Tembec Inc. (OTCPK:TMBCF) Q3 2016 Earnings Conference Call July 28, 2016 2:00 PM ET
Jim Lopez - CEO
Michel Dumas - CFO
Bill Hoffmann - RBC Capital Markets
Sean Stewart - TD Securities
Paul Quinn - RBC Capital Markets
Frank Duplak - Prudential
Bill Hoffmann - RBC Capital Markets
Good afternoon, ladies and gentlemen. Welcome to the Tembec Inc. third quarter results conference call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Mr. Jim Lopez and Mr. Michel Dumas of Tembec. Please go ahead gentlemen.
Thank you very much, Patrick. It's Jim Lopez speaking. And as it was mentioned, I'm joined by Tembec CFO, Mich Dumas. So we are going to get things kicked off and I'll let Mich provide to you the financial highlights of the quarter and then I'll follow that up with some my own comments about the company in general and then in getting into the specific business units.
So with that, Mich it's over to you.
Yes, good afternoon. I'll start with the Forest Products segment. We had adjusted EBITDA of 4 million on sales of 102 million. Adjusted EBITDA increased by 3 million. We saw average U.S. prices increased by $39 per thousand for random and they were up $43 per thousand for stud. This increase was offset quite a bit by unfavorable FX the C dollar was up nearly 7% versus the U.S. dollar in the quarter-over-quarter. Overall, the net of which was average prices in Canadian dollars were up by CAD12 per thousand, and increased EBITDA by CAD2 million. Sawmill costs were relatively unchanged little bit lower but not significantly.
In the Specialty Cellulose Pulp segment, we had adjusted EBITDA of 10 million on sales of 111 million, a decline of $7 million. C dollar pricing for specially grades was down by $49, but that was all currency effect. The specialty prices in Euro and U.S. dollar were really unchanged by grade. And the same for viscose, pricing for viscose and other grade was down by $90 per ton and that was also currency driven and that is essentially producing Temiscaming.
The total price effect for both was negative $3 million. The volume especially pulp shipments was 47,000 tons that was up 4,000 tons from the prior quarter. And especially shipments are running at 90,000 tons higher in the first nine months of the fiscal year versus the prior year period, so we had some growth on specialty volumes this year.
Lower shipments of viscose and other grades in the recent quarter partly caused by the annual maintenance outrage at Temiscaming which in turned drove up our cost by $6 million maintenance and our observed fixed and daily cost. The new boiler and cogent in Temiscaming continued to perform well and the Chemical Business adjusted EBITDA was relatively unchanged.
The paper pulp segment we had adjusted EBITDA of 1 million on sales of 86 million, decrease of 1 million. Prices for high-yield pulp were up US$14 per ton, but the currency negated that and lead to a declining in C dollars of $15 per ton and that cost us $30 million in EBITDA.
We shipped higher volumes, and we reduced our inventory which is a positive. We took no downtime at Temiscaming versus 8 days in the prior quarter and Production was up 3,100 tons at that mill. As a result of the higher productivity cost decrease by a $1 million.
In paper. Adjusted EBITDA of 16 million on sales of 99 million. U.S. dollar prices for coated bleached board declined by U.S. dollar 20 per short ton. Currency was negative and so the pricing Canadian grow up by $113, reducing EBITDA by 6 million.
Newsprint referenced prices up U.S. $12 per ton, but there again the Canadian dollar current pricing down $30 which decreased the EBITDA by 2 million. We saw improvements on cost, lower purchase fiber and freight cost of the coated bleached board led to a 2 million favorable variance on cost.
In the corporate charges, we had general and administrative expenses of 4 million, which is a normal level. CapEx for the quarter was 10 million, more than we would normally see in this period, we had some slippage into the September quarter and we’ll probably do 15 million this quarter as we -- because we average both 12 to 13 normally in the summer months.
Liquidity was at a 109 million at the end of June quarter, that was up from 79 million at end of our March quarter. It’s the significant increase in liquidity given that we also made our semiannual interest payment of U.S. $17 million on the senior notes. Inventories declined by 50 million, that included 30 million in seasonal timber inventory reduction which we always expect in this quarter. But the good news is we made significant progress in reducing high yield and coated bleached board inventories, they were down combined $18 million in the quarter and we're approaching your target levels that we have set internally for these business units.
So, that was a really good work on reducing inventories there. We realized 5 million of proceeds from settlement of an asset sale dispute and 2 million from miscellaneous asset sales, for a total of 7 million and that was -- that helped to offset the extra maintenance cost we absorbed in the quarter.
