Resolute Forest Products Inc (RFP) 2013 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Resolute Forest Products first quarter 2013 earnings call. I would now like to turn the meeting over to Mr. Remi Lalonde, Vice President for Investor Relations. Please go ahead, Mr. Lalonde.

Thank you, Sylvie. Good morning, everyone. Welcome to Resolute's first quarter earnings call. I'm joined by Richard Garneau, President and Chief Executive Officer, and Jo-Ann Longworth, Senior Vice President and Chief Financial Officer.

You can follow along with the slides we'll be using for today's presentation by logging onto the webcast using the link in the Presentations and Webcasts page under the Investor Relations section of our website. The slides are also available for download.

Before we begin, I direct your attention to the note on forward-looking statements in this morning's press release and the slides accompanying this presentation. We will discuss forward-looking matters today. Due to uncertainties inherent in these statements, actual results may differ. Our statements are not guarantees of future performance. You can find additional financial and statistical information, including a reconciliation of non-GAAP financial measures, in the press release and the slides.

We will take questions from analysts and investors following our prepared remarks. We ask that media and others please direct their questions to our communications department following today's call.

Richard?

Good morning and thank you for joining us today.

We all know the forest product industry is cyclical and 2012 was a difficult year for pulp with pricing at the low point in the cycle for most of the year. But, newsprint pricing remained stable and we finally started to see the long-awaited recovery in the wood products.

In the first quarter of 2013 pricing for wood products gained strength and we noted encouraged signs of demand and pricing improvement in pulp, but newsprint prices began to slip in North America following a late year capacity restart which overshadow the effects of the gradually improving condition overseas.

We made a number of key decisions in 2012. We grew the pulp segment and launched new projects to grow our lumber business. We invested in power cogeneration assets to lower costs and generate EBITDA from external sales of power. And we also made difficult decisions to close some machines and mills and restart lower cost of facilities to achieve a leaner and more efficient mill network.

We believe that our efforts in the last two years strengthen our competitive position to better mitigate the challenges facing the North America forest products industry. But Resolute will not stand still. We will always be looking for ways to improve our network through reduced costs.

So, we are sticking to our principles and two to three elements that define Resolute; a stringent focus on continuing to reduce costs and improve competitiveness, an ability to leverage synergistic and (inaudible) supply asset base, and our financial strength and commitment to disciplined capital management.

We continued to work to reduce costs during the first quarter. We generated external sales from -- of power from our cogeneration facilities at Dolbeau and Saint-Felicien, which ran for the whole quarter, and Thunder Bay, which began operations on March 21st with power production in April 7% higher than we expected.

We benefited from most cuts at (inaudible) operations on the restored Dolbeau machine which replaced permanently closed machines at Kenogami and Laurentide. We closed higher-cost newsprint machine at Calhoun late in the quarter, which will be replaced by a lower-cost machine at Gatineau, a facility where we will have extremely competitive power costs. And we also improve dour operational efficiency at certain mills by improving (inaudible) and fiber usage. But, these positive items were more than offset by uncontrollable cost pressures.

We generated adjusted EBITDA in the first quarter of $16 million in newsprint, down $20 million compared to the fourth quarter of 2012; $6 million in coated, down $6 million; $19 million in specialty, unchanged compared to the fourth quarter; $25 million in wood products, it's up $3 million, and $9 million in pulp, down $4 million. In total, adjusted EBITDA was $72 million, $32 million less than fourth quarter. The decline reflects a reduction in sales due to lower shipments of newsprint and specialty papers, including seasonal FX and our capacity reduction and asset optimization initiatives in the specialty papers.

Following the extensive catch-up maintenance and environmental work that was required at the Saint-Felicien mill after we acquired Fibrek, I am pleased to note that the former Fibrek mills generated $11 million of EBITDA in the first quarter, including a $5 million EBITDA contribution from the US recycled bleached kraft mill.

I will make a few observations now on market conditions in our segments.

Total North America newsprint demand declined 10% in the first quarter of 2013. We believe that the 2012 trend down the grade spectrum has run its course as we noted that demand from newspaper publishers was down 11% and down also 8% for commercial printers. It is possible that these declines are steeper than consumption would suggest as publishers normally try to maximize their benefit by destocking in the falling price environment. At 92%, however, the average operating rate in the industry remained elevated on a shipment to capacity basis. As the strong US dollars made for a difficult 2012, world markets for North American producers we are encouraged to see exports up over 8% in the first quarter, diverting almost 40,000 tons from the North American domestic market in the quarter alone.

