- Earnings call transcript Q3 2022

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Operator

Good morning. Thank you for attending the Graphic Packaging Third Quarter 2022 Earnings Call. My name is Matt and I'll be your 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 our host Melanie Skijus.

Melanie Skijus

to Holding welcome XXXX third and call. earnings morning, Graphic Company's Packaging quarter Good

www.graphicpkg.com. our our are quarter webcast Vice the call company's on be through along us Joining today the we call, which website CEO; To you section will Steve Investors can with CFO. accessed today's President our Mike on and Scherger, presentation, and and Executive third at also President referencing help of follow earnings and the Doss, be

from I over release uncertainties in remind the and factors differ executives Before the call Litigation you filings These of Mike. These that defined not presentations cause projections. and but our call over Reform and me to the the Mike, Securities limited Exchange let me Securities uncertainties XXXX. as With to to actual statements release our turn results our the to by the could expectations statements today's and that include include and are let are that Private Commission. Act turn risks with in the subject press and forward-looking made in to materially identified risks

Mike Doss

webcast joining Melanie. to you, morning and on morning. everyone Good call the this Thank this us

on me the exceptional financial the third Slide results quarter. my Let begin presentation. remarks in of X We delivered

investments quarter, business sustainable growth sequentially, our picked strategic Our In the continued I long-term robust. brands, Interest quarter demand cultivating. and have from remains we product portfolio another sales pipeline built significant and remain highly innovation net and increasingly net represents existing engagement global very have This organic be strong markets outperformance of year-over-year. more customers pipeline organic by and X% versus functional to for new development growth packaging. consumer diversified the new the and robust performance in encouraged our both goals. sales are accelerating to net can organic made sales third up attributed we by end and growth we

As our fiber-based to other packaging platform. packaging business we replace well across alternatives highly low-cost for integrated increases, new demand capitalized are capturing

As XX% is packaging We XX% challenging today and grow was of competitive we such, a Vertical chain global have all integration our differentiator by flexibility integrated producing our to integration rate supply substrates at today's benefit assurance from paperboard commence this into year-ago. production a to we supply three paperboard time our compared customers. the can of the established offer environment.

the EBITDA supports business model enhance to resulting $XXX Vision Importantly, $X.X year-over-year share. margin. to for year-to-date provides amortization increase expect over excluding increased performance XXXX. by We Adjusted EBITDA adjusted per and resulting XX% efficiencies an XXXX to operating EBITDA integrated to our of $X.X goals. midpoint, increase million a $X.X in billion expansion adjusted in XX% vertically year billion $X.XX our per further at the Strong improved XX% our Adjusted now runway an to is guidance. previous reflecting margin billion share full earnings EBITDA XX%

packaging are results more tailwind for Our by financial demand globally. underpinned sustainable secular consumer solutions a

global execution costs extended increases Price and offering ongoing platform to initiatives of be Packaging, and strategic investments unprecedented required specific and Importantly, our commodity offset has growth globally. continue demand. fiber-based positioned to has strengthened our capture to Graphic input executed to and us and packaging inflation

input price input generation. price full cash I've cost year, our positive the will commodity adjusted the drivers $XXX business quarter, two flow $XXX resulting higher from step-up provides realize year X.X quarter. fourth expectations provided months XXXX $XXX and The now are the drive dislocation left additional range. pricing outlook. $XXX million. and more $XXX as year inflationary on expectations to year pricing to we In $XXX from down range of we the million Slide expect EBITDA leverage result, million for the the our through driving in of from $XXX to a than on inflation on significant tightened cost XXXX. the relationship a recover quarter, times last $X.XX in million. billion, This through have in of the roughly costs XXXX. up offsetting commodity business strong flowed to commodity input million costs X to Slide Pricing continue during As million With committed, in the to ratio walked X necessary detail full positive for million we offset guidance environment the focused expect quarter, exit approximately the to and X.X are in

during SBS initiatives implemented the pricing third were other Additional pricing quarter. along and realized with

cost Our million of mark-to-market XXXX $XXX price as commodity $XXX and today, input million rollover million and $XXX million to $XXX ranges are to respectively.

our the will inflation cost have and nature see next Similar provide to want year we fourth reiterate and for will for we when our As quarter we price time we expected stated, XXXX in in rollover we to directional are guidance slide on in I figures report again full believe, in five results point to year, last XXXX, quarter, particularly January. estimates, relationship late Europe.

six. slide to Turning

production Let me recycled progress our update KX machine provide a of coated ramp. board

CRB investment to at September transformational technology in pleased many years capital look in the for with papermaking a our culminating largest XXX are host machine. KX history, We of you of

board analysts Kalamazoo during ahead energy plan. is advancement coated efficiencies. steadily of with and As lowest North able ramping advanced is on investors and operations and automation is America. machine most the to It KX manufacturing tour, producer into truly and the the and of technology, transform were recycled does Production in see largest the cost clearly

over of tons days, tons on X,XXX per day multiple have We X,XXX targeted day our September. averaging per in hit output

and third is on for partners our production with seven new growing in target to quarter business $XX million the With an the how drive organic realized customers Slide continue best and on of KX, best new the to markets. global expect sales Established in our million Vision meet example our of innovation EBITDA part engine growth. focused $XX and XXXX. in pillar is we the as customer XXXX partnerships

be yet known to products to are packaged. and are We was created technology with the solution world's and initiative. intent its XXXX working detergent best to Future they package and as Clean capsule both largest by part some a on with cleaning Unilever Unilever billion Future most Unilever's that wanted laundry manufactured new product its announced brand plastic-free. company's it's recyclable be new Where strategy a laundry transformed change new the be sustainable, and doing that in €X to of its the excited Clean just of way

