Verso Corporation
Q2 2012 Earnings Call Transcript

Published: 9 Aug 2012

[Operator:]

Good day everyone and welcome to the Verso Paper Corporation Second Quarter 2012 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Robert Mundy, Senior Vice President and Chief Financial Officer. Please go ahead, sir.

[Robert Mundy:]

Good morning and thank you for joining Verso Paper's Second quarter 2012 earnings conference call. Representing Verso today on this call is President and Chief Executive Officer, Dave Patterson and myself, Robert Mundy, Senior Vice President and Chief Financial Officer. Before turning the call over to Dave, I'd like to remind everyone that in the course of this call in order to give you a better understanding of our performance, we will be making certain forward–looking statements. These forward–looking statements are subject to risk and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from management’s expectations. If you would like further information regarding the various risks and uncertainties associated with our business, please refer to our various SEC filings which are posted on our website versopaper.com under the Investor Relations tab. Dave?

[Dave Paterson:]

Good morning, and thank you for being on this morning's call. Let me start by covering our decision to permanently shut down and close our paper mill in Sartell, Minnesota. As you are aware, we experienced a tragic fire and explosion at the Sartell Mill on May 28. Since that time we've been evaluating the causes of the accident and our future course of action concerning the mill. We announced last week to the public, our employees and state and local officials, our decision not to rebuild the mill. Our decision is based upon our view of future demand for the products reduced in Sartell, and the mill's ability to be profitable after a setback of this magnitude and duration. We are working to complete an orderly closure of the facility and are committed to work with the state and Sartell community to find alternative uses for the site. Turning to the second quarter we clearly saw a slowing and general sluggishness, across our market segments. While our coated freesheet and coated groundwood volumes, we're in line with our expectations and last year's performance, pricing was disappointing. The paper price increases announced during the quarter were either delayed or put on hold depending on the grade and market. During the quarter, we completed major maintenance outages at our Androscoggin and Bucksport mills resulting in a $5 million hit on operating costs quarter over quarter. While we saw moderation in our input costs, the general lack of momentum in the economy resulted in a disappointing quarter for Verso. Finally, during the quarter we completed several capital refinancing transactions that cumulatively extended the average maturity of our debt 2.5 years to March of 2018. Let me turn it back over to Bob at this point.

[Robert Mundy:]

Thanks, Dave. Turning to slide 4, our overall volume for the quarter was about 14,000 tons below last year's levels. However, last year's volumes included 26,000 tons of supercalendered products that we no longer manufacture after the shutdown of two SC machines at Sartell in the fourth quarter of 2011. The 9000 ton drop between the first and second quarters of this year, is impacted by the damage to inventory that was stored at our Sartell Mill at the time of the fire. Revenues compared to last year's first quarter, last year's second quarter are down due to the volumes I just mentioned as well as lower pulp in coated prices. Versus the first quarter of this year, the $10 million drop in revenue was primarily due to the volume changes as the prices were down less than 1%. Turning to slide 5, as Dave mentioned, coated volumes were about flat of last year's levels we are showing these volumes excluding supercalendered products, as we will no longer have these products in our offerings as a result of the Sartell mill closure. Coated prices were off about 5% from last year's levels and less than 1% from the first quarter of this year, good pulp volumes for the quarter, there's a another (Inaudible) increase from last year's levels that are result of our scheduled maintenance outage that we took last year. Pulp prices were up almost $30 a ton from the first quarter. Now turning to slide 6, you can see the key changes between our second quarter 2012, adjusted EBITDA of $23 million, versus the $25 million in the first quarter of this year. And slightly lower volume versus the first quarter, had virtually no impact on EBITDA and price being slightly lower had a negative impact of about $1 million. Scheduled maintenance outages performed during the quarter, were completed on time and on budget, with a negative impact of $5 million versus the first quarter. Operations improvements contributed a positive $3 million and input prices in total were just slightly unfavorable versus the first quarter. Slide 7 gives you a view of the adjusted EBITDA changes between the second quarter of 2012 to second quarter 2011. Overall volume was down just over 3% or a $1 million prices in all of our segments were below last year's levels, and resulted in a negative $21 million. Operations $4 million better than last year and input prices were unfavorable or about $2 million. There's a bit more information related to input prices on slide 8, where you can see the direction prices were moving versus last year and versus the previous quarter. As you saw on the previous slides prices have been only slightly unfavorable. And we expect them to moderate a bit more during the balance of the year. Dave?

