Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and welcome to the Graphic Packaging Q4 and Full-Year 2022 Earnings Call and Webcast. My name is Elliot, and I'll be coordinating your call today. [Operator Instructions]

I would now like to hand over to Melanie Skijus, Vice President of Investor Relations. The floor is yours. ahead. go Please

Melanie Skijus

welcome and and Packaging Company's Holding Good XXXX to earnings quarter full-year call. fourth morning, Graphic

www.graphicpkg.com. Joining our us quarter webcast Vice the on company's our be through along call today are 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 fourth at also President referencing help of follow earnings and Doss, the be

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

now let turn call Mike. over me that, With to the

Michael Doss

outstanding you, significantly of on Thank morning. for an you us Graphic the leadership in strategic our Good extending call and was XXXX Packaging. packaging. Thank on We continued business grew today. focused our joining executing Melanie. year initiatives consumer fiber-based

goals. and profitable focus XXXX returns for delivering Our in driving shareholders with consumer growth packaging Vision on line our is

announcing me walk strategic of into new X, this through the let look details are XXXX and investment to Turning the brief we morning. capital year's sharing Slide you the accomplishments before a exciting

acquisitions. margin XX% Sales by and positive billion, the by to for X% $X.X growth strong both the in growth were full-year results and increased sales quarter excellent, organic financial pricing, driven billion $X.X full-year characterized expansion. and Our

billion by margins in to a Adjusted XX% basis $X.X EBITDA XXX pace sales expanded of of faster points grew as XX.X%.

today came capital cost the timeline. our our fiber-based XXXX early consumer original to of production content. recycled utilizing as made The we KX recycled life ramped machine low on we of investment or is have CRB New machine investment, high-quality, production successfully in to investment paperboard largest coated the of packaging commitment long-term evidence

of remains to further returned invest total $XXX XXXX the the million has first on run in in incremental XXXX. this we EBITDA confidence track rate to and annual provided a strategically achieve The with $XX investment The million continue to will of us the EBITDA in moments. detail expertise the success investment as few of

in markets, expectations. acquisition by meet further Growth and property excellent new high our have protected proprietary by provided Europe to The continues our intellectual AR accelerated opportunities consumer Packaging geographic momentum. expansion solutions

targeted million successfully XXXX. Our combined and million in with synergy the goal track realized the $XX on integrated remains first the business $XX team initial

As annual at committed, points expanded remain innovative X.Xx leverage $XX.X the basis consumer XXX and demand forma pro XXXX points innovations from fiber-based packaging. strong product XXXX. X.Xx addressable beyond, organic growth and our customers net year-end a our few geographies, ratio for billion of increased organic net year-end market growth just from $X billion new at declined Through given We achieve global ago. to our to in confident ability basis years of pipeline for sales robust XXX in from we

generating will environment. uncertain we prudent adjusted we grow Steve economic sales year-over-year, expect strong briefly remarks, flow cash invest EPS Looking for value long-term today's while having describe his again and adjusted for into as to XXXX, in balance and for creation will sheet EBITDA

the on X September XXXX period performance in the the moment our Before I Vision walk details XXXX. through over past a new we Slide to me are investment significant announcing let since take of three-year today, reflect announcing on

approximately up supported has organic a organic executed XX% since successfully team sustainability to pivot with global XXXX. Our sales growth net

focused We on and much achieved on fiber-based margins milestones scale net and building have business growing XXXX, a entirely sales, larger expanding packaging. journey pursued Vision to almost our including critical a consumer

Over $X and $X.X to the compound representing rate. adjusted sales XX% growth sales pace Adjusted a than share by EBITDA margin grown expanded past driven billion a annual have billion, by earnings years, have over three per faster expansion. at

financial and XXX of basis a resulted last over Our the shareholder X,XXX results the S&P have achievements three points. by return outperforming total return in years XX%,

to as through differentiate us. leadership fiber-based value of consumer our a packaging we advance creating XXXX. made are capabilities investments Vision The We have company our

me As say are you've heard we before, race. different a running

our this only Slide North to to it CRB for details role X to consumer Packaging American will the upgrade and meeting our Let provide play Graphic the in commitment investing demand expand producer announcement capabilities. and sustainable me to meaningfully morning is turn package. regarding now long-term

Packaging places, growing confident more recognize investors. We future this distinct are to this taking paperboard will CRB are more strategy right customers meet steps the our our We the to that value our and Consumer and to is to deliver demand. substrate and can include The to provide. position we of network opportunities

in have this these further and from leadership advances. position cost will a CRB a investment We strong and capability perspective,

American be expertise our a new in recent mill mill unique Waco, system member] leveraging the in will KX investment our CRB [muscle and We leading CRB to our production, from Texas. North build

our Packaging environmental not our our America. investment improves optimization supports CRB low-cost further in network North to the but producer as paperboard of footprint paperboard highest-quality and distinguish enhances only full Importantly, capabilities, this Graphic

well expect significant to drive result, into a future. As improvement and the EBITDA sustainable we