Unilever Our the enhancements plastic will those waste and over reduce year. metric tons developed delivered each for of packaging stream X,XXX for metering

this company are countries. Reception various and customers' with We high are points with of positive enthusiastic we outlets protection and partner with thrilled capsules along France. fiber-based impact. for a growth to can a customers. and Current our our product and packaging the launched high-quality and our the customers purposeful recyclability brands product be laundry The paper, aspect product's solution and design to in printability throughout The launch. found and efforts provide rates making enhances paperboard and of collection proof such of to different the July new packaging additional has the sustainability renewable customers in opportunities brand that marketing appeal on in expect new were been see

opportunities reflecting slide the on we addressable plastic to expectation $XX.X to eight, our across we of billion. substitution, total Turning see have for new markets our raised market

array diversified we resilient under our substitution. and our portfolio grow solutions. wrap my You to can of remains continue packaging This global of and variety consumers. base and up to we a overall configurations by and see innovative noting our wide here I plastic prepared products packaging remarks customers solutions many that for different the business will produce with

focused are as We in a become sustainability. more increasingly need the communities meeting on global marketplace

the results our continued in year XXXX very and are our We achieving full for pleased quarter, outlook aspirations. Vision strong towards enhanced progress the with

we We leadership and XXXX. mill through investments advance capabilities Vision converting made our us. are infrastructure to our differentiate optimize creating and have value The with

running rates. at that, different Our XX,XXX highly call I With and will are over Steve. engaged turn now employees are the to truly

Steve Scherger

Thanks, Mike, and good morning.

highlights of XX% year XX% $X.XX $XXX purchased EBITDA over $X.X $XXX Adjusted share, higher to XX% increase year prior performance. margin in sales relationship Turning X% accelerated XXXX in first and organic X% drove during acquisition price/cost $XXX excluding growth expanded XXX our sales to last from of points the of basis European of A year-over-year increased moved from nine the third the to sales. net EBITDA earnings a half an increased or and key Notably, to financial positive the million, amortization slide intangibles, XX% to million also quarter. per million share. billion. quarter. Net third Adjusted period. to by Adjusted by

slide XX%, our Our Sales On sales paperboard or $XXX by million from please and $XXX XX increased XX%, XXX in waterfalls. and year-over-year, sales find EBITDA million XX, and pricing from year-to-date basis points acquisitions. volume rate organic driven integration up and $XXX in to million improved adjusted mix XXXX.

million million $XX were or and in million to quarter. sales increased the volume price in $XXX Drivers headwind $XXX in a XX%, during was EBITDA quarter exchange growth in of $XX the million, QX. Foreign Adjusted million $XXX EBITDA mix.

of cost benefits sales other the pricing earning offsetting $XXX and inflation, of net million performance acquisitions million million are quarter inflation, and in foreign and are organic volume were meeting million unfavorable labor $XX on exchange. input Partially mix commodity We our of $XX improvements expectations. of and $XX

sales optimization in recorded positively costs to accelerated net year-over-year organic KX of CRB increased million $XX accruals $XX some and growth. quarter, performance. category, and machine the adding the Within incentive performance from ramp the EBITDA our to contributed million higher during meet incurred we quarter

XXXX. allocation. we EBITDA production transformational financials, deliver XXXX. me performance delivering let continue quarterly Momentum an expect as our of expand exit on the year, and are in on On to investment slide additional during million in capital operating $XX EBITDA million we XX, from Mike discussed, $XX this and will and track ramp As

and Our beverage consumer growth. positive acquisitions the food, sales during businesses by driven XX% price organic and before quarter, grew

also strong same from growth, ago. XX% up Our year achieved foodservice one the business quarter

rates data. report Friday. operating industry Turning quarter industry substrates strong QX The to SBS paperboard with XX% across rates CRB XXX%. market third operating will on at very the and for remained at FMPA

remains Our XX%. over CUK rate operating

all Our substrates. and across remained and organic capturing eight-plus growth in successful weeks at teams were higher during quarter. the tirelessly Backlogs sales strong servicing worked

the increase reflective our toward made payout and Vision in of to allocation, January our dividends is the quarterly we to and September, dilution During of incentive approved XX% $XX a stockholders In from million eliminating effectively the common quarter in with cash Directors Board dividend the we growth our repurchased $XX to XXXX strength our dividend balanced increase have stock, capital our flows of of grants. approach returned dividend shareholder XXXX. long-term and progress payable million The effective significant goals.

leverage net was Our the third quarter. of at times the ratio X.X end

net months rapidly past ratio have European the reduced We leverage acquisition. our over XX following the

be X.X We we levered exit expect to XXXX. times roughly as

at slide healthy expectations over full on On provide remains me update liquidity let XX, an year. billion. Finally for $X.X the

