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SWM Schweitzer-Mauduit International

Participants
Mark Chekanow Director of IR
Jeff Kramer Chief Executive Officer
Andy Wamse Chief Financial Officer
Steve Chercover D.A. Davidson
Chris McGinnis Sidoti and Company
Call transcript
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Operator

Welcome to SWM's Fourth Quarter and Year End 2019 Earnings Conference Call. Hosting the call today from SWM is Dr. Jeff Kramer, Chief Executive Officer. He is joined by Andrew Wamser, Chief Financial Officer; and Mark Chekanow, Director of Investor Relations.

Today's call is being recorded and will be available for replay later this afternoon. participants floor placed your will the all mode a questions time, presentation. the and be this have in been listen-only following At open for instructions] [Operator

Mr. turn is floor It pleasure you to my over begin. now to Chekanow. Sir, may the

Mark Chekanow

I'm Good joining Relations XXXX for Chekanow, Director to earnings year end discuss our release. Thank at morning. of Thank SWM. you, Mark Cindy. and you us Investor fourth quarter

remind statements. Before conference you on results I'd we Form to that today's from forward-looking Commission like and included a Form number materially by call Annual comments differ are of include suggested on reasons, in XX-Q our detail filings, and these Actual our more for the may Exchange in our results including which Report reports begin, the in Securities XX-K. discussed comments quarterly

measures Reconciliations measures. comparisons stated measures of the Some continuing year release. the non-GAAP this closest of prior are included earnings these during operations. this in to financial and are GAAP operational to period metric the financial appendix and the and are call financial relate to discussed presentation otherwise, measures Unless

www.swmintl.com. This Investor Relations website, on presentation release the the of our and available section earnings are

I'll over Jeff. now to turn the call

Jeff Kramer

the morning, good range Thank you, of reported full and fourth we’ve quarter million. EPS with strong year Yesterday, the In also Free X% February. to Mark, flow and provided $X.XX XXXX adjusted per impacts. guided everyone. the a share currency adjusted up XX% up negative end in cash high we X% earnings full last increasing was year positive you $XXX year with of results short, and if exclude of it was $X.X,

diversified and growth was X%. growing EP second enterprise. and segments more cash our increased organic our transforming achieved AMS Both a SWM and adjusted grew operating EPS demonstrating is Combined, straight of to success profitability. This and it into all year flow profits

earnings business reflects technical Hopefully, saw of to businesses, before shortly, Tekra you converting more from Trient. growth including but the X% our accretion this cover two any acquisition. core our detail earlier in guidance announced will of expected film week of purchase announcement We outlook up recently and pending our our

converting expand a are value-added as these AMS customers solution host our new new set to the add will offer technologies. customers, bolstering significantly to we we of capabilities gaining presence and existing several We to access can excited and film while markets in

For typical of the curbed we the EPS quarter, healthy year-end were Margins from year’s across of though things were sales AMS inventory adjusted business sales customer rebalancing, with disruption growth. some see as quite largely full which expected $X.XX. did our

were a also timing quarterly higher rate. last We year’s by fourth just was rate, tax low which quarter versus issue a impacted

we year in with at and in delivered stability results AMS. our and growth strong continued another Overall, ahead to look targeted forward earnings EP

point, further this developments we on I’d get comment and At the Coronavirus into in before results, briefly like to China.

be are regular are in our during challenging teams to with dedication and times. We operating to the and by impressed continue their region what in resilience contact

been have pleased and end, that unaffected largely our we’ve facilities that people we are operations. report and resumed To to to-date

and remain with monitoring customers. closely in are our We contact situation and people the our close

was growth operating currency. XXXX. sales in of achieved ex to organic growth AMS on year organic with shifting for the X% X% segments. Now X% the This our top

rail which saw windows, paint switchable our to glass in glass excellent from optical from high growth to cars speed privacy for used of applications, continued reinforce glass for also protection aircrafts. are products bulletproof for and to films, Beyond our transportation, variety performance we

in applications we into expect expand in products to fundamental XXXX solid keep The Filtration and growth additional that global support specialty XXXX. momentum to filtration sales the with and increased growth. continued driving projected also investments products for up capacity demands filtration transportation year our demonstrate we to with again continue water to have and made

bandage the that by highlight another XXXX category. in was we performer driven good Lastly, medical finger

