CLW - Earnings call transcript Q3 2018 | Clearwater Paper Corporation

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Operator

Welcome to Clearwater Paper Corporation's Third Quarter Earnings Conference Call.

As a reminder, this call is being recorded today, November 8, 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

Chris. you, Thank thank XXXX and joining Paper's Clearwater Good conference you call. quarter earnings third afternoon for

Joining the Chief Chief released Executive results me President the shortly Officer; Massman, on for close. and call after today today's John quarter Hertz, third Financial market Financial Linda Officer. were are and

of supplemental the a volume posted certain updated costs, website XXXX, mix, including shipment outlook fourth outlook slide Relations You will our information, current to find providing other as for factors and quarter presentation of Investor of the an the company's on price page clearwaterpaper.com. at

be certain forward-looking included provided Litigation to business statements to year website. the third based forward-looking amended. quarter the I XX-Q, to as call XXXX and our will will comparable forward-looking Massman and the we Then, with ended begin Reform contains results in expectations, and an with and Any a the any release and actual Securities in as change, and this remind as we'll cause open Additionally, John information Private of Securities reconciliation made supplemental the on our you strategic is earnings projects information or outlook providing XXst, the information in this A afternoon's our our supplemental risks from like review on the the discussion. QX presentation for GAAP Act non-GAAP differ within would question-and-answer an and press of update fourth Hertz. results to from information call differ company estimates, described forward-looking to our XXXX are statements this time our may today's These to assumes for the only Exchange as financial that and overview include meaning materially materially our conclude that on prepared that Linda and of December Linda subject for the release non-GAAP actual of statements could in Factors assumptions the including uncertainties environment those from current with projections our are statements. time are XX-K results forward-looking filings on the obligation quarter, followed the date well update remarks the quarterly Commission of session. and statements. will Form filings of Form information. by then the brief

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

Linda Massman

financial joining I'd John you, to Thank before Robin. for everyone, opening start remarks thanks presents and results. the like us today. a few Hello, with

exceeded For the in and by financial the quarter, paper pulp opportunity this for results. produced thanks to excellent delivering team. thank them third we take our want outlook, large outstanding I to board to our part results

quarter record led coupled Solid shipment production demand, sequential another with performance, the to group. strong for

operating the saw Shelby Our model to operating provide results second our two compared lines, improve the of consumer benefits. business quarter, has to accelerated products startups the to The as improved converting sale work begun road costs. to completed a tissue in the contributed take of to while Ladysmith, allowing Wisconsin. off to improved and quarter, us located reduce miles recycle mill transportation In the we results,

was and it premium the ultra-quality producing tissue was well-run strategy focused not market. of retail While aligned to operation, our a for it

current our to to worked finalize In addition, and to sheet projects flexibility we strategic environment. proactively address balance and the liquidity provide our navigate

provide future. balance our need John foreseeable flexibility the We this sheet in that we changes will are for discuss, confident that

remarks. in the full further successfully details benefit pulp our from We I capital Lewiston include the also at work key provide Shelby which remain prepared achieving today's focused site. on expansion digester the and later executing continuous our initiatives, will

Clearwater I firmly to of the Paper. activities the that long-term will on we I now, believe say focused success For will contribute that are

Now to I will turn the John. over call

John Hertz

perspective delivered our performance financial a end $XX EBITDA, from million. range exceeded of outlook quarter adjusted million of $X solid a as which high by was we QX Linda. the Thanks,

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

of adjustments closed by the $X of third sale related to the pre-tax million quarter equity-based That mark-to-market $XX our pretax million XXXX, benefits on the mill, associated of of compensation. which items gain August. those which of expense directors' in For was totaled with of Ladysmith the million offset $XX is primarily

