PKG - Earnings call 4 2023 | Packaging Corporation of America

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Operator

Thank you for joining Packaging Corporation of America's Fourth Quarter and Full Year 2023 Earnings Results Conference Call.

Your host today will be Mark Kowlzan, Chairman and Chief Executive Officer of PCA. Upon conclusion of his narrative, there will be a question-and-answer session.

I'd now like to turn the floor over to Mr. Kowlzan. are you when proceed ready. Please

Mark Kowlzan

Release Good Thank call runs Chief CEO all Officer. and of and and I'm today Earnings you business; PCA. who And on Tom everyone, participating you, Full Kowlzan, in the Financial and XXXX Quarter is Jamie. President, for Fourth Packaging thank America's Hassfurther, the our Again, Vice me morning, Packaging Corporation Chairman Call. Mundy, Conference with Bob Year Mark of Executive

the with turning details. and and an to begin over the will things quarter and results, provide of After Tom I year fourth I'll glad wrap take then up, usual, As questions. further call done, Bob, who'll to the and overview they're be full then be I'll call we'll

net $XXX quarter or Yesterday, million per fourth share. we reported income of XXXX $X.XX

net Excluding million items, sales $XXX for excluding quarter in in quarter, fourth of billion $X.XX in income share. $X.XX special or to fourth the company XXXX and of special per XXXX. XXXX. $X.XX XXXX $XXX XXXX fourth Total $XXX and in items, the net compared income $XXX EBITDA net or million quarter share XXXX million was quarter were million per was $X.XX billion Fourth

or and in full per special items, billion share billion in we earnings share. XXXX Excluding $X.X per the $XXX billion Net were XXXX also year $XX.XX or XXXX XXXX. of $X.XX of $X.XX reported sales million earnings compared $X.X the to

XXXX the billion $X.X EBITDA Excluding special to items, in total was $X.X compared in billion company XXXX.

Details XXXX included earnings facilities for products paper release. all press Jackson, costs our closure -- for year Alabama income related activities and the and other certain our for the to at and items items to full center. special the conversion-related net primarily in and quarter XXXX were schedules corrugated accompanied XXXX year containerboard that Fourth mill special for design the years the of and costs included

share and $X.XX lower in per good Packaging of lower compared quarter prices of and very XXXX the decrease by earnings the These in fourth and fourth mix, paper items, XXXX to volume segment, Packaging special prices $X.XX $X.XX the mix by segment primarily the Excluding items and depreciation of driven quarter the per $X.XX. partially in were $X.XX; share. offset segment higher expense, $X.XX in the volume, was

also driven by good wood process had as costs and other $X.XX and and of well energy as We efficiencies materials control operating and lower chemicals, fiber, lower of converting usages energy, over labor prices. fiber very

lower outage scheduled and a lower logistics addition, freight from share lower expenses, expenses other $X.XX, count of had In lower we $X.XX. $X.XX; expenses repurchases and maintenance share resulting $X.XX

and to $X.XX freight fourth converting the operating segment, costs, were guidance volumes lower share, in per Packaging of expenses. higher results above primarily and $X.XX The quarter lower due our logistics

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

XX.X% excluding billion of sales billion to EBITDA, billion billion was segment special $X.X full with a $X.X Packaging the For items, XX.X% or sales $X.X with margin year XXXX, full of or of EBITDA year margin. $X.X XXXX the compared

customers converting on capital costs during of manufacturing in December excellent build the efficiencies demand well entire the the and needed that the October the during our some process continued stronger -- #X restart as customers the demand the with and quarter, the needs. during of operating November, exceptionally volume benefits and emphasis was the the supplied an had We This ensure operational Throughout and with our meet converting cost helped facility along that spending the higher their Washington system Wallula, and machine program mill lower And inventory management well. part segment stronger our period. than Packaging drove and us expectations. quarter and of ran to across latter

Wallula at at first restart half mill maintenance scheduled phase this in of expectations outages the to #X our #X Alabama in the for with the containerboard help Jackson, strong mill. first plan manage We to and the mill the of quarter continued together the machine XXXX conversion of demand final machine our

I'll who'll containerboard provide more on business. corrugated now the it details over and to Tom, turn sales

Thomas Hassfurther

Thank you, Mark.

