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spk07: Mesdames et messieurs, merci d'avoir patienté et bienvenue à la conférence téléphonique concernant les résultats du deuxième trimestre de l'exercice 2023 de TC Transcontinental. Pendant la conférence, tous les participants seront en mode écoute seulement. Une période de questions suivra la présentation et des directives vous seront données à ce moment. Nous désirons vous rappeler que cette conférence est enregistrée aujourd'hui le 7 juin 2023. Welcome to the TC Transcontinental Second Quarter of Fiscal 2023 Results Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct the question and answer session, and instructions will be provided at that time. As a reminder, this conference is being recorded today, June 7, 2023. I would now like to turn the conference over to Yann Lapointe, Director, Investor Relations and Treasury. J'aimerais maintenant céder la parole à Yann Lapointe, Directeur Relations avec les Investisseurs et Trésorerie. Mr. Lapointe, please go ahead.
spk08: Thank you, Julie, and good afternoon, everyone. Welcome to Transcontinental's second quarter of fiscal 2023 earnings call. Before we begin, please note that the press release, the MD&A, along with complete financial statements and related notes, as well as the slides supporting management's remarks, are all available on our website at www.tc.tc under the Investor Relations section. A replay of this conference call will also be available on our website shortly after the call. Please note that this conference call is intended for the financial community. Media are in listen-only mode and should contact Nathalie Saint-Jean, Senior Advisor, Corporate Communications, for more information. Some of the financial measures discussed over the course of this conference call are non-IFRS. You can refer to the MD&A for a complete definition and reconciliation of these measures to IFRS. In addition, this conference call might also contain forward-looking statements. These statements are based on the current expectations of management and information available as of today, and they involve numerous risks and uncertainties, known and unknown. The risks, uncertainties, and other factors that would influence actual results are described in the fiscal 2022 annual MD&A and in the annual information form. We have with us today our newly appointed President and Chief Executive Officer, Thomas Morin. and our Executive Vice President and Chief Financial Officer, Donald LeCavalier. Before I turn the call over to Thomas and Donald, I would like to invite our Executive Chair of the Board, Isabelle Marcoux, to say a few words about the executive changes announced earlier today.
spk06: Thank you, Yann, and good afternoon. I am pleased to join this call today to introduce you to Thomas Morin, our newly appointed President and CEO. When Thomas joined our organization four years ago, we had a significant challenge in front of us. After many small acquisitions and a major acquisition of Covarris, our packaging sector had reached a critical mass. Packaging needed an experienced leader to consolidate our platform, generate profitable growth, and develop a strong leadership team. While Thomas delivered on all fronts, in a complex and challenging environment, including the pandemic, As our focus turns to generating sustained organic growth, optimizing the return on our assets, leveraging our balance sheet, all the while pursuing our sustainability agenda, the Board has decided to appoint Tama to lead Transcontinental. We are confident that Tama has the experience and ability to deliver on these four priorities with a team that is second to none. We are confident that he can and will lead the organization through its next chapter for the benefit of all of its stakeholders. I know that Tamar will do so while upholding the values and culture that distinguish Transcontinental. You can read Tamar's resume in our press release issued earlier today, but let me make a few comments on the leader he is. Tamar favors dialogue, collegiality, and diversity. He believes in the power of team. He is both a strong operator and a people person. It's built strong relationships with our customers and leaders of our organization. Samad has led what I believe is the best R&D team in our industry. He's focused on ensuring that our investments will generate returns and our efforts are directed at what our customers need and want. We're already seeing the early results of our sustainable journey flexible with some innovative recyclable structures and exciting new products. Finally, Tamar is all about results. With five consecutive quarters of profit growth in this sector, the packaging sector, Tamar has delivered on that front. I also want to congratulate Danone Cavalier, who has been promoted to Executive Vice President and CFO. Over his 17 years with the company, Danone has become a trusted advisor for the leadership team, for me, and for the board. I know that we are in safe hands with Danone. As for myself, I was appointed by the board to the position of executive chair. As such, I will assume the responsibility for strategy and corporate development in our media sector. This will allow Thomas, Danal, and the team to focus on our four priorities. On behalf of the board of directors, I want to thank Peter Ruth for his contribution, first as a board member and then as president and CEO. He has helped our leaders grow and close important deals. I wish him the best for the future. In conclusion, we now have a leaner and more focused team, strongly determined to succeed. I look forward to working with the members of our board and with Thomas, Donald, and our team in creating value for all of our stakeholders. Thank you, and back to you, Yann.
