Packaging Corporation of America (PKG) 27 Jan 222021 Q4 Earnings call transcript

Thank you for joining Packaging Corporation of America's Fourth Quarter and Full Year 2021 Earnings Results Conference Call.

Your host today will be Mark Kowlzan, Chairman and Chief Executive Officer of PCA. Upon conclusion of his narrative there will be a Q&A session. I will now turn the conference call over to Mr. Kowlzan and please proceed when you are ready.

Myra. you, Thank thank of and earnings for in participating conference Good fourth you quarter Corporation America's XXXX and Packaging call. morning all full release year on of I'm Vice Executive Chief runs and and and Financial Kowlzan, business who today CEO packaging Mundy, Mark with Tom Chairman President me Bob the the Hassfurther, Officer. call is PCA our will turning I'll provide and year results full fourth quarter begin and Tom the call details. to I'll further with the be an Bob over overview who of our call and then things up and I'll glad after to then be wrap that take we'll questions. net Yesterday of we reported fourth quarter million XXXX share. $X.XX income per or $XXX

and the Excluding quarter billion or debt in share. conversion in million XXXX XXXX. activities. costs certain for was Fourth compared items fourth share was to $X.X income the net fourth were for EBITDA the XXXX fourth quarter quarter and $XXX items net $X.XX was income per with XXXX sales $XXX special mill at special income XXXX in $X million $XXX paper Alabama October in for completed and Jackson, that million costs company's special Fourth XXXX billion the XXXX. full or $XXX per primarily containerboard items, associated million included for company and net $X.XX net year excluding Total quarter refinancing XXXX to of in quarter related of

billion $XXX $X.X special share. XXXX of per $XXX excluding We were or earnings of earnings and items billion million $X.XX sales also special million per Net XXXX XXXX. reported year full compared $X.X excluding items or in share to XXXX in $X.XX

schedules items to XXXX. all was total Details release. items, special the XXXX were that compared in special XXXX years billion accompanied their in press billion the XXXX earnings in company and $X.X included of Excluding $X.X for EBITDA

prices tax and higher a expense lower driven share due fourth $X.XX, increase in $X.XX, of and higher particularly in segment share availability. in by and paper our containerboard mill per $X.XX the freight cost and low costs, driver energy, had We box year's as along items mix $X.XX, were mix offset earnings surcharges produced above entire packaging segment $X.XX maintenance truck operating non-operating well quarter. prices higher fourth the and both expenses to car wood increases prices volume last year expense our our items XXXX to Excluding increase $X.XX, of was share of the lower supplies, and per per $X.XX $X.XX shortages inflation primarily paper lower quarter of quarter Scheduled $X.XX share expenses, pension $X.XX at special per versus and per and $X.XX. areas. costs indirect volumes as labor machines recycled in and continued repairs, the XXXX portion our the fuel as of by fourth with Higher and by rate to and compared only segment. expenses a and These and partially of continuing primarily fiber in materials $X.XX logistics share areas related last diesel outage fixed several interest for were items other were other very Jackson benefits lower quarter of the were as

expense by per was share. and higher inflation converting higher by costs $X.XX pallets and $X.XX grow Finally, share per on materials other depreciation

year's XX.X% versus fourth excluding margin. sales in million last or special EBITDA XXXX business with the resulted $XXX of in $XXX a of quarter margin items packaging and the XX.X% billion million of $X.X at EBITDA sales billion Looking of of $X.X

containerboard. needs during mill a fourth In with at sales of along quarter. products our or operating compared successful the efficiency of EBITDA of record year minimize setting Demand meet with of was weather plants. billion higher sales billion DeRidder, segment high to with in excluding out from strong our favorable the our and EBITDA to helped $X.X remained a packaging very XX.X% or record to very The operations mill items plants corrugated temperatures $X.X producing billion with precipitation mills of segment a full ran our and inflation shipments seasonal packaging order the For scheduled the our margin. full volume year patterns billion quarter XX.X% XXXX relative of margin to X.X full outage $X.X driven XXXX special Louisiana a costs

quality. mill to and containerboard fully and of postpone and on potential to on strong acquisition the at critical completed inventory the have at the to Considering machines Spring corrugated future again of business containerboard mill a number first very was quarter, we and bottlenecks foreseeable half Although this entire year In on and of target understand from the equipment our outage our XXXX the containerboard now our mill the low both will of inventory anticipated are of already December machines to deliveries, decision Advanced to we work conversion this We enhance containerboard we quarter to reaching ensure the with their Jackson mill the year. over targeted are levels our our the potential other for the the below we the risks PCA meets on with once Tom felt scheduled decided our the and scheduled and supplied more the including assumptions refine their to and specifically. earlier And four details customers Packaging, quality sales our optimal basis needs with machine I phase both the of for the it historical Jackson, provide cost of demand outages, producing weeks the levels. for plan planned who prudent the Alabama into supply standards. produce chain and we'll and supply and levels. estimates at on for third will produced we entire both Fall X ended to continue material from project turn than the mill machines capabilities DeRidder containerboard Jackson additional for first conversion mitigate we order to continue to we

Thanks Mark.

quarter basis Mark established -- us even products record quarter per shipments As the quarter over a new of an days exceeded though shipping our to, corrugated and sequential the quarter XXXX industry. fourth a we for ship was quarter. quarterly On in record total which plants in for both shipments three quarter we third fourth XXXX less had X.X% all-time and a shipments up alluded all-time the record total the fourth fourth set new day

day corrugated the both to as and day year records X.X% set annual one shipment For shipments with per were well less up shipping full in X% XXXX. compared up total

