Magnera Corp (MAGN) 2002 Q1 法說會逐字稿

Good morning. I'm Pat Sweeney, Corporate Manager of Communications for Glatfelter. I'd like to welcome you to today's conference call.

On the call today is George Glatfelter, Chairman and Chief Executive Officer; Bob Newcomer, President and Chief Operating Officer; and George McKenzie, Executive Vice President and Chief Financial Officer.

Today's call will last approximately 30 minutes. Mr. Newcomer will provide a review of operations and market conditions for the company. Mr. McKenzie will share financial highlights for the quarter. Mr. Glatfelter will offer closing remarks and entertain questions from all participants.

Due to technical difficulties, we were delayed in posting earnings this morning. You should be receiving it via business wire momentarily.

I would like to remind you that the statements made today with regard to our future expectations may constitute forward looking statements within the meaning of the Private Securities and Litigation Reform Act of 1995. Although we make such statements based on assumptions we believe to be reasonable, there can be no assurance that actual results will not differ materially from our expectations.

Now I would like to turn the call over to Mr. Newcomer.

Thank you, Pat, and good morning, everyone. This is Bob Newcomer.

I'd like to review with you several areas of our business this morning. First of all, talk about our market conditions during the first quarter for our three business units; secondly, talk a little bit about our expectations for these market areas over the next quarter; review with you our mill operational highlights; and finally, update you on ERP, our enterprise resource planning tool, using SAP software.

So let me begin with the market conditions for our three business units. Let me start with printing and converting, which is our business unit that manufactures and sells products primarily for the publishing industry. They would be hard bound quality books, such as novels for the Harry Potter series. Also within this business unit are papers that we produce for envelope manufacturers.

Demand in the first quarter within this business unit was quite strong, especially for book publishing. January and February, which are seasonally slow times in these markets, that certainly was not the case this year. We really believe that was as a result of the events of September 11th that really slowed the book publishing sector of the business down dramatically during the fourth quarter. The book manufacturers really made up for it in the first quarter of 2002.

We actually currently have our book publishing customers on allocation, which allows us to provide the same kind of high standards in terms of service levels to our customers as well as gives us the opportunity to improve our product mix. We know that our competition in book publishing is not as busy as we are. The good news is that we're the preferred supplier in this market. But the bad news is that hungry competition for orders sometimes results in pricing situations that hurt our margins.

From a pricing standpoint, pricing for publishing grades are generally pretty stable. There actually is a price increase going into effect now for commodity offset papers which is being led by the large commodity players. We are following that price increase of $40 per ton. But we're only a small player in that market, with only about 7 percent of our revenues in the offset side of the business.

So this is not going to have a materially significant impact on our margins. However, if this price increase holds, and it's certainly not a sure thing, it could set the stage for a price increase for publishing papers later this year, which would materially impact our margins.

Prices for envelope papers are stable as well. They declined somewhat in the fourth quarter, but they have now stabilized. Here again, if the commodity offset price increase sticks, envelope prices may also increase later this year.

In terms of our expectations for the second quarter, we expect demand to stay strong with some price relief in the offset grades, but no broad based price increases until at the earliest the third quarter. We believe that our number one position in book publishing and our service programs, which are now being complemented with our web based technology of MyGlatfelter.com, will allow us to remain the supplier of choice in the book publishing market.

Let me now make a few comments about our second business unit, which are engineered products. These are highly specialized paper products with multiple end uses. Some examples would be pressure sensitive stamp papers, disposable surgical gowns, ink jet papers, playing cards, transfer and release and other casting papers. Demand for these papers remains strong in the first quarter. Here again, we were in an over-sold situation with one of our coaters, so we are now working on improving our margins by improving our product mix. Certain lower margin products are being replaced by higher margin products, either in the same or different market segments.

Our other coater is now getting staffed to start its third shift. This will provide approximately 6 percent additional volume with little additional out of pocket expense for labor and overhead. Hence we anticipate a nice improvement in margin for our engineered products business unit. This third shift should begin operation early in the third quarter and be fully functional by the end of that quarter.

Prices within engineered products business unit are stable. There are pockets of price pressure within certain markets, primarily as a result of the weakness in the broader coated paper markets, but nothing that seriously impairs our margins. Our forecast for the near term si continuing strong demand and stable pricing. We are quite pleased with the growth in this business unit over the last two years. Filling the capacity generated from the third shift on one of our coaters along with improving our margin by improving our product mix is going to be our focus for the balance of this year.

