Josh Wool: Okay. And then the last one on just the volumes. As you plan for 2024, what visibility do you have into a volume recovery? I know it seems like you’re taking a conservative stand, given you expected some improvement in Q3 and it didn’t materialize. And what are the tangible data points? I mean, we — I can read what some of your customers say about kind of their growth algorithm shifting from price to more volume growth. But what else should we be looking at or thinking about as we try to, I guess, plan for 2024?
Thomas Fahnemann: Yeah. Again, to be quite honest, there’s not a lot of visibility right now. Like you rightfully pointed out, we thought that we have kind of reached the bottom at the end of Q2 and that Q3 would help us from a volume standpoint, didn’t do that. So it’s really difficult. But what I — for us right now and if I look at our next 12 months ahead, and this is not all market, but this is also the things we are doing internally in our turnaround strategy and our continuous transformation process. So I would say, as far as volume is concerned, we have reached the bottom as far as Glatfelter is concerned. So we are building up. I think the big question is if the markets are coming back earlier, we are well-positioned to capture then the value which is in there.
It will come faster. But overall, we are planning volume growth for next year. But it’s not coming from the market. It’s just based on what we have right now. And if I look at our process right now, at our budget, we are kind of looking at the market right now. We are not betting on any market improvements. But with actions we are taking, which we can influence, we see volume growth for next year.
Josh Wool: That’s helpful. And then moving to just profitability, I would agree you guys have made progress on overall margins. But I guess the issue is with the depressed top line. The absolute dollars are flattish on a year-over-year basis. So my question is, based on what you just said, if your volume improvement is coming from just your own growth and not a market assumption, how much more progress can you make on just EBITDA margin in this type of environment? And how much will be predicated or premised on a turnaround in volumes to really kind of reach that historical level of profitability that we’ve talked about getting back to?
Thomas Fahnemann: Yeah. Again, without going into too much detail, but if you look at two of our main businesses, if I look at airlaid, a little softer as far as EBITDA margin is concerned in the third quarter. But also composite fibers, I mean, we are already in the double-digits. And you might remember when we said at the beginning of — we introduced the turnaround strategy that we said the business needs to be between 10% and 15% depending on where we are in the marketplace. So if I look at airlaid, if I look at — and airlaid was there before, but composite fibers is there now in Q3 in a very difficult market environment, we kind of positioned it. And I think — so that’s very promising. Now coming to spunlace, we still have a way to go.
But if you look at the year-over-year improvement, and again, with spunlace you have to look at two different segments, we have the hygiene and wipes and we have, which probably will get 5%, 6% EBITDA margin than Sontara. Overall, we are making a lot of progress there as well if you look really into the segments. But there’s still the biggest gap to where we want to be is still in spunlace, but if I look at the last two, three quarters, we have made a lot of progress.
Josh Wool: Okay. And then I have one question just on composite fibers’ profitability. It seems like you got some nice improvement from the decline in softwood and fluff pulp prices, which I know are on a lag. Those prices also came down in Q3. So should we expect to see a little bit more price-cost in Q4 based on those declines? And then have you guys been impacted at all by some of the capacity closures in North America on the fluff and softwood pulp side?
Thomas Fahnemann: I mean, I would – we are still expecting a little bit of that in Q4. But I mean, as a rule of thumb, we are buying the raw materials and normally, let’s just say three months later, we are consuming them. In some cases, it’s earlier, but kind of everything you’ve seen in Q3 was actually bought in Q2 and now for Q4. So there should be some lag effect, light effect there. Overall, outlook for pulp is kind of difficult, like a lot of other things, I would say, overall, the market is still weak. What we have seen is in some areas that people say have kind of bottomed out now as far as pricing is concerned. Now fluff, which is a very, very important raw material for us, unfortunately, it took much longer to get down there.
And it didn’t come as far down as we were hoping to be quite honest. But it came down and we should see some positive effects in Q4. Now your other question is impacting us. Right now we don’t have any supply issues. So this is all fine. But overall, if you think about 500,000, 600,000 tons less capacity in the market, that might have an impact.
Ramesh Shettigar: Yeah, Josh, and trying to hang on to this price-cost gap for as long as we can on the non-floating side is also going to be a key focus area for us in Q4. And that will also help improve the margin profile. I mean, basically, we want to make sure there is firm evidence of some of these key input costs coming down in a sustained way before we start to give that up in price.
Josh Wool: Okay. all right. And then I have one question about cash flow and one question about the guide. I guess, first on the guide, you have one quarter left. And if I just remove or take $10 million out of the midpoint of your EBITDA guide last year, it implies a pretty wide range for Q4. So I guess I’m wondering what are the key factors that will drive whether we land at the higher end or the lower end of that range?
Ramesh Shettigar: Yeah. I would say, Josh, look, we previously guided between $100 and $110 million. So even if you take the midpoint there of $105 million, we’re essentially calling for roughly a $95 million EBITDA year, all right? And to get to $95 million, that implies a $27 million EBITDA for Q4. So yes, the market continues to remain soft. There is going to be some sequential growth Q3 to Q4. We also end up having some one-time rebates that typically come in the fourth quarter. So it’s not as wide a range that we are anticipating for the fourth quarter, given that we’re pretty much in early November now. And looking at the data coming from how we’ve done here in October, we’re feeling optimistic of hitting that revised guidance, if you will, for the fourth quarter because of the visibility that we have from October and our ability to influence the continued initiatives on the turnaround and being able to keep a close watch on the market as well.
