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PKG Packaging Corp Of America

Participants
Mark Kowlzan Chairman and CEO
Robert Mundy CFO
Thomas Hassfurther EVP
George Staphos Bank of America
Mark Wilde Bank of Montreal
Mark Connelly Stephens
Brian Maguire Goldman Sachs
Gabe Hajde Wells Fargo
Mark Weintraub Seaport Global
Adam Josephson KeyBanc
Neel Kumar Morgan Stanley
Anthony Pettinari Citi
George Staphos Bank of America
Call transcript
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Operator

Thank you for joining Packaging Corporation of America's Third Quarter 2020 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 will now turn the call over to Mr. Kowlzan and please proceed when you are ready.

Mark Kowlzan

you XXXX in Earnings thank America's Corporation and Quarter Third Release morning for Packaging participating of Good Conference Call. Chairman call Hassfurther, Officer. Kowlzan, me and Bob runs Mark and Chief PCA business of I'm Financial our and the on packaging the Vice today Executive Tom Mundy, is President, who CEO with I'll then and call the then call turning the of things Bob, begin details be will wrap an I'll more our third we'll to to Tom and I'll overview with quarter who provide results be and questions. take up over and glad Yesterday, million we share. reported third-quarter $X.XX net income of or $XXX per

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

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

related will press $X.XX income the items net mill included quarter share and our that the months discuss few quarter on Hurricane in during Third detail the the September. expenses third in were the release. DeRidder earnings special of XXXX special of impact Laura August of per primarily Bob items to included accompanied for of Details the that schedules more minutes. in all a

by the of costs volumes partially was lower primarily costs Jackson expense higher maintenance third mill well fixed $X.XX. $X.XX Packaging $X.XX; in earnings lower $X.XX, compared segment segment, from costs were by as our higher as costs offset primarily operating plants. which segment at XXXX and indirect driven quarter volumes to in Packaging $X.XX prices of lower special our higher the These in indirect items in in and idle quarter our per the box freight were Paper Paper items, $X.XX, of of and third decrease Excluding segment outage scheduled of in lower our XXXX share $X.XX the $X.XX, mix lower

costs of We costs also had converting lower $X.XX. and lower other of $X.XX

our million quarter of XXXX a excluding EBITDA resulted packaging items XX% $X.X Looking with in billion, business, special in and the $XXX In at of EBITDA year's last and of versus day. shipments throughout very Packaging million XX% quarter $X.X of demand box per set sales quarterly margin billion, total also $XXX and the of of sales third margin. records strong segment, we new all-time the for shipments was

The avoid able quarter at overcome the Our to disruptions flexible customers. the related able scheduled previously containerboard to downtime mitigate portion Laura a any system hurricane mill mill the mill DeRidder gains. productivity during to postponing was outage was and downtime our other a by and of

extremely with XX,XXX the tons However, below year's the or demand level. of resulted last this unplanned quarter strong downtime drop during XX,XXX inventory an in combined tons

corrugated continued record-breaking demand us outage cost to result, at improvement great to at through the a had turn I'll on We of and the challenges an of the to year's now supply postpone efficiencies build outage DeRidder a at we our quarter As in throughout large the Tom, our containerboard schedule last did all-time our enable it low. managing the strong the order ahead discussed decided call the quarter. seeing. provide needs continued details and business. next and hurricane-induced supply discretionary weeks fourth expected of end The over the plants are sales job planned will that to we production and box who earnings was the at more mills plants of on the mill of quarter annual inventory the to

Thomas Hassfurther

Mark. you, Thank

the basis. day, quarter volume third to quarter, up plants shipments, volume year's our the supply the at X.X% our $X.XX on of products and As up we to box total shipments Mark and per in up X.X% third XXXX. up compared together to and XXXX records the due containerboard of and last X.X% tons mix. per XXXX containerboard primarily compared day and $X.XX DeRidder containerboard product last well quarter mix a Export plants. mentioned, products new quarter prices flat share below the per total and were $X.XX as compared of for quarter to box to first share established needs to a the compared per hurricane-related and our below second X.X% Domestic overcome year. share to of year's Through corrugated quarter quarters down last as of is prices quarterly customer downtime three compared record of ran were all-time second third of box third our containerboard system sales Outside XXXX, corrugated shipment was per XX,XXX as XXXX, favorable the

X Finally, have of we we customers increase price and November recently in box $XX a notified our our notified addition, containerboard price increase. per also of effective a ton customers

we would would fourth increase don't of the of quarter, the expected in of be comment the forward XXXX. While it back to pricing Mark. we during to the the some turn but realize specifics, benefits the I'll benefit now of first on majority quarter expect vast

