IP - Earnings call 3 2023 | International Paper Company

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Operator

Good morning, and thank you for standing by. Welcome to today's International Paper's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] I'd now like to turn today's conference over to Mark Nellessen, Vice President, Investor Relations.

Mark Nellessen

Thank you, Greg. Good morning, and thank you for joining International Paper's Third Quarter 2023 Earnings Call.

are Nicholls, Chairman Chief Senior morning Officer; Chief Financial this Tim and Vice speakers Mark and Sutton, Executive Officer. Our President and

on legal information X, important at beginning our There's the including disclaimers. presentation certain of Slide

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

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

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

call to Mark the turn now will I over Sutton.

Mark Sutton

you, and good morning, Thank everyone. Mark,

We will intense I across In quarter, begin our of our Slide with X customers. while teams on focus discussion the will where on structure International our well care cost results. highlight executed optimizing Paper our taking third our

incremental this target the on earnings Better our across second delivered delivered we outlook from year-over-year we full provided year our Paper quarter, in our highest performance, for our of to system. contributed at efforts marginal last benefits continue benefits, our a $XX in out and row. a has drive million program the cost International year Building we earnings exceeding [indiscernible] million Year-to-date, the initiatives. IP $XXX Looking

commercial highlight improvement and driven which I initiatives, will Our was performance later by call. the during process

the going forward. encouraged to expect recover also portfolio continue to third environment our in across We're the see demand that trend to continue we quarter, this and

we are more later profitability. actions initiatives I'm improvements, improve details presentation. level additional satisfied earnings. with taking these the these not Therefore, further absolute in regarding Despite share businesses strengthen our to will I and our of

of to reduce costs. our my off to move mill system announced last this week like we optimize share However, we perspective series on the actions I'd strategic and fixed before topic,

our of including at at These the and and Florida pulp permanent Riegelwood two Orange, closure mill. machines, Texas the our North other one mill Pensacola our containerboard Carolina actions in mill include

of make the will members, team impact difficult surrounding are their us decisions our the in families because they achieve incredibly While these objectives, and our help actions to communities.

and at over the members years, We to are our to Riegelwood truly for while grateful supporting contributions them their transition to team our customers. Orange, are serve Pensacola and committed we through this continuing to IP

another the completed like -- ownership in million to interest the on quarter. sale you the venture Proceeds completed We of also the sale our in $XXX update from strategic action in totaled sale Ilim joint as expected. Russia. I'd our

any the With of Paper investment this completion no has Russia. sale, International longer in

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

Timothy Nicholls

Mark. you, Thank

third Slide key our on quarter to X. financials Turning

increased provided sequentially earnings better than Our per share the and quarter. we came in last outlook

from and sales pressure We and initiatives, optimize headwinds, our under also employee margins commercial benefited cost continue and rate. Operating price system to from to be a continue volumes. and lower operational lower tax effective through we impacting benefit macroeconomic

margins However, quarter-over-quarter, lower more improved costs by expenses. outage driven favorable and operating

the third quarter on Slide to X. Moving bridge sequential earnings

portfolio share. volumes $X.XX improved Third was quarter our and in and and per share, due our lower Price stable panel North Operations fibers million export per American less business. across relatively as higher business shipping by offset overall global our costs X day and $X.XX or $XXX packaging sales containerboard earnings movements index compared $X.XX second quarter. to as $X.XX was sales operating was primarily per in to mix lower share the Volume export prices. across by earnings

suppliers and fiber and costs. usage distribution energy, quarter, teams across focus the of system lower their businesses lower and optimizing spending. labor shifting costs mix this driving We're well, continued cost reducing marginal ran our and very and accomplishing by mill the During to reducing our over on and time, cost

in $XX balance last we benefit lower or was $X.XX $X.XX Maintenance outages our the not portfolio lower fixed is to our as economic per million by per across The related costs share, share outlook downtime fourth totaling were demand also quarter, improved. primarily provided or due the repeat quarter. quarter. million third lower costs to unabsorbed in last in During which and $XX employee the third had about will quarter

were increased Input chemicals as corporate costs cost cost and were for items from higher the energy modestly by and in third offset partially tax effective lower benefited quarter. a OCC wood, and lower for rate

mix were starting channels focused shipments daily day index in were improvement. Price X. overall on to Turning lower movements, box initiatives to shipping and higher to export higher lower U.S. commercial on demand. margin higher with Slide Volume was improved. our the segments slightly improved was export shipments benefits from This partially our due despite mix stable due offset X was export box. and Packaging as less sequentially. and across demand prices by to Containerboard stable And Industrial

packaging Demand also impacted destocking. inventory for was by customer

million. at on completed generally we However, from This $XX million benefit based the earnings customer end items mentioned improved and costs I this feedback, the the $XXX earlier. third is quarter. believe includes nonrepeat by the of Operations of

