International Paper (IP) 27 Jul 232023 Q2 Earnings call transcript

Good morning and thank you for standing by. Welcome to today's International Paper Second Quarter 2023 Earnings Call. All lines have been placed on mute to prevent background noise. After the speakers' remarks, you will have an opportunity to ask questions. [Operator Instructions]

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

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

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

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

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

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

I the Sutton. over will Mark to call turn now

Thank you, Mark, good everyone. and morning,

highlight ran the quarter, our a care We will begin customers. well our very challenging discussion taking on businesses results. will demand our second our effectively operations Slide of managed I and our X while in environment In where

incremental Looking of in at the to from benefits full and International $XX our a Paper the our million delivered our are on year of we for performance, year, exceed year IP a half This first second $XXX row. program earnings through target Building of contributed benefit the Better initiatives. track year-over-year million

trend influenced and a of goods pandemic our inventories pressures the Underlying observed as their interest as our as by focused across inventory as services products. customers quarter, and on improved of pulp destocking trends products demand elevated segments but products, for Based well for been with during as second priority work the we by chain This and quarter the goods. throughout well remain and believe remain customers forward rates. our the through constrained various broader end-use inflationary in discussions packaging supply consumer rising pull non-discretionary on has

believe to the we is close. from However, that customers, also on based feedback destocking our finally coming

our across resulting weak portfolio. to prices volumes Margins and lower pressure the due remained under

On received required companies. Russian are we that the approvals However, Russian this are approval the team still and close Ilim quarter sale reported $XXX this allocation, approval, capital sub-commissioned expect million to by the distribution was by the Authority. respect And quarter. marginal to the to in to all reduce as to important from exits as as approval an overseeing Buyers pursue lower input expenses the They from I returned buyers investment, Russian we partially offset our of Competition and last foreign soon our cost. with worked continue awaiting our shareholders secured. regulatory

Tim, will turn our more Tim? quarter quarter it I outlook. and second to now over details about third who will performance provide our

Good morning, Mark. you, Thank everyone.

we million of the which the more further payment sheet. flow our IRS lower impact Recall balance us was cash we settlement the cash $XXX impacted million free $XXX In quarter, from costs to prices. input related from second our per the quarter optimized derisk generated to flow. earnings in Turning favorable effectively initiatives. margins last expense outlook on outage sequentially continued Operating to to also system lower financials our our key provided share than Slide second we the impacted Operating volumes, increased improved and sequentially but as came better by commercial low as quarter through and X. operational quarter timber offset by free that monetization, be and to final sales than first allowed

per very by by per in Cellulose mills downtime, Cellulose driven weaker Slide Fibers index Fibers Industrial and due million, export Volume significant as were business. share lower operating mix first Moving North the was ops second were inventory were and was million run our in pulp impacted X, offset as from prices in movements energy, American and Packaging Higher also by earnings and was our as shipments. across Volume a share was Operations in or customer business distribution primarily portfolio. well. of per earnings both our to lower in second destocking. lower flat $XX in Packaging relief share costs. by Maintenance absorbent Fibers $X.XX Cellulose and compared business our which $X.XX business. saw Industrial business, quarter quarter costs our costs quarter. we lower to improved in offset costs ops was or Global our the wood in businesses lower, on our to sequentially $XX mix to Global costs, outages flat by product due share sequential result to $X.XX per Lower continue second demand demand quarter was and economic Pricing $X.XX by unfavorable input Global primarily lower a as $X.XX

by Turning improve the Slide from due day was Packaging export higher benefits the on to initiatives lower volume commercial was mix the March movements starting continued to lower Sequentially, margin to Price and segments less quarter with offset prices. This Industrial and demand from throughout on was despite improvement. shipping one X. focused as and partially index trough.

were Our demand X.X% quarter year-over-year U.S. the in for second packaging ongoing impacted destocking continued our customers. be as by box down inventory by to shipments

environment customer maintenance year-over-year with inventories costs and our while X.X% aligned we our quarter and the fewer the However, demand June outages. improved. as optimizing operations also in demand was impacted down quarter taking production our as Lower planned

outages materials efforts and mill call approximately across actions outages. maintenance marginal earnings well. by These relentless thirds our lower the economic by energy, some second or very while Overall, by lower teams systems high which to and downtime of timing the half wood some the in Planned in remainder million for was due to distribution benefited system, business ran of cost partially ops continue reflecting services. approximately was optimizing deferral were in two of outages spending the We $XX $XX primarily our of accounted due variance. system quarter. to from improved we resulted sequentially, year environment. the The the as our tons current optimize our cost million costs demand input XXX,XXX which for and costs, the of to in Significantly lower back

To fiber give procurement of optimizing mix tremendous reducing shedding highest our made supplier mills. of by progress and an and have to cost teams example our you costs mill fiber this, fiber the

weights of costs the plants Our rates, reductions and are load, distribution also and teams across carriers, contract mill like in miles reducing warehouse doing box per and renegotiating highest freight expense. driving load increasing things reducing significant shedding per by merge to cost

year. feedback Based is I'll for the across how believe longer regarding demand Turning our third perspective from entire portion share destocking to the and for inventory on built this due pandemic. the of be third – is The analysis, we that Feedback at looking It destocking or customers inventory quarter. inventories and the the from across quarter supply feedback own chain we the during our large initial a at to than large their given supply excess of X. lasting has larger chain declines inventory limited to progressing the levels is completed inventory some good overall approximately in – expect up trend also target customers data, expectations below our them that levels. Slide destocking customers. some visibility of this suggest our of entered XX% news accounted

retailer destocking current our completed first the some data X, view. inventory supports majority additional believe We Slide was the in On of quarter.

