Josh Wool: Yes, maybe this is the last question then around this is just so I was saying that the last question I have around kind of the issue in Airlaid is so broadening out the customer base and finding, I guess, new customers to replace some of that. When do you think that could get the operating rate and absorption back to a more normal level? Is that like Q2? Or is it more second half? Just some context there?
Thomas Fahnemann: Okay, Josh. Now what we’re seeing right now is that we are seeing first shipments in Q2, but these are, again, we are ramping up. It’s new application and all this. We see already coming some volume in the second half of this year and then the full impact you’ll see in 2025 and 2026, where we can replace it. And again, as I mentioned in my remarks earlier, it’s really exciting. We have a nice absolutely new applications where we can position Airlaid and also in a segment, which is also providing enough profitability. Because that’s the biggest issue because we get faced with other substrates, which have a totally different price point and we cannot, we just can’t do that. We don’t see that in the U.S. yet, but we’re seeing it in Europe, mainly coming from Turkey and Asia, and we already initiated the strategy back 15, 16 months ago and it’s coming to fruition.
But again, coming back to your question, you’ll see something a little bit in the second half of this year and then in ’25, ’26.
Josh Wool: Okay. And let’s talk about the price of pulp. And here, you can speak to Airlaid as well as Composite Fibers, but just kind of looking at pulp prices in North America and Europe. They entered 2023 at a very elevated level. They dipped pretty hard through the summer. And now they’ve been rising again, albeit they’re below the last peak. When should we see the impact of rising pulp prices in your margins? And will the experience be any different this year, positive or negative given either changes to contracts or the fact that you’re not also being squeezed on energy or maybe negatively because of what you said, competition with other substrates and that competitiveness getting worse as the price of pulp goes up.
Thomas Fahnemann: Okay, Josh. I mean we are seeing the pulp price increases in Q2. So we are holding normally a 2, 2.5 months inventory. Then if I look at our floating customers, we will pass that on with, I would say, around about three months time lag, so we’ll get it, but there’s a time lag. And contracts are a little bit different, but it’s on average, it’s around about three months. And also, we have, as you know, implemented some of these floating mechanisms in our Food and Beverage segment and with other customers. So that will help. There’s always a time lag, but it will help, and we’ll pass that on. If I look at the non-floating side, we already were able to increase our prices roughly by 2%, 3% in North America. And this was generally accepted. Again, here, Europe is much more challenging, with a very competitive market conditions, but we are working on that as we speak.
Josh Wool: Okay. Helpful. Just one last question, and then I can get back in the queue, around cash flow. Just any context on the performance in Q1 versus your expectations and kind of normal seasonality? And are there any guideposts around seasonality and also the timing of some of the restructuring spend over the balance of 2024 that can kind of help us model that out.
Ramesh Shettigar: Sure. So Josh, I would say in terms of seasonality in the cash flow, typically, the first quarter is a heavy cash outflow for us, and we’ve seen that over the last several years. I would say, from a working capital standpoint, if inflation stays moderated, we can continue to have at least a breakeven to slightly positive working capital profile. And that’s what we’ve been expecting. But if inflation starts to creep up here, whether it’s in input costs, whether it’s in energy, that could have a similar impact like we saw last year as well, where working capital was quite strained. But our going-in expectation is having the cost pass-throughs structured appropriately, we should be able to manage the working capital situation this year as well.
So overall, as we think about the rest of the year, the second half of the year is typically more positive cash flow from a seasonality perspective. But some of these onetime restructuring costs, the costs that we’re incurring related to the kind of premerger integration and the HHNF transaction, all of that is kind of fairly spread out throughout the year all the way until closing. So we’re going to be continuing to manage that appropriately. But as of right now, our cash flow picture going into this year versus where we are right now is largely unchanged.
Operator: There are no others in the queue at this time.
Ramesh Shettigar: Then why don’t we give Josh an opportunity to ask any further questions if he does have.
Operator: [Operator Instructions]
Josh Wool: That’s it for me, guys. I appreciate it.
Operator: There are no other questions at this time.
Ramesh Shettigar: All right. Thank you very much, and we will speak with you again next quarter.
Thomas Fahnemann: Okay. Thank you.
Operator: This does conclude today’s conference call. Thank you for your participation. You may now disconnect.
