The price of pulpwood. It may also be a partial relief for our customers and suppliers that have suffered the impact of higher energy prices. In Western Canada, decreased log harvesting levels are related, and related sawmill curtailments are putting upward pressure on pulpwood prices, and as a result, we expect pricing to be generally flat in Q4. We have made steady progress on our 2022 CapEx program in the quarter. The majority of the program is focused on high return projects that will drive new product development, ESG advances, productivity improvements, and input cost reductions. 2 of the larger projects are new wood rooms at Celgar and Peace River. We expect the Peace River wood room to begin operating late in fourth quarter, and the Celgar wood room to begin operating in the second half of next year. These projects will generate high returns in the form of lower wood costs and have considerable carbon reduction attributes which will help us achieve our carbon reduction goals. In keeping with our carbon reduction strategy, we have commenced construction on a lignin development center that will include a lignin extraction pilot plant. When completed in late 2023, the plant will employ a leading-edge technology that will allow us to look at commercializing derivatives of lignin. We also commenced construction on a $27 million expansion project at our Spokane mass timber plant. These investments will allow this state-of-the-art facility to fully utilize a more varied raw material mix, add glulam to our product portfolio, and increase finger joint production. This is a first step in what will ultimately be an expansion of CLT capacity in anticipation of our efforts to steadily increase our order book for mass timber products, which we expect to begin to materialize in sales next year. We remain satisfied with the pace of the ramp-up of this business. We are currently planning for the permanent repairs required for Stendal's fire-damaged chip pile infrastructure. We expect the repairs to begin in Q4 during Stendal's planned maintenance shut, with the final repairs expected to be completed in the second quarter of next year. Currently, the mill is running at about 90% of capacity, and we expect this percentage to increase to close to 95% with the planned Q4 repairs. When we think about climate change and the rapid shift occurring regarding reducing carbon emissions, products like lignin, mass timber, green energy, extractives, lumber, and pulp are all products that will play an increasingly important role in displacing carbon-intensive products. Products like concrete and steel for construction, plastic packaging, fossil fuel-generated electricity, and synthetic fragrances and flavors, even synthetic textiles. We're committed to our 2030 carbon reduction targets and believe our products form part of the climate change solution. In fact, we believe that in the fullness of time demand for low carbon products will dramatically increase as the world looks for solutions to reduce its carbon emissions. As Dave noted, we are so confident in our ability to meet our carbon emission reductions target that we converted our German revolving credit facility to a sustainability-linked loan, making us part of a small group of wood product producers willing to invest in carbon emission reduction targets in favor of modest reductions in our costs of borrowing. Thanks for listening, and I will now turn the call back to the operator for questions. Thank you. As a reminder. Hi, Sarah. Yes? Just before, it's Dave here. Just before we turn it to questions, it's been pointed out to me that there might have been some callers that were having problems getting into the call today. I just wanted to let folks know that I think it's sorted out now. If you missed part of the call, don't hesitate to ask your questions. Juan Carlos and I have lots of time here today. Just to remind folks, too, if you did miss part of it, the call's being recorded and you could pick it up at a later date. Sorry, Sarah, I'll turn it back to you now for Q&A. That's no problem. As a reminder, if you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. Please ensure your lines are unmuted locally, as you will be advised when to ask your question. Our first question comes from the line of Sean Steuart from TD Securities. Please go ahead. Thank you. Good morning. A couple of questions. Now that Torgau is in your portfolio, wondering if you can give any updated thoughts on potential repositioning of that mill's product mix at the margin, pallets versus standard lumber. I think that was an initial thought when you announced the acquisition, but are there any updated thoughts on that front? Thank you, Sean, for the question. Yeah, we're very pleased with the work that we're doing now with Torgau and the performance of the mill. As we've mentioned before, they're heavily weighted on their dependence on the pallet business. We believe that it's a solid business to carry forward, and we will continue to explore because we know that there are opportunities to increase the lumber production out of that facility without necessarily sacrificing pallet production. We believe we can carry both business forward, and