This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk01: Good morning. My name is Julie and I will be your conference operator today. At this time, I would like to welcome everyone to the Cascades First Quarter 2023 Financial Results Conference Call. All lines are currently in a lesson-only mode. After the speaker's remarks, there will be a question-and-answer session. I will now pass the call over to Jennifer Hetkin, Director of Investor Relations for Cascade. Ms. Hetkin, you may begin your conference.
spk00: Thank you, Operator. Good morning, everyone, and thank you for joining our first quarter 2023 conference call. We will begin with an overview of our operational and financial results. followed by some concluding remarks and highlights of our 2022 to 2024 strategic plan update that was released this morning, after which we will begin the question period. Today's speakers will be Mario Plould, President and CEO, and Alan Hogg, CFO. Also joining us for the question period at the end of the call are Charles Malot, President and COO of Container Board Packaging, Luc Langevin, President and COO of Specialty Products, and Jean-David Tardif, President and COO of Tissue Papers. Before I turn the call over to my colleagues, I would like to highlight that certain statements made during this call will discuss historical and forward-looking matters. The accuracy of these statements is subject to risk factors that can have a material impact on actual results. These risks are listed in our public filings. These statements, the investor presentation, and the press release also include data that are not measures of performance under IFRS. Please refer to our Q1 2023 investor presentation for details. This presentation, along with our first quarter press release, can be found in the investor section of our website. The company's 2022 to 2024 strategic plan update document can also be found on our website and on CDAR later today. If you have any questions, please feel free to contact us after the session. I will now turn the call over to our CEO, Mario.
spk08: Thank you, Jennifer, and good morning, everyone. Before discussing our first quarter results, I would like to mention that we published our updated 2022 to 2024 strategic plan this morning. I will briefly discuss some of the highlights at the end of this call. This document is available on CEDAW and on our website. Moving now to our first quarter results, we are pleased with our Q1 consolidated performance. First quarter sales increased 9% year-over-year, while adjusted EBITDA of $134 million, more than doubled from last year. In both cases, selling prices and foreign exchange were beneficial, while volume and sales mix had a net negative impact. Lower raw material costs was a tailwind at the EBITDA level, offsetting the impact of higher production costs year over year. Sequentially, sales were stable. As negative impact from pricing, sales mix and foreign exchange fully offset the benefit of stronger volume in all business segments. EBITDA increased 18 million or 16% sequentially. This was driven by a raw material pricing tailwind favorable volume and mix in our packaging segments and stronger results from our tissue segment. On the raw material side, highlighted on slide six and seven, the Q1 average index price for OCC decreased 76% year-over-year and 6% from Q4. The OCC market was relatively balanced in the first quarter, with limited export activity counterbalancing the lower seasonal generation. Index prices saw a marginal correction recently to a more normalized level, but remain at historic lows. We are not expecting any material pricing movement in the short term, giving the slow export levels an higher seasonal generation. Average index prices for white recycled paper grades decreased 11% in Q1 but remained 8% above the prior year levels. We saw more favorable market dynamics over the quarter and more recently similar trends were seen with virgin pulp. The hardwood pulp index decreased 5% sequentially but was 16% higher year-over-year, while softwood pulp index prices decreased 4% from Q4 and were up 10% year-over-year. Conditions have improved for virgin pulp following lower demand from Asia, improved logistics, and steadier domestic production and new capacity. Pricing indexes have been going down rapidly recently, which will provide some cost relief in our tissue segment Material is available, and our meals are adequately supplied. Moving now to the results of each of our business segments, as highlighted on page 8 through 13 of the presentation. Beginning with the sequential performance, sales in container board decreased 1% in Q1. This was driven by a less favorable mix and lower U.S. dollar selling prices for both parent roles and converted products. The 5% volume increase reflects a 16% increase in shipment of parent roll and a 4% decrease in converted product shipments. Sequentially, converting shipments decreased by 3% in Canada, underperforming the 0.5% increase in the Canadian market. U.S. converting shipment decreased 8.4%, below the 1% U.S. market decrease. I would highlight that Cascades outperformed both the Canadian and the U.S. market in the previous quarter, impacting sequential relative performance in the current quarter. Q1 adjusted EBITDA of $126 million, or 22.5% on a margin basis, was 6% above the Q4 levels. Q1 results include the final 7 million insurance settlements from water effluent treatment issued in mid-2021 at our Niagara Falls complex, while those of Q4 include the first 5 million partial settlements related to this