Steven C. Voorhees - Chief Executive Officer, Director and Member of Executive Committee Ward H.

Dickson - Chief Financial Officer and Executive Vice President James B. Porter - President of Corrugated Packaging

Scott L. Gaffner - Barclays Capital, Research Division Mark A.

Weintraub - The Buckingham Research Group Incorporated George L. Staphos - BofA Merrill Lynch, Research Division Anthony Pettinari - Citigroup Inc, Research Division Philip Ng - Jefferies LLC, Research Division Alex Ovshey - Goldman Sachs Group Inc., Research Division Daniel Moran - Macquarie Research Christopher D.

Manuel - Wells Fargo Securities, LLC, Research Division James Armstrong - Vertical Research Partners, LLC Adam J. Josephson - KeyBanc Capital Markets Inc., Research Division Mark W.

Connelly - CLSA Limited, Research Division Joshua L. Zaret - Longbow Research LLC

Thanks, Shirley. Welcome to those of you who are listening in.

This is Steve Voorhees, Chief Executive Officer. I'm joined this morning by Ward Dickson, Chief Financial Officer; and Jim Porter, President of our Paper Solutions Business.

Mike Kiepura, President of our Packaging Solutions Business, was diagnosed with appendicitis over the weekend and consequently is not able to be with us today. During the course of the call, we will make forward-looking statements involving our plans, expectations, estimates and beliefs related to future events.

These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those that we discussed. We describe these risks and uncertainties in our filings with the SEC, including our most recent 10-K and also our 10-Q filed for the quarter ending December 31, 2013.

We will also refer to non-GAAP financial measures during the call. We've provided reconciliations of these non-GAAP measures to the most directly comparable GAAP measures in the Appendix of the slide presentation.

The slide presentation is available on our website. I'm going to start by discussing our operating results, then Ward will discuss our balance sheet, pension and other financial measures.

I'll complete our prepared remarks with comments on our outlook, and then Ward, Jim and I will be available for your questions. We made progress across many areas of our business in the March quarter.

Adjusted earnings per share increased by 13% over the prior year in the face of severe weather and associated impact on our operations during the quarter. Compared to our expectations coming into the quarter, the severe weather reduced income by $44 million on a pretax basis, or $0.38 per share after tax, due to a combination of lost production, unplanned overtime, increased energy cost, increased fiber cost and increased freight cost.

We're achieving productivity improvements in our mills, corrugated box and folding carton plant operations. We continued to invest in our converting and mill operations to improve quality, reliability and productivity.

Our Merchandising Displays business grew both sales and income by over 30% compared to the prior year quarter. Our effective tax rate for the quarter of 42.7% was higher than our expected range of 35% to 37%.

On March 31, the New York state legislature passed a new law that reduced the corporate income tax rate to 0 for certain qualifying manufacturers, including RockTenn. While this is positive for us long term, this change also caused us to write off a previously negotiated Empire Zone tax credit associated with the Solvay mill that was previously recorded as a deferred state tax asset.

The impact of this item during the quarter was a $10 million charge or $0.13 per share. And consistent with our past practice, we've not added this back to our calculation of adjusted net income of $1.27 per share.

We generated very strong free cash flow of over $170 million in the March quarter. This is an increase of 40% on a per-share basis over last year.

For the first 6 months of our fiscal year, we generated over $420 million in free cash flow. On March 3, we announced an agreement to acquire the Tacoma mill from Simpson for approximately $343 million.

The complementary West Coast mill location is quite strategic for our Corrugated Packaging and Containerboard business and will create significant operating efficiencies for our system. We will be able to greatly improve the service to our corrugated box plants on the West Coast and our external customers on both the West and East Coasts.

We are awaiting regulatory approval to complete this acquisition. Over the past 12 months, Credit Agreement EBITDA has increased by 27% to over $1.5 billion.

This is $331 million higher than 1 year ago. Our Credit Agreement EBITDA margin increased by 300 basis points to 16.5%.

Our free cash flow of $12.53 per share over the past 12 months is 56% higher than last year. Our leverage ratio of 1.75x is also nearly a full turn below where it was 1 year ago.

We're providing our shareholders with strong, current cash flow returns. We have significant flexibility to improve these returns by deploying this cash flow to implement our operating strategy and also by returning this capital to our shareholders through dividends and share repurchases.

Corrugated Packaging contributed an additional $0.21 per share of income compared to the prior year quarter as increased pricing more than offset the impact of increased cost and reduced volumes. Reductions in our interest and nonallocated costs contributed an additional $0.09 of income.

And the variance in income taxes, including the New York state adjustment, reduced income by $0.17 per share. Turning to our Corrugated Packaging business.

Industry containerboard mill operating rates averaged 95.2% for the quarter, flat with last year and higher than the March figure of 94.6%. Our containerboard mill's operating rate of 94% in the March quarter compares to 90% in the December quarter.

Our containerboard mill's system downtime in the quarter was 87,000 tons. Of this, 73,000 tons was a result of scheduled maintenance outages at West Point and Panama City.

