Thank you for joining Packaging Corporation of America's second quarter 2021 earnings results conference call. Your host for today will be Mark Kowlzan, Chairman and Chief Executive Officer of PCA. Upon conclusion of his narrative, there will be a question and answer session. I will now turn the call over to Mr. Kowlzan. Please proceed when you're ready. Thank you, Stephanie. Good morning, and thank you for participating in Packaging Corporation of America's second quarter 2021 earnings release conference call. I'm Mark Kowlzan, Chairman and CEO of PCA, and with me on the call today is Tom Hassfurther, Executive Vice President who runs the packaging business, and Bob Mundy, our Chief Financial Officer. I'll begin the call with an overview of our second quarter results and then turn the call over to Tom and Bob, who'll provide further details. I'll then wrap things up, and then we'd be glad to take questions. Yesterday, we reported second quarter net income of $207 million, or $2.17 per share. Excluding special items, second quarter 2021 net income was also $207 million, or $2.17 per share, compared to the second quarter of 2020 net income of $132 million, or $1.38 per share. Second quarter net sales were $1.9 billion in 2021 and $1.5 billion in 2020. Total company EBITDA for the second quarter, excluding special items, was $397 million in 2021 and $299 million in 2020. Reported earnings in the second quarter of 2021 included special items expense and income rounding to a negligible impact. While last year's second quarter net income included special items expenses of $0.79 per share, related primarily to the impairment of goodwill associated with our paper segment. Details of all special items for the second quarters of 2021 and 2020 were included in the schedules that accompanied our earnings release conference press release. Excluding special items, the $0.79 per share increase in Q2 2021 earnings compared to Q2 2020 was driven primarily by higher prices and mix of $1.01 and volume $0.74 in our packaging segment, higher volume in our paper segment of $0.03, and lower non-operating pension expense of $0.03. These items were partially offset by higher operating costs of $0.57, primarily due to inflation-related increases in the areas of labor and fringes, repairs, materials and supplies, recycled fiber cost, as well as other indirect and fixed cost areas. We also had inflation-related increases in our converting costs, which were higher by $0.05 per share. While annual outage expenses were up $0.19 per share compared to last year. Freight and logistics expenses were higher by $0.19 per share, driven by historically high load-to-truck ratios, driver shortages, increases in fuel costs, and a higher mix of spot pricing to keep pace with the box demand. Lastly, depreciation expense was higher by $0.01 per share, and paper segment prices and mix were lower by $0.01 per share. Looking at our packaging business, EBITDA, excluding special items in the second quarter of 2021 of $409 million with sales of $1.7 billion, resulted in a margin of 24% versus last year's EBITDA of $313 million and sales of $1.4 billion, or a 22% margin. Our mills and plants continue to do an outstanding job of meeting our customer needs while managing through certain material and chemical availability issues, a tight labor market, various freight and logistics challenges, as well as the planned maintenance outages at four of our mills during the second quarter. The mills executed the planned outages extremely well, and with the help of the number 3 machine at our Jackson, Alabama mill, provided our plants the necessary containerboard to achieve an all-time record for total box shipments. Although we were able to build some much-needed inventory, due to very high demand, we ended the second quarter below our targeted levels and at a new low for weeks of inventory supply for this time of year and ahead of expected very busy third and fourth quarters. In the second half of the year, we still anticipate a planned outage at our Jackson, Alabama mill later in the third quarter, as well as a significant planned outage at our DeRidder mill in the fourth quarter. Implementation of the previously announced price increases continues to be executed extremely well by our sales organization, while our engineering and technology organization and the employees at all of our mills and corrugated products plants continue to successfully implement numerous initiatives and projects to reduce cost through efficiency, productivity, and optimization improvements. With inflation-driven cost increases across most all areas of our company, coupled with truck, rail, and barge challenges for both incoming and outgoing products and materials at our facilities, these efforts are absolutely critical to our success. In addition, being a primarily virgin fiber-based producer of containerboard minimizes the impact of significant increases in recycled fiber costs over the last several quarters. I'll now turn it over to Tom, who'll provide more details on containerboard sales in the corrugated business. Thank you, Mark. As Mark indicated, containerboard and corrugated products demand remains very strong across most of all of our end markets. Our plants achieved a new all-time quarterly record for total box shipments, as well as a second quarter record for shipments per day, both of which were up 9.6% compared to last year's second quarter. Through the first half of 2021, our box shipment volume is up 9% on a per day basis versus the industry being up 6.8%. Driven by higher domestic