IP - Earnings call transcript Q4 2018 | International Paper Company

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter and Full Year 2018 International Paper Earnings Call. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. [Operator Instructions] We ask that you please limit yourself to one question and one follow-up. It is now my pleasure to turn the floor over to Guillermo Gutierrez, Vice President, Investor Relations.

Guillermo Gutierrez

Thank you, Laurie. you XXXX International earnings thank and fourth and year full conference morning for Paper's joining quarter Good call.

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

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

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

presented XXXX website press Relative now will copies Our venture slide the Sutton. contains of the on also now Ilim turn information provides the and the and over slides. those fourth presentation slides. also to quarter Packaging Mark investments, around two earnings I today's Graphic call joint release context to financial

Mark Sutton

morning, three good International XXXX, begin and our across Paper Guillermo, a EBITDA of growth. very XX% discussion three. with strong delivered you, everyone. earnings in second consecutive businesses, on performance slide year We'll Thank achieving strong our

XX% return above venture invested Ilim for with more of our EBITDA grow All excellent with continue $X delivered our billion. shareholders cost the Our of operating than in, of value significantly results capital we also which joint is to on capital.

we provided containerboard box in with Toluca, plant U.S. strengthen year, our will investments, new a fully Industrial our invested integrated further the strategically to mill these Mexico, During opened Packaging business. we Among from be system. that

and with best in to all focus serving enhance capabilities more investments deliberate our XX%. targeted aligned have on made to the investments segments fastest-growing than with also U.S. our These returned business Box We customers. the a being

leverage outstanding X%. company our share shareholders to $X.X down diluted dividends paid shares took reduced ratio billion returned repurchases, which further sheet. our to to by million in derisk We We measures debt, times decisive we X.X and our bringing strengthen and the down $XXX through balance also and

to slide on four. full Turning the year results

revenue on by more X% and businesses. than basis our points commercial we strong across increased our expanded XXX Our performance margins by

Our from delivered year another $XXX million equity flow. Ilim All earnings solid were $XXX of joint million, free in, venture. including cash we strong our

of capital. a increased Turning to very our the year five-year five. We Paper on XX%. This reflects invested International average delivered strong strength portfolio. our return to slide performance of

I'll We are it commitments. over making Tim? the cover delivering Tim our outlook. quarter performance those now and who to investment and across our on right choices the businesses will first turn

Tim Nicholls

and by revaluation on price improved operating OCC. by startup primarily wood, impacted and also businesses. Ops Good Input were Packaging. improved by across benefit I'm earnings lower impacted slide distribution Operating and were bridge. in Thank Madrid earnings $X.XX XXXX. costs the equity lower headwind during morning, negatively expenses, with earnings our taxes associated year you, LIFO by chemicals and everyone. Ilim costs by by activity to of on driven charges were were XXXX performance and and the costs a which driven year-over-year the higher costs our related partially inventory strong and offset Mark. in which events price Operations mill. were three interest Corporate and X shows weather improvement in mix Graphic

delivered Paper Mark very in As said, International results XXXX. strong

in by our year-over-year three Turning X% our businesses. quarter as expanded EBITDA to X, we improved slide results. fourth margins

$XXX we venture $XX repurchases. strong on from Ilim was in equity flow from $XX million a All million in million cash company joint Packaging. and and Graphic completed our the solid including the share in $XX Our finished were earnings quarter million note. Free

costs maintenance mix by cost improved Operations Price businesses improved to startup lowest costs Madrid X. the and Operating slide improved for was favorable $X.XX. less quarter fourth on bridge lower a in due one-time expense and were The and mill XXXX. XX% of energy outage earnings our headwind outage quarter-over-quarter million. the the all maintenance in to year items than in Moving wood. Input earnings regions. total representing quarter $XX particularly of about of and

cost from heavy conditions elevated hardwood remain due to to poor expect We operating rains.

and the let was Now American XX% enter margin. slide see to Starting box segments. with e-commerce some performed demand we January higher under continue We're in produce major in seeing which tariffs earnings North X.X% between me and we're by XXXX as of quarter importer Turkey we EMEA. well and containerboard slowing also Industrial Export U.S. Box the driven turn estimating $XXX pressure business containerboard. the some China to X%. with million in in in The regions X. on is came -- Packaging very and in delivering shipments and EBITDA other demand of strong demand in a a fourth with strong impact

and largely with were first delivered business good strength cost higher wood earnings items, and well. We quarter the which were million onetime quarter in cost. benefited gas were in of expectations from line and in quarter. was with cost. wood expect the plays macro price strong of volume Continuing which and fourth input their the changing Earnings our quarter as significant higher by offset Industrial execute backdrop. ability Cellulose quarter largely the distribution Packaging to Input exception example a costs, and fourth We quarter costs against to the fourth On due continue of pressure slide The natural a team Fibers the inventory XX. delivered of our Operations energy in again. out. impacted Global another with to a performance. were by $XX higher headwind destocking Fourth