In addition, from demand also economic quarter in the improved. costs as lower ops and benefited downtime

to on marginal our spending and while cost environment. mill the businesses teams further optimizing reducing with the customer run demand very chain the reliably align entire highest system and continued to our across Our remain supply focused

annualized downtime reduced raw approximately basis. cost million on have by and by fiber, the For an example, optimizing of economic materials, energy we mix $XX

opportunities We improve there's go contract efforts warehouse shed forward. approximately These including area costs supply to our improve we demerge by and significant efforts in chain and efficiencies high-cost rates to costs, initiatives and have an this basis. lowered on distribution minimize expenses. $XX also million carriers, underway as And load more have freight annualized

our to were the $XX Planned in due to further outage seasonally reduce by spending lower and a efforts million demand lower sequentially outage current environment. outages schedule maintenance

partly chemicals. higher, costs for by higher primarily moderately lower costs OCC, Input the for offset were due costs energy and to

the offset fluff was index the X. Turning mix to Volume our at by partially Cellulose and from for to lower segments. And was by performance, sales This moves, higher on customers third quarter business Fibers most due strategically Global attractive commodity continue higher third lower price offset looking quarter to Slide benefits was partially improved. as price on mix. aligning the of and with focus grades fluff we as our in demand

The feedback the Based chains quarter. quarter levels. destocking trend our more largely supply third customers and destocking manage from completed on as improvement lean order across we inventory customers allow third was in continued in the believe to from bookings,

essential of meeting We personal time play to also that believe absorbent the products needs. over continue fluff in consumer grow demand will because care role

items lower by lower supply Operations the spending also focused and optimizing costs on costs, million. benefit operational a earlier. mentioned improved This the from teams and energy strong chain costs as higher performance, our and value chain. of earnings from million includes nonrepeat I Ops sales $XX entire $XX remain benefited

sequentially flat were primarily to costs $X Planned lower and maintenance input due lower wood and chemical outages million, relatively by costs. were

Industrial Turning to start Slide I'll X and with Packaging. our quarter fourth outlook.

to shipments. Volume X as prior in box declines to expect increase based America and shipping million less We expected is average earnings result decrease an day by export movement $XX mix by index to prices North in earnings higher increase volumes export a and despite sequentially price $XX containerboard due on to date. of and lower million

volumes benefit management This initiatives. is favorable costs ongoing partially by to earlier, are benefits unabsorbed employee from cost costs offset fixed $XX due to I and our by expected and nonrepeat lower the to mentioned earnings Operations million. decrease higher of related

materials. Lower earnings raw are wood $XX $XX input earnings energy, by rising And cost offset maintenance expected for is costs, partially higher decrease to by million other increase to and expected million. outage by lastly, expense driven lower OCC costs by

Cellulose to Turning Global Fibers.

movements. We expect price earnings as and to volume $X prior expected earnings mix by index decrease $XX million increase to Overall, of result by is a million.

higher strategy. fluff execute as lower by offset mix optimization expect of volumes demand, commodity improving We grades our due to we --

benefit are The $XX earnings third to due planned to costs due to quarter. half outage nonrepeat is relative to decrease of by outage Higher the fourth costs by in of expected favorable this and decrease I discussed earlier. Operations expense costs the higher million maintenance to million. expected earnings quarter. remainder maintenance Approximately is $XX the employee

are earnings lower input increase $X million. to costs Lastly, by expected

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

Mark Sutton

and Tim, start I'll on Slide you, Thank X.

our benefit million delivered As our which second the at are mentioned call, a coming we progress This beginning $XXX initiatives. the original in program. the year-to-date, a exceeding from for our total strategy IP has year are year, most . the with Building solid row. target I benefits a of making acceleration of Better of

benefits we process teams provide and attractive business with offerings to focused the are from for value also the customers the customers initiatives. paid and most product and customers while improving Our on segments our our our creating growing profitability seen geographic most optimization what attractive We've for the attractive most by in our regions. also by getting meaningful value service of

costs. productivity across our data ways big advanced teams leveraging identifying improve system, technologies lower new to are By and large our and

excited the actions of our teams growth. the of next slides, our share And profitable examples progress. to business about are drive I'm taking in couple some I'll

