Tembec Inc. (OTCPK:TMBCF) Q4 2016 Results Earnings Conference Call November 17, 2016 2:00 PM ET
Jim Lopez - President and CEO
Michel Dumas - CFO
Roger Spitz - Bank of America Merrill Lynch
Sean Stewart - TD Securities
Bill Hoffmann - RBC Capital Markets
Paul Quinn - RBC Capital Markets
Joe Von Meister - Bennett Management
Good afternoon, ladies and gentlemen, and welcome to the Tembec Inc. Fourth 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.
Good afternoon, everybody. It’s Jim Lopez speaking. I’m joined by Mich Dumas, the Company’s CFO. And of course we are here to talk about our fourth quarter and or yearend results. And obviously, this call has taken place a little bit off cycle because of the extra time to finish off yearend. So, my intent is to turn the call over to Mich, and he can give you the financial highlights, and I’ll follow that with my own comments about the results and get into some of the respective businesses and give you some view of our outlook for what 2017 would be shaping up like for the Company.
So, Mich, over to you.
Thanks, Jim. Good afternoon.
I’ll start with the Forest Products segment. We had adjusted EBITDA of $12 million on sales of $113 million. Adjusted EBITDA increased by $8 million quarter-over-quarter. Average U.S. reference prices increased by US$20 for random and increased up US$30 for stud lumber. FX was slightly favorable in all business segments including this one, Canadian dollar was down about 1% versus the U.S. dollar. Overall, average prices in C dollar were up by $20, and this increased adjusted EBITDA by $4 million. Sawmill costs were lower. The summer months tend to be our lower cost period.
Specialty Cellulose Pulp segment, we had adjusted EBITDA of $23 million on sales of $122 million. Adjusted EBITDA increased by $13 million. C dollar pricing for specialty grade was up $30 per tonne, and that was a combination of currency and mix effect. And pricing for viscose and other grades was up by Canadian dollar $51 per ton that was currency but also higher U.S. dollar prices for viscose. The total price effect was positive $2 million.
The June quarter and the prior quarter, the June have been impacted by major maintenance outages in Temiscaming. There is no major maintenance in the September quarter. We never do anything in the summer. And so, cost improved by approximately $9 million. We had a greater proportion of specialty grades which added further $2 million to EBITDA. The boiler and cogen in Temiscaming continued to perform very well. The summer months are peak performance for the unit because the low steam load and high electricity generation. The chemical business adjusted EBITDA was unchanged quarter-over-quarter.
Overall, the volume specialty pulp shipments was 52,000 tonnes, up 5,000 tonnes from the prior quarter. Specialty shipments for fiscal 2016 ended the year at 183,000 tonnes compared to [indiscernible] tonnes in fiscal 2015, so we are up 14,000 tons or 8%. Shipments of viscose and other grades reached 89,000 tonnes in fiscal 2016, a 35% increase from the prior year and that’s due to higher productivity at Temiscaming specialty cellulose mill.
In the Paper Pulp segment, we had adjusted EBITDA of $8 million on sales of $83 million, significant increase, adjusted EBITDA increased by $7 million. Prices for high-yield pulp were up by US$18 per tonne, and this led to an increase of C$29 per tonne or $4 million quarter-over-quarter. We took no major maintenance downtime in pulp mill; production was up 3,400 tonnes and costs were down by $3 million.
Paper segment EBITDA of $19 million on sales of $97 million. Adjusted EBITDA increased by $3 million. We had U.S. dollar price for coated bleached board were flat, so was a currency small positive. Newsprint reference prices up $25 per tonne. Overall, between the two mills, positive $2 million on price and costs were similar quarter-over-quarter.
The corporate segment, general and administrative expense totaled $6 million. It’s a little higher than normal, normal 4, 5. It was higher due to accrual for variable comp. We finished the fiscal year well ahead of the target adjusted EBITDA that had been said at the beginning of the year. CapEx for the quarter was $17 million; it’s a little higher than normal. We had some carryover from the June quarter, which was low and we had increased part that’s ahead of the October annual maintenance outage that they just completed. We’re still looking at $40 million to $42 million for fiscal 2017 that’s the number for CapEx next year.
Liquidity was $140 million at the end of September quarter, up from $109 million at end of the June quarter. Liquidity was at the upper end of our target range of $135 million to $150 million. We had anticipated reaching this level quite honestly only in fiscal 2017 but the strong September quarter results led to early attainment for us.