Net debt was 712 million this represents a 64 million decline in the last six months, we're reducing leverage and paying down our revolver, that's important to us at this time, it's an objective. Consolidated adjusted EBITDA of 26 million compared to 36 million in the March quarter, the strong risky dollar and the higher maintenance cost were primarily caused in the reduction in EBITDA. Net earnings were 9 million or $0.09 per share and that includes an $11 million gain on U.S. debt consolation. Jim?
Okay, thank you Mitch. As Mitch indicated the June quarter was a pretty good quarter for us, all things considered. If you recall when we had our conference call after the March quarter, we guided there was going to be a couple of things impacting our results of this quarter, one was the obvious increase in the value of the Canadian dollar which had taken place from the lows of earlier in the March quarter. So we knew there was going to be an FX impact on the business in this quarter. And also we indicated that our annual maintenance shutdown was going to take place in the June quarter, which it did.
So it involved both -- all three to high yield mills coated bleached board and the specialty cellulous mill and we indicated that the impact will be about $8 million. So, those two knocked down our EBITDA from the previous quarter but again we feel good, a $26 million quarter with a major maintenance shutdown in that quarter and the increase in the Canadian dollar, we feel good about the outcome.
The other thing we feel really good about is if you take a look at the LTM EBITDA this time last year our LTM EBITDA was 63 million and as you're well aware, our bonds were put in the penalty box after those results. But we're looking at $127 million LTM after the June quarter this year, so it more than doubled. So, this company is on track and the financial performance is coming through and the areas that we were focused to improve, we have improved and we're seeing it in the results and as Mitch pointed our liquidity is significantly better than where we were last year and we expect to make further improvements on that as we proceed forward.
So, in terms of -- there was a couple of issues on the balance sheet that I want to highlight. With the operating cash flow we're generating now Mitch has talked about paying down our revolving debt, we're going to continue to do that. And we're also within much better position to look at other strategic options as they are coming along.
In addition to that one of the things that's apparent in the company's financial statements it's the progress that the company has made on our pension plan, the defined benefit pension plans in Canada. If you look at our plans now, we're in much better shape than where we were a few years ago when we saw the massive declines in interest rates that increased the company's liability substantially and we were in an underfunded status according to the legislation in Canada.
We are now in a situation where on a growing concerned funding our plans are over a 110% funded. Our plans are averaging a 9% return over the past nine years and as I pointed out in earlier calls we have to put $150 million to get these plans to where they are now, so an extra $150 million of cash which none of us had planned on doing five years ago when we were looking at the plan going forward.
The other thing that we’re really excited about in terms of the pension plans, Québec, the government of Québec has gone to a new model, I’ll call it a conservative growing concerned funding model and it's worked out really well. It really, it's puts the plans where they should be relative to the planned performance and the extra funds that we put into these plans so our Québec plans are actually according to the new model in Québec for funding were at a 115% funded status. So we feel really good, we cleaned up this pension plan, at the time it was stressful for us to putting the extra cash in, but we feel very good about where we are now with our pension plans.
Looking at the business segments going to forest products first. Earnings are up over the previous quarter and that's mainly due to the improvements in the U.S. dollar prices for lumber that we saw particularly in the latter half of that quarter. But there is still a significant gap between the price of random length lumber and stud lumber. And even though prices have improve it kind of improved lock-step with random and studs.
So we obviously -- given our leverage to studs is about 50%, we like to see further improvements by reducing that gap between random and studs and obviously we wanted to see the stud prices come up and not the random prices go down.
So there were prices recovered in June and they've carried over into July, there has been no drop of in demand in fact demand is extremely robust, I would say the market is in good shape. Prices are stable to slightly up, they seem to be creeping up week-after-week and the pipeline is in excellent shape. There is not a lot of extra lumber, if any extra lumber anywhere in the supply chain. We know for a fact that customers are not sitting on big inventories and people are working hand-to-mouth right now in terms of shipments.
So we think that the fourth quarter should be pretty good for lumber, July is behind us and many of this are getting backlogs well into the month of August. So we are feeling pretty bullish about pricing for the September quarter and that as I would say there is the strong chance that pricing, the overall pricing on a U.S. dollar basis will be much better in the September quarter than what we saw in the June quarter. So obviously we're calling for a narrow up in terms of the EBITDA for our lumber business.