Now packaging tailored serve International start Slide solutions Industrial customers. to Packaging. broad and segment Beginning has with XX. excellence, turning Paper commercial with of to range I'll capabilities our a

to these Our segments and the commercial aligning advantages improve customers. mix teams are strategically with most leveraging regions, by attractive

our analytics sales data product pricing to and customer product are allows for capture more across more service value using teams also territories. manage offerings. to This Our advanced tailored them

box our technology efficiencies Under and to across cost operational advanced mills data of leveraging plants. excellence, and analytics improve lower we're and system large

raw reliability, as consumption, benefits system actions annual We and optimize areas The Packaging And EBITDA material mill sourcing. our million. mentioned logistics about as the reduce -- improve will and to distribution we're closures fixed maintenance costs. I mill improve for are in by Industrial will $XXX earlier, closure mill and also taking seeing such and

we're fundamentals area Industrial and some XX. we the our create Turning of significant we Due to highlight the to profitable I'll growth of believe value. attractive business, have doing drive in investment investment to opportunities long-term excellence. things Packaging the of Slide

for have improvements More focused in system enhancements investments targeted our customer our and lightweight capital high-quality with virgin needs and investments. products are examples market trends. and that capabilities business. capability our recently, ultra-lightweight of mill product white-top box these align Strategic liners strategic on Added are and productivity investments

allow us and improving by These to levering with capabilities, profitability automation. customers and increase strengthening investments productivity our grow

equipment technology. create organic include adding plants. believe converting our in advanced this plants old newer network box Examples upgrading and and can we through more the We of most of investments large value existing with lines across

past the made the to almost some sized investments over plants three existing of equivalent For is we plants system. years in our the box context, adding average X have

regional box this M&A and We with greenfield addressing in and will additional bolt-on with strategy can by create occasionally enhancing needs supplement we investments value additional plants business. our where

new great a team opening has Pennsylvania, like and in celebrated greenfield also which capabilities. box recognize plant of our grand we September, world-class I'd that the in Adlan, to

for capacity Our network of growth. our in to investment optimize will additional the allow Northeast, providing future us plants while

opportunities our summary, significant well market In to investments mix and grow expertise additional with as as these we our have new to value. capture improve leverage customers,

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

we have a Over the contributed captured meaningful past Better commercial benefits Building year, IP results. our actions, from to which

we renegotiated that Our we get large commercial provide. ensure contracts value paid teams for to

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

grades. benefits However, and to our currently commercial masked challenging commodity by are of cycle a as the business well unprecedented our being as very strategy exposure

On third note, expect quarter. in demand continue to pulp this the trend for began as recovering fluff the we improved positive in and market fourth a environment the quarter

to more are increase business. there strategic levers believe we the pull earnings this potential to forward, of Going

our our markets attractive that business. fixed and allow Through to grades exposure this by by have the costs of our system. are fluff to rightsize serving we us footprint Aligned value our taking improve with reduce opportunity mix strategy, to commodity most customers to across this an we strategy, the go-to-market the and maximize reducing actions

over the the business that announced to by Fibers and can the of there's $XX for within earnings mentioned which cash pulp machines business and of continue business a two the closure I improve beginning the cycle. Global million. good this Cellulose approximately will grow flows As at EBITDA call, we believe we I

with set capabilities. allows their standards. of market customers our with a by We product to that broad and innovation us meet significant system for performance delivering a stringent have safety expertise and talented teams mill and create This products value

Now to XX. I'll Slide turn

we the in of serve, businesses. strongly our We demand we and across recovery believe continue long-term attractive to see fundamentals the markets

On actions to drive growth. taking earnings and improve International are Paper, we profitable

assets, world-class confident our foundation, Given strong strategic value-creating and in relationships, teams, talented financial our customer opportunities market IP's and continued expertise I'm success.

well. and business happy joining Tim to I quarter, perspectives we're that, And with to And provide to their questions. take similar as our last leaders are senior

we're operator, of move the the to ready So call. to Q&A section

Operator

first Fargo. comes of Hajde [Operator Instructions] Wells question from Your the line from Gabe

Gabe Hajde

with guess to closure guess, ask detail. the look be, for and would even of all lot Orange a grow I the bit initiatives? account a a into closure market, might first into then, something own you expect this kind of about guess commercial the as would taking delayed you with Or is market the to that to of again, you XXXX. one and table? I a bit little the recover, that little Thank time Wanted I begins your as be

