(CLW) 2023 Q3 法說會逐字稿

Good afternoon. My name is Brianna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Clearwater Paper Third Quarter 2023 Earnings Conference Call. Please note that this call is being recorded. (Operator Instructions)

午安.我叫布麗安娜，今天我將擔任你們的會議操作員。此時此刻，我歡迎大家參加 Clearwater Paper 2023 年第三季財報電話會議。請注意，此通話正在錄音。 （操作員說明）

I will now turn the call over to Sloan Bohlen, Investor Relations. Please go ahead.

我現在將把電話轉給投資者關係部門的 Sloan Bohlen。請繼續。

Thank you, Brianna. Good afternoon and thank you for joining Clearwater Paper's Third Quarter 2023 Earnings Conference Call. Joining me on the call today are Arsen Kitch, President and Chief Executive Officer; and Sherri Baker, Senior Vice President and Chief Financial Officer.

謝謝你，布麗安娜。下午好，感謝您參加 Clearwater Paper 2023 年第三季財報電話會議。今天和我一起參加電話會議的還有總裁兼執行長 Arsen Kitch；以及資深副總裁兼財務長 Sherri Baker。

Financial results for the third quarter of 2023 were released shortly after today's market close along with the filing of our 10-Q. You will find a presentation of supplemental information, including a slide providing the company's current outlook, posted on the Investor Relations page of our website at clearwaterpaper.com.

今天收盤後不久，我們發布了 2023 年第三季的財務業績以及我們提交的 10 季業績報告。您可以在我們網站的投資者關係頁面上找到補充資訊的演示，其中包括提供公司當前前景的幻燈片，網址為：clearwaterpaper.com。

Additionally, we will be providing certain non-GAAP information in this afternoon's discussion. A reconciliation of the non-GAAP information to comparable GAAP information is included in the press release and in the supplemental information provided on our website. Please note Slide 2 of our supplemental information covering forward-looking statements. Rather than rereading this slide, we are going to incorporate it by reference into our prepared remarks.

此外，我們將在今天下午的討論中提供某些非公認會計準則資訊。非公認會計原則資訊與可比較公認會計原則資訊的調節包含在新聞稿和我們網站上提供的補充資訊中。請注意我們包含前瞻性陳述的補充資料的幻燈片 2。我們不會重新閱讀這張投影片，而是將其引用到我們準備好的評論中。

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

現在，讓我把電話轉給阿爾森。

Good afternoon and thank you for joining us today. As you saw in our press release, we had an outstanding third quarter driven by good operational execution, lower input costs and continued strength in our tissue business.

下午好，感謝您今天加入我們。正如您在我們的新聞稿中看到的那樣，我們在良好的營運執行、較低的投入成本和衛生紙業務持續強勁的推動下，第三季表現出色。

Slide 3 of our supplementals provides a summary of our consolidated results. We reported net sales of $520 million and adjusted EBITDA of $81 million in the quarter, which is at the higher end of our expectations and $3 million higher than the third quarter of last year. Our tissue business drove the improvement by more than doubling its adjusted EBITDA from $21 million in the third quarter of last year to $46 million this year. Our paperboard business delivered $52 million of adjusted EBITDA in the third quarter at a margin of 20%, even with the soft demand that we continued to experience.

我們補充資料的幻燈片 3 提供了我們綜合結果的摘要。我們公佈的本季淨銷售額為 5.2 億美元，調整後 EBITDA 為 8,100 萬美元，高於我們預期的上限，比去年第三季高出 300 萬美元。我們的衛生紙業務推動了這一改善，調整後的 EBITDA 成長了一倍多，從去年第三季的 2,100 萬美元增至今年的 4,600 萬美元。儘管需求持續疲軟，我們的紙板業務第三季調整後 EBITDA 仍達 5,200 萬美元，利潤率為 20%。

Let me share a few highlights with you. Prices increased in tissue as compared to the third quarter of 2022 and decreased in paperboard, which reflects market trends as reported by RISI. Lower input costs benefited both of our businesses as compared to the third quarter of 2022, particularly in fiber, energy and freight. We had good operational performance across both businesses as we balance supply and demand to manage our inventories. Tissue demand continued to be strong, while paperboard remained soft as destocking continued.

讓我與您分享一些亮點。與 2022 年第三季相比，衛生紙價格上漲，紙板價格下降，反映了 RISI 報告的市場趨勢。與 2022 年第三季相比，投入成本的降低使我們的兩家業務受益，特別是在纖維、能源和貨運方面。透過平衡供需來管理庫存，我們的兩項業務都取得了良好的營運績效。生活用紙需求持續強勁，但隨著去庫存的持續，紙板依然疲軟。

We reduced net debt by $69 million in the quarter for a total of $416 million since 2020. Taking that $416 million net debt reduction and dividing it by the current share count equates to approximately $24 per share. We repurchased $5 million of shares during the quarter for a total of $20 million since 2022, with $10 million remaining on our buyback authorization. And finally, last Friday, we started the redemption of our 2025 notes with a combination of a new term loan using cash on hand and drawing on our existing ABL. This further strengthens our balance sheet, creates flexibility and pushes any material debt maturities out to 2028.

