IP - Earnings call transcript Q1 2021 | International Paper Company

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Operator

Good morning, and thank you for standing by. Welcome to today's International Paper's First Quarter 2021 Investor Earnings Day Conference Call. [Operator Instructions]. I'd now like to turn today's conference call over to Guillermo Gutierrez, Vice President, Investor Relations.

Guillermo Gutierrez

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

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

impact that risks and to For this we call, subject example, will including are of the during make forward-looking statements COVID-XX. uncertainties,

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

contains measures XXXX X venture Slide also slides. on will I presented Sutton. and and the website Relative copies press presentation and investment, Packaging provides Our those over of entities. context our quarter today's to turn joint Mark Graphic now earnings around first to the call Ilim the information release financial

Mark Sutton

morning, good and Guillermo, you, everyone. Thank

cash and our the first We solid delivered will Slide earnings Paper begin X. generation in International discussion strong on quarter.

in and system in mitigate packaging We we're channels. the Input strong containerboard our especially continuing seeing to and key transportation X mill all all geographies. the demand which quarter, packaging customer the our build papers, Southern performed a of severe corrugated backdrop see in solid cold absorbent by energy, Our a across duration demand impacted an strong businesses temperatures headwind of U.S. momentum And pulp. for our building, the improved were well with was demand support supply-demand for impact converting for the very of costs winter and to first and across storm the of in significant and

million $XXX including first debt the of $XXX we share in allocation $XXX repurchases. million and million to capital we returned quarter, repaid shareholders, of Our

of vast our care pandemic, and our our to well XX,XXX performance many most each customers. global The circumstances. again commitment each mark of work take be of care and different safety health passing across perform International their and in to employees and our of day, demonstrates the the I take any remains of prouder mills and plants could our of the of members X-year Our majority We're responsibility. resilience important conversion other and Paper and team not agility every the

We the also made solid expect of progress quarter we year. in Printing business, complete which the spin-off our late on this Papers to third

million and XXXX. incremental is making in also Our progress initiatives deliver develop earnings and of by team $XXX multiple to accelerated to of end million earnings strong to achieve the streams growth $XXX the

IP, other delivering commitments work build shareowners our we better on our and As and to remain stakeholders. superior well we laser-focused a our to solutions executing our customers, to meeting

and $XX actively EBITDA to now cash than our Turning focus And sequentially, by winter pretax with from the $XXX working X, million the Packaging controlling our We $XXX our price free million $XXX managing on results. million realization of free businesses. strong of our Cellulose despite running businesses again, more shows cost first Southern Global in cash a is million impact primarily quarter earnings in storm Slide and increased by flow continued the which Revenue delivered Fibers flow well, and U.S. driven capital. our

second over cover business who to it our performance Tim? our turn I'll Tim, Now will and outlook. quarter

Timothy Nicholls

earnings Thank on bridge X. morning. start the you, and good quarter-over-quarter Mark, with I'll Slide

a not a very storm process impacted the in this to pretax First EPS. and million We're quarter by impact at operating stages of estimate earnings were have $X.XX or earnings time. operating $X.XX. do $XX the The recovery winter early insurance still

in truck we're maintenance materials the in decline storm, and sequentially, performance million strong distribution, and we essentially and cellulose which which in recovered were the demand which pulp. volume recover for a are noncash impact challenging, were to to with partly foreign rail, quarter. Looking costs though at starch and increased fiber, the such driven expected to the complete outages from a and energy, and Overall continued seeing price/mix expect strong continue energy as fibers. half about packaging of reduced on and and the we exchange flow-through attributed ocean are flat costs the corrugated solid first mitigate position in conditions and expect Higher papers year. for adhesives. Transportation Volume Operations experiencing prior congestion. raw seasonal and cost operations. bridge, lower the even was was expenses Maintenance and for for we're intercompany by our absorbent earnings continues the price papers GPK. was XX% $XX winter impact loss system Brazil period to driven saw packaging of costs favorable. Mill of and million equity in was included mostly unfavorable, first helped second storm, headwind transportation ownership box significant Input were and Overall, we corporate costs $XX a the chemicals to of quarter. by higher loans, the cost

Turning Packaging segments, on to the and Slide starting X. Industrial with

to across all of We demand our containerboard. strong channels, sheets and see including continue box,

due volume flat. tons the was to We For the quarter, lost of essentially winter production XXX,XXX containerboard storm.