Today's benefit more a fiber-based to Referring most made X, the is according package bin. than materials their with they consumers aware the cyclical is consumers packaging as growing the sustainability And ever. place the the see survey, materials rank recycled of CRB, demand efforts claim. time packaging from packaging recent Dual recycling to Slide made each for a environmentally consumer. by with driven recycling appealing to made a consumer

in with to their with use modern recyclability sustainability them trends produced consumer state-of-the-art goals improved recycled support more demand, the of in breadth is Not is for mills of the preferences publicly advancing key seeking is and utilizing customers growing imagine, for Packaging's driver our their can by also doing what our are the to combined you consumers packaging. As are responding quality materials a This line so telling CRB-based overall Graphic CRB and technology opportunities latest their committed by packaging. expanding programs. only

how demonstrates investment X will competitors. to we this CRB the compared for new demand Slide believe at unmatched our increased cost an meet

optimize the see, expanding our us Waco can capacity to mills by to global you As time network while demand. further over of higher-cost closing meet growing addition allows still

decades-old Waco see used technology that completed clear meaningful new compared to these cost inherent Kalamazoo. new to the mirror will machine machines machines the It's produce expect per and in capacity machine modern to the of cost recently in improvement elsewhere. We KX provides step-change the ton

Notably, cost the to differentiation competitive as is this substrate compared to CRB expansive other substrates. unique fiber-based

built manner future what is a efficient was We are the more building far the that for than in past. in

to X. Slide Turning

the within In itself, city situated a growing Waco of secured we a ideally economic in location to is mill center. addition to efficiency The excited Triangle. positioned Texas the that are very have of the is

a well our Waco located to Texas roadway logistics facilities customers. as the a Our approximately existing within fiber supply to our support and also miles basket. existing easy has new in as to providing be of perspective a XXX advantaged from mill strong infrastructure packaging mill access population rail XX% recycled of will strategically and

of joining community the working support base the we talent the county city are area. We from to we process. the have appreciate forward and our site XXXX. and Waco a selection we We the expect with XXXX looking with up to strong commissioning great the begin and engagement the received perspective, the ramping From as in end in and start by timing production this quarter conducted construction early machine

allows to meet ramp-up process, mill both us in ability leverage key to after with shortly projected the confidence recycled build and Our internally external production that the learnings partners, timeline us paperboard our added to which KX decision on new this our quickly machine. gives from

XX for lower at strategically are cost mill With optimized map targeted new closures, capacity. and and and mill network. Slide network increase future an shows mill investment our this will we that current simplified a looking updated

paperboard throughout mills the Southeast, basket which country. in virgin the the virgin Our is fiber are located best

to future well in the network We will across have in as coverage today CRB have located mill adjust Our optimized two than X% more strong with the industry-leading flexibility geographically be Mexico. estimate mills capacity United as will States in and we Canada demand. the the to with provide capacity line

as meet other virgin mill historically system packages now This our improved is quality CRB capacity will some capacity new Importantly, can benefits made The possible CRB. while our across expansion across substrate will fiber the be require to new virgin by mills the that global of enable mill, free growing up demand. incremental run driven machines by our with in substrates. our other the optimization made the addition Waco

rates packaging global excess of mill our growth producer as America. operation. our in network cost, Overall, and support optimization of extend in lowest once North plans quality plans position integration will our in combination is the mill investment paperboard The highest the new this XX% will

to and quality also new capacity cost significant Beyond outlined Slide investment on there are this advantages sustainability as XX.

investment. our we increases to an percentage waste that of fibers. a we of exported. range our This First, clean separate large will ability of is enhanced be cannot investment paperboard and our secondary drum broader circularity a Today, system pulper increasing through recycle

own internally XXX% generated enable to designed mills waste. paperboard of side Waco Our a and the rolls our recycling

fiber that as of as shipping impact reduce the for the well value of processing. the capture to plan fiber We environmental offshore

processed tons cup waste This of We fiber paper rolls increases and ability. the today. external of mill purchasing also the be our around Waco do enhance as at security we are significantly will versus will estimating side machine secondary also This XXX,XXX fiber the recycling secondary supply.

To to rate have this cups increase The further the paper of recycling take our to teams more capacity, a drum we support has to partners recovery launched engage the per day. pulper to circular collection XX million to with up paper advantage and process customers economy. increased recycling cups and of capacity

initial expect, interest you very is from would As high. customers

Additionally, optimization environmental the expected network CRB our improve to is footprint. mill

technologies to CRB our gas generate all well efficiency reliability. Investments turbine needed optimized gas produce the North as greenhouse Our network to expected as emissions drying by steam mill improve and decrease the absolute for mill in electricity overall XX%. by as will American are paperboard in such

over highlights operating course and the three on let XX. project flow cover the is balanced approach will funded of of investment years internally capital be billion our with allocation. to consistent cash approximately the Lastly, $X me Slide financial with This

business with invest manageable debt We sheet and have strong have flexibility levels. a balance to in our

detail reduce leverage will to further, remain continuing Steve focused in As XXXX. on we our net

million expect optimized capacity. mill We incremental reduction mill EBITDA driven will its full and of generate by benefit million run approximately annual state-of-the-art through rate, cost of $XXX $XXX million the at $XX

summary, In the in to XXXX, investment leadership we in expect $XX our the the realize for consumer showcases investment meet approximately how machine's strategic the extending fiber-based solutions. operation. demand sustainable We in on packaging year more first are to million growing return packaging of

turn to the full-year call Steve? with and Steve on With detail quarter that, more provide the XXXX to I'll financials guidance. over along

Stephen Scherger

Mike, good Thanks, and morning.

