Packaging Corporation of America (PKG) Q3 2026 earnings call transcript

Thank you, Jamie. Appreciate it very much. Good morning, everyone, and thank you all for participating in Packaging Corporation of America's third quarter, 2026 earnings release conference call. Again, I'm Mark Kolzin, Chairman and CEO of PCA, and with me on the call today is Tom Hasherther, our president, and Kent Flutter, our chief financial officer. I'll begin the call as usual with an overview of the third quarter results, and then I'll be turning the call over to Tom and Kent, who will provide further details.

And then after that, I'll be wrapping things up, and then we'll be glad to take questions. Yesterday, we reported third quarter net income of $262 million or $2.93 per share. Excluding special items, third quarter 2026 net income was $272 million or $3.04 per share compared to the third quarter 2025 net income of $247 million or $2.73 per share. Third quarter net sales were $2.6 billion in 2026 and $2.3 billion in 2025. Total company EBITDA for the third quarter, excluding special items, was $577 million in 2026 and $503 million in 2025.

Third quarter net income included special items expense of $0.11 per share, primarily for costs and write-offs related to facilities closures, acquisition and integration-related costs, the impact of a fire at our Palmyra, Pennsylvania sheet feeder, and the Wallula restructuring charges. Details of the special items for the third quarter of 2026 and 2025 were included in the schedules that accompanied the earnings press release. Excluding the special items, our earnings increased by $0.31 per share compared to the third quarter of 2025.

The contribution from the acquired Greif business was $0.24 favorable year over year, generating $0.13 of earnings this year versus an $0.11 loss last year in the first month of ownership. Legacy earnings improved by $0.07 per share, driven by favorable price and mix in the packaging segment for $0.79, favorable production and sales volume in the packaging segment, which includes the impact of additional container boards supplied to the Greif operations of $0.12, favorable price and mix in the paper segment for $0.05, and a lower share count, $0.02.

These items were partially offset by higher labor and operating costs, $0.28, cents, higher freight costs, 26 cents, higher corporate and other expenses, 13 cents, higher fiber costs, 12 cents, higher depreciation and amortization expenses, 6 cents, higher maintenance outage expenses in the paper segment for 4 cents, lower sales volume in the paper segment for 1 cent, and higher interest expense, excluding the Greif acquisition and debt in for one cent. As comparable quarters going forward will include the ownership of the acquired great business for the entire periods, we will no longer separate the state and state the earnings contribution from the acquisition in the future. We exceeded our guidance of $2.91 on the strength of price realization and a higher than expected contribution from the acquired great business.

These items were partially offset by higher labor and operating costs, partially driven by lower than forecast corrugated products volume. Looking at our packaging business, EBITDA excluding special items in the third quarter for 2026 of $578 million with sales of $2.4 billion resulted in a margin of 23.9% versus last year's EBITDA of $492 million and sales of $2.1 billion or a 23.1% margin. The mills produced 1,489,000 tons during the quarter The legacy mills produced 1,286,000 tons of container board About 77,000 tons more than the second quarter of 2026 And 31,000 tons more than the third quarter of 2025 The acquired mills produced 203,000 tons Quite frankly, an exceptional number for a quarter in which Riverville was down for an extensive annual maintenance outage.

System-wide, our inventories were up 34,000 tons from the end of the second quarter, and in fact, most certainly, we need that inventory as we move into the fourth quarter. We've been able to catch up with keeping our plants adequately supplied, resume shipping via most efficient methods possible, and we're in a good position to supply our customers in the fourth quarter, even with three of our container board mills down for their annual maintenance outages.

Operational performance was excellent across the board. Much improved from the second quarter, and we completed the first annual maintenance outage at the Riverville Mill under our own ownership safely and successfully. From the cost side, in addition to increasing freight, we saw significant increases in recycled fiber, purchased power, and chemical costs during the quarter, and we expect these input costs to continue to go up.

Our mill production reflects improved output at Jackson, even ahead of the completion of the winder project coming online in the fourth quarter as we continue to maximize the performance of the paper machines. We also benefited from continued improvement and reliability out of the acquired Greif mills. I'd now be turning it over to Tom, who will provide more details on container board sales and corrugated business in general.