I know a lot of you guys are waiting about the stock wood lumbers situation with the United States, the last agreement expired in October of last year they stand still that we now are currently in expires in October of this year. I still think that there is a reasonable possibility that the new softwood lumber agreement will be put into place. Even with the election cycle going on in the U.S. I think it's very clear that if there is alignment between the industries expectations in the United States and the USTR, I think there is good chance to get a deal done and I'm encouraged about the fact that our government officials from both countries continue to meet and have dialogue on this. But at this time I’d hate to try to handicap it, but like I said I think it's more than a remote possibility for that to happen.
Looking at the specially Cellulose business I’m feeling pretty good about this business and where we are right now we've got the Temiscaming annual shutdown behind us, it was on time and on budget. So the guys meet the goals that we set for them there. Mich had mentioned that the shipment of the specialty pulp is up quarter-over-quarter and year-over-year and there is a lot of good work being done by our team in terms of growing and expanding the specialty business in a number of the grades. And frankly I'm fairly optimistic looking forward to '17 that our specialty shipments have a good chance of being up again over '16.
Looking at the commodity portion of that business, the viscous pulp prices improved from last quarter to this quarter. New orders that are coming in from China are over U.S. $900 per ton, that market is well balanced. Demand for our downstream customers, the viscous producers is good. So, overall we're going to see some improvements in price throughout this quarter as we clear our backlog of the orders at the older price and we feel pretty good about where the viscous pulp pricing is going to be going into 2017.
Now there's some interesting dynamics going on in China in regards to cotton linter pulps and as I'm sure all the people on the call are aware cotton linter pulps compete against our business. The high end cotton linter pulps go into the ethers market and is a direct competitor to our ethers pulp, and our low end cotton linter pulps go into the viscous market. And there's some interesting things happening in China right now, one is that as I think people are aware there are huge inventories of cotton in warehouses in China, some say enough cotton there to last a year or two without planting any new crops. So, one of the reasons that they got into that situation was the government was providing some significant incentives for farmers that plant cotton.
In certain regions of China now it's our understanding that those incentives have been taken and the government is putting incentives on other crops to be planted in China. In addition to that another region of China that produces a significant amount of cotton, there was a hailstorm and we don't have clear data, but it appears that a major portion of the crop in China was damaged.
So, what's happening with that, unlike cotton which can be put in inventories for year’s cotton linters are harvested and processed immediately. So even though the warehouses are full of cotton they're not full of cotton linters, so if there's a decline in the cotton crop for 2016 there's a direct impact on the price -- availability and price of cotton linters and indeed that's what we're seeing, the price of cotton linters is up in China and we anticipate that could even go even higher. So, that's creating an interesting dynamic with the price high end cotton linters, going into each of those markets and certainly the low end cotton linters that are going into the viscous market. So, we're keeping a close eye on that but it's a dynamic that has a potential to be positive for our industry.
Also on specialty cellulose we have no shutdowns in any of our two mills in September so we have a pretty strong arrow up for specialty cellulose for our fiscal quarter of the September quarter and Michel had mentioned that the new boiler and turbine are running very well meeting all expectations and now we're at the point where it's about hey how do we get some extra electricity production out of this system and I think our people are doing a good job of identifying some upside that we can capitalize without putting a lot of extra capital into the mill.
Moving on to paper pulp where the company’s high yield pulp business I'm disappointed with the earnings of that business. When you look at the relative size of that business for Tembec, I mean to be running just above breakeven is obviously not great positive. Our real challengers are in the marketplace, there's a lot of hardwood pulp out there, particularly eucalyptus kraft pulp, there's a lot of it out there and more of it coming on to the market next year. So, it's keeping a lot of pressure on price for high yield pulp.
In the short-term, we do expect and we are seeing price increases prices went up in Q3 and prices are going to go up in certain markets and particularly the China market in Q4 so in the short-term we are going to see some upside in the company's high yield pulp business, but there is a new BEK line coming on in Indonesia next year about mid-2017 and it's obviously concerned when you see that much capacity coming on to the market at one time. So certainly if there is some midterm risk for pricing when that new capacity comes on, and it sounds like the broken record in terms of hardwood pulp because, just when things get stabilize and markets back into balance a new mill starts up somewhere in the southern hemisphere. So, in the short-term I have a slight arrow up for our high yield or take our pulp business for fiscal Q4.