[Dave Paterson:]

Thanks, Bob. I'm going to look at slide 10 and which is an outlook for the balance of the year in third quarter, excuse me, coated – we've seen volumes being stable. And coated groundwood volumes down slightly due to Sartell impact. On the coated groundwood pricing side, we do see some improvement as we go through the third quarter and on the coated freesheet side, we see prices being flat. In the third quarter, manufacturing costs should be solid and with good results, as our major maintenance is behind us and we are in the seasonally strong months in terms of the operating of our mills. Input prices that Bob had touched on are trending a little lower, it could be in energy. And finally, we're approaching the end of the Bucksport Renewable Energy Project and that project should come online in the fourth quarter of this year. So with that, operator, we'll turn it over to questions.

[Operator:]

(Operator Instructions). We'll go first to Tarek Hamid with JPMorgan.

[Tarek Hamid:]

Good morning.

[Robert Mundy:]

Good morning, Tarek.

[Tarek Hamid:]

You've talked a little bit I guess about the impact of the Sartell fire just economically during the quarter, was there a measurable EBITDA impact?

[Robert Mundy:]

Not so much from the operations side. We certainly know when the – and fire happened right there at the end of May. We had inventories stored off–site in some other places that came from Sartell. So we [wrote] down some inventory related to Sartell in June. So I don't think that was a big impact from that point. As far as the fire specifically, in our results, there is about $1.5 million of cost that would not be covered by our insurance, so we did recognize that in the quarter.

[Tarek Hamid:]

And then, just on the insurance, have you collected insurance proceeds, sort of when should we think about that coming in?

[Robert Mundy:]

We are obviously working very closely with our carrier, and we've received some, but it's still – there's still a lot of documentation and support that they are reviewing right now, as we just continue to negotiate that settlement.

[Tarek Hamid:]

Understood. Any kind of broad guidelines you can give us on expectations or timing or size of that settlement?

[Robert Mundy:]

No, I can't – we can't at this time, Tarek.

[Tarek Hamid:]

Okay. Then just one the coated groundwood price increases, any sort of sense of the pace of how that should come through in the third quarter? Would you expect to get most of that in July or in August, or is it really going to be in September when it comes there?

[Dave Paterson:]

In July and August. We are seeing it now.

[Tarek Hamid:]

Great. That's it for me. Thank you.

[Operator:]

We will go next to Michael Marczak with UBS.

[Michael Marczak:]

Hey good morning guys.

[Dave Paterson:]

Good morning.

[Michael Marczak:]

Just in terms of your comments around seasonality and given it's an election year, I was wondering Dave, if you can talk about what you are seeing from your customers, and perhaps what are the inventories down the chain?

[Dave Paterson:]

I would say, we are in the seasonally strong period, and we are seeing some of that pickup. We talked to – depends which customer sets you talk to, but I would say generally, people are not really strongly encouraged. I would say, they don't really talk about an election impact, I think that really hasn't been part of the discussion with our customers. Catalog guys seem to be more busy and more active and more positive about their business than anyone else in our customer set and probably the magazine guys are least optimistic. What was the second question?

[Michael Marczak:]

Inventory?

[Dave Paterson:]

Our inventory, seasonally we pull inventories down at this time of the year and that is happening as normal, and on course with our Sartell event, we had a big drop in inventories, both through the fire as well as selling off our inventory position to our customers to meet customer need. So from a Verso point of view, we have had a significant drop in our inventories, particularly in the mechanical side, and we are starting to see the seasonal pull down of coated freesheet.

[Michael Marczak:]

So historically, you generate a nice chunk of cash in the fourth quarter, and I know, this quarter was a positive free cash flow with capital too, probably because of Sartell. Can you give us any guidance on either size, or perhaps – I guess for the full year, you would expect to generate cash to working capital?

[Robert Mundy:]

This quarter was not typically impacted by Sartell, based on the comment you made it was – we certainly had some expenses associated with that fire, so there was not a big pickup in cash flow relative to that situation. But year, for the year, we expect, as you said, a nice pickup in the fourth quarter, from a working capital perspective for sure.

[Michael Marczak:]

Okay. Then one more, can you remind us size of the price increase for coated groundwood that you announced?

