Packaging Corporation of America (NYSE:PKG) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Third Quarter Bookings
George Staphos – Bank of America Securities: My first question would be can you comment at all on how early third quarter bookings and billings have been. And can you comment at all on the June box containerboard data which came out whether the data was more or less in line with your expectations or if there was any variance. Then I have a couple of company-specific questions?
Mark W. Kowlzan – CEO: Regarding the bookings and billings, for the first seven days our bookings are up about 18%, billings are up about 11%. Again, we are off to a good start, but also take into account the fact that the way 4th of July fell this year on Thursday; Friday and some box plants was an operating day, so even though it was not included as an official day there was some cut-off days. So the numbers are skewed somewhat, but we are off to a strong start but we do expect those numbers to temper down over the rest of the month. And then regarding the FBA numbers this morning; the one comment I do want to make if you look at PCA we came out of our second quarter and — at the annual shutdown of the three of the mills we needed to run, we needed to build some inventory. But we are actually, for the month of June, we build some inventory so our PCA number we are up 5,000 tons. But we are still too low after the outages and so for the quarter we were still down 12,000 tons. So, on an industry basis if you think about the month of June and what the FBA numbers we’re reporting, you’re talking about a 30 day mill month as opposed with 20 day box plant month and again that’s a 10 day differential. Normally, you’ll see a 9 day differential, so you’re talking about 100,000 ton mill contribution from this particular June that typically you wouldn’t see. So, with that, I really don’t have a lot to add to the FBA numbers, except again volume has been strong in our case and the inventories is trended at the historically low levels.
George Staphos – Bank of America Securities: One question maybe more specifically to PCA and you alluded to this in your comment. You’re accelerating some projects to add some high return or accelerate some high return project in the box plants over the next 12 months into this year. If we had a stack rank what investors see as the most likely sources of return improvement in PCA from here over the next couple of years, would it be coming from the market development as you‘re seeing in the economy, would it be coming from the capital deployment as you just mentioned for operations or would it come from value return to shareholders, how would you stack rank the most likely sources of improvement on return to the shareholder from here from those three sources?
Mark W. Kowlzan – CEO: Again, if you think about what our strategy has been for the last few years, we have goal of getting our integration level up to the 91% level and continuing to deploy capital especially in the box plants to help in that direction, which we’ve been very successful at. With that in mind if you think about where we are, year-to-date we’re sitting at about 87% integration, but from a return point of view, again I think the capital that we are spending in the box plant continues to give us extremely higher return opportunities, and as you are seeing that in the volume. Tom, do you want to add anything else (indiscernible). We don’t really talk about it a lot, but your side of the business has been pulling a lot of good small pieces of return – big volume growth.
Thomas A. Hassfurther – EVP, Corrugated Products: Mark, I would just add that we’re really a customer driven company, a revenue driven company. So we will deploy that cash where that driver can accelerate our earnings. That said I think we also taken all of the above approach and we’ve developed a lot of flexibility and we’re pretty opportunistic about where we want to deploy that cash. But right now we have some opportunities in the box plant as Mark alluded to that have some good returns and we’re accelerating those solely based on the facts that we have some very good customer opportunities and they are coming to us, and we’re taking advantage of those opportunities.
Richard B. West – SVP and CFO: Just to summarize, (indiscernible) good question. If I ranked the first one that you had to pick one and I think Mark said it, increasing our integration level will be our greatest source of value creation for shareholders. So, if you don’t mind we’ll circle back to you later for other questions. We have 15 analysts now that cover us and we want to give everybody an opportunity. So, we are going to have to cut you off George, no malice intended.
Anthony Pettinari – Citigroup: Mark, you referenced improvements and some capacity addition opportunities on the box plant side. And given that you are growing faster than the industry and your mills are running full out or near full out. I am wondering would you consider capacity expansion on the mill side or over the next one, two years how should we think about your mill footprint in terms of capacity as you continue to grow kind of faster than the industry.
Mark W. Kowlzan – CEO: The number one priority continues to be the integration level. We‘ve spoken over the last year though we continue to have the tons available that come out of the outside sales both to the export and the domestic sales side of the equation. So, with the creep capacity that we currently have in the mills and the efficiency with which we are running and then with the opportunity to move tons and rationalize tons longer term out of those export domestic markets the mill acquisition, mill incremental capacity is a lesser concern at this point as opposed to the integration, if so.
Anthony Pettinari – Citigroup: And then maybe just a very quick follow-up. You referenced rail car shortages and maybe some higher transportation costs and that’s some things that other producers have talked about. Is this a problem that’s getting worst as you go into the third quarter or is it isolated to a specific region or is there any kind of color you can give us about what the pressure is in terms of transportation cost?
Mark W. Kowlzan – CEO: It was a combination of we went through the outages in the spring, we obviously had opportunities and issues combined with how to take care of the box plants during that period of timing and get the tons move to the right places from the remaining mills that we are running. Again, we had some spring issues again just with the normal seasonality with regards to rails and trucking. And then, again just the nature of where we are with the trucking industry and so, that being said again the fact that we compressed our annual shutdowns into the April-May period probably created the most – the biggest factor in that transportation.