International Paper Q2 2021 Earnings Report

International Paper EPS Results

• Actual EPS: $1.06
• Consensus EPS: $1.05
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

International Paper Revenue Results

• Actual Revenue: $5.62 billion
• Expected Revenue: $5.60 billion
• Beat/Miss: Beat by +$12.78 million
• YoY Revenue Growth: N/A

International Paper Announcement Details

• Quarter: Q2 2021
• Date: 7/29/2021
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 28, 2021
• Conference Call Time: 7:37PM ET

International Paper (NYSE:IP) (NYSE: IP) is a global producer of sustainable packaging and paper-based products. The company manufactures containerboard, corrugated packaging, and other fiber-based packaging solutions used to transport and protect goods across a range of industries. Its offerings also include absorbent pulp and cellulose fibers used in products such as diapers, hygiene items, and other consumer and industrial applications.

Founded in 1898, International Paper has grown through the development and operation of paper mills, packaging facilities, and related manufacturing assets. The company serves customers in consumer products, food and beverage, e-commerce, industrial, and other markets. Its operations and customer base span North America and international markets, including Europe following its combination with DS Smith in 2025.

International Paper is headquartered in Memphis, Tennessee, and emphasizes renewable fiber, recyclable packaging, and resource-efficient manufacturing. Andy Silvernail serves as the company's president and chief executive officer.

International Paper Q2 2021 Earnings Call Transcript

Key Takeaways

• International Paper reported 15% revenue growth year-over-year in Q2 with EBITDA of $793 million and free cash flow of $633 million, bringing H1 free cash flow above $1 billion.
• Volumes and operating costs were pressured by extremely low containerboard inventory following a severe winter storm, the company’s heaviest maintenance outages and constrained transportation networks.
• Management expects meaningful earnings and margin expansion in H2 2021 as price realization continues to outpace rising input and freight costs and maintenance outages step down.
• On capital allocation, IP reduced net debt by $796 million in Q2 (totaling $904 million in H1), returned $258 million to shareholders and has $1.5 billion remaining under its share repurchase authorization.
• The spin-off of the printing papers business is on track for an October 1 completion, with a Form 10 filing expected in early August as separation planning progresses.

Presentation

[Guillermo Gutierrez, VP of Investor Relations at International Paper]

Thank you, Shalon. Good morning, and thank you for joining International Paper's Q2 2021 earnings call. Our speakers this morning are Mark Sutton, Chairman and Chief Executive Officer, and Timothy S. Nicholls, Senior Vice President and Chief Financial Officer. There is important information at the beginning of our presentation on slide two, including certain legal disclaimers. For example, during this call, we will make forward-looking statements that are subject to risks and uncertainties. We will also present certain non-U.S. GAAP financial information. A reconciliation of those figures to U.S. GAAP financial measures is also available on our website. Our website contains copies of our Q2 2021 earnings press release and today's presentation slides. Lastly, relative to the Ilim joint ventures, slide two provides context around the joint venture's financial information and statistical measures. I will now turn the call over to Mark Sutton.

[Mark Sutton, Chairman and CEO at International Paper]

Thank you, Guillermo. Good morning, everyone. We will begin our discussion on slide three. International Paper delivered solid earnings growth and strong cash generation in the Q2. We continue to see very strong demand for corrugated packaging and containerboard, and solid demand for fluff pulp. In our papers business, demand recovery accelerated in the Q2 across our key geographies. We grew revenue by 15% as compared to the Q2 of last year, with price realization accelerating in all of our business segments. Our mills and converting system performed well. However, we operated with extremely low containerboard inventory across our packaging network due to two facts, the lingering effects of the winter storm in the Q1, and then our planned maintenance outages in the Q2. These operating conditions, along with severely stressed transportation environments, adversely affected volume and operating cost in the Q2.

[Mark Sutton, Chairman and CEO at International Paper]

Input costs and freight were a significant headwind in just about every category. I would call out the sharp rise in recovered fiber cost in North America and Europe. Although it certainly had a significant cost impact, it is another indication of the strong demand environment. Our Ilim joint venture delivered outstanding performance with equity earnings of $101 million in the Q2, and a strong outlook as we move into the Q3. On capital allocation, we're making significant progress strengthening our balance sheet. In the Q2, we reduced debt by $796 million. We also returned $258 million to our shareholders, including $57 million from share repurchases. During the Q2, we monetized our remaining stake in Graphic Packaging. I'm really pleased with the return on our investment. The structure of the transaction in 2018 maximized the value of the consumer packaging business for our shareholders.

[Mark Sutton, Chairman and CEO at International Paper]

Looking ahead, we're making excellent progress on the spin-off of our Printing Papers business, which we expect to complete on October 1st. Across IP, the team is doing an outstanding job managing complexity. We remain diligent in applying COVID-19 layers of protection for our employees and contractors. I really appreciate our team's commitment to execute well, take care of each other, and take care of our customers as we work together to build a better IP for our shareholders and really all of our stakeholders. I'm going to turn to slide four now, which shows our Q2 results. We delivered EBITDA of $793 million and free cash flow of $643 million, which brings our free cash flow generation to more than $1 billion for the H1 of 2021.

[Mark Sutton, Chairman and CEO at International Paper]

Revenue increased by $750 million or 15% as compared to last year, driven by higher average prices in our three businesses as well as volume growth in our packaging and papers businesses. Margins improved sequentially with price realization outpacing higher input and transportation costs. We expect margins to expand meaningfully in the H2 of the year as price realization outpaces rising input and transportation costs, and importantly, as we step down from our highest maintenance quarter of the year. I'll turn it over to Tim Nicholls, who will cover our business performance as well as our Q3 outlook. Tim Nicholls?

