Good morning, and thank you for joining us. Welcome to International Paper's First Quarter 2021 Investor Earnings Day Conference Call. I would now like to hand over the call to Guillermo Gutierrez, Vice President of Investor Relations.

Thank you, Maria. Good morning, and thank you for joining International Paper's First Quarter 2021 Earnings Call. Our speakers this morning are Mark Sutton, Chairman and Chief Executive Officer; and Tim Nicholls, Senior Vice President and Chief Financial Officer. There's important information at the beginning of our presentation on Slide 2, including certain legal disclaimers. For example, during this call, we will make forward-looking statements that are subject to risks and uncertainties, including the impact of COVID-19. We will also present certain non-U.S. GAAP financial information. A reconciliation of those figures to U.S. GAAP financial measures is available on our website. Our website also contains copies of our first quarter 2021 earnings press release and today's presentation slides. Relative to the Ilim joint venture and Graphic Packaging investment, Slide 2 provides context around the financial information and measures presented on those entities. I will now turn the call over to Mark Sutton.

Thank you, Guillermo, and good morning, everyone. We will begin our discussion on Slide 3. International Paper delivered solid earnings and strong cash generation in the first quarter. Our mill and converting system performed well to mitigate the significant impact of the winter storm and support strong customer demand across all of our packaging channels. Input costs and transportation were a headwind in the first quarter, especially for energy, which was impacted by the duration of the severe cold temperatures in the Southern U.S. We see momentum building, continuing to build across our three businesses with very strong demand for corrugated packaging and containerboard, and solid demand for absorbent pulp. In papers, we're seeing an improved supply-demand backdrop in all of our key geographies. Our capital allocation in the first quarter, we repaid $108 million of debt and we returned $331 million to shareholders, including $129 million of share repurchases. Our performance again demonstrates the agility and resilience of International Paper to perform well across many different circumstances. We're passing the one-year mark of the global pandemic, and I could not be any prouder of the commitment of our employees to take care of each other and take care of our customers. The vast majority of our 48,000 team members work in our mills and conversion plants each and every day, and their health and safety remains our most important responsibility. We also made solid progress on the spin-off of our Printing Papers business, which we expect to complete late in the third quarter this year. Our team is also making strong progress to develop and deliver multiple streams of earnings initiatives to achieve the $350 million to $400 million in incremental earnings and accelerated growth by the end of 2023. As we work to build a better IP, we remain laser-focused on delivering superior solutions to our customers, executing well, and meeting our commitments to our shareholders and our other stakeholders. Turning now to Slide 4, which shows our first quarter results. We delivered EBITDA of $730 million and free cash flow of $423 million despite the $80 million pretax earnings impact from the winter storm in the Southern U.S. Revenue increased by more than $100 million sequentially, primarily driven by price realization in our Packaging and Global Cellulose Fibers businesses. And again, free cash flow is strong with a continued focus on running our businesses well, controlling our costs and actively managing our working capital. Now I'll turn it over to Tim, who will cover our business performance and our second quarter outlook. Tim?

