Good morning, and welcome to the RYAM Second Quarter 2023 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Mickey Walsh, Treasurer and Vice President of Investor Relations. Thank you. Mr. Walsh, you may begin.

Thank you, and good morning. Welcome again to RYAM's second quarter 2023 earnings conference call and webcast. Joining me on today's call are De Lyle Bloomquist, our President and Chief Executive Officer; and Marcus Moeltner, our Chief Financial Officer and Senior Vice President of Finance. Our earnings release and presentation materials were issued last evening. They are available on our website at ryam.com. I'd like to remind you that in today's presentation, we will include forward-looking statements made pursuant to the Safe Harbor provisions of Federal Securities Laws. Our earnings release as well as our filings with the SEC lists some of the factors which may cause actual results to differ materially from the forward-looking statements we may make. They are also referenced on Slide 2 of our presentation material. Today's presentation will also reference certain non-GAAP financial measures, as noted on Slide 3 of our presentation. We believe non-GAAP measures should provide useful information for management and investors, but non-GAAP measures should not be considered an alternative to GAAP measures. A reconciliation of these measures to their most directly comparable GAAP financial measures are included on Slide 17 through 26 of our presentation. I'll now turn the call over to De Lyle.

Thank you, Mickey, and good morning. I will start this call with a review of the quarter before turning the call to Marcus to provide additional details on each of the business segments as well as an update on our capital structure and liquidity. After Marcus' update, I will provide an update on our key 2023 initiatives and guidance before opening up the call to questions. Let's now turn to Slide 4 to review our performance in the second quarter of 2023. EBITDA declined $7 million compared to the prior year, with a total of $27 million generated in the quarter. The results were below our expectations, mainly due to destocking in certain cellulose specialties and paperboard market sectors and ongoing declines in commodity prices, in particular for viscose and paper pulp. As we experienced softness in our business, we increased our focus on generating positive free cash flow. Adjusted free cash flow generation was $16 million in the second quarter, driven primarily by an impressive $55 million of working capital benefits. As I mentioned, the challenges we experienced in our high Purity Cellulose segment were primarily due to the decline in commodity prices and lower cellulose specialties volumes. However, it's worth highlighting that despite these challenges, prices for our cellular specialties products remained strong, with an increase of 13% compared to the prior year period. Paperboard segment declined $4 million with the higher prices helping offset the impact of the lower sales volumes. High-yield pulp EBITDA increased $1 million, driven by higher realized prices and improved sales volumes over prior year. Corporate expenses improved by $4 million attributed to lower variable stock-based compensation and severance costs. Considering the lower-than-expected EBITDA results, a weak outlook for commodity prices and destocking in certain cellulose specialties and paperboard end markets, we are updating our adjusted EBITDA guidance to $185 million to $200 million. It's important to emphasize that most of our cellulose Specialties markets remain stable and ratable including our acetates, non-construction ethers, nitrocellulose fungus and other specialties. Our ability to participate in all the cellulose Specialties markets, whether it be acetate, ethers and other CS, has provided a strong sales foundation that we can rely on. Despite the lower EBITDA guidance, we are committed to enhancing efficiency and financial resilience. As such, we are raising our adjusted free cash flow to $55 million to $70 million due to better-than-expected working capital monetization, reduced interest expense and lower CapEx expenditures. Now I'd like to turn this meeting over to Marcus to take us through the financial details for the quarter.

Thank you, De Lyle. Starting with our HPC segment on Slide 5. Sales for the quarter decreased by $2 million or 1% to $300 million as a result of a 4% decrease in sales prices. The decrease was primarily driven by weakening commodity markets, while our CS products experienced a 13% increase in price as a result of contract negotiations. Sales volumes increased by 4% to 214,000 metric tons due to a higher mix of commodity sales. Commodity sales volumes increased 72% from prior year, while CS volumes declined 27% as a result of destocking for certain products, including construction ethers, MCC and filtration products. Sales for the quarter included $22 million of biomaterial sales, primarily from green energy and lignin. EBITDA for the segment declined $8 million to $28 million. The impact of higher sales volumes was more than offset by the weaker sales mix and higher labor and maintenance expenses. Turning to Slide 6. Paperboard segment sales decreased by $15 million, driven by a 27% decrease in sales volumes as a result of lower productivity and significant customer destocking. Sales prices were up 4%, supported by continued demand for sustainable packaging. EBITDA for the segment declined $4 million to $10 million as higher sales prices were more than offset by lower sales volumes. Turning to the high-yield pulp segment on Slide 7. Sales improved by $4 million from prior year, reflecting a 5% increase in external sales prices and 9% higher sales volumes due to stronger demand, increased productivity and improved logistics. EBITDA for the segment was $1 million as compared to breakeven in the prior year. Turning to Slide 8. On a consolidated basis, we had an operating loss for the quarter of $7 million. Sales price improvements across CS, paperboard and high-yield pulp were more than…

