Mike Roxland: Tim and Mark, congrats on a very good quarter. Last quarter, you mentioned you had an internal algorithm you used to figure out how and where to take downtime. And then one of the items that you — as part of the algorithm is natural gas. So with the domestic natural gas down as much as it has been with the decline in OCC? How have you shifted your downtime plans, if at all? And just trying to get a sense of whether you’ve been able to more efficiently take down time and whether that was a benefit in the quarter as well.
Mark Sutton: It’s a great question, Mike. We shifted it to the algorithm for marginal cost. And so that’s one of the important one, also logistics and transportation costs which haven’t relaxed as quickly is an important one and then, of course, fiber, wood fiber costs as well as OCC. And I would say, yes, you saw more of our production shift to the lower-cost energy mills but not in a material way. We ran everything. We didn’t make any dramatic shifts but you can see the efficiency and cost reduction showed up in our numbers. Because, again, as I said, at certain sweet spots in an integrated mill where you’re making at full capacity, 80% of your energy at less than full capacity you can make almost all of your energy and you’re not subject to the open market for purchase electricity or gas virtually at all. So that might even trump a lower gas price. When you have a mix of integrated mills and recycled mills like we do.
Mike Roxland: Got it. And then just quickly on China. With the country easing its strict Zero-COVID policies, can you give us a sense of what you’re seeing from a demand perspective in GCF? And I know it’s early stage and I know that you’re also contending with Chinese New Year, so you may not have your line of sight. But any early read on how demand may or may not be impacted from the elimination of those policies?
Tim Nicholls: Yes. I think it’s probably a bit too early, although we agree that there is an opportunity past Chinese New Year, China reopens, we see that as a positive.
Operator: Then next, we go to RBC Capital Markets in the line of Matthew McKellar.
Matthew McKellar: First, I just wanted to ask around the sale of your stake in Ilim. Are you able to talk about the time line to close that transaction. It sounds based on your guidance that you’re looking for it to close this year. But — is there any additional color on that? And also any thoughts on key hurdles to clear in terms of receiving regulatory approval.
Tim Nicholls: I mean I don’t want to speculate such a fluid environment but I think we look to closing sometime this year at the regulatory approval process, will take what it takes. So as we know more, we’ll report it.
Matthew McKellar: Okay. And then just in Industrial Packaging with linerboard medium prices, we see benchmark prices coming down. Can you just remind us to what degree your typical kind of contract pricing lag on realization would be versus those benchmark prices?
Tim Nicholls: Yes. It usually runs a couple of quarters. It’s all over the map. But when you look at it in total, on average, usually see it coming through over a 2-quarter period.
Operator: The next, we go to Cleve Rueckert of UBS.
Cleveland Rueckert: Just a couple of follow-ups for me. I guess, firstly, Tim, in your prepared remarks, you had a comment about taking out high marginal costs. And obviously, you’ve been pretty dynamic about that over the last couple of quarters. I’m just wondering if there’s an opportunity for some more permanent restructuring in the containerboard system, if that’s something you’re considering or sort of remains dynamic right now?
Mark Sutton: If you mean — this is Mark. Thanks for the question. If you mean permanent, like adjustments of capacity, we don’t see that on the horizon. Given the types of products we make, the different grades, cost structure of our mills. We’re quite capable of running at 105% of nameplate rating and 85% of nameplate rating. And we do believe long term, fiber-based packaging market is growing. So structural cost reduction, where we can now say it’s worth making a capital investment to take out this permanently, this marginal cost that ends up only coming out when we are taking economic downtime. Yes, there’s opportunities for that. But there’s no consideration right now or any major adjustment in our asset base because it’s very competitive; it makes the products we need.
And I think we’ve got to figure out also industry in general and I think in particular what’s the new normal in supply chain because location of facility near — converting or near market matters a lot more now than it used to. So we’ve had a lot to figure out on that but lots of cost reduction opportunities through modest capital investment would be our focus on taking it out for good.
Cleveland Rueckert: Yes, that makes a lot of sense. And I was just wondering if there is any — if you’ve made any discoveries through the process of being more dynamic over the last couple of quarters but it sounds like that’s a work in progress. Maybe just 2 more quick ones. You’ve laid out full year guidance. I’m just wondering if there’s any economic downtime built into the plan that you’ve laid out or if it’s mostly maintenance in Q1?