The Seminole mill remained idle during the first 3 weeks of January until customer demand picked up. Seminole accounted for the majority of the remaining 14,000 tons of downtime during the quarter.

Industry production of containerboard for export markets increased by more than 3% from the prior year and increased 10% on a sequential quarter basis. RockTenn's export shipments of 267,000 tons increased by 50,000 tons over the prior year -- prior year and sequential quarters.

Percentages shipped to end markets remained consistent on a sequential basis at approximately 60% to Latin America, 20% to the Middle East and 10% each to Europe and Asia. Our 256,000 tons of domestic sales of containerboard were 63,000 tons less than the prior year quarter.

In the second quarter, we built approximately 36,000 tons of containerboard inventories in anticipation of the expected 85,000 tons of maintenance downtime in the June quarter. We expect inventories will decline by 50,000 tons in the June quarter.

We expect to complete our scheduled outage at Hopewell next week. The outage has included the installation of a sheet press, new paper machine drives and a new dryer section, which will significantly improve quality for our customers.

This upgrade will also provide the opportunity to either increase our linerboard production by approximately 124,000 tons per year or produce a lesser amount of linerboard with reduced energy cost. Our Hopewell mill investments have positioned this mill to produce a significantly better quality virgin containerboard product for both our internal and external customers at lower cost.

The mill's location in the mid-Atlantic region is a great fit for our system. At West Point, we successfully replaced a headbox, which helped us to greatly improve the moisture and basis weight profile of our sheet and overall quality for our customers.

This investment also improves efficiency in cost from this paper machine. Also at West Point, in late March, we identified that black liquor had entered a condensate line.

We addressed the situation over the next 9 days. The impact of this unscheduled downtime was a loss of 23,000 tons of production, which when combined with incremental cost, will reduce pretax income by approximately $10 million in the June quarter.

Our Florence wood yard project remains on schedule for an August startup. The $49 million project will result in an annual benefit in excess of $10 million in fiscal year 2015 and grow over the following couple of years.

Turning to the Corrugated Box business. Industry box volumes on a per-day basis, as reported by the Fiber Box Association, declined 1.6% in the March quarter and 3.3% in the month of March alone, both as compared to the prior year.

In our box plant system, we're seeing the results of our investments and strong focus on operational improvements. Over the past 3 years, we've closed 21 plants to enable cost reduction and productivity improvements at our remaining box plants.

Our waste is currently 4.6% less than fiscal '13 and 19% less than the levels we experienced in fiscal year '11. On-time delivery, corrugator, flexo folder gluer and die cutter productivity have all increased this year compared to fiscal year 2013, and each are significantly better than we ran in fiscal year '11.

For example, our rotary die cutter productivity is now 14% better than fiscal year '11. As we complete the installation of our box plant technology platform in our U.S.

plants in the June quarter, we will be positioned to implement and sustain additional operating improvements across our entire box plant system. During the March quarter, we successfully installed new EVOL flexo folder gluers in our Richmond, Virginia, and Humboldt, Tennessee, box plants, and a new DRO rotary die cutter in our Liberty, Missouri, box plant.

Each of the 3 plants is operating more efficiently as a result of the new equipment. We will install an additional 4 EVOLs during this fiscal year.

In fiscal 2015, we will continue with the modernization of our box plant system by installing EVOLs at the rate of about 1 per month. In the March quarter, our volumes of 18.2 billion square feet were 4.5% less on a per-day basis than 1 year ago.

Average box pricing increased by $63 per ton compared to the prior year quarter. So far in April, we're seeing an increase in shipments in the range of 1% to 2% greater than March as we've experienced seasonal improvement in demand.

The net result of the quarter was an increase in Corrugated Packaging segment sales of $1.65 billion, up 2.7% over last year's March quarter with overall prices increasing by $50 per ton and more than offsetting reduced volumes from our closed box plants. Corrugated Packaging segment EBITDA for the March quarter was $243 million, 13% higher than last year.

EBITDA margins increased from 13.9% to 15.2%. The impact of the severe weather on Corrugated Packaging segment results was $35 million as compared to our expectations going into the quarter.

Let's turn to our Consumer Packaging segment. SBS industry backlogs as of April 16 were 588,000 tons, approximately 93,000 tons more than 1 year ago.

Industry SBS backlogs are at the highest level since January 2013. This is except for a very short period last summer.

SBS markets are in good balance and April's publication again posted another increase of $15 per ton, accumulative total of $40 toward the full $50 realization. RockTenn's SBS backlogs now stand at 6 weeks.

CRB industry backlogs as of April 16 were 119,000 tons, about 45,000 tons less than 1 year ago. RockTenn's CRB backlogs now stand at 3 weeks.

Our CRB, SBS and URB mills ran at 94% during the quarter with no economic downtime taken at any of our 5 CRB mills or our Demopolis SBS mill. We took annual major maintenance -- we took our annual major maintenance outage at Demopolis during the month of March last year and took this year's mini outage in the month of April.