The ABL revolver draw downs were only $10 million at the end of September; today, as I speak, there is zero. So, we paid off the revolving portion of our ABL. We realized proceeds approximately $9 million in October, a subsequent event when we sold the Senneterre sawmill; the sawmill that had negative adjusted EBITDA of $5 million in 2016. It was a spud mill and we did not operate it fully throughout the year; we took some downtime.
Net debt was $682 million at the end of September, represents a $94 million decline in the last nine months, reducing our leverage and improving our balance sheet, continues to be an area of focus. And we’re required to make a Canadian $6 million principal repayment on the FILO portion of the ABL in late -- we will be likely making that in late November. It’s cash based on 2016 performance. This payment will not affect liquidity as the FILO portion reduces the revolving availability increases, so liquidity will remain approximately the same and will save about favorable $650K a year of interest because the revolver coupon is about 4% lower than the FILO.
The FILO term lenders during the quarter also negotiated small extension. The FILO term lenders have agreed to extend the maturity of that long-term from 2018 to September 2018, so it’s seven months. But for us tactically, it’s a more convenient time to have it mature as our September liquidity is always significantly higher than the March liquidity and it’s a benefit with the potential refi of the senior notes at that point at that time.
So overall, consolidated results adjusted EBITDA of $57 million compared to $26 million in the June quarter. We had lower maintenance costs, higher U.S. dollar pricing on several products and a decrease in the Canadian dollar, which all contributed to the significantly higher adjusted EBITDA. Net earnings of $12 million or $0.12 per share, would have been $20 million if not for the non-cash loss of $8 million on the U.S. debt translation. So overall, a very good quarter for us. Jim?
Yes. Thank you, Mich.
As Mich said, it was a good quarter. And frankly, we’re not just pleased with the quarter, we are pleased with how we ended up in the year. And what really makes me the most happy is when Mich and I go through the all the analyticals about year-over-year change, virtually the entire year-over-year improvement in the Company’s results are from cost and productivity. So, we are absolutely thrilled by that.
When we look overall revenue, when you look at the pluses and minuses on product, pricing and currency, it was -- it had no impact on the result of the Company. So, a big improvement for the Company. The good thing is that we think the gain that we had over the past year are entrenched in our operations. Some of them come from obvious places like the full optimization of the big energy project in Temiscaming; we’ve made small CapEx investments in various mills that have given us nice little bumps in productivity and recovery and particularly in the saw mills. So, we’re really happy with these results coming on the back of focus, hard work and determination of our employees through the operating improvements.
If we I get into our business segments, I’ll start with lumber. And Mich gave you some color about lumber, quarterly EBITDA improving by $12 million, driven by good operating results and lower costs, and of course the higher prices help quite a bit. We believe that we hit seasonal peak in lumber prices and we are seeing as expected declines in the commodity price in the December quarter. We expect, as usual that those prices will recover sometime after the new calendar year. We do think that the lumber markets are reasonably well poised for good 2017. We expect further improvements in U.S. housing starts, particularly single-family starts. However, I mean, we think it’s going to be the slow, steady pace that we’ve seen for the last several years. So, we don’t expect this huge rebound in recovery, we think it’s going to be incremented improvement, like we’ve been experiencing.
Mich mentioned that we sold our Senneterre mill in October. That mill was challenged for two major reasons. There was a lack of wood to run that mill on two shifts continuously. So, of course, if you can’t even run sawmill in two shifts, it will be very inefficient and the cost will be high. Also, when we look at our portfolio of sawmills, that mill had the highest wood cost, out of any of the mills that the Company operated in Ontario and Quebec. So, it just made all the sense in the world it’s non-strategic to the Company from the standpoint that we’re not dependent on the chip supply from that facility to supply our pulp and paper operations. Mich mentioned, this was running nearly $5 million negative EBITDA on an LTM basis. So, we add that all up, I mean, this was an accretive, even though we didn’t, what do you call, received a lot for the transaction, truly accretive to our shareholders, just dropping something that was running negative $5 million LTM.