that is our intent. Okay. Thanks for that detail. A question on pulp markets. You touched on generally tight conditions, and list prices in Europe have held steady to this point, but it does sound like there's some cracks forming in the foundation. Can you give us any update on order file activity as we head into the fourth quarter? Any signs of weakness in your business in Europe at this point? Absolutely. Yes, when it comes to the order file, we haven't seen any dramatic change in that regard, so we're well positioned into the fourth quarter with the orders that we have incoming. We do see that, even though there's obviously some pressure from a situation that is more complicated on the paper producers in Europe with the high costs that they're enduring, the truth of the matter is that we also have a situation where China is not present in the market today as it has been in the past. We know that as those lockdown measures related with COVID ease down in China and China comes back into the market, that's gonna be a significant push going forward. For the fourth quarter, we expect that it's gonna be very similar to what we've experienced in the last quarter. No major change on that end. Again, our order book is healthy and we still see some forward pressure, positive pressure, with the China situation going forward into the beginning of next year. Okay. Thanks for that context. I will get back in the queue. Thanks. The next question comes from the line of Hamir Patel from CIBC Capital Markets. Please go ahead. Hi, good morning. Juan Carlos, could you give us a sense of, you know, what you're seeing in terms of lumber demand across various end markets in Europe, specifically repair renovation? Sure. Basically, it's kind of a similar situation that what we've seen with the pulp developments in terms of the order file and how things are moving. The only thing that we see differently is, obviously the logistics are quite a bit complicated at this point in time. There's significant delays in shipments and product that is sitting in the ports longer time than what is expected or planned. We do see that the price development for fourth quarter in both the European and North American markets is fairly similar to what we are experiencing right now. We're not seeing a market that is fairly stable over the fourth quarter versus where we are right now. No major changes there. Great. Thanks. That's helpful. Just I wanted to ask about the lignin plant. You know, assuming you eventually pursue commercialization there, what are the biggest potential end markets that you see, and how big could the potential market be? Lignin is clearly a very attractive opportunity that we still need to dimension properly. We know that there is a big potential for it as a substitute of fossil-based products. The markets in which it can be applied to are various. I'll mention a few, epoxy resins being one of them. Probably the low-hanging fruit, if I can put it somehow. There's also opportunities in the carbon black space. There's opportunity in the asphalt space. There's opportunity in the battery replacement in some of the components. There's opportunity in carbon fiber. We believe that most likely, the epoxy resins, the carbon black, may be very attractive markets, but it's way too soon for us to have already that narrowed down to which market in particular we would be able to participate. That would also depend on the quality and the specs of the lignin that we would be able to produce. All mills are different in terms of their setups, and therefore, the qualities of the lignins that can be extracted from them can vary. There's still questions to be asked as we push this exciting project forward, and we should know more by the end of the year of next year. Okay. Fair enough. Just the last question I had for David Ure. Just given the price cap on energy from December, based on maybe what you've seen sulfur pricing in October and expect for November, what kind of pricing level would you expect for your electricity sales in Q4? For electricity, Amir, is that what you mean? Yeah. Well, yeah. It looks like the cap will be around EUR 180 per megawatt hour. So the regulation, this particular regulation is still being drafted, but it looks like we're expecting that there'll be the cap will go in, and it'll be effective December the first. So in Q3 our average electricity price in Germany was in the order of EUR 388 per megawatt hour, and we would expect that for 2/3 of the quarter, if the regulation rolls out the way the narrative is describing, we would have 2/3 of the quarter would be at a lower rate, like 180, and 1/3 would be at a higher rate. Okay. Where would that higher rate be based on what you've seen so far? Yeah. Currently, it's still in the range of 375-400. Sorry, I said 300, I meant 400. 