Packaging Corporation of America (NYSE:PKG) Q3 2023 Earnings Call Transcript

Mark Weintraub: Okay, super. Thank you.

Mark Kowlzan: Thank you. Next question?

Operator: Our next question comes from Mike Roxland from Truist. Please go ahead with your question.

Mike Roxland: Thank you, Mark, and Bob for taking my questions. Congrats on another solid quarter despite tough environment.

Mark Kowlzan: Thank you. Thanks, Mike.

Mike Roxland: Just kind of a little bit more — I wonder if you could provide a little more color just about the cadence of shipments during the quarter. Just a little more color on laboring upon, I should say. Some of the different end markets, some good color before on the prior question on building products in the automotive segment, but anything you could provide as to you maybe some the cadence during the quarter? And what end markets really showed some significant growth as the quarter progressed?

Tom Hassfurther: End markets. And then when things started picking up. Yes, yes. Okay, well. Mike, I kind of — I think, I got most of what you’re asking here, but outside of those markets that I mentioned, one other market that I had mentioned prior was the ag business and told you that we had a lot of headwinds in ag, especially weather-related, those have pretty much dissipated, and we’re looking for a very good ag season coming up, so that’s going to be a lift. Of course, e-com has continues to kind of take a little bit of a larger share of the corrugated business, and that looks very good. And in general, I mean, we’re selling a lot of food and beverage and all sorts of other segments. And those segments either remain very steady or have look good going forward.

And I think the best news is it’s becoming more predictable now given the fact that we’ve gotten all of this inventory and destocking out of the way, and our customers are operating quite lean at the moment. And so it’s a lot easier to predict what’s happening in a number of these segments. I hope that answers your question.

Mike Roxland: It does. Very helpful. Thank you. And as you think about bringing back Wallula, can you talk about any headwinds that any of your other mills might face? I recall that last quarter, you mentioned — now because of Wallula being down, you were able to optimize production at your remaining mills achieving $150 per ton benefit. So any headwinds that you could expect or anticipate or your other mills once fully up and running?

Mark Kowlzan: Well, no, again, currently, because of the inventory situation, we’ll have to run the entire mill system to capacity. And so the six mills that ran during the third quarter, we’ll have to continue running full out, and then Wallula number three, we’ll have to come up and perform equally as efficiently.

Mike Roxland: One final question, I guess, squeezing in here. Mark, can you help us think about how you’re thinking of growing the business once you’re past the phase, the conversion of number three in Jackson next year, where does growth come from mix? Is the conversion of I Falls, the resumption of M&A? How should we think about you growing the business, let’s say, post 2024.

Mark Kowlzan: Well, if you look at over the decades, we’ve always grown with our customers. And we still have the most diverse, broad book of business nationwide with local accounts and we’ll continue to grow with those accounts and help enhance their business. And so that’s where a lot of the opportunity always comes from. Tom, do you want to elaborate on that?

Tom Hassfurther: Well, I think in addition, I think that as I mentioned, these segments that are down, those segments are going to come back. So they’re going to show back up. And we’ll continue to — what we think is operate, you know, demonstrate the best value in the marketplace to an entire customer base and be able to grow our business accordingly as well. So we’ll — we’re constantly looking outward to see what’s possible and what those demands look like and working very closely with our customers, and we want to make sure we’re well aligned. That’s what’s driving the whole Wallula project at the moment.