impact in recovered storm, XX and sales Mississippi shipments Louisiana had plants the Price and mix box the box by region was impacted the box storm the nearly which plants in quarter. Texas, in quarter. and our We Although mills strong. did affected our quickly, in the

seen. which implementations about repairs from to related includes is to plant about essentially about to due strong second million production winter the channels. is the first of storm. our higher defer leveraged first all half support demand $XX did quarter increased distribution from costs quarter and maintenance that to the impact mill one the costs due loss sequentially. We storm, winter Our increase and million the fixed performance we've and outages November realization. unabsorbed was Maintenance significant $XXX across resulting add, and million from of would the is box cost the $XX solid, fully with costs. and system Overall, customer I of of And is we Operations our balance implemented fastest this to outage the

the expect significant of were in outages costs fiber We million storm related planned higher headwind to distribution winter in energy, complete about mill the of headwind our a packaging raw were significant due our year. in for to plants. first Input maintenance the system another the Higher the costs box to about XX% in materials and half quarter. and quarter, $XX including recovered

certain Texas suppliers and lingering recovered the recover the in fiber, winter We Louisiana produced distribution expect storm. quarter, still effects and chemicals from for in as in cost second we're energy continued seeing pressure the

Turning to Slide X.

and enter strong seeing with export in As quarter, the our second all containerboard regions. continued of demand low across all strong is we inventories channels. we're U.S. demand

demand and restaurant healthy not the about segment in and With beverage, is lastly, produce the as and we first market. the storm. packaging continues Our permanent. the excluding U.S. channel and a segments also the pullback box to benefiting still range sector focus We're We're footprint consumer In U.S. serve to from to packaging shipments And and more and recover housing wide team This double-digit resulting manufacturing recovery. every to consumer system the again improved in to quarter due industrial goods, we're E-commerce, start although had food immediate segment were strong at starting to pre-COVID lifting box way, protein, across adoption exposure meaningful on and and as with corrugated our this of with from is in a a demand pace have levels. accelerated grew by delivering of benefiting from a Nondurables, which restrictions. represents well quarter, in our superior states our just broad for the customers extensive robust customers help strong succeed. demand XX% first positioned impacted to from consumer significant demand production working the states greater products. is we're our majority channels, COVID back demand solutions seeing loss reopen, durable foodservice about of to scale backlogs. remains such in believe

Turning EMEA business. to progress update Slide we're packaging X. making the provide an on I'll in our

last opportunities we plants back with our improved EBITDA compared and generate year. mill customers above containerboard the adjusted our Southern well cost to world-class solutions. sustainable Madrid returns is opportunities to Iberian We're integration our recycled in available. of footprint acquisitions, of we We're bring in the with Our the including Europe $XX business box goal. with improved Spain Peninsula on X selective In through commercial and a array to achieving first These cost fully mill. region. the enhance is ramped, The they box our objective quarter. with our mid-teen more way Madrid margins to in and lightweight acquisitions additional in million acquired capital. our nearly packaging network of this quarter, importantly, We've And by the our more provide first integration integrating the have end capabilities provide at broader

skills will quarter. commitment of After the have make we The which leveraging our recycled X our plans, and to across cost box slide the opportunity footprint bring from the Turkey map sheet progress containerboard company continue operational have system XX plants the We our business returns the to commercial commitments. the sale packaging expect of to have our the sustainable shows Europe sale, box in packaging and resources is EMEA ahead. plants in again, we're with packaging deliver business, our our And business plants. and our more after on to and X performance All capital. clear this close above on and second mills, to

the is healthy solid absorbent accelerating million Slide by were and Volume $XX cost port management. segments with as year have energy FX sequentially, we Maintenance in costs $XX higher improved to million end-use an pulp related and products across partially as the good demand costs about signals Operations fourth nonrepeat outage moderately the first wood Global quarter. Demand costs. as the of region as fluff Canada. at Mid-Atlantic Cellulose improved driven lower and to in in and for costs was improvements due for well as Fibers as seasonal congestion. costs price loss These realization Moving the consumption solid well input write-off by higher to hygiene healthy. mill mix the was the and higher energy to due increased Price we and is favorable all X. operations expected, quarter backlogs. shipping in entered and of the our decreased delays offset Demand on

Turning to Slide Papers XX. on Printing

the demonstrated our outstanding business Our business past -- resilience papers year. throughout has

our footprint our of capabilities highly strength Our and performance scale brands. the global reflects the of our talent the and team, valued commitment of and

all across and return-to-school that regions, we demand the We both expect within activity. in also supply-demand accelerate see I'd which continue improvement to to in outside return broader significant U.S. U.S. seen the and will office steady recovery with dynamics add we've

quarter well outages input wood Brazil favorable system. expected, energy performance, good increased due Looking as in It expected. at across America. Brazil as segment. about price supply by to and and due most also XX,XXX and our Maintenance economic to of downtime with costs and demand management, stretched costs that improved and million. export stable in cost cost increased mix $XX sequentially as as tons North in first improved seasonal the chains lower higher meant Operations Fixed FX decreased sequentially primarily decreasing the modestly, absorption on costs are solid across was and Russia in Volume a regions. the operations the

