International Paper (IP) 31 Jan 232022 Q4 Earnings call transcript

Good morning and thank you for standing by. Welcome to today's International Paper's Fourth Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, today's conference call is being recorded.

I'd now like to turn today's conference over to Mark Nellessen, Vice President, Investor Relations.

Thank you, Paul. you International thank XXXX Fourth and Call. Earnings morning for Paper's joining Quarter Good

morning Sutton, certain and are Executive this on at speakers Our Mark our of Tim There important presentation Senior the Officer. beginning Officer; X, Chairman Nicholls, Vice disclaimers. Financial President including Chief Slide is information legal and Chief and

example, to risks subject during that statements are this For uncertainties. call, forward-looking we will make and

U.S. of GAAP certain present GAAP information. those non-U.S. on figures reconciliation website. to measures We will also our financial And financial available is a

Our quarter website today's the also contains copies earnings presentation of fourth and press release slides.

now to Mark will Sutton. the I call turn over

Thank you, will We'll I touch our Mark on our discussion XXXX everyone. begin on full Slide where good and X, year morning, results.

about of environment. and think through employees we've very First a for work year. our as dynamic as XXXX, all market done hard strong and of appreciative during the our managed very have And I proud the relationships I'm customer all, uncertain

International and the second Looking while and in demand our and earnings lower facing of significant grew the execution, commercial solid performance. half year. operational at by inflation driven Paper revenue

made from our also result, investments opportunities exceeded initiatives, full-year our strategic Packaging earnings delivered of this $XXX across on solid benefits support And IP. growth building accelerating progress million better confident We Industrial a have lowering made target the profitable strong and and in cost We a momentum structure and focused growth. our in growth. we profitable our to as also going forward. We're business have

during in building to our earnings years. additional capacity and generation the continue cash few grow by to invest will next We U.S. box system capabilities and

Global our sheet XXXX very year, $X.X with in progress We we shareowners value past and creating cash in expect pleased billion environment million earnings it to of navigate is growth the achieving of we balance through our towards share grow we the and continue strong. macroeconomic year. by also we to Paper believe also give this repurchases. to This returning This of made dividend will opportunity Fibers significant through uncertain cash also position to to a $XXX and our cycle delivered business. shareowners significant And maintaining improvement returns opportunistic our and invest earnings earnings the from Cellulose us allows I'm returned generation while International cash strength. to

XX%. impacted full segments. X strong Turning key by our demand financials Revenue by Slide by and in per price Overall, EBIT to and year million on Operating volumes X. business about increased X% from improved packaging costs. lower were input year-over-year, $XXX Operating realization margins supply improved by weaker earnings by year-over-year. our share chain driven elevated for

segment our by of offset cost significant Fibers $XXX our each terms growth performance, improvement as profit Packaging Global million both earnings contributed inflationary and headwinds. Cellulose our In to and segment Industrial initiatives about price realization

which was Our we about million, corporate prior FX. free $X.X higher earnings cash expenses the by and above also favorable by IP driven building our and generated billion quarter. driven working flow for fourth And some were capital better also of by our in $XXX year, initiatives of the primarily improved outlook, lowered

venture. the to on to the progress release X. issued like comment Slide week last are I joint Ilim press to our we Turning would related regarding making we

partners and interest X.Xx EBITDA XX% Ilim entered billion of EBITDA million. to value our We SA $XXX total enterprise into This approximately transaction have in agreement approximately for and for XXXX the reflects year JV multiple Ilim an to full for $X.X a results. sell our

a Ilim X.XX% IP $XX of Group represents partners in The interest expressed shares which million. also JV JSC have for all stake purchasing in

in The deal Russia. residual Ilim to regulatory We approvals our other associated interest subject nonmaterial also all partners. and intend to JV with to divest is

Russia. and making additional finalizing have when deal, investments provide becomes no are it in with good longer We IP any will will Upon progress this information available. you

our Turning last X% than we above Industrial outlook now our came as part quarter, the In shipments we were down and to Packaging, periods X quarter. cash in services. goods flow towards U.S. box after results. expected. the our and prior the basis, provided nondiscretionary for what the experienced shifted fourth on Slide and in Demand we played quarter third Earnings priorities similar a better free daily consumer for about latter products year-over-year quarter to of out were and

products fourth the from elevated addition, lower was In constrained positive through the Underlying quarter. also our the and On see input returned IP $XXX in of shareholders stable. packaging benefited building for Tim continue to initiatives their presentation. later which and and million favorable cash work did relief finally, to quarter pulp onetime from some and in a demand during in quarter costs earnings better note, items inventories a to the quarter. free our customers meaningful we demand generated will our channel we solid broader flow which speak the retail absorbent And

call well Tim? to the our segment cover as turn over business to outlook. now Tim will our I performance as

following forward and XXXX nondiscretionary services with goods you, morning, commercial Volume earnings high all dealing as channels of lower the everyone. from our period benefits shifted strong price and on shows during initiatives. inflation I'm good consumers Mark with Slide year-over-year in which pandemic. demand bridge. Price Thank priorities a mix improved and realization and our Great. towards X significantly while was across pull

