Good day, and welcome to the Venator Materials third quarter 2022 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Kate Robertson, Investor Relations. Please go ahead.
Thank you, Betsy, and good morning, everyone. I am Kate Robertson, Investor Relations for Venator Materials. Welcome to Venator's third quarter 2022 earnings call. Joining us on the call today are Simon Turner, President and CEO, and Kurt Ogden, Executive Vice President and CFO. This morning, we released our earnings for the third quarter of 2022 via press release and posted the release and accompanying slides to our website at venatorcorp.com. During the call, we may make statements about our projections or expectations for the future. All such statements are forward-looking, and while they reflect our current expectations, they involve risks and uncertainties and are not guarantees of future performance.
You should review our annual report on Form 20-F for the year ended December 31st, 2021, quarterly reports on Form 6-K, and our other filings with the SEC for more information regarding the factors that could cause actual results to differ materially from these projections or expectations. We do not plan on publicly updating or revising any forward-looking statements during the quarter. We will also refer to non-GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted net income, free cash flow, and net debt. You can find reconciliations to the most directly comparable GAAP financial measures in our earnings release, which has been posted to our website at www.venatorcorp.com. I would now like to turn the call over to Simon.
Thank you, Kate, and welcome everyone to our third quarter 2022 earnings call. Beginning on Slide 3. Macroeconomic uncertainty increased throughout the third quarter, and we experienced a meaningful reduction in demand for our TiO2 products sold in Europe and APAC. Energy market prices reached record highs and other cost inflation continued to increase. Total company adjusted EBITDA in the third quarter was - $8 million, compared to $61 million in the second quarter and $48 million in the prior year period. Turning to Slide 4 in our Titanium Dioxide segment. Adjusted EBITDA for our TiO2 segment was - $5 million in the third quarter of 2022, compared to $49 million in the second quarter and $54 million in prior year period. The third quarter started with weak demand in APAC, followed by softening demand in Europe.
The decline in demand accelerated throughout the quarter and we exited the quarter with weak demand in both regions. Demand declined across most end markets, principally as a result of low consumer confidence and China's Zero-COVID policy. In contrast, our North American sales volumes remained healthy throughout the quarter. In local currency, average TiO2 selling prices increased 1% sequentially and 19% compared to the prior year period. We continue to hold monthly pricing reviews with our customers as part of our customer-tailored approach. We have seen a decline in Chinese TiO2 exports globally throughout the third quarter, and exports to Europe are at the lowest level seen for many years. Throughout the third quarter, energy continued to be volatile and market rates reached record highs.
Compared to the second quarter, the higher energy costs, coupled with significantly lower volumes, drove a negative EBITDA result for our German TiO2 facilities. In the near term, visibility into product demand remains limited. By region, we see APAC as the weakest market, with Europe next and North America the strongest. Despite healthy North American demand throughout the third quarter, we have seen signs of softening in the fourth quarter. Based on our current order book and the demand environment, we expect TiO2 fourth quarter sales volumes to be lower than the third quarter by up to 20% compared to the third quarter. In the fourth quarter, more than 50% of our energy usage is under fixed contracts, with the remainder subject to market rates. In response to the meaningful decline in demand, we implemented a range of strong mitigation actions.
During the fourth quarter, we have further moderated certain manufacturing facilities, including temporarily stopping production at our Uerdingen and Duisburg, Germany, manufacturing facilities. In Germany, we are utilizing government subsidies to help mitigate the impact of the absorbed fixed costs. Looking ahead to 2023, we expect to see demand starting to recover during the first quarter and progressing in the second quarter. We also expect to see some relief on the cost of raw materials and energy costs lower due to government relief schemes from the European countries in which we operate. Once the government energy relief schemes are enacted, we expect the benefit to provide significant offset to the roll-off of our 2022 energy hedges. I would like to provide a status update on our Scarlino TiO2 facility in Italy.
As a reminder, our Scarlino facility generates gypsum as a by-product of the manufacturing process, which has been landfilled on-site and also transported for use in the reclamation of a nearby former quarry owned and operated by third parties. During the second quarter, we suspended two-thirds of the production from this site to preserve our remaining available landfill capacity. By combining the remaining capacity at the Montioni reclamation project, currently approved on-site landfill capacity, and capacity yet to be approved third-party commercial landfill, we believe we have capacity for gypsum storage into the second quarter of 2023 at the current on-stream operating rate. As a result of the low demand environment, we may further reduce production of our Scarlino facility. During this time, we continue our efforts to work with Italian government authorities for the authorization of continued gypsum disposal. We remain hopeful that authorizations will be granted.