IP current a products still long-term the are national capital a to strategic a local of interest large levels, products demand Despite to number of through supply environment, plays higher of is due and range attractive our critical customers rates. and grow role with the reducing consumers. focus bringing with result across second working well and our customers diverse manufacturers essential chain over as positioned to broad packaging of a relationships portfolio inventories end-use However, given and lower in quarter our segments. velocity services improved on the corrugated

Turning in commodity on the response and mix fluff performance, to and a Cellulose due of second pulp at to weaker shipments. higher X. price lower level Global index grades Slide price in a to was quarter movements the quarter Fibers Taking look

Paper the As customers approximately reminder, in this as of XX% regional products major and around business International serves exported a world. are the global

year, under entered pressure. As the came we volumes pulp fluff

for demand pressures. driven And trend there consumer became the in continued hygiene quarter products significant chains the more reliable. by inflationary was across destocking absorbent long second was This supply destocking inventory as First, second, lower chains. and efficient supply

aligned business continue demand. with the production volumes customers impact to higher mix downtime combined our as impact a during the were able supply up resulted work result, in This a tons were approximately pandemic. As economic of of across The in disruptions that system earnings. XXX,XXX lower safety of commodity to grades stocks we response and built chain to the negatively down customer

completed sequentially Looking by we destocking and energy to were our going and distribution majority operations ops This products Planned the to needs. quarter, order were the in chemical quarter, our on we the costs marginal and the grow forward, $XX outages residual energy is $XX continue in lower lower forward. back sales. Coming from maintenance driving also personal believe due long-term. input as second impacted low teams million and cost lower third play will to bookings, absorbent and costs and Sequentially, and from were be consumption meeting due sequentially, on based favorably to of costs. business seasonally fluff role remain over feedback essential customers by customer higher by the demand should high million benefited and down costs lower costs energy focused improved

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

sheet, our strong to balance is We allocation a have framework. which core capital

funded. allocation medium-term returned we quarter, plan ahead, In the meaningful million pension cash of fully to $XXX our and shareowners. to part maturities our a limited we shareholders Returning second capital Looking is debt have framework. remains

is forward, which our maintaining excellence capabilities invested cash for build to out Investment returns We to Going $XXX projects projects in and attractive growing million are in to and and the committed includes quarter, reduction generation. funding strategic second with system. box our essential cash we businesses returning dividend. cost our by for earnings

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

start look outlook. I On with Slide Industrial XX, the Packaging. we’ll third take a at will quarter

average export to shipments price increase to shipping movement We earnings $XX earnings America a demand $X improving prices million declines Volume based and and to America, North due mix decrease daily lower by less prior expected result million is of in on North index by as one to date. offsetting in and expect day.

Operations by are to earnings earnings half more average balance due $XX million expense company rising $XX maintenance increase input to paid expected costs. is cost to outage initiatives. than and management And are million. of our benefits and to is due to The million, expected cost unabsorbed earnings is costs by lastly, Lower fixed lower lower increase decrease higher costs costs. from by energy expected primarily $XX

$XX costs Switching And are lastly, declining stable Volume the expected by quarter. improves Global as and are maintenance Cellulose chemical decrease to increase to and pricing earnings mostly million, by is result and relative increase by fiber movements Fibers, index to to to to costs. prior be increase input lower destocking. expense price lower costs we second demand to expected million million. Operations of a outage as and $XX expected earnings by mix to $XX date. due Lower declines expect to inventory in spot million from expected is earnings earnings $XX

a at year XX, Slide look we’ll On the take full outlook.

of we recognize our portfolio to demand us not resulting price reductions year, across the These macroeconomic have and entered products the and macro shifted ahead trends that risks. were immune for our date. be that over second uncertainties through weaker-than-expected outlook, in including our implemented we these impact will businesses would published we also only an the that includes – the from I changes we remainder. price to remind prior changes provide quarter, the you that it index when As

initiatives. company are are year to projecting actions the market $X.X the company to XXXX of headwinds, EBITDA the full now $X.X optimize to across We our taking building system next commercial be reducing by billion we from opportunities better range driving billion. IP cost in for cost And the Despite about in marginal more a these high Mark and slides. will share additional and our few benefits the

and our related first million monetization payment Free includes cash the onetime $XXX to in $XXX million tax million, flow between the which is expected to settlement. timber quarter be of $XXX

I’ll turn to For increased in box And over XXXX, billion investments to our $X.X $X.X of we system. billion, targeting that, back are U.S. with with CapEx it Mark.

