Arsen Kitch: You know, Matthew, we tend to stay away from commenting on pricing projections. What I would tell you is, in this market, supply and demand drive price and as we mentioned in our comments, we think there is a pretty — there is a good healthy supply and demand balance, so that’s driving pretty good utilization rates in the industry. So if you look back at 2018 through 2020, there’s quite a bit of supply added to the private branded market, which we think outpaced demand growth. If you look at ’21 through ’23, there is actually a net reduction in capacity. And then, you know, if you look out over the next three years, we think that, that supply additions will roughly match with demand growth. So we think we’re in a different and a better tissue market at this point, but I’ll refrain from commenting on future pricing.
In terms of pulp, we did mention in our prepared remarks that about a quarter of our volume does have a pulp cost component that’s tied to RISI. So we are expecting some headwinds here in the coming quarters, $4 million to $6 million per quarter due to lower pulp costs. But if you look at our margin improvement over the last several quarters, we believe that we’ll be able to retain most of that margin improvement at least in the near to medium term. So we think the conditions are better in tissue today than they were over the last several years if you set COVID aside.
Matthew McKellar: Okay, thank you. And then maybe just to drill down at one point there. Do you expect the shift in private branded product consumption or sort of the market share there, do you expect that shift to slow from here given the overall inflationary pressures for consumers seem to have sort of eased? Should we expect that trend to stabilize or do you expect sort of further share gains by private branded product from here?
Arsen Kitch: You know, we’re right around 36% right now, which was roughly the same as we had last quarter. If you go back to 2019, it was less than 32% and if you go back 10 years, it was quite a bit less than that. So we’ve seen private branded share grow regardless of economic conditions through ups and downs in the economic cycle. So we do think that there is more runway for private branded share. If you look at some European countries, they are north of 50%. We’re now at 36%. So do I think it’s going to be consistent growth quarter-after-quarter? No, but I think if you look at over the long haul, I do think private brands — we believe the private brands will pick up additional share over the next several years.
Matthew McKellar: Okay, thanks very much. I’ll get back in the queue.
Arsen Kitch: Thanks, Matthew.
Operator: Our next question comes from Paul Quinn with RBC Capital Markets. Your line is open.
Paul Quinn: Yes, thanks very much. Good afternoon. I just wanted to tag team of Matt’s question on the tissue side. You know, it sounds decent at 18% EBITDA margin. But it’s not the best this business could be. I mean, if we go back a couple of years, you guys really struggled in the business and it seems like the pulp, you know, now it’s sort of bottoming, turning the other way. You know, you’re definitely going to have that cost headwind. Just wondering how confident you are holding that margin.
Arsen Kitch: So we’ll avoid talking about future margin projections, Paul. But I do think that we can retain the bulk of that margin that we picked up here over the last several quarters. If you go back, you know, outside of COVID, you know, we were probably in that mid to high single-digit EBITDA margin. You know, we’ve done a lot of work on our system with our assets and our supply chain and our production and our customers. We think we’re better positioned operationally regardless of what happens with pulp prices. Although obviously, those are providing a nice tailwind for our margins. You know, pulp is hard to predict, Paul. We’ve been through, you know, we talked about this at length over the years. It’s hard to predict.