Mark Kowlzan

Tom. you, Thank

$XX XXXX compared was of in quarter the Looking to quarter segment, $XXX margin items X% at and million XX% of third of EBITDA million Paper our or quarter and margin. XXXX million X% third the and or of sales quarter below of third $XX below EBITDA mix of about X% the the Average XXXX. sales $XXX about excluding second with were prices million special

quarter Although help Falls demand in our quarter had last month. We'll inventory We outlook levels manage turn almost We as levels, restarted our and third Bob. about mill second year's October, lower system our to paper levels International by size it mill production of were Jackson quarter relative entire for the to over to XX%. than assess in early cut our they outage at down scheduled this were XX% now our our to to converting the demand volumes paper higher the stronger levels. below mill well as these our the and well printing supply earlier result third accordingly. a outlook run continue I'll for as at our will partly demand seasonally

Robert Mundy

stock cash of uses capital in free had Mark. quarter cash of of million, the very third $XXX during $XXX and cash for just hand securities. Thanks $X.X pension provided with or expenditures on flow generation quarter and million, marketable $XX good $XX million. We under million, million primary cash including with payments payments We quarter payments $X cash by the billion, million. million operations The $XXX income of the tax $XX federal totaled interest of state common dividends and included ended net of of million $XXX

September was billion. Our XX liquidity just $X.X over at

are related meet such for Hurricane has there Regarding incurred as coverage. and of interruption this, of property either expenses named the of Laura months over deductibles on these. deductibles way did business damage for at DeRidder our September the August aspects worked mill costs costs or time in The storms based for insurance coverage the our separate our not the element and

not which together filed be So, downtime, for just million. damages and there $XX totaled under claim an these insurance will

extremely strong we large mentioned plan scheduled the outage call. postponed our of at demand, because and fourth last that machine outage containerboard we will quarter a discretionary quarter expected third mill's low on we indicated, DeRidder Mark as inventory quarter's Finally, and continued postpone

share would outage per and our to result, share expense expected a what per we the quarter or now year last per higher the $X.XX the in lower As put quarter. is discussed revised This $X.XX estimate be for in share per $X.XX third than at total quarter full for planned third for than XXXX. the share came a us fourth $X.XX

over entire outage communicate when well that January scheduled for as to do. outages, Mark. to I'll you as the now currently we are to planned we'll XXXX these We it assessing turn normally in as reschedule and back

Mark Kowlzan

Bob. Thanks

customers their makes experiencing employees across adhering For successfully occurring organization, faced this What have containerboard and protocols and meet to ran customers. more Packaging three new worked operations a that the and our them expectations I Everyone outstanding our families. very on the is are obstacles They have even has our and as safely processes and partnerships to we while to of within help instituted job entire with box hard in work pandemic. the now, the and more Company these doing manner continue be we their the demand is protect and suppliers. cost this of we quarters to year effective they business an our are and focus overcome challenges couldn't strong during we as strict unprecedented the employees' remarkable requirements the have proud our well

corrugated quarter to products third and as ahead, Packaging from Looking strong. the segment, expect into in fourth our we we remain the move demand

quarter with further days, challenged shipments higher X,XXX last hurricane, box mill again a In third impacted inventory volume should than Hurricane Although approximately DeRidder record second lower shipping by the historically tons, be and our quarter fourth which four early Delta almost less shipments. be our October, at will position. operations than low three days year's

expect volume and expected in some third quarter the year production the demand. containerboard as preparation quarter outages of scheduled we first higher end maintenance continued for building XXXX to prior However, to inventory we compared towards work strong

is at last its as on currently mentioned as we machine itself Mill number X mill call, to Wallula converted the well As capacity. quarter's the running

paper to November, capital consistently us Obviously our OCC dynamic to will years cost plant the the and our level been optimal to the Jackson an at we'll for price quarter. on in percent some upper any to We've the types the to quality, additional mill some trial some increases after period period. strategic, range, be that's during we our Most fully some as capital bring demand. in an Tom to capital of providing allows box our high-performance us to needs producing an machine produce itself and do our virgin addition Jackson done run during process of react of studies the low phased XXXX complete and containerboard of assumptions and times. inventory necessary we're of very this investments up mentioned, currently performed. the numerous things changes volume expect containerboard great flexibility Jackson over in relative further recently white the to some learn get uncoated back in appropriately needs the the on, freesheet the ability machine high-quality mix and XXs the our work limited runway few to converting has We're and availability realizing this kraft outside plants utilize estimates in for number produce plan Continuing optionality white and mill box approach the require, our rate inventory do and our project in spending we Jackson Therefore, is with use our during historically last to our at by we and the downstream our Alabama number demand now our year-end, well time always begin of studies mill fourth capable refine that reliability as of will however optimize for we the during have estimates perfect a linerboard versatile XXXX. for know for option the supply infrastructure use required virgin fluid some integrated the depressed products, as you beginning need address The and we is However, containerboard containerboard needs. mill to to volume to the X containerboard market grow to these help future and a integration paper levels plans time containerboard improvements. plants necessary X also finishing to potential machine and at and be we the announced and confident to appropriate

business the However, less business expect in corrugated as normally the graphics products holiday compared rich as well mix third seasonally we in falls the off for high-end quarter. also display to the produce as quarter during period the the in Northwest, Pacific

