Canfor Corporation

Thanks, operator, and good morning everyone. Thanks for joining the Canfor and Canfor Pulp quarter four 2019 results conference call.

I'll make a few comments before I turn things over to Alan Nicholl, our Executive Vice President of Canfor Pulp Operations and Chief Financial Officer of Canfor Corporation and Canfor Pulp. Alan will provide a more detailed overview of our performance in Q4.

Joining Alan and I today are Kevin Pankratz, our Senior Vice President of Sales and Marketing; Stephen MacKie, our Executive Vice President of North American Operations; and Brian Yuen, our Vice President of Pulp Sales and Marketing. I will focus my comments on 2019 as a year, which overall was a very challenging year for both our lumber and our pulp businesses.

Firstly, Canfor Pulp reported an operating loss of $31 million in 2019. Throughout the year, we experienced decreasing availability of chips and increasing cost due to the significant sawmill curtailments in British Columbia, while global pulp prices fell sharply over the course of the year, reflecting elevated inventory levels and weaker global demand in certain regions.

Following the market driven downtime taken in the latter half of 2019, our focus is on optimizing our production performance, reducing overall costs and maximizing fiber utilization in the coming months as we look to fully capitalize on the projected improvement in market conditions in 2020 and 2021. While global pulp markets are projected to remain challenging for the first half of 2020, market conditions and prices should gradually improve in the back half of the year as global inventories continues to become more balanced with demand.

For Canfor, overall, we reported an operating loss of $294 million in 2019. The very difficult operating results overshadow the transformational global diversification undertaken by the company during the year with the acquisition of Vida and further expansion in the U.S.

South with the Elliott Sawmill acquisition in Estill, South Carolina. We are already starting to leverage benefits from this diversification strategy while maintaining focus on improving productivity, maximizing fiber utilization and reducing costs and debt levels, so we are well positioned to fully capitalize as market conditions improve.

Our BC operations continue to face several challenges. However, we remain focused on working diligently to minimize the financial impacts of these constraints on our BC operations and our overall business.

Global lumber markets showed a modest improvement late in 2019, particularly the U.S., demand in China was weaker, but Japanese sales rebounded in the second half of the year after a relatively slow start. European lumber demand was also subdued due to global and regional issues, but our operation has performed well in the year generating EBITDA of $112 million in 2019.

We expect government's approval of the Vavenby tenure sale in Q1. Looking ahead, recovery in the U.S.

housing market is expected to continue into 2020 and the repair and remodel markets appeared to be steady as well with increases also expected in 2020. While supply from Europe to North America is increasing and there has been new U.S.

sawmill capacity added, albeit much less than forecasted, we don't expect this additional supply to outpace increased demand in the coming year. Overseas markets are forecasted to be mixed both Japan and our European markets improving modestly.

On the other hand, we expect China to continue to be challenging owing to increasing amounts of European fiber as well as the coronavirus impact, which is currently impacting the country. We continue to monitor the coronavirus and expected to have an overall impact on lumber and pulp demand, particularly in China and Southeast Asia.

Additionally, recent blockades of Canadian rail infrastructure have impacted our supply chains and we will be monitoring those events closely and implementing mitigating actions to the extent possible. The U.S.

commerce department released a revised duty rate calculation for Canfor in January, which when finalized would reduce our cash deposit rate from 20.5% to 4.6% as a result of the first administrative review. Until the dispute is resolved, commerce will continue to do annual reviews of the duties with a cash deposit rate reset at that time.

Until there’s a settlement, we will not receive a refund of any duty amounts. So lastly, despite it being a very challenging year, this past year to say the least, we are thankful and grateful for the support that commitment and the dedication of our excellent employees, our contractor base and of course the communities that we operate in.

I will now turn it over to Alan to provide an overview of our financial results.

Thank you, Don, and good morning everyone. As Don mentioned, the Canfor and Canfor Pulp annual and quarterly results were released yesterday afternoon.

These results come together with our overview slide presentation in the Investor Relations section of the respective companies’ websites. In my comments this morning, I'll expand on a number of Don's points and also speak specifically to several quarterly financial highlights.

Our lumber segment reported an operating loss of $27 million for Q4 compared to a loss of $67 million for the previous quarter. Results included a net duty expense of $44 million, restructuring costs of $3 million and $17 million reversal of a previously recorded inventory write-down provision.

After adjusting for these items, the lumber operating loss was $3 million. In Western Canada, operations continue to be impacted by prolonged market and fiber related challenges despite a moderate uptick in U.S.

pricing activity towards the end of the year, which contributed to a 7% increase in pricing for most Western SPF dimensions. The company’s U.S.