In the our XX,XXX higher XXXX quarter than the of record last tons supplying third fourth our internal addition plants outside sales and tons box XX,XXX to was volume of containerboard quarter. year's needs above of

to we the addition to In to the typically on needed catch strong during half domestic customers. commitments the we as year, do our up second of export market key

As over markets. and and have in with dynamics $X.XX can't quarter of relationships quarter share relative long the players turn per you containerboard XXXX you mix together developed the have of not $X.XX global completed years off the customers and fourth many than domestic the of on we products market export share XXXX quarter but prices prices as in of third these price fourth just know and certain versus and were term our last on relationships Domestic $X.XX XXXX substantially XXXX. announcements. large based and we above Export of the the are quarter per higher and than share rollout containerboard third year's per per share up we $X.XX the higher increase were corrugated

shortages and box from they Customers continue higher be had challenging customers and driver have even us variant. and of mills already quite current with continue fourth these been bottlenecks we of or box time doubt for before, some demand the for continue issues the to box no cars other some availability, issue challenges volume of to supply I demand with an to and issues. our chain our and plants this to the also to more our are not same tell most impact our for time. our many move numerous expect outlook if view XXXX demand as Omicron available for containerboard persist will have ship have There's Truck plants, obstacles more to out quarter our similar even which get Labor impact Regarding the lack we the that ability companies more continue as our been with could strong and mentioned to suppliers. facing.

acquisition This will about over per very we like last deliver call gives would I to that provides our ability benefits Packaging was successfully the during synergy and to and add spoke Advanced XX,XXX acquisition several last that month. quickly. opportunities completed Finally, of we other us tons year on integrate our that

Although achieving not from was quarter, meaningful operations PCA the our newest towards no effort employees and transaction we're of results made been to including in back could our without fourth of have to our contribution to turn dedication a it goals great quarter have the Mark. Advanced and as Advanced we into our late now I employees progress objectives. the will start Packaging. This accomplished outstanding the tremendous and closed integrating there already off

of $XX margin $XXX [Technical Tom. fourth in sales million million of X.X% of million Thanks XX.X% compared Difficulty] or with margin. to EBITDA or $XXX XXXX quarter sales

EBITDA million of or compared margin. year For of XXXX segment million $XXX the paper items million sales XXX with of excluding or was special sales full margin a $XX a to XX XX.X% year EBITDA with full XX% XXXX million

As was levels as paper announced and of produce implementation we fourth for volume previously higher X% quarter. mill third increases. not X% of above our at and the as were for mix than below quarter Average the the during quarter price XXXX third Jackson quarter XXXX and the expected last XXXX over sales continued we prices did anything volume year

to paper conditions While produce system accordingly. Jackson, we capability we our machines and market our uncoated monitor run to have at continue currently freesheet on will maintained both

from to done XX% of anticipate our segment the inventory, year paper product over the margins begin at -- International and XXX,XXX of capacity mix, commercial International fairly As at from job we that segment. the call the EBITDA tons the have our optimizing tremendous be solid we XX% will expect representative mill. year as cost Falls and and per The begin we we XXXX paper for Falls team a employees structure the volume

price mention and of ton an beginning turn last notified all for week papers, office to over shipments customers $XX that papers. now printing converting I'll Finally, I will per increase effective it papers, with Bob. we XXth February

in adjustments tax return fourth income of state lower the tax provision Thanks Mark. quarter rate versus favorable annually. The benefit result a was made

call rate of by typical which the XX%. totaled our Capital bit flow quarter tax to related anticipated. a for corrugated the completed million the free quarter the $XXX expenditures first number were to Cash during you we XXXX last on we gave were we plants had expect as provided work as higher represent $XXX guidance get approximately with million. on more conversion rate of We well more million than $XXX quarter able machine a items our at cash several was than Jackson X to projects of operations as

and issues our tax quarter quarter. payments for cash advanced the year $XX guidance labor of about equipment packaging $XXX total interest the last of were dividend payments original of fourth availability still $XX payments of cash million, acquisition, the the $XXX Other to included below we purchase the capital due same million payments range of For $XX million material million. million, our price net spending and during spoke

on year, these we from the October. the last interest per use our our $XXX call, X.X% X.X% we $XX million issued and XXX quarter years. from notes interest X.X XXXX debt years As This XX-year extended during of from notes our early maturity X.X%, by our rate lowered notes and XX.X to average in expense annual our redeem proceeds X.XX% third lowered to transaction overall mentioned million to million

of new balance at billion. $X.X the on of bond the closing September, at timing remains third end bonds proceeds. cash Our included quarter the new the gross unchanged the in Based our debt

XX% benefit redemption included a bonds outflow cash old in the payment in since for million redemption The there However, which of for of million to X.X approximately occurred XXXX. the including with over over and income annual average stock just premium in significant payments, $X.XX provided sequential We dividend first million per and we cash These $X.XX the cash of XXXX. $XXX.XX of of in This the with benefit common was the the compared operations earnings quarter of at $X.X an an year per fourth at ended shareholders returned million quarter fourth from retired October, quarter a XX% $XXX the was an of was together marketable last $XXX year XXst outstanding quarter represent share stock, to share. share expect final cash repurchases in our of bonds. million price additional totaling was per that net $XXX approximately our billion. liquidity shares securities fourth repurchasing of or the December of under $XXX in our of

For the from cash was $XXX free full $X.X and XXXX year was operations cash billion flow million.