spk08: Thank you, Isabelle. I will now turn the call over to Thomas.
spk10: Thank you, Yann, and thank you, Isabelle, for these kind words. He's, of course, with a great deal of enthusiasm that I take on my new role today. First, I would like to thank you, Isabelle, and the Marcoux family, including our founder, Remy, as well as the board of directors for the trust they placed in me. I would like to echo what Isabelle just said about TC's unique culture. Since I joined TC Transcontinental four years ago, I've been very much impressed by the quality and the potential of our talents, our strong culture, and its entrepreneurial spirit. With the company's strong and experienced executive team, with whom I have had the privilege to work with, we will continue to implement our profitable and sustainable growth plans in all three sectors. We will focus, as you said, Isabelle, on the four priorities, which are organic growth, optimizing the return on our assets, reduce our debt, and at the same time, commercializing our sustainability products and agenda. Before I pass it on to Donald, let me briefly comment on our Q2 results. I will, of course, have more to say at the next quarterly result. This is my first day in the job. But we'll go and see what are the highlights of the quarter. Overall, despite lower volumes, our second quarter are pretty solid. After the difficult first one, the teams took quick and decisive actions to improve our financial performance. I'll start with packaging. In packaging, I'm proud of our profit improvement, and as you said, Isabelle, this is the fifth quarter in a row, and it's not happening by chance. A lot of our actions have been taken since the beginning of this year and leading to these results. I will make it two buckets. First, commercially, we continue to engage with customers in finding ways to mitigate the impact of inflation. Second, operationally, we took costs out to adjust to some volume contraction, primarily related to inventory management by our customers. At the same time, we did the same within TC. We are improving our inventory levels as well, adding a positive impact on cash. Looking ahead, our recent investments will continue to stimulate and stimulate our growth, and we are starting to recover as well in our agriculture segment. Now moving to print. In the printing sector, We were obviously proactive with an even greater deal of speed in adjusting our costs and mitigate the impact of inflation as well. With these actions, we were successful in partially offsetting the effect of lower volume in flyers and distribution activities. In terms of innovation, I want to congratulate the team for the launch of Radar in Montreal, a significant evolution in printed flyers which strengthens our cost position and at the same time improves the environmental footprint. This is promising. In closing, I also want to congratulate you, Donald, for your expanded role. I appreciate your knowledge, the sound judgment, and your business sense. We will build over our four years of collaboration, and do even more so, by working even more closely in annual roles. And as we share, along with Isabelle, the same common desire to better live. to better for the benefit of our stakeholders. Last but not least, I'd like to express my gratitude to Peter Bruce, and I would not be here today without his guidance and support all along the years I worked with him. And for you all on this call, follow OTC, I look forward to meeting you and build a fruitful relationship. And with that, I will pass it over to you, Donald.
spk09: Thank you, Thomas. Thank you, Isabelle, for your introduction, and congratulations, Thomas, for this well-deserved appointment. Moving to consolidated numbers on slide five of the earnings call presentation, for the second quarter of 2023, we reported a 4.4% increase in revenues versus the same period last year. This growth was mainly driven by the impact of exchange rates and also benefited from acquisitions in our packaging and media sectors. Organic growth stood at 0.8 million as pass-through of higher costs was offset by lower volumes. Regarding profitability, consolidated adjusted EBITDA for the quarter was $109 million, up 5.2% compared to Q2 last year. This increase was mainly due to a strong performance in packaging, which delivered 15 million adjusted EBITDA growth in the quarter. I will come back to the sector results in a minute. Financial expenses increased to $15.2 million, mainly from the impact of higher interest rates on our variable debt. Adjusted income tax of $11.9 million was in line with last year and represented an effective tax rate of 23.3%. This resulted in adjusted net earnings of 45 cents per share for the quarter. Now moving to slide six for the sector review. In packaging, we generated revenue of $444.2 million. Similar to last quarter, the increase of 5.4% versus last year was mainly due to the positive movement in exchange rates. Positive impact of the increase in price to Medicaid for inflation was more than offset by decrease in volume mainly due to customer destocking. In terms of profitability, adjusted EBITDA in packaging was up 28.6%. Excluding the impact of exchange rates, adjusted EBITDA grew organically by 18.5%. This organic growth was mainly due to improved profit from inflationary cost recovery and also benefited from a favorable mix. With the exception of our Latin American operations, all our segments posted improved adjusted EBITDA in the quarter. The strong performance is a record for its sector, with an adjusted EBITDA of $67.4 