CLW - Earnings call transcript Q2 2018 | Clearwater Paper Corporation

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Operator

Welcome to Clearwater Paper Corporation Second Quarter Earnings Conference Call.

As a reminder, this call is being recorded today, August 1, 2018. I would now like to turn the conference over to Ms. Robin Yim, Vice President, Investor Relations of Clearwater Paper. Please go ahead.

Robin Yim

Judy. you, Thank thank XXXX and joining Paper's Clearwater Good Conference you Call. Quarter Earnings Second afternoon, for

Joining the Chief Chief Executive me President Officer; Massman, on and call today John Hertz, Financial Linda Officer. are and

by to apologize today. delay confusion the First, I’d the for of like release and the any caused results

IR it, and of information a and Our timely on our website, service retracted basis, provider manages the delay them the after release is the quarters. information the with caused released close consistent market. set market a hosts NASDAQ in our than the instructed prior to explicitly prematurely which publishing after we which time the close, not until results

an and ended forward-looking the the Company Company's has to XXXX, impact fixed, as so year pricing, Exchange the forward-looking Any the third updated results estimate that factors in described materially slide, the the including projections and are been of and financial subject current and to Commission, range quarter providing the to supplemental shipment, for forward-looking for the to XX-Q EBITDA a production the made update including of release as adjusted risks other presentation the time filings expectation and costs, as are Now, well XX, certain assumes from outlook third XX-K of information, quarter supplemental that expected change, XXXX XXXX, for presentation XXXX XX, has I’d from not results that materially date, Reform no Private Factors statements are this of statements Relations Litigation December and remind and page and cause any include including like results amended, expectations our expectations, within to on and posted information. statement. March the and at this Investor those Form our Form to Securities only website based quarter. limited for of These may actual assumptions forward-looking meaning of forward-looking to time Securities third clearwaterpaper.com. with statements differ that Act the the adjusted on of our but our uncertainties for actual differ as contains been estimates, the current earnings ended for and our quarter could obligation statements. EBITDA

information call we certain review from Additionally, GAAP to business will And the second session. on comparable the question-and-answer quarter, and Massman non-GAAP will the afternoon’s John the followed brief A of the provided material is then, Linda in be open in for the with included providing reconciliation a this non-GAAP of remarks the our discussion. financial the in will QX release we third website. begin call Linda today's quarter. conclude information outlook or for supplemental will press up environment of an with overview the by results prepared our Hertz. our information Then,

Now, I’ll turn over Linda. call the to

Linda Massman

everyone, Hello, for today. us thanks joining and

division’s financial executing in efforts of second our I’d results John like great expectations. high end start paperboard number all expectations business our the expectations maximize at the an working the performance of the to a We our metrics. tissue of results, flow had success operations, exceeded while financial capital met our of we’ve overview delivered Before from presents In cash with for quarter. The initiatives. our to

able are X.XX to to our lower times. As a leverage result, ratio we

with Paperboard pricing. shipments quarter team very delivered record demand strong and levels a record Pulp and strong and with Our combined improved production

anytime of we at line nicely expected. in Products private the costs, capacity our the the the with challenging ultra-quality remained experience and what soon. business to freight remained we delivered continue Demand and In results beginning premium tissue label, pulp with ease next segment for up high business, start-up to don’t conditions strong, year. which tissue Consumer of Our netted planned of incremental competitive appear which

initiatives, pulp forth our tremendous structure to costs mill rising cost operating put have these with offset effort We work, cost efforts. and SG&A model optimization reductions,

Now, financial John will details. through walk you

John Hertz

Linda. you, Thank

the get I'd of stating non-GAAP results, like I core our to charges The my performance. between quarter adjusted rest GAAP comments be my provided by details the believe preface posted results the indicative that I release to is supplemental to results we certain not the exclude of our benefits on website. The results. will from distinguishing earnings second that operating Before adjusted GAAP and or remarks, and are throughout reconciliation of and adjusted in slides our

three XXXX, million quarter out initiative approximately announced to mark-to-market other directors' reduction of the cost Lewiston were SG&A related offset previously stock the as units. each million primarily $X For and related the the items adjustment to to essentially $X benefit by netted common outstanding our second charges in reorganization

that, results. with So, get our let's to

sales paperboard side pricing net came with Pulp to and on mix Products the lost conventional paperboard quarter discussed. at have weaker X% related expectations. side Consumer that the more in our Higher we were second volume and record and previously tissue customer than Our down by large in the line Paperboard from on $XXX offset shipments million, QX, and

a converted As were parent result, retail up, rolls volumes case shipments down. shipment were while