South operations experienced a more challenging quarter in Q4 as a result of moderately lower prices across most grades, as well as the impact of capital related downtime at several of its operations. Our European lumber business continued to generate solid financial results notwithstanding a modest decline in European benchmark prices during the fourth quarter.

Seasonally a higher production volumes and a market related decline and unit log cost contributed to lower unit manufacturing costs. In early 2020, the U.S.

Department of Commerce announced the preliminary results for the 2017 and 2018 first period of review. Based on the preliminary determination, the company anticipates a material reduction in its duty deposit rates effective in the third quarter of 2020 and a corresponding recovery of approximately $217 million reflecting differences between the current cash deposit rate and the preliminary rates as determined in the first grade of review.

Of this recovery, approximately $77 million has been previously recognized in the company's financial statements based on management's estimated ADD accrual rate over the first period of review. Our pulp business reported an operating loss of $24 million in the fourth quarter compared to a loss of $44 million reported in the third quarter with the results continuing to reflect weak global pulp pricing.

While the purchasing activity from China picked up during the quarter, weaker prices in North America and Europe contributed to a modest decline in average sales realizations compared to the third quarter. Pulp production was up 64% in the fourth quarter following the market related curtailments taken in Q3.

Fiber costs showed a small decrease quarter-over-quarter with the impact of lower market prices for sawmill and residual chips tied to pulp prices helping to neutralize the effect of an increased proportion of higher-cost whole-log chips. Capital spending for the fourth quarter totaled approximately $70 million and included $43 million in lumber and $27 million in Canfor Pulp.

Total spend in 2019 was just over $300 million and included $200 million in the lumber business and $103 million in Canfor Pulp. Excluding pulp capitalized major maintenance in 2020, we currently anticipated capital spending of approximately $150 million in 2020 following the completion of our US$125 million organic growth program and several other major upgrades in early 2020.

At the end of the fourth quarter, Canfor – excluding Canfor Pulp had net debt of approximately $960 million and available liquidity of close to $380 million. Canfor Pulp ended this fourth quarter with net debt of $58 million with available liquidity of $83 million.

And lastly, Canfor Pulp’s directors approved the continuance of a quarterly dividend of $0.0625 per share for the fourth quarter. And with that, Don, I'll turn the call back to you.

Yes. Thanks, Alan.

And operator, we're now ready to take questions from the analyst.

Good morning, Don. Good morning, Alan.

Good morning.

Good morning, Mark.

I wondered just to start, Don, if it's possible to just get a kind of a current read on conditions in the lumber market and I guess I'm interested in your kind of thoughts on final demand and kind of where inventory sits and then the impact of kind of transportation issues and what seems like a little warmer than normal winter in terms of their impact on the market.

For sure, Mark, I'll try to do my best on those four comments or questions there for sure. I mean, I think, clearly, the recovery that we've seen in North America has taken longer than we expected to start with.

I mean, clearly, I don't know whether we all misread it or what, but it’s taken for the prices to move up like they have done recently. It's taken more part of it longer than we expected.

We knew – we felt that throughout the year that demand was increasing and I think we've kind of seen that throughout the year. It's been maybe slow to get going, but certainly in the last four or five months, it's picked up quite a bit.

And we're seeing that move on into Q1 2020, which is positive. And you would have seen the housing start numbers and the permit numbers all look pretty good.

The only real negative on the demand side are not so much negative, just really uncertain at this time is what's going on with the coronavirus and what really – what that's really going to do to supply chains worldwide and that really applies for both pulp and for lumber. That's something that we're keeping our eyes on every day and every – actually every minute.

And then, of course, what's happening here in terms of some of the blockades. I mean, those are a couple of current issues that we're faced with, but overall demand, I think, has been relatively good.

On the supply side, clearly that's taken longer to show an impact as well. And I think that that's played out really with inventory levels being a bit higher than what we would have expected them to be throughout the year.

We do think we are making progress on that now. And I would say now that inventory in the supply chain, notwithstanding some of the supply chain current issues is relatively low across the space.

And I would say that I'm pretty much on the retail side as well as on the builder side. And I think that's helping us as well.

So if you look at it overall, I think, we're setting up pretty good here with probably inventories as well as they've been for some time and looking forward and looking into the spring here with the typical building seasons that we should see and combined with a relatively mild winter. As you mentioned, Mark, it's – we’re setting up not to be too bad for sure.

