Good morning. Welcome to the WestRock first fiscal quarter 2023 earnings call. All participants will be in 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 then one on your touch tone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Robert Quartaro, Senior Vice President of Investor Relations. Please go ahead. Good morning, thank you for joining our first fiscal quarter 2023 earnings call. We issued our press release this morning and posted the accompanying presentation to the investor relations section of our 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's Chief Executive Officer, David Sewell, and our Chief Financial Officer, Alex Pease. Following our prepared comments, we'll open the call for a question-and-answer session. During today's call, we'll be making forward-looking statements involving our plans, expectations, projections, estimates, and beliefs related to future events. These statements involve a number of assumptions, risks, and uncertainties that could cause actual results to differ materially from those we discussed during the call. We describe these assumptions, risks, and uncertainties in our filings with the SEC, including our 10-K for fiscal year ended September 30, 2022. We will also be referencing non-GAAP financial measures during the call. We have provided reconciliations 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, I'll now turn it over to you, David. Thank you, Rob. Thank you all for joining our earnings call today. This morning, I'll provide an overview of our fiscal first quarter results, followed by a review of our strategy and progress on our transformation. I'll turn it over to Alex, who will review our segment performance in more detail, review our Adjusted Free Cash Flow, and provide our outlook for the fiscal second quarter. We will then move to Q&A. Turning to our first quarter results on slide three. Net sales were comparable to prior year at $4.9 billion. Consolidated Adjusted EBITDA declined 4% to $652 million. Adjusted EPS was $0.55, a decrease of 15% compared to the prior year quarter, and the company generated $30 million of Adjusted Free Cash Flow. It's important to note that consolidated Adjusted EBITDA was negatively impacted by $119 million due to economic downtime and weather disruptions. Pension and foreign exchange rates also negatively impacted our year-over-year consolidated Adjusted EBITDA growth by $57 million combined. As we anticipated, the first quarter operating environment saw continued inventory rebalancing, elevated inflation, and shifting consumer spending. These trends primarily impacted external container board demand as well as our corrugated packaging segment. Corrugated packaging improved quarter-over-quarter, with North American packaging shipments up 2% to 373 million sq ft per day. We continue to balance our supply with our customers' demand, we incurred 356,000 tons of economic downtime during the quarter. Our consumer packaging business and external paper board continue to see consistent demand, supported by exposure to several resilient end markets and adoption of our plastics replacement solutions. During the quarter, our consumer business was negatively impacted by weather disruptions and other items in several of our mills. We continue to see healthy demand and backlogs. The resiliency of our consumer business illustrates the benefit of our diversified business model and differentiates us in the market. Longer term, it also positions us well to capture more share of wallet as we are the only paper and packaging company able to offer a full range of packaging solutions, including machinery and automation. Corrugated packaging Adjusted EBITDA margins, excluding trade sales, were 14.2%, an increase of 70 basis points. Consumer packaging Adjusted EBITDA margins were 15.1%, an increase of 20 basis points. Both corrugated and consumer margins benefited from strong year-over-year pricing. We are continuing to implement previously published price increases in our consumer business, which should continue for several more months. Global paper margins declined 320 basis points to 14% as inventory rebalancing and softer demand pressured results. Distribution Adjusted EBITDA margins increased 140 basis points to 3.4%, primarily driven by favorable selling price and mix. We ended the quarter with net leverage of 2.35 x, slightly above our targeted range of one and three-quarter times to two and a quarter times. We intend to use proceeds from the expected sale of our stake in RTS and our Chattanooga mill, as well as our free cash flow to return leverage to our targeted range over time. We remain focused on executing our transformation and striving toward the goals we outlined in our Investor Day last May, recognizing the uncertain macroeconomic environment. We see significant opportunity to drive productivity, increase our margins, and improve our return on invested capital. We will continue to leverage our robust cash flow to invest in growth, manage our leverage, and return capital to shareholders. Before moving to an update on our transformation initiatives, I'd like to highlight that for the third consecutive year, WestRock was included in the Dow Jones Sustainability North America Index in recognition of our commitment to sustainable business practices. The index recognizes the top 20% of sustainability performance among the 600 largest U.S. and Canadian companies. Sustainability is core to what we do at WestRock. We're proud to be recognized for our efforts. I'd like to thank our 58,000 team members for living our values in everything they do. Turning to slide four. Last May, we communicated the four key pillars of our transformation strategy. We continue to make progress in each of these areas. First, leveraging the power of one WestRock. Given WestRock's broad capabilities and scale, we are uniquely positioned to deliver value to our customers and serve their packaging needs. An