Good morning and welcome to the Rayonier Advanced Materials Third Quarter 2020 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions with instructions to follow at that time. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Mickey Walsh, Treasurer and Vice President of Investor Relations for Rayonier Advanced Materials. Thank you. Mr. Walsh, you may begin.

Thank you, operator, and good morning everyone. Welcome again to Rayonier Advanced Materials third quarter 2020 earnings conference call and webcast. Joining me on today's call are Paul Boynton, our President and Chief Executive Officer; Marcus Moeltner, our Chief Financial Officer and Senior Vice President of Finance; and Frank Ruperto, our Executive Vice President of High Purity and High Yield Cellulose Businesses. Our earnings release and presentation materials were issued last evening and are available on our website at rayonieram.com. I'd like to remind you that in today's presentation, we will include forward-looking statements made pursuant to the Safe Harbor provisions of federal securities laws. Our earnings release, as well as our filings with the SEC list some of the factors which may cause actual results to differ materially from the forward-looking statements we may make. They are also referenced on Slide 2 and 3 of our presentation material. Today's presentation will also reference certain non-GAAP financial measures as noted on Slide 4 of our presentation. We believe non-GAAP measures provide useful information for management and investors, but non-GAAP measures should not be considered an alternative to GAAP measures. A reconciliation of these measures to their most directly comparable GAAP financial measures are included on Slides 15 through 19 of our presentation. I'd now like to turn the call over to Paul.

Thanks, Mickey, and good morning everyone. I'm pleased with our strong third quarter results. And I'm also proud of the way that we've been able to maintain safe and reliable operations across the company, while accomplishing these results. In markets where we've seen robust recovery, such as lumber, we increased productivity to capture incremental value, while in markets where we experienced continued demand weakness, such as newsprint, we flexed our production to reduce costs. Financially, you've seen the benefit of these actions. Overall, as laid out on Page 5, we delivered $55 million of adjusted EBITDA for the quarter compared to $36 million last year. Our ongoing efforts to reduce costs, along with actions taken in response to COVID-19 helped drive a 200% increase to gross margins and solid cash flows. We saw significant cost improvements in our High Purity Cellulose segment, driven by increased productivity and reliability and lower cost of inputs. These benefits were offset by lower CS volumes as expected and continued weakness in commodity viscose and fluff pulp prices. Forest Products' lumber prices were a significant contributor to the positive quarterly results. To take advantage of the strong lumber pricing, the operations increased productivity by running extra or extended shifts for part of the quarter and we'll see this volume upside in our fourth quarter sales. Paperboard remained a stable positive contributor to EBITDA, benefiting from lower input pulp costs. And while we saw ongoing weakness in our Pulp and Newsprint segment, we continue to optimize our operations in our Newsprint facility and minimize losses for the segment. Also, we continue to focus on lowering CapEx and working capital to drive liquidity. In total, as a result of our efforts, we generated $34 million of free cash flow through the end of September. Now, I'm going to ask Marcus to go through more detail on our quarter results and then afterwards, I'll provide an update on our key objectives for the year before opening up the call for questions.

