Q4 2024 International Paper Co Earnings Call
Speaker Change: Good morning and thank you for standing by. Welcome to International Papers 4th Quarter 2020 for Earnings Fall.
Speaker Change: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, you will have an opportunity to ask questions.
Speaker Change: To ask a question, press star 1 on your telephone keypad. To withdraw your question, again press star 1.
As a reminder, to ask a question, press star 1.
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Speaker Change: And it is now my pleasure to turn the call over to Jose Maria Rodriguez Mace, Vice President Investor Relations. Sir, the floor is yours.
Speaker Change: Thank you, Christa. Good morning and good afternoon. And thank you for joining International Papers, fourth quarter and full year 2024 earnings call. Our speakers this morning are Andy Silvernail, Chairman and Chief Executive Officer. And stepping in today for our Chief Financial Officer, Tim Nicholls, who is in London for DSMIT Day 1, is Finance Vice President, Mark Nellessen.
Speaker Change: There is important information at the beginning of our presentation, including certain legal disclaimers. For example, during this call, we will make forward-looking statements that are subject to risks and uncertainties.
Speaker Change: These and other factors that could cause a contribute to actual results differing materially from such forward-looking statements can be found in our press releases and reports filed with the U.S. Securities and Exchange Commission.
Speaker Change: We will also present certain non-U.S. GAAP financial information. A reconciliation of those figures to U.S. GAAP financial measures is available on our website.
Speaker Change: Our website also contains copies of the fourth quarter and full year earnings press release and today's presentation slides. And finally, I would like to note that all financial materials in this presentation reflect only the current IP portfolio.
I will now turn the call over to Andy.
Andy Silvernail: Thank you, Ade, and congratulations on your new role as Vice President of Investor Relations, and congratulations to Mark Nellessen, who's moving from IR to the lead finance role in our North American Packaging Solution business. And, Mark, thanks for pinch-hitting for Tim as he's getting us ready here for day one with T.S. Smith.
Andy Silvernail: With that, good morning and good afternoon everybody. I'm going to begin on slide three. I'm excited to share that today DS Smith appeared before the court in the UK to get final approval and we officially expect to close the DS Smith transaction at the end of the day tomorrow, US time, Friday, January 31st.
Speaker Change: As you know, last week the competition authorities of the European Commission approved the proposed acquisition of DS Smith by International Paper with conditions.
Speaker Change: The EEC identified minimal concerns about the acquisition's impact on competition in certain areas. To resolve those concerns, we have agreed to divest five box plants in northern France, northern Spain, and Portugal within the next six months.
Speaker Change: We would have preferred to retain all facilities in the IP family, and we truly appreciate the contributions for the team and the team members of these five plants. We're committed to identifying suitable buyers who can offer a viable future for these teams. Each of these locations is attractive, and we expect significant interest from potential buyers.
Speaker Change: I'm looking forward to welcoming Dia Smith to IP on Monday, February 3rd.
Speaker Change: Together with our customers, we're creating the global leader in sustainable packaging solutions, and we're focused on the attractive and growing markets in North America and EMEA. I'm excited about the potential to unlock value for our stakeholders. We'll do a deep dive on the path forward for DS Smith at our Investor Day in March.
Now transitioning to slide four.
Speaker Change: We are building a performance-driven, customer-centered culture at IP to fulfill our purpose.
Speaker Change: A culture that will enable us to create significant value for our employees.
customers, and shareholders.
Speaker Change: That work begins with strong alignment around a very clear and compelling strategy. And that strategy stems from our mission and our values of safety, ethics, and excellence.
Speaker Change: Most importantly, our teams will put safety above all else. We will drive profitable market share growth by being the low-cost producer and the most reliable and innovative sustainable packaging provider in North America, AMIA.
A disciplined 80-20 mindset will permeate everything we do.
Speaker Change: By focusing on the critical few, we are aligning resources, reducing complexity, removing costs, and delighting customers.
Speaker Change: These efforts are all focused to deliver superior value for all of our stakeholders. I'm now moving to slide five.
Speaker Change: We're making progress and taking actions on our path to achieve $4 billion of EBITDA medium term. This does not include the DS Smith base earnings or synergies. Again, we're going to talk about those things in detail at our Investor Day in March.
Speaker Change: As I've shared in the past, roughly 1.2 billion dollars of the improvement that we are targeting is going to come from cost out.
Speaker Change: This number is net of inflation. So the way to think about it is that we have to take out roughly 1.6 billion dollars of cost.
Speaker Change: As we've talked about on the third quarter call, we've started to do the heavy lifting and we're making the right choices to take costs out of the system.
Speaker Change: Those impacts will ramp up through the year with actions already announced and more to come.
Speaker Change: We've zeroed out the corporate organization, we're aligning resources to the businesses, and we're having a lean, effective, and efficient corporate staff. As a result, we expect our costs will be reduced by $120 million annually.
Speaker Change: We have taken the difficult actions to close five box plants in our Global Cellular Fibers Mill in Georgetown.
Speaker Change: We estimate that these combined will remove roughly another 110 million dollars of cost from our run rate.
Speaker Change: As I mentioned last quarter, there are two regions where we're doing 80-20 pilots. We're now calling these lighthouses. We have delivered 20% plus productivity gains, and we will scale that optimization method to another 22 box plants in 2025.
Speaker Change: As we look into 2025 and beyond, we'll continue to be laser-focused on improving reliability in our mills and optimizing our mill and box systems so we deliver structural cost reduction.
Speaker Change: In 2024, our operating performance and lack of productivity cost us $350 million. Unlocking this performance will free resources, allow us to optimize our overall structure, and drive profitable growth.
Speaker Change: We are also speeding up capital investment opportunities that we believe will deliver significant cost reduction. And to that extent, we have initiated a complete overhaul of our capital investment process to simplify and significantly reduce time from idea to execution.
Speaker Change: Our go-to-market value-over-volume reset is essentially complete. We expect the final unfavorable impact of volume to be behind us later this year. Volume has tracked to our plan for the past three quarters and since we started looking at January, and we have a clear pipeline forward.
Speaker Change: We have developed a new compensation plan for our sales force to better align incentives to strategy. This plan will also support our goal of attracting and retaining the best commercial talent in the industry. We continue to add new sales associates as we enhance our commercial capabilities and move to a customer-centric culture.
Thank you.
Speaker Change: This renewed focus on customer experience has already resulted in significant quality and on-time delivery improvements in our packaging business, which is validated by both internal and external data. This is true in general across the overall business and specifically at our 8020 lighthouses.