turn going quarterly to Thanks, Tim. and our I’m Slide a I’d provide better XX like update now, to our IP on initiatives. building to

on on quarter I call, progress the the $XXX of mentioned the see appropriate and in befit metrics second year-over-year can earnings million earlier $XX slide. in targets incremental the You for a But the improvement delivered as we’re total and making solid million year-to-date.

momentum, target we strong this expect this exceed original our Given again year. to

and to issues unique economic improve. we that as shine are And will conditions these the see are opportunities IP that through

lean $XXX million more better our a the Early building Our more our spinoff. the and after savings our spin-off dis-synergies those of our in to effectiveness simplified XXX% contributed of we XXXX. began of from on, functions by offset we initiative than portfolio streamlining papers with IP cost since corporate realign business, program resulting staff

lower large coming focus by improve Majority have forward where on significant creating to data leveraging advanced process from costs. going of are our benefits our and strategy and intense come optimization commercial the and technologies across productivity value acceleration our and strategies initiatives, big teams system will and business through

these next early of teams more in some I’d our are on of about working opportunities. the couple like to of the in what share slides, excited I’m And examples results.

to XX. So turning Slide

start Industrial Let’s our business. with Packaging

you our teams the the see opportunities to and on As can across profitable business pursuing growth. slide, drive improve margins are multiple

mention was costs has back Tim than by and clawing over an of referenced costs. $X previously these good costs input the of for us. that into year, increased intense period marginal area focus distribution reducing IP we’re more high billion I’ll progress for the First, Coming high pandemic. marginal on making that

and things over spending lower this reducing of mix to and accomplishing usage costs and like suppliers, energy, and are discretionary shifting We by overhead optimizing driving labor doing costs distribution lower-cost expenses. reducing and time, fiber

before, growth. I’ve in for our to capabilities future invest and also business improve expand As mentioned box we’re productivity our

to On investments the expertise leverage mix our commercial these to our additional improve as front, capture we have opportunities value. further new market and well as

plants, real technology look we our advanced As are potential seeing to mills analytics. and leverage data across system we of and box

get some to of marginal before. us never of work in reduction levels that we’ve high reached In downtime fact, that is economic helping cost periods

we’ve and number developed Over broad reduce the increase year, to new and efficiency past capabilities categories. a tools and cost across piloted of

benefits continue our see across benefits these we manufacturing areas technologies maintenance to in as distribution as as logistics starting anticipate to and and system. well We’re deploy significant such and new as sourcing reliability, we

ability All of term. growth this profitable gives drive our me confidence long over in to the

Turning to key share business. in Global Slide opportunities I’ll our XX, some Cellulose Fibers

to initiatives, are have in we captured from to the as meaningful commercial capture continue strategy. there opportunities believe execute business Over that go-to-market benefits past value year, this our our and more revised significant we

contributing example, For pulp our our benefit meaningful finalized commercial fluff commercial teams year. contract negotiations which is this

a relative offerings. our capturing higher and addition, with aligning customers those service In earned commodity of and by product the grades who have premium regions differentiated for grades and and to segments value world value we fluff more

not to a benefits business well are our core the very of unprecedented strategy that However, our masked currently and commercial by challenging are focus. cycle our being as exposure commodity as grades the

significant pandemic, to continue Tim demand destocking disruptions As today. major the inventory chain with by constrain followed earlier, mentioned began supply during it that actions

had said, more volumes substantial earnings. structural. and impact issues business of believe and combination supply we continue opportunities lower significant are have business forward costs elevated value these the a not we over do will going have But chain strategy on to we this to test as And that cycle. I capture This

flows cash this believe earnings business within we continue there’s a can to over I and grow Fundamentally, cycle. business and good that the

delivering structure. We align business, value maximize our improve performance commodity products safety that grades. and creating this of that in our have reducing markets while opportunity our while the meet customers can optimizing delivering innovation. by to us are overall our on we further allow with value an time, We standards customers mix cost to end-use product stringent focused exposure for Over by their to

turn will Slide I now to XX.

well can success, accomplished see, on our possible would navigate environment growth without financial As our you profitable several there or is opportunity over driving of economic Combined this we’re of positioned of working long team the Paper current be to International engaged and for are employees. strong term. none key while areas talented foundation, and with the

work International by will our employees all our for strong my and expressing Paper our I relationships. customer of of appreciation close for

question-and-answer with quarter, last their to to joining we’re the me with And are similar business perspectives. And leaders happy section. that, move senior to provide to our you

to lead portion So, you the we’ll of call. now operator, question-and-answer the

question Mike Thank you. from [Operator Roxland Go Instructions] Your come with ahead. will first Truist Securities.

you, Thank you. taking Thank a questions. good Mark, Time my Mark and Congrats for on quarter.

a regarding you any to the your updated outlook is just versus change walk can Just Cellulose pricing target that through. moving Global driven driven Fibers? much maybe weaker prior parts gauge type versus Packaging of in through some that much Or the much how to How of kind break demand size way by us of how reduction a is versus by environment? of trying EBITDA Industrial

Yes. Tim. Hi this is Mike,

what prices now has the obviously, updated last think more I in we published than quarter.

