The group reports in three reportable segments: Packaging, Paper and Corporate and Other.

The company's Packaging segment includes a comprehensive network of containerboard mills, converting facilities, and administrative offices. In 2023, it produced 4.5 million tons of containerboard and 60.5 billion square feet of products, generating $7.1 billion in sales. The production process uses a mix of virgin and recycled fibers, with 18% of production from recycled fiber. The segment serves approximately 14,000 clients across diverse industries, such as food, beverages, and agriculture, and operates across 30,000 locations. The company faces competition from major players like International Paper, WestRock Company, and Georgia-Pacific LLC. Additionally, they emphasize sustainability by using renewable materials and biogenic fuels, while sourcing essential chemicals like caustic soda and starch through contractual agreements.

As a leading North American producer of uncoated freesheet (UFS) paper, the company manufactures both commodity and specialty papers, including communication and printing papers. These products are sustainably produced from renewable materials and are recyclable. The Paper segment serves around 40 customers in 150 locations, including distributors, retailers, paper merchants, and converters. This segment operates in a highly competitive market, facing key players like Domtar Corporation and Sylvamo Corporation, with significant price sensitivity.

The corporate segment cover corporate support services, transportation assets like rail cars and trucks for product transport, and assets related to the 50% owned Louisiana Timber Procurement Company LLC (LTP).

In 2023, the company faced heightened risks from inflation, significantly impacting the costs of virgin wood fiber, recycled fiber, and natural gas. The competitive UFS paper market, with intense global competition, made it challenging to pass these increased costs to customers. Furthermore, the company's reliance on key customers, such as ODP Corporation, which represented 61% of the Paper segment's sales, presents a substantial risk. Any changes in purchasing patterns or contract renewals could lead to significant revenue losses.

In 2023, the company's net sales dropped to $7.8 billion from $8.5 billion in the previous year, with net income decreasing to $765 million from $1,030 million. This decline was due to several factors, including a 5% reduction in North American corrugated product shipments and a 3.1% drop in containerboard production and inventories. Additionally, linerboard and corrugating medium prices fell significantly, contributing to the lower revenues. The uncoated freesheet paper market also saw a 9.7% contraction, further impacting financial performance. The Packaging segment's income from operations fell to $1,074 million, and EBITDA excluding special items decreased to $1,556 million. Overall, corrugated product shipments were down 4.6% for the year, with some recovery seen by the fourth quarter. The company ended the year with $1,206 million in cash and marketable debt securities, and a total liquidity of $1,529 million. Despite some cost savings in operating and converting expenses, the company faced increased freight and logistic costs, which compounded the challenges faced in both the Packaging and Paper segments.

In Q2 2024, the Packaging segment achieved a record in daily corrugated products shipments. However, rising containerboard inventory levels, which increased by 16,000 tons from the previous quarter, pose a risk of higher storage and operational costs. The Paper segment saw an 8% decline in sales volume from Q1 2024, exacerbated by cost pressures from seasonal electricity usage and rising recycled fiber costs. Looking forward, the company expects a strong performance in the third quarter, potentially setting a new record for shipments-per-day, driven by higher containerboard and export prices. Nevertheless, managing inventory levels, the timing of seasonal demand, and controlling operational costs will be crucial to maintaining profitability and meeting earnings targets.

Despite outperforming the broader market, the stock faces challenges due to weakened fundamentals. Near-term margin prospects are under pressure from slower topline growth and rising operational expenses. Although long-term prospects are bolstered by potential operational improvements and higher pricing, the current elevated valuation raises concerns about the stock's reasonableness at this time. Caution is advised given the immediate headwinds facing the company.