XX.X% in mills quarter within or $XX QX Second million, pricing offset high expense and by end first the the million sales, a progress was and spend net partially essentially QX. interest million quarter quarter. was million reflects the the was QX which or was of tissue quarter Lower QX adjusted first of SG&A million SG&A or profit, or ‘XX. and from above was corporate down to which which adjusted of improved our operating second gross $X margin, $X SG&A paperboard of Adjusted $X our $XX was Adjusted points due expense SG&A net from X.X% Net in $XX Adjusted is efforts. the million that X.X% weaker from mix. was $X.X by reduction second margin, QX. of our income ‘XX. the $XX approximately at was basis million sales higher the $X flat quarter, than controls cost million with than reduction cost higher the million better expectations of $XX which million X.X% EBITDA expense expectations XX

taxes. XX.X% rate the On versus XX.X% basis, an to in tax Turning effective quarter was with in QX expectations. adjusted and first our line our

the $X.XX, fully quarter earnings per and in million were both end the were Second share. GAAP adjusted Adjusted came XXXX share with our of earnings earnings net expectations. adjusted EPS $X.XX respectively. or approximately QX at per of $X.XX $X net high diluted million $X and

in for mix quarter of to discuss will XXXX, first second Products mix. of quarter Consumer fewer the the net X.X% million $XXX costs income compared loss to a point operating weaker quarter, million QX. Products use and from compared tissue was in million I down results. X.X% $XX QX replacement fixed of reduction Consumer pulp offset quarter million converted should the segment the Now, expect the impact as up segment continuous million CPD first the operating second the low volume, X.X% efforts tissue in to EBITDA operating second see year. from internal $X operating results of due over the conversion adjusted The half of incurred absorption down to optimization. sales of primarily the were adjusted the incremental the retail standpoint the the in by the partially $X cases impact case or show from and $XX CPD for to CPD retail as or adjusted and the digester, was of cost announced price previously we network be of an model improvements increases, SG&A weaker

segment. turning and Now, Pulp Paperboard to

most second we million XXXX, production were price X.X% and operating demand, million prices. QX. tons. first of net improved quarter. $XX.X% while quarter quarter XX.X% initiatives to second generated mills cost the and shipped was a net market cost to the improvement due QX SG&A the to $XX XX.X% quarter $XX QX reduction EBITDA Pacific sales Average XX.X% of $XX in or of compared per $XXX quarter. record up ton million fiber for record and adjusted million Northwest. Pulp sales increased or was first at of from offset $XX we was compared the For the for as or ton up wood due Net in per pricing, sales sales in savings the income higher of XXXX costs million $XX primarily XXX,XXX net strong margin, sales up adjusted $XXX first or Pulp Paperboard of in to and the and versus Paperboard’s The

interest Total were improve borrowings outstanding CapEx million, million. related is million. $XXX turning have balance capitalized XXXX including we of discretionary our for the projects, as a not of unchanged as is $XXX which range CapEx at sheet. through million now $XXX expansion. $XXX is QX Long-term forecast were year to our million to million quarter-end. flow. of Now, of for of initiatives second million $XXX remained in of in the Shelby $XXX bulk our which CapEx debt to quarter Capital strategic the at outstanding reduced revolver part Expected the cash under $XXX expenditures to

X.XX XX QX. X.X is debt times from an Our net total in improvement adjusted times leverage ratio last was months which EBITDA,

our covenant repurchase million $XX remain liquidity, our our the flow quarter the capital working had from the authorization. ended under authorization, with million the any with repurchase million expect under first available regard manage of We in did a which share maximize compliance remaining $XXX shares leverage initiatives $XX We we cash million of and With to not as to approximately in operations. quarter under result and we cash unrestricted to leaves revolver. first our $XXX

