CLW - Earnings call transcript Q1 2020 | Clearwater Paper Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Clearwater Paper First Quarter 2020 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions]

to Bohlen, conference Investor like speaker to now Sloan today, Relations. would hand over the your I Please go ahead.

Sloan Bohlen

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

today today's are me Executive and market XXXX for close. Murphy, Mike were the results Joining Financial Financial first Arsen Officer; Officer. on Chief the President and Kitch, released Chief call quarter shortly after

the slide Investor find You page is of providing a the presentation including which Company's a website will posted our information, on Relations at at outlook current supplemental clearwaterpaper.com.

Please discussion. going our non-GAAP in Additionally, supplemental our to the to into reconciliation be on prepared are or comparable than note providing rather we supplemental referenced information, website. information press the will information the incorporate Slide certain in non-GAAP X the slide, included this remarks. by we afternoon's provided in A of GAAP it rereading release is information information of our

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

Arsen Kitch

for We thank afternoon, us hope well. all joining Good you are and you today.

leadership While Company I introducing like investors would of us many quick joining Most and XXXX. with know the we and begin been the I'll I've analysts begin today, myself. with introductions. by since President to Mike both you as was know, finance recently, Products as many well. of Manager the and Senior of Earlier my positions I I career several Paper, held Vice in General division. Consumer our at Clearwater

leadership Toeldte and like during their this Clearwater included this background, and for for to I'd has expertise our Massman thank her my Executive Paper Instead over contributions thank to like I transition. special of a support on X Alexander the many of extend you of her speaking would the to years supplemental all to time. to during support which Slide Chairman, for our also deck, team rest my Linda and

Mike's we introduce that to will we as Mike here. I like are Mike know With invaluable pleasure would operational I have execute be his to experience expertise. insights from and that, Murphy. drive plan shareholder industry just lucky more will very it's us our and to to strategic importantly, benefit develop my greatly to say we value. But

Michael Murphy

Arsen. you, Arsen that value the are Paper his that member our partnering comments at Inc. about Board with the Clearwater create the and team be strategy to The to of my am and Boise and M&A exposure mentioned a opportunity Paper finance, includes Thank by of Company. employees X,XXX roles and at excited industry heart our and KapStone I treasury, shareholder Packaging in you, the

Investment Previously industries, packaging to I relationships. covering I at interacting forward of many from experiences areas. paper new well whom previous my you, I as know worked JPMorgan's developing analysts, as Bank, investors the and among our products with and look building other

Arsen Kitch

Mike. you, Thank

we Before we'll during COVID-XX about share update a brief operations comments pandemic. about provide quarter, the the market Company's outlook the first our and

Let's begin on X. Slide

future and our to We working value are sheet, together will for creation Company our stable our employees which hard position customers, balance believe our most we important reputation our our with assets, with well for shareholders. two our protect

our remote practices, taking to guidelines, distancing jobs so allow work social for restrictions. rigorous First whose employees measures, we them safety travel temperature checks, health care are and of and and sanitation visitor foremost, and by those including implementing do

further and We this leave paid benefits to include employees support insurance health by covered time are and for enhanced COVID-XX-related our paid to our employees during benefits have medical Our sick assistance leave. costs. additional

proactively mitigate our risks. and in continue the facilities, some exposure safety have and remain measures vigilant in to COVID-XX put health business impact. have place minimized we While We to

country. are employees in producing necessary difference proud industry products are an as continue We to have our and that designated a essential we make for our that been

worked have our and with demand. with consistent customers we closely and dependability, suppliers quality, Similarly, reputation meet for heightened to performance

the of increase lot the find a and this challenging teams of leader time. in pride our for proactive I to the of in dedication demand during creativity take service, business, throughput our unprecedented and As products former solutions tissue our to increase

only a actions protect to employees structure, These also supportive capital Company. but very we want challenging that couple months. customers, and through of who times. been to government I our partners with officials, very local customers, stable helping get a these employees, are and our positioned well you and are believe we good not to extend heartfelt state our thank over Along have a and suppliers, to chaotic

are what our each Slide relates to as we If X, talk turn of it we'll businesses at you seeing COVID-XX. to to

division, Products context this industry impacted like has provide supply broader in a will and sharp from us Consumer shift from trends demand that near-term. is a and how our for has the demand and Pandemic to normal on continue some First, our perspective. I'd COVID-XX expectation the driven

