Rayonier Advanced Materials Inc (RYAM) 2021 Q4 法說會逐字稿

Good morning, and welcome to the Rayonier Advanced Materials Fourth Quarter and Full Year 2021 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Mickey Walsh, Treasurer and Vice President of Investor Relations for Rayonier Advanced Materials. Thank you. Mr. Walsh, you may begin.

Thank you, operator, and good morning, everyone. Welcome again to Rayonier Advanced Materials Fourth Quarter and Full Year 2021 Earnings Conference Call and Webcast. Joining me on today's call are Vito Consiglio, our President and Chief Executive Officer; Paul Boynton, our Vice Chair; and Marcus Moeltner, our Chief Financial Officer and Senior Vice President of Finance.

Our earnings release and presentation materials were issued last evening and are available on our website at rayonieram.com. I'd like to remind you that in today's presentation, we will include forward-looking statements made pursuant to the safe harbor provisions of federal securities laws. Our earnings release as well as our filings with the SEC list some of the factors which may cause actual results to differ materially from the forward-looking statements we may make. They are also referenced on Slides 2 and 3 of our presentation material.

Today's presentation will also reference certain non-GAAP financial measures as noted on Slide 4 of our presentation. We believe non-GAAP financial measures provide useful information for management and investors, but non-GAAP measures should not be considered an alternative to GAAP measures. A reconciliation of these measures to their most directly comparable GAAP financial measures are included on Slides 18 through 23 of our presentation. I would now like to turn the call over to Paul for some introductory remarks.

Thanks, Mickey, and good morning, everyone. As you know, I stepped down as President and CEO of the company, January 1, and assumed the role of Vice Chair of the Board. With the completion of our portfolio optimization in 2021, which included the sale of our lumber and newsprint assets. The company was able to reposition itself with a stronger balance sheet and 4 biorefinery assets well aligned towards the accelerating demand for sustainable bio-based product solutions. This alignment, coupled with strong demand for our industry-leading cellulose specialties products creates an ideal time for a leadership transition.

As I shared my retirement plans with the RYAM Board of Directors some time ago, the Board was able to undertake a deliberate and thoughtful search for the company's next leader. We were fortunate to find Vito Consiglio, a seasoned industry executive with extensive global industrial experience and a proven track record of achieving commercial and operational excellence over a 30-year career, working for specialty material companies such as Rohm and Haas, Danaher and Ashland.

Prior to joining RYAM, Vito's most recently served as an adviser to private equity on deals within the chemicals industry. And prior to that, he was Chief Commercial Officer at Ashland, a valued customer of Rayonier Advanced Materials. And even though I'll step down from the Board in May, I'll remain adviser to Vito for the balance of the calendar year to ensure a smooth transition. And of course, I will also remain a large shareholder with continued interest in the value growth of RYAM.

I'm excited for our future. Vito has a strong vision for the company, and I'm confident he is the right person to lead us into our BioFuture. And so with that, I'm excited to introduce to you our President and CEO, Vito Consiglio.

Thank you, Paul, and good morning, everyone. I am delighted to be joining you today on my first investor call as President and CEO of Rayonier Advanced Materials. I want to begin with an overview of what attracted me to RYAM and how it aligns well with the strength of the company.

Turning to Slide 5. As a former customer, while the Chief Commercial Officer at Ashland, I experienced firsthand the superior products and technical acumen that Rayonier Advanced Materials provides to the industry. As CEO for the past 2 months, my appreciation for this has only increased through my time meeting with customers, employees and visiting our R&D and manufacturing facilities.

We also have an unparalleled security of supply, anchored by 4 strategic manufacturing facilities that provide the broadest product portfolio to a wide diversity of end markets.

In North America and Europe, we have the capability to make cellulose specialties on 5 separate and unique operating lines, creating a significant competitive advantage. Rayonier Advanced Materials' backbone is built upon its deep knowledge of cellulose chemistry including bio-based solutions, which we call our BioFuture. The interest in these types of natural nonpetroleum-based products has never been higher. This coming year, we will launch a nanocellulose product to replace microbeads in silica in the personal care industry through our investment in Anomera. We are meeting customer demand for natural-based sustainable solutions that do not harm the environment.

