GPK - Earnings call transcript Q1 2022 | Graphic Packaging Holding Company

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Operator

Hello, and welcome to today's Graphic Packaging First Quarter 2022 Earnings Call. My name is Daly, and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity to questions and answers at the end. [Operator Instructions] I would now like to pass the conference over to Melanie Skijus, Vice President of Investor Relations. Melanie, please go ahead.

Melanie Skijus

to first Holding quarter welcome to conference and our discuss XXXX morning, Graphic Company's Packaging call Good results.

as are is the filings from present the actual risks that and information to should I'll Investors President reliance Steve these in Company's placed everyone Speaking Mike uncertainties on on section to today's the would via quarter periodic Executive call, not Exchange date speak statements and of by statements contained our be along various website forward-looking as accessed to available presentation, Doss, the be materially To uncertainties Vice update statements only Scherger, statements obligation first the self-directed in the statements currently such Company's slides plans, I Mike, over undertakes as with remind the and risks results to differ statements. on such and Securities could at except we forward-looking subject made. and webcast regarding and expectations, you law. like the our the no and to beliefs President and future that with they call follow of Commission. also to and Undue Company regarding expectations. of CFO. turn will are which it on And required which Information www.graphicpkg.com. Such cause referencing be you. help and will be events based CEO; Company's our estimates can are performance constitute

Mike Doss

significant doing billion, morning. results operating net stakeholders. step-up growth, of time X, in to Adjusted share call briefly strong we were input sales another improved you key XX% XX% Net margins quarter spend We'll and share, and our said do nine Slide call in a to growth, quarter commodity an sales put let's delivering on and have growth sales quarter very some start execution for sales these I'm pleased XX% and quarter. eighth $X.X the and that we've million, through sales driven We're cost to purchased of very in acquisitions. a highlights increase building excluding we adjusted what earnings morning track by Good the We're Adjusted returns positive everyone on XXXX, the organic out you, of Notably, our on pricing successful was consistent, $X.XX. quarters X% organic net Thank On higher long-term of us and of joining growth, walk positive year-over-year. record executing a quarter. model well initiatives up pivoting great delivered growth the driving net place we $XXX first a relationship, the profitable EBITDA a amortization from per year-over-year, contributions this record to EBITDA. this including organic operating to a off intangibles, of to today's and performance. first to from price continued to marks with the organic drive webcast Melanie. discussing

the quarter. After been During of hard initiated of global the acquisition our years packaging. to in Kalamazoo the closing XXXX, months expanded we in fourth our leadership advanced of packaging investments to completed, two integrate case first platform in have extend company quarter the the quarter, European to continued Both we fiber-based in we recently work actively transformative fruition. bringing

KX to life KX years. the operating in first in to CRB machine our Kalamazoo, meeting been of Separately, Our dedicated provide million platform and investment teams enhancements, deliver working lower announced have CRB new $XX incremental and the expected machine million integration benefits, will ramp start-up EBITDA three over XXXX, substantial and greenhouse over efficiency including next yield up of The expectations. The quarter. deliver in incremental next quality our are continues targets, early and water meeting environmental $XXX on usage, in to platform years. $XX the collaboratively this came is is investment EBITDA and gas million track The X.X optimization production. is emissions and synergies during year.

on financial our comment from Finally, on before moving this a strength. slide,

While solutions. times, see for unprecedented we to robust clearly continue packaging innovative fiber-based operating we in demand are consumer

driving globally, February. Given are and expansion initiatives growth Investor excellent overall Day at strong reiterating our we and profitable XXXX guidance provided underlying demand, performance our in company-specific financial

business. strong a have We

are have $X global liquidity. greater deleveraging. We than And in billion quickly we

a we While acknowledge would a as are to that vacuum. be the global events remiss geopolitical operating in aren't we I our not are company, performing very impacting communities. well And

and living unsettling humanitarians we in global As times. citizens, very are

in Our go all Slide business Ukraine update AR Russia of fourth On of the way. harm's me the X, an part XXXX hearts standing in out people acquired on the of to in and the Packaging as acquisition. those quarter provide we let

and in the Our folding for customers EBITDA. Petersburg Russia converting X% tobacco local consumption. Russian small, for two of than serve in business annualized and St. business of service The roughly facilities facilities, is other and The Timashevsk. in total one primarily less accounting consists of carton multinational X% sales food

customer sanctions meet adhering existing are are contractual U.S. where and currently all possible. Union European and operating commitments to to We

new agreements investments not into are new in any with the making region nor are entering customers. We we

agreements options to as existing expire. the will We all explore business for continue customer

time QX, XXXX and the X, to as frame. year and the relationship. financial and cost Slide pricing through full positive offset of million back will results Turning I on discuss flowed and business cost $XXX expected $XXX a the XXXX implemented over we In actions quarter inflation. XXXX price commodity million more price pivoted of input than $XX guided, million to we recognized

dislocation momentum price/cost experienced pricing the million the in relationship in million as of further price/cost XXXX. headway continues. into the And Importantly, $XX to to expand we make expect positive range QX, recovering $XXX we

price to result of see our and right can in XXXX. on recognized are million in expected $XXX approximately the through flowing hand positive You pricing the implemented of actions Slide X business

