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Good morning, ladies and gentlemen. Thank you for standing by. Welcome to KP Tissue First Quarter 2020 Results Conference Call. [Operator Instructions] Before turning the meeting over to management, I'd like to remind everyone that this conference call is being recorded on Friday, May 8, 2020. I will now turn the conference over to Mike Baldesarra, Director of Investor Relations. Please go ahead.
Thank you, operator, and good morning, ladies and gentlemen. My name is Mike Baldesarra. I'm the Director of Investor Relations at KP Tissue Inc. The purpose of the conference call is to review the financial results of the first quarter of 2020 for Kruger Products L.P., which I'll refer to as KPLP going forward. With me this morning is Dino Bianco, the Chief Executive Officer at KP Tissue and Kruger Products L.P.; and Mark Holbrook, the Chief Financial Officer of KP Tissue and Kruger Products L.P.The following discussions and responses to questions containing forward-looking statements concerning the company's activities. Forward-looking statements involve known and unknown risks and uncertainties, which could cause the company's actual results to differ materially from those in the forward-looking statements. Investors are cautioned not to rely on these forward-looking statements. The company does not undertake to update these forward-looking statements, except if required by applicable laws. There's a page at the beginning of the written presentation, which contains the usual legal cautions, including as to the forward-looking information, which you should be aware of. I would like to point out that all figures expressed in today's call are in Canadian dollars, unless otherwise stated. The press release reporting our Q1 2020 results was published this morning and will be accessible from our website at kptissueinc.com. Please be aware that our MD&A will be posted on our website and will also be available on SEDAR.Finally, I would ask that during the call, you refer to the presentation we have prepared to accompany these discussions, which is also available on our website. We also appreciate that during the question-and-answer period for you to limit your questions to 2. Thank you, again, for your collaboration. Now I'll turn the call over to Dino, our Chief Executive Officer. Dino?
Thank you, Mike. Good morning, everyone, and thank you for joining us on today's call. Before I review our results, I want to recognize and thank the 2,500 Kruger Products employees across North America for their heroic efforts during this unprecedented time. Their safety and wellbeing has been our highest priority.Let me now discuss our results. We had a very strong first quarter, driven primarily by increased consumer demand for our products due to the COVID-19 pandemic. Our primary focus during this pandemic was to ensure the safety of our employees and communities. And we put significant and immediate practices in place to do this. I'm so proud of how our employees rose to the occasion and successfully managed the tremendous surge in demand. This was achieved in the context of very challenging conditions and with all the uncertainty around the COVID-19 crisis.From an operational level, our plants and distribution centers ran full out to respond to the surge in demand to ensure that our products were available to our customers and consumers. I know consumers continued to see empty tissue shelves, however, our efforts helped improve the in-stock position as we're moving through this pandemic. Our strong manufacturing performance also reflects the benefits and progress of our operational excellence, our OpEx program that we put in place last year, which I will discuss in a few slides.Excluding the divested Mexico business, revenue increased by $50.2 million or 15.5% to $375.1 million. Adjusted EBITDA was a very strong $51 million, up 116% over last year. By geography, Canadian sales increased by a very strong 16.6%, and U.S. sales grew by 13.8%. As we look at the market pulp prices, NBSK and eucalyptus prices in Canadian and U.S. dollars were down over the first quarter of 2019. However, in Q1, NBSK pulp prices in Canadian dollars increased sequentially by about 3%. The year-over-year decline was 17%. The trend was very similar for BEK, or eucalyptus, which was down 24% in Canadian dollars over last year. It's very difficult to predict, but for the remainder of 2020, based on industry forecasts, NBSK and BEK prices in U.S. dollars are expected to have a moderate upward trend. The weak Canadian dollar could amplify this increase as we move through the year.Let me discuss the impact of COVID-19 on our business during the first quarter. First and foremost, our focus was on the safety of our employees and the continuity of our business. We responded to the impeding impending crisis quickly and activated our pandemic response and business continuity plans and protocols in late February. Our safety procedures included work from home for office staff, no external personnel in our facilities, increased daily screening, cleaning and use of PPE. And with regard to business continuity, we extended the purchase of raw materials to manage supply chain, the disruptions that may occur. We proceeded with segregation of specialized personnel and put in place contingency planning on critical assets. I'm very pleased at how our team