Clearwater Paper Corporation (CLW) Q2 2026 Earnings Report, Transcript and Summary

And discuss actions that were taken to reduce costs and improve our margins through the cycle. I will then turn the call over to Sherri to review the financial results in more detail and discuss our outlook. Turning first to highlights of our second quarter performance. Our shipment volumes were up this quarter, with strong 8% year over year growth. This was offset by a 9% year over year decline in market price as reflected in the RISI Index. Adjusted EBITDA for the quarter was -$8 million which was within our guidance range. We faced higher than expected transportation costs partly driven by the Iran war. We successfully completed the major maintenance outage at our Lewiston, Idaho facility. On time and on target with total direct expense of around $22 million. We restructured our Cypress Bend, Arkansas facility resulting in a reduction of approximately 20% of rolls at the mill. This action is driving an expected cost reduction of $8 million to $12 million on an annualized basis. SG&A expenses were at 5.6% of net sales in the quarter, remaining below our targeted range of 6% to 7%. We believe that these are industry leading numbers. That reflect our continued cost discipline. Last week, we announced the launch of CIRCA, our new CRB product line. This line will be sold and distributed through our network, while being manufactured by Greenpaper. This is aligned with our strategy to offer broader product range to our North American converter customers. Finally, we reduced net debt by $59 million in the quarter and by $50 million year to date. Driven by improvements in net working capital, tax refunds and additional insurance recoveries. Let me now provide you with some industry updates. We are seeing some meaningful green shoots in SBS industry conditions. Our shipment volumes are up 6% year-to-date. Industry imports are down 11%, Continuing a trend that we saw last year. RISI has reflected approximately 300 thousand tons of reduced SBS production across the industry since the beginning of the year. We are seeing evidence of substitution into SBS from other substrates. By customers and our integrated competitors. Finally, we also believe that some industry participants have been able to swing some of their SBS capacity to other paper grades. All of these factors are driving an improvement in SBS operating rates from the low 80% range in the first quarter of this year to a RISI forecast of 88% in the second quarter and over 90% by year end. As a result of substantial cost pressure, and improving industry conditions, we are implementing a $60 per ton price increase that we announced in June. We have recently announced a second $60 per ton price increase across all of our products that is going-- that is to go into effect in August. Its latest monthly report, RISI has reported a $40 per ton price increase on folding carton and $60 per ton on cup. We expect that our June price increase and the RISI price index changes will be reflected across all of our tons. With a $50 million to $60 million annual improvement in EBITDA. This does not take into consideration our second price increase or the additional increases in RISI's forecasting for later the year and into 2027. As a reminder, approximately 50% of our volume is tied to the RISI Index. While the rest is subject to open market negotiation. It will take us a couple of quarters for the RISI index move to flow through our P&L. Even as industry conditions and pricing are improving, we continue to face substantial cost pressure and margin levels that do not support long term investment in our industry's capital intensive assets. We believe that our margins are still around 10% below where they need to be across the cycle to deliver returns on capital required to invest in our assets. Even with a recent RISI reported price improvement. Against this backdrop, we remain focused on the items that are within our control. Primarily reducing costs and maintaining share with our customers. Since 2024, we have removed more than $60 million of fixed costs from our system. Including restructuring all of our mills and lowering SG&A as a percent of sales. These actions have enabled us to weather this industry downturn, while continuing to invest in our assets. As part of these efforts, we announced a restructuring of our Cypress Bend, Arkansas facility, during the second quarter. Resulting in a reduction of approximately 20% of roles with expected annual savings of $8 million to $12 million This action limits our network production to approximately 1.2 million tons per year, balancing supply with our current demand. We are currently sold out across our network, and are in an oversold position on extruded capacity, which primarily serves the cup market. We believe that the actions we have taken through the down cycle will result in improved margins and cash flow. As the industry recovers in the coming quarters. Lastly, I would like to provide an update on our strategic actions to further build and diversify our product portfolio. Last week, we announced the launch of CIRCA, a new line of CRB For Folding Carton And Beverage Carrier Applications In The US. CIRCA complements our SBS portfolio, and strengthens our ability to serve customers across more end use applications. it is a high-quality recycled designed to deliver dependable converting performance reliable supply, and strong value for everyday applications. CIRCA was developed through collaboration with Greenpaper, a global producer of 100% recycled paperboard at its state of the art facility in Monterrey, Mexico. By combining our market reach, support, and service, with Greenpaper's manufacturing capabilities, we plan to deliver a high quality CRB solution to independent converters in North America. Without the channel conflict that exists with current industry suppliers. This follows our launch earlier this year of Velora, a lightweight paperboard product that we believe can effectively compete with us with FBB. In addition to launching a CRB line, we continue to explore the possibility of producing CUK at our Cypress Bend facility, to further meet demand for nonintegrated paperboard options. And expand our offering with other substrates While engineering work is complete for a full capital solution of approximately $60 million, we are exploring a lower cost capital alternative that would enable us to launch a CUK product line sooner, and within our typical annual capital spend. We are in trials at Cypress Bend with this potential solution, and we will share updates on these efforts in the coming quarters. These actions are aligned with our long term strategy to diversify our product portfolio and become a preferred independent supplier of paperboard to North American converters. With that, I will turn the call over to Sherri to discuss our second quarter financial results in more detail. And provide our outlook for the third quarter.

