International Paper Company (NYSE:IP) Q4 2023 Earnings Call Transcript

Anthony Pettinari: Okay. That’s very helpful. And then I’m just curious, on the go-to-market initiatives, have you changed anything around incentive structures, how the sales force is compensated or how box plant managers are compensated. It sounds like there’s sort of an asset under investment problem that maybe you’ll turn the corner on this year. I’m just wondering if there’s been a real change in incentives and understanding it’s maybe difficult to talk about that in too much detail on the call. But just wondering if that’s a significant component of the go-to-market initiative?

William Hamic: It is a significant component. Some hard to talk about, but I think some pretty easy, which is from a soft incentive standpoint, does everyone understand the strategy? Do they understand the metrics that we’re going to focus on? Like, I talked about service and profitability and capital effectiveness. That’s very much underway. And I would say, in many cases, complete. You are correct. We’ve changed the sales compensation. And so far, any time you change compensation processes, you can always have a little bit of noise so far. It is exceeded our expectations, and I think exceeded the expectations of the people in the field. So I feel very good about that. But you bring up a very good point. Executing the strategy is not in a silo. It’s across the business. Everything has to be aligned.

Operator: [Operator Instructions]. Next, we’ll go to the line of George Staphos from Bank of America.

George Staphos: My remaining question I just wanted to piggyback on what Anthony was getting at. So obviously, there’s capacity, there’s capabilities, there’s technology, but do you not only need to address, as you discussed, incentives with sales, but do you need to maybe add more people, more feet on the street in terms of executing what you hope to do and go to market with box and corrugated or not? And what would be the reasons why? The related question, again, I’ll stick to 2, and just being mindful of the time. When you look at your end markets and your customers historically, IP has been with larger account and national account businesses. Do you think those customers because they’re more sophisticated potentially, will be more able to understand the KPIs and the whole process that IP is now bringing in terms of this go-to-market or you think that will be perhaps across your end markets a little bit more challenging relative to your local account business, and how you see your end markets over time evolving with a new go-to-market where you get larger with local account or larger with larger accounts?

William Hamic: Good question. I’ll see if I can address it. So I would start with a number of salespeople. You’re absolutely correct. We need a significant number of new salespeople. We’re making progress in that space. And I can tell you the compensation plan has made our positions much more attractive than it has been in the past. So we feel pretty good about that. In terms of the local versus national, I think it would be — it kind of gets back to my local versus national company in terms of box plants that it really depends on the customer. We’re going to have some customers that are professional buyers and they’re going to look at these metrics one way and local customers. I would say this, that we expect to grow higher-margin local customers.

And we expect to keep and grow our national customers. Our leaning is more of a balance and not to run too hard in one direction, but to really evaluate the profit equation as we make those decisions. So you’ll see some rebalancing.

Operator: I’ll now turn the call back over to Mark Nellessen for closing comments.

Mark Sutton: This is Mark Sutton. Thank you, operator. I’ll go ahead and wrap up. I want to thank everyone for your time today, for your continued interest in International Paper, and we look forward to updating you on our progress our next call at the end of the first quarter, we’re already in the second quarter — for the end of the first quarter call. So thanks, everyone, for joining us today.

Operator: Once again, we’d like to thank you for participating in today’s International Paper’s Fourth Quarter 2023 Earnings Call. You may now disconnect.