reacted quickly and prepared us for this unprecedented situation, and we did not have any major disruption in our business through the first quarter.As for the impact of COVID-19 on sales, we saw a very well-publicized surge in consumer bathroom tissue demand beginning in early March. This was driven by pantry loading and increased usage as a result of work-from-home mandates. We also observed increased demand of paper towels and facial tissue for the same reasons and also from increased usage due to heightened personal hygiene practices. Over the next few months, we expect consumer demand to be negatively impacted, driven by high personal inventories and the relaxation of work-from-home protocols. Although our Away-From-Home business performed well in Q1, we do expect the business to face future headwinds, considering end market closures and a projected slow recovery. In response to the pandemic, we also elevated our corporate giving by providing tissue products and financial support to food banks and frontline healthcare workers in both Canada and the United States.I now want to provide an update on our TAD Sherbrooke facility. Due to the COVID-19 situation, the project was temporarily suspended on March 23. We did resume operations a few weeks ago after implementing substantial safety protocols, including physical distancing, enhanced screening, incremental hygiene practices, increased use of PPE and segregated workspace measures. The construction protocols were established in close partnership with our union and contractor partners. We will continue to evaluate any potential efficiency loss and impact driven by these increased safety protocols.We continued to receive equipment during the shutdown, and we have now received most of our major equipment and don't anticipate any significant delays in future equipment deliveries. We are on track for the start-up of our first converting line in July, and we have already hired most of the salaried team and the Line 1 converting staff. The hiring process has continued and new employees are being trained virtually. In an abundance of caution, we also took the opportunity to amend our TAD debt agreement to provide more flexibility and minimize any potential risk. Despite all these changes, at this time, we are not altering our start-up schedule and/or budget. On the sales side, we are making significant progress on the commercialization plan, and we are pleased with the increased interest level from our customers. Furthermore, the pandemic has clearly heightened the strategic importance of the TAD Sherbrooke facility and the new North American capacity it will provide.Turning to our OpEx program. We are seeing tangible benefits and building momentum into 2020. The program has now been rolled out to all sites and across most assets. We've also expanded the focus of the program to now include waste reduction across the network. During Q1, our plants operated very well, and we are now achieving more stable improved performance month after month. To meet the exceptional Q1 demand, we also reduced the number of SKUs that we produced, and this helped our operations run more efficiently and increased our output. As one of the tangible benefits of the OpEx program, we were able to reduce outsourced manufacturing costs when compared to the same quarter last year.And finally, I am pleased to say that we are on track to achieve the planned run rate cost savings by the end of this year of $15 million to $20 million.Let me now turn to our Away-From-Home business. For the first quarter, we had good sales results, which were supported by solid orders coming into the quarter. Furthermore, we took advantage of some crossover opportunities into the Consumer segment, and this is something that we will continue to look at. The situation will be somewhat different as we enter the second quarter, where we anticipate more challenging market conditions due to the severe impact of COVID-19 on end user markets. The stay-at-home measures are also having a negative impact on sourcing sorted office waste paper, and prices are expected to increase significantly. We have done all the right things to rebuild the Away-From-Home business. At this stage, considering the success and progress achieved with the OpEx program, the future performance of this business will be mainly driven by market demand.Lastly, on our branded business, our focus remains on building our brand, and we are starting to see this translate into stronger share performance during the last 12 weeks. On a short-term basis, our marketing is more focused towards connecting with consumers and those in need during this COVID-19 situation. Our full year marketing plan is being completely revised to reflect changes to our promotion properties and to better reflect the mood of our consumers. However, we remain committed to maintaining our investment in marketing during 2020.With regard to innovations and quality improvements, we remain on track to deliver on those plans. I am pleased to report that our new TAD product portfolio is progressing well, and we are also looking at opportunistically building distribution and supporting our White Cloud brand in the United States. We believe these actions will help strengthen our shares and build our leadership position over the long term.With that, I will now turn the call over to Mark, who will review our quarterly results.