As substantial results. volume driving you the organic the in sales in third quarter strength mix KX improved and pricing are strong ramp saw

adjusted are now This closer $X.X the EBITDA $X.X to midpoint for billion. We XXXX. $XX over growth the XX% Expectations increasing our guidance reflects to are by sales billion. for of million at year

is declined. to cash investments while of range higher growth. Adjusted environment, to million for the briefly million, million has moved reflect sales range. to $XXX $XXX $XXX has flow $XXX flow, capture cash taxes organic rate capital to Turning as and slightly interest in the current current cash our expect Cash make be million interest we to expenditures expected future we to

on adjusted seen be can on XX. update amortization guidance EPS excluding Our slide

our $X.XX execution of a initiatives and see growth our margin up has last expectations increased now from year to guidance Continued will adjusted expansion for conclude morning. we comments We this $X.XX provided quarter. share That per range our EPS. this of the

for call Session the Let operator Operator? Question-and-Answer turn me the questions. now over to

Operator

line Relations contact Before Q&A, you instructions Skijus due this The morning, Investor to with [Operator global Ghansham please this call of note being on I experience first e-mail. question via and the provide Melanie connection Baird. from Panjabi if please experienced is Instructions] any issues that, on difficulties

Your open. is line now

Ghansham Panjabi

everyone. Thank morning, Good you.

Mike Doss

morning, Ghansham. Good

Ghansham Panjabi

the in just sort concern I hear as could during morning. the to are side sure make quarter see Good momentum we off third the Mike obviously starting Yes. some very us well? But side give especially me. on I guess beverage to quarter Can you new a volumes of well. strong product in the both first on staple and seeing volume as consumer across maybe as how throughout you're Europe just sense the progress you of side. the what terms US activity

Mike Doss

Yeah.

Steve to you that. some then I'll and can start color Sounds good. add

a quarter. It It from was pretty strong. month-to-month. much saw we broad-based strength change the third I across think in business our materially overall didn't

and that, had was Ghansham Kalamazoo of Some running. function of that we up the a fact

more We We are running. paperboard. had creating Middletown

business had an for to well, it demand. So incredibly paperboard the opportunity created meet service to our with us really customer fact we

because in look we if the they long-term our Europe foodservice kind of of you is early side saw above a here were growth grew saw X% we're of overall, different target, in and third row through positive will be food at continue to as we As here beverage had into them categories. our organic that a year X%, couple mobility what pleased XXX Europe points. fantastic, We growth. But and slightly. on of it And we're North the trajectory, business the finish be certain the rounded for the And we've growth that end seeing at America. in so third kind fourth be level of call of a quarter that then out will verticals which the growth. today with. of And be kind down we'll quarter, top year of basis kind strong

that's XX% period. three-year kind do stack as the trajectory that And on organic know of had that from we in you it's growth. before time terms real over of pivot If you a a

kind that's you I and we're it we're So have don't know how thinking that. anything to about seeing. else what Steve And of if

Steve Scherger

Nothing well. I to add it think Mike, described

plastic of are of food core and couple the and continue thing hundred supporting it can us to add probably points both organic positive service of I net products for real new-to-the-market And beverage. kind to primarily of think only the replacements food is we the identify nature sales broad-based a that basis growth. was innovation

Ghansham Panjabi

allocation that to that. how that of in some opportunities they XXXX innovation And Okay. on the you're just falling terms you just some just And think leverage which in that Thanks cross then sort you of my related AR of this week. then highlighted topics this year. capital for on the some focused earlier can see to touch on have packaging, what second Fantastic. you of for of -- paydown obviously question about debt

to Just anything you can US? share relates there as it the

Mike Doss

in additional $XX.X we zero deck expansion the billion. now see increase and We've of got opportunities trends be of expanded the to we're part into faster. sight learn We be that. for I investment, that's slide got been That able that of ability start positives and move those with seen we anticipated the made sustainability. across one we've much what come really about trends Europe Europe And really you ground we our globe to out see of that's a thesis. because AR the able showed of the of when on that plastic I'll our was the I is mean, the think And talked the would acquisition. part of to TAM. replacement that that of on line and kind seeing lot to that investment as we we

we're see So we there. pleased with what very

that of really You be saw that of those had see we deck one kind did detergent and with put we able leverage Unilever. platform. in of on paperboard in products We're when really with for to what an acceleration global we'll example trends continued pleased we those that of a one anticipate and there the

that optionality the high we've where got to makes at change the strong ability done sense us. We've look to to make early pursue to year three what want year target, project So the where our told at sense there is look midpoint X.X of capital M&A, focus fact reduction. too. and long-term the guide with in and Steve to We capital synergies a we We love around got business. were finish allocation, that's large a going a our I his capital business. heard project, returns by next in And we're game-changing to comes cash you in got then say can be shareholders everybody, sometime to our we've we September X.X too. cost we our converting obviously, dilution. flow our in structure year. due to return our at back XX% the get And what's will saw remarks, as mills dividend we probably times next which down in the buy of what will to debt Board And regards on excited here as In prepared or this And our increased cash an you've generation, in and times. as to we've healthy kind example ability was continue it with

all of throw got off option look macro market for returns we'll little that a and bit. time we've of bad what a for So our of the an drive things watching That's kind love here uncertain the we're actually I into period for types debt to shareholders we lot going us at along develop not lines. those going available But cash. where those of is of see a ultimately can down And we're bit either. we a if us to a

love into job has got, optionality the really pull, we've a start-up and business levers XXXX of and the that the the multiple AR acquisition this with with team year position lot I of So fantastic done a us positioning heading of to Kalamazoo the momentum.