their sales high-end year-end our delivering above XX in X% in the Slide growth year full-year. with expectations represents the net range. the the the $X.X and fourth organic quarter fourth to organic to XX% billion our quarter inventory X%. position line financial Net full-year in was XX% of our growth quarter Turning resulting or sales full-year and growth third organic highlights manage for and customers increased net billion. consecutive $X.X key targeted a sales Fourth This at sales for of as to of of

of XX% tons $XX margin of million EBITDA EBITDA our production increased improved by roughly million winter unfavorable late during the paperboard despite impacted the storm, XX.X% expectations XX,XXX or adjusted December from $XXX Adjusted month. meeting to the QX basis impact $XXX Full-year which year-over-year. XXX million to year-over-year, points points XXX of prior EBITDA margin full-year adjusted Adjusted excluding continue up $X.X of to year $X.XX. from the increased of growing for XX.X% XXXX. billion amortization EPS from XX% or XX% purchase period. intangibles, was EBITDA Adjusted the $XXX expand, to basis million

and walkthrough Slide operations capital performance, of additional financial let details markets, On me allocation. XX,

foreign were were growth beverage Significant and offset by positive XX% XXXX, sales achieved driven Full-year of food, price, organic sales by unfavorable growth driven grew EBITDA from sales up strong and Foodservice acquisitions. also XX% and consumer by pricing, positive partially before acquisitions sales and acquisitions. sales Our XX% in sales in both growth exchange. growth organic adjusted XXXX.

demand. acquisition. EBITDA KX supply and teams was were million by These realized positively the $XX challenges in Packaging benefits from successfully the to million impacted partially $XX managed from customer adjusted by Full-year CRB AR synergies costs chain meet investment also that and XXXX throughout order offset in our positive

the in of waterfalls appendix For and presentation. our your are reference, EBITDA sales available today's

rate XX% weeks Turning reflective over the across supply quarter. FPA environment. was to the of a operating CUK operating XX%. and paperboard market rates and XX%, reported fourth in healthy our CRB backlogs remain SBS was data. solid by seven demand eight Industry balance substrates Company remained to of are remains

During cash flow really the on year, our engine split. strong was full

to Liquidity while billion shareholders investing leverage our remains $X.X strong at grow business, by XXXX we of we committed, debt a $X.X at Net X.Xx of balance delivering and sheet. forma significantly capital In our addition end strategic reduced as capital very pro to from billion. to year-end to XXXX, to million significant achievement. X.Xx return $XXX at the over declined

achieving and progress toward announced Vision increase in Board Directors was January, dividend a quarterly our of given cash the $X.XX strength flows As affected our XXXX the have goals. a we reminder, that of made share to XXXX per our

me million guidance pricing, approximately net solutions, synergy Many innovative XXXX investment, are over positive in to XXXX. XX, for from drive XXXX. will continue that improvements provide the $XXX $XX grow the to expected packaging fuel capture, by returns Slide XXXX sales billion. growth core in of sales We believe KX year-over-year. let our financial performance growth drivers will On driven and positive organic productivity

million intangible to expected of excluding be EBITDA reflecting is per an or increase Adjusted to a increase XX% to $X.X is to at expected billion billion, amortization of share. range $XXX $X.XX a in purchased of of EPS Adjusted $X.XX to midpoint. range $X.X

includes which $XXX to initial million million generate support to investment Waco, expect the in to million, mill cash of $XXX CRB $XXX new million Texas. an We to $XXX flow robust

net year-end. We in our reduction are X.Xx targeting approximately to further leverage ratio by

XXXX our the years. presents last Slide over XX achieving Vision toward three have strong progress we made goal

Our we the enhanced goals, established the XXXX guidance last reflects momentum business February. in financial towards achieving

grow deploy and increase further We expect and paperboard returns integration costs. capital capital, our support our to margins, expand invested on rate growth reduce to

consider Finally, Packaging return position and pursuing well leadership grade is Graphic let's rating, to positioned move investment Vision achieving We believe our growth today progress on Slide credit XX. an and XXXX with our the of rating. continue growth required for credit an coupled the cash while the to flexibility us in pursuing to milestones provide with business, confidence flows invest enhanced sustain future

engaging with and agencies a be rating in options will to We the potential of associated XXXX the benefits assess upgrade.

Mike for will remarks. Thank turn the you back for morning. this call your I time closing to

Michael Doss

significant flow and the mill today to in on provides flexibility Steve, investments means while simultaneously generation the and new an rate. Steve's you. thank Building as debt reducing comments, make financial in cash is such investment grade our business and exploring credit announced CRB Waco, further we

productivity me Let along history all long organic delivering strategically business, our now established growth XX. my and to and Slide we strengthen remarks wrap are Through record prepared the deploying net track of gains, our sales of for on value grow capital with creating up stakeholders.

offer. packaging from executing consumers packaging the solutions breadth are call consumer answer the we of that initiatives from expanding and options sustainable We strategic more

leader, global As time Thank race. running you a different for this private we morning. pure-play, base a your consumer are packaging

call session. operator to Let's the question-and-answer now to the the turn begin back

Operator

you. Thank Ghansham question today comes Our from first Panjabi [Operator from Instructions] Baird.

open. Your line is

Ghansham Panjabi

guys, Hey good morning. Yes.