本季我們減少了 6,900 萬美元的淨債務，自 2020 年以來總計減少了 4.16 億美元。將這 4.16 億美元的淨債務減少除以當前股數，大約相當於每股 24 美元。我們在本季回購了 500 萬美元的股票，自 2022 年以來總計回購了 2,000 萬美元，其中回購授權剩餘 1,000 萬美元。最後，上週五，我們開始贖回 2025 年票據，結合使用手頭現金和現有 ABL 的新定期貸款。這進一步增強了我們的資產負債表，創造了靈活性，並將任何重大債務到期日推遲到 2028 年。

With that overview, let me turn to each of our segments and provide some additional details. We continued to be agile and adjusted our production to meet demand and manage our inventory levels. We took approximately 10% downtime on our paper machines to balance supply and demand during the quarter. Despite this downtime, the business performed well and generated a 20% adjusted EBITDA margin in the quarter.

有了這個概述，讓我轉向我們的每個部分並提供一些額外的細節。我們繼續保持敏捷性並調整生產以滿足需求並管理庫存水準。本季我們的造紙機停機了大約 10%，以平衡供需。儘管出現了停機，但該業務仍表現良好，本季調整後 EBITDA 利潤率達到 20%。

As we noted over the last several quarters, demand began slowing late last year. That trend continued into the third quarter of this year. We believe that this softness is driven by a combination of a slowdown in consumer demand and inventory destocking across the value chain. Industry data reflects these trends with a 9.7% decrease in operating rates and a 15.7% decrease in shipments year-to-date 2023 versus 2022 as reported by AF&PA.

正如我們在過去幾個季度中指出的那樣，需求從去年年底開始放緩。這一趨勢持續到今年第三季。我們認為，這種疲軟是由消費者需求放緩和整個價值鏈庫存去庫存共同推動的。 AF&PA 報告稱，行業數據反映了這些趨勢，2023 年迄今為止，與 2022 年相比，開工率下降了 9.7%，出貨量下降了 15.7%。

As further evidence of this trend, RISI has now reported an $80 per ton decrease in folding carton prices in the third quarter, reflecting the first decrease in more than 3 years. As a reminder, approximately 35% to 40% of our volume is now indexed to RISI, and it typically takes us up to 2 quarters for price changes under these agreements to be reflected in our financials. If we apply an $80 per ton decrease across all our tons, the annualized impact could be greater than $60 million. These decreases are being partially offset with lower input costs and improved operational performance. We remain optimistic about the long-term prospects for paperboard. But given economic uncertainties, we foresee a gradual recovery starting next year. RISI is forecasting a 10.5% decrease in total SBS production this year versus 2022, followed by a 4.2% increase in 2024 and a 5.3% increase in 2025.

作為這一趨勢的進一步證據，RISI 目前報告第三季度折疊紙盒價格每噸下降 80 美元，這是三年多來的首次下降。提醒一下，我們大約 35% 到 40% 的交易量現在已與 RISI 掛鉤，我們通常需要長達 2 個季度的時間才能將這些協議下的價格變化反映在我們的財務數據中。如果我們對所有噸位實施每噸 80 美元的減價，那麼年化影響可能會超過 6,000 萬美元。這些下降被較低的投入成本和改善的營運績效所部分抵消。我們對紙板的長期前景保持樂觀。但考慮到經濟的不確定性，我們預計明年開始將逐步復甦。 RISI 預計今年 SBS 總產量將比 2022 年減少 10.5%，隨後 2024 年將增加 4.2%，2025 年將增加 5.3%。

Please turn to Slide 5 for additional comments on tissue. The performance of our tissue business was very strong. Revenue improved by 8% year-over-year driven by higher pricing and higher retail shipments. Adjusted EBITDA margin improved to 18% due to higher pricing and lower input costs, particularly in pulp, energy and transportation. With roughly 1/4 of our contracted customer volume tied to the RISI Pulp Index and with lower pulp costs, we're expecting a $4 million to $6 million headwind per quarter moving forward. Even with that impact, we're optimistic that we can retain most of the margin improvement captured as we head into 2024.

請參閱投影片 5 以了解有關組織的更多評論。我們的衛生紙業務表現非常強勁。由於定價上漲和零售出貨量增加，營收年增 8%。由於定價上漲和投入成本下降，特別是在紙漿、能源和運輸領域，調整後的 EBITDA 利潤率提高至 18%。由於我們約 1/4 的合約客戶量與 RISI 紙漿指數相關且紙漿成本較低，我們預計未來每季將面臨 400 萬至 600 萬美元的阻力。即使有這種影響，我們仍樂觀地認為，在進入 2024 年時，我們可以保留大部分利潤率的提高。

Let's turn to some industry data. RISI recently reported that tissue capacity utilization is around 94% so far this year, which we believe represents a healthy supply and demand balance. This supports our view that tissue industry conditions are improving. Let's look at some of the high-level capacity trends that are driving these numbers.