[Robert Mundy:]

We announced 60, but as everyone knows, that got pushed out and then we certainly don't expect to realize that much in the third quarter. But as they say, we are seeing it, but it will be something less than that for sure, probably something closer to 30 in the third quarter.

[Michael Marczak:]

Great. Thank you very much.

[Operator:]

We will go next to Kevin Cohen with Imperial Capital.

[Kevin Cohen:]

Good morning. Thanks for taking the questions. I guess, when you look at the Sartell mills, what was the LTM EBITDA contribution, just in terms of adjustment of numbers and kind of thinking about it on a go forward basis for the overall company?

[Robert Mundy:]

Well, I think in the slide, I think that last slide that Dave covered, I think there is a bullet in there about Sartell and the drop off in the volume because of Sartell would have minimal EBITDA effect. So that sort of tells you –

[Dave Paterson:]

It's not a big EBITDA contributor.

[Kevin Cohen:]

Then I guess, when you look at the energy projects, what was kind of the run rate at which the company stood at the end of the second quarter, some of the benefits from that flowing through, just trying to gauge how much incrementally will still flow through?

[Robert Mundy:]

Speaking of the two big projects, certainly the Bucksport project is not operational yet. So that has not kicked in. But relative to Quinnesec 13 or 14 that we said that it will contribute, it was well over half – that part has been operational all year long, so it's well over half of that amount, and we know, we will continue to get the rest of it, to get to that annual 14 number by the end of the year.

[Kevin Cohen:]

Then I guess, if you could just remind us the cost of major maintenance outages in the second quarter that don't recur in the third quarter, what was that number again?

[Robert Mundy:]

About $5 million.

[Kevin Cohen:]

Great. I guess lastly, in terms of the coated groundwood price hike, you mentioned perhaps (gaining) [00

[Dave Paterson:]

I think that's what we can expect to implement, and I think the other $30 is off the table at this point.

[Kevin Cohen:]

That's very helpful. Thanks a lot guys.

[Operator:]

We will go next to Chip Dillon with Vertical Research Partners.

[Chip Dillon:]

Good morning Dave. Good to hear your voice again, and Bob, good morning.

[Dave Paterson:]

Hey Chip.

[Chip Dillon:]

First question is, I know in the past several years and obviously each year has a little bit of a different wrinkle, but we normally see anywhere from a $15 million to say $30 million sequential jump in EBITDA, just because of namely seasonality. Is there any reason that we shouldn't see something in that range, especially given that you are getting some pricing, although that could be offset by not having Sartell?

[Robert Mundy:]

I don't think that's certainly in the range, Chip.

[Dave Paterson:]

The seasonal pattern is still there.

[Chip Dillon:]

Got you. Then just second quick one is on CapEx, where does that stand from the year, and has there been any change since you have come in, Dave, in terms of what you see the budget for both this year, and maybe early days and for next year?

[Dave Paterson:]

Well I think the capital plan for this year was really driven by the big energy project at Bucksport and that's about to be completed. So we're looking at a number in the low 60s for the year and we will start reviewing next year's capital plan, but we do not have a major energy project on the radar screen at this point. So I'd just keep that at the back of mind.

[Robert Mundy:]

Hey, Chip, just keep in mind that that low 60s is what we said, but that is contingent on us receiving one of the [RITC] grant by the end of the year relative to the Bucksport project, which is about $14 million or so.

[Chip Dillon:]

And that sort of is an offset, right? So you could sort of say 75 minus 14, is that how to look to at it?

[Robert Mundy:]

Yes.

[Chip Dillon:]

And then also, with Buck, bought with us – sorry with the Sartell Mill not in the mix anymore, what you sort of think of is being sustained maintenance that is before growth in cost reductions project on capital going forward?

[Robert Mundy:]

It won't change significantly, Chip. There wasn't a lot of capital being put into Sartell. They just did require a lot. So that number sort of our nondiscretionary CapEx will still be around that 50ish type number.

[Chip Dillon:]

Okay. And then last thing, as we look at the market, it seems kind of interesting. The last year we've seen the SC Paper, the supercalendared come, the demand in the marketplace implode while coated has held up relatively well. And I am guessing part of that might be catalogs holding up better than magazines. That's probably a very simplistic view. But how do you all see the market? And I am just not talking about the next quarter or two, but more on a secular basis in a iPad world, do you see catalogs continuing to actually increase its people order align or is that just not happening and how do you see the market evolving from your vantage point?