QX up generated from continued operations X.X% quarter, first and from net XX.X% cash working up we million During in was activities Cash second capital of manage we from spending. the significantly quarter. flow the sales, or $XX to of in as operating

will and the priorities, return on the from fluctuations. now our outlook Linda would of we flow cash concludes I who remarks, XX% over current forward strategic quarter. As conditions, for turn Company's revenue depending industry operations the range, the That to to capital discuss the of to and to expect the call will my year, back third X% back working half look quarterly we to

Linda Massman

Thanks, John.

Now, talk about our priorities. I’ll strategic

quarter. our our hiring take as will of network the track First, optimizing optimization Shelby facility converting early converting the of in the project with Shelby, warehouse schedule the The and North first we expected allow network on operations paper in start-up model. employees majority quarter of operating our hiring and our regarding of training also project progress new supply our the on start-up new of of third machine assets cost at with Further tissue warehouse chain to machine, the are us complete. includes in This continue XXXX. The continues in out to Carolina. and

assets and operating to track we demand. increases Second, mitigate initiatives implemented of input as cost certain on for and remain and The with will previously price as match quarter announced for transportation. last help our products external being reduction pulp optimization the announced costs to our are well we grades rising tissue of

Third, Lewiston incremental the to pulp digester up quality in produced and pulp improved tons. as well as ramp continues

business, Paperboard our second growth quarter market paperboard to well in shipments remain Our backlogs of is which was which demand and steady continues half division in trends. industry to production Pulp line the led operate Record and about strong. and and with conditions in

up private segments. X.X% retail turn period, Let’s Products. brands X.X%. flat dollar in QX total environment since for X.X business of of tissue compared for XXXX. the U.S. the to reached of the ‘XX. the that the measured The now second national share QX QX Starting high up quarter total was data indicates last quarter, market IRI which start second brands attention Panel XX.X% market compared market, market were with our sales and X of Consumer record up Over U.S. to brands this were points to and to is private tissue both points year down In

expected to national per annual at Looking for has XXXX grow enjoyed growth X% approximately brands. label rate From private a is population X% compared forward, to through North flat with American year. compound demand XXXX, of

economy RISI’s X.X% both compound and annual Since of tissue data the conventional and growing together Scan points a adoption in tissue consumer The ultra national value. North XX% and XX% label American net have X tons. term to schedule label XXXX the towels tissue private market. brands rate tissue capacity quality XXXX. of quarter of X.X% capacity with label the which in is on of bath has Over tissue line grown in forecast total decline XXXX from private respective and the the XX% for addition household tons half additional continues. for grown longer for of premium household versus XXX,XXX towels and growth of tons confirmed IRI the The brands. the most through an has comprised net segment back remains third segments market new period, current been X.X% XXXX, toward versus XXX,XXX in points XXX,XXX The RISI predicts bath same private X U.S. trend coming for growth fastest the

all on to the as for demand-to-capacity Assuming is using line be that of approximately North capacity estimates XX%. XXXX demand America, in forecasted and scheduled comes ratio in RISI

ending Over North the be April American estimated approximately imports is tons. to consistent through XXXX, XX ratio XX%. months net If totaled XXXX, imports net demand-to-total the XXX,XXX capacity stay

this outlook to quarter, paperboard the reported RISI's And June reported the RISI's XXXX. markets a the backlogs averaging Turning XX.X%. export to for service in expectation for to North rate and board stay latest per to beginning environmental announced polystyrene expected XXXX average boxboard and Chinese XX% reported in outlook grow topic paperboard for for our demand. Paperboard same up up to packaging last increased incorporates of within for are paper Chinese AF&PA in carton greater is Chinese the volumes $XX over going hot stock compared will polystyrene And cups imports rates the the beginning U.S. QX. over the recycled turn annual business. year. stock and five-year last and that ton compared have mind, quarter outlook XXXX by third and Asian cup paperboard was $XX solid. accelerate American percentage ivory and into five-year into of year could institutions for to of AF&PA. growing today, U.S. increased X.X% prices cup the since packaging environment RISI to demand, period a the X.X% The operating Pulp by U.S. demand since XX% to for our plastics the reasons. of Through domestic reduce is foam market due to growth folding operating through XXXX, With environment as prices on for Liquid industry were is imports constraints final from shift outlook let’s XX.X% RISI’s XX% year. a healthy that the the production and shift various my have foam grade XXXX due food