As we recently announced, we will be making a significant investment into a second-generation bioethanol plant in Tartas, France to meet the growing demand for nonfood-based bioethanol to support cleaner vehicle emissions in line with the European Union's mandate. These investments add to our existing sustainable products, including TemSilk, which is used to make lyocell textiles and Kallima paperboard, which meets the demand for greener consumer packaging applications.

We have other strategic initiatives we are working on, and we will work and share these details with you at the appropriate time.

Leveraging our biorefinery model is the future of Rayonier Advanced Materials. Throughout our 95-year history, the company has consistently developed world-class cellulose specialty products. We also produce and sell approximately $100 million of 9 cellulose products, including bioenergy and lignosulfonates. We plan to accelerate investment in our assets to further maximize the capabilities of these unique biorefineries.

And we have a great ESG story. Our products are made from renewable forests, manufactured responsibly in our biorefineries and used in sustainable industries often as a substitute for petroleum-based products.

Finally, the company is in an improved financial situation with ample liquidity. The strategic sale completed last year of our Forest Products and Newsprint assets enable us to focus investment on our remaining core businesses. Rayonier Advanced Materials is well positioned to capitalize on the growing consumer demand for sustainable and renewable products. And as we say, renewable to remarkable is reality. Now I'll ask Marcus to take us through the financial and strategic highlights for the year. Marcus?

Thank you, Vito, and good morning, everyone. Today, I would like to start by reviewing some of the financial and strategic highlights for the year.

Starting on Slide 6. Revenue grew 5% to just over $1.4 billion, while EBITDA for continuing operations improved by $28 million from prior year to $128 million. The EBITDA gains were driven by strong momentum for commodity prices including fluff, viscose and high-yield pulps as well as solid demand for cellulose specialties and paperboard.

With the sale of the lumber and newsprint assets completed earlier in 2021, we further improved our credit profile and provided capital to reinvest back into our assets. We reduced debt by over $155 million in the year and grew our cash balances by nearly $160 million. This cash provides the company with flexibility to further repay debt and invest in our core business.

Another key strategic accomplishment was securing double-digit CS price increases, along with volume improvements for 2022, which will help offset cost inflation and grow the High Purity Cellulose segment.

Turning to Slide 7. High Purity Cellulose sales increased $40 million or 4% to $1.1 billion, driven by a 13% increase in sales prices, offset by a 9% decline in sales volumes. As expected, CS prices were down slightly as per annual negotiated contracts, while we captured significantly higher prices for commodity products. Volume declines were primarily impacted by lower productivity, along with the buildup of finished goods inventory ahead of the upcoming planned maintenance outages. Volumes also declined as we drove toward a more favorable mix shift with strong demand for CS. In addition, continued supply chain constraints impacted volumes. Overall, EBITDA for the segment improved $18 million to $139 million, driven by the stronger sales, partially offset by higher costs. Costs were impacted by inflation for key input materials, higher supply chain expense as well as higher maintenance costs.

Turning to Slide 8. Paperboard segment sales improved $18 million to $208 million, driven by an 8% increase in sales price resulting from strong demand for our 3-ply Kallima Paperboard product for commercial print and packaging applications. EBITDA for the segment declined $5 million to $28 million as the sales price increases were more than offset by higher raw material pulp and cost inflation in our operation.

Turning to our High-Yield Pulp segment on Slide 9. Sales increased $11 million from prior year to $136 million, while EBITDA for the segment grew $7 million to $10 million, driven by a 16% improvement in sales price partially offset by a 9% decline in sales volumes, largely driven by supply chain challenges.

Turning to Slide 10. On a consolidated basis, operating income from continuing operations improved $20 million from prior year. The company effectively drove price increases across all segments with volume and mix improvements driven by the higher CS sales. Input costs were significantly impacted by higher inflation, particularly with respect to chemicals, wood, fiber and energy. Additionally, reliability issues and elevated maintenance costs negatively impacted the high-purity segment. Higher raw material costs in paperboard and overall supply chain costs also impacted results. Corporate SG&A and other costs improved $8 million, primarily driven by favorable currency adjustments.

Looking forward to the first quarter and turning to Slide 11, we expect the strong demand for CS to continue. The double-digit price increases that have been negotiated for 2022 will start to flow through later in the first quarter. Commodity prices have remained strong, particularly for fluff products. We expect slightly higher pricing for this product in the coming quarter.

