CLW - Earnings call transcript Q1 2019 | Clearwater Paper Corporation

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Operator

Welcome to Clearwater Paper Corporation's First Quarter 2019 Earnings Conference Call.

As a reminder, this call is being recorded today May 1, 2019. 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

operator. you, Thank thank XXXX and joining Paper’s Clearwater Good conference you call. quarter earnings first afternoon for

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

second updated factors mix, and at of find to estimates of quarter You'll an certain presentation for shipment the the providing cost, page supplemental of slide a pricing volume clearwaterpaper.com. as other and company's the including product on Relations posted information outlook current XXXX expectations Investor website our

Additionally update the Private the we contains providing non-GAAP supplemental meaning on statements our website. time company’s for Massman are forward-looking material December information new no today’s those press the of with assumes like is Linda date with the based Act our made change update the non-GAAP XXXX today’s of ended Securities of Reform that comparable looking in or Commission, to based changes afternoon's any the of and to the as begin and the year in information provided Exchange remind presentation obligation XX-K GAAP on XXXX. Form this the developments will this be would on you only include that conclude expectations. filings Any materially information included forward-looking Then subject of I results our reconciliation XX, in will call are including forward discussion. projections statements and the uncertainties statements prepared and company results our of to Litigation followed estimates, from we’ll from These the the our actual to the call will within for described statements. our actual differ or may outlook second with to A Bob from as highlights quarter forward-looking statements assumption strategic XXXX. quarter, could the the question-and-answer Securities Hrivnak. for business and forward-looking in certain remarks and to an Factors that differ Then, environment Linda on of projects materially and are session. current QX risks financial the overview our time amended. by results cause open first expectation, in release

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

Linda Massman

Thank today. you, for us Robin. Hello, and everyone joining thanks

share with you, for I I'm to quarter Before and positive of Senior new President the hit for a Bob us him. meet our running has been CFO. already first I'm highlights Hrivnak, and has to within had you Bob month, introduce Vice happy with ground has a some our Finance excited nearly organization. impact

So begin let's first highlights. with quarter

approximately delivered internal the would that quarter. on largely the consumer in professional internal and cost our Idaho of weaknesses gas first favorably a evaluation XXXX, compared and executed the in paperboard results quarter Without supply we $X XXXX. gas to weaknesses in material were of outlook. gas natural businesses The of control charges natural with top-line and better came pipeline of favorably disruption million additional our of and impact to have the quarter, impairment with as a increased solid fees with Mill. first our the the charges, supplyand temporarily material fourth comparable the associated related additional in assessment our and control, the goodwill and Both the of the at are quarter quarter metrics assessment line the pipeline in natural and well expected. performed our first and the for First to compared from outlook All

fourth converted business financial quarter retail contribution, of shift improved both tissue to from higher mostly for continued paperboard responsible to of prices the and improvement the was XXXX. our volumes While consumer tissue, show compared

tell addition prepared and existing implementation my to provide customers the division. in in paper. projects I'm be grow our we and up private update allows operating better pleased model starting to milestone This produced consumer the outlook us paper continues on an machine results to the drive development in new are quarter team our the and that the with investment we're XXXX, think program. like the produce this company. very helps tons I XXXX of machine later the for in new committed to Shelby in for to to expansion to the and on All brand new Shelby their customers. our for paper remarks. regional and In achieving our I'll you of and sourcing for business second strategic started are our critical forecasted

turn Bob. Now over to I'll call the

Bob Hrivnak

Thank you, Linda. afternoon, everyone. Good

top In favorable is and mentioned, operating were Throughout we from release remarks, results our EPS first and be reflect month GAAP line in and certain benefits I and The results. distinguishing line came our GAAP and Linda website. joined income on reconciliation with do adjusted paper provided results. about and to my non-GAAP charges EBITDA core or results discuss our and our operating press our quarter performance. in an will As adjusted better ago believe supplemental exclude summary, quarter looking materials and our first pleased our and soon. in be The we'll outlook between for that Clearwater margin, adjusted a than our here on results posted I forward to you I'm person adjusted in to meeting basis QX outlook. I'm not

