Good morning and welcome to Mercer International’s Second Quarter 2021 Earnings Conference Call. On the call today is David Gandossi, President and Chief Executive Officer of Mercer International and David Ure, Senior Vice President, Finance, Chief Financial Officer and Secretary. I will now hand the conference over to David Ure. Please go ahead.

Good morning, everyone. Before David begins, I would like to remind you that in this morning’s conference call, we will make certain forward-looking statements. And according to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, I’d like to call your attention to the risks related to these statements, which are more fully described in our press release and in the company’s filings with the Securities and Exchange Commission. David?

Thanks, Steve and good morning everyone. Well, Q2 was a remarkable quarter for us. We advanced key elements of our strategy, growing our annual pulp capacity by 80,000 tons at Stendal, rebuilding our recovery boiler at Peace River, improving our ESG ratings and demonstrating the potential of our Friesau sawmill. We delivered solid operating earnings and executed 3 large maintenance shuts all while navigating the complexities of a global pandemic, wildfires in Western Canada and flooding in Germany. Now, despite these challenges, including the current volatility of end product markets, we are very bullish on our future and I’d like to take a few minutes to step away from the quarterly earnings to discuss why. For many years, we have been pursuing a strategy to create long-term value for stakeholders. We have focused on market pulp, building products, green energy and chemical extractives, because we believe that in the fullness of time these products, produced in modern facilities with a focus on long-term sustainability, will outcompete the many weaker players in this space and deliver superior performance. We invest only in large and modern facilities that have the potential to be world leaders. We focus on timber supply, procurement and logistics in making our investment decisions. We promote a values-based approach to our human resource development that honors health and safety, innovation, boldness, accountability, sustainability and the pursuit of excellence. We maintain our mills to a very high standard. We look forward and execute on high-return projects that provide superior returns, not just financially but environmentally, including resource efficiency. We don’t buy junk. We don’t pay too much. We have a point of view on the future and are seeking growth in areas where we have a strong commitment and where we feel we have sufficient core competencies to be…

Thanks, David. Our second quarter EBITDA was comparable to Q1, despite the significant planned downtime we took this quarter to facilitate capital projects and annual maintenance. Combined, we took about 16 weeks of planned downtime in the second quarter, which negatively impacted EBITDA by approximately $80 million. In addition, our Q2 operating results were negatively impacted by the effects of a weaker U.S. dollar on our foreign currency-denominated operating expenses. More than offsetting these negative impacts were higher prices for our pulp and lumber products, with those higher lumber prices driving record earnings for our lumber business. We generated EBITDA in the second quarter of almost $84 million, compared to EBITDA of about $82 million in Q1. Our pulp segment contributed EBITDA of $41 million, and our Wood Products segment contributed record quarterly EBITDA of $46 million. Our Wood Products segment benefited from strong demand and record U.S. sales prices in Q2. Recently, the U.S. market has weakened significantly, and David will speak more about that shortly. And as usual, you can find additional segment disclosures in our Form 10-Q, which can be found on our website or that of the SEC. Average quarterly softwood and hardwood pulp prices increased significantly in all of our major markets this quarter. In China, the Q2 average NBSK net price was $962 per ton, up almost $80 from Q1. European list prices averaged $1,288 per ton in the current quarter, compared to $1,037 per ton in Q1. And the hardwood price in the U.S. market averaged $1,297 per ton in Q2, which was up $277 compared to the prior quarter. In total, higher average pulp sales realizations positively impacted EBITDA by about $62 million when compared to the prior quarter. Pulp demand remained steady in the quarter. However, our sales volume was down…

Thanks, Dave. I am encouraged by the global rollout of COVID-19 vaccines and the positive effect this is having on global economic activity. Unfortunately though, there remains uncertainty about the impact of the COVID-19 variants and increases in infection rates. And as a result, we remain focused on our protocols to ensure the safety of our employees, contractors and the ongoing operation of our mills. I am pleased with all that we accomplished this quarter. And as I said earlier, we have added 80,000 tons of NBSK pulp production at our Stendal mill. We rebuilt Peace River’s recovery boiler, effectively giving the mill a new boiler. Combined, we completed 117 days of capital and major maintenance work, and we successfully completed all this work without allowing COVID-19 into our mills. Overall, our mills ran well, but a significant level of planned downtime resulted in lower than normal production levels, which was the drag on our results, obviously. However, strong demand for our products and related price increases when compared to Q1 more than offset the impact of our planned downtime, with our lumber business leading the way with record quarterly earnings. Both softwood and hardwood pulp prices rose steadily and significantly through the quarter. Favorable supply demand fundamentals, including low paper producer inventories, unusually high pulp producer downtime, much of which was unplanned, logistical challenges due to the global shortage of containers that has limited the volume of pulp into China and a relatively strong Chinese currency, all factored into favorable supply demand dynamics during Q2. Late in the quarter, pulp prices began to retreat in China, primarily due to speculative forces, but the supply demand factors that created have created a soft landing; while in Europe, we successfully implemented a $40 price increase, taking the list price to $13.40…