claim. Sequentially, EBITDA level benefited from higher volume and lower raw material, energy, and production costs. These were partially offset by lower U.S. selling prices and a less favorable sales mix. Year-over-year, sales increased by 5%, driven by pricing, volume, and foreign exchange. EBITDA increased by 58%, or $46 million, reflecting lower raw material costs, more favorable exchange rate, and a slight selling price benefit. Year-over-year shipment increased by 3%, reflecting a 10% increase in external parent roles, offset by a 4% decrease in converting shipments, mainly driven by lower volume in the Canadian market. Continuing with our packaging business, Q1 sales levels in our specialty product segment were stable sequentially. This reflected slightly higher volume in our cardboard and molotov segment and higher average selling price in our plastic activities, upset by a less favorable mix and lower average selling price primarily in cardboard. It did increase by $7 million sequentially, reflecting better realized spread in most of our segments, higher volume, and lower transportation costs. These were partially upset by higher operational costs during the quarter. When compared to the prior year, Q1 sales increased by 4 million, or 3%, driven by higher average selling prices and a more favorable exchange rate. EBITDA level increased 23% or $5 million as higher realized spread and a more favorable exchange rate more than a set the lower volume in plastic and cardboard and higher transportation and production costs. Moving now to tissue business, sales were stable sequentially in Q1 while adjusted EBITDA levels doubled to $16 million. Top-line performance reflects higher selling prices and slightly stronger volume, as well as ongoing profitability and productivity initiatives, partially offset by a less favorable mix. Shipments increased 1% from Q4, reflecting a 3% decrease in shipment of converted product and a 27% increase in parent roll shipments following the restart of our machine at the St. Helens facility in February. Sequentially, EBITDA improved, was largely driven by benefit from improved selling prices and lower raw material prices. Year-over-year, sales levels rose 23%, with pricing and sales mix initiative and more favorable exchange rate offsetting the impact of lower volume. Q1, a bit of $16 million compared to a loss of $17 million in the prior year period. This year-over-year improvement was driven by higher selling prices and lower transportation costs. the benefit of which more than offset our raw material, labor, and production costs. Alan will now discuss the main highlight of our financial performance, after which I will discuss the highlight of our updated 2022 to 2024 strategic plan and conclude our presentation.
spk06: Alan? Yes, thank you, Mario, and good morning, everyone. So, slides 14 and 15 illustrate the specific items recorded during the quarter. The main items that impacted EBITDA were $152 million of impairment charges in our tissue and container board segments related to U.S. assets. In addition, net earnings also include a $9 million gain on the sale of an investment in a joint venture in our tissue segments. Slides 16 and 17 illustrate the year-over-year and sequential variance of our Q1 adjusted earnings per share, and the reconciliation with the specific items that affected our quarterly results. As reported, Q1 net loss per share was $0.75. This compared to a net loss per share of $0.15 last year and a net loss of $0.27 per share in Q4 2022. On an adjusted basis, net earnings per share were $0.32 in the current quarter. This compared to a net loss per share of $0.15 in last year's results and net earnings per share of 22 cents in Q4. In both periods, this variance mainly reflects improved adjusted EBITDA. As highlighted on slide 18, first quarter adjusted cash flow farm operations increased by 64 million year-over-year to 90 million, and adjusted cash flow levels improved by 22 million year-over-year. This reflects higher operating results and significantly higher interest and net capex pay in the current period largely associated with our Bay Island project. Slide 19 provides details about our capital investments. Paid capital expenditures net of disposal total $137 million in Q1. Of this amount, $100 million was paid for the Bay Island project. For 2023, our planned capital investments of $325 million, which includes approximately $175 million for Bay Island, have not changed. Moving now to our net debt reconciliation, our net debt increased by $104 million in the first quarter. This is a reflection of the combined effects of our current investment in By-Island and usual working capital requirements exceeding cash flow farm operating activities. Our leverage ratio of 4.6 times is down from 5.2 at the end of Q4. As we have mentioned in the past, we expect this leverage trend to continue with improved operational performance of our tissue segment, and the startup of operations at the Bear Island facility. When excluding cash investment made to date in Bear Island and its negative contribution to operating results, our leverage ratio would stand at approximately 3.1 times. Financial ratios and information about maturities are detailed on slide 21. And sequential and new variable sales and EBITDA performance analysis can be found on slide 38 through 41 of the deck. Cost of sales detail on slide 42 and historical index pricing on slide 43 and 44. Mario will now conclude the call with some brief comments and an update on our strategic plan before we begin the question period. Mario?