Otherwise, we may be compelled to close the site in time. We continue to explore all options to avoid that outcome. Turning to Slide 5 on our Performance Additives segment. Our Performance Additives segment delivered $9 million of adjusted EBITDA in the third quarter of 2022, compared with $19 million in the prior quarter and $5 million in the prior year period. The segment has performed well under challenging conditions. Sales volumes decreased 6% sequentially and 8% compared to the prior year period, primarily due to low construction demand within our Color Pigments business. We have seen similar regional demand trends in Performance Additives as with TiO2. However, the business has been more resilient to the macro environment.
Energy and raw material cost inflation continued to be a headwind during the third quarter and were partially offset by higher average selling price of 3% in local currency sequentially. Notwithstanding a healthy demand environment for our functional additives products, we expect a significant decline in sales volumes as we have temporarily suspended production at our Duisburg, Germany, TiO2 and functional additives facility in response to lower TiO2 demand and high energy costs. We continue our monthly pricing reviews with customers to mitigate the ongoing impact of energy and raw material cost inflation. This morning, we announced that we have signed a definitive agreement to divest the iron oxide business from within Color Pigments to Cathay Industries for an enterprise value of $140 million. We believe that Cathay will be an excellent long-term strategic owner for the business going forward.
The transaction is expected to close by the end of the first quarter in 2023. The iron oxide business represents the majority of the Color Pigments business. We will continue to own and operate the ultramarine blue and driers elements of the business. In the near term, this transaction will bolster our liquidity and allow us to focus on our strategic assets. Turning to Slide 6. We are implementing cost austerity measures across our business in response to the challenging business environment. By the end of 2024, we expect actions to be in place to deliver the full cost reduction program benefits to deliver $50 million EBITDA compared to 2022. These actions, which permanently reduce costs, include reduction of SG&A headcount and discretionary spend, lower manufacturing fixed costs, and manufacturing improvements.
We expect cash costs to deliver the program of approximately $30 million spread over the next couple of years. I will now pass the call over to Kurt to discuss our adjusted EBITDA bridges.
Thanks, Simon. Let's go ahead and turn to Slide 7. Our total adjusted EBITDA decreased by $69 million compared to the prior quarter. The decrease was due to a meaningful decline in sales volumes, primarily from within our TiO2 segment. Price mix was a benefit of $1 million as we continue monthly price discussions with our customers. Compared to the prior year, our total adjusted EBITDA decreased by $56 million. We successfully offset higher cost of goods sold that resulted primarily from higher energy costs with higher selling prices. However, the impact from the combination of lower sales volumes was overwhelming. Turning to Slide 8 and our cash flow considerations. Liquidity at the end of the third quarter totaled $278 million. This consisted of $45 million in cash and $233 million available under our ABL facility.
We are aggressively taking actions to preserve cash and bolster our liquidity. Throughout the quarter, we opportunistically took advantage of the strong U.S. dollar and through multiple transactions, monetized and re-entered into new cross-currency swaps. This resulted in a $16 million cash benefit in the quarter and a $24 million benefit year to date. We reduced our expected 2022 capital expenditures by $20 million to $70 million, which primarily represents maintenance spend. We have intensified efforts to manage our working capital. In response to weaker demand, we have moderated certain manufacturing facilities, which should lead to lower finished goods inventory levels in the fourth quarter. We have also reviewed TiO2 feedstock shipments with our suppliers and aligned remaining 2022 shipments to our expected production levels. Importantly, we expect working capital to be a source of liquidity in the fourth quarter as we reduce our inventory levels.
During October, we completed a $51 million sale-leaseback transaction of our iron oxide Color Pigments facility in Los Angeles, California, and collected cash of approximately $42 million in net proceeds after $9 million of withholding for taxes and expenses. In addition, earlier today, we entered into a definitive agreement to sell our iron oxide business from within our Color Pigments business to Cathay Industries for an enterprise value of $140 million. In addition to these transactions, we continue to look for other ways to unlock value from within our business. I will turn the time back over to Simon.