XXXX recurring reported Our rate was cash was tax XX% for rate final effective our XX%. and tax

$XXX be move $XXX expect Regarding certain million full as of approximately expected capital be million. forward, is approximately year items key estimates for DD&A we expenditures XXXX and we to total to

of million pension, XX share quarter fourth payments plan approximately recent postretirement the and repurchases, contributions benefit $XXX dividend of we cash, expect and million. With XXXX

is is expense annual at mills $XX phase XXXX approximately effective result outages of our XXXX. machine million expected first includes our these lost quarter. $X.XX and amortized net full to third, XX%. estimate interest maintenance expected fourth approximately payments quarter containerboard back lost number Mark the share the share rate more during first production per combined is $X.XX in cash and Currently I'll X it lost share $X.XX costs to $X.XX our The per about Our is direct the in estimated to interest the XXXX and $X.XX which per and now earnings $XX cash tons in of impact compared rate conversion be including repair Current by over to will XX,XXX XX% State should Jackson second tax impact quarter, XXXX per approximately XXXX, XXXX tons be fourth be for year costs, the book the million. compared in in tax turn the the $X.XX to quarter. The in in quarter, and of annual approximately outages, planned share in volume, in Federal in

Thanks, Bob.

For any in have new throughout to overcome to accomplishments achieved deliver adaptability company. almost work shipments and both their containerboard employees personal and shipments. lives two for years our records obstacles tremendous and corrugated displayed product significant energy now, the both We

process projects biogenic upgrades Woodyard, future mill including corrugated that opportunities mill press in for we at of head pulp our We projects Jackson, our packaging new for head Advanced improvement recent have customers with allow others. will completed profitable Louisiana at successfully Wallula Packaging, numerous our box acquisition the and Valdosta many reduction optimize flexibility to corrugated at our our Along shoe upgrades, plants the mills, mix fiber or us project business boiler referenced products projects DeRidder, I cost substantially Wallula press preliminary energy, that improvements completed and project improvements to at at the projects continue real better Mill, enhancement and improvement complete way and significant conception, shoe box for and for and and Filer high-return capital Alabama, growth the from entire a deliver refining in in all at self-generated plants, sources detailed the PCA the completed wet involvement required end the of to engineering, implementation through All start-up. personnel shareholders. have and and mill, and mills utilizing and

business did over our Although the so achieve capital and order XX%. the return it required of initiatives, to while utilizing while invested paper optimize significant industry-leading We to capital versatility financial platform on these investments important in Over our and results over we of packaging improving XX% profit business payments shareholders dividend $XXX containerboard was Jackson, capital income and from our repurchases. the our to of returned to million XXXX. of to produce Alabama in minimal net delivering stock our with spending mill

X.X opportunities interest proud our average we maturity flexibility that by the still to built and over adhering In addition, and XX.X many years of $X grow which billion future. to balanced to from approach to million to strong finally, company sheet quickly towards years. overall of the a recent refinancing, our These balance billion maintains illustrate and annual return in debt the capital we've with order with continued ended share extended X.X%, liquidity to financial debt from authorization, balance approved the interest commitment $X.X conservative years. situations year, with I'm the shareholders, a strong our our for the very sheet, expense the to allocation partnerships lowered we lowered or and our rate in accomplishments, And customers year react many recently repurchase per clearly most almost maximize $XX years. as X.X% and our our the profitably we've along to with accomplishments -- and approach, done suppliers while returns the

fourth higher quarter, Looking to segment, we shipping with product slightly benefit year's strong, packaging shipments as and and ahead, than with per last move be to as from into first we from additional higher day very domestic the the in shipments quarter, first and our expect prices higher along mix. remains three days, and we export corrugated demand expect

Additionally, week. implemented expect a price higher segment, There from expect our recent that in repurchases. from share recent price our should from and and quarter our the freesheet first expenses we last previously be prices benefit benefit a lower most beginning also Scheduled increase will be small uncoated announced was last that outage announced our small in was increase November. mix paper we

our in freight well cost estimate all logistics be operating sequential We offset history. to the than expenses However, largest continued and inflation across these higher more this benefits. as most inflation-driven increase and costs, converting as

risks colder and Considering any all impact, increase be new start due I earnings weather This medium and benefits must seasonally addition benefit customers energy Report share. the statements. that, within the as company, any some should Annual on as higher price does of and estimates, on we've to with will wood XX-K, forward-looking that our remind economy the that costs. not that statements expectations, year, to a in to timing-related but across XX-Q and entertain these uncertainties, to questions, materially quarter on expressed on identified happy of differ statements from be including $X.XX from increases in Actual risk and in grades we reports factors ton involve Form to with we liner subsequent like include also the $XX per In With we those open questions, based current call and first those constituted few increase the projections the could to days. and we'd expect the the are that, call items, quarterly costs I'd were inherent the and Myra, our last filed made These please. direction results of Form statements. potential these And a per forward-looking of and communicated you SEC. labor inflation-related

Thank you.

line Your Staphos Bank of of America. from first the comes George question from

ahead. line is go Your Please open.