demand, outside sales volume of containerboard was about 43,000 tons above the second quarter of 2020, but was down slightly versus the first quarter of this year due to lower export shipments, supplying the record requirements of our box plants and the need to position inventory levels ahead of what appears to be a strong second half of the year. We are getting good realization from the implementation of our previously announced price increases across all product lines. Domestic containerboard and corrugated products prices and mix together were $0.92 per share above the second quarter of 2020, and up $0.51 per share compared to the first quarter of 2021. Export containerboard prices were up $0.09 per share versus last year's second quarter and up $0.04 compared to the first quarter of 2021. Finally, I'd like to reemphasize some of what Mark was pointing out regarding the many things we do to help offset inflation and improve our margins beyond just price increases. The benefits from our capital spending strategy in the box plants that we've spoken about over the last few years have been extremely successful and put us in position to serve our customers better than ever before. Our strategy of improving the technology and equipment in our plants and optimizing our footprint through the construction of new facilities, as well as closing certain plants to consolidate business with other locations, is based upon our customers' needs and demands and improving our capabilities to grow with them. We're seeing this in our volume growth with new and existing customers, operating efficiencies and savings, and cost reductions in several conversion areas throughout our plants. I'll now turn it back to Mark. Thank you, Tom. Looking at the Paper segment, EBITDA, excluding special items in the second quarter, was $12 million with sales of $142 million, or an 8% margin, compared to second quarter 2020 EBITDA of $5 million and sales of $123 million, or a 4% margin. Although about 1% below second quarter 2020 levels, prices and mix moved higher for the first and into the second quarter of 2021 as we continued to implement our announced price increases. Volume was 17% above last year, when pandemic issues caused us to take both machines at the Jackson, Alabama mill down for 2 months during the second quarter, while this year we ran the number 1 machine at Jackson on paper and the number 3 machine ran linerboard. Now that we have our finished goods inventory at a new optimal level, sales volume in the second quarter is fairly reflective of what our production capability is as a 3-machine paper system. We'll continue to assess our outlook for paper demand, and we'll run our paper system accordingly. I'll now turn it over to Bob Mundy. Thanks, Mark. Cash provided by operations for the second quarter was $228 million, with free cash flow of $97 million. The primary uses of cash during the quarter included capital expenditures of $131 million, common stock dividends of $95 million, cash taxes of $87 million, and net interest payments of $40 million. We ended the quarter with $972 million of cash on hand, or $1.1 billion, including marketable securities. Our liquidity at June 30th was just under $1.5 billion. I'll turn it back to Mark. Thank you, Bob. As we move from the second to the third quarter in our Packaging segment, we expect continued strong demand for containerboard and corrugated products with one additional day for box shipments. Paper segment volume should be relatively flat, primarily due to the scheduled maintenance outage at the Jackson mill. We will also continue to implement our previously announced price increases in both our Packaging and Paper segments. Our annual outage costs will be lower with one outage in the third quarter versus four mill outages in the second quarter. Inflation associated with most of the operating costs, as well as freight and logistics expenses, is expected to continue. Energy costs will also be impacted due to higher seasonal usage, and wood costs in our southern mills will be higher due to wet weather, low inventory, and high demand. Considering these items, we expect third quarter earnings of $2.37 per share. 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 constitute forward-looking statements. The statements were based on current estimates, expectations, and projections of the company and 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. With that, Stephanie, I'd like to open the call for questions, please. At this time, if you would like to ask a question, please press star then the number one on your telephone keypad. Your first question comes from George Staphos with Bank of America Securities. Thanks. Hi, everyone. Good morning. Thanks for the details. I guess maybe to start, Mark, if, and Tom, if you could talk a bit about your early 3Q bookings, and shipments, what are you seeing? Related point, we heard from some in the trade that lack of availability has actually impaired producers', converters' ability to ship in boxes in 2Q and into 3Q. Has that prevented you from shipping beyond what you reported in the second quarter? Thanks, I'll have a quick follow-up after that. George, this is Tom. I can tell you that going into the third quarter, our bookings and billings are running about 7% ahead of last year. Keep in mind that our comps become much tougher, so it's not as if volume has slowed down at all. It's remained incredibly robust, coming right out of the fourth quarter of last year and all the way through this year. I think that's why we felt quite a bit more comfortable about