Thank you. [Operator Instructions] Your first question comes from the line of Hamir Patel, from CIBC Capital Markets. Your line is open.

Hi, good morning. David, you referenced kind of rising inflation for the sawmill projects under consideration. So for Stendal, do you have a sense as to maybe what that updated build cost would be if you go forward? I know we had a recent greenfield announcement in the U.S., and it looks like, at least in the U.S., that that project was around $750 a thousand. I don’t know if that’s a similar benchmark that you’re seeing in Europe.

I think $650 to $750 could be the ZIP code. There is options to stage things, build the mill in phases. There is – I don’t want to build something that doesn’t have all of the appropriate bells and whistles. We know how important that is to get the grade profile out. So we’re working our way through all the final quotes and adjusting scope as we can. And maybe there is a slight delay in pulling the trigger on this. We’re not going to do something crazy, obviously. But it’s really remarkable how rapidly the cost of steel and just equipment, in general, has gone up. I don’t think it will stay where it is, but for the moment it’s really been a really remarkable increase. So we’re just going to monitor it. We’re going to get – we’re doing the work, and we will be in a position to make decisions. But again, I think it would be prudent to take a really cautious approach to it.

Sure enough. And given the escalation on the Greenfield side, has that maybe increased your appetite for considering buying an existing sawmill and have you seen maybe the pipeline of opportunities improve as lumber prices have come off?

Yes, it certainly factors into our thinking, Hamir. Absolutely. Having said that, we just don’t want to buy junk and everything that we looked at has been pretty expensive and hasn’t really been at a scale, at least in North America, hasn’t been at a scale that would make sense for us from our strategic point of view. There are still a few targets in Europe that we continue to monitor. And you’re right with changing conditions those could come back into focus and make more sense for us. So they are also on the table for consideration.

Fair enough. And just a last question for me, David, with the capacity increase now at Stendal and then just given the sort of cycle of the various shuts, what level of production would you be targeting for 2022?

Well, net of all shuts and things like that, I could just flip through my report here. Just give me a second, unless David has it open. Sorry, Hamir. I don’t have that just easily handy.

That’s alright. I will follow-up. That’s everything I have. Thanks.

And your next question comes from the line of Sean Steuart from TD Securities. Your line is open.

Thanks. Good morning guys. David, I wanted to revisit NBSK markets in Europe. It looks like you got about half the proposed June price hike. And I’m trying to gauge your thoughts on the ability to hold prices through the summer as things have corrected in China and, to a lesser extent, North America. Do you think the industry will have an ability to tread water through the summer in Europe as other regions weaken?

Yes. It’s a great question. And the way I’m thinking about it and some of my colleagues here in Mercer, we’ve been putting some time into thinking about what’s the same and what’s different about the last two cycles the 2017-18 cycle, where we had peak prices, and the current cycle. So one of the differences here is at the end of 2017-18 cycle, the pulp stocks were very high; whereas, today stocks are well balanced. At the end of 2018, the global economy was cooling of considerably, particularly in China. There was the trade conflict with the U.S. going on and so on. And today, in 2021, all major regions are expected to grow and grow strongly, and there is a very different sentiment in the market today. Paper inventories in 2018 were very high, particularly in China. Today those are at normal levels. Considerable overcapacity in the European printing and writing sector in 2018 has been really offset in 2021 through massive cultures of paper capacity, primarily in 2020. Back in 2018, you remember Suzano, the market leader, just completed a merger with Fibria. They were pretty busy with themselves. And most would say they misjudged the market, created some of the problem we had to work through in terms of inventory overhang. And I think another important factor, particularly as your question relates to Europe, is ocean freight challenges favor the European paper producers in 2021. And by that, I mean, like, paper imports into Europe are very limited. So the paper producers are busy, and they are profitable. They have been successful raising prices more or less across the board. And so it’s a much stronger market without much influence coming in from paper producers in China, for example, that they would have previously been competing with. And then, finally, I think another big difference is the dissolving in the fluff markets this year are pretty strong, unlike in 2018. So there is really no swing tonnage coming into the paper-grade side. So there is a lot of differences. And generally, just the tone of our customers in Europe tells us that we’re going to trade at a pretty narrow band here through the summer, and I’m optimistic about the back half of the year.

