International Paper (IP) 27 Apr 232023 Q1 Earnings call transcript

Ladies and gentlemen, good morning. Thank you for standing by. At this time we would like to welcome everyone to the International Paper's, First Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. Instructions]. [Operator

my President, the floor Investor now Mark over is to Vice Nellessen, Relations. pleasure is call turn to yours. It Sir, the

joining XXXX Leah. Paper's you, Good and you Thank morning first call. earnings for quarter thank International

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

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

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

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

now to will I the call turn over Mark Sutton.

everyone. morning Thank and you, good Mark,

slide We I quarter discussion where first our begin will on our results. on three, touch will

begin I appreciative and our customer Let a manage proud by work am and through of discussion relationships for me how of the our macro strong environment. hard we employees saying and the as challenging all dynamic

Looking successfully maintenance International the optimize to a incremental Building and $XX benefits delivered And earnings highest performance, our system as our Paper million of taking continued our year-over-year IP well we mill our very while of system customers. from perform initiatives. our outage continued quarter of executed planned better to our year at care

million $XXX quarter, the during we including of shareholders allocation, to share million capital repurchases. returned On $XXX

environment navigate as work the demand customers products. a elevated supply to their through challenging We of continue chain our broader inventories and

the pressure our from lower been rising lower also benefits as which remain pandemic. goods consumer as believe services, additional offset influenced interest pull portfolio, non-discretionary from inflationary under during of has priorities by were the also by costs. across We forward input Margins pressures, prices partially well rates, and on goods, focused

turn current commitments ongoing environment, I'll well going forward. and the talk about operating slide more as to four Now, as our

of in quarter, us, through part uncertainties and recognized these expected we macro the environment not than immune of were weaker to These our the entered risks. year. resulting we are a there first this in As businesses ahead the macro-economic demand year, shifted trends

Much inventory weather the whole segment. markets, on greater fresh export by the was of destocking weaker chain, unfavorable impacts supply produce and this influenced across

addition, our today on margins to put In year additional in have lower we across our prices portfolio expected pressure outlook. relative what full

chain, the most has we Although our many destocking the been improved the manufacturers of and of course its this throughout of in the run We continues resulting channel customers. second supply second believe environment in quarter, resolved, the will especially retail through rest through of half an year. destocking with the believe the demand

and that know through reinforce manage teams variabilize mills, across options system what the customers' a continuing at of takes wide to capabilities leveraging range to our want our of business supply large costs it our care our successfully of plants needs. box International really and by to to cycle take I Paper chain, while

remain demonstrated preserving includes commitment our our and our this focused the IP our strong care of for on shareholders. cycles, our to our is our to and in business financial We ability key continue maximizing value prior taking operating ongoing way. maintaining and We foundation This of company our customers, priorities do employees, our dividend.

turn on update I I provide Tim, Ilim. Before over an it to want also to

an Russian Russian Authority. of the but the awaiting we the approval sale of made important Buyers from sub-commissioned Ilim foreign have approval We good closing received are the overseeing competition companies, exits by required our still investment. progress toward

We this close are approval be to will required we thereafter. optimistic received final that and plan soon shortly

our will Tim. provide our first to more details as over it performance turn outlook. well now will quarter who about I Tim, as

Mark. you, Thank

per earnings quarter slightly last weaker down financials in our we and better Turning the while quarter above Operating outlook share impacted quarter. demand year, came prior on versus provided in slide outages. five, high-planned was first revenue maintenance were prior by margins key than operating to and periods the seasonally

use XX% first included related for to of earnings our us totaling cash balance with call. sheet. in flow first settlement the Also, occurred annual the a monetization during IRS de-risk the our we capital quarter. $XXX cash final Free for This further last expenditures settlement our million actions; it the quarter timber our to highlighted allowed about of

quarter and share across portfolio. due index share in prices per mix quarter. first a Moving pulp fourth compared to as by were our bridge result as to of sequential at was Cellulose Fibers absorbent slide the quarter's sales Lower per product the $X.XX business export on to $X.XX lower first earnings Price unfavorable operating shipment. $X.XX movements the six, lower earnings mix Global our and

was lower Fibers also Buying destocking quarter business, our days the first shipping Chinese in weaker by the Cellulose our as New inventory customer and and was was sequentially both Packaging due Industrial businesses Year. flat In business. demand additional four Global across offset to American North

In costs, ran our well. very operations and mills

totaling employee However, one-time comp $X.XX quarter-over-quarter cost, from $XX benefited benefit the items quarter was per workers share and medical expenses, or unfavorable, million related fourth claims. favorable because to lower