[Timothy S. Nicholls, SVP and CFO at International Paper]

Thank you, Mark. Moving to the quarter-over-quarter earnings bridge on slide five. Q2 operating earnings per share were $1.06 as compared to $0.76 in the Q1. Price mix improved by nearly $0.50 per share sequentially, driven by very strong price realizations across all of our business segments. Volume was essentially flat versus last quarter. Demand for corrugated packaging is very strong, and demand for fluff pulp is solid, while demand for papers continues to recover in all key regions. Q2 volume in our North American packaging business was constrained by severely low containerboard inventory, and fluff pulp shipments were hampered by significant port congestion. Our mills and converting system performed well.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Operating costs were adversely impacted by a highly stressed supply chain environment for both our inbound materials and outbound shipments, as well as the exceptionally low containerboard inventory conditions in our North America packaging system. Maintenance outage costs increased by $0.18 sequentially as we completed our highest maintenance outage quarter of the year. On an absolute level, maintenance costs were $250 million in the Q2. Input costs were a significant headwind for most materials, and energy costs remained elevated, providing little relief following the winter storm. OCC represented about half of the sequential increase in input costs. Although some of the pressure and input costs could be transitory, such as the impact of heavy rainfall on our wood costs in the Gulf region, the extremely tight transportation environment will continue to put pressure on all inbound materials.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Every mode of transportation is tight, and we expect them to remain tight as we move to the second half of the year. Corporate expenses benefited from favorable reserve adjustments. Our tax rate of 24% in the Q2 was sequentially lower, primarily due to a discrete period tax benefit, and equity earnings improved substantially on very strong performance from Ilim. Turning to the segments and starting with Industrial Packaging on slide six, we continue to see strong demand across all channels, including boxes, sheets, and containerboard. As Mark indicated, we operated with extremely low containerboard inventory in the U.S. system. These conditions impacted volume and operating costs in the quarter. We are working to replenish inventory following winter storm and maintenance outages as we manage through a tight transportation environment. Taking a look at our Q2 performance, volume was sequentially flat.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Strong demand in our North American box and containerboard channels offset lower seasonal demand in our EMEA business. Volume across our U.S. channels grew by 10% as compared to last year, which includes our U.S. box system, open market containerboard customers, as well as our recent equity partnerships with strategic sheet feeders. Price and mix increased by about $110 million in the quarter. We're making excellent progress on the realization of our margin increase. Our mills and converting system performed well. However, operating costs were impacted by severely low containerboard inventories and a stressed transportation environment with congestion across all modes. Maintenance outage costs increased sequentially as we completed the highest maintenance outage quarter of the year. In our Industrial Packaging business, we've completed about 75% of our planned maintenance outages in the H1 of the year.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Input costs were a significant headwind in the quarter, primarily driven by higher costs for OCC, chemicals, and distribution. About $10 million of the sequential increase in input costs occurred in our EMEA packaging business, primarily for OCC and energy. Taking a closer look at OCC, we consume about 5 million tons annually across our U.S. mill system and Spain. We see the rise in OCC cost as a reflection of the underlying strength in global demand for corrugated packaging. We expect OCC costs to rise further in the Q3, even as seasonal generation improves. We expect continued U.S. and export demand, especially from India and Southeast Asia, which are largely offsetting pre-restriction OCC exports to China. Turning to slide seven, we're well-positioned for strong earnings growth and margin expansion in our packaging business in the Q3 and Q4. Demand is strong across all of our channels.

[Timothy S. Nicholls, SVP and CFO at International Paper]

We expect continued robust volume growth across our U.S. channels, and we are making excellent progress on the price realization of our margin increase. Our mills and box plants are positioned for strong H2 performance following the impact of the winter storms and the significant maintenance outages in the Q2. Replenishing our containerboard inventories will enable operational and supply chain efficiencies as we move through the H2 of the year. We do expect further input cost inflation in the Q3, with substantial pressure on OCC and transportation costs. Our teams are doing an admirable job managing costs in a tough environment. We expect further opportunities to be more efficient as inventories normalize. In addition, our commercial initiatives are outpacing cost pressure and position us for strong margin expansion in the H2 of the year.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Turning to Global Cellulose Fibers on slide eight, demand for fluff pulp is solid, and the end-use demand signal for absorbent hygiene products is healthy. Looking at our sequential earnings, price, and mix improved by $104 million in the Q2, with price realization accelerating across all regions and segments as expected. Volume was moderately lower due to significant U.S. port congestion and frequent vessel schedule changes, which delayed our shipments. Mill performance was strong. Operating costs were impacted by the tight supply chain environment. We expect these conditions to continue in the Q3. Maintenance outage costs decreased as expected, and input costs were moderately higher, with lower wood costs in the Mid-Atlantic region offset by higher chemical and energy costs. Turning to Printing Papers on slide nine, our paper business delivered earnings of $76 million in the Q2, with continued strong cash generation.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Our Printing Papers business carries strong momentum as we approach the spin-off on October 1st. Demand continues to recover in all of our key regions. Additionally, our volume recovery is outpacing the industry through the strength of our global brands and commercial excellence. Looking at the Q2 performance, price and mix improved by nearly $30 million with price realization across all regions. Fixed cost absorption improved with no economic downtime in our North American mill system. However, operating costs were impacted by the tight transportation environment. We executed the heaviest maintenance outage quarter of the year as well. On input costs, we experienced pressure on wood, chemicals, and kraft. As I said earlier, we're on track to spin off the Printing Papers business on October 1st. Separation planning is progressing well, and we expect to file the Form 10 with details of the spin-off in the H1 of August.

[Timothy S. Nicholls, SVP and CFO at International Paper]

As you would expect, there is significant complexity. Our teams are doing an outstanding job managing the business as we prepare for a successful separation. Looking at the Ilim results on slide 10, the joint venture delivered equity earnings of $101 million in the Q2 with an EBITDA margin of 47%, driven by strong price realization for pulp and containerboard. Volume improved sequentially on strong demand for pulp and containerboard, as well as more shipping days in the Q2 following the impact of the Chinese New Year in the prior quarter. Underlying demand is stable following inventory restructuring during the H1 of 2021. Shipping capacity is tight, and supply chains to China are stretched. Q3 volume is expected to decrease moderately as Ilim executes the majority of its annual maintenance program.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Now we'll turn to the outlook for the Q3 on slide 12. As Mark said earlier, we expect meaningful earnings and margin expansion as we move to the Q3. Looking at Industrial Packaging, we expect price and mix to improve by $110 million on the continued realization of our March 2021 price increase. Volume in North America is expected to improve by $10 million, while volume in Europe is expected to decrease by $10 million. Operations and costs are expected to improve by $5 million, with the North American system benefiting from a gradual recovery in containerboard inventory levels. Staying with Industrial Packaging, maintenance outage expenses are expected to be down by $122 million. Input costs are expected to increase by $85 million, with OCC representing about 60% of the expected increase.