The original XXXX inflationary million. Accordingly, which throughout million $XXX have guidance. Our are $XXX expectations range million than $XXX we increased to quarter. higher in inflation continued our unprecedented current by price first the operating to are environment our million $XXX we

forecast We will pricing that cost recovering XXXX offset XXXX, million continue more dislocation. to in more million price/cost than range to $XXX initiatives the the of commodity in than fully input $XXX inflation

and Slide and and has European commercial to The Turning quickly immediate strong team The and cohesive customer in integration is new of packaging made Packaging and exhibited and Packaging expanded together expertise. executives, is as a relationships in our team the focused recently on with results. Graphic operating Europe backgrounds, platform. equally AR sustainability of chemistry, leadership place X group coming

we realizing efficiencies leverage, innovation our organizations both of practices best engine. while global the are strengthening With

energized expansion are from customer opportunities. existing we identifying as and are rise. And and We new geographic interest is customers on the

steadfast approximately approach employees X.X dedicated annualized a we and over growth resources the will packaging sustainability book benefiting supported billion vast $X sales, the continue trends also on maintained business around we leading on have and while by integration organic to to are deliver in believe of scale, our of years. global to next sales Our innovation track drive entire European activities, has world. in With million $XX synergies that delivering the is our business

returns and KX continuing a for customers the optimization executed, investment will of The ramp quarter X, scale Slide stakeholders second scale project. machine you anticipated CRB for up snapshot the benefits source a large of during We during new began to the and our machine at KX transformative are successfully is new On our and platform see of hall final start-up. production. stages operating being

on the integrated converting New paperboard. with and KX into produced paperboard customers is of machine delighted the being are facilities. printability quality formation, the our And

fiber-based EBITDA million transition of will some employees our to new Creek fiber-based rates of we optimization coming ensured will on cheeses packaging mill be of salads. to From the are as including plastic in we organic continuing achieved extremely cook, investment up fresh and paper globally. alternative employees include the mill demand that broadening In This our service X I'm our packaging number project over customers Kalamazoo are we bring the new Battle down that February, markets for seal company we will slice, served want our seal important experiencing. paper commercialized see launched be plan. Battle increased turn original Europe customers KX hard-working a original campus. $XX Creek pasta, CRB up with introduced and from retailers of mill all in meats in we are and the my this of continuity the suite seal decommission to to on its and line Customer I to drive of update in Creek will producing iterations, innovation, expected wedge incremental adoption and volume as plan. ramp adoption I major $XXX personally higher. We XXXX, the wrap pleased on Battle we supported PaperSeal transition. support the made paper new higher-cost we and one was deli XXXX by items. growth we as designated for trends in trays and our integration expanded following total frozen thank of PaperSeal the continue and will across innovation first Australia. our notified comments locations evolving that world men this around report similar ramp-up the Slide We sustainability the to in to progresses for and months the as on to fresh will women million an meat, solutions adopted to barrier this

it States. West for package in With New now here the the showcased Coast, the grows around we commercial United are market, Seasons pasta

New replace Seasons in waste. plastic to less PaperSeal clamshells adopting first packaging to effort in market more mover shift to the the an sustainable was with U.S.,

have is a once innovation the occurs, commercialized new to additional a typically test expect phase see first this customers converting. multi-week market, we in grocer packaging mover with we As entering And solution. second by

of commercialized in apple interest and grocers sustainability third from to distributor our more Bell benefits. example, As U.S., producers first gained ProducePack learn about by great another the Michigan eager the in its Harvest solution quarter XXXX,

that are will during to see the excited quarter. our retailer in large We grocery U.S. the a very punnet line launching be ProducePack second with

initiatives. executing on strategic As we've been remain customers you can working and hard see, laser-focused our and servicing

enhanced a results I on over our Steve, and on review call over that, goals. track to Steve achieve of will focused hand to remain the XXXX to are you. Vision We With financials. for

Steve Scherger

good and morning. Mike, Thanks,

was Moving year to to XX% the growth, Net from year-over-year higher billion. Slide period highlights. prior focused million by increase key X% in net sales X, a or financial The $XXX on driven sales $X.X disciplined sales ongoing record and organic XXX from of We volume the business on expansion sales and higher pricing contributions margin to the through offset acquisitions. actions operating a environment, of flowing as mix execution. delivered price inflationary points basis strong higher result increased

to even operating we Given a EBITDA XX% year-over-year earnings increased excluding driving, the share, are greater an $XXX $X.XX amortization of per Adjusted purchased million. intangibles, leverage to adjusted share. grew XX%

as We forward the operating reflects are of including adjusted EPS flow intangibles it by Company purchase and moving for a more calculation cash used capabilities accurately adjustment metric the and in an is investors. earnings the

XX% points our operations. we to Finally, year-over-year global integration converting our paperboard basis internalized into rate increased XXX as

mix and support and As volume currently of growth mix operations. me to our growth of $XXX or year-over-year first foreign million million. quarter slightly driven of million drivers sales price, exchange. to by and $XXX the our tons and from prior of was to in inflation from increase was measure. performance. XX, revenue into solid in offset EBITDA, versus It performance. X were find $XX increased let acquisitions, inflationary EBITDA we The period. organic inflation million dive quarterly by increased $XXX and in cost Despite On higher any On significant produced a Adjusted $XXX sales you our XX% pricing million year-over-year and quarter XX% unfavorable million. million larger XX, in million by million labor of the net will $XX $XX $XX million in positive deeper of $XXX $XXX by Slide waterfalls. Slides volume a reminder, XX other million global we and QX, headwinds $XX of the input the million converting sequentially And purchase year Commodity QX EBITDA paperboard benefits

are acquisitions and expected performing recent Our well returns. delivering

recover year-over-year, growth. continued by XX%, up and price Our organic to business driven with sales foodservice sales

