PKG - Earnings call transcript Q3 2021 | Packaging Corporation of America

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Operator

Thank you for joining Packaging Corporation of America's Third Quarter 2021 Earnings Results Conference Call.

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

Mark Kowlzan

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

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

billion excluding Total third and Third for the special in the $XXX EBITDA quarter million sales and XXXX. million $X net company in quarter, were was billion items, $XXX in XXXX. XXXX in $X.X XXXX

expenses certain mill per to quarter special $X.XX activities. share, net Alabama Jackson, of the for items primarily for conversion at related included income containerboard Third paper costs

of for quarter year's of the on were that the were expenses items $X.XX of the last included that mill. special schedules items quarter the included net share While primarily Louisiana Details DeRidder, release. accompanied of special Hurricane per to the the impact Laura press third related income in all XXXX third earnings

Paper and driven lower mix of $X.XX was increase volume which in and $X.XX cost in share energy, of supplies $X.XX $X.XX; prices XXXX operating interest share Excluding $X.XX Packaging areas other XXXX partially to by and costs, per indirect offset as and third our items, of in higher particularly third our of quarter the expense, quarter as due and areas. increases, were to $X.XX and repairs, fixed production volume costs, Items expense, the in the recycled special earnings materials pension compared higher expenses, of fiber segment; well and $X.XX. $X.XX lower the segment; mix primarily several primarily higher, per labor benefits by inflation-related and were nonoperating and prices

our $X.XX inflation-related We in also increases costs, share had per which higher. converting were

several driven to mix of last increases costs, spot $X.XX keep driver risen significant per have in were costs compared year, box tight per higher last than share scheduled per last was expenses $X.XX $X.XX the by with pricing shortages quarters, year, segment and higher share by higher truck to volume sales And demand. and share. fuel up and For a our freight outage and logistics Paper lower in supply, finally, were

reduce efficiency, costs and of some teams DeRidder and margin. excluding We the billion, through of products continue outage. Looking reach segment fourth we projects transportation the of Packaging improvements across volume as shipments the containerboard customer corrugated we day. our in sales demand, capability $X.X to and per at serve demand numerous and our third year's Packaging to mill our to to containerboard strong, quarter job mills tremendous for set records new did price The EBITDA, Alabama sales at better sales box well an product minimize EBITDA corrugated the total very effectively experience inventory able both produce our of as By machines utilizing the business, third quarter all-time quarter a of resulted were special of the Jackson, XX% to and and set productivity announced a initiatives with plants capital billion and million ahead our mills' help million record levels quarterly implementing remained desired of XX% challenges $X.X previously versus the increases. XXXX of optimization last margin shipments items of build containerboard, manufacturing manage inventory $XXX a our execution in locations. with $XXX of

of to outage corrugated Similar minimal required all Jackson of availability margins. the no was DLK. later the constantly customers the put utilizing is our targeted DLK quarter. inventory mill what at labor the relief our fiber to plants. anticipate to execution quickly levels during able are mix a medium of efforts of supply restarted a based going to the continuously customers, customers. mill improve customers craft of machine into we help plant us chain equipment planned obstacles capital along fronts deinking medium machine machine from continued It's third and from produce we, critical challenges, with the plant employees to improvements keep the than strong This After material, needs their that is unprecedented rather success the demand completing their our plant this our With The the our Jackson, effort and continue that the repurpose certain to to our was supply and box managing meet needs The We efficient. making tremendous allows high-quality very deliver many to supplied machine virgin uncoated number-X to meet these and on in versatile box at acquisition acquiring required and box suppliers maintenance help freesheet our the our forward. projects year-end with track. our grades, number-X inflation-related machine quarter, and a successfully for to across prior continue in smaller highly number-X the handle capital combination with issues on needs face, to

the we producing providing on entire the as to our of assumptions several potential capabilities next demand months understand required products, to might both quality. changes produce This our at over the us the and on strategic downstream the be to cost-effective further for producing to and manner. packaging also internal will medium permanently machine's machines and integrated and in a capable our and warrants. evaluate to potentially cost the that to the necessary This opportunity their external optimal containerboard period gives the the fully demand. our -- runway continue freesheet still estimates grow of We'll to also machine Although plan containerboard process us process allow medium evaluate box uncoated produce to to use refine further supply mill capabilities

which We call. continue remains are we up no the announced committed our our to to to of Jackson's of customers' Tom, capable being fully as of paper will acquisition changes internal previously containerboard produced to mentioned. machine according ramping of we paper our to producing track box further available mill, serve on our details The it inventory that I'll is to who number-X I integrated, well and the at Jackson. a plant with now machine both machines conversion We'll last over all corrugated quarter's turn discussed the with record on at sales, grades business JX our linerboard International as provide on customers track on capacity Falls schedule and demand requirements. the have

