Packaging Corporation of America Q3 2022 Earnings Call Transcript

Quartr
Provided by Quartr
October 25, 2022

Key Takeaways

  • Packaging segment demand was well below expectations, with corrugated shipments down 6% year-over-year due to customer destocking and softer consumer purchases amid inflationary pressures.
  • Strong price realization and mix improvements drove a $0.14 EPS increase versus last year, delivering third-quarter net income (ex-special items) of $2.83 per share and EBITDA of $477 million.
  • Inflationary cost headwinds—particularly in energy, repairs, materials, chemicals, labor and freight—added $0.70 per share in operating expenses, partially offsetting pricing gains.
  • Record operating cash flow of $431 million and free cash flow of $251 million funded $142 million in share repurchases and left PCA with $1.1 billion in total liquidity.
  • Fourth-quarter EPS guidance of $2.22 reflects continued volume weakness, four fewer shipping days, higher scheduled outage costs (+$0.11/share) and further inflationary expenses, underscoring demand uncertainty.
AI Generated. May Contain Errors.
Earnings Conference Call
Packaging Corporation of America Q3 2022
00:00 / 00:00

There are 8 speakers on the call.

Operator

Thank you for joining Packaging Corporation of America's Third Quarter 2022 Earnings Results Conference Call. Your host today will be Mark Golzan, Chairman and Chief Executive Officer of PCA. Upon the conclusion of this narrative, there will be a Q and A session. I will now turn the conference over to Mr. Koolzan.

Operator

Please proceed when you are ready.

Speaker 1

Thank you, Matt. Good morning, and thank you all for Kholzand. I'm Mark Kholzand, Chairman CEO of PCA. And with me on the call today is Tom Hassfurther, Executive Vice President, who runs our Packaging business and Bob Munday, our Chief Financial Officer. I'll begin the call with an overview of our Q3 results and then turn the call over to Tom and Bob who will provide further details.

Speaker 1

I'll then wrap things up and then we'd be glad to take any questions. Yesterday, we reported 3rd quarter net income of $262,000,000 or $2.80 per share. Excluding special items, Q3 2022 net income was $266,000,000 or $2.83 per share compared to the Q3 of 2021 net income of 2 dollars 57,000,000 or $2.69 per share. The 3rd quarter net sales for $2,100,000,000 in 20.22 $2,000,000,000 in 2021. Total company EBITDA for the Q3, excluding the special items was $477,000,000 in 20.22 and $464,000,000 in 2021.

Speaker 1

3rd quarter net income Included the special items expenses of $0.03 per share primarily for certain costs at the Jackson Alabama Mill for the paper to contain wood conversion related activities. Details of all special items for the Q3 of 202220 21 were included in the schedules that accompanied the earnings press release. Excluding the special items, The $0.14 per share increase in Q3 2022 earnings compared to the Q3 of 2021 Was driven primarily by higher prices and mix in our Packaging segment of $1.60 and Paper segment 0 point 2 $3 lower interest expense, dollars 0.04 a lower share count resulting from share repurchases, dollars 0.04 and a lower tax rate, dollars 0.02 These items were partially offset by operating costs, which were $0.70 per share higher, primarily due to inflation related increases in the areas of energy, Repairs, Materials and Supplies, Chemicals, Labor and Benefits Expenses, as well as several other indirect and fixed cost areas. We also had inflation related increase in our converting costs, which were $0.04 per share higher. The negative impact of lower volume With $0.52 per share in our Packaging segment and $0.05 in our Paper segment.

Speaker 1

Freight and logistics expenses were $0.20 Above last year and scheduled outage expenses were $0.10 higher. We also had higher depreciation expense of $0.07 and other expenses of $0.04 The results were $0.03 above the Q3 guidance of $2.80 Per share primarily due to the very sound implementation processes around our previously announced price increases in the Packaging and Paper segments as well as the continued benefits generated from our mills and plants through process efficiency optimization efforts and material usage initiatives. Looking at our Packaging business, EBITDA excluding special items in the Q3 2022 of $467,000,000 with sales of 1 point $9,000,000,000 resulted in a margin of 24.1 percent versus last year's EBITDA of $467,000,000 with sales of $1,800,000,000 and a 25.5 percent margin. Our teams did a tremendous job of implementing our Coulzant. However, demand in our Packaging segment was well below our expectations for the quarter.