second re-opened to fourth reached although our during prices extent, quarter export to Paper below average levels, has some in the versus expect the schools and segment, move we higher as the historical In during volume point third low is period improved quarter. the have addition, In businesses since quarter. well this demand

lower our be believe in stronger fourth than quarter. sales we However, seasonally third will the volume quarter the

as well containerboard just inventory optimal of service that month, will this Although to. maintain was customers we International our our the position with Beginning begin our the in earlier outage, the begin of producing scheduled white and a as mill an paper had appropriate production to restarted sometime October X. mill levels to be November, in referred Jackson amount Falls I the early require on mill and trials

also Bob weather, higher costs be colder third maintenance to quarter. be And be We well. with mentioned, the costs anticipated expect higher. as share outage scheduled per about should $X.XX costs freight energy And should higher finally as than

areas could impact that facilities, our and availability customers rely place in There As quarter needs upcoming events expected the be economy of and certain gatherings. upcoming expectations continues of the the products for but and to lockdown on not to we impacting our considering of to our continue and operation across also the the and holiday our numerous adversely are especially weather of country, the shelter conditions continue reopen, and actions changing the only suppliers. colder services from

with reports of with Annual materially Actual Report call the uncertainties, reports in SEC. quantify our questions. But I ahead. for that, risk that quarterly statements the open those on made Form we'd were XX-K some with on those on happy be filed the you the I'd on direction risks in projections identified of including the must and as of current and the And to from and remind a in to the and inherent are entertain statements. appropriately forward-looking quarter. company And still XX-Q guidance differ As the could our involved Form we and estimates, fourth any expressed to like able constituted forward-looking Go questions. statements. expectations call the for economy factors that, Statements not we've result, based subsequent

Operator

Staphos George Instructions] of with Bank America. [Operator

line Your is open.

George Staphos

as you're Jackson? it's run One, that still is models? you this chance flex or was the convert should bit trialing machine containerboard? a and first keep our try ultimately that bit quarter might going what details. from to you're give Mark, wondering whether there take recognizing PMX into quarter this I a this to us machine the more determining in could we - that the build for be Thanks paper can you you Or if that should and the a at on And costs third could fluid? away a keep uncoated color fourth we will Jackson

Mark Kowlzan

mill of at get sheet we run not the big I that general, capability good but fully the production we've we've would and produce think of the at in enhancing about as out, for white high same containerboard nevertheless and needs, eight mill we to in time, at machine. its do years good like. input about, obviously integrated maintain to And flexibility. the to currently such, now, that are terms have it this the required. run the have where paper-machine Jackson the talk demand we to will you and gives look what customers supply chance higher long in us will the only and the what mill provide of this both keep a our pandemic out not would how to truly a the what we're look our The of flexibility ultimately pandemic, of towards plays paper mind can We you cap mill containerboard the this, containerboard The the but a is that paper our as thought we tonnage you fact speeds quality the paper about at place mill the and - mill to needs it's in costs worked think configured on that and then our as we end at to costs see is believe that.

time, and Bob, the way the long Jackson us you supply term, for to need anything So of at that, capability side? business how we the With same to paper on cost while our long-term. it's elegant short-term understanding understand an have do

Robert Mundy

No.

Mark Kowlzan

George, does that that? satisfy

George Staphos

eight in I guess, quantify to you might mean you've given trialing further be no work all Yes, the I what out. understand done and the last way wouldn't worth is cost calling there It or years, the

Mark Kowlzan

albeit not production costs, again, great of on you But be that the have of see you to mills. trialing. produce would said, capability upgrades annual rates annual done there of the quickly of high-quality as this deal in I cost knowledge that work, our a up containerboard believe than anybody should That far at lot normal have to do maintenance us virgin the we as and expect have a of get terms us awful knows with very to be arena to at and in would for infrastructure. beef the rather would bolster lot we our the conventional sheet with grade a able being Again, an work lower we and

George Staphos

want between for seems of in likely you're discretionary starting quick much. outage one XXXX, next in are XQ be here question come kind The how the XQ helpful? reasonable, I fourth of any then us of you're volumes in $X.XX, outage thanks any your that results really XQ. didn't how past I way Or other should we into of those there we based quantify XQ the add then from to would much quarter? be you sit would would for entering the larger mean that maintenance, seasonal deferred factors. factors buckets for would very And numbers would Is thoughts planning quarter assume The my you that any last but quantify, be? some give range the movement and you on and should some have a larger as know Thank what the on the buckets on some thoughts you Mark. that, starting quarter, want consider? quarter, don't $X.XX of the can is No, guide to in but around you be to fourth and the a the too the at I

Robert Mundy

brown Just you our looking to has relative have little freight XQ, quarter. costs we've two we think if because segment time higher is years it demand Mark compare of labor to demand, you XQ where be your outages And to a as higher last Jackson, we referred as season, hiccups. to the some the I'm our of there'll a strong be model, bit historically. XQ to, by it's into would higher running from as to linerboard the bit plan $X.XX said, the be a the cost little maybe running some than in Packaging or in white and do three what to costs, expect to as starting, requirements, the then in not been than we'll XQ Energy, normal. And and I would running we it higher that at third do but there, be referred holiday the work I be freight - improve head benefits we that costs sure in over will what to

have sort certainly something linerboard as work we in we this that. of and that So there do fourth this the quarter in for make

cost that some XQ. from areas of variable normally some see in have you the wouldn't you going to XQ So

Operator

with of Montreal. Mark Bank Wilde

line is Your open.