Michael Doss

Ghansham. Hi,

Ghansham Panjabi

decorrelated your Mike, down lot their guess, And volumes, that kind I are a year without stepping – then seem morning. A of volumes, I substantially of look they the at been reporting from back XQ have have mid-single of exception first CPGs numbers, good to lot off, digits. almost calendar and them.

you well So volumes parse us on Europe perspective between And give for out you? can also and as just the you U.S. that? some maybe can

Michael Doss

to Happy Sure. do that. Yes.

year First, in broad-based was last really geographies. our growth all

growth. saw our to at were as call comment. expected quite we quarter. with frankly, were the November customers the out talked we to positive about. QX. that the December October quarter through look, our strong of quite have it you that played of in we and the with that to talked And QX, some on be, to able when start deceleration was I'll as us finish got destocking weaker end given some about and we But we Obviously, So

couple with this number of about, think examples comments, focused market And margin to we're the last years. the period on around really a the time, as calls growth. new XX% if see prepared And his I our and a Steve we substitution evident really, in products volume look in of that look, product on profiling remarks, of talked about different those differently over my three-year it's as attacking been at plastic a our it's all over over you prepared three-year have, said I stack, we've innovation,

some those bit, real. it's nature of a portfolio. of so we point, And defense down even like to are elasticities your though And our

what about is years differentiating from five and really in participation, it market Day terms think down you February in we over as is our beverage, talked Investor If dramatically food last was. which the end-use XX%, core done about we've of our where

Five that years I last of announcement they're when and the jobs, movement job and see so this the business of convenience kind busy like, service And mean, and mobility they food Friday's over you products. on ago, we've got things in really and heart of are like movement. a is go those appreciate people XXX,XXX

profile. last end XX% that business, Packaging we're we piece, those multiple beauty that off that acquired like and kind products filter hitting then now build glue and on mean kind dog and cat of consumer fronts. diversified of And defensive food frames, XXX% our so, yes, AR I would with health to to And and almost a the be litters business it's and a

that is label part and of that got private type to, brands, of portfolio, right this store Ghansham, offerings. nature heart that the in defensive almost the of point I'd the of think it you is I know we've XX% other

we there, down, trades catch consumer too. kind of the if it So

side. on weakness. They some so the And branded see we're participating

label in private And foodservice winner as retail it then us this the on customers business been has have a real to mobile. the We continue ultimately, sectors. for be side

Ghansham Panjabi

of with more relates back Waco, for like in then building the Kalamazoo. that? perhaps Is a it the is doing just you And question, pursuing an announcement the changed you. from this? sort system second in give it and just standpoint brand world expansion existing Got just to cost did by geographic customers us of as process terms with on to overwhelming mill your the perspective has an of mill new Or my a thought versus optimization

Michael Doss

thanks Yes, good for question. the It's a one.

look, had existing to expanding we we similar – growing very really what fiber that's a low-cost do back We what being do think, project Kalamazoo. every basket a CRB take if in minute, looked I step high-quality, if a it for facility. did at you you're making CRBs, if to resilient. you you type to But need a from and

when back see of standpoint. simplification a if at so terms the six profile, which the we they’re come our to And on to down from you why important that's looked of slide, reduction in mills, I'll kind

We pressure to Southwest in kind Coast, back to people there really Texas It basket. little fiber you've million our we down Triangle the into West go optionality area be on go growing that that We basket to gives very Mexico can got a needed XX us the with hit can area. of business. great in of East, and that

lot fiber goes a of As fact, of Mexico down into matter now. right that a

So it into high-quality we'll that process grab materials. and back turn

in turbine with we're this mill kind prepared production as put that, relative very we're really with of of owning is we into big on some making will terms own investments electricity, gas of there, the remarks, my about heard you setup. cogen-type in generator And then our excited top to energy other

and that paperboard. to Xx electricity the us going existing Aquacode worth garden our in and steam optionality right haven't market process at going the that's it specialized lot to able rolls like mills the are be back that Waco and Side open drive it. then there a trim hydro give maximum of turned we'll system to we'll to money process our And been trim we'll we then from CRB pulping trim our into to internalize. a take in So bring things trim our from mill some plants take in all now of able and effectively and sold that

allows have of to It looking So us us allows that already course, fiber, security really the And the for. to own. we that is have fiber supply. reliability we're

it's standpoint, winner cash a us. a from So real for

that's with memory this single tangential was a have be like the we how the knock-on our of And in will So one muscle done benefits you have really Kalamazoo in our kind contractors just it Kalamazoo, will together. to machine of once, identical built coming the that that engineers built we an and be this operation. machine machine then

the associated in locating new geographically recycled geographically, didn't have So one and Detroit mill couldn't paperboard Michigan we've But spots. then Triangle, and you the position in costs the with that mills Chicago between got infrastructure we mill better in there. two Texas coated this

me, that over we really next the and cost – highest the that drives lowest excuse So the highest-quality decades, can three have. or cost platform

Stephen Scherger

Ghansham, it's Steve.

we to thing to in the a the up to recycle that is day. also remarks, one prepared also cups mentioned the drum million pulping Just XX add with ability

really incredible the fiber ability in so years it's forward well. looking ways over the an of to the better circular more that and as next we're advancing to in economy, couple capture And investment

investment. the rounded positive benefits of some So it out of the just of net kind

Michael Doss

We're you final our moat far. structure, back think Ghansham, take really since what the one thing simplifying and lowest there. doing share, maybe that you the mill cost to three we're we're would around be I mean years, going went about we're our next by a here And business. building over if step a I really

being that's in this, be questions here globally, you record our lot a bit North going we're and would As and prepared our paperboard over get little again, saw America. around to We of added in primarily support comments other XX% a integrated. track

they and the side, container I XX%, other back. on exception their and for the the have appreciating we're more. that almost going like last On They investing the grades, in virgin we end-use year paper the in They that's the aluminum. of were the some consumer mean get almost see or benefit recycled. when that the with packaging one paper much much recovery work than materials put to really only seeing recycled other bin U.S. maybe any higher rates recycling substrate, go a are of

right that, center look and you more applications. at if in it, the So at going see it's you're to of CRB

rates have now low machines can capability We these that that caliber we it. grade we to the run to have We do boards. on and do modern boards able can freeze beverage be

And to you so as the and our external it prepared to optimize us market. have comments, really in said allows both on Steve remember, I million our And tons whole system. buy we

So our to to that and because the now be we as in able we've optimize able mills new many will and that got not have to be investment buy optimize what will things. we emerging between Waco system

So largely our very control. within is and $XXX high confidence million in the our

Ghansham Panjabi

Thanks much. so

Michael Doss

Thanks so much.