Thank you, Marcus. Now let's shift our focus to Slide 11 where I'll update you on our 2023 initiatives. We are forecasting approximately $45 million of negative impact due to declining commodity prices for viscose, fluff, Paper pulp and high-yield pulp. Additionally, the lower-than-expected sales orders due to destocking in construction ethers, MCC and filtration and paper port market sectors have impacted results by approximately $15 million. While we see this inflation in some key raw material inputs, we continue to experience high prices and/or inflationary pressures for some key raw materials, including wood, caustic soda, labor and MRO supplies. In response, our management team is proactively reducing our expenses in the second half by nearly $40 million to largely mitigate these impacts. These mitigation actions include reducing contractor services; reducing overtime in a hiring freeze; lower wood, caustic and freight purchase prices; and improved productivity; and higher power sales prices. Consequently, we can provide an update to the 2023 EBITDA guidance of $185 million to $200 million. That will exceed both prior year results in our current fixed charges. Despite the lower EBITDA outlook, we are raising our guidance for our 2023 free cash flow to $55 million to $70 million. To date, we have generated $52 million of free cash flow primarily from the monetization of working capital. We expect that this will be partially reversed in the back half of the year as we rebuild the depleted inventories at that just have ended [inaudible] meeting following their annual shutdowns. Also, we reduced our forecast for total CapEx spending for the year to $125 million. This includes $30 million of strategic CapEx, which remains discretionary. Flexibility is key right now, and we'll dial back the strategic capital accordingly if needed. We are maintaining our focus on capturing high…

[Operator Instructions] Our first question is George Staphos with Bank of America.

Thanks so much. Hi, everyone. Good morning. Thanks for the details. Just a few questions, I just want to make sure, Marcus so the annualized interest expense on a cash basis, you said is $70 million, given the refinancing, did I hear that right? And would there be any additional noncash that we should be mindful of as we frame our P&L estimates for next year?

So George, good morning. Yes, the $65 million is reflective of issuers estimate and reflects the timing of when we did the refi and the cash we were carrying. On a more normalized basis, you should model just over $70 million cash.

Okay. cash is booked or is there a little bit of uptick additionally for book?

Yes, maybe 4 or 5.

Okay. Got it. Okay. And secondly, so just to put a finer point on that, $70 million plus on cash, plus 4 or 5 noncash.

Correct.

Thanks for that. On the cost reduction activities, the back half of the year, one of the elements was productivity, specifically there and then across the other categories, how volume sensitive are those? So or said differently, how pressure tested, how confident are you that you're going to get all of that cost reduction activity to your credit to the bottom line in the second half of the year?

George, this is De Lyle. I'm pretty -- I'm very confident that we're going to get the $40 million. The first comment I would make is the $40 million is conservative. We think there's some upside to it. In other words, I tipped a little bit in my back pocket, just to make sure that we get to the $40 million. I would say that of that $40 million, roughly 60% of it is, I would call recurring. In other words, the savings will survive '23, and we'll be able to look to '24 to continue to see some of these savings. I mean, as you note, some of it is tied to productivity. And I would say the productivity is not so much tied to how much production volume that we generate, it’s more around improved material usage variances. For example, better wood yield, things like better caustic usage per ton and so forth. And this is really being driven by a lot of activity at our plants to improve the efficiency and effectiveness of our operations. And we're beginning to see and enjoy some of those benefits from earlier activity this year. The other 40% in terms of, the sake of $40 million, they're not just onetime events. I mean, they're deferrals. And I would suggest that the deferrals are -- we can defer for the medium term without any significant risk. Although there's opportunity --.

What do you mean by deferral, I am sorry, De Lyle, go ahead.

