Rayonier Advanced Materials Inc (RYAM) 0 Q0 法說會逐字稿

Welcome and thank you for joining Rayonier Advanced Materials second quarter 2014 teleconference call.

At this time, all participants are in a listen-only mode.

(Operator Instructions)

Today's conference is being recorded.

If you have any objections, you may disconnect at this time.

I will turn the meeting over to Ms. Beth Johnson, Vice President of Investor Relations and Planning.

Ma'am, you may begin.

Thank you, and good morning.

This is Beth Johnson Vice President of Investor Relations and Planning.

Welcome to Rayonier Advanced Materials' investor teleconference, covering second quarter earnings.

Our earnings statement and presentation materials were released this morning and are available on our website at rayonieram.com.

I would like to remind you that in these presentations we include forward-looking statements made pursuant to the Safe Harbor provisions of federal securities laws.

Our earnings release, as well as our Form 10, filed with the SEC list some of the factors which may cause actual results to differ materially from the forward-looking statements we make.

They are also referenced on page 2 of our presentation materials.

Now, let me turn it over to Paul Boynton, Chairman, President and CEO.

Paul?

Thanks, Beth.

Let me welcome you to Rayonier Advanced Materials first earnings call.

This call is a culmination of many years of analysis and discussion and two years of very focused effort.

With the spinoff now complete, we will concentrate our attention on pursuing long-term growth opportunities, expanding and diversifying our specialty chemical business and increasing shareholder value.

Now, I know we have some new listeners with us this morning, so I will start by taking a few moments to tell you about who we are and what we do.

Rayonier Advanced Materials as the leading global producer of high- purity specialty cellulose, a natural polymer used as a key material to manufacturing a broad range of industrial and consumer products including LCD screens, cigarette filters, and impact-resistant plastics, as well as numerous other applications including many going into the food and pharmaceutical areas.

Our products require high levels of purity and process knowledge and are engineered and manufactured to customers' exacting specifications.

With more than 85 years of experience, we have tremendous expertise in this business and long-term relationships with financially strong customers.

Joining me here today on the call are several members of our management team which include Benson Woo, our Chief Financial Officer.

Benson has 30 years of financial and management experience, most recently as the CFO of Prestolite Electric.

Frank Ruperto, our Senior Vice President of Corporate Development of Strategic Planning.

Prior to joining us, Frank served as managing director of Mergers and Acquisitions for Bank of America Merrill Lynch.

Jack Kriesel, Senior Vice President of Performance Fibers.

For the last 36 years, Jack has held numerous management positions with ever-increasing responsibilities in performance fibers.

And John Carr, Vice President Corporate Controller.

Prior to this role, John was the controller of our performance fibers business.

Now, with that, let me turn it over to Benson for review of our financials.

Thanks, Paul.

Great to be here.

This is an unusual quarter as we have just completed our spinoff, the financial information for the quarter and six months reflects allocated costs incurred by our former parent.

Therefore, the financials are not indicative of the Company's expected cost structure or future financial results as an independent Company.

Sales and production costs were not impacted by the carve out accounting treatment.

With this backdrop, let's look at page 3 to review our financial highlights.

This morning we reported second quarter pro form net income of $25 million, or $0.59 per share, and year to date pro form a net income of $58 million, or $1.37 per share.

The pro forma adjustments remove the one-time separation and legal costs from the results.

These one-time costs include investment banking fees, legal fees, transaction bonuses and financial assurance costs which relate to liabilities associated with disposed operations.

For the second quarter, sales totaled $213 million, while pro forma operating income totaled $43 million.

Towards the bottom of page 3, we provide an outline of capital resources and liquidity.

Pro forma EBITDA and adjusted free cash flow for the six-month period was $127 million and $52 million respectively.

As of June 28, we had available liquidity of $243 million consisting of cash and credit facilities.

Our variance analyses for pro forma operating income are provided on page 4 of the financial presentation material.

As you can see, the sequential quarter and year-over-year periods were negatively impacted by lower prices in the amounts of $6 million, $15 million and $21 million.

As detailed in the appendix later on, cellulose specialty prices were down $55 per ton, or 3% from the first quarter and $134 per ton, or 7% from the second quarter of last year, mainly reflecting the 2014 price negotiations.

I will remind you that we have multi year volume contracts with annual price negotiations which occur in the latter part of a given year for the following calendar year.

As we've previously communicated, CS prices in 2014 will be 7% to 8% below 2013 levels.