XX% sales price Our by food, also beverage sales acquisitions, and and grew businesses driven organic consumer growth. year-over-year before positive

As it operating market first relates the reporting be will XX. April for paperboard to data, quarter on FMPA industry the rates

with substrates, our for products. strong all at the all end quarter. across demand increased the experience Backlogs to continue have of XX-plus We three at weeks first

paperboard low. Our remain inventory levels

allocation. end at was capital net forma on the Pro X.Xx. the of leverage quarter briefly first Focusing

net leverage while we utilize and to between continue margins and flow to Xx year-over-year. generation expect reduce debt substantially be significant We as year-end X.Xx to grow EBITDA cash EBITDA adjusted

to continue the business over significant we Finally, maintain in at $X liquidity billion.

Turning XX. XXXX Slide guidance now on year to full

first share for per financial and Slide we in $X.XX. deliver sales Given We drive year-end year-over-year leverage. adjusted have were the the and share my up On during concludes flow our the flow, point on will quarter changed. expectations. our XX, Pricing this today commodity we with guidance at cash amortization our significant, our not critical Acquisitions of year or will results That commentary to and of track Kalamazoo, are earnings inflation. this will performance, The the are year, remain for commitment earnings for prepared confidence and input and adjusted flow. range adjusted remarks guidance growth real executing reiterating cash EBITDA prepared quarter our offset purchased details continue we per year-over-year. EBITDA, $X.XX in Adjusted XXX be initiatives to morning. basis more than to XX% will XXX will a meet growth above benefits to including ramp Organic cash EPS, to have sales up excluding intangibles. I EBITDA wrap the cost of

now turn Operator? operator over Let for call me questions. the to the

Operator

Please Panjabi Our go Instructions] question from today [Operator first Baird. Ghansham ahead. comes from

Your line open. now is

Ghansham Panjabi

tightness us can us update give an you strong seeing a you're I this the give called chain past, and in supply customers, update you, labor you constraints on -- that you at point? it your as to to just cetera. et an you've And operating you start efficiency, maybe trucking, on just where the the with with year. relates an on it along what could impact way see had mean in Congrats out

assessment stand point? high-level a us where of things you think give Just at this

Mike Doss

what of Steve little and of the a impact you about means an that, from that kind on I'll commentary inflationary talk give backdrop. then operating color

Steve Scherger

within see the inflation. input did commodity on what think I was continued Ghansham, Yes. acceleration cost certainly the quarter, the we

$XX had inflation in prepared So, increases, to I we that the in in million $XXX from we QX, commentary, the saw as QX million, mentioned QX. continued

big we our that inflation of continuing saw $XX to so have our we acquire, chain And energy $XX categories certainly some million of of spend, paperboard and supply chemicals, that to was suppliers about million challenges, fiber, across the logistics.

in in certainly supply bit So, Mike which then, here. it a showed little the talk up the form of we about will inflation QX, the And discussed chain.

Mike Doss

Yes.

I if well. our of most, We that January, bit our pretty struggling of month. like clean in as a Omicron operations And suppliers take Ghansham, mid-February. variant. a at did the ran with were you much some labor, look as But was some a think, well. that impacted it abated we March

our hard know, QX. that very that food But cup really and pandemic. QX up hit been back specifically service, very -- our of during rebuilding as saw starting challenges we the our back ended plants, our One volume force come labor biggest was in strong, in into you

matter QX of volumes were levels. slightly a the our actually ahead As of pre-pandemic fact,

So, we're expect, some second to second was through bit would make able operate I terms we'll but half we on we're It lines. the product a the those And as those to to year, still and pleased that. of scramble. progress quarter continue into out. along the how about efficiencies get we of a do the grind locations, of got in We work

Ghansham Panjabi

prices, as natural then And towards to question, for gas break relates it starting highs. out my are which -- multiyear to U.S. in Great. Okay. second

you commodity, decade. to sort to how in has those as which volatile than exposure much just us approach a may managing of become remind it more Just been over

Steve Scherger

No, Ghansham.

out. We QX You're absolutely hedged QX. itself certainly seen of have right. as not move play through we that volatility kind We're through materially

So, the we'll impact of absorb of that. some

I think in the... are

Mike Doss

million. $XX Throughout

Steve Scherger

currently. $XX million range

the about well. for as included here financial to a the which talk and you give along bit obviously little just will that guide, that a is we in our of way So it relative sense impact, scale the can

Mike Doss

a point that, And just finer maybe Ghansham. little on

We nat look and gas. to and us virgin to opportunities continue that our mills to burn less bark biomass allow for use

platform, obviously, smaller of mills. the more Our than is to Kalamazoo some new going be efficient

is a of ways to kind that finding managing solution of So input kind use inflation. always good less to cost

Operator

Thank you. The Bank today Staphos question George, next comes please of go from from George America. ahead.

now Your open. line is

George Staphos

at to like through the you're implemented like so cost input on been millions possible to I side, look already quantify this had might pressure? extent your year I with where done where currently but dollars, we'd you just call, follow-on connection the and So my I or getting And volume. math a on from And that's 'XX? it. what any the perhaps on heard the $XXX would had pricing could, -- haven't back take? answer think if for go a And or that $XXX you Ghansham, thoughts look -- it, the prudent this I tail wasn't on of or good. you're could another if the couple if extent million, you that on could on year in you but then least price/cost, of the on some call, so seeing relatedly, million

