PCA(US:PKG)2023-10-24 15:28Financial Data and Key Metrics Changes - The company reported a third quarter net income of $183 million or $2.03 per share, down from $266 million or $2.83 per share in the same quarter of 2022 [8] - Third quarter net sales were $1.9 billion in 2023 compared to $2.1 billion in 2022 [8] - Total company EBITDA for the third quarter excluding special items was $388 million in 2023, down from $477 million in 2022 [9] Business Line Data and Key Metrics Changes - Packaging segment EBITDA excluding special items was $374 million with sales of $1.8 billion, resulting in a margin of 21.3%, compared to last year's EBITDA of $467 million with sales of $1.9 billion and a 24.1% margin [12] - The paper segment reported EBITDA excluding special items of $35 million with sales of $158 million, a margin of 22.4%, compared to $33 million and $165 million in sales in the same quarter of 2022 [21] Market Data and Key Metrics Changes - Corrugated product shipments per workday were up 1.9%, while total shipments were down 1.3% compared to last year's third quarter [16] - Outside sales volume of container board was 33,000 tons above last year's third quarter and 5,000 tons above the second quarter of 2023 [17] - Domestic container board and corrugated products prices were down $1.12 per share compared to the third quarter of 2022 [19] Company Strategy and Development Direction - The company plans to restart the number three machine at the Wallula mill during the fourth quarter to bring inventories to desired levels [14] - The company is focused on continuous improvement and operational excellence across its mills and box plants to manage costs effectively [45][49] - The company aims to maintain a balance between virgin and recycled fiber production, leveraging its capabilities to flex based on market demands [87][91] Management's Comments on Operating Environment and Future Outlook - Management noted that inventory destocking is behind many customers, leading to improved volume expectations for the second half of the year [18] - The company anticipates fourth quarter earnings of $1.76 per share, despite expected increases in operating and converting costs [29] - Management expressed confidence in strong holiday demand for the fourth quarter [99] Other Important Information - Cash provided by operations during the quarter totaled $339 million, with free cash flow of $250 million [24] - The company repurchased over 286,000 shares during the quarter at an average price of $144.81 per share [25] Q&A Session Summary Question: Can you provide more color on the cadence of shipments during the quarter? - Management indicated that the agricultural business is expected to have a good season, which will contribute positively [37] Question: What are the expectations for the Wallula mill restart? - Management stated that the restart is driven by demand and will fulfill current needs, with flexibility to adjust based on market conditions [51] Question: How do you view the impact of new recycled capacity in the market? - Management noted that there has been virtually no impact from new recycled capacity, as domestic customers prefer PCA for quality and service [88] Question: What is the outlook for 2024? - Management emphasized a disciplined approach to capital spending and plans to continue leveraging cash generated for shareholder value [81]