XX. a slide on have driven input our customer costs we due excellent we for Again largely in year. geographies. China North Turkey saw headwind across first commercial fluff a headwinds. with Towards and slower volume Printing Chinese demand slowing In of These energy free in the quarter, in Price were the demand New outpaced out shipments year. wood along sheet the a very uncoated to higher currency move softening results, and strong were continued delivered into plays softwood Overall Year. business seasonally performance. the foreign quarter quarter America, the destocking end due as and into the favorable and by trends and to operating industry all and costs. volume strong The Papers realization

our Our year the Europe to XXXX. we and the solid million, of about in, have margins Russia $XXX be by wood momentum other we earnings overcoming and earnings very XX% as good in Papers healthy Brazil, challenges. businesses continue range. low costs delivered And for high XX% All and into in EBITDA improved move operational

quarter. results slide XX. joint in quarter fourth million. International fourth impacted was debt, venture Ilim. portion operating of $XXX were Ilim's planned Now, performance or which in million Paper's outages the $X.XX delivered $XX net were The Volume with IP's noncash solid million earnings with to by maintenance on I'll no a turn exchange foreign share $XX of dollar-denominated the quarter. EBITDA U.S. in equity was charge the per Ilim's and higher on

and For million to the margin. very was were which business $X.X IP the operating $XXX cash EBITDA Ilim Overall, XX% year, full in well dividends performed billion, IP's million. earnings represents XXXX. provided $XXX in equity a

puts takes first our the quarter Turning XX of business. slide by through and outlook. take and to all you I'll

starting Industrial with Packaging. So,

Volume to Staying lower and increase lower increase seasonally $X $XX is costs to destocking are by Global and to non-repeats the In $XX Fibers, to input costs and due $XXX into are higher be inflation well to consumption increase maintenance million mix expected the volume containerboard energy are costs volume, as Industrial million. quarter. as price $XX Operations down well be costs to expected million and with and by $XX to containerboard due expected higher Operations fourth on largely from expect to expected energy quarter. by and North be to expect maintenance million first to as quarter. volume, as We we lower to million, continues and be be related to unabsorbed down the Planned outages seasonal consumption from mix by down unabsorbed the million export positives expected America down and million. increase to seasonal are lower as are volume $XXX expected in non-repeat related flat. driven exports. customer fixed $XX price fourth fixed Packaging. by costs million Planned and Cellulose volume outages the inflation

a reduction the be significant the business for will this all-in in quarter. So

add decision is was color in a macro So, fluff for let the volume I in negatively me impact going the some us commercial that world. our on Fibers. that of quarter. shared Cellulose Earlier the poor made regions pulp certain to Complicating environment

third going While resolve. this the temporary to this between year is fully it until sometime a second setback, take I is to the only quarter of believe and us

belief ability fundamentals our create and change to in over not value it However, the business does time. of our the

mix of as million in Papers, costs expected our and increase down are Price energy in joint $XX driven you to and to by are and seasonal other expense $XX will equity of mix America. Packaging. our effective by outages million Printing Staying and North for is million are rate costs to be pressure Brazil. as and on million Papers. we corporate by Volume down In higher spending. expected see are by on and Ilim Printing estimated to Brazil. expected expected expected XX%. Under $X well XX% in due seasonality the from be lower increase $X interest Operations hardwood to venture outlook $XX to planned million input to Graphic Moving seasonal with increase earnings, inflation items, timing maintenance include tax to continued

year move XX. be $XX full our be full I'll $XXX expense and We expense outlook expect the slide year on million. interest corporate to to to million

of year between the billion are EBITDA $X.X for We full billion. company and projecting $X.X

will the business we is Volume our is that billion; flow in million free Industrial CapEx domestic of of the is and of among Papers Europe, performing backdrop in our the flow; through well. dividends $XXX against Our expect we receive in cash expect of to will our American factors impact business and box market other growth together, recovery at $X demand performing Packaging the billion Putting cash Madrid Ilim. is fluff is In pulp business strong accelerate strong. X% all and $X.X the mill planned very these well benefits North year. from positive

for flow did shareholders. cash we debt our we reduction XXXX, use will free to cash and As in

referenced to funded balance to cash this by better further derisk reduction repurchases. XXXX, we debt is took we it our In pension have sufficiently reduced we slide by reduced committed are sheet we $XXX our use and also as made Mark sustainable our and by dividend authorization. actions million, toward repurchase share $XXX put balance and plan. Effectively strengthening a the balance a plan definitive cash We to progress million. We debt share we $X.X and billion XXXX. On sheet in XX, strong applying

Going forward, remain our cash million range. $XXX we expect will balance in the

let that, turn to back Mark. with me it So, over

Mark Sutton

I opportunity solid performance XXXX. our the just XXXX. and want of we strong as Paper this businesses in views and we Thank with us importantly, my we of off International you, the company really share strengthened to on have take we into Tim. strengthened XXXX earnings in the more record ahead to year across portfolio, and Coming head

are well to may through stronger. Our we drive face. businesses We're any positioned challenge

to cash positioned overall our with value a returning projects And have drives improved to the a drives all businesses To cash in value that, meaningfully, your are cash XXXX chain solve our to high-return strong our the balance generation. well ready decisions. investing our strengthening take company. we're low-cost to free the succeed. we customer's it's We're which system and in That's me We're improve our high-quality XXXX. sheet International We manufacturing grow shareholders. best needs about we're creation. people, of stronger and forward what all and We're We've innovation, also Paper. questions. And to looking to to flow

Operator

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

Anthony Pettinari

shipments kind of that markets Packaging, Just possible of your terms seems seems stronger end consistent on weakness to are And looking some at or with what saying. competitors of categories Industrial what XQ in saw drove it are regions? than in the like XQ. it January Is your or you say what

Tim Nicholls

I Anthony, hi, Well, it's think – Tim. that

Anthony Pettinari

Hi.