by excluded mark-to-market these units. costs this items million in change. the income. calculation common first million and XXXX of retirement offset operating requires partially The standard new adjustments corresponding periodic net $XXX,XXX of prior benefit presented For which EBITDA. includes from other post expense line benefit service pension non-operating adjusted $X to EBITDA has company a conform of the costs to adjusted periods accounting adopted post-retirement of the netted outstanding the other been our first to Beginning all $X.X reclassified EBITDA been the In XXXX, be pre-tax directors’ and pension of outside XXXX, a than have which amounts quarter for to adjusted those costs a on to from quarter of cost non-operating stock

the $X.X backs to million adjustments of full amounted For XXXX, adjusted approximately ad year EBITDA. to those

adjusted For includes net after-tax outstanding benefit for income, the adjustment common of units. a mark-to-market the stock $XXX,XXX directors'

that let's So results quarter. with, discuss for the our

and at which of million to previously first new and sales realization partially retail better to X%. to existing quarter, by flat price products paperboard quarter coming for with fourth announced This range net This seasonally was the in down Our of $XXX largely the both customers. of tissue was strong increases than higher paperboard outlook a due was offset shipments came and quarter. or lower fourth volumes tissue off X%

items as net million net million. of in of $XX gross $X was First expense million QX. professional to is the fourth caps were net was compared the $X extended resulting in was external in costs $XX X.X% favorable QX to million from fees $XX mainly expense million weaknesses contracts $X impairment for cost partially that disruption up $XX million sales of the mill, $XX to quarter in due with Idaho near compares million first was outlook SG&A primarily natural and largely sales freight XXXX of to million with Arkansas $XX of income outlook division. quarter. including conditions was Adjusted consumer higher an to offset fiber sales, which prices expired prices pulp improvement from or $XX.X X.X% the in million with and weather that adjusted or due quarter X.X% line by XX.X% versus in for Adjusted with which our third-party to or operating goodwill $XX a or outlook million EBITDA was all our and Net range related to million impacted mill, up inflationary material $XX.X of warehousing our XXXX Adjusted or gas profit in million decrease increase pipeline QX of an EBITDA QX. That to a percent adjusted our XX-basis-point XX.X% interest and a of discussed due margin, unprecedented line higher were

tax statutory tax including annual for The adjustments rate tax credits. be of the our federal highly XX%. outlook blended state tax benefit This credits. and estimates federal net could result taxes, from rate effective combined of other was tax was changes state XX.X%, to approximately which of pretax to including in and than federal and lower the rate difference of was effective a sensitive earnings number adjustments the QX Turning a

to of share diluted $X.XX included $XX GAAP with XXXX. net medical the That compensation and of was XXXX $X.XX adjusted net in $X.X expense. diluted Non-cash of earnings $X.XX the diluted per net quarter first expenses or basis per retiree million million $X.X of fourth or equity in million which million or and an expense, quarter and line of XXXX million to per $X depreciation amortization, compares in share range pension $X.X quarter outlook were of share, First based on $X.XX non-cash adjusted $X and non-cash earnings million the $X.XX.

and in first sales Now top million shipments results fourth of was increase segment to for X.X% has or due prices improvement savings retail quarter to to third-party sales of case X% X.X% $X.X adjusted higher a increase warehousing or and incremental new solid model Consumer converted XXXX, shipment and the were income regional up fourth product with versus X.X% continued average cost. contributed I'll of million $XXX quarter line first X% due net freight compared results. in tons million implementation existing XXXX XXXX. quarter in which of the in $XX net Products were The was Consumer the quarter. sourcing operating or discuss to the the coupled a in $XXX,XXX mainly The of customers. the

services offset prices than higher for pulp more the to disruption the by was due the this the at natural that price Mill. However in gas rise pipeline Idaho and