in products we we down is Paper quarter, The quarter to increase volume over we Clearwater lot which also last able over the For than million our production were higher XX% increased the cases of the four a XX quarters. our specifically, while roughly and demand of trends in first sold tissue late shipped inventory. rates,

we similar produce customers, that outside is of shipment can rate volumes. with we QX at our our control, worked Together to to a and continue that SKUs to improve diligently absent have throughput, that our rationalize believe we such events

us demand, none products on our in depend to While and needs like our who of daily of reason the our their for meet underlying lives. are employees our consumers customers hard the current working our

conditions same experienced at chains year in depleted, March of In the the leading customers’ were to retail have you sales that market, local your broader U.S. supply over out-of-stock many tissue last stores. as our up were period XX% versus

hotels, driven impacted place. significant In of schools, offices, loading partly U.S. in consumption consumers total their and settings such consumed tissue pantries, by taking this While airports. one-third restaurants patterns a environment is COVID-XX, was in there that approximately not by away-from-home an as is is up change

also staying at-home work, shifted clearly to A only mix has activities large from our population of part home other but consumption. that from not

We demand the will that for underpins return gradual several and near-term. elevated stretched products expect in the to quarters. next to our at-home the view normal be over This remain

there to away-from-home suppliers a From production shift perspective, This continue we pressure normalizes. on maintain products. us the will like believe that higher throughput to retail limited levels is a put asset situation ability supply to until to and utilization

sales over remains a customers with At-home stocked our of total shelves working goal volume. Company's demand the with typically of are elevated the keeping duration make our time. and up of we XX% Ultimately, unknown their this during tissue

on demand. the is customers be to to unprecedented challenge. planning feedback agile Paper manufacturing, Clearwater at an our The the believe further believe that from partner continued customers, over very quarter to elevated performance our current well expertise in chain improved We our transportation our during has key has tissue levels. to here enabled Based is positioned and supply first deliver we strong this execute takeaway and on reputation us

to by that an two-thirds resilient. is segments goods. consumers versus such packaging our stocked that turn our fourth Let's increase pharmaceutical from first consumer demand business as in of the and quarter. We Paperboard as the roughly with led division. traditionally benefited for up strong experienced X% in food are our driven The quarter shipments segments other up. estimate recession market in March non-cyclical demand industry This and to to We exposure the products demand

current conditions what the end making segments to difficult said, closures might being that impact paperboard of government occur mandated economic are market it and for the coming in With quarters. predict the in

and that demand segments driven are impacted In market, conditions. of by discretionary end other economic the one-third market by foodservice goods. paperboard broader restaurants approximately is we These consumer include estimate used that by products

recessions demand, consumer It led center of to to other particularly goods demand with typically economic a store. for Historically, shift found declines at-home these be in consumption impact to remains how food in products seen have conditions current in packaged short-term and paperboard consumer segments.

economically that expect We and dampen said, overall diversification, than tissue. being that end period our sensitive more market help With during this will we of quality will service volatility to segment be demand that model believe paperboard product uncertainty. do

turn discuss I'll Mike that, over With quarter it first our to to results.

Michael Murphy

Arsen. Thanks,

by strong Clearwater Board X. turn our Let's first tissue million, sales the quarter in business. driven a net extraordinarily quarter of had across largely Paper an Slide $XXX which was to with strong

were net Sequentially, our sales XX%. overall up

quarter As income operating the first we with a of the $XX million. ended result,

and income the for quarter net share basis, $X.XX. first per adjusted an our was $X.XX on was Our per share income net

million, above outlook $XX well $XX $XX range million. our was EBITDA to adjusted of million Our

Our continued performance exceeded demand expectations Products in our Consumer due performance to increased division strong cost improvements. by driven and

by well. factors segment utility our Its a Paperboard impacted price were index were previously our earnings results a caused call. division fourth event. by in public decreases Our a reported quarter facility the Cypress weather Bend and disruption RISI quarter at solid Both discussed as had

as capital and managing generating free cash net to capital with focus quarter. continue we expenditures, we on to ample prudently capital in Lastly, generated liquidity continue flows cash have Today, we lower flow expenditures. the and our strong

