International Paper Company (NYSE:IP) Q1 2024 Earnings Call Transcript

Thomas Hamic: Sure. That’s a great question. I’ll take a couple of pieces of it. I think in terms of the investments, if you look at the first quarter, we still have a bit of a weight of new employees, and that’s why we are very on retention. But new employees are not as productive as experienced employees. However, when we look at the productivity across our machines, even though we have a few extra people in place, it’s not significant to the financials, but a few extra people, we are seeing productivity improvement for the first time in a long time. And so I feel like those investments are at a very good payback rate. And we are — it’s not insignificant, these are 2%, 3% improvements in throughput. And I think the most positive shift we’ve made in terms of our capital process and our maintenance expense is we have spent a lot of time, put a lot of people in place to make sure that the local decisions are primary.

What’s happening in that market? Why tie that back to the national piece and make sure that we are reacting to the market because I’m talking, not all 120 plants are in the same position. You’ve got to be very targeted and where you spend the money, which is what we’re doing. And then to your last question, I would expect that as a percentage of our business, the local business will grow over the next couple of years. It’s improving faster right now than the national business, and we know that when you have the capability to match the local demand, it is much more profitable than the national. And so I don’t see some huge swing where we are abandoning national accounts, but I do see a rebalancing similar to what Mark talked about in the segment discussion.

Philip Ng: Okay. Appreciate the color. Thank you.

Operator: Thank you. I’ll now turn the call back over to Mark Sutton for closing comments.

Mark Sutton: Thank you, Greg. And I’d like to wrap up today’s call by sharing my conviction that International Paper is well-positioned for the future. Andy Silvernail steps in the CEO role next week on May 1. I’m very confident his leadership experience and proven track record, combined with the industry expertise of our senior team will amplify the company’s success going forward. When I provided updates along the way about the CEO succession process, I said the Board was looking for the right leader for the company’s next chapter, and I am confident that Andy is that leader. Andy and his team will look forward to sharing updates with you starting on next quarter’s call. Thank you for your time today and for your continued interest in International Paper.

Operator: Once again, we’d like to thank you for participating in today’s International Paper’s First Quarter 2024 Earnings Call. You may now disconnect.