Tim Nicholls

did January. We a I some and very see at that up the December as good strong. think was there we strong into for that year go we X.X% us continuing against. were comps we were very month finish

on balance, So part it lay the quarter of for pretty and strong part of is months way quarter. But fourth the was a timing out. its the us

Anthony Pettinari

run of but Okay. inventory of then maybe competitors how And Any referenced long feel of have could I outlook about That's helpful. that question, customer how its terms in just prepared or XQ to And are don't. to of opportunities and you have take some that down just talked internal to containerboard course some you do remarks think your export levels? in kind inventories visibility destocking. about relative history? where your situations own M&A and take they related then kind your inventories projects you

thoughts of inventory Just general any own you your have kind levels. on

Tim Nicholls

it'll through. region longer I always a make a think that is two in some that, last – don't see tightness existed we'll probably have stocks the Depending stops in those see safety Chinese to that world customers know everyone for Year flow it that some see ahead especially once to up, we to the New on plays every of I month Chinese how There's of and little pulp a it take Europe this buying year. have how but a to Yeah. things you the it there's picks long-term then destocking and is year We bit impact. Year. it given for We out. think than New have containerboard, the as of clearly are like don't through inventories, we lot or kind and back. of where extent place to being do see harder

we our adequately good. feel I far think flexibility. got As supplied. inventories, We've as tremendous We're

Anthony Pettinari

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

Operator

of from Markets. Your of next question comes Mark BMO Wilde the Capital line

Mark Wilde

Mark. morning, morning, Tim. Good Good

Mark Sutton

Good morning.

Tim Nicholls

Good morning.

Mark Wilde

off, see to Selma the impact bit a kind at I'm change in could announced of and of of business. if uncoated Port whether Hudson GP kind wonder the increase talk a little paper? that you I around well Mark particularly conversion how down start about your affecting – also price announcement interested just of you've in you the there's timing the

Mark Sutton

and to supply business conversion about growing That's reason that go The impact specifically And into sheet something the was to box the the linerboard. – uncoated our we the reason need and the changing in a its Selma the we great conversion, communicated on of question, impact free business. Mark. we're original bleached high-quality for making places that's

our great paper driver a wasn't need do So the it our wasn't what for packaging It we it. a really to and system. was – asset system white it's

need So box growth are change we that into we're for we sticking experiencing. pretty that right quickly as communicated going XXXX and product into with now get and we a targeting We're XXXX the plan. to that

continuing that So as through I base normal What plan. the supply in change don't see is terms in it does line any of it evolution. that obviously in change goes and market evolving just -- product market the a its

us full products, for We've great customers. an on that business and team. of is well important the got positioned. position business Papers our -- a still is we products Printing range great So playing And

Mark Wilde

your could if also went dramatically just sounds you is And I question And quarter. that on pretty guys around allocation. follow-on that just like curious, around capital My into little you color repurchase the And have was things decision. in in the Okay. it the we like share had just of first And weakness not the seemed equities fourth about year. quarters the cadencing the in seen given you pretty quarter? of fourth line much with quarter, I'm three on in kind that accelerated through curious wondered back fourth pulled it's in a the really capital it I'm projects you why put might what

Tim Nicholls

the... Yes the second I'll of take part

Mark Sutton

second. take I'll the You yes. first take the

Tim Nicholls

Yes.

minute. got we So mixed up signals for there hand our a

range of of a the cash take expect on slide, through saw opportunity we to shares, well. ago have as repurchases end making to the we're So what cash in we we buy share the sheet were balance or get applying sheet. did top I but lower, And the yes showed terms there's for well. balance as but the was also leverage our Mark, I year sure lot to apply go to to that of fourth we a quarter mentioned And on minute as this to think as you going to that continuing

was and bought the third. second We in it shares just the So a had choice. in

debt we in the down and time. buy continue fourth the We same paid to some at

Mark Sutton

in finishing you nothing Mark look we on not somewhat capital did was quarter fourth your at projects, the as the year. there that's that normal

Some committed just it slower managing some move faster had a projects matter more expected, from that to. bit little and This the to was move time of you than we a spending happens just It's time. activity.

for in So the zone total investors where we up ended right communicated we spending. up capital would to we thought end that we

And have so asset many of an year. the end when got just to sync you up you projects base, the stuff and as these toward large as

a just execution projects. it's of matter of some final of these cadence the So the of changing

Mark Wilde

Okay, 'XX. luck fair in thanks enough, and good

Mark Sutton

you. Thank

Operator

of Your Bank comes next question George of Staphos from America the Merrill of line Lynch.