ongoing example of this is our relationship with Molson Coors. Through our partnership, Molson Coors is replacing their use of plastic rings with our Cluster-Pak packaging and automation solution. Molson Coors estimates this solution will eliminate over 1.7 million pounds of plastic waste annually by 2025. The complementary relationship between our machinery business and packaging serves our customers well, creates deeper relationships, and drives organic growth. We now have over 5,100 machines in our installed base. It continues to grow. We see strong demand for our machinery solutions with backlogs of 12 months as of the end of the quarter. Our next pillar is innovating with a focus on sustainability and growth. We are investing in innovative solutions to help our customers meet their sustainability targets and displace plastic packaging with more than 225 innovation projects in development. More than 30 of those projects are related to plastics replacements. Our plastics replacement revenue continues to grow and is currently estimated at a $365 million run rate, and we are targeting increasing that to more than $700 million in run rate revenue by fiscal 2025. Our third pillar is relentless focus on margin improvement and increasing efficiency. We are executing on our productivity initiatives, and we are on track to achieve $250 million in cost savings in fiscal 2023. These initiatives are driving savings through logistics and planning optimization, centralized procurement, SG&A reductions, and efficiencies in our mill and converting network. We continue to see significant cost-saving opportunities beyond fiscal 2023, and we remain focused on unlocking these savings to expand our margins. Finally, executing disciplined capital allocation. We remain focused on using our cash flow to drive value through our disciplined capital deployment strategy. Last year, we invested more than $860 million to maintain and improve our assets. We've increased our dividend over 37% in the last seven quarters, while also repurchasing more than $700 million of our stock. We are also continuing to refine our portfolio to focus on the most attractive markets, reduce volatility, and improve our return on invested capital. Last year, we permanently shut capacity in higher-cost facilities in Panama City and Saint Paul, enabling us to redirect significant capital investment toward better use in other assets. In December, we closed on the sale of two non-core URB mills, and we continue to work toward closing on the sale of our stake in RTS and our Chattanooga mill, which remains subject to regulatory approval. We also recently completed our Grupo Gondi acquisition, which complements our North American footprint and increases our exposure to the attractive Latin America market. The IMF projects this strategically important market will grow more than 50% faster than the United States, driven by economic growth and export product expansion in produce, protein, and industrial goods. In addition to attractive financial returns, Grupo Gondi's high-quality assets bring us closer to many of our large multinational customers operating in the region. Grupo Gondi is already contributing to our growth, with Adjusted EBITDA of $17 million since the acquisition closed in December, and its full year results were in line with expectations. The results for Grupo Gondi are included in other unallocated this quarter, given the timing of the closing, we are near finalizing how we will report it longer term. I'll now turn it over to Alex to discuss our segment results in more detail. Thanks, David. Moving to our consolidated quarterly results on slide 5. First quarter net sales were roughly flat year-over-year at $4.9 billion, consolidated Adjusted EBITDA declined 4% to $652 million. Consolidated Adjusted EBITDA margin was 13.2%, down 50 basis points year-over-year. Price and mix positively contributed approximately $454 million year-over-year. This benefit was offset by cost inflation, lower volumes, and higher operating costs. Note, consolidated Adjusted EBITDA was negatively impacted by $119 million due to economic downtime and weather disruptions, which impacted our volumes and operating costs. Pension and foreign exchange rates also negatively impacted our year-over-year consolidated Adjusted EBITDA growth by $57 million combined. Turning to slide six. Corrugated packaging segment sales, excluding trade sales, were $2.2 billion, an increase of $26 million or 1% year-over-year. Adjusted EBITDA increased $20 million or 7%. Adjusted EBITDA margin, excluding trade sales, increased 70 basis points year-over-year to 14.2%. As David mentioned, we saw 2% improvement quarter-over-quarter with per-shipping day volumes of 373 million sq ft. Strong pricing and mix contributed $206 million, largely offset by $70 million of inflation, $58 million from lower volumes, and $39 million from higher operating costs. Results were negatively impacted by $60 million due to economic downtime and weather disruptions during the quarter. We are managing our business for current conditions and will continue to balance our production with our customers' demand. Turning to the consumer packaging business on slide seven. Segment sales increased $76 million or 7% year-over-year to $1.2 billion. Adjusted EBITDA increased $14 million or 8%, and Adjusted EBITDA margin was 15.1%, an increase of 20 basis points year-over-year. Strong price and mix contributed $132 million, partially offset by inflation of $54 million and higher operating costs of $34 million. Consumer packaging demand remains strong and backlogs are healthy. This diversification from our consumer business reduces earnings volatility and provides attractive long-term growth opportunities. Turning to slide eight. Global paper segment sales decreased $229 million or 17% year-over-year to $1.1 billion. Adjusted EBITDA declined 32% to $157 million, with Adjusted EBITDA margin declining 