375-400. Okay. Great. Thanks, Dave. That's all I had. I'll turn it over. The next question comes from the line of Richard Short from Amundi. Please go ahead. Hi. Thank you. I'm fairly new to the story, so I did wanna follow up on a couple things if I could. Just in terms of overall costs, I assume most of your costs are denominated in euros or Canadian dollars, whereas the pulp and wood products are sold in dollars. I don't know whether you said something about it earlier, but overall, what was the impact of the strong dollar on the Q3 results? I did have a follow-up. Just looking it up here, sure. You're right. Typically, you're exactly right. Most of our cost structure is in euros or Canadian dollars. Let me see if we can get a rough number for you. 14. Thank you. Sequentially, just to give you a sense, sequentially, Q2 to Q3, we estimate the impact of foreign exchange was about $13 million this quarter compared to last quarter. $13 million in revenue? Yeah. It depends how you think about it. Because we're a U.S. dollar reporter, the way the Uh- The way it comes and the products are U.S. dollar-denominated products, it's actually the conversion of the cost structure, the euro cost or the Canadian dollar cost that gives rise to the improvements. Got it. Yeah. Okay. Got it. Okay. I wanted to spend a couple seconds on the energy business. My sense is the energy generated is a byproduct of your production process, and that there really is not a ton of cost associated with that business, and it's sold directly back into the grid. Please correct me if I'm wrong. Would it be fair to say that if the cap, basically, for lack of a better term, kinda cuts rate in half, that would impact that segment by roughly half as well? Is that fair? Yeah, I think that's fair. A pretty hard margin. Yeah. All other things being equal, yep, that's right. Okay, perfect. Those are the questions I have. Now, maybe I just remind you, so Richard. Yep. Just to give you some context here, these are really solid rates for us. I mean, it sounds like a big reduction coming from EUR 400 down to EUR 180 or EUR 200, but if you go back a year ago, our average was probably closer to EUR 80 that we were selling to the grid. These are still pretty solid rates in our mind. Got it. All right. That's very helpful. I appreciate it. Thank you. That's all I had. The next question comes from the line of Ryan DeRubio from Baird. Please go ahead. Good morning. Before I begin, I was one that had trouble logging in, but just so you're aware, too, the webcast just had the hold music on it, so you'll probably get some people letting you know about that later. Yeah, sorry about that, Ryan. Yeah, we're aware of it. Yeah. If we don't get you what you need today, don't hesitate to give us a call after. We'll make sure you get everything you need. No, no, appreciate it. Just a few for me. You know, given the projects that you were just mentioning that you wanna work on, do you have any guidance that we should think about 2023 CapEx? Absolutely. Ryan, we're looking at 2023 very much in the ballpark of what we have in 2022. We're focusing on our growth projects and ESG initiatives, and we're maintaining that as what we're doing this year. Okay. That's helpful. Just on the, you know, the new energy rules, is there any expectation that that will go beyond June of next year, or is it just unclear at this time? This is still very volatile. What we see so far in the drafts of the documents that have been circulated by the German authorities, they're considering up until June. At the same time, they've also looked into setting a cap for gas. For example, in the case of gas, they're thinking about the entire year. Again, electricity may be until June, gas may be the full year. Whether that's gonna be maintained that way or they're gonna decide otherwise is yet to be seen. That should be known hopefully in the next month or so at the latest. Understood. Just maybe broadly speaking, outside of the investments you're gonna make in the business. How should we think about capital allocation? You know, some of your bonds are trading in the low 80s, but there are also gonna be some distressed companies out there. Just looking to get your thought process on how you're thinking about, you know, using some of the excess cash flow, you know, and basically your balance sheet too, over the next year or so as these opportunities are presented. We discuss these kind of things regularly with our board just as we do all the policies around dividends. We still believe that since we have quite a bit of CapEx growth projects in the pipeline, we believe the better use for that cash is to fund those growth projects before we start buying back some of those bonds. Understood. Appreciate all the responses. Thank you. Thank you. The next question comes from the line of Andrew Kusker from Credit Suisse. Please go ahead. Thanks. Good morning. I think the first question is really for Juan Carlos. I think you mentioned on the mass timber business you've got 30 bids out in the market already. Maybe if you could just give us a bit of flavor on, you know, the projects you're targeting. Are they just dedicated mass timber, or are they looking potentially to go mass timber? And then how do you see the competitive landscape, you know, for you in that business? Absolutely, Andrew. Yes. It's exciting times because we just finished setting up or building the team, actually, the marketing team that is working on these bids. As you might know, this is a pretty intensive piece of work just to get a bid together for any such