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International Paper (IP) Q1 2019 Earnings Call Transcript

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International Paper (NYSE: IP)
Q1 2019 Earnings Call
April 25, 2019 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. Thank you for standing by. At this time, we'd welcome everyone to the first-quarter 2019 International Paper Company Earnings conference call. [Operator instructions] It's now my pleasure to turn the call over Guillermo Gutierrez, vice president, investor relations.

Sir, the floor is yours.

Guillermo Gutierrez -- Vice President, Investor Relations

Thank you, Mollie. Good morning, everyone, and thank you for joining International Paper's first-quarter 2019 earnings call. Our speakers this morning are Mark Sutton, chairman and chief executive officer; and Tim Nicholls, senior vice president and chief financial officer. There is important information at the beginning of our presentation on Slide 2, including certain legal disclaimers.

For example, during this call, we can make forward-looking statements that are subject to risks and uncertainties. We will also present certain non-U.S. GAAP financial information. A reconciliation of those figures to U.S.

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GAAP financial measures is available on our website. Our website also contains copies of our first-quarter 2019 earnings press release and today's presentation slides. Relative to the Ilim joint venture and Graphic Packaging investment, Slide 2 also provides context around the financial information and statistical measures presented on those entities. I will now turn the call over to Mark Sutton.

Mark Sutton -- Chairman and Chief Executive Officer

Thank you, Guillermo, and good morning, everyone. We'll begin our discussion on Slide 3. International Paper delivered solid earnings and strong free cash flow in the first quarter. We performed well against a more challenging demand backdrop, especially in our export markets.

Operational performance was strong, we managed costs well and leveraged the strength and flexibility of our system in a high downtime quarter. Overall, input costs were favorable in the quarter with lower recovered fiber cost largely offsetting higher wood cost that were caused by the heavy rainfalls in Southern United States. Taking a look at demand in North America. Box shipments slowed in the first quarter as customers drew down inventories, and we experienced other near-term demand headwinds.

However, we continue to see a favorable macro backdrop, supportive of continued corrugated box growth. Inventory destocking among containerboard and absorbent pulp export customers is playing out as we expected and as we discussed last quarter. We anticipate our shipments to recover as the year progresses. In the first quarter, we generated $440 million of free cash flow, and we returned nearly $400 million to shareholders through dividends and share repurchases.

Continuing with our first-quarter results on Slide 4. EBITDA was $896 million. That's a 4% improvement year over year, which reflects solid operational performance across our three businesses. Our equity earnings were $114 million, including $101 million from our Ilim joint venture and $13 million from our investment in Graphic Packaging.

Free cash flow increased by almost $270 million year over year, driven by higher cash from operations, as well as lower planned capital spending in 2019. Although it's not part of our first-quarter free cash flow, I do want to note that in early April, we received a $237 million cash dividend from Ilim. I'll now turn it over to Tim, who will cover the performance across our business sectors and our second-quarter outlook. Tim?

Tim Nicholls -- Senior Vice President and Chief Financial Officer

Thank you, Mark. Good morning, everyone. I'm on Slide 5, which shows our quarter-over-quarter operating earnings per share bridge. Price of mix were stable in the first quarter with higher average prices in our North American box business, offset by lower export prices and containerboard and cellulose fibers, as well as a weaker mix in Latin American papers.

Volume decreased, driven primarily by lower seasonal demand in North American packaging and Brazil papers, as well as lower export containerboard and pulp shipments as export destocking continued in the first quarter as we had expected. Operations and cost were impacted by economic downtime in the quarter. Mill performance, however, was strong. We managed costs well and optimized our system in a heavy downtime quarter.

Planned maintenance outage expense was $143 million in the quarter, reflecting an increase of $100 million versus the fourth quarter. Input costs were favorable with lower recovered fiber, largely offsetting higher wood. Energy costs were also lower, and distribution cost moderated in the first quarter. Lastly, equity earnings were favorable quarter over quarter.

Ilim equity earnings benefited from stronger operations, as well as a $21 million noncash foreign currency gain in the quarter. So now let me turn to the segments. Starting with industrial packaging on Slide 6. The business delivered $421 million in earnings.

Price and mix were favorable, due primarily to margin and mix in our North American box business, which was partly offset by weaker export pricing. With regard to volume, the first quarter is our seasonally slowest quarter in the U.S. and Europe. In addition, in the U.S.

we experienced weaker box shipments, which we believe is short term in nature. It is mainly driven by customer inventory drawdown and other regional dynamics, such as flooding in the Midwest and a late harvest on the West Coast. Some of these issues continued into April. But as Mark said, we continue to see a favorable economic environment that's supportive of box growth as we move into the second half of this year.

Export containerboard shipments remained weak with customer destocking in the quarter progressing as expected, and we see destocking continuing into April, although at reduced levels. Against this demand backdrop, we had economic downtime in our North American mill system as we managed our production to meet our customers' needs. Production in the first quarter was also influenced by a significant reduction of our in-transit inventory between mills and box plants. Essentially, as the speed in our supply chain increase from the mills to box plants, we've been able to manage the system with lower inventories.

We think that adjustment was completely made in the first quarter. That said, operational performance was strong as we delivered -- as we leverage the strength and flexibility of our system. We managed direct variable cost well by optimizing fiber and energy cost across the system to mitigate the impact of downtime in the quarter. Taking a look at input cost, higher wood was largely offset by lower recovered fiber, while distribution in energy was favorable versus prior quarter.

Our softwood inventories recovered as we exited the first quarter and costs are normalizing. Staying with industrial packaging, we continue to execute our strategy to integrate the Madrid mill. In the first quarter, we completed a box plant swap to further increase our box system density in Spain. In effect, we exchanged the plant located in Northern France for one located in Spain.

Earlier this month, we also announced the acquisition of three converting facilities located in Portugal and France. This acquisition comes as an opportunity related to the EU requirements regarding the clearance of DS Smith's acquisition of Europac. When completed, this acquisition further expands our capabilities and create additional integration value with the Madrid mill. Coming back to containerboard exports on Slide 7, we wanted to give you a sense of what we're seeing in our customers.

Demand in Latin America is good as customer inventories have largely normalized during the first quarter. In Europe, we're seeing the effects of the poor fruit and vegetable winter season, which resulted in high customer inventory levels, as well as weak durable goods production, both of which are important uses of kraftliner. The spring food and vegetable season, however, look strong. Our customers are still managing through high inventory levels, which we expect to play out during the second quarter.