320 basis points to 14%. While Adjusted EBITDA declined year-over-year, it was 4% above the first quarter of fiscal year 2021. Strong price and mix contributed $115 million, more than offset by volume of $114 million and inflation of $48 million. Note that Adjusted EBITDA was negatively impacted by $56 million due to economic downtime and weather disruptions. We saw weaker demand for container board and more resilient demand for paper board during the quarter. Export container board declined 65% while domestic container board declined 33%. In the current environment, we are continuing to prioritize margin over volume in our global paper segment. Longer term, demand for our external container board business should benefit from the limited supply of virgin fiber globally. I'd like to mention that we will face a difficult year-over-year comparison in the second quarter as global paper revenue increased 36% year-over-year in the second quarter of fiscal 2022. Our distribution results are on slide nine. Segment sales decreased 1% year-over-year to $322 million, and Adjusted EBITDA increased 66% year-over-year. Strong price and mix contributed $20 million, partially offset by inflation of $13 million and volume of $3 million. In the quarter, favorable selling price and mix contributed to the 140 basis points of margin expansion. Looking to the second quarter, our distribution business also faces a difficult year-over-year comparison as distribution revenue increased almost 30% year-over-year in the second quarter of fiscal 2022. Turning to slide 10. During the quarter, we generated $30 million in Adjusted Free Cash Flow, down $54 million year-over-year, driven by higher capital expenditures. We expect fiscal year 2023 Adjusted Free Cash Flow to be above $1 billion for the year, making this the eighth straight year of Adjusted Free Cash Flow above $1 billion. We ended the quarter with net leverage of 2.35 x. Looking ahead, we're focused on returning that leverage to our targeted range of 1.75 x - 2.25 x. Turning to slide 11 and our other financial guidance. We remain confident in the long-term trajectory of our business. WestRock's diverse portfolio of sustainable fiber-based packaging and complementary machinery uniquely position us to serve our customers. We are focused on serving our customers and growing our business through cross-selling, packaging innovations, and plastics replacement solutions. At the same time, we see significant opportunity to reduce costs by the following actions. One, leveraging our scale to capture cost savings in procurement. Two, optimizing our logistics and planning. Three, driving productivity in our mills and converting network. Fourth, streamlining our back-office operations. That said, we're not immune from macroeconomic conditions, which have created uncertainty in the near term. As such, we're removing our full year guidance. Our forecast for second quarter consolidated Adjusted EBITDA is $625 million-$725 million, and Adjusted EPS is between $0.31 and $0.61. Some assumptions behind our sequential outlook include the following: favorable costs driven by natural gas down approximately 20% to $5 per MMBTU, OCC costs stable at $35 per ton, and stable costs in virgin fiber, chemicals, and freight. An effective tax rate between 23% and 26%, and approximately 257 million diluted shares outstanding. We are planning 132,000 tons of scheduled maintenance downtime across our system in the second quarter. I'll now turn it over to David to conclude before we move to Q&A. David. Thanks, Alex. While the current environment remains dynamic, WestRock's diversified business model and financial strength positions us very well. Our ability to provide corrugated packaging, consumer packaging, and complementary machinery solutions differentiates us in the market and uniquely positions us to deliver a complete range of sustainable packaging solutions. In addition, our distribution business provides an additional channel for our products and allows us to serve a broader customer base. Our strong balance sheet and robust cash flow engine enables us to invest in our business and execute our transformation agenda in the midst of changing market conditions. We remain excited about the future, and we look forward to providing you updates on our progress. Thank you. Rob, with that, let's move to Q&A. Thank you, David. Operator, we are ready to take questions. Thank you. We'll now begin the question-and-answer session. To ask a question, you may press star then one on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Kyle White from Deutsche Bank. Please go ahead. Hey, good morning. Thanks for taking the question. I guess I just wanted to touch on the guidance and the full-year outlook and the decision to remove it. I guess where is the most uncertainty that you're seeing and kind of the rationale for this decision? Is it on demand and corrugated and implications on pricing or are you seeing a similar level of uncertainty in consumer as well? Yeah, thanks, Kyle. This is David. You know, we really wanted to be very transparent with the economy and where it's at. To answer your question, our packaging business in both consumer and corrugated came in fully in line with our expectations in Q1. We have full confidence in our packaging business, both corrugated and consumer, in our full-year forecasts. Even despite the soft macroeconomic conditions in packaging, our sales, our EBITDA, and our margins were all up in Q1. Where we see the biggest headwind is in our global paper business. Our customers really experienced much higher inventory levels in the last quarter with a much softer demand environment than they even expected. That was particularly true in the export market. There was no lost business. Our relationships are extremely strong. It was just an uneven global macroeconomic environment. As we look at the full year, the visibility, it was just difficult for us