Turning largely were end QX XXXX results, came paperboard to $XXX retail from down previously at product range. of record volumes just volumes sale financial our the announced paperboard the the low increases, of million, of price tissue offset tissue in in net the below and shipment quarter improved Lower and and mix. X.X% of now shipment by sales and Ladysmith second impact outlook

or contribution by cost progress gross or in from energy million X.X operating by of model QX second quarter and pricing tissue primarily $XX points was Ladysmith partially from our two third margin Third adjusted and that the by SG&A profit of the of on paperboard XX.X% sales, of higher continued X.X% was reflects $XX offset quarter. and efforts. and quarter. the progress costs down seasonally is was The which higher driven months million SG&A million our reduction $X improved increase quarter in only net CPD

expect of from the XXXX. $X.X savings $XX SG&A of which of exceeded X.X% million expense outlook corporate rate higher million margin, $XX total Adjusted We and third came run spend in income $X SG&A was our was or QX the beginning is which than operating QX. in approximately QX. annual down be Adjusted $XX million, quarter, million to at million

the range million $X second up $X approximately versus with consistent our of $XX was EBITDA exceeding mentioned, previously or high of sales, net million the interest adjusted XX.X% expense quarter. QX. and outlook was of I end million Net As

of basis, credits. versus an had recognition XX.X%. tax of have been a approximately XX.X% adjusted rate the $XX QX benefit we Turning Without tax in second alternative of to the production energy to those credits, in On of tax approximately taxes. would due rate expense of QX million XX% primarily quarter, an provision a the adjusted

would QX amortization, compares share, the earnings Third tax Non-cash and compensation million credits. medical $X million net above expense. equity-based third $X of quarter QX earnings of diluted total $X.XX $X.XX diluted per $XX or million our XXXX XXXX $X were Without or per pension of per basis depreciation well GAAP EPS and for those and diluted credits, retiree on adjusted million an $XX diluted the operational net per That adjusted share, of or performance outlook $X.XX to to share. and approximately of due million approximately and be $XX share. quarter non-cash include $X.XX expenses in million adjusted

the I'll segment Now discuss results.

price increases versus third and by or $XX Pulp QX continued million of increases. tons. million X% customary in EBITDA XX%. up quarter and or $XX and with Pulp and due of the of XX.X%, million sales of part up Pulp XX.X% the cross-cycle $XX QX ton and which XXX,XXX above sales compared of the compared strong sales performance sales to was Paperboard's net net second shipped Paperboard strong XXXX, XX.X% of $XXX in announced Paperboard's generated ahead Net For second production margin were adjusted or target in reflecting coupled driven previously QX, as QX. $XXX operating of pre-buying net quarter to of favorable per was the volume just well demand the per record million to conditions. over was ton $XX Average income is realized market sales price price model quarter,

a mix down X.X%, was million announced Now were up partially increased of a for QX savings turning loss The that in by compared pricing, by Consumer $X costs the the of the due Products million from $XX $X sales shipment was Improved operating product the the increases. retail quarter, that product offset quarter. QX versus Ladysmith and lower the $X adjusted away-from-home X.X% second roll partially pulp million, were and and QX. Ladysmith model the second QX. of to expected energy point improved operating tissue mix parent division, from categories richer sale was loss and was EBITDA in net million impact price offset margin the to narrowed within to X.X% Products to sale. million and Consumer in EBITDA volumes up $XXX adjusted CPD X adjusted

Shelby the the to turn sheet. expansion. $XX of balance expenditures with XXXX, were Now in million interest the excluding $XX for I'll capitalized third quarter million Capital

As is to CapEx of to expected the to now sheet revolver the to the costs quarter, outlook will $XXX and $XXX is CapEx discretionary fixed her total $XX the budget a loan report floating the of increase to on expenditures a three $XXX spend cost of cash reduction between be a The be $XXX reflecting the are $XX of expected in end from at revised million Long-term debt year of at had Shelby conversion rate line to the million outstanding project, million by range expenditures $XXX is of of million now exposure. project. outstanding will which previous the $XXX million credit capital CapEx end approximately million. in million the the interest the of for revolving $XXX rate We Linda third estimates totaled details was cash increase under borrowing offset XXXX XXXX. $XXX CapEx the that which in reduce of million a million million increase million, progress to QX, Shelby million. expansion $XXX approximately quarter. a tranche cost million, Balance the borrowings capital $XX $XXX cover and expected for QX of be year includes XXXX $XXX is the term the above million. XXXX