Thank you, Paul. Starting with High Purity Cellulose on Slide 6. Third quarter sales decreased by $18 million, driven by a 19% decline in commodity pricing and a 9% decline in CS volumes. These factors were partially offset by an 18% increase in commodity sales volumes due to improved productivity from the prior year and a 2% increase to CS prices in line with expectations. EBITDA for the segment was $36 million, down $5 million from a year ago. Commodity price declines were significantly offset by lower costs and improved productivity. Improving reliability across our asset base is a specific goal for the company. In particular, our Jesup, Georgia, and Fernandina Beach, Florida facilities have improved overall operational efficiency this year. Compared to the second quarter of 2020, EBITDA improved by $5 million, primarily from higher sales prices, increased CS sales volumes, improved mix, and overall lower cost. Looking into the fourth quarter, commodity viscose prices have improved from lows as we captured price increases in both October and November, our first price increases for viscose pulp in nearly two years. We also expect commodity sales to be significantly higher in the fourth quarter due to shipping delays and strong production realized in the third quarter. Turning to Slide 7. Sales in our Forest Products segment increased by $38 million from the third quarter of 2019, driven by a 62% increase in lumber prices and a 7% increase in volumes. EBITDA for the segment improved by $32 million from prior year, driven by the higher sales prices. As a reminder, EBITDA results include $8 million from lumber duties paid in the quarter. Since the start of softwood lumber duties on shipments into the U.S. in 2017, we have deposited a total of $80 million of duties and accumulated $3 million of interest on the deposits. In prior trade disputes, Canadian producers have historically recovered all or a vast majority of these duties upon resolution. The next steps in the process will come later this month as the tariffs are expected to decline from 20% to 8% when the preliminary determination is finalized and the revised duties become effective around December 1. Looking forward, we expect strong sales volumes in the quarter as our efforts to increase productivity should be realized in this period. Prices for lumber have trailed off from peak levels in September but still remain at historically high levels. Turning to Slide 8. Paperboard segment sales declined by $7 million as sales volumes fell 8% and prices declined 4% due to increased competition in our end markets. Meanwhile, EBITDA for the segment held steady at $7 million as lower raw material costs offset the decline in sales. This segment has seen modest impacts from COVID-19 and looking ahead, we expect general stability. Turning to our Pulp and Newsprint segment on Slide 9. Sales declined by $8 million from prior year due to a 20% decline in Newsprint prices and a 50% decline in Newsprint volumes as demand for Newsprint remains weak. This was partially offset by an increase in high-yield prices of 7% and volumes of 9% as pulp prices stabilized. EBITDA for the segment decreased by $3 million to a $4 million loss, driven by the weakness in Newsprint sales, partially offset by lower costs. Looking forward, we are starting to see sales price increases for pulp, while input costs have remained stable. We are also keeping an eye on further actions in China, including the full ban on recycled pulp in January. Historically, this has had a positive impact on our high-yield pulp demand. In Newsprint, we continue to adapt our assets to match market demand. As a reminder, we have two operating lines at our Newsprint facility and can throttle our production to meet customer needs. We have also developed a new product in Kapuskasing, targeting the quick-service restaurant market. This new Envirosmart bag is renewable, recyclable, and compostable. It is early days for the product but it should help our mill develop an improved product mix over time. Turning to Slide 10. On a consolidated basis, operating income was $17 million for the quarter, up $25 million from the prior year. The significant improvements in the lumber markets drove the majority of the pricing benefits with offsets to volumes and mix. Our ongoing focus on reducing costs generated an additional $21 million of benefits compared to the prior quarter. SG&A and other costs increased by $7 million, primarily due to currency fluctuations and an insurance settlement that benefited 2019. Turning to Slide 11. Total debt remained at $1.1 billion, while our gross secured leverage ratio declined to 4.0x compared to a covenant requirement of not more than 6.65x. The interest coverage ratio ended the quarter at 2.4x compared to a covenant of 1.4x. With $147 million of LTM covenant EBITDA, we currently maintain a 39% cushion to the covenant. Along with the strong operating results for the quarter, we increased liquidity to $196 million, including $83 million of cash, $97 million available on our revolving credit facility, and $16 million from our factoring facility in France. Liquidity improved by $30 million from the prior quarter, driven by $41 million of free cash flow in the quarter.

