Daniel Harriman: That’s very helpful. Thank you.
Marcus Moeltner: But Dan, on your second question —
De Lyle Bloomquist: Oh, yes. I’m sorry. The second question, I’m sorry. And maybe, Marcus, yes, you’re probably the right person to talk about that.
Marcus Moeltner: Yes, Dan. We would remain focused on addressing our next maturity and take care of the refi next year, as we mentioned, any asset sale would accelerate debt retirement. But aligned with our Investor Day comments, reducing debt further and addressing the maturity is a key priority for the company and management.
Daniel Harriman: Okay, great. Guys, I really appreciate it. Thank you.
Operator: Thank you. [Operator Instructions] Our next question will come from the line of Dmitry Silversteyn with Water Tower Research. Please proceed with your question.
Dmitry Silversteyn: Good morning, gentlemen. Thank you for taking my call. You mentioned in your comments that you’re seeing a little bit of an improvement, I guess, in the raw material pricing situation. Can you talk about what is going on with the raw material pricing, both on the caustic side as well as on the wood side? And how do you see that playing out for the rest of the year, and as we head into 2024?
Marcus Moeltner: Good morning, Dmitry. With respect to the input cost, yes, we are seeing some improvement in terms of the purchase price as we go into Q4. And we expect that, that will continue to see improvement as we go into 2024. Some of the biggest improvements we’re seeing is in caustic, as you noted. We expect relatively significant change in 2024 and a more modest change in the fourth quarter of this year in caustic. But I got to note that at the end of the day, the pricing that we’re going to pay in 2024 is still going to be higher than what we paid back pre-pandemic. So, we’re not back down to what I would say a normal level. But we will see some improvement there. Wood prices, again, it’s going to be the impact on wood prices is generally going down.
And that’s due to, in large part, due to the closures that have been announced and have been affected in the paper pulp industry as well as within our own industry. But to the degree by which will be different in the different regions we operate. So, an example would be because of the Domtar, Espanola closure in Canada, that’s going to have a fairly significant impact on the pricing of wood that we bring into Temiscaming in ’24. And here in the U.S. Southeast, the impact of the IP closure as well as the WestRock closure in Charleston and then the Foley closure should have some impact. And we’re expecting some lower pricing in ’24 as well as a result of that. Got to note, though, again, the same thing with caustic, even though the prices are going down, we expect that at the end of the day, the pricing will still be higher than it was back in 2021, 2022.
And then finally, with respect to Tartas, again, Tartas wood basket there, a little tighter than what we see here in the states. And as a consequence, we do expect that pricing will be relatively flat in ’24 relative to ’23.
Dmitry Silversteyn: Understood, very well. Thank you.
De Lyle Bloomquist: Dmitry, the last item that we’re seeing good green shoots on is ongoing reductions on container rates as they relate to ocean freight, so it’s another item.
Marcus Moeltner: Yes, fairly significant change in logistics cost.
Dmitry Silversteyn: That’s a big, good part because certain logistic pricing for everybody has been a problem over the last couple of years. When you look at the fourth quarter guidance you talked about picking up some business and some market share from the Georgia Pacific closure, the Foley plant, should I infer that these that this additional volume is basically being negotiated right now and that you are in the process of getting your products qualified? My understanding was that was going to take a few weeks to maybe a couple of months to get your products, or anybody’s products qualified for these applications, because cellulose is not necessarily a kind of like plug and play type of a solution. And when you switch suppliers, you need to re-qualify your product. So can you talk about sort of where you are in that process and how much you’re going to realize in terms of incremental business in the fourth quarter versus 2024?
De Lyle Bloomquist: Okay, I guess to start with is that many of the customers and CS market we shared with GP. And as a consequence, we were already qualified. So we don’t have to go through the same hoops, that potential competitors would to get into those customer accounts. So the hurdle was a lot lower for us. And as a consequence, we’ve already booked volume for Q4 as a result of GP’s closure. And as I said earlier, we’re very, very confident that we will achieve at least a $35 million EBITDA gain from the sales mix in ’24 as a result of the market, or the sales mix change in ’24. But we’re already starting to see improvements in our increased volumes of CS sales in Q4 as a result of the closure and as one of the principal drivers of the favorable — expected favorable sales mix change in the next quarter.
Dmitry Silversteyn: Understood. And then final question with regards to pricing and kind of following-up on Dan’s earlier question, you mentioned that that some of the specialty cellulose pricing, you’re able to get higher prices. Is that a function of the market demand improving? Or was that more of a function of the Foley plant closure? And people realizing that the capacity has tightened up?
De Lyle Bloomquist: I’m not quite sure. Can you just restate that question again? Just to make sure I get that.
Dmitry Silversteyn: Sure, so you mentioned in your remarks that you have gotten I think 6% sales or price increase in your specialty cellulosic business. So my question is, did that have to do with improved market fundamentals in terms of the demand side? Or did it have to do more with the closure on the plants and the other CS businesses that where capacity has now tightened up?
De Lyle Bloomquist: Yes, the 6% increase is the change in pricing, I believe, in the current Q3 versus the prior Q3 numbers. So it really doesn’t have to, you’re not really seeing the effect yet of any Foley or increase in Foley business. And I would say that the change in year-to-year is due to the price increases that we effected in August of last year, as well as coming into the new year or coming into 2023 for our CS business, and you’re just seeing that favorable change from prior negotiations.