I In earlier. economic addition, was business higher impacted our demand Cellulose downtime due Fibers the environment to mentioned lower by

planned and first lower $X.XX first partially of by input quarter, offset Corporate the million share we was Maintenance by costs, quarter costs. significant expense. driven the FX and were per other from timing energy or and in and items saw lower tax spend, outages impacted OCC $XXX which lower higher primarily were in relief as by

due volume mix This on by benefits lower partially export offset days. Turning benefited on margin slide prices. improvement. the pricing was with initiatives from and focused commercial mix Industrial to Sequentially, additional was four segments and movements shipping Packaging lower to index from starting seven,

in However, lower demand consumer destocking for supply most the across across chain. packaging for and channels segments weakened demand and ongoing March

broad and with of strategic attractive large International our Even in end portfolio environment, and due Paper segments. of is a our relationships this a national diverse dynamic demand services well-positioned across customers products of range number and to local

demand mill timing and well. Ops were spend. of by of I favorable The approximately impacted well lower earlier, $XX the Overall, of non-repeat million ran costs very system as as one-time our items mentioned of Sequentially, system approximately operations environment to our quarter, with downtime demand. resulted production in economic tons customer as XXX,XXX the align our in costs we across and actions impacted These system. adjusted the

was North lower Input $XXX costs the improved million from earnings were benefit the Almost and and by of significantly OCC energy and was and cost. Europe, costs America lower freight remainder two-thirds lower from primarily sequentially. in

full and impact very Overall and inflation during of lower on we face high in a is and to services remains opportunity at materials optimize running are past We couple marginal capacity. a key lever elevated demand further supply continue take we high costs, to there believe the a as years, XXXX. as This from environment out costs. well large system chain the our

some underlying to Turning segment corrugated our trends perspective share thought on slide to for packaging eight, helpful additional it'd be we business.

our all experienced quarter, on were and basis, saw segments e-commerce. March across and month demand almost the except previous down down shipments in of all shown year-over-year in demand As March. U.S. XX% in the We the on slide, impacted segments box another first year-over-year that for X.X% shift a year-over-year a end-use decline

had make was indicators less of represent that The demand the average segments that declines the in consumers high pronounced generally and where our decline dealing with as rising X.X%, interest indicators while were are segments the in choices yellow greater decline. more than were declines inflation demand to more represent overall nature, and discretionary Furthermore, rates. than red average

and impacted on mid-single produce example, essentials weather as Florida. low was down conditions and value, Coast and low-cost protein also a poor Fresh as by to were processed consumers on digits consumer For West food and focus more the poultry serves resilient, in staple.

durables be side On segments and non-durable nature. goods in discretionary mid-teens. across distribution, Along with affected other to the segments declines under most inventory spectrum, and consumer pressure more in segments are supply the the of destocking longer chains. by These these came also the more other efforts tend with the the like shipping

last Based we of quarter XX% still E-commerce our majority through believe more the inventory and showed feedback pre-pandemic the through from customers, year, resilience was been versus digits completed retailer quarter. has down the on levels. first is but destocking up from mid-single

still given supply are interest higher improved capital However, a reducing of levels, working and velocity, demand as manufacturers lower chain inventories rates. on focus result

We well-positioned order backlogs, second at will the products that critical bringing completed quarter. Despite the of role with term. be and half the IP and grow and in we destocking higher our expect of believe understand April to the year, corrugated also these first sequentially headwinds, looking the in customers long in in we volume near-term majority is to plays packaging consumers considering over essential believe our performance the

price performance, look Moving our was Fibers, relatively flat slide Taking quarter to Cellulose a sequentially. at on and mix nine. first

significant generated in restructuring quarter. initiative Our first to contract strategic related improvement the earnings

as to in However, a percentage index this impact as mix the quarter less movements. was commodity from a volumes favorable offset due grades, the fluff well and unfavorable by higher lower of

Volume demand impacted also the our to from quarter. velocity improvements will by Chinese inventory was customers supply majority to congestion the to and less of response lower chain the destocking said, care meeting consumer second role absorbent needs. the to grow will destocking long This personal be over products we completed continue in term. play Year. in reliability, from due the improved essential New believe in due and Feedback vessel the is that With fluff in customer port suggests that

first the our as environment tons actions cost The adjusted in impacted the align variance. quarter XXX,XXX to approximately with our and two-thirds economic approximately for ops in resulted we customer and downtime costs across production system, and lower significantly accounted our the of system demand. These demand operations of

Planned year. I impacted favorable quarter in the $XX sequentially Sequentially, well pressures, million outages approximately non-repeat of one-time represents also of earlier. maintenance that one the ops were $XX as and and fourth of mentioned the costs highest quarters items the of by were inflationary outage as higher by million

lowered million energy addition, were and fiber lower by costs In due costs. input to $XX

our XX, year growth approximately earnings is slide operating this more in million strategy to and over continues to the Cellulose executing increased value to business The a incremental progress Global cycle. in returns our creating deliver driving despite business on business macro XXXX challenging by environment. $XXX Fibers focused Turning make earnings

contributing successfully deployed regions meaningful building which pulp this segments. strategy regional In on is fourth and we strategic fluff most finalized aligning attractive commercial a year. and and negotiations, the key contract commercial benefits focused with team customers Our relationships quarter, our the global

we have forward, are serve improve of couple increased believe the supply by chain during Going past costs, to years. significantly reducing our opportunities significant cost there to which

see to We up start in expect to benefits these outlook. quarter show second will our

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

commodity get this premium over grades, which structural provide. in we value improvement are the for believe we driving In over addition, the fluff we earn We for margin reflected paid expanded ensuring has by pulp time. we is

We going are expect to to drive building this earnings on additional momentum and committed growth forward.