Thank you, Dino, and good morning, ladies and gentlemen. I'll now ask you to turn to Slide 15, which reviews our financial performance for the first quarter. Excluding Mexico, revenues were up 15.5% to $375.1 million in the first quarter compared to $324.9 million for the same period last year. Adjusted EBITDA increased by $27.4 million to $51 million from $23.6 million in Q1 of last year and increased sequentially by $5 million from $46 million in Q4 of 2019. From a margin perspective, adjusted EBITDA increased to 13.6% from 6.7% last year and 13.2% in Q4 2019.In the first quarter of 2020, we recorded a net income of $8.4 million compared to a net loss of $3.2 million last year. The increase in net income was primarily due to higher adjusted EBITDA and lower interest expense in Q1 2020, partially offset by an increase in other expense, primarily related to a foreign exchange loss on U.S. dollar-denominated debt. Net income was also impacted by consulting costs related to operational transformation initiatives and an increase in depreciation expenses.In the quarterly segmented view on Slide 16, excluding Mexico, consumer revenue increased by 16% year-over-year to reach $313.3 million. In the Away-From-Home segment, revenue rose by 12.9% to $61.9 million. Consumer segment adjusted EBITDA increased by $24.2 million to $54.3 million, and adjusted EBITDA margin increased from 10.2% to 17.3%. For the Away-From-Home segment, adjusted EBITDA improved by $5.6 million to a loss of $1 million, and adjusted EBITDA margin stood at negative 1.7% versus negative 12% from the previous year.On Slide 17, we will review Q1 2020 revenue over Q1 2019, which was up by $50.2 million or 15.5%, excluding Mexico. The increase is primarily attributable to volume increases in Canada and the U.S. primarily related to COVID-19 demand and a favorable sales mix. This was partially offset by lower prices in the Consumer segment. By geography, Canadian sales increased by $32.7 million or 16.6%. And in the U.S., sales increased by $17.5 million or 13.8%. In our comparative, the revenue of the Mexican operations divested in Q3 of last year was $26.1 million for the first quarter of 2019.On Slide 18, we provide further insight into our Q1 2020 adjusted EBITDA, which increased year-over-year by $27.4 million or 116.4% to $51 million. Gross margin for the quarter also increased from 8.8% to 16.2%. The increase in adjusted EBITDA was driven by a combination of factors, including significantly higher sales volume, favorable sales mix, lower pulp prices and the benefits of the OpEx program, resulting in lower outsourced manufacturing. These elements were partially offset by an increase in maintenance spending, higher freight and warehousing cost and increased SG&A cost. For a sequential perspective, let's turn to Slide 19, where we compare Q1 2020 to Q4 2019 revenue. Quarter-over-quarter revenues increased by $27 million or 7.8%. The Consumer segment increased by 9.7%, whereas Away-From-Home decreased by 1.1%, reflecting the typical seasonality in Q1 compared to Q4. By region, revenue in Canada increased by $8 million or 3.6% after a strong Q4 and U.S. revenue increased by $19 million or 15.2%, including favorable FX impact.On Slide 20, Q1 adjusted EBITDA increased sequentially by $5 million or 10.8% compared to Q4, and gross margin improved from 15.5% to 16.2%. The increase in adjusted EBITDA was mainly driven by the increased sales volume in the Consumer segment and favorable sales mix. Similar to the year-over-year comparison, the increase was partially offset by increased freight and warehousing cost and higher SG&A cost. I'll now turn to our balance sheet and financial position on Slide 21. Our cash position was $144.6 million at the end of Q1 2020, up from $93.1 million at the end of Q4. The cash position includes $42.5 million committed to the TAD Sherbrooke entity at the end of Q1. Overall net debt at the end of Q1 stood at $578.8 million, up $80.9 million from $497.9 million at the end of Q4 2019. Our net debt to trailing 12-month adjusted EBITDA ratio remained stable at 3.4x, reflecting a significant increase in the latest 12-month adjusted EBITDA, partially offset by higher net debt.Also, as Dino touched on briefly, in response to COVID-19, we entered into discussions with our TAD Sherbrooke Borrowing Group lenders, and we obtained certain amendments providing us more flexibility relating to the credit agreement for the project.I'll conclude my section by reviewing the CapEx on Slide 22. Q1 2020 CapEx totaled $71.9 million, including $66.8 million for the TAD Sherbrooke facility. Looking at the full year 2020, we expect regular CapEx to be in the $25 million to $35 million range, while the TAD Sherbrooke CapEx is expected to be between $340 million to $365 million. And this provides a total CapEx range for fiscal 2020 of $365 million to $400 million. Thank you for your attention, and I'll now turn the call back over to Dino.