Speaker Change: We also have an ambitious pipeline of capital projects that will facilitate the regional optimization of our box system and deliver profitable market share growth. And I'll share an example here on the coming slide.
Speaker Change: Before we move on, let me say that I'm proud of our team and the solid progress we're making. We have a lot of work to do, there's absolutely no doubt about that. But the fundamentals in place are for a performance-driven, customer-centric culture, and those things are starting to show.
Speaker Change: We have the right strategy and execution roadmap. Now comes the hard part, and it will not be linear. We need to demonstrate the ability to execute with excellence. Our success and our destiny lie in our control.
Speaker Change: Our actions are aimed to drive transformational improvements in IP and create significant value for our shareholders.
Speaker Change: I'm now on to slide 6. I'm excited to share we are investing in a greenfield, state-of-the-art corrugated box facility in Waterloo, Iowa. This is a great example of the investments we're making as we continue with our ambitious plans to optimize our mill-to-box system and generate attractive returns.
Speaker Change: This world-class box plant is designed to deliver on our strategy. 20% lower cost, designed-in product quality, and just-in-time service. All of this is aligned to a geography and end markets where we are positioned to win.
Speaker Change: The facility will be strategically located close to some of our best customers, specifically in the protein segment, while being at a freight advantage distance from one of our mills.
Speaker Change: The plan is to start construction this year and targeting for a startup in 2026.
Speaker Change: So, again, it's a best-in-class facility designed specifically to delight our customers, achieve a low-cost position, and drive profitable growth.
Speaker Change: In addition to Waterloo, we're also acquiring a bulk plant in West Monroe, Louisiana.
Speaker Change: This additional capacity and expanded capabilities will allow us to grow our specialty business in an attractive market. As you know, BULQ is a business where we are differentiated and have a very good performance track record. We anticipate closing this deal tomorrow.
Speaker Change: Our four-year results came in line with our outlook. Relative to prior year performance, higher pricing was more than offset by higher costs and expected volume losses from our commercial strategy, just as we expected.
Speaker Change: We have seen significant price improvements in our North American packaging business from our go-to-market execution and payroll price index moves.
Speaker Change: Volume came in lower but very much in line with our expectations and again we're seeing that in January.
This period-over-period volume declines from our packaging contractor structuring.
Speaker Change: is playing out in line with our predictions, which is giving us good line of sight on when we'll see an inflection point to profitable market share growth.
Speaker Change: Costs were higher due to employee incentive compensation and were impacted by reliability issues at some of our mills. As I shared before, we are laser focused on improving reliability and taking costs out of the system.
Speaker Change: As we look to 2025, I want to note that we're not going to go into detail on the outlook for this year. As you may recall, while a combination with DS Smith remains pending, certain UK rules constrain our ability to provide a profit forecast.
Speaker Change: Even though we are looking forward to closing the transaction tomorrow, today we are still subject to those rules which limit what I can say. Our plan is to provide you with our outlook and a detailed roadmap at our investor day coming up in March.
Speaker Change: But at a high level, 2025 is expected to be a transformational year.
Speaker Change: During the first few months, we anticipate earnings will continue the stabilization trend, and then we expect our earnings to progressively ramp from a combination of the cost actions already announced, further improvements throughout the year, sequentially improving commercial wins, and overall benefits of our 80-20 implementation.
Speaker Change: With that I'm going to turn it over to Mark who's going to provide more details on our fourth quarter performance and outlook.
Mark Nellessen: Thank you, Andy. So turning to our fourth quarter key financials on slide nine
Speaker Change: Operating earnings per share came in slightly better than the outlook we provided last quarter. Our EBITDA margin came in slightly better sequentially and overall we see stable to improving results on a sequential basis.
Speaker Change: Our free cash flow is impacted primarily by changes in working capital, as well as sequentially higher capital spending and D.F. Smith related transaction costs.
Speaker Change: We can turn to slide 10 and I can provide more details about the fourth quarter as we walk through the sequential earnings bridges.
Speaker Change: Fourth quarter adjusted operating earnings per share was negative 2 cents as compared to 44 cents in the third quarter. As expected, accelerated depreciation expense was a significant impact in the fourth quarter due to previously announced facility closures accounting for 56 cents per share.
Speaker Change: Price and Mix was hired by $0.12 per share, driven by the flow-through of prior Price Index movements and Mix benefits in our packaging business.
Speaker Change: Volume was unfavorable by 8 cents per share due to two fewer shipping days in North America box as well as some volume trade-offs related to commercial contract restructuring actions.
Speaker Change: Deploying our commercial strategies across the portfolio continue to impact volumes as we closed out the year as we expected.
Speaker Change: Operations and cost was unfavorable by 11 sets per share sequentially. This is largely the impact of seasonally higher costs as well as a step down in insurance recovery related to the X-TAC box plant fire and some reliability events in our mill system across both businesses.
Speaker Change: Maintenance outages were higher by $6 million, or $0.01 per share, in the fourth quarter. And input costs were favorable by $0.06 per share sequentially, mainly driven by lower costs for OCC and WOOD.
Speaker Change: And finally, corporate items favorably impacted earnings by 12 cents per share sequentially, primarily due to lower taxes.
Speaker Change: Turn into the segments that started with the industrial packaging's fourth quarter results in slide 11.
Speaker Change: Price and Mix was higher by $63 million due to the realization of approximately $40 million of benefits from prior index movement, along with additional benefits from our container board export and open market sales.
Speaker Change: We saw a mixed improvement in both North America and Europe.
Speaker Change: Volume was lowered by 24 million sequentially due to two fewer shipping days in the fourth quarter.
Speaker Change: In addition, we made choices based on our box go-to-market strategy that negatively affected our volume as expected, but this will allow us to improve our markets and mix over the long term.
Speaker Change: Operations and costs was $22 million unfavorable sequentially, primarily due to the impact of seasonally higher costs.
Speaker Change: a step down in the ICSTAQ insurance proceeds, which we received $25 million in the third quarter to $12 million in the fourth quarter, and some reliability events in our mill system.
Speaker Change: plan maintenance outages were lower by 22 million sequentially and input costs were 20 million favorable primarily due to lower OCC and wood costs.
Speaker Change: and Accelerated Depreciation decreased earnings by $9 million due to the five packaging facility closures in the fourth quarter.
Thank you.
Speaker Change: Moving on to fourth quarter results for Global Cellulose Fibers in slide 12.