我們來看一些行業數據。 RISI 最近報告稱，今年迄今為止，衛生紙產能利用率約為 94%，我們認為這代表了健康的供需平衡。這支持了我們的觀點，即衛生紙產業狀況正在改善。讓我們來看看推動這些數字的一些高級容量趨勢。

Between 2018 and 2020, nearly 450,000 tons of tissue capacity were added primarily targeting the private-branded space. That increased supply outpaced demand growth. Between 2021 and 2023, more than 180,000 tons of capacity were reduced. We now believe that around 300,000 tons of capacity will come online between 2024 and 2026, which roughly matches demand growth over that same time horizon. Given these dynamics, we're optimistic that our tissue business will perform well in the near to medium term.

2018 年至 2020 年間，新增近 45 萬噸衛生紙產能，主要針對自有品牌領域。供應的成長超過了需求的成長。 2021年至2023年間，削減產能超過18萬噸。我們現在認為，2024 年至 2026 年間將有約 30 萬噸產能上線，大致與同期的需求成長相符。鑑於這些動態，我們樂觀地認為我們的衛生紙業務在中短期內將表現良好。

With that overview, let me introduce our new CFO, Sherri Baker. Sherri joined us in August and has hit the ground running. She brings significant experience building and leading finance teams and an extensive background in strategic, financial and operational decision-making. I'm looking forward to working with Sherri to continue our focus on strengthening our company and creating shareholder value.

在概述之後，讓我介紹一下我們的新財務長 Sherri Baker。 Sherri 於八月加入我們，並立即開始工作。她帶來了建立和領導財務團隊的豐富經驗以及策略、財務和營運決策的廣泛背景。我期待與 Sherri 合作，繼續專注於加強我們的公司和創造股東價值。

Thank you, Arsen. I'm excited to be joining the Clearwater Paper team and look forward to working with you, our Board and our people to continue improving our performance, growing the business and creating shareholder value.

謝謝你，阿爾森。我很高興加入 Clearwater Paper 團隊，並期待與您、我們的董事會和我們的員工合作，繼續提高我們的績效、發展業務並創造股東價值。

Let's cover our financial performance in the third quarter by turning to Slide 6. The consolidated summary income statement shows results for the third quarter of 2023 and 2022. In the third quarter of 2023, we reported net income of $36.6 million, net income per diluted share of $2.17 and adjusted net income per diluted share of $2.19.

讓我們轉向幻燈片6 來介紹我們第三季度的財務業績。綜合損益表摘要顯示了2023 年和2022 年第三季度的業績。2023 年第三季度，我們報告的淨利潤為3660 萬美元，攤薄後淨利為每股收益為 2.17 美元，調整後每股攤薄淨利潤為 2.19 美元。

The corresponding segment results are on Slide 7. The business performed very well on a consolidated basis, with lower input costs and strong operating performance driving a healthy improvement in profitability. Adjusted EBITDA margin rose to 15.5% in the quarter as compared to 14.3% last year.

相應的分部業績請見投影片 7。該業務在合併基礎上表現非常好，較低的投入成本和強勁的經營業績推動了盈利能力的健康提高。本季調整後 EBITDA 利潤率升至 15.5%，而去年為 14.3%。

Slide 8 is a year-over-year comparison of segment income and adjusted EBITDA for our paperboard business. The business delivered $52 million of adjusted EBITDA in the quarter with a 20% margin. On a year-over-year basis, lower sales and production volumes impacted cost absorption, which was partially offset by lower input costs. Slide 14 in the appendix shows the sequential comparison of the third quarter to the second quarter of this year. It reflects a lower sales price and mix, flattening volumes and reduced costs.

幻燈片 8 是我們紙板業務的部門收入和調整後 EBITDA 的年比比較。該業務本季調整後 EBITDA 為 5,200 萬美元，利潤率為 20%。與去年同期相比，銷售量和產量下降影響了成本吸收，但投入成本下降部分抵銷了這種影響。附錄中的幻燈片 14 顯示了今年第三季與第二季的連續比較。它反映了較低的銷售價格和產品組合、銷售趨平和成本降低。

Slide 9 is a year-over-year comparison of segment income and adjusted EBITDA for our tissue business. As Arsen discussed, we are benefiting from previously announced price increases, higher volumes and lower input costs. The business delivered $46 million of adjusted EBITDA in the quarter with an 18% margin. As noted on that slide, in the third quarter, we saw the benefit from lower pulp price as it flowed through to our income statement. Slide 15 in the appendix shows a sequential comparison of the third quarter to the second quarter of this year. It reflects the benefits that we are seeing from lower input costs, particularly in pulp.