Now, let's look at the impact from sales volumes.

While Q2 2014 cellulose specialty sales volumes were consistent with first quarter of this year versus 2013 for the second quarter and year to date, 2014 volumes were unfavorably impacted by $7 million and $21 million respectively, due to the timing of customer shipments resulting from the Jesup plants' planned extended outage.

As we have stated previously, we expect 2014 sales volumes to be back half loaded.

You can refer to the appendix for historical sales volumes.

Now, shifting to the cost mix and other category, although the sequential quarter variance reflects $3 million in cost improvement, the comparisons to the prior year periods show $10 million and $31 million in unfavorable variances, respectively.

Wood, energy and depreciation costs were the primary drivers in these cost increases.

Wood cost remained high as the impact from wet weather in the first quarter continued in the second quarter.

Although prices have now moderated, it is likely that these costs will remain somewhat elevated for the remainder of the year.

Energy costs, although better than the first quarter, remained above expectations due to weather and equipment issues at our Jesup plant.

Some of the impact may extend into the third quarter.

The combined impact from the higher wood and energy cost was an additional $9 million for the quarter and $19 million for the six month period.

I will now turn it over to Paul to discuss expectations for the remainder of the year.

Paul?

Thank you, Benson.

As we stated in our June webcast, our 2014 guidance was based on exceeding 2013 specialty sales volumes by 30,000 tons.

At that time we also communicated our cellulose specialty sales rate was consistent with 2013 levels.

Today, as this incremental volume is still not contracted, it seems less likely that we will be able to sell this volume at acceptable terms.

Instead, we will remain patient, and we will continue to utilize this capacity to produce commodity grades.

The combination of the aforementioned higher cost and the comparable 2013 cellulose specialties volume will cause our full-year results to be approximately 25% below 2013 segment EBITDA, or 10 percentage points below previous guidance.

Although we are obviously disappointed by the lower full-year expectations, we are excited about the long-term growth opportunities for this business.

Our priorities remain the same.

First, we will continue to focus on operational excellence and cost reduction initiatives.

We've installed and started up a significant amount of capital over the past 12 months, and it has, as expected, created some operational hiccups, as we've seen in the first half of this year.

But these are largely behind us, and we are reestablishing our operating rhythm that should lead to better performance and cost.

Second, we will work to increase our cellulose specialty sales volume over the next several years as the market tightens.

We've installed our capacity, it's qualified with 75% of our targeted customer base, so we are ready when the market is ready.

Third, we will reduce our debt leverage to a level more in line with specialty chemical companies.

And fourth, we will expand into the other specialty chemical markets adjacent to our core businesses that fit with our capabilities, allowing us to create additional value and diversify our product portfolio.

With that, I would like to close the formal part of the presentation and turn the call back to the operator for questions.

Thank you.

(Operator Instructions)

The first question comes from Mike Roxland from Bank of America.

Your line is open.

Hi, thanks for taking my questions, and congratulations on your spin.

Good morning.

Some of your customers have recently indicated that they're seeing a slowdown in acetate with either no growth this year or declining volumes this year.

They also indicated an expectation that even in 2015 you could actually see flat acetate volumes.

They pointed to a slowdown in China's demand for cigarettes and also excess inventories by some of the cigarette companies that are still being worked through.

So, how do reconcile the view of your customers with your own view that acetate demand is still growing at 1% to 2%?

Let me turn it over to Jack and let him comment.

I will probably add a couple of things to it.

Thanks, Mike.

Yes, we have heard similar comments from our customers.

The growth being somewhere between flat to 1%, 1.5% in China and driven by actually two major issues and one item around inventory adjustment.

But the drop-off in the economy in China has resulted in a number of industries being shut down and employees laid off and consequently less smoking.

Two, the crackdown on graft, particularly the government officials that are trading, exchanging cigarettes, high-end cigarettes, liquor, dining-type activities, has resulted in a drop-off in demand.

But our Chinese customers believe that once the economy turns around in China that they will see demand pick up to higher levels.

Historically, that number has been 3%-plus.

I'm not sure if it will get back up to that type of level, but they expect an increase in demand.

On the cigarette tow on the inventory adjustment, China has been increasing their capacity to produce tow.

So, they're currently -- they currently have ability to produce roughly 200,000 tons of tow, they import about 100,000 tons.

And so as they increase their capacity to produce even more tow, we would see some of that import being reduced over the next year or two.

And Mike, I'm just going to add to Jack's comments.