giving some sort of guidance going forward. Also, you asked about some of the lack of supply in the second quarter maybe bleeding over into the third quarter. We're running lead times that are longer than we're used to and certainly longer than our customers are used to, so the demand remains very high. Trying to get it out the door is an issue more related to transportation at this stage than it is certainly about paper. We're able to take care of our own plants through our system. That's not the issue for us. It's more transportation, and I think that's reflective of most of the industry. Okay. Thanks, Tom. My second question, if you could talk to it, or third question really is, I think last quarter or going into 2021, you had pointed to a sequential drop-off in maintenance for the third quarter. Just if you could affirm what your maintenance schedule is for this year versus last year. I think the drop-off 2Q -3Q should be about $0.12. Lastly, on costs, you flagged wood costs, I think particularly in the south. Can you talk a little bit about what you're seeing, what kind of headwind that might be for you in the third quarter and fourth quarter? Obviously, the weather's been tough, and that's usually what drives higher wood costs. Thanks, and good luck in the quarter. Yeah, George, I'll take the wood cost. Obviously, we've had a very wet period of time throughout the entire Gulf coastal region, up through the southeastern states through the entire winter and spring into the summer months now. Coupled with the high demand for pulpwood and the logistics issues with the trucking side of the equation, it's basically put the situation where it is at pulp prices are up dramatically because of those situations. It's more of a weather-related phenomena than anything else. Bob, why don't you- Yeah go ahead and talk about. Yeah, George. average cost? Yeah, George, it's about $0.11-$0.12 help going to 2Q to 3Q on outages, which is very similar to our wood cost going the other direction in about the same amount. Thank you very much, guys. Good luck in the quarter. Okay. Next question, please. Your next question comes from Mark Wilde with Bank of Montreal. Morning, Mark. Morning, Mark. Morning, Tom. Morning. Mark, for my first question, I'd like to just kind of step back a little bit, and I know that this is a sensitive issue, but I wondered if you could just discuss kind of plans and process around leadership succession at Packaging Corp.? Yeah. We've talked about this before, and as you could imagine, that's a board-level matter, but we have got the depth and the breadth of the talent across the board that's been identified, and we continue to develop. We're very confident in the talent pool we have, and the board feels the same way, that, again, we've got enormous opportunities with the talent across the entire company. Okay. The second question I had is if you could just walk us through the steps that you might be making as you downsize the footprint in the white paper business to a smaller capacity base, and whether this involves shifts in your customer base. I think your filings in the past have pointed to 2 large customers. Yeah. As you can imagine, without the Jackson number three machine, we've gone ahead and exited some business over the last 6 months. Now as you think about that as a 3-machine system, we're going to be supplying a smaller marketplace. We've been able to rationalize that accordingly. That has shifted us down to a few bigger customers. Nevertheless, the entire market for us has shifted down over the last 8 years since we've run the paper business. We're very confident that we'll continue to supply into that market and do it in a meaningful manner as we go forward. Okay. Finally. Go ahead, Mark. On uncoated freesheet paper. I just was curious, Mark, is it possible to think about International Falls as a containerboard mill at some point? I'm just trying to think about the puts and takes. Typically, upper Midwest with a lot of hardwood, you'd only produce medium up there. I don't even know whether you think from an engineering standpoint, that's an option at International Falls over time. Well, we said this for the better part of the last decade, that you can convert anything to do anything, but there's a capital cost, and there are puts and takes with transportation, logistics, and then, what is your intent in terms of product mix? Right now, we have a good market for that paper that's coming out of International Falls. We'll continue to run to that opportunity. We have the Jackson conversion coming on big next year that will continue to supply us with the necessary containerboard for the next few years. I would say this: As long as the paper business offers us an opportunity with the International Falls mill, we'll continue to take advantage of that opportunity. In the future years, if that was not the case, then we'd have to reassess the situation and look at our optionality with that asset. Trust me, you have to believe that we've already done that, and we have the opportunities in the files and know what we would do at any given time. We're pretty confident that we've got a lot of flexibility. All right. Well, Boise Paper has been the gift that keeps giving, so I'll turn it over. Next question, please. Your next question comes from Mark Connelly with Stephens. Thank you. Two things. Just on white paper, will Jackson be all containerboard in the second half? I'm just sort of curious how these projects affect the ability to run white there. No. Jackson will continue to run with the number 3 machine on