[Dave Paterson:]

Well, I think it's a very fluid situation Chip. I am sure you talked to the printing side as well, but in general catalogs are holding up well. I think particularly the strong catalogs are increasing their penetration or their mailings. So I would see the catalog business again as the strongest sector there and magazines the weakest I think in terms of demand. I think the magazines themselves are trying to reinvent themselves and mostly help that plays out. I would say the move to coated mechanical and coated free is really I think there is a move towards quality in terms of print and presentation of materials. They do distribute via printing, so electronics, so I think quality is starting to matter again in terms of the image presentation. So I think that's to your question about SC versus coated prints. It's really the quality of the print and what the consumer print is expecting out of our printed sheet paper.

[Chip Dillon:]

Okay, got you. That's helpful. Thank you.

[Dave Paterson:]

Yes.

[Operator:]

We will go next to Bill Hoffman with RBC Capital Markets.

[Bill Hoffman:]

Hi, thanks, good morning. I do wonder if you guys could just talk a little bit about some of the other cash implications in the back half of the year. I mean would that enough in Sartell, you indicate I guess $80 million – $90 million in severance and then $40 million sort of other costs, it sounds like most of the severance goes in Q3. Can you talk about the other $14 million, what the timing might be there and then also just trying to get a sense of other cash uses you got in the back half of the year here?

[Robert Mundy:]

Well, those are about the numbers that you just described their Bill relate to Sartell. And as we said that we hope that the negotiations with our carrier sort of coincide with the cash outflows there and we feel good about that as we sit here today. So we don't expect a big negative from that perspective related to Sartell and any other cash items are really just the normal items. As we just talked about we expect the nice pick up in working capital in the fourth quarter. Our CapEx is on target. We certainly want to make sure we collect the grant from related to the Bucksport energy project by the end of the year, but really nothing unusual other than the Sartell situation.

[Bill Hoffman:]

Okay. And I guess it sounds to me like it is sort of what we are looking at as probably end the year liquidity wise about where you are today just because of some of the pluses and minuses, do you agree with that?

[Dave Paterson:]

Yes. I mean certainly hope I think maybe a little better than that actually, but we will see.

[Bill Hoffman:]

Okay. And then as you go forward into like 2013, anything that you guys think you are going to be doing differently with customers just given the state of the business, I mean obviously things are reasonably balanced from a supply demand standpoint at this point in time? And just wondering from a marketing standpoint, if there is any sort of ramped up strategy, anything that you are going to be doing differently?

[Dave Paterson:]

Well, I think we can debate whether we're in a supply demand balance trending on the grades, but I think the conversation of the customers are really around when is the advertising spend going to come back and how do we make sure that print captures or keeps its share of ad spend as it comes back. So in terms of new initiatives, it's really say close to the customer. And then as hopefully the economy picks up at some point and ad spend picks up we want to make sure that we are giving them products so they can go keep print share of the media spend as advertisers or direct mailers ramp up.

[Bill Hoffman:]

And then what about end market mix, Dave, one of the things – it was done previously was shifting the more sort of packaging grades and I know you have pretty much filled up those specific paper machines. Any thoughts on other sort of…

[Dave Paterson:]

Yes. We are still trying to grow the nontraditional grades for Verso and that is somewhat limited by machine capabilities as you pointed out. So as we look at 2013 and 2014, some of our capital spending will be directed at upgrading machinery. So we can make different products and that's one of the things we will be looking hard the balance of this year for the 2013, 2014 CapEx spend. Yes, we had to spend some money to make a significant move in some of those areas.

[Bill Hoffman:]

And just last question, Bob, with regards to the cost saves from the energy project etcetera, where do you think you are today in terms of cost saves and with the Bucksport completion in Q4, what kind of dollar amount do you start to be able to see in that as you head into 2013?

[Robert Mundy:]

Well, Bill, we expect to get in our – in back of the press release, our earnings release it shows the unrealized savings from the projects we have ahead of us and we will have the vast majority of that by the end of the year, except for I guess a better – except for the Bucksport related piece which is about $12 million of that and that's just because that will not start up until sometime around the middle of the fourth quarter.

[Bill Hoffman:]

Okay, great. Thanks.

[Operator:]

We will go next to Richard Kus with Jefferies.