Moving on to our paper business, obviously, continued strong performance by this group being driven primarily by the coated bleached board business, but also having our newsprint operations contribute more and more a lot of that has been due to not just good performance and low cost at our mill but the price increases that we've seen for newsprint. There has been a price increase of $15 that was implemented US$15 that was implemented in the U.S. markets, and they are another $15 that is in the process of being implemented, again US$15 in the U.S. market in July that ones are bit more contentious and it's under discussion, but we positive that there will be an increase. Would we differed to August, I don’t know, will it be instead of 15 some other number, that's a possibility. I would say that it probably won't be clear unfortunately until sometime next week even though the month of July will be behind us. But we do feel that there will be another U.S. price increase it's just a matter of when and what the quantum will be.
There is also been a price increase announce for Canadian newsprint in August. We believe that the newsprint increase in Canada will go through the exact amount is still under discussion with customers the amount announced was $40, but naturally there is some push back in the market place with an increase of that quantum. So we’ll have to wait and see just when the dust settles what the quantum actually is for the August price increase in Canada.
In the coated bleached board business, we have seen a little bit of downward price it's just a little bit of slippage on a U.S. dollar price for coated bleached board, it's nothing drastic and we don’t expect it to be, but we could see how U.S. dollar is pricing for the September quarter be slightly lower than what it was for the June quarter, but again I don’t expect anything drastic out of that. So overall it was a great quarter for our paper business and I expect that the September quarter will be relatively flat on an EBITDA basis compared to what we did in the June quarter.
So, just going back and summarizing quarter-over-quarter maintenance cost were down as I pointed out earlier due to the majoring annul shutdown in Temiscaming and the strengthening of the Canadian dollars, but the results were almost exactly in line with what our expectation were. We have a strong arrow up for EBITDA for the September quarter, given no shutdowns in some of the tailwinds were seeing in our businesses, so we feel pretty good about that expectations for the September quarter. Again the liquidity will continue to improve and we’ll continue to pay down our revolving debt with our surplus cash which we expect to have.
So with that ladies and gentlemen that concludes managements prepared comments and we would be happy to open up the lines for questions.
Thank you. Will now take questions from the telephone line. [Operator Instructions] The first question is from Bill Hoffmann from RBC Capital Markets. Please go ahead.
Jim could you talk a little bit more about the specialty cellulose markets, we're hearing some guides that the there's been some increased competitive conditions in acetate market, I know you guys aren't big in that but my concern or question is that is there going to be sort of fallout from that as you head into next year's negotiations in ethers markets and some of the other end markets?
Bill when you say fallout there you mean in terms of price expectations?
Price expectations and/or guys just trying to push in volumes into your markets?
I think there's always a degree of risk there, but we feel pretty good about our market share right now and some of the business development stuff we have actually like I said in comments, I actually feel pretty good that we've got a good chance of actually improving our market share this time over the next year. But is there risk there? Of course it's always there and I think the greatest amount of friction is going to be come into acetate business because, one obviously it's the largest piece of the specialty cellulose business and it’s the one where the hardwood guys haven’t able to penetrate and they've not been very successful in penetrating the ethers business as I think you're well aware Bill. But yes, I mean it's the risk that somebody -- there could be spill over, I guess there is but I think it's something you always have to manage.
And what about pricing?
We're looking at potentially actually a small increase in most of all our specialty businesses. I'm not going to try to make call on the acetate piece, but I think for the rest of our businesses flat to maybe slightly up a 1% or 2%.
And then question for Mitch on the currency impacts, what was the -- you gave a nice breakdown sort of per segment. What was the total impact and it looks like with the C dollar at 75-ish now do you get a little bit relief in Q4?
Yes, if I got $0.02 Bill that's worth $10 million, $12 million a year. So 2 million, 3 million in the quarter, if we get $0.02. And we have an average 75, I caution [ph] you so far, we've been around there but we haven't averaged that. We'll see where we go in next two months.
But our comments in terms of our expectations on EBITDA when we put our forecast together for Q4 to $0.77, $1 or so, my comments supply to a $0.77, $1 obviously a weaker Canadian dollar it's going just be stronger arrow up over the quarter.
Thank you. The next question is from Sean Stewart from TD Securities. Please go ahead.
Just one question Jim you touched on the near term focuses of paying down the revolver and then you referenced being in a position to consider broader strategic options can you give us any more context on the sorts of things you're thinking about there?
