Q3 2025 Packaging Corp of America Earnings Call

Speaker #3: Good day and welcome to the packaging Corporation of America . Third quarter 2020 Earnings Conference Call . All participants will be in listen only mode .

Operator: Good day and welcome to the Packaging Corporation of America third quarter 2025 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Mark Kowlzan. Please go ahead.

Speaker #3: Should you need assistance , please signal a conference specialist by pressing the star key , followed by zero . After today's presentation , there will be an opportunity to ask questions , to ask a question , you may press star , then one on your telephone keypad .

Speaker #3: To withdraw your question , please press star . Then two . Please note this event is being recorded . I would now like to turn the conference over to Mr. Mark Kowlzan .

Speaker #3: Please go ahead .

Speaker #4: Thank you . Alyssa . Good morning everyone , and thank you for all , all of you for participating in Packaging Corporation of America's third quarter 2020 earnings release conference call .

Mark Kowlzan: Thank you, Alyssa. Good morning everyone and thank you for all of you for participating in Packaging Corporation of America's third quarter 2025 earnings release conference call. Again, I'm Mark Kowlzan, Chairman and CEO of PCA, and with me on the call today is Thomas Hassfurther, President, and Kent Pflederer, our Chief Financial Officer. I'll begin the call as usual with an overview of our third quarter results and then I'll turn the call over to Thomas and Kent, who will provide further details. After that, I'll wrap things up and we'll be glad to take any questions. Yesterday we reported third quarter net income of $227 million or $2.51 per share excluding the special items. Third quarter 2025 net income was $247 million or $2.73 per share compared to the third quarter of 2024, net income of $239 million or $2.65 per share.

Speaker #4: Again , I'm Mark Colvin , chairman and CEO of PCA . And with me on the call today is Thomas Hassfurther president and Kent Pflederer , our chief financial officer .

Speaker #4: I'll begin the call , as usual with an overview of our third quarter results . And then I'll turn the call over to Tom and Kent , who'll provide further details .

Speaker #4: And then after that , I'll wrap things up and we'll be glad to take any questions . Yesterday we reported third quarter net income of $227 million , or $2.51 per share , excluding the special items .

Speaker #4: Third quarter 2020 net income was $247 million , or $2.73 per share , compared to the third quarter of 2020 . For net income of $239 million , or $2.65 per share .

Speaker #4: Third quarter net sales were $2.3 billion in 2025 , and $2.2 billion in 2024 . Total company EBITDA for the third quarter . Excluding special items , was $503 million in 2025 and $461 million in 2024 .

Mark Kowlzan: Third quarter net sales were $2.3 billion in 2025 and $2.2 billion in 2024. Total company EBITDA for the third quarter excluding special items was $503 million in 2025 and $461 million in 2024. The third quarter net income included special items expense of $0.22 per share. The $0.22 were costs related to the acquisition of the Greif containerboard business, including step up of the acquired inventory, integration related expenses, and transaction expenses. Details of the special items for both the third quarter of 2025 and 2024 were included in the schedules that accompanied our earnings press release. We completed the acquisition of the Greif containerboard business on September 2nd. Our results included one month of the acquired operations from Greif, which impacted earnings per share by $0.11 after special items. These include depreciation and amortization after preliminary purchase accounting and additional interest on new borrowing to finance the acquisition.

Speaker #4: The third quarter net income included special items , expense of $0.22 per share . The $0.22 were costs related to the acquisition of the Containerboard business , including step up of the acquired inventory , integration related expenses and transaction expenses .

Speaker #4: Details of the special items for both the third quarter of 2025 and 2024 were included in the schedules at accompanied our earnings press release .

Speaker #4: We completed the acquisition of the Greif Containerboard business on September the 2nd . Our results included one month of the acquired operations from grief , which impacted earnings per share by $0.11 after special items .

Speaker #4: These include depreciation and amortization after preliminary purchase , accounting and additional interest on new borrowing to finance the acquisition . Excluding the special items and the impact of the acquisition , our earnings increased by $0.19 per share compared to the third quarter of 2024 .

Mark Kowlzan: Excluding the special items and the impact of the acquisition, our earnings increased by $0.19 per share compared to the third quarter of 2024. This increase was driven primarily by higher prices and mix in the packaging segment for $0.73, lower fiber costs of $0.16, higher prices and mix in the paper segment $0.02, and a lower maintenance outage expense of $0.01. Partially offsetting the improvements were higher operating costs $0.33, lower production and sales volume in the packaging segment $0.16, higher depreciation expense $0.07, higher freight expense $0.07, higher fixed and other expenses of $0.07, higher interest expense excluding the Greif acquisition debt of $0.02, and lower production volume in the paper segment $0.01. Because of the uncertainties of the Greif closing date, our third quarter guidance did not forecast any impact from the acquisition.

Speaker #4: This increase was driven primarily by higher prices in mix in the packaging segment for $0.73 . Lower fiber costs of $0.16 . Higher prices and mix in the paper segment $0.02 and the lower maintenance outage expense of $0.01 , partially offsetting the improvements were higher .

Speaker #4: Operating costs $0.33 lower production and sales volume in the packaging segment , $0.16 higher depreciation expense $0.07 . Higher freight expense $0.07 . Higher fixed and other expenses of $0.07 and higher interest expense .

Speaker #4: Excluding the gripe acquisition of $0.02 and lower production volume in the paper segment for $0.01 because of the uncertainties of the closing date .

Speaker #4: Our third quarter guidance did not forecast any impact from the acquisition . Excluding special items and acquisition impact , the results were $0.04 above the third quarter guidance of $2.80 per share , primarily due to favorable price and mix in the packaging segment and lower freight costs .

Mark Kowlzan: Excluding special items and acquisition impact, the results were $0.04 above the third quarter guidance of $2.80 per share primarily due to favorable price and mix in the packaging segment and lower freight costs. Looking at our packaging business and including the acquired business, EBITDA excluding special items in the third quarter of 2025 of $492 million with sales of $2.1 billion resulted in a margin of 23.1% versus last year's EBITDA of $446 million and sales of $2 billion or a 22.2% margin. Corrugated volume was largely on plan and continued to reflect the cautious ordering patterns we've seen most of the year. We ran to demand during the quarter and produced 38,000 fewer tons of containerboard than the third quarter of 2024 and 59,000 more tons of containerboard than the second quarter of 2025.

Speaker #4: Looking at our packaging business and including the acquired business , EBITDA , excluding special items in the third quarter of 2025 of 492 million , with sales of 2.1 billion , resulted in a margin of 23.1% versus last year's EBITDA of $4,446 million and sales of $2 billion , or a 22.2% margin .

Speaker #4: Corrugated volume was largely on plan and continued to reflect the cautious ordering patterns we've seen . Most of the year . We ran to demand during the quarter and produced 38,000 fewer tons of containerboard than the third quarter of 2024 .

Speaker #4: And 50,000 59,000 more tons of containerboard than the second quarter of 2025 . Our Containerboard inventory in the legacy system increased by 15,000 tons during the quarter in preparation for the fourth quarter .

Mark Kowlzan: Our containerboard inventory in the legacy system increased by 15,000 tons during the quarter in preparation for the fourth quarter DeRidder outage. From the operational standpoint, we ran very well the entire quarter and with strong performance in terms of cost and production efficiency across the entire mill and corrugated system, which is a testament once again to the successful investments across our business. We continue to look every day at opportunities to take out cost and optimize production capabilities with the support of our considerable in-house technical and capital execution expertise. The acquired mills produced 47,000 tons during the month. Having closed the acquisition on September 2nd, we used the initial month of ownership to our advantage. While our activities impacted the September results, they will improve long-term productivity and efficiency. Massillon had a scheduled annual maintenance outage which we extended to five weeks and completed earlier in October.

Speaker #4: De Ridder outage from the operational standpoint , we ran very well the entire quarter and with strong performance in terms of cost and production efficiency across the entire mill and corrugated system , which is a testament once again to the successful investments across our business .

Speaker #4: We continue to look every day at opportunities to take out cost and optimize production capabilities with the support of our considerable in-house technical and capital execution expertise , the acquired mills produced 47,000 tons during the month , having closed the acquisition on September 2nd .

Speaker #4: We used the initial month of ownership to our advantage . While our activities impacted the September results , they will improve long term productivity and efficiency .

Speaker #4: Maslon had a scheduled annual outage maintenance outage , which we extended to five weeks and completed earlier in October . We did a comprehensive refurbishment of the mill , including reliability improvements on the paper machines , the OC plant and the power plant .

Mark Kowlzan: We did a comprehensive refurbishment of the mill including reliability improvements on the paper machines, the OCC plant, and the power plant. All mill infrastructure and unit operations were cleaned and inspected. We took the two paper machines at the larger Riverville facility down for five days apiece to implement the first phase of our reliability improvements. We'll have additional work to do to implement our efforts and expect to have achieved the first phase by the end of the fourth quarter. We're already seeing the benefits of improved performance and quality, with both mills running at higher performance. We'll continue to manage and invest in these facilities to achieve operating performance in line with the legacy PCA system. I'll now turn it over to Tom who'll provide more details on the containerboard sales and corrugated business.

Speaker #4: All mill infrastructure and unit operations were cleaned and inspected . We took the two paper machines at the larger river facility down for five days apiece to implement the first phase of our reliability improvements , we'll have additional work to do to implement our efforts and expect to have achieved the first phase by the end of the fourth quarter .

Speaker #4: We're already seeing the benefits of improved performance and quality , with both mills running at higher performance . We'll continue to manage and invest in these facilities to achieve operating performance in line with the legacy PCA system .

