WestRock Company (NYSE:WRK) Q1 2023 Earnings Call Transcript

David Sewell: Yes, Mark. Sorry, if I wasn’t clear. So if we look at how we exited Q1 year-over-year, we’re seeing a slight uptick over Q2 year-over-year. But we do still see the volume down.

Mark Weintraub : Okay. Thank you. So I mean — and also just on the Global Paper, I assume that’s pretty much containerboard. Is that fair to say as opposed to the Consumer Packaging grades?

David Sewell: That is correct. Our paperboard sales were actually up sales-wise year-over-year.

Mark Weintraub : And can you share with us at this point what percentage of your — maybe in the prior quarter, what percentage of your containerboard production was going into the export market?

David Sewell: So if you look at in typical environment, it’s usually about in containerboard, it’s about 75% domestic, 25% export. And then we just saw the dramatic softness more on the export side. And again, just to reiterate, it wasn’t lost business. It wasn’t anything other than was a really tight market in 2022, as you know. A lot of our global export customers were getting as much inventory as they could with the tight market. They saw a lot of softness last quarter with their customer base, so they were just had over inventory. And when you compare our containerboard customers to our corrugated customers, I would say, we’re pretty much toward the end of inventory rebalancing on that side of the business. But in our containerboard business, they’re a little further behind. So that’s just where we wanted to get a little bit better visibility in the full year.

Mark Weintraub : Okay. And then just lastly, you, Alex, I think, mentioned kind of a number of actions that you were looking at to improve on cost performance, et cetera. One thing I didn’t hear was anything — any additional potential action on the footprint? Are you, at this point, satisfied with the footprint, or might it make sense to be looking at additional footprint actions?

David Sewell: Yes. So consistent to what we said back at Investor Day and our actions in 2022, we are going to be continuing to optimize our footprint. As you know, we took action last year with the closure of St. Paul in Panama City, the sale and divestiture of our URB mills and RTS stake. And so we do want to continue to improve our vertical integration. We’ll continue to optimize our footprint, especially where we maximize our CapEx for returns. And we’ll continue to do that. But again, this is a cyclical business. We think we’re kind of near or at the bottom of the trough. So we think the upside and everything our customers are telling us for this as we get through the year, it’s going to continue to improve. So we’ll balance all of that in our supply with our customers’ demand.

Mark Weintraub: Appreciate the details. Thank you.

David Sewell: Thanks, Mark

Operator: Our next question comes from George Staphos from Bank of America. Please go ahead.

George Staphos: Hi, everyone. Good morning. Can you hear me okay?

David Sewell: Yes. Good morning, George.

George Staphos: Thanks for all the details and the commentary. So I guess the first question I had for you, one of the things we noted in the slide is it looks like your maintenance downtime schedule, the tonnage that you have out is lower in the third quarter than you previously had been guiding to. Correct me if I’m wrong in that regard. But if there is a change that’s worth noting, what’s going on there relative to your schedule and what’s the impact in terms of earnings?

David Sewell: Yes. George, there’s no material change in our scheduled maintenance downtime. I believe in third quarter, we have 127,000 tons, which I believe is consistent with where we’ve been. But if that’s different, we’ll look into it and — we can follow.

George Staphos: I think you’re at $165 million in the last slide. So I was just checking if there’s anything notable there, that’s all.