Operator

Our from Weintraub comes next Mark Seaport. from question

line Your open. is

Mark Weintraub

going of the But you. really course, possibilities Thank it be in about guidance today, as for keep I quarter, spread your the recognizing, to look quick few, we factoring today, we rate $X.XX. is I'll were like think at what last them at et A cetera. just look been though. for costs, the changes had would be? If it midpoint costs, midpoint Run to price

Stephen Scherger

a good, we given Yes, $XXX the of seen the last range Steve. that we've is on. provided take that years. range think million we $XXX to it's couple to just million, in Mark, prudent Glad volatility The the over

buy range obviously, we Obviously, some that of some logistics. got that moving chemicals right appropriate very and energy we for now down buy a and like paperboard we've feels down up us. fiber, it So commodities

in the million the sitting of basis, of the mark-to-market a low range, On today, also it to low would but end $XXX end be closer million the here to $XXX at it's February. so

refine continue of year some the of out. around that acceleration occur. the as There's plays And we'll so second dialogue obviously, the certainly year could to in costs half

to that to range, sense. million would end closer currently good low to million. keep the of But mark-to-market the So the $XXX a trying we're range $XXX be makes

Mark Weintraub

X% sales to a XXXX curiosity, for of ground, then growth. range? in the organic In you type on a the X% quarter, start that. to that the up little expecting later looking you're Appreciate are it's at thinking be understood. perhaps Okay. that easier you comps? first and The at And weaker follow-up make the as you of in against are Or year the year just

Stephen Scherger

Yes, Mark. Mike any I'll can and add color. start it

view kind in think, I the the the of is January. of today We're good got call expected here into line on start be basis XXX XXX we to that one a with points. off we've to positives sitting to

to as talked, across the we to some board, back saw for expected to we patterns cycle December in order slow where So packagers down we things us, almost all be. them

Mark new was was would be with commercialized. move confidence we the no, of geographies. So year. is expect based. only is lot in product development the Obviously, to January we of that supported QX expectations into It activities by broad [indiscernible] that as that all in really line those that kind a have been Maybe the

across really it seeing we're business. So our

Mark Weintraub

I'll realize a have few back Yes, more. though I because queue others have I get questions. Okay. in

Michael Doss

Mark. you, Thank

Stephen Scherger

Thank you.

Operator

Staphos of from comes Bank America. question George next Our from

Your line is open.

George Staphos

last about lot, you're results XXXX. the strong And expecting have things year? you talked one you've talked turn for the I back about certainly, like on a Thanks mentioned the a to very that's you looks a one think way that moat business. comment, And around to all it Hi, everyone. Good details. well morning. good your guidance, wanted Is in been the year. building given end had we've your Waco. of that to And as this Mike, the about. obviously Congratulations to

EBITDA. at this one tools in machine with or that use off pulp potentially of hits that disposal competition Is totally potentially You'll have when this thing your would cash ahead XXXX, so the capacity in And way have in return, to supply growth out as of and do at your is look XXXX to terms you'll lot earnings disagree and prudent for build a of expect, the ahead and to buybacks, additional not? you you build and XXXX XXXX? you grow of new why the ability that plays why,

Michael Doss

And low the of George. anticipate the liked question. again, that It's of towards we we substrates vertical the kind driving just really that high-quality that the of earlier capitalized, simplified at growth to additional I Ghansham’s absolute made and right mean, well growth six, some here that way building that that to time. need comments, see I build integration structure, part over it, some just mills on look cost XX% our and organic we'll we between is

on basis points. just to you math the the If do XXX XXX

outcomes of very regardless So those look it positions XX, us kind of what well XX for like.

a you've time, this this our watch be is largely to cost there too, I is for years low-cost we expect the what there, great over capability bit because high-cost doing you've And time, and go-around. of But to middle into side, growth. this only really to converting we the create kind And Steve wins, Packaging Graphic on tied low which supporting we're how the positioned thing in about similar And our over spent systems are a I'd not quite of have but done our are in also course, that. this, what that loses. George, and we'll say, it's to that long industry, and I'd experience seen see and is others

way. right absolute the about thinking you're So

George Staphos

to $XX, ton. I and is to of so, All like that? like $XX turn it per would that ton why Mike. Middletown agree a a the if is seems be math you talk some math right. slide seems more the I look the did I it adds with for on versus KX. Thanks, kind Could deck about XXX,XXX metric Would And rough class, right. when make but this if the that? want profit and short And tons, conversion case? It short you higher, if and Waco bit Angus, do to into East also an don't algebra Tama at

Stephen Scherger

and as Yes, tons got Waco Middletown, can Mike start, cumulative I'll The the the in Angus George, But the three the as you it XXX,XXX cost see the it's addition across Steve. facilities you slide, capacity facilities XXX,XXX tons are Tama. higher other assumption and that on add East correct. of well. short investment are

with doing, profile, but And Obviously, the that's can move from the environment this incremental of a the was upon so kind that's there. its improvement seeing years, net its that we're that the they're about math energy of ability seeing like, net stand production because again. and incremental said slightly of on in XXX. investment talking of recovery you you're the will, the and And the supply-demand higher I the singularity Mike And terms of on that what yes, over if own. dependent some investments growth to

Michael Doss

No, that's right.