Steve Scherger

and I'll George. Yes, It's take pricing. Mike the you can walk a then Steve. inflation bit the little talk for about

bit I So looking of just were let that think provide me you little detail a for.

inflation million board and high from million. really all be QX in of QX, inflation watermark, we of major up the of QX, was a around QX is in mentioned, the across commodities. a $XX terms of currently I it in million $XXX $XXX bit As see to should What

to was inflation the as occurring decline in us of some $XXX will which we start on the a range, put some to last of or midway million so. point see in modest year-over-year that lap the $XXX year, the begin low inflation million year basis we'll So, at

mark-to-market, $XXX currently, is tend year to held the is Our if are about, for as which we approximately talk current is which everything kind we where million. of

end were range like So, of on and unusual million. we're volatile discussing our and of seen, all other it's the tenant in other extremely nat and we've at gas we lower $XXX times times, million certainly, $XXX commodities. just But

we've And as So, million really commodities range some an million. And appropriate we've $XXX speaking, move roughly at but year to mark-to-market the is to the but seen, up. got like 'XX inherent abatement, year we've that's Mike, we $XXX continued full just some feel full that generally for possibilities all million we've the of the seen And provided, in price? year currently. range the talk for about to want $XXX

Mike Doss

Yes.

of we here executed at terms They've actions and think take in pricing all we've today. if announced recognized In of full. price, kind just the George, on I a look been and

through recognitions So we're now what those is right contracts. our doing pushing

for upwards we'll mark, looks you It's into You you've did that. would views saw is as to from would meaningful be which that look give case, to midyear. And carryover would our And make increased what we track we what a preliminary got like. that before in you year a be of our -- be million July, do by we'll $XXX what certainly to on like in plan sure quantify But now that that standpoint. for the that. last our 'XX deliver million is of our We're pricing $XXX year mid-year XXXX. our preliminary

George Staphos

customers of talked market, up destruction that vantage the on switch with initially in I'll it you've from and yet obviously, to really question, in is numbers paperboard do second pilots my think I pricing like? pre-buying needed commercialization, having of your ahead to not pushing on the put demand the you Or from pilots for trials, launches, kind on innovation point Because thought. effect that inflation go the of Actually, given XQ? an any you off the about. into margin, there's any your your And side? any going what were you the Mike. seeing or Are it Understood,

Mike Doss

George. Thanks, the take Yes. upfront. I'll pre-buy

That's that have have, sure. pre-buy I'm Graphic for that confident Packaging. the backlog Given we not we

about saw substrates. all across in busy. three backlogs increasing are fall And organic to and our our the out quite into weeks the up Steve mills summer the volumes X.X% terms demand board XX through of You talked looks what like. already frankly, quarter. We're sold

many to a we that it'd focused to point But in that could reminder, the way opportunity of really paper and have customers technology I cycle. of been covering. the disappointed work polyethylene getting one fast George, that on, haven't if fully just that that, It's them It's on more think by replaces on been have operations staffed had I with a inside their be probably area office of I've the great we real a great product. our particular initiative. some traction so

one any in is So But very point of organic conversions is materiality. It's year-end, the We're busy. display. clearly that seeing volume. talked plastics broad-based. our solid. about volumes of the paperboard would overall, of be are products out and terms I'd single-use in our Demand probably the We that to showing you by evidenced

very a all, operating backdrop in for right us now. all So strong

Operator

next today Bank go of from you. The Mark question Montreal. Wilde please ahead. of Mark, Thank comes

is Your now line open.

Mark Wilde

from Europe? wondering, Mike, any just you color Russian back I'm on over impact give in the flows board potential can on sanctions us if

Mike Doss

Yes.

Mark. we profiled Russian for you, So business that our from standpoint,

as matter of kind it What some overly in can shifts. of our in have fact, of flown from for plants small. standpoint, as not result call we sales significant to positive into the volume a other that net probably is of basis, dislocation very some actually the in the On the EBITDA minimis. of of we'd both net de particular. And of terms call Ukraine material us though it a some corporation it's you So is see, they the and a seen

carton written year. solid sit profiles all today, as terms backlogs and means seen that plants we our of a next here quite we of now, about lot And in lot, we've talked in are Europe. kind had demand in a overall all in around early about, our again, so, But what fall right

we're in tonnage We pass prices, customers' Europe, import know, do that in the to a the into own market. paperboard in buyer has form beverage we are locked at albeit securing application. needs from did higher well producers But for at this been job to a some higher really good strong fall our paperboard that market. And of the to price specifically of a teams sure of make that our that you for in As currencies along we be prices. respond position demand at year, the remained and we've to able to in down paperboard,

So that be fluid paint means you But We're ahead. or performing at the well are Net-net, what dynamic us. slight the for closely of it's Packaging Lamar us expectations can market it color for did I'd early there. relative read positive acquisition AR you watching with to kind because a slightly and for appreciate. be we the may maybe a as

Steve Scherger

Yes, Steve. Mark. It's

was the Just on than quarter. as operating at, business sales a organic And Mike in color in better growth to little EBITDA our I AR that, put expectations, fact, little $XX from was saw million. mean, positive Packaging a right saying, we around

Mike coming to were as as we the exceptionally as with really articulated, start established, well So, the there team relative that together well. the pleased team