Thanks, Kurt. Business conditions were challenging throughout the third quarter due to weak TiO2 demand in Europe and APAC, and visibility into near-term product demand is low. Based on our current order book, demand weakness continued into the fourth quarter in Europe and APAC, and we have started to see some softening in North America. We expect sales volumes in the fourth quarter to be lower than the third quarter, which will result in lower fourth quarter EBITDA. Additionally, energy continues to be volatile in Europe. Given the uncertainty ahead, we are focusing our actions on those within our control, and we have implemented a comprehensive range of actions to manage those areas. Firstly, we moderated certain manufacturing facilities and reduced orders for raw materials to control our inventory levels.
We have reduced costs at our manufacturing facilities where possible, and we are utilizing government furlough schemes to reduce and absorb fixed costs. We have implemented a robust global cost reduction program which will deliver $50 million of annualized savings by the end of 2024. These savings will result from lower SG&A costs, lower manufacturing fixed costs, and improvements from a range of actions at our manufacturing facilities. While we expect energy volatility to continue, we operate in countries which have announced government energy relief schemes. In 2023, we expect these schemes to provide a significant offset to the expiration of our 2022 energy hedges.
In order to bolster liquidity, we monetized approximately $24 million through multiple cross-currency swap transactions, and we recently completed a sale leaseback transaction for $51 million, and we signed an agreement to sell our iron oxide business to Cathay for $140 million of enterprise value. As Kurt mentioned, we continue to look for other opportunities to unlock value from within our business. Although we expect lower EBITDA in the fourth quarter, as a result of the energy actions, we expect cash flow to be positive as a result of working capital release and proceeds received from the sale leaseback transaction. Additionally, we have engaged Alvarez & Marsal to advise us on a range of operational and financial actions and objectives to reduce costs, improve liquidity, and to optimize our operational footprint.
We believe engaging these advisors will enable Venator to deliver the optimal results under these challenging operating conditions. With that, I would like to open the call for questions.
We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from David Begleiter with Deutsche Bank. Please go ahead.
Thank you. Good morning. Simon and Kurt-
Hi, David.
Just on the cost program, can you provide a little more details on the SG&A savings as it is the biggest bucket of the $50 million in savings?
Yeah. I mean, I think that, you know, that as you rightly point out, David, is the majority of the $50 million. It's over half of the savings in fixed cost in nature, SG&A and central indirect. You know, obviously that comprised of a number of areas. One of the areas clearly is, you know, a look across the entire business, what we need as a company to, you know, navigate through this very challenging period. It does contemplate some actions taken as a result of the sale we announced today of the iron oxide businesses and some of those numbers are baked into the savings.
The actual headcount and savings reduction, which, you know, predominantly headcount, come from, you know, the full range of functions and departments across the Venator enterprise.
Very good. Kurt, just a couple of cash flow questions. How much working capital release do you expect in Q4? What's the expected net cash proceeds from the iron oxide sale?
Good questions, Dave. First of all, the amount of working capital release in the fourth quarter is largely gonna be contingent on what happens with our sales volumes, right? We think that it will be tens of millions of dollars. As we've indicated, we think that will help us in combination with the sale leaseback proceeds to be cash positive in the fourth quarter. I think about working capital release in the tens of millions of dollars for the fourth quarter. For the cash proceeds on the disposition of the iron oxide business, there are a number of cash adjustments that will need to take place at closing.
You ought to think about the cash benefit as pretty close to that enterprise value.
Thank you very much.
The next question comes from Josh Spector with UBS. Please go ahead.
Yeah. Hi. Thanks for taking my question. Just on the $25 million cost increase sequentially, should we think about that as mostly energy? Kinda just wondering if we saw 3Q have gas prices in Europe or energy prices similar today, what would the results have been in that environment versus what you actually saw?
Yeah. The $25 million cost you're talking about, quarter-over-quarter there?
That we picked up? Yeah, that's right. That is primarily energy costs that we were picking up in the third quarter compared to the second quarter. As we indicated, we have been encouraged by the government support schemes, particularly in Europe, that have been announced to help mitigate energy costs, particularly in 2023, looking forward into the next year.
Okay, thanks. Just on the liquidity side, with the revolver capacity you have, I mean, if you have two quarters of negative EBITDA, you know, this quarter, next quarter, is that gonna impact on your access to that liquidity?
Let's be clear. We said we would be cash positive in the fourth quarter, primarily on the back of a working capital release, as well as having received the proceeds from the sale leaseback transaction in October, which was subsequent to the third quarter close, right? We expect to be cash positive in the fourth quarter.
Yeah.