as parts related half inflation of fuel share per category volumes Maintenance high Total well Packaging other outages business. across impacted equipment, performance costs. sharply as decreased increased improved businesses by negatively services reliability. and and and as materials corporate partially of mill on costs were than every high and lower on significantly planned, inflation rose and follows. cost was offset chain about impacted increase by Industrial contracted higher services. by and with This costs Operating our supply energy directly our higher to items all the $X.XX in by as expenses more Input across just

expenses was per expense was rate tax significant Corporate $X.XX lower some initiatives our the well building benefiting in as per $X.XX from and effective share share as IP benefited year. per higher expense by FX. debt normalized compared XX% a prior XX% of XXXX. with a Tax by declined Interest $X.XX from as reduction better share, in to

impact repurchases share share year-over-year. earnings $X.XX per Lastly, by

Moving to compared improved and quarter. sequential better on result bridge across Global X. from third all Packaging by quarter Global Slide realization in demand as were mix the $X.XX Cellulose the $X.XX our earnings per was and per channels. fourth Price softer $X.XX quarter our share in earnings operating in Cellulose stable. lower as Volume business. of to share mix Fibers Industrial demand And a Packaging price was additional Fibers in business Industrial Fourth

sequentially the in were due and downtime in unabsorbed lower of lower as resulting impacted was shipments volume and began third to pull-through costs volume quarter costs the supply by as chain higher higher However, improve. Operations to fixed velocity economic seasonality. well as

the share added repeat in in quarter. claims. our compensation was employee downtime storm million costs, lower $X.XX reliability the winter which the some to Fibers per Cellulose $XX onetime by Elliott onetime workers' isolated from costs also of caused quarter related expenses in business issues. about favorable These is first and medical items items expected not or and favorable Global benefit to also and Some benefited Ops

fourth outages the higher quarter planned. were as Maintenance in

favorable expense. saw which we benefits and $XXX in fourth input earlier, other and FX mentioned Mark per share or million OCC were expense, quarter, by significant $X.XX the a relief lower other lower interest tax costs offset costs. Corporate by from includes higher from items, driven partially and lower energy sequentially corporate As items

the improvement. Price changes start focused material not The primarily Turning recent publication quarter, segments and did on fourth improved have with Industrial to margin a and from Packaging on in Slide I'll mix impact the on the quarter. mix initiatives commercial X.

line As Mark for was in packaging expectations. mentioned our demand with earlier,

due levels Fourth destocking. retailer X quarter volumes and also fewer volume demand days. ongoing consumer Sequentially, inventory remained to by constrained at impacted was shipping lower

local due dynamic in and through customers is our and environment, and positioned Elliott portfolio products range Paper relationships of our very national Overall, attractive a of across end-use effectively. winter large However, with storm diverse our well and ran a system services demand we strategic of segments. to mill number broad this well International managed

The customer costs lower quarter align of actions as the downtime across economic our costs the These our unabsorbed operations in seasonally XXX,XXX were impacted system we demand. to production higher. our resulting with Ops system, in adjusted and and higher demand resulted costs. tons environment in approximately fixed also

earlier. from items, However, mentioned of favorable this I segment $XX benefited approximately million onetime

as In to from million environment, the high is running services and further costs. opportunity system primarily lever of in remainder during lower we and significantly when a inflation Overall, Europe we by of optimize the there from remains XXXX. chain were costs earnings face in marginal a to past America sequentially. demand This believe energy materials high costs on couple supply as was from About was full a our costs. lower at and costs the aren't out large well the continue lower and and $XXX benefit elevated improved impact OCC take North capacity, key lower we years. Input half

shipments by began incidents disruptions Operations at and to lower $XX third quarter increases. were due Slide reliability performance. and Volume announced to winter the offset velocity was items quarter as to approximately of by mix Taking Fibers X impacted a from of chain partially look storm Elliott our Turning fourth supply was pull-through million sequentially to mentioned favorable by onetime at I the previously Price sequentially due some negatively earlier. XX. costs Cellulose the of were -- improved on mills. price These and improve. $XX million higher in

of million lowest Planned outage $XX the maintenance of sequentially, which by quarter were the higher third the year. represented off quarter coming outages

were $X costs input addition, million. In by lower

we Combined through chain customers from our supply last pace in indicate vessel decline demand a seasonal the in-transit some Chinese As related we pull destocking Year, faster to the at demand they quarter. and expect first improved feedback are with customer seeing impact due inventory inventory port to look to velocity through New reliability. congestion improvements forward, from

below due play care continue said, we the consumer to With demand essential This historical that needs. fluff fluff will absorbent and grow. inventories products is meeting personal to role pulp remain levels that believe in

to Turning Slide XX.