[Timothy S. Nicholls, SVP and CFO at International Paper]

In Global Cellulose Fibers, we expect price and mix to increase by $60 million on realization of prior price movements. Volume is expected to increase by $10 million. Operations and costs are expected to decrease earnings by $5 million on continued supply chain stress due to port congestion. Maintenance outage expense is expected to decrease by $15 million, and input costs are expected to increase by $10 million on higher wood and chemical costs. In Printing Papers, we expect price and mix to increase by $25 million. Volume is expected to increase by $5 million. Operations and costs are expected to be unchanged. Maintenance outage expense is expected to decrease by $23 million, and input costs are expected to increase by $10 million, primarily due to higher wood cost. Under the equity earnings, you'll see the outlook for our Ilim joint venture.

[Timothy S. Nicholls, SVP and CFO at International Paper]

I want to take a moment to update you on our capital allocation actions in the quarter. We're committed to maintaining a strong balance sheet. We're comfortable taking a leverage below the target range of 2.5x-2.8x debt to EBITDA on a Moody's basis. In the Q2, we reduced debt by $796 million, bringing our debt reduction to $904 million in the H1 of 2021. Returning cash to shareholders is a meaningful part of our capital allocation framework. In the Q2, we returned $258 million to shareholders through dividends and share repurchases. Share repurchases were $57 million, which represented 1 million shares at an average price of $60.80. We have about $1.5 billion available under the company share repurchase authorization at the end of the Q2. Lastly, in the Q2, we monetized our remaining stake in Graphic Packaging for about $400 million.

[Timothy S. Nicholls, SVP and CFO at International Paper]

This brings our total cash proceeds on the investment to $1.3 billion before expected cash taxes of about $300 million in the H2 of 2021. As a reminder, we also have a tax receivable agreement with Graphic Packaging, under which we expect to receive about $100 million in cash proceeds during the H2 of 2021. With that, I'll turn it back over to Mark.

[Mark Sutton, Chairman and CEO at International Paper]

Tim Nicholls, thank you very much for all the detail. As we look forward, we are positioned for strong earnings and margin expansion in the H2 of 2021. My confidence in making this statement is based on the following. Our commercial initiatives are driving revenue growth, and our mill and converting systems will regain meaningful operational and supply chain efficiencies as we replenish inventories. Although rising input costs will likely linger, I'm certain we can successfully navigate the environment given the strong demand backdrop. Our papers business carries strong momentum as we approach the October 1st spin-off. Our team is doing an outstanding job managing the business and taking care of customers. I want to take this opportunity to thank our employees for their tireless efforts as we plan for a successful separation.

[Mark Sutton, Chairman and CEO at International Paper]

As we move through 2021, we had significant operating and non-operating cash catalysts, and we are laser-focused on the capital allocation framework that Tim just described. All of our cash will flow through our framework with one objective: maximizing value creation for our shareholders. I'm excited about the actions we're taking to build a better IP. We're accelerating earnings growth and building a foundation for long-term success. We're looking forward to sharing more about that with you in the months ahead. With that, we're ready to take your questions.

[Operator]

Thank you. As a reminder, ask the question press star one. To withdraw your question, press the pound key. Again that is star one to ask a question. For consideration of time, please limit your question for one question and one follow-up. Thank you. We will pause them for a moment to compile the Q&A roster. Your first question comes from the line of George Staphos from Bank of America.

[George Staphos, Analyst at Bank of America]

Hi, everyone. Good morning. Thanks for the details. Thanks for taking my question. I guess my 1st question, Mark Sutton, and you and Tim Nicholls have talked about this in the past, about running the cash flow generation that the company has, both from an operating standpoint and non-operating, since you have so many transactions that have been occurring this year and will continue to occur this year through your framework. What should we take away from that in terms of what tools that you have in your quiver may be more applicable now versus what might have been the case three and six months ago? Tim Nicholls, what gives you comfort and why you think it's appropriate, in your view, for leverage to drop below your target range? What are the things that you think make that a prudent strategy?

[George Staphos, Analyst at Bank of America]

You can give us a couple of thoughts here, and then I had a follow-on.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Sure. Good morning, George Staphos.

[George Staphos, Analyst at Bank of America]

Good morning.

[Timothy S. Nicholls, SVP and CFO at International Paper]

The way we're thinking about it is we are trying to maximize value. We have a lot of cash coming in in a moment. Everything looks positive as we go forward, but we recognize this is a cyclical business to some extent. In relation to the balance sheet, where we are trying to build strength, reduce risk, but also flexibility and optionality. Taking it down below the target range, which is really a target range through a cycle. Sometimes we'll be below it, and sometimes we might be a little bit above, but we just view it, that coupled with our pension performance is de-risking the company. Share repurchases and dividend is very important. That is over time as we, not necessarily quarter-by-quarter, but over year-by-year, we look to be returning substantial amounts of cash to shareholders.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Everything else gets tested, whether it's organic or small bolt-on types of acquisitions, gets tested against that.

[George Staphos, Analyst at Bank of America]

As a follow-on, would the accelerating performance that you are seeing into the H2 be any way a guide, a compass point for you in terms of how you may further allocate capital, especially to value return over the rest of the year into 2022? Or is it really not so much because you look at this on a longer-term basis, and what are the whys and why not on that? My related question, I'll turn it over for everyone. Do you have any kind of view that you could share with how much cash Sylvamo will need to operate on an ongoing basis? Thank you very much.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Yeah. Just on the last we do, and the Form 10's going to be coming out here in short order, and I think that'll answer a lot of questions. To your first part of your question, I think we try to look at both. We try to look at circumstances in the moment, but we definitely have a long-term view, and we're thinking about how to create value and what our value is over time. I hope we try to take both into account over time.

[Mark Sutton, Chairman and CEO at International Paper]

Tim, if I could, and George, just wrap up. There was a lot of ground covered in the capital allocation questions that you asked. We do take a long-term view. As I said last quarter, one of the things we're really excited about is that we've got IP positioned for the first time in really almost forever or definitely recent memory, where our entire capital allocation lever set, strong balance sheet, ability to pay a strong dividend, share repurchases at the right time, and very importantly, smart investments in our business, as Tim said, organic or inorganic. We have all of those levers available at the same time. Our past history, as all of you know, is we've had two or three or maybe two out of four, sometimes only one out of four, and that's what we really are excited about as we're going forward.