Lastly on lumber and I’m going to preempt the questions that I know are going to come. What’s happening with the softwood lumber negotiations with the United States, will there be agreement between the two countries, will there be a trade dispute? And I’m not going to try to handicap that today. All I can tell you is negotiations continue between the Canadian and U.S. governments. I think that there is a strong will by many on both sides of the border to get an agreement. But so far, we had a difficult time agreeing to mechanics that both sides can live with and a market share that both sides can live with. So, these things are going to continue. But I can’t even begin to handicap whether it will happen with this administration, whether it’ll happen with the next administration, whether it will happen at all. So, I think if I look forward, this is probably the one risk that worries us a bit on this particular business. That’s just for lumber.
Moving over to Specialty Cellulose, it was a very good quarter for this business. Our operations ran well and we had no scheduled major maintenance downtime in the quarter. The new boiler and turbine in Temiscaming had its best quarter to-date, as we would expect it to. I mean, not only have we fully optimized that equipment, but in the summer time there is less steam demand from our pulp process, which means there is more steam available to make electricity. So, in addition to having high efficiency in the units, we also had high steam throughput which drove up our electricity production and contributed to -- pretty meaningfully to the EBITDA of that operation. So, as it gets colder, we’re going to see our electricity production decline, we’re going to see our natural gas usage increase a bit, and we’ll see electricity production trough in the March quarter, naturally when it’s very cold in that region.
Commodity viscose prices strengthened in the September quarter; and again, in the December, quarter I can’t predict this price more than I would say two or three months out. It is like a lot of prices that is somewhat volatile. We think that the fundamentals are pretty strong for the viscose business. So, we are pleased to see that strengthening. But I would say, there is probably some risk of weakness in the March quarter, only because just a substantial amount of downtime it’s taking in China for the Chinese New Year holiday. So typically, at that time, I would say seasonally at that time, it would be the weakest period for the demand for viscose pulp.
Now, on this call, occasionally, I address the issue of availability of cotton linters, particularly in China. Cotton linters are a byproduct of growing and producing cotton. And I talked about in the call earlier that cotton production in China is down and the government has reduced the subsidies for plantations of cotton and have prioritized other crops because of the massive inventories of cotton in the warehouse in that country. Cotton linters are not warehoused, cotton winters are produced as the cotton is harvested in prior to put in the storage. So, while there is a lot of cotton available, the winter supply because of the reduction in the cotton crop in China has declined dramatically. And the prices for cotton linters have improved or increased dramatically. And this is affecting both, our specialty and our commodity business because the low-end or the low-quality cotton linters goes into the viscose market as the competitors do dissolving wood pulp and the high-end cotton linters go to cotton winter pulps that compete in our ethers market or high viscosity ethers markets.
So, we’re seeing a dynamic change in that market for the better, and it’s doing nothing but good things for our market. And here is how we are now seeing 2017 unfold for specialty business. Prices for all our specialty grades with the exception of acetate pulp, which is not our core business, prices for all those grades are going up in 2017. The negotiations are completed and we know what the prices will be. And again with the exception of our acetate customers, prices are going up 5% to 10% in calendar 2017. So that’s complete. [Ph]
Our acetate prices, we know what they are going to be in 2017 because the prices are already negotiated and in the contract. Our acetate price is going to be the same or stable in 2017. So, we don’t see any downward movement in any of our specialty grades in 2017. So, obviously, this is going to bode well for the Company’s outlook for next year.
In addition to that, Mich mentioned the increase in specialty shipments. Year-over-year, we’re up 8% in our specialty business, 2016 versus 2015 to a total of 183,000 tonnes. We expect in 2017 and again, the negotiations are done and the contracts are done, we expect our specialty shipments are going to top up over 200,000 tonnes for next year.
The other thing that we are pretty excited about in that business is our top four customers had all renewed their long term contracts with the Company. These top four customers amount to 130,000 tonnes out of the 200 some thousand tonnes of business that we expect to sale in 2017.
So, all in all, this year is shaping up -- coming is shaping up to be good for us. We think that the market fundamentals are good. I talked about what was happening with cotton linters but also we are seeing I think improved fundamentals for our customers in terms of demand for their product and their need for specialty cellulose. So overall, like I said, I just think that 2017 is shaping up to be a great year. Last year and a year before, we were focusing a lot on optimizing our boiler and turbine in this business, improving our pulp mill productivity, reducing our costs. And now, the markets are lining up behind it. So, I would expect, hope that next year when I am talking to you about our results, not on can I talk about more productivity in cost reductions that we have gained in 2017, but will be talking about again the improved revenue this time around with the specialty cellulose business improving, as I mentioned.