Mark Sutton

demand variables I'll But able recent remarks, this with that Jay reset, mentioned demand options for And in my market make ask the level downturn, comment. and change at market. level, will continue all feel Gabe, engage and have been looking our to the of a I I prepared around future investments. capacity good Royalty of there's essentially, mean, to the the to being high grow about and I signal containerboard a again. we think we somewhat investments at with think I

Jay, we're if the thinking to So about want I how on ability grow. don't add to near-term any know commentary you

Jay Royalty

Thanks, Mark. Sure.

view our not demand long-term changed. First has of of all,

So we options and of this term see near kind we have. more the about how was

view recovery. If our quite would customers' evaluating And we've as where reset future. that secondly capabilities running been you system, where what Mark and effectively of factors influenced we the for the we options need be demand trying and develop all a along do shape the point think now. and a and for the of couple to both to matching think can the while market about is to system is we do informed are, And headed One mill we've things. an of our the supply way, as demand we as been our said. those decision And on of our

large, and low-cost with tremendous fleet have We flexibility a capability.

close so think about to even and compromising when amount we we for about grow. and you ] [ have with And Orange ability think to EDT, without taking we need able have you And we what this still that, to customers. term short When our room we're the serve the were closure, midterm. of

when allows a in have way in the structure time. then about grow the the And do lowers to we at as by million. this about run the move think all-in the to we $XXX near cost right heard, options ranges product And future, and term us right optimized in our system you more

Gabe Hajde

guys you're And as perhaps variable 'XX Okay. around back envision just side. then bit this the this pandemic? peeking comment, of you to went if on was Is the maybe you're during D&A. least as capital production little But above to projecting 'XX or over spend something the next the little through year, a bit that maybe, again, that throttling maybe one kind willing at given it to about 'XX, maybe I'm assuming again, as a costs much you exercise, corner investments.

Timothy Nicholls

Tim. It's

think future, Haven't said, where for you work planning yet next right some the level on higher, will there. some have thought finished are around the to D&A about I we a normalized be basis, what years and foreseeable our that's a year lower. as years So specific for

at that So about how say that point. or the then we'll and have we're so. we'll in XXXX January capital complete month to when about over more thinking release, And next

Operator

of Your the next from Citi. line question comes Anthony from Pettinari

Anthony Pettinari

previous had 'XX. the think, updated there's an view slides, CapEx free adjusted updated I guide? if flow wondering view I provided of for was that, cash you and You if just year a EBITDA, full on sort in

Timothy Nicholls

in quarter the provided answer third short any range no in full quarter capital there's fourth the change Yes. outlook at quarter we're we've second EBITDA same had categories material it But and way. we that then flow actuals line and solidly with in of for, right is outlook. that given We and the showed the year a the cash the still

Anthony Pettinari

of box the in maybe box a of shipments, And was Or that of on and then uptick dynamic? the then And would in normal bit like volumes October? you demand helpful. describe you trends quarter about than in of seasonally, Did then during the September. American talk you North Okay. how an That's seasonality? terms little see sort think cadence can think there's touch stronger that I usually you

William Hamic

This is Tom Hamic.

or terms a of the We've troughed QX. Just that from demand, QX. lasted improvement trough we had in QX, in late seen time, continued and through

lot So we they're improvement in we to stabilize of feel segments and the QX, through very good QX. A QX. to going improve think about in seem

stabilization QX. stabilization So in in QX, improvement food, think improvement processed e-commerce, QX, and about QX. In strong really in beverage in

good about feel trend. we the So .

about you of order kind look bit like the you at if at which I the forward, looking close a think best -- book to very is October about be the asked I X% you've a little order especially would could got October, that X%. month book, of we're when growth way misleading, put

so number. improve we That's go through think And as a that's sequential quarter. the going we to

I for think X% X% quarter So to the sequentially.

the these to improve. see -- market the we So continuing segments and

Operator

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

George Staphos

the quarter and you the Given for earlier just announcements your especially well, want best everyone in during wish leadership transition the the to period. management this over to Mark, as I

back to we've the outlook the and slide, got wanted maybe old that to heat just map slide, I this make go correctly. sure

are the Fibers, breakeven given EBITDA, Tim, rough our were suggesting meant, in are I third relative we in somewhere where of below very perhaps ready XXX the done you that to is and tally be and for So haven't you quarter? Cellulose might we we quick overall of -- sort what and the

is in profitability. business. had of your I that largest Europe businesses And then the terms second not question and

how It's see with about that EBITDA And you real there had time? over follow-ups. a generated for what's I Are do Strategically, business, relatively the or X other X profitability? margin. small. within a you It the portfolio? Mark, XX% still IP role And its You've been while. happy