Thank you, Arsen, and good afternoon, everyone. Turning to our second quarter financial performance, we reported a net loss from continuing operations of $21 million or $1.33 per diluted share including $15 million of insurance proceeds. Net sales were $375 million with 8% shipment growth offset by a 9% decline in market pricing compared to the prior year. Adjusted EBITDA for the quarter was -$8 million with the year over year decrease impacted by the timing of our Lewiston major maintenance outage. Lower market pricing, and impacts from the Iran conflict. The Lewiston outage was completed in June on time and on target with a direct cost of $22 million. 5.6%, remaining below our targeted range of 6% to 7% of sales. In terms of the balance sheet, we reduced net debt by $59 million in the quarter, and $50 million year to date driven by a cash tax refund of $26 million insurance proceeds of $15 million in the quarter and a reduction in net working capital. Let's now move to some additional details on the impact of the Iran conflict. We continue to see upward pressure on both chemical and transportation costs. Oil derived chemicals, particularly polyethylene, have experienced significant cost pressure. Transportation costs have been impacted by fuel prices and further exacerbated by tight supply due to driver shortages. The combined impact of these factors was approximately $5 million during the second quarter compared to the first quarter. We expect an additional $3 million to $5 million impact in the third quarter for a total of $8 million to $10 million We expect some improvement in the fourth quarter as supply chains adjust to the new reality in The Middle East. In total, we believe that the conflict will negatively impact us by 20 million to 25 million dollars this year. We will continue to monitor these developments closely and provide updates as appropriate. Let me also provide an update on our recovery efforts related to representation and warranty inference. As a reminder, this is related to the Augusta acquisition where we believe certain representations and warranties made to us were either incomplete or inaccurate. In the second quarter, we received a third settlement payment of $15 million of which $4 million was directly related to reimbursable operating cost. Year to date, we have recovered $32.5 million In total, we have recovered $55.5 million with $25 million of the $105 million policy limit remaining. We will continue to pursue a final settlement on the policy. Let me now provide a brief update on our refinancing efforts. Our intention remains to extend maturities prior to our credit facilities going current. We are working with our existing bank partners to find the best solution that balances cost, liquidity, and maturities. We have ample liquidity on our balance sheet today, with levels higher than historical averages with the tissue divestiture and our actions to quickly delever the balance sheet. We remain committed to maintaining a strong balance sheet and liquidity that enables us to invest in our assets across the cycle. Turning now to our outlook for the third quarter. We expect adjusted EBITDA of $20 million to $30 million We expect paperboard shipments to be roughly flat versus the second quarter with higher sequential production. We expect to begin seeing benefits from our price increase efforts and we have no planned major maintenance outages in the third quarter. As I mentioned earlier, we expect additional cost pressure from the Iran conflict primarily in chemicals and transportation. Let me briefly provide an update on our planned major maintenance outages this year. We now expect total direct cost of $32 million to $35 million for the year versus previous estimates of $45 million to $50 million We have reduced the scope of our Augusta outage in the fourth quarter of 2026 to $5 million to $6 million and plan to complete the remaining work in the first quarter of 2027. With remaining spend of $10 million to $11 million We do not expect to have another major maintenance outage in Augusta until the first quarter of 2028. We also plan to conduct a maintenance outage at our Cypress Bend facility in the fourth quarter with an estimated cost of $5 million to $7 million For the full year 2026, our assumptions include revenue of $1.4 billion to $1.5 billion with modest shipment growth. We continue to expect a carryover impact from 2025 market driven price decreases of approximately $70 million partially offset by approximately $10 million to $20 million of price improvements in the second half of this year. We expect productivity and other cost reduction efforts to partly offset the cost increases that we are experiencing this year. To round out our 2026 assumptions, we expect capital expenditures of $65 million to $75 million targeted working capital improvements of $20 million to $30 million and maintaining SG&A toward the bottom of our targeted range of 6% to 7% of net sales. With that, I will turn the call back to Arsen for closing remarks.