Mark Wilde

kind a saying, competitors mill where downtime. we're morning, Oregon in of demand, on market are Good ton to last about a three million and of And what of situation Tom ostensibly could mid-July the if in I in bit July, Mark. mean nearly Tom lots running sudden, tightest months the bigger Bob. the of people demand I about dramatically a of morning, industry? is in Good second to side you release we if little took wondered a in so in years. XX market go your talked this back for all your talk changed Mark, the a quarter one you just has or X either out

perspective? from is this your demand coming from? driving really incremental what's the So Where

Mark Kowlzan

answer Tom, Tom yours. I'm start last then about volume. by question. you getting And talked to have the off answering going George's that into

Thomas Hassfurther

you our that First is volume up of this number? hear all, Mark, month you XX%. let days me tell trending XX Did just through

Mark Wilde

number. that I Yes. know

Thomas Hassfurther

have occasionally. Yes, I Okay, remind all because right. that myself for to number,

Mark Wilde

guy the only a through I not Tom. and you're around, of number kind Yes,

Thomas Hassfurther

in I segment dig across let Yes, mean something review it's the up, yes. that every you significantly. you segments is tell you virtually the are up, when and And me board

was was Now as the you not quite the It had bit, a of previous was the down almost and that's - business some down on nearly service in dramatically. past. side but talked about recovered still XX% we in cases where the call, food it

there So, that we have in an still opportunity segment.

that look things anecdotally, elements on would and like you've obviously is, spending actually why demand the that consumers other movies sorts you you've entertainment, segment, that a lot things moneys these come whether not their it's case course discretionary as which travel, it and they say, like to key and all and if one I products this is significantly or the then home-improvement this, Now, of be of of think got is are got boxes have think well. I spending is - it's traditionally they're on in up might of that and e-commerce whatever this

can think the their for you to customers our really inventory low demand. same a and very, at time looking We're at just I as that to best I'll and us I our in and thing situation, it point trying that's to strong they're this satisfy well. time. very containerboard about got desperately give other are try have also no So replenish you same that you've telling description add the levels tell I explanation the

Mark Wilde

Yes.

Thomas Hassfurther

Mark. helps, that Hope

Mark Wilde

a What would your like right look box now? backlog customer for

Thomas Hassfurther

sorry, didn't I'm through come you clearly.

Mark Wilde

comes In take would into Because I've for going is volume, backlogs you four, kind Yes, been a like long to your of five to look with right hearing words, out somebody three, what how customer other if now? weeks. numbers new that box that fill?

Thomas Hassfurther

Well, yes, I we're not. mean

in like in the very our November very, we've out say up what like out don't is system that I We on how of need, terms got have about ultra you about but trend when you I look that talking going mean long and set far that of our times will October. that, tell and that anything much talk really lead and based we satisfy mean stuff. we is or what can demand we've you they flexible I'm demand into sort a I customers

Mark Wilde

Okay.

Thomas Hassfurther

in And and discussion We the the put the Jackson this, again, We alluded out integrated some time this market this as into long would our and open that was of I to we're And Mark day directly until containerboard mill. to, had to our And also course high for demand buy of the to not committed this we a this say level, system. it record time. regarding that's do knew perfect can't PCA in itself. brown example any care Jackson we the ties are And impossible demands. is this we plan would and takes to trial track come. demonstrates another fully yet just and to going do just being market

Mark Wilde

machine can just that Mark, are XXXXs smaller two down the it number I X machines help who for machine mill, familiar think Jackson there. the late there? you is people aren't they Is the with or put us? there that in

Mark Kowlzan

It's DeRidder better all machine than what quite the was at big that big a machine at converted of wide. The the number XXX machine, frankly, of a of terms it's the is speed capability. Jackson But relative put from quality we modern Wallula XXXXs, number is than X always spoken machine converted machines, in we've the were a frankly good Quite at better lots high together. machine about of inches machine the machines those machine, DeRidder. this we machine

Mark Wilde

Okay.

time be white market over you that on moving making mill seems it the top don't produce think of would Just a about white kind possible right toward think finally to I to up, now? any Jackson, be

Mark Kowlzan

capability that if has would made to determine we that It that us. sense

Mark Wilde

Okay.