The expected cost of the April Demopolis outage is approximately $0.05 per share. In our Consumer Packaging segment, total sales were up 4.5%, and segment EBITDA was flat with the prior year.

We expect our results in Consumer Packaging for the full fiscal year to be in line to slightly above our prior year results. Demand for April remained stable for SBS and folding carton, while our CRB backlogs have softened slightly.

We do not expect to take any economic downtime in the CRB segment. Our new printer and die cutter for our Nicholasville, Kentucky, folding carton plant will begin operation in June.

This is an $11 million investment. We'll make comparable investments to our Knoxville, Tennessee, and Clinton, Iowa, folding carton plants over the course of the next year.

These investments will generate attractive returns by increasing productivity; reducing waste; reducing maintenance and repair spending; and in the case of Knoxville and Clinton, provide the capability to meet customer growth requirements. Merchandising Displays achieved record sales of $213 million in the quarter as compared to $162 million last year.

The MPG acquisitions contributed $20 million, of this $51 million in incremental revenue and was accretive to earnings in the quarter. We're on track to capture the synergies we expected from the acquisition, including the internalization of materials previously purchased from third parties, and more importantly, the benefit of our increased overall capability to serve customers.

Segment EBITDA margins were approximately 10%. The promotional environment remains very healthy with consumer products companies finding more ways to differentiate their products in the store, including multi-vendor promotional displays and major redesigns of existing display programs.

The additional costs associated with bringing new business into our system reduced margins in the quarter. We expect this to continue into the June quarter when we expect sales to increase.

We expect income to remain relatively flat or possibly down slightly compared to last year. Pictured on the slide is RockTenn's McCormick Simply Asia display, which won the Creative Best of Show Award for best temporary display among all contest category entries at this year's annual competition sponsored by the Point-Of-Purchase Advertising International or POPAI.

This is a tangible example of the capability of our very talented designers across our entire company. Recycling segment volumes were about 240,000 tons less than the prior year due primarily to our previous closures of 10 underperforming recycling plants since February of 2013.

It's also due to the generally soft recycled fiber markets, including exports to China. Segment income was lower than our expectations, primarily due to the impact of severe weather and material processing and freight cost.

During the quarter, we realized the benefit of price increases in our business of $102 million. Average selling prices in Corrugated Packaging were $50 a ton higher than last year.

Average selling prices in Consumer Packaging were $35 per ton higher than the prior year with gains in SBS and CRB increasing by $64 per ton and $24 per ton, respectively. The net impact of volume changes was a positive $2 million.

The inflational -- inflationary impact of commodities, freight and energy was $55 million higher than the previous year. The impact of the severe winter weather was $44 million as compared to our expectations at the outset of the quarter.

This was the coldest winter in the last 20 years in many parts of the country. The average heating days index, as compared to last year and as published by the U.S.

Energy Information Administration, was about 14% higher on average in the key areas of the country in which we operate. NYMEX natural gas prices spiked in February by $1.15 per MMBtu to $5.56 per MMBtu and averaged $1.34 per MMBtu higher for the quarter than in the December quarter.

There were many locations where local natural gas prices were significantly higher or gas was unavailable and our facilities had to switch to more expensive fuel oil. The extreme cold and snow levels also impacted production in our facilities and our ability to get product to our customers.

We lost 57 days of production in our box plants during the quarter. The Morgan Stanley dry-van index, which measures incremental demand for dry-van truckload services compared to incremental supply, hit historic highs during the middle of March, reflecting the extreme scarcity of trucks.

The $44 million of increased costs due to severe weather include $18 million of higher energy cost, lost volume of $18 million, higher wood and recycled fiber cost of $9 million, and increased labor, freight and maintenance costs of $7 million. The unusual operating environment over the past 2 quarters has masked the productivity improvements that we've made and expect to continue to make across our businesses.

Our productivity improvements include pure cost reduction projects in areas such as procurement and logistics, capital projects that reduce cost and Lean Six Sigma projects. The majority of Lean Six Sigma projects improved operating efficiency, reliability and quality at our manufacturing locations.

In aggregate, these productivity improvements have reduced our cost at an annual rate of approximately $120 million when compared to the prior year quarter. I will turn it over to Ward now, who will discuss various financial aspects of our business.

Ward?

Thank you, Steve. During the quarter, we generated free cash flow of $171 million.

And as expected, we sold the second tranche of accounts receivable into our accounts receivable sale program and received $66 million of incremental proceeds. We now have a net $131 million of total receivable advances under this program.

I am not expecting any more significant advances under this program for the balance of calendar year 2014 due to the limitations in other financing agreements. Over the last 12 months, we have generated free cash flow of $12.53 per share and reduced net debt by $493 million.

After repurchasing 560,000 shares in the December quarter, we did not repurchase shares in the March quarter. Our pro forma leverage, after the acquisition of the Tacoma mill, will be closer to 2x.