of update initiatives. Turning to better like the on We're delivered to million earnings incremental quarter. solid I'd slide improvement and the making IP in $XX of year-over-year first progress you XX, building

million portfolio, effectiveness Paper our began initiative corporate we significant we Printing since the functions XXX% than program deliver profitable results was as the acceleration, simplified more more offset building lean staff streamlining of program. of the Our excellence. most spinoff. completed generating commercial with through from of dis-synergies and growth driver By and was cost our year-over-year savings early a investment strategy of to The we IP the mostly in realign $XXX better

value our logistics, on leverage costs as and areas solid meaningful business to Process has initiative we earlier, margins such data for implementing the distribution a will Global deliver growth forward reduce on as business by returns. and going Fibers investing mentioned sourcing, We're believe finish our we improving analytics. creating earnings I also capabilities industrial optimization growing advanced we deliver across new across packaging As and in and generated path We maintenance as focused and term. to initiatives the potential benefits technology our profitably reliability, long these business. Cellulose

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

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

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

strategies have Looking remains medium-term we've ensure mitigation risk pension our ahead debt plan in even limited funded. and taken maturities, finally this fully help we environment the

shares framework. part first represents million capital shareholders, In to Turning cash X.X% our allocation of million share the meaningful total of or a the At outstanding. million is through repurchases, $XXX approximately returned end including we shareholders was to $X $XXX about quarter X.X the billion. our quarter which authorization of shares

and dividend committed share repurchases. Going our maintaining to cash through forward, through we're returning opportunistic

and out earnings cost-reduction the funding in in returns in for which projects growing to build generation. is invested quarter, attractive strategic with excellence businesses Investment projects to cash box our our essential We system. and for $XXX includes million capabilities first

plan we support and and long-term remain box when opportunities. to will make additional forward, our Going system disciplined investments assessing growth across to selective M&A profitable we

Industrial Turning XX, start and with second Packaging. to slide outlook. I'll our quarter

earnings We export million, expected result increase shipping of are expect in due day. $XXX to daily earnings first million quarter. million prices America, by in North offsetting mainly by declines spending. price shipments average mix to and as by decrease the North index Volume of movement expected the decrease to earnings timing seasonal lower increase to prior due normal one-less costs $XX America on is Operations to $XX and in and in based a

of million, in XX% the through first we the will by decrease to XX% outage half second of of approximately and quarter XXXX, have about planned annual is Maintenance expected should outages. represent the cost year completed total expected outage expense $XX

includes $XX expected the lastly, the printing year. outage. with The are by Riverdale This to million from million decrease lower And course Sylvamo part to energy for papers the $XX charges spend freight. average as of second over costs fully and the quarter associated of recovered will approximately of cost be Mill input cost

Switching to to movement. a million result mostly $XX supply lower and lower energy Maintenance earnings higher on to mix costs to and costs expected million, earnings we decrease lower Cellulose expense decrease volume. seasonally by fixed to lastly, increase $X primarily by Operations to expected price index chain by $XX expected are based and to decrease and Fibers, $XX earnings prior as unabsorbed due The million, of is demand. expected and million cost. is higher volume increase million fiber due Global expect from are $XX costs by costs outage to input by

uncertainty resulting discussed year and slide full businesses us, were are XX, changes remainder shifted recognized the outlook including be the our to that of our weaker as over demand macro risks. on in our products ahead prior expected as price we to have first these that and through the there entered across trends will quarter, Moving macroeconomic than year, for Mark implemented reductions we portfolio our index The earlier, the immune not of year.

at As that time. a reminder, price our represented previous indexes outlook

$X.X in $X.X of EBITDA company We to for projecting million. fully are XXXX now year the be range the million to

cost, business We initiatives. growth our driving includes by system Cellulose in our our building to cycle better optimize high benefits additional marginal continue of reducing from Fibers headwinds. This IP despite earnings delivering continued Global

first million, note I from changes today. monetization cash includes price tax to payment only to $XXX would also be in our $XXX expected published $XXX our is one-time to flow Free of outlook includes which million related million a that the quarter the settlement. impact timber

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

investments for system to with billion growth additional our position and $X in us capabilities are of long-term $X.X U.S. customers. our XXXX, profitable billion build increased with we targeting to For CapEx box

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

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

Thanks Tim.

confidence going reinforce turn want I'm resiliency from Now ability dynamic through IP the a to I to navigate strength. to position in and of XX. slide our this of to my environment

range wide to earlier, mills, business As of a our and to teams supply of Paper cost I cycle, take continuing by capabilities to across successfully our leveraging know system and our of at what takes large it manage plants care while chain, a our through customers. optimize mentioned International box options

broad large range positioned well with diverse attractive across and of strategic of are our a local portfolio to national customers segments. do of number services, our a and end-use relationships we due and Also, products

foundation our have and we profitable have wide strength And environments term. and built finally, spectrum makes long a strong flexibility. across significantly enhanced financial we well-positioned The success to that IP over the growth for deliver economic of

leaders our to With call. that, this move I'd senior the and for we're to of business going I've to invited that note Q&A to join portion me like

hear we're it I the environment perspective dynamic for these be helpful from thought leaders. Given some you would in, additional to

go to questions. operator, are So ready to we

of comes question first Our go the ahead. from Pettinari Instructions] Citi. with [Operator line Anthony Please

Hi! Good morning.