Thanks for that detail. That’s really helpful. I also wanted to follow-up on your comments with respect to the CLT asset you’re bidding on. Help me understand, I guess, that opportunity. Have you been looking at other engineered wood opportunities or is it as a result of the Katerra bankruptcy that this one fell into your lap potentially? And how do you weigh the appetite for this type of expansion versus sawmills in North America, because you have kicked the tires on opportunities on that front as well?

Well, I’m really bullish on mass timber. It’s been sort of a current steady area of business for Europeans. It’s growing very rapidly in North America. When you’re at the FPAC table or COFI or listening to the premier or the prime minister talking here in Canada, mass timber is something that’s really supported. It’s a green building product. It’s got a much lower carbon footprint to steel and cement. And I think we all think there is a tremendous growth opportunity here. So we’ve been really focused on the value-add space through time. And as I’ve spoken about in the past, we’ve got an empty hall coming at Friesau, and the opportunity there would be to take the lower-profile material and put it into either CLT or glulam or something like that, do some finger-joining and so on. And so we’ve been really looking for opportunities in that area. So we understand the business, I think, pretty well. We’ve done a lot of work in it. And the Katerra thing is an opportunistic situation, clearly. It’s a big plant. It’s really big. So I always – we say we don’t want to be a small fish in a big pond; we’d rather be a big fish in a smaller pond. But if there is really good growth market dynamics and we can establish ourselves as leaders and use that as a platform for further growth in that area, that’s kind of what we dream about. It’s going to be competitive. I mean, I’d be shocked if others don’t show up. So that means there will be an auction. And as we were with the K1, we will need to be disciplined and not overreach. It’s still a growing market in CLT. So if we don’t get this one, we will possibly find other value-added products we can go into. So we will see. It’s a cool opportunity. It’s a very well invested plant, with equipment that we know. It looks a lot like a sawmill except it just doesn’t have timber in it. But all the sorting and planning and continuous kiln drying and all that kind of stuff, it’s all the same equipment we run in Europe, basically.

Alright, thanks for all the detail. Appreciate it. That’s all I have got.

And your next question comes from the line of Marcus Campeau, from RBC Capital Markets. Your line is open.

Good morning guys and thanks for taking my questions. Maybe starting with pulp here, there is quite a bit of hardwood capacity coming online over the next few quarters. How do you think that will impact the market? And can you remind us how you think about the relationship between hardwood and softwood pulp prices?

Yes, great question. Yes, it’s – yes, so between Arauco and UPM and a bit of [indiscernible] there is hardwood coming. Hardwood is going to struggle a bit, or at least has the potential to. It really depends on the discipline of the producers, in my mind. And one of the – there is a couple of angles in the whole thing. They are adding capacity because they believe, and I think they are right, that the demand for virgin fiber is growing significantly. Hardwood right now is growing at more than 1 million tons a year, every year, and has been doing that consistently. You may remember 3 years ago we thought [indiscernible] capacity is going to destroy the market. Well, it didn’t, until we had a behavior issue that really kind of got in the way. So it’s going to be lumpy, and it’s going to wind its way through. I mean, I think we do have some hardwood pulp in Mercer, and our opportunity with our wood room and possibly some other Aspen extraction material product opportunities that we have up in Peace River, I think we can get our cost structure down to where we can really compete on the hardwood side. And we’ve got softwood swing capacity up there as well. So that mill, still a great mill and will be a contributor over the next couple of years. But for a couple of years, hardwood will be the drag, generally, on virgin fiber. I think the demand for virgin fiber is going to be strong enough, and particularly for softwoods, that the gap between the two grades will widen and kind of end up at a delta that’s probably something we’ve never really experienced for prolonged periods of time before. I’ve seen the difference at $200 in previous cycles. And recently, we’ve seen it as high as $220. Today we’re down below the $200 level, but I could see that being the case for some extended period of time. I don’t think it’s going to be a ball-and-chain on softwood. Softwood is too small a market and it’s too important to so many different paper grades that it will trade based on its own supply-demand dynamic. It will become a niche pulp trade that way, and hardwood will be the big benchmark grade. And the way to be successful in the hardwood space is you’ve got to be a low-cost producer, a high-quality producer, and the consolidation of the hardwood producers should exert some discipline into the market that allows everybody to make reasonable margins.