flexibility leverage The then X.XXx. the adjusted added. The to for to certain available months thereafter. With been ended place EBITDA -- mitigate outstanding X.XXx we've balance added of has These amended debt and thereafter. secured Had under of from a QX interest give liquidity, with order strategic X.Xx current the covenant QX, coverage We XXXX, now Shelby ratio of has and only levels ratio credit. in portion total with provide of as lines of the cash, reduce been which coverage EBITDA been to and next to covenant our the the leverage covenant of steps proactively coverage the amended the X.XXx 'XX to debt financial declining end, and third with projects debt been revolving last our X was $XX -- of year. down and X.XXx market some amendments to financial covers to We've risk, has is complete we on XX finalize QX covenants EBITDA, adjusted us project the the and the peaking long-term and an unrestricted our would we Our we test in amended ratio in of had After quarter a only been been in million end asset see sheet we million The covenant related adjusted at revolver. regard ratio through our leverage ratio from X quarter proactively have ratio $XXX current revolver. amended conditions. been working our to flexibility amounts covenant QX. associated us Xx

pulp, During ship a quarter. sales, of end near second net the from Working or of from generated QX activities XX.X% elevated interest down payroll the sales was we paperboard due and cash the increases $XX timing quarter, operating inventory the accrued in seasonal cash of in quarter, the flow and of in payments. headwind third X.X% the capital million in to log

$XXX did remaining that million million operations in the to million quarter any cash under We which not third $XX the fourth shares authorization. quarter. in expect share be We approximately $XX under repurchase million flow leaves for authorization, $XX the repurchase from range the to of

in QX order our So strategic over a and business Linda environment, the now from company's conclusion, in the sheet on call a provide progress we turn who discuss solid Massman, financial will performance credit balance agreement to flexibility. and quarter projects, our amended I was the us to for standpoint, our outlook. will

Linda Massman

provide now strategic environment we then will an projects, John. the business Thanks, segments. on for our market expect what I and update our discuss

to which with expansion Finally, of producing is start nearing plan, on first quarter. I the quarter XXXX. will our Shelby completion give and outlook you schedule for I'll the paper fourth start our in

line improve helped As by model Shelby at Consumer converting has acceleration transportation warehousing lowering division's to I external the operating costs. the and Products mentioned, two startups of

beyond. improvements continue the expect We will these quarter and into fourth

$XXX market million Shelby by revised estimated total costs to higher the plans original recent the project reduced costs as to that labor tariffs; costs million construction increased the second, by maintain project, significantly as are majority a forecasted to overtime that factors million. due required is Our the costs higher estimate, now is is and increased include; engineering the factors. million. spring higher external additional than XXXX The driving materials, schedule; approximately steel which to contributed the of Shelby costs imposed last, and was the million primarily be $XX related to $XX impacted for tight which external recent and the first, Southeast, to Shelby costs. aggressively finalized the expenditures to The in very proactively well capital wet in we summer To $XXX recently offset the other hurricanes $XX

While a portion big we taking prudently of rising by those believe the are reducing we combating capital we have aggressively other appropriate to costs, spending. steps mitigate costs been

pulp the delivering a in digester to believe components. X We challenges, expected continuous to have believe to our due The to will and primarily it, currently lead months, project which the the XX times we benefits. needed months procure have the take progress Idaho. path fix resolving additional Lewiston, a of made new currently is third to in digester Turning we digester financial about

So we required downtime. with in the machine that to of Paper see XXXX. event the mill expect rates digester continued XXXX into production Unrelated project, process upset experienced we end remaining the pulp. late the benefits at and reduced pulp system throughout at purchased to October, a this in

to to incremental equipment million. resolved, and expected been of are has address impact results up issue $X.X purchased the cost fourth the quarter the to pulp While cost related by

that the to Now, both let's brands segments. this for compared X.X% business indicates panel our turn up U.S. Over tissue a ago. IRI Starting retail brands in total Products. sales up grew period, data national for attention Consumer with were market to measured dollar X.X%. quarter X.X% environment year private The market is third and

the For since of the third last quarters, North is same tiers the total of and private a compared share the Private American to market demand period. record up tissue is market remained market, still tracking which products past to in X%. year-over-year, population XX.X% brands and for trends U.S. X.X high at approximately over up the brands XXXX. third have of while two year resulting of points points quarter the to other to expand, are growth remain share of X quarter Industry the preference X.X% growth label tissue all quality continues versus gain consumer's continues ultra-quality down unchanged.