Moving on to our third business unit, our long fiber and overlay papers, and these are primarily products for tea bag papers and papers for laminates in flooring and furniture applications, demand has been strong in this seasonally busy season for tea bag papers. Demand for overlay papers is strong, having improved from a weaker fourth quarter which was impacted by the slower economic conditions worldwide. Our backlogs for tea bag papers are stronger than our competition, and hence there is some pricing pressure at select accounts. But in general, prices remain stable.

This business unit is our other area of focus for growth, just a reminder of our announcement of six months ago, to invest $36 million to increase our capacity to produce and sell both tea bag and overlay papers. That project is scheduled to be completed toward the end of 2003. We're excited about our growth opportunities in these key markets. Our outlook for long fiber and overlay papers remains quite positive in the near term. We expect demand to remain strong, pricing to be relatively constant, and our margins to remain healthy.

Let me next make a few comments about our operations. We've experienced good operational results at all of our locations during the first quarter. All of the mills performed at or above planned levels. Cost control was also good, with spending levels at or below our budget.

We continue to benefit from cost saving ideas, generated from an extension of drive, our cost reduction program from last year. The drive process remains in place and good cost saving ideas continue to come through from our employees. Our employees are keenly interested in keeping our operations cost competitive. They realize that they have a significant control over the major elements of our cost structure.

One key cost element force is market pulp. The cost for that product continues to be near historically low levels. The current list price for northern bleached pulpwood kraft, which is the benchmark, is $460 per ton. Although just within the last week, many suppliers announced price increases, which will take this cost to about $480 per ton effective on May 1st.

This very low cost for pulp certainly helps our cost structure, especially in the long fiber and overlay business unit. But it's really a mixed blessing in printing and converting. The lower cost material is helpful, but historically higher pulp costs translate into higher prices for printing and converting products. Those higher prices more than offset the higher cost for pulp and hence margins improved.

With the pulp market perhaps improving as a result of these recently announced price increases, we are hopeful that this will translate into an improved environment for paper prices. The timing of such a move is difficult to predict, however.

Let me finally make some comments about our enterprise resource planning, ERP system, which uses SAP software. We launched the SAP software on April 1st at both of our U.S. locations. I'm pleased to say that they were very successful implementations. We experienced no business interruptions with a minimal number of glitches internally. We are quite pleased with our planning and execution of this initiative. There will continue to be a learning curve. But the excellent start will certainly lessen the slope of that curve.

Our next focus for ERP is the implementation in Europe which is set for later this summer. We will also be working to recognize the benefits from having consistent, reliable and more timely information available to us. The real benefits of this system come from making better, more informed decisions and making them faster, so that positive actions can be taken to improve our performance. These benefits will accrue over time as we absorb the information and make it work to our advantage.

We also continue to work on leveraging our web based technology of MyGlatfelter.com by extending its use to more customers. Our goal is to have 80 percent of our North American revenue base using that tool by the end of this year. Feedback from our customers continues to be quite positive about how this tool is improving their performance and how it lowers their cost of doing business.

The next challenge is to incorporate the information out of our SAP system into our web technology to provide even more robust, valuable information to our customers and eventually to partner with customers to link our information systems to theirs to make transactions transparent.

In conclusion, I'd summarize the status of our markets as holding up quite well, especially when contrasted with the broader uncoated and coated free sheet markets. We are growing our business in the specialized niche markets as a result of successfully implementing our specialized business model. Our operations are running well, our cost reduction program is generating significant savings, and the ERP system is up and running in the U.S. and is within its budgeted costs.

We are pleased with the progress we are making in transforming this business, especially when considering the broader economic and industry specific conditions. We are clearly making significant progress in developing a business model that is distinctive within the paper industry.

Thank you, and now I'll turn it over to George McKenzie to review our financial results.

Thank you, Bob. Good morning, everyone.

Despite a continued difficult economic environment, first quarter 2002 results of 26 cents per share on balance were good and above Wall Street expectations, despite being below the first quarter of 2001. First quarter 2001 results still included the

, which contributed 3 cents per share and is included in 36 cents earned last year. The performance reflects continued progress to the specialized business model, which is to be the global supplier of choice in specialized printing papers and engineered products.