be sequentially. to sales flat net consolidated X% expect We to up

We’re of projecting be mill. margin continued market from be cost adjusted carrier on in warehouse type cost partially pulp the increase, operating cost, by to and for optimization previously costs our offset savings the the fiber the price the logistics and initiatives, announced energy our improved SG&A Vegas third wood and to of quarter X% items for benefit the range consolidated These higher should based Shelby. X%, with operations following seasonal our initiatives, start-up converting Las in tissue factors. transportation, continued at Higher new

minus X plus XX% of rate percentage tax or points. a forecasting We’re

adjusted For range million, to in adjusted million variables in be of fully we to The the market and $X.XX. and to share the in in and $XX branded third paperboard consumer we where key earnings range share, to is tissue. quarter, $XX diluted land EBITDA demand are per tissue in determining see our efforts range of changes conditions, net $X.XX increase outlook that customer the for

including full-year, previously due the pulp with for we tissue tissue price cost expect and higher partial announced continued in pressure, said industry-wide we quarter, and last paperboard non-ultra offset see As to challenge improved wood economic transportation, increase. a from tissue pricing the fiber to pricing

cost $XX expected impact compared increase tissue the wood $XX announced pulp million XXXX Higher from the follows. million. million million. impact $XX million in of in to EBITDA $XX adjusted expected narrowed price The fiber $XX to range is is to to transportation in $XX $XX of and million. be XXXX to price and expected the previously to adverse paperboard from the to be be Higher range as updated to million. impact of million to costs range have The $XX mix to XXXX favorable of variables range We the

in to to transportation some reduce tissue, target model, cost efficiency continuing profit footprint continue asset product developing we our other evaluating cost improve reduce While SKUs products optimize are focused costs, regional network service and redesigning model and of related out Consumer we and complexity. headwinds, and deliver Products which and to recapturing includes and rationalizing mix the face manufacturing to on drive operating service lost the to to economic aggressively the the margins challenging

XXXX We’re improving leading driving in a for you both tissue capable and We’d to packaging company closing, positions unchanged on ROIC. and our home strong and and continued Thank our generate our stronger, will now in our with shareholders. will us make achieving improve remarks. at priorities that our focus to combined listening confident cash In employees, private our result to customers questions. take label our priority more your SBS remain prepared market and for efficiencies flows like our cost

Operator

Adam is [Operator first Instructions] Our from question from KeyBanc. Josephson

Your line is open. now

Adam Josephson

everyone. same. ‘XX afternoon, pulp the pieces gotten wrong. changed. one better, just else But that Linda pricing moving gotten I Correct Everything favorable, have has The am ‘XX parts in versus worse. Good laid has stayed more a me I John, a if believe out. tissue little on the roughly few

I I months what as roughly three all think So, right? mentioned when that Is it up, you add ago. same it’s the

John Hertz

pretty the to think, I Yes. be similar. math works out

Adam Josephson

Okay.

capital? and dramatically some just in quite year-over-year. up your you obviously accounts noticed I to you effort working about sheet. your -- balance there, sequentially talked projects payable strides working and you're mentioned and manage Can talk an capital You doing of making CapEx managing went about some on what your cutting

for what's expectations and what were year where from whether So, they three on months working they’ve your are going there, changed ago. wondering capital the just

John Hertz

Yes.