At the end of March, our net debt was approximately $2.6 billion, our LTM Credit Agreement EBITDA was over $1.5 billion and our credit agreement debt-to-EBITDA ratio was 1.75x. We have more than $1.7 billion in liquidity available to us for general corporate purposes.

Let me highlight some key assumptions for the third quarter and the remainder of the fiscal year. Our effective tax rate for the quarter of 42.7% was much higher than our normal range of 35% to 37%.

On March 31, the New York state legislature passed a law reducing the income tax rate to 0% for certain qualifying manufacturers, which RockTenn is. This change required us to fully reserve against previously recorded net deferred tax assets.

Although we will no longer expect to use these state tax credits, the applicable statutory tax rate for our New York operations will become zero. The impact of this item during the quarter was a $10 million charge, or $0.13 per share, and we have not added this back to our calculation of adjusted net income of $1.27 per share.

Our effective tax rate, without the aforementioned New York state tax item, was 36.1%. At March 31, we have recorded unused U.S.

federal, state and foreign net operating losses and tax credits that can be used to offset a total of $410 million in cash taxes. We expect to use the remaining U.S.

federal net operating losses during fiscal 2014. We will use our remaining U.S.

federal tax benefit of $234 million in cellulosic biofuel, alternative minimum tax and other federal credits during fiscal year 2015 and 2016. Based on current assumptions, we estimate our cash taxes at approximately $25 million to $30 million in fiscal 2014 and a cash tax rate of approximately mid-teens percent in fiscal 2015 and mid-20s percent in fiscal 2016.

The June quarter is our largest pension contribution quarter. We will make cash contributions to our pension plans of $107 million this quarter or approximately $103 million more than expense.

We expect our 2014 capital expenditures will be closer to $550 million. We estimate that the expenses related to outage costs for the containerboard and bleached -- paperboard mills will be about $103 million for fiscal 2014.

We are planning on taking 91,000 tons of scheduled maintenance downtime during the June quarter. We expect that working capital and other balance sheet items will be a use of funds of approximately $25 million to $30 million in the June quarter, with no significant additional change in the September quarter.

Now I will turn it back over to Steve, who will discuss the recent realignment of our business and the outlook.

Thanks, Ward. Two weeks ago, we realigned our organizational structure by creating 2 well-coordinated business units to serve our customers better and simplify the way we do business.

Paper Solutions is led by Jim Porter. This includes our containerboard and paperboard mill operations as well as the sales of containerboard, paperboard and pulp to independent converters in export markets.

Paper Solutions also includes our recycled fiber business. Mike Kiepura leads our Packaging Solutions business, which encompasses our corrugated box, folding cartons, partitions and merchandising displays businesses.

This realignment simplifies our organization by bringing our mill operating expertise together, and separately, bringing our packaging design and operations expertise together. We're better structured to provide our customers with our complete offering of corrugated boxes, folding cartons, partitions and promotional displays.

In several cases, our customers have requested and we've provided a single point of contact. In other cases, we'll maintain our current sales relationships but be better positioned to enable better communication across our organization for the benefit of our customers.

Since the announcement was made, we've received very positive feedback from many of our customers. We haven't changed our external reporting segments as our current 4 reportable segments are highly relevant to how we assess and manage our various businesses.

Turning to the outlook. We're seeing a pickup in volumes in April, and expect that our box volumes will be stronger in the quarter on a per-day basis as compared to the March quarter, although likely less than the prior year quarter.

Our domestic containerboard and box business is holding firm. Export markets are improving.

We expect we will export more tons in each of our last 2 fiscal quarters. Positive results from the improving sales environment will be offset somewhat by higher forecasted recycled fiber, freight and commodity costs and the effect of the unplanned downtime in early April at the West Point mill.

We expect free cash flow for the June quarter to be in the range of the $2.34 per share we generated in the March quarter. For all of fiscal '14, our revised estimate of free cash flow is in the range of $11.75 to $12.25 per share.

The reduction from our prior estimate is due to our actual results in the March quarter, our outlook for the business and our expected use of cash for working capital and capital investment during the balance of the year. Conclude our prepared comments by underlying our confidence in our ability to provide our shareholders with strong current cash flow returns and the ability to improve those returns by deploying our free cash flow to further develop our strategy and by returning this capital to our shareholders through dividends and share repurchases.

Ward, Jim and I are now available to respond to your questions.

Steve, just had a question on the volume outlook. I think you said you saw some pickup in April.

I thought I heard you say a sequential increase of 1% to 2% over March. But it looks like, in your closing remarks, you said volumes will be down in the quarter year-over-year.

Can you talk about what's driving that? I thought maybe after we got through some of these weather issues, we'd see a pickup in volume.

Is there some underlying demand issues that you're seeing in the marketplace?

Yes, Scott, I'm going to let Jim respond to that.

Good morning, Scott. I think we're all aware of the significant weather that dramatically impacted the current quarter.

And we certainly all hope that spring is here and we're moving into a little better period going forward. But when we compare our go-forward look with box volumes relative to prior year, there's several things that we consider.