I of opportunity Thanks. early good morning. mix you guess provide couple and little congratulations start, have shipments market to more are in any sector I and the on where we've corrugated, talk in you you a in And a a details the bit some the supply that on the constraints give for in seen and quarter bookings my Hi, follow-ons. first optimize did heard everyone bit detail your of and color and overall, year. and then Thanks your about all there? could can in tightness question the the to the

get that. Tom let into We'll

Hey Tom. George, this is

flavor year. bit the give where me little we're a you Let out just of starting for

in If the -- a perhaps. and numbers bit little there's confusion you of

workday, that for Xrd So the full a be PCA, part, holiday. considered whereas January was the a FPA most to

if about the FPA number the So in, left X% up we're for you month.

out, If you number you days, PCA the went took with that just up X%. we're

on, as in somewhere out will about and quarter X% smooth kind up to there of X.X%. maybe So that rolls blended we're probably the even out. But

period have constantly Regarding But do remind at for question constraints yes, And mix, business, times got both XX,XXX-plus some We're to some other part, we'll we'll just customers type rationalize growth we to selective we time. to business to over the I'd the can very long, things. want people mean, where and I have a at enjoy sorts with looking potential customers. together. these We've there's align of do things. we're ourselves long have long-term those optimizing supply you, people that partnered of we with, growth of we've with and who the most no

So your that hopefully, of this question -- morning. that kind answers

your positive even guidance price Yes, some that. degree, results, in thanks in relative quarter. to for your contributor you to was mix though that release a To said the

quantify results, open up there. containerboard a some draw Obviously, segment is repurchase benefit the authorization not know some that anything, and allocation projects, lot completed of the to in to your no the the relative for so want purchasing and So curve, good the capital from the -- done any one. future? don't based you've you purely not your last turn capital they there from paper you company What, My on high $X got from we just relative you'd And to since call if generating trapped the the for then and to last, business? I generates since should you to kind else work producing or what authorization. cash seem of share on pulp for two billion guys, the there over, they're quarter. Obviously, Jackson return for need degree, Thank ones many Mark, a and be packaging was allocated flow. was market benefit luck other packaging similarly, I'll those Jackson from out and could if done anything recognizing got to there's costs it the there of now coming benefit the having all in you paper

we board first had of mill. all you full I But tons our We system. the the a and that produced through probably XXX,XXX home handle will just if for Tom of question. almost both at year Thanks. of the think about the part for Jackson,

we in generate If at we wouldn't that Jackson, hadn't another way, have had if it we I manner to grow with results. customers look able the the out on think you been allowed of the portion script, you for had segment again, the the my Jackson about called $XXX what to Jackson, do? And Tom, million year. if contributed us it the and for

George, about And existing would it, with you Mark. that the if and think none that have grow certainly with volume had were most to base, part. that not customer for had Yes, materialized had our we the we Jackson, of able we

And so and XX% in demand in the that to which big Jackson jump downtime carrying in improvement quarter, of take I really quarter. is just didn't out recall, due the had demand all, a to the board -- first result right the at believe we into of is being about Jackson. fact forecast fourth able to be get we significant that you if we to And do that

then add And want to do you to Bob, that?

$XX relative Yes, about in that probably to paper I of was Well, and quarter. the to moved probably the packaging it million packaging. George around regarding think, moved $X of million, year-over-year, from costs Jackson to from paper and segment to maybe it from million around package cost then the, $X sequentially, shift question that your was paper

as to billion, use that as the growing send authorization available and the growing to was earnings far new the we to investments, as the buy And to appropriate capital just buyback, forward, share was time was And we as as feel have of authorization to the then all was return going the continues the and decision investors -- right go different again, time regarding right support remaining ways, the that share the dividends, message i.e., and made, continue and the $X we're was utilized, number delivering that shareholders, that that's a send that for the authorization. It to in right far company, it signal. that. then it repurchases, many it

to on next the So question, please.

you. Thank

from question of line the Jefferies. Phil next comes Ng Our from

is ahead. Your line Please open. go

the you gate strong little us quarter. really It cadence see maybe out about given the expect thinking comps. challenges growth chain, here the guys, you're and growth seeing you're give of congrats helpful, on track should Hey how of box great would for PCA more we another year of a It's do some supply be profile normal this shipments again? have strong a perspective Tom, some tougher in and to

the would would to I We've a starting little into it backlogs year. on to It certainly strong. would on bullish. -- I'm be very Yes. more be -- nice very get We're this very got good going out there's strain, the one not labor right have so of only that's customers. do downside -- Omicron impacting of a do result any as thing if the shortages only it, because that fact we it's not now, our

it's little shipped changing and able the be other a ability have customers, truck are basis, if to consistent to tell on in customers bit that things could for in labor significantly our issues more So a chain every that issues us we our almost board, choppy supply not they of States. all plant daily because our United supply single the box across virtually But across mentioned. shortages, the

year? a big whether capital be to of want takeout from a to that's call bigger for then any a but a in you for going it's plan place CAPEX, projects And CAPEX helpful. have it's projects other lot Appreciating $XXX That's this Jackson, it. million cost you nice standpoint, any number. there's a out Got needle the or box mover,

describe just this in Let me manner. it

had XXX four executing replacement, everything we mills enhance on doing were and to alone, of cost that sized in to we projects care we've that and corrugated XXXX, continue For been plants. now. taking we'd We're effort in of equipment just And we're the box significant effort upgrades, new and involves opportunity projects, involving call that X,XXX over XX the The on mills projects from corrugators, continuing the working equipment we're rebuilds, continuing what box plants it the way. between bigger five and work on and that a to the years just it efficiency. plants, for last

wet we machine. two of just stock by And another Wallula, of the new end, paper finished just it as days of DCS, rebuilt the number lot own equipment new we're what new the primarily again, of machine. the over supporting last rebuild example was of Wallula that work -- on ago, the just we new the lot first was, project drives, phase that's electric been a As started X all $XX-some-odd week. Woodyard we approach, box, the We PCA up head speak, we at completing done larger our personnel. speak, do. million we Also A

enhance of type projects the are these to that our will continue So ability.