Timothy Nicholls

it's Tim. George,

So code fourth I the of yes, you're think, in about ZIP generally the quarter. how we're speaking, thinking

everything, I talk team through the think like course, of and all but Of it you IR close. the essentials will -- sounds you're

George Staphos

Europe? with And

Mark Sutton

Yes.

plant the so the EMEA last earnings high 'XX that's performance, we costs. don't like the 'XX we've containerboard the were but density have business. acquisitions years they like to the -- Madrid the natural really gas some hit question, mill. And very we successful with the around We single On over hard built absolute couple of after made from

So view Europe. We mostly we regional as to it's but largely continue there's business strategy. our region. Southern going opportunity, Europe a growth It's in to that come think

less very bit We think EBITDA we a you lower the get of to a has It's being potential. the used U.S. employed in a Europe, to because margins can returns a to remember, in seeing lot it be attractive line. the revenue long-term mill capital mostly growth market. George, generate good have recycled, structure than

here, you XX% same to return if gets margins EBITDA like So mid-teens on the invested low capital. you

structure. So revenue we basis billion $X.X from have business there. it's different capital a And a a

in pretty have we significant Peninsula, Iberian positions Morocco, in France. leader. Italy in, the like So We're we're and regions the that significant a we're

obviously fits us company I it of term, our in some packaging business that growth IP vectors gives long is now. So the think it most and

George Staphos

from create fluff GCF? some longer-term view that effect, value just thought And Understood. within that closures and results -- opportunities How what pulp have it's business, machine the the outlook that you any? in announced, your if perhaps of for still benefit to how the of that got does your fluff, the quickly if growing much a about calls, you follow-on My will to question, up interesting grow you market so opportunities take the past in it's you seems How the eucalyptus-based and more mean, from I advantage that there be in keep take commercial which all bit the can have? come market sufficient potential the the again.

Clay R. Ellis

this take Yes. Clay try your Ellis. George, is questions. to happy at I'll be stab to a

that next first residual fourth We'll that that. of extend quarter. year in costs folks But occur will we machine personnel I as have some quarter. the completed and into first overall, be closures think the move mostly train the will the quarter in around in

so as think immediately, go benefits the And and that see ramp I benefits we'll will through 'XX. you the

work cost big have -- little Very early bit cost do. there. still minimal of our optimize in have 'XX. getting all a we in per ton we And have at that payback happen a That optimization to to Riegelwood, will will will

short is to fluff. or going comment on fiber your You're -- eucalyptus

] a most this Eucafluff [ amount growth. think, of small the It's has been market pretty I X years. So decade, relatively in of significant the been hasn't been out, had X, and market

To and your point, has always there's I concern there think and interest been.

we -- seriously. were that chains fiber interest in prices prices when were high do last more as think differently got and at constrained or it how I year, at create about a point there supply more probably look short

that long-term have stay been the it we in. -- we range. in Again, the market why it's consistent XX-plus growth, percent of and as of think is We pulp the will think it and relatively is has future in fluff view past. reason baked that has the in that the fiber it Long the

And so future. does outlook of view change our the or interiorly it

Operator

next Seaport line Mike Weintraub Partners. Your Research of comes from question the from

Mark Weintraub

the not question for fourth me us in what A clarifications $XXX from the the third for puts few the take I million million generically -- bridge Is fair? think $XXX $XXX on really opposed hairs guidance, quarter, just $XXX basically could first EBITDA quarter, I upper very and the you for I'm hopefully, I And you in there's you on if gave million specific of just the -- you all, splitting that follow-ons, that had the But more that as million. here. if just XQ and to difference provided numbers in numbers.

Timothy Nicholls

Mark. fair, Yes, that's

Mark Weintraub

quarter? so Orange $XXX the in just Orange, show Or does fourth when to Or is And XXXX . that, start on get as primarily it to million, well? now? second, show does in that does the that related then up down And closed? Okay. up

Jay Royalty

This is Jay.

have in we We -- underway will through this wind transition quarter. speak. down work of down and at business the through complete the the And obviously, stages is fourth early working it dynamics, to as transition It's be do all all customers there's the point. we're that a but of did of and So not transition. that

So see in type EBITDA expect fully we would XXXX. of impact to that recognized

Mark Weintraub

Super. then bit little Okay. of just a And color. maybe

seeing the on us what we we've export you mean, pricing. what's Week sort Can of business your that You their -- bit had And Paper there led I of just are us those you again, business. more about And Pulp And time the a color and down. talked protective Maybe happening much you're price of containerboard review getting provide export to more what extent, there? little in can export posted on better. -- prices than with in domestic if certain markets? lower a in going on give was real kind erosion