spk08: Thank you, Alan. We provide details regarding our near-term outlook on slide 22 of the presentation. As a reminder, this outlook is based on what we are seeing currently and may change in the coming weeks. Our near-term outlook for Container Board is for results to be lower sequentially. This is driven by slightly higher raw material costs, lower average selling prices, slightly softer volume and reflect the recent startup of the Bear Island and non-recurrent of the Q1 insurance income. We are expecting slightly softer results sequentially from the specialty product segment. This reflects stable volume and selling prices trend offset by slightly higher raw material costs. Our outlook for tissue is for a second quarter result to improve sequentially and to be significantly above prior year levels. This stronger outlook reflects more favorable raw material prices, ongoing initiatives, and stable volume. Moving now to our updated 2022 to 2024 strategic plan. We provide highlights on slide 24 to 36 in the presentation and invite you to refer to our detailed strategic plan update document that is available on our website and CDAR. Before going into some of the details, I would like to underscore that our focus remains squarely on driven revenue, profitability level, and efficiency across our business platform. To this end, our 2024 objective remains largely unchanged. What has changed, most notably for our tissue business, is the path we are taking to get there. At the operation level, our updated plan takes into account the changes to our tissue platform, the revised ramp-up schedule of our Bear Island mills, and the closure of one of our containerboard machines at our Niagara Falls facility. We have also refreshed growth target for some of our strategic market to reflect demand trends and fine-tuning of our commercial approach and have updated pricing and input cost parameter to reflect current market conditions. With that, I will start with our container board business. We are very pleased to have announced that the first paper hose was produced at the Bear Island facility on May 2nd. We have updated annual production and EBITDA forecast for 2023 to account for this startup. Our 2024 and 2025 and full potential forecasts have also been updated to reflect current market conditions. Notwithstanding the higher project cost and the delay in startup following the significant inflationary cost pressure and supply chain disruption in 2021 and 2022, This facility remains a key strategic move for our container board business. Lightweight, 100% recycled, and geographically well-positioned, the mill position in our container board operation platform varies competitively from our customers' perspective and in terms of our ability to provide customers with top-quality, low-basis-weight, recycled solutions. We provide the highlights of our updated action plan for Container Board on slide 27 and 28. At the revenue level, our 2024 target has decreased to $2.6 billion from $2.9 billion, and our EBITDA margin target decreased slightly to a range of 18 to 20 from 19 to 21. These reflect updated margin prices and input cut cost assumption, including raw materials, and our decision to delay any potential decision on adding converting capacity. We will continue to explore opportunity in this regard, but our capital allocation focus right now is on debt repayment. Moving now to our specialty packaging segment. This business performed well in 2022. generating sales growth of between 10% and 23% in each of its strategic markets. Our objective for each of these markets has been adjusted to account for changes in external demand patterns, realign our commercial strategy and priorities, capital allocation plan, and updated made to selling prices, raw material, and other production costs to reflect the current conditions. As highlighted on slide 30, this business is on track to deliver on its 2024 objectives. Two new sustainable products were successfully launched in 2022, a 100% recycled pet tray for the food processor and food retailer market, and the addition of innovative Norbach X10 technology to its line of isothermal packaging solutions. Both are made of recycled material and are recyclable. In addition, six new products launch are planned for 2023. In terms of financial performance, the 2024 revenue objective has been increased to approximately $735 million from $700 million, and we continue to expect margins within the range of 17% to 19%. We are very pleased with the growth and the potential we see in this business, and it plays a central role of our goal to be the go-to provider for sustainable packaging solutions for our customers. Turning now to our tissue business, before discussing our updated objectives, I would like to take this opportunity to discuss the fact that led to our decision to reposition the operational platform of this business. As many of you know, we launched a comprehensive profitability plan for tissue business in February 22. The pandemic and the repercussion of recent geopolitical events led to significant turbulence and had a wide-ranging impact on business. Demand levels fluctuated widely. Raw material costs rose dramatically. Production and other input costs significantly increased. and the labor market became very constrained. The results generated by this business in 2022 are a testament to these factors, as well as our own internal production challenge. Given this situation, changes were necessary if we were to reach our goal. To do so, we