On the EBITDA Slide is in tissue adjusted of performance business the our highlighted. quarter X,

the XX.X mentioned, remainder. XX% two-thirds from a quarter As this XX.X or increase. Arsen volume of previously XXXX XXXX cases to cost higher input production production costs, of through in declines million improved selling existing The led volume contributed while together improvement. in million quarter driven the cases first absorption, fourth accounted growth some million of in with to by inventory, increased $X grew to over cost the for our of was which Roughly

performance Paperboard business EBITDA On Slide of XX, adjusted detailed. the is our

fourth quarter earnings call, our reported reductions performance than RISI our As impacted $X previously we in by million. mentioned price more

over continued That basis. our sequential orders and experience improved to X% as strong sales year-over-year a said, we on

outage Cypress weather Bend for some impacted experienced wage also to production higher inflation production We costs a utility by our a and facility at disruption event and that caused public due week. a

curve, Lewiston to pulp and to Northwest significant pricing wood we and residual these Pacific broader This consumers. factors conditions by in impact the our customers purchased our market outlook, and is flatten availability uncertainty Mill. the driven impacting supplier, that is COVID-XX, also ultimately of government As we uncertainty actions their all economic there how turn

greater Regardless keeping of our employees which healthy, uncertainty, generate we will balance continue to our our over, and servicing continuing customers, this to to sheet. deleverage that our items have control our on be the cash facilities, operating is focus

ahead we million. second to to expect adjusted currently Looking XX, $XX the on million our $XX Slide outlook on quarter range of EBITDA

expect continued from with demand first quarter volumes tissue. to the moderate elevated We in

growth, in first we our sales production levels that on While quarter. selling goods achieved second believe volume current the contributed some the support rates sales through our the quarter in to of can inventory finished tissue March

should our expect dampen that in end the in second have on market downward impact quarter. quarter the pressure the decreases price our the the margins realized sustained in in but we Paperboard reported of SBS will benefits reductions. that possible tissue diversification in business, created believe We first cost segment be RISI's demand

quarter. second utility We also public at the failure beginning the a Arkansas experienced in of

half optimistic market second key the at the cost of but ahead less are drivers. and economic conditions certain are about segments year, in business, strength paperboard, continued of our Looking tissue on impact we about end the the

we the the number fourth on since likely cost is an plays the outlook that quarter range that components revenue that how call, During currently outcome provided while for each full-year. today's earnings out, the outlook of we and considered and scenarios There net believe component impact are a represents information. for uncertainty given we certain there still

business. We in updated we the on outlook greater our its confidence are economy provide to expecting and degree a an have when impact of

range interest We million expect and and the million million $XXX below expense amortization $XX $XX of in range, be $XX in $XX well $XXX depreciation our to to expected the CapEx million million to million. continue to of full-year to

of certain $XX inventory to less our recent are build of capital million to range $XX cash previously reductions. million to using due communicated We about working

net believe rate anticipate tax annual do our attributes be being a not XX%. tax effective we should excluding we cash year approximately taxpayer and Finally, our this

to on meet year To million adjusted target wrap included comments, this to are expansion $XX we outlook impact EBITDA paper track $XX This expect by the up contribute XXXX. our in Shelby middle in our of million is production to to outlook. and our

in million reminder, XXXX, XXXX of expected additional $XX $XX XXXX. and XXXX contribute to and EBITDA impact our million adjusted in is Shelby to a roughly expansion both million delivered in and the remainder As $XX an

to track to are from to new million expected In half the contribute is on to from reductions. is EBITDA half optimization other while network come and total, that for the other million expected volume, cost project. we $XX of come $XX sales Approximately adjusted of impact

maturities. back to liquidity turn the I'll conclude, and facts key call debt about I the review Arsen our Before to position

You can find the details on XX. Slide

We an asset-based credit bonds. a an ABL, revolving loan covenant-light term have two facility and or outstanding

flow. repayments we maturity additional mandatory we if bond free Our schedule annually current is debt generate our excess million $X until cash maturity XXXX could have and

have a also the loan for standard like in under advance repay to is ABL the maturity, capital bond a obligation structure an bond quarter We least refinance our which of or XXXX and at ours. term

first liquidity At the million. We of positive by the the enhanced liquidity end today, free balance we $XXX expected our year. generated should of flow which was cash believe approximately quarter, be for have adequate the

me it the with conclude remarks. Let and to our over concluding turn see Arsen call call Paper's set a of to back we level value few as Clearwater a today

Arsen Kitch

Thanks, Mike.