Mark Wilde

be and to alternatives. up paperboard of seem produce then little Europe. on North to like clam like I It does in if some general clubs North America shells plastic just seem of moving into progress could out finally that, noticed versus is sort kind thoughts you And steam follow-on, some I us of maybe wondered for picking my Mike, America. on relative warehouse Okay. the give substitution of Europe a

Mike Doss

Yes.

going pointing market to of announced products that I is That strong. wrap So Mark, is ground in year zero for variety out different say see our The would sustainability. initiatives film we hasn't thesis that a May shrink single-use replace very and changed. originally when it's in Europe amount last we plastics on of was in

couple the of because European is for market. of first down from months needed that fact, year this producers actually were As of board imports matter a into in the U.S.

deal trade costs American think different of seeing interesting replacing seeing it be variety store the mean flows rigid the rather it the bringing that that primer North agree market and another than similar kind with they'd for take-home strong, that to shipping you in here. also for statement I applications course, But market and with I fruits you in vegetables to strong, your the made our we're talked applications in with is provisioning And I sell relative steel point for with would We're trends. paperboard. or Of profiled of of for here the paper about acceleration the the that's that lunch. paperboard. around is meals the we've around evening to

as of of types big, of kind because applications in singles being drink shrink and flat, of the was we're volumes store hits, carbonated those a you beer. Europe, So, you again, out from that's when in substitutions and analysts a point, really coming really lot that It's just primer pretty base rigid soft CPGs larger that of the largely from. certainly they're that's the of but around growing. getting of and That's coming look for it's of so and market, some about at know, some broad-based. that And Mark, some at rep the the film of written have where general big

Operator

you. Thank

Mark, today question from next comes Research Mark from Weintraub Our ahead. please Seaport Partners. go

Your line is now open.

Mark Weintraub

I increase and in Paper there's And me us in am in to the of probably the some flows for how see and of lag also me, 'XX correct and realize Week, on was it that for if to pricing escalators. I how cost this assume about to increase of of that rollover think looks that I'm some driven even that in is of going terms through. specifics at it cost we terms escalators. a And wrong, $XXX potentially. an million but is But year to So midyear related more understand pricing Pulp you're I by part to it into give it,

ranges 'XX? probably And I'd to inflation, correctly. just to of there be extensive we end of confirmation So, see about something right if are given fair course, the And number like related to that it you've laid I'm that of very it think say to ways inflationary in -- year would on kind the presumably is the up next at amount to be those get that out, the high bigger? understanding for picture, big Is end it? would that it of then

Mark Wilde

It's Mark. Yes, Steve.

You well. that know models lag. of we I the cost-based market-based are you have combination correct and and business and directionally a models mean six-month

You're absolutely right.

models, We if will it's range now in just flow would flows. depending of that inflation we're to movement roll actions additional price the said, is, end, through the cost like where the it you would then 'XX, But that flow-through will that result executing into through. for with along mid that see initiatives on high upon in

I think we have very year. for direction of on cost offset to impact price commodity through really for the is the we make absolutely that positive expect imperative years, its momentum positive inflation QX. in a that's the effectively. for the input And had continuing we we've And that ensuring see that to rest is way executed pivot and QX one in

Mark Weintraub

second question. then And Great.

that as actions in the just think originally that adjustment a Is you is project you clearly, original as from Because little about now but anticipated? EBITDA $XXX from now -- this haven't reduction incremental from incremental in the had the that that. the originally you is down already expect? revised? I KX. seen now million offsetting related $XXX you line may haven't way contemplated. higher expect capacity the have as incorporated to different million you're talking date to So And $XXX was that in what And EBITDA to we clarity much Is million, footprint made

Mike Doss

Yes, Mark.

of actually to that operate Middletown there's we So which really, we Day, were which what continue where also down. that going paperboard plan to in mill, Investor them Slide that slide deck, at one and used Middletown to is was a we in that our XX, the shut our facility, original reflects, the said

EBITDA XX-week right that is we need say, that those in With that a $XX to Steve got incremental we've million driving the And one footprint So every what's platform. the our got now, as backlog business. of of heard tons substrates. run across you we've

take own will be we're is largely when And over to tons be XX and that the our growth it next going XXX,XXX the KX ourselves incremental an months, the which there's market. to of ramped, in So, XX that products. seeing that in fully because will demand will

Operator

Thank ahead. next go you. UBS. question today Cleve, please Cleve The from from Rueckert comes

Your open. line now is

Cleve Rueckert

into last wanted America some bit and I the you the maybe market. how could you've versus us alluded market is if growth a North -- I months of think couple a than investors the little call. to heard others times the give progressing five it we've more it the mentioned times just dig probably and I the is, organic last on mean, color European But in the recession to word years. in two frankly probably throughout

some on like sort I out the U.S. in you're how if growth seeing independently. could just maybe and Europe of trending spell So, specifics and it you demand organic

Steve Scherger

well Thanks for that. add as markets. that start, very organic and then we're additional sales is pleased business Yes, Cleve. Mike But our can across as It's Steve. really globally growth I'll color. some

was growth we're organic modestly above Europe articulating. so the number And overall, that

a have given its continue food be more we we've the talked of early proving to beverage resilient And its seen packaging is predominantly. and and consumption course and adoption as conversions. So just consumer consumer Europe about, in little

And at North growth as sales food in growth in food, sales of as nicely at beverage platform where Americas so, mentioned, the a organic But American rebounded market European platform, has and service core Mike Europe have America. as organic terms in or we're or our The has level, we in at businesses the total. and there, North organic positive even growth. sales has positive consumer above well,