I want to take a moment to discuss Turkey, one of the larger food- and vegetable-exporting countries and an important kraftliner market for International Paper historically. We're facing structural challenges due to the impact of tariffs and a strong U.S. dollar, in addition to weaker demand due to the recession in Turkey, all of which we expect will negatively impact our kraftliner exports to Turkey in the foreseeable future. Within the Middle East and Africa, inventory destocking is progressing as expected, customer demand is reasonably strong, and we expect shipments to improve in the second quarter.

In Asia, demand in China has seen a modest improvement since Chinese New Year as inventories remain high. In Southeast Asia, high customer inventory levels continue to play out and may limit shipments in the second quarter. Overall, destocking is progressing largely as we anticipated with different demand and inventory dynamics by region. Turning to global cellulose fibers on Slide 8.

The effect of pricing mix lowered earnings $11 million in the first quarter. Conditions were largely as expected with a modest improvement in demand for softwood and absorbent pulp following the Chinese New Year. The impact from tariffs and inventory destocking in China evolved as expected. Economic downtime impacted operations and cost in the quarter.

That said, our mills ran well, and we had strong operational performance. We optimized marginal cost for fiber in chemicals across the system. Looking at the quarter, we had good execution in a challenging environment that is playing out largely as anticipated. Longer term, we feel good about absorbent pulp demand, and more importantly, about our unique capabilities to provide value to customers.

We shared with you some of these advantages previously. It's our innovation capabilities and unmatched regional service model that allows us to understand and develop fluff fibers for different consumer and cultural preferences, all of that being backed up by a multi-mill system that has flexibility. Turning now to printing papers on Slide 9. The business performed well with strong results in North America and Europe.

Price and mix gains in North America and Europe were largely offset by weaker geographic mix in Latin America. Lower first-quarter volume was driven by seasonality in Brazil and lower exports to the rest of Latin America. Operations in costs were higher, attributed mostly through expected seasonal cost in North America. And input costs were favorable with cost mitigation across the system offsetting continued hardwood cost pressure in North America due to heavy rainfall across the Southern U.S.

Overall, a solid first quarter and an $80 million year-over-year improvement in earnings. Looking at the Ilim results on Slide 10. The JV delivered solid commercial and operational performance in the first quarter with operating EBITDA of $254 million. International Paper's equity earnings were $101 million and benefited from a noncash foreign exchange gain on Ilim's U.S.

dollar-denominated net debt, of which IP's after-tax portion was $21 million or $0.05 per share in the quarter. As Mark shared with you earlier, we received a $237 million cash dividend in early April. This brings IP's total cash dividends received from Ilim to about $900 million since the start of the joint venture. Turning to Slide 11, I'll cover our second-quarter outlook.

Overall, we expect stronger seasonal demand across our businesses as we execute our highest planned maintenance outage quarter of the year. So now let me take you business by business. Starting with industrial packaging, we expect the effect of price and mix to lower earnings $20 million due mostly to export pricing. Volume is expected to improve by $25 million on seasonally stronger volume in North America with one less shipping day.

Operations in cost are expected to improve by $55 million due to improved fixed cost absorption in North America, as well as better ops and cost in North America and Europe. Staying with industrial packaging, maintenance outage expense is expected to increase by $37 million and input costs are expected to improve by $40 million on lower wood and recovered fiber costs, as well as improved energy and distribution costs. In global cellulose fibers, we expect the effect of price and mix to lower earnings $15 million and volume to improve by $5 million in the second quarter. Operations and costs are expected to remain stable with improved fixed cost absorption, offset by higher expected manufacturing spending in the quarter.

Maintenance outage expense is expected to increase by $32 million and input costs are expected to improve by $5 million on lower wood costs. In printing papers, we expect to see a $5 million benefit on the recent price increase in North America. Volume is expected to improve $20 million on stronger seasonal demand in North America and Brazil. Operations and costs are expected to be unfavorable by $5 million on several one-time items, and maintenance expense is expected to increase by $44 million.

Let me add a comment on our planned maintenance outages for 2019. The second quarter is our highest maintenance outage quarter at $256 million. So across the system, we will have completed 75% of planned maintenance outages during the first half of the year. And lastly, under equity earnings, you will see the outlook for our Ilim joint venture and graphic packaging.

I'd note that Ilim second-quarter outlook includes a $15 million increase in maintenance outage expense and repairs versus the first quarter. Taking a look at our full-year outlook on Slide 12. We continue to see a favorable macro environment in packaging for North America, and we expect exports to continue recovery. Our printing papers business is performing well with realization of price increases in North America.

For the full year, we're projecting EBITDA of $4.2 billion to $4.3 billion and free cash flow of $2 billion. We're using free cash flow for debt reduction and cash to shareowners. We're committed to strong and sustainable dividend and have just over $2 billion of share repurchase authorization remaining after the first quarter. In the quarter, we repurchased 180 million shares at an average price of $45.60.

All in, we returned just over 85% of free cash flow to shareholders in the first quarter through dividends and share repurchases. So with that, let me turn it back over to Mark.

Mark Sutton -- Chairman and Chief Executive Officer

Thanks, Tim. As I sit here and think about the start to our year, what really stands out to me is that we delivered another quarter of solid performance and strong free cash flow. Once again, International Paper demonstrated the strength of our businesses and our ability to deliver solid financial results under varying market conditions. Looking ahead, we see a favorable economic backdrop for our products as we navigate through any near-term conditions.

We built a resilient company that allows us to succeed and create value for our shareholders by investing in our people, our customers and our operations. And we're doing what we said what we would do, growing free cash flow, maintaining a strong balance sheet and returning cash to shareholders. And with that, we're ready to take your questions. 

Questions and Answers:

Operator

[Operator instructions] Our first question will come from the line of the Debbie Jones, Deutsche Bank.

Debbie Jones -- Deutsche Bank -- Analyst

My first question is on domestic box demand. You called out weather, and you have some destockings. Was that the majority of the shortfall versus your expectations? And then I was hoping you could comment on the confidence you have that you do start seeing the improvements in April, whether it's kind of broader macro or if there are some underlying things around certain segments that encourage you?

Mark Sutton -- Chairman and Chief Executive Officer

Great question and probably the $64,000 question. Look, on April, we saw some things that were sort of one-off like the delayed harvest in California. We know they're out of drought. We know the crops are there.