solid In both addition on fundamentals, successfully and on innovative the waterproof to tape breathable packing capitalizing we comfortable new overall skin. introduced that is a

quarter adjusted Transportation year-end customer mentioned, fourth as fourth in businesses, did we see in sales Filtration to decrease and quarter Turning some our of resulting X%. a inventories

that year’s comparison. up recall However, in were fourth challenging quarter which sales AMS X%, a fundamental last set up

operating On XX% a were positive in note, segment operating XXXX. saw and profits significant up AMS margin segment adjusted improvement

of as up the fourth following year-on-year well note, In low we cost profits addition were softness. efficiency margins the sales projects, to still XXXX. despite Of resin benefits saw sales, higher a quarter the challenging as and

continue strategic In addition we results, financial strong our key to progress to priorities.

transportation We from customers market in our fast-growing now international have production this new several increased capacity unmatched are multiple our capabilities. offering with service serving global and sites film global lines

continue and to also expand water filtration We capabilities. our capacity

In we filtration in XXXX. a of customers existing our and up this acceleration XXXX, product to began sales re-sales into of ramping water paper expect industry

customer to or improvement growth Those were our XXXX without evident structure in ways continue at we the improve expansion Lastly, look disrupting as to across the executing business. quite always, cost we service. margin in and projects efforts are our

X%, Moving down engineered currency. but to papers, X% ex full were only sales decreased

year reset recouping more contributor. mix cost price from pulp Our significant trend volumes, price lower been has in the XXXX, mix some all while benefit benefits year early were offsetting component our contracts a strong of higher nearly was the

Strong remains to and products strategy our highest industry of offset effective priority an a component focus multi-prong value attrition. on our

well wrapper year, volume, of cigarette papers, as and a non-tobacco As last versus increased while papers total our contracted as planned. binder other LIP products and percentage as

vaping increased moderating. trends seems to due the attrition be to prevalence long-term impact in Industry U.S. versus was that elevated of products, but historical mostly

XXXX. attrition and in While to peaked mid-XXXX believe could generally we moderate predict, difficult in

stable lower headwinds. and we of our were steps offset the for OP key to is we reduce continue third year. profits as takeaway take profits efficiencies, perspective, the costs an that delivered to to From operating Despite second up slightly improve the consecutive strategy sales, industry component

for expansion We until XXXX. while mix the second year, the note begin not as throughout price a us see and did pulp lower challenging in benefited we that trend both standpoint, lower half. pulp seeing margin benefits a did P&L cost From year we did after

year fourth the quarter, had previously mirrored of of commented certain We as earlier sales some the the downs Like and isolated strengths these to that the quarters. AMS, full on some customers and draw were builds fourth their there relative year. changes some were this due planned were some supply U.S. Specifically chains. inventory third likely of cases largely the in unwound in LIP inventory in trends

keep believe going. products with customers work XXXX our category we key we Regarding continue we priorities, our that continue momentum gain and to and share binder to in strategic incremental to wrapper

picked and customers higher look products in rolling quarter fourth up sales forward heat-not-burn the new Our to out we XXXX. volumes in from

some presented products. shows several other are have Working Lastly, begun with at binders we testing prototyped players, products hemp small and coco-based and which and we have test independent with developing for customers several trade filler we products marketing have materials. proprietary from wrappers range unique and cigars. for These to

and demand us new the products in and fibers about achieved enthusiasm we them, a will early these growing have for how excited optimism innovations measured are we stages, While be to the that want customers’ we in about these products. gives we our meet niche talk are

to Andy. I over the call will now turn

Andy Wamser

our I’ll now results. you, review Thank financial Jeff.

$XXX XXXX, or nearly segment currency $XX grew Operating million. For the million. for X% or $XX XX% year full profits increased approximately to million sales AMS the X%, to ex

XXX value driven drove was growth, basis cost growth some sales of reduction expansion resin our of XX%. particularly This lower higher combined profitability. with improved points Organic margin and cost by in to products, initiatives

year not the CAGR expect sales for just of resin though levels. most Those X% through is year, in the Resin over directions stabilized profit have and growth. lower two trended the swung volatility prices much Polypropylene our two our both operating from current at years, metrics seem results we organic both have present, in do X% but near-term. reflect over they growth. past costs context At

quarter, sales fourth X% X% declined to AMS $XXX the growth the year’s quarter. exceptional million, last versus fourth during For

to back As comparison, pared year-end customers challenging this several in addition Jeff inventories. already mentioned,