project. The projects that we're looking at are of all different sizes. You have large buildings and complexes that would carry several buildings all together. Also you would have individual construction units. You have an array of different size projects within those 30. Obviously our expectation and as such, some of those projects are all CLT. Others are a combination of CLT together with steel. There's a bit of both, but obviously a heavy weight towards CLT as a replacement of concrete. It's looking very attractive, as I mentioned before, and we're eager to see those bids come to closure, as the team is now advancing successfully into those. That's helpful. Maybe just as a follow-up to that, how would you roughly, and I know they're all different shapes and sizes as far as the projects go, but how would you just sort of conceptually think of the average project? How many average projects do you need over the course of a year to effectively fill the utilization of the facility? It's probably as much as I would like to give you a straight answer and know that it would be the right answer. I don't think we're in a capacity right now to be able to say that the 30 projects that we have right now when we have barely entered the market. We just launched our website. We haven't done any mass work to spread the word out for ourselves. We're about to be part of the San Francisco conference in the first week of November. That's gonna be really the first time that we go out there and are present in a very significant way with a significant amount of developers and architects. The 30 projects that we are bidding for, I don't know that they would be a representative share of what we would expect to see in the future. Those 30 projects are in the $10s of millions. They're significant in essence, but again, I don't think those are necessarily representative of what we see once people really know that we're out there. Okay. Thank you. Appreciate that. If I could sneak one more in and really just changing geographies into Europe. You clearly have an advantage from a power standpoint on the portfolio. There are the pulp mills. Are you seeing signs of stress, or do you think there's signs of stress with some of the other pulp producers? I guess we're sort of asking a different way. Are we seeing, you know, elevated pulp prices in part because input prices have gone up? But even with that, are we seeing margin compression for some of the competitors? Does that distress potentially create opportunity for you? I think we do enjoy a significant advantage because we've made a conscious effort to be able to extract as much energy as we can from our facilities, and that obviously has played positively for us in our strategy. I cannot say the same of other competitors that may have different positions as it relates to energy. I think we're positively positioned versus others on the energy equation. Now whether it's something that is hitting some more than others, I'm sure there is. For us, it's obviously positive, very positive. We still are very bullish about this for Q4. Okay. Appreciate it. Thank you. Thank you. The next question comes from the line of DeForest Hinman from Private Investor. Please go ahead. Hey, thanks for taking the question. Just so I was looking through the 10-Q. It's kind of interesting to see the pro forma numbers with the HIT. I don't have a lot of experience with pallet manufacturing, so could you just give us kind of a quick education on the call in terms of like how that business works from a pricing perspective? Is there contracts? Is it all spot? Is there any seasonality with that business? I'll pause there. Absolutely. Yes, as we're also in the process of learning more and more about the pallet business. But I can anticipate already that yes, this is even though it's a very dynamic market, and we know it follows very much how it's kind of a leading indicator of the economy as such. We do have long-term contracts with customers as well as some reserved spot business. We are by far the largest manufacturer of European or the EPAL pallets. We have a kind of very significant presence in Europe with our product. There are other geographies that are important. Ukraine is one of them, and which is not suffering as you would imagine, because it's the western part of Ukraine, excuse me, the one where the production is held. They are pretty much active in the market still. It's an active market, very competitive market. What we enjoy probably the fact that by being the largest, we're also probably the most competitive, or not probably, but the most cost competitive out there, with the volumes that we're able to produce and how we manage inventory for our customers. It's quite a unique competitive advantage. We'll see how the economy determines a little bit of how this market oscillates in terms of price. There is some softness obviously in the price right now, but nothing that is out of the ordinary for this point of view. Okay, that's helpful. Then just our expectations. It looks like based on that pro forma disclosure, it was a profitably operating business year to date in 2022. Is that still a reasonable expectation for 2023? Absolutely. It will be a