Packaging Corporation of America (PKG) 25 Apr 192019 Q1 Earnings call transcript

Company Profile

Participants

Mark Kowlzan	Chairman of the Board and Chief Executive Officer
Thomas Hassfurther	Executive Vice President of Corrugated Products
Robert Mundy	Senior Vice President and Chief Financial Officer
Chip Dillon	Vertical Research Partners LLC
Mark Connelly	Stephens Inc.
Mark Weintraub	Seaport Global Securities, LLC
George Staphos	Bank of America Merrill Lynch
Scott Gaffner	Barclays Capital, Inc.
Anthony Pettinari	Citigroup
Gabe Hajde	Wells Fargo Securities LLC
Mark Wilde	Bank of Montreal
Brian Maguire	Goldman Sachs Group Inc.
Adam Josephson	KeyBanc Capital Markets

Call transcript

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Operator

Thank you for joining Packaging Corporation of America's First Quarter 2019 Earnings Results Conference Call.

Your host today will be Mark Kowlzan, Chief Executive Officer of PCA. [Operator Instructions] I will now turn the conference call over to Mr. Kowlzan, and please proceed when you're ready.

Mark Kowlzan

Good morning, and thank you for participating in Packaging Corporation of America's first quarter 2019 earnings release conference call. business; Chairman call of Executive today who the Kowlzan, me and Vice Mark our runs the Mundy, on is Packaging am and Officer. PCA, CEO with President, Chief I Financial Bob and Tom Hassfurther, with turn I'll to details. our first I'm over provide further to Tom overview quarter begin an of and results, the then who'll call it going and Bob, to things wrap up, I'll any we'll glad and questions. take be then per of we share. first $X.XX net million Yesterday, income $XXX.X reported or quarter

income with First expenses X $X.XX of net to items quarter included discontinuing of Wallula No. per special the linerboard. to paper the machine our share the related at operations associated conversion

quarter $X.XX income Excluding $XXX.X compared $X.XX million XXXX special per of or first share net million $XXX.X share. first items, income XXXX or net was per the quarter to

were items in billion first First billion quarter XXXX. quarter $XXX for $XXX net in was excluding and million EBITDA Total sales and in XXXX million the XXXX $X.XX special $X.XX company XXXX. in

operating outside paper from primarily and segment building were share. as at well Paper items primarily of chemical higher costs, $X.XX driven as XXXX converting first was XXXX per first and per services our our volumes of and quarter our $X.XX. and of $X.XX partially $X.XX and to the average quarter prices as in higher mix of repair to rental with expenses. increase business segment lower expenses volumes such totaling and depreciation These and by annual earnings offset $X.XX due segment, $X.XX; of mix These due lower exit wood and expenses in benefits the increases compared lower higher Packaging fiber in costs inflation-related of higher equipment indirect the special to prices Wallula and by operating Excluding primarily were share costs materials, $X.XX Paper expense and items $X.XX costs labor in

repair the weather-related mix quarter $X.XX flooding share. across extremely and by production, for costs challenges cold to primarily guidance our prices significant in we addition, and first the share Results temperatures Packaging both above $X.XX from per higher and of and approximately impacted quarter the negatively fuel that experienced In Paper due $X.XX segments. company were per fiber,

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

and entire running challenges established Our through containerboard demand while numerous quarter system record mills managing across weather-related a volume our new the first mill system.

our inventories to and and on our shape, production manner. service to containerboard integration box as customer quarter through record over to who'll needs supplying We details we it maintenance in shipments quarter day. the and I'll a containerboard work by allowed business. now a our plants, for shipments Our us achieved to as the new our all-time which industry-leading the per with necessary good ended box containerboard turn continue outages more well first corrugated maintain our total rate sales in provide timely Tom, scheduled

Thomas Hassfurther

Thanks Mark.

and Export compared quarter and were to share, our first $X.XX first needs both products corrugated above up the XX,XXX were increased prices compared XXXX. our about ran and tons shipments to the quarter plants was plants per of mix of were volume. both as and which $X.XX shipments containerboard indicated, record lower last containerboard supply first fourth export Mark quarter demand, system share products per the first per per we compared down last containerboard containerboard well box up fourth as quarters As quarter the first corrugated as and $X.XX total of XXXX. to together to of managed prices box our about Domestic XXXX day, year's below share, of volume Outside year's had X.X% sales quarter.

back it turn I'll to Now Mark.

