Good morning, everyone, and welcome to the WestRock Company Fiscal Q1 2022 Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the Star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one to join the question queue. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to James Armstrong, Vice President of Investor Relations. Sir, please go ahead. Good morning, and thank you for joining our first fiscal quarter 2022 earnings call. We issued our press release this morning and posted the accompanying presentation to the investor relations section of the website. They can be accessed at ir.westrock.com or via a link on the application you're using to view this webcast. With me on today's call are WestRock Chief Executive Officer David Sewell and our Chief Financial Officer Alex Pease. Following our prepared comments, we will open the call for a question and answer session. During today's call, we will be making forward-looking statements involving our plans, expectations, estimates, and beliefs related to future events. These statements may involve a number of risks and uncertainties that could cause actual results to differ materially from those we discuss during the call. We describe these risks and uncertainties in our filings with the SEC, including our 10-K for the fiscal year ended September 30th, 2021. We will also be referencing non-GAAP financial measures during the call. We have provided a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in the appendix of the slide presentation. As mentioned previously, the slide presentation is available on our website. With that said, I'll now turn it over to you, David. Thank you, James, and thank you all for joining our earnings call today. We have a lot of new and exciting updates to communicate this quarter. First, I'll provide a high-level overview of fiscal first quarter results. After that, I'll walk through our new segment reporting structure, which went into effect this quarter, and explain the rationale for this change. Lastly, I'll update you on our broad-based transformation approach, which is underway, and provide examples of the significant opportunities we see to deliver a step change in performance for the business. Following that, our new CFO, Alex Pease, will provide a deep dive into our quarterly performance for our newly organized segments and other critical financial performance. We will then move to Q&A and answer any questions you may have. We started our fiscal year off with a solid quarter that was in line with our expectations and within our guidance range. Despite continued supply chain disruptions, high inflation, and increased absenteeism related to COVID, we executed well. I wanna take a moment to thank our 50,000 teammates around the world for their dedication and hard work during the quarter. For the fiscal first quarter, sales were $5 billion, up 13% year-over-year. We delivered consolidated adjusted EBITDA of $680 million, up 2% over the same period, and adjusted EPS came in at $0.65 per share, up 6.6%. During the quarter, we also continued to aggressively buy back stock, repurchasing roughly $100 million worth of stock while maintaining net leverage of 2.4x, well within our desired range of 2.25x-2.5x. As a reminder, the first quarter was a record maintenance quarter for WestRock. We had a number of projects delayed from previous quarters due to COVID and the ransomware incident last year, and I'm pleased to report we completed all scheduled maintenance projects safely. COVID continues to cause disruptions, impacting labor at our mills and box plants, as well as further contributing to ongoing supply chain challenges. Despite these challenges, we are resilient and continue to execute well, as demonstrated by our strong results. Finally, demand for our products across consumer, corrugated, machinery, and other product lines remain strong, and our backlogs are near record levels. Let me now provide an update on our new reporting structure. I'm on slide four. As a reminder, WestRock previously reported in two segments: Corrugated Packaging and Consumer Packaging. We are now reporting in four segments to provide greater visibility into the integrated performance of our packaging businesses while we focus our merchant paper business on critical strategic markets, as well as providing material for the packaging converting businesses. This new structure will help us highlight the performance of all elements of our portfolio. We reorganized into the following segments: Corrugated Packaging, which includes integrated corrugated converting operations and represented 44% of first quarter sales. Consumer Packaging, which includes integrated consumer converting operations and accounted for 23% of first quarter sales. Paper, which includes all third-party paper sales and made up 27% of first quarter sales. Distribution, which includes our distribution business, which is roughly 6% of sales. As we reported in our press release, we will see clearly the benefit of vertical integration between our mills and converting businesses, as well as the value of a diversified portfolio of assets. Perhaps more importantly, this new structure will further enable an enterprise sales approach to drive growth as well as greater efficiency and synergy to improve profitability. I will describe this in more detail shortly. In our press release and located within the quarterly feature section of our investor relations website, we have provided eight quarters of recast results to help you better model performance going forward. Let me now spend a few minutes on where WestRock is today and where we are headed. Please turn to slide five. We have been driving a comprehensive strategic review of our markets and our go-to-market approach. In parallel, we have taken a hard look at all our assets to evaluate their merits and their position in the portfolio, while also evaluating our ability to drive to a greater level of operational excellence and profitability. We're already making progress. We've made significant strides in the integration of our consumer business and have implemented productivity improvement plans across the company. The restructuring of our mill assets into one organization is already providing greater production flexibility across our footprint. I will share a more fulsome perspective in the future, but suffice it to say, we have significant opportunity. We have not fully integrated many of the acquisitions we have made. We need to turbocharge our digital strategy, not just in the back office, but also in manufacturing and innovation. We have elements of the portfolio that are non-core to our integrated strategy, and we have inefficiencies that must be addressed. Our profitability and our ROIC are not where they need to be. This is going to change as we implement our transformation plan. Importantly, our senior leadership team is aligned and is mobilized to drive this change. Together, we have developed this transformation plan and have shifted into execution. At a high level, our plan includes three overarching priorities. Second, drive a step change in our margins through pricing excellence, productivity, mix management, and cost control. We are implementing our new WestRock Operating System that standardizes our systems and utilizes our digital tools to identify options to drive efficiency and do things even better. Third, generate consistent ROIC in excess of our cost of capital through disciplined investment, operational excellence, and portfolio