Stephen Scherger

for So George, a right capabilities aggregate we We're the in again, the of internalizing now will in getting some material. lower much here the have markets. that costs of not just little money fiber in export because be

going is So own cost that's and like that from for with about. From steam, of own said, our which also other the quite And standpoint, standpoint pickup that's us making excited a overall the sustainability to part I lower our there. a we're electricity cost.

thinking you're it right. So about the

George Staphos

I guys, Okay much. very will it turn over. Thanks

Michael Doss

Thanks, George.

Operator

Kyle Deutsche White Bank. turn to I'll from

line open. is Your

Kyle White

will pricing begin say your for of morning. asked pretty Thanks in the what happened good your paperboard Hey, like a touch, discounting when concerned increased over Looks environment, grades and with this of you as backlogs that other taking place? kind are just investors in this standpoint but any roll markets. to do came do you for about down taking lot A any markets I competition of healthy. remain see any guess, question.

Michael Doss

back just need to based flat we which at I'll paperboard. to to, meaning if look But expect more going then ads to XXXX. years we're going what XXXX, about is our you that talk and overall on is volumes capacity the step XXXX, Graphic over take relatively announced So been speak grow know in a what's are be for sure. Packaging, publicly some talking you about, happen of Kyle, couple what And there's next we as into at

And expect so remain we [indiscernible]. those to markets

Our going backlogs are here, and solid our expectation we that's as reported forward.

Kyle White

this? on You preliminary inflation relative of bit, on cost, most last caused you by then kind what quite was, this the costs a that a behind bucket the What throughout the about you to that the the was increase where the increased commodity you range? year little but range could the do cost and see And reasoning outlook see uncertainty the most bit to quarter. talked

Stephen Scherger

hundreds at short nat the I seen being you order just in cost recycled come gas, Steve. I mean, like volatility to, of two look business if prudent Yes, seen Kyle. years, in of like think the times. we're dollars at And we've very over last back It’s millions you've categories of high inflation fiber.

plausible. And price earlier, provided so the land. over in pretty of certainly a we of recover. it, the just that this is end. mark-to-market see trying the could a it we'll listen, you point we're commodity that little plausible? years, XXX for fact action the the reinflation I take it year? we're we've two input looking cost But is saying, just now We But have think been to be appropriate environment. assumption. XXX fact some to a is in don't occurs, which And half at to volatile where bit Is on just we in of don't on know we're back And if will view operating the lower good recognizing then a mindful that but it

Michael Doss

if Kyle, you you if I it $X.XX on someone it, told mean, gas, know I think about that, believed just have don't would've in we'd August us mmbtu either. if build to mean, I would've nat

can geopolitical year. on a second this And So I in hurry, of the events. around half mean, a things actually in and the on have about reinflation of things wrote call based couple move analysts other the

Steve we're just as it's think know how terms prudent we said, I for it looking in bit a conservative So here be at sure. to of because don’t

Stephen Scherger

And Kyle that to out. to that, round just

Kyle White

Yes.

it turn Sounds over. good. I'll

Stephen Scherger

Thanks, Yes. Kyle.

Michael Doss

you. Thank

Operator

Adam from Samuelson to Sachs. Goldman now We turn

open. is line Your

Adam Samuelson

Good Yes. everyone. morning, Thank you.

Michael Doss

Hi, Adam.

Adam Samuelson

hi. guess, I So

whether just big much order, kind trying I a and sense come delivers alternative of of shorter you in ROIC. obviously earnings cost on just, or [indiscernible] size capital stock that wanted back just the XX% investment have capital make mean, are risk how cost to you've premium a the sure get I to doesn’t of your XX% spread project return sizeable on a to for adjusted there. capital viewing in M&A And versus project want for just of a which the of buying of to terms the talk that? and return I it's of uses Waco and buying project would about seem risk cash I'm the So versus like how

Michael Doss

the Adam. for question, Thanks Yes.

So out first derisk project off, of knowledge the know, we how have part coming KX. is you of the the experience we and

So building. remarks, the we as just an I'll got I start I machine, mean, with mentioned in identical is this done one my that. prepared

done. engineering the is all So

be think on If you'd ability a to the people's ramp. time I've high. actually it so really run Waco, to we Kalamazoo this the give in things our it'll ramp And shift system by then most exceeded mine, you about debugged those have all us think up getting machine, operating I to down and lift expectations, all and XX our fashion agree which full in to have including were vertical rate. month confidence

about confidence I so think that in that's And you it project. in if those terms, think gives us the

and said is, mill other some a a Having like three into is CRB factor stuff a a much ongoing the other you've And versus with. got the virgin to than have to of like to all backend got plus, you that deal mill the CRB benefit capital this lower virgin think things thing type decade one pulping don't because that, a mill run about that are the I of an requirements investment. investment you

did like in had you $XXX about, that kind talked beneficiaries when they for thrown large. when and were, saw full running $XXX we for drop our if three just it and we cash run decades what a stakeholders every XXX of million KX, year, recall cash we been KX, off once, of million investment. the at through that each on the dropping through And, of will is we're investors pretty So be rate

it So in allocation. we about that's level capital a high think how

on You're you dealing risk we're have in you the there. of bit we've with little right all right, that could acquisitions know with like come AR but winner could more things they we macro we there's did, in immediate, as a growing that like, track. was mean, do are But We're a if done us. it too, about situation our for think the topline Synergies deal now. I those.

almost have We the we've that period of a $X if you of that in done back billion to buybacks buybacks past, go time. done over XXXX

And So at truly is a one for we this shareholders. our a it winner think look allocation real capital we balance as process.