approximately cycle. make Fibers chain despite was significant $XXX XXXX second year by progress, executing business continues supply earnings our returns half near business deliver the on increased million value-creating and Cellulose Global capital in to headwinds. to cost business in significant of and returns cost growing strategy earnings over the The the of Our

commercial with and with attractive and a aligning regions relationships deployed focused segments. successfully strategic and team on regional Our customers most building strategy key global

their safety standards We for by meet value stringent are focused delivering innovative and our customers value. products an creating on product that deliver

margin driving value we paid by improvement are structural we provide. ensuring get the we addition, In for

negotiations contract pulp fourth will commercial the fluff which In we in made solid progress forward. going provide quarter, additional our benefits

are earnings committed momentum building expect to this deliver and to on We significant XXXX. in growth

year. IP $XX Slide like a benefits solid XXX% target About you making our half lean more We're paper initiatives. million streamlining XX, and which total to printing earnings from quarter initiative staff of I'd On with our realign effectiveness XXXX million from in our spin-off. a the have the offset update corporate dissynergies the set to for in $XXX building for better simplified fourth of rapidly by of are progress of of exceeded today delivered the on functions the our and we portfolio,

been achieved, these continue opportunities. pursue of to will have additional benefits most Although we

was investment Another results delivered year significant we excellence. strategy as and commercial growth driver profitable acceleration full through of

getting on on profitably organic Going also investing Industrial business Global focus forward, improving business we Packaging deliver continue to by our for growth. we Cellulose and to growing focused are returns, our value-creating margins Fibers

finish capabilities potential as We and initiative distribution reliability, will initiatives process these maintenance going as across business. leverage has our the optimization technology sourcing and the we logistics new deliver as such data forward we to analytics. across advanced benefits reduce areas Finally, and and believe costs implementing

Slide to a moment allocation XX. want capital Turning on take update I to actions. you our to

core preserve we framework. earlier, capital mentioned sheet Mark to because believe allocation it which we have is a As we will our balance very strong

X.X below our on Our leverage range X.Xx basis of was is to target X.Xx. XXXX Moody's a which year-end

funded. with due billion next allocation to $X.X Looking Returning of meaningful medium-term have years. capital cash And our ahead, debt a the in even maturities this part framework. fully XX our is finally, environment, about remains shareholders pension we limited during plan

we returned to million represents share of shareowners, or shares $XXX X.X% through outstanding. repurchases which the fourth shares million quarter, about X.X million including In $XXX

million of $X.X Board approximately shareowners As a to of our we've XXXX. result, authorized in returned October, of Directors share additional an $X.X cash repurchases. In billion

At year-end, was our billion. $X.X authorization total approximately

is in for and essential $XXX our and strategic dividend to share funding million in maintaining which attractive with Investment includes repurchases. our XXXX capacity Going capabilities earnings system. and growing invested forward, we box cash. out to our committed cost reduction returns cash build projects are We through through businesses returning projects in excellence opportunistic for and

the As box has expected an of example of XX%. plant of in Eastern our successful Pennsylvania an corrugated investment this, new return which start-up on

to plan we box system to profitable forward, going additional make growth. across And investments support long-term our

We will growth. may to our be assessing profitable disciplined when supplement continue M&A selective accelerating of that opportunities and goal

our M&A focus can on packaging opportunities America compelling Any to primarily You bolt-on our in potential must shareholders. long-term in opportunity Europe. North pursue expect and value for we businesses create

turning Slide Packaging. XX, I'll we'll first start at look Industrial outlook. our So quarter to with

by in on earnings index North and days to increase by of in movement to in daily North and fourth due average $XX in partially offset prices mix declines decline Volume million sequentially lower based We normal in expected million quarter. prior price North seasonal decrease America expect shipments America, earnings by more result to $XX a the X as export America. is the

are costs by to and due the to the Operations favorable expected onetime in non-repeat items decrease quarter. $XX fourth of million earnings

energy some from expense to volumes benefit inflation and maintenance outages. due and and lower unabsorbed additional fixed expected will consumption on increase In services. outage costs by Maintenance expect seasonally also we higher million. planned Ops $XX addition, materials to more and is costs higher

by will energy, representing lastly, highest million cost fiber. of approximately for and to quarter outage And fuel average quarter be XXXX. first The lower costs from this in costs are our expected planned decrease XX% input year outage $XX

to Cellulose favorable increased destocking Operations and fourth to based by to chain and million of is customer we supply the by to realization on in $XX quarter. onetime of Global improve prior the seasonally are million demand velocity. the increases. non-repeat price earnings lower expected Switching expect mix to and by Volume decrease items and due inventory Fibers, million expected costs decrease response $XX on to

additional impacted costs ops addition, will as energy fixed some lower volumes by and on and be materials inflation due In seasonally as costs unabsorbed higher to services. and higher well consumption

outage be transfer representing XX% expected recovered this largely fully Again, Maintenance in is as of out. year, paper mill cost XXXX. by our $XX This price is be associated the strategy outages planned quarter maintenance will will course Sylvamo the expense increase Georgetown year. highest the which part printing over to to quarter with of million the the almost of first total

decrease by $XX input mostly energy million, Lastly, expected to costs lower to fiber. due are and

year to Moving our full outlook on Slide XX.