shipments day shipping segment compared less the volume even last of X.X% fourth workday up estimates. Versus fourth guidance total Packaging product As day XX,XXX X.X% year's our Mark of volume quarter. were additional X exceeded X.X% the though shipping Corrugated there and were up tons shipments quarter with were to total were X and day. XX,XXX XXXX. was above X.X%, year's for shipments above was last XXXX, per of third quarter per sales mentioned, quarter and containerboard tons quarter up the shipments Outside up third

remained incredibly throughout quarter. containerboard and cut-up backlog strong order Our the

positive XXXX. Although challenged demand by to other we higher our rates factors, inflation, continue continues interest as shipments enter and momentum this expect first the persistent we be to half of

Export compared share published to industry of a in XXXX $X.XX that of per third quarter richer $X.XX below display point-of-purchase down benchmark the XXXX, the XXXX. $X.XX to prices in and XXXX grades occurred prices the corrugated mix quarter included were compared quarter of containerboard and Domestic the to per together Relative the the mix were $X.XX and share fourth of per which business. fourth compared share and products graphics share down containerboard mix and reductions and to third per XXXX, down quarter of

for we and X, increase announcement. recent price medium linerboard $XX per per ton for price increase a to according ton our invoicing Beginning $XXX XXXX, began January

we'll with publication and be for topic, probably are questions sure in shortly. on some and benchmark medium. not you linerboard Pulp discuss As to or RISI the this happy past I'm them you the aware, will any us recognize industry's increase prices Friday, either Paper did for have this Week you

to back it turn I'll Mark.

Mark Kowlzan

Tom. Thanks,

fourth EBITDA of excluding million $XX EBITDA sales or the segment, fourth XX.X% $XXX $XX margin. sales with XXXX's in of margin the Paper quarter million or to the million items million and XX.X% compared quarter of of $XXX was a special at Looking

year from of EBITDA, or index to during million For full record XXXX, in sales $XXX the XX.X% compared $XXX mix with or that Paper was the XX.X% quarter the declines margin. a of margin driven sales million segment prices $XXX from the items, Prices X% were XXXX a down EBITDA $XXX the and occurred of quarter third year's excluding year by and year. million the with full special million fourth XXXX, last of

year's volume X% approximately below stronger fourth and last of our the down slightly XXXX. sales fourth Although quarter was better X% than guidance, versus seasonally quarter quarter third

job tremendous outstanding order the team to last XXXX. inventory to and the cost-effective management and delivering quarters and business on mix, and product several all continue The optimize operations of have done our our paper efficient results remain in employees over a focused during

now over I'll it to turn Bob.

Robert Mundy

and payments flow of The dividend of provided payments of Mark. $XXX payments tax Thanks, $XX by during primary of and Cash of quarter million. $XXX the included cash operations free million, cash during net million, $XX interest $XXX million totaled $XXX cash expenditures quarter payments was million. million, the capital

from of cash and operations cash million. $XXX full record $XXX $X.X a free capital flow, was million the year For billion XXXX, with spending

Our final effective rate tax XXXX recurring for was XX.X%.

will that $XXX million from these in $XXX quarter, new fourth XXXX. used issued The September notes XX-year million be proceeds of notes. notes redeem the During to our of mature we

new is years. net The basis that XX interest portfolio debt fixed issuance by new XX.X exceeding and this be marketable transaction rate the proceeds debt of rate securities approximately notes. years affected and Our an not the XX.X of invested average this the from raised by in overall bonds extended overall our maturity points will from our to at interest

year-end was this just our the including $XXX transaction, cash from over with securities, billion. balance, liquidity proceeds of on-hand Excluding million, $X.X marketable

expect million. key full upcoming estimates million $XX million. estimate of million. capital million to the to for items be payments And in is $XXX Regarding be and and contributions We we benefit range dividend of plan $XXX of pension year post-retirement of $XXX expenditures expected total $XXX to the approximately cash, certain DD&A year,

interest estimate XX%. book effective Our our is full and approximately expense interest million be payments XXXX should be is to for net cash tax rate about XXXX The million. in year expected $XX $XX

in results annual These by the $X.XX quarter impact the including costs, direct to volume, lost and is expected by amortized quarters. expenses our current include quarter. $X.XX costs our mill $X.XX XXXX by the the The first in of at final $X.XX and outages in during share second is per impact repair to impact per per per be XXXX estimated at This of #X planned quarter cost incurred first share. in negatively second, the volume the Jackson mills the fourth share quarter, the in third and share second that $X.XX total Currently, the $X.XX quarter machine $X.XX phase first completion our per share. will converting during will in and the containerboard approximately and results