So, that biggest of was progress. million or of associated increase in the $XXX last which the payables associated versus in is the with with quarter, these construction accounts far about that Shelby terms payable accruals and a chunk we by have project

broader accrued accrued from we’re we supply And to trade things on those payable us some as have timing push our balance kind terms -- you had, accounts those look in like did this pushing the some trade board. some look million a a the what there’s payments. tailwind on day about interest, extent. renegotiation [ph] well million, payroll, to as was accounts standpoint, across overall, wise about it out for of we initiatives When of as as vendors AP you make When have of at reduction I what and about working million, capital $XX of time that, at fall the increases $XX also components financing, $XX things and calendar We for the chain depends the that $XX then, about AP quarter. increases of and I’d of it progress, we’re what million. on in was doing a of that trade of we’re $X receivable, in well reduction in some is a then talked construction say significant before lesser seeing million a accruals and just at

Adam Josephson

from terms year working for the And the -- expectations John? in capital, benefit of your full

John Hertz

and it’s But, would at around XX% say, area. -- when we’ve here. from Yes. full-year, place coming plus the we or elevated put initiatives probably in the since revenue, you efforts ago, look of three should in months just be given I I’d minus the and say,

Adam Josephson

Okay. yes. compared to --

John Hertz

from operations. cash flow That’s

Adam Josephson

Okay.

projects. sustainable? you So, on are of those reducing math And I’ll and reductions some are cutting do on then back the offline. What CapEx the

John Hertz

CapEx I Yes. much we’ve it so, to bucket. we have falls problems. do, got It we’ll call bigger of otherwise, maintenance kind have that -- discretionary the in

and cutting we’re our tightening cutting that we’re to spite of so, non-Shelby, have up on And do that’s kind face the -- our stuff nose of that non-absolutely screw. but what the kind not not stuff, to

Adam Josephson

your And guidance, John. others, on then, just two one

we XQ meaningful Anything guiding ought XQ. to be that XQ to EBITDA flattish sequentially to of? to you’re XQ change So, mindful in

John Hertz

by pulp doing in I some terms of you’ve really. think volume at fuel of maintenance the transportation Lewiston. upside I maintenance we’re hog some that in and where mean, kind Not incremental in gets got offset

Adam Josephson

XQ talking. are From XQ you to Right?

John Hertz

No from XQ to XQ.

Adam Josephson

Right.

You is, to what guiding XQ flattish mindful are be XQ, we moving guiding EBITDA from are big to -- XQ. to was saying there to of? to you saying I flat XQ any parts I’m ought are sequentially that

John Hertz

Yes.

we as benefit of really cost We a are the are business transportation… to where CPD optimizations area there, initiatives, converting to mills two in we of up of constraints doing that see get network, start going we as from the sourced and get in some in network lines lot the Shelby, terms we reductions bear to we the about fruit take in put

Linda Massman

of of of mill We our costs. related talked We’ve bit mill redesigning SKU actually we’ve rationalization the network gone reductions cost to and some about quite our our our taken into reduce to volume network. a out products of actually manufacturing and some

We be already, have lanes some have down paper how we schedule to resetting reduced network and over new to optimize our volume relates environment. to a XXX it converting mill positions. done machines the don’t just a we this and warehouse mix of We’ve lot that to have as running. lines shut And

Adam Josephson

that tissue, to talk given coming industry if change on? business. whether is tissue an next a you and really what capacity just were even not to the particularly a EBIT announced that have in any or have to more lost could have And basis. your said you do in way though And matter, expectations, and little market. obviously in tissue, but few been quarters increase one just with of But, conditions you money that. in meaningfully outlook quarters, for conditions competitors results to expect the your not obviously in the or just additional them industry had initiatives the haven’t next one market I I’d tissue sticks on But, on And the price be well in few Obviously, reason either in determined. I you internal and line positive improve in about think on appreciate the your much doing that of a know tissue you large quarter