Speaker Change: Price and mix was sequentially lowered by $13 million due to price index movement.
Speaker Change: Volume sequentially was lowered by eight million in the quarter due to the Georgetown Mill closure in early December as well as a pull forward of orders in the prior quarter as customers anticipated a potential port strike.
Speaker Change: Operations of cost was unfavorable sequentially by $23 million which includes unabsorbed FIS costs from the Georgetown Mill closure, some reliability issues, and higher seasonal costs.
Speaker Change: Plan maintenance outages were higher in the fourth quarter by $28 million and input costs were $4 million favorable, primarily driven by lower wood costs.
Speaker Change: And finally, accelerated depreciation decreased earnings by $222 million, mostly due to the Georgetown Mill closure in the fourth quarter.
Speaker Change: Turning to slide 13, before we get into the details, I would remind everyone that accelerated depreciation is included in operating earnings and is called out for each business.
Speaker Change: In summary, adjusted earnings for our industrial packaging segment are expected to be higher sequentially by $52 million. This includes a non-repeat of accelerated DNA expense.
Speaker Change: Adjusted earnings for global cellulose fibers are expected to be higher sequentially by approximately 220 million and this also includes a non-repeat of accelerated depreciation expense in the prior quarter.
Speaker Change: Now let me give you a breakdown by business segment. I'll start with industrial packaging.
Speaker Change: We expect price and mix to decrease earnings by $5 million sequentially from lower export pricing to date and unfavorable seasonal mix impact.
Speaker Change: Volume is expected to increase earnings by 10 million due to two more shipping days primarily.
Speaker Change: We expect operations and costs to increase earnings by $30 million. This includes benefits from our box plan optimization, as well as non-repeats related to incentive compensation and other items from the prior quarter.
It also includes the unfavorable impact of wage inflation.
Speaker Change: We expect accelerated depreciation will increase earnings for the packaging business by approximately $11 million because of the expense related to the five packaging facility closures that occurred the fourth quarter.
Speaker Change: Lower maintenance outage expense is expected to increase earnings by $6 million.
Speaker Change: And lastly, we expect input costs to remain flat overall, with higher energy costs offsetting lower OCC prices.
Thank you.
Speaker Change: Switching to global cellulose fibers, we expect price and mix to decrease earnings by approximately $10 million as a result of prior index movement.
Speaker Change: Our volume is expected to be stable and we expect operations to cost to increase earnings by approximately 35 million. This includes improved performance or reliability as well as non-repeats related to incentive compensation and other items from the prior quarter.
Speaker Change: We expect accelerated depreciation will increase earnings for the pulp business by approximately $222 million because of the expense related to the closure of Georgetown Mill in the fourth quarter.
Andy Silvernail: Higher plan maintenance outages expense is expected to decrease earnings in the fourth quarter by approximately $26 billion. And lastly, input costs are expected to be stable. With that, let me turn it back over to Andy. Thanks, Mark. We'll now turn to slide 14.
Speaker Change: I'm excited to remind everybody that we'll be hosting our Investor Day in New York on March 25th where we'll provide an in-depth review of our strategy, business, and financial objectives for the new IP.
Speaker Change: We will share our progress on DS Smith integration and outlook, the detailed plan for North American packaging, and how 8020 deployment across the company will help drive profitable growth. Our goal is to provide a very detailed, clear, and time-based path forward. With that, Operator, let's now pause and take questions.
Thank you.
Speaker Change: Thank you. As a reminder if you would like to ask a question simply press star 1 on your telephone keypad. To withdraw your question press star 1 again.
Speaker Change: We will now pause for a moment to compile the Q&A roster. We do ask that you limit yourself to one question and one follow-up. And your first question comes from the line of Mark Weintraub with Seaport Research Partners. Please go ahead.
Thank you.
Mark Weintraub: I appreciate in the comments you made it clear that the volumes...
Thank you.
in the fourth quarter were...
pretty much in line with what you'd expected.
Speaker Change: obviously they were pretty big year-over-year declines and I think that in the past you've talked about know that there would still be negative year-over-year for the maybe through the middle of next year and then things stabilize and potentially move positive in the second half is that still kind of a reasonable game plan?
Speaker Change: Yeah, Mark. First of all, good morning. Absolutely. So, you know, while we certainly don't like the reality of the results in the fourth quarter, it is exactly what we had expected. And so when you look at the volume drops off on year-over-year, it is, you know, when you're dead out, kind of wins and losses.
Speaker Change: 100% of what we're seeing is the expected from the contract process that we've been going through in the last you know 18 months to two years and so it's right on track and I think importantly right as we look at January, January is right on track.
in terms of what we're seeing for day rates.
Speaker Change: And so what you should expect to see is that bottom.
of the third quarter and fourth quarter.
Speaker Change: It will step up, meaning less year-over-year loss in the first quarter, yes, less year-over-year loss again, sequentially, in the second quarter. And then as we get into the back half, when exactly we break that zero point, I don't know if it's going to be exactly the third quarter or not, but it's somewhere in there. But in that second half, we expect to crest these choices.
Speaker Change: I'm going to knock on wood, but that feels good. The other thing I'd add to that, Mark, is if you look at the investment that we've been making on the box plant side for reliability.
Speaker Change: I think very importantly that is now showing up in internal and external data.
Speaker Change: So, if you look at the data from our on-time delivery metrics...
Speaker Change: our service metrics, and then you also look at, you know, we do a third-party validated NPS. I also saw another third-party benchmark last week. We have clearly moved very significantly from a service perspective in the minds of our customer.
Speaker Change: And the reason that's important is we're now starting to quote pieces of business.
Speaker Change: that we didn't have the opportunity to quote a year ago. And so we've got some pretty decent-sized chunks of business. Not much of it is baked into our expectations for the year, but we've got some pretty decent-sized chunks of contracts that are now rolling off.
Speaker Change: where we think we're putting a very attractive value proposition. So, we're moving from a very defensive posture relative to, you know, the commercial side of the business.
Speaker Change: to slowly moving to an offensive posture. And I want to say slowly because we still have to finish, you know, digging out of that hole.
Speaker Change: and we've got to win some of these businesses, but I like where we are relative to our plan.
Speaker Change: When you look into our sales pipeline, that pipeline and what's happening on a daily basis is now showing signs of congruity. And I like the fact that we're starting to quote some business that we didn't have the opportunity in the last year or two.