And so these continue. projects will just

every type but that on we of to that these we'll a work projects We portfolio continue are have year, whole see. the

Just again, throughout the enhancements system. numerous

terms color, appreciating just And mention seeing lot one, there the mean, hit, it you're to want great costs. sequential it's guess, on seems Are That's a at out the prices, be to one but call little big at because operating I inflation buckets did across I mean, least you any least OCC of board bit. improvement, gas you a in last biggest stabilizing nat of I Mark. that

kind in a biggest where buckets So it'd seeing helpful you're sequentially? the be step-up of buckets

this Phil, Bob. is Yes

seasonal said, -- You what to normal never there's inflation type we've look the sort we of timing like we and -- addition things. as seen in

timing And $X.XX $X.XX a seasonal Moving sequentially all little that is share. say $X.XX, maybe it's $X.XX in, the thing. per over I just to of would type

benefits, Energy change the the chemical much bit, mentioned. the the of is still. that But extremely of use, above timing the stabilized one over last referring items to high will this wood labor think balance every we be I OCC be whether that fiber, is a seems in pretty then it big inflation year higher. we're So right, other I And And the going type to although you're buckets, compared have up. yes, but that and and is majority to.

of and really and materials item. across So other the board, it's is repairs freight. things. another Freight And course, big

they're relative seen -- what there's historically. So all fairly significant to we've

Got it, lot it. Really thanks a appreciate guys.

you. Thank

Next question please.

question from Bank next Our from Montreal. comes Wilde Mark of

line Please Your open. go is ahead.

Jackson capacity Bob. a in way and doing phase help steps the with and then we of Tom, each you you're at look Mark, be little morning capacity more expect Jackson cadence Mark, what wondered Good details in as forward the could go phase, will kind at step-up of I Thanks. at sort the ultimate around of kind and of terms generally at us what might just each like? in you the what if of

The machine first a until big now in We'll significantly advantage we able the spring capability fully phase that at that to done back phase to Fall, the take talked end be the work that. that mill work about speed. would be of XXXX. the of the will that machine the itself to won't in from time some be pulp really of enhance spring moving higher of the that the be work in the of doing some of We support produce will

in come bigger this to as OCC completed and production on the allow this will plant the come the are the some of spring additional capability ton the done machine machine, final full work work summer you'll tons-per-day the in that allow will of dryers year at a of of when at added the then of XXXX have work time, to the basis out that the XXX,XXX machine benefit Fall. the be that capability fall terms have more So the produce over will shutdown, But capacity. final we is of we utilization after benefit rate will completed. And to done some the per incremental that We'll phase. that the in fiber will be the press see there's

So does that help?

ultimately help. able of be might on But that any that produce machine? second you we and Yes, that does to what machine sense --

That We've that machine X, very a machine. Jackson is good the the as public. but as very to big not not -- big a obviously studied quality machine as is it we're It a good number not number in X trim. It's about machine. a talk a that, good going is obviously, very lot has quality

And we doing then depends choose appropriate minimal a have at produce And give machine how So X,XXX tremendous spending, much could as it day. that market, capital capital tons you currently produce I'll with are, a an that apply or look the we the would XXX day example, what at opportunity. tons to you analysis needs we capital at on a offers growth, to amount look we underway, could at opportunity. machine an internal look of our we we are that

a a as of opportunity from, we the but terms determine base. So where to it on want right what get in depends of we tons great all lot and situation and asset demand

okay. Yes,

if of Hassfurther. at from I it new move into I and And sort ripples going had are pressures the The wondered level. are question other wider sort plant that we means just for to back more to Tom it as industry mill that, corrugators of and what of is of us that some box seems anywhere bigger Tom, sense these the really just also give you could most inches? of related to inflationary sort like the XXX how corrugators in because system the XX for

I'll last Mark. the Yes, regarding take one corrugators. Well, first the

some not long is that time mills -- just mills been a for machine, got my industry, the we've wider moving more some And talked of For an for of got wider when for pool as corrugators. obviously, in trim good that flexibility for good of so to in those opinion, is just mills. corrugators. have machines wider And we've the you've about, the wider as and Mark terms a

into those of corrugators into proper and the way So, lot able getting plant business, a larger And the get finding just to need to of corrugator volume need door. you box run -- profitable narrows to their to corrugator wider and amount combining you're frankly, narrow be of efficiently sorts one to going do footage a out a into are of quite two things. these today, what a out

we've parts customers they as what some and moving going they it's we to know if and it system figure mill So lot are, quite who customer a absenteeism at they And their the the is all very well. that of labor, that's are COVID the dealing the costs enormous been Transportation got everything plants, an obviously, else us. adapt for indicators going needs and example, years. pressures that's inflationary our and do for you've with a box and energy the number a that, do as built dramatically still you rising efficiently. an out all there's a time. -- just of -- it issue to are, to The just way big, around in big been and with on issue way is inefficiencies and we for out take figure on, a And