I should advise you that -- I mentioned last quarter, there was no scheduled major maintenance downtime. This quarter, in the month of October, we shut down our Tartas operation for two weeks to do its regularly scheduled maintenance. Our Tartas operation runs on 18-month cycle as opposed to our Temiscaming operation that runs on a 12-month cycle. So, we have taken that. I know somebody is going to ask about the impact. So, I’ll tell you right upfront; it’s going to be about an $8 million impact for that two-week shutdown and the cost related to that shutdown.
Moving over to the paper pulp business, I would say the business did relatively well from the standpoint that we did improve EBITDA but still the earnings from this business are not at the level we’d like them to be. Our mill performance was very good last quarter, and frankly very good for the entire fiscal year in our paper pulp business. But that’s a business that has a lot of challenges in terms of the marketplace. The positive is there is very strong demand from the Chinese bleached board business. And we sell our maple pulp, which is our, I would guess, most niche pulp that we have in the high-yield pulp business into that Chinese bleached board market.
So, we have an outstanding order book. Our Chinese customers are doing well. So, we have a fairly robust outlook in terms of the demand for our product. As a matter of fact, when I look at overall our order book for both our high-yield pulp mills, we’re sold out well into mid-January right now. Prices are creeping up bit, and we are seeing the eucalyptus producers also put price increase through. And we think we are solid for the next couple of quarters. The concern of course is for the second half of 2017, as there is one large project coming on line with capacity in excess of 2 million tonnes. Now, obviously, there will be a start up curve there but just that additional capacity coming on line has the potential to drive down prices of hardwood pulp, BEK in particular. And where BEK prices go, our high-yield pulp prices tend to fall because it’s also a hardwood product that’s complementary or competing with the BEK.
If I look at our paper business, it was another good quarter and particularly for our bleached board business, which really drives the earnings for our paper group. Our newsprint mill that is okay. We generate decent levels of EBITDA but the bleached board business has been extremely successful for the Company.
Coated bleached board business, the pricing remains stable. There is a little bit more competition coming from the European producers but prices are stable out there right now and they are stable at a level that is obviously very profitable for the Company.
When we look at newsprint, newsprint prices went up in the first half of the calendar year. They were fully implemented. Now, it’s about hanging on to those gains. Obviously, demand continues to erode year-over-year. There has been enough capacity that’s come out of the marketplace and frankly enough pressure from the lack of profitability with many mills in this sector that so far we’ve seen pretty good discipline in terms of holding on to those newsprint pricings that we had earlier in the year.
So, overall, I would say, it was a very good quarter, capping off a good year. For the December quarter, we do have an arrow down on EBITDA when we factor in what’s happened with the Tartas shutdown, the two-week shutdown and that impact, seasonally lower lumber prices in the December quarter as well and then again, we talk about the impact of the weather and the effect it has on the Company’s energy cost. So, while we still think December quarter is going to be pretty decent for us, it’s definitely going to be an arrow down from the $57 million from the September quarter.
If you look at our financial statements, you will see that liquidity has improved substantially year-over-year. Net debt has declined over the last 12 months in the range of about $90 million, and we expect to make further progress on reducing our debt in 2017. And as I’m saying that, Mich is smiling because that would be his number one objective for the Company.
We really like the trajectory of our specialty cellulose business for all the reasons that I mentioned earlier. We feel that the Company is now on very solid footing. We’re focused on further improvements and our operating results. I mentioned we are focused on debt reduction as well. We will look at strategic options at the right time, the right opportunities. Management’s focus is on maintaining all the improvements we gained in the previous year and then building on that for 2017.
The Company has two investor conferences, one next week and the one the following week. So, we will be putting up our presentation material on our website today of those conferences. So, you can get maybe a little bit more color in writing on the progress the Company has made and some of the other key elements that we’ll be discussing at these investor conferences.
So, with that, Julian, that covers the Company’s prepared remarks. And we will be pleased to open up the phone line for questions.
Thank you. [Operator Instructions] The first question is from Roger Spitz from Bank of America Merrill Lynch. Please go ahead.
Thank you and good afternoon. You spoke about ether CS pricing for 2017 of 5% to 10%, which is a reasonably broad range. Is it possible to give us, when you look over the various businesses you have, whether it’s closer to the upper, middle or lower bound of that line?