投影片 9 是我們衛生紙業務部門收入和調整後 EBITDA 的年比比較。正如阿森所討論的，我們受益於先前宣布的價格上漲、產量增加和投入成本降低。該業務本季調整後 EBITDA 為 4,600 萬美元，利潤率為 18%。正如該幻燈片所指出的，在第三季度，我們看到了紙漿價格下降的好處，因為它流入了我們的損益表。附錄中的幻燈片 15 顯示了今年第三季與第二季的連續比較。它反映了我們從降低投入成本（尤其是紙漿成本）中看到的好處。

Slide 10 outlines our capital structure. Our balance sheet remains very strong, and our liquidity improved quarter-over-quarter, now totaling $370 million. During the third quarter, we generated $74 million in free cash flow and reduced net debt by $69 million versus the second quarter. On a year-to-date basis, we generated $76 million in free cash flow. Since 2020, we have reduced our net debt by over $416 million.

投影片 10 概述了我們的資本結構。我們的資產負債表仍然非常強勁，流動性逐季改善，目前總計 3.7 億美元。第三季度，我們產生了 7,400 萬美元的自由現金流，與第二季度相比，淨債務減少了 6,900 萬美元。年初至今，我們產生了 7,600 萬美元的自由現金流。自 2020 年以來，我們的淨債務減少了超過 4.16 億美元。

We announced last Friday the addition of a new revolving term loan with borrowing capacity of $270 million. The initial draw on this facility is $150 million. We will use these funds along with cash on hand and drawing on our existing ABL to extinguish our 2025 notes. This new agreement extends any debt maturities to 2028. Given the redemption process for the existing 2025 notes, we will fully extinguish the 2025 notes in late November. The initial draw on the facility is fixed for 1 year at 9.13%. The revolving credit covenants are similar to our existing ABL, and the loan is secured by plant, property and equipment. With this new agreement in place, we have strengthened our balance sheet and improved our financial flexibility.

上週五我們宣布增加一項新的循環定期貸款，借款能力為 2.7 億美元。該貸款的初始金額為 1.5 億美元。我們將使用這些資金以及手頭現金並利用我們現有的 ABL 來註銷我們的 2025 年票據。這項新協議將所有債務期限延長至 2028 年。考慮到現有 2025 年票據的贖回流程，我們將在 11 月底完全銷毀 2025 年票據。該貸款的初始提取利率固定為 9.13%，為期 1 年。循環信貸契約與我們現有的 ABL 類似，貸款以廠房、財產和設備作為擔保。透過這項新協議，我們加強了資產負債表並提高了財務靈活性。

At the end of the third quarter, our net debt-to-EBITDA ratio was at 1.8x. We used free cash flows to repurchase $5 million of our stock during the quarter. That translated into over 150,000 shares repurchased at an average price of $33.36 per share. Since we reinstituted the program back in 2022, we have repurchased 614,000 shares at an average price of $32.70 per share. We have roughly $10 million left on our share repurchase authorization.

截至第三季末，我們的淨負債與 EBITDA 比率為 1.8 倍。本季我們使用自由現金流回購了 500 萬美元的股票。這相當於以每股 33.36 美元的平均價格回購了超過 150,000 股股票。自 2022 年重新啟動該計劃以來，我們已以每股 32.70 美元的平均價格回購了 614,000 股股票。我們的股票回購授權還剩約 1000 萬美元。

Let's now move to Slide 11 for an outlook on the fourth quarter of 2023 as well as some updates to our full year expectations. With the expected impact of lower market pricing for paperboard, continued soft paperboard demand and a planned major maintenance outage in our Arkansas mill, we expect adjusted EBITDA in the range of $60 million to $70 million in the fourth quarter. For full year 2023, we expect adjusted EBITDA in the range of $278 million to $288 million. This is up from adjusted EBITDA of $227 million in 2022 driven by fewer major maintenance outages, improved operating performance, higher pricing and lower input costs.

現在讓我們轉到投影片 11，了解 2023 年第四季的展望以及我們全年預期的一些更新。由於紙板市場價格下降、持續的軟紙板需求以及我們阿肯色州工廠計劃的重大維護停運的預期影響，我們預計第四季度調整後的 EBITDA 將在 6000 萬美元至 7000 萬美元之間。 2023 年全年，我們預計調整後 EBITDA 在 2.78 億美元至 2.88 億美元之間。由於主要維護中斷減少、營運績效提高、定價提高和投入成本降低，2022 年調整後 EBITDA 為 2.27 億美元。

Lastly, our other key assumptions for the full year remain unchanged. Interest expense should be in the $28 million to $30 million range. Depreciation and amortization expense should be $97 million to $100 million. Capital expenditures should be between $70 million and $80 million, which includes approximately $9 million on our Lewiston recovery boiler tube replacement project and $11 million on the precipitated replacement in Arkansas. As a reminder, the recovery boiler project will require approximately $40 million of total spend, while the precipitator is projected to require $45 million. And finally, our tax rate should be in the mid-20% range.

最後，我們對全年的其他關鍵假設保持不變。利息支出應在 2800 萬至 3000 萬美元範圍內。折舊和攤提費用應為 9,700 萬至 1 億美元。資本支出應在 7,000 萬至 8,000 萬美元之間，其中包括劉易斯頓回收鍋爐管更換專案的約 900 萬美元和阿肯色州沉澱更換專案的 1,100 萬美元。需要提醒的是，回收鍋爐項目將需要約 4000 萬美元的總支出，而除塵器預計需要 4500 萬美元。最後，我們的稅率應該在 20% 左右。

Let me now turn the call back over to Arsen.