longer, of I the on of bulk and business. because taken then the we it So it’s impact is bulk updated price. price and is both last on the export bit higher in than pricing or volume of a the more pulp There index reductions frequent priced on referenced anticipated pricing spot the the speaker is destocking, it when what has proportional price And quarter. basis, levels published comments, we but in been some index is had had little what and the GCF of a from as

expected believe in additional pursued you of think just pulp that and an obviously, than decline at Cellulose Thank I pricing, fluff we you’ve looking don’t better forecast, initiatives in And Global that prior anticipated we the Tim. terms some ton it. your quickly, then get XXX-plus of just in Got Fibers, segment. that I

on, that occurred the things GCF in there I I’m some declined? during quarter highlighted know that despite particular EBITDA fact of you to allowed anything the of in wondering but relatively that was – working that achieve the Mark level you’re So, prices that

side reduced bit ask despite overcome couple to share in a well Clay, running of of demand those operational headwinds? can the running Ellis a the business at second of of price going I’m Clay soft how about environment. Mike, the [indiscernible] talk if some improvements the a little you it in really they’re the and just things quarter some are to about demand

the net Clay into first price thought would better question, subside the took, Mike. quarter. we August the – that exited of is see amount is expected. to mentioned Yes, This that We we the most of as came you. we issues or begun better about Thank destocking you being we inventory June. quarter, And coming than I quarter, some looking than June July May, believing and not think, the demand into also through Great that did improvement EDT We’ve being the second we see see Ellis. what better.

the it’s we’re second certainly hope earlier see So the what focused downtime, improving, but seeing quarter we in cash on we’re generation, managing our things may now, maximizing it’s to machine that you seen for Mill idled to [ph] of run some bit our that’s the a our allow have there, better to ray mills normal other cost. overall we’ve Pensacola EDT a little more consolidate

pull aggressive and Tim credit green production. out And sales. chain, maximizing minimizing also Supply our byproduct energy driving then carbon sales as our there fiber chain mentioned, cost and supply sales and increasing costs costs,

see our Mark our get out Tim of and mix third but to all the our we commodity that cash the and certainly costs the of also year and cost of looking as we in through on that So we improving business our we the manage of in meantime, everything some business, levers second then quarter as we’re can destocking, half around – mitigating exposure costs the mentioned grades. the in and to pulling to our see marginal doing

very Thank Great. you for it. Got that. much

with the will Your line of Seaport Research. Weiintraub come Go next question Mark ahead. from

Thank you.

So you the slide. on some conversations the Is do that? changing on be are that interesting curious you X, or is the seeing slide hopeful Do thoughts on just And the with of this you registered maybe was put look translating any you business as Page what at into where shipments, on survey it sort how that then about in July it very end metrics, be August? slide to very, in you destocking and I customers? came bookings together. sign to

quantitative supply Mark. ask perspective is other you a that There this slide kind qualitative a for of on represents to Tom there’s question. a hard great been inventory terms Mark, value of some feel piece metrics That’s to how slide piece give different in that’s actually chain. have where to and I’ll resides and what terms call kind the of along demand been evolving has a and chain we and of internal is that use. the we everybody that anybody in in spots a

Tom, that. So a you could on bit share if

that to what inventory of goods. Sure. subset Tom a only demand Right. subset Good how talked We [indiscernible] levels consistent we but finished is morning, Mark. see customers their Hamic. This they about is of their them not also but patterns, customers take of for boxes, and are

that’s XX% through sample, see what look not leaders that you segments it’s we in the kind – but flowing so at. here. customer of base. It’s And a we the have not of It’s representative

talk based feedback. back I on expected. see think we it’s consistent that flowing can And the is when through about QX what system consistency is customer to been like you think our going pretty I destocking, you

pieces are both up these matching So well. very

of so excuse digits. about going seeing sequentially improvement up and QX finished mid-single in an terms per We’re – was we’re me, we where we X% into we of shipments July June, day to expected, no, into

think reflective away I this curve going or kind of So destocking time. very that’s overstocking of of over

Super.

sequential the that’s too, comps are so. getting and so easier believe that, I so And

year-over-year to fair the digits? that say on it than is it’s a basis mid-single even better So

Well, is positive quarter-to-quarter. That’s from the digit mid-single sequential. a

to in flat really July. or third quarter in X% more a the about to out minus ties that that think I growth

it. think good now, flowed customers viewing that second continuing we representation pretty strongly through how a and is of through the more So that’s are quarter I our

like idle the of containerboard then you And the Thank to even looking containerboard big you second there’s and seem it ramping in to the anything have Right. capacity your quarter. amounts to that in took misstated, does in Are up, with you consolidate you huge that, between downtime and done terms obviously getting there downtime And during I a just of, for or you downtime gap consolidate demand. produce in business things pulp, at you that. yet? thank idling

good we I anticipated question. patterns – two What What the that, see parts specific a position that different back down for described of production Mark. maximize other kind question, of That’s was and is Clay at of Pensacola best paper. you perfect GCF mills. Mill the is in example cost really a international the to take the then

a The led fiber, you the mills that mills have the – us load to to energy you’re up. are other the to cost marginal take those those virgin set XXX% decisions. green fact full can And them so running one actions when you of at sell mills at

we’re recycle. in cost XX, other urgent far mix the because a XX of containerboard completely So ones and huge or of containerboard the idle permanently involve profile marginal you mills, the wouldn’t

based So other you on recycled physical fiber, the where up mills ramp challenges you have logistics are.