Thanks. That’s helpful. Maybe going back to the CLT side, are you able to help us understand what kind of profitability that you think a CLT plant, like the one in Spokane, could generate under normal market conditions? And what have been some of the key challenges with that facility and where could you help address those problems?

Sure. Well, CLT is – I mean, its largest input cost is wood, obviously. And so when somebody bids on a project, they take the wood cost, they calculate what the cost to convert that wood into panels is and then they add a margin. And how much margin they add is a function of what they think the customer is willing to pay, and that comes into comparing what you’re producing and providing to other building products and also who you might be bidding against to get the job. So it really depends on a whole number of factors. The Katerra business model before the bankruptcy was really an integrated model. So they were – they had the engineers and architects and project ownership. They ran the projects. They underwrote the risk of the projects. They produced the raw material, the CLT for the projects. And that’s a very different business model to the way Mercer would run that mill. Like, we would be marketing – we would be building products for project owners. So we would be competing with others who would have similar facilities who might be in the geographic area that we’re working in. Given its scale, as you get it wrapped up, it’d be a low-cost producer. It would be, like I say, a big fish in a smaller pond and lots of growth potential. Like, we could imagine plugging on a glulam line and running a lot of finger-joining material through it and doing all sorts of stuff. So it has the potential to produce a really nice steady margin, I think. What that will be will take time to determine. But as I say, the business is really raw material costs plus conversion cost and then what the market will bear based on competition and value to the buyers.

Yes. That makes sense. Maybe I will sneak in one more. With lower North American lumber prices, do you expect to sell more lumber in the European market or is that sales mix going to remain steady, sending lumber over to the United States?

So, I have talked about this before. So, we are really committed to a number of markets. So, we have done very well in the U.S. We have got a tremendous customer base, and we are going to honor that and supply them through thick and through thin. So, I would expect our U.S. supply to range between 25% to 40% of Friesau’s availability. The European market, which has traditionally been much less volatile, serves us well through thick and through thin. At the current moment, it’s really strong. Like, it’s held up. Like, it hasn’t fallen the way the U.S. market has. Having said all that, the U.S. market is still very profitable for us. The European market is profitable for us. And with all the new bells and whistles at Friesau, we are really ramping up our J-grade business as well. And J-grade, for those who follow lumber is – in Japan is very high tremendous margin on that product. So, we are pushing out as much of that as we can. And I expect we will just continue to move in this direction. Core of Europe, 25% to 40% in the U.S. and as much J-grade as we can get through thick and through thin. Hopefully, somewhere between 8% and 10% of Friesau could be J-grade in the fullness of time.

Great. Very helpful. Good luck.

Thank you.

And we have your next question coming from the line of Roger Spitz from Bank of America. Your line is open.

Alright. Thank you. And maybe you said this, but regarding the remaining Peace River BI insurance proceeds, did you give the timing on expected receipt?

Do you want to cover that, Dave?

Yes. We didn’t, but we would expect that it would be something that would be settled out in the next two quarters.

Got it. Okay. And can you give any insight into cash taxes, given a material difference in your numbers this year versus last year?

Yes. I think for guidance or I guess for building models, you could probably count on our cash taxes being in the range of 15% to 20% of pre-tax income.

Okay, great. Thank you very much.

Thank you. And your next question comes from the line of Andrew Shapiro from Lawndale Capital. Your line is open.

Hi. Thank you. A few follow-ups here and then a question. Regarding the stalking horse bid at Katerra, with the auction set for Monday, how does this bankruptcy court and this particular bankruptcy case, how do you see it proceeding in terms of the timing of the determination of, we will call it, the winner of the auction? Would there then be an additional breakup fee protection all the way through the reorg vote, etcetera? And when do you think that all takes place. I don’t know how complex a case this is and if this is just one small asset sale that is going to have the gavel bang down long before the overall restructuring is done, or what?

Hi Andrew, yes, it’s going to be a very rapid close, is what we have been told. So, the auction will be Monday, and I think they are hoping to close within a week of that, more or less. So, we will either own an asset or we will have a break fee right away.

Okay. So, it’s kind of a – it’s a separate 363 sale outside of the rest of the restructuring process.

Correct.

