GLT
#Yes.
So the machine is being designed to produce high-value, lower basis weight products and will focus predominantly on the broader specialty wipes category.
Right.
So we will have a much larger platform so we will be able to establish centers of excellence between the Gatineau, Canada facility and the southern US facility.
I wouldn't say shifting ---+ I'd say growing.
So this is a platform that is serving markets that are growing at 5% per year both in hygiene as well as wipes.
In North America the Airlaid substrate is a form factor of choice for the growing specialty wipes category, and we have strong working relationships with some of the key market makers.
And so as we looked at opportunities to invest in organic growth, we saw this as a good opportunity and very timely.
And it's consistent with what we've described in the past in terms of how we envision continuing to grow Glatfelter.
Well, certainly the uncertainty and volatility in Russia and Ukraine is top of mind.
And the Dresden facility is a low-cost producing facility.
It's run exceptionally well.
We have gathered a team together to focus on areas where we can create even more cost-competitive cost structure and look at ways to round out the product portfolio to have fit-for-purpose offerings for certain regions of the world when you've got economies and recession and very volatile and weakened currencies.
So the product category itself, big picture, we still see the markets rolling globally.
Over time we like our leading share position, which is just under 50% market share.
And in terms of its profitability profile, although substantially impacted over these turns of events over the last, say, six quarters or so, it still is a contributor to CFBU and fits our profile.
<UNK>, I think it's a little bit more of an open question.
As we have done with our other timberlands, we will continue to stay abreast of the conditions in the market and look for opportunities to get what we think is appropriate value.
And when we can do that, we'll sell them.
The properties we have remaining, the 8,000 acres ---+ about half of that are eased lots that have restrictions on commercial and residential development.
So the market for those is a little bit more restricted.
But we will continue to do what we've been doing, which is try to make sure we get appropriate value.
And when we see the opportunity to do that, we will sell it.
And as you know, our balance sheet is in very good shape.
So we can take the appropriate amount of time and make sure we get the appropriate value.
Sure.
So since our last call in early November, there has really only been one significant development, and that is that the trial date for the case was moved to January 2017.
It had previously been scheduled for July of 2016.
So there has been about a six-month delay, and that's just driven by the time required for discovery and depositions in what is a fairly complex case.
As far as 2016 remediation, our view really hasn't changed.
We made an accrual last year of $10 million.
We believe that our contribution to the 2017 remediation will be no more than $10 million ---+ I'm sorry, 2016 remediation will be no more than $10 million and could possibly be less.
So, we haven't really changed our view on that.
Well, as you may be aware, there have been anti-dumping and countervailing duties levied against certain countries that were importing into the US markets.
I would say generally speaking it has had a positive effect on slowing down the rate of imported papers and creating a little bit more stability in the floor where some of these commodity white papers are trading.
It was really focused on cut sheet papers, where we have a very small market share.
And there are other plays that have much bigger, but we chose to get involved because we thought fundamentally it was the right thing to do.
So, we see it as a positive.
But we still have the broader issue of declining demand and excess capacity, which, as you know, has retarded selling prices in general.
Yes, <UNK>.
From a comparable standpoint, I would say this started primarily about a year ago, fourth quarter.
So fourth-quarter 2014, maybe a little impact in the third quarter of 2014.
So we've been through about a full year, and so the comps obviously will get a little bit easier in 2016 compared to last year.
It remains a pretty volatile situation if you look at what has happened with the ruble.
The value has continued to decline and reaching some pretty difficult levels compared to the Euro at about RUB90.
So, we don't really see much of a change.
It's a little bit hard to predict when it might change because it's really driven by some of the political issues between Russia and Ukraine, as well as oil prices that are affecting the ruble and then affecting the broader economy.
So, it's a little bit difficult to have a clear crystal ball as to where this is heading.
But certainly the comps will get easier starting the first quarter of this year.
We do have hedges in place, although the strike price of those hedges is consistent with where the trading value is today, so right around that 112 range is where our hedging is.
So we don't expect any impact from those hedges this quarter.
Yes, so happy to comment on that.
As you know, acquisitions are an important component of our growth strategy.
We do have an ongoing process that identifies and assesses targets.
As you might appreciate, we can't really get into any specifics about what the pipeline looks like.
Most likely targets will be businesses that enhance our existing engineered materials business or adjacencies that expand our portfolio and help us build additional growth platforms.
And we have been and will continue to be very disciplined with our process.
And we've got balance sheet capacity that gives us the latitude to execute when we find the right opportunity.
And we're committed to growing our Company but we're not going to compromise our standards or make a bad deal.
As it pertains to uses of cash, if you think about our cash flow profile and expected cash needs over the near term, we've got to finish our Boiler MACT environmental compliance.
As <UNK> said, there will be $40 million to $45 million spent this year.
We announced capacity expansion for the Airlaid business.
We had been signaling this for some time and now we are in the process of executing that.
That's an $80 million project.
That $40 million to $45 million will be spent this year as well.
So we want to support our dividend.
And although we believe that we have very strong defenses for the ongoing Fox River liability, we have to be mindful of any short-term funding dynamics.
So, I think these are all things that we and the Board take into consideration.
And of course the Board always has the prerogative to update the priorities as circumstances change.
Yes.
