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Good day and welcome to the Venator Third Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.
I would now like to turn the conference over to Kate Robertson, Investor Relations. Please go ahead.
Thank you Betsy, and good morning everyone. I’m Kate Robertson, Investor Relations for Venator Materials. Welcome to Venator’s third quarter 2022 earnings call. Joining us on the call today are Simon Turner, President and CEO; and Kurt Ogden, Executive Vice President and CFO.
This morning, we released our earnings for the third quarter 2022 via press release and posted the release and accompanying slides to our website at venatorcorp.com. During this call, we may make statements about our projections, our expectations for the future. All such statements are forward-looking and while they reflect our current expectation, they involve risks and uncertainties and are not guarantees of future performance.
You should review our Annual Reports on Form 20-F for the year ended December 31, 2021, [Indiscernible] on Form 6-K and our other filings with the SEC for more information regarding the factors that could cause actual results to differ materially from these projections or expectations. We do not plan on publicly updating or revising any forward-looking statements during the quarter.
We will also refer to non-GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted net income, free cash flow, and net debt. You can find reconciliations to the most directly comparable GAAP financial measures in our earnings release, which has been posted to our website at www.venatorcorp.com.
I would now like to turn the call over to Simon.
Thank you Kate and welcome everyone to our third quarter 2022 earnings call. Beginning on Slide 3, macroeconomic uncertainty increased throughout the third quarter, and we experienced a meaningful reduction in demand for our TiO2 products sold in Europe and APAC.
Energy market prices reached record highs and other costs inflation continued to increase. Total company adjusted EBITDA in the third quarter was a negative $8 million compared to $61 million in the second quarter and $48 million in the prior year period.
Turning to slide 4 on our Titanium Dioxide segment. Adjusted EBITDA for our TiO2 segment was negative $5 million in the third quarter 2022 compared to $49 million in the second quarter and $54 million in the prior year period. The third quarter started with weak demand in APAC, followed by softening demand in Europe.
The decline in demand accelerated throughout the quarter, and we exited the quarter with weak demand in both regions. Demand declined across most end markets, principally as a result of low consumer confidence and China's zero COVID policy.
In contrast, our North American sales volumes remained healthy throughout the quarter. In local currency, average TiO2 selling in prices increased 1% sequentially, and 19% compared to the prior year period. We continue to hold monthly pricing reviews with our customers as part of our customer tailored approach. We have seen a decline in Chinese TiO2 exports globally throughout the third quarter, and exports to Europe are at the lowest level seen for many years.
Throughout the third quarter energy continue to be volatile and market rates reach record highs. Compared to the second quarter, the high energy costs coupled with significantly lower volumes drove a negative EBITDA result for our German TiO2 facilities.
In the near term, visibility into product demand remains limited. By region, we see APAC as the weakest market, with Europe next and North America the strongest. Despite healthy North American demand throughout the third quarter, we have seen signs of softening in the fourth quarter. Based on our current order book and the demand environment, we expect TiO2 fourth quarter sales volumes to be lower than the third quarter by up to 20% compared to the third quarter.
In the fourth quarter, more than 50% of our energy usage is under fixed contracts, with the remainder subject to market rates. In response to the meaningful decline in demand, we implemented a range of strong mitigation actions. During the fourth quarter, we have further moderated certain manufacturing facilities, including temporarily stopping production at our Uerdingen and Duisburg Germany manufacturing facilities.
In Germany, we are utilizing government furlough schemes to help mitigate the impact of the unabsorbed fixed costs. Looking ahead to 2023, we expect to see demand starting to recover during the first quarter and progressing in the second quarter. We also expect to see some relief on the cost of raw materials and energy costs lower due to government released schemes from the European countries in which we operate. Once the government energy release schemes are enacted, we expect the benefit to provide significant offset to the roll off of our 2022 Energy hedges.
I would like to provide a status update on our Scarlino TiO2 facility in Italy. As a reminder, our Scarlino facility generates gypsum as a by-product of the manufacturing process, which has been landfill on sites and also transported for use in the reclamation of an EMI former quarry owned and operated by third parties.
During the second quarter, we suspended two thirds of the production from this site to preserve our remaining available landfill capacity by combining the remaining capacity at the Monte [ph] only reclamation project currently approved on site landfill capacity, and capacity are yet to be approved third party commercial landfill, we believe we have capacity for gypsum storage into the second quarter of 2023 at the current one-stream operating rates.