Thanks, Mark. Domestic container board and corrugated products prices and mix were $0.75 per share above the third quarter of 2025 and up $1.11 per share compared to the second quarter of 2026. We have realized substantially all of the first net $50 increase and about half of the second $50 increase. Price realization came in ahead of forecast for the third quarter. We expect to realize almost all of the remainder of the second increase in the fourth quarter.

Realization of the $70 increase will be split between Q4 and Q1 and skewed more towards Q1 in terms of timing. Export container board prices were $0.04 above last year's third quarter and $0.03 above the second quarter of 2026. Export sales volume of container board was 5,000 tons higher than the second quarter of 2026 and 10,000 tons lower than the third quarter of 2025 and remains at a relatively low level. While various factors that we've previously discussed led to lower agriculture and market volume, demand was solid throughout the quarter across the remainder of our customer base.

Shipments were up around 11% in total and per day versus last year, with the legacy business down a half a percent, which is about in line with our expectations taking into account the lower ag shipments. A silver lining is that we got ourselves back on solid footing from an inventory standpoint in time for what looks like a pretty strong fourth quarter from a volume standpoint based upon our September and October bookings. We were also able to save a lot on freight during the quarter by being able to plan and optimize our routes.

We remain in a very tight container board market, which, based upon what we are seeing in our own system, appears to be further tightening with fourth quarter seasonal pickup. As Mark said earlier, we have three container board mills down for annual maintenance in the fourth quarter, including DeRitter, and we will need the mills continuing to perform at the top of their game to keep us properly supplied.

The acquired corrugated business meaningfully contributed to our profitability during the quarter, though volumes took a hit from the fire at Palmyra that kept the plant down for most of September. Integration levels continued to improve, and legacy PCA mills supplied approximately 45,000 more tons of container board into the GRIFE system during the quarter than it did a year ago. The improved integration, together with better operational performance in the mills that Mark mentioned earlier, has us well ahead of our synergy targets. All systems work will be completed during the fourth quarter, which will further improve our visibility and day-to-day management of the business. This acquisition is working out very well for us, in large part due to the quality and performance of our people who have put in a tremendous effort integrating and running the business.

I'll now turn it back to Mark.

Thanks, Tom. Looking at the paper segment, EBITDA excluding special items in the third quarter was $34 million with sales of $163 million or a 20.6% margin compared to the third quarter of 2025 EBITDA of $40 million and sales of $161 million or a 24.9% margin. The differences in EBITDA and margin results from the maintenance outage being in the second quarter last year and the third quarter this year. Sales volume was approximately 0.9% above the second quarter of 2026 and approximately 2.5% below the third quarter of 2025.

Prices in mix were up 2.8% from the second quarter of 2026 and up 3.8% from the third quarter of 2025. Sales volume, price realization, and cost performance contributed to performance above our expectations. I'll now turn it over to Kent.

Thank you, Mark. Cash provided by operations was $472 million, and after $247 million at CapEx, free cash flow was $225 million. In addition to CapEx, the primary payments of cash during the quarter included dividend payments of $134 million, cash tax payments of $66 million, and net cash interest payments of $29 million. We did not repurchase shares during the quarter.

Excluding special items, our effective tax rate during the third quarter was 25.8%. We expect our fourth quarter rate to be nearly identical to the third quarter. We now forecast $865 to $890 million of CapEx for the year, and excluding special items just above $705 million of depreciation and amortization. These primarily relate to timing of expenditures and assets placed in service and do not reflect changes in our overall plans. Our special items expense for the year to date, just to remind you, through Q3 included just under $60 million of depreciation expense and write-offs, primarily associated with restructuring. I'd now like to give you an update on the annual outage schedule and earnings impact for the rest of the year.

Our outage expense was 28 cents during the third quarter. Our fourth quarter estimate is 72 cents now, totaling $1.48 for the year.