Hey, thanks, Marcus. Looking at Page 12. We note that we entered 2020 with a number of financial goals. COVID-19 challenged our ability to meet these goals, but our team adapted. With three-fourths of the year behind us, we remain on track to meet or exceed most of our targets. Our top priority, of course, was to remain in compliance with our financial covenants. As we saw COVID-19 creating uncertainty in our end markets, our team worked with our lenders to secure an amendment to the covenants to ensure compliance and to increase liquidity to manage through the pandemic. As of today, we are operating with a comfortable margin versus the covenants. Second, we targeted $15 million of cost improvements in our operations. Through nine months, we've captured $14 million of these savings, primarily through improvements in procurement and logistics, plus incremental operational improvements in our manufacturing facilities. Third, we targeted $10 million to $15 million of savings from corporate costs. Through the first three quarters, we've recognized $3 million of the savings as planned. We expect incremental improvements to put us in the target range in the coming quarter. Next, we sought to reduce capital expenditures by $10 million to $15 million to increase liquidity while still investing in critical areas across our assets. Through the first nine months, we spent $43 million of CapEx or $38 million lower than the comparable prior year period. For the fourth quarter, we expect increased spending but still remain below our targeted level. Lastly, we set a goal of improving working capital by $25 million. To-date, we've captured $13 million of that goal. Additionally, we expect a tax refund in the fourth quarter, now estimated to be $33 million or $2 million above our prior comment. Additionally, we anticipate another $22 million cash tax refund in 2021. So despite the challenges of 2020, our overall focus on costs has led us to capture $109 million of cost reductions, including a number of one-time benefits resulting from production curtailments and other discrete actions. Year-to-date, again, we generated $34 million of free cash flow. We have previously discussed like COVID-19 pandemic keeping our earnings well below our potential, but we believe that we're well-positioned for the current recovery as discussed on Page 13. As the industry leader and owner of five of the eight global manufacturing lines dedicated to cellulose specialties, we are uniquely positioned to service our customers with industry-leading product diversity and technical knowledge, including two world-class research facilities in the U.S. and in France and an unmatched security of supply. We have a broad and diversified portfolio of natural-based products focused on sustainably delivering quality and value to our customers. We have a strong global leadership team focused on executing our strategy by reducing costs, improving cash flows, increasing productivity and reliability and developing new products in new markets. As we just demonstrated, we have taken decisive actions in the challenging market conditions to control costs and improve liquidity. This provides us with the financial flexibility to manage through the cycle and position us well for the improving markets. Lumber markets provided a nice boost to third quarter earnings, but our team did a great job of increasing volumes to ensure that we took advantage of the stronger markets. Pulp markets are just beginning to show signs of recovery and we remain poised to capitalize on them. In other segments like Newsprint and Corporate, we remain focused on controlling costs and improving our cash. We know that we will be the long-term winners in our markets and we are taking the actions today to ensure that we are able to capitalize on our full potential. We are fortunate to have quality assets and employees that have allowed us to operate through the pandemic, unlike many of our competitors. We know that we are leveraged to commodity pulp prices, which are starting to show signs of recovery. We have previously discussed $80 million to $95 million of potential upside by returning fluff and viscose prices to the five-year average. We know that we're going to capture this value as the market returns and we're confident that we will emerge a stronger, more resilient company. So with that, operator, let's turn the call over to questions.

Thank you. Our first question comes from the line of John Babcock with Bank of America. Please proceed with your question.

Starting out, I was wondering if you can talk about – obviously, you generated a really good cash during the quarter, and it seems like you're pretty well-positioned for the fourth quarter as well. So on that point, I was wondering if you can talk about how you plan on deploying that cash, whether it's with debt reduction, investments in your assets or elsewhere.

It's Marcus. As we said previously, we continue to be prudent with the deployment of capital, both in CapEx and certainly remain focused on addressing our overall leverage. And that would include staying close to capital markets and making sure that we're conscious of any avenues to address our maturities that are coming up.

Okay. And then next with regards to the Newsprint business, obviously, you have two lines there and are working to effectively sell off those assets as much as possible. Clearly, you've entered the bag business. I was wondering if you might give us some sense as to how far you might be able to scale up that bag business, potentially, how big it is now, and also, if there are other products that you might be able to produce there that could help keep those assets busy?