profitable business in 2023. I would say more since we're reconfirming the fact that we have the synergies that were identified early on in the project. We're materializing those synergies. If you remember, I believe we mentioned it during the call earlier today that we had identified $16 million worth of synergies by running HIT. The synergies being spread between hardwood chips and lumber. We believe that we are on very good track towards achieving that level of synergies that we had identified. For the first month, we're on target, and we're just beginning. There's a clear value in how we integrate the benefits of having the different set of mills close to each other, whether it's Friesau or whether it's Rosenthal or now HIT. Us being able to move around chips where they're needed and move sawdust where it's needed. That flow of product back and forth between mills rather than each mill looking what to do with those excess products brings a very significant benefit, and we're capitalizing on it. Okay. That's helpful. Then on the sawmill side, on Friesau, it's a very dynamic market. You know, last couple of years, prices up, prices down. We are seeing fiber costs higher in Europe. Is that facility able to run profitably with, you know, just, let me just say right now in terms of, you know, where all the metrics are, do we have the ability to flex some of the, you know, labor or shifts there? You know, is that business profitable in its current state? It is very profitable, and I would say more. Friesau is most likely the most profitable or in cost competitive sawmill in Europe. So we have a structure that allows us to navigate through these moments where lumber prices are not as high as we would like them to be, or some of the costs are higher than we would like them to be. It still generates quite a bit of earnings. So it is still profitable. Okay. Just last question on, I think you alluded to this in the prepared comments, but just the normalization, maybe the normalization of trade flows as it relates to, you know, shipping costs coming down. I think, you know, within the European region, we're kind of, you know, had a little bit of captive trade flows. You know, we had the disruption in BC from the flooding. You know, we're getting further away from that, and we're also seeing, you know, shipping prices coming down. Is it going to be going forward a more dynamic, a more competitive market as it relates to pulp with, you know, shipping costs falling? Yeah. I think you're absolutely correct. We see falling shipping rates, especially out of China. You know that now out of China, either to the U.S. or to Europe, you're basically getting fantastic rates, so you can move product out of there with not too much cost. As lockdowns cease and those things, and China starts to wake up, I think we expect to see a lot more movement, and then taking advantage of those being able to ship at lower costs. I think that's absolutely true. I wish we could say the same about railways or rail car situation in Canada, where we still suffer the consequences of not having enough, even though there might have been a slight improvement over where we were in a couple of quarters ago, but it's still far from where we would like it to be. I think there's a bit of mixed signals depending on where you go, where you're going at, where you come from, that in some cases it's still advantageous and some others, you still don't see the benefit that you would expect to see. Okay. Thank you for taking the questions. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. The next question comes from the line of Matt McKellar from RBC Capital Markets. Please go ahead. Hi. Thanks. First, just on German fiber cost. You mentioned that you expect per unit fiber cost to increase in the fourth quarter with continued strong demand for wood for energy purposes. Are you able to provide a little bit more color or a sense of magnitude here on how fiber costs have trended from Q3 into Q4, and how you might expect fiber costs to trend into next year, including once we're through the winter? Sure, Matthew. When we look at pulpwood costs, just looking at Q3, when we look at Q3 versus Q2, they went up almost 20%, give or take 17% or so. We see that escalation has not stopped, that escalation will continue in Q4. Whether it's gonna be at that same level or not, we yet have to see. As I mentioned earlier, the wood chip is the one that is having the highest impact as people are now seeing the possibility of using those wood chips for the production of pellets and going into energy, and that's a market that, as we know, is booming. While the saw logs are more or less not the saw logs, but the pulpwood is more or less the round wood is more or less stable or relatively stable. Just a little bit up, but not to that effect, nothing in comparison to what we've seen in the wood chips. We believe that trend will continue still in Q4, where there's still until we see this energy cap impact and how that will materialize and what impact it would have on the overall situation of the biofuels and whether they will be maintained at the record levels that they are, or whether they will recede a little bit and go back