George Staphos

one-off I hopefully implications thanks comment on of Fibers that? to year some And decision detail the to guys. bit to I guess you in you, Cellulose why first probing Hi, spend a a what XXXX. middle for one-off related you question in comment I for have was follow-on. Thank the the is guys issues take in good $XX for what all the And and it operator. in the will morning, commercial the good can that Can million quarter correct until XQ? wanted of of the have related the on

Tim Nicholls

number $XX The added Yes, that hey, of items in to corporate quarter. it's the and a honestly. things small of George, bigger-than-usual at It's a million it's Tim. up bunch lot all a

to I describe think best it. way the that's

Mark Sutton

mix, all improve actually for time to all margins, customer do we to improve made course our to make to replace our portfolio. and to particular is that. shifting out you the customer do We to us of shifting right second trying need shift this businesses. longer George and part some on these into. what service happening the you just when some decisions our And commercial decision what's you’re So customer our shift And with had it's decisions taking decision, of mix of running reasons, across of type of the the

it of It's something as but good as decisions, been on. isn't type it's So not do It we've products well on just kind our when our fine. that execution we've a normally is we that take The continue done is an will has as a decision. made these execution just will as we than not We're had abnormal growing. taking that's portfolio our It of little project the outperforming based We intended. market. to customers. market longer be just originally of We'll shift longer. do us and

George Staphos

Mark, fill shift? space in But volume that's to to just I there. my terms of you white correct was volume and replace the mean, some takeaway with fluff ultimately in customers lost fluff whatever expect

Mark Sutton

but fluff Yes, Yes. fully on well. footprint of And we customers also should capability, expect very the continue volume, than to market our to perform and product perform based we fluff better portfolio. our

it's regions absorbent different absolutely, So higher absorbent. economic different customers just in in for at It's value.

George Staphos

quarter. and that question cash second free in cash your think we excess not your number of you in the Thank more every want $X flow recognize terms billion? you XXXX cash you the flow? tensions think $X do an pressure My I'll Or do you the interesting supply and apt price there's but on free markets to in pulling I we the markets, But flow in some billion the are constant so that's for destocking can where at -- are do to If guidance that position Are some for holding figure? that's are you. to the guidance free stick you and and that demand you about be to you others it of luck here. to. good bigger Thank given see quickly in get of kind lever of for

Tim Nicholls

free we so out see $X go for point put Yes, to we pull try doesn't well I all what the through but we billion can think as always cash I do year. there, to upside the it George, that change. to the levers flow, is But your

George Staphos

Tim. you, Thank

Operator

Your the Mark of Stephens. comes from next question of Connelly line

Mark Connelly

happening white whether seeing curious markets out has you're in What paper is now you. mix? decline been happen I'm demand terms U.S. in to your difference your Two the things. how And after mix? in particular will and other terms of meaningful playing of any Thank versus GP in

Mark Sutton

cut is pretty Mark the some I specialties relative think our the industry we and business make. roll business mix size of constant to the staying printing the for

we it's little think to a early a Obviously, are tell. major I supplier.

But we're of X.X it's to So the customers margin have best decline supplier rate. pretty are to mix with mix to pretty what optimize we've interested same to our to four first quarter, we're able flexible, the of kind starts do profitability. post and because to now quickly mix. going in the what be ridden that. But actually we our continued the a facilities announcement. in our becoming parts little our early and system to not the But us at is all their -- with are how the seeing best take going the comes the mills see for it's with that way essentially so mix see shift mills here GP any declining incremental business down should We

Mark Connelly

Okay.

So, you question. the answered flexibility

your of didn't... Are I'm you would you're Can to sense in terms estimate? how a Just thinking X% I X% us drive give one GDP growth a still more. sorry And getting what you of to plus? plus?

Tim Nicholls

seeing may performing I X%. range. January. Mark with expect that it were be I the be is not way we see what Tim, responding fundamentally And to what I in you're in but That's asking to we X.X% this think exactly Yes. we economy the to the referenced

not only we're that's the January, how at for up but holds think year. So, that I looking probably

Mark Sutton

is where were with acknowledged data about We we've think that decoupled with outside a that track. and developed We have a that doesn't internal some kind how some outperformed actually in conclude box demand that that of bit. but and Mark back on major GDP GDP, function, about didn't the now but past, and about a talked demand GDP sometime box resources So, There it there directly before. analytics we've periods box this obviously was it indicators we we GDP. always slightly demand track are other model

of use. it's GDP it's analytics obviously measure input GDP, to just GDP function we and not a set is for a the us. So, but a

Mark Connelly

you. Thank helpful. That's

Operator

line Your of next question of comes from Steve the Davidson. Chercover

Steven Chercover

Two Thanks. quick questions.

about and North if First it's in I how more the three still player. America one appropriate for in so? size-wise alleged think I'm boxes like in the you makes making this of for boxes And that's the can doing all one e-commerce two more IP wondering case. big actually get paid

Tim Nicholls

we We your are think can. And I'd figures correct. directionally say yes

not lot size, the it's think news e-commerce our design all I the getting a customers in and commercial is very teams good their well the And as service flow getting closely, work fulfillment are space just make our we customers. of optimizing we most them optimizing sure centers fulfillment in of it teams. through efficiency that box to the centers to its they as with

box the the It's precisely the just works in broader is box? optimum system. what not -- absolute the it's So,