Mark Kowlzan

Tom. Thanks,

sales the began all-time of XXXX XX.X% our and increases. the a million Paper with items, favorable at or $XXX during of $XXX segment, EBITDA sales Looking announced we margin. an conditions had to of record million EBITDA, XX.X% excluding margin Market first compared record price an and the of implementing first million million $XX or remained quarter quarter quarter, $XX special we

improve logistics and managing our were as sales of running better last a after on volume costs result at were back our pricing the anticipated, to end inventories to allocation. mix and we than and XXXX good of Our most year level able of freight a

Our mill system compared products. focus is a from The exit our to last profitable Wallula business the most of are our on running year paper revenues increased extremely well Mill. result with the at an low

to it. to couple to ago, we As rather years in exactly margins over what I'll allocate capital Paper and said the could it we're exiting see. a felt and this that we profitability And continuing improve starting of turn business Bob. we resources at people Wallula by our to that's than now segment

Robert Mundy

quarter $XX the contributions federal Mark. interest $XXX over back We cash $XXX million. and of free on provided cash of dividends pension and generation, to Mark. for payments of record quarter during million flow the primary turn million. $XXX cash The with tax first state cash capital net $XX expenditures income of million. and We it cash $X with million million totaled Thanks had payments, Common included ended uses quarter of hand. $X of by stock million of I'll million, $XX operations

Mark Kowlzan

Thank you, Bob.

on any repairs on decreases and call fiber current we'd second our our of prices higher costs must second that, that, company Packaging as be seasonally and statements. lower prices constitute be in and and International based first shipments Looking XX-K the of paper Falls $X.XX will with with should statements. our with including But mill. the expectations the estimates, continue effective move tax the and and at first those restricted remind of risks inherent product the the costs do happy our of The per we Considering freight, the quarter improve earnings our price shutdown scheduled items, corrugated due we and as involve expect containerboard In we in as open as SEC. higher projections the of The share. direction to actual the previously you the ahead, to file forward-looking should outage segment, those annual on And lower. similar Recycled please. slightly announced that result could share-based a forward-looking expect like report implementing anticipate price lower, we and identified to of fixed uncertainties, the quarter, cost but the as domestic segments, published to due annual questions, we've factors in be containerboard made quarter, on were I rate and expressed be differ these Zatanya, to results Across With should from certain statements milder the seasonally higher move Form risk we statements entertain some volumes to I'd the questions. segment, stock. materially economy be quarter call we increases, export prices. compensation should treatment the the as from lower into well weather. into Energy costs both slightly higher accounting will the Paper

Operator

Dillon Vertical first Partners. Your of comes question Instructions] from the line with Research Chip [Operator

Chip Dillon

Hi, good Tom, and Mark, morning, Bob.

Mark Kowlzan

Good morning, Chip.

Robert Mundy

Good morning.

Chip Dillon

to I Boise. business, I the had questions quarter seen about couple since which the bought ask we've paper wanted a think white ever best you

the or you half, quarter at As see the then second the asking how to can I would you price in decline the back quarter assume. And segment? of kind much versus of of were second And quarter third a that second in in likely of and to comfortable we the know hit we where I give operations us first - then feel of don't the because quarter how first the they bounce an the idea look increase us how Falls? would much by

Mark Kowlzan

you give impact costs the Bob, the… outage let for I'll

Robert Mundy

about the - continue some quarter. and additional that fixed first, to I there'll up price Chip, quarter, other labor the said, implement from pricing Falls second as some And increases be will well. the announced related first the to to Yes. in we outage. the relative as we'll there's But be $X.XX costs

Mark Kowlzan

you as the up regard expect we to volume, to period. with moving the will volume here. comes at as look seasonal be on then would - summer Back-to-school And impact the should seasonal June in impact, start

to And so be we'll to volume our should inventories. of we're we'd out build Also, sell inventory, expect. able our able be up so as

So in to satisfy ability Falls I customer terms at outage won't impact volume, the our demand. the of

Chip Dillon

sequentially So hear that you a got to even could up in segment? earnings decide I you, you and lot pricing, this of have we assume or flat actually if

Thomas Hassfurther

Chip, though, quarter good a history certainly be sure. to should for It see. We'll relative our

Chip Dillon

Okay.