First of all, I believe you're all aware that we've closed 21 of our corrugated plants since the acquisition of Smurfit-Stone, trying to rightsize our portfolio of assets, improving quality, productivity and cost. And when we close plants, we don't capture all of that business in our new operations.

We get most, but there is some shrinkage. Secondly, we've had 3 plant closures in the Northeast with our customers in that region.

We've seen some contraction due to the highly competitive nature of that region, and that has been a hit. And then I think you're also aware of how we've been looking at our business from a cash flow/margin standpoint.

We've taken a very analytical approach at our business. And we've, in some cases, walked away from contract renewals of some of our accounts that we really just were not able to serve profitably.

So when you put all that together, we're very focused on margin and cash flow and satisfying our customers, more important than volume focus. And when you look at the cash flow generated from this approach, we believe that we've more than offset any volume hit by improved margins.

Okay. And my second question was more around capital allocation.

You mentioned you didn't buy back any shares in the quarter. I know you're working through the Simpson Tacoma acquisition, but I think you said even after the closure -- once you've acquired that business, you're still going to be a 2x net debt to EBITDA.

I would think, with where the shares are today, it would be an opportune time to maybe go after some more of the share repurchase. Can you talk us through that, or are we going to have to wait until the acquisition closes, et cetera?

I'm going to amplify just -- Scott, I'm going to answer that question, before I get to that, I think just to quantify the volume impact in April, we're up 1.2%. If you compare it to the prior year month, we're running a little bit over 1% down versus the prior year.

I just do that because I think our volumes year-over-year were down 4.5% year-over-year, and we're nowhere close to that. So it's slightly down versus the prior year.

With respect to stock repurchases, I'm glad you mentioned the Simpson acquisition. We announced that on March 3.

So we effectively were unable to buy back stock until we got to that point. And then our quiet period begins March 16, so we had a very short period of time.

And I think the $343 million will bring us up to 2x. So I just look at -- are not buying back shares just being a quarter.

And I think we'll continue to have the same view towards capital allocation, and we'll be using stock buybacks to get us to around 2x on a leverage basis.

Want to drill down a little bit more into the free cash flow outlook? The midpoint from the last conference call had been $13.50.

And now it is $12, so it's about $1.50 change. And clearly, the weather had a very big impact in the first quarter alone.

Your order of magnitude, $0.50, which would suggest that there's another $1 per share adjustment. And you referenced some of those drivers.

Could you get a little more explicit as to what that dollar composition, how that would've been made up?

I'm not sure I can. I think just when you do look at the weather, we'll kind of reiterate when we look at the numbers, we're not a taxpayer.

I think you figured that out implicitly in your question. But that $1 amount just impacts our bottom line.

The residual of that is a function of raw materials costs. Gas is significantly higher than we had expected last year.

Fiber costs have gone up somewhat, although we expect the virgin fiber cost may trend down a little bit sequentially. And then we've -- Ward identified about $25 million in working capital and other changes, and we've moved our CapEx up to the higher end of the range.

So I think all of those factors contribute to the change.

Right. And it seems -- so that $25 million on working capital changes and, say, maybe another $15 million, $20 million on cap spend, so there -- is that about right?

So about $40 million, $45 million of it is actually working capital and cap spend?

That's fair.

Okay. That's what I was hoping to clarify.

And then just lastly, bleached board, you referenced the pricing activity. Does most of this show up quickly?

Or does sometimes this beached board pricing take a while to flow through in your system?

It generally takes longer because the -- considering the contracts tend to be for the multiyear, and then we'll have more or less slow motion in having the contracts, which move with the index, although it just takes somewhat longer.

I guess, first question I had, switching gears a little bit, can you tell us how the Simpson acquisition is progressing? Are there any particular areas that this helps you with from a product standpoint, I want to say maybe white top would be one area, and what are the regulators most interested in?

Or when do you think this, ultimately, will close?

It's kind of hard for us to comment specifically on that. I think we're still in the preliminary phase of the HSR approval.

We think this just helps our containerboard position on the West Coast. And there's significant economies on our system from having that product on the West Coast.

Yes, George. Just building -- this is Jim Porter.

We're really excited about this opportunity because, as you know, we've got a portfolio of corrugated converting assets out on the West Coast and have had to supply them from very long distances from our East Coast mill. So this acquisition is one that's very strategic for us.

It will help us to supply our box plant systems and our box customers with a much more reliable supply chain as well as our other customers in that region. So it's an important acquisition for us.

Okay. My second question, and I think you touched a little bit on this in terms of talking about what you've been doing with your converting network, especially in the Northeast.

But there, obviously, have been -- there are reports in the trade press about somewhat more supply pressure and maybe some discounting in the Northeast and the West Coast. I don't know if you can comment specifically to that, but what challenges have arisen, if any, from those fundamentals?

And how have you been dealing with it, including, I guess, perhaps, walking away from some business and/or shedding some converting operations?