Speaker Change: Great, and maybe kind of following up along the lines of the response to the question, I think you also mentioned like a $350 million
Speaker Change: lack of productivity, reliability type of thing. Can you maybe provide more color on specifically what you meant by that and do we get that back and what are the actions that are being taken currently?
Speaker Change: Yeah, so Mark, actually I think this is a linchpin, right? So, you know, going back to my days at Danaher running a sub-plant, sub-manufacturing plant, right? You're always looking for the bottlenecks to the key of your strategy or the key of your execution.
Speaker Change: It took me a little while to get in and understand exactly what was going on, but I'll simplify in two ways. One is...
Speaker Change: You know, we've been living in a world of lax capacity for too long.
Speaker Change: And because of that, it makes you soft, right? It's kind of like an athlete who sits on the couch for a couple of years. It makes you soft.
Speaker Change: as we have started to push part of our operations. And when I say that, pushing them in terms of moving volume to...
to ask that we need to have the A+.
Speaker Change: we're pushing that and so and what that's showing is it's showing the mill capability.
and we've got a few mills.
Speaker Change: that we've got some serious work to do. And when you add that up...
way too much cost in your system.
Speaker Change: because, frankly, if you go back and you do the root cause analysis, which we have, it comes back to two things. It comes back to underspending for a very long period of time. It's not a year or two, right? It's underspending on basic reliability stuff in the mills.
Speaker Change: And so as you can imagine, your plan is constantly changing, the bogey is changing for those teams.
Speaker Change: and they're having to run roughshod. And the second thing, right, is we have experience and everybody in our industry and everybody in manufacturing is experiencing is a pretty significant changeover of people.
Speaker Change: and so as you guys experience starts to change in those mills
Speaker Change: and you combine those two things together, it can make it, you know, a less reliable day-to-day. And so our focus is very much on maintenance investment and reliability spend, capital and expense.
Speaker Change: and it is on rapid training for leaders who are new to a position. And so you've really got to focus there. And the good part about that is you can count this.
Speaker Change: And what I mean by that is you can see the amount of, if you think of kind of mill performance as the benchmark of where you are in terms of your ability to absorb the overhead and produce, we can see this pretty tightly.
Speaker Change: And so making those investments, and that's a linchpin to the rest of our strategy of getting costs out of the system. The second part to it really comes around productivity, and what I mean by that is
Speaker Change: You know, in any manufacturing world, the goal should be to offset your, what I'll call, internal productivity. So I don't mean input costs, right? You know, I'm talking about the wage, maintenance, those pieces of normal inflation.
Speaker Change: You've got to drive to offset that, and in my experience we've been able to do that in the companies that I've worked for. We're seeing it already in some of the very focused work that we're doing. I'll use the box plant lighthouses, or now we call them pilots, we're now calling them lighthouses as the example.
Speaker Change: But, you know, as you know, this is a very high contribution margin business. And so as you drive productivity...
Speaker Change: You can take significant cost out and or as you move volume over a different set of assets, the contribution margins are just really high.
Speaker Change: That's something we haven't done. Again, when you think about keeping too much capacity that ends up as EDT, that's how it shows up.
Speaker Change: And so we believe that absolutely you can go after that. You don't, look, you're not going to get it overnight.
Speaker Change: but in the time frames that we're talking about, in terms of both driving the day-to-day excellence of execution and then having the productivity flywheel moving, it's, you know, it's three to four hundred million dollars. It's a lot of money. And so, yes, we can get it back.
Very clear. I appreciate the color. Thank you, Mark.
Speaker Change: Your next question comes from the line of Phil Ning with Jeffries. Please go ahead.
Speaker Change: Hey Andy, appreciate all the great color. You bet Bill, good morning.
Speaker Change: Good morning. I thought slide deck was pretty awesome. It had a lot of great color in terms of things that you guys have done already on the cost commercial action side of things.
Speaker Change: You also gave us a look at what's still to come, more on the to-do list, with items like mail-in-box systems, structural cost out efforts, reducing organizational complexity, and expanding the self-support.
Speaker Change: So, you know, appreciating 1Q is kind of a stabilization period, and you kind of pointed out.
Earnings, Momentum, Transformation 2025.
Speaker Change: Kind of help us think through how that could kind of layer through this year, some of these actions, whether it's on the cost or commercial side, and think about the earnings momentum as the year progresses. You know, you talked about the $300 to $400 that was a drag. I mean, how quickly can we get some of that back, I guess?
Speaker Change: Yes, so Phil, great question. I think, you know, as we think about...
Speaker Change: this year playing out. The cost stuff that we announced last quarter, as you can imagine, right, you know, making that real through the fourth quarter of the year.
Speaker Change: that then starts to layer in, you know, throughout the year.
Speaker Change: and so you see that kind of sequentially ramped as people who are no longer going to be with the company assets.
Speaker Change: that have been closed, as you know, you don't just close an asset and all the costs go away. There's a tail to that, and so we have to move in through that tail. That gets better as the year goes on.
Speaker Change: and then we have an expectation that we're going to continue to drive cost aggressively as we go through the year and you should expect us that the thing that I would be looking for from you
Speaker Change: is a quarterly drumbeat of actions, right, that that's what you need to see and obviously it needs to show up in the P&L and in the balance sheet and ultimately cash flow.
Out!
Speaker Change: And so, you know, on the cost side, right, we've got a roadmap that we've laid out. We've had to be pretty selective about how we could talk about that with all of you because of the D.S. Smith process.
Speaker Change: That restraint comes off, and so at the Investor Day, the intention is to show a much more clear roadmap, obviously being respectful of all of our stakeholders in the process. You should expect to see that ramp.
Speaker Change: And then on the commercial side, really if you look at what's baked in right now on the commercial side, it is the pricing that we have today. We haven't adjusted for any future index changes. We have no idea what's going to happen with that, so we don't have any expectation there.
Thank you.
Speaker Change: So it's the prices that we're going to market with today, plus if you kind of think through our expected pipeline, so there is no kind of major expectation of giant wins that's in our outlook for this year, so just to be clear.
Speaker Change: So, you know, the reality of that, and you guys know this as well as anybody, you know, turnarounds take time.
Speaker Change: and they are not, they're not linear and so if you think of it, think of it as a run chart, right, as a, you know, you go into one of our mills and you see process run charts all the time.
Speaker Change: The tolerances are wide right now. There's a lot of variation.
Speaker Change: And our job is to squeeze that variation in every way, right? We're trying to squeeze the variation in what causes kind of these wild changes.
