one taking network. place still confident that to

it's which about still this for long-winded It's network. but one strong. optionality my we apologies, in very to answer have S the think think a you-- I needs

BrianMaguire

Appreciate detailed care, to the there. improved Okay. I personal margin answer the looking a lot. guess

business with rate I think you think Is bit some what and eventually on point expand like a that about the growth up the like sight talked diaper there's do and guide margin contribute exit be new low of mid-teens some that more mid-teens in level to of I sales an get line to just just business too could wins. margin. at into I I in maybe is you sounds a better it end wanted; maybe sort little into XXXX. XXXX, of will wins a in volume XXXX think that-- you and are

JohnWilliams

Sure.

obviously have we plan. January business. that So XXXX a very a had We in strong

So exit the the of at we couple we're level on kind sort four. I of that. feel sustained in quarter we the Whether a margins road above of saw to year points

So I I'm I'm sure can claim in yet. not the mid-teens.

I further need get down the to track. think we

I in think we've business. done two personal very care things interesting the

facility. So the Waco of course we shut

generated into we've -- savings generating profile have the customer major We accounts. that we're cost the we expected. And also really focused

simplify our that's is business. to So do actually us allowed what

actually SKUs ugly tail we which kind So of had this causing so much was that hundreds of got rid we've of complexity.

yet through We dramatic. are operating that a our What to saw to do which of facility. I course Waco five ramp we back some we're be really quite to efficiencies business going the we have in is have We US. we in got that get. of up, diaper put Delaware get to of lines into fully think more the as we means we've think out from infant focused And January, them going come now but

actually the So about I'm very momentum behind feeling that positive business.

see I we mean it. way think But I question. the that's hope answers that I your So

Operator

Capital Wilde at question BMO Markets. Our Mark from comes next

MarkWilde

sort that wondered any can personal just thinking would in way scale morning, John, to John. you you kind as I Brian's around here of we of in we Good jump the care. through of move about Good Is that could morning, Daniel. back year. there if kind cadencing expect help and us personal improvement of question

JohnWilliams

me I Let see help. can how

some top-line you give help. can I So

sales view to throughout is our see growth So you're the solid year. going

We have third probably quarter, in jump. clicking some think now sales I the business which we'll see

further. take perhaps somewhere on XX between towards thumb that the or and building an annualized a could XX of rule year-end little You rough basis margin maybe

the obviously give business I'd that's top-line guidance, we've give if strong that of I at reasonable the in you for not but see kind EBITDA that's seen that growth more, together think can't of way think say you people it, rule XXXX. levels I I we're to put much following you'd all a and thumb then Mark.

MarkWilde

look John, time? that could years. you I EBITDA target over is the you it do as good better business or three mid-teens at over next business, margin --is in two a mean that a margin And or

JohnWilliams

question. great a that's Well,

we're competitor, So if the look you showing very major at margins similar.

think their numbers In fact, of quarter right by ahead a I If probably margin. I've slightly point. annualized got four is my

branded mid-teens But are anything to the with $X.X to has on be Certainly, given else. think were good asset going runway I to a we Mark, got we'd place a that, higher place, time that's more before. but get billion I we a in to. billion think, question margins slightly numbers over scale actually a business base sales than that be looking terms that for than certainly house were if we've are which $X.X I have a in to you know

that scale, And we just for now I get a could economies to to can of but we bit get get point. the more want ambitious

MarkWilde

see we'd Yes. be All all I to right. Well, happy that think point.

JohnWilliams

Me too.

MarkWilde

is little gears a white situation paper shift just on the of with trade right update bit, a what us the just can now you And imports? kind

JohnWilliams

Yes. Sure.

people, Australia the been then sheeter except to people and products. case circumvention current that. have some so same the on producers we've importers. Department there's that a are sent for believe where questionnaires circumvent That's Portugal trying been the Brazil, filing, which who we Commerce accepted and the roles five countries case to So those sheeted have China, sit duties That's Portugal, is got-- currently on Indonesia, where there's

we're course, press the something in leading a So something back commerce sort probably the there's think on that that and of with up from turned then on expecting of trade I countries. recently project filling association

probably in So so give that Thailand, Korea, in very Does Finland, enough this of color Argentina just XXX,XXX is Colombia, stages. that's but Israel, would XXX,XXX on South sort be about Germany that? tons you all to early which

MarkWilde

kind months? key coming resolution there Yes. us are next six any I over mean at the of points

JohnWilliams

where Commerce of case from the Well, kind something Department within should circumvention maybe that of emerge on the timeframe.