[Mark Sutton, Chairman and CEO at International Paper]

As we separate into two companies, the new IP is going to have a capital allocation posture that we haven't had in a long time, and that's very exciting for our shareholders. It's very exciting for the company because we have options to grow the businesses that are growing, to manage our return of cash, all generating hopefully outstanding shareholder return.

[George Staphos, Analyst at Bank of America]

Thank you very much.

[Operator]

Your next question comes on the line of Gabe Hajde from Wells Fargo Securities.

[Gabe Hajde, Analyst at Wells Fargo Securities]

Good morning, Mark and Tim. Thanks for taking the question. I guess not to belabor the point here, but, and I appreciate that there is somewhat of a wall of worry out there. I think, one of your peers kind of talked about potentially, a structurally higher level of demand for corrugated for various reasons, whether it's e-commerce or potential onshoring or manufacturing activity. I guess, ask the question a little bit differently. Your balance sheet and pension probably have not been in as good of shape for two or three decades. Is there something that you see around the corner that gives you pause in terms of any of your businesses and, it sounds like again, you have pretty constructive near-term outlook. Thoughts out there?

[Mark Sutton, Chairman and CEO at International Paper]

No, Gabe, I think, we also view the corrugated packaging market as potentially having a bit of a reset through this last year and a half. We listen to our customers on that, which I'm not sure it's 8% every quarter, year quarter in and quarter out like it was in the last quarter, definitely a step up from the low single-digit growth rates. That's what we want to be positioned for. When we talk about growing at a minimum with the market, we mean over time at a reasonable assumption of growth on the U.S. market. That's a number that I think is leaning toward the higher end, just because of a couple of things.

[Mark Sutton, Chairman and CEO at International Paper]

The adoption of e-commerce through the pandemic, which has, I think proven to be very sticky, and the valuable proposition that fiber-based packaging presents to people in terms of its circularity, renewable natural resources, making energy in carbon neutral biomass way, and a high recycling rate is finally, with all the talk about sustainability and climate and a number of other issues, finally getting attention all the way down to the consumer level. We're very excited about the corrugated packaging outlook, and we want to make sure we're there with the right asset base, the right customer list, the right technical capabilities to share in that growth.

[Gabe Hajde, Analyst at Wells Fargo Securities]

All right. Thank you, Mark. I guess, switching gears, are you guys prepared at all, it's been call it eight months or so since you've announced, the $350 million-$400 million of cost reduction, to provide maybe a little bit more detail either cadence of that, of how we might expect it to flow through. I'm assuming maybe we've seen a little bit here in the H1, but, and then maybe by segment, what you expect to see, or is that something you maybe prefer to wait to talk about?

[Timothy S. Nicholls, SVP and CFO at International Paper]

Yeah. Gabe, we plan on starting that as we head towards the Q3 release, and then for the end of the year to get an expectation about 2022 performance.

[Gabe Hajde, Analyst at Wells Fargo Securities]

Thank you.

[Operator]

Your next question comes from the line of Anthony Pettinari from Citi.

[Anthony Pettinari, Analyst at Citi]

Good morning. On Industrial Packaging, the AF&PA and AF&PA data would suggest that sort of industry inventories are kind of closer back to a normal or more of a normally historic level for July. I'm just wondering if it's possible to quantify or put a finer point on how far below you are sort of normal or comfortable levels of inventory, and sort of where that was exiting the quarter and maybe as we're here at the end of July.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Yeah. Through the Q2, we saw the lowest inventory levels in our system that we've probably ever experienced. Coming out of the Q2 into July, we're able to start recovering a little bit of that. Look, the winter storm impact hit us hard, 145,000 tons followed by abnormally high outage quarter in the Q2. It's going to take a little bit of time for us to recover that as we go through Q3 and probably into the Q4 to some extent. Yeah, we were at our lowest levels we've ever seen in the Q2.

[Mark Sutton, Chairman and CEO at International Paper]

Anthony, I think the other perspective on inventories, I've seen a lot written by analysts on normal inventories. One just thing to remember in the way we look at it, normal inventories and averages from the past tend to correlate with more normal supply chain environments. Normal transportation velocity, so forth and so on. We are nowhere near any kind of normal supply chain performance by third-party partners in the transportation world. Our inventory view in IP for the next quarter and the quarter after that is also influenced and adjusted by what's happening in the transportation and supply chain network. I would expect that normal right now should be higher levels of inventory to perform the same with customers as we had when transportation velocity was much higher.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Yeah, that's it.

[Anthony Pettinari, Analyst at Citi]

Okay. That's very helpful, and that point well taken. Then just maybe following up on capital allocation. You talked about the willingness to potentially go under the 2.5-2.8 range at what is I think a pretty positive part of the cycle. As you look to the spin, would you look at revisiting that 2.5-2.8 target range, either up or down? You're going to have a more durable, higher quality business with Industrial Packaging and pulp. The same time, you have a publicly traded competitor in containerboard that's been operating closer to one turn or certainly below two turns. Just wondering if you'd talk about that range and maybe your willingness to revisit it over the long-term.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Yeah, it's a great question, Anthony, and certainly none of this is static, right? We want it to be understood, and we want to be consistent and true to the framework as we talk about it. That doesn't bar us from reevaluating based on portfolio and other specifics on potential changes that we think are beneficial to our investors and stakeholders. Nothing now, but something that we will definitely look at over time.

[Mark Sutton, Chairman and CEO at International Paper]

Anthony, I think the way you should probably think about how we make that decision together, Tim and his team and me, is we try to look at the company and its optimal weighted average cost of capital. One portion of that is what credit rating we need to have that delivers and supports that. You're absolutely right. We're going to be a different company going forward. That analysis is something that we do continuously. We've arrived at the credit rating target we have based on the company. We will continue to look at that and try to make sure that our ROIC is constructed in the most effective way to get the best solid, high-quality return we can for shareholders. Definitely debt ratios and credit ratings are a part of that.

[Anthony Pettinari, Analyst at Citi]

Okay. That's helpful. I'll turn it over.

[Operator]

Your next question comes from the line of Mark Weintraub from Seaport Research.