optimization where appropriate, while maintaining strong free cash flow, significant balance sheet strength, and prudent capital allocation. Let me provide an update on each of our three strategic priorities. Our growth agenda is designed to maximize the value of the complete packaging solutions only WestRock can provide. Our combination of consumer and corrugated packaging, paper, machinery, and access to distribution is unique in the industry and a strategic differentiator. It enables us to sell integrated solutions that are valued by our customers and partner with them to ensure that they are responsive to macro trends, such as sustainable packaging. With our portfolio, we have the capability to deliver full packaging solutions that are unmatched in our industry. General Motors is a great example of this, and we were just recognized as their supplier of the year. With GM, we have partnered to provide options for brand security that help combat counterfeiting issues in the supply chain process. We produce their primary parts packaging and secondary corrugated packaging using our global manufacturing footprint to ensure they have the right supply in the right place when they need it. Innovation and plastic replacement continues to be a growth driver. We also can anticipate customer needs and introduce new products that support enhanced sustainability. This quarter, we announced a partnership with Grupo Gondi in Mexico to provide our CanCollar product to AB InBev Mexico, Grupo Modelo. This expansion of CanCollar is an exciting development and one that demonstrates the growth potential of our sustainable products. Our integrated one enterprise approach is driving value, and we are continually working to maximize this value while minimizing our exposure to lower value markets. To that end, we've completed the first phase of our portfolio analysis, and I look forward to sharing more about this soon. Let's now turn to how we are going to drive margin improvement. Historically, our margins in Corrugated have been 18% and 16% in Consumer. Improving both is a key priority. As we begin our journey of developing an enterprise-wide operating system, our first focus has been quantifying the opportunity and identifying areas to tackle. In recent months, we have standardized the measurement methodology in our operations and have identified significant opportunity to expand capacity without adding capital. We have evaluated our asset footprint and see warehousing and logistic opportunities that we are optimizing. We are also investing in our business to increase our level of integration and introduce automation, predictive analytics, and other cutting-edge digital capabilities into our network. To that end, we are constructing a state-of-the-art corrugated converting plant in the Pacific Northwest that will be cutting edge in efficiency and throughput. This is just one example of many that we are excited to share. Please now turn to slide eight. We are aggressively focused on improving our ROIC in excess of our cost of capital. While improving our productivity is an important part of the equation, capital deployment and capital utilization are equally important. Through our initial diagnostic work, we have identified opportunities to expand capacity without adding capital. We have looked at our portfolio and identified non-core assets that don't meet our return thresholds, and we have implemented a disciplined approach to capital deployment that directs our resources to only the highest return projects. We are focused on ongoing efforts to drive best-in-class returns on our portfolio. Lastly, our senior leadership team now has an explicit ROIC component to our long-term compensation program. Additionally, we are laser-focused on generating strong and consistent free cash flow and maintaining substantial financial flexibility in our balance sheet. This strength enables us to invest in our business through all business cycles and also reward shareholders consistently. To that end, we have aggressively paid down debt over the past several quarters and have increased the dividend twice in the past year. Our intent is to reinforce our commitment to a stable and growing dividend while also continuing to aggressively repurchase WestRock stock. As a reminder, in Q4 of 2021 and Q1 of 2022, we have repurchased approximately $223 million of stock as an initial down payment on this strategy. With our very strong free cash flow generation and our current valuation level, we intend to get more aggressive on our stock buybacks and are targeting repurchases up to $500 million over the next several months. We will continue to monitor short-term fundamentals that provide the best return opportunities for our capital allocation. A lot of exciting change is underway at WestRock, and I'm convinced about the significant value creation opportunities ahead for our company. We are committed to executing our plan to drive enhanced shareholder value, and our team at WestRock is motivated and enthusiastic about what is ahead. We are focused on growing through innovation with new sustainable products and digital engagement tools that our customers and our consumers need in today's marketplace. We have a new transformation office in place that is driving rigor in all that we are doing, including standardizing key operating and performance metrics across the asset base. We have brought in a new supply chain leader, Peter Anderson, who is aligning our supply chain operations across the company with a focus on greater productivity and cost savings. Finally, I'm excited to have Alex Pease join us as CFO, effective November 2021. With over 20 years of experience in corporate strategy, M&A, capital markets, portfolio optimization, and broad-based business transformation, as well as extensive public company experience, Alex has already proven to be a strong partner. I'll now ask Alex to provide the detailed rundown on our performance. Alex. Thank you, David, and hello, everyone. I'm excited to be here for my first earnings call as CFO. Before I review first quarter results in detail, I want to reiterate the diversity of opportunity that David described and reinforce the commitment to a fundamentally different level of performance. The opportunities to drive a step change in margin as well as significant ROIC improvement are real, and rarely have I seen a team as aligned behind a vision for the future as this one. While it's early in the process, I have every conviction that we'll be successful and look forward to supporting David and the team in the journey. With that, let's cover results. Fiscal first quarter sales were up 13% to $4.95 billion, and consolidated adjusted EBITDA increased 2% year over year to $680 million. Consolidated adjusted EBITDA margin was 13.7%. Price and mix positively impacted earnings by $600 million year- over- year. This higher pricing was mostly offset by $520 million in higher costs, including higher fiber, transportation, and labor, as well as the impact of the previously discussed high planned maintenance conducted in the quarter. As a reminder, the first fiscal quarter is the highest maintenance quarter of the year. In addition, we faced challenges with COVID related to freight and raw materials, which impacted our production output. Turning to slide 12, sales in corrugated packaging, excluding white top trade sales, were up 11.5% year over year to $2.1 billion. Adjusted EBITDA declined 17% to $289 million, giving the segment an adjusted