Ramesh Shettigar: And it’s getting there, Josh.
Thomas Fahnemann: And it’s getting there.
Ramesh Shettigar: You’re right, we have said that in an ideal situation a business in the nonwoven space with the portfolio that we have should be operating between 10% and 15% EBITDA margins. Now, we’ve been in that zip code before. We’re clearly challenged because of Spunlace and because some of the market dynamics that we’ve seen here recently. But yes, we’re making our way up there very gradually. So what you may have seen 7% last year could very easily translate to 8%, 8.5% this year and then continuing to make progress as we take more cost out as the turnaround strategy traction kicks in, as we have eliminated some of these one-off distractions whether it’s – or the Ober-Schmitten fire or the Ober-Schmitten topic or the fires and so on, this should help become accretive to our EBITDA margin profile going forward.
Josh Wool: Okay, so maybe let’s start from that kind of 8.5% level, but as we think about the cost trends going forward over the last six months, soft wood pulp prices, fluff pulp prices have declined substantially I think both in North America and Europe. So, remind us how much of your cost of sales is raw materials or even pulp, if you can be that specific. And when do you expect to see the full impact of lower pulp in both as it comes into your inventory, but also as it gets reported into your cost of sales? And just because some of the tissue producers that are reporting are starting to see some of that in their margins is recently as this quarter. And I think more of that is going to come in Q3. But kind of remind us what we should expect across both the Airlaid and maybe more composite fibers where you don’t have the pass through.
Thomas Fahnemann: Okay, I mean if I look at pulp softwood and fluff pulp, and it depends a little bit on the product, but the raw materials round about 50% to 55% of COGS, cost of goods sold, okay, an average across the segments. And one of the issues is was — and we have seen that mean absolutely right, prices are coming down. Unfortunately, I also have to say the gap between fluff and softwood is widening, but it’s now also under pressure. And also fluff pulp was coming down more. But this was a little bit of a time lag. And normally what we have is when prices are coming down you can say it takes us probably two to three months because of our raw material inventory, which we have to keep in all of our sites, to really see the real impact.
So, I would say it’s probably eight to 12 weeks then we see it as well. Okay. And question on the pass-through, yes, I mean we have round the bottom be precise in Airlaid, round about 30% is not on the pass-through, and this is mostly the smaller tabletop customers where we don’t have a contract, but they’re buying from us. And so we — and we are very price — they are very price sensitive, and we are price sensitive. And this is exactly what you were mentioning before and they are sometimes waiting from June to July and all this. But to answer your question round about 30% is not on a pass-through in Airlaid and round about 50% in CF, where we have to manage month by month.
Josh Wool: Okay. And then maybe similar question on energy, maybe first the percentage of your cost of sales that is energy. I think years ago it was call it 8% to 10%, but that was before the squeeze in Europe gas prices in 2021. So what is it today? And when do you expect the recent declines in energy to phase into margins, for instance, where you get the full impact in Q3, or will it be Q4?
Thomas Fahnemann: I mean, if you look at Glatfelter as a whole and then want to go into the different segments because you see a big difference, I mean, when we started before the inflation, I mean, you’re absolutely right, you were around about at 8%. We went all the way up to 11% during the height of the inflation as a company. And we are down to 9%. So, we’re in the middle, we are not back on where we were, but more importantly, if you look at CF and we have most of our assets are in Europe where we have much bigger exposure to the higher energy price. I mean we are up right still today in today’s world at 14% to 15% despite the fact that energy prices came down. And we were before historically in the range of 11% to 12% and we are still at 15%. Last year we peaked at around about 17% almost 18%. So, again we are going in the right direction, but we are by far not way back to pre-inflation levels.