Well, certainly, the new capacity in North America has impacted us all. The new machines, machine conversion in Toronto, the new mill in Niagara Falls is a substantial increase in volume, particularly for that region of -- the SP Newsprint conversion also is new capacity.

So round numbers, 1 million tons of new recycled capacity coming into the market is something that we feel. I won't speak to their specific behaviors as to how they're managing their decisions around customers.

But suffice to say that it has impacted us, and we've responded by moving business around. And certainly, we're continuing to satisfy our customers with high-quality products and making decisions as to where we sell based upon the best fit for our supply chain and creating cash flow for our shareholders.

I just -- I had a question on the 2 new business units. If I understand correctly, you're going to have the 2 new business units, but you're also going to keep the 4 segments that you report financials on.

And I'm just wondering, is there any possibility for overlap in the sense that, Jim, if I understand correctly, is in charge of all the mills. But he's also going to be in charge of his box plants as President of Corrugated.

And Mike is in charge of all the converting facilities, but he's also in charge of the Consumer Packaging mills as the Consumer President. Is that correct?

Or how do you think about those relationships?

Thanks for asking the question. I think Jim Porter's responsibility will be squarely on the -- all of our mills, which produce about 9 million tons -- our recycling business.

And we have very strong customer relationships in the independent converter market, very significant for us. I think that would be his primary area of responsibility.

Mike will be responsible -- is responsible for our packaging businesses, which include the box, the folding carton business, the display business and the partition business. And I'm excited about this because we're going to be able to take all those products and go to the customer based on, boy, the way the customer wants us to go to the customer with our full array of either packaging products or paperboard products.

I think, working here, I think we have used the word silos somewhat between businesses, and I think this is going to break down the silos. I think there's -- a couple of related questions which come up, which are: "Are Jim and Mike going to be able to work together to be able to sort that out?"

And I think that they have worked together. And I think we will look at the business on an integrated basis and review our proxy for next year, you will see that not only mine, but Mike, Jim's, Jeff Chalovich, Craig Gunckel's, and Tom Stigers' income objective will be for all of RockTenn to make sure that we're working together to try to maximize the outcome for the entire company.

That's a long-winded answer to your question, but that's the answer.

That's very, very helpful. And then maybe just switching gears to input costs.

I think you referenced recycled fiber cost maybe coming up a bit, and I'm just wondering if you can talk about what you're seeing with those easy [ph] price trends, especially in the Northeast, where you have Solvay and competitors who have brought some capacity on.

Yes, so this is Jim. So forward view on recovered fiber gets pretty tricky.

What we've seen is clearly softening in Asia. And I think we've all learned that, that really is the major dynamic for driving recovered fiber prices.

North American demand, relatively flat. The big pressure on North American fiber, though, comes from Asia.

And as we've seen their economy soften, we've seen demand for recovered fiber soften and hence, price dropping. We would believe that that's going to reverse itself and that the Asian economy would strengthen, increasing demand for recovered fiber, and that would likely have some pressure on price.

But as far as trying to forecast that accurately, I wouldn't go out on a limb on that one.

Some of the work you guys are doing in Hopewell sounds pretty promising in terms of taking your cost structure down. But if you assume demand is still pretty muted from this point on, you don't run full out, would you still be able to reduce your cost per ton from [ph] that standpoint?

Absolutely -- this is Jim Porter. Absolutely.

And that's -- the great thing about this investment is that we're making substantial improvement in these assets, and we're going to be able to deliver significantly better quality virgin containerboard to our customers. It has a great geographic location in the mid-Atlantic, so we're able to serve the full East half of north America with these products.

And the investments we're making in press section drives, dryer section, et cetera, will improve our efficiencies, reduce the dryness and energy consumption per unit of paper and will significantly improve the cost structure of this mill, whether we take it in increased production or simply reduced energy because of the dryness improvement.

Got you. That's actually very helpful.

And then based on your outlook on demand for containerboard, do you feel like your inventory's in pretty good shape at this point? Obviously, you guys are making some incremental downtime, but just in that demand backdrop, is there any more downtime that you would need to take, potentially, down the road?

We feel very good about where our inventories are and where our system stands.

So on the competitive or increasing competitiveness in the Northeast, can you talk about if there's specific product lines or where this new capacity is able to better compete with you? I guess, what I'm implicitly asking is the quality, especially of the smaller converted capacity, I mean, how does it stack up with what you guys are offering?

And where does it actually compete with you?

So your question is the -- around the quality of the new capacity that's come on?

Yes, especially the converted newsprint capacity. Is that effectively competing with you across your entire product offering?

Or is there a subset that ultimately that can compete with it?

No, we really wouldn't say that it's targeted at any particular end product packaging segment. It's -- simply, there's new volume, and so some of the corrugated converters in the Northeast are using that product.

And so I would say that it's broad based. There are some product categories that require virgin craft because of the strength and moisture-resistant characteristics of that product.

And so that would not be a focus of that new capacity. But beyond that, I wouldn't say that it's really focused on anything in particular.