Mark Kowlzan

back-to-school-type in have of the EBITDA outage And expect Chip, - volume, without outage in with expect, again you generation. quarter good the us second XQ, would be quarter, to another continuing terms XQ sales our an should would then you behind and

Chip Dillon

Terrific. other look of some because on the some in And we dumping kind some some seen that And months. put at I on some trade, data - past, update been yet if guess, on if faltered segment we just there we've I then question where you other countries. I the terms had a that cetera. of one couple have the is in of know of last just demand that I us by could tariffs, know stand the tariffs in of et

to that And place a there us way just update could where still impact five those stands? think I on were U.S. the market? and you in as tariffs involved. Are

Mark Kowlzan

to and their quarter export you the have earlier rest from in all the still purposes, first expected coming the capacity with supplying had the the quite with in tariffs or customers, on are as industry the the frankly, place. out, for intents of of Chip, needs. some market imports announcements And would world rely the

that demand. some did capacity import capacity go Quite domestic point satisfy So needs. frankly, they could to the and at the time, their of not, supply seek in the

industry's of we're a supplies the So the base. in of somewhat rebalancing customer itself terms seeing of how

reaction. That's not imports So it's that surprising picked a have up. natural

Chip Dillon

as or then using few a so, last they major Brazil that eucalyptus. And to last containerboard capacity build week know, announced a you weeks or were producer ago in Mark, down question. going

I've never to grade, that. any a at lightweight had hardwood-based been containerboard, seem you making thoughts any widely are that you that a they very know didn't think if I seen usable. that's we've thoughts seen do Although about I And least, - really about have

Mark Kowlzan

not you or carton fiber. does Traditionally, type of category just It's demand high-performance of that's summarized eucalyptus container. folding able being requirements a short short think hardwoods the frankly, mixed akin I Well, Packaging fall into fiber produce material. container satisfy the of Quite performance to a it. traditional to a

demand the is small So it The would all remind container, be volumes in the you, are small. super-lightweight - which a lightweight, is of worldwide. very

So it'll niche in product. my be mind, a real certainly,

Chip Dillon

Thank Understood. you.

Robert Mundy

Next question, please.

Operator

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

Mark Connelly

Mark, showing think a about gains Can and and individual big customer, there a what how clearly you base quarter lot and of from lot you PCA of customer signs losses? like a in was of that. your us early chatter distress remind you losing looks aren't customer the about

Mark Kowlzan

Yes.

the was we I business January And that that our - that. from of think terms we that call, primarily, about of But competitor the acquisition. sheet in on had talked purchased piece talked Container a about business. Sacramento

that, having business for. to some color other to add than was And some to that's so the of want Tom, big component. make you But been we've that? the up that

Thomas Hassfurther

around the makeup to our that are, times; as Yes. accounts our is to XX% our Mark, And of referring something I I'm of customer are probably in rumor total. different it like lots going markets. going that. a strong mounted or like on that percentage of many lots base industries, of different we've to you, remind think said a our basis, volume relative largest of XX,XXX the was small something you're

by accounts a I So well that of have the in we spread sheet anybody had out, even was somebody. loss it's was don't category. referring Sacramento. we that And large purchased so couple to were What of Mark in those out think, very earlier, discussed we

of was events can't for impactful mean, of Sacramento, to those things, as but large the don't in impact know, you that you scheme us. So it see obviously, big help. I But one that you

Mark Connelly

That's helpful.

you've question. how plant? new calls more talk system to overall significant doing you about little box your last plant And number bit going you of us the of one projects. affect what to about Can in tell and the it's your optimization with a Just Can box integration couple levels? progress talked more your that's

Mark Kowlzan

the put of starting the project a all, plant part Pacific very question First weather operational weather pleased terms some team. the time very of we and schedule XXX the Everything start-up we're down. again, still to corrugated teamed in of breaking on expect, with the of in But the project Northwest had We're first plant. years. we mill delay the worst Richland, a a regards of all then the year in have ground, for had as And your looks little would we with with new end good. bit and out box team for new the management design we've packaging up the oversight you

we've group So to got that? putting a want together. add Tom, quite formidable plan this to you

Thomas Hassfurther

it period this time. Yes. so all there I've customers are more there driven a capacity. needs. it. a keep come where by box was an to add of we did the a real to by our We're of stretched very, when very driven we We're really we is automation. tight before it capacity that we're short demand. any and we in mean and bought any I We or have they satisfy said of add I little to labor build the more - it's other over need not optimization plant just not need doing customer-driven. markets, labor would - satisfy go that We're to that projects And we customers' also what will type mind market a for could And ability Wallula, company. hope up this

Mark Connelly

Mark. and Tom you, Thank Super.

Mark Kowlzan

Thank you.

Next question, please.