XX $XX.X improvement. points equated increased by $X.X basis still we margin to of profits However, million which to operating million, about nearly

weak engineered and of reflects price a the margin papers, by includes XXXX packaging decline X% down lower The down X% million, were year and impacted full sales were positive For to Absent and exits impacts, by printing finished volume decrease mostly volume effect. XX% which papers. euro. X% $XXX offset planned a mix sales but currency was

improved margins our structure, XXX costs. slight efficiencies by benefited basis from We shifts cost positive drove operating from Segment which mix price expanded input points the and cost and to to dollars. lower profit in AMS, similar and increase XX.X% a lower

the lower remains benefits While wood for of energy the XXXX. year, during second see cost to pulp we our did the of costs which half flowed higher P&L

in annual operating profit of continue third We EP the highlight million this as deliver for is range. that profit segment, low to we consecutive year $XXX the stability our operating

profits XXXX year. also We million would for up think segment X% hit from the reflect been OP that currency, otherwise is have segment a it worth noting $X

sales provided XX% XX% XXX increased the For and expansion profits mix a nearly over volume costs. impacts. points quarter which basis positive to lower margin $XXX X% favorable from Segment of absent EP, or currency Price mix fourth million X% down XX% offset declined benefit, decline. with

declines wood as seen Going have forward, and a tighter than well the less years, we pulp offsets. would as past on prices volume two on volatility expect we over what price/mix band

business the natural profitability a result our focus we believe as for stability on we’ve positive a the volumes, While the we strategy that and recent is tobacco industry. demonstrated to manage understand profit continue years validates in there in

to fixed volume pare continue We’ve and continue this past remove use we’ll opportunity back XXXX. taken in intend cost as efforts this we’ll lower and the year We actions an some those strategy to and base capacity.

that that million. as year corporate expenses year, versus IT outset as deferred signaled costs XXXX; the $XX during Three million higher to development of strategic increase we for to related the components year. the were; planned Unallocated investments increased of expenses projects well compensation at the the $XX.X some

program evaluating Regarding forward. deferred that currently volatility are comp, going minimize would changes we potential

$XX years. for were a in historical our several unallocated For perspective, million range the low costs

unallocated in were some organizational million This Bottom-line, unallocated past and investments typical comp year. growth, XXXX. several expect our expenses a to expenses, deferred XXXX reflects made Excluding IT $XX this million. costs investments of about inflation, support reduction we increase in we

largely quarter, up just were the unallocated to the reasons costs For discussed.

operating in approximately for also profits ex million, X%. $X been the compensation consolidated about year-over-year Adjusted flat change On were Furthermore, but have of were up OP $XXX billion, the have exclude expense up would up the been or X% X%. million, basis, ex deferred if X%, would currency. a impact non-cash currency year down sales we $X.XX of

was adjusted $X.X was ex growth flat essentially EP OP down the currency. sales For Despite the and quarter. fourth operating were currency quarter, X% million, combined million, X% or down but of ex this $XX.X X% drag, XX% consolidated profit the representing AMS currency growth in to and

year in this periods versus consolidated which was earnings to XXXX. share large several earnings, that Shifting GAAP There the our comparison, full are items detailed skew per were $X.XX two $X.XX release. press between in

For We beginning of than expected deferred of the $X.XX which euro finish adjusted at $X.XX the the and despite weaker our in EPS, high-end we compensation pleased of finished we to that guided $X.XX, unpredictable a high-end of at expenses. range issued in XXXX XXXX. were to range the

Working operational tax raw in slightly to expected. execution was assumed. costs out better had strong material originally than favor of what were the that than rest a positive The were build performance we and rate our related

$X.XX currency increased EPS X%. excluding adjusted of increased on impacts EPS Overall, would X% the have

year was $X.XX, by as were unallocated EPS For from quarterly and down adjusted last tax EP increased and rate higher the growth offset AMS $X.XX expenses. quarter, a profit fourth

