RYAM
#<UNK>, we said first of all it spans the third and the fourth quarter, it's about a 30-day outage, so it's about half and half in those two quarters.
We said in the last call that last year we had a 13-day outage, that was about a $2 million type of outage that is a little bit more than twice as long as that outage.
So it would be $4 million to $5 million from an operating impact.
Correct.
That is correct.
(multiple speakers) ---+ in 2017 ---+
Yes, so if you look at page 7, <UNK>, of the slides, this lays out how we see this rolling out.
So you'll see we've got $35 million in 2015, we're assuming $40 million in 2016, and then we're assuming right now targeting $35 million in 2017.
Just to draw your attention to it, last quarter we had $30 million in 2017 and $35 million in 2018, so we're feeling stronger about the pace of the cost savings that are going through, and actually shifted $5 million of that back into 2017.
These are incremental cost savings on top of what we would have accomplished in 2016.
And <UNK>, obviously it doesn't weigh in there anything with inflation or movement and prices in that regard.
So it's just pure saving efforts on behalf of the team.
So <UNK>, it doesn't assume anything in there, so it is the majority, I don't think we will provide any further color on that.
It's the majority, and volumes and prices have yet to be firmed up across the board, that are uncommitted at this time.
I think it's fair to say compared to the volumes this year in our acetate market.
Yes, sure.
This is <UNK>.
We said even last year, 2015, that we were told to expect it would flush through in 2015 and clearly that didn't happen.
As we came into this year, we heard that the sentiment was that largely globally, outside of China, the destocking had occurred.
But still we thought through 2016 the Chinese destocking would, could continue.
So our anticipation and thought at this point based on what we have heard that it should be flushed through in 2016.
Just to put it in perspective, the two things I would point out are we're down year-over-year.
We're not forecasting if you do the math down at the midpoint.
We're not forecasting being down second half over first half of this year, so volumes will be relatively consistent.
If you go back and look at our third quarter last year, we had an exceptionally strong quarter, and we pointed that out at the time with shipments of 133,000 tons of CS, which is considerably higher than any of the quarters we had throughout the rest of that year.
And so we'll be comping that third year quarter.
And I think there could be timing of shipments and other things that could impact this year's shipments, but really that is probably the big driver, the strength of that third quarter last year relative to this year.
<UNK>, let me start with that and I'll turn it over to <UNK>.
And just as a reminder about the JV and how it's structured and of course it's detailed on page 13 of the slide.
The JV which we're calling LignoTech Florida is a $135 million investment over two phases.
Phase 1 is $110 million and it should produce about 100,000 tonnes of lignin.
Phase 2 then is $25 million and adds about 50,000 more lignin.
We're a 45% owner.
Our partner Borregaard is a 55% owner.
We are currently, we've completed all the engineering.
We're currently waiting for permits, primarily two permits, building and environmental permit.
We expect to have those complete in the back half of this year.
And with those complete we'll commence significantly on the project.
We think the project will be about 18 months to complete.
So most of the spending you'll see, <UNK>, is in 2017 and 2018.
With that we're looking at all options for financing.
So we haven't discussed or disclosed what that's going to be, but we're exploring all those options at this time.
And <UNK>, I don't know if you can add more color to that.
We've got some small CapEx this year relative to the overall capital that's needed for the project, which is included in the $90 million CapEx figure.
And then obviously we're working on all financing avenues, and we'll sort that out and tell the market as we get to the end of those options.
And so when we get all that financing in place and how we're going to proceed with this, and we get the permits then of course it goes before our board and Borregaard's board for final approval which we expect again in the back half of this year.
I don't think we said price is down 4% this year.
Price is down roughly 7% this year.
But typically we'll have a little bit lower price decrease in the first half, and a little bit higher in the second half, only because of some sales that tend to shift into, a modest amount of sales that'll shift into the front end of the half versus the back, those that fall out of the back end of the half.
So I would say that the pricing guidance, I think we're right in line with that overall pricing guidance.
No, <UNK>, I don't think we've got that number out there as far as any kind of percentage, anything like that.
Again, the majority of our business is contracted, and again, we are working as typical on the back half of this year on both volumes and prices and so nothing out of the ordinary in that regard.
But I don't think we have any percent out.
I'm trying to think back at what that may be referring to.
All of our CS volume is typically contracted at the end of the year, <UNK>.
We obviously have contracts that come up every year.
As you know the big three, our three largest customers are contracted much longer term, but we'll be going through the normal negotiations contracting, both for our customers and those in the market looking for CS volumes.
I think those comments, I'm sure those comments are directly related to our customers' business, and specifically acetate tow.