As a result of a low demand environment, we may further reduce production of our Scarlino facility. During this time, we continue our efforts to work with Italian government authorities for the authorization of continued gypsum disposal. We remain hopeful that authorizations will be granted. Otherwise, we may be compelled to close the site entirely. We continue to explore all options to avoid that outcome.
Turning to slide 5 in our Performance Additive Segments. Our Performance Additive Segment delivered $9 million of adjusted EBITDA in the third quarter of 2022 compared with $19 million in the prior quarter, and $5 million in the prior year period. The segment has performed well under challenging conditions. Sales volumes decreased 6% sequentially and 8% compared to the prior year period, primarily due to low construction demand within our color pigments business. We have seen similar regional demand trends in Performance Additives as with TiO2, however, the business has been more resilient to the macro environment.
Energy and raw material cost inflation continued to be a headwind during the third quarter, and were partially offset by higher average selling price of 3% in local currency sequentially. Notwithstanding a healthy demand environment for our Performance Additives products, we expect a significant decline in sales volumes as we have temporarily suspended production at our Duisburg Germany TiO2 and functional additives facility in response to lower TiO2 demand and high energy cost. We continue our monthly pricing reviews with customers to mitigate the on-going impact of energy and raw material cost inflation.
This morning, we announced that we have signed a definitive agreement to divest the iron oxide business from within Color Pigments to Cathay Industries for an enterprise value of $140 million. We believe that Cathay will be an excellent long-term strategic owner of the business going forward. The transaction is expected to close by the end of the first quarter in 2023.
The iron oxide business represents the majority of the color pigments business. We will continue to own and operate the Ultramarine Blue and dries elements of the business. In the near term, this transaction will bolster our liquidity and allow us to focus on our strategic prospects.
Turning to slide 6, we are implementing cost austerity measures across our business in response to the challenging business environment. By the end of 2024, we expect actions to be in place to deliver the full cost reduction program benefits to deliver 50 million EBITDA compared to 2022. These actions which permanently reduced costs include reduction of SG&A headcount and discretionary spend, lower manufacturing fixed costs and manufacturing improvement. We expect cash cost to deliver the program of approximately $13 million spread over the next couple of years.
I will now pass the call over to Kurt to discuss our adjusted EBITDA averages.
Thanks, Simon. Let's go ahead and turn to slide number 7. Our total adjusted EBITDA decreased by $69 million compared to the prior quarter. The decrease was due to a meaningful decline in sales volumes, primarily from within our TiO2 segment. We also saw higher energy and raw material costs which were partially offset by lower manufacturing fixed costs. Price mix was a benefit of $1 million as we continue monthly price discussions with our customers.
Compared to the prior year, our total adjusted EBITDA decreased by $56 million. We successfully offset higher cost of goods sold that resulted primarily from higher energy costs with higher selling prices. However, the impact from the combination of lower sales volumes was overwhelming.
Turning to slide 8 and our cash flow considerations, liquidity at the end of the third quarter totaled $278 million. This consisted of $45 million in cash, and $233 million available under our ABL facility. We are aggressively taking actions to preserve cash and bolster our liquidity. Throughout the quarter, we opportunistically took advantage of the strong U.S. dollar and through multiple transactions monetized and re-entered into new cross currency swaps. This resulted in a $16 million cash benefit in the quarter and a $24 million benefit year-to-date. We reduced our expected 2022 capital expenditures by $20 million to $70 million, which primarily represents maintenance, spend. We have intensified efforts to manage our working capital. In response to weaker demand, we have moderated certain manufacturing facilities which should lead to lower finished goods inventory levels in the fourth quarter. We have also reviewed TiO2 feedstock shipments with our suppliers and aligned remaining 2022 shipments to our expected production levels.
Importantly, we expect working capital to be a source of liquidity in the fourth quarter as we reduced our inventory levels. During October, we completed a $51 million dollar sale leaseback transaction of our iron oxide color pigments facility in Los Angeles, California, and collected cash for approximately $42 million in net proceeds after $9 million of withholding for taxes and expenses. In addition, earlier today, we entered into a definitive agreement to sell our iron oxide business from within our color pigments business to Cathay Industries for an enterprise value of $140 million. In addition to these transactions, we continue to look for other ways to unlock value from within our business.