year We billion. for approximately the XXXX are projecting EBITDA full company of $X.X

our impact execution, Cellulose Fibers includes in significant note of earlier capture of mentioned we presentation, costs we and also I strategy reduce meaningful changes. in building from believe As commercial This a Global business more a IP benefits outlook our earnings initiatives. as that growth our price only would across system I the to previously published our result this set includes our from better opportunities have marginal high

between million be to timber million our a which expected includes of payment is related $XXX settlement. billion monetization to onetime tax $XXX flow cash Free and $X.X

free approximately to cash the to $XXX flow, of addition cash from Ilim expect sale. proceeds receive In million we

been purposes, the Regarding special took as JV Ilim this impairment charge transaction, operations. reporting an And classified as fourth quarter, in for noncash the we which discontinued item. was a treated has

with system box $X and our For increased customers. capital XXXX, our with profitable spending and $X.X support billion of to U.S. billion are investments capabilities additional between in targeting we build growth

high-cost We across will system. projects also cost focus on our reduction

it And that, with over to turn I'll back Mark.

Tim. Thanks,

in International of a turn the I navigate our to environment to strength. to ability dynamic XX. Slide this of my want Paper confidence I'll position Now from reinforce through and resiliency

products continuing optimize successfully to our cost broad mills, local earlier, large of cycle national and to relationships of at capabilities IP know chain teams care and strategic As Also, across while customers. services our take to by leveraging well a segments. end-use what our diverse of system a options takes business we're number due plants across through supply to portfolio and it a and our and customers our with large Tim of positioned manage mentioned attractive range of

in on initiatives growth. to in we exceeded to improvements and profitable long focused and strong as enhanced In earlier, better of enter success drive target mentioned This deliver finally, have and XXXX. through as addition, efficiency and invest over foundation We And makes continuing are I building cost XXXX our significantly structural accelerating reduction term. we have solid initiative well a IP we our momentum projects spectrum flexibility. positioned growth for financial a strength IP environment the economic profitable across to our

And Slide XX. turning to

the conditions States milestone confidence Paper part company. our precise, XXXX, all To incredible paper marks look we this to an the of resiliency that northeastern of and and form United I of today anniversary. pulp draw hand, company's at reflects XXX-year in mills joined XXXX On in the XX the dynamic our be International from As to date, Company.

be I would our of the serve. in make pursuit the appreciate the we excellence including environmental enterprise at I incredible safety list founders we long-standing and years, stewardship. through would customers and the amazed evolved expansive how think our products to our has of commitment also

While our of not talent people changed the world providing years. next as team XXX products, has and every changed, the on we dedication essential day has our and on embark depend our to commitment

our serve and excited principles to well. how are about continue resilience Our company. us reengaging I'm will we

We haven't us. but our performed to potential that's full behind

recently performance team front right We to It's in are a committed we strategy. adjustments made to and to talent have skills match right our higher to right the level. us. to execute leadership of take We our the opportunities the

make build IP of to areas. focus to better on our a continue traction We lot

results. and legacy our in months you'll essence, I'm drive apart you build set on In what like days, we're proud things see. will ahead. years the positioned to confident are will XXX-year and well The going after our us and we

we're With to that, questions. operator, ready take

Instructions] Hajde. will [Operator first Wells Fargo come our Gabe in Securities of line And from question the

geopolitical look from use. Packaging anything potential of Has impact I specific question segment, the I'd IP's can your natural one mediating guys corrugated was anything changed sequential of kind confirm second, math half -- I of in lower from tensions inputs? And maybe you guess, Industrial perspective on guess, at the across least kind and has by half risk in beat you And I energy the organization with kind kind and quarter, or first had so one given gas. the these say when and changed at on, with I that? commodity what on of is, was one-timers

I think of you sound the like one through the that. split times last get quarter. a cost corrected and you the got especially the on all on about But right lot of efforts, it like medical in things which between usually

than On the I and actually higher lower we're running energy geopolitical, the full is less mean, we can energy reason usage energy our is question be capacity part our of about because our optimized make cost own have energy percentage of a when energy.

purchased we that buy the consuming it's can And the natural raw whether that's gas as don't we actually just purchased whether ourselves. to we energy electricity boilers or much auxiliary power so stop -- make

or Our view no better geopolitical else's. on than anyone is worse

the forward. consumption. able of of the been with fuel steam the is As don't part some demand energy we're generate we doing. to do is of happening weather stable Europe we've main Not electricity. lower, Gabe, optimize wood know, feel generating environment of in mills, right we We biomass own terms and is what gas our it better that to But you own level, what's we more but natural a happening want our output really optimize ahead, one. manage are profile being it's most which of integrated demand our in and fuel, what going the can we out our like in it at look as most what's for And when from is

in And your to if $XXX think, the I quarter commentary, suggests EBITDA obviously that ramp mean, Okay. then, for a used which full I significant think is take Global implied get year range point on if I was you'd there. willing know maybe to the put in term I first maybe finer significant pretty somewhere out, Tim's directionally, outlook. you be improvement implied I if a what's wanted parse to Fibers, Cellulose to

the and again, year somewhat half lot then appreciate, but maintenance to is ability the on this of run of And performance Mark not your we've to words, into kind these front-end efficiently guys the use take so or then that are it visibility seemingly more necessarily. costs the your crept and -- of back with costs you I as of But a sounds improvement were and got maybe some progresses based there. kind out system like loaded pleased in the

about full blocks the of think to getting that just building So maybe magnitude how number? maybe of you year