recent brands. is with Additionally, XX.X% to ultra-quality through The X% brands of tissue American national in approximately XXX,XXX most net for new North beginning the growth the tissue XXXX growth from of forecast decline RISI XXXX capacity tons. a compared private led year-over-year, for

XX the American XXXX, quarter of new fourth the by and ending the net totaled months they XX,XXX tons. XXXX. the the XX,XXX XXX,XXX from be of adjusted from healthy tons a demand forecast estimated of ratio new to is to 'XX of capacity removed RISI their second Since of last from of total through imports tons If they accelerating closure have second quarter capacity stay XX,XXX pushed capacity XXXX out total imports of And net Over XXXX. XXXX, XXXX, to tons to consistent a North XX%. the has quarter July,

current continue the share to the for tissue for versus momentum is expectation brands. term the long market market and gain private Our label

experiencing healthy rising some term. we market by While see long and remain input term, made we therefore costs are the expect to currently pressures, volatility to competitive worse near expect

quarter Forest Turning Paper the to Industry last Association. in the backlogs the to of solid the were X.X% compared the paperboard environment XX.X% by and year, Paperboard beginning demand & 'XX, as for business, our down to American American year. increased Pulp reported third and North since rates operating was of XX.X%

U.S. seasonal see food Liquid not in XX%. increases, for While prices today, the market be let's slowness With our structural consolidated grades in to processing Products RISI that we $XX off see to any sequentially, model, XXXX reasons. $XX to my Consumer in the current have operating turn of the X.X% increased stock volumes be see our market environmental of sales we issue ton, annual due price announced conditions. the rates for outlook consolidated in continued XXXX, adjusted net quarter, beginning growth carton latest to X% fourth to packaging shift in X.X% pressure the to quarter pulp increased improvement for paperboard external since of higher change X% to due projecting third and of period environment operating service approximately down polystyrene on previously margin in for do compared due the We in foam year. and X% five-year the over to to as usage, however, prices to XXXX. mind, of Compared X% pulp prices packaging for XXXX we due for to per the expect a outlook of We're range quarter. pulp SBS continuing coming topic expected plastics to operating seasonality. final QX, and October. further X.X%, outlook in upward primarily fourth average X.X% through reported are have and grow healthy a for and to favoring is the paperboard export cup folding RISI's average

the from $XX fully outlook The share Our million. earnings fourth diluted in $X.XX. million adjusted QX of net $X.XX EBITDA per to is outlook adjusted to is quarter range for ranging $XX an

market rate we improve adjusted mitigate be or while balance minus where land sheet XX% plus service commodity conditions, the our tax full managing are and transportation. we and couple risk, CPD, to other in The of to variables for see and key we a conclusion, operating quarter pulp, to fourth especially paperboard improve continuing our and for discretionary changes aggressively In and our expect approximately our determining to the business points customers. tissue model range, We XX% year. our costs, and reduce in CapEx that

we Clearwater your win, in appreciate We make dedication team the call it desire to to stronger continue and and and to participation tremendous our value and like questions. With customers shareholders. your would to our of open can today's to more now Paper up

Operator

Our first Paul question with Instructions] [Operator Quinn Capital from comes RBC Markets.

line Your now is open.