Speaker Change: in parts of our business that frankly we don't think should be as volatile. We're making changes to those things.
Speaker Change: And then you've got to execute and you know what I said in my prepared remarks. This is where the hard work begins
Speaker Change: This is where you are in the muck. You have to be. These things happen at a box plant, at a mill. They don't happen in the ether. So really getting to incredibly disciplined cause and effect.
Speaker Change: where I'm pulling a certain lever and that is going to take a cost out or it's going to win a customer. That's where we are and so we certainly have a plan for how that ramps throughout the year.
Speaker Change: I'm very aware, you know, look, I've looked at hundreds of businesses and business plans over the years.
Speaker Change: And whenever you see an aggressive track like this, you have to discount it, right? You have to be smart about that, so we have to make consistent progress.
Speaker Change: quarter over quarter. We need to exit this year substantially better than where we ran last year and where we ran this year. A couple of things that I see as really encouraging, so if you look at the North American packaging solutions business exclusively,
Speaker Change: and you look at where they're tracking relative to where Tom Hammack and team said they would be tracking, on the commercial side we feel really good.
Speaker Change: on the investments that we've made into the box plant business and the expected improvements on service improvements that has absolutely shown up. We have moved an entire standard deviation in performance, in customer service performance, in the last year.
and that is a big deal.
Speaker Change: And so we've seen that, and we've also seen what that means to specific customers. I'm spending time with specific customers talking about...
their experience with us.
Speaker Change: We're now getting on site with customers doing joint innovation sessions. We're pushing, we're starting to push those envelopes more than we have in the past. But this is where, look, this is where it's a knife fight. That's the end of the day. That's what this is. We're in execution mode now.
Speaker Change: okay that's that's super helpful I guess you know you gave us a broad map today in terms of
Speaker Change: CapEx, Ben, you know it's great you're reinvesting in growth products for box plants, you're stepping up maintenance and reliability and doing great things on the sales board front.
Speaker Change: Is this a level in terms of capital spend and maintenance operating spend?
Speaker Change: That could be steady state from here, or should we kind of accept that to step out the next few years as you kind of move forward?
Speaker Change: Yes, so you know, Phil, if I had a magic wand, meaning I had the ability to spend it, meaning the performance of the business was where I wanted it to be,
Speaker Change: and we had the capability to effectively spend the money, I would spend more. I would. And the reason we're targeting this 1.2 is it matches what we think the organization can actually effectively execute.
Speaker Change: and where we are relative to the turnaround of the business. But look, I think as we perform, we will invest aggressively over the next few years. It's really kind of a combination of things, Phil.
Speaker Change: We've got to close the gap on a number of things that we've had. When you make decisions around non-strategic assets.
Speaker Change: and you incrementally increase spending, right? So if you think of it, both those things happen at the same time.
Speaker Change: What happens is you radically increase the spending on the strategic assets. It's not a small change It's it's you're not talking about 5 and 10 and 20 percent. You're talking about 20 30 40 50 percent in some areas
Speaker Change: And we're going to have to do that for a few years because, you know, look, we dug a hole over a decade. We're not going to fill it in a quarter. And so we've got to make those choices.
Speaker Change: You know, a visual, and maybe this will help folks, is a visual that I've been using is
Speaker Change: Think of the demand of the packaging business over a cycle. So if you just think of it as what does demand really look like of a packaging business over a cycle? It's about one, one and a half percent volume increase through a cycle.
Speaker Change: And that changes to kind of a plus two, you know, plus two points to that, so we'll call it plus three.
Speaker Change: to minus one or so, or minus two or so, somewhere in that range. That's kind of the range in any given year of actual consumer demand. And when I say consumer, consumer industrial demand of our product.
but investment trends, profit trends, historically have been highly volatile.
Speaker Change: Right and and then people react to that and they make the investment trends even more wallow
Speaker Change: So if you think in a very simple way of what we're trying to do right here is we're trying to cut off volatility We're trying to sand the board on the top side and on the bottom side
Speaker Change: Right to take volatility out and when you look at GCF as an example I love the GCF business, but it's volatile. It just it's more volatile than our core packaging business
Speaker Change: There are other parts of our business that are relatively low profit that are pretty volatile. As you start to move towards your core integrated packaging business, that volatility goes down.
Speaker Change: And then if you match your investment plan with what your real trend line looks like, you take out more volatility.
when you chase the trend line with investment.
Speaker Change: You know our box plant managers, our mill managers, they can't plan to be successful if they're reacting in quarters They've got to have you know, you know 18 months or so on the maintenance side and probably three years plus on the capital side
Speaker Change: and that's got to be consistent and we haven't allowed them to put them in a position to be successful.
Speaker Change: and I apologize for the length of this answer but I can't tell you how passionate I am about this. We have to consistently invest in being great.
Speaker Change: We have a hole to fill. We're going to fill that hole and we are going to be much more consistent in our capital investment.
Speaker Change: and you know everything flows with capital investment in this business and what I mean by that and I look I spent three days last week personally three days in a Kaizen event looking at our capital investment process and and I look no offense to anybody it's a ludicrous process
Speaker Change: that we have right now, and we are radically changing it in terms of time, in terms of responsibility, in terms of who has authority and signing responsibility, and we will dramatically change that timeline. And in changing that timeline,
Speaker Change: We take the handcuffs off of our people, and it's not just the dollars invested, right? It's because everybody is attached to that. You've got literally thousands of people.
who are chasing things.
Speaker Change: that are unproductive. And those people could be working with our customers on innovation. They could be working on productivity, right?
Speaker Change: And we need to take the handcuffs off our people and allow them to freaking run. And so, you know, sorry, that one gets me worked up. So I'm pretty passionate about it.
Appreciate all the great color on it, Andy. Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Mike Roxlin with Truist Securities. Please go ahead.
Mike Roxlin: Yes, thank you, Andy, Mark, Jose, for taking my questions. Congrats on all the progress. And obviously, Andy, congrats on the passion as well.
and Mark Jose, congrats on your new roles.
Speaker Change: Just wanted to quickly follow up on what Phil has mentioned in terms of the portfolio coming up from a different angle. You mentioned in the press release one of your objectives for 2025 is to balance capacity to your demand.
So I'm wondering, can you help us?
Mark Weintraub: at least in speaking of generalities, Andy, if you can, what type of capacity movement do you have in mind? Is it more of what you mentioned in previous responses in terms of...