Thank you, Mark, and good morning. I'll start with the quarter-over-quarter earnings bridge on Slide 5. First quarter operating earnings were $0.76. The winter storm impacted pretax earnings by $80 million or a $0.15 impact to operating EPS. We're still in the very early stages of the insurance process and do not have a recovery estimate at this time. Looking at the bridge, price/mix was strong driven by prior period price flow-through and packaging and cellulose fibers. Volume was essentially flat with continued strong demand for corrugated packaging and absorbent pulp. Overall papers volume continues to recover even though we saw the expected seasonal decline for papers in Brazil in the first quarter. Operations and costs were favorable. Mill and box system performance was solid and helped mitigate the impact of the winter storm, which was a cost headwind of $55 million to operations. Maintenance costs increased sequentially, and we expect to complete about 65% of our maintenance outages in the first half of the year. Input costs were unfavorable, which included a $20 million cost impact from the storm, mostly for energy and raw materials such as starch and adhesives. Overall, we're seeing higher costs for recovered fiber, energy, chemicals, and distribution, which we expect to continue in the second quarter. Transportation conditions are challenging, and we're experiencing significant rail, truck and ocean transportation congestion. Higher corporate expenses were driven by a noncash foreign exchange loss on intercompany loans, and lower equity earnings are partly attributed to the reduced ownership position in GPK. Turning to the segments, and starting with Industrial Packaging on Slide 6. We continue to see strong demand across all of our channels, including box, sheets and containerboard. For the quarter, volume was essentially flat. We lost 145,000 tons of containerboard production due to the winter storm. Although our mills and box plants in the region recovered quickly, the storm did impact sales in the quarter. We had nearly 30 box plants in Texas, Louisiana, and Mississippi affected by the storm, which impacted our box shipments in the quarter. Price and mix was strong. Our November increase is essentially implemented fully with the $131 million first quarter realization. And I would add, this is one of the fastest implementations that we've seen. Operations and cost includes about $55 million impact from the winter storm, about half of which is due to unabsorbed fixed costs and the balance is related to repairs and higher distribution costs. Overall, mill and box plant performance was solid, and we leveraged our system to support strong customer demand across all of our channels. Maintenance outage costs increased sequentially. We did defer about $30 million of maintenance outages from the first to the second quarter due to the significant production loss resulting from the winter storm. We expect to complete about 75% of our planned maintenance outages for packaging in the first half of the year. Input costs were a significant headwind in the quarter, including about $20 million related to the winter storm due to higher energy, distribution, and raw materials in our mill system and box plants. Higher recovered fiber costs were another significant headwind in the quarter. We expect continued cost pressure for recovered fiber, energy distribution in the second quarter, and we're still seeing the lingering effects in certain chemicals produced in Texas and Louisiana as suppliers recover from the winter storm. Turning to Slide 7. As we enter the second quarter, we're seeing continued strong demand across all of our channels. U.S. and export containerboard demand is strong with low inventories in all regions. Our first quarter shipments were impacted by the significant production loss resulting from the storm. We're working with our customers to recover from extensive backlogs. In our U.S. box system, demand remains robust as more states start lifting restrictions. E-commerce, again grew at a strong double-digit pace in the first quarter, and we believe the majority of the accelerated consumer adoption in this channel is permanent. With states starting to reopen, we're also seeing improved demand in segments with greater exposure to restaurant and foodservice channels, such as produce and protein, although we're still not back to pre-COVID levels. Nondurables, excluding food and beverage, represents about 30% of U.S. box demand across a wide range of consumer and industrial products. This segment is benefiting from strong consumer demand in the broad manufacturing sector recovery. And lastly, demand for durable goods, which had the immediate pullback due to COVID is benefiting from a healthy housing market. We're well-positioned and have the scale and footprint to serve just about every corrugated segment in a meaningful way, and our packaging team continues to focus on delivering superior packaging solutions to help our customers succeed. Turning to Slide 8. I'll provide an update on the progress we're making in our EMEA packaging business. Our objective is to bring this business back to sustainable mid-teen margins and generate returns above our cost of capital. We're well on our way to achieving our goal. In the first quarter, we improved adjusted EBITDA by nearly $20 million compared with last year. The Madrid mill is fully ramped, and we have more integration and cost opportunities available. We're integrating our world-class lightweight recycled containerboard with our box network in Southern Europe to provide customers with a broader array of packaging solutions. We've improved our footprint in the Iberian Peninsula through selective acquisitions, including two box plants in Spain acquired at the end of the first quarter. These acquisitions provide additional integration opportunities with the Madrid mill. And more importantly, they enhance our commercial capabilities in the region. We continue to make progress with our box system performance and have more opportunity ahead. All our plants have clear commercial and operational plans, and we're leveraging the skills and resources from across the company to deliver on our commitments. The map on the slide shows our packaging footprint in Europe after the sale of our Turkey packaging business, which we expect to close in the second quarter. After the sale, the EMEA packaging business will have two recycled containerboard mills, 21 box plants, and two sheet plants. And again, our commitment is to bring this business to sustainable returns above our cost of capital. Moving to Global Cellulose Fibers on Slide 9. Price and mix was favorable with price realization accelerating across all pulp segments in the first quarter. Volume was moderately lower due to the shipping delays related to port congestion. Demand for fluff is solid and we have healthy backlogs. Operations and costs improved sequentially, driven by the nonrepeat of the $20 million write-off in the fourth quarter as well as solid operations and good cost management. These improvements were partially offset by about $10 million of higher seasonal energy consumption and an FX loss at our mill in Canada. Maintenance outage costs decreased as expected, and input costs increased due to higher wood costs in the Mid-Atlantic region as well as higher energy costs. Demand improved as we entered the year and the end-use demand signals for absorbent hygiene products are healthy. Turning to Printing Papers on Slide 10. Our papers business has demonstrated outstanding resilience throughout the past year. Our performance reflects the talent and commitment of our team, the scale and capabilities of our global footprint, and the strength of our highly valued brands. We continue to see steady recovery in demand across all regions, which we expect will accelerate with broader return to office and return-to-school activity. I'd also add that we've seen significant improvement in supply-demand dynamics both within the U.S. and outside the U.S. Looking at our first quarter performance, price and mix were stable across the segment. Volume decreased sequentially due to the lower seasonal demand in Brazil and Russia as expected. It also meant that the export supply chains are stretched in most regions. Operations and costs improved on solid operations and good cost management, as well as a favorable FX in Brazil of about $10 million. Fixed cost absorption improved with economic downtime decreasing by 40,000 tons sequentially across the system. Maintenance outages increased modestly, as expected, and input costs increased primarily due to higher wood and energy costs in North America. Looking at Ilim on Slide 11. The joint venture delivered $49 million in equity earnings in the first quarter with an EBITDA margin of nearly 35%, driven by higher average pricing. Volume decreased sequentially, primarily due to fewer shipping days because of the Chinese New Year, as well as the impact of tight shipping capacity in China. Underlying demand remained strong as we enter the second quarter. And lastly, in April, we saved a $144 million dividend payment from Ilim, which is $44 million higher than the estimate we provided last quarter. Now we can turn to the outlook on Slide 12, and starting with Industrial Packaging. We expect price and mix to improve by $75 million on realization of our March 2021 price increase. Volume is expected to decrease by $10 million on lower seasonal demand in Spain and Morocco as the citrus season winds down. Operations and costs are expected to improve by $15 million, with the full recovery of the winter storm impact partially offset by higher incentive compensation accruals related to a stronger outlook. Staying with Industrial Packaging, maintenance outage expense is expected to increase by $77 million. And input costs are expected to increase by $20 million due to higher OCC, energy, raw materials, and distribution costs. In Global Cellulose Fibers, we expect price and mix to increase by $100 million on realization of prior price movements. Volume is expected to increase by $5 million. Operations and costs are expected to decrease earnings by $10 million. Maintenance outage expense is expected to decrease by $10 million, and input costs are expected to be stable. Turning to Printing Papers. We expect price and mix to increase by $25 million. Volume is expected to increase by $5 million. Operations and costs are expected to decrease earnings by $10 million due to the nonrepeat of foreign currency gain in Brazil during the first quarter. Maintenance outage expense is expected to increase by $22 million, and input costs are expected to increase by $5 million. And under equity earnings, you'll see the outlook for our Ilim joint venture. Turning to Slide 13. I want to take a moment to update you on our capital allocation actions in the first quarter. We're committed to maintaining a strong balance sheet. We have no significant near-term maturities. And in the first quarter, we reduced debt by $108 million. We also returned $331 million to shareholders, including $129 million of share repurchases, which represented about 2.6 million shares at an average price of $50.28. We acquired two box plants in Spain at the end of the first quarter. You can expect M&A to continue to focus primarily on bolt-on opportunities in North America and Europe. And lastly, in the first quarter, we monetized about $400 million of our stake in Graphic Packaging. After that transaction, we now hold about 7.4% ownership in the partnership. And with that, I'll turn it back over to Mark.