Paul Quinn

was the Just QX expected that price outlook exactly difference maybe you look I and be out but when which lower, up curious, on as the at summer looking mix, was and discuss bit, differences, in happens, could things for wondering quite you the just got? bridge predicted, quarter, from the pan to what back you this what and expected you didn't just what on a it often

Linda Massman

I we ago. what been And price a we've I seeing. primarily so would months what had and that's mix the the guessing we've I'm Paul, would side you're bit have product just also would expected versus on say paperboard few of say, better improved ability Yes, through is in seen a push little

Paul Quinn

volume on volume incremental get Okay. side? the you happened And expected that, on means, the we what but side, then some didn't

John Hertz

announced increase. that price that's Well, the to the had ahead of largely the and we due up, was pre-buys some paperboard fact happening volume

side, expected business. volume be tissue we have quarter after as without loss On full the we customers down a significant to of the

Paul Quinn

are you parts up when and pulp for flipping those digester got the then over need installed new the weren't and the just actually you -- Lewiston that why and Okay running? what digester, to parts

Linda Massman

need is the to same our to and catalysts to were installed. been be the going benefit the just wasn't weren't optimize significant time a in we're in and be to that original lead What time therefore for We've long catalyst modification now The it issue get using that the solution. in is testing our the replaced. we There arrival, but process, we the a polysulfide it of quite time, ordered is proven the points ineffective that. scenarios, so with Yes, And the particular is key one this is well waiting test parts have for believe COX is biggest to going and catalyst to environment. reactor. promise, the to its to with we associated worked has has the fixed lead be unit the original polysulphide that the congestion that are remaining required at

Paul Quinn

that work on changing catalyst something Was Was technology it and then the or... unproven now then for you're new it you using? and was the What you're didn't that market?

Linda Massman

the I catalysts has of catalysts ineffective. would say a that there there our is vendor is be of be used a and variety yes, chose variety can that proven [Indiscernible] one to

moving a now little catalyst a are in commonplace is industry. say we would bit the that more So, to probably I

Paul Quinn

just Okay outline, Shelby is you and looking of and at going the spending, the next unfortunate, so maybe how remaining you number machine on bump John, on expect the spending spending be sort what forward XX% X, the -- -- to the quarters? then guess could I then of cost

John Hertz

Yes, interested cash a you from are standpoint?

Paul Quinn

trying just to get here, in I'm where you peak debt QX. bridge Yes,

try to item the do to it? spending that, So, on to major that the be need to I to I just know able kind be able of but to want do

John Hertz

perspective. then, $XX that's quarter the Yes, in million-ish in 'XX million so cash balance the in of million we'll and probably from the $XX and a quarter spend to of cash $XX fourth first 'XX, about QX

Paul Quinn

right, QX luck, I All in 'XX. Balance all had. Best of thanks. that's guys,

Operator

Markets. Josephson from Capital And question our next Adam comes with KeyBanc

Adam Josephson

January as John, covenant overrun? of your in then the related much you got million for of that you I how cost -- Shelby recently just I $XX sale ask -- the covenants is on loosened and cash obviously I was as amendments, believe the Ladysmith. to

covenants this to expecting you quickly. wasn't your I again So, amend

with So drove what me nature and timing this? just of the help

John Hertz

caused to past to and after August there months. drawings in kind going to for more do overrun ahead and six much we've I Shelby, us the go considering, would say, the considering strongly final just of covenant light on analyzing that engineering we would be that been the switching that plus an came from say that to let's when of only -- I was go done were this. secured

Just through QX. move didn't that be it QX want to we tight have and as

Adam Josephson

expect you'll just net XQ? levels And -- reach to said XQ, peak top out debt XQ. it ratio your top out you at EBITDA you to in debt do I What will in presume in

John Hertz

Yes.

So, under only, the covenants, the to revised secured out X.X. it around expect we probably top

Adam Josephson

debt And EBITDA? on net to

John Hertz

to And translate about X.X. to so that's going

Adam Josephson

the alternative just a obviously, And then months energy -- couple others, not production those three the anticipating tax were the ago. credits, benefit, you

So there? what me can you with just help happened

John Hertz

Well, something with not uncertain or was would it's We not. that whether to working we're tax it but -- fly with it thought on, very or IRS. as

So the produce a boiler. the bunch and in a We're allows continuous relates produce energy little us liquor Lewiston. analysis of to that in that whole bit different uncertainty digester at recovery to then time. more This black to more of able there is it and

tactical the about on credit. can as get that's So drives as but that's tax what I it,