Slide XX. to turn Let's

believe is First, across we complimentary two businesses. Clearwater positioned well Paper attractive very and

believe Our division within the this tissue key our From strengths Consumer is point, branded a of leader the business Products growing we private the following. market. are vantage

not impacted and Historically, demand First, tissue economic been product. resilient is has an need-based uncertainty. economically negatively by

to share brand branded XX% to in XXXX. risen the away trends Second, This there XXXX, XX% has in are from up tissue products Private amplified brands. private over U.S. from is recessions. during in long-term

these where over share. many way countries where we a represent are XX% tissue While impressive, are from trends brands of long total still European private are

a Lastly, with wide an proposition our attractive footprint ability sales to we customers. to have supply range an product which in tiers, national quality is categories of

and a differentiator, today. is challenging key transportation especially in times manufacturing, supply expertise like Our during chain

that Turning key the are to of strengths business this the We division. our believe following. Paperboard

invested well assets we customers on both First, enabling operate to us service footprint, the with coasts. geographic efficiently

end diverse have segments market base have with demand. We largely customer stable a that

with on Second, commitment. not integrated being quality us vertically service independent to and enables focus customers unparalleled

more of is foodservice Lastly, sustainable to we business trends positioned products. believe the take that and packaging well towards advantage

operational generate to flows aggressively allocating reduce continued delivering Paperboard capital investments business in We large benefits ability flows. behind equity intend to do are strategy We best capital to way holders debt the the and an that for so believe investment, we working and prudently and value from and margins cash solid Shelby create near-term. improvements, us demonstrated is our managing good our Overall, has prioritizing Our this capital. by to are cash debt.

key we that sustainability of add our the we them, that report both a we to want for of which investment our areas, way products our the recently part and our sustainability environment, believe make and also I make we business prioritize includes We published the is local the long-term. focus benefit the proposition. latest which communities,

find the can report our You on website.

Paper COVID-XX-related our on I am your issues impacting we want questions, leadership time of take at how the Before to excitement this taking I the to that responded and my have reiterate proud and our Clearwater are how professional employees for with personal lives.

and So questions. with that, we will end our your prepared take remarks

Operator

Thank you.

Josephson Our first Adam question with comes line KeyBanc Capital from the Markets. of

is Your line open. now

Adam Josephson

Mike, and afternoon. Arsen good

Arsen Kitch

Good afternoon.

Adam Josephson

of both Best your to roles. luck of in new you

off X.X% relative for what shipments were start you, your and And March were second in they the March you they about of biggest April? were and April? quarter you're what what expecting driver mentioned, up in to as in for either talk your of segment Paperboard balance the were on the up that. of obviously you the sequentially volumes Now, Can was whatever

Arsen Kitch

and well I'll backlogs in that were March our years. versus strong tell is March were what strong in shipments as our you prior So

look at high the up in March were and operating you by February we also backlogs XX% If industry, versus had rates. overall

the Our backlogs year. balance current impact remain and healthy question how paperboard that's have us question April the for the does so into is of to shipments. environment the market biggest we healthy continued broader have – economic before The

overall I for that in believe third and food have do demand which current and is we we we think What packaging this demand. remarks, and as that of we will strength business the discretionary, foodservice we don't folding is stated know that is packaging. applications. other a consider in the underlying is is, products of called our types third know used prepared luxury-goods the carton pharmaceutical of how recession we impact What in

Michael Murphy

in And Adam, it. both add February. had momentum if and to good actually I We can January year-over-year sales

growth explanation our above the in So wasn't we growth March, trend, sequential full saw. the that and while for year-over-year

Adam Josephson

about April don't to up you or want you I up April. were guess in Arsen, talk Thanks. not what

you in Can up what the you some – shipments to remains to backlog your know versus XQ? your give I as trying said us healthy. were Just just perspective

Arsen Kitch

off on think I hold we'll QX. on commenting

Adam Josephson

Okay. discretionary. you versus just do you foodservice on your in the of terms you more And industry's estimate much and have mix different Is mix your mix a the estimate then paperboard, retail thank industry's than or comparable for mix one of to be? what

Arsen Kitch

and what So we packaging less believe folding But I a of discretionary liquid than packaging. have the have we exposure exposure foodservice call to to the and more rest industry. we would

be mix would also mix would recessionary is of So – by about our while is I potential is that do third demand call conditions. impacted We what our different. our a think

Adam Josephson

who Sure. I will state last. otherwise. Thank that of that of capacity let's do operate affairs Well, the to knows as expecting will online? to affect tissue, at-home additions you're reason demand On remain slated it. assumption think the how you no long But have come the situation elevated you. will the under How think

I'm the for tissue an the and few market years excess with over this months balance supply demand that. private just demand situation. how in supply has that struggled affect surge next longer sudden perhaps could wondering Obviously, than label

Arsen Kitch

So that, Adam. a comments of couple on

XX% in April by increase into would I in we we So in and XX% what The March, driven what pantry April. call saw XX% saw loading. a increases. a saw increase was March was We a industry and XX% saw

Adam Josephson

Yes.