Yes. That’s a good question. Let me clarify one thing, first of all Roger, all our specialty prices are up 5% to 10%, except for the acetate grade. So that would include the MCC and the nitro grade as well. And it is a broad range because it’s -- these moves are both grade specific and customer specific, based on the circumstances. I would just -- if I want to give you some thoughts on how to model this, I would say the average increase is going to be and these are in Canadian dollars around $90 a metric tonne. So, if we average that over that specialty business that gives you a pretty good outlook of what to expect in 2017.
Thank you. And are you at all in postulant [ph] acetate filter tow or in acetate you’re in other markets not the tow market?
No, we’re in the tow markets, we’re in other markets but we’re also in the tow markets.
You are in the tow markets?
Yes, we are.
Okay. And then, lastly, based on what you see right now, how far the 2017 will your especially pulp customers perhaps be buying under their 2016 contract volume requirements? I guess what I’m trying to say is my understanding is even as you slip into another new year whether prices go up or down, if they’re not buying all the volumes from the prior year contract, they have to finish those volumes up before they go into the new, in this case 2017 contracts, assuming that’s the way it works in your business?
So, it’s not clear to me what’s your question is, Roger. I think Roger, you’re asking there’ll be carryover at the lower prices?
If there is, it’ll be a few thousand tonnes here or there. I will say this that demand has been very robust in the second half of the calendar year by our customers. So, I think that’s part of what’s set the stage for negotiations for 2017. But, if it carries over, it will not be a huge volume, it will be about 1,000 tonnes here, 2,000 tonnes there. Nothing that’s going to materially impact the overall year’s results.
Great. Thank you very much.
You’re welcome, Roger.
Thank you. The next question is from Sean Stewart from TD Securities. Please go ahead.
Thanks. Good afternoon. A couple of questions on your paper pulp business. You’ve seen consistent declines in unit costs over the last year that you referenced. I guess a big chunk of that’s better productivity. But, can you speak to any of the other variables that helps push that cost trend along, and I guess your thoughts for further progress into 2017?
Right. You’re definitely right about the productivity, Sean. That was a big contributor to our cost improvements. But that been said, we’ve also done some things in the mill to improve our fiber recovery. So, our yields have improved, particularly in the Temiscaming operations, but also in our Matane operations. And we’ve also made some improvements in our energy costs.
So, yes. It’s probably one of the best years we’ve had in terms of step changes in costs. We’ve got some other projects we’re working on now that we think will be further changes, but probably not to the degree that what gained in 2016.
Okay. And for your specialty cellulose downtime schedule, you referenced Tartas in the fiscal Q1. So, Temiscaming will go down in fiscal Q3. Is that the right assumption similar to what you...
Yes, that’s correct.
Okay. And then, lastly for me, you referenced your specialty cellulose volume guidance. How should we think about viscose volumes this year as Temiscaming transitions?
We’re 200 odd on specialty, we’ll be about 75 on viscose.
Yes. I hope it’s higher from the standpoint that I hope our productivities continue to improve and we can sell more viscose. But yes, like Mich said between that 70,000 to 80,000 tonne range depending on pulp mill productivity.
Okay, that’s all I had. Thanks guys. Good quarter.
Thank you. The next question is from Bill Hoffmann form RBC Capital Markets. Please go ahead.
Just questions on the specialty side. Jim, can you talk a little bit about -- it’s obviously a nice bump up in volume. You feel like you’re gaining share there or where is the incremental thing coming from?
We’ve gained share in certain areas and we are seeing just overall improvement in demand from existing customers.
Cotton linter, we think we’ve got cotton linter volume for sure.
Yes, right. That will be a part of share.
Then, I’ll guess that be other part of question, so with the cotton linter tightness, is that what’s also allowing for this pricing to go up?
Without a doubt. I think the fundamentals are good all the way around. I mean, like I said, demand is improving, our customer businesses are improving, and the lack of supply, just taking a small increment of tonnes out of there makes a big difference in the market.
Okay, thanks. And then just, as we look forward into the next couple of quarters, just as you get into the colder weather et cetera any -- Mich, can you give us any qualification on how we should think about reduction in power sales or just anything [ph] that comes out of that business?
It’s the winter quarters, you can think about $2 million a quarter out of Temiscaming for the cogen just on that project alone. And then you’ve probably got another $1 million spread out across or the remaining footprint of the company, small increments at sawmill, small heaters turn on. So, probably $3 million a quarter overall per quarter.