[Mark Weintraub, Analyst at Seaport Research]

Thank you. Wanted first just to get maybe more color on the corrugated volumes. Again, solid up 3.9%. Industry, though, was up 8.2%. You mentioned supply chain and other challenges you had. Did that actually suppress where your volumes otherwise would have been? If that was the case, is that business that when your system's operating easily comes back? Can you kind of give us some color on how to understand the volume situation?

[Mark Sutton, Chairman and CEO at International Paper]

Well, Mark, I think the way to think about I was looking at what we sort of put in our outlook in the Q1 call, and we actually had stronger performance than we thought we were going to have. A lot of people didn't know the market was going to grow 8%. We had the inability during the quarter, in some cases, to pick up incremental business. We didn't lose any business with our core customer list that was coming into the quarter as business. There may be some business that we didn't bid. Most of it is shorter-term business. The answer is yes. We have people still calling us today. "Can you supply me more boxes?" In some cases, we can. We just couldn't do it in the Q2. I'm not concerned about losing anything permanently.

[Mark Sutton, Chairman and CEO at International Paper]

We basically had a classic mismatch between the available capacity in our system and the demand in a 90-day period.

[Mark Weintraub, Analyst at Seaport Research]

When you say the available capacity, is that because your capacity during these 90 days were constrained by unusual factors? Or basically you're just pretty much running full to your box system?

[Mark Sutton, Chairman and CEO at International Paper]

The two factors I mentioned, Mark, in my opening comments. We have more than one quarter of recovery from the winter storm, 140,000 tons that just evaporated from our containerboard supply chain. On top of that, we had our highest maintenance quarter in IPG in the last 10 years. If you just normalize what was above normal maintenance plus that winter storm, that's a chunk of containerboard capacity that could not be converted into a box. That's coming back. It's just going to take a little while to get it back. What we had available ran wide open, but we had capacity offline for maintenance, and we had the lingering effect of the 140,000 tons from the Q1. None of those are permanent. All of those will be significantly improved as we navigate through the H2.

[Mark Weintraub, Analyst at Seaport Research]

Got it. Then just on pulp, obviously great price mix showing in the quarter, and you pointed to another, I think it was $60 million or so for the Q3. Does that pretty much reflect all of the benefit from the pricing that's already happened, forgetting about what happens from here? The way your contract's set up, is there meaningful additional lag that might come through based on what's happened previously with posted prices?

[Mark Sutton, Chairman and CEO at International Paper]

That's a complicated question because of the nature of some of these contracts by customer type, by region. Let me just kind of restate what we talked about the last two quarters. That, A, you could expect quarter-over-quarter improvement in this business, steady improvement in this business, and we're seeing that. Our strategy is to have the kind of margins in this business that reflect the value that fluff pulp provides for the end-use customers. We're taking a very structured, very measured approach to each market segment and to the agreements we currently have in those segments with individual customers. As we implement this approach, we would expect that there'll be some volume shifts and movement between segments, and our goal is to have mix improvement, better agreements with better economics that reflect the value of fluff pulp.

[Mark Sutton, Chairman and CEO at International Paper]

That is a kind of customer-by-customer, region of the world-by-region of the world. I would expect, and we're making progress, good progress on that. Given the length of some of these agreements and the way they're structured, we should expect to continue to see margins improve over the next several quarters.

[Mark Sutton, Chairman and CEO at International Paper]

That's a long, complicated answer to will we have any more price flow-through. It's not just about price flow-through, it's about restructuring these commercial agreements and getting the proper value for this product.

[Mark Weintraub, Analyst at Seaport Research]

Appreciate the color. Thank you.

[Operator]

Your next question comes on the line of Mark Wilde from Bank of Montreal.

[Mark Wilde, Analyst at Bank of Montreal]

Good morning, Mark. Good morning, Tim.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Morning.

[Mark Sutton, Chairman and CEO at International Paper]

Morning.

[Mark Wilde, Analyst at Bank of Montreal]

I wondered, Mark or Tim, if you can just help us a little bit with kind of cadencing the pass-through of the spring containerboard hike. I don't think you said anything about this prospective early August hike. Maybe if you could just give us some color around that as well, just as we think about the next couple of quarters and into 2022.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Yeah. Hey, Mark, it's Tim. I think the increase from the fall, as we talked about last quarter, went through in a record amount of time. It was the fastest I've ever seen. The pace on the second one, we were kind of expecting a normal historical ramp on it. It seems to be going faster, not as fast as the first, but still faster than what we've seen over time. As August comes, we'll see how that one plays out. Right now we see our fundamentals looking very strong. We see strong demand, and as Mark talked about, all of the complications with supply chain are really stretching inventory tighter than they would normally be. Far through the first two price increase implementations, we feel really good.

[Mark Wilde, Analyst at Bank of Montreal]

Can you give us a sense, Tim, of how much benefit from that spring hike you've had in the Q2, and just order of magnitude, what we might expect in the Q3 and Q4?

[Timothy S. Nicholls, SVP and CFO at International Paper]

I think if you look at the two of them combined, we'd be about 80% complete on implementation at this point.

[Mark Wilde, Analyst at Bank of Montreal]

Okay. All right. Any thoughts on sort of how August would roll in?

[Timothy S. Nicholls, SVP and CFO at International Paper]

Yeah, that's forward-looking and we feel very confident at the moment, but I don't want to speak to forecasting price at this point.

[Mark Wilde, Analyst at Bank of Montreal]

Okay. All right. That's fair. Mark, I just want to, as a follow-up, turn to the containerboard business from just a kind of a supply and demand standpoint. Does this continued strength in global containerboard demand, is it altering your thinking at all about investing in either debottlenecking projects at the existing mills or potentially the timing on that second conversion at Riverdale? Are you also doing anything to kind of gear up capacity on the converting side as e-commerce continues to grow as a bigger and bigger percentage of the market?

[Mark Sutton, Chairman and CEO at International Paper]

That's a great question, Mark, and the answer is coming into maybe the middle of 2020, we were saying, and I was saying, we feel really good about our containerboard capacity. We have what we need, the amount, the type of grades. When everything's running, we have enough capacity. Everything isn't running every day with outages and, of course, events that you don't predict, like that winter storm issue. Yes, we are looking continuously at debottlenecking. We've done a bunch of that in the last several years, thankfully, because we need that containerboard now. We are looking at different options for adding containerboard into our system if it looks like this kind of demand level is going to be consistent. Remember, we are structured maybe a little bit uniquely in the sense that we bring containerboard to market through three distinct channels.