Again, back to that 1% to 2%.

I think as we talk to customers and we talk to some of their customers of course as well, the tobacco companies, it still seems a very consistent message out there that they believe that overall demand is at that 1% to 2% level for tow and that we would expect to see that for the next five-year plus type period.

And we've seen it in the past, we've seen years where we've actually gotten up above that level.

And we may be in a year where we're seeing it, as our customers are talking about, slightly below that level.

But we think that 1% to 2% is still pretty reasonable guidance out there.

Thanks for all the color.

Would be fair to say, then, for 2015, that you could actually see another flat year, though?

I think -- I would disconnect what you may be hearing from our customers to what our situation is.

We talked about flat volumes this year because we are going to be patient in taking our capacity into the market.

And we -- again, we think the overall market still has that growth of 2% to 3% for cellulose specialties.

And we believe that over time, that we will be able to put our product into the market at prices that we think are -- that are reasonable for our shareholders.

So, Mike, it's hard to say what's going to happen in the near term.

We feel very confident what's happening in the mid and long term.

And we think that the growth is going to be that 2% to 3%, and we think that's going to work well with our capacity addition.

Now, --- don't materialized as you expect them to, or if your customers push back again heavily on pricing as you get into the fall this year, what steps is the Company prepared to take?

Is it possible that we could see the Company actually just shut a line down to try to tighten the market and make for a better pricing dynamic?

We -- again, we are not in the position to talk about pricing yet for 2015.

And obviously, we will always work on the cost side of the equation.

We've got a host of things that we can do related to that.

We don't see scenarios where we would actually get to a point where I'm shutting anything down.

We see our volumes strong.

We run 24/7, all of our facilities, whether it's at the high end or at the commodity end.

But certainly a focus, as I talked about our number one priority on operational excellence and cost reduction will remain our primary objectives as we go into the new year.

So, just to summarize, basically, if the acetate volumes or the cellulose specialty volumes don't materialize as you plan for 2015, then you would just run them at commodity viscose.

Yes, absolutely.

And again, that's our decision right now.

We said look, we were after that additional 30,000 tons for 2014.

But we said we wouldn't do it at any cost, we're not going to chase that volume.

We'll just be patient and we'll just run that additional volume as commodity volume.

Last question and I'll turn it over.

Can you help us frame how you are thinking about the mix of businesses going forward and where you intend to grow?

Is that going to be more designed to be an acetate, would you like to gain share in ethers, or would you even consider moving away from dissolving pump altogether to get into an unrelated specialty chemical business?

Thanks for all the color, and good luck in the quarter.

Mike, this is Jack.

The answer is yes to that.

We are looking at all of our product segments, the acetate, ethers, high tenacity rayons, especially in high value.

Obviously, our focus will be on the ethers, high tenacity rayon and basically the non-acetate.

But we do intend to grow with the market in acetate.

Specifically in the ethers segment, our focus will be on the fastest growing, highest value-added products in the food and pharma segment.

Thanks, and Mike, just on growing outside that product line, obviously, and we've talked about that a lot.

Our goal is as we put the capacity in, we will be patient for that, and we will feather this product into the market as we feel that will be a good return for our shareholders.

That's how we look at our organic growth.

And we think as we go forward out into 2018, we should have plenty of ability to do that with our new capacity.

But we have also said we're going to look for inorganic opportunities, and maybe, Frank, you just want to comment on that.

Yes, I will.

We are at the early stages, being at a public Company for 30 days, on our external growth strategy.

The one thing I would say at this point is that I think you used the term unrelated areas.

We would not do, or it is highly unlikely we would do anything in an unrelated area.

Whatever we look at is going to have a business fit with what we currently do.

It will be in markets that we view as attractive from a growth and margin perspective, and it will be in areas of scale that we view that as a platform to ultimately get to a market leadership position.

We will look at that, but any of those businesses, the focus will be on enhancing our existing platform and having a relatively close fit with our existing businesses.

Thanks very much, good luck in the quarter.

Thanks, Mike.

Thank you.

The next question comes from Steve Chercover from Davidson, your line is open.

Thanks, good morning, everyone.

I wanted to touch on the $30,000 that is not -- sorry, 30,000 tons that is not yet placed.

Is it safe to say that if you could place it at that 1768, which was your Q2 average price, you would be selling it but you're just simply not going to discount beyond there?

And by extension, that volume is more important than price to you?

Hey, Steve, good morning, thanks for your question.