Ghansham Panjabi

Mike. much, so Thanks Perfect. Great.

Mike Doss

You bet.

Operator

next the question Montreal. you for from line your Thank of Wilde Bank Mark of The is question. with

line open. is now Your

Mark Wilde

and Good morning, Melanie. Thanks. Good Steve morning, Mike.

Mike Doss

morning, Hi. Mark. Good

Mark Wilde

even greater customers little us right color does off seeing Europe there economic than Mike, like you're about is season and prospects can also It about we're talk now. winter I on I can wondered of front wondered, to just of over when seem you're what the North your of, cuts? in start seeing you give Europe America. you just energy talk more pressure seeing from you a what the kind in in if And

Steve Scherger

then It's to Hi, can Steve. Mark. and add start on it. morning. Good Mike I'll

come mentioned, to Europe the us on the slight in the in Mike growth in and environment As organic favorable we a positive consumption a kind made quarter we at-home terms folks sales towards net being there around beverage and we of for was of challenging that consumer-based saw returned investment weakening the to in bit. been core back to the in packaging saw fiber-based as move as that's expect given macros of of beverage holding. about the But amount We quarter, out the winter consumption modest which actually the actually food little given the to beverage. was business

As Mike our on to mentioned year-to-date to even of in face Packaging year the at AR and just EBITDA million economics of on adding the expectations million those are that for in. specifically $XXX level $XXX it actually expect we we're environment foreign the the million to be exchange $XXX

operating there Mike the So as and the level really innovation at outperformance component. mentioned

Now challenging some -- energy can energy not certainly what to ahead. and ability other some about talk in we're winter businesses run We to as be we're Mike basis. dependent the turning manufacturing region. because date as -- towards months talk can But can type briefly the of

meeting know have in successfully add if that Mike? anything customer to don't operating We to been I demand.

Mike Doss

No.

side gas a basis. exposure XX and to converting company buy of million we think million isn't in high. a as one add a We tons nat on fair Mark because Europe so gas only I you our global of it's a just on buy know is there than real paperboard those maybe one as in little less amount the MMBTUs so natural

the mark-to-market prices push ability and got to of contracts part our here and in as obviously, So that remarks. we those watching in seen for really that. gave the And we've our reflected we're to you along prepared producers that those you've

customers But watching It's highs of So gas Europe. weeks levels what's now their look good last June over last the on nat quickly. been know. come from all high our and and change I very that down their in have you all-time are is right the July couple the of well think as are can weeks weather prices going injection in good couple

mark-to-market really why And you call daily is that we changing monitoring there just good the and in between cases a we're largely communication and now. range right so it's some saw have part of and that to Steve and a myself that's and $XXX in fact Europe got that business \ due closely. We've a inflation to weekly of and the on little in million it's basis hard

make And so sure around of as we'll that to cover that our thinking that's kind And how and watch We'll be it. operating I about aggressive we've we're been. think continue pricing environment. actions we

Mark Wilde

projects And couple about is that the and in for And think just an talk my the Mike. all helpful of talk then guess questions just talked mechanical down of you I One at Texarcana. of seeing update make converting you've We're Scandinavians FBB adding. over you bought if Augusta follow-on in mill Augusta this from a at That's just I had about. the I is Okay. that could to we've SBS give other conversion on context to the pulp potentially wondered those us that particular about boxboard CUK asking using capacity. I'm

Mike Doss

that I to FBB we've it Yes. type question. for on we that. got in what pulp very good Thanks is run Augusta. mean in doing we're Sure. trials of continue terms a And

a our property. we pulping mentioned you acquired As adjacent thermomechanical operation to right

so really any like on to machine. has fair. the at see growth Kalamazoo we be we But start-up We look fair new over. machine got would seen over ago. CRB in good. looking the some swing our years the continuing optionality take thing still Texarcana the about there the action with what very things. we be of a backlogs eight platform at We're to of also seen kind to benefits that couple we've machines to those. those of be got one with week those been we're Same be and optionality haven't with what strong that cost would we've It's to far the need what talked that So and convert We've of the

pull we've we're we I think think Graphic smart do, of we what we perspective number allocate we buy having and and well about which million being would really roughly capital externally, tons. make as a relative long-term sure, as you make a mind, in integrate can into that our got to own about as, one what levers we're is trying so to And what medium we operations and how

that So is be our we leadership at will study We kind continue and to something -- that. as look a and as team about with of we do that here, and Board talk it that look forward. we grind

Mark Wilde

I’ll you. good. over. turn Very Okay. it Thank

Operator

Thank is you Mark Partners. the for your with question. The from of Weintraub Seaport Research line next question

now Your line is open.