the which higher as as Slide margin Looking of as Volume quarter. a EBITDA April, an demand at pricing. capacity days last impact in decreased $XX venture joint higher lastly, fewer than of dividend Chinese provided from payment sequentially, the the average Underlying of Ilim, due the nearly earnings estimate in shipping $XXX strong enter in second we is quarter. remained XX. $XX well million million quarter China. first we Ilim to XX%, And saved the tight we on million in New by Year, delivered driven with shipping because The primarily equity

we Packaging. Industrial with turn Now XX, starting the on and can to Slide outlook

by by We of improve the related March our season Spain full costs XXXX decrease expect lower and the winter to as Cellulose increase million of expected and price to materials to $XXX down. million we and expected higher and expect are costs with by is Global stronger mix prior to OCC, on on energy, million input winds and $XX impact Operations by Fibers, And $XX due million. $XX are recovery Packaging, by price million. earnings outlook. million, on increase expected maintenance by be price $XX accruals movements. price to expense storm offset outage costs. expected higher compensation citrus raw seasonal to distribution to the In decrease Volume million, $X of mix expected increase. demand are expense Operations million Maintenance Morocco to Volume with input by to Industrial decrease increase million. partially expected is outage realization by increase to expected by costs stable. are is $XX and is and a expected improve to $XX $XX incentive to by costs Staying realization in

Turning to Printing Papers.

increase and input million. are to see and expect Maintenance by costs first by the in $X the the outlook is million. expense to And our We Volume to quarter. $XX you'll are foreign Ilim price earnings, $X increase million, joint million during gain $XX to due currency under venture. for and expected expected Brazil million. increase decrease nonrepeat mix $XX to expected by Operations is increase by to equity expected earnings outage costs of by

balance XX. to moment a We're a Slide to want capital our in to strong maintaining sheet. committed Turning to I first you quarter. take the allocation actions update on

reduced maturities. significant And quarter, first $XXX no near-term million. have by the debt We in we

returned represented plants $XX.XX. of an Spain $XXX shareholders, quarter. at to million price acquired box including in million X.X the first X shares which of million repurchases, $XXX also end We share at the of average We about

of the And stake expect in M&A about in I'll we X.X% quarter, about and North monetized Packaging. on our it to hold You Europe. lastly, And bolt-on Mark. $XXX we partnership. million that, continue transaction, ownership After in can Graphic over that opportunities America primarily focus to the in now to turn first with back

Mark Sutton

you, Thank Tim.

XX. Slide to Turning

said the quarter, we there As we mindful and the still in we is that that markets operate. we're geographies businesses. significant the uncertainty see still I'm and global in second momentum that, Having in a our pandemic, midst enter building of X

Printing strong and demand containerboard much America solid offices demand as where very seeing improvement. see with to seeing seeing for We're demand a and change pulp in supply/demand Papers, and corrugated packaging we're pulp a supply continue absorbent also for We Europe. favorable reopened, in areas backdrop. in North demand dynamics more demand. recovers. we're have a steady In schools And we're step better recovery and Overall, seeing paper-grade

increases price prior our across businesses. from flow-through price X expect We

costs improve, input impact energy to even manage We we through fiber, transportation. expect margins the higher as and of for recovered

cost addition, to initiatives general expect offset we In and other inflation. productivity

to will All remarks to our And that we those this steadfast of pandemic. long remain for as pandemic living When in past first year we takes to a protocols and has year, and a more and we place contributes care talked of been XX. it we full performance taking last to outlook what favorable put just stayed the in continue reflect Slide employees quarter fully get about environment. on XXXX. I'll as and all adhering a safely moment end of a want working safe our keep global prepared on I contractors so shared take quickly now our the to about to protocols, customers. could we diligent We for our

Since adapt our and a to customers' in IP our I to of commitment well a the day We this to safety for employees once to the of and not the for level thank employees to employees, of And contractors, environment time of in role pandemic Tim a teams sustainability our for and to our circumstances short-term of they making especially And again, our to and rapid company ability towards needs at health stakeholders. and building that, Paper a unwavering think continue I an to understanding the their view supporting frontline are questions. to our and perform about for our with long-term geographies. adapt resilient. the better strong of critical I and with needs that and don't commitment taking stakeholders, by goes International our began, in and across success as all operate care to want all of happy high take this and your our communities with also each take their and change,

Operator

[Operator Instructions].