our So key drivers. those are

to comment. I want

If years, last and equipment, all XXXX you plants, approximately improved from packaging box new to of XXXX, the per system. hundreds the we've new went you compare the upgrades, executed equipment hundreds we've back couple that and projects of these XXXX, across of over productivity hour unit period, XX%

had in the and they be so base would And if our of the improve capital able are business. results growth we corrugated to of not upgrade achieve side packaging the what asset and been the not the all

clear helpful, plant Would that's would cost that you just Yes, or the box of the box the you in the Mark. between customer freight customer Tom, the and the freight. on business, to be carry up? pick does

that's -- of and that's enormous ultimately, mechanisms there's we stuff, pricing that driving lot some we're freight that just prepared price just of obviously, what's different the we've listen, not and eat of different But increases realized. improvements lot mean, I a -- these use. a Well, and things to we're not

Thanks I okay, guys. over. turn Yeah, it will

you. Thank

please. question Next

Our the Mark Seaport Research. comes next from question line Weintraub from of

go Your Please open. line is ahead.

Thank you.

the very been that? to to willing, sure and whether be you're hear I'm if or have for a great internally. performing industry raising you they've prices. hats a get you customers People go of guys very market, thoughtful. are guys I Again, perspective year. on at would raising you been to and you good First, sense thoughtful this is share you're looking just not announced whenever data, was time have prices questioning to quarter, to off containerboard. you trying superbly -- to love phenomenal a And better you

this never Mark, No. talk you as -- what else. don't Tom. about it is are around forward-looking pricing We we our or thoughts anything know, or

-- going that's I'm that. it's all to So say about

let going as a about I me one -- follow-up is little Well, as of be just people it are higher. seem the questions, asking much I bit to on inventories guess, Okay. would

an out I'm how probably place, really and the an Would going have factoring Is which that industry, plays some talked the cars that, at plants, in you the so mill much better led and I what's in could occurring view that for necessarily that so to, that these outsiders? on way anything times being the about of like guys share dynamics a of thinking might us dynamics is. where going business understand for inventories the You unusual apparent it's potentially you're of there the and sure have notice increase could in you for be how that maybe would guys your did you box or that in help about on very drivers color share instance, any not to business to issue. on you market you're box not the the specific

lot recently, confusion. data was came Mark, there AF&PA when of out a the

a mills at Again, hoping the the you holidays getting how switched, box the of truck about trucks car mill a if you were think the up. you And and looking taken it about or box was it a if mill that at way the get get mill would at could show away hope. unlikely, You're car the think from data. the running, a fell even trying mill, to likelihood was

history it for largest PCA build the containerboard saw So to the holidays, the was terms during at of inventory the I've trying difficult our XX and most years move of the almost mill period increase mill. of here in we in the been since holiday

hand, high that as level box We to the other the the the low plants. drop saw level. at the opposite On built inventory mills the we saw to

for we same lot trucking the We being the similar not we situation able a a though. a to of same believe speak share of are I share so lot railroads. probably in all industry, And industry. the where

out that? FPA color Tom, to data. little you And comes with so interesting be their want add a when it will do to

of -- agree just you, lot you mill Mark it's jump to demand on to, get of need totally skinny I just alluded those box right we based can conclusions quickly and Nothing's ton I if Yes, Mark, look a I on inventory. very our the out every people at curve, as mills. our with changed that plants And we think in as now, plants, box about. and inventory talked are

of course, we mills of other well. and the see do that paper same out And coming of -- trade out problems we we own. So as our

-- now which So mill the in level, low has and seeing begin a my inventories snapshot led to little right up, a which inventory taking in misnomer, think I of sit is with, at to to go really is a the opinion, number as numbers of a where small bit those industry.

even think Mark, holiday, could before switch switch normal rail day, if you holidays. the one count go a a the about on you through you a and back pandemic

trucks showing scheduled. up still have as You'd

days a holiday come cars And in Now experienced to what and to see it mills. put of availability containerboard was of in few doing that. floor away. your to to cases, because for had trains where out we Omicron we've didn't take empty we close particular, and just bring loaded cars at and with drivers on We a deal crews, of room in the to, rail were running the and

And an extremely so was challenging holiday period. it

that. our So again, take that's on

all I additional that color. really appreciate

are they were a as still any as on they those issues few seeing you difficult are Just easing back? weeks or yet

availability significantly, railroads. before really very the improved which where of but to whether holidays, impacts were mean trucking labor to it's for not industry, there, good everybody the we improved the begin with. was it's I out It's it's pandemic-related

and have But normal out When mill to you outside look winter a level still challenge. that back containerboard storm balance and every customers. we into how at storm. inventories our impacts plants so is and more And headed to again, getting the weather day box at a now the now the our

don't happening but improved, trying sure day, it's to fall XX make all have again, we behind. hours eyes on So what's on, still a we

Thank you. quarter. the on Good luck

you. Thank Alright.

question. Next

comes from question Wells next Fargo. Gabe the from of Hajde line Our

is open. line Your

You may now ask your question.

little environmental terms over more and little become could your your of recycled bit at kind of But incorporate you having a Good in was maybe bit as your guess, in on rethink and Tom, can more Mark, I least of insight I to initiatives, morning look it's system. increasingly of Bob. to cause obviously We get it understand a mill virgin-based. system mill time? want at or consider some to recycled predominantly this exposure content, hoping focused customers, containerboard