[Richard Kus:]

Good morning, guys. Can you talk a little bit about the pulp business? There is significant capacity coming online in South America. I am curious how you guys view that and how you think it may end up impacting profitability given that you guys, you are making nice chunk of change in that business?

[Dave Paterson:]

Well, we are not a big pulp producer. We like the pulp business. It's a nice piece of business at the Quinnesec mill, so that's – and that's an important piece of our business. So I guess we survived a lot of pulp expansion in South America and Southeast Asia. I think we see some pulp conversions in North America going out of crap pulp into higher value grades and we will see some new demand for paper grade pulp in North America when that conversion of Southeast is done. So there is some pluses and minuses in the market. Our target market is the Midwest US and the Northeast US. So I think from a logistics point of view that tends to be a little tougher for the South Americans to service, but at end of the day it's a global business. So any time there's big additions, you'll see some price pressure. And I think sum up of what you are seeing now in the marketplace in terms of price pressure is the capacity expansion. And of course of the Chinese, I think the Chinese market has softened in terms of demand and they are going to wait to see what happens in China. So right now we're in a sort of a downward cycle in price on pulp, but we feel good about the pulp business and we feel very good about our cost position on the pulp business at Quinnesec.

[Richard Kus:]

Okay, great. And Bob just a quick housekeeping one for you. What were your SC tons in the quarter that you ended up pulling out of that number in the slides?

[Robert Mundy:]

I'll have to – I'll have to as well. I'll have to get back with you on this.

[Dave Paterson:]

But the mill produced about 20,000 a quarter -- excuse me, a month, so 60,000 a quarter, Bob. I mean I don't know the exact number.

[Robert Mundy:]

On the SC tons, it's -- I'll have to…

[Dave Paterson:]

It's not that much SC, you're right.

[Unidentified Analyst:]

Okay, that's fine. Thanks guys.

[Dave Paterson:]

Thank you.

[Operator:]

We'll hear next from Bruce Klein with Credit Suisse.

[Bruce Klein:]

Hey, good morning.

[Dave Paterson:]

Good morning.

[Bruce Klein:]

On the coated groundwood, was that -- I know the coated freesheet didn't have much support. Do you get the sense some of your competitors are supporting on the groundwood side?

[Dave Paterson:]

Well, I mean the customers tell us what's going on. So, yeah, I think coated groundwood both from an operating rate and from supply-demand balances is -- it tighter. So, yeah, so our customers or our best bet whether what's going on and they seem to indicate that we're getting support in that area, the market support in that area.

[Bruce Klein:]

Okay. And then on the potential NewPage Corp., what is the latest thinking in terms of the timing, are you waiting on them on (inaudible) or is there anything status update you can give us on that?

[Dave Paterson:]

Well, there really -- there was a flurry of press and activity around our disclosure of our discussions vis-à-vis NewPage and it's really been quiet since then. So I think we're watching like everyone else the court process and what's going to happen in the Chapter 11 court process is the next trigger point for any discussions about our combination.

[Bruce Klein:]

Okay, thanks. And then the -- it sounds like you've indicated a seasonal pickup, I guess is there any way to characterize it in terms of whether it's better, worst about what's typical, is there any way to characterize that?

[Dave Paterson:]

I would say -- my sense from talking with customers and talking with our sales guys that it's about normal. It is -- everyone wishes it was stronger but I don't think anybody's disappointed with it at this point. But everyone wishes it was stronger but at the same time, we're tracking what we said we'd track in terms of order volume, order intake.

[Bruce Klein:]

Okay, thank you guys.

[Dave Paterson:]

Thank you.

[Robert Mundy:]

By the way that was about -- it's about 7,000 tons of SC that's pulled out during the quarter.

[Dave Paterson:]

Bob, don't get out of the previous fact book.

[Operator:]

We'll take our next question from David Ross from Citi.

[David Ross:]

Hey, good morning guys. Just touching back on the Sartell and the insurance policies you have out there. What's covered under your insurance policies as it relates to kind of business interruption, fire damage, inventory, can you just touch on that as far as what's covered?

[Dave Paterson:]

It's really pretty much described. We certainly have proper insurance coverages for a facility like that and those are the type of items that are in our policy.

[David Ross:]

Are there any specific limits that you can disclose?

[Dave Paterson:]

I really can't get into that. We're still in discussions with our carrier.

[David Ross:]

Following up, as far as the HoldCo PIK loan that comes due in February, when do you guys plan to address that?