I was just going to say with respect to the 40% of the $40 million is kind of deferrals, taking spending, for example, in contractor services or engineering services, things around head count, for example, producing and strictly managing it over time and putting a freeze on hiring. All those things, I think, can be deferred for the medium term, but there is an opportunity cost for doing that. An example will be engineering services, all those savings I had mentioned earlier in terms of material usage improvements we've seen is being driven by the spending we've had on engineering services to improve the plant operations. So I prefer not to defer those for more than just the medium term, but certainly, we can, but there's a cost to it.

Sure. And I guess at some point also, you're going to watch that because you can wind up with operational considerations and whether you want to kind of to take more unplanned downtime, but we'll see how that plays out.

George, just to address that. We were very mindful not to impact our maintenance spending. We want to maintain the level of productivity and reliability that we have spent a lot of money on the last couple of years to continue forward with that. So the spending that -- the spending and savings that we're noting here, very little of it. I'm looking to the list right now, almost none of it as it relates to our focus on maintaining reliability.

Okay. Thanks a lot. My last one, I'll turn it over. Recognizing it's not October yet or November, but how should we think about the CS pricing outlook for '24 in light of the volume so far in '23? And what's been happening on commodity pricing? So you've had the 13% increase year-on-year. It's going to come off a bit in the back half. It will be high single digits. What's the outlook for '24, given the demand outlook and what you're seeing in commodity? And can you talk about what kind of paperboard volume increase you're seeing year-on-year in the third quarter? Thank you so much.

Okay. So to answer your first question with respect to pricing for CS in 2024 relative to now and any pressures that you would expect from the fact that commodity prices have declined as significantly as they have, to answer that question is that when it comes to our CS business, we put a priority on the value of that business versus the volume. We will continue to have that focus going forward. The whole idea that commodity business is putting a drag on our ability to raise prices next year, I would say that's not the case. I would suggest that much of our business that we have out there, our product set, our customers see the value in and are willing to compensate us for the value that we do provide. With respect to the destocking we've seen this year, I would say that the last thing I want to be doing is chasing a market where the demand is limited by lowering prices. It just makes no sense to do that. Why would anybody lower pricing to get nothing for it? So we continue to focus on making sure at the end of the day that we maintain the pricing and the value that we have in our products. Although, if there is competitive activity out there that threatens our share, we will defend it. And that needs to be clear that at the end of the day, we are very jealous about the share that we have, and we will defend it.

Paperboard year-on-year?

Paperboard, yes, I'm sorry. On paperboard, with respect to pricing, we're seeing pricing relatively stable from what we saw in the second quarter of this year going into, and we forecast going into the second half of this year. We're not really seeing a lot of pressure there given that much of our business is on a contract basis. I think it's too early for me to tell you our forecast what I think is going to happen in '24. Again, we think that there's a significant demand growth there. And we think that at least through '24, that supply will be constrained enough for us to realize additional value in 2024. So that's our expectation.

Our next question is from Paul Quinn with RBC Capital Markets.

Yes, thanks very much, guys. Good morning. Just at the beginning of the year, we had a CapEx budget of $140 million to $145 million with $15 million to $20 million of CapEx, catch-up CapEx. And it looks -- what's happened to that catch-up amount? And how do you figure you still going to maintain the reliability with the reduced maintenance expense?

Well, Paul, so let start it by saying good morning, Paul. As I mentioned to George, we're not reducing our maintenance expense. All right? So we can continue to invest and make sure the facilities are properly maintained going forward to maintain the current level of productivity. The capital that we were planning to spend that we're pulling back now is to further advance the productivity going into 2024. But the fact of the matter is, is that demand's soft, at least for high-value products. And frankly, I don't need that additional capacity right now. So why spend the money? So let's wait and see and raise capacity and improve reliability when the time is needed. So that is the focus that we have on that.

Okay. And then the confidence that you've got on that, hey, we're going through a destocking phase as opposed to a drop in demand or consumption. How confident are you that it’s destocking, it's going to bounce back in, say, '24 or '25?