[Mark Sutton, Chairman and CEO at International Paper]

Our own box network, open market in North America to companies that provide a certain service in the box market have been long-term partners of ours, but we don't make the box, then our export. What you have seen, and will continue to see, is movement of containerboard within those three channels. Obviously, we have favored the U.S. box market as much as we can. Trying to continue over time, not just in the Q2 of 2021, but over time, get the highest possible margins in our business by participating in all three of those channels. Containerboard, you're right, is a high-demand product all over the world, both recycled and virgin. We obviously only export the virgin version of it. Box capacity, we've been actively investing.

[Mark Sutton, Chairman and CEO at International Paper]

Luckily, with the acquisitions we did back in the early part of the past period, we've had a lot of opportunities to fill out existing plants by adding single or double lines of box-making equipment. We've built a few plants, and we've acquired a couple of partnerships, but there's definitely opportunity for us to continue to invest in our converting network. The other option with converting, as you well know, Mark, is when you know demand looks like it's going to be solid, you can bring on more employees and actually fill out an extra shift in many plants, and you've got latent capacity turned into productive capacity. You obviously want to do that when you're pretty sure, and you first do it with overtime, and then you do it with permanent employees.

[Mark Sutton, Chairman and CEO at International Paper]

That's a challenge right now given the labor market dynamics, but we've got several levers to pull to continue to invest in not only box capacity, but the kinds of capability we have. E-commerce specific assets, for example, is something that we're also bringing to market.

[Mark Wilde, Analyst at Bank of Montreal]

Okay. That's helpful. Thanks, Mark. I'll turn it over.

[Operator]

Your next question comes from the line of Mark Connelly from Stephens.

[Mark Connelly, Analyst at Stephens]

Thanks. Tim mentioned that white paper price mix gave you about $30 million, when I look at overall revenue per ton in this segment, we've got only a couple of bucks, which implies that maybe overseas price mix was flat or even down. Can you talk about price mix across your system, particularly outside the U.S.? On the white paper side, sorry.

[Timothy S. Nicholls, SVP and CFO at International Paper]

On the white paper side, Mark?

[Mark Connelly, Analyst at Stephens]

Yeah.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Yeah, you're just a little bit muffled coming through. Were you talking about looking forward, Mark?

[Mark Connelly, Analyst at Stephens]

No, I'm curious what's happening in the system right now. It looks like you got some gains in the U.S., but you didn't really get much across the entire white paper business.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Yeah. Well, all of the regions we're seeing price increases or realization of price increases to some degree. Some of this in other regions started earlier in the year. Russia was kind of on the forefront earlier in the year implementing a price increase. Brazil as well, domestically. Those are running their course and playing out. Where we still see traction is in North America and in some of the export markets as well.

[Mark Connelly, Analyst at Stephens]

Okay. That's very helpful. Mark, just to switch gears completely, I'm curious what your position is on this packaging stewardship legislation that we're starting to see as states try to create incentives to reduce waste. You've pointed to the growth in e-commerce, which some of these states are pointing to as part of the problem. We know AF&PA is against containerboard being included. How do you think about containerboard industry responsibility? What should it be if the legislation should not apply to you?

[Mark Sutton, Chairman and CEO at International Paper]

Well, I think if you look at the legislation in detail, there's a federal view that's kind of in its nascent stage, and there's a state-by-state view. We are actively working in the state-by-state legislatures. The big issue and the big goal of this extended producer responsibility type legislation, it was really targeted non-recyclable or hard to recycle, in many cases, plastics. In some cases, that has led people to believe all packaging should be included. The first thing is separating the facts of what corrugated packaging can do, and actually, corrugated packaging can be a solution to the problem because of the high recycling rates. That message has to get to policy makers, and we work very hard on that. I spend a fair amount of my personal time talking to people about that.

[Mark Sutton, Chairman and CEO at International Paper]

In many cases, it's a new learning, Mark, for people at the local level, that there is a completely different story on fiber-based packaging that's made from the renewable resource and a high recycling rate in the 90% range versus many of the other substrate choices. I think that's the case we're making, that it's actually part of the solution, not part of the problem. As usual, in legislation, sometimes it starts with a blanket, all packaging needs to be managed in a different way, and people need to be responsible for their packaging that they put out there when we have a system. For example, we spent a lot of time, and it's in there right now, on the infrastructure work that Congress is working on.

[Mark Sutton, Chairman and CEO at International Paper]

In that bipartisan agreement they made yesterday, a significant amount of investment in recycling networks in the country is part of that. We'll see if it stays in there. That's the answer, is in improving recycling rates for easy to recycle and reuse materials. That's the value proposition for corrugated packaging not being included in the intent of some of that legislation.

[Mark Connelly, Analyst at Stephens]

That's super helpful. Thank you.

[Operator]

Your next question comes from the line of Philip Ng from Jefferies.

[Philip Ng, Analyst at Jefferies]

Hey, good morning, everyone. Appreciating the winter storms was a big hit for you guys, but Tim or Mark, do you expect inventory getting back to a more manageable level for containerboard in 3Q, where you'll be able to better capitalize on the growth we're seeing and get operating costs back to more of a normalized level? I think in the past, you've always kind of targeted to grow faster than the market, but any color on kind of getting back on track on that goal?

[Mark Sutton, Chairman and CEO at International Paper]

Philip, we think it'll be steady progress. It won't be all solved in the Q3. We think we'll make steady progress through the H2 of the year. We have targeted to grow at or slightly above the market over time. We were really hampered in our ability to do that in the last couple of quarters because of the issues you just mentioned. We will definitely have more options available for incremental growth as we go forward, just based on the fact that we won't have so much of our system down for maintenance. It will take slow, steady progress month after month through the H2.

[Philip Ng, Analyst at Jefferies]

We should still expect you to lag the market a little bit in 3Q and obviously continue to make progress.

[Mark Sutton, Chairman and CEO at International Paper]

Not necessarily. Part of what happens in 90 days, that's a pretty short period of time. Part of what happens in the 90-day period is your segment exposure and what happens in the seasonality, if you've got more of this versus that. I think I wouldn't automatically assume we'll lag the market. I think it will take us the next H2 of the year to get to the point where we feel comfortable that our inventories are more sustainable. I think the first thing we'll see is we won't miss any sales. The second thing we'll see is our costs will come down.