As in EBITDA compared in from adjusted $XX a margin result million XXXX. QX. X.X% X.X% adjusted up EBITDA was was million The of QX $XX.X CPD to

of the division, quarter sales due net to fourth of off strong XXXX volumes the were Now turning seasonality. Paperboard a down for or quarter. Pulp to first million coming $XXX X% X.X% and lower Shipment

margin, or previously was of to However, sales X.X% higher Paperboard’s natural sales margin to in fourth price quarter million mentioned million operating XX.X% QX $XX of net reflecting and I Paperboard’s the net or in price increases. compared announced average decrease The income XX.X% from quarter. was XXXX million fourth resulted $XX the of that prices for first compared on EBITDA previously. adjusted XXXX adjusted improved or Pulp in XX.X% quarter. the XX.X% operating gas primarily $XX.X

approximately unrestricted and depending $XXX quarter at $XX were the remained early expenditures the our million million total at we with short-term remains and covenant for leverage at million the X.XX XX We The We Now covenant expect of versus in in borrowings. CapEx expected had XXXX. to secured capital XXXX revolver. decreasing under to $XX of months at revolver thereafter. million, at under million quarter $XXX flows ratio available approximately on sheet, cash million $XXX our rate balance turning for of fixed ended March With million now the to last late debt for cash XXXX unchanged the first $XX EBITDA QX remains X.X times. we $XXX unchanged $XXX adjusted CapEx total sheet purposes first peak end XX net liquidity, QX a balance or million timing had begin quarter was includes revolver of borrowings outstanding long-term regard million three-year cash of outstanding times $XX of to debt and

changing that the reflecting the now levels who over This higher new mainly we quarter, activities. remarks Shelby, company's inventory collections. timing and of used turn machine arrangements will was finished as and prepared and million customer cash levels paperboard concludes receivable accounts start of to I we to discuss working outlook. seasonally will first $XX call on goods This in and the the my to higher due for During production were capital paper operating Massman elevated Linda

Linda Massman

Bob. you, Thank

bring strategic of quarter conclude our and projects, Shelby The market startup brief the me machine and Let on our environment update on is you provide up-to-date now for paper the for a outlook year new our full the underway. with second XXXX.

with and We The the already up XX full startup to be the a production machine line rate is machine expected XXXX to in committed run costs expect be production volume ramp are paper months. curve. the paper typical in

last QX. In line to is customers converting addition, being start site Commissioned of end the at the cases producing by the for expected is the and

in run to savings. digester to achieved rate annual and run be well in from pulp digester on energy The maintain continuous Idaho. $XX the to benefit Turning Lewiston project we continues the XXXX expect track million to

generated resolving necessary continue the the introduced XX% the has our expected catalyst. paperboard the last the the We differentiated delivery progress still in reactor with cup achieving product for timeline with of pulp million American in components is catalyst this NuVo of the dollar and are have and to then remaining the end superior associated track the surface. IRI this in make We fiber market qualification remains view cup the of private the the markets with Since estimated completion to the of each month chosen towards also of savings the for market on with our our stock Turning post-consumer XXXX. for starting tissue anticipated optimize along excitement material of product installed brand the new manufacturing momentum challenges positive we to of the of North new to work of panel $XX to in we up The to brands. environment terms process paperboard nearing expect polysulfide realization and for launch a Once reflect We also businesses XXXX by benefit addition foodservice print data of market cost catalyst making raw of

tissue approximately year total market the First over grew year. X%

grew brands same for XX% the brands over private X% Second versus national period.