Alright. I got some confidence in a number of our sectors. There are some areas that were still -- I would suggest are relying upon what our customers are telling us. I'll start with paperboard. Paperboard we are actually we have seen a fairly significant increase and, I would say, back to normal levels in terms of sales volumes in July. I would expect that will continue going forward. With respect to the destocking in some other areas, like if you take high-yield pulp or the mechanical pulp business, we're seeing prices begin to increase. That would suggest that we've kind of -- we've hit bottom, and demand/supply is back in balance, and prices are starting to reflect that. We're also seeing that in our paper pulp business. We're starting to see that rebound a little bit and start hitting in the right direction again for the same reasons. Tire cord in our CS business is also showing signs of increased activity, as the OEMs in the auto industry are beginning to pull increase their demand pull for our products. So I'd say that's, again, another nice green shoot that's suggesting that we're getting to the end of destocking. On construction ethers, I would say a lot of that is both destocking as well as a decrease in market demand. It's tied to the higher interest rates we're seeing around the world. And it had a dramatic impact on construction activity, in our case, principally in Europe. And we're seeing -- we're forecasting that we'll see some sequential improvement in Q4, not necessarily in Q3. And again, to be fully transparent, we have yet to see much of an improvement yet an increased pull in demand for our construction ethers. But again, we're relying on our customers and having them give us some of their forecast on what they think is going to happen through the rest of the year. So and then the other businesses, particularly around our CS business, whether it's acetate or construction ethers and things like nitrocellulose and so forth, the demand for those products have been stable. And we've mentioned this a number of times in the past that roughly 60% to 2/3 of our CS business or -- I guess it's our overall business is recession-resistant. And I would say that, that's we're hanging in there. That's holding true.

Okay. Thanks for that. And it sounded like you've taken downtime in July at one of the lines in Temiscaming on high-yield pulp and expect to continue that through August. I'm just wondering why only the two months and why bring it back if you go --.

Yes, just to confirm that, yes, we did take it down. It was due to market conditions. I think we mentioned that in the last Analyst Call that if pricing got to a certain point. We would make that call and take some capacity out. And as mentioned, we did keep one line open so that we could provide the feedstock into our paperboard business. We kept it down for four to six weeks. And then we started seeing an improvement in pricing and therefore, feel that it's an appropriate time to bring the plant back up, and we'll bring it back up later this month. But again, we reserve the right if we see any kind of degradation in pricing, we'll will again consider whether we need to operate that line or not. So again, it's being driven by the market -- our activity that is being driven by the market conditions.

Okay. And last one for me. Just on the strategic alternatives, I suspect that doesn't mean sale of assets. But what's the idea with -- specifically with viscose, just to move the production of that from an existing facility to a different line? Or what do you think that --.

Yes. It's not reshuffling about the deckchairs, so to speak. That's not what we're suggesting here. The typical options you would look at when you're doing a strategic review of businesses, and I won't go through all the different options we're looking at. I will say that we've been looking at this for a few months already. So we're well down the path. Some more work to do on that. But I would say that we're looking at all the different potential strategic options that someone would typically think of. And we'll be prepared in a couple of months, probably by the November Analyst Call to give you more clarity on exactly what we want to do.

Our next question is from Sandy Burns with Stifel.

Hi, good morning. And congrats on getting that refi completed in this environment. Maybe first, to talk about the commodities business in HPC. Historically, where has pricing bottomed out in that business? Or if you have like a good number, like how close are we to the bottom in your opinion? And then kind of tied into that also, at current pricing, was that part of your business EBITDA positive in the second quarter?

Those are great questions. Thanks for joining us, by the way, Sandy. I appreciate it. I would say with respect to the paper pulp business and the high-yield pulp business, we're seeing the bottom now. Historically, maybe the prices were lower than in the past. But because of the inflation that the world has seen over the past 12 to 18 months that floor has increased. And I think what we're seeing now is it has reached bottom, and we're starting to see the prices move up. With respect to viscose, I would say we're -- I would say it's roughly the same. We're -- we've been fairly steady and stable on viscose pricing, although we've seen a little bit of deterioration, just $10, $20 a month kind of deterioration. So I would suggest we're very close to the bottom there as well. So I think we're seeing the bottom on all of our commodity businesses. In the past, your comment about whether or not in Q2 and Q1 or the first half of the year whether it was our commodity business, what I would again define is our viscose and our paper pulp businesses were the positive EBITDA in the first half of the year. I would say that they were marginal and probably close to zero, if not negative in the first half, but I would suggest that the second half will be significantly weaker.

Okay. Thanks. And then on the cellulose specialty of side business, you talked a little bit about destocking and how you kind of been cautiously optimistic into the second half of the year. When you've gone through these destocking trends in the past, and I realize this environment seems a lot tougher for chem companies this year, how long has the destocking tended to be? Like how many quarters or so? I mean, I think at some point, customers must work through their inventories and start to stabilize and rebuild their inventories. So like maybe on a historical perspective, how long does the destocking period lasted for?