Our year up which fourth trued quarter, very to last from rate in low was we full tax range. was X.X% significantly up quarterly adjusted EPS year’s our XX.X%, as

versus This quarter to approximately adjusted XXXX. $X.XX hit increase represented a of EPS the fourth

adjusted adjusted year $X.XX our XX.X%, in slightly by EPS. to tax income a implied rate EPS adjusted excludes Recall and rate XXXX XX.X% finished is EPS and the full XXXX to that representing rate normalized our pretax impacts adjustments EPS. up Our the from associated non-GAAP approximately adjusted at tax impact tax

approximately was XXXX was the $XXX free CapEx $XX slightly year, below up a $XX flow the strong at to million or million, up for guided $XX range. million $X million cash very XX%. million

Some this will into our underspending flow XXXX plans. of CapEx

facility, end at credit debt-to-adjusted From at a X.X times our XXXX. X.X down from net finished leverage of times XXXX perspective for the year terms EBITDA, we

by million debt $XX million investments our undrawn to during year acquisition. future our have $XXX full net including reduced revolver fund credit and pending the We nearly

guidance. XXXX our to now Switching

want the implying adjusted from This base yet not the of expect Tekra We of as clear range include expected $X.XX, does Thus pending the I our be compared EPS is be in of is this related that not range $X.XX to growth up to guidance range business. to to to to it to $X.XX. a only X% accretion equates GAAP to XXXX. and guidance $X.XX Trient acquisition closed.

the in segment profits. in we guidance in Our growth continuation incorporates and stability saw trends profits, of a XXXX EP AMS with

On the expect unallocated approximately would reduction to a million. of $XX expenses several we million dollars

we $XX to project flow that another to CapEx, million be Regarding the range free increase, we expect cash million. despite of $XXX year million and in $XX still exceeding

we on rate our be For average our X% interest expect effective modeling purposes, total to debt. approximately

Additionally, and of that an in XXXX the about we two which we contribute to rate of EPS income, loaded project forecast tax to to million $X JVs again higher adjusted rate be net back-end one XX.X%. points

quarter our fourth highest this and expect point the while pattern. quarters we second with seasonality, first. our third would by is remain quarters This then followed and throughout XXXX Regarding year, the to EPS consistent much our the contains at

the Jeff acquisition. Trient Now and review back to Tekra to

Jeff Kramer

Andy. Thanks,

In for capabilities bring were a to the our to acquisition private to base addition announce of complementary and carve we outs this company technologies equity-owned their Trient are of positive we excited set business earlier SWM. next Tekra XXXX, and a XXXX, and are in and good in performance to pleased outlook week.

We the these a EBITDA approximately sales subject the of of end expect about to closing Combined, transaction of XX%. $XXX two million have price of to adjustments. businesses close quarter million, towards the margins $XXX first annual typical purchase and with

maybe we somewhat would comments responses own do with already Q&A of To what businesses limited disclosed. than thus, other and reiterate the clarifications these certain my and session, preface we have yet not caveat that I

more of short, Tekra can companies we pair offer capabilities, are AMS film These for a In technical and our as which adjacencies Trient and solutions. of our technologies set converting a with suite now expansion well a of compelling capabilities. customers natural broad have comprehensive extrusion

customers increase acquisition expertise addition synergies presence deliver we time, can our wider markets to range In to a to and will of many capabilities, are and our there access the other new our Over we sales end-markets, and believe us together. bringing existing new in actionable give films also of expand substrates.

which net To impacts, increase EPS expense, to purchase, our After the about fund began the expect we revolver incremental in full summarize will would using to representing to add XXXX. forma a our to minor from credit financial X.X interest the we the leverage bring adjusted we only XXXX. be $X.XX times, pro where deal approximately

Normalizing the quarters ownership, $X in well three time we roughly these transaction as expenses over that of sales adds of two in million believe EPS of potential with assumes exceed integration This as like and the for acquisition to annualized $X.XX first items, synergies. growth year. with

with purchase included and be be which associated integration usual whereas our transaction practice, accounting expenses in expenses, cash adjusted our For the will the non-cash our acquisitions EPS, will excluded.