Operator

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

Mark Weintraub

a follow-up, being more could quarter XQ? a expenses bit by year? X% mentioned provide you as One know of than you I question outage is, you. the I Thank this Falls XQ

Mark Kowlzan

Yes. than call. Mark. we There's what no on last different gave the

second the $X.XX in $X.XX this They third quarter in and $X.XX year. in the this first $X.XX quarter, fourth. were expect in We the about

Mark Weintraub

the are give you completed conversion leg at been there whether you you. we is through Okay. sense whether or mode as can of as the the year? with full second And Wallula, a kind of or on the to now Thank us not profitability - upside still having progressed

Mark Kowlzan

We basis. January talked about about this a in rate run on

So we've supply Wallula the next capacity years system of for the off capability. couple to got

we're modified year. machine to run a rate, a so XXX,XXX the full at that was produce not And tons

to supply future come requirements capacity And to the year XXX,XXX We're so within running of needs, statement running demand. but supply That's the off our capacity. a couple about part final not we are to of from the ton talked our will running the Wallula. next additional we years into

Mark Weintraub

Great. you box And April then lastly, could of give shipments to-date? us a sense

Thomas Hassfurther

Yes, X.X% Mark. Through - up a XX days through XX days. we're

- these So demand talked a and well. Sacramento was year the from year-ago, given some - we comps as that we're remember also especially about, last I tough again, are got situation some good

bit So a a the in we're what off a we'd a be April, we to consider of see half little little being to but bit slow little better. - start second

Mark Weintraub

Okay. the slowing in And that had up you seen showed in the statistics? March

Thomas Hassfurther

Yes. Yes.

into I baked look the a think the back X.X%. think One - recall, year-ago, up I number factors if number is, a like of was were I I March. you March think if

comp. So it was incredibly an tough

nearly anywhere X.X%. Given fact out that year didn't the to a the turn at near be

was there - an it but to February had well suffered like you every lot weather from shutdowns as related lot event West I certainly week do March March, We flooding, You to in it vortex, seemed Coast mean certainly a the lot polar a had whether of Coast. name and with issues. our month during during well. of of snowstorms, on box mean I a it East plants, going of really,

Mark Weintraub

Thanks all for the color.

Mark Kowlzan

you. Thank

please. question Next

Operator

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

George Staphos

wanted customers, a then April of seeing for that inventory box we've Would and quarter you we've others has caution on would a you on agree maybe more to discussion everybody. little that quarters piggyback kind a a that bit is first of of Hi a month the off more good from with taking the holding little that couple that of inventory. Thanks shipments Thanks of start recognizing last What for and for in questions. in the your been quarter just the is maybe deceleration and growth to terms the patterns you bit and the function seen a say progressed. I details. Thanks. started slowly. has for

So a helpful? comes people be would ratchet that close. on quarter thoughts things down to as Any

Thomas Hassfurther

Yes, George.

given day and good think things I the hear globally large that you course of fact most and One customers day the other of companies. we're reading. our are our global customers news reading negative same news. look They're

reaction. So I lot a think there's little a knee-jerk - more of

now, The relative pattern it's so a I off especially where and same off. stronger think kind it they you're to right we're about, that's little started customers. that to talking our seeing of we're inventories off then talking and and going on - quarter and tail starts

are like talking their planning negative but feel business still inventories growths are anything about very, customers closely. Our and of in managing not business, very terms or that. bullish They're their they their they to still grow

George Staphos

Tom. Thanks that, Okay. for

years? trends do ETL couple perhaps different out trying content seen this use of in the of next take I you materialize basis question were had going is are you've And What what any to comes Are in to optimize fiber, based there? used seeing different less earlier is than on you U.S. and you some terms the up packaging about to how basis the is seeing Mark, question last views rate change just think not package, lightweights talking and anything of the in or couple of quarters weights If you the calls. on being trying discernibly to on at codeine on Second the move level? to of the terms move and the the the weights of the on periodically announcement.

Mark Kowlzan

and color? ahead go some you don't add why Tom,

Thomas Hassfurther

where ability to knows That's trend trend being as of fibers, containerboard trend tell everybody is long fibers, virgin-based that - performance. you cetera. system, bodes the the well very I'll for us we've better et the George, because and the with a got formation the is

of chemicals, things ability with We amount have where more you about fiber cetera. to a added lot that's throw are performance a comparison, in levels And really the where meet We've much correct have better to fiber. talked headed. et recycled

trends we're spot long-term now where in and business. the very, box for right long-term for good think a I very are the

George Staphos

mentioned, missed the Do on be last weather? by in seeing in done the cost Thanks think I'd if you Okay. have to had, think how luck helpful. My Obviously, normalize Tom. of might a south be for you it'll to you we're on long with that what been question wood dependent any take relative the we you for that, period? and particular can't quarter. would it'll time And good the we've do normal weather, to which here it, we're the in thoughts but XQ, Thanks. predict, back to because

Mark Kowlzan

your the we weather you all got so activity. George, and in Mexico answered tropical southeastern severe are off month, hurricane of here We own season hurricanes end question. with a up type Gulf bets or some harvesting starting of if

George Staphos

right. All

another Wisconsin box So doing then one. curve. plant I'll take up far okay the so coming

Mark Kowlzan

Yes.

very are We with pleased that.