to ascertain purely in global paper in this environment. Our customers are definitely expecting more normalization in the second half of the year, and we do expect sequential and steady improvement. We're focused on what we can control and manage with our costs and productivity. We're confident that we'll get back to normalization. It's just probably gonna take a little bit longer than we anticipated and our customers anticipated. We felt the best thing to do was to provide a quarterly forecast till we get back to more confidence in the global environment. Just as a reminder, Kyle, our global paper had an incredible year in 2022. Sales were up 20% almost. EBITDA was up 40%. Going back to 2021, we're still up 3%. We see the paper business in its cyclical downturn. We have a tremendous leadership team that's actively managing through it. We've all measured these turns very well in the past, and I'm confident we're moving through this cycle in paper as the year progresses. Sounds good. On the outlook for next quarter, are you able to give us a sense of how shipments have trended here in January for both the corrugated as well as the consumer business or maybe what the outlook assumes for demand? Yeah. Kyle, we've definitely seen corrugated stable from Q1 into Q2. Year-over-year, it's actually a slight uptick. We feel good about where that's going. Consumer is truly a resilient business, very strong through this cyclical environment. January is off to a really good start. One comment I'd make on consumer, we did have a weather impact at seven of our mills in December. That did impact us a little bit. The business is strong and resilient. I'd also say on the paperboard side in global paper, it's been resilient as well. Really when you look at our full-year forecast and where we're at, it's really just the uncertainty around the global paper business, particularly in the export market. Sounds good. I'll turn it over. Thank you. Thanks, Kyle. Our next question comes from Mark Weintraub from Seaport. Please go ahead. Thank you. Dave, just a quick clarification. You'd mentioned corrugated, a slight uptick year-over-year. Does that mean that the year-over-year comparisons are looking a little bit better, i.e., it's still down but not quite as down as opposed to...? Yeah. -actually seeing an uptick? Yeah, Mark. Sorry if I wasn't clear. If we look at how we exited Q1 year-over-year, we're seeing a slight uptick over Q2 year-over-year. We do still see the volume down. Okay. Thank you. I mean also just on the global paper that we... I assume that's pretty much container board. Is that fair to say, as opposed to the consumer packaging grades? That is correct. Our our paper board sales were actually up sales-wise year-over-year. Can you share with us at this point, Maybe in the prior quarter, what% of your container board production was going into the export market? If you look at, in typical environment, it's usually about, in container board, it's about, you know, 75% domestic, 25% export. We just saw the dramatic softness, more on the export side. Just to reiterate, it wasn't lost business. It wasn't anything other than, you know, it was a really tight market in 2022, as you know. A lot of our global export customers were getting as much inventory as they could with the tight market. They saw a lot of softness last quarter with their customer base, so they were just had over-inventory. When you compare our container board customers to, you know, our corrugated customers, I would say we're pretty much toward the end of inventory rebalancing on that side of the business. In our container board business, they're a little further behind. That's just where we wanted to get a little bit better visibility, in the full year. Just lastly, you Alex, I think, mentioned kind of number of actions that you were looking at to improve on cost performance, et cetera. One thing I didn't hear was anything any additional potential action on the footprint. Are you, at this point, satisfied with the footprint or might it make sense to be looking at additional footprint actions? Consistent to what we said back in Investor Day and in our actions in 2022, we are going to be continuing to optimize our footprint. As you know, we took action last year with the closure of St. Paul and Panama City, the sale and divestiture of our URB mills and RTS stake. We do wanna continue to improve our vertical integration. We'll continue to optimize our footprint, especially where we maximize our CapEx for returns, and we'll continue to do that. Again, you know, this is a cyclical business. We think we're kind of near or at the bottom of the trough. We think the upside and everything our customers are telling us for this as we get through the year, it's gonna continue to improve. We'll balance all of that in our supply with our customers' demand. Great. Appreciate the details. Thank you. Thanks, Mark. Our next question comes from George Staphos from Bank of America. Please go ahead. Hi, everyone. Good morning. Can you hear me okay? Yeah. Yep. Morning, George. Thanks for all the details, and the commentary. I guess the first question I had for you, one of the things we noted in the slide is it looks like your maintenance downtime schedule, the tonnage that you have out is lower in the third quarter than you previously had been guiding to. Correct me if I'm wrong in that regard, but if there is a change that's worth noting, you know, what's going on there relative to your schedule and what's the impact in terms of earnings? Yeah. you know, George, there's no material change in our scheduled maintenance downtime. I believe in third quarter, we have 127,000 tons, which I believe is consistent with where we've been. If that's different, we'll look into it. Yeah. make a note. We can follow up. I think you're at 165 in the last slide, so I was just checking, if there's anything notable there. That's all. Okay. No. Um- We're anticipating