containerboard, at the present time, our intent is to run number 1 machine on paper. Okay. Even during the project. Great. Secondly, you talked in this call and previous calls about box plants, the bottlenecking projects. I'm just curious if with all the activity you've got going on right now and all the COVID, are you doing as many of those projects today as normal or more than normal, less than normal? Yeah, we're extremely pleased with the rate that we've been able to execute these projects. I'll give you an example. We did slow down a little bit last year during the 2020 period, and we had to become a little more targeted in what projects required the attention of the various technical organization, just because of the travel restrictions and the concern for people's wellbeing. Sure. This year, that was ramped up to full activity, and so we're continuing to execute well across the board. I can give you an example. If you go back over the last three and a half years, we've executed approximately at 62 of these box plants, $850 million worth of capital project activity. Flexo folder gluers, converting equipment, upgrades, major rebuilds, new corrugators, built the two new plants. We're doing this all in-house, but the pace is ramped up in 2021 over some of 2020. We're very pleased with what we're seeing, and so we currently have a great deal of activity going on at numerous plants nationwide that will continue to provide the benefits that I spoke about and that Tom spoke about. We're extremely pleased with the opportunities. Fantastic. Thank you, Mark. Next question, please. Your next question comes from Mark Weintraub with Seaport Research. Thank you. First, it looks like you're getting really rapid and significant pass-through on the board increases into boxes. Can you give us a sense, A, is it true? Are you getting more than full pass-through? Is this the type of environment where you're able to achieve that? Can you give us a read on how much more is there to come in the third quarter? Just wanted to confirm, are you including any of the pending August increase, or is that excluded from the guide? Mark, this is Tom. Let me just comment. This isn't any different than the price increases we've had in the past. It's a very disciplined approach that we do. We roll them in over approximately in a 90-day period. We have local accounts that go in at maybe a quicker rate than some of our contractual accounts. If you want to look at the 3 price increases kind of separately, the first price increase was effectively done. You do have some bleed over, depending on contracts and things like that, timing, those can be impacted. Second price increase, the same way. It rolls out over a whole 90-day period. Third price increase hasn't been reflected yet in pulp and paper. Obviously, we have raised prices to our independent customers and our linerboard and medium customers domestically. Those are in place. The lion's share of the price increase, which goes through boxes, again, that'll flow through over a 90-day period. Virtually none of that would be reflected at this stage in the third quarter. Okay, that's helpful. Lastly, one other question. The impact from volume you note, I believe it was $0.74 which is $90 million-$100 million if we think of it pre-tax. Which seems like a really big number relative to an extra 100,000-120,000 tons of board and boxes being shipped. Just trying to understand how we get to that number. Is there some sort of mix element included in here as well, or? I realize this is a kind of a esoteric question, but any help there would be appreciated. Yeah, Mark. For starters, if you just look at the raw volume, the raw volume is up dramatically. As we came out of COVID last year into that 4th quarter, the question mark, and it was a big question mark for everybody, was will that level of volume be maintained going into 2021 and then throughout 2021? So far, we've maintained very close to those kind of numbers. I think it's just indicative of what the market is right now and the changes that have taken place from consumer habits. Also, I'll remind you that last year during COVID, of course, from a mix standpoint, our display business had basically gone to nothing because of the shutdowns and no shopping in brick and mortar and things like that. That end of the business had dried up quite a bit, and that's back now. Then also, we've had good cost controls in terms of getting this volume out. As we've indicated, a lot of these capital projects are paying off. We're very comfortable with the number. Okay. Super quarter. Thank you. Okay, next question, please. Your next question comes from Adam Josephson with KeyBanc. Mark, Bob, and Tom, good morning, and congrats on a really good quarter as well. Thank you. Thanks. Tom, would you mind just elaborating on your demand expectations in the quarter, just embedded in your guidance? You mentioned the comps get a lot more difficult in July. I know for the industry, the comps get particularly difficult in September. Can you just remind us roughly what your comps looked like last year and consequently what appropriate expectations might be as the quarter plays out? Yeah. Adam, it really ramped up in the second half of the year, as we've indicated. Those numbers were high single, even to mid double-digit increases by the time the fourth quarter rolled around. To be at or above those numbers is a very large number and a robust number that we've essentially been able to maintain. If I look out into the second half of the year, and that's why I say these comps become much