The increase of eight cents from when we last update you is primarily due to some timing, with a couple of cents in 3Q moving into 4Q, as well as our decision to substantially increase the scope of maintenance activities at the completed third quarter Riverville outage, with more costs now being amortized into the fourth quarter, and to a lesser degree, an increase in the scope of the derider outage will take place next month.

I'll now turn it back over to Mark.

Thanks, Kent. As we move from the third quarter into the fourth quarter, we expect solid corrugated products demand with some seasonal improvement. Shipments per day are expected to be at or around last year's fourth quarter level with two fewer shipping days than the third quarter, and total corrugated shipments will be higher than the third quarter. Prices for container board and corrugated products are expected to improve as we continue to implement earlier price increases, but corrugated products mix will be seasonally weaker with higher e-commerce volumes.

Container board production will be lower with annual maintenance outages at three of our mills, and mill maintenance outage expenses, including the impact on production volume from the fourth quarter outages will be significantly higher in the fourth quarter. We expect seasonally lower volume and slightly higher prices in the paper segment. We expect freight costs to increase across our business with diesel fuel prices above third quarter levels. We also expect costs for recycled fiber to continue to increase as well as higher wood fiber costs to increase due to winter yields and mill mix costs for chemicals and energy will increase due to higher chemical prices and higher seasonal energy usage Considering these items we expect fourth quarter earnings of per share excluding special items.

With that, we'd be happy to entertain any questions, but I must remind you that some of the statements we've made on the call today constituted forward-looking statements. The statements were based on current estimates, expectations, and projections of the company and do involve inherent risks and uncertainties, including the direction of the economy and those identified as risk factors in our annual report on Form 10-K on file with the SEC.

Actual results could differ materially from those expressed in the forward-looking statements. And with that, Jamie, I'd like to open the call for questions.

Yeah, we'll let Tom get into that.

Hey, George. This is Tom. Good morning. Good. Bookings were good in September. They're doing very well here in October as well, up a little over 5%. Billings have lagged a little bit, and we expect that will catch up during the fourth quarter. So we're forecasting right now for pretty flat for the fourth quarter, But keep in mind that, you know, that's a tough comp we're talking about as well. So, you know, it's easy to kind of look at October, November and get some insight. But December is always a bit of a crapshoot. So we're just, you know, we're just going to be a little cautious in terms of that forecast.

But we're pleased with the cadence of the volume. You know, we've had some struggles, as we mentioned, with the ag business, especially related to the lettuce issues and some things like that from some of our customers. And we expect some pickup, but again, that'll be determined seasonally. Sometimes it picks up in the fourth quarter. Sometimes it tracks into the first quarter. So that's kind of where we are right now. And of course, our mix is going to be a little more concentrated towards e-com in the fourth quarter as well.

Okay, George, you know, I'm going to remind you of something we've talked about for years. When we're in price increase mode, we're 100% focused on price increase because those opportunities don't come along that often, and that's incredibly important to our business in the long term.

Relative to volume, we may lose an item or something like that, but for the most part, these are the same customers we've been dealing with for a long, long time, and they understand the situation we're in, and they're in the exact same situation. When you're using revenue over tons, yeah, there's some great effect in there, no question about it.

That's a different segment of the market that we weren't in before. So that's going to impact that a little bit. Hopefully that gives you your answer.

So, George, I'll give it to Mark after this, but in terms of timing, no. We were a little favorable in 3Q to what we'd put out there last time, but that rolls into the 4Q. That's really kind of timing of amortization of expenses more than anything else. In terms of activities, Mark can maybe comment a little bit more on what we're doing in the two mills.

Yeah, I mean, George, we always reserve the right for new discoveries, new opportunities. We move the capital up and down as we see fit, and some of it's just timing on engineering and deliveries of equipment for installation, but we're pretty encouraged. We just went through that annual shutdown at Riverville, and during that week of downtime, for most of that week, we had over 1,400, 1,500 contractors and people in the mill site working on that mill. We found some good opportunities, and it will lay out some really nice upside opportunities for that mill over the next few years. I'm talking about things like some head box, some forming section work, some dryer section work, press section work, things in the back end of the mill.