AMS. acquisition cutting slitting, been businesses host of to accompanied they complement Together, and able release capabilities the from and our two understanding this of hopefully sheeting press a that how ranging laminating At have converting point, have you die to packaging. and a clear slides these review bring

significantly short, Also, technical multiple new our in products improve our to diverse new of the and are our Trient customers. handle expertise materials and these Tekra formats various customers substrates and configurations deliver to In across a materials and set segments. films other to broadening ability

printing but set presence largest with for is monitoring focus that digital an glucose a limited currently diversified end-markets. also used business we and a Tekra reach. diagnostics are area with They commercial a where graphics, strip tests on for solid in have product their and to and Their diabetes. play, have also are in respect Trient medical in example

our to strategic From with access across applications cross-sell new end-products. customers key and in perfectly base. aligns performance set high-level product a to where they SWM. value combined a components critical customer offers high and customers is their potential that support perspective, theme principle on to their core deliver are transaction This features This focused that they

team in value are weeks. forward delivering to aligned team expect will and we approach collaborative integrate customers into coming and highly welcoming smoothly the look through members SWM. the new culture aboard Our to our to We well partnerships

So EPS I two XXXX profit positive operating and as business to some growth in just regarding were closing, our of delivered segments X%. key takeaways want overall grew operating results strong fundamentals. reiterate our we

are growth believe record we and We and create AMS EP building in a this stability of mix track for our powerful of profile. growth cash financial flow and balanced high

This us maintain sheet leverage allows strong internal the delever balance cash robust and a enables and generation dividend investments to comfortable as ratios we grow. investors supports to

financial integration our investment most steps recent beyond. strong growth important, continued In well to in the support support. the organic community to continued your synergy exceeded performance appreciate on executed necessary or and years, and interest our taken acquisition, We and commitments have met delivery, plans, and we XXXX

and open concludes remarks line for Cindy, please That questions. the our

Operator

Your first from question Chercover go Steve Please Instructions] [Operator comes Davidson. from ahead sir.

Steve Chercover

Good everyone. Thank Thanks. morning you.

Jeff Kramer

Steve. Hey,

Steve Chercover

Trient first Tekra the is which looks a perspective. financial So, same from question and both strategic the on deal, and

it And is easy footprint? international to it expand the across how current business? is So, how your

Jeff Kramer

good Yes, question, Steven. so,

is businesses. this do to the our of in know, global mostly to be of the North to acquisitions So, about another we able And are benefits we’ve previously, able currently leverage is, something are particularly been presence our focused one that you excited of businesses in to many American example internationalize as those region. the

it’s so, there reason is That that, core a the opportunities upside us. we nice And in the think investing us but be to not will for for well. do as properties,

Steve Chercover

safe, know supply your how impact Coronavirus, your question obligatory that appear on to might the it either it’s chain? or good And end-markets Okay. your but facilities

Jeff Kramer

we so, it monitoring quite been have Yes, closely.

team leadership our now, on what’s direct throughout basis the get and a We the region customers to really speaking very all sense Right ground. up actually to to are plans they’ve happening are a a our and running. of local blessed been on strong really have

We our back quickly not can we the our quickly. holidays. of at time. come there is at New but how There yet Year employees some But full from are well are on getting this meeting orders capacity, we are some limitations Chinese

are Filtration where holding some we may protection business, impact our Surface confidence the business On in some see the for quarter. if the But have or we up. line this demand continues. in we is of high this product weakness and and customer

be have seem little a in but position, it’s on first quarter, the good But daily that for hard ground. bit to to a crystal So the ball. things change we

monitoring daily so, And almost basis. are on it we

Andy Wamser

And maybe just…

Steve Chercover

ahead. Go Sorry.

Andy Wamser

could just maybe sort quarter maybe is, I would have film on the we that, side add potential to is, what have, in first And be the right where it’s any of expectation then strongest made to sales a the second, say would we about of now our would the are that softness balance that will in softness the sort up a of with and our to sales and that But the talking guidance first. line XXXX be third we year. the quarters fourth follow our

Steve Chercover

Got you.

other Okay. because primarily lethal And smokers. then, particularly old men, one is it’s Coronavirus, of they to is observation about that are the

So, still kind perspective? observations that any implications or business, the in you guys from are of

Jeff Kramer

situation through No, knows of we all who I a careful. implications dies was this who the I and think anybody have kind to because of what before, don’t during think and living the I’ve very in epidemic. Asia in lived I this all SARS at lives be

problems. have people other medical cetera don’t any or et to connection more point. like were particular think I anybody the elderly about things who But aware and Coronavirus this Typically, be I’d very flu, tend So, by impacted is cautious it. at of be

speculation point. everything at think is I this

Andy Wamser

very EP if add centric. our the you recall financially, us one for And what think would just is, reminder if about impacts and U.S. to business, you European is I is, say then

two the - had are of fairly and limited the contributed just net we the million China back-end into So, in guidance $X year. that our JVs sales which of was about those income