Mark Sutton

every major that is a has is value some this and supply to through Steve others. than thing interesting more important to e-commerce player customers proposition chain The velocity their slightly different

the ones the physics to others, But able it's you to able slows it value perfect because product as if for that for be that's to a even the there's actually box important get be proposition. as chain. value got down their through issue you've you here so And load that the to might not

not with to to out work and we're smaller direct figure make table how to business better. model sell so the helping people them who all how major at a their the make And box

needed. And sometimes amount that changes of packaging the

help Sometimes economics it improves their way meet able goals. the actually of our because them to we're

Steven Chercover

the not Terrific. a reporting that lower. it skin my Packaging. Yes, game. have clarify you to respect but you're directly question still necessarily mean quick lot is wanted that's the Consumer just other because to in I with And of a it's what negative not was I volume

the prognosis how for the optimistic So, happy partner industry are is and behaving? you your with you are about

Mark Sutton

into working what They're that the you expected the intended. out with Graphic every we potential business is good out packaging, would that investment I think doing got interesting it preferences. be market of I going think made I we buyer do. pretty the as lot day our pretty SPS. about because as the types -- to is we going. We is business, well-positioned question a the And say see is those building the for and look ride packaging, marks single-use versus and products consumer policy an where and non-sustainable, it's public at sustainable think of But look sentiment to we are at integrating

Steven Chercover

Great. you very Thank much.

Operator

question comes the Markets. Josephson of KeyBanc Your next of Capital line Adam from

Adam Josephson

for Tim, good and morning. taking so much my Thanks Mark question.

Tim Nicholls

Good morning.

Adam Josephson

the The a year. imply year on for million, earlier. they one back-half somewhat $XXX one Tim, weighted. to on guidance a what seasonality I we in year about based that fair XQ second impact quarters? to seasonality around are just guidance just the know thanks talked perhaps you're XQ? so guidance. three figure out bit. every in be the for a costs Just relative as seems with to -- is know help which the And to getting there called lower bridge to full it's half the like you what other how Is get EBITDA The I out way seems going you us the maintenance are appreciably is can

Tim Nicholls

Yes, sure. a directionally seasonally. our probably demand lowest quarter from it's standpoint I mean,

be used quarter. quarter the three to So well, years. four the weaker fourth it that past up it second that quarter the over And or change we've seen as a but picks in was

the significantly of and and in have year XX% again, outages maintenance we'll is maintenance first the fourth on quarter comment half well. in third, as correct. our completed, the then In of roughly the off Your outages it significantly drops

Adam Josephson

with of happen the U.S. down implications happening what's the European demand? situation Europe, And your in for this what in there bit. fair you're interested point on there at Thank market any last containerboard earlier about Mark what overcapacity may are year. And And that. a for you. are point into obviously that Thanks I road? market the mean, the Okay. prices at that getting some thoughts falling

Mark Sutton

It's a good question, Adam.

than the bit different U.S. and differently. I price containerboard price the little of European and market behave of is think the a boxes the

comment made think before. I I've this

part of that XX%, industry, of which XX% With a of really the recycled series regional is markets. it's it,

a So, average in on spec. and because across needed then it's recycled Europe spread paper lower means Europe. performance linerboard for not some between containerboard the virgin It whole And mean the in always lot. a that's typically there's don't used prices region, something but

We you XX% overcapacity. if a And containerboard southern on an so nature U.S. market grades in targeted to box I the Kraftliner that demand. going to the always personally of very back far you right regional and parts versus somewhere end-use of overcapacity, mostly there's that's be Madrid. even our in And frames integrated the Europe of on of part as with kind neighborhood because remember of capacity But our we're that with market can up. of had how been nameplate And be good as tend largely now integrated to from mix recycled got are average certain the XX%

have So we position our right now. like we

have got industry But you've on time over regional about think think really how it European multiple about, my think premise it'll to to you evolves. markets. I the depend is as

Adam Josephson

Mark. lot, a Thanks

Operator

Gaffner Scott Barclays. next from line of of question Your comes the

Scott Gaffner

Thanks. Good morning.

Tim Nicholls

Good morning.

Scott Gaffner

morning, Good Mark. morning, Tim. Good

return shareholders. the Just of cash on and focusing cash to

XXXX just we so I far net the the mean, I that if dividend, caution point you're on XX% would in then you sort payout I minute, get repurchase doing we then dividend one flow debt. further the on that just close sheet pretty of increase and balance reduction $X.XX at the questioning on as later at of the but free just versus billion maybe some the on debt target guess should into look on cash the you're cycle. right the about a or whether as I repurchase For ratio part -- debt mean current how the think reduction. share I share is versus mean as at long-term cycle? in second And really to this

Tim Nicholls

good questions. Yes so, two

we that, do year The The we to key seven look past in been eight on we the it dividend, and once it fourth that. the or want our and at years the first tend sustainable. over that practice be typically we'll continue do is That's a quarter. to to

about And it so we to we'll come evaluate how later year. this things we're when thinking

you debt what repurchases of we outlook reduction the think situational as can In of and and would that imagine, heading on somewhat be we're it based share terms as into.

the to our the the believe look active below are at we're that we'll we what as very sheet. that is balance strength range but well. to balance end range, value be be, there sheet top on is on seriously. We we're so foundational shares the of buy very And to believe going if to we So the intrinsic at company, opportunities in the

trying we to be is as we're to thoughtful we and what two. it's the as cash as we applied going will can and and do a to saying, share be of to there's lot So divide be reduction debt repurchase how

Scott Gaffner

sort should the think how forward? as of And creep about we annual Okay. share we go

Tim Nicholls

The annual talking about incentive share are creep, you from compensations?