現在讓我把電話轉回給阿森。

Thanks, Sherri. We have previously discussed our prioritization for capital allocation to create shareholder value. Slide 12 is the framework for our approach. Our top priority is sustaining our assets, followed by maintaining a strong balance sheet, and finally, evaluating value trading opportunities, including returning capital to shareholders.

謝謝，雪莉。我們之前已經討論過資本配置的優先順序以創造股東價值。投影片 12 是我們方法的框架。我們的首要任務是維持我們的資產，其次是維持強勁的資產負債表，最後是評估價值交易機會，包括向股東返還資本。

I would like to now spend a few minutes sharing some thoughts about the broader strategy for both of our businesses. To start, operating performance matters greatly in both segments and is critical to meet customer needs. We have made significant progress over the past few years improving our operations and becoming a more competitive player in both of our businesses. But given the capital-intensive nature of our industry, we believe that scale is needed to be able to invest and grow.

我現在想花幾分鐘分享一些關於我們兩家公司更廣泛策略的想法。首先，營運績效在這兩個領域都非常重要，對於滿足客戶需求至關重要。過去幾年，我們在改善營運方面取得了重大進展，並成為兩項業務中更具競爭力的參與者。但考慮到我們行業的資本密集性質，我們認為需要規模才能投資和發展。

In paperboard, we believe that we're uniquely positioned to become a supplier of choice to independent converters across multiple substrates and product categories. To do that, we will explore offering additional paperboard products such as lightweight FBB, white top, poly-free cup stock, the additional recycled grades and other products that meet the needs of our customers. We're currently conducting engineering studies to evaluate the feasibility of investing in our existing assets to expand our product offering. We may also be opportunistic buyers of paperboard mill assets across SBS and other substrates. Our long-term goal is to build a scaled, high-performing and diversified paperboard business that is well matched to the needs of independent paperboard converters in North America.

在紙板領域，我們相信我們具有獨特的優勢，能夠成為跨多種基材和產品類別的獨立加工商的首選供應商。為此，我們將探索提供其他紙板產品，例如輕量 FBB、白色頂部、無聚杯紙、其他回收等級以及其他滿足客戶需求的產品。我們目前正在進行工程研究，以評估投資現有資產以擴大產品範圍的可行性。我們也可能是 SBS 和其他基材的紙板廠資產的機會主義買家。我們的長期目標是建立規模化、高性能、多元化的紙板業務，充分滿足北美獨立紙板加工商的需求。

In tissue, we believe that consolidation is needed given the consolidated customer landscape and the fragmented supplier base. The top 3 or 4 retailers in the U.S. now account for more than half of the private branded tissue market. Given the size and demands of these customers, private branded tissue manufacturers need scale to deliver the right combination of cost, quality and service. In addition, manufacturers need scale to be able to make sizable long-term investments in new capacity to keep up with the growth of these retailers. We believe that recent improvements in the tissue industry could facilitate the creation of a scaled private branded tissue manufacturer. As we stated previously, we're willing to participate in this consolidation under the right market conditions and appropriate values. To be clear, any internal or external investment decisions will be balanced with our goal of maintaining a strong balance sheet and financial flexibility through the cycle. We're going to continue to be disciplined allocators of capital, and we'll seek the right opportunities to create value across both of our businesses.

在衛生紙領域，我們認為，鑑於客戶格局的整合和供應商基礎的分散，需要整合。美國前三、四名零售商目前佔據了自有品牌衛生紙市場一半以上的份額。考慮到這些客戶的規模和需求，自有品牌衛生紙製造商需要擴大規模，以提供成本、品質和服務的正確組合。此外，製造商需要規模化，以便能夠對新產能進行大量長期投資，以跟上這些零售商的成長。我們相信，衛生紙產業最近的進步可以促進創建規模化的自有品牌衛生紙製造商。正如我們之前所說，我們願意在適當的市場條件和適當的價值下參與這次整合。需要明確的是，任何內部或外部投資決策都將與我們在整個週期中保持強勁的資產負債表和財務靈活性的目標相平衡。我們將繼續成為有紀律的資本配置者，並將尋求合適的機會在我們的業務中創造價值。

In summary, we have spent significant efforts over the last several years improving our operating performance, especially in areas that matter most to our customers. We have also greatly improved our financial position by focusing on cash flow generation and debt reduction. We are now well positioned to look at all strategic options for our company to grow and create value for our shareholders.

總而言之，我們在過去幾年中付出了巨大努力來提高我們的營運績效，特別是在對我們的客戶最重要的領域。透過專注於現金流產生和債務減少，我們也大大改善了我們的財務狀況。我們現在處於有利位置，可以考慮公司發展的所有策略選擇，並為股東創造價值。

Let me close by thanking our people for all that they do to keep our operations running safely and efficiently. I would also like to thank our customers for placing their trust in us and our shareholders for their continued support. With that, we will end our prepared remarks and take your questions.