While reported sales are down $53.6 million, or 29 percent,

sales accounted for $42 million of that decline. For the remaining businesses, engineered products volume was up a strong 11 percent and volume in long fiber and overlay, as well as printing and converting, was essentially flat. Reductions in average selling prices caused the year over year sales decline. Engineered products average selling prices were down over 7 percent, long fiber and overlay down over 2 percent, primarily due to currency, and printing and converting down almost 8 percent. These price reductions were worth approximately 13 cents a share in quarter over quarter results, and more than explain the reduction in EPS this quarter versus the first quarter of 2001.

Let me turn toward the expanded income statements that we have given you with the press release and highlight a few items and then give a few balance sheet statistics. First I would highlight gross profit margin of 24.7 percent in the first quarter of this year, versus 24.5 last year and 20.8 in the fourth quarter of last year. Significantly better results than the fourth quarter and better than last year, which is indicative and reflective of the cost control that Bob had mentioned.

Operating profit of almost $18 million or 13.6 percent of sales, again, is significantly improved over the fourth quarter and lower than the first quarter of last year, but the difference is all reflected in pricing compared to this time last year.

The effective tax rate we used for the first quarter was 35 percent versus 35.9 percent last year. Return on capital employed on a 12 month rolling average is just under 10 percent this year versus 10.7 percent last year. Continued progress in reduction of debt occurred as net debt to capital was lowered from 34 percent at year end to 33 percent at the end of the first quarter. And finally, capital expenditures for the first quarter this year were $8.4 million versus $9.5 million in the same quarter a year ago.

Now I'd like to turn it over to George Glatfelter to give a summary and his closing remarks.

Thank you, George. Good morning, everyone.

As you were talking, Bob, I was thinking, it takes a certain amount of chutzpah for any company to go live with ERP on April Fool's Day. That's Glatfelter for you. The startup I think really reflects the confidence and the capabilities within our work force, and just another great job of executing against the plan and Bob, publicly, I'd like to commend you for your leadership in the ERP implementation.

I think both George and Bob have done a pretty good job of summarizing our first quarter results and the business experience. So frankly, there's not much that I can add to their remarks. My broad observation is that the Glatfelter specialized business model continues to perform well in a business environment that in my view offers little in the way of expectation for near term improvement.

As Bob has indicated, our order volume across the entire product portfolio has been quite strong. I think this fact has differentiated Glatfelter from others who participate in this segment of the industry. The core issue for us, however, is no different from anyone else in the white paper side of the business. The issue has been and continues to be the lack of pricing power. As I've mentioned in our 2001 annual report, absent some improvements in pricing, it's unlikely that we can achieve our ROCE targets by 2004.

Also, although we remain committed to disciplined growth and have expended a high level of energy in this direction over the past year, we've been unable to identify growth opportunities that have met our financial expectations. This fact, when coupled with the divestiture of our tobacco papers business in mid-2001, makes our objective of generating $1 billion in sales revenue by 2004 equally problematic. I've said on previous conference calls and frankly, I've said directly to many of you that are on this call today, that we're not going to do a dumb acquisition simply to meet our revenue targets. I've meant it every time that I've said that, and I mean it again today.

The vision of this company continues to drive us to become the global supplier of choice in specialty papers and engineered products, and we intend to continue to pursue this vision and effectively execute the model upon which our strategy is based.

Having just returned from about three weeks of meetings with key customers around the globe, I can tell you that Glatfelter today is perceived to be the supplier of choice in each of our markets. Bob had referred to that. Customers are willing to pay a price premium for the value that they receive beyond paper through our relationship. It's why our order books are full when others are searching for business. Frankly, I guess in an economic environment like this, that's not a bad place to be.

I was thinking about this the other day, I was watching part of the Volvo Cup ocean sailing race. I don't know whether anyone else has followed that. I found it fascinating. I actually watched two segments of the race. The one that I saw that was pretty intriguing was when the boats were racing around Cape Horn and they were confronting gale force winds, 30 foot seas, icebergs, and they were dealing with frostbite and broken bones and broken masks, everything you can imagine.

The second segment that I watched were those same boats off of the coast of Florida just barely headway in a very light breeze. I was struck with some of the same thoughts about those crews and the degree of frustration they must have felt, while knowing full well the capabilities of their boats and being unable to move faster. Frankly, high winds and even a few icebergs to dodge would be most welcome within this industry right now. Practically speaking, however, I don't see them on the near term horizon.