comes from Montreal. Wilde question Bank the of first of Our line Mark of

Mark Wilde

line does a just of the second has at potential just that that And but like containerboard, just curious corrugated. market I'm it down thinking I'm business accelerated curious, be quite Mark, is really not that about Selma? your seem containerboard how about globally, the tight. impacting conversion might And

Mark Sutton

product good a Mark. the that in That's future. might what question, need have at obviously We looked and we

some our that capacity. immediately and probably with And it that If the containerboard have of we our containerboard screen. on own and feel of whether foreseeable grades, you or like we don't out good future. export One all type a operate that's quicker that you'd we is interruptions But look now. at in have When like box, domestic grade the type option we we sooner. in we channels, other. using packaging quality, future. current expensive But need first domestic open the storm and the us interruptions what outside to need the you and the conditions, need. look the about had linerboard it's We of we of of depends our at just play largely quite well the quarter, when it's medium for than talked one-offs, from radar market and our a standpoint is for winter and the believe don't do we we confident right But in feel overall less on

Mark Wilde

producers -- could, and businesses volume of long-term you I by pulling both in to about have just in out this export think converters places of context curious producers always I imported I North if follow-on, there's the American think European have and domestic real some their board. know taking export care of America customers the I'm been domestic And of concern about rechanneling customers. how Okay. that market kind as Latin I Mark. just and because relied sort a that of on like

Mark Sutton

to Yes. tight it's that's importance are chain. in who and us, right of that provider make the difficult it for kraftliner. probably for Disruptions It's And Europe supply definitely about board more important we've market, long-term Latin for largest and IP talked the our us. use critically because is to needed. very America now. to customers kraftliner the channels especially of further -- Things important

to now I where right through are are customers each our low make think and working But future. processes. for individually in we're of of And we it. that obviously, are think needs time can't system speak they for is with can the a need inventories much foreseeable looking their customers, as provide at supply I we our we others, the sure chain, I tight very for as especially our the kraftliner with possible own

Operator

line Our next question comes Bank America. of from George of Staphos of the

George Staphos

well. really acceleration stay. consumption new the and is new they're from you my what first seeing the usage less -- paraphrasing, doing the corrugated, levels corrugated of e-commerce, and you're And and you're I around from question or volume. guess more Mark, to that mentioned here I'm you Hope that think

that You to don't don't intend or recede. expect

comment to tell us the you're second and can you the you can that volumes suggests what how why early have in looked seeing your quarter? that -- So evidence extent that

Mark Sutton

it's So George. a question, great

shift our more real to is majority look real part portion question, repeat real we capability, investing we're at believe think around not it. and winning of of e-commerce gives really of the seeing them permanent, this hiring customers capability it Their way customers, equipment dollars a the all look their be And one may of retail It an analytics on and I putting and in that and at. what to customer employees. but important of buying the permanent. that is things good your XXX% e-commerce confidence data is

traditional it. clues of we environment", to instead do? retail to Were in-store are a return listen return customers studies from be what retail, our from lot things at and look "normal guess and loss of What's to for it a still it's it earnings hybrid? company's and it at Is e-commerce? there reports type wish a normal Or a some in that net does going is conclude trying So to is can as information, more hard those uncertain or to to brick-and-mortar businesses, that. to you look

box volumes trends April make I'll continuing our our they're in So we quarter. look But first remind serve -- the multiple the make, we like you, boxes from channels. the box for -- own looks

we the box, we're those we're long-term a overall and whether the it's the box open strategic for volumes box American we and market. have our whether for the double digit whether boxes close in containerboard have market, So a pure or specialty partner make market, exposure up we making North using to seeing

channel is pandemic. looks shows it hard news. good that which weekly restaurants Xx picking the twice is some So same. type we're weekly, do in the shifting, fresh supply really We the area foodservice of of up. this produce, some buy got Where up which more hit like for see in overweight food things and restaurant basis, and IP, see obviously We

in exposure have. and segment So we're what trends encouraged that we're by demand we the seeing the

George Staphos

double-digit that point reference was close to referring Just clarification. that what you made, to? just of The a

Mark Sutton

It's provide box look the to all to in that channels we market. U.S. to market

the then at When open we participate in channel in that's And box own have either vertical specialty where partial ownership our And strategic or business, type box have and the usually, our it's the really arrangements. ownership So the we market, market have partnerships converting. have activity look in that U.S. we downstream products. we some -- pure long-term majority just where strong. we we

George Staphos

this why a other you quarter. and such clearly, in in from energy And quarter a standpoint. the different storm saw a we understand very question, outage My first costs Okay. was recognizing pickup can

its what quarter -- IP's are that like can see perhaps you Looking back the efficient looks even seen experience, within where it Are last time, of there consumption? that become over IP relatively the given energy in what given more of in consumption constant. mill energy terms and has network areas been we've