Speaker #4: I'll now turn it over to Tom , who provide more details on the Containerboard sales and corrugated business .

Speaker #5: Thank you . Mark . The performance of the packaging business was largely as we expected , and it was another strong quarter . Domestic containerboard and corrugated products prices and mix were $0.72 per share , above the third quarter of 2024 .

Thomas Hassfurther: Thank you, Mark. The performance of the packaging business was largely as we expected, and it was another strong quarter. Domestic containerboard and corrugated products prices and mix were $0.72 per share above the third quarter of 2024 and down $0.02 per share compared to the second quarter of 2025, which was all attributable to containerboard mix export. Containerboard prices were up a penny per share versus last year's third quarter and flat with the second quarter of 2025. As Mark mentioned, while customer ordering patterns have continued to reflect market conditions that have persisted throughout most of the year and corrugated demand improved as the quarter progressed in the legacy business, shipments per day in our corrugated products plants were down 2.7% versus last year's record third quarter when per day shipments were up more than 11% over 2023.

Speaker #5: And down $0.02 per share compared to the second quarter of 2025 , which was all attributable to Containerboard mix export Containerboard prices were up a penny per share versus last year's third quarter , and flat with the second quarter of 2025 .

Speaker #5: As Mark mentioned , while customer ordering patterns have continued to reflect market conditions that have persisted throughout most of the year , corrugated demand improved as the quarter progressed in the legacy business .

Speaker #5: Shipments per day in our corrugated products plants were down 2.7% versus last year's record third quarter , when per day shipments were up more than 11% over 2023 .

Speaker #5: We will continue to see tough comparisons going into the first quarter of 2026 . Total shipments were down 1.1% in the third quarter of 2025 versus last year , reflecting one more workday this year .

Thomas Hassfurther: We will continue to see tough comparisons going into the first quarter of 2026. Total shipments were down 1.1% in the third quarter of 2025 versus last year, reflecting one more workday this year. For a little context, on a per workday basis, July shipments were about 6% down from last year, while August was less than 1% down and September was less than 2% down. Margin performance was very strong again with packaging segment EBITDA margins improving to 23.1% versus 22.6% in the second quarter and 22.2% last year. Including the acquisition, shipments were up 3.7% over last year per day and 5.3% overall. The acquired plants had a strong September with volume growth and good price realization. We're working very hard to integrate the operations into the PCA corrugated system, and we like what we see.

Speaker #5: For a little context , on a per workday basis , July shipments were about 6% , down from last year , while August was less than 1% , down and September was less than 2% down .

Speaker #5: Margin performance was very strong again , with packaging segment EBITDA margins improving to 23.1% versus 22.6% in the second quarter and 22.2% last year , including the acquisition .

Speaker #5: Shipments were up 3.7% over last year per day and 5.3% overall . The acquired plants had a strong September , with volume growth and good price realization .

Speaker #5: We're working very hard to integrate the operations into the PCA corrugated system , and we like what we see so far . The culture is highly compatible with Pca's and our new colleagues have gone beyond the call of duty to continue to develop strong customer relationships and serve those customers .

Thomas Hassfurther: So far, the culture is highly compatible with PCA's, and our new colleagues have gone beyond the call of duty to continue to develop strong customer relationships and serve those customers. Greif has historically carried relatively more inventory in its corrugated system than we do. With the acquired plants being part of a much larger integrated system, we can more efficiently and nimbly supply them. Now that they are part of PCA, we have the opportunity to bring inventory down to lower levels and will manage our operations to do so over the next couple of quarters. As expected, export sales volume of containerboard was down 8,000 tons from the second quarter of 2025 and down 32,000 tons from the third quarter of 2024. I'll now turn it back to Mark. Thanks, Tom.

Speaker #5: Griff has historically carried relatively more inventory in its corrugated system than we do with the acquired plants being part of a much larger integrated system .

Speaker #5: We can more efficiently and nimbly supply them now that they are part of PCA , we have the opportunity to bring inventory down to lower levels and will manage our operations to do so over the next couple of quarters .

Speaker #5: As expected , export sales volume of Containerboard was down 8000 tons from the second quarter of 2025 and down 32,000 tons from the third quarter of 2024 .

Speaker #5: I'll now turn it back to mark .

Speaker #4: Thanks , Tom . Looking at the paper segment EBITDA , excluding special items in the third quarter was $40 million with sales of $161 million , or a 24.9% margin , compared to the third quarter of 2020 .

Mark Kowlzan: Looking at the paper segment, EBITDA excluding special items in the third quarter was $40 million with sales of $161 million or a 24.9% margin compared to the third quarter of 2024. In EBITDA of $43 million and sales of $159 million or 27.1% margin, sales volume was 1% below the third quarter of 2024 and 10% above the second quarter of 2025. Prices and mix were up 2.1% from the third quarter 2024 and 0.5% from the second quarter of 2025. Performance reflected the seasonally stronger third quarter and sales volume was higher than expected. I'm now going to turn it over to Kent.

Speaker #4: Four . EBITDA of $43 million and sales of $159 million , or 27.1% margin sales volume was 1% below the third quarter of 2024 , and 10% above the second quarter of 2025 .

Speaker #4: Prices and mix were up 2.1% from the third quarter of 2024 , and half a percent from the second quarter of 2025 . Performance reflected the seasonally stronger third quarter , and sales volume was higher than expected .

Speaker #4: I'm now going to turn it over to Kent. Thanks, Mark.

Kent Pflederer: Thanks Mark. Cash provided by operations was an all-time quarterly record of $469 million, and after $192 million of CapEx during the quarter, free cash flow was a record $277 million. In addition to CapEx and funding the Greif purchase price, the primary payments of cash during the quarter included dividends of $113 million and cash tax payments of $19 million. Our quarter-end cash balance including marketable securities was $806 million, with liquidity approximately $1.4 billion. To update you on annual shutdown expenses, we now expect $0.45 in the fourth quarter for the legacy PCA system and $0.02 for the acquired business. The legacy system expense is expected to be $0.29 higher than Q3 2025 and $0.17 higher than Q4 2024. We are revising our capital forecast for the year to be approximately $800 million from our previous forecast of $840 to $870 million.

Speaker #6: Cash provided by operations was an all time quarterly record of $469 million , and after $192 million of CapEx during the quarter . Free cash flow was a record $277 million .

Speaker #6: In addition to CapEx and funding , the purchase price , the primary payments of cash during the quarter included dividends of 113 million and cash tax payments of 19 million , our quarter end cash balance , including marketable securities , was $806 million , with liquidity of approximately $1.4 billion .

Speaker #6: To update you on annual shutdown expenses , we now expect $0.45 in the fourth quarter for the legacy PCA system and $0.02 for the acquired business .

Speaker #6: The legacy system expense is expected to be $0.29 higher than the third quarter of 25 , and $0.17 higher than the third than the than the fourth quarter of 24 .

Speaker #6: We are revising our capital forecast for the year to be approximately $800 million from our previous forecast of 842 , 870 million . This is primarily as a result of timing of expenditures , and we have not changed our overall capital plan .

Kent Pflederer: This is primarily as a result of timing of expenditures, and we have not changed our overall capital plan. This revision includes incremental expenditures for the acquired business as part of the Greif acquisition. Purchase accounting requires us to record the acquired assets on our books at fair value. Our valuation is preliminary and is subject to change over the one-year period after the acquisition. Our preliminary evaluation, in addition to working capital, includes approximately $870 million of property, plant and equipment, $530 million of intangibles, and $280 million of goodwill. We recorded $12 million of depreciation and amortization of the acquired assets during the third quarter, and we expect an annual run-rate going forward of approximately $130 million. As a reminder, annual net interest expense is expected to increase by $95 million, and we recorded $8 million in additional interest during the third quarter.

Speaker #6: This revision includes incremental expenditures for the acquired business as part of the grief acquisition purchase accounting , we are required to record the acquired assets on our books at fair value .

Speaker #6: Our valuation is preliminary and is subject to change over the one year period after the acquisition . Our preliminary evaluation , in addition to working capital , includes approximately 870 million of property , plant and equipment , 530 million of intangibles , and 280 million of goodwill .

Speaker #6: We recorded 12 million of depreciation and amortization of the acquired assets during the third quarter , and we expect an annual run rate going forward of approximately $130 million .

Speaker #6: As a reminder , annual net interest expense is expected to increase by 95 million . And we recorded 8 million in additional interest during the third quarter .

Speaker #6: We were a significant containerboard supplier to grief before the acquisition and shipments of Containerboard that were recorded as third party sales in the past are now integrated .

Kent Pflederer: We were a significant containerboard supplier to Greif before the acquisition, and shipments of containerboard that were recorded as third-party sales in the past are now integrated. This affects the timing of recognition, as shipments are now recorded as inventory with sales and profit being recorded when that inventory is converted and sold to a customer. We estimate that this affected results by about $0.03 in the third quarter, which will not deter going forward. I will now turn it back over to Mark.

Speaker #6: This affects the timing of recognition, as shipments are now recorded as inventory, with sales and profit being recorded when that inventory is converted and sold to a customer.

Speaker #6: We estimate that this affected results by about $0.03 in the third quarter , which will not occur going forward . I will now turn it back over to Mark .

Speaker #4: Thanks , Kent for the fourth quarter . We expect per day corrugated shipments to be higher than the third quarter , with three less shipping days .