George Staphos

guys. Thank Okay. you,

Mark Kowlzan

question, Next please.

Operator

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

Scott Gaffner

Good Thanks. morning.

Mark Kowlzan

Good morning.

Scott Gaffner

April gave you us Tom, Mark. Hi, numbers. the

at what polar of mentioned for think some cadence day little talked You the about of you of how you or the the month? out us give of quarter you in box sort Midwest, the The happened can shipments in broke a end but bit the XQ. and the flooding during vortex I actually

Thomas Hassfurther

going remind And I our course, They're very much day. was I to of steady quarter starting then those weather pretty related. felt we're about also. with mean and just kind mean, into pretty good actually exception throughout of the that gone. down shape tailspin out. essentially I'm And good March. that March everybody, customers not went and in down, when they're we out pretty are started you mean, I when of it are know, down, it orders producing we But the were

up, come So back over all they starts when it production again.

down were our if what as really and was March. we wasn't impact weren't. customers in the So That's

Scott Gaffner

enough. fair Okay,

sequentially prepared Are seeing rates that? comments Mark, patterns? You you thought higher I that you reaccelerate think it your or costs, XQ. in it in freight versus would freight XQ driving different freight actual what's be mentioned Is

Mark Kowlzan

seasonal the adjustment increase, It's just fright some timing. of fright

Robert Mundy

that mix when back, mills And there mixed as in goes well. outages Scott, some that there's certain depending and into them you have well, when at there's on bring you as a factor

Scott Gaffner

for last said look you you Okay. And outside at one just When down the sales, XX,XXX me. tons.

more I Is difficult I was if other? outside Pacific any if in other? a versus Northwest. in think it's that region the sales. some it's I customers weakness was don't know or in regionally year-over-year on one anything, place down we've than comment one the Southeast. more that heard mean, Was there the from the was more the that affected

Mark Kowlzan

of the the throughout to we And referring countries - The year-over-year that we was saw of primarily very world. And around world but XX,XXX tons was and the small was that you were domestic, shipped that bulk decline. odd export. the amount export the some decline all around that XX

Scott Gaffner

Thanks, Tom. Okay. Thanks, Bob Mark. and

Mark Kowlzan

you. Thank

question. Next

Operator

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

Anthony Pettinari

Hi, good morning.

Mark Kowlzan

morning. Good

Anthony Pettinari

want public a typically downtime you regular they the Your to market two quantify something release. to in possible the to that amount competitors basis, some take but as that? running that's and of any, you understand interpret demand downtime do you in we not Should mentioned it on market took is XQ if big disclose

Mark Kowlzan

if our Wallula do and at just first in you look what capability. for if now you our Well, with terms quarter what capability then, we you is the and the are system of produce math, know

Wisconsin Wallula think never out I Filer will running the smaller call mills three that number of two We machine; a which the its is on I some requirements. demand downtime. to machine, machine, a smaller one which is the did say like and math. the amount number take downtime Tomahawk, machine. number you do can the We at City, besides specifically

a were levels going unit, polar and also vortex During few days. for when only to gas spot reaching price operations $XXX that astronomical price, was was they the but period curtailing not a the

on we machines just the days in couple to. as was that, So smaller it we as demand might just to downtime have the throughout of Midwest. to push hard than a running system Other having DeRidder, of Counce, net-net the the mills saw

Anthony Pettinari

Okay. with of That's from virgin mills? Can mix to sort $XX OCC you between quantify opportunity your helpful. virgin switch into of follow-up your on remind at fiber any then very OCC? OCC margin and a at you can a at question And just mix? us And sort the ton,

Mark Kowlzan

We're still XX% recycle the probably of in containerboard flows XX%, Tom? amount DLK terms of in that mills. the level through OCC the

Thomas Hassfurther

add also what as you to say, Not for customers really for selling the mean I'll we, that on Anthony, potentially can we're we short-term in a not we're make the could earlier, base because gain be OCC. performance and sacrifice mentioned performance I linerboards marketplace switch. our going very I our

Anthony Pettinari

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

Mark Kowlzan

Thank you.

