Productivity Improvements

Q: What does 20-30% productivity gain mean for EBITDA? "

A: The 20-30% productivity improvement refers to increased output over a fixed base, like square feet per unit. " This enhancement drives over 60% incremental margins at the contribution level when they improve productivity. " While individual box plant EBITDA isn't the focus, the overall effect is significant, enabling growth and reinvestment in the business. " They plan to roll out these improvements through 'lighthouses' and strategy deployment in 2025, also applying similar principles to their mill system. "

Capacity Adjustments

Q: What's the outlook for further capacity adjustments at mills? "

A: The company is evaluating all options to rightsize their portfolio, including potential mill closures. " They've already closed a mill earlier this year and are analyzing areas with overcapacity. " While cautious due to regulatory approvals related to the DS Smith acquisition, they aim to become a more integrated business with less volatility, deemphasizing areas that don't align with their strategy. "

Global Cellulose Fibers Sale

Q: Are you considering options besides selling GCF? "

A: While they evaluate all options, the most likely path is a sale of the Global Cellulose Fibers business. " There are interested parties, and they expect a robust process. " They won't speculate on value, but emphasize that GCF is a good business with a 35% supply position in a highly valued global commodity. " Performance is expected to improve significantly whether they own it or not. "

DS Smith Integration

Q: Can you apply specialization to DS Smith's system? "

A: DS Smith has strengths, particularly commercially, and there are opportunities to bring specialization approaches to their system. " Due to fewer density plays and country boundaries in Europe, the application will differ. " Segmentation insights and focus on key customers are applicable, and they expect to realize synergies of $514 million, with potential upside. "

Volume Leakage Slowing

Q: How is customer optimization progressing? "

A: Volume leakage has slowed. " They expect year-over-year volumes to be down for the next few quarters but anticipate returning to at least market growth in the back half of next year. " Through 80/20 initiatives, they've sharpened focus on priority market segments, specifically the 'big middle' 60% of the U.S. market, which is their sweet spot. " They aim to be the low-cost producer without being the low-price player, emphasizing great service. "

Specialization of Box Plants

Q: Is regional box plant specialization applied at DS Smith? "

A: DS Smith is ahead commercially and has some regional specialization, but opportunities exist to apply these approaches further. " There's potential for productivity improvements and customer focus, though differences due to European market dynamics mean the strategy will be adapted. "

Investing in Capacity

Q: How does freeing up capacity align with market conditions? " "

A: While there isn't a shortage of converting capacity at the highest level, regionally there are disparities. " Some regions have overcapacity, requiring plant closures, while others lack capacity, necessitating investment. " By optimizing capacity regionally, they aim to improve customer service, reduce costs, and support growth. " "