Scott Gaffner

From compensation correct.

Tim Nicholls

how repurchases XXX saw we But said year of to we've we mean, approved shares guidance I'm we repurchase. the last forecast minimum you fully We around that later dilution. cash debt first share what have going at share quarter. million that you And much year. did the this what for year given reduction the not hasn't been and see I Yes. in and ended comes because yet

will dilution So we I in comp. would incentive it -- excess of be will be well imagine well from that it any see

Mark Sutton

Scott. Yes,

think that capital last share understandable for it's the our we do to we kinds We way think and to in as in Paper optimize think to but made But what figure year, really little that long-term of XXXX trying we the basic it's to as today. cash longer-term way are source many a to short-term over have prior we cycles and trying being a cases are. we flow as we're job committed the in is we the that to International And a and this investments to have one we're run progress of that zone that right actually about and We a of that through that returns good returns The the returns that said producing made to plan exposed think we and yesterday different is period, shareholder Tim short-term X.X us. investments that to do out for the a the flow the are base, we're capital systematic XXXX. better economic important sheet shareholders lot and on cash do bit to repurchases. company returns materials But continuing been in of I and area. company doing not allocate. and a happen described dividend X.X through want the to some balance in on we how understand

Scott Gaffner

Okay.

it. the quick talk how one the Appreciate throughout shipments, Just that cadence saw one about quarter you on progressed? you fourth can last box just

Tim Nicholls

Yes. It and in December. was we then fairly and finished even October November strong

had strong we -- So of fourth on balance quarter quarter XXXX. a

Scott Gaffner

guys. Thanks right. All

Operator

the line Global. Mark Your Weintraub Seaport of from of next question comes

Mark Weintraub

One you've been pulp and point grade what so made tends more that's have paper seeing than certainly stable the much is far. that fluff we've commodity past to pricing pulp in

reference Now you place for et of have majority with that this that, year, actually in now lot recognizing what about be the contracts does got will contracts are pulp place or the of before, to some move talked of other you that your visibility great indexes the cetera? good most a activity we've pricing the but a in fluff now commercial

Mark Sutton

pressure. our we And mix There's got can to under what's a other more visibility. is. make A portion it's contracted the and the price good we've fluff from visibility resilient true price is much mark pretty Mark absorbent a is pulp how for of Again, on on perspective. people so what there's of market a who and not contracts it happening always that pulp and portion know long-term both market softwood is year the well that's a mix statement the – in of that the been that compares question

So on the you typically fluff softwood that time-to-time into product from qualified fluff. of health move available that happens could that has slowing And a would the to market. based quality see capacity any make

real our typical position the will into that the good bit this seen with be second of went and more to But market continue we out that resilient the itself and market. we pulp half much And ultimately a the little play growth we've pulp of goes as in think the I softwood rate through we pricing than feel products think the fourth grade the be. a type quarter. would of especially about –

Mark Weintraub

Sure. of global of on you're That provide makes there was a where lot America of seeing what hoping got sense. a many in industry. And that the a of of view might just relative than or you've and folks footprint other North are places – outside given weakness I you the more that maybe strength?

Mark Sutton

lower Europe. country-by-country that of we the see what you about on think mean, see going France, all it's growth that of Tim I that's slightly you are containerboard and the I economic Europe or Brexit some price. talking whether export see. in hear distractions Germany about a results on what was we that, volume in rate comments and both And of on some

see there, out again, of we also now no economy we sell cases there it's products in is a some impact right the direct don't see Chinese types to a change. is We figure but because secret We that slowing. And have hard demand of being think, then the America right of a some improving. with actually of a overlay great turmoil Year. on times little Turkey's Latin that temporary, lot that bit I Chinese disturbances because is now. but up of A example. And currency. there's ends New is

That's what new Brazil everywhere what's kind America, is hopeful figure on ends happening. good through the Brazil be weighing pretty commerce course and Venezuela that's else feel the between mostly the happening Latin of the how U.S. will exposure benefit. government of trade our solution and up, which I Europe on in the customers to. we exposure exchange biggest I'm benefit our in we how we manage than But think make no their that, stability of have whole that stabilization that things looking Latin other they've a and that We and we up in out benefit, and sell about really think what China I America. because might white and and it's political of issues actually in paper. of and we'll

voices. as our doing to we're policy many to on one of part that influence So and try work

Mark Weintraub

the Thanks. for helpful. Thanks Very quick Okay. tour.

Operator

next Your the of Chip from question of Vertical comes line Dillon Research.

Chip Dillon

all could had for It more. on I to and an or a on XXXX far question maintenance a down it $XXX higher from thought as thanks and maybe And XXXX right going I with $XX would? like would a it -- you million. even morning the shifting rotation as But change to that it about or that going details. $XX fall maintenance was good I heard and maybe million so a be XX-month I that if ago ago looks didn't us million, year it's talk down to maybe much I $XX recall closer year from you or why Yes, talked as XX-month would be million. year-to-year. just right had Maybe you if to the what's you thought cause

Tim Nicholls

it's Tim. Chip, hey Yes,

a on some an we year go. million in So and terms do was degrees in in think normalized this said was ago $XXX we outage that range $XXX million far expected out last this you the elevated at a XXXX. time year you decrease I to how to time year spending of varying and planning we what level, maintenance saw in But

But constantly possible. simplest mean, the some we're as too, been really that's for I as year. this we bring But the how And a that, so to rolls of second a could so that in planning as later last to we it that's number explanation into year work than is half the try there bit And it XXXX the have our target. up. more goal low there's that of thought finalizing and time little year in for

Chip Dillon

Okay.