Thank you, Sherri. To close, I want to emphasize that we operate high quality assets are executing well, and have longstanding strategic customer relationships that we are prepared to defend. We have taken critical steps to improve our financial performance including the restructuring of our Cypress Bend mill disciplined pricing actions, and continued product portfolio diversification. These actions will improve our margins and cash flow in the long run, regardless of where we are in the industry cycle. And we are starting to see positive signs of a recovery in SBS. And I remain confident that the industry will return to its historical performance levels. Over time, we believe we will deliver cross cycle EBITDA margins of 13% to 14% and generate more than $100 million of annual free cash flow. With that, we will conclude our prepared remarks and open the call up for questions.

We will now begin the question and answer session. Your line will remain open for follow-up questions. If you would like to ask a question, please press 1 to raise your hand. To withdraw your question, press 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of George Staphos with BofA Securities. Your line is open. Please. Go ahead.

Thanks very much, Good afternoon. Hope you are doing well. All the details. Arsen, Sherri, I guess first question and if you would mentioned it and I missed it, I apologize. Do you have a view on what free cash flow will be for this year? At this juncture? Given the momentum that you had in 2Q and some of the pricing? Or how would you have us think about that?

Yeah. We are expecting free cash flow to be positive. I think some of the bigger drivers are obviously the reps and warranties insurance of which we have received $32.5 million year to date this year. The tax payments that we have received, $30 million on a year to date basis, And then we are also targeting a $20 million to $30 million working cap improvement. So we think all of those combined offset by the capital and interest estimates that we have given earlier. We do believe that we have a clear line of sight to positive free cash flow this year.

Thanks, Cheri. On the tax refunds, what is left at this juncture? I want to say you said there is 27 year to date. And there was 23 coming into the quarter, but I just wanna make sure I have got my numbers right.

Yeah. We got $4 million in the first quarter. We received 26 million in the second quarter. We do have, I am going to call it a net payable of right around $5 million to $6 million just due to some of the pieces that we need to reimburse Then we have a small amount of tax receivable that is still to come. So call it small net payable.

Okay. Very good. Switching gears. So the maintenance outage expense for the year, can you talk about what some of the drivers were in terms of, I think, decent size reduction And then Arsen, you mentioned that bleach board demand is up. It was up 8% in the quarter. 6% year to date. You know, What gives you comfort that it is not just buying ahead of obviously, warranted price hikes. Based on what you said about reinvestment rates?

Let me thanks, George. Let me tackle the Augusta question first. So that is the biggest delta this year. Is we are, splitting the Augusta outage into 2 pieces. Doing the $5 million to $6 million this year and the rest early next year. We had a go no go decision on the Augusta outage. And to be perfectly frank, the confidence that we were prepared to execute a good outage. So we made the decision to do the most critical things in October. And push the rest of it to, to January and give the team a little bit more time to prepare. We have also made some leadership changes at the mill. So we would like to give the new leaders at the mill an opportunity to impact this outage. Augusta has historically done their outages in Q1, so we are going to revert back to that to that date moving forward. So the next outage will be in Q1 of 28. So I think that is the Augusta. The Augusta question. From a demand perspective, we saw a, 8% volume increase Q2. Year to date, we are seeing a 6% volume increase. I do not view it as a fluke. We have good growth with especially in our foodservice business. We have some strategic customers that we are growing with through some new programs new volumes that we are picking up. So we feel pretty good about where we are from a volume perspective We are our production right now is about 1.2 million tons per year. Our paper machine backlogs are strong. And we are actually oversold on extruded capacity, which is which goes into the cup into the cup segment. Okay.

I have got more questions, but I will turn it over to be fair, and I will see you back in queue. Thank you.

Alright. Your next question comes from the line of Matthew McKellar with RBC Capital Markets. Your line is open. Please go ahead.