Gabe, it's quite And Tim. summarized actually you I think it well.

first loaded front-end get quarter down. a the on in maintenance We outages, we step are so

GCF look But you across contract in closed the X on the quarters average it the through, fourth X. really, If at the come to were through benefits that quarter. negotiations

marginal category. these we has a the taking But almost little X have mix opportunity and of what costs going of profitability been the out stickier. see better we and year supply us proven flowing for I opportunity. side, this across Supply achieve be logistics scheduling standpoint, is more on chain fuel premium think -- move back both there rate be bit back cost costs. the to the and could some normalized and an mode of But from a a we're to customers. step-up marginal just build getting of to just costs to transportation and a just been higher product operations so to to type in real freight given and going then the past based expect chain those. And IP have years on a And every up relentlessly mean

of America line Next go of George Bank to we in the Staphos.

tell. quarter than would better X-X? you thing were or a Cellulose point quite did Fibers, X-X One I we in the looking clarification of Much for plus quarter. the be plus couldn't first for. on say mix price Congratulations and

that, about plus X-X. Sorry

Okay.

Gabe's you're that else to can you on levels your what I at more extent forecast, color, GCF. snapshot, embedded not really Anything could provide could that Or in assuming on a So operations, current the take pricing? provide Anything questioning on might least bit what I comments improvement? provide to do have on significant a pricing, the you're of discussion piggyback making Again, you from wanted there? 'XX? that with in are in us direction versus terms of a current terms right, of a you 'XX the you cost internally you? us profit of the see that and delta, you

I'm I sorry, Gabe. got part that, different I think last was in GCF I it's about missed the talking of what the negotiations George. than big in fourth no mean the We quarter. changes I just contract with in structural

starts number go supply through of categories getting as a and So That internal second inputs And quarter. of or their that a terms a-better build back they're hits on the then mills including most across normalized whether usage IP chain, initiatives more of self-help, of the now. and just to through operation levels structural in in they're first like. the we just

immune were type we're incurred have full the of but So more relates of from especially cost environment in us front can it run that that work there's lot marginal we that a macro to we the in think as a not on, environment. we

or against what million couple 'XX? you're GCF that if kind hundred the very pricing as headwind be any fair Tim, as in basically it simplistically just packaging in maybe dollars mix of in on to better close changes you profit-wise Would to I the price annualize market? seeing manage a of Ex gap need in versus 'XX industrial say, to a

of close... magnitude, yes, Order it's

George, this is Mark.

to the commercial think and it, And year on should our of are types occurred the what that's There coupled a numbers all locked world position. regions XXXX. be benefits lot those changes agreements for and out. Fibers, largely our market about the XXXX, thinking Cellulose through a you full in, improving way just about commercial I now work customers although with the good cost of not to verbalize accounts in they're be with way think one same of

a So on earnings that's comes commercial significant and from, And where structure. higher-velocity the the the gets improvement. that much is of sane layered driver, expansion cost chain supply more lower you top

ones sense. industrial then over. and the last Make the packaging Two to business. turn related one One and GCF I'll to it

Tim and mentioned Mark, So for GCF, you inventories low. that are

that your believe the I at said is customers' thought quarter. potential in also destocking levels, first a there you You but for

X So the you how points? What then targeting are been Pennsylvania in converting as on industrial, And other as help bringing reconcile the for at keep Pennsylvania how And region, your box what converting business? managing plant New implication the your -- rest levels in of you implications? us can any Jersey. against the retention are in And do given you investments. those high footprint as box potential have you you're the and and perhaps you adjust including

a it's Yes, things. combination the side, X inventory on George. of

to that the that accelerated been got a the back to quarter but would years. still what historical a believe of be past levels through phenomena on not inventory. going get we historically people little able chain of for in bit are bit third low. little velocity couple inventories supply But way of They've the So a were recover you've with

on to once a little historical picks buying but So bit they've then a got more you they're we again. work Chinese basis and with believe New get low up through Year,

deploying that's but is the GCF, on lot the labor strategies been business of 'XX So a battle through a issue, there. yes,

the maybe I'll time a X way of quarterly with environment. to demand our example back structural to you of in commented required the on last calls a think lot coming the our I and then the running obviously softer demand over Pennsylvania about where plant take on plants. box George, meet to

we are part working enough capacity our that employees of the country, overtime. even of And have particular fair so with in we -- amount a don't

region some going we've in gain around entire the this getting sustainable only not but by had it of to plant away for plants help So our a onto is places to turn employees. us schedule business, more stabilize operating

of them. incremental on stabilizing statement. in schedule. average So and parts This sustainable have because not the of country. one will we're nearby the into different our benefits capacity. plant benefits retention more operations And an of the from actually the secondary It's by volume is customer a it's stretched This