Mark Weintraub: transparent production, is it a matter of, you know, maybe closing mills at a higher cost and efficiency where we're required too much capital to fix at this point? Can you help us frame like what type of capacity realignment you're anticipating?
Speaker Change: Yes, so Mike, I'm going to give you an answer that's going to be partially satisfying just because of two things. One, if we do have some
Speaker Change: minimal restrictions, and also, I think as we talk about assets and locations, we need to do that the right way at the right time, so I have to be a little bit opaque around that, so I apologize, but that's just the right thing to do.
Speaker Change: So I want you to step back for a second and think of it as you think of our entire business.
Speaker Change: And you think of the quality of earnings across the spectrum of that business, right? It's pretty wide, from one market segment and one product to another market segment and another product. Those core earnings are a pretty wide band on that.
Speaker Change: when you look at the portion of our business that isn't as profitable or, frankly, maybe negative.
Speaker Change: and then you align that against assets that really have pretty poor returns.
Speaker Change: When you put those two things together, those are tough chunks of things to look at, right? And when you put them together, there's no path to that being super successful.
Speaker Change: And so you've got to move your investment to the customers.
Speaker Change: the products and the assets and the people who are going to allow you to win. And that's the process that we've been going for, and when we talked about kind of a whole slew of that.
Speaker Change: in the third quarter. That's what that was all about. As we move through this year, we will absolutely continue to move down that path. And we've got to do it in both the block system and in the mill system.
Speaker Change: And we just kind of think about the ability to do what I just kind of got fired up about a few moments ago. To do that, you can't peanut butter spread investment.
Speaker Change: Right, you have to move investment. It's 80-20 thinking at its most foundational, which is you've got to move your resources, your money, your people, your energy towards those things where you can have a differentiated position.
Speaker Change: And the cool part is if you look at our box network in the United States and throughout North America
Speaker Change: and you look at where we are positioned across the country and then you compare that to the competitive set. We feel really good about that. Now we know we have to change that because we have places that frankly have too much capacity.
Speaker Change: and there's too much, it's too, it's got a crazy marketplace, right, and you got too much there and you got places where you don't have enough.
Speaker Change: And so in the places where you don't have enough, like Waterloo, Iowa, we're going to be super aggressive. So Greenfields, Brownfields, the lighthouses that we're talking about.
Speaker Change: The demand is there, and we can't satisfy the demand because we don't have enough capacity.
Speaker Change: and some other places where it's not, we need to first focus in on niches of sub niches of markets where we're really good and we can win and we can win in that sub niche and have you know a great sustainable
Speaker Change: competitive position that's sub niche and then in places where frankly it doesn't make economic sense we need to make other decisions.
Speaker Change: You know, on the mill side, when you think about the mills...
Speaker Change: You know, I grew up in, as you guys know, I grew up in a mill town, and so, you know, these conversations have been in my blood since I was eight years old.
Speaker Change: And you have to invest, right? You have to invest on a consistent basis.
and Milt. And of course, the older they get...
you have to make sure you keep them primed.
Speaker Change: For anyone who is interested in cars, look, there are 40 and 50 year old cars that run great.
Speaker Change: but they're not as competitive as the car you're going to buy off the lot tomorrow.
Speaker Change: And so you're constantly looking at where that is, when do I continue to invest and when do I not.
Speaker Change: and you have to be able to do that in a very clear...
in a more mature way.
Speaker Change: because all of our stakeholders require them, right? So if you think about our people, our customers, and our shareholders as the three principal stakeholders, I'm a big believer that none of them can win over the others in any long period of time before it damages all of them. And so to make those investments in the business,
Speaker Change: It absolutely makes our business competitive. It creates, you know, very stable attractive jobs for our people. We win with our customers because we offer them the kind of service and reliability and innovation they want at a fair price.
Speaker Change: We take the cost out of the system, which gives us the margin to reinvest back, and ultimately that turns into profitable growth for our owners. And so that highly dependent system of stakeholders is what we're driving at.
Got it. Thank you. And just one quick follow-up.
Speaker Change: Just, you know, that obviously a lot of changes in a very short period of time and that, you know, it's interesting for a company that has had a really entrenched corporate culture. Just wanted to get a sense from you whether there's been any pushback, any resistance, and what you may be able to sort of like grease the wheel to encourage buy-in.
Yeah, great great question. Look, I have been
Speaker Change: Thoroughly impressed with how people have grabbed on You know to the change there. There was an enormous pent-up demand in this company
for CHANGE.
And look, the people are great.
Speaker Change: You know, to be candid, right, when I was considering this role, one of the thoughts I had to myself was, wow, how good can the people be with the performance we've had? And I have been absolutely delighted. We have smart, capable, driven people.
are who want to win.
Speaker Change: That being said, in a business like ours, there are a handful of very, very big decisions that get made that either enable or disable the organization to win. Capital is a huge one. When you are spreading your capital thin,
Speaker Change: You are basically telling your people to play whack-a-mole. They don't have another choice. So when you don't make the courageous decisions, that's what happens.
Speaker Change: When you have capital decisions that take an ungodly long period of time, it ties up thousands of people in non-value-added processes.
Speaker Change: If you grab any one of our mill managers and you were to ask her or him
Speaker Change: what does it take to win? They know. They know. And we have, in many ways, handcuffed them with decisions on capital investment, with decisions that are very bureaucratic, and, frankly, not setting and upholding very high expectations.
Speaker Change: The reality is, is one of the things that I'm trying to do, would this call as an example?
Speaker Change: is I believe there ought to be perfect alignment between our owners, our board, the management team, and everybody who works in this company. There should be no daylight.
Speaker Change: between the expectations of action and the expectations of performance between anybody.
and look...
Speaker Change: You know, a lot of people complain about having to do these kind of things and do quarterly calls. I think they're great.
Speaker Change: You know, I grew up getting a report card. You get a report card and you got to go home and you got to talk about why you got an A or why you got a D. And there's no hiding. And I love it. I grew up playing sports. Scoreboards are great, right? You are what the scoreboard says you are.
Speaker Change: There is no confusion in this organization about what the scoreboard says we have done. No confusion at all. And our goal is to be one heck of a lot better.
Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Matt McKellar from RBC Capital Markets. Please go ahead.
Hi, good morning. Thanks for taking my questions.
Matt McKellar: I'd like to start asking about the Waterloo Greenfield box plant. Are you able to provide any additional color on what kind of CAPEX you're anticipating for that plant, and then how you would think about an attractive return for this type of project, please?