Okay, got it. And then on the April volume, how many days of April do you already have in the book and so far, and -- that volume number is based on?

It would be based on information we would've had as of yesterday, which would be, I can't tell you whether it's Friday or Saturday. But it would be information that we would've had as of yesterday.

Okay. So almost the entire month then.

Okay, I got you. And then just last question in terms of the weather-related...

If you can get back in queue. I think we are trying to keep it to 2 questions per -- I'm happy to ask -- answer the question later, but I would like you to get back in queue.

This is Danny Moran on for Al. You guys mentioned some incremental inflationary headwinds on freight and recycled fiber.

What are you thinking about for virgin fiber cost in the upcoming quarter? Do you expect a typical seasonal decrease in prices?

I think we'd look at somewhere between -- somewhere around a 1% to 1.5% decrease based on what we're looking at now in June compared to March quarter.

Okay, great. And then last one.

Just looking at the segment income bridge on the presentation, you showed $2 million benefit from volumes. With volumes down 2.7% on the corrugated side and a $10 million unfavorable impact from weather, what were the positive drivers here that offset this?

It was primarily the revenue increase in the retail Merchandising Displays business.

A couple of questions for you. First, what are you seeing thus far in pricing demand levels or undermining supply demand fundamentals within the export markets?

Are things remaining pretty firm there or softness? Or how would you describe that?

We're seeing demand really strong, and I would say firming beyond that. And with that, we would see increasing prices over time.

Okay, then it's been firm. That's fair.

CapEx for '15. It sounds like you've got quite a few of these new box plants and things working through the system.

Would it be surprising to see CapEx kind of stay at this level for '15? Or do we go back to kind of more where you've been maybe 2013, 2012?

I think we're putting together our capital plans for next year. I think it's just premature for me to provide guidance on that.

I did want to speak about the EVOLs because they're strategic to our container -- to our box plant business. But we'll provide, probably, another measure of guidance on the next call.

This is James Armstrong for Chip Dillon. Most of my questions have been answered.

But I have -- of the 36% to 38% tax rate for the year, does that include or exclude the one-time New York tax charge?

It includes it. In fact, that's why it's up.

That's just is the explanation of why it's increased.

Very good. And then if demand stays at April levels, do you see a significant risk that the Seminole mill may need to go back down for any extended period later in this year?

I think that's hard for us to speculate on. I mean, we will match our production to meet the demands of our customers.

Jim, you talked earlier about the impact of your box plant closures on the company's box shipments. At what point would you expect box shipments for the company to turn up on a year-on-year basis?

And along those lines, how concerned are you about continuing to see market share?

As I shared earlier, we're really focused on getting our asset portfolio rightsized, and we're getting pretty close to that. And so I can't say there might not be some small moves in the future, but we really like the assets we have at present.

And I would say that we should begin to become more industry-average levels as we get towards the end of this year. But again, we look very analytically at our portfolio.

We have great customers, and we want to satisfy them with perfect products on time, every time. But we're also focused on margin and cash flow.

And so we'll be creating that portfolio of customers that we can supply well and make a margin.

And just one related question. Do you have a view of what normalized U.S.

box demand growth is, should be, and based on what? And obviously, demand has been weaker than expected year-to-date.

Obviously, there has been a weather impact. But longer term, what would you expect industry box shipments to be?

That's a great question. I think the way we look at the corrugated marketplace, we see it as a nondurable goods manufacturing minus.

And so as we look at trend lines out into the future, that would be the industry that I think we would think most closely correlates with our products.

Steve, 2 things. When you bought Smurfit-Stone, you had some short-term people, expertise issues that slowed you down a little bit.

As you think about the projects that you've got going on over the next couple of years, is that team fully in place, or do you still need to build? And the second question, I think I asked you last quarter about shifts we were hearing about from supermarkets in the timing of display activity.

And I'm just curious whether you've had any different thoughts about that, given the performance this quarter, or if it's just weather and, et cetera?

Yes. I think we just -- on the -- your second question is just on displays, correct?

Yes. Yes, exactly.

I think primary demand for displays is very strong now. And I think it makes sense with the shifting shopping trends that when somebody goes into a store, that's an opportunity to promote your product.

And we really haven't seen any change in that. I think with respect to our organization, our mill organization is strong.

We're executing projects. I think Tom and Jim have done yeoman's work in strengthening the organization.

On the container side, we also have significant improvement, but we would identify that we can do what we need to do. We'd like to have a little bit more depth on the bench and box plants than we have today.

And that's a high focus for all of us.

Two quick ones. First, with Hopewell, you've added a lot of optionality to the project, which looks like it'll pay off one way or another.

Have you been doing any of that with Florence? I know the primary focus has been the woodyard.

But will the project allow you over time to produce maybe a different sheet or produce more or lower cost over time? Any thoughts around that?