tougher. Yep. When you're starting to compare to high single and low double-digit numbers, pretty hard to be significantly higher than that given everything that's going on right now and just the difficulty getting it out the door. Interestingly enough, I'll also point out, our customer base is telling us that they could ship a lot more. They have higher demand than what they're able to get out because they're dealing with the same supply chain issues and transportation issues that we're dealing with. I'm bullish because there's some upside even to these numbers that we have so far. Yeah. No, I appreciate that. Just relatedly, Tom, would you compare this period to anything else you can remember having worked at the company? If so, what would that period be? I think a couple things is, number one is I don't think we've ever gone through a time like this, certainly in my career. Yep where the government has pumped a lot of money into the economy. Businesses have just taken off coming out of a shutdown. I don't think anybody would have ever guessed that during an extended COVID shutdown, that people would turn to things like e-commerce very quickly and as rapidly as they did. Those habits are now pretty well entrenched. What may have taken about 5 years to have occurred, took place in a matter of a year. Those demands have certainly helped the corrugated box business. Again, interestingly enough, I can look across, we've got 15,000, 16,000 customers, and our top 50 accounts are up in excess of 15%. When you look at the mix of those companies across the board, they're in every segment. Obviously, food and beverage is the largest one we have in the corrugated box business. Whether it's home improvement, apparel, like I said, food and beverage, whatever the case might be, they're up dramatically, and most of our customers say they could even be higher. Yeah. No, I really appreciate that, Tom. Mark, on your cash balance and just your balance sheet situation, obviously, you've done a terrific job of maintaining a rock-solid balance sheet for a long time, and you have over $1.1 billion of cash and equivalents at your disposal. Can you just talk about what your inclination is in terms of repurchase, acquisitions. I know you've got the spending on the project, but you have ample room to do more. You've been reluctant to buy back your stock in recent years, and understandably so. Just can you update us on your thoughts about best uses of cash at this point? Perhaps there may not be any, just given where asset prices are. Yeah. The same thought process continues that we've always used. You can use cash for dividends, acquisitions, buybacks, as an example. Organic opportunities with capital spending currently happens to be a very big return opportunity for us that we've been taking advantage of for the last few years. We're always looking at opportunities in terms of acquisition opportunities. That hasn't changed. I think more than anything, we just remained very prudent in how we go about looking at that use of cash and being mindful that every dollar is extremely valuable. Again, quite frankly, currently, I would rather take a dollar of cash and put it into a good capital project in a box plant or a mill, because we get immediate return for it, low risk, high return opportunity. Same thing with dividends, dividend being a board-level matter. We continue to discuss that periodically and understanding that dividends should be meaningful but sustainable. As time goes on, we'll just continue to look at the bigger opportunities. I think, again, one of our virtues that we've held closely is our patience, in that we're extremely patient group. Yep long answer to your question. No, I appreciate it. Just one last remark on the labor situation. I know freight is problematic for everyone these days, and there are many other costs that are problematic. Can you talk about labor, specifically, what you've experienced there and what you're anticipating along those lines? Well, again, it's pretty understandable that the demand for labor is high across the board. We've been fortunate, through the capital spending programs in the last few years, that with a lot of new technology going into box plants, as an example, we've provided enormous tools for the existing workforce to become much more productive. That has been a very big benefit to us. Again, we're struggling like everybody else is, trying to, again, look at the workforce. How do you retain and how do you attract people when the demand is so high for the current labor pool in this country? I think we're in a good place. Our retention rates continue to be high. I'm feeling pretty good about it. We're mindful. Tom, you want to add to that? Yeah. Listen, labor is an issue for us. It's an issue for our customers as well. Getting people back into the workforce is going to be incredibly important. I think it also goes back to your capital question, Adam, relative to we think long term about what we're going to be doing and how we run this business. One of the things that we've been working on for quite some time now is how to do more with less in terms of labor, just because we knew that it's going to be an issue for us over the long haul. I think that that in itself has paid off some big dividends for us that Mark alluded to. Really appreciate it, Tom. Thank you. Okay. Next question, please. Your next question is from Gabe Hajde with Wells Fargo Securities. Mark, Tom, Bob, good morning. Morning. Morning. I had a question. Not only did you reinstate guidance, but you also made mention of kind of just