million for the quarter. That being said, we don't expect to repeat this every quarter going forward, giving the favorable mix this quarter and continued customer destocking expected in the second half of the year. Moving to printing on slide 7, revenues increased by 2.3%. This growth resulted from the pass-through of inflationary price increases and higher revenues from our in-store marketing activities, partially offset by lower volumes in retail flyer printing and distribution activities. Printing's adjusted EBITDA was $50 million for the quarter compared to $54.7 million last year. This $4.7 million decrease is a strong improvement compared to the $16.2 million decrease we saw in the first quarter. The work by the printing sector to implement cost reduction measures helped to mitigate the impacts of lower year-over-year volumes. These actions, combined with improved performance from the ISM segment, contributed to reduce the gap versus last year's EBITDA. As we expect volumes to remain under pressure, we will continue to be disciplined on our costs. Corporate expenses were higher than last year, due mainly to higher stock-based compensation costs. Now turning to cash flow. We generated $105 million from operating activities, an increase of $30.6 million versus last year, due mainly to improved working capital. This is also the first quarter of positive working capital since fiscal year 2020, and we are confident in our ability to further improve in the second half of the year. Our investments in CapEx at $53.2 million are higher than last year, but in line with Q1. We expect CapEx to reach about $160 million for the fiscal 2023 net of potential disposals. before returning to a lower run rate in fiscal 2024. While impacting our debt in the short term, our investments position us well for the future and should be a key driver of our long-term growth, especially as we see growing customers demand for sustainable packaging. Despite a high level of capex, our net debt ratio is improving, standing at 2.58 times at the end of the second quarter compared to 263 times three months ago. The improvement of the last three months is mainly due to higher cash flow generation from positive working capital and improved EBITDA. Given our free cash flow generation, we expect the ratio to come down close to two times in the coming quarters. In closing, despite challenging operating conditions, we delivered a solid quarter that benefited from the actions we implemented to improve our financial performance. In terms of outlook, in packaging, while we expect pressures on volume to persist, we continue to expect to improve profitability in fiscal 2023. In print, we continue to expect growth in our ISM and book printing activities. In terms of profitability, we expect lower adjusted EBITDA for fiscal year 2023, from the impact of inflation on volume and cost structure, partially offset by the impact on the ongoing cost reduction initiative. We expect corporate costs at the EBITDA level to be around $40 million for the year. Moreover, cash taxes should be at around $60 million. On that note, we will now proceed with the question period.
spk07: Merci. Mesdames et messieurs, nous allons maintenant procéder à la période de questions-réponses. Si vous avez une question, veuillez appuyer sur les touches étoiles suivies du 1 sur votre téléphone à clavier. Une tonalité se fera entrante confirmant votre demande. Les questions seront prises dans l'ordre qu'elles seront reçues. Veuillez également vous assurer de décrocher le récepteur de votre appareil téléphonique si vous utilisez la fonction main libre avant d'appuyer sur les touches. Un moment, s'il vous plaît, pour la première question. Thank you. One moment, please. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press the star followed by the one on your touchtone phone. You will hear a tone acknowledging your request. Your questions will be pulled in the order they are received. Please ensure you lift the handset if you're using a speakerphone before pressing any keys. One moment, please, for your first question. Your first question comes from Adam Schein from National Bank Financial. Please go ahead.
spk01: Thank you. Good afternoon. So congratulations to everyone for their promotions. It might be a little bit early, but to the extent that you can talk a little bit about how your strategy and maybe your vision in your new role may differ at all from your predecessor. And then I'll just follow up with a few more if you don't mind.
spk10: Sure. I think we will focus on the four key priorities, some of which would be not so much different than what you would have heard earlier, Adam. The four key priorities really is to generate organic growth and profitable organic growth, I would add to that. So how to get there really is to continue to invest in the segments we know are growing. Using the tools we've developed along the last few months and years, like the Commercial Excellence Initiative, you're probably aware of, and continue to leverage on the partnership with our key customers, investing after them, investing after the customers who are winning. And this, Adam, I think works in both print and packaging. I don't see any difference between the two. So what could be different moving forward is to have a fresh pair of eyes and look at can we replicate this method and apply it to print and see if there are nuggets we can capture. But the key thing is really to invest on the winners, on the segments that are growing, and on the segments we know we're making money out of.