Arsen Kitch

a at-home a takes a this that And as pantry drive XX% year place question that between out the you loading. tons throw third that shift of if consumption you demand. of chunk incremental a assume the to just total you – outside XX%, shifting big longer-term as And capacity a somewhere home. that XX% lot of by XX% know. a XXX,XXX And to and at-home. number, There estimate of is was is tissue home driven of consumption forecast for would XXX,XXX in increase The out tissue at-home, can there consumption away-from-home

off can’t capacity In that you turn this and can't on finish all you industry, and capacity quickly.

capacity at-home the So it's that balance for how we supply coming think assume continues. trend demand going have is terms online. this that consumption to driven overall of and But towards I at-home to tissue, by long in be

Adam Josephson

Arsen. Thanks,

that the from addressed capacity? but happens know just in And your that briefly for on your away-from-home how remarks, prepared can't, that for to to that in of of you What at-home capacity that the terms much can you with – all that, what share converted be last I comes us of capacity you Just could away-from-home. producing me those and – for it? thoughts away-from-home

Arsen Kitch

It's a analyze. Yes. one to hard

So we majority. think but some think can don't converted portion to we be production, the it's at-home

minority the be in tell But the convert think of players decided production to I or that to converted. So do, they that hard to could not. away-from-home any decide to it's spend capital what whether

So it's on comment now. hard right to that

Adam Josephson

Arsen. Thanks a lot,

Operator

Thank you.

with Quinn question next the Our Paul line from Capital Markets. RBC comes of

is line Your now open.

Paul Quinn

so you much. afternoon. Thank or Yes. morning, Good guys

a it's long day. Sorry, been

Arsen Kitch

afternoon. Good

Michael Murphy

Good afternoon, Paul.

Paul Quinn

away-from-home just Adam into question, you away-from-home market, that up brands. on that of guys produce the limited did that you a ability the idea described XX% Just you switch, yourself following for or did to some The XX% of at-home. on a as side, the switch you produce consumer

Arsen Kitch

plus XX% sales at parent of high level well combination is of as a at-home. away-from-home sales are roll sales. So as a A XX% our

actually of away-from-home sales. So than is our less XX%

But think retail a right products small that that all part capacity. We can. we're have assets running we it's I overall of very the specific now our away-from-home and

Paul Quinn

what drawdown inventory the in quarter? then And the tissue was Okay. Thanks.

Arsen Kitch

April. our up, we a we're on there inventories drawdown substantial think well exactly going I supply stock our of would was ended in it I to where So with increase with we similar assume March to inventory significant tell drop a and running are as demand unprecedented was you inventories. not have assume, drawdown and But comment very essentially happened a inventory And our we where across levels. at our the that the to specifically chain cycle but customers

Paul Quinn

the demand increased near notion the high and you consumption your QX some expect in just on down the have Do at this then to consumer? of pull expectation point Or it by you in road? And that term. increased the actually back seen Okay. stays

Arsen Kitch

going state back of least patterns old to to it's how back consumer a and consumption shifts and to last to quickly quarters at it's normalize. driven how back We orders people to few going be think some to long get quickly back I their think traveling, work, by to these for home get eating get things take how out. the

it's So to we in now. do difficult expect think what demand the coming right predict quarters, increased but extent, to I

Paul Quinn

just little tailwind What's just Lewiston. bit Okay. a And it of pulp going forward? quarter. expectation at on a And looks maybe an the your update was in like then the lastly, digester

Arsen Kitch

Yes.

to we So that during million be the expect we fourth stated $XX for million to us. a $XX pulp quarter earnings call, tailwind

QX $XX later of bottomed have this into As you have think end year. still upside $XX increases of QX projecting RISI know, pulp million prices We million the at year this is of to we year-over-year. and pulp in

Michael Murphy

working on project Paul you benefits. asset to still generated latter on an and Lewiston, of upcoming the the the the to just look quarters. that give We're will million remind optimize And overall we to on update you $XX want comment EBITDA has

Paul Quinn

Okay.

what trying is, to your more exposure So to more pulp I'm market. get

remains at somewhere So still XXX,XXX tons. around that

Michael Murphy

as that's as to the of That's the opposed about think correct. softwood. us, And hardwood you majority exposure

Paul Quinn

Great.