I will turn the time back over to Simon
Thanks Kurt. Business conditions were challenging throughout the third quarter due to weak TiO2 demand in Europe and APAC. And visibility into near term product demand is low. Based on our current order book, demand weakness continued into the fourth quarter in Europe and APAC. And we have started to see some softening in North America. We expect sales volumes in the fourth quarter to be lower than the third quarter, which will result in lower fourth quarter EBITDA.
Additionally, energy continues to be volatile in Europe. Given the uncertainty ahead, we are focusing our actions on those within our control and we have implemented a comprehensive range of actions to manage those areas. Firstly, we moderated certain manufacturing facilities and reduced orders for raw materials to control inventory levels. We have reduced costs at our manufacturing facilities where possible, and we are utilizing government furlough schemes to reduce unabsorbed fixed costs.
We have implemented a robust global cost reduction program which will deliver $50 million of annualized savings by the end of 2024. These savings will result from lower SG&A costs, lower manufacturing fixed costs, and improvements from a range of actions at our manufacturing facilities. While we expect energy volatility to continue, we operate in countries which have announced government energy relief schemes. In 2023, we expect these schemes to provide a significant offset to the expiration of our 2022 energy hedges.
In order to bolster liquidity, we monetize the profit approximately $24 million through multiple cross currency swap transactions. And we recently completed a sale leaseback transaction for $51 million, and we signed an agreement to sell our iron oxide business to Cathay for $140 million of enterprise value.
As Kurt mentioned, we continue to look for other opportunities to unlock value from within our business. Although we expect lower EBITDA in the fourth quarter as a result of the meeting actions, we expect cash flow to be positive as a result of working capital receipts release and proceeds received from the sale leaseback transaction.
Additionally, we have engaged Alvarez & Marsal to advise us on a range of operational and financial actions and objectives to reduce costs, improve liquidity and to optimize our operational footprint. We believe engaging these advisors will enable Venator to deliver the optimal results under these challenging operating conditions.
And with that, I would like to open the call for questions.
[Operator Instructions] The first question today comes from David Begleiter with Deutsche Bank. Please go ahead.
Thank you, good morning. Simon and Kurt just on the college program, can you provide a little more details on the SG&A savings as it is a big bucket of the $50 million in savings.
Yes, I mean, I think that, that's that, as you rightly pointed out, David is the majority of the $50 million it’s over half of the savings in fixed costs in nature, SG&I and central indirect. Obviously that comprised of a number of areas. One of the areas clearly is, a look across the entire business, what we need as a company to navigate through this very challenging period. And also it does contemplate some actions taken as a result of the sale we announced today of the iron oxide businesses and some of those numbers are baked into the savings. The actual headcount and savings reduction, which predominantly headcount come from the full range of functions, and departments across the Venator Enterprise.
Very good. And Kurt just a couple of cash flow questions. How much working capital release, do you expect in Q4? And what's the expected net cash proceeds from the iron oxide sale?
Good questions, Dave. First of all, the amount of working capital release in the fourth quarter is largely going to be contingent on what happens with our sales volumes, right. And so we think that it will be 10s of millions of dollars. And as we've indicated, we think that will help us in connect -- in combination with the sale leaseback proceeds to be cash positive in the fourth quarter. But I think about working capital release and the 10s of millions of dollars for the fourth quarter.
For the cash proceeds on the disposition of the iron oxide business, there are a number of cash adjustments that will need to take place at closing. But you got to think about the cash benefit as pretty close to that, to that enterprise value.
Thank you very much.
The next question comes from Josh Spector with UBS. Please go ahead.
Yes. Hi, thanks for taking my question. Just on the $25 million COGS increase sequentially, should we think about that as mostly energy? And kind of just wondering if we saw 3Q have gas prices in Europe or energy prices similar today? What would the results have been in that environment versus what you actually saw?
Yes, so the $25 million costs. You're talking about a quarter-on-quarter there? Yes, we picked up. Yes, so that that's right. That is primarily energy costs that we were picking up in third quarter compared to the second quarter. And as we indicated, we have been encouraged by the government support schemes, particularly in Europe that have been announced to help mitigate energy costs, particularly in 2023 looking forward into the next year.
Okay, thanks. And just on the liquidity side, with the revolver capacity you have. I mean, if you have two quarters of negative EBITDA this quarter, next quarter, is that going to impact any your access to that liquidity?
So let's be clear. We said we would be cash positive in the fourth quarter, primarily on the back of a working capital release, as well as having received the proceeds from the sale leaseback transaction in October, which was subsequent to the third quarter close, right. So we expect to be cash positive in the fourth quarter.