spk01: Can we just maybe follow up? You touched earlier on Latin America, or at least specifically on the agricultural segment, and to the extent that there might be signs of improvement. Maybe just specifically, is there an opportunity for this to revert to growth potentially at some point in the second half, or more of an F2024 dynamic? And then in a similar vein, destocking does continue, and I think it's been telegraphed to continue into the second half, but are you seeing an improving trend at least in regards to that exercise?
spk10: Sure. I'll start with the Latin America and agriculture. So the first half has been rough in Latin America and agriculture segment in particular. Several factors for that would have heard that the war in Ukraine has diverted volumes from Ecuador to the rest of the world. This has caused some disturbance to the market. Whether it's an agricultural business or whether it can help or may not help, it's not helping. This can explain some year-on-year variances. Now, the important factor, though, is we pushed inflation recovery as well as raw materials recovery to this segment as well as we've done it to others. This led to some share of water loss. Let's be very clear. This is now something we're now recovering as we've exhausted our expensive inventories. This is where we've pushed the inventory reduction the most and the fastest. And now we can leverage on cheaper materials and recover those volumes again. That's basically where we stand at. Now, how fast are we going to recover that? I don't know. I don't know yet. Okay.
spk00: De-stocking.
spk10: De-stocking, yeah, I was going to that. De-stocking, the same thing as what we've experienced, longer supply chain lead times led our customers and ourselves to have higher inventories compared to what we've had in the past. Since the beginning of the year, we've been de-stocking, our customers have been de-stocking. It's not equal across all the segments. It happened at different time of the quarter. I'm expecting this to continue towards Q3. The way we can anticipate is by having very close discussions with customers, which we do, and we have a very, very clear line of sight on the amount of volumes they plan to reduce in batteries. So basically, I think Q3 may be the beginning of Q4.
spk01: Okay, and just one last question for you. It's obviously a good quarter in packaging. I'm just curious, just in regards to the segments, when we look at revenues from plants in Canada where you were down. I'm curious if there's anything in particular that's going on there because you have been down through the first half in that specific call-out.
spk10: I think we can take this question maybe in a different call-out because we're going to be very specific. All the sites we have in Canada have different market segment focus. Some are internally driven, some are externally. So if you don't mind, I'm totally happy to have this discussion with you maybe in a different call with more detail.
spk01: Sure. No, happy to do that, and I'll queue up again. Thanks.
spk10: Wonderful. Thank you, Amir.
spk07: Your next question comes from Amir Patel from CIBC Capital Markets. Please go ahead.
spk00: Hi. Good afternoon, and congratulations, Thomas and Donald, on your new roles. I just wanted to follow up on the destocking in packaging. Thomas, are you able to scale the volume decline that you might expect for the business this year in packaging?
spk10: That's a good question. First, I'd like to add that despite the volume reduction or destocking, we are gaining share of wallet. So as we speak, we are growing with customers as a percentage of their demand. And the reason for that is the team has done an exceptional job during the pandemic to maintain a good service level to our customers. So despite this stocking in lower demand, if you will, we are continuing to gain shares. And this also supports the investments we're making. Now, your question is about the amount of volume stocking. Difficult to say. It depends on customers, to be honest. But the variance is between 30 days and 45 days, if you will, compared to the target days of inventories. So that's why I'm saying about a quarter to digest this seems to be reasonable.
spk09: To give you maybe more color, we're supposed to be flat on the first quarter, and this quarter we're close to minus 4%. As the trend continues, it's hard to say, but for sure we see, as Thomas mentioned, Q3 will be – we see the same tendency for Q3.
spk00: Okay, great. Thanks. That's helpful. And just sticking with packaging, Thomas, can you speak to some of the sustainable packaging innovations that you expect to kind of bring to market over the coming year and how that could drive further share gains?
spk10: Yeah, thank you very much for this question. First, the agenda is pretty full and the speed of execution is high. We've seen in the course of Q1 and accelerating in Q2 a stronger demand and momentum in our customers' agenda when it comes to sustainable packaging. There are many reasons for that. One is the bills that are passed on in several states in the U.S. Second is also the pull from the retail. So this is certainly a very dynamic agenda. The good news is we've been working on that since basically four years. And we have a lot of products which are now ready to be launched. And some are already commercial as we speak, actually. So the way we look at it is to measure the amount of recycle-ready products we commercialize as well as the PCR volumes we integrate in our packaging. So that it's clear our PCR assets are not full. So we're buying PCR on the market because of the success of these products, and we are ramping up very, very quickly our monomaterial recycle-ready packaging with our key core partners in packaging. So strong dynamic, and we're ready.