So room down could in other words there the future? more in be

Tim Nicholls

Yes.

Chip Dillon

Okay, okay. And then dividend. just to back the

years. are of and holding making thought back what that generally that every year raising to year? least There a year you that? different very versus that it once, of terms into increase thought it fall it every so have your a I to ahead on the tend companies of get remains having You about screens kind And actually meaningful skis more start want Have your once of and get lot double they at is but important know ever some that, you raised nine when don't not sustainable in but digits. it's into it guys last for to

Tim Nicholls

think to we XX% go we what said free I of about back XX% cash And flow. Yes. to

sustainable. want be we it to So

cash but cash. range we're We in, longer a more stream. option of And target about we that not free of today, -- good just have have we mentioned at share the the how a flow dividend well. I very as feel returning cash earlier year And longer-term that planning through also term about repurchases we we flow cash have look as but

making not framework through I'm that's evaluate the a the the that's saying at go we same other. it. just that call we look or and this we'll I'm way one So year when later framework

Chip Dillon

XXXX? us. any if EBITDA much quickly you Okay. they last away that you replacement prices the where quarter customer And would the -- the you How I as this the number there -- make the the in all with let's an business. quarter whether you what see saw EBITDA or likely results reason of half. expect assume be year? Pulp one take can EBIT comparable wouldn't the the better And are, whole Maybe issue say or fourth shift and be give than stay it's it's would in could Fluff the then we say in you fourth to it's on first on is And

Tim Nicholls

impact referenced a you lot be into across for company, fully second think, to quarters related quarter a is we going the see costs fixed. year. then to get in moving unabsorbed hesitate as extra third the think you we quarter some couple the first for us we volume it but resolved. And yes how we the parts the itself to also specific of of of and the referenced, shaking to from out, as provided to we there's take Well, and items this forecasting correcting them. would I EBITDA see But it's in

I... So

Mark Sutton

Yes.

except trend. on in the recover along We're on good think the specific to company guidance the issue way we full specific it, about in Cellulose I we EBITDA the from. we full it. issue very on mean factors think I about still -- a would for others, we'll year were but this issue a way I Fibers. gave And with that's that I some think the trend, one mentioned good

the sort of about business, I quarter-and-a-half, the And of year that really investment as outlook. be of we plan. in So pause in Had we market, our it outperforming incremental we'll that of would think see heading factored being on the toward ahead two-quarter a with integration a the half the into year And full second almost the hindsight, perfect fully happened, year that track. improvement. of back none this world in

full It's best the gap. So we now We're into of going flows But in that the close incremental that our year left only outlook. thinking that to that's best company to how terms improvement on table. right January so our best. do going do XX, our we're to

Chip Dillon

for Thanks Great. details. the

Operator

Maguire Your of next of Goldman Sachs. the Brian comes question from line

Brian Maguire

guys. morning, Good Hi.

Mark Sutton

Brian. Hi,

Brian Maguire

just globally, you're here, Mark, of public the assets just gave converting impact some thinking you meaningfully have your cash of One in uses little Has didn't months? whether this equity on how of on regions. changed slide thoughts value these perspective a at creation. down appreciate days, you that or that mention mill the come the multiples acquisitions. point? in really multiples on M&A thing that be there and bit, about so wondering, have last couple or around assets And general presumably, on changed. from Would color I'm the it really thinking was different the

Mark Sutton

the On small that, that a with plant the opportunity or economics region, be about talking you're compare U.S. you could box of plant in a a book acquisitions, versus a always types already there's like to where an location in something of business, certain of if like acquiring the

for been total and ends in it. on right the the but buy where smell they're for For strategic like you are may of us, we typically organic out a amount not the the exactly sale? companies, have. Is the us, what Do of not economic just plants investments. it invest International may other organically small a they lack need, part We strategy an like for when we end looking the Do of of But up is look best things not money we'll sale, of it's to need we part most for have do that could or acquisitions less our the what's financials. It to improve are everywhere, intent the just the get we original exactly way because like That just the And be that investments decision Paper. of to had we're if for customers? or we winning area, always part simply compare business, location? like it. options your and capacity so you four in it don't same actually

could But organically organic seen wouldn't be good so it we'd it, The you probably that's much do better it, foolish it. to us look is with opportunity would reason I you And options say because how say internal of because base. than asset miss had never at a we think about haven't that, our better that's an investment. we've

Brian Maguire

then, last just the the And issue. -- to Fibers color. one one back the Appreciate on Cellulose Okay.

there'll we Or keep the assets you lower those find assuming time think some going needed being? just you there? think will sold, lower a just going operationally do new a it for then at be run being? do until such qualification operationally Just rate some you do for be when continuing to this run do for time you you're period would you it the operationally work, volume you're do think you assets And And you find period customers ubiquitous run it, deal customers in are think it, for about that to then, how be those think you with? qualified with you usually thinking Or you new there'll and a of needed assuming and kind the would time that's in find talking there? pretty do you otherwise stuff easily that qualification for home Or pretty inventory about customers it? at can have to rate

Tim Nicholls

fixed customer been probably think supply are be that question be about that running, fixed quarter chain. on that of we'll charge there'll some sure to the I because optimizing and running so our from vary does unabsorbed saw have hence It right. we we've you the making of commentary demand that. To in you're customer running the very your the in And all and won't we businesses our reference straightforward Yes, covering to of our customers' cost.