The harvest is coming in, and it's going to start later. So we feel good about that. And in our supply chain visibility to customers, we have seen the destocking rate begin to slow down, so we feel pretty confident about that. Longer term, when you look out for the rest of the year, Debbie, we look at a number of macroeconomic indicators that we feed into a model that gives us a sense of a range of box demand.

And those macroeconomic models that we use and those indicators are still by external agencies being forecast to be relatively firm. So we feel good about solid conditions going forward and really a better second half as we look at the general economic indicators that correlate the most with box demand.

Debbie Jones -- Deutsche Bank -- Analyst

OK. Thanks. And my follow-up question is just on the full-year guidance. Can you just talk about what drove the reduction? I think some of it must have been the $10 cut in PPW on containerboard.

And then can you comment also if you actually saw that in the market? And then how are you going to correlate that with no change to the cash flow guidance?

Tim Nicholls -- Senior Vice President and Chief Financial Officer

We have -- Debbie, it's Tim. We thought we had headroom in free cash flow. We called that out on last quarter's call, and so we feel really good about the $2 billion being solid at this point. And in terms of the guidance, you're right.

It is acknowledging that there was a $10 published down but also acknowledging that there were some additional weakness in export markets than what we were thinking about three months ago.

Operator

Our next question will come from the line of Gabe Hajde from Wells Fargo Securities.

Gabe Hajde -- Wells Fargo Securities -- Analyst

I guess first one might start with Ilim. It seems like operations and shipments and everything there seems pretty strong. Can you comment at all about sort of the trajectory or outlook for the full year in that business and then what you're thinking about or what the organization is thinking about in terms of expanding capacity? There's been some reports out there that suggests they're looking to make an investment over the next couple of years.

Mark Sutton -- Chairman and Chief Executive Officer

Gabe, we -- I don't think we heard the first part. Were you talking about Ilim?

Gabe Hajde -- Wells Fargo Securities -- Analyst

Yes, Ilim.

Mark Sutton -- Chairman and Chief Executive Officer

Yes. Thanks, Gabe. Ilim -the thing about Ilim is we've got the best cost of operational position in the world to serve the largest-growing market for softwood fibers that are targeted toward tissue, towel and packaging. And that, coupled with the absorbent business that we have in the U.S., gives us a really strong position.

But specifically for Ilim, they're continuing to see growth. They see the same thing that everybody sees in the fibrous market in China. China's economy has slowed down a little bit. There has been some pricing pressure, but Ilim is continuing to grow.

You can see the EBITDA performance and the performance on the IP side of the shareholder arrangement with the dividends and equity earnings. Ilim also has the ability to adjust their cost structure like we do in North America through a sophisticated approach to how the variable as much of what looks like fixed cost as possible, and they're continuing to make progress on that. So I think the future is really bright for Ilim. As far as future development, there are some projects that have been publicly talked about.

That's normal in that part of the world to start talking about possible investments to get everybody lined up all the constituents, cities, governments, banks, all of that type of thing. But to this point, there's nothing formally approved about the next phase of pulp production. We have been doing some things for the packaging business in Russia and in Eastern Europe around containerboard and some box, but there's a bright future for Ilim as the primary softwood fiber source for the Asian market.

Gabe Hajde -- Wells Fargo Securities -- Analyst

OK. Thank you. And then switching gears, I guess, to the cellulose fibers business. There was discussion on the prior-quarter call about a commercial decision, sounded like maybe some destocking also.

Can you update us on how that's progressing through, I guess, the first-half year and then visibility into that getting a little bit better maybe on the volume front in the back half?

Mark Sutton -- Chairman and Chief Executive Officer

I think that's exactly our view. We had two main causes for our volume shortfall, if you will, on the absorbent side. And that is the customer decision we talked about last quarter that you referenced. And also, if you recall, we were talking about some uncertainty about Chinese demand that was in the Chinese New Year period, whether there was going to be a snapback in demand post Chinese New Year or a gradual return.

We see more of the gradual return. Outside of China, though, we have really good demand in the other regional markets, in parts of Europe, in Latin America, in the rest of Asia. So we think that when everybody looks at what's happening in China, we see certain things starting to turn, some economic stimulus starting to be injected. We feel pretty good about the ability to be on the volume recovery plan we had that we described a quarter ago as we go through the year.

I hate to keep saying second half. But in this case, China is such an important market. As they start to come out of the relative slowdown they had last fourth quarter and the beginning of this year, we'll see the benefits of that in our cellulose fibers business.

Operator

Our next question will come from the line of Chip Dillon, Vertical Research.

Chip Dillon -- Vertical Research -- Analyst

First question is you mentioned, Tim, the Ilim dividends of total $900 million. I seem to recall your investment in Ilim has been all in less than that, I think, when you did that investment 10, 12 years ago. Could you just update us on that, please?

Tim Nicholls -- Senior Vice President and Chief Financial Officer

Yes. All in, it's roughly $685 million, Chip. So now we've recovered more than what we have in the investment.

Chip Dillon -- Vertical Research -- Analyst

OK. That's great. Thank you. And then second question, can you just update us on the timing of the conversion that you're planned at the Riverdale mill? I know the last comment was a little bit -- there was a bit of a range of date.

I think first half or first quarter or first half, I think, were the terms. Where does that stand now? And are you -- because of the incremental looseness in the market, not to mention the strength in white paper, are you considering maybe pushing that to the second half or just some other period?

Mark Sutton -- Chairman and Chief Executive Officer

Chip, that's a very good question. And we did talk about it, I think, last quarter. Just a quick reminder. On the Riverdale conversion, it's bleached white top, high-performance liner, something that we currently don't make that exact product in our current mill portfolio.

So that project is about giving IP capability in the box markets for the high print segments. And so what we talked about was a little bit of a range. Right now, what we're planning on is first quarter of 2020, and it's because of the product that we're going to make at Riverdale. It's not more of the same type of containerboard that we're already making.

We don't know. Obviously, no one knows exactly what supply demand and what our order book is going to look like. But we're quite confident that when we bring that product on, if we have to adjust our output in other ways in our system, then we've got the capacity to do that based on our order book. And if you remember when we brought Valliant on, that was also a different product.

It was lightweight, medium that we had sold basically after the Temple acquisition that we were bringing some of it back in-house. We brought that on in a period where we didn't need 100% of our capacity to meet our box demand, and we just adjusted the output of our system. So I'm quite confident that we can slot this capacity in because it's a different product than we're making. It's a product we need.