So we're very encouraged by the continuing opportunity that Massillon and Riverville will provide, much in the same way that the Boise mills delivered over the years, so using that term, the gift that keeps on giving.

Let me talk about Greif and then Tom and Kent can weigh in. You know, we took some criticism last year during the first phase of our ownership of Greif because we got heavily engaged in fixing the assets right away. We, you know, had all of our technology organization heavily involved in Massillon and Riverville right from the get-go last September when we closed on September 2nd. So we took advantage of that and very quickly were able to get the mills in a very good position to start delivering results. And we talked about that on the second quarter earnings call, that we had accomplished a great deal from a reliability and a performance point of view. And so, you know, quite frankly, through the summer months into the fall now, we've seen exceptional performance coming out of both of those mills.

and the same thing on the core choice side of the business. They continue to make improvements. And so, you know, again, that's what we do. That's, you know, what PCA does best. We've got an incredible technology and operational group across the board. And so the results speak to that. Tom Kent, do you want to weigh in on that?

I'll just add, obviously the integration did help a lot, but I would not put it all on GRIFE. Some of the other things that we do and we do incredibly well is we can utilize these GRIFE assets in some different ways than they were able to use it since we have such a large system and we're positioned all across the United States.

So there's some end market restructuring that took place as well within our system, which contributed. But there's some puts and takes to that. You may move it over to one as opposed to the other. And so that's why I say you can't just hang it all on gripe. But it did provide a lot of opportunities for us. And as Mark mentioned, that's what we do well. We get in there and we take advantage of it, and we figure out how to maximize these assets in a way that perhaps wasn't previously available to the previous owner. So that's – and I think, you know, when I talk about end market structure, that's not only how we're going to these end markets, but also perhaps how we're, you know, some of the opportunities that afford themselves in terms of profitability as well.

Kent, you got anything else?

No, I'm good. Thanks.

Anything else, Mike?

Well, Mike, let's put it this way. Our objective is profitable revenue growth. That can come in a number of different ways. Price is our supreme focus at the moment. So that's what's driving our results at the moment.

And as I mentioned before, We did have a couple of segments that were pretty large in that have been a little bit of a drag, but it has nothing to do with losing business. It's just that they had some issues of their own, which cut down some of their demand.

All right, Mike, without putting too fine of a point on this, because we really only guide one quarter in advance, but, I mean, these are the drivers.

You will see continued price improvement from 4Q to 1Q as the $70 increase, the remainder of that comes in. Okay, mix also improves a little bit from 4Q to 1Q as well.

Outage expense also significantly, the P&L hit moves in the right direction. Volume goes down just seasonally. 1Q is, you know, 4Q is sort of the peak. 1Q then it comes down a little bit. Mill production up a little bit because we have less outage impact. On the cost side, you're going to see mill operating costs primarily at 4Q, if not even a little unfavorable, just because you're in winter.

And then you have the normal inflation that hits the labor benefits, services, all that sort of thing. Starting at about 3%, we do the best on that, though, to whittle that down through operational efficiency. So, you know, I gave you a lot of factors there, but, you know, hopefully that gives you at least a start based upon our historical performance when you try to model all this.

Thanks, Mike.

Oversimplified, yes, but I'll give you a little more color on this, okay? We saw a fairly large sequential increase from 2Q to 3Q in price Given the mix and given the timing of roll we won be nearly as favorable 3Q to 4Q but the price favorability should be enough to offset the additional cost that we're taking on in the outages. That's about even. We then have higher operating costs, and if you look across the portfolio of costs in our mills and operations, you're going to have higher recycled, higher freight, higher seasonal, okay, offset a little bit by favorable in the corrugated operations just due to better cost absorption.

So you have, you know, all those factors into place. Yeah, we're about, you know, 20 to 25 down from 3Q to 4Q, but the big help there is realization of the 70 increase, the beginning of realizing that. Hope that helps, Mark.

Let me start. Yeah, the energy projects, you'll see the benefit more into the 2028 period. Again, We're in construction mode right now at Jackson and breaking ground at DeRitter. We're waiting on permits for the gas turbine installation at the Riverville Mills, so that's pending. But you just hit it on the head. We continue with our capitalization program.