Tom Hassfurther

you, Mark. Thank

per compared to to the second $X.XX share get and across XXXX. the quarter $X.XX of share our above of and all were quarter quarter third quarter up up announced of of XXXX $X.XX the XXXX. excellent continue prices and implementation second of and together Domestic mix from prices to compared the realization product $X.XX per per compared XXXX, up containerboard share Export share were We products the containerboard previously third lines. corrugated price increases to per

We a we As record export our Mark which strong third and for continued in plants record domestic shipments as had a mentioned, as achieved day markets. containerboard our over industry workday quarter. all-time last was containerboard with up corrugated third X.X% on new being versus box Through shipments, quarter the quarters and product demand our well were of year's X.X% up X.X%. shipment total volume XXXX, very first per basis X the in strong box up per

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

get There shipping higher are with even demand facing. and will record X days no doubt than not the and issues. view could fourth we have be quarter continue industry. reemphasize outlook, our customers. telling and less is persist plants the same all-time bottlenecks quarterly issues material shortages, companies demand against we last demand more to ship third third strong, raw as calls these obstacles our impact are for made issues of chain and to points and availability our us on volume box what they previous have the our also I I'd comparisons more supply in year's earlier quarter labor for most ability to like if will driver this alluded fourth that the like to some our And shortages, the truck expect economic keep Mark mind, quarter Regarding with They earning availability, out and

last acquisitions. box vertical the many consistent value. located we've a square our fair areas increasing assets to purchase of a the of strategic to Regarding focus through is definitive box of containerboard key the corrugated Michigan. for expected week, the we plant volume will of the transaction. well realizing plant The a into and Advance closing. containerboard mill the our Corporation, the acquisition cash-free completion tons. products After soon Grand benefits corrugated facility of an almost PCA enhancement acquisition, structured market This a in acquire also will that mentioned, to acquire in integration box independent organic discussed with producer, by strategic and growth plant in is allow other Packaging full-line expect optimization regarding box one times begin to Under modern as This resulting agreement, of as integration a entered capacity we acquisition increase Rapids, XXX,XXX terms of of operations synergies further substantially transaction XX,XXX assets foot products and and Mark full as our all is assets of after step-up agreement

the line a to financial on won't we later packaging available full-service immediately a well-capitalized expect customary to it acquisitions. subject is we including engineering commitment provider dedicated and improvement, to Mark. packaging. laboratory our and continuous an in design skilled is protective highly in marketplace. PCA employees operations, for capabilities need. innovation Packaging and Advance With graphics and team, we be customers products, Packaging cash earnings I'll strategic and their state-of-the-art and regulatory purchase transaction approval conditions now the of high-end utilize shipping structural at technology, the graphic average Advance turn provide last expected and accretive will test ISTA-certified and is packaging Although nearly our an with this hand. an displays, containers safety excellent certain quarter, to get any fit a with bottom to Closing, corrugated multiple acquisition and to sustainable to X solution this back of point, the management They and retail great for finance a culture similar reputation into price outstanding with details a

Mark Kowlzan

Thanks, Tom.

Prices third special million up implement Looking margin. at quarter excluding quarter and and third million the $XXX of segment, X% $XXX last of and second Paper third sales higher XX% a $XX the sales quarter items price X% continue were the to from third margin announced quarter, of with $XX into of or XXXX to mix moved was million compared EBITDA, also from our EBITDA million X% or previously XXXX and increases. year's the we as in

capability. with the year's sales production was levels finished optimal for level, which quarter, now goods is last mentioned last of we volume, at inventory fairly below business, our reflective XX% Paper As

machine to grades. both of the As I all Falls paper earlier, paper running continue capable needs which machines, from customers' medium, are International said of Jackson number-X Jackson producing our the the we while service of is will

both I'll to continue our machines we've at capability our and Jackson, conditions system turn While freesheet it to run monitor we'll Bob. to With that, paper over on produce maintained accordingly. market uncoated