Hi, Arsen and Sherri. Thanks for taking my questions. Maybe first, just on the collaboration with Greenpaper. Can you maybe provide some updated perspective on what this does for you strategically, maybe talk about what kind volumes you might anticipate through this agreement either immediately or at the time. And then I guess, adding that second grade to the portfolio, does that change at all how you are thinking about pursuing that CUK capacity and what that might mean for you strategically I will leave it there. Thanks.

Yep. That sounds great. Good questions, Matthew. Thank you. So if we rewind the tape to 2024, when we when we emerged as a paperboard focused company, what we said is our goal is to have all substrates under our umbrella and to be able to offer a more complete solution to independent converter customers. The CRB collaboration, pretty excited about it. I think it is the next excellent product. We were at a facility that the green paper runs is outstanding. We think there is there is space in the CRB part of the industry for a truly independent supplier without any channel conflict. We think approximately 20% of that industry is, nonintegrated. So it is hard to tell exactly how much volume we are going to capture, but let's just let's just make let's just say it is 10 per percent. That would be somewhere probably in the 40 thousand-ton range if we were to capture 10% of that, of that of that independent part of the of the market. So we are, you know, we are we are in the process of to our customers about it, and it is going to take a few months for us to get qualified and placed and placed volume, but we are excited to have, another tool in our toolkit for our independent customers. CUK is something that we think we can do on our existing assets. So Cypress Bend is where we are looking at. We have an engineered solution, a $60 million solution, that would essentially enable us to produce as much CDK as we as we want at Cypress Bend. We are developing a much lower cost solution, call it less than $10 million that would fit within our capital budget that would allow us to come to market a lot sooner What we would sacrifice there is probably some speed, some cost, but what we get is, is speed-- speed to market that would allow us to see how well this product would do. The key for us is to make sure that we deliver a really high quality product to the market. So we are in trials as we speak inside of us then. And we are not going to go to market. Unless we are confident that we are able to deliver a solution that is as good, if not better, than what the competitive set out there offers.

Very helpful. Thanks very much. And then just focusing on CRB again. Beyond the benefits of being able to serve your independent converter customers, more effectively, I guess, with the additional grade, Should we expect, I guess, a meaningful financial contribution from this new arrangement? Thanks.

it is-- I think it is too early to tell. I think it is-- it is essentially a distribution agreement. We will sell and distribute this product through our through our channels. So it is it is it is a bit it is a bit too early for us to start talking about potential revenue and profit upside. Let's see let's see how much traction we get in the market in the next couple of quarters.

Okay. Thanks. Fair enough. I will pass it back.

Thank you. Next question from the line of Sean Steuart with TD Cowen. Your line is open. Please go ahead.

Thanks. Hi, everyone. Arsen, first question on the volume guide. You are guiding to higher quarter over quarter production, flat shipments. Which is surprising a little bit given you have taken some capacity out at Cypress. And maybe I am missing something in sort of inventory shift quarter to quarter because we do not get the production data directly. But can you give us some context on where you are squeezing tons out of the other mills? And you would seemingly be on a track to exceed the pro forma 1.2 million tons of capacity for volumes this year. Can you connect some of those dots through the back half of the year?

Yeah. Absolutely, Sean. So if you recall, we performed a major maintenance outage at our Lewiston facility in Q2. So what we ought to see is a bit of a bump in production without having that downtime in Q3. that is really the extent of it. I think it is as simple as that. So sales would be I would say, relatively flattish, but we would see a bit more production because we actually took down our inventory here in Q2 through the outage, so it is rebuilding just necessary inventories We still have our net working capital goal reduction through balance of the year, so the team is focused on that.

Okay. And then on that working capital piece of it, maybe a question for Sherri. You know, you would seemingly be ahead of pace through the first half of the year with respect to the target for working cap declines, and I appreciate their seasonality to this. But could we qualify the overall objective as conservative at this stage?

I think 20 to 30 is the right is the right number. I think you will see ebbs and flows in inventory. So you saw I guess, an ebb in Q2. You may see a flow in Q3. But we are focused on getting to the right inventory targets by year end. there is probably smaller pieces on other inventory buckets as well as accounts payable. So we think we are on track for that $20 million to $30 million reduction.

Okay. 1 last 1. I appreciate the Q4 maintenance shut is being split, and you will see some of that in Q1 next year. Is the only other outage, the Q4 outage, I think it was at Cypress next year. And if so, do you have an estimate of direct cost for the maintenance program in 2027?