[Philip Ng, Analyst at Jefferies]

Super helpful. Pulp prices, appreciating its volatile nature, it's a commodity. Both softwood and fluff pulp prices really surged this year, but the market appears to have softened up a bit. What's your crystal ball saying in terms of pricing for fluff and softwood pulp globally? Do you have a view in terms of how much inventory levels are in the channel? It's tougher to gauge, just given some of the logistical bottlenecks you guys are seeing in the market.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Yeah. I wouldn't want to forecast price looking forward. I talked about how we think about it at the moment, what we believe we're seeing. We're seeing a bit of a pullback in some of the markets, but our view at the moment is that things are more stable than not. You have to look at not only the underlying demand levels, but at the transportation difficulties, which are really, in effect, extending supply chains at this point. You're right, pulp, commodity product, but our view at the moment is this is a bit of a correction, not a complete turn.

[Philip Ng, Analyst at Jefferies]

Okay. Super helpful, guys.

[Operator]

Your next question comes from the line of Adam Josephson from KeyBanc.

[Adam Josephson, Analyst at KeyBanc]

Mark and Tim, good morning. Hope you're well.

[Mark Sutton, Chairman and CEO at International Paper]

Morning, Adam.

[Adam Josephson, Analyst at KeyBanc]

Mark, one more on pulp, and then I have a containerboard question. Just, I appreciate your comments that you expect segment margins to improve over the next several quarters. When I look at the last 10 quarters, it's been a pretty tough slog for the business. As Philip Ng just said, prices in China have been coming down of late. I guess, what gives you confidence, just given what's happened over the past two-three years, that this is a business in which you have a meaningful competitive advantage?

[Mark Sutton, Chairman and CEO at International Paper]

If you think about the remarks I made a couple of questions ago about what we're changing in the business versus the last 10 months or the last 10 quarters, that's what gives me confidence. This is a very value-creating material for our end-use customers, and we just haven't always extracted that proper value that gives us a value-creating return. That's what we're working on. I think the growth rate will stay solid as economies around the world improve, so there's a growth component. We're going to run the business in a different way than it's been run before. When we made the decision to invest in the business, it changes the profile of this being a legitimate first-rate business for a company versus, in many cases, a smaller sideline type of business.

[Mark Sutton, Chairman and CEO at International Paper]

Some of that's reflected in some of the way the commercial agreements have been made, and we're working on changing that for the better.

[Adam Josephson, Analyst at KeyBanc]

I appreciate that, Mark. Just one on box, I think you mentioned earlier in the call that long term, you think the market could be at the high end of that 1%-2% range that you were talking about. Just want to make sure I understand this. Let's say the market's up another 4% this year after 3.5% last year. You're talking about kind of an 8% step change upward post-pandemic in a market that had been growing at 1% per annum. Are you thinking that we're going to stay at these higher levels and grow on top of that, or that there could be some correction as retail sales normalize, and then we'll get back to some kind of growth trend?

[Mark Sutton, Chairman and CEO at International Paper]

Yeah, it's hard to predict that with certainty, obviously. We believe that part of what's happening is the role that fiber-based packaging is playing in general commerce, driven by a few segments, has taken a step change up. We think the base will be stronger. It depends on a lot of things, and number one, the structure of the U.S. economy. If there is really action on some of the things that are being learned now around supply chains and global issues with supply chains, and we do have more manufacturing that actually occurs in the U.S. for certain components, I think that'll bode well for the business. How strong the consumer is going forward coming out of this.

[Mark Sutton, Chairman and CEO at International Paper]

I think you're looking at maybe what's going to be close to two years of pent-up demand by consumers because of the things that happened during the pandemic. How that plays out in consumption will play a big role in what that growth rate's going to be. We have this model we use. I know others have models. There's third parties that have models. A correlation around GDP, it has been slightly less, has been what's happened in the box market, and we think that'll still stand. It looks like we're poised to have a stronger consumption-oriented GDP for at least as far as you can see right now.

[Adam Josephson, Analyst at KeyBanc]

Terrific. Thanks a lot, Mark.

[Operator]

Your next question comes from the line of Paul Quinn from RBC Capital.

[Paul Quinn, Analyst at RBC Capital]

Thanks very much. Just a question on pulp. I understand you guys are making some operational improvements, and I'm just trying to balance that with the Q3 guide here, where you've got ops and costs up $5 million. Is there something on the cost side that's more than offsetting the operational improvement that you're seeing? If you could give us a sort of a scope as to what the big bogey is out there for three-five years out in terms of the things that you guys can control, i.e., how much improvement do you expect that segment to have over that period of time?

[Mark Sutton, Chairman and CEO at International Paper]

On the longer-term part, I'll ask Tim to look for that cost offset part of your question. On the longer-term, we believe that a combination of how we operate, so in the manufacturing sector and the cost structure of our mill system, and I've said this before, especially the part that was the legacy IP mill system, which is mostly converted mills from other products versus what we acquire with Weyerhaeuser, which is mostly all built for purpose. They tend to have a better efficiency and lower cost. We've got opportunities to lower the cost, primarily in the legacy IP manufacturing system. Couple that with the commercial arrangements, improvements that we're talking about and that we're doing now. You put those two together, we should hit the margin structure to have a solid business above the cost of capital with a slight growth potential.

[Mark Sutton, Chairman and CEO at International Paper]

That's what we are working on, and we see a path to that. It'll be a steady path quarter-by-quarter, and that's where we're heading. The question on the cost offset, Tim Nicholls?

[Timothy S. Nicholls, SVP and CFO at International Paper]

It's modest, but it's really transportation. We're continuing to battle the transportation challenges.

[Mark Sutton, Chairman and CEO at International Paper]

A big part of the transportation issue in this business, Paul, is the export port congestion, much more exposed to international ocean freight than the other businesses of the company.

[Paul Quinn, Analyst at RBC Capital]

Right. Thanks very much. That's helpful.

[Timothy S. Nicholls, SVP and CFO at International Paper]

Thanks a lot.

[Operator]

Your next question comes from Neel Kumar from Morgan Stanley.