On Newsprint, right? We've got a great asset, low-cost asset in Kapuskasing. We've talked about there's two lines there. We're operationally moving back and forth between the two lines to just address the market situation. And we're currently running on one line, and we plan to optimize in the near term around that one line. But, effectively, we're really playing a sales mix opportunity where we've really reduced our export, which is much lower value to the company and taking advantage then of more North American demand. The bag opportunity is real. We've got quite a few different trials going on out there in the marketplace, but it's also early, John. So I would say it's too early to make a call on how that's going to drive value for the business. But we do believe it's real value and we look forward to kind of giving you updates to that going forward. And yes, we do have a couple of other opportunities that the team is working on up there as well to expand some new product opportunities. I just see, let's say, far into this, and we'll give you updates as we go forward, but too early to say how it's going to drive value and different than what we have today.

Okay. Thanks for that. And next on the duty front. Clearly, it looks like they might come down from around 20% to around 8%. Can you just remind me, logistically, how this works? So, I mean, I guess, first of all, just on timing, when that might come down, but then also would Rayonier Advanced Materials get any sort of refunds associated with the past deposits because of that reduction, or should we not expect any sort of cash inflow from that?

Yes, it's Marcus again. So the way to look at the duties is the preliminary determination will be confirmed. So we should see a 60% reduction in the duty rate on deposits going forward so that new rate of 8% and that addresses 2017 and '18 duties that were then overpaid. There will be no refunds of duties given, if you follow the past duty file, these duties will remain in place and will continue to accumulate until there is a final resolution of an ultimate agreement. So we will get validation that there was most likely an overpayment for those periods, but there won't be any cash, with the Department of Commerce.

Okay. Thanks. And then, last question before I turn it over. I was just wondering if you might be able to provide some color as far as how the contract negotiations are progressing in Cellulose Specialties.

Yes, John. As always, it's our policy not to comment on CS negotiations, volume and/or pricing until the fourth quarter earnings call in February for competitive reasons. So we are in the middle of many discussions for the 2021 supply agreements with customers and many of them will be finalized over the next two months. And in fact, most of them, or all of them, will be finalized over the next two months. I would say the limited travel due to COVID is making the discussions go a bit slower as all customer meetings are virtual at this point and will likely continue to be so through the remainder of the year but stay tuned-in on the first quarter call, we'll give you some insights into how those negotiations finalized over the next couple of months.

Thank you. Our next question comes from the line of Steve Chercover with D.A. Davidson. Please proceed with your question.

So to start, I'm intrigued how the extra or extended shifts in lumber will flow into Q4 sales. Like, did you accumulate inventory? And if so, why wouldn't you sell every stick that you made when the market was on fire in the third quarter?

Yes. Great question. Steve, look, we did just as you noted there, right? We extended shifts and that is just to the extent possible through the third quarter. If you remember when we talked at the last quarterly call, we talked about we were probably doing orders six weeks out in lumber at that point in time. So if you think about ramping up the quarter in September, we were probably already sold through October at that point in time. So we were realizing September peak sales and capturing them into October sales. So it's going to give us a strong start to fourth quarter sales and we've noted, obviously, prices have come down considerably, but they have stabilized and future is now we're sitting above cash. So we feel good about where the equilibrium is sitting today. And again, we should get the benefit -- a lot of benefit on another strong sales quarter because of the fact that we kind of sold out a little bit further than we would normally would from quarter three into quarter four.

So, I mean, could EBITDA be similar to what you generated in Q3 or you're still being prudent to put it down a little bit?

Well, we won't give the EBITDA guidance but, Steve, we've noted that volume will be stronger and pricing should be also strong as well. And you can kind of do your math, if you -- if we said, look, we kind of sold out October and the September timeframe and factor in the balance of the market indices there, you're going to see another strong quarter on lumber.

It's Marcus. Just to add on the volumes, if you look at the lumber volumes, sequentially, we were up, call it, 2%. And then if you compare it to last year, almost 7%. So we did drive some good volumes, just to kind of build on Paul's comments.