Next please. question,

Operator

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

Gabe Hajde

morning, Good Good Mark, Bob. morning. Tom,

terms we're particular came think about the of, end substitution, set guess that I first out seeing curious any at sort and I in in in question to reports what context quarter a applications. and/or all stands asking Tom, of you're what could if an what if of the fairly market of eCommerce mentioned some the having some comment maybe You April, customer seeing through there's diverse and was you I you,

saying. you curious Just what guys are

Thomas Hassfurther

probably seasonal the changes is regular year throughout segment. some if a there's that and more markets mean, it on Well, art. are are would typically I eCommerce say I steady some the segment would But that I would be there basis, pretty was any and one our

you fourth quarter, is eCommerce. first out get very which the come we're is quarter, of course, And into which Of less. the heavy then

the one So ways reduce there and their like larger for there's looking stated players in and things that no way packaging to some that. publicly expenses question of that have have they're trips

there, some a the more it's impacted. one still the big probably going that market. be is big, And part still there's but on it's that's but to growing, going So of

- hand, of segments what example for reasons, been other food corrugated, transport that myriad the could moving safety for a have it that reasons, as in we've including environmental. are On for sustainability an other got back reasons, for to and RPC's

the markets very these and So and time. all you have are dynamic pluses minuses

the we So environment. all things it's the of in competitive time this kind face

Gabe Hajde

mention repurchasing quarter. all understood. in anything That what you Can allocation guess shares comment terms I like in anything that? acquisition of you the makes on the changed sense. at in terms of market front? didn't I valuations the capital looks like anything, Bob, about Has or

Mark Kowlzan

out to want we didn't regarding and target over regard any We're million, what hasn't a still capital. Bob, buyback, add XXX bought Gabe, talked share a shares that And in back for you about January, obviously anything? call on to changed. little we a then

Robert Mundy

for to say that that this evaluate continue or call last or they similar that's Gabe be, said high that and what continue look year. to is we the of related I'd we or it return No, answer to capital buybacks is, dividends we'll options. hasn't to at all changed way M&A our are Where do and share continued how -

Gabe Hajde

luck. Thank you. Good

Mark Kowlzan

Thank you.

please. question Next

Operator

question of Bank comes Wilde from Mark the Your next of with Montreal. line

Mark Wilde

morning. Good

Mark Kowlzan

morning. Good

Thomas Hassfurther

Good morning.

Mark Wilde

if current could a level. wondered us running were your I B? What integration Wallula would give you Tom, ton you at that if XXX,XXX sense Level

Thomas Hassfurther

it math, XX%, absolute puts the up doing area. XXs mid us into Without back

low we're So XXs. running currently a

mid that yet. the somewhere probably XXs math done back move into having up without You

Mark Kowlzan

to got before, we've some continue I've domestic relationships As long-term we're with participate to said Mark, going customers, to…? as with our because there you our well. want export Bob, and market

Robert Mundy

there have future the our we're just that not certainly running out way what that's we're I in earlier, But would be. Mark and said it runway at running with to we would Wallula saying, call as if to that were going for demand. obviously rate go box integration a it case, current demand, match supply that you Yes. down. We're - would saying, if were was that

at down certainly go current would it but demand. - So box

Mark Wilde

a bit possible beyond Okay. that it stretch tons? And little is you then further XXX,XXX just could thinking Wallula out,

Thomas Hassfurther

Yes.

more of I for amount mention Wallula, some spend call the to you January we stretch some and money the If certain capability. at recall, ever Mill Wallula on capital, - a did that that out could grow

Mark Wilde

had The a Okay, guidance guidance. quarter hikes. year the a essentially think we couple second flat when got kind is me from containerboard But and all right. is question you The of just of paper last about last you've hike year-over-year.

terms So Just when kind what of paper the in hikes? containerboard and main offsets from think the big just we are that are year-over-year things offsetting the the benefit of buckets.