to XX% strong share Brands growing and pa preference private acceptance the with brand the products points the consumer data for points preference Private acceptance compared quarter consumer private growing last and ended data XX% Third And to last, products, XXX,XXX and XXXX to ago to year averages strong long from year X% which first with to market X.X% for net brand the per at in annum. ultra-quality per especially growth in tissue remains new for approximately XXXX capacity unchanged XXX,XXX term forecast through the RISI’s over category. tissue tons tons, line out and

capacity that capacity demand for ratio American comes estimates plus Assuming XXXX net the unchanged forecasted America, demand RISI all online XX%. and to approximately and North using be scheduled, in North imports in as in is

ranging expects away order to North to and not backlog XX%. and RISI Turning the for XXXX for than both for half last price packaging a from earnings stock outlook we paperboard, are since of the folding later call. XXXX from a pricing but single-use start move RISI’s our of stable UK a more back increases and changed rates seasonally market conditions RISI’s plastic averaging variety SPS. year. to reasons premium a the for improvement of carton in versus the cup has last improving Industry operating includes balanced American did year activity, steady with forecasts backlogs seeing bit remain the

be gas about volumes primarily to shipments a tissue. rate costs cost the operating the of due margin machine. and to outlook be quarter XXXX higher expect of usage paper approximately Maintenance state Now first $X X.X% million, about higher to fiber to case and to particularly improved quarter XX%. expected the the statutory $X.X and improve X.X% we range the our adjusted converted quarter, are to combined quarter related second higher million be X% will prices sequentially, and net by of new of have to consolidated by impacted prices sales weather. expected compared XXXX, Arkansas, X%, repair paperboard persisted and of in and due federal in to up be second mix to startup into and Consolidated wood to are is tax million Natural $X.X

and been of million. In When $XX this totaling EBITDA goodwill with EBITDA of range result and would the diluted EBITDA out $XX costs point and to fully per disruption of machine We by the the million. to $X.XX. our startup the in like exclude associated repairs the Shelby net earnings and be first the I weaknesses to million $XX $X.X we in second adjusted charges in that XXXX, adjusted will would pipeline and maintenance million quarter, share $X.XX expect if of range material adjusted adjusted have the impacted quarter, all impairment the to for balance paper rare in approximately considering

QX. in major our expect year, to million expense. incur forward we back Please note As $XX $XX of last in stated the evaluating bringing maintenance million to we QX of call, the are we of half of option that outage into a portion the major the

doesn't achieving for key To in equipment in in plans label the and there quality remain longer our EBITDA, confident SBS fourth end that customers quarter the quarterly our a adjusted for market So market. preferences This greater line it a drivers generate include overall and while that growing focused high optimizing the our success, term which packaging also year guideposts may to on with we flow. our products private cash call. variability we be on consumer on conclude, are and and producing includes provided structure dynamic change facilities our current and and on focus our cost

will Before I walk of Joe Corkrean and board John company. believe the and experience take previously services two President John Security and being And President Lehman to operator well Resources is Peabody experience and brings to to to decades for with of valued new want our Safety, a Paperboard, Chair corporate a to Committee, We financial serves perspective Human to additions questions. as he for the Environmental their the team. Committee in we for Energy where of and Chevron that, we Vice served the Laymon. as Fuller at of two as over of your serves Vice call Q&A, the Joe CFO board the our valuable leadership turn on and Member now and Corporation. nearly Clearwater – on H.B. the new Health, of Compensation the our as Executive directors

Operator

line question RBC first Markets. Paul our And the Quinn from with Capital Instructions] [Operator of comes

Your line is now.

Paul Quinn

Yeah. Thanks very good and much, afternoon.

Linda Massman

Paul. Hi,

Paul Quinn

Yeah.

in is where particular Just down, paperboard list here, starting was that is is quarter that just mix wondering the mix? or prices just were the price your customer that your in up if –

Linda Massman

and I’d to usually changes well price mix of of recent with price those a a some causing had that’s as other think and back then effect some customer see up bit before rolled as around those one-quarter into we recall, prices some say, little so changes, and Paul, folding particularly price received I two-quarter go lag cartons. they as you reports noise. we these increases it’s of

Paul Quinn

Okay.