Chip Dillon -- Vertical Research -- Analyst

Understood. And last question. I know when we met with Tim when he became CFO last fall, Tim you mentioned in New York, you wanted to make buybacks something that have a certain cadence to it. And certainl, we've seen that in the last several quarters.

And I guess, Mark, as we look ahead, one sort of interesting track record of point that we could see IP achieve is if they raise the dividend again this year, whether it's just our $0.05 a quarter or something, I think that would be the 10th year in a row. I've looked back as far as the 1930s, I can't quite get back to 1898, but I don't think there were ever more than two years in a row where the company raised the dividend until the streak began nine years ago. And when I look around the marketplace and see certain stocks that have had a track record, you see certainly premium valuations. Is that something that is important to you as you think about capital allocation going forward, having an annual increase of some sort?

Mark Sutton -- Chairman and Chief Executive Officer

You mentioned the string here of annual increases, so that sort of speaks for itself. But what I would say is we recognize the role -- increasingly, we recognize the role we play in different types of investor's portfolio. So as a materials company, we have investors that need and want short- to medium-term returns, and you can do that with share buybacks and dividends. We have other investors that are willing to use us as part of their long-term return strategy and obviously in capital-intensive industries, that's an element of our business.

So I'm committed to balance capital allocation, and we're trying to show through our actions that we mean it. And so the dividend and the dividend improving over time, governed by, Chip, our target and guideline of 40% to 50% of free cash flow. So the reason we talk about free cash flow and the reason I'm excited about our ability to continue to generate $2 billion and to continue to grow it as it allows us to meet the expectations of that type of investors that put International Paper in their portfolio.

Operator

Our next question will come from the line of Mark Connelly, Stephens Inc.

Mark Connelly -- Stephens Inc. -- Analyst

Two things. Do you think that the white paper market has fully adjusted now to where it's going to be between roll and cut size. I'm trying to think about your own reoptimization given the opportunities that have come up. And with the higher prices that we're seeing, how are you thinking about imports not just in the stock-out period here, sort of over the next couple of years?

Mark Sutton -- Chairman and Chief Executive Officer

Mark, on the mix, between the roll, various printing grades and cut size, we have a strategy, and cut size is a little bit different than some of the market and still believing that there's value in a branded continuum of products, and we think that does play into our results. So that's obviously an important part of it. It's difficult to predict the roll side and the roll printing side, just general offset paper has had fits and starts with its decline rate. But I think, right now, we see some stability in the split between the printing paper, roll side and the cut size side.

Obviously, if you look at our asset base and what we have in North America, in particular, less focused on that business. They're great mills, but there's only a few of them. And they lean more toward the cut size sort of branded markets. So I think you can see just by basis of what we have and what's happening in the market, that's where we lean more.

As far as imports, we obviously, look at data around markets and best destinations and we factor all of that into the strategic part of our pricing kind of decisions and we'll continue to do that.

Mark Connelly -- Stephens Inc. -- Analyst

OK. And just one quick question. You mentioned pulp export destocking. Do you have a view on where we are in that process? And has it had a significant impact in your mix near term that might be changing as we finish it up?

Mark Sutton -- Chairman and Chief Executive Officer

So I think we are past the midpoint of destocking. If you look at inventory days on softwood pulp, they're still high. They're higher than balance. But they're not rising.

And so I think the question is going to be a combination of demand and other fiber choices, how fast we can get back to in an industry that's more balanced on inventory. Temporarily, that usually means, for us, if we took a hit in absorbent, as I described, because of some of our commercial decisions, sometimes we fill that with non-absorbent softwood pulp, but it's not a material change in our mix. We're still working toward an 80% plus mix of absorbent to nonabsorbent softwood fiber. And we're still solidly in the mid to high 70s.

So it's a few percentage points. It's temporary, and we'll be back on the track toward getting into the 80s based on the comments Tim made about some other products that we have. Some of the patents and the customer base is pretty rich as far as diversity of needs in parts of the world.

Operator

And our next question will come from the line of Steve Chercover, Davidson.

Steve Chercover -- D.A. Davidson -- Analyst

First one, hopefully it's easy. You used to provide us with your U.S. industrial packaging EBITDA margins, and I'm wondering if you have that handy for old times' sake.

Tim Nicholls -- Senior Vice President and Chief Financial Officer

Yes. Something that Guillermo can follow up. I don't have it right in front of me, Steve.

Steve Chercover -- D.A. Davidson -- Analyst

OK. I'll do that. So getting a bit more meaty. Obviously, you're running your containerboard systems to demand.

How do you characterize your own inventory situation at present? And how long do you think it would take for the broader industry to get back into balance?

Mark Sutton -- Chairman and Chief Executive Officer

Yes. I think we're kind of where we would like to be in terms of inventory levels as we look at the demand that we had in the first quarter and what happened with the transportation network and tried to reference that in my comments earlier. But a big portion of the downtime that we took was just adjusting to the speed of the transportation network and how it's working now versus how it worked over the past few quarters. So I think we ended in the quarter roughly in line with where we think we need to be and but we manage it week to week and month to month.

Steve Chercover -- D.A. Davidson -- Analyst

OK. And similar question on cellulose fibers. You took your first economic downtime in several failure. So was that a function of the commercial decision that you made? And also, was that downtime anticipated incorporated into your commentary at the end of January?

Mark Sutton -- Chairman and Chief Executive Officer

So I think it's the two things that I talked about: the dislocation related to the commercial decision we made and the lack of timely replacement of that volume through the latter part of the fourth quarter and into the first quarter, so the commercial decision, plus, we didn't see exactly the slowdown in China coming for some of these types of products. And that created a little bit additional to that. So in order to balance our overall profitability, customer service and costs, we decided to adjust the output of our system. And again, when you think about our system, that's the cellulose fibers comment, but some of these mills were in the same fiber basket as our containerboard mills and even our printing paper mill.

So we manage the inputs those facility enterprisewide, and we manage the output from those facilities, i.e., transportation enterprisewide and then we look at the customer commitments we have. And we believe the results you see in the first quarter and the variable cost management is a combination of all of those decisions we made, which, in this case, resulted in some economic downtime in the cellulose fibers business, partly related to the two issues I talked about, partly to optimize our overall cost position in a less-than-full operating environment.

Steve Chercover -- D.A. Davidson -- Analyst

Yes, but I mean, I think you actually exceeded our expectations going from the bridge that Tim gives us for each of the segments. So I guess you are managing that downtime in a very efficient fashion.

