Segment Information

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment Information

19. Segment Information

We report our business in three reportable segments: Packaging, Paper, and Corporate and Other. These segments represent distinct businesses that are managed separately because of differing products and services. Each of these businesses requires distinct operating and marketing strategies.

Our Jackson, Alabama mill had historically operated as a UFS mill, with its results of operations reported in our Paper segment. During the fourth quarter of 2020, in order to meet strong packaging demand and maintain appropriate inventory levels, we temporarily began producing linerboard on the No. 3 machine at our Jackson, Alabama mill. In the first quarter of 2021, we announced the discontinuation of production of UFS paper grades on the machine and the permanent conversion of the machine to produce linerboard and other paper-to-containerboard conversion related activities. In the third quarter of 2021, we began producing corrugating medium on the No. 1 machine at the Jackson mill (which had produced UFS paper in the past) to help satisfy our demand for containerboard, build necessary inventories, and evaluate the capability of the machine to produce containerboard on a cost-effective basis. For the periods presented, operating results for the Jackson mill are included in both the Packaging and Paper segments, as appropriate.

Each segment’s profits and losses are measured on operating profits before interest expense, net, non-operating pension income, and income taxes. For certain allocated expenses, the related assets and liabilities remain in the Corporate and Other segment.

Selected financial information by reportable segment was as follows (dollars in millions):

	Sales, net
Three Months Ended September 30, 2022	Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	1,935.1	$	5.1		$	1,940.2		$	359.2		(a)
Paper		165.3		—			165.3			26.1		(a)
Corporate and Other		25.5		37.8			63.3			(25.0	)
Intersegment eliminations		—		(42.9	)		(42.9	)		—
	$	2,125.9	$	—		$	2,125.9			360.3
Non-operating pension income										3.6
Interest expense, net										(16.5	)
Income before taxes									$	347.4

	Sales, net
Three Months Ended September 30, 2021	Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	1,825.0	$	4.4		$	1,829.4		$	365.2		(b)
Paper		150.3		—			150.3			11.0		(b)
Corporate and Other		24.8		36.5			61.3			(23.4	)	(b)
Intersegment eliminations		—		(40.9	)		(40.9	)		—
	$	2,000.1	$	—		$	2,000.1			352.8
Non-operating pension income										5.0
Interest expense, net										(23.9	)	(b)
Income before taxes									$	333.9

	Sales, net
Nine Months Ended September 30, 2022	Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	5,956.8	$	14.8		$	5,971.6		$	1,141.3		(a)
Paper		468.6		—			468.6			71.2		(a)
Corporate and Other		74.2		110.6			184.8			(79.8	)
Intersegment eliminations		—		(125.4	)		(125.4	)		—
	$	6,499.6	$	—		$	6,499.6			1,132.7
Non-operating pension income										10.9
Interest expense, net										(55.3	)
Income before taxes									$	1,088.3

	Sales, net
Nine Months Ended September 30, 2021	Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	5,159.3	$	12.1		$	5,171.4		$	940.3		(b)
Paper		457.0		0.1			457.1			22.3		(b)
Corporate and Other		70.8		101.0			171.8			(76.9	)	(b)
Intersegment eliminations		—		(113.2	)		(113.2	)		—
	$	5,687.1	$	—		$	5,687.1			885.7
Non-operating pension income										14.8
Interest expense, net										(72.2	)	(b)
Income before taxes									$	828.3

(a)	The three and nine months ended September 30, 2022 include the following:
	1.	$3.9 million and $9.4 million, respectively, of charges related to the announced discontinuation of production of UFS paper grades on the No. 3 machine at the Jackson, Alabama mill associated with the permanent conversion of the machine to produce linerboard and other paper-to-containerboard conversion related activities.
	2.	$0.2 million of charges and $0.2 million of income, respectively, consisting of closure costs related to corrugated products facilities and acquisition and integration costs related to the December 2021 Advance Packaging Corporation acquisition, partially offset by a gain on sale of assets related to a corrugated products facility. For the nine months ended September 30, 2022, these costs were offset by insurance proceeds received for a natural disaster at one of the corrugated products facilities and a favorable lease buyout for a closed corrugated products facility.
(b)	The three and nine months ended September 30, 2021 include the following:
	1.	$4.5 million and $9.4 million, respectively, of charges related to the announced discontinuation of production of UFS paper grades on the No. 3 machine at the Jackson, Alabama mill in the first quarter of 2021 associated with the permanent conversion of the machine to produce linerboard and other paper-to-containerboard conversion related activities.
	2.	$2.7 million and $0.1 million, respectively, of charges consisting of closure costs related to corrugated products facilities. For the nine months ended September 30, 2021, these costs are partially offset by income primarily consisting of an adjustment of the required asset retirement obligation related to the 2020 closure of the San Lorenzo, California facility, a gain on sale of transportation assets, and insurance proceeds received for a natural disaster at one of the corrugated products facilities.
	3.	$0.5 million of costs related to the Company's September 2021 debt refinancing.