resulted in So far, type lowest the way order mismatch bottom that the does cost. we our we’ve learn we and we the of will what book. look destocking, then capacity has and evaluate the like? of upturn though the And more IP been now we There’s demand decline containerboard as our believe about about mark our we’ve seen believe duration doing system a marginal question of for this it between for in the

changed different the decision made load a year have you where And it’s cost expensive us to there’s decision. through not to those and marginal be different up if make then other see mills, as would a

of see so it. have company that, two the different different products in on example cost two marginal based that’s that parts the operate making. And methods And how can try same you of attributes we to different an we’re

clear helpful. and Very Thank you.

ahead. comes George of question Staphos from America. of Go line with Bank next Your

Thanks quarter. the and details in a performance Thanks and operating Mark great you. Tom, Hi question for very everybody. much. for the

be So the analog that market, nonetheless, you’d box not it’s data, we retail relatively weak. data perfect for remains have to what the scanner certainly in takeaway a and seeing extent

the a lot consumer the obviously box of store. is center And It’s the market what drives of non-durables.

what takeaway through retail supply from So in store? the you and chain relative what to the happening you what’s telling are the customers is hopefully in sell patterns their terms at loading your an now through and uptick of center purchase of and

at to George, uses scanner – is at down well, data try what and look we as intensive, Tom. we this boxes. is what it box Sure. I also push but so look we

that Our is analysis is then, resilient, channel QX been to our which past. take the minus the that’s okay, suggest and about comes year-over-year out, that of would broad The and you strongest say the where relative the you segment think somewhere line, you a for set taking exiting at retail X%. space that’s perishability of is is look normally get, it plus range segments, of if revenue X% most obviously what this But I that so that inflation difficulty the of the would when a segment between what been produce goods? that’s

to the have that health demand material down negatively will I exactly their to said supply the built the going that of what pull the you they’re non-durables risk. and I don’t it obviously a box ones think struggling for And we’ve But the goods so way. that in consumer up are cover now And further. life is shelf think are But talked recession it’s beyond durables. impact they because chain that about long and

Okay. That’s very interesting.

on from the into saying? be probably a chain up that there for going because and supply Would that really down shell fair of most and allows that matter, also the So you’re shelf to life, stay take such they fact shelf on the got opening lumps on guess they’re consumer you’ve that have of what retail the the their can I you’re summary the isn’t inventories customers the side. large I saying that that a what seeing stuff

that’s motor stocking right. thing exactly see I the oil out, to but could pandemic, classic that people up. going I type I department think you the of about the think mean, during in that’s time not store,

places where multiple people talk. And think you’ve got so I

not Understood. is bit My question. here comes on XXXX, tricky you’re other question a the but and this recognizing guiding

which We way a XXX better efficiencies, price EBITDA building congratulations the of on a IP, on, XXX doing change your assumptions know to what what the another guidance what impact do the we back the operating another of what We very XXXX XXXX? as have have add, terms forward, is of that at guys terms you changes I price the quarter. year. you’re slide for to date, no occurred look So is. well in further effect into from you’ve think index IP good you What optimization the said next year, pocket will as would – next well going better of that that we we out prior EBITDA? building you be look what or If one making know to in all does. what all luck and you done the is and in in the the Thank know

it’s George, Hey Tim.

shot… a right. but You’re it a question, give That’s I’ll tricky

But so? who you, better Tim, interest than

George. Thanks, Yes.

the mix the we’re be won’t the change carryover lot same hesitate look we the is but as than of a we reasons, is has price mix one a one on particular changed. it impact through to and different mix that so but quantify sorting price to impact and I at the going just So price for had in

moment, all commercial of that but are on that call the that we’re terms on results are there you call the the the to of better think we’re also in I side. side things initiatives working going on strategic drive and also on In working the heard initiatives, on characterized

stick think fourth and what’s outlook beginning the And see but self-help our on to into we call I the as year. that, about the we’ll we the So company to that XXXX. good that will pretty that I – when go give at way going mitigate going feel that in do that typically the quarter of we we of we’re carryover

Thank it. you, Okay. turn We guys. appreciate We’ll over.

will ahead. UBS. Your next Rueckert from question with come Go Cleve

you mean, years. asked for? of the just a capacity everybody. taking of volume evaluating questions that been the question, to talked year? for a couple couple the think times you’re much like mean, Is you drivers about thinking that’s recovery? the of the kind of little mean, on need to I kind last the pricing versus quarters this well, as I happen to half are of just needs earlier looking to be you’ve about What about you’ve get very thanks you that Great, the kind in got the what you’ve going next in that follow-up was volume really expectations. drive I it said like George’s I talking of of enough bigger case, but the we’ve sort good want but cyclicality and system still couple sounds are a bit to feel I there? second differently it earnings picture morning recovery and we