I continue to believe, as Bob has indicated and I think George has supported as well, that the remainder of 2002 will be very challenging for this business. I also feel that the outlook for 2003 and '04 is more positive, and that the combination of a continuing economic recovery here in the U.S. and further consolidation within the industry should lead to improved levels of demand and ultimately improved pricing.

In the meantime, our direction is clear. We will continue to build the capabilities in our business to further support the specialized business model that we've developed. We've got three corporate-wide focus points for the remainder of 2002. These are the things we can influence and control. And they are the things that matter most to us.

The first is to continue to drive reduction in cost of goods sold and margin enhancements to improve our ROCE performance. You heard Bob talk about some of the plans that are underway.

The second is to follow our successful North American ERP launch with similar successes in our European go-live later this fall. Success is defined as on time, under budget and with no material adverse consequence to the business. A corollary to this focus point is to maximize the benefit that the technology provides to our business by actively integrating the capabilities of the new information platform.

A third focus point is to continue to executive effectively the Glatfelter specialized business model with particular emphasis on extending our value proposition to customers. Metrics around this focus point call for continued revenue growth in our EP business and finding other ways to get paid for the value we create for our customers. I had mentioned that the variable compensation of the Glatfelter executive team is aligned with the effective execution of these three corporate focus points.

Bottom line, I guess, is that we can't change the current economic environment, but we can continue to leverage our specialized business model to further differentiate Glatfelter from others. And even in a light economic wind, there's the opportunity to differentiate and develop competitive advantage. We're going to continue to explore any and all ways to create value to all constituents and will continue to look for ways to strengthen our position as the supplier of choice in the markets in which we participate.

That's my overview for this morning. I'd like to thank all of you for your participation in today's call and for your continued support of GLT. Pat, I'll turn the call back to you for the Q&A segment.

Great. Thank you, George.

Now I would like to turn it over to the conference call operator, who will field questions for us.

Are there those at this time who like to ask any questions? You may press star one on your touch tone phone. You will be announced prior to asking your questions. Once again, press star one.

Your first question is from Mark Wild.

Good morning, George, George and Bob.

Good morning, Mark, how are you today.

Good. I wondered first, just a couple of detail issues. Could you give us some sense of what loading that second coater, I think that's the G coater that you're talking

Are you there, Mark? We're dead. Hello?

Is the operator on?

Technical problems.

I'm sorry for the inconvenience. We had some telephone difficulties there.

Let me open Mark Wild's line. One moment, please.

Mr. Wild, your line is now open.

Thank you. Can you hear me?

Yes, we can.

A couple of detail questions first. I wondered if you could talk about the leverage over the next several quarters from loading that second coater, I think that's the G coater that you were talking about.

Right.

Any sense of that?

I don't want to get into specifics in terms of margin, Mark. I can tell you that by adding the additional shift, the third shift, we'll generate about an additional 6,000 tons of capacity. So that might give you some indication, and again, just so everybody understands, we can do that without adding any significant overhead or significant additional labor expenses with that. So the margins, the return on that is very significant, as you might imagine.

Another detail question. Bob, can you just remind everybody of how much market pulp you buy every quarter, and if you could also give us a sense of whether your wastepaper costs up at Neenah are moving at all right now?

Mark, it's about 20,000 to 25,000 tons per quarter. That's down, as you might recall, from when we owned the Acusta division, we purchased a lot of the pulp down there. So it's down rather significantly. And wastepaper costs, about $20 per ton lower than previously.

Okay.

Those costs are, you know, again, pretty darned low levels. They really track very closely what happens in the hardwood pulp market.

Okay. Then from a bigger picture perspective, I wondered if you can just talk about kind of acquisition strategy and I wondered if you can specifically talk about sort of looking at things here in North America versus offshore. And then whether you're looking at things kind of outside of the paper business proper.

Okay, Mark, this is George. I'll take a stab at that.

First of all, our acquisition strategy is disciplined. It's disciplined by some pretty rigorous financial metrics. So we are not in the market simply to buy tonnage or simply to increase revenue. Our focus is very specific. I would tell you that to support a growth strategy for this business over the past year, we've developed competencies within our organization that have allowed us to catalog assets across the globe, identify the markets that are most attractive to us, and really build the capability to go forward and execute the right acquisition when it comes forward.