Mark Kowlzan: Thanks, Kent. For the fourth quarter, we expect per day corrugated shipments to be higher than the third quarter with three less shipping days. Export containerboard sales will be higher than the third quarter but relatively low when compared to traditional fourth quarter volume. Containerboard production in the legacy system will be slightly lower than the third quarter with the maintenance outage at the Derider mill, and we expect inventory levels in the legacy system at year end to be similar to levels entering the fourth quarter. Outage expenses will be $0.29 higher than the third quarter. We expect prices and mix in the packaging segment to be lower as a result of seasonally less rich mix in the paper segment. We expect seasonally lower production and sales volume and flat pricing.

Speaker #4: Export Containerboard sales will be higher than the third quarter , but relatively low when compared to traditional fourth quarter volume Containerboard production in the legacy system will be slightly lower than the third quarter , with the maintenance outage at the DeRidder mill , and we expect inventory levels in the legacy system at year end to be similar to levels entering the fourth quarter .

Speaker #4: Outage expenses will be $0.29 higher than the third quarter . We expect prices and mix in the packaging segment to be lower as a result of seasonally less rich mix in the paper segment , we expect seasonally lower production and sales volume , and flat pricing .

Speaker #4: We also expect seasonally higher energy and fiber costs , as well as slightly higher freight and other operating costs . We expect significant improvement in the results of operations from the acquired business .

Mark Kowlzan: We also expect seasonally higher energy and fiber costs as well as slightly higher freight and other operating costs. We expect significant improvement in the results of operations from the acquired business. We will be impacted by lower production and higher maintenance expenses from the Massillon mill outage that did continue into October and seasonally lower volume and mix in the corrugated business. We will benefit from a full quarter of improved operations at the Riverville mill. We will be managing production to achieve lower inventories as Tom mentioned. Considering these items, we expect fourth quarter earnings of $2.40 per share excluding special items, and with that, we'd be happy to entertain any questions, but I must remind you that some of the statements we've made on the call constituted forward-looking statements.

Speaker #4: We will be impacted by lower production and higher maintenance expenses from the Massillon Mill outage that did continue into October , and seasonally lower volume and mix in the corrugated business .

Speaker #4: We will benefit from a full quarter of improved operations at the mill . We will be managing production to achieve lower inventories . As Tom mentioned .

Speaker #4: Considering these items , we expect fourth quarter earnings of $2.40 per share , excluding special items . And with that , we'd be happy to entertain any questions .

Speaker #4: But I must remind you that some of the statements we've made on the call constitute forward looking statements . The statements were based on current estimates , expectations and projections of the company and do involve inherent risks and uncertainties , including the direction of the economy and those identified as risk factors in our annual Report on Form 10-K on file with the SEC .

Mark Kowlzan: The statements were based on current estimates, expectations, and projections of the company and do involve inherent risks and uncertainties, including the direction of the economy and those identified as risk factors in our annual report on Form 10-K on file with the SEC. Actual results could differ materially from those expressed in the forward-looking statements. With that, Alyssa, I'd like to open the call up for any questions, please. Thank you.

Speaker #4: Actual results could differ materially from those expressed in the forward looking statements . And with that , I'd like to open the call up for any questions , please .

Speaker #4: Thank you .

Speaker #3: Thank you . We will now begin the question and answer session . To ask a question , you may press star then one on your telephone keypad .

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. First question is from George Leon Staphos, Bank of America.

Speaker #3: If you are using a speakerphone , please pick up your handset before pressing the keys . If at any time your question has been addressed and you would like to withdraw your question , please press star then two .

Speaker #3: At this time, we will pause momentarily to assemble our roster. The first question is from George Staphos, Bank of America.

Speaker #4: Morning , George .

Mark Kowlzan: Morning.

[Analyst]: George, thanks for the details. How you doing? I guess maybe the first question, as normally comes up during Q&A, can you talk about bookings and billings as we're starting fourth quarter? Obviously, you have fewer shipping days, but what are you seeing on a per workday basis or however you want to frame it? We had some other questions.

Speaker #7: How are you doing ? I guess maybe the first question . As normally comes up during Q&A , can you talk about bookings and billings as we're starting fourth quarter , obviously have fewer shipping days , but what are you seeing on a per day basis or however you want to frame it ?

Speaker #7: And then we had some other questions .

Speaker #5: Hey George , this is Tom . Right now , you know , kind of the blend of bookings and billings that we see so far is a little over 1% up .

Thomas Hassfurther: Hey, George, this is Tom. Right now, the blend of bookings and billings that we see so far is a little over 1% up. I'll remind you, very tough comps. Okay, got it.

Speaker #5: And again , I'll remind you , I'll remind you it's very tough comps . Okay .

Speaker #7: Got it . And you said the tough comps just factually will be difficult through one . Q that was part of your script or were done by the end of this quarter in terms of what you think tough comps are , and is any any sort of strength in any of the end markets that you would point us to or anything that's particularly challenging right now ?

[Analyst]: You said the tough comps just factually will be difficult through Q1, that was part of your script, or we're done by the end of this quarter. In terms of what you think tough comps are, is there any sort of strength in any of the end markets that you would point us to, or anything that's particularly challenging right now?

Speaker #5: Well , actually , George , you know , outside of a couple of end markets , our business has been very , very good .

Thomas Hassfurther: George, you know, outside of a couple of end markets, our business has been very, very good. Those couple of markets that we've struggled, it's not we've struggled, they've struggled in the marketplace. Everybody's read about beef. That's a big segment for us, and the cattle herds are down to a 70-year low. There's a lot of struggles going on there. We even have the administration looking at other ways to solve that problem. The other area is the building materials. We all know what's happened with housing starts and where that stands. Those two segments have been a drag on us. Other than that, we've been very pleased with the results in all of other sales segments.

Speaker #5: Those those couple of markets that we're that we've struggled . It's not we've struggled . They've struggled in the marketplace I mean you know everybody's read about beef .

Speaker #5: That's a big segment for us . And you know the cattle herds are down to a 70 year low . So you know there's a lot there's a lot of struggles going on there .

Speaker #5: And we even have the administration looking at other ways to solve that problem . And then the other area is the is the building materials .

Speaker #5: You know , we all know what's happened with housing starts and where where that stands . So those those two segments have been a drag on us .

Speaker #5: Other than that , you know , we've we've been very pleased with the results in all of our other sales segments .

Speaker #7: Thanks , Tom . As regards growth , I know we'll get more color over time , but any big picture , any large sort of boulders , you could tell us about in terms of what you're finding with grief relative to the deal model .

[Analyst]: Thanks, Tom. As regards Greif, I know we'll get more color over time, but any big picture, any large sort of boulders you could tell us about in terms of what you're finding with Greif relative to the deal model, and is there any way at this juncture you can give us a view on what the maintenance might look like? In that regard, is $300 million of EBITDA reasonable for the combined business? What does maintenance look like? I had one or two last follow-ons. That'll be quick.

Speaker #7: And is there any way at this juncture you can give us a view on what the maintenance might look like ? So in that regard , again , $300 million of EBITDA reasonable for the combined business .

Speaker #7: What does maintenance look like ? And then had one , 1 or 2 less follow ons . That'll be quick .

Speaker #4: Well , again , I think as we talked about this , the court choice side of the business that we acquired , the converting side was very well capitalized and and very good condition .

Mark Kowlzan: I think as we talked about this, the core choice side of the business that we acquired, the converting side, was very well capitalized and in very good condition. The two mills we've had from September 2, that day we've had upwards of, on a given day, 100 of our PCA personnel in the mills at Massillon and the same number of people in the mill at Riverville assisting in doing what we do. That's operational expertise. Tom, do you want to comment about corrugated?

Speaker #4: The two mills we've had from September the 2nd that day , we've had upwards of on any given day , 100 of our PCA personnel in the mills at Massillon and the same number of people in the mill at Rivervale assisting in doing what we do .

Speaker #4: And that's operational expertise . Tom , comment about corrugated .

Speaker #5: Yeah . Let me just say in total , you know what we've I think the best way to summarize this , George , is probably that you know , that it is an organization that is very customer focused .

Thomas Hassfurther: Let me just say in total, you know what we've. I think the best way to summarize this, George, is probably that it is an organization that is very customer focused and, as I mentioned, the culture of the business fits very well with ours. That's a great bolt on operationally, not nearly as strong as Packaging Corporation of America and, you know, because we've had many, many more resources and we've got this great team to address those issues. In typical Packaging Corporation of America fashion, we get on it right away, right up front, not trying to manage to a quarter or anything like that. We're looking at the long haul. I think, given that organization and their focus on the customer and the end markets that they supply, this is going to be very, very accretive to our earnings going forward.

Speaker #5: And , you know , as I mentioned , the culture of the business fits very well with ours . That's a great bolt on operationally .

Speaker #5: You know , not not nearly as strong as Piqua . And , you know , because we've had many , many more resources and and we've got this great team to , to address those , those issues .

Speaker #5: But you know , in typical PCA fashion , you know , we get on it right away , right up front , not trying to manage to a quarter or anything like that .

Speaker #5: We're looking at the long haul . And I think given given that organization and their focus on the customer and the end markets that they supply , this is going to be , you know , very , very accretive to to our earnings going forward .

Speaker #4: One note , George , you know , we we took the machines down at Rivervale for basically about a five day period . Each machine in September .

Mark Kowlzan: One note, George. We took the machines down at Riverville for basically about a five day period, each machine in September. During the time we ran in September, we improved operations. We were running like 97.2% for the month of September in Riverville. That's up dramatically from prior to the acquisition. We've seen immediate improvements in both efficiency and quality. The good news is we'll continue to see a lot more benefits as we work through things. As far as your question about some of the accretive value, I think, Kent, you and I are talking this morning.