Anthony. Hi

Tim, in this growth Cellulose talked about Global Fibers Mark, confidence Hey! you earnings year.

kind sense pulp of you remind offset of then, kind have or to as either any Assuming gives any published fluff can to confidence deterioration? give that if guess been price there. like us your change you that you confidence the in further in I'm of further the if contracts just we the won't wondering us see list the prices meaningful initiative lag offsets, index the and deterioration from can today, earnings. I you that commercial what of prices kind have the And

Okay, a first made. take on to we've ask Anthony. Ellis, then of Fibers part of little Global our to great you the I'm business give I'm perspective question, going the going Cellulose leads and to who that, Clay some changes

contractual, mean, really portion there's I we've large confidence portion is base. generating is source market. shorter customer the absorbance. that's a multinational many also traded open changed is the in of explained way to monthly contract uplift or we which the as global earnings And significant less our There market, that's this of we've times, contract that's term, business more go our

not have markets. tracking exactly a business specialty We those that's

which last have is which volatile, the the hit likely will the and exposure to is the most we business a have hit piece, business. pricing where of the then market And still lot pulp, issues

improvement, XX we strategic that's in coming is, are customers where absorbent, to our last we the really if around and confidence fruition. the So profit that changes and the months made focus on the core, the

real And go. similar demand, the remarks see to and far end-use in year some add through what the flow to demand bit about there's destocking customer the going as we what happening, more and you little where is described Clay, to maybe described Tim prepared we story from a with I'd I how As to ask the that. a my color and think

Hey Sure, Anthony, good Mark. question.

hit general. around our And there. around to mentioned, a pricing, around Just that in the it Mark what you lag a think think confidence, on just in lag about index gives think was quarter, hitting if time you us I quarter

customers also we Geneva still large where absorbent, was of small many at solid. our to products to week last some index conference an our Our see, our had talk we of global of demand way regional. and I in see, end-use many hygiene customers all the is

come downtime outlook we what expect Absorbent gives It's are second and gone be this largely us consumers profitable mostly quarter, story. experiencing year. an certainly normal deeper. even And second good longer in to growth so it's drive confidence, in end expected, economic levels and across that same returning is It’s We little we happened. it than more This the what's mix, outlook on do to Board, improved about would then growth. should doing the and by to historical is to the expect of the over inventory destocking able half half space. is the and be first think last in a to also more the we're then volumes, the and and

market. sort think to the its of helpful. you or quarter possible I of any worse? or to improving And the I I of about the that quarter. Packaging, light the where are inventories tunnel second on are when very know that's the customer the maybe general at if Is confidence indicated guess is regions any end destocking export about there. could run there I'm talked getting weak, of think that's about Industrial there? comments remains end course channel, think Okay, you which that don't maybe the comment you there's sort it domestic wondering, a by or second then, in switching

that's question, Anthony. Yeah, great a

that. right. packaging comments working and we're container which runs understand teams You're our very to prepared here. market business, the Tim North feverishly as EMEA on I Both Jay as global board well were is I's been Royalty focused our just primarily America. is try largest to and Jay with the business has in, But think Jay

export you So comment markets of to Jay, the question bit if and on destocking a about and phenomena non-U.S. want Anthony's demand.

Hi Mark. Anthony. Sure,

demand lot at when for So think months weak. to the We've yeah, cooperating I it's it high inventory levels, to even as it's U.S., last a you been around whether relates export Europe, several been vegetable seen like inflation. very of look remains into then and channel; the the not goods fruit different and for places low geopolitical, Morocco. factors, globe, particularly low consumer activity weather has really And the due also,

We signs inventory some of levels any we improvement. of and see improving terms to are in there start stabilization can seeing

and one I some is think between, a bit we markets point. these of maybe rebound those will markets Latin far are But which serve. in few little the America, at

America, who consumption time. Our value to are with to vegetable really and are fruit positions going activity those linerboard segments heavily Latin over across kraft customers Europe, oriented grow and Asia, consumer and these with

good both we this that's well on So feel certainly pressure about moment in the pricing. putting and future, weak, particularly as demand it's but as

Okay, over. turn that's it very I'll helpful.

from is Markets. next Matthew question Capital McKellar Please go ahead. with our RBC And

whole, very about much. and in the start bit to you're in and add seeing relative as both and in where if wondering was of QX, little different the what customer March strength areas business of compared QX industrial a demand seeing thanks could particularly maybe just Yeah, packaging to you're and weakness. thinking you of segments a terms color I

That's the a demand Mark. great I components. end-use mean, at we is final Matthew. question, consumer. look This There's in two

term the that, in customers. And marketers are the the our the really supply of our organic term of that that chain we ahead Those think demand there's manufacturers demand. then and ahead consumer. I manufacturers

broad comments. we But business Hamic, box what the it de-stocking your leads ask had chart comments confidence then I'd the he American about about gives forward, on on see when who our going looked some segment, segments. Tom our question segment him Tom. North maybe us is to give piece, and some how insight here, then down break colorful And you and it by Tim where that at

very We or and strong Matthew. entered quarter Thanks second the exited to March. Mark relative Sure. morning good

April. So from to we've March moving momentum got good

shipments think could than You about backlogs that. maybe better actually and are X% up to being X% our

that see backlog. we So almost double-digit in improvement

thought that have is quarter. second about I as Tim it's mentioned immediately, Because mentioned, to it but transition de-stocking is how the away de-stocking it's through, are that. too of a on everyone like and to levels having or depends they if so much perishable we've not So to in-inventory. work and going Mark it's that different not It uniform segments segment has going the think through go different the goods indicates something and in