Benefiting from our strategically located mill network, our international sales rose from 37% of total shipments in the fourth quarter to 46% in the first.

Global demand for newsprint was down 2% through February, the last month for which data is available. In the same period demand in Asia, Latin America and Western Europe was basically flat. China was up 4% and India was down 1%.

North American demand for coated mechanical paper was down 5% in the first quarter, which shipments from North American producers down 10%, or about 80,000 tons. And imports up 12% or about 10,000 tons, mostly for-- from Western Europe. Accordingly, the industry shipment to capacity ratio fell to 87% for the quarter compared to an average of 94% for 2012.

Following the difficult adjustment period following the idling of Catawba number one machine, the mill's operation in the first quarter met our performance expectations until it was temporarily idled for the annual outage. Following a 60% decline in North America demand for uncoated mechanical paper in 2012, the first quarter of decline was a modest 2%, reflecting an increase of 8% in high-gloss grades, but a drop of 8% in higher brightness grades and a 16% drop in light-weight grades where we have only limited exposure.

The shipment to capacity ratio stood at 89% at the end of March compared to an average of 92% in 2012, in part the result of a significant capacity addition with the restart of a large machine in Port Hawkesbury, Nova Scotia late in the year.

Overall, chemical market pulp demand slipped 1.4% in the first quarter. Demand from China was down 8%, but it was up 2% in Western Europe and 8% in North America on US tissue paper, capacity increases.

Global demand for softwood pulp, which represents about 80% of our virgin fiber capacity, was down 1% in the quarter, including a 6% increase in demand for our southern bleached softwood kraft and a 2% decrease in demand for northern bleached softwood kraft.

Seasonally adjusted housing starts broke 1 million in March, up 47% from the year-ago level where we started to see the sign of a weaker rate we experience today. We continue to move forward with our growth projects, the restart of our (inaudible) saw mills and the construction of the new Atikokan saw mill. This will further improver our position in the lumber segment for the future.

As we continue with our strategy of profitable retreat from certain paper grades, our philosophy remains the same, run for profit, not for tons. We do that by managing production and inventory levels, selling only profitable tons and maintaining world-class operational standards.

We made significant progress in the last two years. Our assets are more competitive, our costs are lower and our financial position is stronger. We have focused our paper production in our most productive sites and grow better efficiency by restructuring mills and reducing labor costs. With our competitive position we don't currently expect to further reduce our paper capacity in the near term.

Let me finish with an update on our pension situation. On April 26th we reached an agreement in principle with company stakeholders in Quebec, the provincial government and its pension regulator to replace the significant uncertainty associated with potentially material corrective measures in favor of a more stable, predictable and balanced funding we need to run our business. Under this agreement, we would make reasonable incremental contributions in order to secure longer-term funding stability. With this significant progress in Quebec, we look forward to meeting the provincial government of Ontario and its regulator and our Ontario stakeholders very soon.

Jo-Ann?

Thank you, Richard, and good morning, everyone.

Today we reported a net loss of $5 million or $0.05 per share in the first quarter on sales of $1.1 billion. Excluding $33 million of special items, we generated net income of $28 million or $0.30 per share.

The special items are described in this morning's press release, but the most significant ones are a $25 million charge related to asset impairment and closure costs mainly relating to the idling of the Calhoun newsprint mill; $11 million of start-up costs at our Gatineau newsprint mill; a $7 million non-cash charge on translation of Canadian dollar net monetary assets; and a $10 million gain net from other items. Of the $33 million of special items in the first quarter, $13 million are cash disbursements.

Total sales in the first quarter were $1.074 billion, excuse me, down 5% from the fourth quarter of 2012. We shipped 39,000 fewer tons of newsprint and 37,000 pure tons of specialty paper during the first quarter for declines of 6% and 10%, respectively. This reduction is due to seasonal downturn, changes in market dynamics and our leaner operating footprint where we eliminated two higher-cost machines in favor of our refurbished state-of-the-art Dolbeau mill and cogeneration facility.

Shipments were down slightly in market pulp, mostly because of annual maintenance at our Catawba facility and in wood products due to the limited availability of rail cars. Shipments rose 6% in the coated paper segment compared to the fourth quarter where we experienced equipment failures.

Average transaction prices rose 10% in wood products on the strength of the US housing market and prices increased a modest 1% in market pulp, but dropped for the second consecutive quarter in newsprint, down 3% or $17 per metric ton. Prices were slightly lower in the specialty segment by 1% or $8 per short ton, while in the coated paper segment prices remained unchanged from the previous quarter.

