Packaging Corporation of America (NYSE:PKG) Q3 2023 Earnings Call Transcript

Mark Kowlzan: Thanks, George. Yes, you know, as far as Wallula, as we’ve always said, we’re going to run to demand. And Wallula is just one of the opportunities we have to move the needle on our needs. And so by getting number three started up, you know, over the course of the next couple of weeks, it will fulfill our current needs. And we’ll anticipate that through next year. If demand just holds on the trajectory that it is right now, we’ll need Wallula running through the year and so we will look at the opportunity to supply the marketplace. We’ve got our own internal targets on what we want our inventories to be to minimize transportation and logistics issues. But we can flex the system up and down and as we always have, we will always run to demand. So that’s how I’ll answer that. And then Tom, why don’t you go into the current box cut-up?

Tom Hassfurther: Yes, let me first just kind of tag along with what Mark just said relative to running to demand. You know, that is what we do. And if we didn’t have the demand, we wouldn’t be talking about restarting Wallula, pure and simple. Now to calibrate that a little bit, George, I think you need to really look at our low point was the first quarter of 2023 in terms of demand. Our demand currently is, you know, just in a couple of quarters is now 8% higher than that number and going higher going forward. So, you know, that’s the real reason why we need the, you know, the cut up in — at Wallula. It’s really being driven on the box side of the business more so than anything else. And relative to the bookings and the billings, again, our bookings are up 14% for this at the beginning.

And again that’s, you know, you’ve got to take that number, because we’ve had high numbers and then we come in a little low, you know, we come in significantly lower for the actual quarter, because a lot of these bookings are for quite a ways out. But I think the key here is that the backlog remains incredibly strong, and our cut-up demand is also very strong. So we feel very good about where we are on the fourth quarter and certainly entering into next year.

George Staphos: Thank you very much.

Mark Kowlzan: Next question please.

Operator: Our next question comes from Mark Weintraub from Seaport. Please go ahead with your question.

Mark Weintraub: Thank you. Tom, just following up, you mentioned an 8% reference to your demand now versus, I think, first quarter. So is that sort of what you’re expecting in the fourth quarter on an average day basis? Because I was sort of trying to do a little bit math and again, is that how to think what that number you just mentioned?

Tom Hassfurther: Yes, Mark. I mean, our trend still remains positive. So we’ll be up. And again, I think it’s really important to get calibrated kind of the correct way to some extent. And because when we look at the fourth quarter, compared to the fourth quarter of ‘22, in ‘22 we had an extra day in there given the way the FBA holidays fell. So we were actually up a couple of percent in the fourth quarter of ‘22 over the third quarter of ‘22. And — but then, of course, in the first quarter of ‘23 is when we really hit what I call rock bottom in terms of demand. And as I said, so we’re up just in a couple of quarters, 8%, and we look at that number going up again in the fourth quarter.

Mark Weintraub: Got it. Okay, thank you. And just on the Jackson project, could you just remind us what the end result is going to be? Is it happening in the fourth quarter and the first quarter? And, okay just color on that would be great?