So, and alert which the of X.X% into total. totality platform, it's in geography the across both the market

Mike Doss

XX% and XX% X%. is aids, health to around you And beverage. about think got as our And you've think mentioned, I Europe, we you actually products what a if as food And heard beverage. end-use for of bit Cleve, corporation, XX% Graphic. do The about think little in markets beauty Steve food a consumer it service. we're then and to is and food over-indexed maybe, globally and in

physiological recession So drink. human about investors, you're still while we're a hearing talking have it's to you potentially need that that a about or from

it question as versus and has XXXX, of today know. pretty And get business And resistant, a you we where pressures, you happened And and we've recession inflationary been so in about slide that historically, XXXX kind stuff? shows that what there back are they is, at think the on-premise the which our are got to is going home Company different. actually in when very in what very versus

Our debt is a lot lower.

Our cash lot is a interest lower, a cost lot company. bigger

And positioned So weather how thinking be to you those macroeconomic handle able of I on things. bit hopefully, developments, about variety pretty that a color to relative positioning of it. gives for to kind think little we're our business of well a we're

Cleve Rueckert

sort just then what Yes. curious I'd in just of be the like of run just they past. average think just of helpful. -- great. follow-up. Steve, remarks that naturally And or target the prepared Company, backlogs I maybe you are where XX how your to backlogs the know be where how want said at compares to That's to weeks. you about you sort your in sit earlier that really That's a to

Mike Doss

some you I we we we're or strong. where of goes for three would schedule we've just XX over guess, four the effectively, range be very Well, But I the be times to the basically we're be them we customers on where would actually little longer if years. paperboard eight-week in sure. able the around last have to back, facilities, how beyond hopefully Cleve, pedantic weeks, six- certainly, having to went the because business to tell given bit our service in that more you But like international historically, been a would I transit

Graphic. So, they're they were from definitely for where up

Operator

Adam, from ahead. go The Samuelson Adam next today Sachs. from you. comes please Goldman question Thank

now is Your line open.

Adam Samuelson

line thinking trade especially looks I see struggle higher-end more your and of branded side of price food business same of HPC a little your private on within sense the you consumers guess those those implications of brands to? it's growth the area, at brands -- to in question that on about bit that just names label some before. mix So is shifts of and expense questioning the -- of the exposure there volume down. raise see of a of first that the one as some the kind is sell see how trying just get And could in private following But And to label. you is retail

Mike Doss

plays answer I the we that weeks talked And is we about this what about mean build Thanks I guess do store price recession, try experiencing. through to mean in I a do have that that customers they've a for in they're brand past. currently our is is Company greater talked that, that -- Relative announced Adam. be how earnings at way. remember, couple is it XX% would regard. a a than I I in that's guess what you to to and had seen in last I the out that elasticity Investor the XX% of slide the And or comment. Day back of that February showed global we bit resilient brand private we label. what

of would normal private right top So, what we're branded of that markets that kind versus And you of on kind in distribution kind capable of see handling the mix. would of be label. all of a

and And acquisitions of years make made where over behalf. able goes what in on happens. where build of well model consumer we're we in were our be here operating that heavily number versus an we 'XX, it where last were that terms And indexed to demand. kind our is, to in of almost in even of overall handle 'XX we purposeful positioned sure well XX more So, environment a that's to regardless perform fact, to we branded the that growth to

Adam Samuelson

second from supply A, how sense much in concerns, have it in Europe in you term Europe. short paperboard board a it's doesn't Europe? I'm the to is question And halo source much I'm that -- to driver there distinct How of more halo sound there's U.S. trying provide and just Okay. get that the more U.S. That's if does terms around European on into provide much capacity energy you for helpful. the cost of a pricing of mills. And And markets, like not to -- because -- the to relationships bit just just a about thinking the flexibility pricing or does then corollary in costs energy maybe because a a that of of is the of flexibility -- actually paper the have issues but

Mike Doss

mentioned, question of of commitments buy last sure down our job to tonnage gas fall They out that answer team grades. those number of lower would of as of you're they of impact kind what the nat in I in make the for looking had year if that did at of North started were customers. a of the means to in saw to us sure for that. around the paperboard cost curve, is this be front that excellent on a and yes. relative an in Well, locking coming competitive tonnage we result -- America sure cash a take Europe, from for moving your But terms the we care as mills making

material. here I our you inflation As assumptions that in it's pricing are paying and that see we But for embedded mentioned, more share. we

more to they understand actually making But customers wrong. pivoted have me security now. but store keep right get ever. the They don't the more, the pay that sure towards have on shelf. they're they products Don't the sure make materials so, that's supply. more the environment -- the they that want that And and And polling to in products making of

doing what So, capable continue of But for the the business. through material beverage the your here we the got our North I case of right the given we're about own just that we've point, year. is extent would tons will around do the to that balance import anticipate the of demand American that, To in market. now of be XXX,XXX

it -- market make shipping on staying that have than market the American I the stuff year money them. the I given North some are the North for or it opportunities European are market European As North data first of more are of into in I seeing, than and although me, assume, couple would is they to excuse least available that will mentioned going in it preliminary also are of growth months know the to the in the America. actually, some they challenges they to shipping America. They're don't year-over-year at this though, that of down in imports we actually