I triangulate in the term, is growing of understanding think and to data, what over time a understand their chain about confidence supply seeing our work. are de-stocking conversations experience how these we customer as between our how lot and near they as macro are we they in in segments well

good those out all direction But headed. for through feel about where Obviously, part the demand the there's a the point sense, a as is us on positive in we box the dependent. this large momentum And second of plays quarter. in that same of business component that's

then helpful. of are where see to expect the downward that's you given shifting to thinking levels room QX line repurchases or share free here? cash shares how the trading? over, QX given sort about trend continue we for do Thanks, can Should look maybe Great! them of a flow purchases or sense more limited with Thanks. And you're to even you do repurchases accelerate and revision in give us you

Tim. it's Matthew, Hey Yeah.

step specific across do. framework, you're cash with think into and repurchases allocation I the from on in of uses our and familiar say we I just capital that consideration would share the take So all we everything back that

tremendous complete and repurchases. As with Mark Maintaining share balance is sheet, flexibility. dividend target gives a we opportunistic the said, starting strong commitment a financial us it

and the for moment where any the So time deploy and around is to we're in in at we're decisions constantly looking value creation making maximization. environment, place best cash

in of of about nothing's change we cycle, the the through parts cycle. framework into that terms how comes it think All consideration. going So to

Okay, turn it I'll back. thanks.

ahead. And Gabrial Securities. with go Please is our Wealth next from Hajde Fargo question

question. taking for Mark, Tim, good the morning. Thanks

morning, Good Gabe.

to about system.’ in system to wanted seven. supply you I on were think I a the sort you about I to facing words maybe ‘further out which higher prepared variable make think the environment I box Tim's Tim, I take in slide or overall, your adjustments? the I'm us to and thinking there in opportunity think I continue or was that revisit of of costs, sort what talked your the was philosophy remarks make to can has want mill change take heard assuming – wanted hear, chain current low there costs optimize some where permanent means system out, system of been sure you

I but second at half of we you're more in right. talking you're system year. that it marginal we started when had out we're looking marginal efficiently And this the you we started recently No, the the on started mean, optimize how year, of and last possible. ago, it years of to we about constantly taking as marginal amount have so something cost it half in first well, it's cost, run and as the we trying – this continued downtime, get and high the cost

nature plays dramatic little well. transportation and into shift the given but and we're starting in we've the just it's as responded, more bit buying way in than and inputs, highest through taken inputs see to a but now cost only normal, demand the in And how time not it

getting real cost a it's possible. just as focus out on So much as

sometimes you know is this Yeah. Mark. Gabe, –

way operate about, in and lower the question a consider it part most would a not Sometimes the current may part. demand we almost get really continuous and that, in approach And changing of to get of of we we later evaluate call, our we running versus get, the environments on running instead system at different output we I mean basis. levels running we

fiber at all supply theory back is on what's then have you close in different decided mills. you you full, and the if and others, across and for imagine logistics on in marginal mills up on described, high there of the as the of XX gradient and environment add net happening, OCC depending because marginal we're inputs, Tim them, cost temporarily then then run we most no And And two to savings with that chain one to cost other the the going can geography huge or and you depending savings. they're to cost at have end eliminating

at are continuing that. look we So to

the gotten best have at systems out But best take we quarters demand and better, the about better full in is figuring optimization could lot the reduction capacity. marginal way total signal. think table We of information an lower really with but that a the I the gotten to cost than ahead or get our anything two across terms operate value much have in powerful. off it's – for teams cost we we of the running takeout cost ahead don't the the have marginal But quarter really didn't

that. Thank guess you little bit term I in short And for here. more a then nature

You in talked favorable because gas. kind that X. million have I healthy an of and talked peers if we that's And element of effect natural OCC suspect for increases about price $XX rail you. that lower Curious something sort into pretty hovering impacts ask industrial that the explicit of I one about your input of assumption costs packaging. are April you question, maybe today, is where a came being do an

half second recycled fiber some virgin your again you And that terms implied inputs, towards then underlying of bigger there instruct anything explicit whether the for energy? in of or sort there assumptions fiber, for of is guidance, it's us in would

its Yeah, so Tim hi, again.

– depends the to strip. headline better. impact so gas, and It movement but that similar is on and going There which natural we're you like of pretty out. second the distribution that very quarter are plays charges cost be the category about. the much things that how not On think that we is can talking you're see I the follow it, is some

and On time different times quarter at a be mixture believe don't third go over the and environment on I plays we reference it modest on that getting a seeing. is OCC, – little we and bit have all how in we and transportation to modest know are the it's quarter. into the a are this it's over there but we're transportation, the contract. the increase Chemicals whole you of time, for us depend fluid so could going out These a modes dynamic, across mentioned better as points

balance, the going flattish it's we on to depend you There and the on another is with second half of kind go the quarter I'd costs benefit on out of the backdrop. say input but But depending the get scenario, it's second again, as in small on pick-up, this year.

and right, luck! thank good that you All for

Kyle Bank. And our Deutsche question go from White is next a ahead. Please with

question. Good for taking the Thanks. Thanks morning.