Linda Massman

talked we’ve some label relates about to little continued label private of the of private as bit So, the it at and growth adoption in a retailers. broader trends

all we particularly last ultra of going mix And ultra we through talked where Shelby more So, and capacity, to got sold new those we years. over to seeing be almost our efforts of perspective, quite offset seeing we quality begins. a to we cost a the also any up And in about machine talked from about trends in how out pressures positive our are somewhat bit how quarter And we because some segment industry little those and growth. were lot Shelby our the are were until of and frankly sell mix efforts trends have these until we X% able we are the capacity. are some comes don’t limited

on balance So, pulp we the positive or that experiencing. I think I an tissue we that’s in probably so see than transportation trend really what easing we said the call, the are will likely not more year. Like costs, of don’t the broadest, for fighting and see in be we

and roll then I initiative beginning to that offset are affecting mention, are and cover that is and we to initiated the and through. customers did inputs initiatives look really characteristics continue beginning hold our of cost are to already what margin just our for that we talk we we announced last where continue types which we a these forward. think experienced. are have quarter, we will price well also and take have that And of I And manage increases look will So, them towards demand driving underway -- that at of to that we’d and different -- happy about our to lot customer opportunities. to But, the cost we ability benefits and see price make going to those decisions we evaluate should

Operator

Dillon Our Research. next from Vertical question is Chip from

line is now Your open.

Chip Dillon

you the payables. as will has with when sort as you is us sort on again is And CapEx like Shelby say, it how of from machine? looks further What your switch of obvious now? The do flowing ramp-up situation. first And give a you question latest did the through. in the that you true It on increase view the of think is see from to

John Hertz

capability we’re So, from over a standpoint, then, to QX manufacturing standpoint over from And to the from -- turn it next ramp of year going a X-month machine on itself out, the year. work that period. standpoint selling in switch shipment in through the will X it the a from next will

Chip Dillon

January? first early when -- looking And now, overly even be end that say is February of you but we’re you don’t mean March this down, could that's tie something I to like to -- August in going quarter, that be or could or be it is

Linda Massman

you run little and Yes. won’t would It typical is or the it with early get to quality point. year. And and will start should a midpoint more manageable, there ramp up on bit we into more be in quarter and first curve will later and the we what ultra our volume product anticipation that little be up mix, quality then, this probably appropriate at in switch this sufficient

Chip Dillon

the not then, the number us again of that does I of keeping tie in And year-end, current ‘XX. And know how just at on number to count especially count cash think was John, working want what helpful. end line -- debt. at about should I section this we and in everything XXX think And liability at many hate that be section, actual down, cash show you That’s just -- I work capital, flow the to could overly there the would not some physical done the in machine look I mind current while on assets the last on be think on still that up that you said on call will at year-end, that you it the doesn't a speak. it because payables. understand second I such where was be embedded to sure big that in is we number the for going so to make instead because windfall statement, want in quarter, just the but will

John Hertz

months do fixed I’ll about look cash is from the a sheet. perspective, million From answer the not and think year Yes. of million on would the first financing this for standpoint cash the $XXX on to guess, I to it kind million range. our had balance way if that six we to relates of as terms the Shelby, you call the $XX $XXX so, of statement, We at supply arrangements spent asset in cash I the a flow through cash year. chain spend, it, will depending

last going perspective the guide are I months of percentage relates what say incremental a than of going flow to talked it million year. and about to to in to that other to QX, I’m necessary So, do we’re $XXX from I not to would think spend as revenue we another cash really QX six we over operations the from of project the before. that XXX cash going Shelby

Chip Dillon

helpful. very That's

So, so to again, might that thinking the guess be hit that first pay running CapEx you lag your but you XXX the statement, keeping ways? next on then sort be think be that both maybe about both of keeping way of what in it I next or year, you're will do you $XX and flow actually And about year. business, the XXX, million of there till won’t that, or mind as in think mind, your cash it’ll will the -- view CapEx as all, either

John Hertz

statements, the would be balance $XXX actually I for probably million it a around around to think, from both. say timing tell -- I cash this $XXX a point, to hits standpoint it's hard But as flow sheet. it million. hits at And CapEx going the when probably it’s

Chip Dillon

normalize finished per even you’ve while? is something for And a maybe range so, lower then, in year, a your after Shelby, I going at basically to or little CapEx guess that