And so I can't add any more color than what they have already provided out there for you.
In our regard again, we see it directly as well.
We see the destocking happening on our customers behalf, but we've largely factored that into our plans for the year.
So I think two different issues there, as we look at it.
Yes.
(Multiple speakers).
That'll be consistent with what we do every year.
So it should be consistent with what happened this year.
And that should be in the second quarter there, <UNK>.
Well, <UNK>, as you know both of those segments are smaller segments for us.
So these are high single digit, maybe low double digit type segments.
High single digit, we [haven't] put that kind of guidance out there for a while but it's still very consistent with what we have discussed in the past.
But again we're encouraged because we are seeing some expansion in some of these key areas, again, with some customers in the engine filtration area as well as in the high end ethers area which is where we tend to focus more of our product portfolio is in that high end.
And so we've got several customers out there with plans to grow, again, which is not something we've been able to share with you until this point in time, which is, again, great for us to see and we're encouraged for our customers.
Yes, and again it hasn't changed much.
We've certainly got a lot of focus on it and a lot of dialogue.
We've got some new products out there that we're working with these customers in the ethers and tire cords and other areas.
So yes, but we have always said that we're not going to push it in there, we're going to come in with some value, with some differentiation that allows us to have a meaningful dialogue with our customers and give them something in terms of value that they don't have today.
So with that, it just takes a little bit of time.
And at some point, <UNK>, if we get some meaningful change out there in those segments, we'll give you some updated percentages to help your guidance.
No.
What we're saying is we believe, from what we've heard and of course if we get anything different we will update you as well, that the fundamental market consumption is roughly flat.
And we've said this for some time now.
I think you're seeing with our customers, which is what we see, the ill effects of destocking and mainly now still working through China, that's pushing back on their business in terms of volume, and we listen to their calls as well.
It sounds like in terms of price as well.
And again they have said it's a different equation between what they're working on and what our business is, in terms of pulp going into the market and pricing for our product.
Again I think we share the same, the cloud a little bit.
The reporting information is not great, so we have to go on what customers in China are telling us.
We believe as we stated before and this is not new information, that there's certainly a correction out there in terms of the destocking.
We think also some of the new Chinese regulations have suppressed demand here.
But we had heard that once these are put in place and destocking is through, that they believe their market will be slightly positive going forward.
So we're operating with that framework, that mindset, and if that changes we'll obviously update you.
<UNK>, we're anticipating spending capital associated with the JV in the back half of the year, and most of that capital would be spent after the announcement.
But what we look at here is we've got to get some work going early on, on the infrastructure and other things that we need to do to move the project forward when we get the green light to move forward.
So we're just anticipating that and putting that into our guidance.
Yes, I think that's a fair assessment.
We put out an announcement not too long ago that said look, we're at a point where we're just waiting for the final permitting to come through, and once that comes through, and our Board likes the returns that we think we can get out of it, and similarly that Borregaard, that we'll move forward with the project.
So yes, I think we're positive on the project at this point in time, but obviously there's still final reviews by our Board and we have got to get the permitting in place.
Looking at the back half of this year we're seeing some incremental pressure as new capacity comes online.
We think therefore we're indicating that pricing could be down slightly in the back half of the year, and what the magnitude of that is, I don't know if it's a percent or two, but it's in that range somewhere there.
It could be a bit more, but it's not a huge amount.
And again the key, <UNK>, is that we can flex between commodity viscose and fluff.
And so if we see the fluff pricing get too negative for us, we'll make sure we pursue greater viscose in the coming period.
So we can move back and forth.
But yes, we just see the pressure on some of this incremental capacity coming out there, and it's in line with what we expected at the beginning of the year, it's not really different from that.
But we just are updating you on our perspective for the balance of the year.
I think we have been holding our share across the board fairly consistently, maybe even improved it over the last couple of years.
But it's hard to say because there's been so much dynamics around this, particularly in the acetate with the destocking, it's hard to tell.
And ethers in particular, again we think we're, ethers in other segments, I think we're holding our own, but it's hard to say exactly.
As you know there's not a lot of public information out there so we just do our best to estimate to say where the market's at.
But I don't see a significant change either plus or minus.
You know, we haven't updated that at all, <UNK>, in recent times.
We've certainly seen some pricing pressures in the ethers and other segments more dramatically even than acetate.
So I don't know if there's developing a little bit of gap there or not, but I don't know if we have any guidance to provide for you at this point in time.
But in the past, you're right, we've always said in the high end areas of these other segments they were fairly consistent with acetate.
Whether there's a separation there or not, I'm not too sure because our pricing has come down quite a bit across the board.
So I really don't have guidance to provide you in that regard.