spk00: Okay, great. And just the last question I had there was, Thomas, are you able to – comment on how the margins of the sustainable packaging products that you bring to market would compare with the base business?
spk10: Good question as well. We can also go deeper in the analysis. It obviously depends on the type of product we commercialize. In some cases, we do have an expanded margin because of the PCR content, for instance. This is helping us having a good control on some of the costs. This can vary. For the moment, it is the case. For the rest, it's a bit too early to say. We have a commercial plan, a marketing plan, so that we know the level of margin we're targeting, which is an enhanced level of margin. Difficult to tell you how fast we can measure this or report on that. We will, obviously, and it's definitely in line with our strategy.
spk00: Okay, great. Thanks. That's all I had. I'll turn it over.
spk07: Your next question comes from Sid Dilawari from Carmark. Please go ahead.
spk03: Hey, guys. Thanks for taking my question and telling us on your promotions. I guess just switching gears to the printing side, you talked about the retail flyer distribution business being a drag this quarter. Can you maybe talk about how you expect to see that unfold in the back half of the year and any initiatives that the team has taken to stabilize this vertical?
spk09: Well, yes. Actually, we saw a decrease in the second quarter regarding the tonnage, but it was less than Q1, but still was an important decrease. But we already took initiative on that side. You may recall that we We announced when we announced our numbers in Q1 that we had put a program in place for cost reduction initiative, and this has helped us actually in the second quarter. That's one of the key reasons why we have a delta between the minus $16 million in Q1 and minus $4 million. So volume was affected a little bit less in Q1, but definitely we had a good cost initiative program that helped us. And the team is still working and we will adjust, you know, accordingly to the demand by clients. So we're very proactive on that side.
spk03: Sorry, so for the second half of the year, do you see volume sort of stabilizing a little bit or still being down?
spk09: Well, you know, it's hard to comment on the second half of the year, but for sure we saw some decrease last year in the second half of the fiscal 2022. This is why actually Q1 was a tough come for us when we announced our public numbers last quarter. So we saw some decrease. So it depends on where the fall season will end up. But last year, the fall season was below our expectation. This is why we adjust our cost in the early 2023. But for the moment, we will certainly adjust our cost structure. So it's hard to say regarding how deep it will go, but we will act accordingly.
spk03: Right. Okay. That's very helpful. And then, you know, just a higher level question, just on your capital allocation priorities for the year, given the current great environment, we obviously saw a spike in interest rate expense during the quarter. How do you think about your balance sheet debt here or acquisitions or share buybacks at this point?
spk09: Well, share buyback is out of our strategy as we speak. You know, we, until the rest of fiscal 2023, the main objective is to decrease the debt. We want, as I said in my remarks, we want to get closer to the next year. the next quarter's debt to EBITDA ratio. So for sure, it will be paid on debt. We will produce a lot of free cash flow in the second half, so that will be put on our debt for sure.
spk03: Okay. All right. Thanks. I'll pass the line.
spk07: Your next question comes from Stephen McLeod from BMO Capital Markets. Please go ahead.
spk02: Thank you. Good evening. And I just want to reiterate, congratulations to everyone's revised and new appointments. Just wanted to ask a couple questions, one on packaging, one on printing. Maybe starting with packaging, you know, lots of puts and takes, and I know resin prices play a factor, but you had very strong margins in the packaging business in Q2. And I'm just wondering how you expect the margin profile to evolve as you sort of move through the year. And then looking out beyond 2023, how do you view a progression sort of back towards that 16% number?
spk10: Yeah, you keep on raising the number. So thank you for asking this question. The resin has gone down, but not that much. You should take a good look at it. It's been going down, but then went up slightly since the beginning of the year. So the year-on-year movement is not that big, not significant, I would say to you. What is significant is obviously the recovery compared to last year on inflation and raw material pass-through. That's for sure making a difference, not so much the raising reduction. Now, your question is about where should be landing a margin percentage. I think it's going to be around the 14%, if I may say so, in the remainder of the year. We'll see. We are in the 15% this quarter, 15-16. What really matters, if you will, is the longer view and the mix improvement and the play we're having on the various segments I mentioned. So our agenda is to grow where we're making more margin, if you will, as opposed to trying to squeeze margin out of low-margin products. That's really what we intend to do strategically. And that's why I'm confident we will indeed reach this 16% mark, but not so much on a one-quarter basis, but more in a sustainable manner when we progress towards the healthier product. Now, we have tools for that. We have commercial excellence. We've been launching about a year ago. Excellent progress here. We've almost finished the rollout of this tool within packaging, and we're starting to do it within the print segments as well. So with this, we have, if you would, a forward-looking, we know where to go so that we improve our mix.