Thank you, Mark. Despite the impact of COVID-19, we remain focused on our long-term strategies to build our business. Specifically, we will continue to focus our energy on driving sustained top line growth. Also, as mentioned, there are many efforts to improve Away-From-Home's performance, considering the headwinds created by COVID-19. We will continue to grow our leadership position in Canada, building on the market share momentum over the past 2 quarters through greater investments in our brands. The benefits of our 2020 OpEx program will create a more efficient and capable supply chain network. This is a cultural change on how we run our facilities and assets and will drive improved safety, capacity, quality and costs. Completion of the TAD Sherbrooke facility is a top priority, considering its strategic importance and added North American capacity. I'm pleased that despite COVID-19, there is no material change anticipated to either the budget and/or time frame of this project at this time.Finally, developing our organizational capability and culture of continuous improvement to drive future growth is a permanent part of our DNA. I think it's fair to say this was never more evident than in the manner in which our employees have stepped up during this crisis. I thank each and every one of them for their strong dedication and heroic efforts, especially during these unprecedented times.Looking forward, from a financial point of view, our business remains very strong based on high demand for our essential products and anticipated favorable input costs compared to 2019. For our second quarter, considering the risks and uncertainties associated with the COVID-19 pandemic and the impact it could have on our operations, we are providing a general range of guidance for the adjusted EBITDA that is lower than the Q1 2020 and higher than Q2 2019. Thank you for your time and attention today. We will now be happy to take your questions.
[Operator Instructions] Our first question comes from the line of Hamir Patel from CIBC Capital Markets.
I know on the prior call, you mentioned that you were holding prices steady in Canada as COVID spread, but several of your U.S. peers saw price hikes. Did you see any movement in your pricing on the U.S. side of the business?
We did not, Hamir. We said early on that we would not take advantage of the situation and maintain our pricing. I mean, if -- obviously, if input costs continue to increase, we will deal with that as we normally would. But as it reflects the increased demand, we have not changed our pricing to our customers. And for the most part, they have not -- the retailers, they have not changed their pricing to their consumers. Also, one other point I want to make on that one is there's much more demand than capacity, and we were committed very early that we would be fair and equitable in how we allocated our capacity to our retailers, whether they had 2,000 stores or 2 stores, that we would proportionally be respectful of what their needs are. So yes, that's -- I answered your question plus a little tag on for it.
Yes. Fair enough. But I guess related to that, you also called out significant inflation for SOP. So is there potential to, at least on the Away-From-Home side, pass on some of those increases? And maybe if you could speak to what scale of increases you're actually seeing in the market?
Yes. I -- so the SOP market, obviously, the capacity is constrained because of shutdowns. About 1/4 of our business or just less than 1/4 of our business relies on recycled fiber. A lot of it is in Away-From-Home. We are looking at whether that is going to trigger a price increase. We've got to layer that in with the weakening Canadian dollar and other factors. So that may result in a price increase. I'm not committing either way right now. We'll continue to evaluate all the input drivers. As it relates to the magnitude, it's fairly significant. I don't know if I could quote a -- I don't know if I can quote a percentage for you, but I would say that it's significant enough. It's still less expensive than virgin, for sure. So it's not as simple, just use more virgin pulp and less recycled fiber. It's still less expensive than virgin, but still a significant increase that we had not considered. And I think I'll take this opportunity to also answer, as we go through this, normally, people talk about headwinds and tailwinds. Well, we've got multidirectional wins going on. And the key for any organization, ours or anybody in any industry, is just to be able to manage where are the headwinds and where are the tailwinds and making sure that you're reacting accordingly. And the benefit we have in tissue is an essential service. We generally have more headwind -- more tailwind, I should say. But there's pieces moving all over the place. The Canadian dollar weakens and pulp prices and demand and SOW and increased costs for COVID. So the goal for our organization is to look at it all and make sure that we minimize the risks and take advantage of the opportunities and come out ahead.
Great. That's helpful. And just curious, when you look at the -- on a full year basis, given the consumer stockpiling in retail and likely destocking later in the year and weakness in Away-From-Home, what do you expect the overall North American tissue market to be up this year in volumes? And how would you break that down between Consumer and Away-From-Home?
Yes. I mean I don't know if I'm that good right now to give you that number. At the end of the day -- I'll stay true to my -- when I first came into the tissue business, I learned that it generally moves with population. And as long as populations are growing and the usage and the penetration, there's not much more to get there. So it depends on how many more bodies you've got. I think overall, when you look at AFH and when you look at Consumer and when you look long term, that's probably a very true statement still. You're going to get some variations, AFH moving over to Consumer. You're going to get some pantry loading that's going to change buying behavior. You're going to get some incremental usage, particularly paper towel and facial for hygiene purposes. But generally speaking, I would say, over the long term, the market continues to be on a steady growth of about 1.5%, 2%. I would stick with that.