Yes, I think it is safe to say that we don't feel we can place that 30,000 tons at our average price today, cellulose specialty price.

And therefore, we just won't do that.

Yes, I'm sorry, I misspoke.

Price is more important than volume.

Okay, and could you elaborate on what the equipment issues are?

We understand energy and we understand logs, but what is going on, is it the new equipment, the tie-ins from the Jesup expansion?

Steve, this is Jack.

One of the big projects we undertook in our Jesup annual shut down, recall that we were down for 45 days on two lines from A and C line.

But we had to take that amount of time down to do a major project in our recovery boiler.

And that was replacing what we call our generating tubes, it's a bunch of tubes and these recovery boilers.

And these were put in 33 years ago, and when they were installed, they were not installed properly, and it just took a lot longer to get them out.

So, we were down an extra five days on the line associated with that.

The ongoing issue that we have largely resolved, as Paul indicated, we put a new drum reel in on one of our lines a year ago when we did our CSE expansion.

This is unrelated to the CSE expansion, but it was another project.

And we have had some subsequent issues with that drum reel.

And the drum real is what winds up the pulp on the end of the drying machine.

Again, most of those issues are resolved, and we don't anticipate to have anything major in the future.

Are there any counterweights inside those drum reels?

Counterweights?

Yes, one of your friends had some problems with those things.

This is more associated with the electronics issues.

These things are very advanced today, and all the sensors, and as well as some of the bearings that are prematurely wearing out.

Got it.

Thanks for that.

And I guess one for Frank and then one for Benson, who I haven't met, but I look forward to establishing a dialogue.

In terms of the adjacent market structures.

Would they have, in all likelihood, similar EBITDA profiles to performance fibers, at least with performance fibers when it's doing well?

In the low 30% range?

Yes, I think it's premature to say where they are.

I think what we will be focusing on are businesses that will clearly have attractive margins and that those margins are sustainable and potentially able to grow over time.

There's a very limited number of areas that have 30%-plus EBITDA margins.

But again, we're looking for companies that have clear, defensible EBITDA structures, EBITDA margins over the long term.

It may not be exactly where we are today, but we are still too early to tell what those adjacencies are.

And finally, it's -- you are a very new Company, so we understand that your near-term objective is to pay down debt and presumably get on a growth path.

But I just want to know, ultimately, if the stock is what you perceive to be undervalued, when Benson, and I guess the Board, start to say that our best investment is Rayonier Advanced Materials as opposed to some other company?

Steve, I will let Benson jump in after me if he has got more to add, but just real quickly, you're really pointing at uses of capital.

And again, you're absolutely right.

We're going to work to bring down that leverage.

We would like to get into 2s where it's more comparable to other specialty chemical companies.

And then we're going to look for opportunities, as you just talked to Frank about, for acquisition growth.

So, then we see that as our second priority after we get the debt down.

And then thirdly, obviously we have got a dividend out there, we'll always have to make sure that we're looking at that and looking at the dividend level.

And then finally, we'll look at other uses of capital, and certainly, we will always have a conversation with our Board whether we should go back and do share -- or stock repurchase at any point in time and say, that's the best point in the market, is to go ahead and buy Rayonier Advanced Materials.

So, absolutely, that will always be part of our conversation, is what's the best return on a per share basis for our shareholders.

Yes, I think following up on that, Steve, I think you could see a see-saw pattern in terms of the leverage as we get our leverage down to more comfortable levels where we generate more capacity to go after these growth opportunities.

And then it pops back up after an opportunity and then we will bring it back down into the 2s and then repeat.

Again, we think that is a sustainable growth model for us.

Very good.

Thanks for taking my question.

Thanks, Steve.

Thank you.

Next question comes from Roger Spitz, Bank of America your line is open.

Thanks, good morning.

For clarity, could you say what your 2014 EBITDA guidance is specifically?

Or if that's complicated with the pro formas on the spin, can you say what the implied second half 2014 EBITDA guidance is?

As an actual number, I think we would just put out there, it's 25% below.

And I'm looking at Beth, as a starting point at --

2013 segment EBITDA was 386.

Just straight math off of that 386 there, Roger.

It's literally 25% below 386, is the full year?

For the segment, and then you would have to back out any corporate G&A.

Which we've guided at $25 million.

Okay.

Okay I was just trying to get a very specific number.

And how much do you expect higher cost impact EBITDA in the third and fourth quarter here?

We expect the wood costs to moderate, but I think wood costs and energy costs will continue into the third quarter.