Adam Josephson

gave The in I SBS you your pre-buying customer that you about, you were assume anticipating when talked business not guidance. that

came than $X pre-buy, of your of that curiosity? higher you driven midpoint million about how the guidance, in just of out by much was So, the

John Hertz

say pre-buy. was I'd million $X to $X million the

Adam Josephson

just than of $XX said, Linda was price $XX. as SBS it alluded in the to, expecting. SBS better Paul And an then, -- were just RISI was Obviously, recognized there pricing increase was you announced you $XX, your

same only -- it as the actually of just be. the $XX at your a time $XX, better was pricing to reconcile, getting an announced little I'm you struggling quarter So pricing realized bit your would thought than you're in

So help can me you two square those things?

Linda Massman

to million say and pricing. half $XX the that about combination it on going and increases, Hopefully XXXX. that of questions probably year, those have that a of 'XX with in some would take what be that I I'm be basis price I expect we seen Adam, this we've for annualized half be using in expect of to and we'd on a so answers Yes, an am you notch incremental to up of an to that about

Adam Josephson

you at quarter, clearly expected short I still I the success increase. something -- better if SBS industry happening the with just, to little better-than-expected by success is price in at got just fell so you I'm -- what but price pricing only your attempted follow wide increase am a and the struggling the my logic. was understand announced fundamentally of $XX same conditions time, worse-than-expected of same you $XX pricing the terms in I'm than the given industries time,

John Hertz

and to Well, QX I what increase, what in versus what from the way we think happened -- are the look was, of when more we you get previous at have that but we outlook pretty increase increase by the much little of fully price in and price to expecting we didn't a bit to was, and the offset what got have price the transpired mix shifts more way [indiscernible] more mix shift. our

Adam Josephson

million million, in the terms Lewiston to tissue where that the in in lastly, improvement just the of you expecting are any $XX do -- your the $XX disruption? guidance, and Is coming business. Okay, sequential

me, cetera, with sequential if said Just you've know I'm improvement you correct that et out I balance the of the over the there. previously because -- cost wrong year, are savings of expecting

John Hertz

couple expecting consumer are we improvement of the business. in Yes, million a

Operator

question Our Davidson. Chercover with next comes from Steve

now Your open. line is

Steve Chercover

everyone. afternoon, good Thanks,

and actually John, of benefit. with to answered adjusted tax So your was in you would XX, -- earnings which to first are part my earnings slide at was target. close respect net the were been cross-cycle But have quarter close your I what the looking absent current question, to

$X.XX in be is quote? normalized, would the was at everything expecting if earnings So you

John Hertz

normalized? Everything

Steve Chercover

Yes, never happen. which will

John Hertz

not sure your following am I question. am I quite

Steve Chercover

cycle at I if guess I'm its paperboard saying, cross XQ what and expectation. was margin at cross-cycle expectation was its

John Hertz

it. Got

got I it. Okay,

Steve Chercover

Would per to you be expecting earn quarter? $X.XX

John Hertz

out. works the math the probably way that's think I

Steve Chercover

wanted liquor for this there Will alternative look energy. that's forward a to little industry? more black that. And bonanza then tax mean, new on also a elaboration I I is the pending

John Hertz

new new across continuous nothing I that would, then is putting the think maybe they're there's broadly digester, applicable but in Well, if they industry.

Steve Chercover

Okay.

really is this So a Lewiston benefit?

John Hertz

Yes.

Steve Chercover

in Got $XX, of it. the quarter, better out your stopped $XX to we these target. -- were have questions hate realizations as follow And so other the and of I your but margins than out then your cross-cycle on yet

is A, of and testament hard really did you that your for this to the push increase, B, So, assets? and your quality a position cost

John Hertz

I work Well, the on price we to hard more think but with it's production. increases, always do

Steve Chercover

And in then I next XXXX. major either Lewiston the haven't on or When's think, the Cypress had for maintenance you really maintenance Bend? front, anything

John Hertz

QX, in and QX it's be QX. one one in got to --

Steve Chercover

next year, In both?