Cost of sales was down $19 million or 2% from the fourth quarter, mainly on lower volumes. We achieved considerable efficiency improvements with our Dolbeau facility which restarted in Q4, and we implemented lower cost furnace changes on the remaining machines in Laurentide. But these costs were outweighed in the quarter by an increase in manufacturing costs, including higher mill start-up costs as we get Gatineau through the final start-up stages; annual maintenance outage at Catawba; higher steam costs because of an increase in natural gas prices and winter conditions in Canada; timing of payroll benefits; and higher wood costs in the US Southeast due to heavy rain.

Distribution costs were down 5% in the quarter due to the lower volume.

When compared to the first quarter of 2012, unit operating costs in the newsprint segment increased by $11 per ton, or 2%. They rose 4% in the coated paper segment, mainly due to the lower volume. Operating costs per unit were unchanged in specialty, but the fell $89 or 12% in the pulp segment, mainly because of annual maintenance timing. Unit costs increased by $40 per thousand board feet, or 13%, in wood products, largely due to higher stumpage fees because of higher selling prices for lumber and lower chip revenue.

Our Saint-Felicien and Dolbeau power generation facilities operated for the full quarter. And together with the start-up of the Thunder Bay cogen on March 21st, they generated $8 million of EBITDA from external sales of power, $4 million more than in the fourth quarter. We expect this EBITDA contribution to increase with the Thunder Bay unit, our largest, now fully operational and with the smaller Gatineau unit coming on line at the end of the second quarter.

First quarter selling, general and administrative expenses were $9 million higher than the previous quarter, mainly due to fourth quarter items, namely the collection of previously written off receivables and the reversal of capital and franchise tax reserves.

Closure costs and related charges were $40 million in the quarter, down from $82 million in the previous quarter, almost all of it related to accelerated depreciation and severance charges in connection with the closure of the newsprint machine at our Calhoun mill. Only $5 million of these closure costs are expected to be cash related.

We closed the Calhoun machine following the buyout of our joint venture partner and Calhoun Newsprint Company or CNC. In the transaction our partner paid $8 million in cash, forgave a $12 million note payable, after which we acquired its share for $1.

The $23 million of other income in the profit and loss statement results from the 412 million CNC note forgiveness, as well as a $9 million distribution from the liquidation of a former UK subsidiary that we deconsolidated in 2010.

We recorded a $41 million income tax benefit in the quarter, which reflects primarily the release of valuation allowances on capital loss carry forwards that we will now be able to use as a result of the CNC transaction. Our effective accounting tax rate should remain at 30% on a normalized basis. Excluding currency translation impacts and other adjustments we do not expect to pay meaningful cash taxes in the medium term.

We took our major maintenance outage in Catawba during the first quarter and the annual outages at Calhoun and Coosa Pines during the current quarter. Thunder Bay and Saint-Felicien are scheduled for September and October.

Turning to the balance sheet and cash flow items, cash and cash equivalents decreased by $48 million in the quarter, closing at $215 million. Although we collected $8 million in cash in the CNC transaction, our working capital increased by $50 million in the quarter to $825 million. This was due in part to a $10 million increase in trade accounts receivable, despite lower sales; a $39 million net increase in inventories, specifically the seasonal increase in logs before the spring breakup; higher wood product finished goods due to limited rail car availability; and higher finished goods inventory in newsprint and specialty paper.

Net cash used in operating activities was $20 million in the first quarter, down $94 million from the prior quarter, primarily because of the working capital increase. We will work to reduce our inventory to more normal levels in the second quarter.

Capital expenditures were $40 million, down from $67 million in the fourth quarter. For 2013 we expect to make capital expenditures for compliance and maintenance of business activities of between 55% and 65% of depreciation and amortization. We also expect to spend between $50 million and $100 million for value-creating projects. Disciplined capital management is important to us and, if necessary, we will adjust our spending accordingly.

ABL availability remains high and our liquidity stood at $752 million as of March 31st, 2013.

Pension contributions were $26 million in the first quarter and the associated expense was $10 million. For 2013 we expect to make $160 million of funding contributions to our pension plan, while expensing $40 million of that.

I will close by noting that on Friday we priced $600 million of unsecured notes at 5.875% and will issue them at 99.062%. We'll -- we will use the net proceeds to repay up to all of the $501 million of our outstanding senior secured notes due 2018, for which we are conducting a tender offer.