最後，我要感謝我們的員工為確保我們的業務安全高效運作所做的一切。我還要感謝客戶對我們的信任以及股東的持續支持。至此，我們將結束準備好的發言並回答大家的問題。

(Operator Instructions) Your first question comes from Matthew McKellar with RBC Capital Markets.

（操作員說明）您的第一個問題來自 RBC 資本市場的 Matthew McKellar。

Just like to start with the paperboard business. It sounds like you're expecting a gradual recovery in that business toward -- in 2024. Maybe you could provide a bit of color on whether that's early in 2024 or whether we see that recovery start later in the year. But it sounds like we shouldn't see much of a change in shipments quarter-over-quarter in Q4. Can you talk a bit about weather conditions in the paperboard market have sort of improved or worsened through the quarter and to kind of start progressing through October here? Are there any specific areas of strength or weakness by end market you'd call out? And then what are your customer conversations like at this point? And what gives you confidence in recovery that starts sort of in '24 year?

就像從紙板業務開始一樣。聽起來您預計該業務將在 2024 年逐步復甦。也許您可以提供一些信息，說明復甦是在 2024 年初，還是我們會在今年晚些時候開始復蘇。但聽起來我們應該不會看到第四季的出貨量較上季發生太大變化。您能否談談紙板市場的天氣狀況在本季度有所改善或惡化，並在 10 月開始有所進展？您認為終端市場有哪些具體的優點或缺點領域？那麼此時您的客戶對話是什麼樣的呢？是什麼讓您對 24 年後開始的復甦充滿信心？

Yes. Thanks, Matthew. So if you look at volume Q2 to Q3, we're flattish. We're actually maybe up slightly in volume. But I think conditions remained stable in Q3, throughout Q3, and we're seeing similar conditions here as we start Q4. We're not seeing a material recovery just yet. The market -- the SBS reduction and demand is down. So if you look at RISI numbers, they're showing a 10% decline this year. We believe that a lot of that is driven by destocking. So at some point, the destocking will come to an end, and we'll start seeing a gradual recovery back to 2022 levels.

是的。謝謝，馬修。因此，如果你看看第二季到第三季的銷量，我們的表現持平。實際上，我們的數量可能略有增加。但我認為第三季和整個第三季的情況保持穩定，並且在第四季開始時我們也看到了類似的情況。我們還沒有看到物質復甦。市場——SBS減產，需求下降。因此，如果您查看 RISI 數據，您會發現今年下降了 10%。我們認為，其中很大一部分是由去庫存推動的。因此，在某個時候，去庫存將會結束，我們將開始看到逐步恢復到 2022 年的水準。

If you look at RISI, they're forecasting 4% production increase next year and 5% in 2025. So it may take some time to recover. At this point, we're not prepared to project whether that happens in Q1 or Q2, but we do believe that recovery will start next year.

如果你看看 RISI，他們預測明年產量將增加 4%，2025 年產量將增加 5%。因此可能需要一些時間才能恢復。目前，我們不准備預測這種情況是否會發生在第一季或第二季度，但我們確實相信復甦將於明年開始。

If you look in the long run, there are some favorable trends in SBS sustainability trends. The markets are inherently stable if you look at the end-use applications. So we do think once we get through this destocking, that the market will start recovering gradually and our production and volumes will start gradually recovering in 2024.

如果從長遠來看，SBS 的可持續發展趨勢存在一些有利的趨勢。如果你看看最終用途應用程序，市場本質上是穩定的。因此，我們確實認為，一旦完成這次去庫存，市​​場將開始逐漸復甦，我們的產量和銷售也將在 2024 年開始逐漸恢復。

Great. Maybe we could stick with paperboard. Is there any additional color you can provide on sort of the time line and maybe bound with investments you're contemplating as it relates to product development in the paperboard business? And then maybe as you think across what could be out there in terms of acquisition opportunities, what might be complementary to your portfolio?

偉大的。也許我們可以堅持使用紙板。您是否可以在時間線上提供任何其他信息，並且可能與您正在考慮的與紙板業務的產品開發相關的投資相關？然後，也許當您思考收購機會方面可能存在哪些問題時，什麼可能會對您的投資組合起到補充作用？

Yes. So we're looking at the independent converting -- independent converter market out there and see what their needs are in the long run, not just SBS but other applications, other paperboard applications, so whether it's lighter weight products like FBB, more recycled grades and other products as well. So our aim is to develop what products that cover the spectrum for those independent converters. We've started the work, the work will continue into next year. So we don't have any definitive time horizons for when we'll make decisions. And so we're going to continue to work through next year.