And so with that, we baked that into the guidance that we've just provided.

Okay.

Lastly, would you be willing to provide maybe your Q2 2014, Q1 2014 actual volumes broken down by just specialty cellulose, viscose grade and any other?

Thank you.

That should be in our release.

In your release, okay.

Roger, if you look in the back, we've actually put it this time back in an appendix within the release.

But it is there, it's by quarter, by product line.

Thank you very much.

Sure.

Thank you.

(Operator Instructions)

Next question comes from Paul Quinn from RBC Capital Market, your line is open.

Yes, thanks very much, and good morning.

I just wanted to ask a question on mix outside of the specialty side.

You talk about producing commodity DP, and I suspect you're also producing fluff and maybe some other grades.

Maybe you could give us a breakdown of -- rough breakdown on volumes and relative profitability?

Paul, this is Jack.

In the commodity segment, I think as we have said in the past, that we have the ability to switch between commodity viscose and fluff.

And so -- and we will make that decision based on the relative profitability of each of those.

Currently, we are focusing on fluff as the trend of the commodities viscose has continued to drop down into the mid-800, 800, range.

It more profitable for us to make fluff.

But we don't share the actual numbers in terms of our profitability by grade.

And the number, if you look at the volume, this year we're going to do about 82,000 tons each of commodity fluff and commodity viscose, so 160,000 tons, roughly 25% of our total.

Okay, and just a clarification on that.

If you move back to fluff, do not increase your yield as well?

The c-line in Jesup did 260 before the conversion.

Just wondering if you get extra volume when you move back to fluff?

Yes we do.

And I think we've noted in the previous discussions that we would be up around 635,000, 640,000 tons.

Now, based on our current fluff production, that total number is going to be up around 655,000 tons, so you do get a better yield producing fluff.

Okay.

And then maybe just off of the your main grade acetates, and maybe just a little bit of a background and discussion around ethers growth.

This is an area of the specialty market that is definitely is higher growth.

Where do you see that growth occurring?

And how was your ability to be able to move into that segment of the market?

In the ethers market, it is a pretty complex market.

A lot of different end uses ranging from industrial to construction, pharmaceutical and food type applications.

And within that, there is all levels of grades that are utilized to produce the ethers.

Our focus is going to be on the higher end, higher value added, faster growing products, the food and pharma segment, and those are growing in the high single-digit levels, whereas some of the others may be in less than 5% type of growth range.

Overall growth for the ethers segment combined is the 4% to 6% range.

But again, our focus will be on that higher end.

And Paul, from the time that we were sold out there, as you know, for quite a few years.

We shifted a lot of our production over to supporting our acetate customers.

And with that, our participation in the ethers market is relatively small, as was the other segments overall.

So, we feel we've got a nice opportunity to move back in that direction with some real good value-added products.

We're looking forward to participating in even greater ways and participating in this growth, as Jack was just talking about.

Last question I had was, some market participants cited weakness in European demand last year as one of the components for the eventual price drop in specialty.

I'm just wondering what you see in that market, whether that's come back and what you're hearing from your customers there?

I think specifically we heard that and actually saw that the construction end of it, that was for the ethers type application, as well as the automotive applications, the high-speed tires, filtration, they were off.

But across the board, we see all of those markets improving in Europe.

And I would just add, still well below, but definitely improving.

I think they've bottomed out but they're moving up, which is encouraging.

Great, that's all I had.

Best of luck.

Thanks, Paul.

Thank you.

The next question comes from Daniel Rohr from Morningstar, your line is open.

Thanks for taking my question.

When you think about prospective acquisitions and the potential for value creation via M&A, what sort of attributes do you all think Rayonier possesses that would make certain kinds of assets more valuable in your hands than someone else's?

Let me just start.

What we do really well, we take a natural product, and we obviously refine it to a very consistent, pure state.

So, we've got some great knowledge and leverage in the biochemistry world.

There's a lot of adjacent markets to the biochemistry world that we think we could offer some of our technologies, some of our processing capabilities as well.

Again, as Frank said, we are a month into this, so it is really early on to say, here's the segments that we're going to go after, and we're going to go through that process now.

But again, what we do well is bio- chemistries and we do bio-polymers.

If you think about what we're doing today, we've got some great R&D knowledge and we've got some great manufacturing and processing knowledge.

So, we view those as our strengths.

Great.

And did I hear right, that you're looking at something around 655,000 tons of total production this year, and something like a 75/25 DS commodity split?

