Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Third quarter sales levels increased 2% from Q2 and were stable year-over-year, driven by volume and pricing improvements.
- Consolidated EBITDA of $140 million increased 25% from Q2, reflecting stronger pricing and lower production costs.
- The Containerboard segment saw a 50% sequential EBITDA increase, benefiting from market price increases and lower production costs.
- Specialty Products division delivered solid results with a 4% EBITDA increase from Q2, driven by higher realized spreads.
- The company expects stable to slightly stronger results in the Tissue business for Q4, with stable to slightly higher volumes and lower raw material costs.
Negative Points
- Year-over-year consolidated EBITDA decreased 13%, impacted by higher raw material costs and less favorable volume and sales mix.
- The Tissue business experienced a 20% sequential EBITDA decrease due to higher raw material and transportation costs.
- Bear Island mill is currently 20% below its daily production target, affecting overall production efficiency.
- Net debt leverage increased slightly to 4.3x at the end of Q3 from 4.2x at the end of Q2.
- Q3 net earnings per share were only $0.01, a significant decrease from $0.34 in the same quarter last year.
Q & A Highlights
Q: Hugues, on Bear Island, you mentioned you're below your production targets. Can you help frame for us maybe what level of production you're at currently and where you would have expected to be at this point?
A: Yes, sure. We're roughly 20% below our daily production target. However, we're seeing more days at or above target. We need to focus on reducing the duration and occurrence of breakdowns. Recent progress over the last six to eight weeks is encouraging.
Q: Assuming the ramp-up improvement you're seeing continues, how should we think about what type of productive capacity you could sell in 2025?
A: We're finalizing our plan for 2025, but we expect to close the 20% gap with a consistent ramp-up curve, achieving this before the end of 2025.
Q: How should we think about CapEx for 2025, and any major projects that you might be contemplating?
A: We are assessing next year's plans, but no major projects are on the table right now. Expect CapEx to be similar to this year, but we'll provide more details once finalized.
Q: Can you give us an idea of what the issue has been at Bear Island in achieving target operating rates?
A: The main challenge is uptime. When the machine runs, it performs well, but we need to increase uptime. It's a typical start-up challenge, but we have the right team to address it. We're seeing progress in recent weeks.
Q: Could you help us understand the degree to which you see cross-pollination between the Containerboard and Specialty Packaging segments today?
A: Most of our Specialty customers also use regular packaging, well above the 50% mark. We see potential for cross-selling and have identified customers where we can improve. There's significant potential for profitability impact.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