是的。因此，我們正在關注獨立加工市場，看看他們的長期需求是什麼，不僅是 SBS，還有其他應用、其他紙板應用，無論是 FBB 等重量更輕的產品，還是更多回收等級的產品以及其他產品。因此，我們的目標是開發哪些產品能夠涵蓋這些獨立轉換器的頻譜。我們已經開始這項工作，這項工作將持續到明年。因此，我們對於何時做出決定沒有任何明確的時間範圍。因此，我們將在明年繼續努力。

In terms of potential acquisition targets, as you know, Matthew, these are episodic. So what's important to us is the right strategic fit, the right quality asset and the right valuation for those assets. So we'll look at opportunities as they come up, but they have to be a good fit for our network. But we do see ourselves as a leader in that independent converter market. We want to build a company that provides for the needs of those independent converters. They're an important part of the broader paperboard market, and it's our intent to be the supplier of choice.

就潛在收購目標而言，如你所知，馬修，這些都是偶發性的。因此，對我們來說重要的是正確的策略匹配、正確的優質資產以及對這些資產的正確估值。因此，我們會在機會出現時關注它們，但它們必須非常適合我們的人脈。但我們確實將自己視為獨立轉換器市場的領導者。我們希望建立一家能夠滿足這些獨立加工商需求的公司。它們是更廣泛的紙板市場的重要組成部分，我們的目的是成為首選供應商。

Okay. And then just switching over to tissue. You touched on it, and we've seen pulp pricing come down a lot over the last year. And I think you talked about kind of competitive dynamics and what's going on with pricing to some extent there. But any additional color you can provide? And it sounds like you're looking to retain most of the economics you've captured. But just what you're seeing there from competitors and what you expect price to do here if pulp stays where it is over the next couple of quarters would be great?

好的。然後改用紙巾。您談到了這一點，我們看到去年紙漿價格下降了很多。我認為您談到了競爭動態以及定價在某種程度上的情況。但是您可以提供任何其他顏色嗎？聽起來您似乎希望保留您所獲得的大部分經濟效益。但是，您從競爭對手那裡看到了什麼，以及如果紙漿在接下來的幾個季度保持在原位，您預計價格會發生什麼變化？

Matthew, we tend to stay away from commenting on pricing projections. What I would tell you is in this market, supply and demand drive price. And as we mentioned in our comments, we think there's a pretty -- there's a good healthy supply and demand balance, so that's driving pretty good utilization rates in the industry. So if you look back at 2018 through 2020, there's quite a bit of supply added to the private branded market, which we think outpaced demand growth. If you look at '21 through '23, there was actually a net reduction in capacity. And then if you look out over the next 3 years, we think that the supply additions will roughly match with demand growth. So we think we're in a different and a better tissue market at this point, but I'll refrain from commenting on future pricing.

馬修，我們傾向於避免對定價預測發表評論。我要告訴你的是，在這個市場上，供需驅動價格。正如我們在評論中提到的，我們認為存在良好健康的供需平衡，因此這推動了該行業相當高的利用率。因此，如果你回顧 2018 年到 2020 年，自有品牌市場的供應量增加了相當多，我們認為這超過了需求的成長。如果你看看 21 年到 23 年，實際上產能是淨減少的。然後，如果你展望未來三年，我們認為供應增加將與需求成長大致相符。因此，我們認為目前我們處於不同的、更好的衛生紙市場，但我不會對未來的定價發表評論。

In terms of pulp, we did mention in our prepared remarks that about 1/4 of our volume does have a pulp cost component that's tied to RISI. So we are expecting some headwinds here in the coming quarters, $4 million to $6 million per quarter due to lower pulp costs. But if you look at our margin improvement over the last several quarters, we believe that we'll be able to retain most of that margin improvement, at least in the near to medium term. So we think the conditions are better in tissue today than they were over the last several years, if you set COVID aside.

就紙漿而言，我們在準備好的評論中確實提到，我們大約 1/4 的產量確實包含與 RISI 相關的紙漿成本部分。因此，我們預計未來幾季會出現一些阻力，由於紙漿成本下降，每季將出現 400 萬至 600 萬美元的阻力。但如果你看看過去幾季我們的利潤率改善情況，我們相信我們將能夠保留大部分利潤率改善，至少在中短期內是如此。因此，我們認為，如果不考慮新冠病毒的話，今天的組織狀況比過去幾年好。

Okay. And then maybe just to drill down on one point there. Do you expect a shift in private branded product consumption or sort of the market share there? Do you expect that shift to slow from here given the overall inflationary pressures for consumers seem to have sort of eased? Should we expect that trend to stabilize? Or do you expect sort of further share gains by private branded product from here?

好的。然後也許只是為了深入研究其中的一點。您預期自有品牌產品的消費或市佔率會改變嗎？鑑於消費者的整體通膨壓力似乎有所緩解，您是否預期這種轉變會從現在開始放緩？我們是否應該預期這種趨勢會穩定下來？或者您預期自有品牌產品會進一步增加份額？

We're right around 36% right now, which was roughly the same as we had last quarter. If you go back to 2019, it was less than 32%. And if you go back 10 years, it was quite a bit less than that. So we've seen private branded share grow regardless of economic conditions, through ups and downs in the economic cycle. So we do think that there's more runway for private branded share. If you look at some European countries, they're north of 50%. We're now at 36%. So do I think it's going to be consistent growth quarter after quarter? No. But I think if you look at over the long haul, I do think private brands, we believe that private brands will pick up additional share over the next several years.