even second half strength on the packaging side. I'm curious what you're seeing, kind of the difference maybe than you were before, if there are end markets, and I know, Tom, I think you just called out kind of e-commerce. What gives you that confidence to make those comments relative, again, relatively speaking, I think you guys tend to be a little bit more conservative on your outlooks. I think it's just inherently looking at the marketplace and understanding where demand has been now for the last year. Understanding what the paper side of the business has been doing and where demand has been going with paper. Looking at the pricing side of the equation and understanding how pricing's been holding up for our corrugated products side of the business, volume pricing, just the success of our own execution on our capital spending as we go forward. I think we're in a pretty good place now. If one assumes that demand does what we think it's going to do, that in and of itself builds a lot of confidence opportunity for us. All right. Thank you for that. I guess, I know it may be difficult to discern, but is there any way you can parse out for us at Jackson, sort of the incremental contribution that you're getting, maybe in terms of production tons or dollar amount? Then is that being, I guess, reflected as a detriment to the paper business or any inefficiencies? Just trying to understand sort of what A normalized profitability level might look like in Paper. As far as International Falls, without going into details, which we won't, if you think about the productivity, we've talked about this, I believe on the April call, for the second quarter, International Falls number 3 produced, I believe, 111,000 tons of linerboard, if I'm not mistaken. We did explain that that is higher cost production than the rest of our system. Even at a higher cost, at the productivity and efficiencies that that machine is running at, and it's extremely valuable in terms of its contribution to the bottom line and providing us the necessary tons. The cost will come down significantly next year as we go through the first phase of the conversion, and then through the final phase the following year, you'll see the cost position at Jackson equal to or better than the rest of our containerboard system. Jackson currently is a very significant contributor from the number 3 machine containerboard side. Okay. I guess to be clear, those inefficiencies are booked and kind of reported through Packaging, not the Paper segment? Yes. Okay. Thank you. Next question, please. Your next question is from Philip Ng with Jefferies. Hey, guys. Morning, Philip. on another impressive quarter in a tough environment. I guess, bigger picture, Mark and Tom, the industry's obviously set up for another strong year in box demand. I think many of us have been accustomed to seeing 1% growth in your comps to get a little tougher when we look out to 2022. Do you expect the growth profile to kind of be elevated north of that 1% rate? Just any color how you think about the outlook going forward? Well, Phil, if I could predict that exactly, I'd be a much wealthier man, I can tell you that. Yes, you're right. We've been more in that 1-1.5% growth range. We had this giant leap that took place last year. It's continued into this year. I think just the maintenance of that number has changed the dynamics of this industry dramatically. I think going forward, I think you'll see some more normalization, but I would guess it will be something a little north of where it traditionally has been, just given the demand we see out there in the marketplace and what we're hearing from our customers. I think one way I look at it, if you think about what happened in the 1980s and the 1990s in North America in general, we had a lot of offshoring of manufacturing activity that created a decrease in corrugated product demand. At the same time, if you went back over the last 60 years, for many decades up into that 1980s, 1990s period, box demand was strongly correlated to GDP. It wasn't a one-to-one correlation, but there was a high correlation. To the 1980s into the 1990s, that correlation separated, and again, in the GDP equation, service industry became a bigger factor in GDP. Manufacturing was less of a component. What we're seeing is more onshoring of manufacturing, more American businesses investing here in the United States in manufacturing. Box demand tied to that factor. I have to believe that as we go forward into the next few decades, as an example, that you'll see on a trend line basis that box demand will have a new, very strong correlation to GDP in general. That's how I'm going to think about the future. Okay. Super helpful. That's kind of how we're thinking about it too, so that's great to hear. Appreciating weather is having an impact on wood cost. How long do you think this impact is going to linger, and any risk that you're going to have supply shortages that could impact your production in the back half this year? Well, there's a couple of factors involved. If it was just the wet weather, I'd say, well, sooner than later, it's going to stop raining. We just had an unusually consistently wet winter and spring, and then in the summer, we had that 1 tropical system that came through in June, came up through the Southeast. We've gone through wet periods before, but what's also a major factor is the availability of the trucking side of the equation in terms of log hauling to a mill is dependent on trucks. Those truck drivers have a choice. They can go and work over the road hauling various goods