EBITDA margin of 13.5%, also excluding white top trade sales. Price drove an additional $277 million in adjusted EBITDA year-over-year. However, this was more than offset by $230 million in inflation due to labor challenges with COVID-related absenteeism and logistics issues, as well as $63 million of lower productivity and $43 million of lower volume. The impact of the high level of downtime, both planned and unplanned, drove much of the volume decline. Following a strong first fiscal quarter of 2021, we experienced significant supply chain challenges in 2022, as well as cost inflation in most input costs and the higher fixed cost impact of the record planned downtime for the scheduled maintenance in our mill system. This was further impacted by lower productivity due to high COVID absenteeism and the introduction of inexperienced labor into our factories. We are actively working to address each of these issues and are anticipating that the business will return to more historical levels of profitability over the balance of the year. With additional upside as we deploy the WestRock Operating System that David discussed. During the quarter, our North American box shipments were 3.7% lower year-over-year, driven by our record mill maintenance levels, COVID-related slowdowns, and continued disruptions in the supply chain. However, backlog for the corrugated packaging business remains very strong. If we could have made more, we certainly would have sold it. Over the next two quarters, we expect additional pricing to flow through our corrugated packaging business from the previously published price increases. As a reminder, this only includes pricing that has already been published in Pulp and Paper Week. Turning to the consumer packaging business on slide 13. Sales were up 7% year-over-year to $1.1 billion, though adjusted EBITDA declined 3.4% to $169 million in the quarter. Adjusted EBITDA margins were 14.9% for the segment. As in corrugated, better price and mix added $50 million to adjusted EBITDA. Also, improved productivity and better volume drove $14 million and $6 million of higher adjusted EBITDA, respectively. However, higher fiber, transportation, and labor costs, as well as the high maintenance level, negatively impacted earnings with total inflation of $76 million, more than offsetting the other improvements. Consumer backlog remains very strong at five to seven weeks, and we continue to implement the previously published price increases across all consumer grades. The production of COVID test kit packaging is contributing to the strong backlogs in consumer packaging due to the recent announcement by the U.S. government to offer free COVID test kits to every household in the country. Turning to slide 14. Revenue for our paper business came in at $1.4 billion, up 24% year-over-year. Adjusted EBITDA was $232 million with an adjusted EBITDA margin of 17%. Adjusted EBITDA was up an impressive 53% year-over-year due to price and mix improvements with the flow through of previously published price increases. Export markets were also very strong. While we face some headwinds with lower production levels and freight inflation, the paper business performed very well this quarter. Looking forward, demand and profitability for our paper products remain strong, both in the independent domestic and export markets, highlighting the importance of certain strategic markets and the value of our diversified portfolio. Backlogs continue to be at historically high levels, and for the remainder of the year, we expect to achieve significant pricing as recently published pricing flows through our contractual business. On slide 15, we show our distribution results. Though sales were up 7% to $325 million, adjusted EBITDA margins fell to 2% from 5.4% last year, mainly due to supply chain issues and the higher cost to service customers driven by higher fuel and labor costs. Demand remains strong for our distribution business and is outpacing our ability to supply customers due to labor and supply chain challenges. Our free cash flow for the quarter was down significantly year-over-year, but much of this change was due to the reversal of the pandemic action plan that we had in place during the first quarter of fiscal 2021. Specifically, we were negatively impacted by the payment of short-term incentive compensation in cash versus the stock payment made in the previous year. Compounding that pressure, our strength in fiscal year 2021 led to a larger bonus payment as compared to the previous year when short-term incentive compensation was paid at threshold level. Finally, we had negative impact from the 401(k) match, returning to cash payments rather than stock, and the required repayment of the deferred payroll tax as part of the CARES Act. Though the quarter was highly impacted, we still expect to generate cash flows in excess of $1.3 billion as we progress through the year. Turning to slide 17 and our financial guidance for the second quarter of 2022. We continue to implement all previously published price increases. We expect roughly flat sequential cost inflation as improvements in energy and OCC costs should be offset by higher freight, wage, and other expenses. Though we are past the highest maintenance quarter due to delays in mill maintenance earlier in fiscal 2021, along with our originally planned outages, we still have approximately 128,000 tons of scheduled downtime across our system in the coming months. These assumptions result in forecasted consolidated adjusted EBITDA of $780 million-$830 million, and adjusted earnings per share of $0.94-$1.08 per share. As a note, this guidance does not include any potential benefit from the $70 per ton price increase across our container board grades that we have communicated to our customers. Some additional assumptions behind our outlook include OCC costs down $10-$15 per ton, natural gas costs down sequentially, labor expense up sequentially due to normal Q2 merit increases, continued inflation in freight and logistics expense, a tax rate of 23%-25%, and diluted shares outstanding of approximately 267 million. I'll now turn it back to David to conclude before we move to Q&A. David? Thank you, Alex. In closing, we're in the process of transforming WestRock into an industry leader that delivers consistent, strong results to shareholders through all operating environments. We are in the beginning phases of our journey to optimize our portfolio through operational efficiency, footprint optimization, and growth investments. We've made substantial progress on these efforts already, made decisions about our path forward, and continue to hire and develop key talent to help us advance our vision. We look forward to providing a deep dive overview of WestRock, our WestRock Operating System, and long-term targets at our 2022 Investor Day, which was previously scheduled for February. Given the current situation with COVID, we have decided to move this important event to May with the hope that we can meet in person. We'll share more details about Investor Day in the coming weeks, and thank you for your continued interest in WestRock. With that, let's move to Q&A. Thank you, David. Operator, may we take our first question, please? Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one using a touch-tone telephone. If you are using a speakerphone, we do ask you please pick up your handset before pressing the numbers to ensure the best sound quality. To withdraw your questions, you may press star and two. Once again, that is star and then one to ask a question. We'll pause momentarily to assemble the roster. Our first question today comes from Mark Weintraub from Seaport Research Partners. Please go ahead with your question. Thank you. Certainly appreciate all the details. Look forward to the deeper dive we'll be hearing about, come May or. One quick follow-up. Well, first of all, can you give us a little bit of a sense at this juncture when the benefits of the actions that you're gonna be undergoing? I realize it's gonna be a process, but when is that likely to start showing up on the bottom line? Is that something that we should think next year becomes part of the driving process? Or even, do we start to see that sooner? What type of timing framework? Good morning, Mark. I appreciate the question. We have begun our journey. I believe you will start to see benefits this year. We are implementing a new WestRock Operating System. We were challenged in the last quarter between our heavy maintenance schedule shutdowns and really an unexpected COVID-related absenteeism with the supply chain. We are already starting to see some of those benefits. You know, if you take out some of those unique situations, especially in our consumer business, now that we've integrated the former MPS business with our consumer business, we've seen a lot of productivity improvements. We're starting to see that with our One Mill organization and in our global paper organization. We are starting to see them. There will be, we believe, material benefit to our profitability, and it will just continue throughout, you know, as we move forward. I think we'll start to see benefit this year, and next year, I think you'll start to see more material benefit, as we move forward. Mark, just to add on to what David's saying. If you think about the guidance we provided, we are actually, as I mentioned in my remarks, anticipating a return to more normalized margins, really across all the segments, and a lot of that is being driven by the actions that we're taking. If you look at our full year expectations, you do anticipate margins being north of where they were last year, again, driven by a lot of what David described. Great. Maybe just following up on that, I do see in the appendix, you have the same slide on guidance for this fiscal year. Should we interpret that as a reiteration that despite the COVID, the absenteeism, and the supply chain issues that you highlighted, that other things are happening, X price increases which haven't been established in PPW that should enable you to still be in that guidance range. Is that a fair interpretation? Yeah. I think David explicitly said that we were reaffirming our guidance for the full year. Just to give you some, you know, additional detail, we do expect a lot of the inflationary impact to mitigate over the course of the year. I think we said in the prepared remarks that we expect OCC, at least sequentially for Q2, to be down between $10-$15 a ton. You know, natural gas on a year-over-year basis, you know, will still be up, but sequentially over the course of the year will be down fairly significantly. Freight is really the one thing that we're, you know, continuing to battle. As David mentioned, we've, you know, brought in a new head of logistics and supply chain with Peter Anderson, who's addressing that. We expect to at least manage some of the freight impact to keep it, you know, roughly flat year-over-year. We are fairly confident in reaffirming our guidance for the full year and expect a strong print in the second quarter. Great. Just to reaffirm, I think that also you had mentioned that it is, and I think it was specific for this coming quarter or the current quarter we're in, but that it doesn't include anything from the containerboard price increase that's in motion. I assume that the statements that you made about confidence on the guidance for the full year would be true, too, that it's not dependent on the $70. Is that fair? No, that's exactly right. Since you mentioned pricing, I'll just add on a little bit. We have, you know, been realizing in the order of $160 per ton, as you've seen in the published pricing, and we've been successful in realizing, you know, most, if not all of that. We do have what we've communicated to customers, and we do have the impact of getting improved price realization as some of the national contracts roll over. We do expect pricing to continue to be a favorable tailwind as we get in the balance of the year. Great. Appreciate the details. Our next question comes from George Staphos from Bank of America. Please go ahead with your question. Thanks very much. Hi, guys. Good morning. Thanks for all the details. Good luck with the transformation. Kind of one minor question, shorter term. One, when should we get, I didn't see it if it was in the materials, additional volume disclosure as we used to have? Could you comment at all on how early fiscal 2Q volumes are going for you in your key businesses? I think you had said corrugated was down 3% in the last quarter. Did you have a comparison for cartons there as well, folding cartons? Yeah. I'll start, and then I'll let David comment on the velocity of the business, you know, as it relates to the beginning of the year. The reason we didn't provide the volume disclosure in the quarter really was just related to the new segment disclosure. You know, the team has been working exceptionally hard to get all of the detail and all the transparency that you all need to update your models and so forth. Unfortunately, we just weren't able to get to that level of detail. We anticipate providing that in the quarters to come. Nothing to read into that. I'll let David talk about the velocity in the business this year. Yeah. Thanks, Alex. You know, George, we, as I mentioned earlier, we are seeing near record backlog levels, and so we feel really good about our demand from our customer base. Our backlogs are very strong. It's really just a situation of getting product out the door. The better we come back from some of these COVID and supply chain disruptions, the better we can work down our backlog and get our you know, the volumes to meet our customer demand. We feel very good about customer demand. We feel good about it, how it started the year. It's just getting through some of these disruptions and getting to a more normalized manufacturing position, freight situation, so we can service our customers and get volume out the door. Okay. At this juncture, David, I'm taking it you'd rather not comment on how volumes are, partly 'cause it's not really comparable because the supply chains, the issue. Is that a kind of a fair summary? That's exactly right. I mean, the demand- Okay. Yes, the backlog is there. It's just, you know, how quickly we continue to be able to get production volumes to where we need them to be to meet that demand. Okay. Understood. Two maybe bigger picture questions. WestRock has always championed the fact that it offers both a consumer and corrugated, you know, product offerings to its customers. It has the systems and the machinery capabilities. You've certainly over the last couple of years talked about sustainability. As that's always been part of WestRock, what should allow you to maybe get even more progress and more margin in return from that strategy and that offering to the customer? What's gonna change or maybe accelerate on that front, and why should we expect that? Specifically to the paper