So I improvement add feel our our an total a employee think operating efficiency It's really resiliency. and operating and net we in and good. our cost

in of markets doing other going we've parts So got examples to the we're the be same thing. several where different

The the Partners, of Research line next Mark Weintraub. from Seaport

on Or less of we fixed? are we quite be X market is PPW, pricing fibers, transactions beyond open to these you're that So in the impacted the a be changes shifts the for do moving going with you making, more instance, One are by with was XXXX it still think quick is questions. to cellulose are going? that -- going bit kind where see

structurally do by Mark, to the Yes. efforts channels I needed the and referenced making and bit as I to serve. mix of mean a that want were This the we've different believe, quarter the delivering. the we it's that negotiations And a in structurally it's forecasts to or the value that taking across -- is do in fourth little it. business they're segments be business so said, predictions start for we something do we took to you have terms of don't but get Tim. time paid contract corrected piece that last that it

but prediction paid for a the taking making not get with So consistent that actions we're we believe how value. we that

'XX. you think as so that can you means 'XX through read go we And into what and

Okay.

it to hopefully, the Is of leads a that's reduced volatility. fair the I'd intent So I read contracts? that guess -- that

dramatically each the the it's the approach Well, of we've over value just intent that our I that think customers doesn't with taken equation change recognizing and time. of

to the there's described it obviously, with a need mix it's improve type which improve transactional on the profitability, that's to the just comes And doing a you is quarter. mean is multiple we customer the less of by strategic say that reduce fair volatility probably by our versus strategic ways Tim that throw think what then relationships, reduce month I we which way there customer. of volatility all a in profitability by usually we to do as our but very and and is commercial or transactional playing segment longer-term of objective the are When we volatility. like view depending the make versus words word and objective Mark, market to to partly secondly, that

quickly X seasonal talked the just Packaging, the days. about you Industrial you then And when Understood. about on more volume, talked

seasonality the course. a You of negative, talked typically about being

you your become might are any third customers. not negatively the seeing Or getting you? maybe quarter might less and end? indications that start And towards signs that fourth any that Any quarter working by from which destock Now then again impacted against may when as the customers that a be in we an the to positive? signs

Yes.

close care the think It right, portion getting if of A Mark. that's And like to the large in taken that some it's there's I was yet January, feels end. we maybe but but looks you remnants fourth cut X% where just in year-over-year it It quarter. like out. we're don't stabilizing year-over-year, looks fourth are but at to have we following first. from look numbers just down like

line the in to go Mike of Truist Securities Roxland. we next, Then

you downtime. of good gas. an Tim and figure algorithm mentioned And algorithm part how take quarter. out Last quarter, natural very as one a the and you you Mark, on that where is to congrats then you -- items used to the internal of had

the down as downtime natural of OCC? if have domestic with as sense efficiently quarter trying So been you and with able all? well. more just shifted gas whether And the in whether has a it was in to been down you've time that a get decline How to take as plans, much your the benefit at

Mike. question, We for the shifted algorithm to cost. great a marginal It's it

certain the relaxed would capacity our an the logistics the our fiber as I shifts but costs gas wood of mills as the material energy cost as a at you're purchase electricity almost you numbers. to all mill all. or than integrated efficiency your sweet reduction open not can at you your virtually subject said, as market less of important shift And dramatic haven't We fiber, one quickly of so saw production at any And making capacity, spots energy that's transportation make one, yes, then, XX% energy you also full is and but and say, make at for Because, to which full well costs in more can you're of lower-cost an see I up and where didn't showed again, one in and important course, ran OCC. everything. We not of in way.

even have might a So mills we price. gas that do. and lower When integrated like a you of trump mills mix recycled

on then And China. quickly just it. Got

Year, stage With the country I easing us a know a may impacted And from New contending sight. the sense may elimination and on its policies? early give strict demand you may not of GCF? read in you're so or how have line I Zero-COVID policies, you're can with demand know that your not you from it's of But Chinese what also those any perspective of early seeing be

Yes.

bit early, New a opportunity we a that positive. Chinese an China we Year, as it's past think there agree I see that probably reopens, although is too

in we next, Capital go line Then to Matthew RBC McKellar. the Markets of

close to sounds you your for talk that around transaction. clear line able based additional that And of to in there wanted the -- ask color terms Are receiving to just is approval. guidance on hurdles time to any you're of the I sale stake But to on It about thoughts any First, in year. Ilim. looking regulatory your close key it also this that? on

environment speculate will but don't regulatory take to a takes. to closing look I think it approval the at mean I such process, what this I fluid want year sometime we

know So more, as we it. we'll report

benchmark would contract just realization Industrial Okay. of benchmark Can us prices remind be typical you Packaging coming medium those kind linerboard what versus just prices, And lag down. pricing your then see degree in to with on we prices?