Yes, sorry, I meant EBITDA, negative. So would you have any issue with trailing leverage or some springing covenant if the trailing leverage starts to get too high?
No, no, no concern in the fourth quarter.
Okay, thank you.
The next question comes from Vincent Andrew with Morgan Stanley. Please go ahead.
Hi, guys, this is Will Tang on for Vincent. Thanks for taking my question. Can you talk can you -- how you've seen the order books kind of progressed maybe since September on a month-to-month basis? And then what kind of sequential buying trends are you factoring in that 20% kind of lower sequential volume in the fourth quarter?
Yes, look, I guess we're not going to sort of break it out by month but clearly we saw this trend originate in Asia but spreading into Europe and falling through the third quarter. As we look into our -- into our fourth quarter I think the following comments probably apply. In the fourth quarter, we typically would expect a seasonal step down in sales volumes from the third quarter, that would be a double digit percentage in most years.
I think that so, the way to think about it is the balance probably is continued destocking within the fourth quarter, which we think sort of ends at the end of the fourth quarter. And there is some sort of feedback from customers, to that end, around the fourth quarter. And that probably should help you get a sort of profiled feel for how we see it progressing from the third quarter into the fourth quarter. And I think we said here as high as 20%. And frankly, not that much difference across the applications groups. I think, I think there is some evidence that in the third quarter, we did see some of the sales last magnify by positioning in a packaging, plastics and elsewhere, where we considered probably overweight within the industry.
Got it. Thank you. And then, and then looking at long term, I guess what kind of needs to happen from maybe a cost or demand standpoint for you to consider bringing your capacity back on line. And then, I guess, kind of where the cost considerations for you when you bring that facility back on as well.
Yes, I mean, look, it's, I want to emphasize very clearly that what we see today is not much. I mean, visibility is severely constrained and limited for us. Clearly, with this reduction in demand being coming up so quickly, in this severe level, we've had to really make sure that we manage our working capital inventories, both on the final products and raw materials, which I think we've remarked upon. We had a pre-existing constraint in Scarlino, Italy as you're well aware we've talked about it a number of times now, that's running at one stream, we had to factor that in. And in Germany, which was sort of one of the worst affected area, we've taken the decision to moderate.
So there's a fair slew of capacity moderated in a short period of time to get us to stay in control and proactive on our inventory. So that's an important point. As we look forward into next year, of course, generically, what we need is demand recovery. We do expect demand recovery to start in the first quarter. If destocking has ended, we get the typical step up for Q2, 1Q we'd expect to see the stock demand recovery. But beyond that, the profile of demand recovery is very tough to call. I don't think we're in a position to be able to call that.
But clearly, as we work through the issues in Scarlino, that's going to inform, the situation around what, what runs from our capacity standpoint. And I think as we remarked upon in the call, we have we have contracts contracted with Alvarez & Marcel to come in and help us look at all cost cash and asset optimization possibilities we might have. And we are still digging into that and contemplating that, and it's probably too early to sort of apply on that. But we’ll fundamentally will come back to the profile of demand recovery that we see, predominantly in Europe, but also elsewhere.
Got it. Thank you.
The next question comes from Arun Viswanathan with RBC Capital Markets. Please go ahead.
Thanks for taking my question. I just wanted to delve in a little bit more to the volume decline, you discussed sequentially. So I think you noted that your customers are indicating that the stocking will be done in a winding down in Q4. Could you just elaborate on that? What are you hearing specifically? And I guess, are there any differences by region? You noted that APAC is the weakest? Sorry, inventories, I guess most bloated there, and maybe we can start there? Thanks.
Yes, the plan is different by region. I think that there's no doubt about it. I mean it one has to recognize in TiO2 that the majority of our sales are in Europe. And, and our plants as well, of course. So the feedback we've had from a whole range of European customers suggest that destocking would be done by year-end. And I think as I said that that comes across, each of the each of the major applications group. I think we sort of heard felt it quite hard in 3Q for the reason that we are large in Europe as a region and we overweight and plastics and inks. And of course we took swift action on production to try and manage inventories as well. But I think Europe, that's pretty clear to us, the feedback.
I think the picture elsewhere is a bit mixed. We don't have the biggest window in to China. We said that a number of times, we’re quite small there. And we'd like to think the demand picks up particular as we encounter Chinese New Year next year. And we, we get through some of these COVID restrictions and like, hard to tell in Asia. But what we can tell you is that we had seen a pretty solid sort of demand profile in North America in the third quarter, and we have seen some evidence of softening in the fourth. And there's a number of customers, they're delaying and pushing off orders. Again, no fixed pattern to it by segment, but that's a different sort of dynamic to the one we'd already seen in Europe.