Okay. Excellent. Kind of along these lines which is, again, the use of pulp in a variety of other uses than the standard Mercer business line. You have a joint venture with Resolute in Performance BioFilaments. And can you remind me what percentage Mercer has of the joint venture? And more importantly, I think the last that we might have heard about this was that the Québec plant, the initial plant in Québec, is under construction. And maybe it has now been completed. And they anticipated making, I think, products, production and sales commercially here in 2021. What’s the status of all of that?

Well, so Performance BioFilaments is a joint venture that we have with Resolute Forest Products. And both companies were very interested in the technology. We have access to all the patents and everything through our membership in FT Innovations. And we decided that let’s work on, let’s co-develop applications versus competing with each other in the market. And so, we put our resources together in Performance BioFilaments, hired the team. And I think somebody used the word, it’s an incubation hub, if you like, of products for the future. And filaments provide papermakers value either through strength or different properties that you can manipulate the surface features of filaments. It goes into non-wovens. It can go into cement. It can go into drilling mud. There is just all kinds of applications. And so Performance BioFilaments is all about working with end users, industries and companies that can benefit from biofilaments and helping them develop applications for it. And then the vision is that we would have the exclusive capacity to provide materials, like a chemical material, if you want to call it that, that creates value for them for whatever their application is. Our partners in Resolute felt strongly enough that they are building a plant, and that plant will provide material to Performance BioFilaments and will also provide material to operations in the paper space that they operate. And I think they are pretty excited about it. I can’t talk too much about it. It’s really their project in a way. And so I will leave it at that. But we continue to – I wouldn’t say plug away is the wrong word. I mean, we still feel there is lots of potential in high-performance strengthening agents for papermakers and other special applications, but these things take time.

Is the plant construction completed?

I can’t talk – I don’t know the exact status of it, Andrew. Mercer doesn’t have any ownership of the plant itself…

Okay. So, you don’t have anything of the plant. Your ownership is the venture that provides raw material to the plant.

We are on the application side with them.

Okay. And then lastly, in light of the persistence of the pandemic, I think things are going to continue virtual for quite a while, perhaps in the investment conference side and all that. What are the company’s plans for virtual or in-person IR activities in the coming months and quarters?

Dave, do you want to cover that all?

Yes. We will be participating, these are all virtual conferences, but we will be participating in the Jefferies Industrial Conference next week. Pardon me. I have lost my voice.

Okay. Dave got a little frog in his throat. We have got TD coming up. And we will participate in all the bank – I think there is a BofA conference coming. So, we will participate in the bank virtual conferences. And we are pretty active with shareholders on a daily basis anyway. I won’t be making a tour into New York or Boston or down your way in the next few months. But I really do look forward to being able to travel again and getting out and seeing everybody. But for now, Google or Zoom is what it’s going to be for the next few months, I am afraid.

Okay, great. Thank you very much.

You’re welcome.

[Operator Instructions] Your next question comes from the line of DeForest Hinman. Your line is open.

Alright. Thanks for taking my questions. Can you give us an update in terms of your thoughts on the production capacity of Friesau? I know you have the summer holidays with the maintenance, but I know we have been adding a lot of equipment there. Has it changed your thoughts in terms of what can that facility do from a production perspective?

Yes, great question. Well, I mean, it’s everything we thought it would be. And it really depends on how you run it and how you staff it, what it’s going to produce. So, maybe to give you the guidance that I think you need for your models, DeForest, for the third quarter we have got our summer maintenance. Sawmills are a little different than pulp mills. We can do – we kind of rotate through departments. So like, we will work on the log line for a while, work on one of the saw lines, get it back, work on the other saw line, work on sorters, work on dryers, work on planer, that kind of thing. And we can also double-shift some of these lines. So, when one is down, we can work hard on the other to produce the product. So, our production target for the third quarter, despite having all this maintenance, is about 123 million to 124 million board feet of lumber, is what we will produce in the three months.

Okay. That’s helpful. And then in a quarter where we don’t have to do something like that, has it step-functioned higher?

Yes, it has. I mean, we are running it at around a 500 million to 550 million board foot rate, is our plan. We could go up significantly. We could get up to the 750 million if we want to put more shifts on, difficult to do and not always the best thing for the equipment. So, it’s kind of like you want to run, like, a boat; you want your motor running at a good rate, but you don’t want to be pushing it too hard all the time. So, our focus is on really fine-tuning all of the optical grading, the THD scanners and things like that. So, we get the maximum value out of the profile and really tune up the precision edge trimming and getting a J-grade grading as crisp as it can be. And running at the 500 million to 550 million board foot is just kind of the optimal place for us to be for the next, call it, six months or nine months. And so that’s what you can expect for now.