Speaker Change: Yeah, so we haven't disclosed anything today. We'll put a lot more color to that. This will be an item that we'll talk about certainly at the investor day. Obviously, it's a very large investment. It's by far the largest box plan investment we have ever made.
Speaker Change: And my expectation is this is going to be something that we should be driving cash-on-cash returns of about 20%.
Speaker Change: That's the kind of thing, and I mean the total cost, not just on the investment purely for that thing, but if you look at through the value chain from an integrated perspective, that's the kind of value that we should be able to add from an investment like this.
Speaker Change: And what I love about this investment, and we also see this, we've got some more that we're looking at that are like this. Obviously not a ton of them, but some more that make sense, and we're looking at some brownfields, and then if you look at the pilots
Speaker Change: What I like about these kind of things is they bring all the elements of our strategy together. So, in our world, our goal is not to be the low-priced player, but our goal absolutely is to be the low-cost player.
Speaker Change: and we think that we have the scale and the footprint that gives us license to do that, but we have to make different choices. And a plant like Waterloo dramatically changes that. If you look at our two lighthouses that we have, our two regional lighthouses,
Speaker Change: The gains that we're getting and we're seeing encourage the heck out of us, and that's why we're going to roll it out to 22 more box plants here in 2025, and then we'll keep going. The goal is, over the next few years, is to completely reconfigure our box plant network.
Speaker Change: And, you know, look, this is a harsh thing to say, but for a long time we thought of our box plants as kind of a dumping ground for paper.
Speaker Change: That's kind of how we treated it. And the bottom line is, it is the front end of our business. It's more like a retail shop than other things, right? Where you want to be super great service levels, very reactive to customers, and make sure that we're employing our 80-20 mindset as close to the customers as possible.
Speaker Change: And so, we're super excited about Waterloop. We'll give you more detail here at the investor day about it. And we're also excited about the bulk plant side, right? That's another example of a different type of strategic thought that's unlocking one of the pieces of great value that we see in the company, which is in specialty.
Speaker Change: and we're excited about that acquisition. It fits us well. It's small, but it enables us in a great way. It also helps us move fast, which is a great enabler.
Speaker Change: That's helpful. Thanks for all the color. If I could just follow up with one more on the box plants.
Speaker Change: As you sort of scale your approach from your first two lighthouses to the incremental 22 in 2025,
Speaker Change: Are you anticipating pretty similar improvements in productivity? Does that change at all versus the first, what you achieved at the first couple? And then does that change at all again as you kind of target, you know, the next batch in 26 and beyond?
Speaker Change: I do expect the same the same kind of results right and I think it's important to note that the results that we're seeing
Speaker Change: are really not being driven by dramatic capital investment. The results that we're getting in these two places so far are really around what I think of as the volume mix matrix.
Speaker Change: So as you think about complexity, the key to what we're doing is isolating complexity.
Speaker Change: Right, so we're putting a lot of complexity in a few box plants.
Speaker Change: where they become experts at that complex product customer configuration. And then other places where you can almost run lights out, it's that combination that we're getting, the kind of productivity that we're seeing. When you enable it with CapEx, there's more to come.
Speaker Change: That being said, the gains will not be, again, I use the term linear, meaning we're not going to get the exact same kind of gains everywhere. There'll be places that we get more and you want to enable it with more CapEx and there'll be places where you won't get, you know, the 20 or 30%.
because you don't have the same configuration in a geography.
Speaker Change: So, I think we're going to get really substantial productivity improvements.
Speaker Change: We also, you know, I'd like to rule this out, lightning speed, but you've got to be mindful of it, right? You can't just throw ideas at folks, you've got to go hand-in-hand with them, make the changes, right? So you have to...
Speaker Change: You have to make the volume mix changes, you've got to make those changes.
Speaker Change: where you want to consolidate a box plant and then have the remaining box plants take that on and people who want to move over to those things, those box plants can.
Speaker Change: You want to be able to do that. You want to install daily management and make sure that's working before you kind of ride off to the sunset to another thing. So, it's kind of the old saying, go slow, you're in a hurry, because you want it to stick.
Thanks very much. I'll turn it back. Yeah, thank you.
Speaker Change: Your next question comes from the line of Charlie Muir Sands with BNP Paribas. Please go ahead.
Hey, Charlie.
Speaker Change: Hey, thanks for taking my questions. Just sticking with the rollout of the Lighthouse strategy for a minute, so can I just clarify, that is the one that you think can unlock around 300-400 million dollars of cost and productivity?
Speaker Change: No, I think that was not the main focus of that. That was really around, I think you've got, you know, call it...
Speaker Change: $175 to $200 million of just, I'm going to call it mill reliability, right? So that's just, that's very much in the mills. And then the balance is, it's productivity. A lot in the mills, but also the box plants. And what I'm talking about there, Charlie, is
Speaker Change: You know, my experience has been is you get a productivity engine humming.
to be able to offset things like wage, inflation, benefits.
Speaker Change: and other, what I'll call it, internal inflation, so not your input costs.
Speaker Change: We don't do that well, right? And if you look at our financials and you go back over five or 10 years.
and you actually look at the destruction of value.
Speaker Change: The two big linchpins you see are, I'm going to call it, reliability that showed up at the customer, which then had become a headwind from a volume perspective.
Speaker Change: but also it ends up driving a lot of costs. So I looked at some analytics over the last couple of weeks. If you look in our mill system as an example,
Speaker Change: and you follow long-term maintenance spend relative to replacement asset value. So if you just kind of follow that.
What you see is a building gap over time.
Speaker Change: But that doesn't mean that your cost went down because what ends up happening is your cost shift from being capital to being expense And so if you actually stack capital and expense together, we're actually spending more combined today than we were five or ten years ago
Speaker Change: because of that choice, and that kind of comes down to the car analogy, right? If I don't change my oil, I'm eventually going to lose my engine.
Speaker Change: and that losing your engine costs a hell of a lot more than changing the oil. And that's, you know, that's kind of what we've run into. And so, you know, now we're doing some pretty rapid, you know, engine rebuilds. That's the way to think about it. But the productivity engine is something that's got to be going all the time.
Right, and if you think of the math on it...
Speaker Change: You're talking about, you know, 2-3% per year is what you gotta get. You gotta get 2-3% per year and that will offset your internal inflation. And that, you know, I know in a world where people talk about, you know, I need 5% year over year. Well, you guys know the truth. Very few people get 5% year over year. What you really do is you liberate capacity.
Yes, I can shut non-strategic assets.