Speaker 1

Tom will discuss this further in a moment. The containerboard mills operated in an efficient and cost effective manner as we balanced our supply with current domestic and export demand. As part of the effort, we began the scheduled maintenance outage in the first phase of the number 3 machine conversion to containerboard at our Jackson, Alabama Mill a few weeks earlier than originally planned. Total economic related downtime for the 3rd Quarter was approximately 128,000 tons. The outage and conversion work at Jackson will be completed in the 4th quarter And we will remain committed to ramping up our internal capacity according to our customers' demand requirements.

Speaker 1

Finally, although we are still experiencing historically high inflation within our operating and converting costs, Our mills and plants continued to remain focused on delivering numerous cost reduction initiatives, efficiency improvements And integration and optimization enhancements and capital benefit capital project benefits that help to minimize the impact. I'll now turn it over to Tom, who'll provide more details on the containerboard sales and corrugated business.

Speaker 2

Thank you, Mark. As Mark mentioned, we continue to get excellent realization from the implementation of our previously announced price increases across all product lines. Domestic containerboard and corrugated products prices and mix together were $1.54 per share above the Q3 of 2021 And up $0.35 per share compared to the Q2 of 2022. Export containerboard prices and mix were up 0.06 dollars per share compared to the Q3 of 2021 and up $0.01 per share compared to the Q2 of 2022. The lower demand in our Packaging segment that Mark spoke of was driven by several items.

Speaker 2

The combined impact of which resulted in our volumes being much lower than we Kulzand. Corrugated product shipments were down 6% in total and per workday compared to last year's Q3. Outside sales volume of containerboard was 57,000 tons below last year's Q3 61,000 tons below the Q2 of 2022. The ongoing inventory correction in the retail channels is larger than originally thought And significant inflation continues to negatively impact consumers' purchases of both durable and non durable goods. In addition, various events and issues in 2021 and this year, including the recent hurricane in Florida, continue to have a negative effect on the agriculture and protein markets.

Speaker 2

Demand is beginning to experience headwinds from the cooler housing markets as well. These things combined with rising global interest rates, Coulson. Deterioration in U. S. Economic conditions, economic weakness in China and Europe, along with China's 0 tolerance COVID policy, all negatively impacted domestic containerboard and box demand.

Speaker 2

As we look from the Q3 and into the Q4, we expect the majority of these conditions to continue. And in addition, there are 4 less shipping days in the 4th quarter compared to the 3rd quarter. Now I'll turn it back to Mark.

Speaker 1

Thank you, Tom. Looking at the Paper segment, EBITDA excluding special items in the 3rd quarter was $33,000,000 with sales of $165,000,000 or a 20% margin compared to the Q3 of 2021 EBITDA of $18,000,000 and sales of $150,000,000 or a 12% margin. Prices and mix We're up 21% from last year's Q3 and moved 6% higher from the second and into the Q3 of 2022 as we continue to implement our previously announced price increases. Sales volume was about 9% below last year's Q3, primarily due to this year's scheduled outage at our International Falls Mill as well as last year's Falls Mill as well as last year's Q3 that included paper sales from the Jackson Mills number 1 machine. The outstanding efforts around implementing our latest price increase together with optimizing the cost structure, inventory and product mix Delivered excellent margins in the paper business.

Speaker 1

Now I'll turn it over to Bob. Thanks, Mark. Cash provided by operations and free cash Flozand, at all time quarterly records at $431,000,000 $251,000,000 respectively. The primary payments of cash during the quarter included capital expenditures of $180,000,000 Common stock dividends Totaled $117,000,000 $77,000,000 for federal and state income tax payments, Pension and other post employment benefit contributions of $51,000,000 and net interest payments of $4,000,000 In addition, we repurchased 1,032,000 shares during the quarter at an average price of 137.6 $0 per share for a total of $142,000,000 We ended the quarter with $794,000,000 of cash including marketable Securities. And our liquidity on September 30th was $1,100,000,000 Lastly, our planned annual maintenance

Speaker 3

Coulson. Outage expense for the

Speaker 1

Q4 is now expected to be about $0.38 per share or $0.11 per share higher moving from the Q3 to Q4. I'll now turn it back over to Mark. Thank you, Bob. Looking ahead, as we move from the 3rd and into the 4th quarter, As Tom mentioned, we see most of the issues in economic conditions and higher global interest rates that impacted 3rd quarter Packaging segment demand Continuing. Our box plants will have 4 less shipping days compared to the Q3, and we also expect a seasonally less rich mix in corrugated products as well as lower average export containerboard prices.