I guess that would be my comments on that. In terms of transportation, I mean, that's always a challenge.

It's a challenge right now with the blockades. As you know, we're keeping our eye on that.

We're doing a lot more trucking clearly to try and mitigate it as best we can, but know it's – I guess on that time will tell how much the impact will be.

Yes. Well, I guess Don, I'm just asking you to make kind of this objective judgment, but two years ago, clearly transportation was a big factor in the run-up in lumber prices.

I'm just trying to get some sense of, do you think this is having a material impact right now?

On the transportation?

Yes.

Yes. I don't – not all that much, no.

Okay. And then just switching gears, I wondered if you could talk a little bit about what's inside that $40 million cost takeout program over Canfor Plup?

Yes, maybe I'll let Alan speak to that and…

Yes, no – good morning, Mark. Absolutely.

So, this is something that the team has been very focused on as we ended 2019 recognizing the challenges we faced. And just as a matter of note, we have been encouraged by some of the progress we've made on the fiber side.

But as we look forward, we're clearly motivated to generate free cash flow through the trough as well as obviously during the cycle. So the $40 million really has targeted a lot around improved operational reliability and all of the benefits you get from that, from stable production as well, as well as targeting improved usage of chemicals and half fuel and very much targeted on improving fiber yields as well.

So those are the main themes and overhead cost reduction is in there as well and we're clearly motivated to look closely at that as well.

Okay. And then I was – I noticed that announcement I think at a craft in the other day about kind of closure because of the lack of fiber supply.

I'm just curious if we look out the next two to five years, how do you feel about kind of fiber supply for your pulp mills in the province?

Yes, it's a very good question. And I think from our perspective, I think we clearly have some shocks to the system last year, as I mentioned a few minutes ago.

And I think where we're comforted here, Mark, is that we've made some headwinds securing additional fiber supply, particularly in the second half of last year and we've tied a lot of that fiber up to long-term contracts, which gives us increased security around the sawmill residual volume in particular. But we've also been able to secure respectable volumes of more high-cost whole-log chips admittedly.

So we're feeling pretty good as we look out the next couple of years and we have a few contingency plans in case there is more rationalization, but right now we're feeling pretty good about that not contemplating any material curtailments or anything like that in the foreseeable future.

Okay. And then just finally on the supply side lumber wise up in BC.

Can you give us some sense of where you think we're at in terms of kind of rationalizing lumber supply, so that it is – it matches up with available wood supply in the province and also whether you think that the lower duties will bring any supply back into the market?

Well, maybe I’ll let Stephen to talk about that, but just before we’ve got a couple of quick things. First of all, I think as we’ve said all along, I mean, this has been evolving over a number of years, right, as a result of the beetle.

And I think that we're going to clearly need to see more rationalization in British Columbia, no question about that, where it's going to be and how many is going to be at this stage of the game. I'm not sure – we’re not sure probably 100% where that's going to play out, but I do believe that we're going to see more mills that need to shut over and above our Vavenby operation for sure.

And so that's – I think that's going to happen and there's no question about that. And then we've also got the spruce beetle and there are some challenges with the spruce beetle too.

But maybe Stephen you’re much closer to that and probably have some more to add to that.

Sure, Don. Good morning, Mark.

I mean, I think, you did cover it well, Don. I think the way we would characterize it, Mark, is that we've not yet seen the full impact of rationalization across the BC operating landscape.

We saw a lot of activity last year, some permanent, some temporary and obviously we've got more to do there we think as an industry and there is certainly capacity that’s still got to come out to align with the available sustainable and economically viable long-term timber supply. So we would expect more.

And that's probably about all I would say at this point.

Okay. All right.

And then just on the duty – lower duties.

So then – and whether the lower duties are going to allow more mills to maybe operate or increase capacity is that where you're trying to getting that at?

Yes.

I don't – really the issue now is not so much the market levels, it's availability of fiber and that's a constraint that we've never seen before. And so, I think that's going to be a huge limiting factor as we move forward, Mark.

It’s going to really limit any upside opportunities to increase capacity anywhere. I mean there's just no – there's not – there's might be economic fiber, but there's no fiber.

Okay. That's great.

I'll turn it over.

Thanks. Good morning guys.

Good morning, Sean.

Good morning, Steuart.

A few questions Vida to start with. Maybe help me connect the dots on the Q4 results.