Tom, comment on the successful startup of the new box plant in Ohio.

We hit it out of the park. We had an incredibly good startup in our new Newark plant. which also allowed us to announce the closure of Middletown a little bit earlier than what we probably would have otherwise.

We've got further installations going in there as we speak, and we're continuing the same cadence basically with putting in other equipment and upgrading other equipment in box plants all across the United States. So, you know, we have to be incredibly well-equipped to continue to deliver at the levels that we do for our customers and perform the quality that we have and those sorts of things. I might mention, in addition, you know, the work we continue to do on our proprietary grades of paper is allowing us a lot of opportunity, and we'll continue to do that going forward. and that has a lot to do with our capital expenditures as well. So, you know, Mark, we continue to do what we do incredibly well and we've been doing, you know, on a regular basis for the last decade.

You know, another example, Mark, is the new winder at the Jackson Mill. You know, that had been under construction for over a year and we got that started up at the end of September and really the last couple of weeks now, but it came up incredibly well, and that winder is running as planned. And so, you know, Jackson's got, you know, a duplicate winder now running 10,000 feet a minute if we need it, which, you know, the plan would be to put more fiber over that machine. And, you know, but I fully see the Jackson mill over the course of the next, you know, year and a half or so will become a million-ton a year mill.

And we've been talking about that for the last six or seven years, that that was the direction we were taking the mill, and that's where we're going. Counts is another example. We've got the second phase of the work going on on the number two machine at Counts to upgrade that capability, so we'll be seeing further benefits, significant benefits out of the Counts number two machine, which will be productivity, quality, cost.

But, again, we've got approximately 200 people in the corporate technology organization. dealing with these matters seven days a week. And, you know, those of us at the corporate level, this is what we do. And either we're doing and working on operational matters or the group's working on customer-based marketing and sales matters. And that's what we focus on, and that's what we do well.

Anything else?

You know, good question. It's both. We undertook, obviously, with the Massillon Mill and the Riverville Mill, we undertook more activity. But also we're just doing some things at the Legacy Mills that we want to get done. And, you know, we always take care of these assets and, you know, in terms of we may have older mills, but if I took you into these mills, you'd think they were new mills. And so, you know, but also it's the cost of capital.

The equipment costs today are significantly higher than they were just a few years ago. And so whether you're buying a pump or a motor or a major new head box, the costs have gone up dramatically just in the last year or so. And then, again, the labor cost to install. If you're having contractors come in, that labor cost is up significantly.

And so that's really – it's the amount of work we're doing and taking advantage of the time and capability to do it and the pure capital cost of these components and the labor cost to do it. So I would mention, you know, we are in a really good position. You know, for the last 10 years we have gotten ahead of the curve, so to speak, on recapitalizing our, you know, box plant assets. Our mills are in great shape. And so everything we're doing is more on autopilot opportunity, taking care of the customer base, growing with the customers.

And, you know, Tom, why don't you add a little bit more?

Well, just to follow up on that, Mark, I think that, you know, we've mentioned this numerous times, but, you know, this cost of capital has gone up, you know, 2, 3x in a lot of cases, both at the mills and at the box plants. And, you know, so it's imperative in order to be able to continue to grow with our customers and be able to take care of our customers and all those other sorts of things to be able to, you know, earn your cost of capital. And, you know, that's part of, you know, that's part of a struggle, you know, that we have every day to make sure that we're able to do that.

And, you know, to Mark's point also is, you know, as I mentioned, you know, we've been at this for a long time. So a lot of those improvements that we put in place were prior to some of these exorbitant increases that we're now encountering. But those are definitely considerations going forward. And all these projects that we've got going on also, God only knows we need all these tons too.

They're sold already.

Thanks, Mark.

Morning. I wanted to ask about synergies. I think you said they're running ahead of plan. Any way to put a finer point on that, like how much it contributed in 3Q, and also are you still expecting $30 million, $30 million for this year next year, or do you think you can end up doing a little better than that?