Steve Chercover

Got you.

purchase AMS words, kind of away? is the Okay. associated Or to will go Switching other with and GAAP gears or going of when a converge? the operating earnings in wee bit. establishment diminish When accounting expenses

Andy Wamser

we I Well, acquisitions, this to think see kind as do we’ll more have we as continue convergence. we continuing M&A, to – we are this expect, make as continue of to

think people basis, on on a people I some at So, GAAP a look at some look non-GAAP.

we We can are with through the in when then we bridge it, follow-up for are adjusted then it. the numbers. when of close to and EPS we numbers we focused everyone just more finalize terms we the But Trient, for on where today walk can on Tekra you

Steve Chercover

Okay. Last I promise. question

Jeff Kramer

problem. No

Steve Chercover

the best not my still capital be you to should when to of So repurchase a of the the saying your top allocation I want your good have intrinsic you have your am $XX value. capital of think a authorization. a to But toolbox it hierarchy. stock in at it’s the don’t knowledge, and looks send with I guys at great. and surplus And tool signal have stock about you view deal And

like yield when the about? it a or do talking debt, the I and dividend dislocated can is gets think your eliminate as you same Board is recently, But something that reconsider was stock it the guys you

Andy Wamser

somewhat Well, say has we over surprised the where of prices share a let are this. terms me past. that the perspectives performed give you in I on couple would

Jeff Kramer

Actually not, somewhat

Andy Wamser

surprised, no share of couple how has it price news. on Yes, in in the certainly terms performed really past months the

the past or on made closing As on for the Jeff targets synergy consistently guidance in has met said whether couple exceeded for we’ve remarks, years. promises his we’ve or of

focused I synergies very – were deliver to related think, making those we on we the Conwed. XXXX, sure

And this some those you you – saw year. saw of that

they kind That frankly got and deal. think of we have – transactions next and we being size. range great a did as always do did right of to as look and to what found, So, a think the that, the XXXX, Board, said, deal. and Tekra for we’ve as say, we we a Trient, earned a earn number we management we team, have and at I to And we

We the think at healthy X.X – end in will balance as about I be is on position. debt deal basis. close, X.X we think, this sheet this the times a sorry, year on And net times we a

allocation always a we take our deal I capital do, like fresh closes, process. look think So, at after we’ll this

will I you still M&A say out, it’s continue that fair pointed to our primary focus. as be to think

additional But on as investments share the and part business into repurchase also of that.

take think everything. to a look So, we’ll it’s I say fresh fair at

Steve Chercover

All right. Thanks, Thanks, Andy. Jeff.

Andy Wamser

Sure.

Operator

Your question McGinnis Sidoti Chris from from next comes Company. and

Chris McGinnis

for morning. Thanks questions. taking Good my

Jeff Kramer

Sure, Chris.

Andy Wamser

Hey, Chris.

Chris McGinnis

starting on weaker QX was start you want know, the strong. just – you year I to I maybe to about last QX, Hi. the very rebalancing, you just inventory Are are just talk starting see, the quarter? up But in trends least maybe in to at in QX. normalization bit maybe know the that for QX, the I a in trends little segments pick were

Jeff Kramer

Yes.

Just want rebalancing I question, on it’s nothing inventory this so just to extraordinary. emphasize,

nothing ordinary. of the it’s So out

If key supply materials, our with the customers, that and you our a chain. think approach the supplier think you the it usually business we of about around about people approach involves can actions it’s to our as strategic also and but do value-added types it

you so global supply And chain our talk advantage about us hear has. competitive the

So, customers we supply with manage to work chains to closely cetera. our very et be enable jointly to able us

the that fourth or it So, goes goes that the one way something it in sometimes quarter other. just is

But our happens is for a the of in just and that just AMS both it’s actually creation think some We’ve I seen value us. it and something markets. it side EP competitive advantage the