Speaker #4: But during the time we ran in September, we improved operations. We were running at 97.2% for the month of September in Rivervale.

Speaker #4: That's up dramatically from from prior to the acquisition . And so we've seen immediate improvements in both efficiency and quality . But the good news is we'll continue to see a lot more benefits as we work through things .

Speaker #4: And as far as your question about some of the accretive value , I think , Kent , you and I were talking this morning .

Speaker #6: Yeah . So , George , going into the acquisition , historical great performance . 240 was about a good annual run rate for the EBITDA .

Thomas Hassfurther: Yeah.

Kent Pflederer: George, going into the acquisition, historical Greif performance $240 million was about a good annual run rate for the EBITDA. Our projection for synergies on a run-rate basis after the second year was about $60 million. We're well on target for that. We're looking probably in about the $20 million range by the second quarter of next year to give you a little bit more clarity on that on a run-rate basis.

Speaker #6: Our projection for synergies on a , on a , on a run rate basis after the second year was about 60 . We're well on target for that .

Speaker #6: We're looking probably in about the 20 ish range by the second quarter of next year . To give you a little bit more clarity on that .

Speaker #7: Okay .

Speaker #6: On a run rate basis .

Speaker #7: Thanks , Kent . Quickly , $0.20 maybe a sequential increase in DNA as part of the 240 is kind of rough math . And any way I know it's kind of tough on live mic , but any way to talk about what the inventory strategy quantify , what the tons coming down might mean in the system relative to where you've been .

[Analyst]: Thanks, Kent. Quickly, $0.20 maybe sequential increase in DNA as part of the $2.40 is kind of rough math anyway. I know it's kind of tough on live mic, but anyway, to talk about what the inventory strategy, quantify what the tons coming down might mean in the Greif system relative to where you'd been. Thank you and good luck in the quarter.

Speaker #7: Thank you, and good luck in the quarter.

Speaker #4: You know , the comment about inventory again , it was mentioned we've got ten mills now in the system . We've got incredible opportunity to take care of all of our box plants nationwide .

Mark Kowlzan: You know the comment about inventory, again, it was mentioned we've got 10 mills now in the system. We've got incredible opportunity to take care of all of our box plants nationwide. We will quickly incorporate that strategy into the core choice operations, and it'll take some time to work the inventories down. We've already started that.

Speaker #4: So we will quickly incorporate that that strategy into the core choice operations . And it'll take some time to work the inventories down .

Speaker #4: We've already started that . So yeah .

Speaker #5: Also also George , I just add that mix is a part of that equation . Also . So you know we've got to do both at the same time .

Thomas Hassfurther: Yeah. Also, George, I just add that mix is a part of that equation also. You know, we've got to do both at the same time. Very good opportunities there.

Speaker #5: And but but very good opportunities there . Yeah .

Speaker #4: All right . With that next question please .

Mark Kowlzan: All right, with that, next question, please.

Speaker #3: Next question is from Mike Rocklin . Truist .

Operator: Next question is from Michael Andrew Roxland, tourist.

Speaker #8: Yes . Thank you . Mark . Tom and Ken for taking my questions . And congrats on closing the acquisition .

[Analyst]: Yes, thank you, Mark, Tom and Kent for taking my questions. Congratulations on closing the acquisition.

Speaker #4: Thanks , Mike . Morning .

Mark Kowlzan: Thanks, Mike. Morning.

Speaker #8: Good morning . Just wanted to follow up with you on one on the numbers that you just mentioned in relation to George's question , the $240 million EBITDA , the 60 million of synergies , now that you've owned the the assets for roughly six weeks , can you talk about any potential upside to those numbers that you foresee from the from those assets .

[Analyst]: Morning. I just wanted to follow up with you. One on the numbers that you just mentioned in relation to George's question. The $240 million of EBITDA, the $60 million of synergies. Now that you've owned the assets for roughly six weeks, can you talk about any potential upside to those numbers that you foresee from the.

Mark Kowlzan: From those assets, you know.

Speaker #4: You know , right . Right now ? Again , I'd rather just let you know that we're every day we're we're seeing positive results from the work we're doing .

[Analyst]: Right.

Mark Kowlzan: Right. Now, again, I'd rather just let you know that every day we're seeing positive results from the work we're doing. I think a lot's going to depend on the marketplace in the future and what we can do to take advantage of the footprint on the converting side. The mills will continue to be improved upon and continue to deliver in much the same way that the Boise assets delivered over the last 10 years. I think I'd rather just be conservative and say we're going to stick with the numbers we've already given you and just say that there's always upside, but it does depend on what the market does.

Speaker #4: So again , I think a lot's going to depend on the marketplace in the future and what we can do to take advantage of the of the footprint on the on the converting side , the mills will continue to be improved upon and continue continue to deliver in much the same way that the Boise assets delivered over the last ten years .

Speaker #4: So again , I think I'd rather just be conservative and say , we're going to stick with the with the numbers . We've already given you and just say that there's always upside , but it does depend on what the market does .

Speaker #8: Got it . Mark . Any comments you can make on terms of the improvements , whether , you know , in terms of efficiency , costs went out with respect to Massillon , you extended you mentioned in your comments and in the press release that you extended the , the the maintenance outage to five weeks .

[Analyst]: Got it. Mark, any comments you can make in terms of the improvements, whether, you know, in terms of efficiency costs. One, with respect to Massillon, you mentioned in your comments and also in the press release that you extended the maintenance outage to five weeks. Can you talk about maybe some of the benefits that you're receiving from that extra work that you put into the mill?

Speaker #8: So can you talk about maybe some of the benefits that you're receiving from that extra work that you put into the mill ?

Speaker #4: Yeah , I mean , it's it's quite remarkable that with the capability we have in PCA , you know , we've got upwards of 200 people in our technology , engineering organization .

Mark Kowlzan: Yeah, I mean, it's quite remarkable that with the capability we have in PCA, we've got upwards of 200 people in our technology engineering organization. Again, from September 2nd that morning at both mills, we were working simultaneously and we had for at least a six-week straight period of time, at least 100 PCA personnel in Massillon working full time to assist the mill in improving their capability. I don't think there's anything in that mill that hasn't been touched. We undertook the first week of just cleaning the mills, inspecting, taking apart major equipment, bearing changes all the way down to lubrication systems, hydraulic systems, roll changes, power equipment, boilers, turbine generators. I feel very good that comprehensively we understand the opportunities we need to take advantage of going forward. The Massillon, as an example, we understand the limitations, we understand the upside.

Speaker #4: And again , from , from September 2nd that morning at both mills , we were working simultaneously and we had for at least a six week straight period of time , at least 100 PCA personnel in Massillon working full time to assist the mill in , you know , improving their capability .

Speaker #4: I don't think there's anything in that mill that hasn't been touched . We we undertook the first week of just cleaning the mills , inspecting , taking apart major equipment , bearing changes , all the way down to lubrication systems , hydraulic systems .

Speaker #4: Roll changes , you know , power equipment , boilers , turbine generators . So I feel very good that comprehensively we understand the opportunities we need to take advantage of going forward .

Speaker #4: The . Massillon , as an example , we understand the limitations . We understand the the upside . Some of it's going to be dependent on ordering some equipment and getting it delivered .

Mark Kowlzan: Some of it's going to be dependent on ordering some equipment and getting it delivered. The good news, I still feel though, what we told you is that it's, you know, when we converted some of the Boise acquisition, we were spending $500 million. That is DeRidder, Jackson, Wallula, per these conversions. I told you before, we expected, you know, the work at Massillon, the work at Riverville, it'll be the tens of millions of dollars. Over the next couple of years, $10 million here, $10 million there for system improvements, upgrades and technology and capability. The bones of the mills are good. We just need to update them and then, like I say, run these mills the way PCA looks at the business and takes care of the business. I'm feeling very bullish on what we've seen just in a month and a half.

Speaker #4: The good news I still feel though , that what we told you is that it's , you know , when we converted some of the Boise acquisition , we're spending half $1 billion , i.e. DeRidder , Jackson , Wallula , Purdy's conversions .

Speaker #4: But I told you before , we expect to be , you know , the work at Massillon , the work at Rivervale , it'll be the tens of millions of dollars .

Speaker #4: So over the next couple of years , you know , 10 million here , 10 million there for for system improvements , upgrades and technology and capability .

Speaker #4: But but the bones of the mills are good . We just need to update them and and then , you know , like , say these mills the way PCA looks at the business and takes care of the business .

Speaker #4: So I'm feeling very bullish on on what we've seen just in a month and a half . As an example , both mills , we saw you know , we started up Massillon the week before last and we saw at least a 50% improvement just in the quality of the profiles moisture profiles , basis weight profiles , physical test profiles .

Mark Kowlzan: As an example, both mills we saw, we started up Massillon the week before last and we saw at least a 50% improvement just in the quality profiles, moisture profiles, basis weight profiles, physical test profiles. Huge improvement there. That translates into customer experience with the product through core choice. Again, feeling very good about it.

Speaker #4: So huge improvement there . And that translates into customer , you know , experience with the product through core choice . So again feeling very good about it .

Speaker #8: Gotcha I appreciate the color there . One last question before turning it over . Excuse me EBITDA for the one month you own the assets came in a little lower than we expected given recent performance prior to your ownership .

[Analyst]: Gotcha. I appreciate the call there. One last question before turning it over. Growth EBITDA for the one month you own the assets came in a little lower than we expected given recent performance prior to your ownership. Was that all due to the outages these took at Massillon and Riverville, or was any economic downtime that you took due to your choppy backdrop or as you manage elevated inventories? Any initial thoughts in 2026?