Operator

from Stephens of next Our question Mark Inc. comes Connelly

MarkConnelly

things. Two

let can innovation. Is term You've made with you of anything in lot was white supporting of levels And terms how about products new us pulp? you share or and comment second progress. the you with to know question are a us your about inventory approaches can both there your near in First satisfied obviously markets? new

JohnWilliams

Certainly, Mark.

that So at would were I the as CEO a we to. to of would still while say inventory foolish term get turns like I capable think inventory, happy. on at the you're it back, And not level ever that if inventory I we're look to of be

always can. we to tightly think place. in but we as as would we're could good a we're certain don't network like in place, be think but a I it's I I I make think number running dramatic a better the

So peripheral there to opportunities? but are probably further They're we'll see. have

that I capital can. all think kind one something tighten that's always to of wants do wherever to working

On the innovation of side, as know couple you a things.

opportunities interesting some We business. of sort there a are have think we organized there. So biomaterials

a the On the as whole negative. we're around atmosphere paper interested plastics in side, potential always

game That's So a there Whether We've testing product. and for actually in can the us of our R&D of that's out and of kind Huron lot plastic. of work Espanola. terms and number R&D paper, our to things substitute of generate one we're grades on allows paper we stretchable terms that do things. upped the network particularly a of really in Nekoosa doing of whole Port

we it's So a some to potential build not time of lot think but over tonnage. there's meaningful tons

Operator

Chercover from Davidson. Steve of comes D.A. question next Our

SteveChercover

morning. To differ help how hoping year's might wettest I year-over-year. record. on calibrate the us Obviously, in was results, last cost could US South I think Thanks good the you fibre and QX tell

JohnWilliams

costs. inflation fiber first on massive in expecting not quarter the We're Yes.

in our mean reasons Steve, So One actually I is of inventories, was like our aware probably that but you're are US piles were in shape chip time being, yesterday. it they last secure. Armageddon I as better year. We're pretty the southern than say the this

the don't place on of up based on been wet, cost. Canadian make and just again that our the our fiber So soaking in around firing we've had Winter us what up an no industry going lumber drives governments go there. the damage is on costs obviously Kamloops, sure what's mad sort back which helping issue. Mills local hasn't but the to is

So we're inflation space. not expecting in much that

SteveChercover

volumes? idea pulp. growth why has in Okay. Any presumably Thanks. challenge prospects to and it market than it's then so better fluff switching Since both And price pulp. been commodity terms

JohnWilliams

they've $XXX fluff I'm or which that softwood that not that a you look, fluff and fluff but softwood still fluff ourselves. I it's tell of a comparing about you a perhaps pulp southern sure better the I that? pulp tailed mean bit southern that because has for historically is southern think you course southern a swing is that it's than color on price. and think, is lot softwoods Delta pricing as Delta, question. that I mean of reasonable I I'm you're have pulp and give as expect. pulp tailed pricing off even if speak the And I and to a said, capacity, discount $XXX only I can selling of ton down fluff a slid looked little selling between further softwood answer sort driven can what, I happened, has Does the people at actually and current bit been, piece been I'm always a partly of would of down

SteveChercover

you. if to would free thought by play end process? than Street So even deemed less for your far Yes. into just Does plays instance respect sheet then Thank finally pulp. --? your valuation I'm And be market the at so compelling the the when was done fluff look conversions, only and the analysis Wall in markets conversion multiple it really wondering that with end to you you've into

JohnWilliams

obviously if EBIT market. answer other say mean that than but you're I one in I the dollars the consider. things yes value XYZ you're of would to it's going so the All differently Thinking.

think of both that value consideration I do place have is see to as value for to Do can part course ourselves? well can off tell But we a category higher the customer will us what to be have others. story than where of them but that you for we competitive? that undoubtedly and the starts with one we create seen as is fully a a

Operator

of of next Our George Staphos Bank America. comes question from

GeorgeStaphos

or taking said just made, I'm John, I in it the a it's you you a about think to the Thanks a of a positive been why not uncoated demand sheet. your just want if more what's it or What of positive follow great recognizing all And because and bit give I a that if be fundamentals a Hi. on. place And that? could because know It comment be; themselves, a great the you environment back correctly still, challenging come the obviously on be place you would but for surprised, frames above be great. free to market in? to to the think. I answer place is place first us but to but I good be you Is sheet. the quoted optionality. to uncoated color free

JohnWilliams

to I'll I try response, be that in my George, not obvious promise.

you EBITDA terms place things. with you in be in So to a enterprise I is can when this This good the think get right. generate attractive two of Patently, demand things profitable shape, right. an is those supply

in position leader. strong the as market this market a have We

our to of offering some I think of our able differentiate that versus that because competition. been we've

to to make proposition world very those a base think, capital So assets point, off will in specific about we make customer good interesting your -- that world us, which intensity that choices And in of we the we're can good much certain of to I perpetuity. some asset we pretty feeling we're can consider make I have base. in money our offering our of value high a because

growth of care. in So a challenge two top of line position things personal pulp declining I that's those position the paper. in said growth a I if I managing together, to yes, myself, course put in But a and

I So together, good that that. about pretty all put feel

GeorgeStaphos

for guess had bit financial range it picture. bigger to crisis, of been relatively of I not Thanks the flow after If a a number is John. Domtar's been After has basically black $XXX And liquor, returns over I that term, in million years. growing. financial have maybe second at I stable performance look little million question last Okay. before but longer a dividends. call cash The your free $XXX the

if that on bond somebody the relatively and you is of been anyone fact, so without necessarily cover it's like has wouldn't annual How They that a with anymore. that might your equity price was that really base? If, an do premise return. looking going-forward at looks company looking agree more of impact a reports stable was allocation if physical at think stock in but on report. annual who return, capital think at Your you the the

in want you You to said balance balanced; the shape. you'd keep be good

How about and allocation for basis? public you in on term? in these forward do means the but hasn't that The from minuses think think you we Domtar can lot for the a invest growth, it numbers. in being cetera. of really been all market You a see that pluses to longer et of want there capital What Thank growth do terms you. going of a