Stephen Scherger

Yes. And Steve. just add on to that. It’s

We ways long-term X.Xx XX%, in by there again structure point, both today, but return know value And the we're besting execute also, to variable we're is in is profile at reduction. creating. drop returns couple sharing another Mike to X.Xx. quite fixed are is a is growth, It end, there's the can going how class it's with cost We cost going for it, things $X.X debt many to and we're that from XX-year articulating. leverage what XX% probably we're there's a But investing think, in to returns it. in see XXXX, mechanical. was against I echoing One control. our actually cost the a for reduce billion, reduction,

by flows around build the And this for back around stakeholders shareholders driving targeted way, business the long-term in cash the significant to to down to in case modes returning returning way a the to value very all in while range. our low so end balanced up a significant investing we are the of mode leverage

Adam Samuelson

going Okay. ask That's all follow to a very helpful. up. am And I

by about the come kind against footprint that in reoptimizing talked some others of the and do mills. the directing capacity some markets kind are How how this it, different of You those kind CRB? that being that by put compete putting think capacity Waco of type and what to impacted cost the up that's mill, SBS of how virgin of in positions grade network your products the of of to your mill out FBB you position kind can

Stephen Scherger

we're and virgin the CRB rates integration we're fiber baskets best the going And and our X% on the XX%. you on up for about here tough above take going we're about environment tons to both very this out the talking grow driving over coming creates organically growth six time, mill our And it side. an think when have think system the I in many in it, domicile cost U.S. them to lowest and that ways. optimized

the $X million a creates always lot and where continue spend of levers core buy outside allow optimize as growing to us strategic where both the business have we have our full said, the we have tons situation different of grow So and have we buying now optionality we M&A. want to and pull that global the converting to paperboard, on point that to our ability with we're and leverage a can a organically different to Adam, to our

think and strategy positions our I that's it a So moat us from well standpoint.

online funds as So in and XXXX come XXXX. those

Adam Samuelson

it All all That's helpful. you. pass Thank on. That's right. all. Okay. I'll very

Michael Doss

you. Thank

Operator

from Gabe next Our Securities. Instructions] Fargo Hajde question from Wells comes [Operator

open. Your line is

Gabrial Hajde

Mike, Steve, morning. good

Michael Doss

Good morning, Gabe.

Gabrial Hajde

I capital of clarification. there a it's there. that do the $XXX that flow taxes, are It I what points not guess little footnote Tama like was bit to of map of tell Maybe what seems to you at giving cash interest, side of don't it guide end with, mill Thank January. color us XX. pension, on if about Slide guess, This million right it And like the us, at on Steve, that's you. million there? just look or the talked $XXX as Two, one trying I driving I the decision the when on was much, required then you to you're sounds because discussion a it know working

Michael Doss

overall tons run so CRB committed take next into your supply that. that can doing XXX,XXX So need February part we're first centrally XXXX, had making. business. question. to of converting we pretty here, very to ultimately step second relative part remember then with we let a if of almost We're as first the half and a their we by in the it the into large, [indiscernible] business those when the I'll part we're a of you make is, few bought to volume back handle our But and that that evidenced tons Steve agreement our Greif was integrate mill, of the business investments and of sure Gabe over over that what the We're back take that we years

business of part sense for So of that it us de-risk made kind here our to going forward.

Stephen Scherger

Yes.

Tama our we're the where we're continuing this of It'll really really cash million for interest offset get range pension what cash work expectation with other add a business fall. as a that to the couple of Russia of that's exit bit EBITDA. expectations is guide from articulated of we've the context through. the terms year. working of for the there earlier expect points all inside is $XX just mill or doing the we this there other of items, to you mill the Relative by Just that, for about that capital the year were providing the And uses and little taxes, will

Our in interest are the to costs be mid-Xs. low going to

a be probably will plus taxes to $XX and pension cash range, Our XXX minus, million. zero in or working then a capital and

and costs appropriate is your just the it work. it's that hence, of what $XXX we're EBITDA into our CapEx, the million, from putting putting less category, And it million really we're operate all that’s the the the the walk midpoint to capital there business less $XXX to to So beyond small any doing to we do. the other flow that get down million. leverage $XXX to the things [indiscernible] Take dividend million range. to to that debt $XXX two $XXX where you $XXX the in million half benefits you million And cash off that's get of to reduction of the

the you providing walk. just we're So with

Gabrial Hajde

guess of maybe numbers it. next those I of for of Understood. It what of and maybe investors side you're And appreciate question maybe a was Steve. broken parts hearing, think our timing of kind you, in off this magnitude you aggregate investment. what bit those little is and the the guys is table Thank you're had and of the behalf previously on of of us. hearing just and surprise from I I two kind terms the

so, by a there. start saying, have Kzoo, I'll guys congrats So look, proven you success lot think of with I

have it requirements some part existing guess perspective this the or accelerated the of things one existing footprint. may look timing one, I you the the across as is, some a So to of system, that two could from be, forefront of that, the question brought existing capital

not was that So, making? talk whether can decision or the of about you part

from tons I a standpoint, growth. enabled the And second some Steve, incremental then of maybe you capture point, Middletown this think of to XXX,XXX financial the mill

ascribe incremental million So that get in of that, close were to per some kind project, going I because weren't other If that, to words, EBITDA to figure of well they already million your you EBITDA to as would it the that open seen track $XXX you've guys say, talked kept expecting were a were before. as it they $XX on ton you've of growth. original part you about, Kzoo

looking from just with logic you'd have cost flaws you at project return so gotten I not really saves maybe that Middletown. could $XX the because but maybe that from that million already is And will? potential be the growth the in that that simple, perspective, if getting it's know you