usually when you a at on over average, It look usually But the it quarters. over in couple it coming through X-quarter map. It's total, Yes. period. a see all of runs

Cleve of to go Rueckert we UBS. next, The

permanent of guess, had about me. Just over remarks, out your costs. that firstly, follow-ups Tim, taking been a couple about you've a I comment for in you dynamic pretty obviously, prepared high And dynamic remains of wondering now? something right if of opportunity the or restructuring sort some I'm that's for the an if considering quarters. last there's you're in just containerboard system, more couple marginal

-- Mark. is If this you the question. Thanks for mean

of we If horizon. you don't adjustments on the like permanent, capacity, that see mean

of And we market the nameplate running believe cost is at of we do nameplate different packaging and of mills. term, grades, structure our rating of make, fiber-based XXX% rating. growing. Given long quite the types capable We're products XX% of

economic investment marginal makes can base for the it's we a that consideration we take need. But products very Yes, asset competitive; are capital opportunities to no our So out or any cost ends there's taking right structural now in cost now downtime. where major this permanently, this it's it out we worth say because adjustment there's coming when reduction, making up only that.

And a now I because got new to near more in what's normal facility supply of we've industry think market think general I chain it figure or in matters -- used to. converting near particular lot also the and out in than location

a So had to on through cost be but out of focus modest it good. reduction opportunities lot taking for out we've figure on capital our investment that lots would

over just is that it of lot wondering process of quick sense. but just through more you've work Yes, the a progress. more X And last in was a I any dynamic couple any the discoveries sounds that's of makes if if like ones. Maybe there quarters made -- being

maintenance into laid just wondering guidance. there's economic You've the out built you've if in downtime I'm that full laid QX? mostly any if plan or year it's out

and the we don't year. need plans to downtime going system But go view about don't a Yes. or we We of the we'll comment as economic forward. have on we have run how any the through market growth

finally just flow. fair conceptually I'm enough. free frequently that's little here, bigger you how cash of thinking me, bit then evaluate wondering And sort I'm through curious, cycle picture. just for Okay, just a

about about of that dividend just from on to curious I'm a free to another you to here payout how conceptual cash $XXX to I support think XX% talked million XX% there it before. looks basis. just million flow you plan get like $XXX the need within that we've

be mean the cash we XX% through of to the that. a requirement. to very sustainability flow fast we that our ability free rule it I is cycle. the We Yes. the feel testing and mean, do good look And always I hard within meet dividend XX% around trough at dividend. will not about

number through above over below. But could we is for. shoot time be think bit might to appropriate years it XX a a of and Sometimes across bit an it range to a cycle, little little the sometimes averaging be XX

expect say Would we 'XX? CapEx average is a like above down. come should running little to you bit in I that mean something is that

last lead was times, in to difficulties it's just long were given but I the think zone. I impossible. year million, supply it it's within $XXX mean million or we probably on $XXX more trying and spend chain

capital $X billion suppliers deliver again, were time we D&A over it time year. at a so But in and $X billion runs short between And We're to that But average within and on just year. ability $X.X about a billion. We've over targeting $X.X last depends of terms this billion little looked frame. spending. of vendors'

the Then Ng. Philip next line go from Jefferies, we of to

This them do do being of see ask the to Or outage see little IP. largest the I is bit for a John they a environment? weak up on your of wanted just you XQ you base to build a continuing maintenance Where in decent your actually spot great with Dunigan on are for because containerboard need demand first about kind this outage? guys is inventories but mean, maintenance now? quarter. Phil. one Congratulations I

first into without in the quarter. going mean in the they came getting little second but quarter. I for a Yes. bit heavy down the We're sure into maintenance quarter season, numbers, fourth outage

level So sure we at make appropriate we'll our are support at inventories look outages. and that an to

I don't -- movement. So lot expect of but a

the to And or is have frequently terms of IP along of Okay. in more some up for the of Any any your in in longer instability bid period time the coming how a contracts demand? quarter. up those heavily impact of capacity any customers here anything on lines? for just just with the online, shore for potential lock coming supply businesses the capacity the then to you in the Have of of coming avoid maybe able kind that's new you all half that's latter been responding or some seen And from that? to industry

boxes. customers. our we to John, make our for is we what box use the market. for obviously, There's spot long-term I We about do it are us be that think board export a just that: all to integrated system the the board would the And that kind system very And type our think market of we what considered balance pieces domestic way little customers domestic call X and our an market. agreement market, market is of in and buy strategic open is position. containerboard from would

export that And And we that we so kraft for linerboard look to signal. then that have match which don't we that about. talking is the at you're some all churn demand output and of our really demand on we issue oscillate virgin

degrees past past. we've on in of So navigate just in this we'll the like And and in degrees we've seen done come But capacity varying varying success. comes velocity whether really of operation we one pretty do long-term and or it fiber all on makers to the run -- run from purposes, making a whether box market box a for integrated strategic open making practical box, we're it. we the

from portion of Ilim deck, on the says year mean Okay, in XXXX. understood. this there's And this that just just given year, Or on point dividend it of it there clarification. of off table closing? sometime In the the I one closing, is expected holding expected no price? Ilim no in from to cash depending sale come for the included the the could kind just dividend that's longer was