Well, Sandy, let me just state that we're going through right now in terms of destocking is unprecedented. And I think if you were listening to other Analyst calls from our customers, they would say the same thing, particularly in our CS business. Dow and Eastman and Ash, and they all talk about the fact that they're down 20%, 30% on their sales volumes and their construction-related activity. And in fact, some of them would note that they've actually shut down lines as a result of that. I think what we're going through right now is unprecedented. It's obviously being driven by the logistics constraints and bottlenecks that we went through last year. And everybody shifted to just-in-case buying activity to, and now we're going back to just-in-time ordering activity. And so what we're going through is something that I've never experienced, and I don't think this business has ever experienced before. But as I said earlier when I was answering Paul's question, we're starting to see some green shoots. We're starting to see pull. We're starting to see demand pull in some activity that would suggest that we're getting to the end, if not at the end, in some of these activities. And some of the softness, though, that we expect to continue does actually relate more, not to destocking, but more to just suppressed market demand because of a lower economic activity.

Okay. Thanks. And last one for me on the cost reduction actions that you mentioned, and you kind of walked through some of the different specifics. Maybe like in total, how much of it would you say is being implemented at the corporate level that will reduce, we should say, in corporate expenses come down?

Okay. Let me see if I can answer that question, specifically corporate. Sorry, just give me a second so I can give a reasonable number here. It looks like -- and this includes some activity that isn't specific to a plant. For example, caustic pricing, that was lower caustic pricing that has been negotiated by the corporate sourcing team and lower freight rates, which will apply across all the mills. If I add those two up, it's roughly $1.5 million. And then other corporate expenses, we're seeing roughly about $4 million. So a total of about $5.5 million or roughly 13% of the total.

Our next question is from Dmitry Silversteyn with Water Tower Research.

Good morning, gentlemen. Thank you for taking my call. Just wanted to follow up on a couple of questions that were previously asked, just to make sure that I understand what you're telling. So if you look at the declines that you had in volumes in your cellulose specialty business. You talked about destocking, you talked about market weakness, particularly in the construction segment. But you also talked about sort of your strategy of taking or keeping price versus keeping volumes, so playing in that volume price lever. If you had to take a look at sort of those three components, particularly in light of your peers in the industry who operate in the same businesses. How much of the slowdown in volumes that you've seen is, would you say is due to destocking and market weakness versus your strategy of keeping price and protecting your market share, but certainly not going after new market share?

Thanks. I can unpack that question a little bit. And certainly, if I don't answer completely, then ask for clarification. I'm going to start with the last part of your question there about have we lost any volume due to us holding prices and maintaining value for our CS business. I would say that we have lost some volume, but I'd say it's largely immaterial so far. We haven't yet responded in pricing to that set of action by one of our competitors. The belief being that it's been so far been immaterial. But again, I will go back to an earlier point I made, which is we're going to protect our share. There's -- that should be clear. And frankly, going after share in such a market today where you've got no market growth just seems silly to me. It's something that I don't completely comprehend or understand why someone would do that because we're going to respond and protect that share. But to date, and what we expect going forward, is that we don't expect that we don’t have to protect share. And we have already lost an immaterial amount of share so far. So that's the first part of your question. The second part of the question is how much of this is due to destocking to versus, call it, general market activity, the lower economic activity because of higher interest rates and so forth. I would say that 60% has been due to just general market GDP activity. And the other 40% so far has been tied to destocking.

Okay. That's a good number. Okay. Thanks for that. The second question, I guess, I have is on the CapEx reduction. I think you've sort of addressed the fact that which you're pushing out in terms of CapEx is discretionary spending in terms of improving productivity and improving production throughput, but, not necessarily, or not at all, I would hope, related to your biomaterials CapEx that you're investing to grow that part of the business. Did I understand your comment correctly? I just want to make sure I got that right.

Yes. Dmitry, I think you did understand that correctly. I mean we can remain committed to our biomaterials strategy. As I mentioned earlier, the EBITDA margin improvement, the growth potential, the stability and the low volatility that will provide going forward, I think, will be well received by our shareholders. The reduction that you're seeing is really due to us increasing the investment hurdle for that -- for this discretionary strategic capital investments. The $5 million is actually the potential projects that fell out that can't meet that 30% ROE and two-year or less payback period. So those just get pushed back on the shelf. And one day, I'll probably pick those back up when capital is more available.