And then with the EVOLs coming into the box network at a very steady pace, back before the acquisition, Smurfit had gone through a very large box plant transformation of sorts and had invested a fair amount, we thought, in EVOLs and upsizing their box plants. Did they just not do enough of it?

Or are you finding more end markets and more opportunity to utilize EVOLs, hence, the investment?

Okay, just on -- with respect to Florence, the -- we call it the upstream, the pulping capacity and capability of Florence is -- will be a major strength of that location. I think as time passes, we're looking at the paper machines on a long-term basis.

And that is something which is not an urgent need, but ends up being an opportunity for us longer term. With respect to the Smurfit's box plant transformation, I think they put in 6 EVOLs.

Each EVOL, in round numbers, is about 0.5 billion square feet. So we're about a 75 billion-square-foot system and today, implemented about 3 billion square feet worth of EVOLs.

We've seen an opportunity for us to invest in the converting capability, which I think other than the EVOLs, Smurfit did not focus on that as much as they did on the corrugators, which are in generally pretty good shape. So we're taking this opportunity to, I think, more fully implement the strategy we have to have low-invested box plants.

Two questions. First, Steve, you said you had box plants on the West Coast.

So I'd like to know, what is your exposure to the California ag market? And does the drought have any factor in your volume forecast for the year or even beyond that?

We do serve the California agricultural market. And the impact is, I think, is more of a longer-term impact than immediate impact this year.

So you can have -- might have some impact, but it's not a huge pack -- impact. The bigger issue is what happens longer term.

Now there are certain commodities which are doing very strong. And I'll just point out that the strawberry season has been very strong.

But I think just -- that's just that. So the short answer is, it's not a big impact on the outlook for this year, but it may have an impact in succeeding years.

Glad to hear that. Second question, people have been asking about, I guess, the more competitive environment in linerboard.

I'd like to ask, have you seen any change in the amount of competitive bidding for the box business and maybe an increase in accounts changing hands relative to the last few quarters?

No.

Steve, just a follow-up on volumes. Did -- just a clarification.

Do you have any economic downtime built into the June quarter? And then, second on your volume forecast for the full year.

I think before, you said on the last quarter's call that you thought flat volumes for the year, obviously, we can't -- it'd be difficult to get to that number now. Can you just kind of give us a full year volume forecast at this point?

I'm just -- I'm not going to comment on whether we have plans to take economic downtime or not and just -- but it's, I think, with respect to our volumes, I think it wouldn't be surprising to have us around 1% to 2% below on the box system for the balance of the year.

Yes, so 2 follow-ups. First, Boiler MACT for 2016.

As you sit today, do you have everything compliant, or is there more you need to do?

This is Jim Porter. We have very good clarity on what we need to do from a Boiler MACT standpoint.

And I guess, we're pleased to say that it's better than what we had originally looked at 1 or 2 years ago. And we'll be implementing those projects as needed.

But it's fully scoped and all projects identified and...

This has got probably the most significant project that we have, which is related to Boiler MACT is the project at Demopolis the biomass boiler, which we're really doing in lieu of complying with Boiler MACT with 2 very old turbine generators. That's a $60 million to $70 million investment, has very attractive returns on its own and has even more attractive returns if you back out the opportunity cost of what we would've had to invest in the turbine generators to comply with Boiler MACT.

I think just in terms of a lump of capital, that's the most significant capital which is related to Boiler MACT.

If you look at requirements, not only your own, but as you've seen -- there's a lot quite [ph] across the industry that folks have to do, would you anticipate -- I mean, we've talked a lot about both in industry and on previous calls of things of extra capacity, and Jim, you laid out 1 million or so tons of capacity comes on stream. Do you anticipate there could be some capacity that ends up kind of slowly going away given the expense of keeping some of these things compliant, not only yourselves or with others throughout the industry?

How do you think about that?

I don't know that Boiler MACT alone is a driver for that. I think the ongoing capital costs and margins of the products, really, is the ultimate factor.

But I wouldn't pin that on Boiler MACT.

Just a few follow-ons. So on the volume, Steve and Jim, now you're saying minus 1% to 2% versus flat before.

Can you pinpoint what's changed?

I think the biggest factor is we have another 3 months in the book to see just what the actual has been. I think we're not running our business to try and maximize volume.

We're running our business to operate as efficiently as we can and serve our customers. So the volume is almost not a result of the implementation of our strategy.

And I think that's what we're running now. And I'd just have to say that's probably the best indicator of what we're going to run over the next several months.

But we'll see how we run in the next several months.

Very helpful, Steve. And then on the share buybacks.

So in the context of your full year free cash flow guidance, can you help us with what we should expect the relevant range of share buyback may be?

That's -- I think that has to get mixed into our overall opportunities and, I think, to put out a range would be just difficult for us to do. I think we do expect share buybacks to be a mechanism from which we'll make sure our shareholder returns stay -- we may use the word optimized as a result of making sure we've got the appropriate leverage on the business, which is our target leverage of 2x.

Okay. Thank you very much for your participation and interest, and we look forward to speaking with you in 3 months.

Thanks.