to more normal levels. We'll yet have to see. I think the gas cap and the electricity cap that Germany is about to implement, all those measures, will help bring things a bit more into a more reasonable level. Not at a cheaper level that we used to before, but not low, but at least not increasing at the rate that we've seen from Q2 to Q3. Okay. Thanks for that. Just one other. Following up on Sean's question earlier on Torgau, I know it's early days there, just under a month since you closed, but could you talk about, you know, the opportunities that you see to expand and whether those are kind of opportunities you're looking at in the near term that we should expect to see in your capital program for 2023? Is your focus at this point still working toward the synergies you're targeting? Thanks. Sure. Right now we're focusing primarily on the synergies that we targeted. At the same time, we're looking at what would be the capital plan for taking that mill to a higher level. We know that that mill can perform at higher levels, and it will require some cash in order to do that, some CapEx to do that. We don't know at this point exactly what we would be looking at in terms of investments into the mill. We know the potential is large, but it's too soon for us to already put a number out there of how much we think we will be investing into that facility. There are things that we can do that are not very costly. We have planer capacity, excess capacity in Friesau that we can simply move to Torgau. That would be those kind of investments that are not material in terms of CapEx, but can bring already a significant improvement in the lumber output capacity of Torgau. There are things that we can do without necessarily adding a significant amount of CapEx. We know that if we're aggressive on CapEx, there's a lot more that we can extract from that facility. Thanks very much. That's all from me. I'll turn it back. Thank you. Our next question comes from the line of Dennis Collins from Stifel. Please go ahead. Hi, Carlos. Good morning. Good morning, David. Thanks for taking the call. Gentlemen, as of September 30, the company has, looking at the Q3, $287 million in cash, and estimates that the cash position will be as high as $430 million-$440 million end of 2023. Just looking at that, looking at obviously the bond offering that's due in 3 years and 3 months, I'm guessing that the board has spoken about a buyback of stock. I'm sure there's opportunities that the company is looking at in terms of acquisitions, but the stock has been volatile at times. Isn't it advisable to have a $50 million-$80 million buyback? That'd be about 11% of the cash position at the end of next year in place for volatile times. Is the board considering a buyback announcement? If not, can you explain why not? Thank you. Yeah, thanks, Dennis. No, I can tell you the board is considering. This is a regular every meeting that the board has. This is a regular topic. So you can imagine, they think about other ways of giving back to shareholders, a buyback, a dividend, a special dividend. Those are all on the table, but ultimately they get weighed against alternatives. The alternatives that they're looking at are the high return capital program that we have. Not only the one that Juan Carlos talked about, guiding for next year, but the portfolio of other projects that we have behind that. Many of these projects have got considerable returns, better than 3 years. Of course, on top of that, we've got a lot of resources that we're applying to trying to grow the company still. Folks that are looking for new opportunities to buy something, to grow in spaces where we've got competence and having a bit of dry powder has been—we've been rewarded for that several times in the last few years, including the Torgau acquisition, including the Spokane MMT acquisition that we probably wouldn't have been able to do if we didn't have the agility that we do and have the cash available that we do. These are all considerations, including debt reduction. That's also a topic, particularly at the moment since the bonds are trading at a bit of a discount today. These are all topics. At the moment, we feel the right thing to do, and the board thinks the right thing to do is push ahead with the high return CapEx and give ourselves a little bit of dry powder to make sure that we can take advantage of some of the M&A opportunities that we're currently looking at. I know not the answer you're looking at, but I can tell you it's a these are elements that the board considers quite considerably. Okay. Thank you. We currently have no questions coming through. As a final reminder, if you would like to ask a question, please press star one on your telephone keypad. Okay, there are no further questions, so I will now hand you back to your host. Okay, thank you, Sarah. Thanks to all of you for joining our call. Dave and I are available to talk more at any time, so don't hesitate to call one of us. Otherwise, we look forward to speaking to you again on our next earnings call in February. Bye for now. Thank you for joining today's call. You may now disconnect your line. Hosts, please stay on the line and await further instruction.