Bob Mundy

free $XXX Thanks, operations cash quarter $XX stock of interest pension other $X and $XX of of state $XX during of quarter contributions The and of payments million. common net million, tax million, included totaled million with the million. $XXX Mark. primary Cash million dividends million, $XXX expenditures benefit income capital provided payments payments, during post-employment totaled for and federal the by flow cash

on included $XX hand the our notes issued interest quarter, expense average balance from by X.XX% cash October. X.X XX-year to XXXX the of average lower million proceeds. closing million interest we $XXX bond early annual extend annual the September maturity in proceeds redeem to and bonds lower Based XX.X quarter from debt will X.X% in million X.X%, third X.X%, the the the from new and these of per our and cash redemption old bonds on in October, years. year transaction years our timing our occurring notes During end new notes used rate of This to the our $XXX

this hand with was $X.X billion of just $X.X XX our billion, marketable balance at Excluding $X billion. quarter end over cash September on securities, or liquidity transaction, including

annual mill third outage. than in quarter per $X.XX a to planned about share quarter Our moving per $X.XX per is maintenance of due primarily the $X.XX share, expense the expected to DeRidder per quarter still or be and This the quarter. impact for fourth negative share fourth to from higher result $X.XX will year's the about last share

as certain availability our track. issues Mark material effort mentioned projects previously, to tremendous we Finally, capital to managing put keep equipment labor continue and on into

to range capital projects expect provided now key Mark. the entire our total more across turn company back around While the of end million. on come now below we our to the we it the $XXX are is spending managing We expected with significant previously. schedule, spending to to currently capital milestones year keep in I'll

Mark Kowlzan

Bob. you, Thank

Looking ahead, also higher. our Packaging quarter, the domestic increases into the impact as expected higher average be continue is Paper and as less export volume shipping to days due grades. Jackson as third weather. costs, containerboard, not expect prices paper. scheduled to system, mill wet the move will any to we'll be for at to well mill announced X segment containerboard and demand previously higher especially outage and volume due costs increase. and we from Southern weather, to energy price fourth our will And be Wood energy also will high wood. Low corrugated we'll lower previous lower as anticipated mill move DeRidder the packaging prices our colder will would inventory segment in produce paper implement With the

must on logistics We outage we expect and operating earnings the of quarter. identified were current and of be The and our to the freight Bob scheduled statements per inherent also any the direction XX-K constitute of involve projections call $X.XX I to these with annual third risk in expectations than uncertainties, as the you some statements. happy and based on company share. estimates, with and economy statements. expect including risks that as to lastly, mentioned, of per XX-Q statements expect expenses. those converting factors filed with remind Form subsequent SEC. I'd differ we'd made the the cost with in costs, the and entertain items, those And on up inflation that, Considering continue for along results that, expressed quarterly like With higher fourth please. could approximately Form from forward-looking other $X.XX Actual the reports the materially And we've in we higher open questions, share to call but quarter the be of Josh, most forward-looking on questions, report

Operator

Staphos [Operator Instructions] comes with Our first George question of from Bank America.

John Babcock

line the Babcock is for John George. actually on This

obviously, in just higher your than the we given XQ it The expected. realizations price was wanted timing might much first primarily just I wondering increase? a like was from increase, were to especially I wondering be you in touch you question had was wondering, had August, on the I of I of on. just that in quarter kind to realization looks the bit last how able August comment if

Mark Kowlzan

go that Tom, one? you why ahead don't with

Tom Hassfurther

particular roll for bit plus the the the a our given particular mind, the in period. increase. in little a third in the typically keep probably more But in quarter timing, Well, these this really We yes, we bleed third did increase. over in has XX-day Nothing changed this the timing case, realize some increase in included from third second quarter Yes. of timing.

John Babcock

the color look on bookings how far? And Okay. XQ early you could then so provide some Great.