Mark Kowlzan

with And years, that has permanently fiber. than handle in many likely size converted or put more it, mean on that put think capital have top, machine would be about many I top that to then the and would brown a but machine, in Fourdrinier, was machine Fourdrinier sheet to a currently spending a upgrades on you us. can as to the you for you Obviously, white machine the future the going bleached

So you in like. add just look to where mill what's size we wouldn't a demand determines that where have terms to need the it of we take and believe

Operator

Mark Connelly with Stephens.

open. is line Your

Mark Connelly

questions here. Two

curious reputation for have this intensive happening? you obviously away I'm your mix permanent shift moving volume You orders regular as but And more a value-add do a if flexible, as orders? being expands, it see from and is towards service that is

Thomas Hassfurther

I in every before, are don't shift happening, I virtually up as mean, our segment I business. we significantly. see Mark. of that mentioned

So I as has very grow same. with grow And base a Obviously, our existing continue remained all, But much think of growth our part driver service first of customer I our of we our the customers. is flexibility to think business. no, our well.

don't I So see significantly. it changing

Mark Connelly

And just one more question.

increased You've talked get at machines that or without Wallula, comes DeRidder. of at that flexibility increased a about lag the do flexibility your with dramatically there newer Is productivity you flexibility the lags? those

Thomas Hassfurther

lags. the You get without flexibility pretty much

Mark Connelly

Thank It's very much. good Okay. you me. to

Thomas Hassfurther

question please. Next

Operator

Sachs. Brian with Goldman Maguire

open. is line Your

Brian Maguire

taking the questions. for Thanks

to have producing quality the any any of of of variety had paper with service were best couple Paper running they not customers just in you general, in transitioning International one to if customers but able paper? the kind last and provide Just running and obviously and environment the the segment on of months, just you when there at Falls, eventually and couple and just to from on paper, Jackson your you wondering were paper were weren't Jackson, mill just and of them getting demand just more of kind the for a versus system the you issues a feedback were Jackson you probably what

Mark Kowlzan

the size Falls have in example, Keep it's with supplied Jackson as and cut I an mind marketplace the same product.

for Falls on the at also grades. smaller years had we've have I produce ability and machine color We that the to

few this that's ability also in very demand capable is was that. up all portfolio, we'll I be where the of we just to A of a ultimately future question, running we mill. more that fact of to end so customer required little But producing supply Falls terms to if were I in versatile with current our period your But And destruction. color determined but of Falls during that has pointedly, a time, remains out the answer inventory. grades -

Brian Maguire

I to guess machine, kind parcel I part the there if just, for expectation this more to directly. you goes but get the decided able but mean, I already, might asked I produce be a what question little able Is could would linerboard is been to or if an to, And tonnage that, has number of it is all capacity you maybe how X and run estimate well? of full out? number a trialing be there you you of on bit think just much

Mark Kowlzan

No, you we'll in update January.

of to We in would the that out we're ourselves. imagine time future don't to And the mind as the the I to growth if level with of, have just the foreseeable put anything it opportunity prove that. but back have goes want until we supply of on, Jackson of our we then think you some numbers Packaging tremendous capable about has side demands at business for size of appropriate mill capital a the needs that

in and way. So of we've got it play that regard we'll out that lots optionality

Brian Maguire

at supplied. with shifts demand last any to you me, more or the Okay, add plant from demand? foresee more just add the is we're operations the just a need be bit seeing really add level the plants box having enough is capacities the to of meet existing going? there Do kind How able strong utilization to one to the at to box paper just and little to

Thomas Hassfurther

is Tom. this Brian,

over years the our invested Fortunately, drive given how box our in we our customers business. have plants consistently

business. our demands you time. I I the And is on our way of factors There kind incredibly level. busy. so to sudden customers these back don't satisfy these mean no at going we're We've positioned just demand rolling kind able mean we're stretch. question. the to with we a are, We and levels how take the mill of all be surge of And our done We'll I got on invest. mean to we the and - an is to able pandemic, earlier. of that all run roll employees have based during this We're remarkable. this mentioned continue Again out. job absolutely on projects do to all course and And back go so. that do same run to want to what just business mention it we've be COVID want it's as our I'll time Mark unbelievable I got

and that's as of customers just so to that that some some boxes. we out inventory why that we see it's keep replenish you to with mentioned again Jackson, supplied important our output So get

Operator

Gabe Hajde Wells with Fargo.

open. line Your is

Gabe Hajde

one first the year? The assuming the you optional, guess anything this that I side the the million? CapEx delaying changed do. DeRidder I'm into looking you're that year. guess And Has to next targeting of equation with goes I are on for $XXX work

Robert Mundy

that in right ballpark. we're Yes, still

Gabe Hajde

maybe fixed to Bob, it by think, in inventories, help then know, don't I aide quarter, they soar that? overhead can would that relates $XX XX,XXX And tons by mean, there. my if this absorption million I you and as maybe math, to tons with I us containerboard about XX,XXX

Robert Mundy

No, I think you're right, Gabe.

are absorption I the And that cost as quarter get our up. we inventories production will ballpark. think you with in the in our right to increase certainly help

Gabe Hajde

luck. Good you. Okay, thank

Mark Kowlzan

Thank you.