Mark Sutton -- Chairman and Chief Executive Officer

Well, we worked very hard at it. It's a very analytical process with some automated tools. I've described before. It's been a while since I've had to describe it thankfully.

But we've gotten better at it. And the team's really worked well across businesses to really optimize quickly the variabilization of a lot of our cost that sometimes can be sticky when you don't have a robust sales and operation planning process and the ability for your manufacturing and supply chain teams to have faith that they can make this change in an input based on the output of that mill and not get caught without something. And we're just continuing to get better at that and we challenge ourselves to operate like last year when everything was wide open and also operate top-notch when things aren't wide open.

Operator

And our next question will come from the line of Mark Weintraub, Seaport Global Securities.

Mark Weintraub -- Seaport Global Securities -- Analyst

So hoping to get a bit more color to understand the improved fixed cost absorption you're expecting to see in industrial packaging. And I'm sure part of it -- a lot of it relates to likely less economic downtime. And so I wanted to kind of, if we could parse through some of that. Tim, I think you talked about the transportation network.

And can you give us a sense as to how much downtime might have been related to that because presumably that is now done, and we don't have to worry about it on a go-forward basis. Is that fair?

Tim Nicholls -- Senior Vice President and Chief Financial Officer

Yes, Mark. It was roughly one third of the total economic downtime that we took.

Mark Weintraub -- Seaport Global Securities -- Analyst

OK. Great. And then would it also be fair to assume that a significant portion was also related to destocking in the export market? And if you maybe could give us color on the pulp business. Where do you think we are in the destocking with export? And I realize there are moving factors with underlying demand, maybe changing a little bit, but maybe more color on how much your exports were down in the first quarter.

And if it's reasonable, if you can give us a sense for the full year, how much you would think your exports might be down?

Tim Nicholls -- Senior Vice President and Chief Financial Officer

Yes. I won't go into quantifying that since it varies region by region. What we see right now, and I called out some of this, Europe is still in the process, and it's a combination of a weaker winter season but we think a stronger spring season as we go into the new agricultural season in Europe. Latin America feels better, but there's still some inventory destocking that has to take place in Southeast Asia.

So we see it moderating and flattening out in the second quarter and then recovering in the third and the fourth quarter is a general comment across all of our containerboard exports.

Mark Sutton -- Chairman and Chief Executive Officer

The only thing I would add, Mark, is that Tim made a comment about Turkey, and that's an issue because some of the retaliatory tariffs. And I don't know -- no one knows if that's how much of a seasonal issue. It will get solved at some point. But we are a major supplier into that market for their kraftliner needs.

We have box plants there, and it's a challenge right now. So that demand dislocation or the ability to ship there looks like it's going to persist for a while until some of these other global trade issues get worked out on steel and aluminum and other things. So we'll just have to factor that into our output plans.

Tim Nicholls -- Senior Vice President and Chief Financial Officer

Yes. For sure. I mean, that is one of our largest export markets as a country.

Mark Weintraub -- Seaport Global Securities -- Analyst

All very helpful. And lastly, announcement by Klabin, I think it's last week. Any thoughts? Obviously, it would be the first large-scale eucalyptus-based containerboard project. You're down in Brazil.

Youknow the containerboard markets better than anybody. Any thoughts you would share with us?

Mark Sutton -- Chairman and Chief Executive Officer

You know, the Klabin, I think, information that came out is not new. It's been talked about for a while as part of this large fiber project they had. We don't make containerboard out of that fiber. We make printing papers out of that fiber, so we don't have any real-life information to share about, whether how good it's going to be or anything like that.

But we'll learn what happens as they try to bring that into the market. It's a really short fiber, but boxes are engineered systems. And sometimes, you can use different products in different places in the box construction. We do that all the time with fiber mix.

Our Madrid mill has a laboratory for that different types of fibers and different layers, so we'll see. But to us, it was just confirming what was already out there. Just the numbers and the amounts were kind of specific.

Operator

Our next question will come from the line of Adam Josephson, KeyBanc.

Adam Josephson -- KeyBanc Capital Markets -- Analyst

Tim, one on the guidance, your second quarter guidance implies, I think, first-half EBITDA will be flattish, and then second half will be up about 100, just based on the full year. Can you just -- and I don't think maintenance will be any different year on year, 1H versus 2H. So can you just help me with some of the moving parts there, why you think the year-over-year comparisons will be much better in the second half than the first half? Is it better U.S. box volume? Is it something else? I'm just trying to understand that a bit better.

Tim Nicholls -- Senior Vice President and Chief Financial Officer

Yes. I think -- well, compared to what we think we're going to see in the first half, I think box volume will be better. I think we also are anticipating some of the destocking that we've talked about in export containerboard moderating in the second quarter and then beginning to grow again in the third and fourth quarter. On the pulp side, again volume related, we'll see a pickup in volume and a better mix of as we go through the third and fourth quarter that we've experienced in the first two quarters of the year.

So some of the those things are what we're expecting to play out and with pretty good confidence that, unless there's a dramatic shift in terms of the economic forecast we see in crop harvest and things like that, we think those are reasonable expectations.

Adam Josephson -- KeyBanc Capital Markets -- Analyst

Thanks for that. And just on demand for either of you, just a two-part question. Can you give us your April box demand just in the first couple of weeks of the month if I missed that? And somewhat related,just on the e-commerce. In late '16 and throughout '17, there was a surge in box demand, and there was a great deal of discussion about the e-commerce benefit.

And as demand has slowed in the last year or so, there's been discussion about a potential adverse impact from e-commerce as Amazon and others are looking to reduce their packaging. Can you just share your thoughts as to what you think the e-commerce impact has been in recent months and what you expect in the months to come along those lines?

Tim Nicholls -- Senior Vice President and Chief Financial Officer

So on the e-commerce, we see it continuing to grow. There's a lot of things that get bigger over time. Growth rates tend to go down but we're still seeing, not only from our largest e-commerce customer, but we have a lot of others that are growing rapidly, too. So we're still very bullish on the e-commerce and where it goes in 2019.

I mentioned without getting into specific numbers, I mentioned demand in April as seeing a continuation for March into April. It's moderated a little bit as we've gotten further into the month, but I think we're expecting a similar type of destocking pattern against, again, a very tough comp in March and a tough comp in April.