JohnWilliams

Right.

yield Why am a you're I So to this I have I I go guess what outrun the getting get from necessarily way ask the a kind think great yield; standpoint I think what see proposition is of rainbows do says, as to managerially great investor? you right. the is investor the chasing the therefore paper allocation to in you'll a continue the And have in what trying decline capital not yourself this top-line, an to business. business we

So more to asset to have. we have therefore thoughtful do we be it base this that we earning is whatever about how very money And keep time we to asset from base. life give the

conservative if dividend sheet. to to that level caution certain So to sitting about I'm I'm make there priority. have going always thinking, understand you're a is a that a of my I balance it's mind, to going the think betting do foolish, Does to promise in understand to terms I'm that that I store. don't in capital going you that going help? of to my I'm anything of certain terms make allocation keep like,

Operator

Sachs. Maguire next question Brian of from Goldman comes Our

BrianMaguire

high the or level One just for discrete that a And kind little CapEx, any reasons any out changed the of wondering do and came then within anything for to that get of much and if think the a on lower could guidance CapEx. It in XXXX quarter, of to in projects kind if world how Where you that. bottom you would CapEx. be had suddenly in at? fourth growth

JohnWilliams

Sure.

of cost reduction. is well assets growth rule XXX will of for the or be in that more stay and sort be particularly a we're where of space the alive, XXX CapEx anywhere the productivity Anything may than So personal rough for keep looking projects shape thumb between care would looking kind in - good front. we're be

look if a --if So if business down you if in a take bigger batten to you said you the were you hatches, when me, volume back to had look we long batten able had XXXX to Yes, asset that do and again always terms we could hatches CapEx. in to to. do actually, really on we we the down if were what terms

don't lean end for sort of long. get I kind of below XXX. be think that want you a bit. really the and want do can in you can mean the But to the piper little if world's that and this - to ending down you pay get out to in this years XXX But you XXX you

BrianMaguire

It the is elevated? little on XQ a bit being high

JohnWilliams

I am sorry. Yes.

good Sorry, really needed complete. projects little few projects I apologies. we I just we XXXX to that XXXX. had a mean question, a the that bit we forward We on of had brought forgot into from that my some part

So some paid deposits more that got nothing really. mysterious than

BrianMaguire

but it buying XQ? I'm far have your Okay. so been on comment you not stock can in sure if back you active

JohnWilliams

that. on comment can't I

Operator

Mark And Markets. Capital Wilde question our final of comes BMO from

MarkWilde

specialty are whether ups, all. market segment a at that One seeing the there's consolidation is we John. role and in wondered some follow for the in Domtar Two process paper of I

JohnWilliams

so. think don't I

ton, X,XXX One reasons, ton, X,XXX XXX always are full of products the customers. businesses of businesses I'm --those ton;

not that consolidating sure for much I'm So kind sense that of us. makes

I'd got grow which organically I that rather and in develop to take opportunities quite space, honestly, we've product on. think

MarkWilde

Okay.

but And when biggest in of me your container that challenge the thinking market. is on is to issue? Could The about other I kind just these more kind pulp, I'm to John, have, get of market thinking we just conversions. think about channels one board kind the updated than access of we

JohnWilliams

Certainly.

all the large you of to thinking value in mitigate somebody to in of at the of risk and partnership of things? to box plant for way with of the has corrugated right? end how Are things end container at with think does the kind task What with or board containable things? fair, the the of customer in mean, feeder in back interested who be example actual I really the partnership you piece. be partnership you So seeing entry. end -- around kind a that Are is conversion to you Are looking commoditize, sheet somebody the is either

because we that look on that. So at discussions -- where of all just entry to agree I risk an mitigate is we risk element parameters with to people have with you those that there

I'm not that to to hundred the open if we I into completely have build risk. work few business, market, a thousand convinced that out put a really to of mitigate couldn't containable but I'm going

End of Q&A

Operator

we this have in at further questions time, And queue. no

Nicholas Estrela

Cassidy. you, Thank

Thursday April We a day. on will results XXXX listening. first have XXXX. quarter Thank XX, And great you our release for

Operator

concludes you, and This Thank teleconference. gentlemen. today's ladies

disconnect. You may now

Nicholas Estrela	Director, Investor Relations
John Williams	President and Chief Executive Officer
Daniel Buron	Senior Vice President and Chief Financial Officer
Anthony Pettinari	Citi
George Staphos	Bank of America
Adam Josephson	KeyBanc Capital Markets
Brian Maguire	Goldman Sachs
Mark Wilde	BMO Capital Markets
Mark Connelly	Stephens Incorporation
Steve Chercover	D.A. Davidson

Domtar (UFS) 7 Feb 202019 Q4 Earnings call transcript