Thank you, Tim. Turning to Slide 14. As we enter the second quarter, I'm mindful that we're still in the midst of a global pandemic, and there is still significant uncertainty in the geographies and markets that we operate. Having said that, we see momentum building in our three businesses. We continue to see very strong demand for corrugated packaging and containerboard in North America and Europe. We're also seeing solid demand for absorbent pulp with more favorable supply and demand dynamics as paper-grade pulp demand recovers. In Printing Papers, we're seeing a steady recovery in demand. And in areas where schools and offices have reopened, we're seeing a step change improvement. Overall, we're seeing a much better supply/demand backdrop. We expect price flow-through from prior price increases across our three businesses. We expect margins to improve, even as we manage through the impact of higher input costs for recovered fiber, energy, and transportation. In addition, we expect productivity and other cost initiatives to offset general inflation. All of this contributes to a more favorable outlook for 2021. And I'll end our prepared remarks on Slide 15. I just want to take a moment to reflect on what has now been a full year of living and working in a global pandemic environment. When we shared our first quarter performance last year, we talked about all the protocols we quickly put in place to keep our employees and contractors safe so that we could continue taking care of our customers. We stayed diligent about adhering to those protocols, and we will remain steadfast for as long as it takes to get fully and safely past the pandemic. We continue to operate in this environment with a view towards the short-term and long-term success and sustainability of International Paper for all of our stakeholders, with an unwavering commitment to the health and safety of our employees and contractors, to understanding and taking care of our customers' needs as they also adapt to rapid change, to supporting the critical needs in our communities, and to building a better IP for all of our stakeholders. Since the pandemic began, not a day goes by that I don't think about the commitment of our employees, and especially our frontline teams for their ability to adapt well and perform at a high level across circumstances and geographies. And once again, I want to take this time to thank each of our employees for their role in making our company strong and resilient. And with that, Tim and I are happy to take your questions.