Overall, in High Purity cellulose, our focus is mitigating substantial inflationary and supply chain pressures and improving EBITDA for the full year. However, we expect a slower start to the year as we execute extensive planned maintenance outages at 3 of our 4 facilities, beginning with Jesup in the first quarter, followed by Fernandina and Temiscaming. These outages are larger in scale and more than 50% longer in duration than our average maintenance outage. We will be focused on investments on major pieces of equipment including the Jesup recovery boiler to improve overall liability.

Turning to paperboard. We continue to see strong demand for both packaging and commercial print uses. As such, prices are expected to continue to climb higher. Costs for this segment have also been under pressure, specifically for the hardwood and softwood kraft pulp, purchased to make the outer layers of the 3-ply Kallima brand.

North American kraft pulps have recently seen a sharp increase driven by supply disruptions. In high-yield pulp, we expect to recognize lower prices in the first quarter due to a lag in realized pricing. We also continue to experience significant supply chain constraints in this business as well as cost inflation for key cost inputs.

Our corporate costs for the year are expected to remain stable, subject to noncash currency and pension fluctuations, which could create volatility in the quarters. It is also worth noting that the first quarter of 2022 is 13 days shorter than the fourth quarter of 2021 due to the timing of our fiscal calendar. CapEx for the full year is expected to be in the range of $140 million to $150 million, including $40 million for strategic capital. The strategic capital will be focused on a few discrete projects, including the previously announced G2 bioethanol plant in Tartas, which accounts for more than half of the strategic spend. This bioethanol plant is expected to be largely financed with low-cost green loans.

The maintenance capital will also be elevated for 2022 as we focus investments on improving reliability especially during our planned maintenance outages. Helping offset the capital investments, our $21 million of cash tax refunds expected in the year and the potential to monetize 28.7 million shares of GreenFirst Forest Products valued at $39 million as of the end of 2021. As we have previously stated, our goal is to reduce net debt to 2.5x EBITDA.

Turning to Slide 12. Our net debt stands at $684 million as of the end of the quarter, including $253 million of cash. Our near-term goal is to drive this towards $625 million, with cash tax refunds and the proceeds from the eventual monetization of the GreenFirst shares. We have enacted plans to improve our EBITDA to help us achieve our leverage targets. With that, I would like to turn the call back to Vito.

Thank you, Marcus. Turning to Slide 13. Our EBITDA margins are unacceptable and we cannot continue to operate at this level. The higher cost that we are incurring must be recovered and the initiatives that we undertake must drive profitable growth.

We expect to generate EBITDA margins at a much higher level than the current conditions have allowed. Given our specialized asset base, unique product offering, security of supply and technical leadership, the company aims to improve its cost position and generate meaningfully higher EBITDA margins.

To achieve this, we have developed a plan focused on 5 key areas, which I've outlined on Slide 14. For over 95 years, RYAM has been a sustainable company, yet opportunity remains for us to make this a competitive advantage. Last week alone, we published our 2021 ESG report detailing the benefits of our company and established a 40% reduction target to greenhouse gases by the end of the decade. This, combined with our recent announcements, including the ongoing investment into bioethanol G2 plant at our Tartas facility, demonstrate the importance of this key priority.

Additionally, I also want to make sure that we have a workforce that represents the communities that we operate in and is open and inclusive of all ideas and people.

We need to ensure that we are getting fair value for our products and services. As a prior customer of RYAM, I know the value that we bring to the market. We need to ensure that our customers recognize this. As you saw on the prior slide, we are increasing prices on CS products to help mitigate inflationary cost pressures and improve margins. Additionally, since joining in January, I've had the opportunity to meet with some of our key customers, and I will continue to engage in an ongoing dialogue in an effort to ensure they recognize the value we provide to the marketplace.

Related, we will continue to increase our investment in R&D and innovation-driven projects. Our investment in Anomera, a producer of carboxylated nanocellulose with performance-enhancing attributes for personal care and [coatings] is ramping up production in its newly constructed Temiscaming plant.

We are looking to capture near-term sales in the personal care segment through a distribution agreement with Croda, who is a global specialty ingredient supplier to the beauty and personal care industry.

As global demand for more environmentally friendly products continues to evolve, we are working to offer solutions from both our existing natural products and developing new offerings to meet growing needs. We will further enhance our self-help initiatives to mitigate the extraordinary inflationary raw material and supply chain pressures. We are actively managing through significant challenges in Q1, and as such, it will be a rebuilding quarter.