outlook kind and maybe Just business cellulose us through of some Anyway in to regarding new to parts the versus the environment of the that walk change moving pricing if by much How the was wanted can packaging in? the fibers. versus to of you the go much of size reduction wondering corrugated updated outlook kind target. the is versus driven driven how we're is demand weaker by initial that

to Kyle? Yeah, X.X new talking X.X of so you're versus about range X.X the the

that's correct. Yeah,

Yeah.

to there’s system. was think decreases. a demand took price, in it. to our we I That surprise downtime out we of it, other no terms But economic was, balance the drop-off and you published way to us look price at resulting when So that further March had say

We had came more prices more volume For had pulp down. EBT, we and means which cost. lower export

that second things also you we to a then in year, look half And the but as as present, I of those costs. the quarter through bit the are mentioned, get at better input little how we go be going evolves on second

we're maintenance And significant our some because there's on out. additional half come drop-off then front-end maintenance front that outages, a have outages. really costs We loaded in loaded,

of we the though getting know impacts part that significant March, the better, month it you still looked of even all first the it, pretty it's when at was of second some moves there So in quarter.

little for of Obviously has demand to to XXXX, new embedded a bit Got the it. understand help and environment. be guys than talked more what kind about to was is you that terms being destocking box I assumed guess come Are able full back the And then been maybe on where to has you year for provided able outlook in go weaker of shipments you think a now? could us everyone the shipments outlook anticipated if last initially. you had flat potentially for think box being quarter, I that we and back in

this Sure, is again. Hamic Tom

activity demand. lot, view You know drops this is economic our say on box that boxes, we and a

the for only channel near-term any to really directly the to And substitute thinking or so we box as is see U.S. tie we not in There about when channel retail you're expect economy, no demand it. a box to really delivering a

rebound. we're confident that So about

have, to we we destocking. happening of in year, now full say the would due most the difference in we of for this year the think the terms what first what is and half thought full I

to full So it's year forecast really exactly. the hard

us open second I going in because this the is to depend about it's question. de-stocking be on to out, general, an improving. economy quarter also playing But see think we correct being and the going the

Got makes over. That turn it it. I'll sense.

Seaport And Partners. we ahead. next Please with Mark go Research go to Weintraub

container have got particularly fact the you. Thank had of coming thought one supply new the is the and that's the industry of you've I take about that call. some board. Obviously investors marketing advantage the concerns leaders into try on would

the on where you as absorbed your that how – how already out getting things might being to it? right to perhaps play about and/or Just now? that think as is could that thoughts Is see it capacity update

is Yeah Royalty. Mark, this you. Good talk to Jay to

things keep few to this coming in new that's a that think I capacity relative to in. mind

the all, of First you small as open is relatively know. market

including up in relationships cases and market in made long-term some equity of that position strategic Our positions. some is really

Producers important what an container of buy some having buy So spot very and is which container day customer they end the board, business board. that of system and at needs but it's the the little people integrated may we've are boxes don't you – day to complex. the buy about it's all we remember got have and end at

think you with flex having geographic to to are what their you important. and needs, the mix what IP customers, rate search it's And capabilities, about redundant so a customers wide are brings comprehensive about know there's things offerings, reach, and there, ability value looking for and they what all of these

our you really about mill. and system customers those value customers a single when think about and capabilities with fashion. for things, be of that relationships strong going and that's have the a long-term these relationships, it's to in compete so It's to about what you that's what looking our are those allows so us So new than form in are some know trying entrants more having to

ahead April the Good through. so on But you to but color backlog want and little just we enough X%, I environment, That's What data of to is actually to for of the that had and would so could the April, get mean so we a between about recognizing far likely then the date. we're the get that think backlog, but to up destock for demand there. just on – thanks shipments mentioned and shipments and if – were you should encouraging, and indicator reason helpful, this Okay. that? don't And gone does that’s we've could What digit. double very we're to why maybe being-up in the distinction ourselves, right backlogs X% what on again more we've trying bit which make closer thoughts follow-up the being difficult where of shipments lead I conservativeness, sort through a talking very, go Jay. some

This is Tom again. Mark. Sure

as was the for it's about the earlier, I weaker about still strong had second shipment of and you right, Just X% it sequential March common talked sign than as that's some was from clarity that momentum. March Tim had but quarter, and obviously

to and more the all get be as because customers see gets better more Backlogs lean because orders that. that of you more times market volatile, tend in

close you future a where but it's backlogs is moment, in the I play you have not seeing So than because outlook indicator about, that think talked combine good it month with of we have shipment points if Tim of and you Mark quarter the to more the on a the improving, probably the it we're bit this any second out probably delay. a in it for

So what all from together it feels customers. we're fits like to hearing that's and it me

or where then. when over again up been last is then in the have the follow-up quick real the and One say just they really and seen back environment, shipments really in seen time difficult this first backlogs this? demand we've seen went you you’ve this Have roll six you months

is first seasonally. from we've this seen shift time I would the a you think significant about think what

of thinking think I it's You me. certainly changes affect your a might have But don't have that I – would it and the mix. numbers enough, a affect can start. have it, total don’t we've front might big it falser about segment we if say had in

appreciate it. I super. Okay,

the go go Bank Next to George Staphos line of America. ahead. we of with Please

you Tom, the voices, Thanks you for hope Jay hear that? difficulties there a I morning. and Hi your call call the well. But improvement Good million doing see on this. dollar suggested technical details. hundred that mentioned last to our everybody. have you’re in may had the Is and fluff roughly could to in Q&A couple an some getting GCF good had update profitability.