The next question comes from Vincent Andrews with Morgan Stanley. Please go ahead.
Hi, guys. This is William Tang on for Vincent. Thanks for taking my question. Can you talk?
Hello.
Can you give us some color on how you think the order book kind of progressed maybe since September on a month-on-month basis? What kind of sequential volume trends are you factoring in that 20% kind of lower sequential volume in the fourth quarter?
Now, look, you know, I guess we're not gonna sort of break it out by month, but, you know, clearly, you know, we saw this trend, you know, originating in Asia, but spreading to Europe and, you know, falling through the third quarter. You know, as we look into our fourth quarter, I think the following comments probably apply. You know, in the fourth quarter, you know, we typically would expect a seasonal step down in, you know, our sales volumes from the third quarter. That would be a double-digit percentage in most years, you know. At the end of the fourth quarter and, you know, there is some sort of feedback from customers, you know, to that end around the fourth quarter.
That probably should help you get a sort of profile and feel for how we, you know, see it progressing from the third quarter, you know, into the fourth quarter. I think we said, you know, as high as 20%. Frankly, not that much difference across the applications groups. You know, I think there is some evidence that, you know, in the third quarter we did see some of the sales loss magnified by our position in, you know, packaging plastics and inks where we considered probably overweight within the industry.
Got it. Thank you. Looking out long term, I guess, what kind of needs to happen from, you know, maybe a cost or demand standpoint for you to consider bringing the Scarlino capacity back online? You know, I guess kind of what are the cost considerations for you when you're bringing that facility back online as well?
Yeah, I mean, look, it's you know, I wanna emphasize very clearly that what we see today is not much. I mean, visibility is severely you know, constrained and limited for us. Clearly, with this reduction in demand you know, coming up so quickly and at this severe level, we've had to really make sure that we manage our working capital inventories, both from the final products and raw materials, which I think we've remarked upon. We had a preexisting constraint in Scarlino, obviously, as you're well aware, we talked about it a number of times now. That's running at one stream. We had the fact that go into next year. Generically, what we need is demand recovery. Now, we do expect demand recovery to start in the first quarter. You know, if destocking is then doing.
Given the typical step up from Q4 to Q1, we'd expect to see a sharp demand recovery. Beyond that, the profile of demand recovery is very tactical, and I don't think we're in a position to be able to call that. Clearly, you know, as we work through the issues in Scarlino, that's gonna inform, you know, the situation around what runs from our capacity standpoint. I think as we remarked upon in the call, we have contracted with Alvarez & Marsal to come in and help us look at all cost, cash, and asset optimization possibilities we might have. You know, we are still digging into that and contemplating that. It's probably too early to sort of opine on that. It fundamentally will come back to, you know, the profile of demand recovery that we see.
The next question comes from Arun Viswanathan with RBC Capital Markets. Please go ahead.
Great. Thanks for taking my question. I just wanna delve in a little bit more to the volume decline you discussed sequentially. I think, you know, you noted that your customers are indicating that destocking will be done in, you know, or kind of winding down in Q4. Could you just elaborate on that? What are you hearing specifically, and I guess, are there any differences by region? You noted that APAC is the weakest. Their inventory is, I guess, most bloated there. If we could start there? Thanks.
Yeah. The pattern is different by region. I think there's no doubt about it. I mean, you know, one has to recognize this year too that the majority of our sales are in Europe. You know, our plants as well, of course. You know, feedback we've had from a whole range of European customers suggest that, you know, destocking would be done by year end, you know. I think, as I said, that comes across, you know, each of the major applications group. I think we sort of felt it quite hard in 3Q, for you know, for the reason that, you know, we're large in Europe as a region, and we overweight plastics and inks. Of course we took swift action on production to try and manage inventory as well.
You know, I think Europe, that's pretty clear to us, the feedback. I think the picture elsewhere is a bit mixed. We don't have the biggest window into China. We've said that a number of times. We're quite small there. We'd like to think the demand, you know, picks up, particularly, you know, around Chinese New Year this year, and we get through some of these COVID restrictions and the like. Hard to tell in Asia. What we can tell you is that, you know, we had seen a pretty solid sort of demand profile in North America in the third quarter, and we have seen some evidence of softening in the fourth. You know, there's a number of customers there delaying or pushing off orders.
Again, no fixed pattern to it, by segment, but, you know, that's a different sort of dynamic to the one we'd already seen in Europe.