With our strong balance sheet we were able to take advantage of very attractive financial markets. We are refinancing our high coupon secured debt with unsecured debt at an interest rate that is more than 40% lower and which adds 5 additional years to maturity.

Consistent with our strategy of acting opportunistically to enhance our competitive position, we believe it was the right time to lock in these attractive terms, which reduce our annual interest burden by $50 million per year and improve our financial flexibility. I note that in connection with the offering, both S&P and Moody's affirm their current corporate rating, BB-, stable, and BA3, and assigned the same rating for the issuance of the unsecured bonds. Moody's also upgraded its corporate outlook from stable to positive.

Great. Thank you, Jo-Ann. Sylvie, we'd like to open the call for questions, please.

Absolutely. (Operator Instructions). Our first question is from Stephen Atkinson from BMO Capital Markets. Please go ahead.

Thank you. Good morning. Congratulations on all those achievements. In terms of the pension, can you tell me the -- a breakdown between Quebec and Ontario in terms of the pension?

Hi, Stephen. Good morning. I don't really have that number in front of me, Stephen. Essentially, though, in broad terms, Quebec is probably about two-thirds, with Ontario being about one-third.

So, the $160 million this year, what -- are you able to tell us what it would be going forward with the Quebec agreement?

It would be -- unless there's any change in pension requirements in the US, okay, it would be about exactly the same for at least the next two years.

Okay. And so that includes the Quebec agreement, the $160 million?

Yes.

Okay. But not Ontario?

Yes, it includes Ontario as well.

Oh, okay. So, you've assumed --.

It includes everything based on our best estimate as of today.

Okay. Okay. And that's good, thanks. And so what is the status of Gatineau?

Gatineau, we're -- the plan is to restore the machine by tomorrow and we expect to have the mill up and running within a week maximum. So, I think that all of the repairs have been completed and the employees have been trained. And obviously, we're going to benefit from the extremely low power costs, long-term agreement that we have at this mill. Plus, the restored -- the restart of the small cogen unit is going to be probably in early June. But at the end of the second quarter we are expecting to have -- getting lower and lower -- low-cost mill, including the cogeneration up and running and that we expect to reap the benefit of this restart. Obviously, we did it with -- coordination with the closure of Calhoun that had the higher costs, higher manufacturing costs.

Are you able to tell me what the revenues from the cogen will be at Gatineau?

I don't have it handy, but it's not a big cogen. I think that we're going to be -- the production is going to be around 7 or -- 6 or 7 megawatts. So, it's not the -- it's not a big one but, again, it's what the green power rate is going to benefit this mill.

Okay. And actually, the big one, of course, is Thunder Bay, which I guess is just starting up. What's the plan for annual savings out of Thunder Bay on the cogen?

Well, the only thing that I'm going to share with you is the capacity. We had -- the plan was to produce (inaudible) 43 megawatt. And in April, after -- we mentioned during the call that the cogen or the turbine was started on March 21st and now production in April, as of yesterday, the average was 47. So, we were at 6% or 7% higher than our expectations. So, we are very, very happy with the way that the turbine runs and we believe that there's probably (inaudible), Stephen, to optimize it a little bit more.

And may I add, Stephen, that the -- there's four cogeneration facilities that started up either in late 2012 or are starting up this year. You've got the second generator at Saint-Felicien, which started in mid-November; Dolbeau, which started in mid-December; you've got Thunder Bay now started up and Gatineau towards the end of June. On those four generators we expect to generate $65 million to $70 million of additional EBITDA from power sales.

Great. So, just a thing on the agreement with the -- on the closing of the mill, of the machine, I should say, at the Calhoun. Did I understand it correctly that the -- your partner paid you, basically, to -- for them to no longer be a partner?

Very perceptive and absolutely correct.

Thank you. So finally, the interest expense going forward, what would be a good number?

Well, we're looking -- we said it will be around $15 million less, so you're talking about $600 million at 6% with -- including the discount, amortization of the discount, it'll run at about 6% of the $600 million.

So, it's a saving of about --.

Savings of $15 million --.

$15 million --.

Cash per year.

Per year. So, it's significant. And it's unsecured. That's a very attractive rate, so --.

Yes.

Would provide more flexibility. So, we are very pleased with this new financing.

Are you able to tell me how much it cost to close the other one?

Yes. It will cost us approximately $83 million in (inaudible) and other $7 million or so in costs.