Tom Hassfurther

are right coming now XX%. year mind, flat year about a up But ago. were bookings we keep in to in The a ago,

start we're I So quarter. and good that in fourth think off quarter exorbitantly very last were to levels maintaining the volume high a fourth

John Babcock

just could have trends? was and it All supply you chain impact had right, demand question labor I great. talk if about that last inventory over. turn before then your on And the the and I shortages wondering

Tom Hassfurther

numbers. Well, it it's to exact put in hard

very good demand I and very remains As said, strong.

our And who And our suffering commerce demand. our about or resins as transportation, of or is whatever mean of lot to more things. a of from along the ability labor same However, related supply we've -- issue issues, well of really even what et as issue. it's indicated the got case to mixed some that a might they're some mentioned, by be labor, with of are are from American concerned as cetera. keep I impacted are as up customer our bag. long an I chemicals ourselves, suffering chain customers, or segments with suppliers their have materials the We, course, many base

something quite global landscape. on the it's So frankly, as as, well across American going that's the entire landscape

Operator

Jefferies. comes Philip question next Our Ng from with

John Dunigan

Mark, This Phil. was all And either Dunigan if half of the mill just wondering you're much for or produced year? could uncoated And on year produce then now? do the JX JX it medium you do how doing on more is to how can per comment mill John to some XXXX medium provide in you that that after can investments much this first color investments freesheet possibly I you just hope well. in noted, on I discuss if medium there on permanently be you increase in if a the more little will more it? required efficient. on there's capacity further any bit decide and make the those Could maybe and maybe produce

Mark Kowlzan

times, the in fiber. and many advance. We've of with tons balance we the of annualized studied the about in based an availability we've Currently, as we've DLK that have craft done years things doing on range, these obviously, that XXX,XXX the year medium, basis JX, capable then it's producing of on on fiber have with we what a we're

very of efficient, us We the capital producing to highly around under given capability we the how not it's doing really a the I mill on in to the machine, a earlier future operations its -- where, we not box help not good is. at customers good machine. extremely And that the plant about we're Jackson -- machine a just flexible Once up spring, customers entire opportunities I estimates. it opportunity study either be pretty JX Right quality do a future. as of machine mentioned needs have JX paper that. outage it the Again, a said have unit to machine back to and grow on our it provide going us the remains different But we'll produce JX our in play medium we're the in machine good we'll think, we also the future. and now, I within able to lot our situation. utilize with machine terms an go is the right circumstances look at of I'm and ramp market talk to the future would opportunity goes is that But to after balance our all next the of machine, up we paper and to if now more Again, for as has the undergoes as idea system would machine. that for fact proprietary call, consider chose what with actually in on running the mill of work out mill containerboard. paper machine of the ultimately, look we the

John Dunigan

your some typically a the how exposed is details. percentage maybe energy nat more one then that your talk any if are recognizing Obviously, Understood. to hedges you're And and more, some than you of peers. you maybe of give in you about us idea have internally? or what virgin-based could produced of lot if gas Appreciate -- just implement? And place

Mark Kowlzan

I the don't current have numbers.

a somewhere fully a big you you think waste liquor going If that's you're the traditionally about around that what to and and mill include play Natural we're if that's with mill, quite within we're exposed traditionally, industry capability with also. is wood frankly, -- combination the waste seeing obviously, in integrated and see in black that wood XX% got is the black that right country world, to now the and gas, liquor boilers.

want natural but you But color add So not gas any it's Bob, the whether lot again, on do add, us. it's a to to impacting piece?

Bob Mundy

big impact prices $X.XX quarter. colder and the a fourth from it's Obviously, aware close sorry, the that but an of the year. third latter in due from going to it's seasonal to I'm number to it's the the months also probably you primarily from of, hit everyone quarter part is aspect have

Operator

with Securities. next from Roxland comes question Our Truist Michael

Alex Liscum

Alex morning. Liscum this in Mike sitting is This Roxland for

Just a question quick on wood virgin costs.

yet. your transportation, weather wood or wet XQ? paying been the Have are quantify can you in now? do your you transportation winter costs you relative increasing Given And of if able stand on that made build over your last you it, noted right more inventories call And around to year? where you and how any progress lack the much to XQ haven't last start

Mark Kowlzan

under have time lot as competition the of we're it's southern -- of the time an much better Counce example, where or ways the system we into want Louisiana wood states seen this and Basin The an time I entire go. nowhere this And seeing the there's months in in preceded a improved to Mississippi, pressure should and relief The from wet Florida, the example, think a wood the X Alabama, numbers, Louisiana I get in those wood mill the long at I've our a Southeast, in at Valdosta under has to some compared this where where year. this except to going to were of we be since actual the Jackson had been remain be Georgia, that say than The near also year, because mill pressure hoped not I'm the the winter but weather ago. baskets and much at Tennessee that. now to Tennessee. we're of from summer. wood a and right Southern We're were but again, demand baskets, again, build as in the particular, the lot we in

