Roger Spitz

Roger Spitz asked about Magnera's fiscal 2026 volume growth assumption, specifically if it remains flat, and sought insights into 2027 volumes. He also questioned the main drivers for the fiscal 2026 EBITDA growth, asking if it's primarily cost savings and merger synergies or other factors. Lastly, Spitz requested further details on fiscal 2026 Free Cash Flow, including working capital movements, cash taxes, and other relevant items.

Answer

CEO Curt Begle declined to comment on 2027 volumes. CFO Jim Till confirmed a flattish volume outlook for 2026, with Europe expected to be slightly down and North America slightly positive, offsetting each other. He noted intentional efforts to be selective in the portfolio. Till clarified that the primary drivers for 2026 EBITDA growth are synergy realization and Project Core initiatives. For Free Cash Flow, Till stated a target of flat working capital and provided a breakdown for the $100 million midpoint: $395 million EBITDA midpoint, $135 million for interest, $80 million for integration costs and taxes, and $80 million for CapEx.

Roger Spitz asked about Magnera's fiscal 2026 volume growth assumption and any preliminary thoughts on 2027 volumes, the main drivers for the fiscal 2026 EBITDA growth (pro forma fiscal 2025 including Glatfelter), and further details on other fiscal 2026 Free Cash Flow items, such as working capital, cash taxes, and other outflows.

Answer

Curt Begle (CEO, Magnera) reiterated the expectation of flattish volumes for fiscal 2026, with Europe slightly down, North America slightly positive, and South America normalizing in the latter half, declining to comment on 2027 volumes. Jim Till (CFO, Magnera) confirmed that the primary drivers for 2026 EBITDA growth are synergy realization and Project Core initiatives, given the flat volume assumption. For Free Cash Flow, Jim Till stated a target of flat working capital and provided figures for interest ($135 million), integration costs and taxes ($80 million), and CapEx ($80 million), totaling roughly $100 million at the midpoint.

Roger Spitz inquired about the expected quarterly tempo for Magnera's fiscal year 2026, specifically how the company anticipates outperforming its 2025 fiscal quarters to achieve the projected 9% year-over-year EBITDA growth.

Answer

CEO Curt Begley explained that while Magnera does not provide quarterly details, the company is on a good trajectory for synergy realization, particularly in procurement, SGA, and BEX programs. He noted that Project CORE will ramp up throughout the year, with most of its benefits expected in Q3 and Q4, and some impact in Q1 and Q2. He also highlighted that the initial quarters of 2026 will involve lapping the challenging South America comps from the previous year.

Roger Spitz asked for the overall pro forma volume growth for fiscal year 2025. He also inquired about the expected quarterly tempo for outperforming the fiscal year 2025 quarters, given the 9% year-over-year growth forecast for fiscal year 2026.

Answer

Curt Begle, CEO, reported that total tonnage sold for fiscal year 2025 was approximately 3.5% to 4% negative, with the Americas segment experiencing a 3% to 3.5% decline primarily due to South America challenges, and Europe seeing roughly a 4% decline. Regarding the quarterly tempo, Curt Begle stated that while specific quarterly details are not provided, synergy realization is on a good trajectory, with procurement savings already impacting Q3 and Q4. Project CORE benefits are expected to ramp up throughout the year, with most impact in Q3 and Q4, and South America comps will be a significant factor in Q1 and Q2.

Roger Spitz from Bank of America inquired about Mercer's 2025 cash flow projections, specifically asking for estimates on cash taxes, interest, and operating cash flow less CapEx. He also asked for details on the German revolver facility, including any maintenance covenants and the current headroom available.

Answer

CFO Richard Short provided guidance, estimating 2025 cash taxes at approximately $25 million, interest around $110 million, and a $100 million CapEx target, with working capital expected to be flat to slightly negative. Short also confirmed the German revolver has no maintenance covenants and possesses significant headroom, likely in the range of $150 million to $200 million.

Roger Spitz from Bank of America asked for the total EBITDA impact from the 2024 pulp mill turnarounds to establish a rule of thumb for downtime costs. He also inquired about the maintenance cycle lengths for each mill and whether they could all be moved to an 18-month schedule, and if German regulations mandate specific turnaround frequencies.