Mark Sutton

On main side anywhere thing there. It's in XX% our from a There's energy, maximize integrated fully own is can do energy XX% good of the where to more mills, the we mill do our on system biomass. question. make we with make we energy our can kraftliner carbon-neutral

it investment. Sometimes takes

what know, with you those we've and some are As entire years last done over then get investment the you We our and Riverdale capital situation. our can navigate the projects pandemic projects strategic -- to that back is like managing later. liquidity and of program couple the type of go

unfortunate, it's though Sometimes, them have good they we but really delay returns. even

we more of natural from got switching, gas we've in don't fuels. So converting And the plants, other investment done energy. make own Fuel our can higher-cost lot make. we we've a to

part of all returns. of phases we consumption, grid, terms And uses of of of energy financial Most George, investments most efficiency are in profile. it's of part the in those to that part increase now plant. in invest company And the we stronger. exposure through but all investment all our highest condition our that our those in much of now is So of to our geographical plan it's usually, have energy the projects areas where the that, -- are

Operator

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

Mark Weintraub

to that was turned to give this fastest pricing more did price or original what of think have more been. the was it one ability mentioned, in Packaging happened your out Tim, get on than flow-through be Industrial color very you lot And a and the what business your question tells really us you? guidance you good. you Can I pass-throughs First had

Mark Sutton

many unique It's agreements. many and a because difficult question, so so Mark, customers commercial there's

and you our have not dealing get packaging a It's answer general challenges. is type the just chain multiple customers but the are this that inputs. other of with supply think of I lot demand, when they the

went material the problems about no get gray in commercial think and I and box possible as out in at is in loves final one one quickly customers. fast answer. to in tends And tight minute how multiple slow, them. parts be right done when or only this That's a and the get get a about it lends obviously. itself, general because the relationship of dynamic in just of faster. team the got is there a our so lot are area The increases, of I've just negotiation now price just every how That it for supply XX our very let's everything time chain dynamic as discussion you of and implement things the human

Mark Weintraub

all included can And a that is I carryover was genuinely second for us you're give quarter that in. sense the impact still recognize there all of end initiatives? Is versus by million some Great. in -- the the the you quarter? it quarter, certainly that in actually the $XX that's from that first new looking Or

Timothy Nicholls

increase, but Yes. it's a It's small, Mark. in. price virtually all first of There's probably just little bit the from

now to increase implementation. the forward And we're looking March so

Mark Weintraub

of but on that more that the in laid already I quarter half of price based increases visibility see that there come bit black. the of year. presumably the to pulp to A, the where b, is -- have be yet implemented those on you've that going is be to will one, actually contracts Or be pretty to imagine pretty And should do second you come? because conversations great negotiations valid? that? the -- to one the that, begin and you do are And in even sort vein, business, second in in a last same out, though, way prices the little hopefully, good have

Mark Sutton

the outlook. for gave we an -- It's

movement -- I like Cellulose part pricing. fourth confidence and my can in the remarks, third Fibers I like in don't that. closing conclusions. right on third some the take we going think in said now. to think the just to million is $XXX in trajectory, make or the of that you go into out you I if But we're quarter quarter. momentum But prepared But like was into go the as in big the the second -- want in have the price we as number quarter. far That's A as we I really

Operator

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

Adam Josephson

one the this are. call, on Okay. better same the about on through question the building resume know the year. slide. guide as there all momentum Why I last the go be everything not Well, many the guidance seems point? question -- getting always are as -- so uncertainties, but to there asked I providing XXXX -- Tim, at basic you

want So did much now to did that how at reach And that? for don't doing conclusion, you to you did doing consideration you the you get -- least so? why resume

Timothy Nicholls

don't I guidance outlook. we quarter. mean, within look about It's good give had an that periods, range. Yes. such. technically, full that Adam. in It's It's as sometimes every year something and outlook we We provide talked we a at a expectations question, a prior true

we're and the I -- be the of But have think as diminishing. to for not. vaccination some is we what's around a better what's I we'll maybe get feel seems the middle to uncertainty -- think reopening COVID rates and of year,

a see And so optimism But full playing about in it have we the talking our to this of guidance. about was just do in year not how lot start point enough we time at year view out.