No, we're doing a little better than that. We're on a run right now between 40 and 50. And, you know, we called out 45,000 tons of increased integration from PCA into the acquired. That's a big piece of it. There's other integration benefits. And then there's just the reliability, cost performance, and whatnot at the acquired Greif Mills. You know, 70,000 more tons now than what it was doing at the time of the acquisition.

So really those buckets are the factors and the synergies at this point.

I know, I'll take a stab at this. You know, I've mentioned ag numerous times. You know, we do see some recovery in ag. The question will be is how much of that occurs in the fourth quarter and how much rolls over into the first quarter, and does weather cooperate? That's been also a little bit of a drag.

Protein markets have been, especially on the beef side, have been down now for quite some time. Everybody's heard about the level of the herds and how long it's going to take to get those herds back up and get that volume back up. So that's going to still take some time. But the other market, EECOM, is still not growing at the same rate. It had grown for a long time, but still is a growing market and still doing quite well. So outside of that, the other markets are kind of where they are. I mean, we'd like building products to pick up some and things like that. That has to do with government regulations and a whole bunch of other things and interest rates.

So, you know, there's lots of puts and takes, and we're in so many different markets, and we've got, you know, thousands and thousands of customers in these various markets. So it's hard to predict any single one. Ag has stuck out more than others just because of what's gone on. weather-wise and the lettuce and all the other things that have occurred.

Thanks, Anosia.

Yeah, I mean, if you think about our expected run rate for 2026 is probably going to be 5,757,000 tons. So, you know, I would think we're on track, and I've been talking about this for the last year, that, you know, we'll get to be a 6 million ton system with this work that we're doing. And so it's basically, you know, we get through these outages next year at Counts and some of the work we've got going on at Jackson. We certainly have that capability that, you know, depending on the grade mix you're producing, you know, we're bumping up against that 6 million ton capability. But this is, you know, this is ongoing. This is what we do.

You know, we continue to, you know, stretch the capability. We see the opportunities. That's why I mentioned earlier on the call the annual shutdown that just occurred at Riverville, mill, it unlocked these opportunities before our eyes in terms of some capital input will greatly improve the productivity and performance of the Riverville mill. And so that's going to be another piece of the container board supply over the next couple of years as we get that equipment installed and that mill stretched out.

Massillon Mill is a good example. You know, Massillon Mills are performing incredibly efficiently compared to a year ago. And so, you know, these are the little things that we do that, you know, make Massillon such an important mill to us. You've got the new box plant down in Newark. I believe it's like 80 miles from the Massillon Mill. So it basically shuttle truck you know distance away The Ashland box plant is probably 40 miles away from Massillon So Massillon being a very efficient mill just within the first year of ownership presents an incredible opportunity But we'll continue to stretch out. But, you know, long answer to your question, you know, we're definitely at that 6 million ton bumping that capacity.

with the projects we've got coming on over the next six months to a year.

We'll give you a better target in the January call, as we always do, but I mentioned some of the bigger projects. We know that really the big spend over the next 24 months will come from the gas turbine installations. We've got three gas turbines going in, and we've got to finish up the Count's number two machine improvement work. That was a fairly sizable amount of work. And then the rest of it is just the whole host of opportunities that present themselves across the board in the box plants.

It's going to be the one-off equipment. It's the Evols, the Vops, the various rotary die cutters, new corrugators to continue to grow with our customer base. That's all customer driven. That's the beauty of that, that we invest with the customer. And so I think without giving you a number, if you think about the cadence of our capital for the last couple of years, we're going to take advantage of those type of opportunities. We're generating significant cash flows.

So I think the question will come, as it has always been, what are we doing with all the excess cash? I'll leave it at that.

Okay, so take your last one. I think it's probably a little more in the Q4 than what you said. But, you know, I don't want to throw a number, but it's better than 20-80 in terms of Q4 versus Q1. All right, so on input cost, freight recycled. Right now, at least, looking past 4Q, we've got to assume it stays at elevated levels, okay, until we see some sort of breakthrough in the drivers on those.

Right now, I'm assuming at fairly high levels, similar to what we're forecasting for Q4.

Thanks, Phil.