It looks like your price realizations from Europe sequentially were down quite a bit more than the benchmark price that you quote in the MD&A, hoping you can give us some context there. And then following on that, it still looks like the EBITDA margins were really robust and I gather that's partly better productivity and lower fiber costs, but I wonder if there's anything else that fed into those strong margins despite prices weakening.

Yes. Maybe just quickly, and I'll turn it over to Alan here, but I think at Vida a couple of things that are important is to know as we've had, over the quarter, it's been a solid improvement on the cost side, for sure.

No question about that. So some of that increased benefit would have come from that, yes, definitely prices were off to some degree for sure.

But just these based on partly with the – what's going on globally through the quarter. But some of that's been obviously a lot more positive now and similar to what's happening in North America.

But -- so I think that -- but the bulk of the work has been accomplished there or the difference has been on the cost side. Alan, is that

I think so, Sean, again, we're just struggling just tie in some of your comments around the middle of that. So certainly, there was a modest reduction in realizations.

But as a general statement, we continue to see more moderate price movements in that region. But what more than offset that was the higher production volumes, obviously, after the seasonal downtime in Q3 with very strong productivity.

And with that, two, also reduced log costs as well that somewhat reflected market conditions in that area as well.

And I mean, it looks to us that you produced your stated capacity there. Is there an updated capacity number for Vida we should be thinking about?

Well, I appreciate you noticing that, Sean. I think we've guided to close to 1.2 billion board feet here for 2020 and beyond is that kind of modified capacity number.

Okay, that helps. Alan the CapEx, number for 2020 can you give us the split between pulp and lumber this year?

Yes, it is pretty similar to where it was for 2019. So like two thirds of it really pertaining to the lumber segment and one third for pulp.

Okay, that is all I have for right now. I’ll get back in queue.

Thank you.

Thanks Sean.

Hi, good morning. Could you give us a sense as to how your R&R volumes into the big box channel has been faring this year and maybe what sort of volume growth they're pointing you to for the full year?

For sure, Hamir. Maybe if it's okay, I'll get Kevin.

He's really close to that. We've been doing a lot of work around that.

So maybe, Kevin, if you can help Hamir on that.

Actually we had a fairly steady year in 2019 with about 6% to 7% growth in volume, and our outlook for 2020 is still to be 4% to 6% growth in volume.

Okay, great. Thanks a lot Kevin.

And next question I had was about, you referenced mass timber demand in the MD&A. How meaningful could that be in the next two years?

And how are you positioning your mills to kind of service that growth?

Yes. I mean we are really encouraged with the development of the mass timber in that new space, especially as it's into non-residential, and we see it as all incremental demand that we would not have previously participated in.

And it's going to – it's still early days, and a lot of it's into like projects, like at schools and public structure. And so while we are participating in it, and we see that growing over the next two years, and we're quite optimistic about that segment.

But maybe, Kevin, the only thing that might be worth mentioning to Hamir, is around how we're viewing the future demand of mass timber in North America, leaving out Europe, obviously. But if you were to ask us, that soft lumber board, it does a lot of work around that, as you know.

We see that the potential here to be close to five billion feet, and we're running right now around 1.2 billion, 1.4 billion kind of thing. So – but what's really encouraging to me and I think to the industry guys that I speak with, Hamir, is around the type of customer base that we're having to deal with now.

And you start to talk about some of these global brands, like Microsoft and Amazon and Walmart and Lendlease out of Australia, which is one of the biggest developers in the world. You're talking about some pretty high level of customers that we're all learning to deal with.

But you start to get them behind it, like we're seeing, the upside is -- I don't think any of us is going to really predict where it might end up here. And it's not going to be tomorrow, but if you think about – you roll that out over the next two, three years which is a time frame you indicated, it looks pretty darn positive from our standpoint, Hamir.

Thanks, Don. That’s really helpful.

And next – switching to the pulp side. I was just wondering if we can get an update on how the JV with Licella is going.

And just generally, what initiatives do you have underway to increase the sort of bio products that you can get out of the pulp mills?

Yes, Hamir So Hamir, it's tunneling on. It's moving steadily on as you probably will have noted from our disclosure.

We are in a pre-feasibility study phase, and that's where the focus is today. The one cautionary note around the pulp JV right now is more around the fiber availability just given the landscape in British Columbia, and that's something obviously that we're working through right now.

But lots of positive developments in that biofuel space, to your point. We're very keen to participate in that in the way that hopefully can forward the business.

Thanks Alan. Just a final one for me, you know the release mentioned you're assessing long-term recovery boiler options at Northwood.

What – can you speak to what those various options would be? What sort of capital investment could be required there?