Adam Josephson -- KeyBanc Capital Markets -- Analyst

And sorry. What was the March number, Tim?

Tim Nicholls -- Senior Vice President and Chief Financial Officer

We didn't publish the March number. Talking what we are seeing across the industry in terms of box demand and ours was down. I'm not going to characterize what the number was for a specific month, but we did see weakness as we saw the weather-related events and the destocking that we think took place across our customer base.

Operator

Our next question will come from the line of Dr. Mark Wilde, BMO.

Mark Wilde -- BMO Capital Markets -- Analyst

I wondered, first of all, just in light of the downtime in containerboard in the first quarter, can you give us just a rule of thumb in terms of how you think about the cost of downtime in your containerboard system right now?

Mark Sutton -- Chairman and Chief Executive Officer

A rule of thumb for how we think about it. Well, the rule of thumb is a percentage, and it's relatively split of our cost is true fixed cost in the short term. So we try to keep that at all times at an optimal level. And the rest of our cost, we view as variable, even if it's not purely variable cost.

And we have, as I mentioned, on input -- of all inputs, wood, chemicals and everything else and an output of all transportation and supply chain to the customer. We have a supply chain operating model, SAP-based, lots of data visibility. And our goal is to minimize all of that variable cost. And every time we have to go through a period of this type of operation, we've gotten a little bit better at variabilizing more of the cost.

And our people and those systems continue to learn how to manage. And it's about coordination. It's about not looking at it by containerboard or cellulose fibers or printing papers. It's about looking the fiber converters we have, making all three of those products, taking in wood, pushing out transportation and logistics cost and warehousing costs and using chemicals and other things and optimizing that for International Paper.

And that's how we look at it. So that's our rule of thumb, not a specific number, but getting that to the smallest level it can be so that we have the best possible outcome when we're not running at sort of nameplate capacity. I would add, though, Mark, running like we ran in 2018 with virtually maintenance outages and nothing else, it's not actually the optimal way to run our company or to supply our customers the service platform they need. We'll do it when the market indicates we need to do it.

But something like I talked about before, 3% to 3.5% of our productive time for maintenance, planned maintenance and about the same amount for flexibility in the supply chain marginal cost optimization, the ability not to buy expensive wood when we don't have to, that's where we make the highest level of profitability and have the highest margins. And that's not the first quarter, that's more than we would like to see, but that's why we work on that variabilization of our cost structure constantly.

Mark Wilde -- BMO Capital Markets -- Analyst

OK. That's really helpful, Mark. For my follow-up, I wondered if we could just talk briefly about Ilim. I'm mainly focused on this talk about potential containerboard project over there, as well as what your thinking right now in terms of your ownership position at Ilim.

We've talked about this over the last few years about whether you want to take that position up and potentially be able to consolidate Ilim.

Mark Sutton -- Chairman and Chief Executive Officer

So on the ownership position, it's 50-50 right now. We think that's the right answer for this point in time. We have good partners. It's working well.

We have a strong shareholder agreement. Our senior executives make up half of the board, so it's a very collaborative effort. And we think the 50-50, all-in, considering what's going on globally and everything, is the right model for us right now. So we don't see a change in that in the near term.

As far as the potential on containerboard, there's a market, 170 million people in Russia. The market is a good corrugated market. We participated in it in a small way. There's a little more we can do.

And then there's some pockets of kraftliner demand that is theoretically anyway best served with Russian containerboard if you can get the supply chain figured out. There's part of China's fiber needs for brown virgin fiber that can feed in that's also the best place to do that from is there. So we look at those unique markets to that cost structure and that asset base and really that fiber source as really what drives any interest in containerboard that goes outside of Russia.

Operator

Our next question will come from the line of Anthony Pettinari, Citi.

Anthony Pettinari -- Citi -- Analyst

Tim, just following up on Turkey. Is it possible to roughly quantify the size of your business there? And from an earnings perspective, is it accurate to say that this will hit both North American industrial packaging on the export side, as well as the European industrial business?

Tim Nicholls -- Senior Vice President and Chief Financial Officer

Yes. Probably to a lesser degree in terms of the business on the ground in Turkey, and I would expect most of the detrimental impact to be in our export containerboard business. Turkey, it's ranged, but it's been anywhere from 100,000 tons to 200,000 tons. And it depends on the economic conditions in Turkey and a number of other factors.

So it's a big market for us. And given, as Mark said, the tariff structures that have been put on for one, but then secondly, just the underperformance of the economy there, it'll -- we'll work to overcome it. But it's a challenge in the near term.

Anthony Pettinari -- Citi -- Analyst

Got it. And then maybe more broadly on Europe. You ramped Madrid. You made these recent box plant acquisitions.

But obviously, the market has had some issues from a demand perspective. How do you currently think about the timeline for achieving profitability in European packaging, understanding it's not the biggest part of your business, but --

Mark Sutton -- Chairman and Chief Executive Officer

Well, our expectations on our European packaging business is we had, in the past, a very profitable business above cost of capital returns. There's a couple of industry changes and a couple of IP changes that led to our profitability deteriorating, and we have addressed most of those. So we fully expect that business to be profitable throughout as we exit this year and from then on. And we expect it to be a cost to capital returns, a big, big strategic gap for us.

And it wasn't true 10 years ago, but it's true now. It's having basically zero in region integration on these cycled liner, and we have that now. And where we have that now, you draw a circle around the mill in the Spanish box plant system. It's a very good business today.

There's just other issues that we've got to finish fixing through capability of the boxes we can make and the full integration of that mill. And I consider us technically integrated on most of our kraftliner from our U.S. mill systems. There's just a supply chain step called a shipping channel between the production and the usage.

But to me, it's an integrated output for 30% to 40% of our fiber needs there.

Operator

Our next question will come from the line of George Staphos, Bank of America.

George Staphos -- Bank of America Merrill Lynch -- Analyst

Thanks for the details, and congratulations on the operating performance. A couple of questions. First, in terms of pulp markets, recognizing that your business is obviously much more oriented to fluff and different than other business that we would see in the fibers market, there's been this standoff between buyers and sellers, particularly in Asia, going back to the fourth quarter that, in turn, has led to inventories at the producer level rising. And we've talked about this on this call that I think you're now working those down, and buyers inventories being worked down.