spk02: Okay, that's helpful, Keller. Thank you, Thomas. And then maybe just looking at the printing segment, you know, you've had – you had sort of turned organic sales growth from negative in Q4, Q1 to positive in Q2. And I'm just wondering if there's some sort of inflection point that's being driven by, or is it maybe more mix-related and isolated to the quarter?
spk09: As we said at the end of the first quarter, we said that obviously we had the impact, like I said earlier, of the... flyer business and distribution like we had in the second quarter. But what came also in the first quarter is that the ISM business came below our expectation. And that was that explained almost 50% of the decrease of the margin in that order. And in this quarter, they turn around, not they turn around, but it's more what we expect from that business. So in that business, this is where we're investing. It's a growing business. We think we can gain market share, and we certainly keep thinking that we can be more efficient and increase the margin through the year. So Q1 was not the level we wanted for the flyer business. We put plan in action to make sure that we push away costs, and you see some of the impact in Q2. And ISM turning around was also very good for us in this quarter.
spk04: Okay, that's great. Thank you. Thank you very much.
spk07: Ladies and gentlemen, if there are any additional questions at this time, please press the star followed by the one. As a reminder, if you're using a speakerphone, please move the handset before pressing any keys. Your next question comes from Drew McReynolds from RBC. Please go ahead.
spk11: Yeah, thanks very much. Good afternoon and congrats, Thomas and Donel. Two for me. First, on the printing side, I guess in May, there was the transition with Publisac and obviously nice to see Radar out there in the market. Wondering, just as we kind of think about the financial impact here on that kind of transition, just what you've seen or what you expect here in the quarter. And then secondly, Thomas, just for you, it sounds as if there's maybe a little bit more emphasis on packaging margin. I know Peter put, I think, a lot of emphasis on packaging EBITDA and dollar amounts. Maybe I'm just kind of reading too much into nuanced wording here, but any real kind of change in the emphasis on how you define profitability within packaging?
spk09: Thank you. Yeah, Drew, I can take the question regarding Radar. First, I will say that it is, I agree, it's a great product. We're really proud of that new product that was put in the market. And it comes from a lot of great work by the team at Print that's always worked to sum up with an amazing innovation, so really proud of it. It's a promising start, so we like what we see so far, but it's definitely too early to comment on the financial impact on the longer term.
spk04: All right. Yeah, I'll take the one on the profit.
spk10: Yeah, I think you're right. The percentage doesn't pay the bill. The dollar amount pays the bill. And if you go back to our four key priorities, and one of our four is obviously to deleverage our balance sheet. So this is done with dollars, not with percentage. So we need both. I think the percentage, the way I would look at it, is a guidance. As I said, aiming at higher-end margin-level products. That being said, what matters is the absolute dollars that are left at the end of the day. So it's both, I would say to you. percentages of guidance and the target.
spk11: Okay, that's great, Thomas. Maybe one final one for me, back to you, Danelle. In terms of a normalized CapEx, looking beyond fiscal 2023, roughly, you know, how do you view what that normalized level is, just because we've seen, obviously, you know, a buildup over the last few years, just wondering what kind of step down we should be modeling, and thank you.
spk09: Well, first, the impact this year, obviously, when you look compared to previous year, most of our capex are in the packaging group, and a large part of it is in U.S. dollars. So that has an effect for sure. Having said that, I will say that 160 that we might end up this year is certainly not the base. I think the region of 130, and we will adjust depending on the project, might be a more normal area for us, 120, 130.
spk04: Drew, is that it? Is that good? That's great. Perfect.
spk07: Il ne semble plus y avoir de questions en ce moment. Mr. Lapointe, there are no further questions at this time.
spk08: Thank you, everyone, for joining us on the call today, and we look forward to speaking to you soon.
spk07: Mesdames et messieurs, ceci termine l'appel conférence pour aujourd'hui. Merci de votre participation. Vous pouvez maintenant raccrocher. Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.
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