Our first question comes from Mark Wilde of Bank of Montreal.

Mark, I'm just curious, it does seem like the containerboard business really has accelerated globally, not just containerboard, but corrugated. And that the market is quite tight. And I'm just curious about how that might be impacting your thinking about a potential conversion of that second line down at Selma?

That's a good question, Mark. We obviously have looked at that and what product we might need in the future. If you just play out the current conditions, you'd probably look at using some of that from a packaging standpoint sooner. But outside of interruptions like we talked about with the winter storm and one-offs, we have largely the containerboard we need when you look at all of our channels, domestic and our own box, domestic open market and export for what we believe is the foreseeable future. But that's a good option for us in the future. And it depends on the type of grades, whether it's medium or linerboard that we need. One is quicker and less expensive than the other. But it's on our radar screen. We don't feel the need to immediately do that right now. When we operate well and we don't have interruptions like we had in the first quarter, we feel quite confident in our containerboard quality, type of grade, and overall capacity.

Okay. As a follow-up, Mark, I've noticed that producers in Europe and North America are stepping back from the export market and redirecting volume to their domestic operations and customers. I'm interested in your perspective on how this affects long-term export customers, particularly since converters in regions like Latin America have consistently depended on imported board.

Yes, it's definitely important to us. IP is likely the largest provider of kraftliner board in Latin America and Europe for long-term customers who require it. This necessity is critically important to us, and we've discussed the significance of our market channels, particularly for kraftliner. Currently, conditions are very tight. Disruptions make the supply chain even more challenging. At this moment, inventory levels are very low throughout the system, both for our customers and our own processes. We are collaborating with each of our customers to ensure we meet their needs as much as possible and in a timely manner. However, we anticipate a tight supply chain for kraftliner in the foreseeable future.

Our next question comes from the line of George Staphos of Bank of America.

Hope you're doing well. My first question is about corrugated volume. Mark, you mentioned that based on your observations and the rise in e-commerce, you believe that the new consumption levels and usage of corrugated are likely to remain stable. You don’t expect them to decrease. Can you share the evidence you're seeing that supports this view and how your volumes have appeared early in the second quarter?

It's a great question, George. One of the things we focus on is our customers' behavior. Regarding e-commerce, we are noticing key clients investing significantly in their capabilities, including financial resources, equipment, and personnel. Their data analytics on repeat customer purchases give them confidence that a substantial portion of the shift to e-commerce retail is here to stay, likely for the long term. While it may not be completely permanent, the majority appears to be shifting. We prefer to gather insights from our customers rather than making assumptions. What remains uncertain is how traditional retail will respond as we move towards a more normal environment. It's difficult to determine if it will translate into a net loss for e-commerce or create a hybrid model where we see a return to in-store retail alongside e-commerce. Analyzing various data, studies, and earnings reports from companies in those sectors leads to challenging conclusions. Our box volumes in April for our manufactured boxes show continued trends from the first quarter. However, it's worth noting that we serve multiple channels. Whether we are producing the boxes ourselves, partnering with others who use our containerboard for specialty boxes, or engaging in the open market, we are witnessing volumes rise close to double digits in the North American box market. It appears to be more of the same, with some promising channel shifts. We've noticed an uptick in foodservice and restaurant supply, particularly in fresh produce, which restaurants typically purchase multiple times a week and was severely impacted during the pandemic. We are encouraged by the demand trends and the segments we are involved in.