With respect to where those acquisitions may or may not be, as I indicated, they can be anywhere around the globe. Over the past year, we have explored a large number of possibilities, some of them were direct paper making operations, some of them were more aligned to converting operations. In terms of casting the net for growth for this business, we're prepared to cast it wide, beyond paper, to the extent that we don't move out of the core competencies that we've developed within this business. I tell you that being able to participate and grow markets in the areas of engineered products and specialized, the long fiber and overlay, puts us into very close proximity with a number of converters that utilize different substrates, and I think present potentially intriguing opportunities for growth for Glatfelter.

But the bottom line is, as I mentioned earlier, we're not going to do anything dumb here. We're moving forward in a very, very disciplined approach. I think there are assets that are particularly attractive to a company like Glatfelter. Many of them I think tend to be located in the European continent, but I certainly wouldn't discount assets that are available here in North America.

Okay. And then finally, just a question about capital spending. I think you said about eight and a half million dollars in the first quarter, George McKenzie.

Yes, that's right.

Does that include monies for the projects in the Phillippines, at the Abaca pulp mill, and also for some of the upgrades you're doing over in Guernsbach?

Yes, it includes a small amount, but I must say that the larger amount of capital spent in the quarter was related to the ERP implementation that Bob and George have mentioned.

Are we going to see a ramp in that number as sort of the Phillippines and Germany ramp up?

Yes. More towards later this year and next year.

Okay. Do you have a number for the full year this year and then for next year, George?

In the annual report, I think we disclosed a number in the neighborhood of 50 plus million for the year 2002 for total capital. And again, that includes impact for the ERP.

Okay. Any thoughts on 2003?

It's still somewhere in that neighborhood, as impact goes down and more money is spent on the German and Philippine expansion.

Okay, very good. Thank you.

Your next question is from

, from the Carl Group.

Folks, congratulations on a much better than expected quarter. I actually have two questions. The first relates to financial planning. Obviously the bank facility is coming due fairly soon. And a question for George McKenzie, George, would you think it might be advisable to perhaps lock in a fixed rate instrument, senior note, something like that, to term out the maturity of the debt, particularly if there will be a disciplined acquisition program in the next few years. That's the first question. Then after that I'd like to ask a second question.

Okay, Bob, thanks. You're right, the debt is due December 22nd. We are in the process right now of, actually we're very close to putting a strategy together as to how we are going to refinance that debt, which we don't think will be any problem at all.

And to answer your second question, we are also looking at fixing in the rate, given where rates are today. You should also know that in the process of refinancing this debt, I think as you know, Bob, it was $150 million. Because of exchange rates, it's now down to $120 plus million. So we've had a $30 million economic gain, for which we've also been able to identify ways to have offsets of losses, so as not to pay tax on that economic gain.

Okay, good. Second question is really just an observation. If you look at insider sales, you see an awful lot of people exercising stock options and selling, particularly I guess in February. Obviously the stock had depreciated 50 percent, so I'm not overly concerned about that. But I just wondered if management could comment on what appears to be an inordinate amount of senior officers selling altogether.

I'll take a stab at that, Bob. This is George. And you didn't see my name on that, by the way.

But we had put in an option program for executives and other employees for this company several years ago. Those options, as you might have expected, have been under water for quite a long period of time. So really what I think you see here are employees taking advantage of a benefit, frankly, that they've earned. I think that there have been a relatively large number of executives taking advantage of that. I'm glad they've been able to that. Variable compensation, the whole idea of options, is designed to drive value both ways. I think it's done that. That's why, for the first time, you see options that are above water, presenting alternatives to members of the executive team that simply weren't there for a long time.

Right. If I could just follow up on that as a fairly large shareholder and former CEO of an NYSE company myself, I think it's a perfectly appropriate thing for those people to do. I agree with you, and it seems to me even more appropriate to do it in the context of the quarter in which you exceed Wall Street expectations. I think that's just fine. I really do.

Thank you.

That's all I've got.

Okay. Good talking with you, Bob.

Okay, George. Thanks.

Your next question is from Mark Connelly, from Credit Suisse First.

A couple of things. I wonder if George McKenzie could walk us through what to expect over the next couple of quarters in terms of SAP implementation, and when you would expect to have milestones to be talking to us about. I was hoping we could circle back to the book business question. Bob, you made the comment that 9/11 affected seasonality last year. I'm curious whether you think this is going to be a typical year ahead, whether that one time issue is out of the way or whether you still some funny seasonality in there.