Okay. And finally, on your tax deferrals, where -- what -- are you -- like, would -- I understand with the Champion closing then, I mean, your tax deferrals in the US may go up?

I'm sorry, I didn't understand that one.

Well, in looking at your deferred taxes it's --.

Yes.

About $3.5 billion. And the way I've been looking at it, $1 billion US, 2.5 billion in Canada. Has that number changed with the agreement at Champion -- not at Champion, I'm sorry, at Calhoun?

Yes. We will add another $36 million for a deferred tax asset on that. Calhoun does have a deferred gain that was payable on timberland sales from many years ago that was going to be payable in 2014. Because we now own 100% and can combine our tax returns, we'll now be able to use capital loss carry forwards that would have expired in 2014 against that cash tax payable; in other words, eliminating that cash tax. So, that benefit has now been set up as a deferred tax asset on our balance sheet.

Thank you so much. Great.

Thank you, Stephen.

Thank you. Our next question is from Sean Steuart from TD securities. Please go ahead.

Good morning. Thanks. A few questions. Jo-Ann, the incremental funding on the pension of, I guess, $120 million over the next couple of years on top of expense, can you speak to what funding relief you expect in Ontario in that number, or I just want to clarify. You assume a standstill there and, subject to negotiations in Ontario, you might get incremental relief?

No, the number we have given you is our best estimate of where we stand on funding as of today globally; Ontario, Quebec, US.

Okay. And can you give any sort of indication on how long you think negotiations in Ontario will take, I guess, with all the various stakeholders and regulatory authorities?

Not very long. And I just want to clarify; we have already incorporated what we think our contributions resulting from our discussions with Ontario are. They're not final, they're not guaranteed, but our best estimate and that estimate has already been included in the $160 million.

Okay. Richard, just interested in your comments on offshore newsprint markets. Obviously, a focus for you going forward. The March data suggests a little bit of a pullback in volumes. And I guess some of it was a tough comp. But, can you speak to what you're seeing in terms of the offshore dynamic given capacity closures in Europe and exchange rate movements?

Well, I think that the -- we're very encouraging -- it's very encouraging to see what is happening on the export market. So, I think that we've mentioned that the export volume in the first quarter went from that 37% to 46% of our shipments. And what we see now in Asia is a strengthening in the market, like we have China demand or consumption was up 8% in the first quarter. And we have indication now that India is also -- the market demand is getting stronger. So -- and Latin America we had a small decline, but we're certainly very encouraged. And the (inaudible) that we presently have for our customers offshore, obviously, is very encouraging.

Regarding the strength of the currency in Europe, it is still a market where we want to be a player. But obviously, with the difficult economic condition and the potential also to see the euro weaken against the US, we have only a small position that we want to maintain. And because of the location of our mills on the St. Lawrence River, we have a mill that is dedicated to this market, which is certainly going to -- to continue to be a important player in Europe.

The other factor, Sean, that is certainly worth mentioning is all the announcement of capacity closures in Europe. So, I think that -- and the mills, also, in Russia. The big (inaudible) mills. I think that it's also more and more indication that capacity could certainly be closed permanently.

And when we look at O&P and its indication now, I look at the fourth quarter of 2012, we had O&P costs at the mill to North America was $138 million. In the first quarter we were up to $146 million. So, we're starting to see, certainly, the impact on O&P of a lower demand or a lower consumption. So, it's going to certainly put pressure on -- more pressure on the O&P. The cost is going to go up and that's going to provide also some opportunities to complement what -- with virgin fiber.

And I think that this situation that we see in North America, it's certainly going also to -- and we see it also in Korea with our South Korea mills. So, I think that India and the countries that rely for significant volume of O&P or recycle pulp are going to see more pressure and it's going to -- we see it as an opportunity to be able to serve this market. And obviously, with the increase in the O&P, it's going also to have a beneficial impact on setting price, on transaction price in these export markets.

Thanks for the comprehensive answer there. And just finally an easy one. The pulp downtime you're taking at Calhoun and Coosa Pines in Q2, can you quantify the tons that will be taken out of production from that or a monetary figure if possible?

Well, I don't have the monetary figures, but it's our annual outage. And normally, it's anywhere between 6 to 9 days, depending of the -- how extensive the work that we have to do on the recovery borers. And I don't think that we have seen anything more significant, so it is going to be the normal timeframe to make a repair.

Great. Okay, thanks. That's all I had.

Thank you.

Thank you. Our next question is from [Craig Simpson] from Oppenheimer. Please go ahead.