Speaker 1

We'll run our containerboard system based on this Demand outlook along with completing the Jackson Mill scheduled annual maintenance outage in the first phase of the containerboard conversion work on the number 3 machine. In our Paper segment, we'll continue to implement our previously announced $60 per ton price increase on all office printing and converting grades that took effect on September 6. However, volume will be lower compared to the seasonally stronger Q3. As Bob mentioned, scheduled annual outage expenses will be $0.11 per share higher than the Q3. Lastly, we expect slightly higher operating costs, primarily labor and benefits expenses along with anticipated colder weather resulting in higher energy costs.

Speaker 1

Considering all these items, we expect 4th quarter earnings of $2.22 per share. With that, we'd be happy to Coulzand. I must remind you that some of the statements we've made on the call constituted forward looking statements. The statements were based Current estimates, expectations and projections of the company and involve inherent risks and uncertainties, including the direction of the economy and those identified as risk factors Koulzan. In our annual report on Form 10 ks and subsequent quarterly reports on Form 10 Q filed with the SEC.

Speaker 1

The actual results could differ materially from those expressed in these forward looking statements. And with that, Matt, I'd like to open up the call for questions, please.

Operator

Thank you. We will now begin the question and answer session. Our first question will come from George Staphos with Bank of America Securities. Please go ahead.

Speaker 4

Hi, this is Sandy Liang on behalf of George Staphos. He had a small conflict. First, can you please discuss your early 4Q booking and billing trends? And to the extent that you can Share. Our customers continue to destock in the supply chain.

Speaker 4

Thank you very much.

Speaker 2

Sandy, this is Tom. Good morning. So far, our bookings and billings are running about 5% below last year. You asked about stocking and some inventory issues. I will tell you that I think the good news is, well, first of all, we didn't predict that it would last as long as it is in terms of this inventory issue.

Speaker 2

There was obviously coming out of the pandemic, retailers and other customers stocked up significantly to try to meet The record breaking demand that they saw and wanted to maintain that. And of course, that demand has now waned some. In addition, we find that they ordered excessive amount of boxes as well to meet that kind of demand. So we are going through this period right now of pretty severe inventory adjustment. That's what we're seeing primarily in these down volume numbers.

Speaker 2

And that's going to take a while to work through the system. We had thought that it was going to work through the system in about 30 or

Speaker 4

Thank you.

Speaker 1

Next question please.

Operator

Our next question will come from Mark Weintraub with Seaport Research Partners. Please go ahead.

Speaker 3

Thank you. So following up on the demand questions, Could you ballpark and I realize this is just judgment, but yours is certainly going to be as good or better than anybody else's. How much That inventory destock might have contributed to the down 6%, realizing there are other factors you highlighted as well.

Speaker 2

Mark, this is Tom again. It's significant. There's no question about it. And it's the primary number. It's quite interesting that, just as of yesterday, as a matter of fact, I mean, we had a fairly large customer at one of our plants who sent an e mail in and said, I have finally run down my excessive inventory.

Speaker 2

I'm now ready to order again. So, we probably lost in a lot of cases 1 or 2 of the typical order cycles that Some of these customers would go through as they went through this destocking of inventory.

Speaker 3

And then you mentioned you thought, Whereas originally 30 to 60 days, maybe it's going to be a couple of quarters. So is that your best is it right to interpret that as meaning We had it in the Q3 and you're hopeful that we'll be done with it through the Q4 or might it Go beyond there and do you anticipate it's going to be continuing at higher level as what we saw In certainly the latter part of the third quarter.

Speaker 2

Well, obviously, I can't predict the future. But I can tell you that I believe that when you look at our Q4, as I mentioned, there are a lot of other factors going into the Q4, including this destocking. So if you look at those numbers and you think about those, you would see that the trend is probably we'll begin to work our way out of this Inventory issue, but we've got some other headwinds as well as I mentioned, especially like the Ag business in the South that was impacted by the hurricane. And that those crops are either going to be delayed or in some cases lost completely. So we, I the only I've never experienced this, to be honest with you, in my entire career.

Speaker 2

So, this severity of this Building the inventories, the lead times that box plants got to and the and kind of in some cases almost a panic buy of boxes because They couldn't ship their products without it obviously. So, it's just going to take a little while to work through this. I look back at the Great Recession And it was kind of interesting there because in the Great Recession, it took a couple of quarters for the cycle to finally turn and the business to really turn up. Beginning, it still wasn't equal to the previous year. That took a few more quarters, but it the first two quarters You know, we're the big jump.