And then just as a follow up on to, could you discuss your pricing outlook? I know, Roz [ph] has maybe started to moderate a little bit. And the industry trade rags are discussing potentially lower pricing as we go into 2023. What are you guys seeing from a pricing perspective? How should we think about that? Thanks.
Yes, I mean, look, I think there's no doubt that in the fourth quarter, there will be some energy and raw material moderation initially. We're halfway through. I mean, we should remind ourselves it’s pretty volatile. So, I think everything I would caveat with the fact that, volatility is there, even in the near term. But assuming there is some relief there in the fourth quarter. I think there's no doubt about it, there have been some selected price adjustments in the different regions, particularly in Asia and in Europe. But I'm hopeful that we can still target to hold on to our contribution margins as best we can, as we as we go through to the fourth. And I think that's underscored by the fact that the industry has, we have very high cost structures. We know others have high cost structures because of raw material energy inflation, which has been a pattern for us over the last three to four years. And but very bad, of course, in the last six, six to 12 months. So I think that takes you to a point where for us, unit pricing remains elevated. But I'm not saying there won't be some gifts here, as we see some relief in energy.
Thanks.
The next question comes from John McNulty with BMO Capital Markets. Please go ahead.
Yes, thanks for taking my question. So I guess the first one would just be on the German plants. Can you help us to understand what the cost is going to be on those plants in terms of just kind of the I don't know, I guess I call it stranded costs with them still in the portfolio, but, but ramped down just so we can kind of think about how that impacts 4Q and how it might disappear when things are better next year?
Yes, why don't I go ahead and take that? I mean, I think that look, as we think about the moderation of the German facilities, keep in mind and Simon addressed this in his prepared remarks. We have been accessing government furlough schemes in order to offset what I believe you're calling stranded costs. I -- we think about those as unabsorbed fixed costs at manufacturing facilities, but for the most part, the government relief schemes can offset up to 70% of the costs. The company will contribute a certain amount and then while the employee sits at home, they also contribute or forego a portion of their, of their salary.
So as it relates to the German facilities, I mean, because of because those furlough schemes are available. It is more conducive to moderate those facilities. And also, those are, that's the epicenter of where we're really feeling high energy costs as well. So hopefully, that's helped.
Yes, no, that that's definitely helpful. And then as far as running Scarlino now where it sounds like it's down like two thirds or so, from kind of normal hops. I guess why isn't that one, at least temporarily, kind of put on the side or mothballed or whatever, is it just the, the, there's some specialty products that you're making there that need to you still need to kind of meet the customer demand or I guess why wouldn't now be a good time to take that one down at least temporarily
Yes, I mean, look, there's a couple of issues there. And clearly there are products made on that site that are very valued in this industry. And some of these products, for instance, come out of that state. So I think that's an important factor. We -- these plants always better when, they have some element of them running. I mean, mothballing is something that while we've done in the past, in total terms, we don't really like doing it, we have done it, but we don't really like doing it. And we're locked in the negotiations there with, with our, with our local authorities. But, I think that the other thing we should tell you is that while we, has been on one stream for a while, we will actually take down that plant, maybe for some period during this fourth quarter as well to manage our manage our total working capital needs.
So, I wouldn't call it mothballed. We don't have access to quite the same legislative, systemic industry help in Italy that we do in Germany, although there is a sort of variant of that scheme that we are closely examining. And I think, that's probably, the puts and takes of that situation.
Got it. And then maybe just one last question. So I know you have energy hedges in place through the end of the year, I believe you still do? Is there anything you can do to monetize those at this point, like where, if you do run an asset down, and you don't necessarily need the energy you thought you needed? Is there a way to essentially sell or unwind those hedges and create some value that way?
Yes, there is an opportunity to do that. And we have done that already.
Got it. Okay, thanks very much for the color.
The next question comes from Matthew DeYoe with Bank of America. Please go ahead.
Morning, everyone. So we're going to do -- idled right now? Correct me if I'm wrong, I just said, but how much does it cost to restart those facilities next year? And how does that kind of flow through from reporting basis?
When you say start, if you mean sort of onetime special startup costs, is that is that what you mean?