So would is going of characterise Paperboard bit earnings a forward a side – or that some unique that this going see of in effect? because do to be you lag see you do you they’re stable drop little

Linda Massman

little I think the the with steady being perspective, We expected. we're talk it through we're track bit like a mostly our like back market part for balanced to out downturn, come most and be about of would and slower from kind but looks lag it the a think pretty on the I seems what of through, pretty a little seasonality market. seasonal

Paul Quinn

I not over Shelby two? if contribution think the to could Okay. you going how and And switch be address those up, tissue going then it’s if that the about two suspect should just I started we like forward Shelby when one,

Linda Massman

Yeah.

a is Shelby, haven’t start but up. and have we that to So expect still have precise we given pretty hold average through what would we the with contribution we said

the paper We to on months equipment probably months now. after we XX about production reach XX should run rate start-ups expect that, full from be able

also we you're then get incremental we inventory volume. existing are of costs would building as would $XX ultimately Shelby the this some costs. then and This some the million see Obviously back half that have through towards volume year be optimizing and of whatnot those we you and network half as of But benefit mentioned quarter, business half of startup of committed that and to the be our year. incremental about

Paul Quinn

Okay.

that in a be to will $X.X costs? repeat QX in So drop or that’s in that you do costs expect drop million -- in QX,

Linda Massman

still into that be cost machine whatnot, QX, and the the incur costs the potentially the inventory of as with but Most shouldn't much. as of we'll but we see through of some it move at start-up building

Paul Quinn

in you just one And it low looks or Is Okay. a liquidity on end this do last then the just a and $XXX expect over just leverage, you’ve that like liquidity. million of quarter? at got next point

Bob Hrivnak

Yeah.

for early late spend QX the QX. basically be is by So Shelby to expected done

the our maintenance year for $XXX So the cash bulk strategic to CapEx and is spend into the in of we the script, expected and of projects in of QX range. to a bit million large going due as discussed going two in CapEx invoices. million lead might half year timing that’s occur $XXX But little the to to the portion is first most be that

going half bottom and is move focus completed, the we So debt. flow down the year paying execution free bank cash and into CapEx line on begin second to as generating major our of with the we're spend

Paul Quinn

leverage up Okay. QX into To year? half come way, your going in back put down other of I the is guess then the at it’ll but

Linda Massman

working start We’ll that. Yeah. Right. on

Paul Quinn

Thank you. I luck. That’s Best all of had.

Linda Massman

Thank you, Paul.

Operator

line of Thank next question you. from comes the Josephson And with KeyBanc. Adam our

Your now line open. is

Adam Josephson

Thanks. everyone. Good afternoon,

Linda Massman

Adam. afternoon, Good

Adam Josephson

Hi, Linda.

is nitty from couple me but your X my and to addressed in a $XX you're wrong, repairs, separate – million I Fred. questions, that million later major in the maintenance correct expecting million bridge, in maintenance from the that they remarks a on and of if Just XQ the prepared $XX the distinct half. hopped apologies expenses second bit this you gritty

right help separate XQ in guess So that's a pop on what $X back you going you'll maintenance, then with then million me can have EBITDA? that's that $XX million the I to to of and just but $XX drag million is

Bob Hrivnak

absolutely. yes, Yes,

the carry over back biggest that those and but correct. this, distinct they’ll million takes of a million from $X the and in had in $XX What Yes, and we driver is and costs -- to of million year. thereafter of scheduled into done QX. our with to major all So was unplanned are take unscheduled half there the this in it talked maintenance to related that's repair we've $XX most presumably. going range about care the this to in in we be Lewiston maintenance in of being is had it some But some are boiler of that puts

Adam Josephson

Robert, welcome And the Okay. way. by

Forgive me, capital quarter. first you there a in big this if build Obviously is addressed already. working the

you issues about. inventories issues and some are receivable and talked expectations you other Forgive some the again? think Shelby addressed you year addressed building me for I capital, What this. there think then your you for were for if already I working