Speaker 2

So that's the only thing I've really got it to compare to. And so I think, when you think about how many boxes somebody can Store or how much product they can have and get rid of, I would think that through this Christmas season, you'll see a lot of destocking take place.

Speaker 5

Appreciate the color.

Operator

Our next question will come from Adam Josephson with KeyBanc Capital Markets. Please go ahead.

Speaker 6

Thanks so much everyone. Hope you're well. Tom, just one more question about that. Are you seeing it At the retail level, at your customer to your point, I just I wouldn't think that your customers could store would have room to store that many boxes. So I'm just a little Perplexed as to where exactly that destocking is taking place and how much longer it could last for?

Speaker 2

Well, let me get specific on that, Adam. I mean, what we're talking about destocking is, we're talking about customers that built their own inventories Koulzan. Of their own products to hopefully continue to meet a demand curve that was quite steep and quite good for them. And all of a sudden when that demand leveled out, they're sitting on a lot of their own inventory. That coupled with the lead times that got out in boxes, They had to store more boxes as a result of those lead times.

Speaker 2

And those lead times have now come back down to a more normal level. So just be it by coming back down to a normal level, you can miss a whole order cycle.

Speaker 6

Got it. Okay. But even though they've come back to normal lead times, they're still sitting on, it seems like Much too much inventory for current demand levels.

Speaker 2

Yes. In some cases, yes. I just told you about A large customer at one of our plants that is now ordering again. But they didn't order. I'll give you another example.

Speaker 2

A very large account of ours Through mid year was up about a little over 3%, and suddenly the next month it was down 50%. Now this isn't lost business. This isn't anything other than just they've got they have excessive inventory that they're going to have to work off for a while. So We got to get through this cycle.

Speaker 6

Yes. No, I appreciate that. Bob, just on the guidance, can you just walk me through the implied Sequential change, the $0.60 decline, I believe you said maintenance is going to be $0.11 higher sequentially, so that leaves another, Call it $0.50 Can you help me with how much is inflation? How much is lower containerboard export? How much is the Jackson Conversion work, etcetera.

Speaker 6

And then within that, Bob, how much would you consider essentially one time items, for instance, elevated maintenance Relative to normal, etcetera, if you catch my drift.

Speaker 1

Yes, Adam. I'll say, as Mark mentioned in his Comments, we expect to run our containerboard system similar to with the same types of issues we had in the 3rd. So when you consider that, I'd say about half of that sequential movement will end up In the volume side of so and then the balance of that, the items that are probably higher versus what we would normally see going from 3rd quarter to Q4, really a couple of buckets, primarily energy for obvious reasons and labor and benefits again For some obvious reasons as that continues to just increase with the situation with the labor force. I'd say one other item that might be a little bit different as well is on the freight side. We certainly are seeing some improvement in Freight world right now, but when you're matching supply with demand, you're not always able to optimize Your routes and you may be shipping things more on one mode versus the other than normal or for longer distances.

Speaker 1

So that is a reason that We expect that to be up a bit going from 3Q to 4Q.

Speaker 6

Yes. I appreciate that. And Mark, just on the buyback, Correct me if I'm wrong, but I think the average price of $137 was comparable to what you did in 4Q of last year. Were you doing that as demand like before or after demand did what it did? And I'm just wondering about your thoughts about And where the stock is now versus what you've been paying for buybacks in recent quarters in light of the recent demand weakness and otherwise?

Speaker 1

As we went through the Q3, we saw an opportunity based on where the stock price was at the time That it was a good value for us to buy back and we look at it as a conviction opportunity that We see the value there. We have the cash and took advantage of it. It is Historically in line with what we did last year at this same time in the Q4. And long term, I think Under the circumstances, we will continue to take advantage and be opportunistic in the same manner.

Speaker 6

Just one last one on that, Mike. If you were to compare potential acquisitions to further buybacks, is there one At this juncture that's looking more attractive to you than the other or not necessarily?

Speaker 1

Not necessarily. Again, I think Again, we see value in terms of the stock buyback during the Q3. And so you would have to imagine where the stock is today. We have that same type of conviction. And so we'll update you on the January earnings Call on what we actually did, but I think you have to understand, if we do hit the $2.22 number that we're guiding to, we're going Coulson.

Speaker 1

And so it's going to be a record year for us once again. So again, I'm going to use the term conviction. We believe strongly that there's a much higher value in the embedded in the stock valuation.

Speaker 6

Thanks so much, Mark.

Speaker 1

Thank you. Next question please.

Operator

Our next question will come from Philip Ng with Jefferies. Please go ahead.