Mark. it to I'll now back turn over

Mark Kowlzan

and very Thank along delivered We you, plants. products successfully at other mills improvement outstanding demand process corrugated very with under and Bob. proud challenging reduction the initiatives XXXX numerous I'm key results in conditions. containerboard of completed PCA the cost strategic projects

deliver us our and shareholders needs were opportunities opportunities and to growth business future. the combined entire the them their sales for our with customers into now to motivated profitable allowed and service responsive customers' of proactively business to solutions their organizations be These customer and to works packaging Our They and challenges. to their efforts enhance understanding our our and continue dedicated customers. and very help extremely

the employees our operations. to extended along year all-time product flow. very helped deliver saw years. efficient our record distribution to paper running overall liquidity and record achieve average These capabilities overhead the free debt cash new XXXX the business and $X.X optimize also annual manufacturing over accomplishments mix, maturity to with margins, our of We inventory, reflecting a us structure channels with almost billion of XX ended

maximize allocation. balance a to would allows to and the without This approach of company and over strong partnerships the flexibility talented a suppliers while our we've shareholders to many react capital to years. the employees commitment work these maintaining quickly our hard our situations opportunities. customers for the continued None financial things grow built possible to sheet balanced profitably and us towards and and strong returns We of with be many,

our be restarting momentum as to partially Packaging Tom continued the higher offset Tennessee mix in Wallula and in volume machine we Prices shipments. increases we of and prices the in as in should lower Despite at maintenance the be mill, segment, at the outage corrugated demand benchmark expect days to downtime mill. the fairly export ahead, move higher #X X machine additional at drive Counce, due positive will shipping implementation that product Looking quarter, by into along #X containerboard XXXX, first the the in indicated, scheduled the total conversion with the and announced occurred fourth associated flat. slightly first prices quarter from a Jackson with decrease mill with published a late January of our the the price with the

improved yields and sales impact usages quarter volume. mentioned, flat per In and the the and of share. the with our seasonal associated Paper conversion mill, quarter and prices restart operations. wood And to the Bob increases taxes to at occur slightly energy, operations Recycled finally, at a for fiber be benefits Jackson cold prices timing-related related significant costs restart outage we to costs along segment, chemicals, move new the is Wallula annual full the increases negatively operating year Labor will and will expenses. beginning mill unusually of that compared expenses the of compensation estimated first will and with fourth with an higher mix impact as outage expect be wage include the of weather at energy the higher share-based will payroll to and have scheduled $X.XX benefit higher which seasonal

Thanks, as items, the we $X.XX call earnings we I'd quarter out. like And Jamie, first can that, to expect share. it Jamie. call you these for proceed Considering per of and open with questions,

Operator

from Seaport first [Operator Our Partners. from question today Weintraub Research comes Instructions] Mark

Mark Weintraub

you're in year expecting are little you so strong including in despite release challenging $XX some First, that you The November. in congrats -- the the decrease press on say increase, slightly that? higher really fair is environment. a obviously, another say And more January you pricing -- $XX as than we're in -- a the to on going we bit about including average the How have should you're think questions XQ? The mentioned, from which, that little undoubtedly. that to a

Thomas Hassfurther

effect linerboard Tom. And we put add $XX a is Yes, increase and January side the follow-through got And invoices this Mark, have the also accepted we're accordingly. buy and on And slightly increase on $XX. we been have said, accordingly paying X. it's well, Yes, published that as I $XX invoicing and also getting buyer, as the price the above into the medium I down. paid might net accordingly. We've that

Mark Weintraub

Okay.

just as was that you $XX, impact lags quarter. net the when sorry, slightly the so into the Or of announced cetera, you you're $XX been the because prices the clarify, the was increase work, And of I push et $XX clarify... through than $XX? is that apologize but the way just impact minus said question, to first the more it for that of the box effectively in that's

Thomas Hassfurther

Yes, now, as into is you the given $XX it you're box triggers. think And about pretty got contract right. much also right business to factoring the

Mark Weintraub

a January give business? Got how sense turn in And so lastly, shaping Could far demand of you I'll is the up it. for Understood. and over.

Thomas Hassfurther

We're booking the about and that trend strong. and billing see ago. very above And remains -- X% continuing through demand currently it's year we Yes, a quarter.