Mark Weintraub

Thank you.

therefore, a catch we And some do First, question, get million up We on be get what like a of accruals so, number next bridge? year, double typical? kind but smaller then incentive year, more lower assuming a it's of sort the next almost do we the $XX on would next bump year. this a year get a

Steve Scherger

Steve. Yes. Mark, it's

more We'll a wouldn't to consider XXXX, guidance to return that January, really that's be perform compensation. might characterize as in little able assume Obviously, be on to had incentives know, one. rolled with by put the look incentives, return to you to the business, normalized modest year this and we bit that snapback inflation bridge articulate together. we I'd more at significant through underperformance short that long continue more a the both normalized driven a the a significant last a as of level. term normalized level. in we'll There this kind year, at As more this to I but

Mark Weintraub

recent doing Got paper pretty it. date also was been what's of in Thank some when of declines that the was recent? you're that as pricing you. the And capture, mark-to-market kind that when as big very Is recovered of? the in past? Does

Steve Scherger

as It's conversation. moment pull the together talking, of things head of as we're Yes, Steve. Mark, into kind it's we mark-to-market we as this

current. So, it's very

front, So consideration into pricing pricing what on know. latest into SBS consideration it we it takes takes the

of Europe. through. reasons mentioned, day-to-day just cost is is obviously, in Europe, Mike We're a certain in XXXX, we've As it, in even in the the on variability terms on we're range because mark-to-market just got side of costs though managing what bit that a a knowing of of one for mode into the

very the overall, variability by both the those and would think price now, of And and would bit is if driven mark-to-market did numbers, that so, we is cost wide -- cost a that primarily Europe. representative the price you it be be repeating of truly but midpoint just right the

Mark Weintraub

Appreciate added Thank Okay. color. you. the

Steve Scherger

Thanks, bet. You Mark.

Operator

question. Staphos your The with for of from George America. is the next of question you Thank line Bank

Your now line is open.

George Staphos

Hi, Hope Thank doing Thanks for the you. well. details. good Hi, guys, morning. you’re

of we've ultimately allowing in ordering being of willing just inflation? capital double anticipation ordering, signs precaution into the the eight that seeing, the market we I products that is are it's market where the growth as against at or And you or there's have if environment particular was you're where line you question you First seeing the terms seen lots your in top bit going know on, in are growth there lot the a and are two how I new dissipates. to -- question related and be one that sort What could three do And a you of because but bringing you prevent markets customers cell us backlogs from in that things, an demand are of, give had drove that? booking on relatedly, Mike, to weeks billion. a how consumers allocation. color volume billion to pay double expectations. generate stress for, $XX.X And then were the that of how addressable of grew $X to then, And

Mike Doss

been of our XXX and target that for that to range. which frankly, XXX Quite outperforming in was basis I'd believe This part we right take been of over latter goal to medium quarter remember, the the X% we've first, long-term growth George. is our you And last exceptionally strong. long-term, our as medium points, kind company.

the last outperformed packaging That's, and some years. couple last or of we've in if increases three didn't did, see during we how we segments at it. growth at the double-digit And that look firms XX% look So saw, years. you we like of other of what kind

Ours is there. steady pretty

were this first customers. our in second a quarter behind As we ability serve year and wanted the where of actually of fact, as to terms in the matter a to be quarter little disclosed we we

Our run XX need backlogs to they weeks the is us get too at were customer their up long plus, just which to what business. for

our quite now So, our well. being historically us to our strong service backlogs That's for that with at strong where and would actually pleased allows eight backlogs we're customers weeks. be quite industry

to really visibility that anybody kind So, building actual inventory look of wants in of to But this process. bunch got customer we've a limited macro see build little into capital. a hard our working it's

if So, don't actually we're broad-based. sure themselves to service time into since months to levels seeing six, actually be. we in correct I our back they our need. have think And continue range is it's expect we'd we're work they what make it's obviously been are to with to And customers going nine are And which XX% can moving the and actually where on that. say full them it's probably happened

graphics to really Packaging about with paperboard And with market So, that's well. to different packaging segments we're every that's enhanced package. sitting our they get seeing. in try and story. it's capabilities of huge opportunities really that tell going of time find we thought was did AR and It's excellent particularly to really globally a way I and a XXX% you terms at growing, sustainability and innovation and that the the it earnings George, it childproof Unilever packaging that great -- where out got why design we're around things good and and and the win. getting it's to into a some fiber different something this for in just acquired on the And margin addressable pleased give one looking we what as different snapshot looking personnel can call a markets paperboard down profile was an we types consumer-based

we're continue seeing do customers so that. And to

innovation and provide our focused really that's unique their publicly, fit the of mantra. customers you right the they're and all we accomplish -- in type some So reporting that and their to improvement. ESG them part requirements large on allow And driving of look objectives. at that and When options doing center of those are we that

we've I Europe, resources that that our as it's out penetrate it's to points February us we that customers growth and commitments Vision meaningful and in our that ones additional segments that creation the find made for to the look enhanced a working. And the confidence. our So, take in laid Steve company. right can the value gives basis we team now and real different we've work goals XXX XXX have at and that's and done what of we for are the part the XXXX

Steve Scherger

add to $XX.X on actual category to replacement the is based. a specifically just it's plastic point And category it's broad-based the of Mike's billion, George consumer so course and

our beverage, And I the consumer of foodservice think packaging. to so heart right food speaks it

consumer to increase in are So, been what's and honed that on allow plastic replacement market. of the us kind to really addressable

George Staphos

Okay.

life Mike? you Just share can luck the a CapEx that about huge the number, the markets guys drove quickie, talk that quarter. to not you it's good can on key in Thanks extent in a what but and increase any end

Steve Scherger

$X to No, high that that typically to out are These investments capacity projects the million the both And to investment modest-sized organic $X mostly time. of it's have a are return converting take in the capacity actually million type capture growth we're the us for of to bit sales growth. case we're all thanks George. known it because about investing behind pleased little at up

replacement think talking a of cup replacement just as so that And a categories into bowl like replacement we it about kind a were of or fiber. fiber or

sales are to in give points basis. basis confidence on growth these XXX the organic multiyear capture primarily that XXX us a will So, investments

George Staphos

turn over. it I'll Thanks. Okay.