我們現在的比例約為 36%，與上個季度大致相同。如果你回到 2019 年，這個比例還不到 32%。如果你回到 10 年前，你會發現這個數字要少得多。因此，我們看到，無論經濟狀況如何，在經濟週期的起起落落中，自有品牌的份額都在成長。因此，我們確實認為自有品牌份額有較多的發展空間。如果你看看一些歐洲國家，你會發現它們的比例超過了 50%。我們現在是 36%。那麼我認為它會逐季持續成長嗎？不會。但我認為，如果從長遠來看，我確實認為自有品牌，我們相信自有品牌將在未來幾年內獲得更多份額。

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

我們的下一個問題來自 RBC 資本市場的 Paul Quinn。

Yes. I just wanted to tag team of Matt's question on the tissue side. It sounds decent at 18% EBITDA margin. But is that the best this business can be? I mean if we go back a couple of years, you guys really struggled in the business, and it seems like the pulp now sort of bottoming, turning the other way. You're definitely going to have that cost headwind. Just wondering how confident you are holding that margin.

是的。我只是想在紙巾方面標記馬特的問題團隊。 18% 的 EBITDA 利潤率聽起來不錯。但這是這項業務所能做到的最好的嗎？我的意思是，如果我們回到幾年前，你們在這個行業真的很掙扎，而且紙漿現在似乎已經觸底，轉向另一個方向。你一定會遇到成本逆風。只是想知道您對保持這利潤有多大信心。

Yes. So we'll avoid talking about future margin projections, Paul. But I do think that we can retain the bulk of that margin that we picked up here over the last several quarters. If you go back outside of COVID, we were probably in that mid- to high single-digit EBITDA margin. We've done a lot of work on our system with our assets and our supply chain, in our production and our customers. We think we are better positioned operationally regardless of what happens with pulp prices, although obviously, those are providing a nice tailwind for our margins.

是的。所以我們將避免談論未來的利潤預測，保羅。但我確實認為我們可以保留過去幾季所獲得的大部分利潤。如果你回顧一下新冠疫情以外的情況，我們的 EBITDA 利潤率可能處於中高個位數。我們利用我們的資產、供應鏈、生產和客戶，在我們的系統上做了很多工作。我們認為，無論紙漿價格如何變化，我們在營運上都處於更好的位置，儘管顯然，這些都為我們的利潤提供了良好的推動力。

But pulp is hard to predict, Paul. We've been through -- we talked about this at length over the years. It's hard to predict. We don't see global demand fundamentals to drive up pulp price here in the near to medium term, although we've all been wrong. But we do think our business is fundamentally in a much better place than it was a few years ago, and pulp prices will do what they do.

但紙漿很難預測，保羅。多年來我們已經詳細討論過這個問題。很難預測。我們認為全球需求基本面不會在中短期內推高紙漿價格，儘管我們都錯了。但我們確實認為，我們的業務從根本上來說比幾年前要好得多，而且紙漿價格也會改變。

Okay. And is there some product on the tissue side that you're missing or that you'd love to have more of? Is there -- just trying to just figure out your business going forward.

好的。您是否缺少或想要更多紙巾方面的產品？是否有—只是想弄清楚您的業務未來發展。

Yes. Paul, we cover all quality tiers and product segments nationally. So that's what makes us somewhat unique in this industry. Historically, the ultra segment has grown faster than the conventional and the value segments. Our Shelby investment plays to that, and we placed a lot of those tons in the ultra space. But I think we're pretty well covered in terms of quality and products. What I did mention in my comments is I think in the long run, what's needed in this industry is that consolidation that is -- where scale players able to invest in the business in the long run to add capacity, to grow low-cost capacity. But I think it requires scale. We are a smaller tissue player. And those investments are large and they take many years to achieve the kind of return that we would need to see. So we're not all that well positioned to make those big investments at this point, which is why we think that consolidation is needed.

是的。保羅，我們涵蓋了全國所有的品質等級和產品領域。這就是我們在這個行業中的獨特之處。從歷史上看，超細分市場的成長速度快於傳統細分市場和價值細分市場。我們對謝爾比的投資正是利用了這一點，我們將大量的此類資源放置在超空間中。但我認為我們在品質和產品方面做得很好。我在評論中提到的是，我認為從長遠來看，這個行業需要的是整合——從長遠來看，規模企業能夠投資於業務以增加產能，並提高低成本產能。但我認為這需要規模。我們是一家規模較小的紙巾生產商。這些投資規模龐大，需要很多年才能實現我們需要看到的回報。因此，我們目前還沒有做好進行這些大規模投資的準備，這就是為什麼我們認為需要進行整合。

There are no further questions at this time. This will conclude our conference call. Thank you for joining us today. You may now disconnect.

目前沒有其他問題。我們的電話會議到此結束。感謝您今天加入我們。您現在可以斷開連線。