I have a question about the Thunder Bay mill complex. Recently you announced the idling of one of the machines there amidst some renegotiations that you're attempting with the City of Thunder Bay in terms of taxes going forward and also taxes back to 2009. I'm wondering if this is kind of the first sign that you are looking further at cost savings at Thunder Bay and perhaps closing some of the other machines, that they're quite high cost and obviously quite a distance from some of the key growth markets that you've just indicated, like India.

Well, first, let's start with the tax. So, I think that the assessment was based on the mill like it existed back in 2008. So obviously, the assessment includes the two pulp mills, one has being closed; includes also two paper machines, one has been closed; and also includes the O&P plan to recycle the O&P and it's also closed.

So obviously, we are expecting an adjustment into the tax base because we have, as you're aware, that the -- it's the machinery, the equipment that is basically included into that taxable value. So, we expect to see a reduction -- well, I would say a significant reduction because there's half the mill, basically, that has been closed permanently. So, we are looking for the adjustment on this site.

Regarding the machines, I think it's just a question of supply and demand. And if you look at the newsprint demand for North America, it was down 10%. This mill is on land so -- and obviously it serves only the North American market, contrary to the mills that are on the St. Lawrence River or flows to a port. So obviously, we decided to -- we made the decision to take down time because of the location of the mills and the state of the market in North America. So, it is the only reason. And obviously, we're going to watch the market and see how the -- how demand is going to evolve in the next few quarters.

But overall, it's still -- with the large network that we have, we optimized the mills and we have talked to our employees and made the case for some adjustment that would help to bring the costs down. So, it's part of the -- it's part of the -- basically the approach and it's part of our strategy to always look for opportunities to be more cost competitive and I think that it's a matter of just another step in that direction.

Thank you. Our next question is from Richard Ashcroft from Wells Fargo. Please go ahead.

Good morning. Canada's Communications, Energy and Paper Workers Union has been making a lot of noise about pensions, as discussed, as well as some of the work slowdowns in a number of sites, for example at the Thunder Bay mill. Is the purchase of expensive assets like the Fibrek mill for hundreds of millions of dollars come at the expense of financial stability of other areas of your operations, in particular your labor relations, salary overhead and routine in going forward?

Well, I'm not sure that I get your question. So, the -- you were fading at some point. We have some issues, probably, with communication. Could you just rephrase more specifically the question that you want me to answer?

(Inaudible) regarding their disagreements with the Company, your approach to pensions, your shut -- your slowdowns at a number of mill complexes. My concern is that, given the huge expenditures to purchase assets like the Fibrek mill, there has perhaps not been the attention paid to financial stability and the labor relations (inaudible) the end of 2013.

Well, I'm not sure that it's related. So, I will just explain the strategy with the operation that -- at Thunder Bay. And I think that was -- I thought I was clear on our strategy to bring the costs down and where the mill is located. I also touched based on the strategy with the employees, to talk to employees. I think that it's part of any relation between the companies and its employees. And on the pension, we already explained what it is. So, I am a bit confused by the questions and I think that I covered it really well. So, thank you for the question.

Thank you. Our next question is from Joseph Von Meister from Bennett Management. Please go ahead.

Hey, Richard, I was -- my question has already been answered. It was on the pension funding requirements.

Okay. Thank you.

Thank you, Joe.

Thank you. Our next question is from Paul Quinn from RBC Capital Markets. Please go ahead.

Yes, thanks very much. Just maybe you could outline the power savings by segment just to get us -- that's the way we -- well, that's the way I've modeled it, so it'd be helpful to try to sort of see that $65 million to $70 million annually broken down in each of the buckets.

Hi, Paul. How are you?

Good.

I don't have the buckets in front of me, but if you take a look at the size of the megawatts that each of these cogens have, and then you can see that Thunder Bay is obviously newsprint, Gatineau is obviously newsprint, Dolbeau is specialty papers, and Saint-Felicien is pulp.

Yes. And Thunder Bay is newsprint and pulp.

And pulp, sorry. Yes, newsprint and pulp.

Okay. Maybe I could follow-up offline. Congratulations on the pension deal. Thanks.

Thank you.

Thank you very much, Paul.

Thank you. There are no more questions registered at this time. I would now like to turn the meeting back over to you, Mr. Lalonde.

Great. Thank you, everyone, for joining us today.

Thank you. The conference call has now ended. Please disconnect your lines at this time. We thank you for your participation.

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