Jay Royalty

This Jay Sure, again. is Mark.

see to continued last go back third you quarter. export we and spoke the starting some improvement markets, the to in call, If in about that definitely the

all Asia, we've in think America, we Europe, So Latin this we major inventories the to see and those markets seen markets continue normalize you serve, when of point, demand improve. about at

Latin in very a being America we be resilient. bananas to products, a season much as direction and by an of 'XX early vet-driven rebounding, in really in quarter, 'XX -- a and beginning these been 'XX, very third pineapples, positive shift the anticipation for types saw early better the agricultural well, saw versus late last quarter, year. second solid Europe, that's that's in as we driven and so in continues of melons,

recovery as that continues a well. seeing we're Asia is there bit, lag but to a market

look so you quarter, through when end strong through at that all the books order And we look of the the see way and of the fourth all year.

and demand certainly encouraging. we is outlook So bottom seen believe the more we've

Mark Weintraub

but aren't that going Is improvement supply function could it pricing. Or recognize I better you regard. forecast And that into business? translated this out color there demand to of with this chasing seem . help has yet Great. that any us you prices Okay. in doesn't here, guys more a

Jay Royalty

shifting but see turn. that. Yes. on to supply-demand is I know that's improvement. also about see of have actions being taken seeing improvement as a are There still supply mean, the the this imbalance, We're both you that because to side demand demand and market you

we -- So outlook's I We'll bottom. at think demand more said, this we're goes from seen encouraging. where The as it here. point, we've see

Operator

Securities. of question next Roxland from Truist the Your comes Mike line from

Michael Roxland

Orange you Just on a Texas on I have mill. But that was mentioned one not capacity follow-up comments the that ago the believe adjustment around a horizon. permanent appreciate quick few I closure. do Jay's do quarters

So transpired the last I'm changed that in wondering what's happened quarters what's or few approach? have your

to more then to be on can but rationalize about type extent of think on And you to similar your opportunities broadly, additional the portfolio realizing your difficult further your may that forum, and this comment, portfolio?

Mark Sutton

take I'll Mike, any the have one permanent didn't and said the who the we first part -- I'm on because closures horizon.

closures what don't around I I and was said at look have permanent secular think we declines, we believe we that.

built also for is kinds today. business need a make the we containerboard in future to also the and Jay downturn. And this, the It's anything than -- we've cases, and the we that I we starting long-term have make business the containerboard Industrial we seen of think what's of Packaging not changed is mentioned the duration we since this some like plan for depth and mid-XXXXs. in different

at mill. invested bleached product makes future-looking pulp We white Riverdale that top high-quality not our in a using containerboard, That's recycled.

got We've quality. future. basis needs high So and can system weight for the high-performance that today address lightweight our

of So depth of. allowed product we that decision what out make us duration this that need is offering fact to boxes the to the make our downturn, change we I time over think the part this of and

and a investment do opportunity this timing we're future of then any the get to taking right. to have we So reset

of I X not But that's what's this were changed. type quarters downtime. about We ago, type still believe in still said, this would in economic have as environment the taking thought long-term Jay growth. fundamentals, of we demand

Michael Roxland

to or in does then, And the of you additional . opportunities in similar question my where it. the of Orange Got just terms that similar appreciate rationalize, part you opportunities have portfolio, stand? second may that could Mark, color, that

Jay Royalty

comfortable This fleet as and is We're extensive as Jay. to sets with the the made have evaluation enable a room that We've it this We very moving us commercial the and made in forward both very that through to for how and and came we're us do and our side to of will it And have well we've to decision grow. we this announcement. thorough will We business to still a system win future. up that. capabilities. grow

Michael Roxland

it. Got

cost IP Okay. that Better a how Can quick you terrific entire laser-focused you approach starts to team Obviously, notably efficiency, kudos follow-up, help ensure to more job forward initiative. the company's a on particularly you with the driving improving improve? you And demand as us remain going how just that and as with Building -- But one just team inflect efficiencies. understand and removal are Mark. do cycle then and and you the to do despite the the doing the gets cost ensure takeout and