Okay, perfect. That helps. And then, Jim, with regard to the trade case, are you going to in this quarter again starting accruing for those, how do you think about that from cash standpoint?
No, we are not accruing anything right now. There has been no trade case launched. And it’s going to be an interesting exercise, if there is a trade case launched. Two major factors go into how these trade cases are analyzed. One is, we’ve had countervailing duties in the past, and we’ve also had antidumping duties. And basically dumping is the one where you’re selling below your cost. But it’s needless to say, it’s been a pretty good year for lumber producers in Canada. So, I think that it’d be very difficult to prove dumping. And overall for countervailing duties, the U.S. industry has to demonstrate injury. And it’s been a pretty good year for lumber producers up here and down there. So, proving injury could be a challenge in the short term. Now, I am not saying they won’t try but I am just saying there is some technicalities there that will make the trade case all that much more difficult to launch.
Right, okay. It’d be interesting to see how it plays out. And then just last question, the paper pulp volatility in 2016, how should we think about that as we go into 2017? Do you feel like you’re at a better operating run rate? I mean, Q4 is always the best, but it’s the other three quarters that we always worry about.
Honestly, we are not looking at much of a change in results year-over-year. I hope I’m wrong, I hope the BEK prices don’t come down in the second half of the year, Bill. In our outlook, in our forecast right now that we provided board, we are looking for that and hoping that it doesn’t happen. But if it does happen, it will be a very similar outcome 2016 to 2017.
I guess the only other question then is from a cost standpoint, do you feel like you at a lower operating cost should run consistently ex-weather effect?
Yes. We took downtime at the start of fiscal 2016 though and we are anticipating starting up the year that way for sure.
Thank you. The next question is from Paul Quinn from RBC Capital Markets. Please go ahead.
Just a clarification on the energy side. Mich, you mentioned the 3 million quarter-over-quarter. Is that of the average and are we expecting 28 million from that cogen facility in Temiscaming?
Well, the 3 million is quarter-over-quarter, like you said, in your modeling 3 million out in the December and March quarters and add back in the June September quarters. There is very relatively -- it doesn’t happen that way but quarter-over-quarter it’d be variable. [Ph] It’s not as linear as supposed. And yes, we are running at our $28 million run rate of savings, just high level numbers prior to the project, our guess, we had a cost per day of $17,000 of gas, exceeding our facility [ph] with the project with the target with the average $60,000 a day of electricity sales over gas, so net sales of $77,000 a day we try to everyday. And we are averaging that. Of course we are doing like 80, we are doing now 60 but like 75 in the summer and we are doing nearly 20,000 a day less than winter, 20,000 a day, 91 days, that’s the $2 million difference winter to summer. We are at the 28.
Just to clarify, Jim, your comment on the average C$90 metric tonne in price on the -- I think that was the ethers, MCC and nitro, does that include acetate as well or put another way, what do you expect the over mix to be up is that the C$90 or is it some…?
Yes. That’s our specialties including acetate, which is obviously for us not a huge part of our portfolio. I am not going to give you grade by grade. So, I am averaging it overall the specialty grades.
But it is on 200,000 tonnes, Paul.
Thank you. The next question is from Joe Von from Bennett Management. Please go ahead.
Joe Von Meister
Hi, guys; it’s Joe Von Meister. So, Mich, my math is that if you produced 200,000 tonnes of specialty and 70,000 tonnes of viscose, you have to run one of your plants at greater than 85% capacity utilization, which historically seems to be the outer limit of average capacity utilization. So, maybe you could tell us what we should be expecting from Temiscaming after the boiler upgrade in terms of what your actual capacity -- your real production capacity there is?
I think you’ve seen, if you look at 2016, we’re pretty close to that right now. So, it’s not to say 200,000 tonnes of specialty and 75,000 tonnes of viscose next year in fiscal 2017 is not significantly different than what we just ran the last year, it’s two percents above. So, it’s not that big of deal, it’s just continue to optimize this and with good demand running mills efficiently.
Thank you. There are no further questions registered at this time. I will turn the meeting back over to Mr. Lopez.
Okay. Well, thanks everybody for joining us. And we’ll certainly look forward to speaking you again at the end of January after our next quarterly board meeting. So, have a pleasant afternoon.
Thank you. The conference has now ended. Please disconnect your lines at this time. And we thank you all for your participation.
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