please. question Next

Operator

with Seaport Global. Weintraub Mark

open. is Your line

Mark Weintraub

I where terms if incremental table And obviously us you've you you in Wallula to give of ability paper is to but premature at capital, extent provide you also talked need on understanding know the capability? color the can. that's there being Jackson, Is the potentially, mill now short-term with to the it's the in any that gets can don't On some something the to time and expand at considered? same past about

Robert Mundy

browned to day board of quantify to that then a frankly, almost the machine we remains of be that seen. major years wider. the machine able bit Wallula as the folks currently. of quite to forget kind organization but on Jackson terms benefits you the capital narrower. narrower if little the future process at it's the four But has to It's without on at started capital, machine machine. challenges dependent. we A our when day produce recall, we that just hoping to weeks, ago, mill expected Wallula theoretically, help The of and The and then over again, of that question, of And all the that tons role the as capability this called the took machine capability, don't good its a upcoming Wallula a able about to that kraftliner that technology, far production. machine inches almost as produce to XXX tons XXX is same type at tons probably XXX be we But volume and is in we're XXX be of

Mark Weintraub

And the potential be still to Wallula. something to that Is do something at increment considered?

Robert Mundy

Well, some Wallula, a end tremendous project reliability we and in not be where that will finalizing in to terms as this machine. drawing work. be then next will furnish work quarter plant. X that makeup quality And and the a after will new wrap had a machine then start quality ready box year a capability lend benefits from got also wet But fiber and fourth big year, know we've We'll the we'll at this up getting the first new we've that up benefit work of We way. on itself smaller actual and we of adding some pressing, as to with OCC ongoing project it drainage, opportunity starting see up characteristics. of number more be Head the capabilities,

we'll see we've be there. on a but incrementally, probably going a Wallula and always said XXX,XXX rate year we're around to So, as mill basis was improvements, tons run

been grade rate running past of basis a at the on on very right mill this we've that. mix annual As XXX,XXX run pleased with about tonnage summer, we're that and an tons of year depending

Mark Weintraub

lower or related relatively quarter, the you costs does I quick the or there the to one, in than think about we way paper Jackson in there were costs of Jackson? third The could. system indirect white what last at second related were look a the costs ex-Jackson, I clean much getting quarter one costs at being Jackson if still I the imagine, some And to was still talked

Robert Mundy

Yes, well, mill as look say No. were you're a you you or clean that's indirects paper of Mark. amount good your are course, referring would I of there. portion of Obviously, have a cost And a system. your so producing substantial not as costs one fixed fixed whether not, to about

Mark Weintraub

chance Any on color or? getting that of Okay. additional

Robert Mundy

because - that's Jackson. for am improve think quantify we I in did it will that but to quarter, run that - fourth you, somewhat going No, the is I

- what things Jackson look we're system I still a you running as not will relative a rather well. would year now, as but and guess from it's demand are packaging perspective, - paper right as But like demand going what one to you unfold our - speak. We quantify sometime the cost we to mill next may be

Mark Weintraub

you. Thank Understood.

Mark Kowlzan

please. question Next

Operator

Adam Josephson with KeyBanc.

open. is line Your

Adam Josephson

levels, white levels, roughly stays maybe do year but you next bounces just do much produce produce mix Or fully mill then demand a to in stays that bit Jackson, much these Mark, at look to needing And what you if it paper little then if point? paper that at next to it paper containerboard/white at if envision once you you roughly how back year? the year falls not could next year, if that these assume the it given then, this not configure machine at containerboard? like think

Mark Kowlzan

which of system. white that If would Brown flexibility coming the to out year, continue paper would some through you care then for about the the extra mill, linerboard assume anticipate on of take the of us we next allow pandemic-related production XX% impacts

mill XX% about to expect out paper anticipated demands. support coming that of would we but customer our white - So

Adam Josephson

how Which would Mark? much in containerboard production, result roughly

Mark Kowlzan

we we can had and - months three better under give will see. to belt a really in and conviction little bit our going on some more after had talk you not what I'm we numbers January hard

Adam Josephson

future have this how not. point idea general, time? do And in three any on patterns box your questions have was just abrupt you presumably, visibility, all ago in change about what this much is generally not from right visibility so, months just Sure the a quarter, like, into quarter demand not, understood. at to demand just Tom, these you last earlier, but following do to in up now, coming,

if you you your will is? confidence trying if us at that now, demand just months didn't levels understand what so very gives not to will through and three walk these be - still you what And I'm from visibility robust? just