Steve Scherger

bet. You

Mike Doss

Thanks George.

Operator

with your The Thank is Kyle Bank. the question question. Deutsche line White for next from of you

is now line open. Your

Kyle White

if saw off to or September Curious something was earlier this expect taking morning. your drop offset October? back noticeable the maybe is September. you wanted grade, for occur a was believe on being I question. I good or to beverage Thanks in We you in guys in go peer CUK it Ghansham's elsewhere, to volumes that weak a report question. some Hey had especially can

Mike Doss

you Kyle, repeat there. please? Mike. Hi had little it's problem the We question Can a

Kyle White

hear that you now? Yeah. Apologies better about do me

Mike Doss

Yeah you. Yeah. we got Good.

Kyle White

wanted was And you a I if in peer Got especially some on -- had report to you, weakness Ghansham's beverage back drop-off guys to September. noticeable curious in question you're specifically? or expect here a details saw give September, is I us we you can in grade that grade in anything CUK your or it on you that demand of October, can seeing in terms that something occur on go to

Mike Doss

not have we No CUK. Yeah. our seen a drop-off meaningful on

food a us, in of of now strong the beverage. fair it's strength matter Beverage just more And as frozen market. a know Kyle, a much As broad-based strong. globally for amount That's it there. but is we a fact we're really for CUK. you than buy our lot market There's, of demand remember, remains big applications But too.

we've every time a got for out both Monroe in so and making we're plan XXXX And in West of XXXX. that making

Kyle White

a then Got board year. near-term on over how here And is your the that of and relationship recycle the you recently, more code And curious average think pricing what then, costs a lot for think the just importantly kind versus it for long-term? will about next volatility OCC out what then, should it. we OCC of outlook between

Mike Doss

Yeah.

I week and quarter. backlogs we've fact at October X% on we're materials with you X% grew why all that eight we pricing about But like jump here demand. the based on that, just can done don't to-date is take the And got to range. talking month And and got add. the in supply look, on commodities So paperboard at anything growing in least we're all we Steve our

do. package we we So that every grow requires to paperboard paperboard. and That's because needs what continue

be I at can the of so how in OCC might to with means if our eight some weeks run who's standpoint, still on we and you plan one down OCC and and that bit, with and about few the our we're of kind probably those actually early what's happening. given around to look of gone if we see what same not buying has organization talk that they're our and continue they're the to And does backlogs why Steve mill, around poke to magazines. I that, paperboard the the someone here business. are, And that that's we able running trade with do tons responsibilities square got but to that want From I need a here write-ups comments little call a on And accelerating the you made look plus. Kalamazoo on our at saw Middletown

So on out you look, that as we're Steve mentioned, in know. actually will we'll market his it. our another about here prepared as of get data so on Friday, comments look the -- half But come FPMA

it. pretty feel now good relative we it to again demand on pricing OCC supply And is strong. down so got we've pricing to a And comes like and beat actual to And of paperboard the all right demand.

Steve Scherger

chemicals inflation paperboard we're in hence we're we're deflationary energy I'd turn thing only a external a then, add on for you continuation the Kyle, managing the just ongoing that is will than been QX. the in just for more net et year-over-year of for inflation so And is. it's seeing but QX, as specifically is assuming into that OCC net even basis And here offset mark-to-market, environment cetera, by our

Kyle White

it turn over. Got I'll it, it’s helpful.

Steve Scherger

Thanks, Kyle.

Operator

with is you Thank Cleve from UBS. for next of question. the The Rueckert question your line

now Your line open. is

Cleve Rueckert

Steve, X. you wanted Is I'm necessarily to should I existing within downstream morning driven sort growth minute do Thanks ago R&D And focus market? go now a products Good new of couple said it this as Hey. the I that on this expect my you to of incremental years? that it customers? of growth. mainly looking capacity just In growth opportunities just past to most just for back I you mean, explore guys. by is of accelerating is in of investment do the slide sort on specifically guess, the But sort sort response questions. in you to George. organic mainly to at of wondering, taking access for we've touched not we portfolio. next your converting what addressable the with that have in to what and

Steve Scherger

Yeah. our as time. I innovation the No, Cleve, in you mean I think take know is reality right. that's segments

orientation. sight least there's of the what's And look in in as at confidence that to continue XXX convergence with to our so dollars million these sight totally our years that, us team of in basis XXXX, XXXX at orientation ongoing have to it's a line because give you've KeelClip, multiyear to points, couple XXX It's it like for Do we its hundred of there. for customers are takes play we in out. XXXX their some to it line of even conversions seen multiyear

about even that looking projects initiatives. probably for of It's support certain is are XXXX we're to to we're the making we some opportunities So already that's multiyear significant. why of -- talking that backlog out investments today out

about today I don't add. to is it it's So also multiyear. anything but know, Mike