Best much. so guys. luck, of Thanks Okay.

Arsen Kitch

you. Thank

Operator

Thank you.

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

Your open. line now is

Steven Chercover

everyone. afternoon, Good Thanks.

Arsen Kitch

afternoon. Good

Steven Chercover

tissue. fairly May. So that's are? I the Any early quarter obviously, said in I visibility no forward a And late from sold how your I for are volumes attest order you I things was be out expect to similar. know good the files department. can guess that it April, far on surprise very you mean still

Arsen Kitch

within lead order demand points So the month, is their times. in look various we tissue, what at our in at customers

that see demand. IRI I continues that would strong the do April levels May. continuing but would is strong strong there our that, remains data I strength March. in we're and as you at obviously the think in the I not to remain tell same think think support I orders what demand So into And

on our supply forward, inventory. think chains light we pretty are customer look As still I

up will So until our strong. the shelves and product customers get fill we I pretty I think our book think chains, remain supply order on

Steven Chercover

important kind mean some you think but converted third I party a you're obviously point, you prefer product? And sell very than XX% less I Is parent level is would there a an rolls to converters. away-from-home only for Thanks. of selling it's small to touched part, not for target this, any integration on and instance?

Arsen Kitch

think assets that optimize way the look and our to of each our and probably our regions, out what's each answer I is, figure of best at we mills of each the to profitability. best way

when the sell way So do for we profitability parent that tons. optimize best to rolls, is those

continue to So rolls types parent those are will decisions. our finished cases but that's business goods in mean, the I we'll of incremental we make sell if make preference, don't financially. obviously, good we sense and those finished

Steven Chercover

there paperboard, the related kind function utility also for the the product of recovery waterfall a failure that gears disruption is Switching it. to Arkansas? insurance chart, any power the in is issue? you of And referenced Got anticipated that in

Michael Murphy

And one, This first in any a not we the line get anticipating recovery that can into down that on there. and happened mill. Steve, the power of So was second necessarily again I'm the again sort quarter. power went

I so the part question. And first answers that know the of to

for the questions. could me The part, you second just clarify

Steven Chercover

in disruptions was utility I'm Well, the same chart and that's waterfall wondering part the failure? there of product if

Arsen Kitch

that experienced we little a of Cypress we of from Bend. but at majority power most That's outage the had was disruption in it, the of quarter Lewiston, in the Yes. it bit

Steven Chercover

the it you the Shelby? you does operationally, ramp of machine then voracious you would for out have to I mean than the it last faster tissue ramp like mapped might at And fall? Okay. new how prompt demand characterize

Arsen Kitch

doing can. as those quickly What as ramp possible I would tell is to are you we everything assets we

the As our out and And we're ramp goal end machine ramped into heading said, track this we XXXX is on the XXXX. to everything through sold year. get halfway to by of

may it for many the off trying to possible. you running XX/X and and as those and as get is been customers are making cases So site has we imagine, lines as products

Steven Chercover

on the digester. just follow-on Lewiston Paul question the finally, of And Quinn's benefits to a Okay.

So that? think benefit me said of help it original $XXX investment? $XX was I got you the of What you've so Mike was frame Can million far. target, XX% million the

Arsen Kitch

cost, a was seen that of the think of we're $XX that. is third was What incremental we're was was and third volume a third was roughly It – that not We we benefit. what million the resulting a A third yield that production. getting – target. and have initial yield seeing not

our to assets. team we're continued have to update one. So we benefit, with is working but when will provide the hard get you The optimize we an

Steven Chercover

Yes, – maybe know secret I new the got I sauce the mean not wait that just that's only so catalyst you've I catalyst the in, should evidently.

Arsen Kitch

we said, the part I've as – and think looking I are is process. team the that at production every of

imagine to to end-to-end an process process you may at number. As we stages it's the various we have can see in get what and look do to to that yield

Steven Chercover

Got you.

Stay safe. much. Thanks very Okay.