[Neel Kumar, Analyst at Morgan Stanley]

Hi, good morning. You mentioned wood cost being higher sequentially, partly because of the wet weather. Could you just give me a sense of the magnitude of inflation you're seeing there? Have you started to see more of a 3Q issue, or could it carry over into the Q4 as well?

[Timothy S. Nicholls, SVP and CFO at International Paper]

Yeah, it's really due to having access to the fiber and being able to get it out of the woods based on the rainfall that we've had. We look at a very long lead time in terms of how we manage wood inventories at mills and across basins, and it's really been the Gulf States that have been more heavily impacted, but some of the Southeastern mills as well. It'll depend on the weather as we go through the rest of this quarter into the fourth. Our inventories are in decent shape, but they're a little on the low side, and it's just going to cost more to get the wood out and get it to the mills. Transportation's not helping either. We referenced inbound materials and whatnot, and that's seemingly impacting everything.

[Neel Kumar, Analyst at Morgan Stanley]

All right. That's helpful. Then in terms of your maintenance outage expenses, you're now forecasting $642 million for the full-year. I know it's early, but I'm just curious how you're thinking about 2022 maintenance. Do you expect it to step down year-over-year or generally remain near 2021 levels?

[Timothy S. Nicholls, SVP and CFO at International Paper]

Well, we're still working through that. I think a good way to look at it, the way I look at it, last year was an abnormally low year. This year is a little bit of a out of range high year. When you put the two of them together, it looks roughly in line. Our outages can be anywhere from $500 million to a little bit less, or maybe some years a little bit more, pushing $550. Last year, given all the uncertainty, we pulled back and curtailed. This year, we're catching up on some of those outages from last year. We put the two of them together, it looks more normal. Next year, we have to finish our planning. We always provide that as we near the end of the year and look into the coming year.

[Neel Kumar, Analyst at Morgan Stanley]

All right. Thank you.

[Operator]

Okay. Our last question for today comes from the line of Kyle White from Deutsche Bank.

[Kyle White, Analyst at Deutsche Bank]

Hey, good morning. Thanks for taking the question. I just wanted to talk about some of your end markets in corrugated packaging. How is e-commerce performing relative to your initial expectations at the start of the quarter? Any slowdowns there that you see? How's the recovery in food service going? Just any details on the end markets that you can provide.

[Mark Sutton, Chairman and CEO at International Paper]

I think on e-commerce, no disappointment. Still very strong. We're getting into the period of the year where you start to build for the year-end demand increases as you move toward holiday season. Still a very strong story. We're continuing to invest in that segment. Food service, continuing to improve. I guess there's a question mark about what happens with the Delta variant and COVID and whether everything continues to open. I think a big question or a big potential upside is as schools and events start to open, food service related to those, which obviously hasn't been open during the summer, is another potential upside. If that in any way, shape, or form gets delayed, then the food service growth could slow a little bit.

[Mark Sutton, Chairman and CEO at International Paper]

The only segment that I think, and it's kind of predictable, that maybe saw some flattening was processed foods, and I think it's directly related to the general opening of the economy and a little less stocking up of kind of the center of the grocery store, if you will. Good strong performance across the key segments, and we believe, listening to our customers and looking at order patterns, that's continuing as we go into the Q3.

[Kyle White, Analyst at Deutsche Bank]

That's helpful. Then focusing on transportation, I know it's early, when you look to next year, do you see any relief or kind of stabilization in transportation costs, or do you anticipate kind of continued inflation headwinds? Is there anything internally maybe that you can do to provide some relief against these costs?

[Mark Sutton, Chairman and CEO at International Paper]

Well, internally, the best thing we can do on the cost side is to have our system optimized with the right inventories. What that means is, make a product in the right factory so that the transportation cost to the customer, or in the case of our Industrial Packaging business, our containerboard mill makes containerboard for box plants that are nearby, not box plants that are all the way across the country. That's the number one thing on cost that we can do internally. We don't have our own trucking company or anything like that. It's about really optimizing our supply chain, and there's dramatic improvements we can make on cost.

[Mark Sutton, Chairman and CEO at International Paper]

To your first part of your question, I don't know this for sure, looking at what the analysts that follow the transportation industry talk about is that there is a belief that labor and some of the impediments to truck capacity and the training that's required to bring on more employees and more assets in the rail industry will get better, that people will want to return to those industries. Many of those companies laid off a lot of people. You can't just bring people back in rail. There's required training and other things, same thing for truck. The belief is that that'll get better. Capacity should get better. If the economy stays kind of red hot, it's a good problem to have, I think capacity will get absorbed pretty quickly.

[Mark Sutton, Chairman and CEO at International Paper]

The jury's out on that, but we think it's really disrupted right now, and velocity is really slow for a lot of reasons. We think part of that, at least on the human labor side, will get better.

[Kyle White, Analyst at Deutsche Bank]

Got it. Thank you for all the details.

[Mark Sutton, Chairman and CEO at International Paper]

Thank you. Let me go ahead and wrap up. Just a couple of takeaways I would like to leave with investors. First, you heard today that we are really positive on the strong momentum we're building for the H2 in both earnings and margin expansion. We're absolutely laser-focused on capital allocation and a balanced approach to that, and we are in very good shape on all elements of our capital allocation framework, and we're very excited about the prospects we have in front of us as we separate IP into two companies, and we work on building a better IP going forward. Thank you for your interest in International Paper. We look forward to talking with all of you next quarter.

[Operator]

Thank you for participating in today's International Paper Q2 2021 earnings conference call. You may now disconnect.

Participants

Executives

• Guillermo Gutierrez, VP of Investor Relations
• Mark Sutton, Chairman and CEO
• Timothy S. Nicholls, SVP and CFO

Analysts

• Adam Josephson, Analyst at KeyBanc
• Anthony Pettinari, Analyst at Citi
• Gabe Hajde, Analyst at Wells Fargo Securities
• George Staphos, Analyst at Bank of America
• Kyle White, Analyst at Deutsche Bank
• Mark Connelly, Analyst at Stephens
• Mark Weintraub, Analyst at Seaport Research
• Mark Wilde, Analyst at Bank of Montreal
• Neel Kumar, Analyst at Morgan Stanley
• Paul Quinn, Analyst at RBC Capital
• Philip Ng, Analyst at Jefferies