Speaker #8: Was that all due to the outages you hook at Massillon and Rivervale , or was any economic downtime that you took due to the choppy backdrop ?

Speaker #8: Or as you manage , elevated inventories and then any initial thoughts in 2026 , CapEx ? Thank you .

Mark Kowlzan: CapEx, thank you.

Speaker #6: Hey , Mike , I'll take that one . It was it was largely from the outages and the timing effects of the revenue and profit recognition that hit us by about 12 million during the quarter .

Kent Pflederer: Hey, Mike, I'll take that one. It was largely from the outages and the timing effects of the revenue and profit recognition that hit us by about $12 million during the quarter. It was those in terms of economic downtime. No, we didn't factor that in. The Greif results for September.

Speaker #6: So it was those , you know , in terms of economic downtime . No , we didn't we didn't factor that in in the in the growth for September .

Speaker #6: No .

Mark Kowlzan: No. The other part of your question about CapEx into next year. We'll update you in January for the plan for next year. I think we're on track with taking advantage of our opportunities. I would like to say that just to remind everybody that the biggest pieces of capital spending this year right now are a couple of big projects on the converting side. We've got one big project going on in Ohio right now, and that's a new facility. In upstate New York, we're totally upgrading one of our facilities as a big CapEx project. Both those projects will finish into next year. We're always taking advantage of these capabilities to insert new converting lines and upgrade converting operations. We'll give you a better feel in January what we're looking at.

Speaker #4: The other part of your question about CapEx into next year, we'll update you in January for the plan for next year.

Speaker #4: But I think we're we're on track with with taking advantage of our opportunities . I would like to say that just to remind everybody the the biggest pieces of capital spending this year , right now are a couple big projects on the converting side .

Speaker #4: We've got one big project going on in Ohio right now , and that's a new facility . And then then in upstate New York , we're totally upgrading one of our facilities as a big CapEx project that will both those projects will finish into next year .

Speaker #4: But we're always , you know , taking advantage of the of these capabilities to insert new converting lines and upgrade converting operations . But we'll give you a better feel in January .

Speaker #4: What we're looking at , we do have some some very interesting energy opportunities that will give you more detail with next year . In on the January call .

Mark Kowlzan: We do have some very interesting energy opportunities that we'll give you more detail with next year in the January call.

Speaker #8: Thanks very much and good luck and thank you .

[Analyst]: Thanks very much, and good luck in Q4.

Speaker #5: Thanks .

Mark Kowlzan: Thanks, Mike. Appreciate it. Next question, please.

Speaker #4: Thanks . Appreciate it . Next question please .

Speaker #3: Next question is from Gabe Hyde . Wells Fargo .

Operator: Next question is from Gabrial Shane Hajde, Wells Fargo.

Speaker #9: Mark Kent Tom good morning .

[Analyst]: Mark, Kent, Tom, good morning.

Speaker #5: Morning , Gabe . .

Mark Kowlzan: Morning, Gabe.

Speaker #9: I wanted to ask I see this number and I think you kind of strip out input costs . So it's I'm going to call it the frictional inflation treadmill .

[Analyst]: I wanted to ask. I see this number and I think you kind of strip out input costs, so it's going to call it the frictional inflation treadmill, but running kind of around the dollar year to date. I think in this quarter it was $0.33. If I annualize that, we're looking at kind of $170 million. Is that something that's particularly elevated this year or kind of post-pandemic when we think about, you know, labor inflation and insurance costs, things like that, that's a good run rate on a go forward basis for maybe the combined entity or maybe legacy Packaging Corporation of America.

Speaker #9: But running kind of around a dollar year to date . So I think in this quarter it was it was $0.33 . So if I annualize that we're looking at kind of $170 million , is that something that's particularly elevated this year or kind of post when we think about , you know , labor inflation and insurance costs , things like that , that's a good run rate on a go forward basis for maybe the combined entity or maybe legacy PCA .

Speaker #4: You know , let me let me . One good piece of that that we're dealing with . But everybody's dealing with it even at your household is energy costs , electricity rates .

Mark Kowlzan: Let me give you one good piece of that that we're dealing with, but everybody's dealing with it, even at your household, is energy costs, electricity rates. Just in the last year or two, we've seen some of our facilities, electricity rates are up 50 to 75%. That's one good example of what the world is dealing with. We're part of that world. That's why I was alluding to the fact that we've got three significant projects that we're going to introduce into early next year that will take three of our mills, essentially electricity independent within the next two and a half years.

Speaker #4: Just in the last year or two , we've seen some of our facilities , electricity rates are up 50 to 75% . So that's one good example of what the world is dealing with .

Speaker #4: And we're part of that world . That's that's why I was alluding to the fact that we we've got three significant projects that we're going to introduce into early next year that will take three of our mills , essentially electricity independent within the next two and a half years .

Speaker #6: And then Gabe on the others , it's the usual . It's the labor inflation . It's it's chemicals . It's any kind of supplies , insurance , rent , those sorts of things that have been , you know , that have been going up at a fairly healthy clip in the last few years .

Kent Pflederer: Gabe, on the others, it's the usual. It's the labor inflation, it's chemicals, it's any kind of supplies, insurance, rent, those sorts of things that have been going up at a fairly healthy clip in the last few years.

Speaker #9: Okay . But but is that is it particularly elevated this year or is that something that that sort of .

Mark Kowlzan: Okay, is it particularly.

[Analyst]: Elevated this year, or is that something that sort of?

Speaker #4: Well , again , it's just I think I think the biggest , the biggest factor was electricity rate increases nationwide .

Mark Kowlzan: I think the biggest factor was electricity rate increases nationwide.

Speaker #9: Yeah .

Operator: Yep.

Speaker #4: If I take one , one element of , of cost , it would be electricity .

Mark Kowlzan: If I take one element of cost, it would be electricity.

Speaker #9: All right, Mark. But when you're planning for next year and you're looking at that number, maybe it's down a little bit because we don't expect more energy price increases.

[Analyst]: All right, Mark. When you're planning for next year and you're looking at that number, maybe it's down a little bit because we don't expect more energy price increases. Maybe we do because we gotta build those data centers.

Speaker #9: Maybe we do because we get to know data centers .

Speaker #4: On the on the contrary , I don't see energy , electricity cost flattening out with with the demand from all of the data centers .

Mark Kowlzan: On the contrary, I don't see energy, electricity cost flattening out with the demand from all of the data centers. That's ongoing electricity rate increases. I just don't see that it's going to abate anytime soon. That's why we take it upon ourselves that we've got plans to, you know, three more of our mills. We've got a couple of our mills are in very good shape right now with electricity independence. Within two and a half years, we'll take three more of our mills and essentially get them off the grid and will be in good shape.

Speaker #4: That's ongoing . The electricity rate increases . I , I just don't see that it's going to abate anytime soon . That's why we've taken it upon ourselves , that we've got the plans to , you know , like I said , three more of our mills .

Speaker #4: We've we've got a couple of our mills that are in very good shape right now with electricity independence . But within two and a half years , we'll we'll take three more of our mills and , and essentially get them off the grid and we'll be in good shape .

Speaker #9: Well , Mark , I feel like you've you've got me on the hook . So I have to ask , are you referencing maybe some biogenic carbon capture opportunities ?

[Analyst]: Mark, I feel like you've got me on the hook, so I have to ask, are you referencing maybe some biogenic carbon capture opportunities? I think we've read in some outside articles that that could contribute up to $85 a ton that you produce.

Speaker #9: And I think we've read in some articles that that could contribute up to $85 a ton that you produce .

Speaker #4: No , that's a separate that's that's a separate issue . We're talking about essentially gas turbine technology . We've moved ahead and we've got some great projects that we're we're going to be executing .

Mark Kowlzan: No, that's a separate issue. We're talking about essentially gas turbine technology. We've moved ahead, and we've got some great projects that we're going to be executing.

Speaker #4: .

Speaker #9: Understood .

[Analyst]: Understood.

Speaker #4: We've got we've got some facilities without getting into the details , Gabe , we've got some facilities that already burn a lot of natural gas and power boilers , but we're not getting the advantage of the downstream electricity generation .

Mark Kowlzan: We've got some facilities. I mean, without getting into the details, Gabe, we've got some facilities that already burn a lot of natural gas in power boilers, but we're not getting the advantage of the downstream electricity generation. On a combined cycle through efficiency, you're not getting all of the upside opportunity for each term of gas that you burn. The gas turbines will give us that complete efficiency on the combined cycle from steam generation and electricity generation.

Speaker #4: So on a on a combined cycle , thorough efficiency . You're not getting all of the upside opportunity for each therm of gas that you burn the gas turbines will give us that complete , you know , efficiency on the on the combined cycle from steam generation and electricity generation .

Speaker #9: I appreciate that .

[Analyst]: Appreciate that.

Speaker #4: And and these these these will be projects . These will be projects . Again we'll introduce to you early next year a lot of a lot of discussion on the January call will give you a lot more details .

Mark Kowlzan: These will be projects. These will be projects. Again, we'll introduce to you early next year. A lot of discussion on the January call will give you a lot more details.

Speaker #9: Yes , sir . Tom , one , you know , we've read recently about , I'll call it price elasticity on on Corrugate .

[Analyst]: Yes, sir. Tom, we've read recently about, I'll call it price elasticity on corrugate. I'm just curious, in your conversations with customers, broadly speaking, how sensitive are customers in terms of potential price increases or trying to do more with less, whether it's lightweighting and how that's showing up, maybe in your own volumes, not necessarily specific to price increases, but more thinking about lightweighting on that front.

