Packaging Corporation of America

Thank you, Holly.

And good morning, everyone, and thank you for joining us today. I'm Mark Holzan, Chairman and CEO of Packaging Corporation of America, and with me on the call today is Tom Hasfurther, Chief Executive Vice President who runs the packaging business, and Bob Munday, our Chief Financial Officer. I'll begin the call with an overview of our fourth quarter and full year results, and then turn the call over to Tom and Bob who'll provide more details. I'll then wrap things up, and we'll be glad to take questions. Yesterday we reported fourth quarter 2020 net income of $124 million or $1.30 per share. Excluding the special items, fourth quarter 2020 net income was $127 million or $1.33 per share compared to the fourth quarter of 2019's net income of $163 million or $1.71 per share. Fourth quarter net sales were $1.7 billion in both 2020 and 2019. Total company EBITDA for the fourth quarter excluding special items was $293 million in 2020 and $335 million in 2019. Fourth quarter net income included special items of $3 million primarily for facilities closure and restructuring costs. In addition, we also reported full-year 2020 earnings excluding special items of $550 million, or $5.78 per share, compared to 2019 earnings excluding special items of $726 million, or $7.65 per share. Net sales were $6.7 billion in 2020 and $7 billion in 2019. Excluding the special items, total company EBITDA in 2020 was $1.23 billion compared to $1.45 billion in 2019. Details of the special items for both the fourth quarter and full year 2020 and 2019 were included in the schedules that accompanied our earnings press release. Excluding special items, the 38 cents per share decrease in fourth quarter 2020 earnings compared to the fourth quarter of 2019 was driven primarily by lower prices and mix in our packaging segment of 30 cents, the paper segment five cents, lower volumes in our paper segment of 27 cents, and higher scheduled maintenance outage costs of eight cents. High demand for trucks due to low inventories along with driver shortages and rail rate increases drove higher freight expenses of seven cents and our tax rate was five cents per share higher, primarily due to some of the benefits we had in 2019 that were not repeated in 2020. These items were partially offset by higher volumes in our packaging segment of 40 cents per share and excellent management of costs during the quarter, which resulted in lower operating costs of one cent and lower other costs of three cents per share. Looking at the packaging business, EBITDA, excluding special items in the fourth quarter of 2020 of $303 million with sales of $1.54 billion resulted in a margin of 20% versus last year's EBITDA of $303 million and sales of $1.46 billion or a 21% margin. For the full year 2020 packaging segment EBITDA excluding special items was $1.2 billion with sales of $5.9 billion or 21% margin compared to full year 2019 EBITDA of 1.3 billion with sales of $5.9 billion or 22% margin. Demand in our packaging segment remained very strong as sales volumes in both the container board mills and the corrugated products plants set all-time records. Although we were able to replenish some inventory during the quarter by postponing a large discretionary outage at the Derrida Mill and utilizing the Jackson Mill for additional containerboard production, we again ended the period with inventory levels lower than planned and at a new low from a weeks of supply standpoint due to much stronger than expected demand. As we mentioned on last quarter's call, during the fourth quarter, we did begin producing high performance virgin liner board on the number three machine at Jackson, Alabama, to help meet the continued strong demand from our box plant customers and also to build some much needed inventory prior to the year end. The machine's capabilities met our expectations for the quarter, producing excellent quality, lightweight, high performance grades for the months of November and December. Although, as we said previously, these tons are currently at a very high cost, we were able to refine our previous studies and assumptions in order to more accurately estimate the future capital investment and process changes required in a phased approach to fully utilize the potential of the mill to produce container board at an optimal cost and quality. In order for us to address our strategic integrated container board supply needs capable of providing the necessary runway to grow our downstream box plant demand, this analysis, along with other options we've been evaluating, will be reviewed by the Board of Directors in our February meeting. We'll then be able to discuss this further with you. I'll now turn it over to Tom, who'll provide more details on container board sales and the corrugated business.

Thanks, Mark. As Mark mentioned, our corrugated products plants established new all-time quarterly records for total box shipments up 9.9% compared to last year's fourth quarter, as well as shipments per day up 11.7% compared to last year. Said another way, although there were three less shipping days this quarter compared to the third quarter, our total fourth quarter shipments exceeded the third quarter by 2.2%. For the full year, annual corrugated shipment records were set as well, both in total and per day, up 5.8% and 5.4% respectively, with one more shipping day compared to 2019. Outside sales volume of container board was 16,000 tons below last year's fourth quarter as we ran our container board system to supply the record needs of our box plants. Domestic container board and corrugated products prices and mixed together were 31 cents per share lower than the fourth quarter of 2019 and down 11 cents per share versus the third quarter of 2020 primarily due to a less rich mix as the graphics and point of purchase display business as well as the produce business in the Pacific Northwest tails off during this period. Export container board prices were a penny per share above both the fourth quarter of 2019 as well as the third quarter of 2020. As expected, late in the quarter, we began to see the initial benefit of our recently announced packaging segment price increases. While we don't comment on forward pricing specifics, we would expect to realize the vast majority of the increases during the first quarter of 2021. I'll now turn it back to Mark. Thanks, Tom.