Linda Massman

terms So in help for you planned certainly capital would in with of the – currently Shelby inventory we know working for expect startup completion the project Shelby. to with increase we have our of an –

know So year. in normalize know that spend. CapEx you know you certainly of terms we've should the over Then payables, you significant had

we’ve see So certainly normalization a spend. had CapEx well. that we around significant should as

So are of We collections there see cash normalization collections the receivables, couple as respect significant a a some week With in cash we the that of around well. drivers. – should April. to had first

increase, So relationships. some customer then of we part have new the part increase And was due the another timing. to of

receivables. So we – increase which to hope the caused an in

normalize well hope over that we So time. to as

Adam Josephson

So again – back to [ph] Michael.

working full expectations you just me source? the a So be to neutral Can you help drag, year, do expect out for there? it capital

Linda Massman

a about drag. million Maybe $XX

Adam Josephson

then for thank And Robert. – Okay. that you just

[indiscernible] EBITDA get going your to debt said course – me – debt, secured help Net covenants it the EBITDA wrong. you I'm me can debt to us help your you you EBITDA but no at is into know was higher so, trend and I over X.X just expect it quarter-end with how to the to with if to And to of think can I net correct you year? were net tied at longer debt well

Bob Hrivnak

Yes.

So about to to is range debt EBITDA basically, we've we've times. before target I X for our – X.X think adjusted that disclosed

CapEx X. of spending projects is above to view as give the that second completed start So into will we with the the debt. But the half we're the free the and paying generate move CapEx large down flow, us more ability is year cash large currently underway, the

range So lower closer we the want to the the time, range of get and into back to then over time. part over get

Adam Josephson

Thanks And a for Robert. end couple and board. on that box Linda, first markets, your just

and and a in seems rescinded SBA bit price rescinded immediately was and then fall recent industry there actually two after rest increase a it’s the the announced got got increase increase, didn't schizophrenia previous price increase So been was participants been only to There the in announced it months. have almost bother. of price the an then an

some obviously pressure. is competitor is So There a U.S. and new import in the it

So you it's said bit all these I can strange understand a strange balanced, a why parts think you help know Linda? it's us recent situation. fairly of you moving just months, in but seemingly

Linda Massman

Yeah. see. a in heading our stable backlog quarter in pricing like I’m seeing to tell we're directly hoped to speak I relatively you tick the market, that up I'll seen able going to again be but exactly would don't know and expect we've second happening that to a that see what's situation, just to you into and steady which is what had we

feeling to move pretty as confident market about So we're paperboard we XXXX. the

Adam Josephson

just some what one are to backlogs, your so just we just perspective? have compared And historical

Linda Massman

standard They would backlogs. year, seen last follow to you have what close pretty would pretty I mean

Adam Josephson

– implementing, expecting? is prices compared were price how XQ increases Okay. that is slightly got, any that sequentially your And then, just much all the and you're when talk you or you on announced expecting, about price that more XQ, had were to up you what just to are were increases can you the pretty tissue you expecting

Linda Massman

to focus the and are to and into Shelby we you our that as continued starting and seeing getting last relates we see in year making for is and us on really flow -- our tissue product we’re network that impact be volume fulfill customer sure well, positive quality year what we so contract Shelby now, cost. the the reduce this as seeing to starting price to running well, had good price XXXX increase Yeah, producing it was announced optimizing is

Adam Josephson

to you have million cost $X million drag in know what's sequentially. $X cost, on bucket Linda, that last Just one don't I of there.

expectations we've Forgive seen inflationary were discussed of some top items expecting pulp considerable wondering in Thanks months. etcetera again, for moving you on along those what your what direction freight in whatever much. in and recent me else weakness just very can if lines exactly I'm you might freight are this highly pulp and another? last or be the pulp. markets earlier, and that are -- year one you but

Linda Massman

kind think see inflationary I as good progress news we're continuing into is Yes, XXXX. we to environments the those of not

So be commodity bit the we're would puts that's pretty reduction a some on maybe expect we cost. for the stable commodity of news. fiber the year. the pulp. pricing balance good stable say pretty little might overall, of pricing in takes seeing that There but But pressure still and I side, some wood

Adam Josephson

you Sequentially, mean?