Just a point of clarification. The close to double-digit reference that you just made, what was that referring to?

It's all in channels to market that we look to provide to the U.S. box market. So our vertical channel in our own box business, we have some strategic partnerships where we have either partial ownership or majority ownership downstream in the converting. And usually, that's specialty type products. And then we have just the pure open market where we have long-term arrangements. When we look at the activity and that we participate in the U.S. box market, it's really strong.

My other question recognizes that this first quarter was quite different due to storms and outages. We can clearly see why energy costs increased during the quarter. Historically, IP's energy consumption has remained relatively steady. Considering last quarter's experience, what areas do you believe can enhance IP's efficiency in its mill network regarding energy consumption?

It's a good question. On energy, the primary focus for our mill system should be to optimize our energy production in our fully integrated kraftliner mills, where we generate approximately 75% to 85% of our energy using carbon-neutral biomass. There is room for improvement in this area, though it sometimes requires investment. Our capital investment program over the past few years has focused on strategic projects like Riverdale and managing our liquidity during the pandemic. These projects can often be revisited later, and while it's unfortunate, we may delay them despite their strong returns. We also have more opportunities for investment. We've transitioned to using natural gas from other higher-cost fuels. In our converting plants, we do not generate our own energy. This situation is partially influenced by our location relative to the grid and partly due to our energy efficiency practices. Most of our current energy consumption is aligned with our investment strategy, and these projects typically yield the highest returns. We intend to increase our investments in these areas now that our financial condition is much stronger.

Our next question comes from the line of Mark Weintraub of Seaport Global.

First question was you really did have a lot more pricing in the Industrial Packaging business flow-through than I think your original guidance had been. And you mentioned, Tim, that this was one of the fastest pass-throughs or your ability to get price turned out to be very good. Can you give us more color on what happened and what it tells you?

It's a difficult question, Mark, because there's so many customers and so many unique commercial agreements. I think the general answer is when you have this type of demand, and a lot of our customers are dealing with multiple supply chain challenges. It's not just the packaging that they get but the other inputs. I think the discussion time about the gray area in every commercial relationship about how fast or how slow, no one loves price increases, obviously. That dynamic just lends itself, so let's get this done and get our material in and get it in as quickly as possible because I've got 17 problems and the box is only one of them. That's just a general answer. The dynamic out there right now is things are very tight in multiple parts of the supply chain for a lot of our customers. And everything at the final minute of when you implement tends to be a human team in negotiation, and it just went faster.

Great. Can you give us an idea of whether there is still some carryover impact included in that $75 million that you're expecting in the second quarter compared to the first quarter, or is it all coming from the new initiatives?

Yes. It's small, Mark. There's probably just a little bit from the first price increase, but virtually all of it's in. And so we're looking forward now to the March increase implementation.

It’s encouraging to see that the pulp business might break even in the second quarter. I assume that, given the structure of the contracts and the price increases you've already implemented, there will likely be more price adjustments in the second half of the year. Is that accurate? Additionally, do you have a clear outlook on that, or will it depend on future negotiations and discussions?

It's for the outlook we provided. I think the number was $100 million in price for the second quarter. That's about all I can share. However, as I mentioned in my closing remarks, we are really encouraged by the momentum in Cellulose Fibers right now. A significant part of that positivity comes from the changes in pricing. I don't want to speculate about the third or fourth quarter, but based on our confidence in the trajectory, I think you can draw some conclusions.

Our next question comes from the line of Adam Josephson of KeyBanc.

Okay. Tim, I have a question about the 2021 momentum building slide. I asked something similar in the last call, but it seems like everything is improving as the year progresses. Why are you not resuming guidance at this time? I understand there are many uncertainties, as usual. How much thought did you give to the possibility of resuming guidance, and what led you to decide against it for now?

Yes, that's a good question, Adam. Technically, we don't provide specific guidance; instead, we offer an outlook. In previous periods, we discussed a full-year outlook and expectations sometimes within a range. We assess this every quarter. Some of the uncertainty surrounding COVID seems to be lessening. However, as we approach the middle of the year, we expect to have a clearer understanding of vaccination rates and reopening scenarios. At this point, we believe it's premature to discuss full-year guidance. Nevertheless, we hold a lot of optimism about how the year is shaping up.