Chris McGinnis

for Thanks color. Okay. that

Andy Wamser

to of maybe of a basis, years sort about expect this ex on we and would say, going look X% is kind forward. side on - from been that continue that Chris, more to I if has the would add sales just one thing performance two an And you that at business currency

business same see the was. don’t ever health of is as it - any we So the the

Chris McGinnis

now just an And is on color. Can sales synergy any the that is for one Thanks is there this obviously overlap – just about, Understood. was potential talk or the customer Okay. opportunity? there any you acquisition week. that

Jeff Kramer

Yes.

investment it this excited of our are meets acquisition, because about We actually really multiple criteria.

as of there new the so that’s one of customers and something there and a always number look discussed the are we calls, optionality I So of in bring. for. that’s overlaps we are customer also large kind think we that But

automotive, brings sandbox. always like is several we end-markets really really that great like is to participate in our And but for so, of many those us. complementary to the in, It always we skills are technologies, looking medical, to of in are something it our graphics, key which it a complement areas those overlaps add

overlaps, a to number these companies of So, strategic on the joining us. about two are we of excited

Chris McGinnis

and know And just sheet just where strong would it’s M&A. talk about even the deal but, your think appetite for Great. more once the – yet, just, it it closed – obviously, you is I closed, not post how is if hopefully, And closes? balance

Jeff Kramer

Sure. I Yes, question. no, your get

So, I think we’ve strategic are illustrates types well-valued the continue to example emphasize acquisition. we continued it’s and Trient another disciplined acquisitions of in acquisition we of brings. Tekra think optionalities emphasize after. fits a the we how very the Hopefully, go to and it We

throughout that those it been one community that, to we We trying of focused to believe continue paid at of emphasize look we’ve you investment types the will for complement organic are our intent. don't call, acquisitions an growth. extraordinary heard we price the we things and to that our strategic is on But as again,

we in demonstrate hard will we the are able the we say so, we’ve to going properties organic deliver believe at to run. looking only it. And be been show when we we working that are And help to that going that to be boost long growth,

Andy Wamser

times getting maybe terms me, I for up context for additional forma at just as with X.X can’t myself help And net pro at be credit we leverage into sometimes times. go and this facility, theoretically deal, but X.X our we could leverage to of Jeff will the numbers, we smiles the

this to do close but to of it have did this continue We’d year to capacity the balance we frankly, go are and we in said, saying holiday, being that we we X. not X.X reduce are sheet. times, We expect can like up delever an acquisition going will to in to terms That X.

And to our balance tick I still so, this it’s and we’d think balanced expect sheet flexibility. if down allows leverage

Chris McGinnis

two on half one, Is lower pulp benefit like quick in prices in just it then the still first you questions, And Okay. sounds EP. that correct?

Jeff Kramer

Yes.

for in adjusters have So this year. the into if you last did prices, we benefit from year, effect recall, some of of but price that half we second do pulp the go

still it be are another So, stable sort year tailwind. we in to business as to looking is three that the the we But we're would expect for of and going EP effective, this years, fourth it’s moderate performed stability. of a thinking last of

Chris McGinnis

Great. XXXX. just obviously that million year three that that about that quickly down average? unallocated, $XX more maybe that you you referenced talked towards on And Is then, the coming in lastly, on

Andy Wamser

about, past million, million within of $XX an the so, in XXXX, IT support kind significant we gone low if systems through historically, No, upgrading if of $XX – we look over We’ve back $XX go of lot back you particularly a ERP was we’ve years million, mentioning were of to growth what I our have you XXXX, couple to our gone that made initiatives. investments a lot implementation range.

you million $XX So, of strategic the of we’ve with on, unallocated projects other and where that some some would down investments what I from worked ended – the be mentioned the we million about IT factor when year. several and would be what are we the

Chris McGinnis

and in Thanks the very much good luck QX. for color

Jeff Kramer

Great. Thanks.

Operator

turn questions I like go to back the ahead. to Dr. now further would no are Jeff conference this Please There time. Kramer. at

Jeff Kramer

Cindy. that. appreciate thank you, Yes, Well, I thank you, Cindy.

in comfortable story continue to I in to continues just So, what our I evolve. team again delivering to we’ve close SWM the said. executive we be think, –

think think us with gives our journey. our And Tekra Trient flexibility, of I is growth performance a acquisition positive. I the continue and additional

with Thank you. and talk I forward will to positive look support quarter results. another your in again we more So, continued hopefully

Operator

and this for today's Thank gentlemen, call. concludes Ladies participating. you conference

You may disconnect. now