Speaker #9: I'm just curious in your conversations with customers , broadly speaking , how sensitive are customers in terms of , you know , potential price increases or trying to do more with less , whether it's lightweighting and how that's showing up , maybe , you know , in your own volumes , not necessarily specific to price increases , but more thinking about lightweighting .

Speaker #9: On that front, thank you, Gabe.

Mark Kowlzan: Thank you, Gabe.

Speaker #5: You know , obviously we don't we don't talk about any forward pricing at all . So I'm going to I'm going to pass on that one .

Thomas Hassfurther: Obviously, we don't talk about any forward pricing at all. I'm going to pass on that one. I will tell you that, again, you hear Mark talk about, as I indicated, that when we expect our mills and acquired mills to run at a tremendously efficient rate, we expect them to meet some very stringent specifications. Those specifications relate to a lot of the technology that we have put into our boards, proprietary technology that gives us lightweighting capabilities that we believe is unique to the marketplace. Those are solutions that we take to our customers. Given this inflationary environment we're in, given the fact that costs are constantly going up, we're doing everything we can to help ourselves and our customers to fight those.

Speaker #5: But I will tell you that , you know , the again , you hear you hear Mark talk about as I indicated , that , you know , when we we expect our mills and acquired mills to run at a tremendously efficient rate and we expect them to meet some very stringent specifications and those specifications relate to a lot of the technology that we have put into our boards .

Speaker #5: Proprietary technology that gives us lightweight and capabilities that we believe is unique to the marketplace . Those are solutions that we take to our customers and , you know , given this inflationary environment we're in , given the fact that costs are constantly going up , we're doing everything we can to help ourselves and our customers to fight those .

Speaker #5: However , at the end of the day , you know , I mean , it's it is an inflationary environment , but I think that's a real competitive advantage .

Thomas Hassfurther: However, at the end of the day, it is an inflationary environment, but I think that's a real competitive advantage we have in terms of our offerings to the marketplace.

Speaker #5: We have in terms of our in terms of our offerings to the marketplace .

Speaker #9: Thank you. I'll hand it over.

[Analyst]: Thank you. I'll hand it over.

Speaker #4: Thank you . Next question please .

Mark Kowlzan: Thank you. Next question, please.

Speaker #3: Next question is from Mark. Adam Weintraub, Seaport Research Partners.

Operator: Next question is from Mark Adam Weintraub, Seaport Research Partners.

Speaker #10: Thank you . First , just want to just follow up on on gray for the big increase in the DNA from purchase accounting .

[Analyst]: Thank you. First, just wanted to follow up on Greif with the big increase in D&A from purchase accounting. Just want to reconfirm in terms of CapEx related to those assets. I think you in the past talked about $50 to $60 million and with that type of spend, you can get them up to Packaging Corporation of America efficiencies, et cetera. Is that still a reasonable number, which obviously would be a lot lower than the $130 million D&A you had talked about.

Speaker #10: Just want to reconfirm in terms of CapEx related to those assets , I think you in the past talked about 50 to 60 million .

Speaker #10: And , you know , with that type of spend , you can get them up to Packaging Corp. efficiencies , etc. . Is that still a reasonable number , which obviously would be a lot lower than the 130 million DNA you had talked about ?

Speaker #4: Yeah , I mean , after what we've seen with the efforts at Massillon and then the work at Rivervale , it's that type of capital that we're going to spend .

Mark Kowlzan: Yeah. I mean, after what we've seen with the efforts at Massillon and the work at Riverville, it's that type of capital that we're going to spend. It's very similar to what we did at International Falls over the last 14 years. We did not have to spend massive amounts at International Falls. We just had to improve the capability on a lot of little systems and taking care of some of the technology. We're well on our way. It is in that tens of millions of dollars and it will happen over the next year or two. I'm really confident that that number's still good.

Speaker #4: It's it's very similar to what we did at International Falls over the last 14 years . You know , we we did not have to spend massive amounts of Diepholz .

Speaker #4: We just had to improve the capability on on a lot of a lot of little systems and taking care of some of the technology .

Speaker #4: But , you know , we're well on our way . But it's it is in that tens of millions of dollars and it will happen over , you know , over the next year or two .

Speaker #4: So I'm really confident that that number is still good .

Speaker #5: Mark , at this time . I would also add that as we indicated before , the sheet feeders and corrugated box plants are very well capitalized and we're pleased we're very pleased with that .

Thomas Hassfurther: Mark, at this time, I would also add that as we indicated before, the sheet feeders and corrugated box plants are very well capitalized, and we're very pleased with that. Although we've got some maintenance costs and some other things that will take place there, we're not going to invest huge amounts of capital in those facilities.

Speaker #5: And although we've got some maintenance costs and some other things that will take place , there , you know , we're we're not going to invest huge amounts of capital in those facilities .

Speaker #10: Right . So obviously cash earnings from gripe are much stronger than what the book earnings are going to be . But I'm also kind of curious whether or not is there much in the way of tax shield benefit that you're getting through accelerated depreciation , or is that sort of not not something to call out specifically ?

[Analyst]: Right. Obviously, cash earnings from Greif are much stronger than what the book earnings are going to be. I'm also kind of curious whether or not there is much in the way of tax shield benefit that you're getting through accelerated depreciation, or is that sort of not something to call out specifically?

Speaker #6: Well , I think you saw it in our cash tax payment for the third quarter that we called out in the script . The allocation that we had to PPA , we were able to take bonus depreciation on and reduce our reduce our cash taxes out pretty significantly this year .

Kent Pflederer: I think you saw it in our cash tax payment for the third quarter that we called out in the.

Thomas Hassfurther: Script.

Kent Pflederer: The allocation that we had to PP&E, we were able to take bonus depreciation on and reduce our cash taxes out pretty significantly this year. I think you see that in our cash for the third quarter.

Speaker #6: So yeah , I think you see that in our in our in our cash for the third quarter .

Speaker #10: Okay . And presumably you'd see that next year as well . But so it kind of shifting gears if I could obviously it's sort of been a pretty difficult environment industry wise .

Thomas Hassfurther: Okay.

[Analyst]: You'd see that next year as well. Kind of shifting gears if I could. Obviously it's sort of been a pretty difficult environment industry wise, box shipments, et cetera. In the past you've been able to, through business wins, grow a lot faster than the industry and fill out these new box plants, et cetera, that you are building. Have you had business wins of late that you have visibility on that can give us confidence that you can continue to outperform on the volume side?

Speaker #10: Box shipments etc. . In the past you've been able to through business wins , you know , grow a lot faster than the industry .

Speaker #10: And , you fill out these new box plants , etc. that you are building . Have you had business wins of late that you have visibility on that can give us confidence that you can continue to outperform on the volume side .

Speaker #5: Mark , this time we haven't changed anything that we typically would do . Absolutely nothing . We've been you know , as I mentioned , we've been hurt in our numbers from a couple of big segments of ours that we can do very little about .

Thomas Hassfurther: Mark this, Tom. We haven't changed anything that we typically would do. Absolutely nothing. As I mentioned, we've been hurt in our numbers from a couple of big segments of ours that we can do very little about. However, we continue to grow within existing accounts in a big way. Yeah, we continue to have wins, but these are wins that we earn. These aren't wins that you just go out and have something to offer that nobody else is doing necessarily. We have to earn these wins. We're just continuing to do the things we're doing. We're just not getting a lot of lift, obviously, from the economy, and these starts and stops that we've seen consistently go on throughout the year relative to tariffs and a bunch of other things certainly are impacting the business.

Speaker #5: However , we continue to grow within existing accounts in a big way . And and yeah , we we we continue to have wins .

Speaker #5: But , you know , these aren't these are wins that we earn . They're not you know , these aren't wins that , you know , you just go out and you know , have have something , have something to offer that nobody else is doing necessarily .

Speaker #5: But , you know , we have to earn these wins . And , you know , we're just continuing to do the things we're doing .

Speaker #5: We're just not getting we're not getting a lot of lift , obviously , from the economy and these starts and stops that we've seen consistently go on throughout the year .

Speaker #5: Relative to tariffs and a bunch of other things . You know , certainly are impacting the business .

Speaker #10: Great . And then lastly , we've had this extraordinary year in terms of magnitude of capacity closures in the North American Containerboard business .

[Analyst]: Great. Lastly, we've had this extraordinary year in terms of magnitude of capacity closures in the North American containerboard business. You know, box demand hasn't been good, but are you actually feeling any more tightness because of the closures of containerboard capacity? Any color you could give would be appreciated there.

Speaker #10: And , you know , box demand hasn't been good . But but are you actually feeling any more tightness because of the closures of Containerboard capacity ?

Speaker #10: Any color you could give would be appreciated . There .

Speaker #5: Yeah , I think I think , you know , the containerboard capacity , you know , I think you're seeing a consistent trend in this industry that it right sizes to demand .

Thomas Hassfurther: I think the containerboard capacity, I think you're seeing a consistent trend in this industry that it right sizes to demand and we run to demand. We do. That's what Packaging Corporation of America does. I think, in addition, even on the corrugated side, we've closed some facilities, we've rationalized some poor assets, things like that, and we'll continue to do so. We will run to the demand that we see out there.

Speaker #5: And we run to demand . We do that's that's what PCA does . And I think in addition you know even on the even on the corrugated side , you know , we've we've had we've closed some facilities .