business, what's the goal? What's the strategy for this business longer term? Ultimately, you want to improve vertical integration from what I recall. Are you gonna manage this business more for margin, and so we shouldn't necessarily expect it to grow because vertical integration is hopefully gonna increase? How should we think about that business, and what will be success as you define it for that business? Thank you, and good luck in the quarter. Thanks, George. I'll take your questions one at a time, and first I'll start with the corrugated and consumer business together. You know, there has been obviously, you know, thoughts of, you know, is it better to be split or together? I would tell you that I have never been more convinced than I am now that we are significantly better together. I mean that from a customer-facing standpoint, from a solutions that we can provide our customers. I think General Motors is a great example, and that goes on and on. What I think in getting to the crux of your question is the other value that we have, which is the journey that we're on, where you're going to see the benefit both in margins and return on invested capital, is the work we're doing on our new Operating System. We are going to really drive significantly better productivity and efficiencies with the scale and flexibility that we have in our model. This is something that's truly unique and from a strategic standpoint where we can provide differentiation that customers value and that we can drive a better operating efficiency because of it. I think that is something that we wanna continue to double down on, and you will continue to see that margin in ROIC improvement as we continue to drive on the infrastructure. We're already seeing it. Just in the short time that we brought the former MPS and consumer business together, it's amazing what we've done with some of that lower margin business driving productivity at our mills now that we're one mill. You'll continue to see that. Then to your second question, I think that ties right in, we really like managing our paper as one business that's aligned to our mill system. What that does is provide you the transparency that demonstrates our profitability. We like the profile it gives us with the flexibility to serve our growing packaging business, but also serve very attractive paper markets. That market demand is growing, especially as sustainability being a key driver. We do, and I've said in the past, we do want to reduce our exposure to the more volatile areas of the paper segment that we do externally. So you will start to see us trim you know the market segments we go after that are more volatile. By and large, you know, we are a market leader in paper, and so once we trim that, which we went through as part of our strategic and portfolio review, we like splitting this business out so we can demonstrate to you how profitable this business can be, the flexibility it allows us in our mill footprint. I mean, we have embedded flexibility in Longview, Dublin, Roanoke Rapids Mills to flex between container board and kraft paper markets and amongst our Charleston plants, we can flex. We have great flexibility in a changing market dynamic situation where we can optimize our profitability. You know, just as one example, 10 states have banned plastic shopping bags in supermarkets. The demand for kraft paper over the last couple of years has really been extensive. You know, we have a leading position in kraft paper, and our ability to flex mills to drive better profitability is really an advantage for us. That's why we like to do this. That's why we think there's tremendous value in paper, and tremendous value in the new structure that we announced. Thank you very much. Thanks, George. Our next question comes from Gabe Hajde from Wells Fargo Securities. Please go ahead with your question. Thank you. Good morning, David. Welcome, Alex. Morning. I wanted to dig in or get a little clarity on what I thought I heard was maybe capacity debottlenecking. It wasn't clear to me in the past, at least, that there had been kind of availability issues. My question is, if you could maybe give a little bit of detail there if you're more talking about on the mill side or on the converting side. Then you also made some comments about warehousing and logistics optimization. I think what I hear from that is maybe better velocity through the system and an impact on profitability, but potentially sort of a working capital need or build to enable that. Just maybe if you can expand on that. Sure. Thanks, Gabe. Appreciate the question. I'll start with your first question. I was really referring to our conversion plants versus our mills, where we think we have untapped or unlocked capacity opportunities. As we've introduced this new WestRock Operating System, getting very detailed metrics and continuous improvement identification opportunities, we have found, especially in a very, you know, high demand market like we're in today, that we can operate our assets much more efficiently. We're going through a very detailed operational excellence program to drive better productivity, better throughput, better, quite frankly, better manufacturing planning, better asset utilization that's really gonna drive more volume through our current assets and get better operational efficiencies. That's what I was referring to more so versus the mills. The second part of your question on warehousing and logistics. This is part of the, I believe the value of, untapped potential for consumer and corrugated being together. If you were to go back, we were running our consumer and corrugated businesses separately, and we had separate supply chains. Now with Peter Anderson coming in, we've now created one common supply chain. You know, we can leverage now warehousing for both corrugated and consumer. We can leverage logistics for corrugated and consumer and a one mill system as well, because the mills were separated as well. That's part of what I'm talking about, the value creation that we believe we have that we're gonna drive. And so, you know, that's kinda how we think about it that way. As far as inventories, you know, I think our inventory position, you know, it's kinda hard. I wouldn't even use first quarter as a metric because we just had trouble getting freight, we had trouble getting rail, we had trouble getting, you know, it out the door from our mills, especially in December. You throw COVID absenteeism in it at some of our box plants to unload. It was just kind of a perfect storm. There's no extra working capital that we see. We actually see this as a benefit for working capital. Yeah, just maybe to layer on a little bit on the inventory point. We did actually deliberately build about 96,000 tons of inventory in anticipation of the mill outages that we anticipated. That was a deliberate step. If you think about, you know, container board inventory, it's basically at the healthy level. It has been running a little bit low. Now we're back to, I think, more normalized level. SBS inventory was flat. Then we brought down some of the CNK inventory as we dealt with the transportation issues that David mentioned. Just to reiterate David's point, you know, I think our inventory levels are healthy and that is about where we'll maintain going forward. Okay. No, that's a great segue to the next question. I'll try to keep it brief. Can you talk about velocity through the system, and maybe to the extent that you might be carrying a little