We rely heavily on the use of certain raw materials (principally virgin wood fiber, recycled fiber, caustic soda, starch
and adhesives), energy sources (principally biomass, natural gas, electricity and fuel oil) and third-party transport
companies. The market price of virgin wood fiber varies based on availability, demand, quality, and source. The
global supply and demand for recycled fiber may be affected by factors such as trade policies between countries,
individual governments’ legislation and regulations, and general macroeconomic conditions. In addition, the
increase in demand of products manufactured, in whole or in part, from recycled fiber, on a global basis, may cause
significant fluctuations in recycled fiber prices. Taking into account ongoing inflationary conditions in domestic and
global markets, we have experienced, and may continue to experience, a significant increase in various costs,
including recycled fiber, energy, freight, chemical, and other supply chain costs, which has adversely affected, and
may continue to adversely affect, our operations. Moreover, the availability of labor and the market price for fuel
may affect third-party transportation costs.
In addition, because our business operates in highly competitive industry segments, we have not always been able
to, and may in the future be unable to, recoup past or future increases in the costs of any raw materials, energy
sources or transportation sources from customers, which significantly affect profitability. In addition, where we are
able to recoup our cost increases, there may be a delay between the onset of the cost increases and the
recoupment. Any inability to recover input cost increases could lead to a material adverse effect on our business,
financial condition, results of operations and/or future prospects.
We have significant exposure to energy costs, in particular gas, electricity and other fuel costs. Energy prices have
fluctuated dramatically in the past and may continue to increase and/or fluctuate in the future. Transportation costs
are also impacted by energy costs since a key component of transportation costs relates to the cost of oil. We have
employed and expect to continue to employ, strategies, including hedging a portion of our energy costs, and risk
mitigation tools to reduce the volatility of energy costs and ensure a degree of certainty over future energy costs.
However, there can be no certainty that those strategies and tools will continue to manage such impact in the future.
Volatile and increasing energy prices, including as a consequence of the conflict between Russia and Ukraine as
well as heightened geopolitical tensions in regions such as the Middle East, China, and recent events in Venezuela,
or a failure to effectively implement such strategies and tools could have a material adverse effect on our business,
financial condition, results of operations and/or future prospects.