about 130,000 tons, as David mentioned. You know, that's sort of in line with our normal maintenance schedule. Yeah. You'll know that sort of the end of the calendar year tends to be our and first of the calendar year tends to be our heavy maintenance periods. That's consistent with the way we've always done it. We can follow up, though, if there was any difference. Fair enough. Fair enough. Second question, kind of a two-parter. You said backlogs are good. I don't know if you specified a number. If you did, apologies. Could you tell us what the backlogs look like in consumer across the grade? Can you give us an update? You used to provide, you know, the enterprise sales metric, where the number of customers or amount of revenue that's being generated by customers buying $1 million of both consumer and corrugated packaging from WestRock look like. Can you give us some, here's where we are, here's where we've been on that discussion point. Backlogs and enterprise sales. Sure. I would tell you, George, first off, on the consumer side, our backlogs are consistent with what they've been in 2022, as we head into Q2. That's why we feel it's a very resilient business. We feel good about where we're at with our both our consumer business as well as our paperboard business. On the enterprise piece, I appreciate you asking that. We feel great about it. We are still tracking over $8 billion in sales of customers that buy over $1 million in consumer and corrugated. What's been really encouraging is the dialogue we're having with customers now that we have Gondi. Many of those customers, particularly in beverage, and some industrial customers, have large operations in Mexico. We're having really good dialogue both on the corrugated and consumer side. We this just really emphasizes the importance of that Gondi acquisition. Okay. Last question. I guess, do you have any kind of growth, sort of a delta, the enterprise sales or number of customers, something like that would show the progress that you're getting from that versus, say, last year or two years ago? My last one, would it be fair to say that not getting into forward-looking pricing, but the price changes that we have seen in container board will likely see most of that impact in WestRock's results in fiscal 2Q and fiscal 3Q, and if you could give us a cadence? Thanks, guys, and good luck in the quarter. Yeah, sure. To start with, your question on pricing, obviously we don't forecast what we. Yep. believe pricing is gonna do. With the pricing that has been announced, you know, if you look at our corrugated business, about 65% right now of contracts are tied to RISI pricing, and the contract implementation is typically about 3-6 months. If you back out when those increases were announced, and you add about 3-6 months, you'll see that in, you know, 65% plus of our corrugated customers. You do see that pricing much more immediate in our global paper sales. Conversely, you know, last year, as you saw that, we got price increase very quickly on paper, and there was the delay of about 3-6 months on now the corrugated side. Our next question comes from Phil Ng from Jefferies. Please go ahead. All right, Phil, is your line on mute? Pardon me, Phil, is your line on mute? Our next question comes from Cleve Rueckert from UBS. Please go ahead. Hey, good morning. Thanks for taking my questions. Just, you know, I wanted to start kind of on a big picture question, and it was sort of following up on the investor day and some stuff we've talked about before. Can you remind us how you're thinking about margins in, you know, really in the consumer and the corrugated segment? You know, as I recall, we were targeting about 20% EBITDA margin in both of those. Can you give us an update on kind of what the margin targets are and maybe on the timing and where we stand? Yeah, sure. If you go back to our Investor Day, we targeted greater than 19% margins overall for the company. We are laser-focused on, you know, value over volume, driving our value-added solutions in both our corrugated consumer business. That ties in with, you know, our customer base, our segment, our pricing discipline, but also our productivity and cost out. Even as you look at Q1, which is historically a, you know, low margin quarter just on the cyclicality of the business, and even in a softer economy, we were able to grow margins in both corrugated and consumer. We feel we're right on the right path. We're committed to the focus of our 2025 targets for Investor Day. Okay. I mean, is it fair to say that margin improvement in consumer and corrugated is kind of the focus right now? That's correct. Yeah. Well. Yeah. You know, driving growth, but, you know, it's profitable growth is the way I'd say it, where we provide great solutions for our customers. Sure. Okay. That's understood. You know, I don't wanna beat a dead horse, but just to follow up on the guidance, you know, you said that Q1 was basically in line with your expectations, which, you know, if you add back the weather, you sort of hit the midpoint or pretty close to it on EBITDA. I'd just like to understand, you know, where and really when is the uncertainty? You know, I mean, is this about second half container export demand that just isn't clear right now? Or should we take this to mean there's a higher degree of uncertainty around the second quarter? I'm just trying to square those comments of, you know, sort of Q1 falling in line and then, you know, being more uncertain about the outlook. I guess, Cleve, let me take a swing at it. You know, first of all, as David mentioned in his response to the prior question, you know, we feel really good about how the converting business is so performing. They're performing directly in line with our expectations. The segment that has been more challenged has been Global Paper, driven by the issues that David mentioned around inventory, you know, inventory destocking and customer