Operator

from question from line live Sandra Sandra Our and your possible on is of mute? next is your comes Securities. Liang America maybe phone it Bank

Mark Kowlzan

to move the question. next Let's

Operator

Our Mike comes Truist. next question Roxland from from

Michael Roxland

good quarter. Congrats on a really

from they were a looked Box you notably down sequentially mix get to wanted in sense the XQ. Just year-over-year. like regarding prices

any Now that products, wondering that as weaker softer was from UAW you in onetime XQ, in impact in XXXX? issues an fade building and aside lower I'm if retail, from recall there strike. expect XQ lower that well graphics well? called to you as And out whether had I price, mix

Thomas Hassfurther

us, was fourth expected pretty business came of incurred form. it will the was But about to as was our we we end about you true of quarter, that little into be. a steady much behind mix with destocking, which headwinds she very -- had quarter especially what in which the it's goes to that we that this during our And I going the year, the XQ that the At those of more Mike, be think followed -- third unpredictable some graphics XXXX. mix kind XXXX positive. in in, talked

Michael Roxland

Got it.

say those you So XQ? some a of in little would mentioned time with in XQ it in continued fair -- issues to last be bit XQ, that

Thomas Hassfurther

did, Yes, year. but they began of did a bit little end settle They they into the then the towards XQ. out to

Michael Roxland

Sorry.

prices $X.XX in bit versus mix? guide Okay. for parse and Got And is it. there in the was any -- then how mix, $X.XX just was your much the lower of price mix price of embedded then separately? terms of And and

Thomas Hassfurther

kind does Well, I think it's impacted And -- I mean it's mostly price and obviously, by but get that then forth. varies back it of mix.

we So we the try that. to do forecast best can to

Michael Roxland

quality, This to end, fair, given 'XX? so given in expecting in some these you you're destocking a 'XX previously probably my of issues question, -- it. would an time be expect mix and coming better high-quality Got mentioned versus

Thomas Hassfurther

what I think be we our mix to will have. traditional typically

Michael Roxland

perspective? Jackson now a Obviously, is? here, lot you it over. growth cash, modern a that for niche have before next Falls run Got the in from you it. about finishing realizing I a you a And you're of really asset, question of the I us Falls still turning is Can I what's to help great What's next think PKG PKG just last Falls after? expect for growth generates Would trajectory has paper. as leg is up

Mark Kowlzan

lot a we're going we've don't know obviously, you Mike, the is got of hold, but to doing. what in what future Yes, optionality

continue plants, All as example, capital to to our spending to create do incredible box of continues an with customers. we grow the that in opportunity the

is year, cutters, in corrugator of upgrades installations, it significant our EVOLs, was of plant Salt in strategic City. projects and rebuilds magnitude. number Lake planned new we for This converting this plant corrugators, XX Just same And year new of box a plants. over at past rotary situation, corrugators, this the start XXXX, die equipment of major Pennsylvania, alone, XX out the

so will the in grow internal marketplace. And the organic build we to to continue capability with

that be buy been And that's the go adding of supply future us, But the the to have we to and with. had issue mill can few to the a packaging or assume, the for expect key grow of an then proceed the issue out always is as a and we The next capacity next But we mill, have number mills provide that over to never providing ability future. within for existing there's to we the or optionality grow whether we side we tremendous that if it mill converting the done, need have the years. to mill have containerboard to an in I the to in a you continue have it's now, lot runway containerboard an system in capability as the and years. build right unit of the

I'm encouraged where So by are. very very, we

Operator

Our Bank next Securities. question of America from Staphos comes from George

Unknown Analyst

sitting actually is [indiscernible] this an internal morning. for had This conflict George. in He

So and comment of to the at able you I pricing guess to boxes? or prices containerboard both invoicing in what higher those of in customer just back base percent discussion, at all terms are

Thomas Hassfurther

with I'm about customers linerboard XXX% linerboard and and medium here, it's to of Well, and outside regard well. linerboard customers on our and talking medium, partners trade medium as

So just increases disputes we're having disappointed obviously, I the that up these we're as like in And to I that no show it that's or customer anything. stands. mentioned where didn't trade price add, they we market now, And publication, on are feel and reported. I'd -- customers a see and disconnect frustrated on being going what's the with the a there's have that there's mechanism what feel earlier. And right that in now that incredibly right mean, between

alternatives not they give just customer the forward, our that liner And are dog forward and base we'll all any we've is feel now you outside customers some kind including us we'll going how the has things index, to as on be and because so I quite here, even to you give color side don't box And it's some going exploring you the using that asking alternatives. where for now. some about but that look an the wanted the both moment. of and wagging is that maybe on small aware of got of -- shrunk at But Now it's we'll -- progresses. severely maybe tail but that market want make certain we the

