Packaging Corporation of America

Good morning, everyone. Thank you for joining Packaging Corporation of America's third 2024 Earnings Results Conference Call. Your host will be Mark Colzan, Chairman and Chief Executive Officer of PCA. Upon conclusion of his narrative, there will be a question and answer session. I would now like to turn the conference call over to Mr. Colzan. Sir, please proceed when you are ready. Thank you, Jamie.

Thank you, Jamie. Good morning, everyone, and thank you for participating in Packaging Corporation of America's third quarter 2024 earnings release conference call. Again, I'm Mark Holzan, Chairman and CEO of PCA, and with me on the call today is Tom Hasfurther, Executive Vice President who runs our packaging business, and Bob Munday, our Chief Financial Officer. As usual, I'll begin the call with an overview of our third quarter results, and then I'll turn the call over to Tom and Bob who'll provide further details. And then I'll wrap things up, and we'll be glad to take questions later. Yesterday, we reported third quarter net income of $238 million or $2.64 per share. Excluding special items, third quarter 2024 net income was $239 million or $2.65 per share compared to the third quarter of 2023 net income of $185 million or $2.05 per share. Third quarter net sales. were $2.2 billion in 2024 and $1.9 billion in 2023. Total company EBITDA for the third quarter, excluding special items, was $461 million in 2024 and $388 million in 2023. Details of special items for both the third quarter of 2024 and 2023 were included in the schedules that accompanied our earnings press release. Excluding special items, the 60 cents per share increase in third quarter 2024 earnings compared to the third quarter of 2023 was primarily driven by higher volume of 94 cents and prices in mix, 3 cents in the packaging segment, higher volume in the paper segment for 3 cents, lower freight and logistics expenses of 9 cents, lower scheduled outage expenses for 6 cents, and lower interest expense for 5 cents. These items were partially offset by lower prices and mix in the paper segment for 2 cents, higher operating and converting costs, 51 cents, and higher depreciation expense, 5 cents, and other expenses, 2 cents. The results were 20 cents above our third quarter guidance of $2.45 per share, primarily due to higher volume in our packaging and paper segments and higher prices and mix in the packaging segment. Looking at our packaging business, EBITDA excluding special items in the third quarter of 2024 of $446 million with sales of $2 billion resulted in a margin of 22.2% versus last year's EBITDA of $374 million with sales of $1.8 billion and a 21.3% margin. The operational benefits of our capital spending program and the continued great focus and execution by our sales, customer service, mill and corrugated products plant employees continue to deliver impressive results. Setting new all-time quarterly records for container board production, total box shipments and shipments per day, while meeting the service and quality needs of our customers, would not have been possible without a long-term, well-thought-out strategic capital spending plan and the hard work and dedication of our employees. Even with record production, as a result of the strong demand, we were not able to meet our inventory target at the end of the quarter. With some adjustments we made to the DeRidder Mills scheduled outage plans for this year, plus two less corrugated shipping days during the fourth quarter, and with a lighter-than-average schedule in the first half of 2025, we do hope to reach our target by the end of the year. I'll now turn it over to Tom, who will provide further details on container board sales and corrugated business.

Thanks, Mark. The corrugated products demand strengthened throughout the quarter, and as Mark mentioned, resulted in record-breaking performance for our plants. Shipments per day were up 11.1% over last year's third quarter, and total shipments with one additional shipping day were up 12.9%. Versus the second quarter of 2024, shipments per day were up 5.8% and total shipments with one less shipping day were up 4.1%. Outside sales volume of container board was 45,000 tons above last year's third quarter and 7,000 tons above the second quarter of 2024. Prices and mix came in ahead of expectations as implementation of our previously announced price increases for container board and corrugator products was managed very well. Domestic container board and corrugated products prices and mixed together were up 35 cents per share versus the second quarter of 2024 and flat compared to the third quarter of 2023. Export container board prices were up 3 cents per share compared to the second quarter of 2024 and the third quarter of 2023. I'd like to mention that in addition to ensuring our customers' quality and service needs were met during a record-breaking quarter Our employees did not get complacent. Their focus on continuous improvement regarding customer service as well as efficiency, quality, productivity, and optimization improvements across our packaging segment is relentless and drives our industry-leading results. They fully understand that there are always areas that can be improved upon even with record-setting performance. Now I'll turn it back to Mark.