Answer

Executive Richard Short provided a rule of thumb of approximately $1.5 million in EBITDA impact per day of downtime, noting the total 2024 impact was about $80 million. Executive Juan Bueno confirmed Stendal and Celgar are on 18-month cycles, while Peace River and Rosenthal are on 12-month cycles. Moving the others to 18 months is an objective but requires extensive review and approval from insurance companies. Short added that German regulations do not prevent an 18-month cycle, as evidenced by Stendal's schedule.

Roger Spitz asked how the OCI acquisition will impact Methanex's realized price discount to benchmark prices and whether widening discounts were due to shipping patterns.

Answer

President, CEO & Director Rich Sumner stated that while the average discount may increase due to OCI's Atlantic-based sales, this will be accompanied by higher overall price realizations and a more efficient supply chain. He clarified that widening discounts are driven more by increased competition in the Atlantic Basin rather than shipping logistics.

Roger Spitz from Bank of America, on for Olivia Key, asked for details on the new $50 million inventory financing facility and sought an explanation for the divergence between Tronox's volume performance and a competitor's pre-announced results.

Answer

CFO John Srivisal described the financing as a short-term, renewable facility that adds liquidity and is recorded under 'other liabilities,' not debt. CEO John Romano attributed Tronox's volume miss versus expectations to a muted U.S. coatings season and heightened competitive activity in Europe, which led to some share loss in the quarter.

Roger Spitz inquired whether the Botlek plant idling is a warm or cold shutdown and how difficult a restart would be. He also asked for a breakdown of 2024 cost of goods sold between mining and pigment operations.

Answer

CEO John Romano stated there is no plan to restart the Botlek asset, noting that chloride plants are typically not restarted after long-term shutdowns. CFO John Srivisal declined to provide a cost breakdown, explaining that the company views its operations on a fully integrated basis.

Roger Spitz of Bank of America asked why Tronox's TiO2 volumes were projected to grow 11-12% in a year when the global market is flat to slightly up, and which competitors might be losing share.

Answer

CEO John Romano attributed the outperformance to a successful commercial strategy of aligning with customers who are growing faster than the overall market. By focusing on these high-growth partners in key regions, Tronox can gain volume organically without resorting to price-based share grabs. He did not speculate on which specific competitors were losing share but emphasized their growth was tied to their customer alignment strategy.

Roger Spitz from Bank of America requested an update on Olin's plan to test the U.S. PVC market by tolling its VCM through a partner.

Answer

President and CEO Ken Lane reported that he is very encouraged by the team's progress, having secured a handful of customers and products with a long list of others in qualification. He reiterated that the long-term goal is to find the most capital-efficient way to maintain participation in the vinyls market by 2030, with all options, including commercial agreements and joint ventures, being considered.

Roger Spitz questioned the potential impact of tariffs on sales from the U.S. to Mexico and China and asked for clarification on the available borrowing capacity under the AR securitization facility.

Answer

CEO Frank Bozich assessed tariff risk as manageable, with negligible impact from imports and resilient exports to Mexico/Canada due to being highly specified in the auto value chain. CFO David Stasse explained the AR securitization availability is tied to a borrowing base, which was seasonally low at year-end but is expected to increase in Q1.

Roger Spitz asked for specific full-year guidance on various cash flow items, including base CapEx, cash interest, taxes, and working capital, and sought confirmation on the use of proceeds from the recent term loan.

Answer

CFO Stefan Schellinger provided full-year estimates: working capital inflow of $40-$50 million, cash interest slightly below $200 million, cash taxes around $30 million, and base CapEx of $120 million. He confirmed the new term loan proceeds were used to pay down the ABL facility, a leverage-neutral transaction that strengthened liquidity.

Inquired about the reasons for the significant volume decline in Spunlace compared to Airlaid, sought clarification on 'other operating cash flow costs' for Q3 and the full year, and asked for color on the large volume drops in composite laminates and metallized products.

Answer

The company explained that Spunlace is a more competitive, lower-end market facing significant import pressure from Asia, and that they deliberately exited unprofitable business. 'Other operating cash flow costs' were about $4 million in Q3 and are expected to be similar in Q4. The decline in composite laminates was attributed to the Russia-Ukraine war, though some volume has been regained elsewhere. The metallized product decline is due to a weak market and customers seeking cheaper alternatives like plastics or direct-to-glass printing.