Speaker Change: You get a benefit from that, but then you liberate capacity. And in our world, when you liberate capacity...
Speaker Change: and you get volume growth of any kind, it flows through at ridiculously high levels.
Speaker Change: The early stages of this are actually the costs coming out.
Speaker Change: And as you think of this, a couple of years from now, what you want is that engine of productivity that our mill managers, our box plant leaders are thinking about that and they're thinking of productivity on a two or three year rolling cycle, not I'm showing up in December and I've got a budget for next year and I've got to figure it out. Those are very different approaches.
Speaker Change: So the rollout of the lighthouse strategy doesn't necessarily deliver immediate...
Speaker Change: P&L Benefits until you're able to actually grow the volume to actually absorb that extra capacity? Or you can put a dollar value against that as well? Yeah. If you look at what we've done in the two lighthouse regions that we've been in, we have closed two box plants, right? So we've actually closed two box plants and consolidated the volume into the other lighthouses.
while taking on-time delivery and service levels meaningfully up.
Speaker Change: So when you look at the actual, it's real productivity, it's real dollars, right? And so you get it first because you're taking out the overhead of the stranded capacity.
Speaker Change: and then you're also driving continuous improvement as you bring that volume in.
Speaker Change: And so it kind of starts off with a big bang. If you think of us, think of IP in a microcosm in one of these regions. That's exactly what we're talking about, right? You're taking out cost that's effectively stranded cost, unneeded cost.
Speaker Change: You're matching the volume matrix, volume mix matrix correctly. So those businesses are becoming more effective. And then over time, you're driving that drumbeat of productivity. So it's a big bolus that we have to get in the box plant side and in the mill side. And then you have to build the muscle of ongoing productivity going forward.
Thank you.
Speaker Change: Right. And sorry, just one more question. I think historically you've guided annual corporate expense. I know that there's been a big restructuring and cost saving. You've devolved a lot of the staff headcount to the segments. Yeah. But I just wondered what we should understand as being...
the figure now for 2025.
Speaker Change: Yeah, so I don't think we're calling it out very specifically, but the way you should think about it is, as we go into 2025,
Speaker Change: you're going to see the cost reallocations as appropriate back to the businesses of where they actually sit.
Speaker Change: So you'll see some ups and downs. So, as an example, you'll see the North American packaging business was not probably getting enough of the load, where more of it was being pushed to other, you know, GCF and RMEA business.
Speaker Change: and we'll get that balance right. But in total, the central costs are going down precipitously. They're going to go down by $120 million from the actions that we've outlined.
Thank you.
Okay, thank you.
Speaker Change: Our final question today comes from the line of Gabe Haji with Wells Fargo Securities. Please go ahead.
Morning, Gabe. Thank you.
Gabe Haji: Good morning, Andy. I want to try to put some numbers to what we're talking about and go back to the presentation that you gave us on the Q2 call. I think in that presentation you indicated that you underspent sort of the peer group by a percent and a half on
Speaker Change: and maintenance I think it was 40 cents per thousand square feet but yeah don't have it in front of me but that that sounds right yeah
Speaker Change: Okay and and you're talking a lot about mill reliability and some under investment over time and I sort of I like your analogy so I'm thinking about running a quarter mile or a one mile race and I'm a quarter mile behind.
Speaker Change: It's really tough to catch up. So the number I think that we saw thrown out there was $260 million for this new investment.
Speaker Change: from local government agencies, et cetera. So Waterloo that is. So this year you're gonna spend about another billion, maybe a little bit less.
Speaker Change: When should we expect that IP starts to catch up that billion-two of underspend? And do you feel like, as you look across these metrics that you're talking about, that you're falling further behind?
Speaker Change: Now, I don't think we're falling further behind, right, because of the choices that we're making on reallocation of where that other money is going is a big change, right? So if you just took a peanut butter spread, I would agree with what I think I'm going to call it your concern, right?
Speaker Change: which is, if you were just going to leave it the same, yes, that would be 100% true. If I just did Waterloo and I did everything the way I did it in the past, that would be true. But you can see from the actions we've already announced.
Speaker Change: That is not the intention, and you can expect to see us make some other choices here readily.
Speaker Change: around that. And so, as we think about that application, so you got to think of it as you're going to move your investment towards your strategic assets. That's already started.
and that's a good size number.
that the total time frame to make up the whole.
Speaker Change: I think is about three years to make up the whole. And look, again, I'd do it faster, but I don't think we could spend it faster effectively. And if you just look at lead times in terms of equipment and whatnot, I think it's a three-year march. That's my opinion. Mark, any thoughts there? I would agree with that.
Yeah
Speaker Change: No, I appreciate that. I mean, it's sometimes like pushing on a steering if
Speaker Change: You don't have the resources to enable it, understood. Okay, maybe more... I think it's really, before you go, what's really important though, right, is this dynamic resource allocation is really, really important, right? Moving it away from places that don't deserve it, that don't make money, that you're not going to win in.
Speaker Change: to places where that is true, right, they do deserve it, you can win there and the difference in returns on capital are gigantic in those choices and so if you think of a bell curve of ROIC for these investments, right.
Speaker Change: oftentimes people think about things like safety investment or maintenance investment as on the left-hand side meaning not very attractive right and I look at it completely opposite on the far right hand side of that they are everything
Speaker Change: and so you have to have stability before you can have improvement. And so, so much of the work that we did last year and we're still doing today is around stability and then it gives you a chance, you know, to drive improvement.
Thank you.
Speaker Change: Got it. I want to be respectful of everyone's time. The last one, you talk about report cards, score cards. Near-term, just to be clear, Mark, it wasn't. In the Q1 industrial packaging view, you are not including any price as it relates to the January increases because it was not reflected in RISI, or how should we think about that?
No, we are not including that.
Great. Thank you.
Speaker Change: Thank you very much. Well, thank you everybody. I appreciate your time today. I appreciate your interest in IP. I want to thank the teams for just the Herculean effort that they are putting in and the commitment that people are showing to grabbing on to doing these tough things.
Speaker Change: Doing hard things is what we have to do. That should be our motto. Do hard things.
Speaker Change: and that's what the team's doing so I'm very proud of how we're tackling that and I appreciate your interest. So I look forward to seeing you on March 25th at the Investor Day and laying out a lot more detail. So take care everybody.
Speaker Change: Once again, we'd like to thank you for participating in International Paper's 4th Quarter 2024 Earnings Call. You may now disconnect.