Hi is good That’s unfortunately, question. Cleve, really thing. this Mark. one a It’s it’s not –

our drives component I it to margin has is think the recovery between and which see what volume of obviously we north XX%. earnings of structure that back a kind the need to structure price cost,

lot what is – are So look the our time. business, yields track of used a packaging, the case in XXX kind working – In cost that do – that above at basis least were to capital. of above of to GCF returns we case be that structure of the points there we’re to way we margin well that of we this we at

that to commercial, we number break are there compete per of market the purely that what somewhat is and available for. we amount that And the in just that into i.e., components macro related, so can do price of volume And who what EBITDA a on. at are are sell simple we focus ton for to that we down everybody

And longer increases mix based that price through that. and to impact took the number them responsibilities. of inflationary on on in it we demand didn’t areas to the had structure there’s the contractual our of is work by the changed for IP cost that wait customer get what’s cost pulled But us area. for then up the of accompanied forward wealth ramped a was And really and

undo So now. that have margin we we had a classic to squeeze

to So is of a rate it happen. lot started to that’s declining a is Obviously, at really got not market decline. what’s the it that

August we in sticky And has that. out effect quickly and to in that things For consumer, That the year but last of about, destocking all the maybe all you’ve end earnest. not year through this under the cost or in talked when of time about started reasons it’s chain. inflation supply those of that flowed hard from got labor and to get your all last

type long-term So both being producer What don’t lines facing I overall most is our product in of those types and growth a who be sell we of we we think price demand, how at profile. but efforts. operate these facilities and control to confident that’s quartile manufacturing first cost to what’s we the got in products. of to We what control are do happen

very grow initiatives focus back we’ve returns and efforts confident and all levels earnings then the get so from on we’ll I’m And those to of and of and got there.

kind to to assuming be this just environment well pretty just bit up for slightly half into for low, ask, that tailwind quarter. one little me for the in process. the – your thought sort are just a you of third July? are the expectations sticking for I maybe clear, That’s sort think able we’re it’s clarity question of implied yes, of I we’re on out to the And thanks in – and I Okay. on million sequentially volumes into correct But packaging – quarter. of that’s sort of in said with of volume but then flat about bridge, and follow-up, relatively a business, a sort just $X vague growth what’s talking the insight And your second the quick that fourth to in figure the am the we starting mean,

or volumes box about overall... talking you Are

business. -- Yes. One in the packaging the in packaging

to Jay to the talk open Well, board other here export I’ll is ask the Tom side also on container – Royalty we’re and market channel. channels box and comment on seeing the in our what about

want So to start? Tom, you if

quarter normal. to quarter, we’re fourth the getting back going Yes, third into through the and think to I see

a this is big think destocking I effect.

And so second that with the better And out even year-over-year we year, the of that, the see second to expect continued better the easier, think the strengthening first demand half balance to we year get comps normalize and year-over-year. substantially of you’ll the somebody pointed much than I see half year. but the of half relative through a

Royalty. Jay This is

modest the on the from I a been a we standpoint, see export big on market the both relative improvement channel, in we’re to second From channel quarter. year. those these But demand this seeing channel, quarter, we about continuing would improvements the based in domestic on see some commenting did thus domestic say are us encouraged books, a and domestic of the the improvement it’s order So standpoint far that, to channels. and third our open we’re – in – of have drag both

about customers less to think and orient If food you those of they’re orientation, their type customers.

And and the I harder hit we’ll they’ve so more think from standpoint, been a as that destocking have opportunity for unwinds, pickup.

encouraged we’re there. So

of an standpoint, first weak. year incredibly From export the the has been half

the thing across flow As in see order if go And three I in regions, that’s current you We America in saw ton we that into patterns, through first based mentioned is August, And second the we’re in the last some particularly all of Latin our half and seeing second the quarter. Latin our order improvement out and America. rate XXX,XXX third seeing at bookings pattern. on inventory quarter, run some look we rate improvement run through started to pickup in half. evidenced EMEA order to about stabilization Asia, the the a levels as related we’re encouraging quarter, our versus

and – to there. room from we’ve got grow So

at So that through I what about we’re both we’re think how the seeing second in half. flow and time can cases, encouraged for this

all That’s Appreciate very Thank you so it. clear. much for color. the

Go with Pettinari comes the to next Your question question ahead. – line of Citigroup. Anthony

just a the dividend. with specifically, free and regards guidance flow cash the on question I to morning. Good updated had

You’ve talked XX% I think, dividend XX% to to time. flow and about, free the over the cash of, maintain commitment targeting

you little that payment, I the levers allocation or the and just think midpoint and approach above the guide, priorities or free year of can the balance maybe capital that With forward sort that this how a dividend cash we think you bit. that how of in changes kind do ways pull about of coming flow going can