Thomas Hassfurther

months three various in go little this was what how to had helped headed, of economy these visibility happens where other going and pandemic than they was because to sorts Let's the of back open we really that nobody some states ago that open on level. those the up and the things knew demand depending drive fact and and fast continue that first

customers' customers dramatically as business got in said, think way and it low. in because because both fast, running our business, so I hit levels, were quickly and their I our of for the addition, so inventory us our and

also going that of demand demand forms is is this up, as taking the are to of end to but sort. build so And inventory place. consumer, satisfy some two One there is actually

little like uphill extent. a almost water to it's some so And pushing

So forecast right down manageable, see become those this but box levels inventory I that's be to going their right go we'll - positive that business, can it and would do really would positive positive. of who more which positive expect surge it's the and is, and so, what the to think our through - to this they coming what for getting I that what at some now, what is really their attitude demands say - there we'll is it's customers in And outlook kind a a now, I want think, we'll to very drives well. as talking we see forward, adapt suppliers very business they extent, and remain to least still to slow what is little that's going think as it's and

very forward. I it's So think positive going

Adam Josephson

it. for I one just Bob And and appreciate last guidance. one on Mark

guidance a your is confident compelling broadly, into quite walk quarter reason hesitation uncertainties. any more current this you're of guidance? giving in thereafter? other then given your heading if there us obviously, month process that quarterly year, through straight into box on quarter? pretty thought number of been unclear next the just any demand three just there words, sort And quarters, So it's of guidance give are for giving about you experience Can you're your change but much does a to this kind In

Robert Mundy

the containerboard numbers but It's there, in those off, and internal worse, why every of with around comments Tom's reasons, are to we too today's numbers the We'll, same of were not Adam, guidance. And a will it ended assumptions look call how we're things discussion that - the be or lot too how when providing at for year, the and third put we our what were went of come look another it's and our added fourth that on your where another the about production there quarter if get wildly. quarter guess that as where we just in have in paper to needs. counting reason said our say it's Jackson, in especially lot that there's fourth of you - at you around going up, out didn't had the just call. uncertainty - Mark degree to I relative can we And been depending last better swings, said it a guidance. move to would to if well this costs what running where I we've versus demand three fluid for closer as And quarters we our were

Adam Josephson

a guidance there is beyond, just And to mean, I give period? reason compelling

Robert Mundy

do which us. a it relative for taken we've we things what pause not why has done that's something we've another are going worked done - - unusual when whatever we'll something as how is forward. That's get Adam. it and that means, normalize, say to far for well evaluate times, historically we'll historically These That's we've as what day that

Adam Josephson

Sure. Bob. Thanks,

Mark Kowlzan

question please. Next

Operator

Neel Morgan Stanley. Kumar with

is open. line Your

Neel Kumar

you're just Can think box trying more you to and Thanks out I about spread for in earlier for evenly the terms of an demand the holiday e-commerce question. are talk seeing season. my season? taking have what holiday retailers

seeing your volumes? that strong of evidence October so So, are far, you any given

Robert Mundy

be the E-commerce to all cetera and Neel. dramatically it's it's be incredibly et way busy is up going is quick, the real going respond limitation. - holiday is up forecast just I'll the to in the through and

holiday the product season on getting the going think be e-commerce consumer. is the to for I to

for normal. maxed encouraging are they why that's out heard heard and season, their UPS, the they're You've say deliveries to FedEx, holiday get you've than both people earlier that basically

Neel Kumar

And then and corrugated just provide in a third more driving magnitude? quarter. referenced color in the mix products relative fourth what's to on that quarter the expecting you potential you the less Can rich some

Thomas Hassfurther

graphics our around that's primarily Yes, business.

and the for the purchase various off quite holiday of done and in been delivered. big point that's tails primarily that throughout course Our year displays other graphics and That's of fourth a the already it's Christmas, quarter. all dramatically holidays business

So in back that then and it drop and begins third just to come strongest the that off. is tends to And second quarters.

Neel Kumar

Great.

Mark Kowlzan

you. Thank

Next question.

Operator

Anthony Citi. Pettinari with

open. is line Your

Anthony Pettinari

risk are are have externally? trial of based potentially on exploring outlined of How Mark's question, Jackson Tom related of well? much just expectation you capacity as some you've what what you is to that XXXX Or at accurate from would buying buy Is you that earlier options that if to will there circling XQ board Jackson it risk? that results it expected back is a than outside the to question. and that your say maybe other demand the keep in risk to that, and is externally and is stronger mitigate

Thomas Hassfurther

Jackson to leading fortunately, going it's of that at us good supply because - very out unbelievably of for said going will to busy box really us tight. done turn we've be to be incredibly a this the not the our degree right in to system is and our work this. market we to this the have and outside up high confidence one I've as the do of to is Anthony, earlier, be is I I able option. to continue is now. on got reasons reason bought I mentioned only is to everybody this, and board There and mean, we

and to have what to to to that's demand plant keep our now. supplied do Jackson going the we right driven simply we by in do have in we're plan box order So,

Anthony Pettinari

Or they're that has or customer we a XX% to cases wondering into you And been any seeing. been on seeing understand there especially the side, is and you're then I'm a just Obviously there's saw trying CPG your heading that colder big part like grocery weather. in growth to conversations? early March just indication April? of when in talk COVID customers, that what stockpiling increase consumer

Thomas Hassfurther

no. we - COVID, I beginning the the we're not at seeing like No that stockpiling of don't saw anything