Okay, great. I don’t think anyone asked this, but I think it’s important. On the Stendal digester project, can you give us an indication of how the mill is performing with the new assets in July?

Yes. July was a little bit bumpy, but I am pleased to say it’s running really well now. So, the issues that we had at Stendal well, a couple of things. I think the capital investment project was executed very well and really proud of the team. One of the areas where we struggled a little bit is these big mills have what we call DCS systems. These are the digital monitoring systems, all the loops that we use to control the equipment. Well, one of the vendors – the DCS team virtually couldn’t make it because of COVID. And so we really had to support the DCS development work from our Rosenthal mill. They are both Valmet systems. And so we got through it and it took a little longer than we expected, but it was really some fairly specific reasons. The equipment is all what we expected. It’s installed properly. It’s all up and running now, and it’s just a matter of fine tuning. And when you put new digester capacity in – and for listeners, we also increased the sprint capacity on the dryer and we improved the washing capacity on the bleach plant. So, what we are doing right now is just fine-tuning everything, finding those little bottlenecks and cleaning those up and just ramping up to the 740,000 ton annual rate. And we will be at that rate within another three weeks or four weeks, is our view. And so very successful project and also very accretive considering a level of government support that we had with the capital. I mean, it’s probably some of the cheapest tons we have ever built in Mercer, to be honest.

I guess I am not aware of that. Is there a grant involved with that or was it…?

Yes, there was. So, we have these wastewater fee offset programs in Germany. So, if you put money into equipment that allows you to provide some environmental benefit or resource efficiency benefits, you avoid having to pay the wastewater fee. The capital kind of displaces the fee. So, what we were able to do is negotiate 6 years’ relief from wastewater by putting in this equipment which gives us a lower environmental impact intensity, and a big chunk of that comes from the washing, the new washing equipment that we put in. So, we are avoiding €24 million of wastewater fees, which is 6 years’ worth, on a project that had a capital cost of about €45 million.

Okay. Perfect. Just kind of an aside, but just monitoring the Shanghai Exchange, there is a forward curve now. There is a lot of volume. It seems like a real futures market. Is there any possibility that we could use that and enter into forward futures contracts and actually deliver the tonnage? Is that feasible?

I think that’s a growing market and both financial and physical opportunities there. Most of our investors like us to stay open. They don’t want us to be taking speculative bets. They want to play the pulp market. So, I am not really anticipating participating there. We find – it’s becoming a factor in pulp pricing, though. And so we are having to monitor it pretty closely. I think that it has the potential to do is create a little more volatility in pulp pricing. So, when prices are going up, they may go up a little faster and higher. And similarly, when sentiment turns and speculators get involved when pulp prices are coming down, it might push it down a little harder and a little further. But that’s just my view. But I am not anticipating, DeForest, taking big positions in that market to try to smooth out earnings or any of those kind of things.

Okay. Very helpful. And then last question, just on the CLT facility. Did you envision that facility as is or do you see that – I know you mentioned earlier it looks like a sawmill. Is it possible that that could just be run as a sawmill as kind of a semi-turnkey asset that you would be able to move on relatively quickly through this bankruptcy proceeding?

Well, we have some ideas about optimization and innovation in that facility. I don’t want to talk about those too openly just at the moment because we may not get it. But we won’t be putting a saw line in. It buys timber packages from others and sorts through that and uses the material to produce a value-added product. So, there is a lot of capacity in that facility. It’s got a very big building. And the bottleneck is the press. So, additional incremental volumes of CLT or other products are very possible without a lot of that other associated expense. Like, if you were to do a Greenfield glulam, you would be needing to put all the departments in place. This is, frankly, just the press is the bottleneck. So, there is lots of potential for us in the future on it.

And just so I understand, I haven’t gone through all the documentation within that bankruptcy proceeding, but is it just the physical asset you are bidding on or is there a supply contract on the wood side? You just mentioned that’s one of the things you have to consider…

No supply contracts, no liabilities, minimal workforce, no marketing. I mean, it’s a startup. But the asset is there.

Okay. Thank you.

Thank you. And there are no further questions. I would now like to hand the call back to Mr. David Gandossi. Please go ahead.

Okay. Thank you, Patricia, and thank you all for joining our call. And as always, Dave and I are very happy to talk to you any time. So, don’t hesitate to reach out. I look forward to speaking with you. And otherwise, we will look forward to our third quarter earnings call. Thanks again. Bye for now.

And this concludes today’s conference call. Thank you all for participating. You may now disconnect.