Well Sean, you really want me to comment on strategic options? No, I think just where we were at this time last year with liquidity being so tight, we were just so constrained to do anything. I mean it was just -- the focus of the company was lining up the piece we put together last fall with the new lenders and driving cash flow and managing the company. I think now that our balance sheets are in better shape, I think we have the latitude to consider more things, but we’re not really open to talking about it in any specifics. As usual you will find our when we’re ready to announce something, we have not announce anything today.
Thank you. [Operator Instructions] The next question is from Paul Quinn from RBC Capital Markets. Please go ahead.
Just a couple of easy questions. One on [Indiscernible], long-term gap what are you see as random one is that I mean look at it historically, but do you expect to get back down or where you expect to be 67 bucks, I guess in the quarter 69 in the quarter before, where do you think that is long-term?
Even though the gap has been persistently above the historical and typically when we get into good housing markets, I mean housing is the primary user of stud lumber. So, I think that as housing start to improve, there is a potential that that gap is going to narrow, but I was explaining this to a board this morning, there is a different dynamic in this cycle then we've ever seeing before and that dynamic is what's going on in terms shipments from the west coast production into the China. And it provides a clutch for random lengths. Unfortunately there is very little studs going into China, so we are a 100% depended on the housing market in North America, obviously mostly into the U.S.
So my hope is that as housing start to continue to improve that we are going to see a narrowing of that gap. I actually think there is a potential for that this quarter because when I talk to my sales team and I look at our inventories as we have -- we produce and we ship, there is a demand for studs, they’re extremely robust right now and I wouldn’t say there is a shortage, but it's tight like it's a very -- we rarely can offer prompts shipments now and I'm pretty sure that that's a pretty much a reflection of the market place.
So I think this is potential in this quarter that we can start to see it narrow, but if it's been to my surprise and disappointment we haven’t seen a narrowing of that gap now and the studs have improved, just over the last several weeks going from 350 to 367 I think was the last lift, but random also increased, so am I upset, well I’m glad to have $17 price increase over the last couple of weeks, but I'd like to see the studs accelerate a little bit more. But it's a tough call right now, Paul.
I would expect to just in case of the China has taken the random likes that they are just going to pull up that price and not doing anything for studs and that's why you get that the growing gap, but it sounds like you are hopeful that as housing recovers and we get some more demand for studs, that pulls that gap down I guess?
Yes, but my thesis is the same as yours. That's why the gap persist now.
Right, okay just one softwood lumber when you said reasonable chance reasonable to me suggests 30% to 35%. And then you made the comment it's more than remote to me, is like 5%. So, I'm certainly left with, if I put in percentage terms anywhere from 5 to 30, would that be fair or am I do you see movement on both sides, I guess it's more of the question?
I do actually, I do think there will be movement on both sides. I think the challenge right now is there is certain expectations in the United States and there is expectations and limitation to what the Canadian side can accept. So, what I see now is a little bit more out of the box thinking. U.S. doesn't like this, we don't like this, is another way to get at this thing and I think there's conversations going on and looking at this from a maybe a new template instead of the 2006, the one before that or one before that, is there another way to go at this so that I can satisfy the desires of the U.S. and still keep Canada relatively content.
So, that's what leads me to believe that there's a reasonable chance there. I think there's sincere effort going on in both sides and it’s just a matter of how we come to a comprise in the middle. I'm not sure I would like your goalpost of sort of 5% to 35%, I might move that one goalpost little higher than 35%. But I guess I'd rather manage down expectations and be pleasantly surprised to manage up expectations and then we disappointed.
We can debate the percentages. Just on your specialty business and just on earlier call with international paper is buying or how is your cellulous fibers business, they sound pretty excited about the business and not just for fluff pulp but they meant in fluff and specialty pulp grades, do you have any of your specialty or viscous that right now competes with Weyerhaeuser current product?
I'm not sure. I don't think so. But I'm not sure. What we do know is when dissolving pulp prices, viscous prices get to a certain point and there's gap between fluff and dissolving pulp and it's favorable to dissolving we know that fluff pulp leaks into that market and the viscous guys, albeit at a penalty can use fluff pulp. So is that Weyerhaeuser, I don't know. I don't know who we running the commodity business and I don't know who these guys are buying from, but I mean as a matter I'm not aware of any competition with Weyerhaeuser or any other market.
I think Weyerhaeuser was making a couple of years a product called crosslink which is kind of a higher grade [indiscernible] plus or fluff plus type grade that was I guess entering the bottom of the viscous side, when viscous market is really are really hot. So just curious if you have any overlap there?