Unknown Analyst

kind anticipated Okay. you converting production, any I interested expected in you you terms look you know had just that of in lower XQ reliance than I of you rest and appreciate [ items? you the for XQ, that of And But ] year-over-year. then might operating down pause? chems, cost cost there but of energy there? higher commented in had out the can as you give packaging? in I of know you costs that And and and if production items color. was commented those that fiber shed any were items where the kind were

Robert Mundy

say that Yes, this some around fixed rentals, we prices, there I baked quarter a to Bob. were things some, guided relative some a touch cost call, little XQ, what a costs we from to. in. had what a higher. had that, type certainly was is we in, maybe just higher outside, it relative maybe equipment would But like OCC other good and probably what just services very maybe to was all But perspective than

as are some first far quarter the first to the there. there -- from parts As moving fourth, going the

that normally being our XX% what weather just change be or we're which in is more pointed cold which by are of so you type things seasonal look of a we and the southern to plants, share. would $X.XX don't not of we all weather-related, this cost little timing usages mills a Jackson Obviously, XQ box the that, probably by impacted down sequential call there's But Those other that down if severe see. them those to are are big is we and relative XQ going to cold impacted of year get of per much relative see conversion, significant because we which much at costs, Some there. so increases. the actually of or what weather a on outside the basis, change out typically

the benefits. gets then And that every base -- wages year. The base and larger

deflation have never You with wages your benefits. and

start dollar alone, XX%. year gets XQ XX% the were we they that medical this going increases in the Plus and higher, to from So new of impact to up experienced XQ, over higher and a that. probably year, it costs just annual our

flip to sequential However, start the weather-related to about timing the other on a should to move a the should the X, back as we items basis. flip other on as XQ half back wage-related Those sequential way of from -- X basis, those way and items. XQ

sort there, I quarter to very we on have taking Jackson forward. a that and balance replacing mind the That's probably item a is $X.XX. tons guess we're of and say hit itself in the that outage down, so about You the of keep well, bringing other of -- in going in I'd one $X.XX of first And cost that's talked exclusive low-cost high tons. right with impact Wallula

things then that just inflation related that the is about a talked lot. And get of don't balance

cost we provides product a believe For all same those us, me, increases part, to anyone good they're experiencing increases. service who a these incur,

So of rentals, there's rents, taxes even. property a equipment services, outside lot

have -- go nature lot you XQ to see You -- sequential and it is on absorb we All to of on. in money a it's on that and going can a especially from that on XQ. mostly

that the for gives hope little those color in what's you -- I about our for So a numbers guidance.

Operator

Hajde Our Wells Fargo. comes from Gabrial next question from

Gabe Hajde

reading in bit the maybe speaking, of markets But side. little GDP have kind demand RISI. that or industry type was green this on growth. good the the job exceeding I a relative or seemingly even of wanted to done quarter pretty guys the ask report to what outperforming you a kind pronounced Historically we're of

your that that. change just talk excited you for I or know win guys new that So folks business. sales mean, like you curious there's or just about historically, vitality go you out if a talked like about haven't can anything and incentive something business I all new to wins I'm about, structure index are But maybe

Thomas Hassfurther

customers. majority of existing from increase in our volume our came the Gabe,

many said new the new us. we've the align As many, And with customers over winning big that's mean, Are right And some plus I haul, to tried will of way. time, growth Yes, the we the think going But that's we other do been we I out so our long a -- times, we over who, main business? for engine. some business grow. any to historically, forward. But of kind goes industry, over as we we as I you It's quarters. and business, a other did mean, we come number outperformed ahead. mentioned, lag have plan do the you probably know, for win

Over mentioned a were times the during some that of screeching crazy the lag. example, that segments in. And an products when halt. to as went we last couple I there and years, then I were building COVID of it's we suddenly mean, did because before, And came of

of And we're our so big now segments back growth. part in some nicely us these that's that of and did back, they're coming a hold but

Gabe Hajde

gave going incremental point, is the guys in March, $X.XX. by our I know question. happening? it Bob, and timing to on Is that sequential ton QX, quarter? a but then of and answer, the the your reflected sometimes then ton they're questions that's, of the maybe through, Mark, And basis is terms math, on $XX in guidance $XX the basis, always a and -- if from a being in flow when if directly conversion. know is then the standpoint? It in a and terms be don't not a on fair should through I'll X April like that $XX it will is But ask extra $XXX second the Jackson a a that sequential into I Okay. you the that straddling ton you embedded us, sounds And costs maybe linked $X.XX

Unknown Executive

[Technical Difficulty].