Just as a follow-up on you, could you discuss your pricing outlook? You know, I know raw has maybe started to moderate a little bit and, you know, the industry trade rags are discussing potentially low pricing as we go into 2023. What are you guys seeing from a pricing perspective? How should we think about that? Thanks.
Yeah. I mean, look, I think there's no doubt that in the fourth quarter there will be some energy and, you know, raw material moderation in this, you know. We're halfway through. I mean, you know, we should remind ourselves it's pretty volatile, so, you know, I think I'll caveat with the fact that, you know, volatility is there even in the near term. You know, assuming there is some relief there in the fourth quarter, I think there's no doubt about it, there have been some selective price, you know, adjustments in the different regions, particularly in Asia and in Europe. I'm hopeful that we can still target to hold on to our, you know, contribution margins as best we can as we go through the fourth.
You know, I think that's underscored by the fact that, you know, the industry has, we have very high cost structures. We know others have high cost structures because of this, you know, raw material and energy inflation, which has been a pattern for us over the last three-four years but very bad of course in the last six-12 months. I think that takes you to a point where, for us, you know, pricing remains elevated, but I'm not saying there won't be some give here as we see some, you know, relief in energy.
Thanks.
The next question comes from John McNulty with BMO Capital Markets. Please go ahead.
Yeah, thanks for taking my question. First one would just be on the German plant. Can you help us to understand what the cost is going to be on those plants in terms of just kind of the, I don't know, I guess I'd call it stranded costs with them, you know, still in the portfolio, but ramp down, just so we can kind of think about how that impacts Q4 and how it might disappear when things are better next year?
Yeah. Why don't I go ahead and take that? I mean, I think that, look, as we think about the moderation of the German facilities, keep in mind, and Simon addressed this in his prepared remarks, we've been accessing government furlough schemes in order to offset what I believe you're calling a stranded cost. You know, we think about those as unabsorbed fixed costs at the manufacturing facility. But for the most part the government relief schemes can offset up to 70% of the cost. The company will contribute a certain amount, and then while the employee sits at home, they also, you know, contribute or forgo a portion of their salary.
As it relates to the German facilities, I mean, because those furlough schemes are available, it is more conducive to moderate those facilities. Also those are, you know, that's the epicenter of where we're really feeling high energy costs as well. Hopefully that's helpful.
Got it. Yep, no. That's definitely helpful. As far as running Scarlino now, where it sounds like it's down like two-thirds or so from kind of normal ops, I guess why isn't that one at least temporarily kind of put on the side or mothballed or whatever? Is it just the you know, there's some specialty products that you're making there that need to you know, you still need to kind of meet the customer demand? I guess why wouldn't now be a good time to take that one down at least temporarily?
Yeah. I mean, look, there's a couple of issues there. I mean, clearly there are products made on that site that are very valued in this industry. You know, some of the ink products, for instance, come out of that site. I think that's an important factor. You know, these plants always better when, you know, they have some element of them running. I mean, mothballing is something that, you know, while we've done it in the past in total terms, we don't really like doing it. We have done it, but we don't really like doing it. You know, we locked in the negotiations there with our local authorities.
I think that the other thing we should tell you is that while we, you know, have been on one stream for a while, you know, we will actually, you know, take down that plant maybe for some period during this fourth quarter as well to manage our total working capital needs. You know, I wouldn't call it mothballed. We don't have access to quite the same legislative systemic industry help in Italy that we do in Germany, although there is a sort of variant of that theme that we are closely examining. I think, you know, that's probably, you know, the puts and takes of that situation.
Got it. Then maybe just one last question. I know you have energy hedges in place through the end of the year. I believe you still do. Is there anything you can do to monetize those at this point? Like where, you know, look, if you do run an asset down, and you don't necessarily need the energy you thought you needed, is there a way to essentially sell or unwind those hedges and create some value that way?
Yes, there is an opportunity to do that, and we have done that, already.
Got it. Okay. Thanks very much for the color.
The next question comes from Matthew DeYoe with Bank of America. Please go ahead.
Morning, everyone. Simon, I believe you said Uerdingen and Duisburg are idled right now. Correct me if I'm wrong, I think that's what you said, but how much does it cost to restart those facilities next year? How does that kind of flow through from a reporting basis?
Yeah. When you say start up, you mean sort of one-time special start up cost? Is that what you mean?
Yeah. Just as you return those operations from idle to producing again, what does that look like from a cost perspective?