Where would you say your customers' inventories are, both in terms of the consolidated cellulose fibers business and also Ilim as we stand here today? Are customers' inventories relatively normal at this juncture, Mark? And relatedly, on pulp, you mentioned there were some downtick in demand that caught your operations a little bit by surprise. From our understanding, tissue has remained relatively stable in China from the day that's grown 5%. So what ticked down that led to the downtime? And then I had a follow-up on containerboard.

Mark Sutton -- Chairman and Chief Executive Officer

Along the overall inventory question, it wasn't clear to me whether you were talking about hardwood or softwood inventory. I think hardwood inventories are where the standoff is. So I think primarily, the bleach eucalyptus pulp coming from Latin America is a big input to China. That's what's been publicized that I've seen that there is a standoff between the producers and the users, and we don't make that.

But on the softwood side, again, as we said, 75% to 80% of our mix in the North American business is absorbent pulp. And that has a number of demand drivers. One of them is obviously the economic health of the population in the GDP per capita and how many people can move into those types of products like disposable baby diapers. And if that changes because the economy changes a little bit, you just have a slower adoption rate.

And that's what we've seen. In other markets, we've seen the ability of a poor economic environment to actually have people stop the frequency at which they use some of those products, which then shows up in a lower growth rate. The rest of the softwood goes to the number of different users. You would see softwood in some towel and some packaging, and we're not a major player for North America in that.

That's really the Ilim story. And I don't have a number for Ilim's customer inventories, but we just look at what everybody looks at, which is the industry inventory numbers. And they're north of I think 40 days, and that's a high number for that particular product line. I think the perfect overall balance for customers and suppliers is in the 28- to 30-day range.

So I mean, kind of do an assumption on demand and an assumption on production, and you can figure out how soon it gets back to a more of what could be historically normal.

George Staphos -- Bank of America Merrill Lynch -- Analyst

OK. But I mean, Mark you don't make hardwood per se but as using analogy perhaps for cellulose. Your fluff business and from what you can see, your customers inventories on that side are relatively still high. But working lower, would that be fair? And Ilim, you wouldn't have a view on that.

Would that be fair, recognizing it's tough to get at inventory data in China for the other customer side.

Mark Sutton -- Chairman and Chief Executive Officer

I didn't the understand analogy you're making. So yes, the way you stated, it was high, not as high as that analogy, but high and working off and high basically because of the dislocations in demand that I described, primarily in China and a little bit in the Middle East. But that they thought they were going to sell more finished products and they did, so there's more fluff pulp in the system but not at the levels of your analogy on hardwood craft. And on Ilim, I think Ilim looks more like the general softwood market, I would say.

But I don't have customer inventory levels handy.

George Staphos -- Bank of America Merrill Lynch -- Analyst

Totally fair. Appreciate the thought. I want to come back to -- you're saying earlier about maintaining 3% to 3.5% flexibility in the system. The way perhaps you needed to run in prior years because of all of demand for containerboard led to not necessarily how you'd like to optimize the system on a going-forward basis.

To maintain that flexibility, I could think of a couple of ways that that might change how you prosecute your commercial strategy over time. Do you think -- what would you be able to relate us in terms of how that changes how you run the business commercially in containerboard differently than maybe years in the past? Thanks, and good luck on the quarter.

Mark Sutton -- Chairman and Chief Executive Officer

Thanks, George. That's a fairly involved question. But I would just say at a high level over time, not in a quarter, not even in a particular year, but just if you want optimize a business like this, then we believe somewhere in the range of what I talked about is what's necessary to keep your operations safe and reliable and then to keep your supply chain and your customers happy, which leads to better value propositions, better margins, better position for the customers if you have a great product and you have great service. And so that comes out to roughly about 6% I talked about.

For the second 3%, it's about continuing to invest in our system. Some of these boring projects we talk about, something like head boxes and all, what it does it makes three mills able to make the same basis rate range and the same quality, which allows us to optimize the way we run. Everything doesn't have to be running wide open at the same time. And the other way to do it is challenging our teams through Six Sigma and best-in-class lean manufacturing techniques to improve productivity.

And so that we can do more with what we have that then build a cost structure that is not requiring 100% nameplate output to make a decent return. You have it as a reserve capacity like a public utility does, and you don't use it and you don't put input cost. You don't put people against it when you don't need it. And I would say there's a human element to this, too.

When you run like we ran last year, you wear everything out. You wear the equipment out, and you wear the people out. And that's not a small issue in our company because we want to run a safe company where people are engaged, and they're not completely running a sprint all the time. There's an element of running a nice race over time.

And so reliability, best practices in manufacturing and doing those kinds of things, building system flexibility and duplicity so we can make some decisions around the 16 containerboard mills we have, all leads to being able to have that flexibility time in terms of machine hours without it being a big cost. And I believe when we look back at periods where we've had, that's when we produced the best margins, the best -- you don't know it, but we know it, the best customer satisfaction and allowed us to grow our position because we could meet every need the customer had.

George Staphos -- Bank of America Merrill Lynch -- Analyst

It gives you a predictable system and probably ability to have a more predictable customer base with longer-term contracts. But we'll turn that over at this juncture. Thanks again for taking the time.

Operator

Our next question will come from the line of Scott Gaffner, Barclays.

Scott Gaffner -- Barclays -- Analyst

Tim, I just wanted to go back to the export market for a minute. You said the inventory destocking was as expected, but then we are talking about the guidance. You talked about some additional weakness. So two things.

One, are you seeing a little bit weaker in market demand in the export market, in addition to the destocking? And then, two, when you look at the visibility to the export markets, I mean, how do you get comfort around your visibility? Is most of your sales there direct to customers or you're going through distribution? Just any color you can give us on that will be great.

Tim Nicholls -- Senior Vice President and Chief Financial Officer

Question. Most of it is direct. So we do talk to our customers, and we get their view. I think the part that we didn't fully anticipate in terms of underlying demand was some of the seasonal crop weaknesses that I mentioned earlier.

Europe is more of the issue as I laid out in some of the prepared comments. Europe is going to take a little bit longer. We see recovery starting in other regions of the world. Some are better than others, but almost all of them are better than Europe.

So there's a little bit more weakness there in the first quarter. But again, talking to customers, we expect that to moderate as we go through the second quarter.

Scott Gaffner -- Barclays -- Analyst

OK. And as far as the full-year forecast on export, it sounded like you were mentioning that just you expected recovery in the second half, but you don't expect recovery back to 2018 levels. Did I hear that right?