Morning, Anthony. Just following up on the energy projects, I think at the beginning of the year, you talked about the gas turbine projects, you know, taking maybe two and a half years, and I'm wondering if I got that right, and if kind of in the current operating environment, which is pretty tight, is that, are you sort of on track for that? Are there possibilities to move that forward?

You know, because there are three installations at three different mills, they're moving in three different paces. We're currently, you know, we're actually in installation mode at the Jackson Mill. That's moving along very quickly, and part of that was we were able to get the permits very quickly and move on that through the summertime period. and so DeRitter is somewhat behind that and then Virginia with the Riverville mill we're going through a permitting process and that's taking a little extra time part of it is we're just comprehensively looking at the entire mill footprint with the mill opportunities in terms of productivity on the paper machine side, the pulp mill side and comprehensively looking at what that mill will become over the next few years so there's a little bit of extra time in the permitting process.

So that would be kind of like a late 2028 into, you know, truly just the, you know, two and a half years out to see that one come on at best. That's why it's really a multi-year phased project.

Anthony, this is Tom. Our timeline is pretty much the same on each of these. And I gave you the, you know, I gave you the, in the commentary, you know, we got the first is the end. We still are realizing some of the second 50 in the fourth. We'll realize a little bit of the 70 in the fourth, and the majority will come in Q1 of next year. So the cadence on these are pretty much the same. Now, you may be asking the question because it's not every day that we get three back-to-back-to-back. So, you know, it's – but that's the – that's how this – that's how the cadence is working for us right now.

And it's all based on the normal procedures that we go through with our customers.

Hillary, this is Tom. In the normal cadence that I just talked about, the great majority of the realization will all be in the first quarter next year.

No. Again, we take advantage that it's a mill-specific opportunity, mill by mill, location by location. You've got transportation considerations on OCC. And then, again, just what the pulp mill itself is designed to do. And so you balance out your fiber needs with OCC in general, DLK. but in the conditions we're under in terms of, you know, with the tight market need for container board, you know, we've got everything pretty well maxed out, virgin craft, you know, productivity, OCC plant productivity.

So it's basically, you know, utilizing everything we can take advantage of right now.

Hey, George, I'll knock off your last one. The answer is we're pretty darn close to that. There are some inflation effects to that. But, yeah, we've talked about that before publicly in response to your prior questions. But, yeah, that's still a pretty good number there.

And then on some of the lead times, it depends on what you're ordering. If you're ordering some very complex, you know, pieces of unit operations, you know, the lead times can be longer. In some ways, you know, there's some opportunities that have taken place.

You know, some of the equipment suppliers actually don't have as big a backlog as they had a few years ago. so the lead times have shortened up. But more than the lead times, it's the cost.

Whether two years ago it took 14 months to get something delivered and now you get it delivered in 10 months, it doesn't matter if the cost is up 60% from what it was a year and a half ago. And so it's the absolute cost to acquire the piece of equipment and then the installation labor that goes into it and the associated installation factors that have increased, in many cases, have doubled the cost of capital projects just in the last two years.

And I'd add that if we're building it all, I mean, you're now competing with data centers for land and for steel and all these other things that are going on, So those construction costs are just going through the roof as well.

We're definitely seeing, if you think about contractor availability as a good example, and what Tom just said about data centers. With any specific region, if you are in the building and trades and you have an opportunity to go work at a data center, quite frankly, if you look at the pay scales and locations, and quite frankly, just the magnitude of the build-out, it's put an incredible demand nationwide on a lot of the building and trades. So again, that's another factor that we deal with. We're fortunate we have a good group of contractors that we've aligned ourselves with. Again, we have our own incredibly talented maintenance organization that we use across the board. We call that the traveling team in conjunction with the technology group.

So we're able to overcome a lot of that, but still, again, I wouldn't – the delivery times is one factor, but it's the absolute cost of the equipment. That's really the factor.

Yeah, I mean, it just depends on the equipment you're buying, the vendor you're buying it from, what country it's coming from.

Again, the permitting issues, the contractor's availability to install it. But I can tell you, investing in this business is not for the faint of heart anymore.

Thank you.