<UNK>, I think it's consistent with the 4% to 5% guidance we gave out at the very beginning of the year in regards to our volume outlook for this year.
As you know, predominantly all our CS volumes are typically contracted by the end of the year.
And so we're able to give out pretty good guidance in regards to that, to that issue when we get to our February call.
And so we're just seeing that the first half was pretty consistent with last year, and last year we had a very strong third quarter.
So that decrease from destocking and other things needs to come into the year at some point, and we're just going to see it happen in the second half versus the first half.
Sorry, <UNK>, you're coming in very weak right now.
I wouldn't take anything from it.
I think our commodity volumes will be strong.
I think we gave out guidance before around the 250,000-plus ton range depending on mix between fluff and viscose.
So I wouldn't take anything from the first half.
From an IRS basis after this contribution we're very well-funded currently, but close to the 100% level, I believe that's accurate.
So close to the 100% level.
Obviously we've got to watch three things as it goes to funding.
One is the returns that we get in the market and obviously last year was a poor return year for everyone.
This year is getting better but it's still below benchmarks for most people.
Second is discount rates, and as the treasuries have dropped and other things we've seen some pressure on discount rates which could increase funding.
And thirdly is the potential adoption of the new mortality tables by the IRS.
And that could happen as early as 2016 ---+ I mean as early as 2018.
Potentially 2017 but I don't think people think that will happen, so probably 2018.
So we'll have to keep a look on those things.
But right now again it was a voluntary contribution, it wasn't a mandatory contribution.
So I think that puts us in a relatively good state, but we'll have to continue to monitor those three other issues in the future to see if that impacts our funding status.
Okay.
We paid $20 million after the quarter ended, <UNK>, so that was one big chunk.
We paid the $10 million pension.
We do have some of the funding for Borregaard on the balance sheet, the lignin joint venture on the balance sheet.
But I think you'll continue to see us look at ways to either reduce debt or put cash on the balance sheet for future investment in the business which we think could drive good returns and longer term growth.
It was, yes.
Good observation, <UNK>.
A couple of things.
One is, and I looked at it more from the end of last year to this year, which was roughly a cash positive $60 million, when you look at the change in current assets and liabilities.
And what you're going to see is when you look at our cash flow guidance it's roughly equal to or slightly less than our first half cash flow, so for the full year.
So some of that was just some early payments and some other things that were timing on the working capital side.
So we would expect a little bit of that to go out at the end of this year, based on timing.
So we'll reverse some of that, that it's very hard to talk about working capital in small increments because it just depends on what day you get paid things, or need to pay certain obligations.
But you'll see a decrease in that in the second half by a bit.
Additionally you'll see significantly more CapEx.
We spent $38 million this first half, and we're going to spend $52 million, or forecast to spend $52 million in the second half.
So you'll see a little bit more cash outflow in the second half than you did in the first half, [and you saw a gain] in the first half.
<UNK>, as part of our Transformation Initiative, I know we talk a lot about the cost component of that, but we are very focused on driving cash flow, incremental cash flow as well.
So as we have discussions on contracts either with customers or suppliers, that's one aspect of the discussions that we have with those individuals.
And we look for opportunities to improve the cash flow through better working capital terms.
So we'll continue to focus on doing that.
Whether or not it'll give us more cash flows next year is hard to say.
But it probably won't be anywhere close to the numbers that you saw this year, as we had a lot of positive cash flow adjustments going through the first half of this year.
So <UNK>, let me answer just on terms of ongoing CapEx, and as we've guided this year we're about $90 million.
We think a steady-state future for us is in that $50 million to $60 million in terms of funding our ongoing business and being a quality consistent supplier.
With regard to the JV opportunity, we have yet to decide how we're going to fund that, and that's what we referenced earlier.
So all those decisions are before us and to be approved by our Board.
And so we're looking at all options, whether it's financing or putting capital in directly, but all of those things out in front of us.
And <UNK>, the $135 million that you referenced and our share of that, the first component of that's $110 million.
So that incremental spend won't come for several years after the JV gets going.
So I think in the near term or the intermediate term we're about the $110 million than the $135 million.
Roughly.
Thank you.
Well if there's no more questions, I'd like to thank everybody for joining us today.
Let me say I'm extremely impressed with our team's ability to drive results on two critical initiatives within our control.
We're well on our way of improving our business through cost and aggressive debt reduction to achieve an appropriate capital structure, positioning us well as a long term market leader.
And I'm confident in our ability to develop opportunities through growth and innovation that allow our customers to win in their markets, and for us to create value for our stockholders.
We look forward to updating you on our progress in a timely manner as we move forward, and I thank for your time this morning.