bit of, I'll call it safety stock, given these known delays? Question number one, sorry. Are you embedding an improvement in availability as the year progresses? And then number two, would you be willing to provide or quantify kind of backlogs in the consumer business at this juncture? Yeah, let me, I'll take a shot at it, and I'm sure David will wanna add on. Just to reiterate, I think, you know, we view our inventories at healthy levels. I think that's the headline. We have seen congestion in the system related to the freight issues that David described. Largely that's in roll stock, just, you know, being able to convert that to finished product. As we deploy the WestRock Operating System and we get greater velocity through the system, we'll consume that inventory, you know, and basically deliver on the demand. I think your point on backlogs or your question on backlogs are at a record level. We're not breaking it out by individual segment, I don't believe. Backlogs are extremely healthy, and we can sell anything that we get through the system. That's one of the drivers behind, I think, the optimistic outlook for the year. I'll let David add on anything he wants to add. Yeah. Thanks. Just as far as consumer, I would share we are close to record levels at five o weeks, and that's growing. Our corrugated backlogs are higher year-over-year, so we still see strength there. The backlogs continue to be healthy, and you know, we don't see that slowing down. Thank you. Our next question comes from Anthony Pettinari from Citi. Please go ahead with your question. Good morning. David, you talked about your strategic vision for the paper business, which is very helpful. I'm wondering if you could share maybe some thoughts on the distribution business, you know, how you would judge the performance of that business. You know, there have been a few large paper and packaging companies that have spun off distribution arms over the past decade. Kind of, what does distribution add to, you know, WestRock as a whole? Yeah. Thanks, Anthony. I appreciate the question. With our distribution business, one of the things that struck me is in this new world of supply chain disruption, is the changing viewpoints of our customers on inventories and supplies with their suppliers. You know, we are really seeing customers wanting predictable supply, security of local inventory and delivery. There's, I think, an enhanced value to distribution maybe than there was in the past from a customer viewpoint. The pull-through is incredibly strong within our business. It's a great, you know, pull-through, and just having that proximity to the customer is really critical to everything we do. To the second part of your question, our expectations is for a much greater margin expansion. We have undergone multiple projects to expand those margins to get them to higher levels of where we believe that distribution could be. You'll continue to see margin expansion, but we like the proximity of being close to our customer. Just to add on. You know, we're focused on ROIC, and I think one of the interesting things about our distribution business, obviously the margins aren't where we would like them to be, and we're gonna improve the margin profile, but ROIC is still just under 10%, which is well in excess of our cost of capital. I do think even with a narrow margin, given the lower capital intensity, it's not a bad business for us to be in. I'd just add that to David's comments. Okay. That's very helpful. And then you mentioned the Pacific Northwest box plant as I think an example of maybe a high return investment. Just wondering if there's any kind of finer point you can put on that in terms of you know CapEx investment or targeted return or maybe timeline. As you look across your box plant network, you know, understanding you have a great position at Longview, do you see similar opportunities across you know across the network to maybe construct larger greenfield box plants or consolidate box plant operations? Just any thoughts there? Yeah. Thank you. We do, and we've talked about, you know, also vertical integration. Longview does several things for us. It's going to be really a showcase in efficiency and automation and digital manufacturing. It's 400,000 sq ft. It's going to be located on a site near our mill, which is right there, so it takes cost out of transportation. You will see. And it's a very strong market for us right now, which is growing. What Longview does is it's gonna be a very high efficient manufacturing site. It's gonna be close to our mill, which we like because that reduces our transportation. We will be able to be a larger site to produce more volume, to get that efficiency that we talked about. As you look at our footprint, you know, around the rest of the North America side of our business, we'll continue to look at those opportunities, especially in large metro areas, where we can drive a very good return on an internal investment, to be world-class in our manufacturing, to be close to our mill footprint, and be closer to our customer. Okay, that's helpful. I'll turn it over. Thank you. Our next question comes from Phil Ng from Jefferies. Please go ahead with your question. Hey, good morning, guys. You know, David, great to see demand is quite strong, at least underlying, backlogs are really robust. How do you kind of see these bottlenecks that are limiting your production levels performing? Do you see that improving sequentially? When do you see that kind of normalizing over the course of the year? Yeah. Good morning. We do see that improving sequentially. I will tell you, especially in our corrugated plants, they just got hit really hard with COVID absenteeism. Then you throw in our record maintenance schedule that we had in the first quarter. I think you'll start to see that improve sequentially. We've already seen improvement in our COVID absenteeism, you know, as we progress through January. Our expectation is continuing to get our labor force back, continuing to improve our labor productivity, continuing to get the productivity at our mills with our uptime being higher. We think that'll all flow through sequentially throughout the year. Yeah. Just to give you a sense, I mean, historically, Q1 is sort of our seasonal low. I think you've got a bit of the perfect storm. You've got a seasonal low, you've got all the absenteeism issues that David's mentioning, the supply chain issues that David's mentioning, and, you know, and then just really in the opening innings of the WestRock Operating System. If you think about the outlook for the year, we've baked in, you know, sequential improvement really over the duration of the year. You should expect to see both volumes and margins improve as we get into the balance of the year. Yeah. No, that's great. I mean, just given the absenteeism, I thought your fiscal 2Q guide was pretty solid. You guys are operating quite well in this tough environment. David, just given with the new segments in place, as you kind of embark these efforts to better integrate consumer and corrugated, how's that process stacked up relative to your expectations? When we think longer term or even medium term, what are some of the big buckets where you see performance improving on the operations front? Anything that stands out that's a low-hanging fruit opportunity? Well, the answer to the first part of your question, I'm probably one of the more impatient people you'll ever meet. I, you know, for me, I want everything