Thank you. And switching gears, I know that COVID has crimped demand for Cellulose Specialties but did the mill rationalization initiatives that you discussed during your Investor Day back in 2019, did they generate the benefits that you expected both operationally and also in the context of market perception where your clients knew your capabilities were?

Yes. So the short answer is yes. They did generate the savings that we have. We track those very closely in regard to all of our integration and transformation savings over the past several years. So, we benefited from moving grades to where they were most efficiently produced in many cases and where we had better logistics prices. So we did see real benefits from some of those movements. In addition, last year 2019, you saw some modest price improvement, 1% to 2% coming into this year, set for the year, although we did see some lower volumes as we exited some lower margin businesses over the timeframe there. As I answered in John's question, we're not going to give any outlook into CS negotiations for competitive reasons as to how that goes into next year, but overall, the repositioning of the mill assets have allowed them to run more effectively and efficiently, which generated some real opportunities there. And for the most part, the customers that trialed and moved with us have done so successfully. So, all-in a good effort.

Okay. Thanks, Frank. So my follow-on has nothing to do with the negotiations, but in the press release, Page 1, you mentioned that viscose and high-yield markets are starting to see signs of economic recovery. Can you give us just the lay of the land in acetate and ethers?

No, I can tell you more about viscose and high-yield pulp, but I'm not going to comment on any of the CS volumes or pricing.

So the viscose that you're referring to, is that commodity viscose for T-shirts or is it tire cord?

No. This is commodity viscose going into the textile applications. So this is what we've run, the fluff and viscose commodities that we run. That commodity viscose is up for the first time in 24 months in October. So this is the charts that you've seen us put up before that started to drop when the Trump tariffs on textiles out of China were put into place in May of 2019 and accelerated in September as those tariffs went up to 25%. They went from roughly $900-ish level down to $600 and sat at $600, $605 for effectively the entire year until October. Through October and November, we've seen better demand as the apparel demand has picked up post-COVID, better downstream demand for the spinners and the apparel manufacturers, and as a result, over the two months, we've seen effectively a 10% price increase, probably half and half in October and November. And we think the dynamics in those markets remain strong as we enter into next year with most analysts having their increases over last year up roughly $100 a ton. But those, I would say, are dated and we're seeing more price momentum in the viscose market than those analysts had anticipated in the fourth quarter. So I would look for those analysts that do cover the viscose market, CCF, and others, to have different perspectives, maybe more bullish perspectives as we enter 2021.

Okay. So you're really making no comments, whatsoever on -- what's going on in specialty cellulose. And let me just...

The only thing I'll tell you about specialty cellulose is just kind of our markets in general, Steve. So I'm happy to say that. But, I mean, as we've looked at this year, acetate tow has been resilient throughout the year, but industrial applications did see declines and we've talked about that. I would say the automotive end markets for filtration and tire cord were hit very hard in the first half of the year. We finally seem to find stability and we are seeing improving customer forecasts, albeit from a depressed level in the fourth quarter. So some healing there in that segment, as things stabilize. Ethers for construction, which go into plastering and cement, remain a bit of a wildcard. There's varying opinions depending on each customer's geographic mix, product portfolio and general outlook. But we don't envision further deterioration and likely expect that the market to improve, while the construction ethers market to improve going forward, while ethers for food and pharma have remained relatively steady. So that's kind of the current state and the best we can see on the demand side of it without getting into specifics in regard to negotiations and customers.

Got you. Okay. Last odd ball one. There was an election the other day and there might be a change in administration. I honestly don't know. But assuming there was, do you expect that would make things better or worse with respect to your tariffs in China and also the $80 million bucks that are being held hostage on the lumber side?

Look, Steve, I know you don't know and I don't know. I think it's too early to say where this all goes and the impact to the business. You can lay out scenarios that are plus and minuses on both outcomes. So I think, right now, we stay tight. Obviously, the conditions we've been operating in for the last couple of years with the tariffs, as Frank just noted haven't been positive for the company. And regardless of the outcome, we hope those conditions improve going forward.

