A lot of the mill projects are so expensive and large and OEM equipment is of a scale that it ends up flowing through our CapEx in that $1 billion of CapEx. So the way we think about it, and I’ll ask Jay and Tom maybe to give you some particulars, we look at the cash investment in our business, whether it’s a maintenance expense or whether it flows through capital as the investment in protecting today’s cash flows via reliability and generating tomorrow’s cash flows in the Box business via new capacity and capability and in the middle business by lowering our cost and changing grade structures and those types of things. But the 40% is inflation in that neighborhood is the part that I think a lot of people miss. And while inflation isn’t going up as much, there’s no deflation in any of that stuff.
There’s some deflation of few energy inputs and all that, there’s no deflation in what drives maintenance cost. It’s just going up less fast than it was. So Jay and Tom, do you want to add a little bit of color.
James P. Royalty: Yes, I think the inflation comments are right on. It’s a very extraordinary period that we are in versus the last decade or a couple of decades, and so certainly a step change in that regard. I think the other thing to keep in mind, Gabe, is this we’ve been intentionally — we’ve been intentionally spending at lower levels for the last several quarters to match the lower demand environment. And as we see the early stages of recovery, making sure that we are ready to ramp with that as it comes, we are stepping up. So that’s the other piece, I think, to keep in mind in terms of these comparisons. Tom, I don’t know what you …
Thomas Hamic: Sure. And I think Mark summed it up well. I would say the increase if you’re — there is an increase in the Box spending that is focused on reliability. If there’s any change in our focus, I would say that in the past, we were comfortable running over time. So say, two Saturdays a month in a Box plant. But that doesn’t — that might you get the orders made, but it doesn’t satisfy the reliability. So we’ve become very focused on on-time delivery and quality. And there is significant amount of this maintenance spending that we are targeting towards that shift, and frankly, it supports our margin structure going forward.
Gabrial Hajde: Okay. Thank you. Thank you for that Tom. You guys did outperform, if I go back to the bridge on a sequential basis, you talked about flattish pricing. It was plus 57. So it’s clearly showing up. We didn’t build a better IP in this presentation formally talked about. Is it incorrect to annualize that 110 number? Is there a reason why it’s more pronounced here in the first quarter? Or just, again, any way to think about that? Because it I mean that in and other shelf [ph] was, I think, a big part of a better IP and it’s shown up in pretty big numbers now here.
Mark Sutton: Gabe, this is Mark. I think you broke up on the first part of your question, but I think we get the gist of it. On the 110, yes, it’s a fair assessment to say you can annualize that number. And a portion of that is definitely inside of the build better IP. But I didn’t hear the very first — we didn’t hear the very first part of your question when you were referencing the bridge, one of the bridges.
Gabrial Hajde: It’s just the sequential price rate you guys outperformed, I think, by 57 million. So it was just …
Mark Sutton: Yes, that’s the part we didn’t hear. Yes, that’s correct. And that’s the right way to think about it. Thanks, Gabe.
Operator: You have one last question. That question comes from the line of Phil Ng from Jefferies. Please go ahead.
Philip Ng: Hey, guys. Well, I’m glad I got to get on this call because I wanted to thank you, Mark, for all the help over the years, really appreciate it.
Mark Sutton: Thanks, Phil.
Philip Ng: I guess, first off, you’re certainly seeing a lot of inflation, and you guys are putting real dollars here to be positioned to capitalize on a better demand environment. So my question is really, do you think you’re getting paid for these investments? So is there another opportunity we should be mindful of in the not too distant future? And as you implement these latest box price increases, are there levers here where you could potentially drive more than the $40 linerboard increase that went through in February, especially as you kind of move forward with this go-to-market strategy of yours?
Thomas Hamic: Yes. Yes, Phil this is Tom Hamic. I think we can comfortably separate the two. So the improvement you saw in Q1, as Mark said, it’s sustainable. The $40 that I expect to be, like it always is. I mean if you think back to previous price increases, you should feel confident that it’s going to flow through the same way. But I would see those a bit separate. In terms of continuing the margin expansion there’s a lot that gives me confidence. Piece one is we are investing significantly in our commercial capability. And that’s a shift. We’ve always focused on commercial, but not as much as we are going forward. And I think the other that is where we really understand segments, and we are very close to those segments and the value proposition, we are very successful in terms of market growth and in terms of margin structure.
And so our job is to take that capability, and this is what we are doing and build a better — I mean, go-to market is expanding that to other segments. So there’s know-how in the company. This is really the change for us of driving that across the entire business.
Philip Ng: Got you. Okay. That’s helpful color. I guess my question — my next question is just really on the operations front. I know there in the COVID years, you had some operational headwinds that perhaps limited your ability to kind of grow the market, you’re obviously going through stretch here with the go-to-market strategy. But when we kind of think going forward, are you set up properly now to kind of growth market on the operations front in terms of production. And then some of the investments you’ve made on the Box side, give us an update there. Are you starting to see that take hold and be well received in the marketplace. And as you kind of pivot to maybe a better mix in customers, give us a little perspective on is there a target percentage in terms of regional customers versus national in some medium to longer term time frame?