Tom, why don't ahead? go you

of primarily, Gabe, job starting a base, recycled base customer done product. mean have sustainable product virgin think our product. educating without the we And fact with consumers our and very the customer you a a I with Hey good has etcetera a can't I listen, industry that have

fact So I that our job think educating our that most the people it now done and good certainly well. virgin us we've a things. of in have customers are down stream terms of fiber lot we amount the of working recycled in And on sorts those sheet. and It creates flexibility of that the We the a road. the to customers, performs constantly fiber, gives very

for And sustainability see containerboard do to get So what they do the as sole continue they closed things the company story around to loop we'll system, best we we our grades. for the and think and and long our in really to the very that's believe going proven And fiber us structures I be term. mills forward. in good for cost flexibility, our for get

think might you more end you low for to want end then XXXX comfortable or us and to say get formal can is and think target, if an kind sense within, then And want outside operate you. making you bandwidth little the I once quantitatively the when don't exiting Thank is Okay. about capacity? you're of PCA give there, a but of bit high if integration rate you a or mill that to purchases, to

I'll sure and Bob to answer this. weigh are on or in going that, I'm Tom

at ourselves look we integrated. integration, as as far fully As

calling before last Tom balance amount situation earlier a or whether we looked or going we we or say to outside out we're integrated a as base year the XX% normalized. particular, and rather XXXX. mentioned to that XX% decades. Bob, export had to add sales minimal with you business into want number, at XX%, the fully do or in of part is customer the customers. on in through many script and we it's run to XX% year, Tom exact where are we've that to that? of continue stay But for some That product move We than his an

some smaller other little And that. that mean even customer way -- course, we've begin have our very independent we integrated. the will just is times to did mentioned we Advanced, now fully customers I've was consider outside many and at smaller with through we as few have large or of But have, those and those relationships them them fully be one add another even is industry that that, one and -- have outside business. we them got that acquired small integrated. look that gone long-term the extent, them contracts customers with base, that customers very I in like smaller, to outside as percentage in such treat become to they people be And acquisition. that and long-term they're the even I've and that to of the before now we the

containerboard, that outside as on And I see -- don't demand. out side the think looking also packaging we need need. part of grows your supply question to going regarding We're to years the the that and market into for future we

that, very the achieve have on pull three years and We we growth levers over type do expect. comfortable out would the on we to next we how would how looking five would we're of internally to

you Thank guys. good luck. Congrats and

you. Thank

question. Next

from the line Adam from Our KeyBanc. next question of comes Josephson

ahead. line go open. Please is Your

think obviously, in Mark, send like opposed time XXXX but George over why back mentioned year or I been past appropriate were stock two preceding mean was I to year congratulations now time signal so trying months to you the as and the I'm stock has a pretty back you Thanks. now any earlier, as fine I to just Good didn't buy past did now Tom, or the on to think and several the why asked any so, that morning the was investors? bound good you Bob, guess, you this over to time. buyback, quarter. felt opposed what over range you just a really the previous you wondering And about Mark,

investors that we ahead wanted dividends. that to and that reaffirm just doing we way There's ability good -- time only been to right the of in with our to go it take value We've the the care answer numerous is to just continue to was believed and the return the investors that ways.

profitability, continue feed generate extremely capital we value it generates returns with that again, stock buy the Maybe in ultimately into the felt, the we and was was at the it available a it the continues the higher had But cash had We was with been, our for we fact range to which fair high buy price the that simple it's to to and right shareholders. that to felt that. as trading time spending as it.

appreciate your on deviations but much XX% guidance. you in quarters And one of reinstated the mean by have business $X.XX several guidance, you it your beat guidance pandemic Sure. I fourth or the then And you a quarters outstanding, for makes just from the versus I and guidance which outset No, refrained just at that. few ago. giving is obviously, wonder given these significant it your in me still visibility how quarter, you

several over characterize for for So how compared past what several quarters to would that coming this the next your weeks matter? quarter it's what's into matter, visibility you the over or pre-pandemic and been that

more the say guidance Bob. it I'll once uncertainties the when stop that after Hey stopped made become situation just and us Adam, now so we again difficult, the whether one to giving obstacles. has this XXXX. complex that things, many just there know I there more quantify we probably were be the variants right were many chain COVID that of leaving have is are more you even in began than pandemic Because did supply ones workforce, but -- people back the that worse, the and wanting

-- the embedded have So worse. after just to started that sort get they things that pandemic been continue began just becoming have of

struggle stopped But guidance, that was of orders, uncertainty end, shown, have they for don't They more to, I alluded and same our is the beating the struggle get yet, for been obviously, think with. and end containers have one with, the guidance, things our it. the the conservative there's frankly, there out as put So in to door. reasons which but then results we now these boxes, we've than us the up in we see they and at other orders our their when we customers labor Tom orders --

more forth. what our got change to up a not that -- that to sudden and it's we all they we the of been to this, started we than was they're So accurate, do of back changes dumb so do early doing. late And relative there in now, lot always just like this unknowns XXXX. when forecasting but part have And we've they're a frankly, backs all -- in how fairly

understood. Best luck. a lot of No, Thanks Bob.