Viscous prices Paul at $2,500 it was forcing a lot of innovation by producers and consumers.
Last question I had and you probably mentioned this, but I got on late, but just CapEx spend out and that your balance sheet is looking a little bit better. I know you talked at length on the -- your detail strategic options with Sean, but just wondering where do you expect that CapEx budget to increase and I suspect there's a number of operations that you've got, those have been underfunded over the last number of years?
We're going to continue -- for the time being Paul we're going to continue with $40 million a year number. We think we can fix up a few things. We won't do everything with that number but we're I guess I'm holding my pen here as I’m [indiscernible] internally I'm going to pay down from other revolver.
But I think in that 40 million like Mitch you'll see some -- we'll probably do some things in the sawmills, as you know few many bucks can go a long way in the sawmill. So, we'll do some things in the sawmills and we -- one of the areas we're looking at pretty intensely is how do we make more green electricity in Temiscaming because the leverage of extra megawatts there is tremendous. So, we've got some projects we're looking at on how to improve the energy efficiencies, the pulp mill that will divert more steamed to the turbine and less to the pulp mill.
So, we'll get some project like that done in that basket. Looks it won't be anything significant that you are going hear about, you won't hear about a complete rebuild of the sawmill or anything of that magnitude or additional pulp capacity, you are not going to hear about anything like that in the next year or so.
Excellent, thanks so much guys. Good luck in the quarter.
Thank you. The next question is from Frank Duplak from Prudential. Please go ahead.
Just a question sounds like there is a couple of things maybe going on in working capital, you made some good progress in inventories and maybe there is a little bit of pricing comment. As you kind of think about the fourth quarter -- fiscal fourth quarter, should we be thinking sort of maybe there is a little use of working cap coming down the road or there are further opportunities in the fourth quarter maybe to free up a little bit of cash?
As I mentioned Frank we are approaching target levels, so I'd say pretty neutral in next six months and then the seasonal timber builds starts in end of December early January. So pretty flattish, I don’t see working capital moving a lot. You might even see it go up a little bit with AR, [indiscernible] some of this prices go up AR. It's a high class move because they are organizing those stuff [ph], if we get some pricing. But beyond that don’t expect anything material to really happen.
Okay, and then as we think about maybe the magnitude of the arrow up sequentially. Could we get back to fiscal second quarter or fiscal first quarter 2015 kind of numbers in the mid-30s, is that kind of we should think about for EBITDA or like to thinking that arrows too bigger too small?
I don’t think you are off base Frank. I mean we are going to have the $8 million better just on maintenance Frank.
So, yes you need to ball park.
And then the last, one I saw in the part past, I even heard you guys talk about it a little while about a target when liquidity level. I thought I had like a 135 to 150 number? Is that something you think is sort of the tenable over the next let's say 6 months to 12 months or sooner or longer or how do you guys think about that?
It really depends a little bit on our profitability, but we can do it. I think probably more towards the low end in that range for in the couple quarters but I think we can get making some the headway and get very close.
Thank you very much guys.
Thank you. The next question is from Bill Hoffmann from RBC Capital Markets. Please go ahead.
Mich can you just talk about the next downtime schedule to Temiscaming and also Tartas in the next maybe 6 to 12 months?
Tartas will go down in October for its 18 months, it will be 18 moths interfold, and Temiscaming goes down every year in May.
Okay. Anything major in those maintenance outages?
No. Pretty routine, you know Temiscaming was a little more intense this year because year-over-year after this start up with the new boiler and turbine so of course there was a punch list of all the things that people that want to get done or optimize the -- after going through the startup and you don’t shut these boilers down for a day and do that work, so we have the full week down and it gave us an opportunity to go to that punch with. So actually last, this past May was a little bit more intensive, whether it will be in the future.
Okay, great. That's it. Thank you.
There are no further questions registered at this time. I'd like to turn the meeting back over to Mr. Lopez.
Okay, well thank you, everybody for joining us and we hope we can follow through with expectations that we've generated based on this call and we can have another positive quarter as this you know this September will the end of our fiscal year so our will be delayed until November as we go through all over year end statutory stuff.
So, we'll look forward to talking to you in November and I expect that we're going to have good news story for you again. Thank you very much for your interest in Tembec and we'll talk to you soon.
Thank you. The conference has now ended. Please disconnect your lines at this time. And thank you for your participation.
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