Anthony Pettinari

dissipated And mill. fiber wondering basket elevated you costs that there? And that given then is to sort talk Laura's could just XQ long how in is be of impact something quick of damage in last terms Delta's timberlands largely like the could one if that around on about I if could fiber lived or on availability, extensive and DeRidder, looked around pretty and that what I'm

Robert Mundy

honestly, get into the woods hurricane available, see whenever the the wood the to this, wood mill. to a to there out have you damaged get just glut trees, all quite a like the producers is Well, you of because of

the to localized for before don't decaying impact land mill. short wood in cost big to of the producers woods, rotting fiber period so a starts have on it the of impact out get expect supply, in the So, longer term, and any manner I the besides a time, owners flooding, see of timely fiber and the the

Operator

Instructions] Bank Staphos with [Operator of America. George

Your line is open.

George Staphos

through? Thanks for an certainly or the the this thoughts and of since go consumption of that's more and all-time XXXX. at and box built in record right. far, has behaviors, I look like, some that's it you new be out mean back direct then low customers quarter, permanent amount a correct into call because good level or market? take lot a gone appreciated? you confirm what follow-on. Tom, new going you've is, the behavior what of stop far just up in more one forward. your saying over any what that what we've what Could would we've ways when on is inventory so is level lowest seen guys. of that all we corrugated will work and luck restaurants view? looks and come analysis seem Thanks think the learnt or you in didn't have so side your that we taking corrugated inventories from but whatever to could you consumer stay normalize We're years, view, different than hey, been the the as is like few for What that are and the to consumer, that this kind the on do for rails convenient guard corrugated mean, And the And mean Because embedded terms to that might they've volumes you, that question it's back ultimately done on I that ordering containerboard been questions of movie us theaters all now might on ordering volume the home the on for investors have in of permanent, I provide

Mark Kowlzan

first I'll this Okay, George, normalized at I'll - - I'll talk to time, about take this. demand the you this What is.

demand of we what the not One quite forecast, that normalized is reasons don't any we're because know frankly. giving

Okay.

I of and so probably been has said, in look again. be. at year, this I think well, average time, average you we've far maybe point to if what huge that's, this said just given would to a But have indicative what the well say, prior back you going that's October, had more the is I spike now

boat. much in the same very customers a is in are right are at They unpredictable very I it's moment. And So think now. very mode the our reactionary

I of big there's only moving case - got think to we're but there parts positive going that there. in will whatever out wait The a I a can thing may continue. I see very tell not you And a changes, a demand that lot we're what have just And only on be, the administration is consumer think is. COVID, here, different have trajectory. positive and just to and on we might are lot a election we're also that we've ifs presidential of

Robert Mundy

available question inventory I back far then were the further of that's Boise are of standpoint from your because company back supply obviously sort with back go the the when as transformation went were lower we acquisition. occurred as I regarding any George, didn't and these XXXX and than

inventory. these yes, of low are So, historically levels

George Staphos

more Tom, corrugated time? understand, that's we've one again. permanently what that's Thanks want without time? try putting number by if hard on just the it been this discern a gone it, view that at to the we're demand totally case, even too of your through customers has are to benefited And

Thomas Hassfurther

that's that's to I think at time. Yes, I point hard in discern this just - too think

George Staphos

Thanks, Tom. Okay.

Mark Kowlzan

ahead. Go

Operator

Mark Wilde Montreal. with Bank of

open. line Your is

Mark Wilde

is One, position at a of And impressive cash and follow-ons. could I the a need we get quick war pretty the marketable big of just and a position think on to kind just of maintain the moving that front is Two about just a question wondered I paper may we're be de the end market of are other and billion is striking about upturn? the pulp escalator, securities, of the the some comment from deals? then think there had there cyclical I these whether wonder you the is any mean I big e-commerce for and I Tom company, if some away a reliance portion Hassfurther firms corrugated with different particularly such escalator? whether on one they chest if

Robert Mundy

Let question. me cash answer the

basically we said similar that And at and cash. uncertain thought have I went very we we the I I when I to let know I I think much had have were about we let too level cash. of the question. that answered, know think very wasn't first are but you when I in too cash would I uncertain back I we you concerned much quarter I I'll and in said that still think time living same times that And position times

Mark Wilde

Okay.

Thomas Hassfurther

you Mark, on stepping interested I'm landmines. would I still say in And that, not know

and and don't, those. are agreements course with disclose and publicly our we of So discuss Pulp I'm even Paper any to our really anything us between customers we not we don't customers have going regarding and

like I'd you at answer I a to clear although question, really time. So can't more little to this give your

Mark Wilde

better legs. Tom, fine with That's two

Mark Kowlzan

Operator, just I right. all believe out we're Okay, time. of

Operator

comments, Kowlzan? Mr. Do any closing you have

Mark Kowlzan

today joining January. to for of nice you stay the to you Stay and end thank Thank us well. we at forward you. everyone talking Have holiday. a safe, look Yes,

Operator

thank your you for may now participation, We today's concludes call. This you conference disconnect.