John Hertz

be two Yes, so will there 'XX. in

Steve Chercover

what's the of cumulative those? So total

John Hertz

when So there, or $XX fixed million has range depending it what of be what $XX call that the get find can in they on million between two to they to them. they find from, when

Steve Chercover

Okay.

headwind So a us 'XX $XX year. million we in not facing got like this that's

John Hertz

Correct.

Operator

Research. our you. Vertical Thank question from Chip next And Dillon comes with

Your line now open. is

Salvator Tiano

Hi guys, how Chip, is Salvator for this filling you? are in Tiano

John Hertz

are thanks. Good, How you?

Salvator Tiano

Great.

question production. my first roll significant is increase parent So the in and on tissue

obviously price all, provide. QX something the we mitigating, in what loss So, volumes that bit effect secondly, a and have segment, you what data based could first about any the do the we're in how strategy. and can you XXXX demonstrate should are in loss you're operating if and this it's quarter, think you're gaining by show, are versus if about through little Kruger over the thinking how would mitigating you of your And you Essentially, the how in the volumes much roll tissue. weighted on average have seeing the you on how parent you

Linda Massman

Yes.

that in retailer. still that had the large with is said So, replaced I cases. of parent we volume to we we've is volume replacement lost related of the increase What true with about previously business say XX% the would rolls

state into probably parent with balance replacement will about those on going of through what bid it parent opportunity continue market are that a up lines to say think, that's cases. normal convert that expect at cases, look rolls. I rolls rolls. activity was forward. The I into parent this point, for good I with environment mean, bringing shifted new producing but is will course, business steady to finished pretty those that and would we XX% that opportunity be to we

Salvator Tiano

second of up think just one tissue, one And we doing probably for least up competitors started the on is your and following at I so machine as speak. officially has

losses still to new my because perhaps any they fill. both portfolio, potentially, entrants, may, As understanding XXXX, some you volumes we look may other is, some volumes into still, need within new they and guys see to do these any your risk

that in XXXX? So about thinking else anything is there should we

Linda Massman

label. we competitive said And the new branded remarks, my I we and to pressure like would trying see have say, those both as come parent sell online, to private on going on into we I the that's the say, volume to to side, create and capacity. would label some seeing the but rolls looking drive some machines competitive private to I branded side cases, new to activity seeing convert and continue be trying prepared out been situation. are in volatility, of in activity appears finished really will the near-term and

of in be step it it will and capacity just market some future us large more the conditions, So conditions, market will no think be work I through with new this change coming the for foreseeable think I online. same, of as here that's we

Salvator Tiano

so last again, from X where already mentioned talked had to on tax out, coming And back you credit, looking further it's year. million you going you the

is put So, could that recurring there if we see estimate our on that so, an in basis, something we annual and is models? a could it

John Hertz

we outlook, Not something particular it's with but something specifically credit an as that Lewiston, it that is to however, this the something in really for not planning continuous to tax lends It's day and every opportunities. all doing looking we're that but tax time. digester are relates doing the itself

Operator

Roger next Our from comes with question Bank Spitz America. of

Roger Spitz

'XX. remarks? CapEx your did either, And QX you the give you I hear cash a don't or was what flow repeat 'XX you Could I that prepared operating QX during know gave XXXX

John Hertz

We did, yes.

our So GAAP to as CapEx balance cash opposed assume you're sheet? focusing I on --

Roger Spitz

cash like the your you're statement. report that flow going on CapEx I'd to

John Hertz

CapEx. cash Okay,

yes. So,

million for is be So, $XXX between to around $XXX going said for XXXX, we million CapEx and cash XXXX million. we $XXX think and

Roger Spitz

And did did I just you -- give did flow cash hear the you or that? mishear QX I operating

John Hertz

between No, correct said we million and would cash $XX operations. million, you heard $XX it from and flow that be

Roger Spitz

excuse cash, Right, to million. that an of within make inflow assumption $XX working what that $XX in me, QX. capital okay. And in did million working million then, $XX terms

John Hertz

Yes.

will modeling million. $XX be million a So, we're in in area think QX capital we the to working tailwind of $XX