you. thank Okay,

question please. Next

Our next Michael Truist from Roxland of question comes Securities. the line with

ahead. Your is line Please open. go

or issues of Thanks do inventory a to the of how on you there's about the now? quick to have Mark, ones which that very do you're can think Most continue you Tom. about any constantly us given basis, wanted that side, you the stressed big be frame couple to logistics, go-forward -- management decades, excuse try for modify ask a that and asked, level, in you're Congrats me, it'll of other out one been supply much. for last questions. been Hi does think you higher the experiencing taking that focus inventory. been has call, thinking the to Bob, type I year. solid my -- help X% a on account how inventory time, you similar of about or do And coming XX% is higher, on just how my quarter on questions you chain question Thanks just

good lower in to this We're third into through getting to really also be in XXXX into right -- answer we've needed and got have schedules place than our shutdown actually point inventories summer we and dropped now we mentioned, But quarter. to into came build when desperately out at. a me for ready we it a XXXX, we the of did annual that, we now. the ourselves as inventory, need Let the much we're way,

a will go the So very winter and and spring, up at we low through point. end

to going box not few as the be just plants. supplying for and sure make number continue the has a you been last that I'm producing mills years, year, are And this target, to tell give adequately will a it going to challenge so you to for a that the I'm

that to at. ground with lost we again, where problem in had we good level regard, it's was slipped so And situation But high-class be logistics that PCA a have. to again, a the been transportation But is issues. for and the

So to add -- Tom, do you want to that?

say as that our have grow just one has starting that's Mark out thing coming. business, to We got not I'd outages position spring a moved this commensurate inventory Well, year. mill into backlog, demand last one We got decent said, we've we up we and keep a summer, is able as growth. to that. to pretty we with continued but -- got got gigantic mind has here to we've are that catch totally be -- in just somewhat up with been thing And the again, and

on level, our everything get and at produce the hands So shipped we it not the get deck to only some other to can it customers. box is to all to mill of what but plants produced

Now the quarter. least, is, in news half good the business is export second that the other and into heavy at the our fourth of year primarily

got So that we've do lot back will the inventory but work get a get of a little to levels up. relief there, to

color. the appreciate I

supply case larger new go-forward guess, management, a a amount you have about I cautious get let’s chains think of the little be to will COVID, you going more with you keep reoccur, to like these Just historical inventory, conditions say inventory just been trend, you relative past look to as how what's a basis? in then, will normalize, things on are do you inventories

we'd really efficiently, and in transportation to Mike. avoid, to we we'd could. here. when right we're we'll to cost whole be with providing if back do lean system chain away We that. from depends, some if What could able get is area got we we've long do incredibly the that to But that really place can, like to because like to Yes, supply normality if like that operate a we that. operate way inventories returns, a now, time Unfortunately, still and that's

Thanks very much. Good luck in the quarter.

you. Thank

please. question Next

Citigroup. Our Anthony question of the comes from from Pettinari next line

go Please open. is line ahead. Your

or very that to many how Tom, sort Fall seeing. you're demand good of if possible Hi Spring about you right talked just I'm to Mark morning. year, about -- strong the phase thinking that buys postponing you way? conversion I'm Jackson's meet the it quantify the is from to tons that this

just to started machine getting the out when originally we or efficiency year was I'll from about Bob. be out will more up, about in is say actually now of scheduled than and were had Because expecting the -- relative it that it same. originally frankly, the of spring volume we we're it, really of out this Anthony, that this more Jackson when thought. originally is production we

So we although as on a -- out sort net-net been the additional in exactly fall, the we'll that early before the we getting efficiency about won't get year, spring machine push we get we those of would ramp of that it what on the we've that year higher to thought outage. basis, from be this pushed because we

Okay.

be forward-looking how the increase, price sort And bottom the have remind or or of hikes, not many to previous for typically taken through to kind you with months Okay. line? That's but quarters historically, price of then flow us reflected asking helpful. those can any view containerboard on

of roll typically formal about period. from that a typically, announcement over out will time we completion, We the XX-day Yes. to

Okay, helpful. that’s I will over. it turn

Thank you.

Next question please.

the line next Our comes of Kyle question from White.

Your Please ahead. line go is open.

Hi for were at good to there level like to experiencing. labor is looks give I how challenges box the and of the that question. sort go in what week per typically plants you're taking wanted workers magnitude Is way back the of any morning. experiencing just industry Thanks that of us the out kind terms many back the in order of December and today? to

out workforce place. could predictable then as appear. not place, a of it We was it percentage wish have and percentage as a that another a in good have pretty and might high make at question I one out

example, closely So track And very variant, country. as happened you nationally. this with with if the Omicron what's on what's it's we going across moving an track just

disruptive. couple available certainly the incredibly we've centers a you you whole of have that. it's shift, where not machine in on just point in one when might essence, a crew have time a demand a However, -- on we particular a At particular got center, for have machine --

customers So then issue what addition, this our just really -- I what the but and with think exact think same I Bob I are mentioned mentioned is thing. complicates in earlier, again, labor dealing

And so result there's deal that with of of disruption a this. trying a to as lot

is It's definitely Got it. time. unprecedented It difficult to makes quantify. sense. That

to a given authorization sheet, balance announced? is time line use you buyback, the there fully you healthy that expect On your just that that

No.

done As years, just past have that. the in it we've and available, it we'll at we leave

and Sounds in luck over the will good. I year. turn good it

Thank you. I and of out out believe With we're time of questions. that Myra,

Yes, Mr. you Kowlzan, we have no questions. more Do closing comments? any have

Take look us to a everybody we review you I'd and talking April the results. today, Have to forward for join time like care. the to earnings thank to taking in good quarter day. to first

call. you all today's Thank for conference participating. concludes This

You disconnect. a Have may now great day.