So let's see. So next year, we will do the portion of the Augusta outage in, let's call it, January. We will do a Lewiston major maintenance outage in Q2. Which will be probably similar level of spending as maybe a little higher than this year with inflation and everything, then we would do a at this point, we would probably do a Cypress Bend outage and Q3, Q4 time frame. So probably the delta would be a smaller, Augusta outage next year, technically speaking. Until we get to 2028 when we have all, you know, all of our annual outages in full force.

Got it. Okay. Alright. that is all I have for now. I appreciate the, the context. Thanks very much.

Thank you. Your next question from the line of Mike Roxland with Truist Securities. Your line is open. Please go ahead.

Yeah. Thank you, Arsen, Sherri, for taking my questions.

Hey, Mike.

Arsen-- hi. Yeah. Arsen, how's it going? Wanted to follow-up with you on the to 1 of George's questions in terms of volume growth. You mentioned some new programs and volumes picking up. Does the volume growth you had this quarter reflect share gains against peers, or is the growth reflective of growth that is coming from existing customers?

it is a good question. Let me think through this. So we saw, call it, 6% year to date growth We have not seen Q2 industry data yet. Q1 was flat. I would say there is been some capacity changes in the industry, as you know. So maybe that is impacting that a bit. You know, I guess, by definition, if our share if our volume is growing and the industry is not, I would mean we are picking up share. I maybe I will just comment more. it is customers exist new and existing programs that are driving this growth. So hard for me to pinpoint whether there is some specific win we had against a competitor. But I think you have a industry capacity that has shrunk a bit in the first half, and we have seen some good robust growth on foodservice with, some of our existing customers.

Gotcha. So with the existing program, just more or less on food service, but you actually it sounds like you also have maybe some business wins as well. Would that be fair? So it sounds like new and existing Right? So existing business you have mentioned, being in food service, the new business wins, came from where exactly?

I listen. Listen, I think the growth came from food service. So without going through too detail, I think we are seeing quite a bit of good growth on the food foodservice side. We have relationships, I would say, with every major, major customer. Good relationships long standing relationships. So you know, in due course, you know, you pick up programs, you lose programs, and I think we are picking up programs. Got it.

And so when I think about the price weakness in during the quarter. With, you know, I think you said it was $1.08 thousand a ton, so down from $1.1 thousand a ton in Q1. Is that all due to RISI pricing? Or some of that due to maybe the more and more competitive market that you were participating in to help you get some achieve some of those wins?

I think it is primarily the carryover from last year. So if you recall, RISI reflected about $100 a ton late in the year. And we have said previously, it takes us a couple of quarters for RISI to play through our P&L. So I think that is what you are largely seeing. There was a bit of a mixed impact Foodservice has various components, including things like plate, So you have a bit of a an ASP change because, of a heavier food service mix. Got it.

Thanks, Arsen. 1 last question, quickly. Just, yeah, going back to what you mentioned, obviously, it takes a couple of quarters for RISI to flow through the P&L. Can you help us frame how to think about the $40 that RISI reflected in July in terms of full, folding carton and the $60 per ton in cup stock. What type of impact should we expect in 3Q and 4Q? My sense is probably getting more of a 27 event. But just any type of call you could provide around how that flows through in February would be really helpful. Thank you.

Okay. I will I will give you a little bit of detail here to help to help through this. Maybe starting at the high level, what we said is this year, we are expecting a $10 million to $20 million impact from both our first price increase as well as what RISI reflected in their July in their July report. We think that first increase and the RISI change would will be applicable to all of our tons. And that would be a benefit of $50 million to $60 million on an annualized basis as we head into next year. I think it is probably the best way to start thinking about it at a high level if you drill into it a bit. About half of our volume is tied to RISI. The other half is spot negotiated or open market negotiated. So 50% of our volume is tied to RISI. it is gonna take a couple of quarters for that to play to play through just like it did from 2025 into 2026. The open market negotiations, those are frankly, arm wrestling matches that our team is doing on a daily basis with our customers. Does that help answer your question, or, can I go into more detail?

No. that is very helpful. But you are expecting-- to put a bow on it, you are expecting 10 to $20 million impact this year. $50 million to $60 million. that is right.