Thank you. Our next question comes from the line of Paul Quinn with RBC Capital Markets. Please proceed with your question.

Just on the specialty pricing that was up to 13.48, up 3% quarter-over-quarter, is that on mix or is that on contracted volumes?

Yes. So let me just step back and -- it's all on contracted volume. And then the mix of that contracted volume changes over the course of the year. So one way to think about this is that all of our pricing for Cellulose Specialties gets set by the end of the year, in the previous year. That has a relatively -- there is a range of prices depending on end markets and the specific products. And what you see during the course of the year are two things. One is, going into '20, the 1% to 2% increase that we were able to negotiate flowing through the sales as we go through the year. The other piece of it is the mix piece, which is higher or lower prices based on what is actually sold on a contractual basis in the quarter. So it's more about the customer order patterns, any deviation from that 1% to 2% is more about the customer order patterns in any given quarter than it is about any fundamental changes in the market.

Okay. That's helpful, Frank. And while I got you, anything of note on the product innovation side in specialties?

Yes. We spend a lot of time looking at product innovation and we've got a very big effort in that regard. I'll just give you a couple of areas where we've been focused which -- without going too deep into it, but we are looking at alternative textile applications, right, whether it's improved viscose type of grades or its acetate grades that go into the textile group. So that's one that we're fairly far down the road from a development perspective as we move forward there. I think we're also very focused on emerging trends, in particular in the acetate world. And when I say that, many of our customers are looking at, with a declining non-Chinese acetate market -- acetate tow market, looking for opportunities to expand into faster growing businesses and we're looking to actively partner with those customers to the extent that we can to help them drive new uses for acetate outside of the tow arena to manage some of that structural decline in the acetate market over time. So that's another one. One more that I'd give you a little flavor on is the ethers market. There is a significant application of cotton lint pulp that goes into the ethers market. And that has been growing over time with some good cotton prices out there. But we have, out of our Tartas facility, the highest intrinsic viscosity ethers out of dissolving wood pulp in the world. And we're the only one that makes these levels of viscosity to our knowledge, and we are looking to take that viscosity and compete against the cotton lint component of the market, which is fairly big. And so, it will take time and cotton lint will still have significant uses because of its applications, but there is a middle ground where both cotton lint fluff mix and ethers pulps are both used and both capable and so we're working very closely and very hard to penetrate that cotton lint market with some of these recently developed products.

Okay, great. And then, maybe just last question in the lumber side. What's the sustainability of the increased lumber production? And when I take a look at the shipment volumes year-over-year, it's not that impressive. So what are you doing in the mills? Are you running overtime or are you just running every mill on two-shift basis?

Yes, it depends on the mill, Paul, on how we did that. And talk about the sustainability of those higher levels, I would say they're not. I think our production levels are going to be relatively consistent year-over-year. And again, keep in mind, we took some considerable downtime in the April/May timeframe, a month to two months depending on the facility. So these were really again, extended shifts, elimination of breaks and things like that and really just kind of focus around that third quarter for a period of time. And so I don't think it's anything that you would take a look at year-over-year of a substantial improvement or a change in the relative output of our assets. I think you just got to look at it in this period of time when prices are really strong, we're taking advantage of that as we said we had a bit of an upside in Q3 and you're going to see quite a bit more in Q4, again, at relatively elevated prices compared to historical levels.

Thank you. Our next question comes from Sandy Burns with Stifel. Please proceed with your question.

Maybe just tagging on to the previous question about the lumber business. Obviously, volatile business, historically high pricing, strong demand and such, but given operational initiatives you were taking on it even before the upturn and maybe thinking that demand and pricing will return to somewhat more normalized levels, do you think this business going forward could be positive EBITDA consistently on a quarter-by-quarter basis or you feel like it's still volatile enough in your cost structure, feel uncertain enough that we may see that in the future if certain things go against the company and the industry?