We are investing to improve reliability and drive down costs at our 4 biorefineries, having reliable assets, lowers cost, increases throughput and drive efficiencies. Importantly, these investments also reinforce that safety is our key priority. We operate in complex industrial workplace where ensuring safe and reliable operations is critical. I believe a workplace focused on safety is also a workplace focused on quality, reliability and execution, which are important factors to generating value.

We have a talented and diligent team with a strong mix of skills, backgrounds and experiences. Our most recent hire, Joshua Hicks, is our new Senior Vice President of High Purity Cellulose. He brings nearly 20 years of business leadership experience in the chemical and advanced materials industries, and most recently as Vice President of Global Industrial Solutions for Univar.

Previously, he held leadership positions at Nexeo Solutions and Dow Chemical. Together, we bring a fresh new perspective to the business to complement the existing management team.

Lastly, we expect these actions to drive higher EBITDA margins to sustain the capital needs of the business, reduce debt and provide positive returns for investors. We are well positioned to capitalize on the opportunities in front of us. We have tremendous demand for our products. We are addressing the challenges with reliability and managing extraordinary inflation and supply chain issues.

It is incumbent upon us to execute against our objectives and grow shareholder value. With that, operator, please open the call for questions.

(Operator Instructions) Our first question is from John Babcock with Bank of America.

Actually, I just wanted to ask just kind of following up from some of the last comments that you guys made. I was wondering if you could provide a little bit more color on what opportunities you see from an operational standpoint to improve the way that RYAM is performing. And then on top of that, also, the extent to which you see opportunities to further improve RYAM's position in the market and grow from here.

John, it's Marcus. We mentioned during our last call that our real focus is on improving the reliability of our assets. And we've got a strong commitment to allocate a higher level of custodial capital to our operations. And certainly, running reliability is really our best lever to improve the cost structure of our assets.

To your second question, right, obviously, in this inflationary environment, pursuing other self-help avenues to help mitigate inflation is important. As Vito has mentioned, we've got Joshua in the team. Vito brings a new perspective. We're actually looking at our commercial agreements and making sure we're getting fair value for our products. So just ensuring the value proposition that we bring to our customers is being fairly viewed by our customers. So that dialogue is important.

Okay. And then did -- one point of clarity. One of your customers looks like it's starting to shift some of its acetate tow production into more of a growth area, which looks like it's going to head into athleisure. And I was just wondering the extent to which you can comment whether or not that new product will entail the use of acetate or not? And also, if so, what -- whether or not RYAM's acetate fits into that opportunity?

Yes, certainly, John. There's a couple of avenues people are pursuing to get into garments. We've mentioned lyocell before. But you're right, the acetate material is making it into textiles to support a sustainable product in that area. So certainly, we've heard of those inroads. And certainly, given our operating footprint would be well positioned to pursue that kind of growth. And we've also, as you know, have opportunities in plastics for acetate as well.

Okay. And then next, just on the cellulose specialties market and the double-digit increases that you guys announced for the year. Might you be able to provide some color on the magnitude of what you mean by double digits? And also, how much was pricing up for the volumes that are -- that weren't contracted? Having -- because I understand at least a portion of your contracts had pricing negotiations for a multiyear period. And I guess I was curious for the volumes that didn't have that multiyear kind of extension.

Yes. So if I step back to our original press release in October, right, we had indicated a range of 15% to 30% on open contracts. And then during our last conference call, we guided that on the majority. So at that time, we had indicated for your modeling kind of take a composite of those reference points. So certainly, that's where we're ending up with the outcome where we're seeing double-digit increase.

All right. Great. And then just last question before I turn it over. I was wondering if you might be able to talk about the price cost relationship for your different segments over the balance of the year? In part, just given kind of the dynamics in pricing, including the lagged effect on pulp and also with CS pricing falling in not towards the -- not until the kind of end of the first quarter. I want to get a sense overall in terms of how you're thinking about price cost over the first quarter and to the extent that you can comment over the balance of the year?

And, John, you're looking for that by segment. Is that what you indicated?

Yes, if possible. I mean, obviously, an overview would be useful, but if you could do by segment, that would be great.

Yes. So again, we're seeing continued inflation on our key material inputs. So think of wood, chemicals and energy. And energy is the one that, in my view and through my lens is accelerating, given what we're seeing on gas pricing, it's been a colder winter gas pricing has come up. We're obviously partially hedged, but there's still that exposure and energy in Europe, given what's happening with the destabilization of the energy markets in Europe. And then the last area where we're seeing inflationary pressures is in the supply chain.