Steve Scherger

just point to to Mike's dialogue add one there. And Adam,

the in pricing it'd we much nat paperboard or gas such, fluid. has As Europe, -- become the be more environment that acquire, given inflation whether

is been what been unprecedented just more overall so relationship reality and of annual quarterly historically the an manage And having a upon to into through effectively that's may what or depending have And like. have environment. monthly the agreements turned inflationary

Operator

The you. ahead. please from Anthony, Pettinari next Citigroup. Thank from Anthony go question comes today

line Your open. is now

Anthony Pettinari

is Can the versus now and lot consumer, for we demand Tatter. pandemic, the remind and unwound during or over normalized On might might service of comps course about now? talked you're of that Peter just us, food the food those fully you Or bev sort a how and trends the you given markets year year-over-year trends that kind end perform the demand seeing? two of the just expect

Mike Doss

couple is it years. about reference levels. ahead actually mentioned, your also our of last kind to as food service that, to appreciate I I as And question. But the pre-pandemic for this the slightly you Thanks I'm of we Yes. quarter, how of talked business tell of over happy

already So in that equilibrium the talked we've we're on would we to some service growth where expect that growth years be on back to ourselves growth we more improve, see with profile. call, the plastic vertical. I'd the to continuing and few that replacement, returning the things of would of of over And say in to that food we strong as that about some other beverage of expect continues food business next our-self that and kind mobility

that So markets with end-use pleased relative servicing. we're we're got we've positioning to quite the

Anthony Pettinari

Okay. you obviously a is helpful. That's And project. massive up which ramped then Kalamazoo, very

West you at largest had couple Sneak. that, And Monroe a I before the projects the big you've undertaken. at and of project think

is on Just year? platform of of any into for your the sort sort time forward? thoughts and this we still and maybe KX going operational year, CRB take most and next optimizing next of are opportunities performance Or energy the optimization going to

Mike Doss

off commitments a focus set the majority start. Well, that's effort that us. we next and exceed And the vast to to initiatives make we deliver and take into year to certainly critical a year of sure or of decent made KX. our going for this We're on

tons if As XXX better, we down were machines, in targeted day, what doing. we're above for averaging the sooner, we you, shut are fact, is performing a which, Battle would month-to-date, we X,XXX Creek somewhere, tons. told We're

and So targets. our of great. months ahead we're two Quality slightly looks

background to team with them them. in. off give able shout Our done done done years. tremendous the has COVID out pull a wonderful over just accomplishment for And it they've a a last It's I job. be what to in couple to they've the of

machine that hourly are Our performing too. up very that ramping are folks well,

fiber, we're an So FDD we trials. I'll to to us, Day, Trials told project now, give continue We continue them show on at running project Investor trials promise. a to actually shout out. right you as Look, those the run have see if a don't sense. we it but for makes

we here, something forward Company want context, at the forward. to a again, about And all we really look we as in sales the And Anthony, of so there. X% margins. go that CapEx that going I how of project let And with is want you that model actually come it's we'll if know you up think then to you that's that EBITDA because XX% potentially. and

has done good us margin increase along to will So returns. Graphic EBITDA do targets It job lines. have we capital we our increasing with because be our really spending. also those those projects Historically, expect a

think we maniacally And about something, bring that's year. think again, KX that, ramp we'll it I'd we've continue to it, up And forward. this at beyond So other got you ask look if on things. we focused how to

Operator

comes go Arun Markets. you. Capital Viswanathan The question today ahead. Please RBC Thank next from from

Your line is open.

Arun Viswanathan

Just guess, outlook. curious about I cost, price the

realize in recent and should maybe that inflation And impact in 'XX? you 'XX expect the of the what our tightening the 'XX how get actions it well, outlook? as as should pricing far as we rest some I Given guess, market to --

Adam Samuelson

our I made our at been we've full. roll to would take. contracts. So are we announcements of is all not that prognosticate Arun, on future every actions would tell our backlogs we're you And in pricing through recognized one implementing that XX the going know And that, weeks. mean those you I we're around have now through

that the So, but we're make basis. making on and about decisions Company, good actions monitor continue a for sure we'll pricing that going to future not to talk call I'm

Arun Viswanathan

the outlook, the your said, potentially growth to substrate XXX organic whether Understood. to volume about you And maybe of relates outlook? we basis thinking range? kind you seal as and are still paper help Or discussed, seeing some XXX you it the points then right that conversion, product anything, are other you as managements would on increase new those of

Mike Doss

quarters, prepared Look, for as I at eight beat our you actually goal, Thanks look nine comments, in now, Yes. said question. last the it. the my out we've if of

the what so keep get question. to I on want we've logical to XXX is it's beat the credit things, a outperforming. sound consistently there. to row. to last for in quarters do we we points? And And the here. And to But actually to other side able don't XXX now just you XXX decided snarky want fact Do the XXX a raise of basis that out eight points we've that put been And for basis

later, put goal sooner markets the a we're keep to we or just to be that rewarded And try it. higher and out going than that, rather believe see there, we'll for performing. will So

Operator

Wells today ahead. go from question Thank Please comes Gabe from you. Fargo. next Hajde The

Your line is now open.