Got it. Okay. Great. And then just to clarify, in your previous comment when you talked about the EBITDA of your commodity businesses in the first half of the year, you said it was kind of close to zero, maybe a little bit negative. But did I hear you right, you expect it to get weaker in the second half of the year?

Yes. And again, quite frankly, that was a big guess on my part. I would say that we're going to lose $50 million in EBITDA. That's our estimate right now on the viscose and paper pulp business in 2023, and all that's being driven by prices. And the reason why I bifurcated the two is our pricing in the first half was significantly higher than what we're expecting in the second half of the year because pricing, particularly with our high-yield pulp and our paper port business are falling off pretty dramatically in the April/May time frame. But yes, so I would expect that pricing or the results for those businesses will be significantly worse than they were in the first half because of the deterioration in pricing we started experiencing starting in April.

Got it. Okay. That's helpful. And then last question. Typically, in a slowing economic environment, you would see a decline in a lot of the commodity prices that you guys use as raw material inputs. So what is your outlook for sort of raw materials? I know some of your markets or some of your raw materials are a little bit countercyclical, if you will, to the markets. But any outlook on the second half of the year and getting into 2024, perhaps on what you expect your raw materials to do?

And that's -- one of the questions we continue to wrestle with almost every day here is to understand where our cost of inputs is going in the near and medium term. I guess the best place to start is that a number of our largest input price, their prices on those are continuing to be elevated for some of the reasons I think you're alluding to. With respect to wood, I mean one of the -- we live off of residual wood in a number of our facilities. When the lumber activity because of housing starts on all that goes down, Dmitry, the supply of residual would also go down. And therefore, the price of those residual wood goes up. And we're particularly experiencing that in Canada and, to a lesser extent, in France. Here in the States, we are seeing prices come down, but it's on wood. But it's still elevated, significantly higher than we had before we went into pandemic. We do expect that those prices will continue to moderate over the short to medium term. So going into '24 and so forth, we expected that those prices will continue to decline. But with respect to France and in Canada, the price for wood there is really relying on what the heck happens with the housing market and in the lumber market. And so with a higher interest rate environment and so forth, our thinking is that we're just going to have to plan to live with higher wood prices in those two businesses. The other big spend we have is with caustic soda. And caustic soda pricing in Europe has returned back down to, I would say, normalized levels. But here in the States, they tend to be -- they tend to have stayed elevated. And we expect or hope that those prices will moderate over time, and we're seeing some moderation. It tends to be relatively slow moderation quarter-to-quarter, but we're still very elevated there. And I would hope that as demand softens and supply increases, which we do expect in '24 with the new [inaudible] operations coming in the Gulf that supply, or pricing for caustic soda should improve in 2024.

Maybe just to add to De Lyle, the other area where you're seeing reductions is in container rates, the ocean freight. So that element, certainly, I think there's reference points that has reduced and continue to reduce.

And we'll see some of the benefit of that in H2.

In the second half of the year. Got it. So if I kind of put it all together, what I'm hearing is your input pricing is probably going to sort of stay flattish but maybe trend down slightly, but we should not be looking for significant raw material relief to help you out on the margins. Would that be sort of the correct takeaway?

Yes. And Dmitry, I would say that's correct. And certainly, I think that's the position that we have here at the company, is that we're not counting on our raw material prices to save the day. We're looking at being much more proactive in more strategic things like finding ways to bring balance to the supply/demand equation to improve, give us better pricing power, looking at ways to reduce our exposure to very volatile parts of our business like the viscose, and paper pulp businesses to eliminate that volatility and concern. Those are the areas that we feel that we can control and that we can get after. The things that are more exogenous like input prices, we just assume that we'll do -- we'll live with what we have, and then we'll figure out how to mitigate that.

Thank you. There are no further questions at this time. I would like to hand the floor back over to De Lyle Bloomquist for any closing remarks.

Well, thank you all for joining us today. We believe that we continue to make significant strides toward achieving our financial and strategic objectives. I'm incredibly proud of the collective efforts of our team, and I'm very confident that we will continue to enhance the profitability while also working to reduce our debt and our leverage. I look forward to going into more detail at our Investor Day on October 10. So I hope that those on the call will have the opportunity to join us at that time. In the meantime, if you've got any further questions that you want addressed, our lines are always open. So feel free to reach out to us with any questions if you require further information. So have a great day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.