Yes, good morning. It's Marcus. Over the last couple of years, we deployed some targeted strategic capital to these facilities, saw line improvements, scanning capabilities to drive better margin and drive down costs. So I would certainly say that they are positioned better to run through a cycle and they certainly have the fiber base to sustain that type of production. So, I think, yes, certainly they're better positioned, given the capital that was spent to strengthen there.

Yes, I think, add to that, Marcus, further, just our focus on reliability across all of our assets, I think that really, we're starting to see the benefits of that. And so, I think that obviously improves our overall cost position of these assets as well. So I think both the investments, as well as just kind of the focus on day-to-day blocking, tackling from the team out there, it's been excellent. So, we're pleased with the outcome.

Thank you. Our next question comes from the line of Paretosh Misra with Berenberg. Please proceed with your question.

So I just wanted to go back to some comments, I believe, Frank made about uses of your products, so -- for your Cellulose Specialty products. So some of your customers are obviously using it for some emerging textiles applications as opposed to cigarette tow. So my question is, when they do that, does that change anything at your end? And is that a different product that you ship to them? And is there any difference on the pricing side?

So without getting into the pricing side of it in particular, Paretosh, I would say it is a different product. It is a product that is valued, both for its application and use, but as well as its ability to -- its sustainability characteristics. So as the textile market continues to move towards more sustainable solutions, our products that go into those are well received by the customer base from a sustainability perspective.

And Paretosh, I'll also add to the comment Frank made earlier, and again, recognizing the textiles is certainly of interest of some of our customers. But, Frank also mentioned other customers who've approached us and we're working with them on -- think about bioplastics, right, because what we sell here is something that's very different. It's a fundamental building block based on nature and our some of our customers are looking at making a shift, they're looking at, hey, how do we better compete together as a supply chain team against petroleum-based alternatives? And these initiatives are going to take some time, but for us, it's very exciting that our customers are working on it and we're happy to partner with them to support their effort.

Got it. Interesting. And is there any opportunity for you also to differentiate yourself on the sustainability front in terms of how you get the feedstock for your cellulose products or pretty much everybody does the same thing?

No, it's not. And we continue to work on it. So we've got FSC-certified wood up in Canada, which is very useful and we've begun to do more in the U.S. in regards to our wood sourcing opportunities to continue to work on getting the appropriate designations from the NGOs that really move the needle with the customer base. And, Paretosh, I think this is a big focus of ours. This is a trend that's going to continue to go this way over time. And as Paul pointed out, the removal of petroleum-based items is going to continue through the supply chain, which will leave cellulose opportunities -- will broaden cellulose opportunities in the marketplace. And especially -- goes to the consumer end markets. This is a consumer pull which is not going to go away for greener and better sustainable solutions on things that they purchase.

Got it. Now, very interesting. And then lastly, I had an industry question on high-yield pulp. So, sorry I'm not super close to the news flow there, but I think you mentioned some changes in China happening regarding the use of recycled fiber, recycled pulp. Can you just elaborate as to what's going on in that market? And when do you think that could impact pricing in the industry because of those changes?

Yes, good morning. It's Marcus. If you look at the Chinese market for coated board, those producers use sorted office paper in the production of that product. And given the ban, they would look to replace that with recycled pulp, but those options, from what we're hearing, are limited. So the next available fiber, if you look at the continuum of fiber that they might use, would be high-yield and we've seen that in the past that when you see these shifts in -- where they're sourcing their fiber, they come and look for high-yield. So it's certainly a potential opportunity here that we see.

Thank you. It appears we have no additional questions at this time. So I'd like to pass the floor back to management for any additional closing comments.

Yes. Thank you, operator. And look, we appreciate everybody's time today. We're pleased with our third-quarter results and we look forward to driving shareholder value as we continue to do our cost takeout initiatives and we participate in these rising commodity markets. So again, thanks everybody for your time this morning. We look forward to giving you an update in the near future.

Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation and you may disconnect your lines at this time.