[Operator Instructions] Our next question comes from the line of Sean Steuart with TD Securities.
A couple of questions. The sequential Q1 gains in consumer EBITDA, mostly volume gains in March. And looking at your slides, it looks like a lot of that was from the U.S. Can you give us a sense of what your capacity utilization looked like heading into the pandemic and what your operating rates look like now? And I guess, a lot of that incremental volume is from Memphis. Maybe I'm misreading that, but any sense of how your operating rates have trended?
Well, our industry, in general, runs at very high utilization rates. It's a very capital-intensive industry. Most operators run in the high 80s, low 90s. So there isn't a lot of firepower. It felt like one shift becomes 3 shifts and you can triple your volume. I think most operators operate at very high efficiency rates. So we started improving our efficiency -- operating efficiency through OpEx last year, particularly at Memphis, which started, and then across other sites. And we came into the pandemic in a pretty good position with our assets. And I would say that we took actions to -- that we may not be able to keep long term to increase demand, mainly deferred any maintenance that could be deferred so that our machines could run. Obviously, we also took the opportunity in some cases to run idle assets or assets that aren't just cost-effective, but we needed the volume. We utilized overtime and additional labor where we could. And the key one was reducing the number of SKUs that we produced so that our lines wouldn't have to deal with changeovers and can run much more effectively. So all those measures that we took, some that will keep going beyond pandemic and some that can only deal with short term is what helped us get more efficient on production.And the other thing is like most of our competitors, I'm sure, we had a significant depletion in our inventory. We're to the point now where we're literally -- can count it in single-digit days of inventory, even less than that we're making in shipping. So that was another way that we were able to offset the increased demand through increased production. And then, of course, uses of our inventory.
So is it safe to say that the incremental volume in March was mostly inventory drawdowns versus production gains? How should I think about that split?
Yes, I think it was both, but I would say with a sudden impact like that, of course, you're going to draw down your inventory. It's -- you just can't react quick enough. So we had a big drawdown in inventory, and we'll start to rebuild that slowly as we can. But when you get an immediate surge in demand, like we got starting in mid-March or early March, the only way to deal with it is to go after inventory as you're starting to ramp up your assets.
Okay. That's helpful. Second question, the Q2 pressure you're going to see in the Away-From-Home business, can you give us any sense of the volume impact? And if you're forced to curtail production a little bit, I'm just trying to gauge carrying costs on the fixed cost side as you take potential curtailments and how that might affect margins for the Away-From-Home business.
Yes. That's a great question. It depends on how quick economies come back, it's North American economies, because we supply North America and certain jurisdictions may come back quicker, and we're seeing that already. So the interesting thing about our AFH business is we are -- 50% of that business is in end markets that are declining, and about 50% of that business is in end markets that are actually increasing. So you think about, for instance, something like health care. So the problem is that the 50% that are declining, like restaurants, are right off the cliff. And the 50% that are increasing are seeing small increases. That's leading to the decline in anticipation in AFH. I would say the things that AFH is doing well is they did price the business last year to kind of get back on the margin curve, reflecting costs. They are doing our operational excellence program. They are looking at opportunities through channel with their distributors of getting some of that product to the consumer. And then we're also looking at changing our product portfolio where we can make modifications such that it's much more flexible to be available for a consumer use. So we're doing all the right things. And of course, we're watching our SG&A costs. So although I see a decline in the AFH business driven by demand, I do not see a significant impact or curtailment in that business. It's still going to be a very viable business. We had high aspirations for it coming into this year after sequential improvements last year. So those may be tempered a bit, but this is not a disaster story. It's still going to be a very viable strong business, doing the right thing. It's just not going to be to the level that we would have expected, given the demand curve softness.
Our next question comes from the line of Zachary Evershed with National Bank Financial.
Congrats on the quarter. With inventory in single digits, as you said, are you going to be holding off on reintroducing the minimized SKUs until the second half so that you can build your inventory levels back up?