We case. base it. be don't wouldn't that Yes, expect

The sorry, I'm Josephson. from next -- from Deutsche Adam KeyBanc, Bank

-- assumptions full thinking one what of on sequentially at will XXXX. better XQ. Just the would be you quarter, to that embedded you're that getting the Just the be your about about would you affecting I your thereafter? over XQ couple Could think, the guidance. One talk sequentially think demand, destocking underlying fourth demand point course some Tim, expectations given are you questions demand of year your mentioned about flattish in box talked

about and what year that. wondering you're are just XQ for expectations exactly talk full So your 'XX, versus if able 'XX to beyond shipments

do we modest a recovery. mean see I

at neighborhood the looking of in we're over something absolute think the year. of maybe I course the X%

out get pickup is part the year, latter a we first but of modest. the the anticipated into as So of quarter going

P&L, just price, is with only so from to but when that. Industrial confirm assume it to XQ but your I given to I just Tim, also hit your reasonable that the published XQ? XQ mentioned realized not previously Got respect to in changes would fall it. you will from sequentially And the XQ prices lags on price want Packaging to assume

reasonable. that's think I Yes,

latter about last my will think I $XXX just compared implied by X the if quarters. is question And I XQ maintenance the guidance, around million, think, about be to higher Okay. million $XXX

you I'd I $XXX the if the last take get million, the that, $XXX to So year. if go X to assume up you billion equal, quarters else of about all for $X.X

guidance, So realized assume or your improvement pulp prices additional embedded higher obviously, from there's otherwise. I in

XQ make So sure XQ likely I on just and you're assuming from that from lower I'm Is -- will even though prices thereafter. be to in that Industrial onward. want to XQ parts Packaging the clear moving

It reasonable. all sounds

demand? XX%? extent your the are or me to just XX% And you -- the as box What as one their way you has you're played the terms how and are? to levels Mark, which their is sense, think expectations there? it. last you to Tim your hearing is from in of what out are what inventory customers -- what customer for Do of are Got destocking

up had we've is a we're occur Tim, are the in of couple large we're segments but in think, are There inventory. hearing going I -- orders through kind mentioned it. that quarter. of cases, earlier range But to segments Adam, certain the fourth replenish the hearing, maybe some a still I pick a think, in there as of did destocking in portion question,

book So chain qualitative largely. of played and it that what demand on story order out we're we're in based seeing feels the destocking like what hearing

and everybody's we with is of on do And getting half year consumer what now inflation, with income, mark the fuel happens respect on move relief some the as they're move consumer first does the what to the question prices does mind through the disposable looks who it but it longer get wrong and will the probably it will And come or goods take get back right we're hearing. into that's we won't what will back than but back precisely to faster it come everybody more economy. it likely, at

Citi will of Our Pettinari. come in line last from Anthony question

question Adam's of couple following a on on quick ones. Just up Maybe outlook. the

wondering think that do there? kind I'm way sort last just you're giving a when formulating a $XXX billion an of outlook bit of a target? different of maybe number. I presenting the year over outlook, few year, a or range $X.X specific kind you've given given million This upside, about if how of of you've X.X EBITDA. a the full more sort you're downside is of think internal million years, is there's Or which you

or $X.X be $X.X Anthony, dynamic level. billion. higher It it's lower bit Tim. will We we think a bit and little be around said little a could is it billion environment just that approximately a

deflation costs, I And you just about function And slide. are just uptick was if if could fiber kind you're Okay. the then comment wondering a in outlook of price seeing talked real kind if any maybe was fiber declines just if I you or on virgin local or seasonality you're there. that's then lower understanding in OCC? seeing XQ costs wondering And those Southern of markets. of

No.

we're and I to modestly. expecting think fiber, be down virgin it's OCC

lot good But You've on shape. our had a transportation are in inventories of on both. really virgin cost fiber on and -- impact

have bring we wood to think virgin we down an well. so cost slightly And as opportunity

Sutton I'll closing comments. over for to the call Mark back now turn

Thank you for joining our everyone, and today. thanks, call

this We're believe uncertain environment. would consider to in to we get outlook. something We different opportunity Just of of cost back to opportunities ratios. lot wrap our that to in We've couple excited our kind got performance cost about points. on of up more key maximize a structure with normal XXXX. our A

see system, and primarily in more a the demand looking environment improving in XXXX we geographic locations. on with making and And and investments sustainable make level a normal those capacity we ready we'll returns XXXX, making continue expect the our then appropriate level regardless profitability into demand our we more we're model throughout are are dividends commercial operating to with capability when will converting the then, be improvements right the and at to of to box the of

along our to for today. forward look the and So a to We're we lot call joining Thanks way. excited updating do. you it about

for Paper's International earnings today's fourth your in you thank to like we'd quarter call. again, participating XXXX Once

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