Thomas Hassfurther

Yes. be The paper big buckets, Mark, certainly the would side. on

be drag. Our because than be business, we've so mind in Fiber liner keep that exiting will And about the would the reasons too. higher down a year, for volume earlier. costs last talked are certainly of release just the that

is in pulling expensive out costs Wallula said, everyone when we lot just else. that real for fiber. part we're high is a country, we As of the with It very of - WX, it everything fiber and like just

so from the And then and fiber then adding alone up as WX, add, going metric Energy you inflation. the at volume very are for cost, up just that well. a to high costs we're is and needs go when that

But as go accounting thing versus a the export $X.XX restricted share. $X.XX the also just course and on. at almost export of things stock and year's We quarter. about have across and And release normal. and issuance. us have equipment do operating labor a that benefits materials, around levels it's mentioned that quarter on of probably, repair from this inflation for we the just the inflation don't building hits down on about in get we about look sizable materials, item show second we prices second year rentals, last this an are a talked then last as accounting the year of prices, lot and there's or a And rents, amount quarter, rentals, in second It's

in that that improvement packaging gate the were side. starting getting price the on the those we So paper

Mark Kowlzan

Yes.

move It frankly, were that, portion They're In was market. we of market. of $XX, as small of far we surprise. didn't as came addition, Mark, And add outside it the see any concerned. we I just large risky a a such of the out participate very citing do nowhere the had which we quite in and

a movement a that impactful. us and those was be So surprise big can to even $XX

Mark Wilde

Okay.

one slip more. Just

balance? you You've to this terms like what billion upper in willing there you're it should and on hold Is almost limit be cash got a of of kind $X.X of looks year. more cash any cash, building

Mark Kowlzan

it about you we'll then. When we let talk get We'll there, know.

Mark Wilde

right. stay We'll tuned. All

Mark Kowlzan

that a right, All class be high will situation.

Next question please.

Operator

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

Brian Maguire

good Hey, guys. morning,

Mark Kowlzan

Good morning Brian.

Brian Maguire

the last guess cut understanding that been integrated, made highly you or on price you'd like are material change in follow-up linerboard a in guys your change to the had a so more comment would I prices. see in before prices. published $XX you it in, wanted Just around $XX selling take my

actually you sort prices market expecting being when sales lower a or export open revenue the of around the prices in some XQ an So of prices talk the box in impact you the are headwind, specifically on guide and board around XQ talking of XQ? small are around box kind you you're selling and merchant comments versus

Thomas Hassfurther

that I going the dramatically But mean, speculate it area. think as been well. in When on in Well, past, what's people in on competitive, $XX and export Brian, prices. show something, no landscape based the the like movement about goes But with a about going other so obviously, a about biggest and does to liner on for result our or market. goes mean, all. kick That's get don't always fluid on the But what's forward the And market. to in find what's talking you there's the And the integrated that start even structurally, about often I happen certainly going has given is market. concerned in liner be I what we're the on you in and industry just short-term regarding the And are their going contracts markets do past is factors, think what's the liner took box the we changed think in talked that a speculation some box as there I domestic in pricing own they're drag. - hedge it happened kind the they're that about of in different medium of a industry. going in medium place, certainly export try at and never that I happen sales happen and anything have impact, to has And to a to might future. I side doesn't where in we've But this some impact, medium going past. discussed so we in can and this - that of what answer box lot that

right and short-term, think paper disagree think, I still this the pulp a it but particular and that I forward, in in going was It may sometimes So eventually, gets do. we case surprise. we big

Brian Maguire

like kind gave? Got where is inventory see needing contemplated versus you you be. it try levels comment guidance and them and your the as economic you'd gets in of to Would in in to your how be. mentioned for the of it. downtime levels Understood. you sort inventory And I to you get envision Packaging any want demand XQ kind wherever just take want running you those on segment, to adjust to that of

Mark Kowlzan

Well, that machine using demand, at to will running have take outage an the in the term June still again, down. we DeRidder

outage XXXX up extra we quarter. part second of had as until we the some the inventory the And first to quarter build through so we activity to And we finished did normal get knew in that. the early

And quarter first it in where we're ended now. shape to the good so right right and want we we

So something what unless mode we're running. to in and we're that the economy, doing running the going we're in doing continue changes

but again, anticipate So that's are. where I unusual, don't anything we

Brian Maguire

turn I'll Thanks. it Okay. over.

Mark Kowlzan

question, Next please.

Operator

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

Adam Josephson

everyone. Good morning, Thanks.