That's a great question. I think the consumer, the retail and us learned a great lesson around having a simplified SKU portfolio. And I don't want to undo any of that learning once things get back to normal. So I think you're going to see a move back to the middle maybe. I don't know if we'll get back to the levels we were. We shouldn't, quite frankly. But yes, I don't think we can sustain the reduced SKU portfolio that we've got today. So somewhere in the middle will probably be a balance of giving consumers and customers the choices they need, whether it be a size or format, and still keeping our operating efficiency strong. The one thing we will do, though, as another opportunity comes out of this is as we rebuild our inventory and with any risks that may occur with COVID going forward, whether it's a second wave or just a sustained wave, we will focus on building inventory on our key SKUs, our ace SKUs, the ones that we're generally producing today, and that will be the first priority of rebuilding inventory.
That makes sense. And in terms of that huge demand spike that we saw, how much do you think is stockpiling? And how much do you think -- how much are you expecting consumers to continue to hold higher levels of tissue at home going forward? And how much of a reversal do you see over the coming year?
We try to look at this number in many different ways. It's an interesting number to try to figure out rough numbers, and every company is going to quote a little differently. So I apologize if you may be hearing different numbers from different companies. But we expected just with stay-at-home protocols, just the fact that there's more people in the household that there'd be a 30% increase in consumption versus what may have happened previous to that. And obviously, they're not going to the office. They're not going -- traveling. They're not going to sporting events and conferences, et cetera. So that should have resulted in a 30% increase and likely stay as long as restrictions in travel and at-home protocols remain in effect. We look -- when we looked at inventory loading at the customer -- at the consumer level for in home, it ranged anywhere from -- so we segmented it and I think the average number that we looked at looked anywhere from 3 to 5 weeks of loading. That's an average number. Many consumers bought a year and some consumers didn't buy any extra. So it's an average number that we looked at looking at our consumption data. I would also say how and when the consumer will deload that and get back to normal will depend on their confidence in the supply chain. The more they go to stores and see shelves full, I think that will give them comfort that the supply chain is back to stable and there may be a deloading. So I think it will be a slow deload over the year at home. It won't be as rapid as, obviously, the loads that took place. And it will all be dependent on, obviously, what's going on with COVID-19, but also their confidence in the supply chain for tissue.
[Operator Instructions] Our next question comes from the line of Paul Quinn with RBC Capital Markets.
Just a question on the Away-From-Home business and your ability to switch some of that into the Consumer side. What is that ability in terms of, I guess, percentage of what you're currently doing in Away-From-Home?
Well, that's a great question. There's some products that we make today that are suited for Away-From-Home. So think of a single roll of bathroom tissue that you would see in a hotel. It's packaged for an Away-From-Home location, but it's easy to -- not easy, but you can certainly put 12 of those in a box and have it available for a consumer use. So things like that are easier to do. Some of our napkin business as well. So a napkin is a napkin. It may not be configured the right way, so we may have to do some additional co-packing or get a UPC or an outer wrap on it to make it available for a grocery channel. So things like that are things that we're looking at. The other thing also is we sell through distributors. So a lot of the distributors that we sell through have also been focusing their attention on providing more product for consumers in what would normally be through the grocery channel. They had to change their business models as their end markets have dried up. So they're using our product and making it available to consumers as well. So even though we're selling through the same distributor, some of that product that used to go to AFH is now going to a consumer use.
Okay. And then just -- I think you aligned your cash position. What's your total liquidity right now?
Paul, we have -- in our liquidity, we break it out in our MD&A, and we show the restricted group, which is our main bank syndicate, about $217 million available. That's including the available loan revolver as well as any cash on hand. Go ahead.
Sorry, I was just going to -- you pointed out higher SOP costs and potentially higher pulp costs and a weakening Canadian dollar. What's your hedging strategy with respect to currency?
In terms of currency, when we're buying on pulp or SOW, we really buy that in -- without any hedging going on. And from standpoint of the market that it is at right now, that is obviously a 1.40 exchange rate would be considered negative when it comes to buying pulp and SOW in U.S. dollars. But we have that practice, and I think it's worked out well for us as we've been able to manage the movement in pulp on that basis.
Okay. And then, I guess, lastly, just -- I might have missed this, but the inventory drawdown in the quarter was how much?
You didn't miss it, because we didn't say it. So yes, I'm not going to -- we're not going to release our inventory position. But you'll see on the -- when you look at our financial statements, you should see -- you should be able to get a directional number there.
That would be down?
Yes.
And there are no further questions in queue at this time. I would like to turn the call back over to our presenters.
Thank you for joining us on this conference call this morning. We look forward to speaking with you again in August following the release of our second quarter results. Again, thank you. Stay safe, and have a great day.
This concludes today's conference call. You may now disconnect.