Mark Sutton

Mark. Adam, this is

it's a It's add. good -- question. to look, Just

year of Tim full as at a range, We other have said, investment for expectations. community, couple least the EBITDA an given numbers

than Look, an for I think of was year, talk the that of capital EBITDA year if did think beginning we number. in given the less expenditures, is I full given about year. this But I'm guidance would as optimistic into the we valuable our a have maybe middle We person. missing what's at the get example. year,

I in holidays and think personally, employees Brazil, January am Adam, the me were their they with really in But are our now right You or we soon are. just good I Christmas economy as about we and I say effect lives. and as employees in where where about feeling that, Poland its their on our during know pandemic and

only So don't and skis say behind was imply just and I that to us is get quick. what, say, our have that things out want to over come back to too all this

sheet a sense I of are strong And a numbers walked get So and gives as capital big low we of the that range And methodically flowing Tim frustrating, a this the generation, is things outlook those and slide. outlook, repurchases on little interrupted to a framework, cash it's casually. we said, quickly improving. not very good that's the Tim to, our people dividend cash allocation allocation the which trying the but program picture, committed really hopefully, for to albeit share slide, through headed as through we're on transparent have, balance all like capital know end

you don't And But to right to work message information analysts that's investors point and now. want to is It's really have, with. take taken. have so well used you I but your away the

Adam Josephson

really back the And I other -- that, to you No, box Mark. one for question the issue. just appreciate on demand whole e-commerce and

this of the and box changed, between to and GDP, in your that you and effect. demand used all, you nondurable information permanence do roadshow at about about handout demand slide presumed you good relationships really relationship have to have You have How growth. given talk between production. if box this e-commerce think the industrial And those new that

Mark Sutton

but nondurable roadshow index I know know you're it and our that metrics. our Well, have that's of and looking question. the talking in a at if is we that the it. of a yet, good don't at resiliency that where looking team transportation number there's our slide I in a team model know I that shift decided is other about we've creates really

future. we something our the about like we to good legitimate As that it's do we soon that feel and as statistically share we'll in that valid, material, and and in investor that have

Operator

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

Philip Ng

prices there's XXXX of back initiatives are you the lag commercial earnings power implementing, levels? return kind for greater flow-through approaching on with Appreciating pulp do cellulose to levels, that and how quickly in guys you XXXX to think fluff But a pricing.

Mark Sutton

quarter, Well, the trend the for on and can the we second you outlook million. gave just look at the pricing $XXX of comment there

are 'XX. market a as to. on business. the cost how in can we the the sustainability in we about think And less think and side, go multiple back And lot now. the part I invest from we're market change we're that work can dynamic. about I it's because to if get volatility business in where can on and we also with mentioned we more interact are And put customer-specific, customers about that's feel you're primarily times, right model good we upon to talking we work, the numbers improve And then, commercially, how pulp of our trying trying, so we that business I but we of comment what

Philip Ng

you great. that? build behind would That's XXX,XXX pretty an as you given inventory? supply would winter sell that of essentially It to gauge is of much for color. containerboard given have strong view like been appreciate kind trying seems And The lost tons demand broadly, now? I'm view if your kind just more I that a effort asking, XQ. reason the just Or have tight things customers game how all that demand from your solid storms, pent-up The right bandwidth plan. to are, you then is do how in I'm to

Timothy Nicholls

needs with glove to portion a a In tons, maintenance sale challenge. of for working ready cases, second quarter, said all go. available it's the heavier that, trying meeting go make XXX,XXX some big possible. our Having channels, we're We're customers as as outage and was sure Yes. hand in quarter. of their that into to across quickly we that as a it's

for side. well. preparing part that more side, it of as, containerboard down definitely so And on exposure. is not opportunities the But and significant on But missed plants as XX if box importantly with the

growth that disruption. in we around would that that had quarter overall if growth haven't the that be estimates to we closer is had our industry exposure So the

Philip Ng

demand get things how supply But tight that kind elsewhere you to Or still are? given see just your of of there? kind customers went

Timothy Nicholls

of it's there. Well, some

through, prepared are in still through Some working working them I as of comments, backlogs. the mentioned

expecting lead when different on have times channels these orders of them. customers and All are

we're that And customer so it through by basis. working on customer

Operator

Connelly of Stephens. next question Mark from is Our

Mark Connelly

Following in on shifts timing about exceed reason performance and obviously, or any lag and a a think there maintenance that the or Phil's quarter, to XXXX the IP was question. thinking If I'm held shipments we in there remove match can't that XQ industry Because the it? first even outages back impact too. the in storm is that lag sort of stuff.

anything. So I not make want sure to we're just missing

Mark Sutton

to or no can't No, it's question, match exceed. we There's reason believe a Mark. good

but But operational Now reason quarter, size And issues, given to geography than you expect not excuse, the our if basis Fourth winter you we better there's no this on of recall. market. points, can't an and did match right some not some top multiples. means storm us the reason then at have you exceeds perform matched the us. market. shouldn't But no or

Mark Connelly

helpful. that's And Okay.

to and comments, EMEA wondering following between investment coming spending opportunities those just mid-teens in Tim's converting EMEA, the or opportunities? the most on margins and converting mill does mills is on improvement push breakout if if the there's how Just side. incremental I'm on of at

Timothy Nicholls

many of opportunities, It's it's cost require We so ramp think up supply operations, managing a in and good how of not mill we Mark. both that mill the and question, get capital but in as the and Yes. additional them we're have integrated, fully we just chain. curve terms

see we opportunity in more mill So for the Spain.