Robert Mundy

Yes.

as other [Technical XX As far Difficulty]. the

Thomas Hassfurther

what of Right. et customers, the through and box our roll all will be, midst discussing that in we're the cetera. Well, on the especially side with

but I where to And mentioned, through, roll traditional we a we'll see place as for roll medium. through. the in increase got it linerboard we expect things So be the

Operator

Our Pettinari next Anthony question comes from Citi. from

Anthony Pettinari

Paper off Or market, looking is earlier customers on was in contracts your something were guess, producers Just were paper wondering the really do? at move and of other the what Pulp welcome? who some you discuss wondering, -- percentage Pulp and there you index I able can the how your you you Paper that feel customers potentially extent box Is that on up there Following reflecting they if about think could comments, I'm didn't are some that might and And not some boxboard was like you really a that. Week? to happening some week. to think grades,

Thomas Hassfurther

Pulp Well, being Anthony, a customers, as With market Paper see with box we the and both what reported. both the and level that and I what's liner they a mentioned, on I frustration high of to side. mean, do the feel have on in and there's disconnect there

disconnect, being for now, real that's -- market that continues shrink digits. my cause a in what this opinion. number mid-single becomes if reported years and as really consider to And market we to of quite open gets can into a said a that the I've on, that's As independent be all

those of we with along in of customers We them, our alternatives we'll really at us we to into details are between and like look doing, kind different end people get customers. lot asked we us moved have off just and that's a some to that? So of up. our because see don't which where Have

will you, we those I'll other at than leave one going looking all just into tell not discussions are I and we're any aside get because that really to alternatives. So

Anthony Pettinari

very helpful. That's And for Okay. then just guidance switching the on CapEx gears 'XX.

$XXX Jackson. discretionary any maintenance, that and kind possible from completed? Is that terms it when million capacity to rate million of Jackson is then point between in run $XXX CapEx. to said finer is the conversion you think of I down add there break And

Robert Mundy

Yes.

say that or spending. about? Jackson be nondiscretionary of The amount. must-do talked And you to be I'd I so Mark, balance, that $XX as maintenance-type million say will XX% $XX capital would As type far million would sort of

Mark Kowlzan

year. this the smaller plant of be the Lake But finish plants in And the goes strategic $XXX in working box in the probably one-off the we're mills. Salt I will just and in obviously, capital we're and And all up. then the box the the plants. we've And million in rest just quite spending it that the bulk mean building it finishing that's of the -- Jackson maintenance-type is frankly, projects conversion. to got on out of the alone that new plants projects then XX close box And the then up bulk is on. City

Anthony Pettinari

capacity number in how Jackson on when And much to -- that expect a of the completed? Okay. you many there terms how add add that final is it's would tons

Mark Kowlzan

The machine XXX,XXX XXX,XXX able XXXX XXX,XXX XXXX. with incremental ought of to is that to when of tons machine the tons more around done of phase I year somewhere for a was believe production this to work. certainly production add we're be number approximately for

tons XXX,XXX all add up you if tons on again, our But So depends you're that that in it more capability. XXX,XXX demand.

that going product us we're and can to of depend always we runway the can can know build on they so And the customers grow the necessity they able supply and but we them this they demand, to our that's need. run have, to value being and with as

we position. to is machine capability need ramp ramp Jackson cost an incredibly that the so and have and grades going the down provide And all up at attractive to

Operator

Our next from question Ng Jefferies. comes from Phil

Philip Ng

a on strong really quarter. Congrats

outlook any demand half way? year's customers really online. that markets with stand business, but effectively? end worth any a kind where destocking restocking And there seem in business kind bigger of of out pockets selling? bounce you Are seeing it capacity relatively you're are bringing the is seeing certainly of the a first on back after a confident of pretty your What Your for shorter cycle are demand back