conduct an extensive internal analysis and review the plan and initiative that had initially been set in February 2022. The repositioning announced at the end of April is the result of this analysis, which indicates that additional actions were required to meet profitability and efficiency objectives. In other words, our goal for this business remains largely the same, is the path that we are taking to reach them that has changed. We provide an update overview of our operational base on slide 31. With the changes to our tissue platform, annual production capacity decreased by 92,000 short-term, or 15% on the manufacturing side, and by 10 million cases in converting. Slide 32 provides an update 2024 objective for this business following the announced change to our operational platform and amended market condition assumption. We will be focused on maximizing the operational efficiency and production capacity of our core production facilities while limiting investment to approximately $35 million annually through 2024. A large part of our focus is on our U.S. operation, most notably the Oklahoma facility where we have made good progress to the addition of management and technical resources focused on increasing production efficiency levels and improving overall execution. The announced change to our platform and update made to our market condition assumption reduce our 2024 revenue objective to approximately $1.5 billion, down from $1.7 billion previously. Our 2024 EBITDA objective is now a range of $120 to $140 million, or 8% to 9% on a margin basis. We walk you through the key factor driving these objectives on slide 33. I would highlight that the two main components supporting these objectives are internally driven and are already in place. We will continue to explore additional initiatives to further improve profitability in our teaching group. As highlighted on slide 34, the adjustment to our 2024 tissue objective and those of our packaging businesses result in only slight modification to consolidated objectives. Our 2024 revenue target remained unchanged to approximately $5 billion, and our EBITDA margin target has slightly decreased to a range of 12 to 14 from 13 to 15 previously. Target free cash flow from levels are largely unchanged as well and are expected to reach 9 to 10% on the revenue in 2024. We have slightly modified our 2024 year-end leverage target to a range of 2.5 to 3 times following lower levels of cash flow generation in 2022 due to the significant cost inflation and the higher Bear Island project costs. Our capital allocation priorities are focused on reaching these leveraged objectives and ultimately our goal of 2 to 2.5% in the future. Given this, we are maintaining our dividend, but we have not renewed our normal course issuer bid in 2023. Our capital investment targets remain unchanged and will be limited to 4% of revenue for both 2023 and 2024, including the $175 million for Bear Island in the current year. As I mentioned, we are focused on debt reduction and reaching our leverage objectives. We provide an overview of how we currently see our net debt evolving over the 2022 to 2024 timeframe on slide 35. Slide 36 summarizes our top priority. We are focused on achieving our profitability objective in our tissue paper business and on ramping up production at our Bear Island mills. Over the long term, we will continue to explore opportunities to grow our sustainable packaging business in the U.S., including expansion of our converting capacity. Let me be clear, however, that this is a long-term objective. Our focus through the end of 2024 is on reaching our leveraged target by limiting capex, reducing debt, and achieving our profitability target in each of our business segments. Overarching all these priorities is our commitment to deliver on our comprehensive sustainability action plan, and our continuing goal to recruit the best talent and train and develop our most important asset, our employees. With that, we can now open the call for question operators.
spk01: Merci. Si vous voulez poser une question, veuillez s'il vous plaît composer l'étoile suivie du 1 sur votre clavier téléphonique. Si vous voulez retirer votre question, composez l'étoile suivie du 2. Thank you. If you'd like to ask a question, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, please press star too. Again, if you have a question, please press star, then one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Matthew McKellar from RBC Capital Markets. Please go ahead.
spk03: Matthew?
spk09: Hi, sorry about that. Thanks and good morning. I think there's a comment that your container board outlook for Q2 reflects slightly softer volumes sequentially. I was wondering if you could provide just a bit of color on what trends you've seen in that business through April and the start of May and how you're thinking about business and its progression to the balance of the quarter.
spk07: Okay, so Matthew, this is Shaw. What we see now is the usual pickup and seasonal pickup is not as strong as expected. Though we see that the volume now are more in line with the pre-COVID, I would say. So we're being cautious considering the question about the economy. And that's why when we see at our volume right now, We do our benefit aid goals from the growth from our investments that we made in Piscataway, in New Jersey, and also in Ontario. So we're being cautious about our numbers, but we're also seeing at the same time that we do have some potential gain on development.