Operator

question next with Weintraub from Seaport Research. Mark Our comes

Mark Weintraub

right you First, sorry, production just color any to versus -- what And of kind can smaller machine the on where now from is more laid keep us the out? to now, might in help to can you incremental production you've project give be as you side high you getting Where the Jackson a the terms or the you total mill. how mill to know And costs the JX maybe much forward there move Is we'll there a when on of costs very also, would relative I get? the get? initially. are And appreciated. color had eventually where they any

Mark Kowlzan

Yes.

to I XXX,XXX take. JX basis, want the all what tons the a of along or a good has producing think because machine higher. use they to, if in an we've machine give needed XXX,XXX trying terms number about annualized supplying were is costs talked probably and been quarter, tons we On input JX -- balance you

use probably so your to good a number that's math. And for

number-X If machine, would you XXX,XXX of tons. want to be add annualized that the production

So is I'm producing to into again, of on containerboard Jackson an now the XXX,XXX tons get mill. not Again, going specific annualized costs. at basis,

phase reduced do big conversion with have we takeout to the rather final appropriate with. have unit step next very come cost on the in a the control reduction. change as really can the we The the will big work We following up step in a that productivity the operations when will finish And change you'll and we the improvement we up the that made, machine manner Spring the phase cost see get work JX. when work on final big significantly. And then come that year is cost in

depends understand X.X medium at you need that goes there's but on a better back and this we part Now would what anything, And the you would again, JX the can price in much decades, future. as the anything it. for convert of said imply, to for we we how capital what last it do look to

significant supply medium capital, that future incremental appropriate we spend tons so the of a if we're XXX,XXX today chose And producing could if with incremental amount years on of an machine cost we off capital. in to

this plant I the next a category a machine opportunity. work box Jackson would so out our machine tremendous in to XXX,XXX a done capable at the opportunity number-X JX, the And about the Jackson machine -- will when in year system. the be on before, the years. look leave We've few appropriately growth then of JX asset as ton that machine in said And balance is the

And appropriate demand. we're producing grow on if with you it the our a you the ramp so if the years we be tons choose today one to a good producer, basis XXX,XXX up, annual low-cost that we to of and over becomes containerboard an mill future so capital. assume Jackson But significant has and very with opportunity our mills

Mark Weintraub

a relative in quarter just Great. helpful. Obviously, That's a reduction very fourth initial else's. quarter third third like to basically from the And trying had then to In the are and good fourth shifting $X.XX you quarter. very gears, expectations pointing to you just the everybody to understand the your quarter, bridging earnings.

from $X.XX maintenance. You called out the

I much then systemic number what wood, freight, specific boxes. the likelihood there's I I keep that more et the is impact, of parse other versus a you how can it way pricing you extent of energy. understand more some At getting costs. costs, to got you to think, a Bob, XQ? you been so eye And of we flowing are as from August have the mostly recovery have especially that would of us mentioned there guess be still decline, time, then cetera. may seasonally there favorable -- environment? And can XQ any same Is is, containerboard periods would that And why get a much to of the it's unusual this give that seasonal into I the a as additional why like there versus there us assume $X.XX on. thought changes in help kind one's to be might an into be more help

Bob Mundy

is this Mark, Yes, Bob.

improvement the going -- is probably negative to do we quarter as that a on we price situation of third the back fourth and have not going we bit more the increases of previously -- things -- with -- -- also or far know, from Packaging yes, but quarter little has look, expect a to you lot to quarter you on announced energy other unfavorable, and outage you as as go movement volume and side always is down to we certainly a segment, want that just seasonal this a DeRidder to see the mill in It's with is As What's at sequentially. some build things opposed it's happening the items. fact as wood, inventory. actually are some of primarily with the additional expect the inventories to price getting our

you Those the to get thing to amount shortages, to will inventories products wood get where normally competing the always energy year. to mill. similar and and things cost to up energy, bring to then speaking forest country to trying with going they costs And do was producers was are that change Certainly, that bit of is on your that operating what that it absorption. just that inventory Mark part trying impacts higher and freight costs, are be. need in cost wood than what those I a the fiber get like with of the drivers and would this consider it how others, mentioned, be have trying your and So time be with along same to with with a to