I don't have the specific currency number for wallcover.
For the year our volumes were down 20%.
We also had some price erosion, of course, the FX impact.
But I don't have that specific breakdown.
I can follow up with you after the call on that.
Yes.
I think, as you might be able to appreciate, we have confidentiality arrangements with our customers.
So I can't get deep into the contract at all but I can tell you it's more than a year.
But I can't really go further than that.
You are speaking to our Specialty Papers business.
Sure.
So we do not take any downtime in the fourth quarter in our Specialty Papers business and we don't expect to take any downtime in the first quarter.
We have generally been ---+ I think, as I mentioned, we grew ---+ in the fourth quarter we saw book publishing products was up and our non-carbonless forms products grew, and that offset declines in our other product lines.
So we are currently essentially running at capacity.
And we have been able to, as I described, generate some growth in certain product lines to offset the overall decline.
So we haven't had any downtime in Q4 and we don't expect any in Q1.
Sure.
So I think, as you mentioned, the run rate or what we achieved in the fourth quarter was $10 million.
And the guidance we provided from Q4 to Q1 ---+ was from Q4 to Q1.
So we generated $41 million in total, so it was a little bit backend-loaded.
But I think the $10 million number for Q4 is what we'd expect to sustain as we go forward.
As far as a breakdown by business, again, I do not have that in front of me.
But I can certainly follow up with you, <UNK>, to give you a sense for that.
But it's embedded in the guidance we provided for Q1.
Sure, yes.
No, no.
Generally speaking, it's a breakeven type project from a cost perspective.
So we have some cost benefits, but it's offset by higher fuel costs.
So essentially it's about a neutral going forward.
We obviously will have some depreciation expense from those investments, but from an operating cost perspective, it's a neutral.
Correct.
Yes.
I think that ---+ obviously, we only gave guidance for Q1 but our guidance was ---+ it will lead you to the fact that we expect volumes in Q1 to be in line with Q4, and pricing should be in line.
So we expect it's sustainable.
Yes, the spending is in both of our North American facilities, Pennsylvania and Ohio.
We have adjusted the estimates based on what our actual spend is.
So in 2015 we spent $27 million, where I think we had been guiding more like $35 million to $40 million.
So we spent less there and we have made adjustments.
We will largely finish these projects in 2016.
Certainly Ohio will get started up.
Pennsylvania will certainly get tested and maybe started up before the end of the year.
The spending in 2017 is really just the final cash flow from work that will be completed largely by the end of 2016.
So the total project cost estimate has not changed; it's still $85 million to $90 million.
But how we are incurring that cash flow has changed a little bit.
Yes, so that's ---+ the $2 million in 2016 and $4 million in 2017 is driven primarily by the need to hire and train a workforce at the new facility and then the actual start-up process.
So that's why there are some costs in 2016.
We will need to begin that hiring and training process as we go through the second half of 2016 so that we can meet the start-up timeframe and get folks trained on the operation of the equipment.
<UNK>, I would say that certainly the wallcover market we saw price erosion and then we also saw erosion in some of the food and beverage, due to some competitive situations.
But I would say that in Q4 compared to Q3 we were largely flat on pricing.
So we believe that much of the price erosion or all that price erosion is largely behind us and that we ought to see better stability as we go through 2016.
<UNK> will give us the exact data.
But what I can tell you is that we have seen a bit of a leveling out as to which parts of the book industry have moved to ground and which are staying on permanent freesheet papers.
In some cases there have been categories of titles and publications that initially switched to ground but then moved back to permanent papers.
So I think there has been a bit of a settling out and we do not see a conversion rate that we had experienced in previous years.
So I think the market has settled down a bit.
I don't know, <UNK>, do you have the exact ---+ .
I don't have it just specific to trade book.
So I'll need to follow up with that.
It is, yes.
Big picture, most of these product segments are still declining 3.5% to 4%.
You do get some quarter-to-quarter and year-over-year variation.
Those are the operating assumptions that we are using for these businesses.
But for certain we've seen a slowdown in e-books and a slowdown in the cannibalization of freesheet by ground wood papers and in some cases a reversal of moving away from ground wood papers back to freesheet.
Sure, happy to give you some commentary.
So single-serve coffee is an important segment for us and we have a leading global share position that we estimate in the 70% range or so.
I think the category is still growing and we expect that to continue.
The growth rates have slowed down as the base continues to get bigger.
So, right now we are estimating single-serve coffee to grow around 4% a year or so.
The announced acquisition of Keurig ---+ the holding company that's acquiring them is a business ---+ they own other businesses that we do businesses with, so we know them and have constructive working relationships with them.
So we intend to continue to be the global leading supplier in single-serve coffee and we don't envision there being any real difficulties or challenges getting acquainted with Keurig's new owner.
Yes, so we still see the teabag market growing at about 3% per year globally.
Our market share is a little over 50% worldwide.
And we continue to do well in that particular business, both on the heat seal and non heat seal.
And we expect that market to continue to grow.
And as I commented earlier, our food and beverage sales, up 5%, are a good recent example of that, notwithstanding all the geopolitical and foreign currency volatility that we experienced in 2015.
All right.
Thank you for joining our call today and we look forward to speaking with you again next quarter.
Have a good day.