Adam, this is Mark. I want to add that it's a good question. We've provided the investment community with at least an EBITDA range and a few other figures for our full-year expectations. However, what's lacking is the EBITDA number. We have discussed our capital expenditures, for example. As we move into this year, giving a full-year guidance in the middle of the year is perhaps less useful than it would have been at the start of the year. I tend to be optimistic, and I feel good about our position, but I also consider our employees in Poland and Brazil, who are still facing challenges similar to what we dealt with during the Christmas holidays and in January due to the pandemic and its impact on their economies and lives. I don’t want to overstate our situation and then have to retract it later. I understand this can be a bit frustrating, but we are striving to provide a transparent outlook, as Tim detailed in the numbers on the outlook slide. I hope this helps convey the larger picture, which shows that things are strong and improving. As Tim mentioned, on the capital allocation slide, our balance sheet is rapidly approaching the lower end of our range, and we are generating good cash, which we are channeling into our capital allocation strategies, including dividends and share repurchases, even though there have been interruptions. This is the key message I want investors and analysts to take away. Your point is well noted; it's information you previously had, but currently do not.

No, I really appreciate that, Mark. I have one more question for you regarding e-commerce and the demand for boxes. You previously discussed the correlation between box demand and GDP, as well as box demand and nondurable industrial production. You also included a helpful slide in your roadshow materials illustrating this. How do you believe those relationships have evolved, if at all, with the new insights you have about the expected permanence of e-commerce growth?

Well, that's a really good question. I know our team is looking at the resiliency of that model that creates that slide you're talking about in our roadshow where we have the nondurable and transportation index and a number of other metrics. I don't know if we've decided that there's a shift in it yet, but I know our team is looking at it. As soon as we have something that we feel good about and that it's legitimate and statistically valid, we like to share that in our investor material, and we'll do that in the future.

Our next question comes from the line of Phil Ng of Jefferies.

Appreciating there's a greater lag in the flow-through on pricing. But with fluff pulp prices approaching 2018 levels, and commercial initiatives you guys are implementing, how quickly do you think that earnings power for cellulose to kind of return back to 2018 levels?

Well, we gave the outlook for the second quarter, and you can look at the trend there on just the pricing comment of $100 million. I think we are in that part of the pulp market dynamic. And we're also trying, as I mentioned multiple times, we're trying to change the business model commercially, primarily on how we go to market and how we interact with our customers so that we put more sustainability and less volatility in the business. And that's a lot of work, about work I can comment on because it's customer-specific, but we feel good about where we are right now. And we think the business can get back to. And then, if we can invest in the cost side, improve upon what numbers you're talking about from '18.

That's great. I appreciate that color. It seems like a solid game plan. The 145,000 lost tons in containerboard from the winter storms, is your view you would essentially sell pretty much all that? Or would that have been kind of an effort behind to build inventory? The reason I'm asking, I'm just trying to gauge if you view that as pent-up demand for 2Q. And then more broadly, just given how tight things are, do you have bandwidth to kind of supply your customers given how strong demand is right now?

Yes. We're working hand in glove with customers across all of our channels, trying to make sure that we're meeting their needs as quickly as possible. Having said that, it's a challenge. 145,000 tons, a big portion of that was available for sale and ready to go. In some cases, as we go into the second quarter, it's a heavier maintenance outage quarter. And so part of it is preparing for that as well. But definitely missed opportunities on the containerboard side. But as, if not more importantly on the box side, with 30 plants down and significant exposure. So our estimates around that exposure is that the growth that we had in the quarter would be closer to overall industry growth if we haven't had that disruption.

But you see that demand still there? Or your customers kind of went elsewhere to kind of get supply just given how tight things are?

Well, some of it's there. Some of them are still working through, as I mentioned in the prepared comments, working through backlogs. All of these channels have different lead times on orders and when customers are expecting them. And so we're working through it customer by customer on that basis.

Our next question comes from the line of Mark Connelly of Stephens.

Following on Phil's question. If we remove the storm impact that held back first quarter, is there any reason to think that IP can't match the industry shipments in 2021 or even exceed it? I'm thinking about the outages and the maintenance timing shifts and that sort of stuff. Because obviously, there was a lag or a lag in performance in 4Q too. So I just want to make sure we're not missing anything.

No, it's a good question, Mark. There's no reason to believe we can't match or exceed. Now given our size, exceeds means some basis points, not multiples. But there's no reason you can't match the market. Fourth quarter, we did have some operational issues, if you recall. And then not an excuse, but this geography and the winter storm matched right on top of us. But no reason you shouldn't expect us to perform at or better than the market.