Mike Doss

Well No. Steve. said

we've has as us it but do that talked to end-use and fiber-based plastic categories quite part regarding we CapEx the this many mentioned about And to we've of customer. Steve a on it requires the call our earlier believe those those able here. in because think got are want to that to capabilities that cases investment is our on to other innovations win sticky that also have this. be we're solution makes replacing really behalf the we in unique with it competitive I growth the drive investing increased level Cleve, of behind And and positioning

we've to the both. to reduction and problems investments away that. and to with hitting to in that good what got of operations converting And of making historically last well capabilities think that the trying had had seeing combination on as and a that's been pivot years a that corporation. number and from terms as driving and the capabilities we're and really over stride we've operating focused pivot a in cost that's that that. four coming the really Hopefully you been we in a one where three design we a it's DNA we've you're really meaningful did and market top and made are that build job a great through a over flat growth truly line that's company now years innovation our along So process the really human our heavily or support really of I capital as CapEx strong that in invested those and we're And do lines made

Steve Scherger

behind day company the win and low work. willing want a mean to our tends cost because recognize well-capitalized they put highest I to quality Yeah. time over dollars to that the too, invest customers that's to

Cleve Rueckert

guess follow-up one, earlier time. I And Thanks Yeah, on point. making that's the for question, get a another all that we great question the clear. an just but

mean, you. thinking about pose talked thinking should more capacity It these I extensively about also expansions capacity But in inside? And China, that planning how so think how want And US it competitors. than American some especially just Europe to I business? outside I we changes? relates it these and for know and calls then affect before. market of you we've I to North on your the the from it? guess how So in to are does paperboard about about

Mike Doss

a I appreciate It's I bit. the little question. apart one. parse an important guess And

to both about on what's view to talked say different in first that continue terms of going going because grow. the share China what common to I'm market You is is there. Europe and going a they're But we

last to we've the able over I we've think of that demonstrated do. what been years three

a on for what look is going Are rates think tons covered, long the And very amount there's like? a minds those on China its makes board where actually North overbuilt question, and here operating of should So and paperboard course, decades about investors' be go? modest call been The in ivory last do I has China time, those the what they market are need for implications? that As in two the to to followed the of the a plus, you that future. is we do mean way of who've it for be America. more

energy, cost. that think for in in cost tons. makes reason the mills primary which the less XX,XXX the I China and non-integrated was majority high it them both vast of or last And year than is

associated that costs service really to tend because stuff just it. they well. to local different that market well of But export the with quite so And doesn't geographies,

the that European and over show North curve say consumers. way no cost say medium-term it never can disadvantage. to not the against it it's up and to American structure it's here, So other There's the but cost just,

we China. So that's think how about

own I you fair thinking of of thing at that of what over will pressure a particularly announced given location of two a I'll what their terms existing hypothetical, to that XXXX, recycled lowest-cost well-capitalized years. And and situation online look that be to going Europe's anticipate believe given don't to is which and in a is looking Europe create spending, estimation Europe, small you me what a FBB years know now, the the announcements doing spend I will company that materially that board three I'm they on And FBB type machine that's very potentially of lot in mill billion, money next and they're be non-integrated the made sense fair by over given to what put to €X will amount playing mill. comes look, into money. put these an there versus have have it. manufacturers the some few some said In that lot of XXXX week in been I'm happen makes that just they're energy last different at been this. let that's And have next they least, out is

to material of as some see could to relates that kind have question for how that the all the into the So, the Ultimately, implications are here US, US. what stated is out. investors that Packaging We'll time plays imports for tell. the they will it Graphic to of as come

I sure, XXXX, right really long for now. answer which anybody it to down think to know is FX what's question because doing what comes away now ways that's are a answer a doing, from in for costs to for me hard to

sure lot is the throw-off Graphic over few to Packaging what years. So, cash know of next a flow going we that is for operating

going we've to very I think to for strong create very a very, business of job XXXX. shareholders. our back into reinvesting done it good value intelligently we're in And company a be

to decisions thoughtful rates our to we'll plays do, it very in around our ready happens our be But and grow of kind And is out. And investments supply into what how drive up. based we on there we'll continue mills, terms what back manage demand the we business. integration make to we'll all of be so, how respond and Cleve,

XXX that we year. continue year. this progress saw basis You will make points again And improvement We'll had by XXXX grow. next of to

And for how flows, you earlier, buy mentioned this. where that's potential study create FBB we through about time. so, own CRB, we question And we I how as and those We over most back it. what time are a it make, of we the into kind Mark thinking the investments tons, we business, of of lens of terms think CUK, in it's around shareholders our to lot asked how thinking about spent or when value integrate that what trade kind that into

board. So, And that spend it's rest of a you thoughtful be to going forward. time the on lot will we team that continue can leadership assured a a process and that case very as here a as

gives I that a little And color you bit appreciate asking hopefully, So of the topic. the you on question.

Cleve Rueckert

Yeah. Appreciate it.

Steve Scherger

in upon round any And Cleve, morning, additional investments to out as North probably frame recent of the in most thing point the kind only earliest this here to least facts the time at based it just, add in at are XXXX Mike's to other out America probably from competitors. North of -- America

Cleve Rueckert

you very guys. much, it. Appreciate Thank

Mike Doss

bet. You

Operator

next The question question. is your with of Securities. for Mike from line you the Thank Truist Roxland

Your line is now open.

Mike Roxland

good quarter. Melanie. Congrats Steve, Mike, another on Thanks

Mike Doss

Thank you, Michael.