The is for there mature more a mill a other been that's mill while.

we given in optimal an play, But the And at level. so see opportunity. Spain, probably integration it's running more

Mark Connelly

strengths in U.S. to the there. So integration have bringing the some the in that you over of

Okay.

Operator

of UBS. Our Rueckert of comes next from Cleve question the line

Cleveland Rueckert

Just $XXX up wanted follow to incremental the $XXX of I million to EBITDA. million on first off,

from how And to expect that date million challenging, towards be XXXX of to much rate? on you've much of supposed think an savings. headed exit or was this to but cost didn't kind you how I realized update achieve $XXX that hear year achieved was that I QX I of

Timothy Nicholls

-- you one. we Well, provide didn't Yes.

looking through last of using and in working all probably some beginning right XXXX. on automation year, benefits process implementation expectations that we and executed to rate third we we're of and we're of this the through terms the process our achievement plans go plans we the provide of pointed saw quarter the as robust through, update that coming in the run all And So to are of of that. but forward we're this year, being call a the technology. now, quarterly where We the also and more for data analytics

Cleveland Rueckert

of, Could And guess, or you the are quarter? Okay. the disruptions kind today I And just where average? follow-up All sense of give the containerboard I the the trajectory where you you've the versus corrugated business. side where second inventory historically what an on right. inventory given like box been just your to us there That's a clear. and in where on on at guess, stand, then, inventories level you is outages kind of given be a

Mark Sutton

comment like the to that's glove of easy answer Well, And hand Tim made. than be. the we'd source just the is to we're lower

be So important very across we we while customers' have active rebuilding wide need we inventories our to in stock of make. we need rebuild, range demand, serve efficient roll to to the that boxes

we and of the us of with for very you to unexpected more really when have then type and big there's good very recovers not talked the just a the have about it So news and it's the one-off system, this we It's flexible But demand, quickly. timing interruption coupled outage do. schedules. of storm is

would support And customers demand is like, feel than right with right what our concerned all to our we inventories we So we I'm do it. changes. ability now. is are through the lower our like their that's now our things But dynamic thing could considered. main And focus

Cleveland Rueckert

you quickly, position be the to you would That's about what a second inventories? build expect clear. know to given I guess quarter, just in

Timothy Nicholls

Every quarter. going to to outage maintenance effort inventory levels, made to heavy try is be but restore a it's

so triaging And the and prioritizing to trying and all satisfy across the channels. you're needs of

time good long, outages supply a long So is, and the very the now of to chains us behind are news to take time recover. of year. the the most But we by middle they get the are these

Operator

Instructions]. [Operator

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

Gabe Hajde

that North maybe different making back rearview maybe the whether America or for the up still more defense in as view operations that thinking corrugated I'm competitors the destination? Packaging levels bit Industrial playing way. the or appreciate of and a mean, bump of right some kind about to kind have not looking are that you you're little kind trying asset integration And you this I some in of reasons. changes kind mirror, and/or along also of I

Or acquisitions. the plant over small XX% I'll box that you that cash made X a get and at I Is that you part these Now on you've of disposable basis? got that level don't with know, good go offense closer maybe some feel strategy more, call something, kind to to kind it, longer-term XX%? of of

Timothy Nicholls

Yes.

integration we important is what's about go building about it. So we how think

most American we channel customer. that the to to business and box our Our the of on to by our domestically delivering side profitable customers. grow channel containerboard solutions part want the to And is North packaging integrated superior

we implementing through small So creative some that more we've grow arrangements can long-term to started we're where sustainable of that M&A relationships that building these or channel.