tomorrow. But this is a journey. When I look at opportunities, as you mentioned, Phil, I think, you know, I really feel like we have a great footprint in our position, but we just have not fully integrated the business. I've just been around a lot of acquisitions where once you fully integrate and capture the value of the scale and the operational efficiency, the supply chain efficiency, it is remarkable, the margin expansion that that can create, as well as starting to improve your ROIC on the investments that you make. I just believe, you know, we've developed what we call this WestRock Operating System that standardizes the critical metrics that we believe are just so important to run our business. It immediately identifies areas for improvement, and then we put rigor and process and tools to execute that. We're gonna be highly operationally focused now that all these assets are in place, and I think that's gonna create a lot of value. You know, Phil, my favorite slide in the slide document is slide seven, where we walk through the details of what the transformation agenda looks like. You know, these are all real. This isn't just sort of words on the page. We're gonna go through this in depth when we get into our Investor Day. You know, I think the headline here is that we've got a very broad-based, deep transformation agenda across all the levers of the P&L, and that's what we're gonna be driving as we push to a fundamentally different margin profile. Okay. Super. Thanks a lot, guys. Thanks, Phil. Have a good day. Our next question comes from Mark Wilde from Bank of Montreal. Please go ahead with your question. Morning, David. Good morning, Alex. Morning. I wondered just to start, and following on these discussions around Longview, can you just share some thoughts with us on the level and direction of capital spending over the next two or three years, where you see the biggest opportunities to put capital to work to improve returns? You know, typically, our capital diet is in the order of $1 billion. I think we've provided guidance of $900 million-$1 billion this year. I think one of the things that both David and I have a lot of passion around is making sure we're deploying, just for sake of round numbers, deploying that $1 billion to the highest return projects and really focusing the company on ROIC. Of course, there's you know, the basic sustaining and health and safety investments that we have to make, but then there's these growth investments. I think as we think about growth and productivity investments, the Longview plant is a perfect example where we're gonna build a factory of the future, leveraging all of the world-class automation, digital technologies. We have another investment that we didn't talk about in the script around pre-print capacity and bringing digital into pre-print to reduce the setup times and allow shorter runs and really deliver on what our customers are asking us for. As we think about capital deployment going forward, it's gonna be all about how do we deploy our $1 billion of capital to the highest return projects, and how do we look at the portfolio and where there's things that aren't delivering on the return threshold, you know, consider alternative uses or alternative disposition of those assets. You know, obviously this is an extremely capital-intense business, and I think there's work that we can do to make sure we're getting the best return on the investments that we're making. David can talk more about the strategy for that. Yeah. Well, I think Longview, Mark, to your point, is a great example of that. I mean, the easy thing would have been to, okay, is there an independent box plant in the Pacific Northwest we could buy to help with our increasing capacity needs? That would have been a lower return, much lower than building this 400,000 sq ft box plant the way we wanna build it in the exact geography that we wanna build it. Lowers our cost. It sets us up for exactly how we wanna run an incredibly efficient box plant and be close to our customers at the same time. The ROIC or the return on that is gonna be much higher than if we were just to make an acquisition in the Pacific Northwest. That's kind of how we're thinking about it. Okay, that's helpful. I guess for follow-on, I'm just curious, David. You've been at WestRock for about 10 or 11 months now. You know, any thoughts on, you know, potential changes in how you manage integration or, you know, how the industry handles things like national accounts, which are often an area of debate within the sector? Yeah, I'm smiling, Mark. You know, it's been interesting coming into this industry. Obviously, I came from a different industry. I think there's opportunities, especially as we continue with innovation and sustainability and our machinery business and everything we can provide, especially at a national account platform that values solutions. I think there's opportunities how we commercially look at value selling, which gets us out of some of the cyclicality of margins. We're gonna look very hard at that, and how we partner with customers to look at that, to reduce our cyclicality. You know, if I look at the integration piece of it, you know, I may have mentioned this before, but I always believed when you make acquisitions, you have to make one plus one equal three. You do it for a reason, and it's to be significantly better and to bring better shareholder value and better customer value. We've brought all of these acquisitions together, but we hadn't fully integrated them. We're not quite at one plus one equals three, which is why all the efforts we're doing, which we are confident we're gonna be able to execute, we're gonna get to three, and that's gonna be helping not just our growth, but our margin and ROIC profile. All right. Very good. Good luck through the balance of the year. I'll turn it over. Thank you, Mark. Our next question comes from Lars Kjellberg from Credit Suisse. Please go ahead with your question. Yeah, good morning. I just wanna turn back to you mentioned quite frequently sustainable packaging solutions. It's curious to see this has been a relatively low-growth business in the past. Sustainable packaging may be pathway to accelerate growth similar to e-commerce. I'd like to know if you can comment on how you see your pipeline building in that business and how you view that potential opportunity in light of what you've seen in e-commerce, if you dare to compare the two, and what you'd need to do, if anything, to capture that potential growth. Yeah. Thanks so much for that question, Lars. I think the sustainability piece is something that is one of the most exciting things about this industry, because of the environmentally friendly, sustainable solutions that we provide. Our run rate on and we measure our plastics replacement opportunities. Our run rate every quarter continues to improve on business that we capture in plastics replacement. And really sustainable solutions is the way I would say it as well. You know, we, you know, as we started measuring this, even last year, we had a run rate of about $250 million. Then, you know, a couple quarters later, our run rate improved to $280 million. And right now we're just below $300 million. I mean, it just sequentially continues to grow. You throw in the paper side of it. That's just on the packaging. Now paper with kraft paper, as I mentioned earlier, with 10 states banning plastic shopping bags. We mentioned last quarter, I believe, the Tim Hortons program