So we're seeing that. Think of that across our segments. If I break it down a bit by the other segments, in high yield, certainly, there's the logistics challenge. And as we mentioned, pricing was down this quarter, right? But you're seeing announced increases in the marketplace as the -- there's been capacity that's been deferred in South America. So that's helping these price increases come across. Paperboard, really strong demand. So price increases in the future has been announced by a lot of the major competition. And there, you're going to see the impact of pulp as well, right? And lastly, there's that inflation in our core business, but you probably picked this up from our comments. The demand and the market outlook for our CS products is very positive. But again, it's the supply chain, getting it through the supply chain and any spillover volume that we had from last year would mitigate Q1 to some degree as well.

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

Yes. Just maybe to start with the CS double-digit price increase. If I take the midpoint of that prior range of 15% to 30% and say that's 22.5% and say half -- majority of them are open, and you got the midpoint. Are we looking kind of like a 12%, 13% price move?

Yes, Paul, it's Marcus. That math that you just laid out resonates.

Okay. And then in terms of the sales volumes being up, what time -- what's the metric on that?

So we're seeing, if you look at volume, absolute tons sold, given the strong market dynamics across all our end-use markets, that's what we're speaking to the CS volumes.

Okay. So is that -- do you expect that to be up 5%? Do you expect that to be up 10%? What's the quantity?

Again, we prefer to be -- given the challenges in the supply chain, that's really the wild card here, but we're seeing strong pull-through from the customer side.

Yes. Paul, this is Vito. We probably aren't going to get that granted on this call. But I'll tell you, I want to compliment the team on the progress they've made. It's been a very difficult year. There's great upside here.

So we're working. We're continuing to work through the cycle of contracts, and that's a primary focus for us. But from the commodity side, the pricing is quite dynamic there in the (inaudible). Some of the transactions on spot (inaudible) contracts that are in place, they're going to lag a little bit. We got some work to do there. But I applaud the team for the efforts that they're making. And in this environment, we've had great success in passing through the inflationary cost. So that's a big plus for us moving forward.

Okay. And then maybe we can talk about just how that sales volume is going to come in, in terms of the maintenance capital or maintenance projects in especially heavy maintenance in first half. So is it going to be like a 40% volume in the first half, 60% in the back half? Or how can you help us sort of go at it?

Yes, Paul, definitely given the outage in the first quarter, expect lower volumes, which is going to draw down that overall average, right, for the first half.

Yes. So 40%, 45%, 55%?

But certainly, Q1 is a challenge, right, for everybody on the logistics side.

And we're going to need a couple of quarters to see this through.

Okay. And then just over on paperboard, I mean typically, the way this segment moves with high-yield pulp is one goes up, one goes down and this quarter both went down. Just trying to understand that paperboard because you're selling some of the high yield into paperboard. What else -- how much kraft or (inaudible) you using to make that product in -- or another way, another point of question would be how much high yield is going into that paperboard?

So Paul, we purchased around 80,000 tons of kraft, both hardwood and softwood. And as you know, regionally, North American pricing for kraft was ahead of China, given the flooding issues in BC and some other curtailments and weighting of shutdowns. So that's why you see that disparity between the cost of pulp going to paperboard and high yield being down because of mainly China for sales there.

Okay. So you're purchasing 80,000 tons of kraft and then you're consuming about 100,000 tons of the high yield from the paperboard?

In the range of 65,000 to 70,000 tons of high yield.

Okay. That's really helpful. And then just lastly on CapEx. If I take a look at your sort of base CapEx over the last 5 years, it's somewhere around $70 million, you're guiding to $100 million to $110 million. What are the extra projects that you're doing?

Yes. So as we called out, the recovery boiler in Jesup, right? So that's a retubing of the boiler. And as you know, those are done every 20-odd years. So that's a big item. And in Temiscaming, we're focused on addressing the larger pieces of equipment in that mill to drive reliability. As you know, the focus in the past and Tembec days was the #10 boiler. So we're deploying capital in the other areas to drive reliability.

Okay. And Jesup is Q1, Fernandina Beach and Temiscaming are in Q2, those payments?