spk09: Okay, thanks. And then moving over to the tissue business, I think there's a comment that labor constraints there have improved. You've highlighted your efforts to attract, retain, develop talent as part of the strategic plan updates. I was wondering if you could provide a bit more clarity around whether labor is still a constraint on production at this point, what you might be hoping to achieve with your efforts there, whether it's from production perspective or metrics around turnover and retention. And then it also looks like you're maybe expecting more of your capacity to be unused in 2024 versus your prior expectations. I was wondering if that's maybe tied to the labor kind of issues there, if there are other drivers to be aware of.
spk05: Thanks. Yeah, good morning. So, the constraint level is less than it was before, less than last year, for example. So, our positions are filled. So, it's not a matter of recruiting anymore. We've been through this. Now it's a matter of training, getting the right level of skills and the right experience level to extract the most of the equipment. So, yes, there's a portion of this that is reflected in the 2024 volume, but also, I would say, technical startup of new equipment that we have in Pryor and in Waygram, for example. I think in the past we overestimated a little bit the capacity of these equipments or were more realistic now in the targets, but there's still good potential there.
spk09: Okay, thanks. I'll get back in the queue.
spk01: Your next question comes from Amir Patel from CIBC Capital Markets. Please go ahead.
spk11: Hi, good morning. Mario, I appreciate all the detail in the strategic plan. I noticed that it referenced CapEx in 2024 for approximately $175 million, but it mentioned that that was before strategic CapEx. You know, I think in your prepared remarks, you mentioned there's really not much on the table for 2024. So are you able to scale what limited strategic CapEx you would expect to – initiate next year, and when you do need to move forward with an additional box plan, how should we think about the timing of the spend there? Is that going to be kind of a 2025 event, and what's the sort of scale of investment that might be needed?
spk08: Hello, Amir. As we speak right now, strategic capex on the table, we have not, you know, so that's why we are focusing our capex to $175 million. so nothing is planned but you know we always keep our eyes open for opportunity that could be generating good value for the company but for the moment we have nothing on the table as for a potential expansion on converting in the container board in the us if ever we would be moving forward A facility like this with the new cost of construction and constraint, I would say, would be around 85 to 100 million, depending on how many equipment you would be installing. But it will not happen before 2025. So it might take over eight years.
spk06: 18 months to do a project. So we might have a decision for 25, 26. But I mean, everything, all of that will be all linked to our balance sheet and our leverage. So we will manage, as Mario mentioned, our priorities in that regard.
spk08: So we might have a decision to move forward in 24, but it really depends on how we achieve or execute our plan. So the target right now and the focus is really to reduce our debt and ramp up Bear Island and keep improving the tissue situation.
spk11: Okay, great. Fair enough. And just the last question I have for Charles. What sort of uplift would you expect in OCC and mixed paper prices as Bear Island ramps up and also some of your competitors? new recycled machines start ramping up as well.
spk07: Let Luc just answer the first part of your question for the OCC.
spk04: Good morning, Amir. For the OCC currently, we're living in a global market. As you're probably aware, China is pretty quiet at this moment. It's impacting also the recycled pulp, brown pulp. There's been downtime that has been taken in two significant mills in North America now that obviously impact the availability of OCC. The domestic obviously is in line with the container work production. So, we are also now in the higher generation season. So, for the moment, we don't expect significant movement on the OCC pricing for the coming months.
spk07: Maybe the other thing also is location-wide, when we look at the bare island, where it's located, and the work that has been done with our sourcing group, we started... a year and a half ago to develop some good contact with sources of supply, so we're well positioned.
spk11: Okay, great. Thanks. That's all I had. I'll turn it over.
spk01: Your next question comes from Zachary Evershed from National Bank Financial. Please go ahead.
spk02: Thank you. Good morning, everyone. So with Bear Island ramping up now, can you tell us a little bit more about your plans for possible inclusion of mixed paper in the furnish and what that could do to your cost of production over time?
spk07: Okay, so I'm not going to be too detailed, but I can just give you the investment that we made. This mill is very well equipped to have a lot of flexibility. So we can go up to a certain grade to 80% of the content for, let's say, if we produce medium, then we can go up to 80% in mixed waste. So I'm not saying that this is what we're going to do, but depending on the market, the dynamic, we can do this. And that's why we made the investment on the stock prep and the cleaning capability of the mill. And that being said, we can do this in producing very high quality also paper because this is very important. We want to be able to use the mixed waste when the market gets a bit more tighter, but providing to our customers the same level of quality and furnish also on the sheet.