we have in Canada for a completely sustainable cup, which could translate across multiple applications in food service. It's just an incredibly exciting opportunity. As we see the plastics, you know, market overall is well over, you know, $50 billion. We've broken it down to what is the attractive market that we believe we have a very good solution for, and we see that at about $6 billion-$7 billion. Got it. Do you need to change anything to capture that opportunity? No, you're absolutely right, Lars. What we're really doing is investing in our innovation and R&D labs. We are finalizing the expansion of our pilot plant in Richmond, Virginia, to pilot all of these programs with customers that we're partnering with to develop solutions, 'cause we have a ton of products. We're hiring a lot more on the R&D side on barrier properties, 'cause we think barrier properties is really a key to packaging innovation for sustainability. We are investing in this, and you'll continue to see expansion of that investment as our opportunities continue to grow. Just a question about how do you view this relative to what e-commerce has delivered from 0% to 15% of the business, where you see this potentially being in five-10 years from now? You know, I apologize, Lars. I'm not sure I heard your question. You said e-commerce? Yeah. If you compare this opportunity to what e-commerce has delivered. Oh, yeah. You know, e-commerce is an interesting market for us. I mean, it's an important market. It's definitely significantly higher than it was pre-pandemic levels, but I think you're starting to see a little bit of a plateau in e-commerce from some of the major players. The reason for that, I think, is also because, you know, the work we're doing with them to get the right package size. We have things like pack on demand, where there's not a lot of waste of air space in the packaging, so there's less packaging. You know, if you think about the omni-channel and the number of people that are getting into e-commerce, that just continues to grow. I think there's innovation opportunities in e-commerce too, when we think about smart packaging and the connectivity we have of our packaging and supply chains and the interaction with customers. We're also looking at an innovation side, in that regard. E-commerce is a really important growth market for us. Is it as high as plastics replacement? It's hard to say for me. I get excited about both of them. Got it. Thank you, and good luck. Thank you. Our next question comes from Mike Roxland from Truist. Please go ahead with your question. Great. Thanks very much. Congrats, David, Alex, James, really, on the transformation that you're proceeding with. Thanks, Mike. Just a quick question, David, on the transformation plan. I know Alex referenced this slide 7. You know, that's the key slide highlighting the various phases of that plan that you're pursuing. Realizing that you want improvement as soon as possible, can you give us a rough sense of timing to complete this plan? And you know, is it one year out, two years out? How should we think about those various phases that you've highlighted and your timing to completing each one? You know, it's a really good question because there's so much opportunity. There are projects we've completed that you know we'll start to see the benefit for this year. There are some big projects that we probably won't see the material value till next year, but we are measuring it. At our Investor Day, we'll kind of walk through each bucket, as Alex talked about, what we see the value of, the timing of that. Our expectation is to make continuous progress sequentially. Some of the bigger projects might take a year and a half, but there is a lot of low-hanging fruit that we're gonna take advantage of starting this year. Gotcha. Completion, if some of those larger projects do take a year and a half, the plan itself, from our vantage point, should be completed by fiscal 2024, roughly? You know, I guess the way, Mike, I might tackle the question is, as with any continuous improvement journey, there's you know, never a completion, right? So we're gonna continuously optimize the company, and we're gonna drive a fundamentally different culture around continuous improvement, focus on ROICs, focus on margin, extremely disciplined capital allocation. I think that's part of the change that David's driving. When we get to Investor Day, I think we're gonna be prepared to lay out you know, a target to 2025. We're not gonna wait until 2025 to unveil what the improvement is. There's gonna be, as I mentioned in the guidance, improvements sequentially over the course of the year, where we get to more historical margins. As we get into next year and beyond, we're gonna close the gap on our competitors. We're gonna divest aspects of the portfolio that aren't meeting our return thresholds. I think, you know, we're gonna lay out for you a very clear vision for what the next, call it, three years looks like, with very tangible milestones that you can hold us accountable for. You know, there's gonna be near term and long term, and then, you know, once we get there, we're not gonna stop. Got it. I appreciate your time and the additional color. Just one last question. Realizing that you are gonna provide these details later at the Investor Day in May, is there any incremental color you could provide around this WestRock Operating System, even at a very high level? It's been referenced a couple times during your call. I wonder, and David, you mentioned and said it is truly unique and really does differentiate WestRock from others. Just any color at a really high level as to this operating system and what is unique about it and how it allows WestRock to operate differently than it had and certainly versus peers? Thanks. Yeah. Thanks, Mike. It really starts at the foundational level of measuring the right things and measuring them the right way across the company. You know, our vision is of growth, margins, return on invested capital, investing in, you know, our people on their training, growth, and safety. What are the right metrics for that to drive what we're trying to drive? We have established that. Now once we have that established, we immediately identify gaps to what is world-class and, to Alex's point, how do we continuously improve across all of these metrics that we've now identified? We have, as we mentioned, a transformation team in place. We have rigor around. We've identified the projects that are gonna drive that value, and we've put rigor, processes, and tools to execute it, and we measure it, we review it, we change compensation plans on it. That's gonna drive our transformation. We'll share more detail about our new Operating System at our Investor Day. It's probably more operationally focused than we've been before. It also has a commercial excellence focus to it. We're excited to implement it, and it's gonna really help drive the vision that we have for the future. Thank you. Good luck for the rest of the year. Thank you. Ladies and gentlemen, with that, we're going to close today's Q&A session. I'd like to turn the floor back over to the management team for any closing remarks. Well, thank you for joining our call today. If you have any questions, please give me, James Armstrong, a call or shoot me an email. I look forward to talking to you next quarter. Thank you. Ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for joining today's presentation. You may now disconnect your lines.