Mark. I’ll start Anthony, this that. is on

the one that kind of occasionally this on Just at fair that’ll is and of We look odd we get, is it’s you to a free a the we’re the that a medium know really XX% potential, we cash back are numbers dividend the know the short map, company. in it, testing time, but flow. potential of the generation be of we’re question, upper long-term flow dividend tested if And dynamics grow plan just cash that. with it question. cash a very It’s the at for flows. end set XX% with cyclical confident really period and of of is We if range long-term into future the very comfortable the can and

just formulaic said So paper. remarks, international that his dividend. That’s not the we’re in prepared commitment means. as It’s for Tim committed a to what

dividend’s believe especially shares time, of shareholders, very period long talking a our people We hold who with the the in our important for to them.

normal we’re it fits just So times. we’re that nicely we we clear on range. would second And over of and add far how this in levers comment We about that committed something easy as it, times in guidance pull a end, a It’s metric, at and also do it’s it dynamic. happened cyclical why question we’ll don’t to can the we very we it you and into the pull. comments to might Tim, into and not not more but Tim part that little a to dividend. at committed we be few don’t that. when that’s like committed we’re so a we’re we’re when to levers end bit a with believe to when good as the look think just on handle what the doing the back that nervous on But we’re and I’ll get could something to if on upper doing, ask the grow I’m what arbitrarily just time lower stress about

Anthony. Hey, Sure.

Just a think important. that points couple of I are

first in quarter. the was which almost payment as the First monetization, $XXX $XXX all, we million settlement of million for to includes $XXX timber referenced the million

And a repeat. item one-time and to so that’s not

is just The the to the a we’re that, we going couple pandemic. with but put invest tighter year as the chain we we really much X.X than of past of more at beginning X the capital to since year, out supply of other we to and have item – we’re before range And wanted difficulties, as delays given the than had years. struggled normally, invest this

have of Well, and X tighten that push range that we’re are things and we deployed, be be projects it so as we things billion being again, that tighten high so and but it later the up on was limit upper the of X.X. as freed kind way, X.X. And freed it anticipating could the course, up, the could year way the it range, could in

So I think to flow. that’s important free relative the cash

back were to forward are portion terms big On the working we’re earlier what basis, talking of of a we initiatives on go about initiatives, it’s the cost. in

that then on back. And as spend And think if to consideration we over well. Working capital be is pretty flex we an we so a we there’s moments. capital think more have – that to and our we’re And we have the getting would traction years, on demonstrated focus and call need think lot we to a certainly, ability in capital this I we’ve intently. something

hopefully helps. So that

Yes.

the but I’ll levers, I now. them we made business, Tim in we have we’re think we are the that that about that and Tim, of want operations. the I lot Unlike exactly cover converting you box that to, if our was investments. past, can just when our the finish would in what A that was point doing something investments is in pull

why am future ask flows today those cash in making XXXX about because produce future investments we’re is and XXXX, of a those you so XXXX. confident And will lot flows cash I

doing investment maybe the real where but have what's normal a the future to quality that's of maintenance not it’s lot and cash cash capital current cited fair about a a the normal amount that that we of were of number be is about flows, a And done, things spending connection past of flows. versus on Tim didn't so And some different it to cash lot of protection flows. needed the in future

the in this the if in could in new just of very That's sort competitive disruptive helpful. more I'm mean, a think to most just sort wondering talk talk competitor the has something speaking or capacity this Is and market? appreciate second guess, you somewhat less capacity additions in I absorbed relative in a expectations? which as impact up about how of Okay. competitive seen question here? I been without I maybe guess it has a And I of specific then been market any maybe I about landscape and sort that. And running. to it generally more related, the of which overall your kind That's see it of just number expected that but is of the how containerboard of disruptive, absorbed half? felt terms is going obviously year, impact Is the already and be company. We've corrugated. capacity very the possible you helpful color. landscape are of maybe this to

a Hey Anthony, question. it's Jay Royalty. Yes, it's great

of to evidence we in vantage take – a offering. our the a complex you I'll at day, of it our from point lot space. boxes customer requires and back – think and we're our where complex customers to a set of – in that seeing are customers because not I the buy in our end tons continue of going these wonder space, needs

X think kind their fulfill set these about cannot limited of with needs. terms of grades all entrants, offerings they're of and And some in that coming mill if single of a new you a in singular so limited

relationships about robust fulfill our our we a with those in chain bringing our so all and to And grades, structure them our we offering, and needs supply more of redundancy accordingly. we're help manufacturing when relationships our customers, think multiple system

So that's Paper. a terms of what competing in they're company like against up with International

over. it turn I'll helpful. That's Okay.