spk08: Horton, Zachary, you understand that in the ramp-up mode, we're using better quality material right now to stabilize the machine. And as we go, we'll use more mix and stabilize to the recipe that Charles just mentioned.
spk02: That's great color. Thanks. You haven't mentioned the potential for swing production to craft paper in a while. Is that still an option that you have available for Bear Island?
spk08: I will let Charles answer that question.
spk07: Yeah. The machine design, again, can produce multi-grade. So, again, this gives us flexibility and time. But at this point, our mix that we are planning to produce is really priority on liner board and medium to a certain percentage. So, really, these are what we're going to be focusing on.
spk02: That's great. Thanks. And just one last one. With the project startup being pushed to the right over time, was there any difficulty in extending the commercial agreements, the off-take agreements?
spk07: No. We've been keeping our customers informed of our ramp-up curve. and also the delay, which they understand. So on that side, we're well covered. So that's why when we provided numbers saying that we're covered on the volume 100% for the first year, you can extend that to the first year of operation, by the way, so the first 12 months, and the 75% for the years following. We want to keep that number. Though we have some potential to do better, we're maintaining the same comments based on what we have today.
spk02: Makes sense.
spk03: Thank you.
spk02: I'll turn it over.
spk01: Again, if you'd like to ask a question, please press star 1 on your telephone keypad. Your next question comes from Mike Roxland from Tourist Securities. Please go ahead.
spk10: Thank you. You mentioned that you're not seeing the usual seasonal pickup in container board volumes. Any way for you to quantify what the usual seasonal pickup is on a percentage basis historically and what you're seeing currently? And the reason I'm asking the question is a number of your peers have noted that they're seeing a double-digit increase in bookings in April versus March. So I want to get a sense of what you're seeing relative to what they've already announced.
spk07: Okay, so our, again, as I mentioned, we're being cautious because we did very well in what we consider in our Q4 was very, very strong for us. Our Q1 was also good for what we see. We are on the, when I say seasonal speciality product or the produce, We usually see higher intake than what we see right now. So I would say that our volume right now is about the same as Q1, with some potential being May a bit stronger than April. So at this point, again, I want to be cautious in what we're saying.
spk10: Got it. Thank you for the color. Would you be able to comment just in terms of, think about your integration rate currently as it stands. Can you just remind us how integrated you are roughly? Is it 70% integrated, 75% integrated? If you're more comfortable using a range, just to give a sense of how integrated your overall portfolio is on the container board side.
spk07: Okay, so we have the number that we have because we have some JV and some numbers that we consider in our integration. So we're at 76%, including our JV that we are a partnership that we own in different businesses.
spk10: Got it. And that's on the container board side specifically?
spk02: Yes.
spk10: Okay. Thank you for that. Just one final question real quick. I really appreciate all the color. Can you just remind us how much of the tonnage from Bear Island will be integrated into your own operations? Is it 50%, 70%? And maybe the way to think about it is maybe it's less today than And as you, because you've delayed your plans to increase your U.S. container board converting capacity, so maybe it's at a lower percentage today and you're looking, you will accelerate that level of integration as you pay down debt and expand your converting capacity. Just a couple of frames, how much you intend to, how much you're using internally currently and where that should go. Thank you.
spk07: So as we speak right now, we're using zero because we're in the ramp up. So we're We're still improving on the quality of the sheet, so we're producing paper, but we need to bring it up to spec before using eternity. But in our model, what we're planning with the current potential that we have in our converting facility, we want to go up to about 30%, because we still have some capacity, though we're not looking at on a short-term, like Mario explained, to add up some converting. We do have some capacity in our own converting facility, so some potential growth in there. But our goal is to bring it up to about 30% of the volume to be used in turn. For now. Yeah, at maturity, yeah.
spk03: Thank you very much.
spk01: Thank you. There are no further questions at this time. Mr. Plourde, please continue.
spk08: Thank you, everyone, for being on the call this morning. We appreciate and we're looking forward to present our Q2 results in August. So have a good summer. Thank you.
spk01: Thank you, ladies and gentlemen. This concludes today's conference call. You may now disconnect.
Disclaimer