Mark Sutton

I think with is just that in is replacement cases a it the of most reality the other existing on customers. growth. It's capturing matter

of of Some the in Year; described very patterns macro Chinese buying it; those pulp you fourth some are New like that heading last part the Tim destocking. some when could tight that slowing and with customers some fluff with then in demand into some get market; the around containerboard a quarter backdrop occurred

hurricane a things interruptions had just other I player, say, about with large if you think and qualified. our they If think can we what earlier the get and we we then get in issues shared and now year we we're I some had, a -- that company for it's had operating man better you I customers

cases news many part the for is that's at of that that good So, rates higher are product of regain we're growing most It's on average. the happening. in already traction. it's the ability kind just The with what's accounts to existing qualified than that

it's -- why properly be just a just we original So, We of didn't little termed longer taking the decision -- take to poor we'll the we that's than didn't a decision. our able why have going I'm recovery plan really hence confident the execution done.

Brian Maguire

Okay, appreciate the color guys.

Operator

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

Gabe Hajde

Good question. for taking gentlemen. the Thanks morning

I me first The of outage around, production. centers pretty a kind heavy one XXXX struck as mill guess, year. or

way in way due to to incremental production I the another you had like didn't do XXX,XXX from to what production maintenance. lost what XXXX guys us access would help Is you mills? tons that is what Or you that look there in maintenance? now could otherwise in understand maybe and roughly the have given to You guess plan of any know XXXX you there

Tim Nicholls

and are and Well, about just year of more this is there's things during $XXX and always I million done evaluate guiding benefit get you and around standpoint. Maybe But certain in it year. the be earlier comment of completed to from lot whether have capital dollar we're on year. the we puts current next looking to an spent absolutely we're million efficiently projects it way think to to that not. XXXX, a or $XXX as In referenced outages takes do that a the always

but we're than to that So, have of obviously try target terms lower our be million, -- we're in the going to we $XXX to spending. of going

Gabe Hajde

can remind completed flow or debottlenecking efforts white you out go you price XXXX any you terms XXXX I increase then said the did And Mark, I incremental with or you Okay. capacity? paper? And if that in apologize of if you through did that us XXXX -- again confirmed that a not would in don't into in

Mark Sutton

question. Gabe, answer I didn't that

and always as our pricing, is International Paper forward-looking customers. pricing between we So especially say really

you didn't miss So anything.

Tim Nicholls

recycled only lost --sorry, a was produces our a recycled non-integrated of train mill, which containerboard. It my thought Maysville The is big for material containerboard minute, debottlenecking our mill.

days we project took a it's and back stuff, late July it's and that So that, you well. it the benefits from like had other But complete just outages things the and in small about itself normal get think running it maintenance us major I project that. to the XX-plus that than started

Gabe Hajde

and you, good gentlemen, the year. luck Thank in

Tim Nicholls

you. Thank

Operator

Paul the Capital. come of from of line question final RBC will Our Quinn

Paul Quinn

taking for question. thanks Yeah, my

up on Just question this pulp. following cellulose of line around

right percentage strokes U.S. could for And on trade market what to trying Ilim? your NBSK the broad outline I and is - I'm of then slowdown to guess if How is -- of Chinese you now. the pulp what at a you get to Just think much that factor China issue? exposure in idea sort China SBSK the

Mark Sutton

-- how I slowdown, clearly if all that the I assessments to hard you to - trade they're in good put trade growth terms the China are I think negotiations. discussion is inventory mid demand low of of about much. not -- to underlying I much That's is is changing that a of digits the that think the kind a really in in kinds at very catalyst place inventory now related environment predict. been is these Chinese not when for is expectation why sure it and all a it. the high-single use just But you trade your with of the for uncertainty management, of that's you're think cost But of was hear China the while. the in and U.S. reasonable

enough which it? all speaking to of the can't are is So, and its is Or trying question. greater inventory for need the we quantities? have happen afford the don't doesn't it customers, in it's unless the product with part input consumers fluff you understand So of typically material, our type just we of that product, the you your are that less second buying of pulp

product our our fluff absorbent the product pulp, category so For China. goes about pulp XX% into of

Operator

or remarks. return Thank closing additional you. I'll now the call Gutierrez to Guillermo any for

Guillermo Gutierrez

again, fourth call. quarter International earnings you, Thank joining for Paper's

available questions. day. Have follow-up be and Michele I for great a As always will

Operator

Paper and full XXXX in International the participating earnings for you fourth quarter year call. Thank conference

and may lines now have disconnect day. your You wonderful a

International Paper (IP) 31 Jan 192018 Q4 Earnings call transcript