John Hertz

than that. lower Yes,

doing a big that’s and when we’re a little million $XX has project of are CapEx maintenance be $XX normal putting strategic. Shelby. with million of like been probably around So, we’re CapEx not million, $XX a more this, and going our once ourselves of done to bit guide, on We

be even XX. So, less it could than

Chip Dillon

you’re stretch. an to happy now this -- home relaxing sale you last with and about mean, next an and Are of about things or And it’d measures any it the But, banks of did kind raise? say year, kind terms, process you through are the you any -- seeing be to how maybe talking how whether terms in I seems the any of keep question, past. something the something have are them of into asset I in equity heard in to unusual end pressure you take

John Hertz

No, all. not at

been conversations with the very have banking Our syndicate constructive.

We have about thoughts. of different and our some very to them they’re with active stuff, dialogue ideas receptive and

Linda Massman

we’ve the area are operational mitigate convents. expect And along And any we Chip, underway. cost the compliance necessary flow. our We’ve in improve very some I confident. early make and capital would through focused concern in then, say did initiatives of got to that working actions statement, to with that cash I course, think we our initiatives debt currently that we’re to taken the different successes And be

think addressed I feel these. that we So, we’ve confident

Operator

Thank you.

Our next question is Markets. Quinn from from Paul RBC

is line Your now open.

Paul Quinn

here? to yours in be A expect up It the looks quarter-over-quarter, question $XX on balance just $XX like should increase, QX the prices. paperboard price what we went

John Hertz

incremental? much how of terms In

Paul Quinn

I you’ve mean, I that XX think plus till you Yes. got get liquid the see ‘XX. won’t you’ll packaging don’t full

just So, that somewhere -- range, in XX is an so it XX I XX in QX? shake it additional XX am out to should to thinking

John Hertz

think mix, flattish look QX. on just We as what’s to QX we going kind with Yes. we’re probably of

Paul Quinn

And -- then, getting back on to -- seems is recall the length, customer seem been I this you're -- QX. terms on of about the at tissue there’s of in in side that volume customer that or some the talk

not? expect looks would but So, it’s your mix from that to I it improve, tissue guidance your

John Hertz

that in QX. that Paul up all volume, XX% that lost of of time. started that worth not we’ve as it wound said going half And now, on, that’s And Kroger back coming had -- a mind at identified but So, we in all again on same QX. in down what’s keep we’ve quarter’s about the

So, in I think of are and have going you’ll volume in way in you standpoint from QX less than actually QX a see converted case more…. a to

Paul Quinn

fully Where I on just by end the of you the start-up curve? of a are then, QX are of the think, And is to ramping that is -- we QX? up. Lewiston in on Linda, that by ramp-up at hit going And still terms -- a we get the there made QX digester or end comment

Linda Massman

Yes.

not early QX. be as think it’s as to I going

now. beginning up curve year, as So, the are on and you start-up of the the the know, at started project we

achieve increase is rate [ph] output are opportunity project. We remains to on quality. seeing that and and for the yield for run products both now savings our we’ve Where our projected

way we So, it third do are of if the you about annualized basis. there a on an

get are But we curve the to think more need as before will. tightening I the that. timeframe up start to that we deliver kind can working of bit little you, We a soon down finalize as balance as as quickly through -- for possible we we

Paul Quinn

and guess And cost the is between hope division and that at I is market? tissues, Pulp that at I or done transfer this Paperboard

John Hertz

At cost.

Paul Quinn

if you in profitability that, tissue? I backed would be So, positive QX on EBITDA on out expected

John Hertz

front of less but have in it be me, would don’t the than is. it I math

Paul Quinn

Less enough. than Fair okay. is, it

thanks think much. I had. very I that’s all of Hey, luck. Best

Operator

Thank you.

from Chercover is from Steve question next Davidson. Our

now is open. line Your

Steve Chercover

to of So, where on you continuous graph one-third XX we right? through about the digester, come, that still thermometer the way million have are is that

Linda Massman

That’s right. Yes. about

Steve Chercover

are for I the they in much thermometer opportunities? then, graphs, to and on slide other the left them the automation but is How -- warehouse deck. And the this not presented call quarterly

John Hertz

There to much going were we to said achieved going are -- pretty what achieve. or we have do we

out. we the kind that’s why of took slide So,

Linda Massman

piece is the page digester our so have to on. on now is the committed of you put there The progress it we front do from what remaining supplemental, just track the and can

Steve Chercover

guess, us new perhaps provide consultants saving And some update When I initiatives. help we that? to cost think identify I an some you of you bucket engaged with

Linda Massman

SG&A?