Linda Massman

Yeah.

Adam Josephson

Linda. Thanks, Okay.

Operator

Thank you. And the the D.A. our comes line with question Davidson. from of Chercover Steve next

Your line now open. is

Steve Chercover

Hi, good afternoon to and welcome Bob.

Linda Massman

Steve. Hi,

Steve Chercover

think X so I there QX. start just but was no have the number quarter this, So in in did might the second said you impact Shelby

Linda Massman

Steve. right That’s

Steve Chercover

So filter startup costs in. we have to the

then overall just you wanted announced first changed the expected back in about $XX metrics with of Shelby, have million EBITDA to million So business since I financial $XX conditions that to get to you then. surrounding $XX million when depreciation,

is still all attainable? of first EBITDA So target that

Linda Massman

market also high in and what about launch consumer quite turning Shelby regards label as still that's business, we the well to in tissue. and say big tighter we're from label would think that really I bit will we private see by that the there of part as it’s in looking so the the this of they're and target a little positioning factor to conventional demand for we talk this and driver tissue addition the quarter-over-quarter path which a it private consumers is and, product Steve demand the, nicely ultra-product produce Yeah in is

we're good So about feeling it.

Steve Chercover

Okay. Well comforting. that's

in first first higher overall returns $XX that but be is into million the million investment be to $XX about? depreciation does clearly you filtered cost the the the than won't what extension, get and that by with going Now anticipated overruns, talked you

Linda Massman

Yeah right the this that. of into so depreciation. And the so, return you're the on will the yes had won't about previously we some talked factor of impact be it same. And

Steve Chercover

that? number a you published million $XX have annual and So be at depreciation better back

Linda Massman

front estimate next try we call. have don't can I that the on information me provide to that but in of

Steve Chercover

unattainable still with perfect is Okay. not digester XXXX. is And the what until Lewiston on maybe but a fix segue it going

Linda Massman

Yeah.

true. So is that

So chosen of in Nothing end track the and catalyst components of polysulfide would XXXX cost to try year $XX the for savings the about those optimize remaining last reactor that install we we to delivery after the on us has really new as quickly are process and of for to work regard get arrive XXXX. timeline see qualification we the the we’ll we've and by in remains with catalyst the effectively much and million to in it raw then completing changed this to talked in we that call. the manufacturing materials it that the still expect pulp expect and making to

Steve Chercover

that would think. don't right And but that have because start such these are painful you want design conference litigate a a fairly manufacture probably is but off that unusual available proven to I to call shelf I don't technology should up recourse there you to say to any it's want mean I on things see the be normally

Linda Massman

Yes.

getting this the continuous of we’ll on environment is in So some road flow our digester the address those issues focus other working and and down polysulfide here. main reactor

Steve Chercover

you. right. All Thank

Operator

you. Thank

with line Dillon from comes next question the Chip Research. Vertical of Our

Your line open. is now

Chip Dillon

Hi good afternoon everyone.

Linda Massman

Hi, Chip.

Chip Dillon

question that to once machine and the incurred capitalizing is book debt ramp you see should we as much you've How got completed. start interest a been would you expensing? the First bit up you've go because assume you've I up started quite expect is to the expense CapEx up and of

Bob Hrivnak

Yeah.

situation So for I QX. on can comment the interest

is $X ability the QX increase CapEx down So flow debt. us $X.X of cash million bank and to about projects about interest pay that. which would over time our you million the capitalized know get should basically for the But completed spending reduced, free also give was our our we and as

Chip Dillon

Okay.

of guess a starting that is to from then and jump third quarterly a quarter there, $XX interest high the of the expense watermark basically So I million down and on would guess? go $XX good million or kind is probably around basis

Linda Massman

Yeah.

do could back of you think I envelope. a the

Chip Dillon

Okay.