And would we expect to get some volume gains with that as well?

Yes. So it’s a good question.

So as we guided before, we are looking at longer-term solutions to the recovery boiler situation that we have at Northwood. Currently, we have two recovery boilers there today.

So the options include repurposing, refurbishing both those boilers or building one major new boiler that would replace the two currently existing ones there as well. So lots of work are being undertaken into looking at both those options.

Both of them are strategic long term in nature. But we are planning to make a decision around those in the next 12 to 18, 24 months, Hamir.

In terms of cost, it's really hard to put a firm number on it, but depending on which of those two options you go, you could be talking anything between $150 million, $200 million and upwards, right? And so that's clearly one of the areas we're very mindful of as we look at this and obviously doing the right things.

The new one, if we do go down that path, obviously, would bring additional benefits, but we're still working through there as well. So you would get additional benefits attached to the higher spend.

Thanks, Alan. That is all I had.

I’ll turn it over.

Thanks, Hamir.

Yes, thanks so much. Good morning guys.

We expected weak Southern Yellow Pine prices in Q4, but they seem to be -- continue to be weak here and only just started to pick up. Is that surprising you?

And what are you expecting going forward?

Go ahead, Kevin.

Sure, good morning Paul. Yes, we did see that weakening in pricing in Q4.

When you start looking at the Southern Yellow Pine production, which I think has increased – I think it was like 1.9% year-over-year, and the bulk of that really occurred in November and December, so I think some of the increased supply is what we're seeing and some of the results of that. And so that, I think, addresses some of that commentary.

However, when you start looking at the breakdown of the width, it's -- we're starting to see improvements on the wides, on the 2x8, 2x10, 2x12. And so we think that, that's going to -- we start to see that last couple of weeks outside of January.

And also, looking forward, I don't know if you're aware, but there's some news that the lumber out of the U.S. will be part of the duty reductions in China, and that should play out in Q2.

So right, currently, it's 25%, and there's an opportunity for that to get diminished down to zero or some kind of phased out approach. So that should help support the Southern Yellow Pine pricing as we go forward.

Okay, so just trying to understand this export comment. You described exports to try to being pretty difficult given the slowing economy there and the coronavirus.

But I guess with the duties coming down, you expect more exports out of Southern Yellow Pine in containers to China despite that?

Yes. I mean as soon as they contain – the virus gets contained, we got some pretty good demand and interest.

And our customer base is actually quite encouraged with this latest announcement. So I think long term, and then hopefully into later into Q2, we should see some of that demand.

And we've already got interest for orders already this week in anticipation of this. So we are starting to see that actually translate into commerce.

Okay, so that maybe helps you in the second half of the year. In the short term here, do you think there's a risk of increased European imports as they get back up not able to get to China and come to North America?

Yes, I think, we're seeing a little bit, of course, that European supply coming into the U.S., and I think there's a limited to the upside on that. But we're also participating in that from our Vida operations, and we see that as an opportunity to expand markets and participate in markets that we couldn't otherwise be in so

If you think of that, too, right, Kevin, we were talking about this. There's been a lot of chatter over the last while about all these European imports over the last – [indiscernible] months, but the last 12 to 18 months, what was going to happen.

And even a best case scenario, still 50% of what it was at the peak in 2005. So is it going to increase?

Yes, probably, but it's still a long way off for what we've seen and had experienced with before.

Yes, I would note that starts in 2005 were a little bit higher than they are right now, but also demand was higher. Maybe just on Vida, you've seen prices come down, but the margins seem to be pretty robust.

What do you – the anticipation for 2020 given the increased lumber production coming out of Europe for the salvage side?

Yes, so I think today, I think our team are quietly optimistic as they look forward. Clearly, prices are a little lower today, as we mentioned earlier, but we're quietly hopeful of price gains here as we get into second quarter and then continuing to ride out hopefully for the balance of the year.

So certainly, a pretty respectable outlook, Paul.

Okay, and then just lastly in lumber. On the capacity curtailments or capacity reduction that needs to come out of the BC interior.

I mean we saw a material move in that in 2019, I don't know, somewhere around 2.5 billion, what – how much more do you think needs to come out?

Yes, go ahead, Stephen.

Good morning, Paul. I guess I stayed away from an actual number in this question earlier, but there's still a significant component.