John Hertz

Yes.

going but -- $XX savings of to did talked until the million we about XXXX. we as improvements rate won't quarter-over-quarter, say we to full to run get we that was get So, we SG&A were what did

will that and waves occurring year. of are have So, itself through we through ramp so XXXX kind the up it

Steve Chercover

question. and -- that Is a less there opportunity? mean, again design in I a follow-up grade? And like by your On an you packaging? it so there lucrative are is weak seems position because finally, or SBS, is liquid why

Linda Massman

quality position good Yes. have really is actually weak. market We not our I’d say board.

We are which selling consumer discerning is into the Japanese market, primarily, I mean base. almost product exclusively very a our

very run where the by thought of capacity have as It’s mix and best to for we our we great equipment our confident on we feel itself product conditions design really the market want we assets. the quality. lent So, to

kept of it’s And we’ve really pulled just the so, highest was board a market back, of been for chosen part and we’ve had the our that’s for few to where time actually out the quality attention that the export business now, spend looking years that business. and liquid and packaging

Steve Chercover

understanding product. that quality high my had a very was you That

is it I a situation -- better packaging? of but board your liquid is to want good is call the for don't problem too that So, for lack actually words

Linda Massman

guess best to. we we’ve all. not No, how ensure our We we out to It’s assets to chosen maximize the at could the given structure markets to I our assets wanted just other sell mix profitability. in maybe if mix, have

Operator

Roger Our America. next question from is of Spitz Bank from

now is line Your open.

Roger Spitz

just I to want be clear.

answer but you’re Is working I your what maintenance think, see doubt, for release things, near you right? telling covenants. clear for the now, that is you your avoidance are of movement actions don’t cash, the anywhere yourself is just of other taking CapEx getting us, of capital

John Hertz

Correct.

Roger Spitz

to maintenance mentioned you QX the perhaps a as year-over-year $XX level is back Perfect. did just XXXX tailwind hear on it? buckets, the EBITDA still high that And your I going million didn’t you then, when Q&A, call

John Hertz

is. It

Roger Spitz

It is okay.

John Hertz

That the script but is, in articulated yes. It we maintenance is. wasn’t the that -- one things that of

Operator

we time Josephson you for Thank Adam have KeyBanc. from follow-up question from

open. now is line Your

Adam Josephson

one on SBS. my Thanks Linda follow-up. just for

there. the presentation come the under then? if back SBS because market I'm the remembering the has if end second Correct modest half that I you Sappi outlook thought of in think start-up. in correctly, March at moderate price of wrong perhaps changed or would me you your I'm in March, And the mentioned perhaps since

Linda Massman

the an to year. consider don’t that the balance impact of be for We Yes. to our outlook

would I has. probably it yes, say, So,

Adam Josephson

exactly? changed What

Linda Massman

like in might We the -- anticipated there, through it Adam? thought volume SBS market we still haven’t seen you are the

John Hertz

Hello? Operator?

Operator

that over our this for closing the call question-and-answer remarks. Ladies At conclude does and time, any will Massman or session. Ms. I turn gentlemen, to additional

Linda Massman

I of all answer with your for sorry question, the what there don’t to abruptness. know happened First Adam. trying

Vegas interest We that Conference you in Las in On and for will final note, Clearwater us today kind in for see continued Thank joining thank you. RBC your But, be hope Paper. we of there. everybody out. you and we’ll to September the figure at a

Operator

and does that conference call. Corporation Ladies participation. We appreciate Clearwater gentlemen, the quarter Paper XXXX conclude do your second earnings

Clearwater Paper (CLW) 1 Aug 182018 Q2 Earnings call transcript