Mark, this is Bob. I'll deal with that question and maybe also make some comments about the ERP. There clearly was a significant downturn in book publishing demand the fourth quarter. Actually what happened was a lot of folks were going to be out pushing their books. As you know, usually in the September-October- November time frame, right before the holidays, is a big time to get authors out pushing their books. With all the travel restrictions and everything associated with September 11th, that really dried up.

So the first quarter, we think, was a pickup from that. But actually, we see the rest of this year relatively strong. Normally, as we get into the second quarter, which we're in now, demand for book publishing picks up, and it has. I mentioned that we are in allocation, which is unusual. We're clearly the only person in the book publishing market that does have our customers in allocation. We need to do that in order to manage their expectations from an ordering standpoint as well.

So we see the balance of this year as pretty normal, and think that the slowdown that we saw towards the end of last year was an aberration.

Let me make some comments about the ERP. Our plan right now is to launch the ERP first of all in Germany, mid to late summer, then launch in France late summer or early fall. And we're on track to be able to do that. We believe we've learned an awful lot by going to the process here in North America and being able to leverage all that learning into what hopefully will be a more shallow learning curve for our co-workers in Europe.

I'll also tell you that the folks in Europe have gone through, the Schoeller group, before we owned them, went through an ERP implementation back in the early mid-'90s. So they have been through this process once already and have learned from it. So we remain confident that we'll have a successful launch in Europe, just as we have here in the States.

Thank you, Bob.

I've just got two more questions. The first about MyGlatfelter.com. You said that the goal was to reach 80 percent customer penetration in the U.S. Can you tell us what that looks like now, and what parts of your business I assume most of your customer base that's on now is book publishing.

That's correct. Mark, I don't know offhand the number of customers or the percentage, but I know it's in the 20, 30 percent range, something like that, when we started the year.

Okay, so you've got quite a bit ahead of you.

We still have quite a bit ahead of us, although I will tell you that I think we can get to the 80 percent level before the end of the year. And this is 80 percent of our total revenue base, not necessarily 80 percent of our total number of customers.

Right.

But 80 percent of our revenue base. We also began to leverage this through the engineered products business unit last year, and we are going to continue to roll that out with more engineered products customers. That's a little bit more of a challenge because some of those folks aren't as big and quite as sophisticated from a systems standpoint as some of the book manufacturers and book publishers are. And our plan then is, we're developing a plan in '02 to roll it out to the long fiber and overlay business unit that we will then begin some time in early '03.

Okay. And one last question, a big picture question. A lot of what you're doing with ERP and Impact Drive relates to being a better specialty company. We've seen over the last probably 10 years commodity producers make inroads in specialty grades with their older, higher cost machines. Do you see that kind of activity still happening now in your grades in this current down cycle?

I'd say it's still there, but it's there to a much lower extent. The number of smaller mills that have been permanently shut down over this last 18 months, two year time period, as you know, has really accelerated. So the folks who used to be kind of out there nipping at our heels, a lot of those folks have totally gone away. I think that's one of the reasons why we were so successful last year in growing our position in book publishing. Because some of those people weren't nipping at our heels any more.

So it's still there, but I would tell you it's dramatically reduced.

Okay, so far it's probably mostly a function of their change in behavior, rather than what you folks have accomplished. Or is that balance starting to swing your way?

Well, I'm not exactly sure what you're referring to, Mark.

Well, what I mean is that, if they're shutting old, high cost machines, rather than playing around in your markets, that's more what they're doing than what you're doing.

Right.

But ERP and drive suggest that you should be starting to make it more difficult for them in your markets anyway. I'm sort of curious whether that balance has started to shift.

Well, yes, I don't think there's any question that we've gained significant inroads through the things that we're doing. George mentioned his trips over the last three weeks with customers. There's no doubt when we go out and talk with really all of our customers in all of our business units, we are the supplier of choice. I don't think there's any question about that. I think the things we've done with differentiating ourselves through MyGlatfelter.com, with the face time that we're experiencing with our customers, now the ERP system, the branding effort that we went through last year, all these are clear differentiators. I think that that's really a significant reason why our volumes are where they are and why our backlogs and why we're on allocation in a lot of our markets.

So I think we're doing a lot of the right things. I think it's swung our way. There's no doubt that what other folks have done, taking that offline certainly helps, and we're pleased to see that, the high cost businesses need to go offline. But I think we're controlling our own destiny a lot more than we did before.

Terrific. It's a good time to have some good news. Thanks very much.

There appear to be no further questions at this time.

Great. If there are no further questions, thank you very much for our participation today, and have a great day.