demand. That's really it. It's the macroeconomic environment that's driving the uncertainty. We feel really good that the team is executing well, and the team is performing against everything that we can control. We're taking cost out of the back office. We're driving operational efficiencies. You know, we're managing the slowdown in the economy through prudent use of downtime. We're controlling everything we can control. As David mentioned, we, you know, still saw margin expansion even in the converting businesses. The real uncertainty comes from Global Paper and just not knowing when that business begins to rebound. Again, you know, we feel good that it will strengthen as we get to the back half of the year. You know, given the level of uncertainty, we just felt as though it was prudent to shift to a quarterly cadence as opposed to an annual cadence, which I don't think is that uncommon for cyclical industries like ours. Okay. Thanks, Alex. Our next question comes from Phil Ng from Jefferies. Please go ahead. Hey, guys. Can you hear me now? Yeah. Good morning, Phil. Sorry about that. Hey guys, quick question. On your consumer business, if I'm looking at it right, your volumes were down about 4%. Was that mostly weather-related? Anything else that's driving that? David, you commented how backlogs have been pretty strong. Do you expect demand out of consumer business to be like flat to up this year for the most part? Yeah. There was a couple things. Weather certainly played a role in December. We also have, you know, some really large national accounts that as it got to the end of the year, they just wanted to reduce their inventory levels. How January started, we, you know, we feel we're back to where we were in 2022 levels. If you look overall, as far as a dollar basis, which I know is also common that way to look at it's flat, which is similar to, you know, how the industry looks at this when you take out FX and pricing. We continue to see strength in our consumer business, and where we're at, and I think there was just a weather-related and just some inventory relations with some large customers at the end of the year. You talked about how your export business was a little weaker in containerboard. Are you seeing any of that on your box board side? I mean, I believe the SBS, you probably export a little bit. Yeah. you know, because of the weather, we actually could have sold a little bit more, but because of the weather that happened in December, as I mentioned, our sales were still up in paper board. you know, we're not seeing paper board trends similar to container board at all. Okay. Super helpful. From an inflation standpoint, Alex, really appreciate the color you provided for fiscal 2Q. How are you thinking about it more holistically on a full year basis on the big major inputs? On the nat gas side, certainly it's pulled back quite a bit lately. Can you remind us how much of it's hedged? I think you started implementing a hedging program more recently. We're probably hedged in the sort of 40% to 50% ZIP code. What we've done is our assumption on natural gas for the second quarter is around $5 per MMBTU, that's contributing about a $25 million tailwind to EBITDA when you think sequentially. When you think about the full year, you know, the full year outlook for natural gas, you know, we expect it to stay relatively stable. On a year-over-year basis, down about, you know, call it 25%. The other areas where we are seeing favorability, you know, again, sequentially versus and also year-over-year, are fiber and freight. Fiber OCC, sequentially, we anticipate being, you know, roughly flat up about 3% to call it $36 a ton, and then continuing to strengthen as we get through the balance of the year. That's offset by virgin, which is down about 8%. That becomes about a $20 million good guy to EBITDA sequentially from Q4. Freight has mitigated as well. Sequentially, we anticipate that being down about 1%. The area where we're seeing some inflationary effect offsetting the good guys that I just mentioned are both wages and chemicals, which are both up about 4%. That's about a $75 million headwind sequentially, and that will persist likely through the balance of the year. Just while we're talking about kind of guidance and the outlook, important to point out, Gondi is gonna add about $12 million of incremental depreciation for the quarter and about $47 million of interest. As you're getting your models tweaked, don't forget those two inputs. On your hedged exposure in nat gas, can you remind us, where your hedge is at from a dollar value? What we do is we dollar cost average it over the course of every month we make a purchase, and we're in the market dollar cost averaging it. Like I said, the blended number that we can share is $5 per MMBTU over our overall portfolio. Got you. Super helpful. From a cash flow standpoint, pretty impressive, despite, you know, the uncertainty, you're able to reiterate your free cash flow guidance. Any offsets that you're seeing, that's helping you kind of to sustain that level of free cash flow? In this current environment, David, any thoughts on how you want to deploy that capital? Maybe I'll take the cash flow comment, and then David can talk about where he's gonna spend it. Look, the biggest delta in the quarter was on CapEx. If you look, it was about $100 million higher year-over-year from CapEx. A lot of that's driven because of the supply chain constraints that we had. Last year, we were, you know, accelerating purchases to get the orders in the system, and now we're deploying that capital into the system. We do feel as though there's some, you know, opportunity to manage that as we get through the balance of the year. The other area where I think we can see some improvement is in working capital. As we came into the end of the year, we did see several of our large customers basically just managing their cash flow across the period, and