Thomas Hassfurther

much the one no There's than Phil, outlook good. pretty a the Because struggle the that stores think remains out the board. you I that's demand side brick-and-mortar continue more It's other across than obviously to little of the business. by other, e-commerce industry offset more maybe see but bit, stands than still e-commerce. the

think I the was destocking I during And they're a conservative bit trying a "I'm but good. relative I but quite on I to to jump quite " a forward. back saw saw been has reasonably that -- remains we up restocking of as that, result like a and said, bit restocking, little conservative that that, say So of to -- nothing COVID. anything where would Nobody Or going think saw probably date. -- the be And side. like jumped we so we going little to

Philip Ng

year look side back especially all were back you're Okay. your Preaching That's helpful. some half But projects for come box last If is the sharply, going about And of that which and costs question then gains to at down of I guess And have half, talked I outage on. Jackson. converting these quarters, come? know you guys a with impressive in expense pretty I X the the the on first working operational saw is Wallula of sticky, different are that's you of the guys some things. to and still you pretty Bob.

year. kind So of us potentially or bad good this think how help driver that through

Robert Mundy

feel? I sticky did what sorry, you was didn't that say catch I'm part.

Philip Ng

cost, came some of guy XXXX, the expect well? gauge that that and converting the trying XXXX. should half you're good we follow-through especially just box down in in in as making with investments a of back to I'm nicely the operational Is pretty plants? The

Robert Mundy

that things, new every historically, and capital reductions we've others technologies, about a those cost continue those many And money thousands is It's doesn't future. to a It those as don't that the It's of just mean, we've new I on comparing absolutely. just really in changing it's will No, times, what ideas, stops. technique, certainly things new projects. are process. that and not never -- things that year. behavior, that talked going said drives

Mark Kowlzan

a One capability. about of our don't transportation talk we and lot, good example that,

group now. we've last strong taking the but not of of incredibly transportation logistics an a got built within decade, large customer. care very nationwide country, it's of and company, containerboard, packaging our running trailers to We've tractors only the and lot Over a the fleet the

the of that transportation having has side the equation. in management on provided so of trucking enormous And capability our in-house cost own flexibility

just that's example our one about executing. business at So go looking how and we then of

Philip Ng

Super.

me. one last one Just for

to flow prepared the pretty come Is growing of capacity market free little $X.X some about are nicely that's distressed, opportunity? little Any especially remarks, opportunities obviously offense you a on. generate billion perhaps a capital You terms liquidity. an guys here. a balanced you highlighted cash the on think of of called that's that in more play and ton in of I deployment. a being Mark,

Mark Kowlzan

We know if that of on side you But an into the how firepower. sheet. up beauty we let comes packaging That's or side on I'll finance having found that. the to balance we not that up how buy and business, the when to look it attractive, opportunity and it easily can move at something happens. the only a continue can we not move share we If mill affects one-off dividends. about buyback it existing worry came into that on can an

I other XXXX XXXX we capital, down And million. capital back reminded manageable would want level, range. that remind when be million so we $XXX And much thing to reasonable $XXX capital and over -- going in level called the more the XXXXs out the we the everybody into everybody, more a that up much

the The we mind, that high-return and and and shareholders in alike. because balance keep that customers incredible into can projects we affords projects also of opportunity projects that high-impact an sheet and be $XXX appropriately. did trend. continued Just cash we free goes generating million that of our year, cash amount an accomplished impact again benefit operating us deployed this range all incredible high-return, we're with our But that,

good place. a in very we're so And

very, we've mills Over in the efficient lifting last the all box XX the years, to very condition. and heavy plants get the done

projects. And it's so with much about how go now these about more we manageable

technology much we than But the this to world. have with and bulk optionality we a is in we'll again, the with engineering fact on position that. us been internal We're ever all the we've better and And of manage that all at how look organization continue so work. capability the for the open

Operator

follow-up Weintraub from Partners. question a Research Next from Seaport Mark is

Mark Weintraub

pricing more contemplated? Would they it types Would can to Or going cost negotiating on and be be share some where Would your bias of the more counterparties, with might with might So tied? be just you color be be more the us structures kind perspective? from any that they as alternatives of combination? macro or data tied?

Thomas Hassfurther

it's and we at and going not that it, all but your I you about forward. between all before, customers. because, nice options told that I appreciate Mark, you're I'm us out you into just those go that thinking our as to work as that's presented, get And we'll

So you I'm can't anything, give sorry, we but that's the I do business. way

Mark Weintraub

the a Totally there's recognizing have to your bunch would of that that missing been there anything list customers. be things going going in may whole you're talking have Is that be been understood. with about to

Thomas Hassfurther

Nice ditto try, again. but going I'm

Okay.