Mark Kowlzan

morning. Good

Adam Josephson

really ecommerce economy March. or and and which state-of-box late that other XXXX? the to it the continued February, extent. to extent you middle back you one about weather slowing on in Tom, has we characterize started to and Tom, earlier? just demand the say, lesser XXXX where point to to that to talked affecting adversely good the compared would on growth some morning. March you slowing, more How the throughout see industry you just we If when Are a last factors to that - say, about talked I demand. year, effect the was, about into in so, that's would X.X% of know go and today there demand

Mark Kowlzan

that start let one with Well, me up. and then I'll finish Tom

in think economy. you about world you news throughout about every I'm the uncertainty last day the think and watched talking the about with the read the If everything day. morning you year,

that. the States economy. on. lot uncertainty a American of Europe just it's Chinese trade by North day going United worldwide with and A got and You've the didn't discussions go

was media about very that news Some fact. talking

Tom little segments, slowed, I of auto in business mentioned the think because it's base this has or customers not so customer demand fact, in And industries or earlier, whether down. a are right there And running tighter our are that whether in uncertainty. their general, people now

a lot the So at during - you I if index European, German manufacturing think look just of there's first quarter. down

So some the economic negotiations uncertainty Tom? creating the or the some and actual I there's the the began of slowdown so think slow down actual of with trade and along some uncertainty

Thomas Hassfurther

anymore, starting mature. is was infancy kind of is, demand we comments, very it's not what growing came look becoming because Adam, say do this would Yes. it's out a to not way I went but knows pace say grow, I growth Ecommerce in a a the it at to everybody to eCommerce. curve Mark's little be this business fast I so that good through went it's more from addition at nowhere mean, that dramatically. and in would up might to business that continues a even the

this true now at had So of demand, good. even well. well, is think, last if building we you in spike still But and that we're and it this said, top on which I big you and spike was over time of as demand, year looked right

customers in shipping a translate slowdown said, overseas. stuff box I as back began goes business the does that suppliers it global when things of because does lot world in all elsewhere this to our are box, As a the and

the to of So top call of on much good the base. a those we what feel I although continue about fact kind grow are that still headwinds I larger have, that we

Adam Josephson

all for you that. Thank

April you X pretty know off one comp Just X.X%. I of the about is follow-up, start tough.

comp assume industry, you appreciably in but I I June. I for the for think I'm easier as gets May know comp not sure, the the and

you in you're the demand terms say at roughly quarter the of what guidance XQ, you gave assuming a to that for for growth are whole? So as rate liberty of

Thomas Hassfurther

based make assumptions We We we facts No. that that. on on really by know. we just don't the go

Adam Josephson

Thank you.

Mark Kowlzan

please. question Next

Operator

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

George Staphos

of asking to Thanks the guys are there's might are for rate end electronics avenues and whether a not growth well food, markets, corrugated think you again, get and you. not penetrated. e-commerce, Do really months get your expecting this certainly consumer? you luck or to I'll some that historically, two, free not take produce But penetrated and are make to of increase many tell sheet an a long getting there see them it go. like to quarter which more consumer, for pretty To key and can consumption will you necessarily in frankly bulkier That's increase, historically, get to product my And would these two but quarter. quick. it that comment markets Tom, some - been you back markets Question back, apparel the it's more taking so market, question be on need to follow-on. to it the There's looking other in into heavier extent how goods, in? other paper. good the that improvement one. the have number uncoated how about e-commerce potential Thank been take the haven't price that Recognize cargo ultimately to number new the market. for this get as there back you to us product yet. the to

Thomas Hassfurther

Okay. engine. one growth Yes, clearly a as on I engine. and it is second Ecommerce your still first growth to take paper. the it's said, still I'll one I'll George, over take Mark a turn to the

a food had can corrugated. ground. It's and going to to getting customers fresh not they as do it and I comes of will. some off that mentioned great and still and I penetrating It's good that feel you when market. like some ecommerce think pick know, our about and mean, that to a end produce they their feel the you I that. require difficulty, to consumers food, touch lot I It of it still it think own, you if think, obvious is

to at I penetrating be will like for going to go there's some be - the difficulties large So there's that. going to market that's they like some to, segment continue they'd think of develop to and there's it but going a

reinvent different going well. way our deliver for to something every the others as And make opportunity that most an a clearly try easy the within that's they'll require as in ecommerce it possible to can market lives industry. that's They're possibly purchase. in as good So do way and corrugated will And and of area. and there's our and the way, consumers boxes they

Mark Kowlzan

moving And about looked once then start and regarding a the you month back if paper three price up time on has the index of period it's you picked average. Historically, price, timing. when went

George Staphos

Thank you, guys.

Mark Kowlzan

any questions? there you. Are Thank other

Operator

[Operator Instructions]

Mark Kowlzan

to are good. good no questions, it want with for Thank I we you. Have Operators, the joining everybody there sounds look Very on a in forward if to talking day. thank you call us and July.

Operator

Thank you call. for in participating today's

You disconnect. may now

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