Yes, that's correct.

All right, thank you much.

Thanks, Daniel.

Thank you.

Next question comes from Maharth Kapur, your line is open.

Could you give some more color in terms of why you expect cost to be elevated through the remainder of the year?

Is that due to the higher wood cost, or is that related to the third line at the Jesup mill that came up in May?

Was there some issue related to that?

Just some color around the cost picture?

I will quickly comment on it.

As Benson noted in his comments earlier, that we saw elevated wood costs due to wet weather in the first quarter.

We thought they were going to subside a bit in the second quarter, and they didn't, they got hung up there.

We have since seen them subside, so they are down quite a bit today, but the still elevated over 2013 levels.

So, yes, there is some residual wood cost going up there.

And also, we're consuming a bit more energy right now on some of our operational side of things, and that will also come back off here in the third quarter, but they'll hang on here a bit in third quarter.

So, we will see energy a little bit elevated, below where it has been, but elevated to where it should be in the third quarter.

We've got a couple things that are slowly coming down here and didn't completely shut off, obviously, in the second quarter.

So, in terms of the Jesup mill operational issues that happened in the first half, that's not part of the reason as to why you expect higher costs the rest of the year?

The balance of this year?

No, I wouldn't say so.

The third line came up fine in May, basically?

Well, the third line was up and running actually reasonably well last year, as reported out.

That's actually done.

Again, we put in -- if you look at that project again going back, that project of our CSE expansion was probably 26 different projects in itself.

In addition, we did some other work as Jack talked about the drum reel.

So, it's kind of making sure that everything is being optimized.

And again, for the most part, the line itself is running well.

But there's always a couple kind of hiccups and bugs, as I was talking about, that you still have to go out and debottleneck and get smoothed moved out.

And so we had some of those in the first half of the year, in addition to the longer extended maintenance outage that Jack referenced.

Okay, and then on the 30,000 tons that you don't expect to place, is that -- has that been completely removed from the 25% down year-over-year EBITDA numbers?

Does that take out basically all of the 30,000 tons from this year?

Or is there still a portion?

No, for guidance, we just went ahead and took it all out.

It doesn't mean we're not still working on it, still in conversations.

Okay, fair enough.

And I have got one big picture question for Paul.

Paul, you mentioned during the presentation that about the $125 million EBITDA long-term, $150 million EBITDA long-term assuming you placed the incrementally CS expansion volumes at 2013 prices.

Obviously, some of this stuff hasn't -- it's been softer this year, and you haven't gotten out of the gate as strongly as you might've expected.

But can you talk about how -- where you stand in terms of your confidence level or in terms of achievability?

Or how are you thinking about just the longer term viability of that long-term placement of those volumes?

Yes, I think it is still -- we still feel very good about it.

Again, we've said, and we've even said at the time, the near-term is going to be a little bit plus or minus here.

But the midterm, the longer term, we feel there's a great opportunity to place this volume out there.

And again, that guidance was based on 2013 margins essentially and obviously, those will change a bit over time.

But we still feel very confident that the market is growing in that 2% to 3% range, that's up to 50,000 tons per year.

There's an limited number of players to serve that market.

And some point, and whether it's using our numbers are using folks who track the market like Hawkins Wright, we believe that our capacity and others capacity will be absorbed into the marketplace.

And we will achieve this -- the EBITDA growth that we have put out there as part of our CSE expansion.

And Paul, do you still think that 2013 prices are like a viable way to think about it?

It's not some kind of peak pricing year to think about in terms of a five year, four or five year time period?

And also, given some of the recent customer color on acetate tow market, even with those issues, do you still think that that -- thinking about in a four year or five year timeframe, that that framework make sense?

Yes I think again, we used for math purposes the 2013 numbers that we had, because that's what's publicly available and that's what we have.

We don't go up there and project pricing going forward and talk about that.

And we've said that it could be plus or minus, it's just a matter of dialogues with our customers going forward.

So, I can't give you any specifics on the pricing side of things going forward.

All I can say is using the 2013 analysis that we provided, we feel good that that volume will get placed out there and will have an attractive term turn on that investment for our shareholders.

I'm showing no further questions at this time.

This is Beth Johnson.

I would like to thank everyone for joining us.

Please contact me with any follow-up questions.

Thanks again.

Thank you so much for participating in today's conference call.

You may now disconnect your lines at this time.

Thank you, and have a great day.

Thank you.