Okay. And that's helpful. Just on EMEA, following on Tim's comments, how does the push to mid-teens margins in EMEA breakout between converting and mill opportunities? I'm just wondering if there's spending opportunities at those mills or if most of the incremental investment and improvement is coming on the converting side.

Yes. It's a good question, Mark. We think we have additional opportunities, not that so many of them require capital in the mill operations, but just in terms of how we're managing cost as we get fully up the ramp curve and integrated, and it's both mill and supply chain. So we see more opportunity for the mill in Spain. The other mill is a more mature mill that's been there for a while. And so it's probably running at an optimal level. But in Spain, given the integration play, we see more opportunity.

So bringing some of the strengths in the integration that you have in the U.S. over to there. Okay.

Our next question comes from the line of Cleveland Rueckert of UBS.

Just first off, I wanted to follow up on the $350 million to $400 million of incremental EBITDA. I think $300 million of that was supposed to be from cost savings. And I realized Q1 was kind of challenging, but I didn't hear an update on how much of that you've achieved to date or how much you expect to achieve this year headed towards that 2023 exit rate?

Yes. We didn't provide one. So we're working through our plans right now, and we're in the process of beginning the implementation of all that. We pointed on the last quarterly call to some of the benefits that we saw coming through, more of the process automation and using data analytics and technology. And as we go through this year, we're looking forward to probably the third quarter where we provide a robust update in terms of all of the plans that are being executed and achievement this year, but also run rate expectations for 2022.

Okay. All right. That's clear. And then, I guess, just a follow-up on the containerboard and corrugated box business. Could you give us just a sense of where your inventories stand, given the disruptions kind of, I guess, where you are today at an inventory level versus where you like to be or where you've been historically on average? And kind of what the trajectory is there on the inventory side given the outages in the second quarter?

Well, the easy answer is we're lower than we'd like to be. And that's the source of the hand-to-glove comment Tim just made. So we need to rebuild, while we serve our customers' active demand, we need to be very efficient in rebuilding important roll stock inventories across the wide range of boxes that we have to make. So there's more for us to do. It's not unexpected when you have this type of demand, coupled with the one-off interruption of the storm we talked about and then just the timing of outage schedules. But the good news is we have a really big system, and it's very flexible and it recovers very quickly. So we feel like we could do it. But our inventories are lower than we would like, all things considered. And the main thing I'm concerned with right now is our ability to support our customers through their dynamic demand changes. And that's what our focus is right now.

That's clear. I guess just quickly, given what you know about the second quarter, would you expect to be in a position to build inventories?

Every effort is going to be made to try to restore inventory levels, but it's a heavy maintenance outage quarter. And so you're triaging and prioritizing and trying to satisfy all of the needs across the channels. So now the good news is, most of the outages are behind us by the time we get to the middle of the year. But these supply chains are very long, and they take a long time to recover.

Our next question comes from Gabe Hajde of Wells Fargo Securities.

I'm thinking about integration levels in the corrugated operations or Industrial Packaging North America and kind of whether or not you kind of still view this as the right destination? I mean, you have some competitors that are maybe trying to bump that up for different reasons. And I also appreciate that maybe looking back in the rearview mirror, you're kind of playing a little bit more defense and/or kind of making some asset changes along the way. Now you've got some kind of more, I'll call it, disposable cash to go on offense with and you made these two small box plant acquisitions. Is that part of the strategy that maybe get that closer to something, I don't know, 90%? Or you feel good at that 80% level kind of over a longer-term basis?

Yes. So we think what's important about integration is how we go about building it. Our most profitable channel is our North American domestically integrated channel containerboard to box and to the customer. And we want to grow that part of the business by delivering superior solutions on the packaging side to our customers. So that we're building long-term sustainable relationships where we can through small M&A or some of these more creative arrangements that we've started implementing to grow that channel. So higher over time, but done in a very sustainable way.

Okay. And then, I guess, kind of to revisit the cost reduction or the $300 million to $350 million of savings and trying to marry up the comments that you made about Europe. Are those sort of mutual exclusive, meaning the $20 million or so that you saw an improvement in profitability this quarter and I think what you talked about kind of getting back to mid-teens implies maybe another $100 million of improvement in aggregate for European Industrial Packaging. Is that more related to the mill conversion over there and that starting to contribute? Or is that, again, kind of included in that $300 million to $350 million of savings?