Mike Roxland

some have in demand. rags you around you the to mentioned I'm with and of on wanted obviously, noise the CRB some just backlog. moderating eight-plus quickly weeks, -- some CRB mentioning Mike, the follow-up wondering, you trade of

can seeing respect wondering moderating chain to easing to what really kind CRB. more And really with you extended? a whether of or maybe the to business So, do I'm backlogs that time been with clear has elaborate the function on out supply it your that you're moderation is of real if constraints in you really have just backlog demand, allowed of

Mike Doss

to people It's for Yes. other what know sure hard are seeing.

into speak to our said here. as an gone CRB today, Middletown Graphic that's in Michael, that's to with future but continues the Kalamazoo ramp eight-week and the we backlog and business I'll planned, on we mill have So, better a it would operate than

we're seeing. two factors combination, are what really those So,

as else as we indicated five-week don't haven't when material, that. we producer visibility say, they to they've say four half got don't have seen of about all clear earlier, is can a of kind I so backlog. I that what And into I a All know, that. roughly seen Again of someone

The remained actually pretty strong. Our good. the demand center has store is of

our down brand is I the for holding seen or They've price, taken And there, Michael of X%. us that, of in fits think but label remember actual are you've I to lot customers. volumes the their think here some thing of store maybe XX% portfolio into sector. North in America other a over business private our

decade So, is to an we to more, for on able tend not portion company participate a little whatever really built level our do customer purposeful the be business last equal trading the that bit is we is which if the that to there, and reason, grow. a if at down of over continues behalf to

see look on Friday and will says, the be good. we others, the very backlog than our on what more robustness for substrates three hard to data overall know think of So we but benefiting remains might it's me I

Steve Scherger

product terms earlier, And to healthier actually significant get on XX said demand, to for full. of from in for expectations time in in meet them ability our still to to ability actually customers' as but them benefit eight Mike repeat of a us terms was relationship weeks well something actually customer moving experience it's

Mike Roxland

there. in appreciate you. of follow-up schedule. your it's color Kalamazoo. Got mentioned this that commentary And quick I on you just the one ahead Mike,

anticipated, and to on color see as mentioned out I mill some reiterating running you than laid lot can the anticipated? why trip there think thing well. same you it's you're your upside guess, actually you the than you've you the If around a if better field that is guidance don't better I numbers those EBITDA running provide

Steve Scherger

million prepared we're plus ramp-up it's the XX QX. Well, with tons in XX I to in think pleased -- mean day with on a QX, mentioned sight line day-to-day ramp-up in we of million a the the strong X,XXX-plus big a operating as into remarks, basis, I and very the

have we'd confidence that guess the in the So million. next I million of XX and in XX a reiterate lot we

point, this returns in guidance are at overall the so confidence our And high consider context the of that there. just

Mike Doss

Yeah.

million that's I think said there I when $XX Michael, in said, really mean, XXXX at confident there. well We that. was feel you Steve. we look

Mike Roxland

balance Good you. Got the for year. the of luck

Mike Doss

Thank you so much.

Operator

be will Gab The final of Thank the Fargo. question you Hajde line with question. for your Wells from

now open. Your line is

Gabe Hajde

Good morning, Steve.

Steve Scherger

Good morning.

Mike Doss

morning. Good

Gabe Hajde

little And bit I apologize a I late. joined

forecast bottom QX XX we're say? know I on is it, XX component do directionally price if appreciate XXX, biggest more of end, So take kind be million non-material-related take which best EBITDA number? flat but know me swing I there this I peek there if guess I to the around kind I were but into bit if assume XX annualize It or pieces to cost little I'm graphic midpoint maybe appreciate guess normal I the assume or and a know should we I that But price number. imply little to of XX of future corner apply volumes, like the to Are I don't XXX mark-to-market of I would parts of And call last even way try question seems would the take in the we isn't XXXX. to from trying midpoint to in missed plus it a a to surprised if to on the XXX you're it maybe inflation the then that Kalamazoo that maybe me cost apologize, to might don't non-input get and I XXX, seem I to to don't and I seeing I related running costs productivity. factor it. a the the missing And the

Steve Scherger

and it's I it. Yeah, know we're mode respective in more do in into that you than of I anyone appreciate mean, the that Gabe, XXXX January at obviously, We'll end I Steve. our transparency guidance we'll provide and we space provide yet. think certainly not

have a things. few about we Something talked public

basic in the to that's Russian like of And other headwinds, business. maintenance headwind. have potential million it a environments in the You're assumptions talked -- correct a downtime. execute. like $XX And company FX likely little year, like year-over-year we've owning to on more going of lot But type public probably that look past the all next looks obviously terms for we the is not your a how in we'll are

we of full provide round get the out quarter and guidance when here we'll detailed So corner into the move XXXX.

Gabe Hajde

appreciate Thanks I that. right. Good luck. All guys.

Mike Doss

Good bye.

Steve Scherger

Q&A Gabe. End Thanks, of

Operator

time. for you at additional There questions are waiting no this your question. Thank

Mike Doss back pass conference will for any I to the closing So remarks.

Mike Doss

in I for sound the you're able results update XXXX and I and Thank I our established goals you. full join with And year have everybody for quality quarter towards hope participating a our any not day. thank to call of been hope to the able all want us enhanced that on with to today. continued anybody apologize today. our we're I were and web Vision may the experiencing get terms the an in January to some we given out with fourth for there in great XXXX. issues achieving queue problems of that, to progress you have

Operator

your you participation. call. conference the concludes for That Thank

disconnect now may You your lines.

Graphic Packaging Holding (GPK) 25 Oct 222022 Q3 Earnings call transcript