that had a negative impact as well. We think both of those are strong levers we can pull. You know, one of the things I'd point out, we said it in the prepared remarks, for the last 8 years, we've generated more than $1 billion of free cash flow. You know, you all have lived through the cycles of the last 8 years, including COVID. I think we, you know, continue to be extremely confident in our ability to generate strong cash regardless of the uncertainty around the profitability and the revenue growth. David, do you wanna talk about the deployment? Yeah. I think it's consistent with what we demonstrated, over the last year and a half, is, we'll continue to get our leverage in the range that we've targeted between 1.75 and 2.25. With Gondi came up, you know, we'll get that paid down fairly quickly. Then with the cash flow generation, you know, we'll continue with a growing and sustainable dividend, and we'll be opportunistic in our share repurchases when we think our stock is undervalued. Okay. Super. Thanks a lot, guys. Really appreciate it. Again, if you have a question, please press star then 1. Our next question comes from Gabe Hajde from Wells Fargo. Please go ahead. David, Alex, good morning. I apologize. Good morning. If this has been asked. I we joined a minute late. I wanted to ask about this, the disclosure as it relates to economic downtime. You called it out in your corrugated operations, which I think historically speaking, we would have associated economic downtime with mill activity. I thought with the new reporting structure, that's sort of been segregated. I'm just... Was this related to corrugated operations that were also taking downtime or maybe there's a transfer effect? I don't know how to think about that. Yeah. Let me take that one, Gabe. Economic downtime, it is directly related to the mill operations. As we go through our process of dividing up profitability between our corrugated segment and our global paper segment, we basically do that following the transactions. A portion of the economic impact of that downtime will fall in the corrugated segment, packaging segment, and another portion of that will fall into the global paper segment. That's why perhaps it's a little confusing. You know, previously when we did that historically, it all would have been blended within the corrugated packaging because that's where it all sat. It did impact our corrugated business. As David mentioned, our consumer business remains strong both on the consumer packaging as well as, you know, the consumer side of global paper. That's really just as we're showing you the fully integrated margins by the segment, that's where you see the split out. Does that, does that help, I hope? It does. Again, I apologize if it was addressed, but as you look across the system in terms of inventories, you know, we on the outside world are trying to understand, you know, where you're at. I know the destocking term has been thrown around quite a bit. Just where you're at with inventories going into the heavy maintenance outage period in your corrugated system specifically? Maybe I'll take the internal inventory question, David, you know, will I think comment on how the market looks. From an internal standpoint, I think we feel as though our inventory levels are looking quite good. We did take some higher inventory at Walmart on the consumer side of the business as we were anticipating some potential disruption related to the labor issues that we've talked about. We also tend to take inventory as we're planning for the maintenance downtime. We did have, you know, inventories that were, you know, perhaps elevated, but not elevated beyond, you know, what our expectations were. David, do you wanna comment on the market conditions? I do. Maybe just one other comment. Alex mentioned Walmart, and I did wanna let you know that the contract was ratified yesterday, so, our employees will be back to work as soon as administratively possible. We feel great about that. That'll certainly help us as we move forward on our productivity issues. Just the team's just done a great job ensuring that there was no disruption in our customer service. As far as overall customer inventories, I think destocking at our corrugated customers is largely behind us. I think it's getting back to normalized levels. There's a, you know, a few here or there, where it may be a little bit elevated. As I mentioned earlier, it's really global paper, specifically even more so in the export market, where they still have elevated inventory levels. I go back to, you know, last year when it was tight, I think there was a lot of ordering to make sure that they kept their customers secured with product. With a little bit of softness in the global economy, I think their customer orders were softer than they anticipated. They're still sitting on some elevated inventory levels, but they are working through that. That's why, as Alex mentioned, as we get toward the second half of the year, I think we'll have more confidence in, you know, the normalization of where we're at. Thank you. Our next question comes from Anthony Pettinari from Citi. Please go ahead. Good morning. David, just following up on that last point. When you look at your global paper export customers, and you think about the inventory situation, would you draw any differentiation between, you know, Europe, Latin America? You know, I guess Asia is maybe a bit smaller for you. Yeah. When you talk about normalization in the second half, is that calendar, second half calendar 2023, or is that your fiscal second half? Yeah, Anthony, thanks for that. You know, it's pretty consistent. You hit it. I mean, we export Latin America, Europe, and to a smaller extent in Asia Pacific. It's pretty consistent across all of those as far as kind of the levels of inventory that our customers are seeing. I don't think I could really classify one region's ahead of another. It's just been