Yeah, I mean, look, there would be some sort of inefficiencies as you ramp up, but by and large, we don't think of that as a large, you know, cost item, the sort of restarting, you know, of the plants. You know, as demand returns, of course, we'd be looking to do that.
Okay.
I think perhaps another way to think about that is it can take a week, or so to bring those facilities back up, and get them ramped up. You know, one to two weeks to get those ramped up to full production levels. Maybe that's a way to think about kind of cost, at least in terms of the timeframe.
Yeah, that's very helpful context. Thank you, Kurt. I guess if you had to close Scarlino, I know you kind of mentioned something that you don't wanna do, but if there is no solution on the gypsum, what would the closing and remediation costs and all that end up looking like for [Scarlino]?
Well, look, you know, we sadly have closed a number of plants over the sort of many years I've certainly been in this business. What I can tell you about the Scarlino situation, you know, we're not there yet. We don't want to get there. We're gonna fight very hard not to get there. But should we eventually get there, then, you know, the total cost will be the low end, I think we said, of, you know, our past experience of closing these types of sites. The types of spend items would be very similar to previous times. You know, I would urge you not to think of this as even the same sort of order of magnitude, for instance, as the Pori situation, which was a very unique, specific set of circumstances.
Understood. Thank you.
Next question comes from Roger Spitz with Bank of America. Please go ahead.
Very much. On iron oxide, would it be possible to provide us the LTM Q3 2022 sales and pro forma EBITDA for that business? Pro forma for the sale.
Yeah, Roger.
of Los Angeles.
Sure. We don't have the carve out financials for the fourth quarter of 2021, which is why we used an average EBITDA of 2020 and 2021 to give you a sense for what that EBITDA looks like. I think that is pretty representative of what the EBITDA has done, certainly here recently. Listen, we think that that's a good business. We certainly think there's growth potential for Cathay. We think that they will be good owners of that business going forward, and we think they have a real good probability of growing. They're taking advantage of a lot of the cost savings that we've taken out here over the last year or so.
Got it. Can you speak about whether you have any active process or perhaps any potentially soon to be active process to sell other assets out of the performance segment?
Yeah, I mean, I think you heard us on the call today indicate that we will continue to look for other opportunities to unlock value within the business. Look, the iron oxide process took quite a while, over a year, to you know to get here. You know, these oftentimes take quite a bit of time. I think we have shown a willingness to be opportunistic where we can create value for stakeholders, and we'll continue to do so.
Thank you very much.
The next question comes from Jay Meyers with Goldman Sachs. Please go ahead.
Morning, guys. Thank you for the time. I guess to kind of follow-up on Roger's question more. Is this sale leaseback transaction that you announced earlier this quarter kind of implicated in the iron oxide business, or should we kind of be thinking about like a net impact on the EBITDA you're receiving? Is that kind of two separate businesses and unrelated?
No, they are entirely related with one another. The sale leaseback of our Los Angeles facility is part of the iron oxide business. You can think about a monetization of the sale at $140 million plus a $50 million sale leaseback gets you to $190 million of enterprise value that we will have monetized when we get to closing.
Okay. Thank you. Then, you know, you mentioned on the call just kind of thinking about proceeds as bolstering liquidity. Can you just kind of talk a little bit about what that means? You know, is that generally keeping excess cash on the balance sheet to just kind of navigate some of the volatility that you've spoken about? Or do you think there's opportunities to kind of proactively address parts of your capital structure, you know, things that start coming due in 2024 here?
Yeah, I think in the near term, we're focused on liquidity. We'll keep any excess cash on the balance sheet, certainly as we get through the, you know, near term. We'll explore opportunities to address the capital structure after that.
Okay. Thank you. One final one from me. The kind of cost to achieve on the new $50 million cost savings plan was announced today at $30 million. Can you kind of give us an update on the remaining kind of non-revenue generating costs that you had talked about last quarter? There was $70 million between restructuring pension and Pori. Any kind of change in that number after today?
Not much change. We'll spend a little bit more kind of here within the next couple of years, in order to fund this new program. If you look out over the next two to three years, then we'll still have that $70 million structural reduction in cash uses.
Okay. Thank you very much.
Thank you.
This concludes our question-and-answer session. I would like to turn the conference back over to Simon Turner, President and CEO, for any closing remarks.
Okay. Well, thanks, everyone, for joining our third quarter 2020 earnings call. Please feel free to reach out to Kate with any additional questions you might have. Thank you once again.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.