the year. the of much get look like this your of outlook, improvement the GCF, at next going waterfall don't an maintenance and I kind look to in look at granularity, I then I sequentially And earnings and is what couple if quarters in

business for move? has should as destocking about guidance here a today thinking the earnings we realizing question that container of is revision structurally, why your still to factor big and to had you improve. for will so Talk this just in Mark And as allow I in And about what shareholders embedded a a for where earnings IP we have GCF, to sit – and good see board. the be real see hopefully been on its

Great Okay George, question. thanks.

separate the absorbent business, then core embedded the just rest me what's headline comment outlook. Clay ask and and on commodity. And then remind specialty our of really part in Let business which and be tends of and ask to volatile I’ll the hit the to the more him and to

it. aligned had with million assumptions $XXX certain The

of so the those we and and there's to the operating. business have given be neighborhood the and assumptions somewhere Some in of going improvements assumptions some the improvement just in the changed. million improvement were adjust pricing still of sites business timing line are we of $XX change in those We see to still what the in of have earnings plus

bit about puts year takes make little a talk the up to want outlook. might and full that that you Clay, So

Yes, thanks Mark. Hey George.

just half all have almost to in We products future demand what consumer see on you you the the that early So minute destocking. we like some we see confidence the hygiene of have re-kind use issue a of in end mentioned the and growth. of do lot first is but historical try causing absorbent and missed to of may lot flow, being

the from a is half with mention been we're about those And very, issue, moment so, while unprecedented current inventory have of changes really stronger believe through million have or the issue the a that's an this $XXX excited We flow about kind it, second come confident in of made it called, we'll and and they're in so made there. flowing that pricing, last you of the the out through.

flow we've customer had, low $XXX as the EDT and But, with eroded the we has taking prices the volume see, year. order price that million through taking, low it as about the those the rate we're that $XXX moves, million the of

still we earnings million on ‘XX. what $XX of So Mark’s in to last the million point, see year versus is to accretive ‘XX $XXX hundred top

moving this demand forward. volumes the EDT issue, we our we'll normalized, get from our confident get Tim get more about we there, confident, consumer had normalized, it So that that as mentioned, cost feel the away we is more and through we we're mixed feel get strong

the it's and George, look wheelhouse asked, based the you we I then look product when now, IP for you process Both products, directly last manufacturing the mean the we've and part forget our and a chain. Cellulose facing business a in shareholders. growing good why I’ll customer absorbent corrugated just at at both for natural – two in standpoint, a supply got that businesses, and thing end-used layer believe the about wrap good packaging, about question Fibers still you when out business and the we're resource markets. from

and of types they layer You customers the value. what out

they of in kinds value the business. same they Fibers the in things design, box technical the Solutions, business Cellulose value

a that's IP type markets, It's turning manufacturing global softwood fiber single is are in base that facing a products well starting line growing customer very, valuable more believe Fibers that is and but term. giving in box good creation, we that very long value positioned we business, base, a company of it than into of that believe our product the in that with higher Cellulose quality renewable,

we businesses at couple sustainable as don't and like the quarters. next just things products in of year road did headed the the are And portfolios. exciting or sort a look where this think they where one investors for that where single their are both natural We think making about decade, head, moments down of out over resource types we type that's companies

to boxes, everything packaging, else spec the the make recognizing going the Thanks box spec customer ultimately that sheet to then run of you're paper the the On Mark. on dictates substrate box follows. and corrugator in

end a also curve the issue, Given structural that that the the we've weakness weakness of terms we’re a durable not and in seen really one of and quarter and shifts occurring markets, kind the versus cost now, whose this issue, we're good curve shift low on seeing or realizing virgin right recycled nonetheless towards is in cost AG. a bit given

luck do structurally good year. away relative to relative or than might more your years. on the couple like about you converting, we richer next doing of three industrial anything do what mix and over think what over take fleet, what two, there will of Is the if in last as mix time you quarters mill we've not be or seen your should the think business you're rich look in the Thanks in

This Tom. George. is sure Yeah,

Hey Tom.

and huge about the are got system, we've products, customer – grades. you? Hey, I container of bit a about substrates board talked different think of manufacturing as different because us, for a different that's advantage a this little the You You how huge base talked

we since directly so mix plant And access to the can box design and the box direct that. those, have we around

how levels I conditions, destocking normalization certainly U.S. the a economic economy and destocking think little like we a we segments, expect coming. the That take different the about. recover. going to should of because different but we're by terms to I segment But of it's talked going we may In demand, see of is given these think about feel longer

bit little improvements April to a the question a piece your coming of [inaudible]. biggest then seen of And we've is, one into is maybe specific

is tough So couple the to been good I over back because sign. a has pop very starting think business a up, that of really that weather and last see years of which we're