pretty consistent that, you know, I think our customers are telling us we were just really worried last year when the market was so tight, they just experienced a little bit of softness more so than they anticipated. That will, I think, come back. Anthony, I apologize, what the second part of your question was. When, when you said, you know, second half could be the timeline for normalization... Oh, yeah. Is that calendar or fiscal? Yeah. I think that goes part to the transparency and our guidance is we are on a fiscal year, so obviously we end, you know, end of September. Our customers are talking calendar year. That's where I think it's just we just wanted to be certain. I think that's just a subtle difference with our fiscal year versus the way our customers think about calendar year, and which is why we just felt like let's go to quarter until we get that stabilization in the second half of the year, whether we understand it's our fiscal Q4 versus, you know, 2024 Q1. I think we'll get visibility to that as we get closer. Okay. That's helpful. Then just on Gondi, I mean, you gave the earnings contribution in calendar 2022. You know, understanding you're not giving, you know, full year guidance for 2023, I'm just wondering if there's any kind of finer point in terms of maybe expected contribution for Gondi or just maybe more broadly, you know, how that business and maybe the Mexican market is performing, you know, maybe relative to expectations three months ago. Let me talk about the outlook, and then actually, David was down in Mexico recently, so he'll talk about the Mexican market. You're right. We did disclose in the other unallocated portion of the business. We did disclose Gondi contributed $17 million, and that was for 1 month. The other point we made was it finished the year on a trailing 12-month basis in line with our expectations. We're not gonna give guidance for Gondi, for a lot of reasons. I think from a modeling standpoint, it's fair to, you know, either annualize the December results or, you know, take our comments on it performing in line with expectations as a reasonable pro forma for what it will contribute next year. Yeah. No, nothing more to add other than, I mean, if you look at Gondi Mexico sales, they came in line. As we mentioned, the IMF predicting that Mexico will grow faster than the U.S., and we saw their packaging sales higher than our North America sales. Okay. That's very helpful. I'll turn it over. Our next question comes from Adam Josephson from KeyBanc Capital Markets. Please go ahead. David and Alex, good morning. Thanks very much. Alex, just on clarification on your free cash flow guidance, can you put a finer point on what you're expecting to spend on CapEx as well as any source from working capital that you might be expecting this year? Yeah. Our CapEx guide is in line with $1 billion. That's, you know, that's consistent with what we've communicated previously. You know, working capital, I think, you know, it's fair to take a look at what AR did in the end of the year and, you know, anticipate that we'll be working on that significantly. I sort of anticipate, call it, you know, 4 days of improvement in our, in our cash conversion, and that'll get you back to your $1 billion or north of $1 billion. Okay, perfect. In terms of your total cost expectations for fiscal 2023, some of it's inflationary, whether it's, I think you mentioned labor and chemicals specifically, but then you've got OCC, gas, other costs that will be significantly deflationary in fiscal 2023. Just overall, can you give us a sense for what do you expect total deflation, flattish total cost, maybe slight inflation? Any thoughts there? Sure. Let me, I'm gonna avoid giving guidance, I'm gonna try to give you directionally where we're where we're headed. I think I mentioned in my prior comments, we do anticipate gas right now in Q2 at around $5 at MMBtu. We see that as relatively steady through the back half of the year. OCC, you know, it's right now at around $35-$36 a ton. We do see that strengthening as we get to the year, probably exiting in Q4, maybe a little bit between where it was in Q3 and Q4 of fiscal 2022. You know, Virgin probably staying fairly consistent with where it's been, where it exited last year. Call it in the $45-$46 a ton zone. Freight, mitigating, so freight being stable. Really the largest headwind, I mentioned being the chemical and the wage, which is 4%, and that'll persist through the balance of the year. Got it. Okay. No, thanks, Alex. David, just on the topic of providing full year guidance, I know you're doing it just to help investors get a sense for what your full year expectations are, but obviously, during COVID, the company withdrew guidance and now again, you've chosen to withdraw guidance. Just on a longer term basis, do you think it's appropriate to continue providing full year profit guidance, just given how frequently you've had to withdraw it? Look, you have no control over the macro currency, commodity costs, et cetera. Is it really worth it to try to give investors a sense for what you expect when there's just so much over which you have no control? Yeah. Adam, I appreciate your comments and thank you for them. You know, your points are all valid, and we'll continue to evaluate it, as we continue to move forward. You're right, there are a lot of moving pieces that are out of our control versus, you know, we are in a cyclical market, and so we'll continue to evaluate it. You know, I don't think we have a firm answer one way or the other right now. Yeah. Thanks so much, David. Appreciate it. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Robert Quartaro for closing remarks. Great. Thank you, everybody, for joining our call today. As usual, we are available after the call for any additional questions that you have, and we look forward to updating you again next quarter. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.