So Fernandina Beach kind of straddles the 2 quarters, starts in March into April, right? And then Temiscaming is May.

And Tartas is?

That is October.

Yes. And, Paul, as we noted earlier, these are the most extensive shutdowns and reparation work that we've done in quite some time, and we look forward to coming out of this in a good position, but these are pretty extensive, and it's the work that needed to be done and will drive us to adding step change in the future here.

Yes. No, I agree with that. Anything that help the reliability, which has been pretty shaky. Just G2 economics, you get a $20 million investment, what are the returns on that?

Yes. We haven't shared those yet. Obviously, we're early in that project, but it's an exciting one, Paul. And we'll share those details when we get closer to launch. But it is a high-return capital project meeting our strategic deployment hurdle rates. It puts us in an extraordinary position moving forward. And then we're doing the right thing for the environment.

Lastly, the one I have is just Anomera. You've got -- I think you've got a 44% ownership. Do you have an option to buy a majority position? Or what's the expectation of the future for that?

You're right on the ownership level, and that's a good level right now as we move forward and build that business plan out, right? The small manufacturing facility is on the site, and they're making great advances there.

Tremendous opportunities on the work that they're doing, as we mentioned, in the personal care industry. And we're looking forward to upcoming product launches here with the items that they're working on, there's a tremendous need right now from consumers demanding these naturally based products, and we're in a really good position there.

And Paul, your question on Anomera, it's -- the 44% is the voting interest and then actually, the economic interest is around 48%.

Our next question is from Paretosh Misra with Berenberg.

So first of all, on inflation. I'm just wondering if you could provide some more color as to how much total inflation across all your segments you saw last year? And your maybe best guess or your expectation for 2022?

Paretosh, it's Marcus. For '21, as we guided during our last conference call, it's been confirmed we're in the high single-digit range for inflation, and it's across our key manufacturing inputs, being wood, chemicals, energy and freight. And through our lens and our business planning, we're seeing around the same outcome based on our planning right now for the upcoming year.

Marcus, and then regarding the bioethanol production plants in France. What's the next step for it? Is there any CapEx that you're spending on that for that project as well this year?

Yes. So Paretosh, we had said we allocated around $40 million in total strategic and close to half would be allocated to that strategic project.

So we're working on the engineering and all of that.

Got it. Got it. And then I think it's on the CS business. You had a $12 million favorable impact related to sales of emission allowances in Q4. Can you talk about that? Is that something that could recur next year -- this year as well? Or is it more like a onetime?

Yes, Paretosh, we have access to those in France through our production footprint at Tartas. So yes, that is a recurring matter. Again, the important item to note there is the pricing of those carbon credits are tied to what's going on in energy pricing in Europe as well. So think of it as an offset, right?

Got it. Got it. And then maybe last one. Besides CapEx, maybe if you could just walk through the other potential uses of cash for 2022?

Well, certainly, the focus is the custodial capital and then the strategic capital and covering our other fixed charges being interest. And I think for your modeling, it's important to note that we've got some further tax coming in, just over $20 million. And we mentioned the GreenFirst shares. And then obviously, we had built inventories to support these outages. We're very focused on our cash conversion cycle and improving our working capital.

And Paul, all the best for the next phase for your career in life and Vito again, congratulations to you on your new role.

And it's Marcus here. Just to end, again, a lot of questions on the inflationary environment. I just wanted to emphasize that the inflation that we're seeing in Q1 and Q2 is at a higher rate, but we're very fortunate to see a stronger year based on the outlook on volumes. But energy is certainly a common theme and the front-end loaded maintenance outages.

And I guess what I would add to that, Marcus, is when we talk about our timing and the fundamental challenges that we'll see, it's going to be unlike prior years in terms of seasonality. So it's important here that we're improving and investing to improve our reliability, which we're doing that in the first quarter and the second fourth quarter, which is going to cost us in terms of the Q1 and Q2, but we're going to see huge dividends pay off on that work as we get into Q3 and Q4. And we're extremely excited about the future, where we're going and the work that's part of that process. So we look forward to talking to you about that.

(Operator Instructions)

Okay, I would like to thank you again for your time today. While there are challenges, the opportunities to drive sustainable value creates an excitement in me and throughout the entire Rayonier Advanced Materials team. I look forward to keeping you updated on our results. Thanks so much.

Thank you. This concludes today's conference. You may now disconnect your lines. Thank you for your participation.