Mark Weintraub

that? be increased second the -- XQ X% try. did then to put the we Bob, a that Could if from seasonal of sort you it I you And $X.XX that And had costs on or per share? XX% XQ about had timing. were Would back mentioned quarter? of come in like just number

Robert Mundy

Mark, be ], $X.XX a per share. maybe closer it'd little more to [

Mark Kowlzan

Okay. Thank questions, other please? Any you, Mark.

Operator

[Operator follow-up Instructions] Our next Fargo. from question from is also Hajde a Gabrial Wells

Gabe Hajde

Mark, try more time. going to I'm one Tom,

bulletproof what And as was. hearing thought price to I maybe as not over the as the useful is apologize discovery that or So in we've is seen understand the XX maybe think more process. it years, we're I trying once but past it's advance, process

in roll as really misunderstood And are spec a a something service to of we're sell is what is to guys customer's customer made you selling so a and that boxes that opposed the is hearing industry, parent I think a that paper. maybe needs

what's your fair to And what scenes something structure trying value behind understand is you're you're pricing is that the that. that so the is move understand customers help work on like bringing them maybe with and to them to really to and going ultimately it the

Thomas Hassfurther

linerboard then is Gabe, box market, and go you. a And be There a and and the there's well. honest created things value of with you market. market it, Well, Lots there's to all very accordingly. medium custom-made. got box described different it I is into a

as in point to our what I'm those the get that it of customers. reported they said I all into So things view, accurately, especially you customers' different discuss quite we'll gets all do of is see before, marketplace. optionality those -- think, the sorts describe you things, than from I've other not But our going with what and

over just as that that So There the so. who they said, the past there's even need when marketplace. saw a months customer example, I prices XX went see that or that an mean, the I or in isn't a for down,

figure probably way the very we've put I customers to is -- solve disconnect, So published. than how our to And got that best is to from what's what we're got out it. that different hearing getting guess, we've disconnect,

Mark Kowlzan

Any other Jamie? questions,

Operator

Paribas. Our Charlie next BNP question comes Muir-Sands from from

Charlie Muir-Sands

us very about. a you think given answers Thank lot far all good to for the much so

one had Just question on mill. Jackson the

should the ramps contextualize quantified that talk can helpfully very in expect is obviously we this mill But network? compared cost how drag of see once it temporary mill about You've from the QX much rest the that with QX. efficient and your perhaps the cost fully you just up should and benefit we more

Mark Kowlzan

because the dryer the cans, steam plant plant We're to it's work megawatts rebuild, ] steam power paper of section will mill the involves talked Yes. we're also the a flows, back high up. itself -- press plant XX-day the is start machine of work with and than be [ outage reconfiguring it years this this the about of efficient pressure, all at of for last month but but of going higher pressures off and next which we'll steam machine. paper be ultimately, more that a power the of that with just and finish work more then in producing in providing We lot about that's couple into a and done reel end will again, when the work. going It's more power mill, on the lot

so to the mill in and linerboard the have the system. our done, And will be when net-net, or capability at it's produce lowest cost amongst

quite counts, about should and Jackson into think money. than its you Valdosta, run frankly, DeRidder as counts And or for probably Valdosta DeRidder. good better, if So be get

savings the future. is forward, you to cost flow through do that huge that? Bob, in the the so And in go as want will add opportunity to we

Robert Mundy

is machine and Charlie. that once Yes, is $XX, completed, looking operational. if sort between you a what ton that all Mark work fully we're And describing, is quantify $XX of somewhere that,

Mark Kowlzan

Any please? other questions,

Operator

additional Richard Intelligence. And we have Work from Bloomberg from an question

Unknown Analyst

maybe just increase? that attempting into was I X, to you to some price the get fourth by announced with customers wondering forward be pulled get January price effective saw quarter increase, your demand if

Thomas Hassfurther

see not that, did Richard. we No,

Mark Kowlzan

follow-up questions, other Jamie? Any

Operator

At additional showing no this time, I'm questions.

Mark Kowlzan

a to I'd All no are joining the and we questions, good right. call, If conclude in on with go ahead Why we like everybody April. there day. talking to us Everybody, this. you Thank for thank have forward don't you. and look

Operator

for joining. Ladies we'll thank conference call gentlemen, presentation. We and conclude that, you and with today's

disconnect lines. now You may your

Packaging Corporation of America (PKG) 25 Jan 242023 Q4 Earnings call transcript