So I think when you look at the impacts of the mountain pine beetle wildfires, some of the Swiss park beetle implications as well as we've got other constraints on land-based, some of those being announced today in terms of Caribou recovery plans and stuff that will impact available timber supply in the Northeast, I think we need to see at least another 1 billion board feet equivalent come out, and that will happen. The timing on that will be yet to be determined, but probably at least another 1 billion feet pulp.

Oh, excellent. Okay, thanks for that and then just maybe switching over to the pulp side.

You mentioned that you've got some additional sawmill residuals secured at the end of 2019. Just wondering how much volume that is.

And what's the length of those contracts?

Yes, we can’t go into specific contract details. You appreciate that, Paul.

But in total, we've got the equivalent of two sawmills volumes in the fourth quarter, in addition to locking out our current existing volumes to longer-term deals as well.

Okay, then just seeing the maintenance schedule on the pulp side, just nothing for PG, pulp and paper, because the long outage in Q3 last year?

Yes, it is really a function of our 18 months turnaround. It's just a function of timing, Paul.

Okay, excellent, thanks very much guys. Best of luck.

Hey, Dan I wanted to – can you just help us with the Central European spruce beetle, the impact on both Vida and potentially on North American operations. And I guess one of the questions I have around this is, is this – if this beetle kill lumber comes to North America, are there any limitations in terms of what it can be used for, could it be used for any building product at all?

Would it meet spec? Would it meet code?

Yes. I think, certainly, it will be less will meet code than if it wasn't beetle kill.

But just like we experienced here in North America, going back with the beetle, at the end of the day, mostly will be for construction use, right, where we really saw the impact in BC and it will be the same for them, which, actually, of course, will help Vida, and I'll get to that in a second, but just that they -- from an appearance standpoint, for J grade A, which wouldn't probably be useful, but for appearance grade for home centers or whatnot, it would be a challenge, right, because of the blue stain and the checking and all the same defects that we see here. So yes.

So it would probably primarily be used - the application probably would be mostly for industrial items, creating and all that kind of stuff or for new home construction or – and to some degree, maybe some R&R. But for the most part, those are what it would be used for.

It is actually, because Sweden is – they're mostly small landowners there, and they do a much better job or they do a very good job of managing that – their land base there compared to others because of that, and so we haven't seen any real impact whatsoever from the beetle in any of our operating areas and don't really expect to see any because of that. And so we've got a lot of capability there as you've seen with some of the numbers in terms of -- on the value side, high-value side, which we've always -- one of the things that really got us interested in Vida in the first place is the way they can differentiate out of the commodity business, right?

So it's really -- actually, for us, it's going to be a real advantage here for Vida because there's going to be less high grade available in Europe overall because a lot of that in the past, you should come from Central Europe not only from Northern Europe.

And then, it sounded like you guys saw a pickup in the kind of incremental supply coming out of the U.S. South in the fourth quarter.

I know some of the projects down there have had start-up issues up. If we just think sort of year-on-year in 2020, how much would you expect kind of the U.S.

South production can go up?

Steve, why don't you -- done some work on that. Why don't you talk to Mark?

Yes, sure Mark. I mean the U.S.

South in total or Canfor specific?

For the region as a whole.

We think that the capacity has been slower coming online in the U.S. South than maybe you had anticipated.

These capital projects, as I think we have all experienced, they're more challenging than maybe you'd hoped that they would be, take longer to execute, certainly, lead times from vendors and contractors have presented some challenges down there. And with the significant capacity adds across the industry with really the whole industry doing major capital projects, it has caused some delays, for sure, not only for us, but I think for the industry.

We're largely through our organic capital growth plans now, and we're encouraged about just executing well and really giving the teams an opportunity to run and realize the benefits that we've expected on those projects, and we're going to – we’d expect our numbers to go up 4% or 5I think that the industry could be in that range probably, Mark, overall.

Okay, that is helpful. And the last one from me, we have had a lot of wet weather in the south recently.

I just – I wondered if there's any impact you're seeing on kind of logging and log supply.

Yes for sure it has been incredibly wet down there, and we are seeing some tightness in supply. But overall, in terms of our regions, we're in pretty good shape.

We've got adequate timber supply. But we are seeing that pulp, for some others down there that there's a tightness in supply.

Does that translate to log prices?

No. We're pretty flat still.

Again, in our operating regions, we've got significant available supply, and our expectations are still for modest increase in log costs in the U.S., though, but really quite flat overall.

Okay, super that is helpful. Good luck this year guys.

Thanks, Mark.

All right. Thanks, operator, and thanks to everyone that joined the call, and we very much appreciate your support and we will look forward to talking to you at the end of Q2.

Thanks very much.