Operator

Capital Instructions] do Adam Josephson KeyBanc Markets. [Operator with a have with We follow-up

Adam Josephson

follow-up. for everyone Thanks my taking

year, someone, next about your XXXX Just, maintenance it Steve about on are asking bridge, might been more John, $XX any -- up one other million have be by that will buckets you the there big you you've burning any be million but cost drag I you're us year? mindful know next big from -- the on than savings Shelby, have ongoing maintenance of, got $XX other would initiatives, buckets major

John Hertz

Well, we'll tissue the increases. and of get paperboard the full effect price

Adam Josephson

$XX an would what, next million, incremental, That John, year? be

John Hertz

million no, that's $XX tissue side. So on on side the the -- paperboard

Linda Massman

on then $XX million $XX the annually, expecting about be is that should increase, and to 'XX be occur XX% the which that's that tissue, balance the -- No, we're CPD in on million and CPD in paperboard, paperboard of price on will 'XX. about

John Hertz

a million. $XX So different

Linda Massman

Yes.

Adam Josephson

net of should year. gross price, then, as we, are because there'll thinking I so as there obviously Okay. that's in Right? the or business And every mean, inflation is next be that year price, you

Linda Massman

Yes, number. that is a gross

Adam Josephson

Yes.

basis there is have or basis would that us inflation number annually? general And Okay. think you percentage a about dollar

Linda Massman

to strict that of percentage, lot be but will very think, transportation, attention working and through I'd we we're as increases try beat pulp there's costs to be areas our to will and paying maybe a to and inflation we'll any offset -- as I model not but much that which there aggressively say to that our the a wood environment operating puts can. takes try try

Adam Josephson

added to obviously, just still past been Sappi Linda, others. really the about and import RISI's two talking been down Just again, pressure coming backlogs SBS the degree. some months few are on although healthy they've pretty over capacity,

the the you Sappi So, the was what import latest price current conditions? characterize and obviously increase would $XX, how $XX situation, to situation -- SBS of the limited

Linda Massman

strong. the current are say conditions I'd

you decent like a mentioned. I have are since actually We been the in market. know July, backlogs declining

of robust summer regard pretty time demand common what and I'd seeing pretty say, about the year is market. good to this So we're months. paperboard feel the with in and we seasonality,

Adam Josephson

for just John, cash to back a moment. CapEx And

we number just maintenance know 'XX spend what $XXX to just ongoing always -- you but $XXX me I beyond Shelby is think of difficult what us much and have would of CapEx how million Shelby 'XX, would -- the impact? should given million, how remind So barely maintenance, the about that of because companies

John Hertz

the million. of call 'XX is $XX Shelby then the million so and to range to cash $XX be balance is piece going for it around CapEx between, going Yes, $XX million and the

Adam Josephson

that say again. little I'm Sorry, confused. a

John Hertz

it's CapEx going for million. to cash 'XX, be $XX Shelby around

Adam Josephson

And your other CapEx...

John Hertz

any capital and other maintenance to for $XX would strategic million. Then range from $XX million

Adam Josephson

is just expect very ongoing million number it's I basis low. or a CapEx mean, of an sounds that on and reasonable -- just So that $XX to

John Hertz

both project from a CapEx, with a next on this and the is we year from Shelby tightening standpoint capital we $XX strategic that elevated $XX then standpoint, and a are our said other million. CapEx. year a not in we CapEx around No, big mean spend traditionally environment year spent screws major we I What have maintenance million around

Adam Josephson

spent but So normally, and Shelby, point saying million it this million for post you've $XX $XX you're would be from $XX like more million? not

Linda Massman

that say accurate sheet the condition. would better balance I gets would until in

John Hertz

on will the be We for next a CapEx plus. tie-up year

Operator

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

Linda Massman

your us you appreciate and continued Paper. interest great the support for thank Clearwater for joining questions. today And Yes, do we in and everybody

Operator

XXXX do a We and conclude Paper that appreciate Corporation great conference quarter your third and day. have the call. Clearwater Ladies does gentlemen, everyone earnings participation

Clearwater Paper (CLW) 10 Nov 182018 Q3 Earnings call transcript