From an annualized I think it is going to start in Q3, probably bigger impact in Q4. And I would expect by early next year, we ought to see the full run rate of benefit across all of our REC tons as well as our as well as our open market tons.

that is awesome. Thanks very much.

Your next question comes from the line of George Staphos with BofA Securities. Your line is open. Please go ahead.

Thanks very much. Hey, Arsen. Hey, Sherri. So I wanna come back to the question I would asked earlier on volume and how you gauge it relative to customers trying to be strategic with their buy pre buying. And you said you are sold out that is good. But what does that actually suggest about whether customers are or are not prebuying and what gives you comfort that you are not borrowing some demand from third quarter, fourth quarter into second quarter. And then I had a couple of questions on circa.

Yes. George, it is a really good question. it is a hard 1 to answer unless you have real good visibility into your customers' inventories as well as their customers' inventories. I would say receipt price changes flow through, a lot of it a lot of times all the way down to the, to the to the customer of the actual product. What I would say is the numbers we look at is backlogs. Right? So our backlogs are as strong now as they were last the last few months. So if there was a major prebuy effort in Q1, Q2, you would start to see the backlogs trailing off. We are not seeing that. Again, do not know what is gonna happen tomorrow, but at the moment, our backlogs are strong. We do not usually report our backlogs. It will be more of a qualitative comment. Our backlogs are strong and, frankly, the team is struggling to deliver to deliver products on time to our customers right now.

Understood. there is no penalty, though, from cat for canceling an order. Right? So a backlog's as good as long as the customer has not canceled. Right? Or there is a penalty if I ordered from you and then said, I did not need the order.

How would that work? I mean, Lee, I do not I do not think there is some firm penalties that exist. I do not think that is how we normally operate. I may have to go back in time and try to recall last time, you know, we had a massive amount of orders canceled by customers. So I do not I do not have a good answer for you in that, George. I do not expect at this point, cancellations of orders. I think customers are buying what they need to what they need to buy. Now, historically, when price when price does move, you would see some customers potentially prebuying out of price increases. So that is not an atypical pattern. Just do not know if I am seeing it right now.

Okay. Arsen, that is fine. I just wanna make sure I understood the parameters. Now with CIRCA, strategically, on the 1 hand, I understand why you are bringing it into the market based on the original value proposition you offered your customers once you sold off tissue. On the other hand, though, you know, because there is been this compression that is occurred with CRB. And that is been 1 of the grades you have been you know, to some degree, battling against in the market. Why would you bring in CRB that is presumably, you know, pretty attractively priced when ultimately you have got the integration and the value add, if you will, in BleachBoard? what is help me understand how CIRCA ultimately helps Clearwater and helps you improve your return over time.

Particularly in bleach board.

Yeah. George, I would say many of our customers buy CRB and CEK in addition to SBS. Right now, all we can sell them is SBS and they have to go to our competitors to buy the other 2. And, frankly, go to our integrated competitors to buy the other 2 where they are not a-- they are not going to be a priority. So we think having a more call it, wholesome solution by an independent supplier to customers has value in this in this market over the long haul. I know there is dynamics at play right now with substitution and various operating rate trends across the various substrates. But I think in the long run, our goal is to be able to deliver a more complete solution to our, to our customers where they can buy all substrates from us, from an independent supplier. Versus splitting up their, splitting up their buying. Okay.

Fair enough, Arsen. I appreciate that. And then lastly, what effect do you think some of the tariffs in the market might have on product coming into the U.S. You know, given some of the work that we did and checking around, we think maybe around 150 thousand tons from Canada and elsewhere from Folding Box. Might you know, have a more difficult time coming into the U.S. You know, have us think about it from Clearwater's perspective. What are you seeing in the market right now? Thank you, guys, and good luck in the quarter.

Thanks, George. Tariffs have been notoriously difficult to predict and the impact of those tariffs, So the latest 50% tariff on Canadian products, it will it does the way we read it, it will include paperboard imports from Canada, But not market pulp. There is a SBS there is a bleached paperboard mill up in Canada. Hard to tell exactly what impact it has on the North American market. We 10% of everything we buy and sell is global. So these things have a more limited impact on us. And we have to see how the USMCA negotiation plays out, and we are yet to see if there will be any retaliation from Canada for products coming up from The US. Or if these tariffs will go into effect or if they will get negotiated. So there is just a lot of a lot of moving pieces.

Okay. Fair enough, Arsen. I will turn it over.

Thank you. Thank you. There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.