Yes. Part of it is included, but it's across commercial, operational supply chain. It's all the things that we touch in terms of delivering a packaging solution to a customer. So we've got improvement plans across all aspects of the business.

Our next question comes from the line of Paul Quinn of RBC Capital Markets.

I have a question regarding Global Cellulose Fibers. Looking at the quarter, there's improvement, but the results are still disappointing, especially compared to your European competitors. Where do you see this business in a mid-cycle scenario? Can you achieve the profitability levels of your peers? How long do you estimate that will take?

As I mentioned in the last call, we see the business improving consistently each quarter. We believe it will be in very good shape. I don't have all the European numbers memorized, but we think it will be in very good shape as we finish 2021 and move into 2022.

Our next question comes from the line of Neel Kumar of Morgan Stanley.

For corrugated, can you just talk about the cadence of volume growth through the first quarter by month? And then, can you just give us a sense of what you're seeing in terms of box shipments so far in April?

April is performing very close to, or perhaps slightly better than, how we finished the quarter. It was fairly consistent throughout the quarter. It started off strong in January, which we attribute largely to our exposure to e-commerce. In addition to the holiday season boost, January benefits from returns and specialty sales, making it a strong month as well. Overall, I believe it was solid throughout the quarter.

Okay. That's helpful. And then in terms of your recent asset sales, I was wondering if you can just touch on how you're thinking about allocating proceeds between buybacks versus inorganic and organic investments? And then more generally, where are you in the process of evaluating your portfolio of assets. Could there be additional asset sale announcements? Or is it generally complete at this point?

Well, when we talked about on the acquisition side is look at what we've been doing for the past couple of years. They've tended to be one-off operations, sometimes two, bolt-on in nature and filling gaps in capability or exposure that we want. And most of them, to be honest, that's happened in Europe at this point. In terms of the cash coming in, we have a fairly robust capital allocation framework that we have talked about over time, including the strong balance sheet, target ranges of debt. The fact that we're on a path of share repurchases before COVID hit and out of prudence we took a pause last year, but we're back in the market. But the goal is to be thoughtful about the cash coming in and making sure that we're doing everything in our power to maximize value through the actions that we take.

And our last question comes from the line of Kyle White of Deutsche Bank.

On Global Cellulose Fibers, I just want to talk about the port congestion that you're experiencing and maybe how that is impacting your volumes or your supply chain in that business?

It's a good question, Kyle. It's a big issue. We're not losing orders because of it because we're spec-ed in, in a lot of the customers. It's just creating a long, long supply chain. So customers are trying to figure out the new duration between placing an order and actually receiving it and in some cases, trying to get our help to understand whether they should change their order cycle. So there's a lot of order management changes being talked about and figured out between IP as the supplier and our customers. But it affects more than our pulp business. It affects our export containerboard, and we're even seeing it in our export paper business in Brazil. I don't think there's an immediate fix to it. So it's a velocity mission on the supply chain than it looks like, we're going to have to adapt to for some period of time.

Got it. That's helpful. And then switching to EMEA Industrial Packaging. Can you guys provide some of your integration rate for just that region and kind of where do you see it going with these recent acquisitions in Spain? And then maybe just a longer-term target for integration there as you continue kind of bolt-ons in that region?

We typically do not provide a specific number because it isn't very straightforward. We are integrated with our kraftliner from our U.S. mill system to our European box plants. Our world-class mill in Madrid, which we launched a couple of years ago, is nearing its full capacity, particularly in producing high-performance lightweight liner. However, we source most of our medium, the corrugated medium, from the open market. Therefore, we generally have not disclosed an exact figure. As Tim mentioned, our most successful approach commercially and financially is through building an integrated model regionally. In Europe, we are focusing on regional density, specifically in the Iberian Peninsula, supporting our new mill with kraftliner from our U.S. system. Additionally, we rely on some significant suppliers in the European market for grades we do not produce or that make sense geographically. Consequently, we remain a major customer for key European containerboard producers, with whom we have established long-term relationships. I appreciate everyone's questions. Thank you for your interest in International Paper, and we look forward to speaking with you again next quarter.

Thank you for participating in today's International Paper's First Quarter 2021 Investor Earnings Day Conference Call. You may now disconnect.