Mark Sutton

That's question, great Mike. a

As our the X-year a is had stuck really of that's no to that cost high part inputs. something had inflation gotten into of one's before, a we takeout do lot meaning

sourcing 'XX back that but one side. on the to wants real that were global In any our not like becomes, no early sales customers So just our challenge able and of using to world, with they 'XX. 'XX, less, get through becomes give just commercial the a pricing

that to of and of inputs some buyer to So some as of all -- large hardball positioning ourselves out. getting play and extent a these cost

that put need And what we're kind in we to -- of and here invested around on of have be on be everybody we to us gap. margins get is clear capital. directions We needs does to our that the the -- for returns a kind EBITDA drive the company what

and including with run has in cost everybody revenue levels and that that all like to because And staying distribution cover logistics at things that those at gap. a stubbornly before we've just strategic can't never role higher So levels, all substitutions. the inputs, are prices seen that takeout of especially closing into other these play of and you issues

So to got we've on all of work it.

very the to do way conquer But and but that become bit of some really and and approach way have organized so a have is then take can in and that's a divide things it the close their found gap. structural, we analytical out the in

we se, very focused formal focused using same a a It's dependent to mentioned, IP, to should and a see on won't you on initiative market they're you Much approach. we've rigorous quarter, But on IP quarter is not unique We continue. of process but per is the as better quarter earnings after plan process. reward the initiatives. success, what We name not it. it, but probably it had call very same and that -- analysts we and build that use call improved what on hopefully won't that investors won't going to we're after

on in-house outside do We to continuing setting the take We're have running that to we in up. and it get out. it some plan cost help entirely now,

Michael Roxland

luck XQ. in Good

Operator

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

Philip Ng

I Mark, off, your the want for to you first over Well, great leadership. all and the appreciate years, I insights thank

characteristics the they're that question is, my executives So of that plan of process you've next bench versus around when Board internal moved that looking terms of for out in any nicely. is senior has external? for? first the plan, candidate, thought looking What's deep company had game a stand always the the the succession And

Mark Sutton

great CEO the we have last it's companies for succession, a When public we leader of question, succession. to senior kind publicly most do, we put that to announcement process It's leadership phase, multiphase a process and out and notify multiyear were also the a moving like Phil.

and make the of very the the from next I'm with both Board possible selection The IP leader working best hard, obviously our and talent. from them, is on Board internal working to

look we said, exhaustively to at best But have talent again, governance also outside you and practice company. good in As talent. the tremendous the is

just workforce, happening to to of we point about holds think built And specification where on. on a the a respect will remember looking respect with when we the but it. They're changing the that's with report, IP find what company. And is the They're future making next what get the think you we the when on what's future. future will. not leader me. progress, we're something Board about for laser-focused replace Board we with to working looking we need to technology, for for to it. And the hard thing have doing the in job one to They're great we the leader the to And it, is markets,

we're using, out it But year a IP. from how approaching the we the process high I standpoint. next and the But great for with think likelihood focus really for the process that's choice come we're

Philip Ng

of Okay. in about capacity. I That's downtime million of you Orange, have XXX,XXX is X.X great economic taken containerboard. color. tons tons think, guys about Year-to-date,

you any you well. the guess, you this I that when downtime I I on would year So savings to, of be downtime would economic as EBITDA mean, called take economic the demand be assuming out, the is reduce do your capacity next year, color . effectively that helpful million out? by half additive And to guess, impact, stable $XXX from growing?

Jay Royalty

Jay is this Royalty. Phil,

both trajectory. we Your good. how is the the I situation. works. I heard improving math math But demand think you've a talk And in and Tom transitional That's about are

the this operating obviously, the cost change to of us So that doing move, commercial need get for still doing and that our to on of us flexibility leaves the terms box in together room. flexibility. the make Tom's flexibility as comfortable some we're and that the our and closely It anything how need execution how of our very outlook, worked the containerboard we that in this we We some we're and doing what we still we're with plans, we that leaves that what cost -- we what won't minimize flexibility. capacity it But analysis, commercial very in about future. see business business commercial we're

are. we where that's So

Philip Ng

so any been $XXX size this interpreting And correctly, year EBITDA how that additive am way to I economic much be Jay, in downtime far? would impact in cost improvement But million of any savings? to it's up an

Jay Royalty

from economic in benefit of yes, the up taking put there eliminating that is be downtime. that out that would million impact, the we've terms number or downtime economic there but further $XXX EBITDA

Operator

today And Matthew McKellar the of comes final Markets. [ your RBC from line question ] from Capital

Unknown Analyst

like on investments you you're still run at further that Cellulose importance cost Are pricing? favorable mix structure either about versus relative your when more cost sounds you then drive looking factors maybe there whether bit that to think looking drive in capacity you capital and to like about achieving above further think a optimize in stronger production what your you're other cost Global able what opportunities cost exist It detail Fibers. capital could provide to opportunities actions or do the structure that to optimizing of how stronger performance? And of achieving current or rate returns, more driving business can