Speaker 7

Hey Mark, Tom, Bob, this is John Dunnegan on for Phil. I appreciate the color. I want to start off with your own inventory levels. Mean, they ticked up sequentially ahead of the J3 outage as you were planning, but obviously the demand outlook has worsened quite a bit. Can Can you just give us some color on how you're viewing your own internal inventory levels on the containerboard side?

Speaker 7

And is there any economic downtime baked into your guidance?

Speaker 1

Yes. When we went into the Q3, we historically, Q3 is always a robust quarter. People are getting ready for Kulzan. And so you also come out of the second quarter, which is traditionally a bigger annual outage quarter when you've taken Mill is down and you run your inventory down to the lower side, so you always try to start building back up during that July August period, Which is what we did. Obviously, the demand did not materialize, so we course corrected And ran to demand, and so we will continue to do this.

Speaker 1

I think as far as inventory targets, we don't have a specific target as such. We're looking at what Tom is understanding about what the market is doing on his side of the business And what we would imagine we would need to supply that and we will continue to run our mills in that regard To meet the demand. We got a lot of flexibility. We will be finishing up the Jackson work sometime in November. And then we will, again, using the term run to our demand.

Speaker 1

Understood.

Speaker 7

I guess leading up this quarter you had talked about being still pretty tight on the inventories. Obviously, there's a course correction. I'm sure there is a little bit of a moving target In terms of the inventory levels, but I guess my takeaway is that you're feeling comfortable with your inventory levels now. There isn't some big destock that you You have to do yourself with the pullback on the demand side?

Speaker 1

No. We're in a good place. And again, we're at a place now We can move the tons and inventories where we see we need to move them. So we're in a healthy place.

Speaker 3

Great.

Speaker 7

Okay. And then, just shifting over to the paper side. My expectation, I thought from last quarter was that paper volumes would be About flat sequentially in the Q3. Obviously, it came in much higher, seasonally stronger quarter. Was there anything that kind of stood out on the paper side for drivers that we should expect maybe going forward?

Speaker 1

No, it's just again, it was a good quarter first. We've also right sized the business. We've got International Falls running in a manner now in terms of its split between cut size and offset converting type grades. And so we're in a good place there. We worked off the final inventory from the Jackson production That was produced last year.

Speaker 1

So we see the market is in a balanced place right now and We're capable of supplying the nationwide demand we have.

Speaker 7

Excellent. Thank you for the color and I'll turn it over.

Speaker 1

Next question please.

Operator

Our next question will come from Anthony Pettinari with Citi. Please go ahead.

Speaker 5

Good morning.

Speaker 1

Good morning.

Speaker 5

Good morning. Hey, we've seen a big step down in OCC over the last couple of months. And understanding you have more of kind of a virgin leverage system, I think you've made some investments in recent years to add flexibility there. I was wondering if you can remind us how much OCC you can consume, how much you can swing into potentially to take advantage of some of these low costs. Any thoughts there?

Speaker 1

I think the best way to look at it is on a percentage basis. If you think about The total capacity of our mill system would still be around that 20% low 20% capability of fibering up our mills. And so it's whether at a point in time with pricing, you're running 15% recycle through the system Or taking advantage of opportunities on price and availability and ramping it up into the lower 20% recycle. I think That's how we look at it and that's the kind of capability we have.

Speaker 5

Okay. That's very helpful. And then there are some competitor capacity projects that maybe will come online by the end of the year or early next year. I think some of those have explicitly targeted In Box Market, you have a very high integration rate. I guess to the extent that you can, are you seeing any of that new capacity In the market or entering discussions or does your integration rate kind of insulate you from that?

Speaker 5

Just any thoughts about Some of these new projects and impact on the market whether you're seeing it or not.

Speaker 1

I want to let Tom comment on that.

Speaker 2

Anthony, number 1, as you summarized it correctly based on our integration level, that's been a target of ours, A very high integration level, that's where we come from. What and we've said many, many times, what other people decide to do and the investments they decide to make, that's strictly up to them. And we've talked about what we see the independent market Being with or the open market and what's happened to acquisitions over the last decade or more, That market has changed quite dramatically in terms of size. I would just say that it's really we're a little bit ambivalent to what others decide to do.

Speaker 5

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

Speaker 1

Thank you. Next question.

Operator

Our next question is a follow-up from Adam Josephson with KeyBanc Capital Markets. Please go ahead.