So way. but higher sustainable over done time, a very in

Gabe Hajde

then, over more starting think of talked implies those $XXX in I maybe that million and aggregate million there million getting what of that to to the up mid-teens Packaging. $XXX European I the in and of this is savings? that saw cost the you sort that $XXX related another that million made for back $XXX million to of you kind so Or marry $XX about you to kind to or mill or exclusive, included contribute? of And that, and revisit Is trying an conversion meaning Industrial improvement comments Europe. kind in the again, of savings $XXX of about to Are to improvement guess, quarter Okay. reduction mutual the profitability million

Timothy Nicholls

touch in of It's we packaging terms that Part to included, a customer. it all solution Yes. it's but operational a across of is things commercial, supply delivering chain. the

improvement the across all business. got So plans we've of aspects

Operator

comes line of Paul RBC Capital Markets. Our the of next Quinn from question

Paul Quinn

Global on Just question Fibers. had a Cellulose

that's a Just compare you long when get being the I it's look result, profitability at to you Where up European this the especially it's an business quarter, peers. to -- I Can do see when peers? mean, And take? going your do still you think how but you when mid-cycle? I disappointing your improvement, of to it

Mark Sutton

of think in very the good we last see mentioned shape. I after Paul, we be numbers into 'XX. as don't Well, 'XX have last quarter call, after call, but good we in -- improving quarter. we quarter head, head business And shape it'll -- all on and as I think off the European quarter the top leave be those my in it'll very head my we

Operator

Neel of question from line Morgan Stanley. the of comes next Kumar Our

Neel Kumar

what just us For volume sense growth shipments in quarter corrugated, first then, April? can box month? the by you through seeing just talk can about so you you're far give of a terms in of cadence the of And

Timothy Nicholls

is it I the -- very to close January. just bit quarter, how in started steady running mean, yes. we exited -- of was April throughout quarter really ahead looking a little pretty it the maybe strong

and part But month in of but Now that I tends a is push the e-commerce specialty our quarter. because strong a January with to only as think to returns holidays, around big throughout be well. exposure whatnot. we you Christmas the not sales the think It it have solid and was

Neel Kumar

Or in generally, And terms announcements? then sale And there organic portfolio you helpful. evaluating recent be this where touch more inorganic point? just if I generally and asset your of in assets. versus asset That's buybacks investments? wondering complete it Okay. was your additional you on the of between Could of you're process sales, at about can proceeds how thinking is then allocating are

Timothy Nicholls

and of Europe And Well, gaps They've nature when the at point. we one-off filling this capability want. couple side of two, past that's exposure we've sometimes is bolt-on what the about or acquisition be operations, we been to look for at honest, be talked doing tended years. in that in to happened in most on them,

have we a year, the the a on time, But cash sure to debt. before robust making market. fact take. we're through talked be but of power terms of fairly ranges of out we're that actions to maximize in about value is thoughtful the we the pause goal our and everything the in that coming doing took cash in back last prudence we we're that balance In strong of path share including allocation and over the that capital repurchases coming target have in, The COVID sheet, hit a we framework about

Operator

And our Kyle White the of last question Deutsche line Bank. of comes from

Kyle White

business? supply to want talk how or that you're experiencing congestion and is the that volumes Global port On just your maybe that in Cellulose your I impacting about chain Fibers,

Mark Sutton

in, chain. It's orders of good spec-ed Kyle. because creating it customers. We're long a It's of a issue. question, losing the not we're It's just supply because a big in lot long, a

order actually they receiving cases, trying the to between get our and duration are understand in customers and out placing an to new it change help So whether order some should to trying cycle. their figure

as I it So and being think pulp don't in export even and management between business and in about there's lot It IP customers. But our supplier figured the it. immediate an business. paper our it of than our there's fix we're more changes talked affects our a containerboard, out order export to seeing Brazil. affects

adapt on looks we're a period velocity than to the it's time. it like, mission some supply have to of going to for chain So

Kyle White

Packaging. do in that guys of And longer-term That's switching kind to see just for region? you with of provide kind Spain? it. you target maybe and that there a Can just then acquisitions rate some And helpful. as you where integration Industrial continue your Got region EMEA then of bolt-ons these recent integration going it for in

Mark Sutton

give U.S. it's typically because We mill don't European on integrated from kraftliner not system a box plants. number as our clean. We're our to our

have of market. lot couple We buy at of the ago a mill. corrugated medium lightweight But open Madrid. almost -- started the our of our years a That's high-performance in which liner. its we most medium ramp, from just world-class We up is full

most the on absolute success given have number. we an financial But haven't model building is we metrics. an as said, typically the commercially Tim So regionally integrated where and

density. we're is that's taking kind so Europe the And regional approach of in

important supported it's have we from geographic system. Iberian make with sense now, our grades just right that that in surrounding Peninsula then so the some don't kraftliner European And suppliers make and of for because we mill or new our very U.S. market grade. And

large a containerboard customer relationships. European key still and producers for we're long-term some So those are

we you International everyone's you appreciate thank in and I look questions. to Paper, forward quarter. Again, So interest your talking with again next for

Operator

in Earnings Paper's XXXX International First Day Conference for Call. participating you Quarter Investor Thank today's

now disconnect. You may

International Paper (IP) 29 Apr 212021 Q1 Earnings call transcript