or go into the woods and haul logs, and so there's been extreme competition for truck drivers. I would think, though, that if we get a dry period or a normal weather period in the South, you'll see a significant normalization of wood cost relatively quickly. Everything else dependent on the economy in terms of labor, driver availability on that side of the equation. There's two major factors in that equation. Got it. Mark, it doesn't sound like you're expecting any real shortages where you can't produce. It's ongoing bottlenecks you've kind of experienced. Is that so, Mark? Well, yeah. Speaking for PCA, we're okay day to day. We are looking at it carefully, as you can imagine. Currently barring any unforeseen hurricane, big tropical systems that come up through the southern states right now, we're okay for the time being. I do watch the weather consistently because of that. Again, that's something we can't control, you do the best you can. Currently we're okay with where we are. I'll point out, the industry, typically, at this time of year, would be starting their winter wood build. Mills across the southern region would be starting to stockpile wood in their laydown yards, in their wet storage areas, satellite wet storage areas, for the upcoming, what would traditionally be a wet late fall, wet winter period. You compound the problem right now that the inventories across the mill system in the South and Southeast have been depleted. We're running basically day-to-day short inventories. We're also not able to start our winter wood build as an industry, as you can imagine. It's going to be important that we do get a dry period because we have to set ourselves up for the late fall and winter when you really get the weather systems coming through with the traditional lows that come out of the Gulf of Mexico and move up through. Got it. That's the longer-term concern. Got it. Just one quick one. I think Mark tried to tee this question earlier, it looks like your drop-through incremental margins on your volumes just really popped in Q2. I know the previous two quarters may be challenges with how strong demand is on these bottlenecks. Maybe the drop-through wasn't as good. Anything that stood out in the quarter, do you think that is sustainable in the back half of the year, those great incremental margins you saw in the quarter? Again, if you think about the richness of the book of business in general that we have, the operating efficiencies we executed extremely well in the mills and the box plants. These capital projects, I called it out just in 2018, 2019, 2020, and then the half of 2021, we spent $852 million on significant improvements in two-thirds of our box plant fleet across the country, and massive capital opportunity for the employees to be significantly more productive. That's paid off in a big way for us. Again, it's pretty simple. Great book of business and operate extremely efficiently equals high margins. That's super helpful. Thank you. Really appreciate it, guys. Okay. Next question, please. Your next question comes from Neel Kumar with Morgan Stanley. Thanks. For corrugated, can you just talk about the cadence of the 9.6% volume growth through the second quarter by month? Can you also just touch on what you're seeing in terms of demand trends for your various end markets? Maybe what surprised both positively and negatively during the quarter? I can give you the volume trends through the quarter. April was up 12, May was up 11, and June was up 6. As I indicated, July, we're rolling about 7 over last year. Again, I'll remind you that it's not as if volume went down. Volume continues to improve, but it's against a much tougher comp. Right. Can you just maybe touch on end markets, how they performed relative to your expectations? Well, our end markets have performed as expected. As I think I indicated earlier that our top accounts are up in double digits and have plenty of opportunities to continue to grow. They're hindered a little bit by those same things we talked about, which are supply chain issues, freight issues, labor issues, those sorts of things. I think that the trend remains very good. Okay. In paper, can you just discuss what you're seeing in terms of demand trends so far in July? What your expectations are for back-to-school demand this year? It's paper. I'm sorry, I couldn't quite hear you. Yeah. I'm just saying for paper, can you just talk about your demand trends so far in July and your expectations- Yeah for back-to-school demand? Paper, as you can imagine, the trend line has moved up, and it's for that very reason. School openings, business openings. People got to restock. We explained that because of the Jackson machine coming out of the system, we've reached a new equilibrium in our ability to go to market and serve the market. We've intentionally brought that marketplace to a new point with PCA. We're up, but we're up to a new level that we can manage to and supply into. We're not representative of the industry at large because of what we've done at Jackson. Thank you. Okay. Next question, please. Your next question comes from Kyle White with Deutsche Bank. Hey, good morning. Thanks for taking the question. You already discussed wood fiber costs for Q3 quite a bit, but curious what your expectation is for recovered fiber costs and what's embedded in the guidance going forward. I understand it's not as impactful to you as other peers, but just any thoughts there would be helpful. Well, again, your guess is as good as mine. We're fortunate though, again, you have to believe with the current