Yes, just as you if you return as operations from idle to producing again, what does that look like from a cost perspective?
Yes, I mean, look, there would be some sort of inefficiencies as you ramp up. But by and large, we don't think of that as a large cost item, the sort of restarting, of the plants. And as demand returns, of course, we'd be looking, we'd be looking to do that.
I think perhaps another way to think about that is, it can take a week or so to bring those facilities back up, and get them ramped up one to two weeks to get those ramped up to full production levels. So maybe that's a way to think about kind of cost, weight in terms of the timeframe.
Yes, it's very helpful context. I heard, I guess, if you had to close Scarlino. I know you kind of mentioned something that you don't want to do. But if there is no solution on the gypsum, what would the closing and remediation costs and all that end up looking like for Venator?
Well, look, we sadly have closed a number of plants over the many years. I've certainly been in this business, what I can tell you about the Scarlino situation. And we're not there yet. We don't want to get there. We're going to fight very hard not to get there. But should we eventually get there, then, the all other closure costs would be at the low end, I think we said of our past experience of closing these types of sites and the types of standard items would be very similar to previous times. And I would urge you not to think of this in the same sort of order of magnitude for instances as the party situation which was a very unique, specific set of circumstances.
Understood, thank you.
The next question comes from Roger Smith with Bank of America. Please go ahead.
Thanks very much. On iron oxide, would you be possible to provide us the LTM Q3 2022 sales and pro forma EBITDA for that business performance for the sale of Los Angeles?
Sure, sure. We don't have the Carvel [ph] financials for the fourth quarter of 2021, which is why we use an average EBITDA 2020 and 2021. To give you a sense for what that EBITDA looks like. I think that is pretty representative of the of what the EBITDA has done, certainly here recently. But listen, we think that that's a good business. We certainly think there's growth potential for Cathay. And we think that they will be good owners of that business going forward. And we think they have a real good probability of growing those earnings and taking advantage of a lot of the cost savings that we've taken out here over the last year.
Got you. And can you speak about whether you have any act or process or perhaps any potentially soon to be agile process to sell other assets out of the Performance Segment?
Yes, I mean, I think you've heard us on the call today indicates that we will continue to look for other opportunities to unlock value within the business. But the iron oxide process took quite a while over a year to get here. And so, these oftentimes, oftentimes takes take quite a quite a bit of time. But I think we have shown a willingness to be opportunistic, where we can create value for stakeholders and will continue to do so.
Thank you very much.
The next question comes from Jay Mayers with Goldman Sachs. Please go ahead.
Good morning, guys. Thank you for the time. I guess, Kurt, to kind of follow up on Rogers question. Morning. Is the sale leaseback transaction that you announced earlier this quarter kind of implicated in the iron oxide business? So should we kind of be sitting thinking about like a, a net impact on the EV you’re receiving or is that kind of two separate businesses and unrelated?
No, they are entirely related with one another. So the sell leaseback of our Los Angeles facility is part of the iron oxide business. So you can think about a monetization of the sell at $140 million, plus, a $50 million sell leaseback gets you to 190 million of enterprise value that, that we will have monetized when we get to closing.
Okay, thank you. And then you mentioned on the call just kind of thinking about proceeds as bolstering liquidity. Can you just kind of talk a little bit about what that means? Is that generally keeping excess cash on the balance sheet to just kind of navigate some of the volatility that you've spoken about? Or do you think there's opportunities to kind of proactively address parts of your capital structure, things start coming due in 2024 here?
Yes, I think in the near term, we're focused on liquidity. And so we'll keep any excess cash on the balance sheet, certainly, as we get through the, the near term, and then we'll explore opportunities to address the capital structure after that.
Thank you. Then one final thing for me. The kind of cost to achieve on the new $50 million cost savings plan was announced at $30 million, can you kind of give us an update on the remaining kind of nonrevenue generating costs that you talked about last quarter, so $70 million between restructuring pension and [Indiscernible], any kind of change in that number after today?
Not much change. We'll spend a little bit more kind of here within the next couple of years in order to fund this, this new program, but if you look out over the next two to three years, then we'll still have that $70 million structural reduction in cash uses.
Okay, thank you very much.
Thank you.
This concludes our question-and-answer session. I would like to turn the conference back over to Simon Turner, President and CEO for any closing remarks.
Okay, well thanks everyone for joining our third quarter 2020 earnings call. Please feel free to reach out to Kate with any additional questions you might have. Thank you once again.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.