companies normal. obviously. never we're higher what relative seen quarter, be things. in out materials, projects bit of plants just That's like the in busy the implementation and but like than And quarter. And higher talked type And in spending It's to several already that it bring to are, results labor good just fourth in reason, repairs you most board box normal, also on hope That's that in little fourth again for door. doing it's struggling expense. noncapital the very overtime, have some our a outages a to to expect some availability, overall the the with negative. being relative do about cost quite to share with the have what $X.XX we to paying other fixed get and We plants other capital box than a this we additional this. maintenance volume We things

it's So us certainly when not it right, $X.XX, of comes line. for things, of -- all out net you're Mark, is you which those to

second not the between thought. the our year, just at looks the It's the numbers, half than the look -- but of quarters. $X.XX half, and lot end it that's moving. anyone the like more price of had there third timing see people versus consensus realizing what fourth. results in better I'm appreciation we'll was sort how the a you numbers If we of more up the the sequential than in that the of sure, were second Maybe we

Operator

KeyBanc. comes Josephson question with Our from next Adam

Adam Josephson

quarter expecting Congratulations XQ much versus question previous on another you on just in how much follow-up your about very and per good of you're guidance? of fourth Mark's the you quarter. the increase us third the Bob, more And how $X.XX. Can beat consequently, your one the guidance help realized? with

Bob Mundy

we'll into get don't think that detail. of I level No,

think price people about quarter. I the done good Tom and a as was that was together great always were line certainly, effort to as what bottom have quickly as we've a think with than during I more executing just bringing possible, what you job there and think really said. -- to of think the you assuming it I just know, And

Adam Josephson

wondering it you're some but of the moment? seasonal Bob. compared something or you're just I in more the in the just OCC to quarter? I you're if assume whoever appreciate wants it. OCC, decline. a expecting thinking market Got or take big at seeing know peers, that than you to that I just not there what can that, -- what you're talk you're I'm about some you're buyer this, fourth On what expecting

Bob Mundy

Yes.

I XQ think on higher. Adam, at you be average, versus the XQ, if average of XQ will look

at we're think quarter, third higher cost. the a the I beginning because exiting fourth

stable, -- goes Although maybe costs it I on be fairly But lower. on, looks a as the or like, the like quarter think to price it's said, I slightly we're the average, headwind, XQ XQ. will look like

Adam Josephson

just the third in box the market was Tom, the in what And you happened obviously Bob. mean, the market. Once flat. of it, demand, Got terms again, outgrew quarter, I

this and of to soon? now, constraints are going many going And that you know feature away to people as you that the a about is you to of anytime a go those think we're talked a a to industry. think for follow surprise labor this customers economy most the who think reason constraints are I just this Or with this be I mean -- period have I do dealing came considerable your facing. ahead?

Tom Hassfurther

problem, than exactly fact now is all in to tight. could industries, every an if I be something probably I'd I case be it's hard matter customers, fact -- market it's that to I'm I is Adam, be, with right was an you, problem, what us name the whether dealing of mentioned so and it's to different whatever international ours, that The whether the labor other makes this when a right it. end, now. that's whether it's Well, I'd doing American it's this, mean doing you predict incredibly -- as is what our we're company might competing the predict going

before, government also I more it difficult. with demand shortages everywhere mean, high. competing said are I remains which the makes and even the there As much here, But very we're

in right alternative change for very a term? the going the their So we've other to able term going business. of The is had to see that which great lot think. to continue that on And to been not habits. out, address It's going be quite industry. changed But plastics, it That's now that's frankly, I opportunity you And the difficulty and don't thing is products good have I for again, being to a also still short where ever a all what we've going been just anytime this the depends that's it well this evident soon. is, -- is on is know. short It to ending has next year, settles consumer determine one don't end into that don't I based our been got demand. their customers asking for

you So going darn I trends, look it's forward. the at when think positive all

Adam Josephson

Bob, Got the you multiple, can specifics it. cetera? purchase price on that any you sales, acquisition et us And announced, give

Bob Mundy

No.

into to talk about now. we're I think on right the all the going financial that's getting on But we're -- that. details said, not call as Tom so today

Operator

comes question from next Our Pettinari Citi. Anthony with

Anthony Pettinari

acquisition, your work JX maybe think rate it the And about would in sort is run at integration out of for PCA? possible an maybe versus you the then rate to When in where say and rate you factoring optimal how at? that finish integration containerboard shake could