looks by you've it that million so CapEx look believe to the know we the be Okay. you got know of million me mentioned at then you That's $XX good. pretty your back much covered And liquidity will half depreciation. another of the we year as which and of I $XXX

the what sometime know would the second. did and as the is, And opposed I'm is you, the peak previous you debt is really at guess so beginning of but the say – I previous I quarter around getting the the not heard the to net we of that question end first – call

your watermark and watermark, you as saying million. looks much as how the guess - sort what’s I second right so good third million if high net out you above $XXX to find more of quarter debt that? it now you're Now go the I ended like wanted could the just because around $XXX at to give high a could to mean us

Bob Hrivnak

Okay.

that's $XX way and So, I maintenance about project and the mean, million. was the for both cash about our in I think would CapEx spend QX major this

And we projects. to get expect so to up know you wrapping the in close wrap-up QX, Shelby or

we we what QX, So you in know would cash we QX. but our spent know QX in spend you and then as some CapEx you we QX see move lower know additional math, do CapEx. drop it should you be would in than have can into a the significant significantly And

Chip Dillon

maybe to $XX quarter is don’t And level? million million, $XX probably Okay. know a a fair I that

Linda Massman

Yes.

think estimate. good a I that's

Chip Dillon

you minus there all considering really year doing working sorry rest you're come we you've Adam a And you net further cash I should I will net what says And $XX about Okay. that appreciate see it a this, up liabilities but for capital great job the current I'm debt Robert, a I working answered assets month. And current LB the debt, at would to you answers. could investment He first the this. look about and been maybe of know know When – the expect minus million see the asked drag counted in from net here on capital shot or be what down? do the that quarter. we the

Linda Massman

then know receivables. where we through that caused also shall had collections in week to Then spend payables, in know outlays in terms in you a April customer issue of going for know have progressed arrangements of mode receivables receivables, new we terms last had there. as have first to see an QX. end on terms we're had expect spike our the of you know for increase normalize significant timing for levels to of and of we we know a Shelby start-up temporary then which then to that issue, inventory those the But know we some had we and the we down has with timing know because saw accounts you and expect big payable was invoices we're in we a in be you it it we Well, you cash respect had the you toward quarter to you year the incurred year significant we our

lot but our we a we is the in you said a drag. working of to year if dollar see system, there's earlier know million line I across So noise capital, the $XX maybe bottom normalize were

Chip Dillon

Okay.

to from mean, the end You of the end of XXXX? XXXX

Linda Massman

end That’s end. to Right, right.

Chip Dillon

Okay, okay.

the mix How say you mentioned goes phase Shelby when we would million back, up may XX a going months, be there, – at recognize I the So how as – look right. then machine to get it up, we say you is market what of that you a that is you let’s XX-month up. proportion now, would in you that get math question mix least, know that, ultra from if you means what sector much service last be to on. the because time start as $XX to machine be end and about? coming where at I – need And year gradually my to let’s Linda, But say used for not at of the might if

Linda Massman

trying predict, not Yeah to today I think it's and hard I'm to here answer. sitting avoid the

machine, production relatively year be as but get progress for this out the there figured that, the to will need mix into just XXXX. we to the have off we think changes I we

layer try really the So that but know a to to first that – and keep land we through good prediction. like, need making lay getting of the through what know informed you so we before you any out you sure startup is as to we starting we'll sense the of course start mix a that of good year look on we you progress the have have

Chip Dillon

or early us you give look And last XXXX? to quick range CapEx question. Any want for

Linda Massman

Yeah.

any debt. XXXX, not for know think So what need and paying to planning digest down strategic projects, bank executed have on currently I start you we because CapEx we we're our

the year. $XX at a level CapEx think at So for normalized could you I anticipate the million mark

Operator

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

Linda Massman

interest us, day. in Clearwater you continued Thank and a everybody I for good And hope Yeah. your for Thanks. Paper. joining has

Operator

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

Clearwater Paper (CLW) 1 May 192019 Q1 Earnings call transcript