[Dave Paterson:]

It will be soon. In the next few months, I think you would see us do something relative to that, certainly well into the year.

[David Ross:]

And just touching back on Sartell, what were the end markets that that now served?

[Dave Paterson:]

Number 5 coated groundwood and the SCA plus markets.

[David Ross:]

Was it predominately catalogue magazines, commercial print or blend?

[Robert Mundy:]

It's just a blend of things.

[Dave Paterson:]

Although in the SC, their order book was moved to other facilities. The SC was the only grade that we couldn't produce somewhere else in the system.

[David Ross:]

Thanks very much.

[Dave Paterson:]

Thank you.

[Operator:]

We'll go next to Bill Green with Claren Road.

[Bill Green:]

Hey gentlemen. I just wanted to follow up and make sure -- to be crystal at the moment there's no negotiations with NewPage. You're just in there watching the process?

[Dave Paterson:]

Well, yes, we are watching.

[Bill Green:]

But not negotiating?

[Dave Paterson:]

I would say that there is no -- the discussions we had weren't with the company. They were with the first-lien holders. So there's been no negotiations with the company.

[Bill Green:]

Okay. So just a freight question. Are negotiations with the first-lien holders ongoing or are they kind of [understand] while you watch the process in the play?

[Dave Paterson:]

I think we're all waiting to see what happens to the court process.

[Bill Green:]

Okay. And then just following up on the previous question surrounding the HoldCo PIK maturity, can you give us some sense of how you intend to refinance that I appreciate the timing, but method?

[Robert Mundy:]

No, we -- like I said, we'll be dealing with (inaudible) but really not ready to talk about how we kind of do that.

[Bill Green:]

Okay. Thank you very much for your time.

[Dave Paterson:]

Thanks.

[Operator:]

We'll go next to Lori Pomerantz with BNP Paribas.

[Lori Pomerantz:]

Good morning. With the US dollar strength, has there been any meaningful imports entering the market?

[Dave Paterson:]

Well, there's always been -- in the coated paper sector, there's always been a significant important presence traditionally from Europe but also from Asia which is -- now there is duties on some of that current information. But the answer to your question is, is it's pretty stable at this point. We haven't seen an appreciable pickup in imports, but we watch that obviously very closely. But my sense is it's stable in terms of the percentage that imports take of the US marketplace.

[Lori Pomerantz:]

Okay. Has there been any impact from the stress financial position of the US postal service and catalogue market?

[Dave Paterson:]

Not yet. I think it's very concerning to them because obviously that's their avenue to get to their consumer. But yes everyone that you talk to, you eventually talk about the post office and what's going to happen with the post office. So it is important to our customers what the post office -- financially sound but not get so expensive that they have to rethink their way to -- with their customers.

[Lori Pomerantz:]

Okay, thank you.

[Dave Paterson:]

Thanks.

[Operator:]

We'll take our next question from [Sari Karim with Kingdom Capital].

[Unidentified Analyst:]

Thanks for taking the call. I just wanted to follow-up on the HoldCo PIK. Just given the expectations for liquidity and then the first quarter seasonality and working capital, are you guys comfortable with the liquidity position today given the maturity and the working capital drop?

[Dave Paterson:]

Obviously you always like work to be better but with the refinancing that we did earlier this year, it will certainly have -- we have various options to deal with the -- with that term loan and more options on the beginning of the year and so -- but yeah, we feel comfortable that we'll get it taken care of in a prudent manner.

[Unidentified Analyst:]

Okay, thanks.

[Dave Paterson:]

Okay.

[Operator:]

We'll go next to (inaudible) with JMP Securities.

[Unidentified Analyst:]

Hi, thanks for taking my call. My question was just if your -- while you're waiting on NewPage, are you seeing potential value elsewhere with other small competitors and might you pursue opportunities there instead?

[Dave Paterson:]

Well, I think we're always looking at the overall industry structure in the marketplace and we are waiting to see what happens and it's basically what we do much else, but we -- I'm sure everyone looks at the structure of the industry all of time and that's what we're doing. But yes, we're waiting on NewPage to see what happens there.

[Unidentified Analyst:]

Thank you.

[Dave Paterson:]

Thank you.

[Operator:]

And we have no further questions at this time, so ladies and gentlemen that will conclude today's conference call. We like to thank you all for your participation.