Speaker 6

Thanks so much, everyone. Tom, I was just one more thought, which is In 3Q shipments were down 6 and you're talking about excuse me, yes, in 4Q, Coulson. Can you just remind me how that compares to 2019 levels? And what you think a reasonable expectation for demand is at this juncture relative to 2019 levels? There have been obviously so many distortions at the onset of the pandemic and thereafter.

Speaker 6

I'm just wondering how you're thinking about that issue.

Speaker 2

Yes. Well, Adam, we'll still be quite a bit above 2019 levels. So in spite of this, and I think that a big portion of this is, as I said, inventory restocking. So, I haven't changed I really haven't changed my viewpoint, even from the last call we had in terms of that We will retain quite a bit of the gains that took place during the pandemic going forward. This isn't Severe demand destruction or anything like that.

Speaker 2

Obviously, inflations have taken some toll. But this is more of a Coulson. Couple of quarter phenomenon, I think, regarding these excessive inventories.

Speaker 6

And what gives you confidence in that, that you would hold Some of the volume you gained post 2019, just again given that there is this Extraordinary surge with all the government stimulus, you name it, and now we're seeing the other side of that. So I guess what would give you confidence that you would hold those post-twenty 19 gains, if you will?

Speaker 2

Well, a couple of things. No different from you having a discussion with me about my viewpoints. I have the same discussions with our customers about their business and about What they project going forward. And based on their forecasts And what they see and what they expect to be doing in their business, the capital investments they're making in their businesses, etcetera, I have a high degree of confidence. The other thing that gives me some confidence is regarding the consumer themselves.

Speaker 2

Consumer spending And the consumer relative to savings and other things like that has held up pretty well, in spite of this big step up in inflation. So, I think some of these things, some of these phenomenon we're dealing with here in the short term are going to wane. And It's going to be relatively positive going forward.

Speaker 6

I appreciate it. And just one, I think you mentioned that the impact that COVID lockdowns are having COVID lockdowns in China, excuse me, are having on domestic demand. Can you just talk about just give your perspective as to the impact On the U. S. Economy from what's happening in China?

Speaker 2

Well, interestingly enough, we set the all time record For on shoring of manufacturing, just in the last quarter, in the U. S. It's not talked about very much, And it's a little subtle, but certainly very impactful for our business. And I think that'll continue to be the case. I can tell you the supply chains are still a big problem.

Speaker 2

It's been a it continues to be a problem for our customers who rely on Certain parts or chips or whatever the case might be coming from China and the continuous disruption of that supply. That's beginning to really drive more on shoring, not only here in the United States, but in Mexico and other related countries That bordered the U. S, which will be much more beneficial, going forward, for our box business.

Speaker 6

Thanks so much,

Operator

come from Mark Weintraub with Seaport Research Partners. Please go ahead.

Speaker 3

Thank you. First, just a clarification. You had mentioned that Outages, I think we're going to be about $0.11 higher than you had previously anticipated in the Q4. Did I hear that right? What is that number kind of on a per share basis expected to be in the Q4 versus the Q3?

Speaker 1

In the Q4, if I follow your question, it's $0.11 Mark, it's $0.11 going from the Q3 to 4th quarter.

Speaker 3

Got it. So it was like $0.26 or so in the Q3 going to $0.37 is that?

Speaker 1

It was, yes, it was like $0.20 yes, yes, dollars 0.26 $0.27 yes.

Speaker 3

Okay, very good. And then the other question I have is, with the Jackson project, And one of the things that was also going to do was reduce your costs meaningfully. And hopefully under a certain environment that would show up in 2023. Is that dependent on demand getting back to strong levels? Or are there ways you can run your system that benefit is Going to show up regardless, do you think?

Speaker 3

Or again, is it that it'll show up, but we'll have to wait until the demand is back to stronger levels?

Speaker 1

Yes. You just answered your own question. When you run the mill, the way it's designed and the way we're finishing up the work that we're doing, It will be a low cost operation for us. And so we built that capability into it and we'll be able to take advantage of it. But as we stand by the position that we will run the entire system to demand.

Speaker 1

And that means rationalizing from a nationwide point of view where we need the tons to come from.

Speaker 3

Okay. So basically for the full benefit, obviously, you need demand to get stronger. Is that the right Conclusion?

Speaker 6

Yes.

Speaker 3

Okay. Thank you.

Operator

Mr. Coulsand, I see there are no more questions. Do you have any closing comments?

Speaker 1

Yes. Thank you for joining us on the call today, and we look forward to talking with you in January for the Full year Q4 earnings event. Take care. Have a good holiday.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now

Powered by Quartr