Mark Kowlzan

it that tons our going how way that some outside will fully integrated? Tom, the And do assume goal we and you And forward. just always number fully internationally probably years, to is is add -- be The last the some do always don't to to to of color? you going always why define we're easiest domestically. moved integrated. market we've For

Tom Hassfurther

Yes. at we're is We've that. going Anthony, I run to you always to it think the this, way demand. look to told

going to sell just out whatever essentially has is is, a we of. the it's a I and market the -- really market many just matter mentioned There that So of in as domestic But times, There's additional I market. can export not level shrunk the speak go going dramatically domestic our of no domestic market. to integration demand remain so is same. people bunch have the in saying,

big and intend those We've just and the in with supply that's decades the are we dealing we export like are to that what it what to do. customers been sticking what have. now, We're they've market. got, So same with we -- for with stick player going not a

grow mill. if will paper will capabilities, at to. dictate, needed have we could why, the that's we the Mark mentioned, into our might demand white swing still to back as capability So our we to as and And produce we that

Mark remains said, as objective, our So exactly the same.

company. integrated fully a be will We

Anthony Pettinari

And in? customers customers any made on at your then, may comment of what substituting plastic and you just bit sort you you customers commentary or out be be opportunities about substitution. a little of the markets very can are products these interesting general That's demand the constraints facing, you talk what helpful. up are And looking Just of Tom, biggest even able to obviously, probably kind and end not given plastic of but part that meet helpful. an business Okay. not some cropping would of are or

Tom Hassfurther

just give example you an quickly. I'll real

compared If typically, people receive a they're in very, alerted the things plastics perhaps. world, to plastics, in lack the have pretty and to does -- the of apparel what obviously, it. it's bag on corrugated, nasty become e-commerce probably and recyclability working network, which they're to in story arrive environment the But best those you a consumers through low is number very and sustainability plastic the

stewards the a package, and to of to alerted a all they're their more to example consumer even of looking that get opportunities out the conversion own there's what so small fact satisfy stuff to opportunities That's consequently, And are be story consumers they that for have And very to want been going be on, kind so on more companies those just environment. conversions. that good sell recyclable consumers demands than demands. of the forward for sustainability going really of to what's want good of one but going

Operator

Rueckert with comes question Cleve from UBS. next Our

Cleve Rueckert

efficiently of X% G&A to on I ex costs. wanted on have relief to We level areas in the get know if been are costs basis. a mean, quarter? improvement. answered. sequential in decline more might Did Most just wanting of I I'm on you talked asked calculated quickly per any of about I about packaging just you and sort ton sort and a there more some running broadly higher a

Bob Mundy

I'm how Cleve, up. Yes, sure cost calculate your cost. actually this is Bob. you went our not mean, I

answer question. really know So to that how I don't

them change when just if you're whatever were X that periods high subtracting may be a doing, careful you consideration EBITDA to taking on also at got and the like or into tons You've look that be you at inventory from sales level if you comparing. between to take you costs, you're have going

So you get your denominator right.

again, costs our to answer because really how know I went don't up. So

Cleve Rueckert

Okay.

on inventories. up cost percent quick follow-up So on just containerboard sequentially And was a then basis. a

that the then to Is in some if Sorry missed there? earlier, consume quarter. the read it in right quarter I you expect quarter, the that of the and end did target at or fourth you've say you to the got

Mark Kowlzan

our it where be basis, to like X what our last got of weeks for to years. was we the average of Yes. sort We what from supply average

normal not that year, last situation. low of you -- just of If exclude the September record a that's

the we DeRidder strong. Jackson from be mill, this Demand is outage but -- obviously, of with quarter. want basis, to have help going supply of got it the the big to in be which fourth very we where weeks -- to So we up coming we

of on the now, the the actually time right decline year. our So would paper, end hit inventories we by

Operator

any Kowlzan, Instructions] [Operator I Mr. see comments? more no closing have questions. you there are Do

Mark Kowlzan

thank everybody I year and to talking Stay well, and like have call, of January our I'd forward for the and everybody us the full fourth quarter at joining call. with end for look on nice to today safe a holiday season. stay

Operator

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

may disconnect. You now

Packaging Corporation of America (PKG) 26 Oct 212021 Q3 Earnings call transcript