Speaker #5: We've rationalized some , some poor assets , things like that . And , and we'll continue to do so . And you know , again , it's , it's , you know , we , we will run to we will run to the demand that we see out there .

Speaker #10: Okay . Tom , just since you mentioned that , I apologize . I know I'm going a little long here , but I think you have two box plants , which you're not , which you're going to be closing in the fourth quarter .

[Analyst]: Okay, Tom, just since you mentioned it, I apologize. I know I'm going a little long here, but I think you have two box plants, which you're not, which you're going to be closing in the fourth quarter. Can you give us a little color around the decision to do that?

Speaker #10: Can you give us a little color around the decision to do that?

Speaker #5: Well , they just they just happen to be box plants that are not , you know , that that we can't capitalization isn't going to isn't going to be the answer for those box plants .

Thomas Hassfurther: They just happen to be box plants that are not, you know, that we can't. Capitalization isn't going to be the answer for those box plants, and they have to be in markets where we have, you know, other facilities and bigger facilities and better equipped facilities to handle those customers. It's not as if we're abandoning any of those customers. We're keeping all those customers, but it's just a matter of, you know.

Speaker #5: And they have to be in markets where we have , you know , other facilities and bigger facilities and , and better equipped facilities to handle those customers .

Speaker #5: It's not as if we're abandoning any of those customers . We're keeping all those customers . But it's just it's just a matter of , you know , rightsizing to to the demand we see in a particular market .

[Analyst]: Right.

Thomas Hassfurther: Sizing to the demand we see in a particular market.

Speaker #4: I think people tend to forget , Mark , you know , if you think about the last 16 years , we probably made 25 acquisitions .

Mark Kowlzan: I think people tend to forget, Mark, you know, if you think about the last 16 years, we probably made 25 acquisitions, and during that period of time, we probably shut 20 some odd plants.

Speaker #4: And during that period of time , we probably shut 20 some odd plants .

Speaker #5: 20 some odd plants . Yeah .

Thomas Hassfurther: 20 some odd plants.

Speaker #4: During that period of time , we built some , you know , a number of new plants and essentially recapitalized the rest of our footprint .

Mark Kowlzan: Yeah, during that period of time, we built some, you know, a number of new plants and essentially recapitalize the rest of our footprint. As Tom said, we run to demand, and people lose sight of the fact that we have gone ahead and closed a number of our older plants that just don't fit our needs anymore.

Speaker #4: But , you know , but as Tom said , we run to demand and we , you know , but people , people lose sight of the fact that we have gone ahead and , and closed a number of our older plants that just don't , don't fit the fit .

Speaker #4: You know, our needs anymore.

Speaker #10: Thanks so much .

[Analyst]: Thanks so much.

Speaker #4: Next question please .

Mark Kowlzan: Next question, please.

Speaker #3: Next question is from Anthony Pettinari , Citi .

Operator: Next question is from Anthony James Pettinari.

Speaker #11: Good morning .

Operator: Good morning. With Greif, your mix into recycled will increase, and I'm wondering if it's possible to say how many tons of OCC PCA might buy with the Greif assets. As you look at your end markets and talk to your customers, as you think about the next three to five years, is there any reason to think recycled demand will grow faster or maybe slower than Kraftliner, or do you not necessarily think about it that way?

Speaker #4: Good morning . .

Speaker #11: Hey Christ . Your mix into recycled will increase . And I'm wondering if it's possible to say how many tons of oak PCA might buy .

Speaker #11: Kind of with with the grip assets . And as you look at your end markets and talk to your customers as you think about the next , you know , 3 to 5 years , is there any reason to think recycled demand will grow faster ?

Speaker #11: Or maybe slower than Kraft liner ? Or do you not necessarily think about it that way ?

Speaker #4: You know , I , I look at it as an opportunity , quite frankly . I'll look at Massillon and Rivervale as an opportunity to make more medium , which we need .

Mark Kowlzan: You know, I look at it as an opportunity, quite frankly. I look at Massillon and Riverville as an opportunity to make more medium, which we need. Our plans run very well on the recycled medium. Combining that with our high performance liner grades, we get the best of both worlds. It's not on a total % basis. It's really just taking advantage of the opportunity, and we'll play into that in the marketplace. The recycled medium would work very well with us.

Speaker #4: And our plans run very well on the recycled medium . But combining that with our high performance liner grades , we get the best of both worlds .

Speaker #4: And so yeah , it's not on a total percentage basis . It's it's it's really just taking advantage of of the opportunity . And we'll play into that in the marketplace .

Speaker #4: But the recycled medium will work very well with us.

Speaker #5: Yeah . Market . The key is that , you know we do need we do need the medium and and 100% recycled medium is is you know a good runner in our facilities and stuff .

Thomas Hassfurther: Yeah, Mark, the key is that, you know, we do need the medium and the 100% recycled medium is a good runner in our facilities and stuff, and trade for some of that, those sorts of things. As far as end markets go, we attack every end market with whatever the best solution is.

Speaker #5: And so trade for some of that and those sorts of things . But as far as end markets go I mean we , we , we attack every end market with whatever the best solution is .

Speaker #11: Okay . Any , any quantification of Oak consumption , tons or I'm not sure if you disclosed , but .

Mark Kowlzan: Okay.

Operator: Is there any quantification of OCC consumption tons or not sure if you disclosed.

[Analyst]: But.

Speaker #6: Hey , Anthony , we were we were flexible beforehand . We could flex the system a little bit , but we typically ran around 20 low 20 percentage , furnish oak .

Kent Pflederer: Hey, Anthony, we were flexible beforehand. We could flex the system a little bit, but we typically ran around 20%, low 20% furnish OCC. That's going to move up about 10% on the whole to, you know, 30% going forward, if that helps.

Speaker #6: That's going to move up about 10% on the whole to , you know , 30 ish going forward . If that helps .

Speaker #11: Got it , got it . That's very helpful . And then just a couple quick questions on CapEx . I mean . Understanding you'll give us more detail in February .

Mark Kowlzan: Got it, got it.

Operator: That's very helpful. Just a couple quick questions on CapEx. I mean, understanding you'll give us more detail in February, but the box plant projects that you referenced, does the CapEx spend for that from 2025 to 2026, is it sort of directionally similar or does it sort of ramp down modestly or maybe ramp down more sharply? I guess, second question, you've got us really interested in these energy projects. Are there currently Packaging Corporation of America mills that are selling meaningful amounts of electricity back to the outside utility company? Could that be potentially an opportunity or part of the projects that you'll tell us more about next year?

Speaker #11: But the box plant projects that you referenced, does the CapEx spend for that shift from 2025 to 2026? Is it sort of directionally similar, or does it ramp down modestly, or maybe ramp down more sharply?

Speaker #11: And then I guess , second question , you know , Mark , you've got us really interested in these energy projects . Are there currently PCA mills that are selling meaningful amounts of electricity back to the outside utility company ?

Speaker #11: And , you know , could that be potentially an opportunity or part of the projects that you'll tell us more about next year ?

Speaker #4: First part on your CapEx , we would expect as we finish up the two bigger projects , the one in Ohio and the one in New York State next year , CapEx will continue to be kind of flat in that range .

Mark Kowlzan: First part on your CapEx, we would expect, as we finish up the two bigger projects, the one in Ohio and the one in New York State next year, CapEx will continue to be kind of flat in that range. We would probably take advantage of that opportunity. The good news is, and Tom's mentioned this and I've mentioned it, Greif gave us the opportunity with the core choice converting side of their business. It's going to help us minimize what we have to do in some of these regions. We will avoid having to spend some major pieces of capital on any new plants for the next couple of years. In that regard, we'll continue to do some converting installations as far as evolve sun rotary die cutter type stuff, some corrugator opportunities. As far as major plant projects, that'll mitigate itself.

Speaker #4: We we would probably take advantage of that opportunity . The good news is , and Tom's mentioned this , and I've mentioned it , grief gave us the opportunity with the court choice converting side of their business .

Speaker #4: It's it's going to help us minimize what we have to do in some of these regions . We will avoid having to spend some major pieces of capital on any new plants for the next couple of years .

Speaker #4: So in that regard , we'll continue to do some converting . You know , installations as far as evolves , sun Rotary die cutter type stuff , some corrugator opportunities , but but as far as major plant projects that that'll mitigate itself .

Speaker #4: And then then I see the next couple of years the big projects are going to be some of these energy projects . We'll take advantage of that .

Mark Kowlzan: I see the next couple of years, the big projects are going to be some of these energy projects. We'll take advantage of that. It's probably a two and a half year process. We'll get into the details in January and the first part of next year. These are projects that have a year and a half payback type projects. Very, very high return projects. As far as the level of CapEx, we'll be in a very comfortable range. The amount of cash regenerating, I think quite frankly people are going to be asking us what are you doing with all the cash on hand. That's going to be the high class problem we get into. I'm not worried about the CapEx. All of our capital that we've been spending over the years, we've got a very good track record of return on our investment with this CapEx spending.

Speaker #4: It's probably a two and a half year process . We'll get into the details in January . In the first part of next year .

Speaker #4: But these are projects that have , you know , a year and a half payback type projects , very , very high return projects .

Speaker #4: But as far as the level of CapEx , you know , will be in a very comfortable range with the amount of cash we're generating , I think , quite frankly , people are going to be asking us , what are you doing with all the cash on hand ?

Speaker #4: That's going to be the high class problem . We get into . And so I'm not worried about the CapEx . We'll all of our capital that we've been spending over the years .

Speaker #4: You know , we've got a very good track record of return on our investment with this CapEx spending . So as far as what you're modeling , just I would just continue to model what our trend has been and we'll update you next year .