Tom's entire container richer make and you And George, our chain, as the comments solution and board and value the the time concentration Where long-term make is system in of but of strategy got America that got packaging really. the will box pointed the them, I'll products mix ultimate paper, North and the U.S., just then we packaging Southeastern provide. the the covers a the mill we've do we've toward the question over make. we we market about, part mix a of types, mix asked we type end with evolve a we richer for our whole see our in a heavy

liner. purchasing us clinical second tier, that brings a and making some that being see liner investment the most board is we a different probably quality slightly which you'll we new probably into so was and our were of the of And to quality our locations it container was in future good some have we top paper, game white mix. paper I’ll point into And white feathered set changing ourselves, over higher time, level of and definitely recent recycling before, were some segments, of best now where whole

you on only it into capability, point box quality so want investments And pay turn that a see to you'll product willing again for. improve us and to only and Jay’s matters people incrementally are that if which

richer business natural that be focus good the end-to-end from part chain better the every mix the we over that best getting product at customers. and finish a see can of value that's time, So we to with a our for resource

much. Thank you very

Please of question our Jeffries. ahead. a comes today And from Phil go Ng for line final with

getting Hey showing cash resilient a to soon? is free backdrop coming believe hopefully from pretty here flow be fitting in and for should that Tim, still cash plan very deploying Despite the guys, What's the in. proceeds be I me thanks $XXX pretty cash challenging you Ilim. million excess game

always do. we Tim. Phil, like Hey It's it’s

framework in at deploy capital and values. then best decisions make to on where the how look we our have cash and we We allocation moment for are

it'll the for same mill. of as flow incremental cash cash So be construct type in free and comes

you. Got

from and premium side your versus chain And of pulp Curious that year. helpful. that's Okay, certainly market choked in supply was certainly very confidence things, seeing pressure. maintain prices pulp large up last some fluff. logistics And a

it be So the being container level in you of to hard XQ? reopen will your was through starting curious, any mindful destock started how just of the confidence in And done lift that kind board, destocking to see China here? of seeing how I'm

question Clay here. done the in quarterback the and comment on to and board. our you me I'll visibility. asked specifically on container the confidence that work maintaining really going ask in of that Actually container improved. Fibers about supply let is Phil, in to our both we've But take the businesses chain change and that in take terms premium then the a and doesn't go-to-market get port through to Jay question fluff China. has covers the velocity board be getting better Jay even Cellulose more may of things one. That will So

So the about [Cross question Talk]. would Clay, if answer you

board, see made more Mark, was my because on the fluff. it supply container that. the hard really on was I question point chain on to just pretty through

confidence see there. your what’s just through of Just out just kind

I’m Phil. sorry, Okay.

your Sorry Phil, I question. misunderstood

will So of Clay take both them.

It's good This you. to to is So, Clay Ellis. talk Phil. hey

grade point in the April. in seen we've QX on resilient somewhat can April you on the pricing decline they and publications market were the market huge then through of first pulp, pulps, and first quarter, pulp, in that Your down yeah in a paper see month

the over that high see pretty expect time you being And market a over pricing to pulp, continue. resilient, good so premium can keeping we fluff

through of when clearly to immune the isn't paper we the think Fluff the you fibers then and said look through whole I that. first at as going down pulp, on grade the ecosystem quarter, and April.

realistic in of fluff be course be prices ecosphere volatile. that premium, but whole a there's gravity on continue too. well, down, I to when maintain to they fluff moved fibers, have the prices the some to as less fluff They'll go a will down Of think continue but

us pulps. capacity some have susceptibility why it's with to to be So, more of mitigate grader space the the fluff, the market it's paper for customers, higher future to and integrated into to more that remove our to grow or in commodity growth our important

working is confidence chain seeing through the then And and the your supply through destock?

chain. last our further not I of Geneva see through stocks, mentioned stocks, good earlier when level very confidence. Even just entire of Conference. hygiene about did on I the a week with Yes, the it's Again, lot customers fluff. supply call the It's and not talk absorbent customers the

the converters, like then the way hour all all and So from way retailers, back materials raw into customers, fluff. the

It was higher, more customers are than we But more our see – seeing getting so order there retailers anyone the more, saw. normal.

seeing seeing they down that So out the has fluff historical. slack lower historically than road. of to really are inventories our getting come We're of

think also they in where across lowering were we see chain, targets So the I part the the been supply past. the this inventories of from has

up begin I pick everyone's the and that's the it of are sees no slack into and more more. and now half. But the out So supply out chain, system where a they second think everybody prolonging seeing caused in see bit coming moving matter orders, they to their the even of this

really that little has And China it you more an given confidence hasn’t had impact quite a yet. of much reopening or dynamic

can end. us consumer is it's demand a it confidence issue. we gives see that one, it not destocking That the and that Yes, more

So yes, that confidence. us gives

a lot. color. Okay, thanks Great

I Sutton, for will comments. Thank Mark call now to and CEO you. closing over Chairman the turn back

ago. would I'd And continued our I to again, interest unfolds. these challenging forward for really for continue Thank customers and and years updating you delivering up employees running and time in progress Paper. safe thank taking of work of people this be every today International I efficient Leah, to our hard a to our International of to and Paper. can look like through everyone customers, leading happier and They I be thank as to selling the team started and argue to and show of times, you, products for like couple year our couldn't plants, your just your which the care prouder great day,

interest for have and company our day! again great your a thanks So, in

again, we'd for you in to Paper’s once call. XXXX International like And participating earnings first your quarter today's thank

You may disconnect. now