trends, it's going up, and there's nothing that indicates it's going to go down anytime soon. Some of the latest data that's come out indicates record low nationwide inventory levels of recycled fiber availability, all-time demand for all recycled fibers across the board. Unless something happens to the marketplace in the world, I don't see that changing. Again, I think for PCA, we've always considered ourselves. We don't have a crystal ball. We don't know where the world's going, we build ourselves around flexibility, we still remained the lowest dependent on OCC, as an example, compared to the rest of the industry. We can take advantage of it. Again, we are always mindful of maintaining our flexibility and fiber utilization. Got it. Going back to Neel's question on some of the end markets. What are you seeing in agriculture? Do you have any exposure to, or any impacts from some of the fires over in the Pacific? On e-commerce, are you seeing any kind of signs of any slowdowns as markets reopen, and people aren't at home as much? Kyle, this is Tom. Regarding ag, we have not had any impact on our ag end markets so far. The majority of the large fires out west are on the Oregon-California border. Those Northern California ag markets, those fires are quite a bit north of them. Regarding e-com, no, we have seen zero slowdown in e-com. In fact, I think everybody in the business of any sort is trying to figure out how they can use that e-com to better grow their business. Consumer preference still remains very strong in the e-com area. Got it. Thank you. Good luck in the balance of the year. Thank you. Thank you. Next question, please. Your next question is from Cleve Rueckert with UBS. Hey, good morning, everybody. Thanks for taking the question. Morning. I just have one follow-up on containerboard production. With the mills coming off maintenance in Q3 and your outlook on demand, how much do you think containerboard production could grow sequentially in the quarter? When do you think you'll be in a position to have inventories more normalized in line with the targets? Well, again, we're in a much better place than we were earlier in the second quarter because of all the outages we were dealing with. As we mentioned on the call, on a weeks of supply basis, in terms of weeks of supply inventory, we're at an extremely low level compared to what our needs are. Even though we built some inventory, we're not where we need to be or should be. Our productivity out of our corrugated, our containerboard mill system will be much better in the third quarter. Production will be up. I'm not going to give you the number. You can run the math on what you currently have for mills in the system. We expect to build in terms of our productivity, but we also expect the third quarter to be a very high-demand quarter for that containerboard through our box plant system. It's probably not the answer you wanted, but I'm not going to give you quantitative numbers. Do you have latent capacity in the box plant system? Could you run the box plants harder if you needed to? I wish. Cleve and I talk about that all the time. We'd be in big trouble if we had not undertaken a few years back the capital program that we did, and also the organizational changes that took place back in 2019 with the technology and engineering groups and how we manage the business day to day. Yeah, I wish we had a lot more productivity opportunities in the box plants, but we're building that in every day with the execution of more capital spending and projects that we're doing. We're in a good place, but it's like we've always talked about at our mills also, and I see this in the box plants. Box plants and mills run really well when they're under pressure. I will continue to believe that going forward. We have plans, longer-term strategic plans on how we will continue to build out our opportunities, and anticipate what our customer requirements will be. It's all about the customer. Right what the needs are and being able to react and respond in any part of the country and within any region to meet that market demand. That's fair enough. One quick follow-up. You did mention earlier in the prepared remarks that you're outgrowing the industry through the first half in packaging, which obviously is implying market share gains. Do you have a sense of where you're gaining share, whether either in markets or in product types? That's it for me. Thank you. That's a very complex question. Where do we gain share? I think we have a long tradition of having a much broader customer base than most of our major competitors. We have corrugated plants plus sheet plant network that we deal with. We have tried to align with customers that have a very good growth trend and good opportunities. Of course, we've got a customer base spread over 16,000 customers, all trying to win in their marketplaces. Of course, I think our ability to be able to, as we've talked about over and over here relative to capital, our ability to expand as our customers needs and as they grow. Those are the key elements to why we have traditionally gotten more market share than our competitors. Thanks very much. Thank you. Next question, please. Mr. Kowlzan, I see there are no more questions. Do you have any closing comments? Thank you, Stephanie. I would like to thank everybody for taking the time today to be with us on the call, and I look forward to talking with you in October for the third quarter earnings call. Stay well, stay safe. Have a nice day. Thank you. This concludes today's conference call. You may now disconnect.