Mark Kowlzan: As far as what you're modeling, just, I would just continue to model what our trend has been. We'll update you next year. There was one part, your part of the question on electricity. No, we're not wheeling power into the grid at any of our facilities. We do have one facility in particular that's essentially 100% independent, but we're not wheeling power into the grid.

Speaker #4: There was one party , oh , you're part of the question on electricity . No , we're not wheeling power into the grid at at any of our facilities .

Speaker #4: We are we do have one facility in particular that's essentially 100% , you know , independent . But but we're not wheeling power into the grid .

Speaker #11: Okay . That's very helpful . I'll turn it over .

Operator: Okay, that's very helpful. I'll turn it over.

Speaker #4: All right . Next question , please .

Mark Kowlzan: Next question, please.

Speaker #3: Next question is from Philip Ng Jefferies .

Operator: Next question is from George Leon Staphos.

Speaker #12: Hey, guys. I appreciate all the great color. So, Mark, you talked about potentially some of these energy projects in the next few years.

[Analyst]: Hey guys, appreciate all that great color. Mark, you talked about potentially some of these energy projects the next few years and obviously you're going to do some great work at these Greif mills, kind of get it up to PCA levels, and then you called out from the inventory where it's a bit more elevated at Greif. Curious when we think about 2026, does that translate to, you know, more downtime than we should, you know, kind of be appreciative which could potentially meet some of the EBITDA contribution from Greif. I think Kent gave a number in that $240 million range plus synergies. Just want to be mindful just because it was extra noise in the back half of this year, is there friction that we need to be thoughtful of that could be impactful next year?

Speaker #12: And then obviously you're going to do some great work at these grist mills . Kind of get it up to peak levels . And then you called out some of the inventory where it's a bit more elevated at Griff .

Speaker #12: So curious . When we think about 26 , does that translate to , you know , more downtime than we should , you know , kind of be appreciative , which could potentially meet some of the EBITDA contribution from graph .

Speaker #12: I think Kent gave a number in that 240 range plus synergy . So just want to be mindful just because it was extra noise in the back half of this year .

Speaker #12: Is there friction that we need to be thoughtful of that could be impactful next year?

Speaker #4: I think again , the the work we just did at Massillon for the approximately six weeks , really gave us a comprehensive , you know , look at the mill .

Mark Kowlzan: I think again, the work we just did at Massillon for the approximately six weeks really gave us a comprehensive look at the mill. We literally touched everything in that mill, clean from the ceilings down to the, you know, drain sewers. Everything was cleaned, touched, inspected, new lighting, and in doing so we understand what it is in terms of components, motors, pumps, rolls, systems on paper machines that we want to upgrade to the PCA standards. We've already got our plan in place. These changes will take place on monthly outages and it's not the three week outages required, it's the 24 hour outage and the annual outage for five or six days a week type thing. We'll be in good shape next year. Riverville in a similar situation. We've got to just continue to take care of the mills and we'll invest appropriately.

Speaker #4: We literally touched everything in that mill . Clean from the ceilings down to the to the you drain sewers . Everything was clean touched , inspected new lighting , and so in doing so , we understand what it is in terms of components , motors , pumps .

Speaker #4: Rolls , systems on paper , machines that we want to upgrade to the PCA standards . So we've already , you know , got our plan in place , but these changes will take place on monthly outages .

Speaker #4: It's it's not the , you know , three week outages required . It's the 24 hour outage in the annual outage for 5 or 6 days a week type thing .

Speaker #4: So no , we'll be in good shape next year . There's , river bills and a similar , similar situation . We've got to just , you know , continue to take care of the mills and we'll invest appropriately .

Speaker #4: And but no , I'm I'm bullish on the what we've got facing us for the next few years . No no major . You know we went through 40 some odd day outage at at Jackson a few years ago .

Mark Kowlzan: I'm bullish on what we've got facing us for the next few years. No major drud. We went through a 40 some odd day outage at Jackson a few years ago and we don't see any of that type of situation. We'll be in good shape.

Speaker #4: And we don't we don't see any of that type of of situation . So we'll be in good shape .

Speaker #12: It sounds like you would largely be able to do the work that you want to do , whether it's energy projects and then I guess even taking down the inventory at Griff within the scope of your , your normal manage outage , it shouldn't be an outsized year next year .

[Analyst]: It sounds like you would largely be able to do the work that you want to do, whether it's energy projects and then I guess even taking down the inventory at Greif within the scope of your normal managed outage. It shouldn't be an outside year next year.

Speaker #4: Yeah . No , I mean the inventory management that will happen over the next couple of quarters as we work our way down .

Mark Kowlzan: Yeah, no, I mean the inventory management that will happen over the next couple of quarters as we work our way down. Like I said, that's just future upside for the business.

Speaker #4: Like I say , that's just future upside for the business .

Speaker #12: Okay , helpful . And a question for Tom . You called out , you know , building mats and beef being more pragmatic .

[Analyst]: Okay, helpful, and a question for Tom. You called out, you know, building mats and beef. Being more pragmatic, Tom, can you size up how much of that of your box business is tied to those end markets? Are trends in those end markets getting worse? It's kind of bouncing along the bottom. In the other categories, are you seeing order patterns pick up a bit, and how do you kind of envision your customers managing inventory to kind of close out the year?

Speaker #12: Tom, can you size up how much of your box business is tied to those end markets or trends in those end markets getting worse?

Speaker #12: It's kind of bouncing along the bottom . And the other categories , are you seeing order patterns pick up a bit and how are you ?

Speaker #12: How do you kind envision your customers managing inventory to kind of close out the year ?

Speaker #5: Okay , Philip , number one is I'm not going to I'm not gonna give you what , you know , how much these segments are .

Thomas Hassfurther: Okay, Philip, number one is I'm not going to give you what, you know, how much these segments are. I just told you they're relatively large segments for us and those are the ones that are impacting us the most in beef and building products being down. Beef is more of a long term thing. It's going to take a little while. As I told you, the herds are down to 70-year lows and these things take two to three years to rebuild. We're only a year into the process. That's going to take a little while. Building products are very reliant on what happens with interest rates and they're coming down, and what the cost of materials are and how quickly things can be approved and those sorts of things in the nation. The remodeling bottoming has begun to go the other way. That's a good thing.

Speaker #5: I'm just , you know , I just told you they're relatively large segments for us . And those are the ones that are impacting us the most in beef and and building products being down .

Speaker #5: But , you know , beef is beef is more of a long term thing . So it's going to it's going to take a little while .

Speaker #5: As I told you, the herds are down to 70-year lows. And these things take 2 to 3 years to rebuild.

Speaker #5: And we're only a year into the process . So you know , that's going to that's going to take a little while . Building products , you know , very reliant on , you know , what happens with interest rates .

Speaker #5: And they're coming down and and you know what the cost of materials are and how quickly , you know , things can be approved .

Speaker #5: And those sorts of things in the nation and , and the remodeling , the remodeling , bottoming has begun to go the other way .

Speaker #5: So that's a good that's a good thing . The other segments that we're in have been pretty , have been pretty steady . And steadily growing .

Thomas Hassfurther: The other segments that we're in have been pretty steady and steadily growing. Our customers are pretty bullish on things going forward. I think overall, our portfolio is in really good shape. Good time.

Speaker #5: And , you know , the our customers are our customers are pretty bullish on on things going forward . So I think I think overall , I mean our portfolios in in really good shape .

Speaker #12: Good. Tom, you're not hearing from any of your customers that they have desires to kind of work down inventory to close out the year.

[Analyst]: You're not hearing from any of your customers that they have desires to kind of work down inventory to close out the year?

Speaker #5: Well , you know , I'm glad I yeah , yeah . Philip I forgot that part of the of your question . But our customers are already operating at very low levels , and I think they would tell you that across the board .

Thomas Hassfurther: Our customers are already operating at very low inventory levels, and I think they would tell you that across the board. That inventory is peeled down about as far as they can do it, because again, it goes back to all these things that have taken place during the year and the bumpy road we've been on with tariffs and all these other sorts of things. I think our customers have been very cautious. Okay.

Speaker #5: inventory

Speaker #5: So , so that that inventory is about , you know , is peeled down about as far as they can as they can do it , because again , you know , it goes back to all these all these things that have taken place during the year and the bumpy road we've been on with tariffs and all these other sorts of things .

Speaker #5: So I think our customers have been very cautious .

Speaker #12: Okay. I appreciate all the color, guys. Thank you.

[Analyst]: Appreciate all the color, guys. Thank you.

Speaker #4: Thank you . Next question .

Mark Kowlzan: Thank you. Next question or any further question, please.

Speaker #3: For any further question

Speaker #3: press star one on your telephone . This concludes our question and answer session . I would like to turn the conference back over to Mr. Mark Kowlzan .

Operator: Press star and one on your telephone. This concludes our question and answer session. I would like to turn the conference back over to Mr. Mark Kowlzan for any closing remarks.

Speaker #3: For any closing remarks .

Speaker #4: I'd like to thank everybody for joining us today . And appreciate it and look forward to talking with you all at the end of January .

Mark Kowlzan: I'd like to thank everybody for joining us today and appreciate it and look forward to talking with you all at the end of January. We're very, very pleased with where we are today with the acquisition and looking forward to having a good conversation with you in January with that. Have a good day and have a great holiday period. Take care.

Speaker #4: We're very, very pleased with where we are today with the acquisition and looking forward to having a good conversation with you in January.

Speaker #4: With that , have a good , good day and have a great holiday period . Take care .

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