from line Go next with Gabe Wells Your Hajde come will Fargo. ahead. of question the

good morning. Tim, Mark,

XXXX, plus think quarter if price XXXX, basis, $XX $X.X But work business, the sort a I'm was you the million take the a year-over-year at that it on And I apologize cumulative, this in implying sequential windy where on the question Industrial way, know think $XXX we're there second I but for I realized. in the about of doesn't here. Packaging year-over-year, talked a million-ish. back I $XX exactly advance I looking down in million, long billion of

something Has converted, the about of linked. I your is of is like the changed, business [indiscernible] when maybe XX% of think integrated corrugated XX% vertically that

it be And in lag guys to longer rate that what relatedly of anything have changed in maybe guess, run have to or at transpired it's [indiscernible] initiatives. – at about pass-through I on respect Has based be? the we than commercial and sort You will QX? talked negative with shorter used price

might assumption at stab to I for And if you one about far, what take guys thus through what have roll maybe out, the look like in with XXXX? I'll negative year and rates operating if an improvement on next we summarize segment an of were price based And to terms make in it. see said volumes that what in improvement flattish cost you and Industrial Packaging EBIT be

of normal that thing would for us. and the market meaning is different price I of more the the and you Big in long appreciate different rate take I the picture, question, movement, changes of that questions, Gabe, about was from was a you the in price gave if out these what what type of would consider IP period, three So different up through. last for halfway preference is some XX-month

anticipating fast Some go maybe price limits you through. on one our constructed more two had been like of year, commercial how can a arrangements with increase

it So in That customers conditions. in last in declining a last increase was year, atypical getting early year still the the we fall. increases some of that of price started in some price terms set cases, were this and was

realization looked flow-through a schedule the than little in has and the for past. the IP So different it

the the it. keep of now, I think flow-through. following that. think used of is mix is critical the one and in we what is thing all portion about the not of negative, go would our I of price going of model of you but I term kind customers price an and of challenges well to about balance increases out times leaders question which of forward, you sure And reasons type rate of additional the things. because kind have absolute with resilient up terms base up in about we more to right to I'm try market increases followed maybe of the same commercial But IR one is that's we're I tend when were with of customer just those a your ask on Mark types couldn't The market performing all the some come with pretty basis to those rapid and that base, with abnormal which that be like customer talking on

you. in it's when the but timing of performing like if thing I that of can it Thank talking paper appreciating you differences Okay. tough terms talk article change as as saw to of to sort how vagaries you this; or comment, with us about Again, an things in? in are an businesses to yesterday And cash Russia? there? go live might anything the about planned, respect can update could process of the the And come give some

an It's time. you really, give the really hard to update on

multi-point we parts. As approval of we – that's competition got approval. multipart We've and on one lack authorities those all a said, the

military with issues, unrelated think I completed. of distraction bit things – it's the have going and a that occurred. happen IP is end so on a the in that's with and And companies been what's I foreign will all for that say on larger Russia, these Ilim factor I kinds transaction the with to think government the getting the things of though, of jobs exiting

with the gets really levels higher things people obviously higher it doing and at So approvals of are the been this. they've not related busy to scrutiny level, and a other

timing. wish you I I could a So give better

potential line. not their a you who gave trying buyers it it finish is would just an is I – contacts be which working working get the partners it are prediction, Our as educated constantly. worth much. are we normal They're government, know not gas, to the to with the If

that? something And you to Tim, if add to want

Once right, is is Mark think transaction be the flow-through the the cash on on approval impossible closing the clear. obtained, preceding is I were in the very approval gauge. or to timing Just,

line line. Matthew with moment your comes ahead, while Your final Go One today please. the of from McKellar question we RBC. open

Cellulose to ask Hi. about Thanks, like I'd business. your good morning. Global Fibers

any substituting that thinking talked over you're pulp. focus pricing about fluff more seen recognizing broadly, certain can any maybe customers So in you Maybe coming with you've the who about market And past consumers attributes you fluff about the seeing few your pulp off talk changes value the lower-cost impact on grades? substitution from of your peak? whether date quarters then Thanks.

question. that and and Clay this whole can are good Matt, understanding know you a his really all team about substitution what over [indiscernible]. we if phenomenon. comment that's Clay, how on

Yes. good get that This very of There's areas more drove were supply is customers some actually couldn't Sure. Hello, really I geographies tailend segments. Yes, were a the Matt. in supply China are customers the think of mean, and chain of And XXXX chain markets I in these always in these of local that. product. the question. Ellis. disruption substitution tick in Clay and been some level it's

performance that critical. and think geographies I a rate so substitution. And brands drove this not some of are segments where high-quality and are higher product These

I their little to might are China. like flow in technical about and These specs And broader allow core customer the think ebb we'll market, as would we our part economics base. the and be pads over not fluff regard that substitution quality of example this pet a as an product time less with market. think in parts of performance

saw end the it's also lot we the a a nearing first up and spot of that a change, mentioned year. of you but Clearly, small segment – of come market. also has think the it price it's as second back went saw changed We we increase, half quarter, out. So as market again, the the in very of fluff prices that

chain again, is it. likely not it's where We clearly broadly. supply the to the increased done. but and a phenomenon, price don't differential and to it's to how think it's it's it in due economics. we – grow there. know We So understand very due new it it We it's stickier their think But been

turn very much. all I'll Thanks it Great. me. That's back. from

I'll for turn Mark back remarks. now And to call over you. the Sutton closing Thank

Paper. We some of to are you, for outlined and International Thank for of everyone catalyst in future focused time on growth. your the our exciting company initiatives that continued thank I your and operator. today the some earnings future for want interest

So I Have great our look a forward next our during updating to on call. you day. progress

Paper your Quarter participating XXXX Second thank you we'd again, in today's like International Earnings Call. once for And to

disconnect. now may You