Gabe Hajde

pretty and million guidance. will, of don't I realization. start about maintenance I you give about the what to thinking impact, said, you think if the I quarterly $XX to But strong if look price ask outlook, to at wanted $XX of the you or know year. I a and the million guidance kind

like incremental that say, for not when think, recognize last is $XX the fact you were QX Day, to And I sequential that will million $XXX let's EBITDA so million. looks us at price let's the relative midpoint, be, we increases there price in realization, guidance, don't know, $XXX to appreciating that a of So range. pick outlook. couple in updated million the say, Investor it I your your or

things So, little a bit it feels tracking better are like maybe.

guys you range guidance pretty-wide that any for in early aren't some it's adjusting us there's appreciating year why today? uncertainty, So reason and the

Steve Scherger

Yes, Steve. Gabe. It's

components. price/cost relative we In provide relative set range, to of guidance, you're like but on them the in And you felt to if planned where terms range we you we'll relative don't the back appropriately heading width, of downtime. likely after provide relative just $XXX and And QX, is of to question correct, this maintenance will, QX, that on QX. let's to we really the million front. And dial maintain your the inflation QX

ability inflation, we'll specifically navigate of But then to the certainly, about you us pretty around relative range, we in absolutely we'll pricing, be questions to today, work in if XXXX QX. that a the as of last that. that year, clear Just and a given gives I feel and for us, incredible uncertainty little at hence, $XXX the every so we've seen, the bit it's range. our the today mark-to-market It's wider million of moved up but that mark-to-market to has month appropriate. prudent inside will, July. is talk couple dialing And the through

Gabe Hajde

sort see guess missed didn't clarification. quarter, quarter. disclosure/point then this of And a it, right. had I All given us unless I I of Last that tons, you and

talked So too not of I number. about a tonnage much kind know on focusing you've to us

ticket own and two, make and the question as then again, we of think forward thinking volume from other intentional, as say, to So we going Kalamazoo. that about assumptions to big a acquisition few and that's incremental other Packaging from assuming Just forward? guess curious, well that won't AR the extra price our I'm as about? about million million $XX rolling one. kind be XXXX, synergy be that's realization want of number moving would But can cost. number we an be items dollars getting And I I I items Are there should

Mike Doss

Sure.

a both We're for you. me those Let quick packaging take of company. real

with sight Company. almost what of this growth we the this supplemental so reporting materials added really in provide That with And to it organic represents line sales which XX% calculation, herein the of of set our was did quarter. and we've X.X% is calculation new

as we've growth. from so tons. look we organic that like appropriate was talked to We about away felt tool it move sales to the And

Investor we at of now our acquiring Day, tons we're at million X paperboard. As talked

just the synergies a really grew that And X XXXX, that into particularly as to that on articulating. quarter, are will investments in of Relative packaging acquisitions. We've examples initiative you're so, that And to make talking of things goes continuation it to part tool been expectations. million Those in report the our was calculation. produced we We've were And got what good are ago, of both tons. XX% are against, over making, given be to the Kalamazoo. company the about relative we XXXX inside improvement a of integrated the to we've all of towards the march of and that EBITDA continuing towards correct organic fit pivot up we moment Kalamazoo. the years. context we a those next the have we today's margins goals growth But the several got from Mike sales that

Operator

Thank you.

ahead. comes Kieran today from Please from Mizuho. question De Brun final Our go

is Your now open. line

Kieran De Brun

you've the in touch has surprises would like integration seeing how of over you're also, you in can from appreciate years? quick the co-product kind about terms of perspective, really or begun, should color acquisition. And terms cadence experienced? those now $XX or the I that terms negative a next us we any a had any it. just just I of bit positive of since are months think opportunities And could few a there you little Is the million one if there three cross-selling of a had AR of the you've synergies Packaging give in development that

Steve Scherger

in, year period pretty you Mike to Steve. opportunities, bet, right and things still about relative we'll our about over I in said, being high opportunities. add three-year in, it growth the it of period to but facilities. that we some very It's commercial Yes, kick think and those can it is on over come That add we'll evenly I very But optimizing specifics. us. oriented likely growth it's There confidence and are possible million way do one, and to But manage Mike being addition will with will side. a time, XXXX natural to this, a positive optimistic on Kieran. think those think off $XX I'll be the through cost feels for and that can how I what's how more cost come in and in this maybe

Mike Doss

correct, Yes. It's Steve. absolutely

talked I confidence Yes, there. executing terms to would it I seeing opportunities right very are cultural it. the probably be prepared But we're the given but They now. things of it we about the my and exceeded think, comments. frankly, $XX quickly a got actually teams given is that of in of And Both the real done easy don't I on course, to backgrounds. work. some similar. is in Europe say working look, companies will solid high quite to and our my in bit anything expected want million, It's be chemistry to I the the XXXX, indexed overplay expectations.

that's good crisis. So a

have geographic Sometimes, same up that's to we've opening book the us. new of and that helps the gel expansion, got for team customers, and we're innovation a of and together, they And what we're big those seeing. terms in

And when we part playing of would. the so was we're expected again it it's that leveraging hypothesis that and that way deal, and did inertia we out our the

all expect fully all and of all, Kieran, in business made that off to strong Packaging. deliver to we're the really the a on So acquisition start commitments we for AR

Operator

question-and-answer That session. concludes today's

pass Please to over conference go ahead. the to like for I'd So, Doss Michael closing remarks.

Mike Doss

talking quarter we for our I'd results. with call Have great July to the today. you And look thank everybody in like forward day. again a to to joining second

Operator

That concludes Thank for quarter earnings call. your you the XXXX Graphic Packaging first participation.

disconnect You line. your may now

Graphic Packaging Holding (GPK) 26 Apr 222022 Q1 Earnings call transcript