Tim Nicholls -- Senior Vice President and Chief Financial Officer

Right. It's going to be down versus last year, but it will start ramping back up from the first-half numbers as we get into the third and fourth quarter.

Scott Gaffner -- Barclays -- Analyst

OK. And just one last one here, I know we're late in the call. But Mark, when we look at the monthly data for the industry, whether it's box shipments, supply demand, etc., a lot of other industries like retail and auto have really gotten away from this idea of having monthly sales data. Obviously, IP is the leader in this industry, and the data itself significant volatility in the shares 1Q and has historically.

Is there any thoughts to why or why not you or the industry wouldn't move away from providing data on a monthly basis?

Mark Sutton -- Chairman and Chief Executive Officer

It's a good question, Scott. Honestly, I haven't thought about it that much. Some of the data comes from aggregation of industry trade associations, and it's a question worth considering. I really haven't given it a whole lot of thought.

I know that the -- some of the retail industries have gotten away from that, some of them are still in it with same-store sales and those things that tend to cause overreaction. I think it's something that we'll think about.

Operator

And our last question for today will come from the line of Brian Maguire, Goldman Sachs.

Brian Maguire -- Goldman Sachs -- Analyst

Two-parter on M&A. One, public company multiples have come down a lot over the last year. And obviously, the macro environment and even some of the business-specific outlooks have become a little bit more muddled and uncertain. So just thinking how do you kind of balance those two and how you view M&A today versus how you viewed it a year ago in terms of your overall capital allocation strategy? And further related question there is obviously to do with the DS Smith investment package.

I wonder if you could comment on what that might bring to the table. What that might give you that you didn't already have? And any expected EBITDA from that in 2019 and whether that would be included in the guidance at this point or not?

Mark Sutton -- Chairman and Chief Executive Officer

So on general question about M&A. It is true that sometimes valuations come down in periods where companies might not be prepared to do M&A. The way we think about it is it has to be a strategic fit, first and foremost. And obviously, timing does matter.

But if you're talking about public companies, a temporary valuation change usually doesn't win the day because boards of directors look at the value of the company over the past 12 months and all kinds of other valuation formulas. Right now, we really like the company we have. We have more runway in the company we have today, as we talked about, in terms of our strategy is to improve International Paper. It's very possible and has proven to be true in the past that some M&A has helped that and it probably will in the future, but it's not a burning platform for us because we built a really good company, really since the transformation plan coming out of '05 and '06.

And we're trying to bring this company to its full potential. So it's always a potential tool or a tool in a strategic toolbox to improve a company. But value creation, good returns, above our cost to capital and earnings growth leading to free cash flow growth is what we really want to focus on. And as I mentioned in my comments about our investor base that we have today and the investor base that we recruit, we recognize the balance capital allocation is a role that a company like International Paper needs to play, short-, medium- and long-term capital returns.

And that's going to remain a focus.

Brian Maguire -- Goldman Sachs -- Analyst

And just on the DS Smith business in particular?

Mark Sutton -- Chairman and Chief Executive Officer

Thank you for reminding me of that. DS Smith business. Well, it does two things. It's relatively small in the big scheme of things.

But for the European business, it will have a meaningful impact. The Portugal plant is right in the backyard of the Madrid mill, and it's so -- it's about capability and integration. And the other couple of plants that came with that, a little bit of integration, but also some high print capability that we lack in France and in general Mediterranean regions. And so this was a way for us to accomplish something that was already in our strategic list.

And doing it as an output from a sort of European antitrust type of sale, we think we made a fair acquisition, addressed two of our strategic needs at a pretty good value. We haven't had time to factor in that into our forecast this year, but I'd view it as upside.

Brian Maguire -- Goldman Sachs -- Analyst

OK. Last one for me, Mark, a lot of discussion about demand and the weakness in 1Q and obviously some of that is tied to macro uncertainty. In your view, sitting here today, do you think that if we get trade deal with China, which has been rumored for a long time, that's going to lead to an acceleration in box shipments, both in the U.S. and the export markets? That could be a meaningful catalyst for getting us back on track to closer to 2018 levels? Or do you think looking at the end markets that you got a lot of food and beverage, it really won't show up that much on the numbers?

Mark Sutton -- Chairman and Chief Executive Officer

I actually think it's more likely to show up in the numbers than not. The China, I think we're learning every time there's a disruption with China, how much of a role it plays in the global economy. I think the uncertainty around on the margin, a lot of our U.S. customers for packaging, export a portion of their output, whether it's food or other materials to China.

It's not a big part of their business, but it's a meaningful part. And it's disrupted to some extent due to tariffs and other things. When you add all that up, it's a U.S. box produced for an export product to China.

It shows up as softness in U.S. demand, but it really has nothing to do with the U.S. It has everything to do with them or that they can get to their product, a marginal amount of their product to a market that's currently slowing down, number one, and number two, in some cases, has some additional tariffs applied to their products. I think it helps take some of the uncertainty in the economy away.

And that typically, when you look at the drivers of box demand, the consumer components of GDP, nondurable production, those things tend to get better. And I think when we had a less uncertain environment with China, go back into early '18 and '17, we had better macroeconomic numbers that drive box demand. So I don't have any information to say that that wouldn't return if we took the uncertainty off the table.

Operator

Thank you. I'll now turn the call back over to Guillermo Gutierrez for closing comments.

Guillermo Gutierrez -- Vice President, Investor Relations

Thank you again for joining our first-quarter earnings call. As always, Michelle and I will be available for follow up questions. Thank you.

Operator

[Operator signoff]

Duration: 72 minutes

Call Participants:

Guillermo Gutierrez -- Vice President, Investor Relations

Mark Sutton -- Chairman and Chief Executive Officer

Tim Nicholls -- Senior Vice President and Chief Financial Officer

Debbie Jones -- Deutsche Bank -- Analyst

Gabe Hajde -- Wells Fargo Securities -- Analyst

Chip Dillon -- Vertical Research -- Analyst

Mark Connelly -- Stephens Inc. -- Analyst

Steve Chercover -- D.A. Davidson -- Analyst

Mark Weintraub -- Seaport Global Securities -- Analyst

Adam Josephson -- KeyBanc Capital Markets -- Analyst

Mark Wilde -- BMO Capital Markets -- Analyst

Anthony Pettinari -- Citi -- Analyst

George Staphos -- Bank of America Merrill Lynch -- Analyst

Scott Gaffner -- Barclays -- Analyst

Brian Maguire -- Goldman Sachs -- Analyst

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