Clay R. Ellis

It's implication. question. Yes. high-cost machine. machine the was made Riegelwood structure we Matthew. great a with This has Thank you, Part Clay. cost a a that Pensacola moves Pensacola of and is

although talked of market capacity, the part use but was pulp. majority it. flowing for fluff, -- Riegelwood, it years, So past couple has of not of market We that's over machine about that the for softwood pulp

as well that a as cost So implication implication. mix a has

the there both and mix. cost in benefits So in are

our of the opportunities, things customers were what place supply are as you think various to lot serve XX% costs. XXXX, opportunities as in If container and supply volume in would freights business, of it's in With think as I between chain put our -- that going get last to It warehousing we in forward, increased our out would a chain. the we first about globally year, I prioritize export volume our cost methods.

unwinding are warehousing modes. in those We different

freight rates, down carrier Of in are course, rigs. ocean coming costs

things the That's uniquely to will very helpful, big can driver, being driver. that's big uniquely. be the that we a and but So been unwind that we very a continue probably biggest did driver also

have We optimize there. to more

fluff in machines historical continue growth I want we to ranges our think we capacity, on to -- optimize I fluff. think again, the kind as of fluff we see want -- -- to of the

the is opportunity. mix think biggest I

As and Is There's clearly mix? like cost? -- price? then this in a there. cost Mix even Is opportunity mix you obviously bigger in and is it a or optimizing price and disadvantaged supply we're chain would of after opportunities move the or is a manufacturing mentioned, cost. be it price feel the benefit we don't It's it opportunity drag. there's prices we're mix so there, but is

Unknown Analyst

sticking Maybe with Pensacola.

if you How that . at side profile down does taking pulp produce think containerboard capacity I in cost also mill, affect that the all? of site. the at

Jay Royalty

Yes.

is So Royalty. this Jay

of are there Pensacola. So -- containerboard there's little perspective move, has to costs that as consequence business clearly about a that how just -- the there bear on think clearly we a

kraftliner from pounds export and definitely portfolio. our NAC]. It's to differentiated there, well unique asset within the as goes all about a from globally lightweight really [ competitive think is range the about of the a grade serving both mid-XXs, XX it if you we that lightweight as Pensacola have standpoint. domestic And channels so

the right like basis ton at way not that's a it's look on per the mill on of -- to look right you a pack, in If at middle it cost traditional curve, a but the really Pensacola. not is

at on basis, made and the it to area which have is sold. are look You an boxes way

particularly Demand the from very It's output, a lighter It's is wide Pensacola market machine. where that machine. products. growing is capable our high these a when way. basis the about a you for And perspective, consider is is XXX,XXX heavy. well-equipped match It's and Pensacola, got weight And tons, significant capabilities machine. at which significant, really

that mills regard. in to in no have and also are mill, of that single Pensacola machine are other be and we different successful, machine being we And expect a competitive context the single that mills

Unknown Analyst

if run of a generally course. this inventories run a the were you segments, quarter? show customer there destocking at all particularly on But last last today, were fourth customer Anthony's Are or target Great. to but And you And indicated segment. would your question, quarter, segments you America you that slide down same has levels? think North below that could within broken by be one in still analysis here then inventories and your its do levels factor where any touched for sounds like as target part where showed me, versus to it customer destocking response

William Hamic

Hamic. Tom is this Matthew,

get the back, destocking over came out in like I shift and think actually forecast last inventory saying, in talked over. quarters dramatic an terms to And exactly generally is that idea of -- you're we the We We is quarterly actually we're went data X of that stock levels. to the accurate saying do a customers. levels.

so like you -- people and many in the more orders certain of bit. have look a anecdotally, kind you cases, along can rush hearing fact, picture In our orders we're volatility in Europe in markets, patterns that them And balancing we're more seeing at oversteered order bottom. it if looks

box demand. exactly is So it's healthy relative far what more you we But in think many all cases, indications said. than so future to

Operator

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

Mark Sutton

want you, progress for look I your on of January. on to operator. time along I end in the you to with thank and International everybody at our Paper. call leadership the update your forward team for Thank interest next our today

you. have So rest a of Thank day. the great

Operator

like for Paper's we'd thank again, Earnings Call. XXXX today's to Third in Once Quarter participating you International

disconnect. now may You

International Paper (IP) 26 Oct 232023 Q3 Earnings call transcript