Arsen Kitch

you. Thank

Michael Murphy

You too, Steve.

Operator

with Markets. a KeyBanc do Thank have question follow-up Josephson Adam Capital from you. We

is line now open. Your

Adam Josephson

the extent full savings would Mike. Mike high that of won't the would to, in two, there then $XX the Shelby be point that or obviously, wide we given for XQ, expansion? is to to XQ, just $XX number, in. incremental fact that such the that the But end And you your it's one? highly the Arsen, circumstances and I from Arsen is think to you bottom range particular that One Shelby Thanks, addressed savings there on million get in a the sequentially end million guidance, XQ anything or unusual ourselves find rather you

Michael Murphy

questions. of from Shelby expansion. each incremental some There Adam, your quarter benefit order I'll reverse the So is the

as or not QX. a it's bang – and it a it's modeling in So either big it, not you're QX that all we received

Adam Josephson

Right.

Michael Murphy

million $XX be volume to strength. to $XX the part to of is up million, backing going Second, it

that's have of of side the in to to the we benefits continue quarter. we then the we on drive things. going see tissue demand if lot So abnormally SBS And high that a what see demand,

very think I first we we've strong had that quarter. a commented

I in think some, the we're the overall there. dissimilar pullback see We're industry not some way. from major starting to

question I know Arsen, those you are my have to the if marks, at so least mind. anything don't And in bigger add.

Arsen Kitch

No, agreed.

Adam Josephson

cash comment? given substantial the tissue on that that or could working earlier not in that just your even anything flow, flat payables you cap cash on Can that this Perfect. receivables use year? think And I on or Mike. cap elaborate be of the working anymore, to? you decline be point a a just Or thinking Are you just perhaps of now the may cash you would mentioned Thanks inventories. side source

Michael Murphy

giving clarify. me for to the Thanks opportunity

is end we part inventory. to a $XX assumption we're I a demand be $XX great of we've in the balance quarter, that to to on will guided year sheet of the seeing our levels the sure that's able due drawdown in in capital. year What Where land seen assets. the we're the inventory and fourth that the if our end working think we're we've and seeing the to million now at million increased drawdown function some replenish we of of at not on largely that been

Adam Josephson

to visibility what guidance at point? Mike. you much in, try further tissue do Perfect, last and this – is Arsen. your point? XQ your just into of or visibility/backlog that How effectively to you the locked Just back tissue, clarify one how this have And again your to into just know at point. one, volumes question, have this asked But visibility you're I much

Arsen Kitch

demand So tissue don't in backlogs. of in think of business, the we terms

and – on customers times Our a they very pattern. a in very order regular their lead within order

now, look over have – the time those that And strong, the what to for see lead we like. is ordering. time lead that visibility orders to remain we out to out but visibility customer right So what orders

here. not your look I'm that how But it's sure if So we tissue at the business question. answers

Adam Josephson

than matter would shorter two of you than a that? in is it weeks, longer So weeks, that, three measure weeks, that

Arsen Kitch

the but on you're yes, I customer, the It ballpark. in depends think

Adam Josephson

much, so Best Thanks luck. Okay. Arsen. of

Arsen Kitch

you. Thank

Operator

Paul follow-up Capital Thank of line you. from Quinn question a have do We the RBC with Markets.

is line now Your open.

Paul Quinn

guys. thanks Yes,

Just easy various been up. toilet I've in paper one when here. I've noticed Columbia shopping that price British of here moved has at locations

about seem demand? other increased look you out increase any Now a talking to price you some of – whether can prices. share there, increase the there thoughts Is reluctant the given they for to producers any

Arsen Kitch

of of So there a a at ways couple to look – that. ways couple

this in proposition our focused space servicing by is driven we're now, customers right and the pricing one market. supply number on demand and our in So value

not that's a future way talk we're actions. to going about of nice pricing saying, think I publicly

Paul Quinn

Fair Thank you. Okay. enough.

Operator

This now remarks. to turn President Kitch, like for Executive back and I call would today's you. concludes Officer to Thank question-and-answer Arsen session. closing the Chief

Arsen Kitch

us to And for continued you. in Paper. joining your you for great Thank Clearwater Have today, everybody Great. interest a and thank day.

Operator

Ladies and conference today's call. participating. gentlemen, this concludes you Thank for

You may now disconnect.

Clearwater Paper (CLW) 5 May 202020 Q1 Earnings call transcript