Stephen Scherger

Yes.

second from that, take one million to attack XX the and final the real XX. Let and first, XXXX, and million in first million no, get $XX year. XXX KX. can Mike clarity. the We then first get $XX incremental We'll the got next $XX this is We'll

this CRB platform. got a high EBITDA a So very from decade mean, you've accumulation unique improvement of level XXX. an is world and class, here quality substantial I cost, multi investment in very this low nearly of XXX,

XX, plus what's XX, is plus XX, there asking That's if XX. there So that not, question, minus is a plus XX, not you're plus and plus common.

Michael Doss

Yes.

other important. part Gabe is the think so, I that And of

To talent control is of fair, in they terms these ability kind of a the need We an in for look really will be that decisions are have that mean, will excellent small in nature, facilities shut we in know mills are mills operational. have see we those run long rooms folks attract modern are hard. of those places these type life that mills in three well hiring And to in that is, have of that, to But environments. capitalized, our kind I Kalamazoo process. once digital to done like frankly, it's work people work to diminishing quite it new you always with said job it our and You work those Waco down are time. what end assets.

an thing our get just the alone proclamations is if that have we ability now led point there in next they objectives across over other to the at this to public and And pressure absolute like years. they're you're out, serious going are emissions the investments them have look investment that you the XX%. have those when you've And greenhouse our under Waco by is Kalamazoo CRB increasing I'll because platform you to Waco, help and important, we make service them of XX making to five gas in commitments lights. reduce and then can't with around they're sustainability got customers facility and and the because And converting kind those did making accomplish sustainability of our about to relancing circularity, really

and flows aspirations that ongoing are support major goals our outlined. and of time period consistent that margins, So really that moves we've over customers to these making this position our are multi-decade a XXXX we're company to generate with Vision cash then

Gabrial Hajde

gentlemen. appreciate I Thank you. it,

Michael Doss

you. Thank

Operator

next from Mizuho. Our question from comes Brun Kieran de

Your is line open.

Kieran de Brun

the range, midpoint just the on that sales got and good implies Hey, if the morning. on might questions a to touch towards on EBITDA look as the even that EBITDA front out towards capital not much M&A. but be there adjusted front, at implies end it or sales we the for may just XXXX, look so Yes, higher at again there the room some of have I but to guess I answered, been lot priorities, of kind deployment to

future kind M&A? or bolt-on larger on, adding of acquisitions think So, Thank the is do there where you about if capabilities in even you. that focus

Michael Doss

question, Thanks for Kieran. the

the I XXXX, to both head say the macro and So happy that things of bit least. we an one about into of a Steve is uncertain are

and with a got If we've for to continued And going what Steve our savings getting that's and to acquisition. AR work on, Waco. got you Packaging to busy We've things self-help and be in will align can organization $XX great outlined. that that. CFO have and course, drive got our able the up ramp ongoing a of has another CEO thing your ultimately, now, We've in million that of be can a synergies you to teams as Kalamazoo, have around growth deliver down we year this

we track So know. really, things these record our that high around as execution execute we control you on. And and really can are is

we that. so, And like

market. the I continue And any always Having so come given we're control for when we'll as things mean some that working don't extremely that, we've say, bar M&A said is, to would our high, to said before, is something of to and we internally. on get

high we so bar, EBITDA and to a there the but going are other a to us And certain actions at, three things that the our really got our would it's obviously next look we've to take own priorities front in the really have through two years. given improve of over ability really,

So that. going that's worth of year. here about to And kind of million another roughly down $XXX we as pay we're has this Steve how think debt said,

goes look what you If debt like, our X.Xx. a that looks at take ratio

something we not come and grow we our continue will high positioning as have incredibly to into we're where again, it'll optionality in an self-help just go going along. as XXXX and this would we we'll to it'd then we've the very We like like we're that's said, And how internal spend into our expand so here have compelling focus XXXX, and the XXXX. company future, But, story, but bar. unless have, to

Stephen Scherger

and value that's that out is next we XX%. towards several integration that's Kieran And bar of part integration to look Yes. really point, years, we where moving that big over up drive the Mike's high can

part big if we of we expectations will, that the return a assess. for bar, anything that's So set would you around

Kieran de Brun

you. Thank Great.

Michael Doss

You bet.

Operator

Truist turn Securities. to from Roxland now Mike We

is line open. Your

Michael Roxland

Thanks. Mike, Steve, Appreciate Melanie. taking questions. the

quick just one hour Waco but here, one Nowhere over the approaching, on the we're acquisition.

Kalamazoo at based at that and of the the versus estimates fact like is Can due is on a there's, your with seems cost initial what's outset, EBITDA, Brownfield? cost Greenfield the us generation driving some frame and you EBITDA return look spend. kind just primarily and those you to lower on dealing you're help of that return that Waco lower the initial than yielding If it

Michael Doss

build answer absolute the a with costs start the terms of to I'll of in we some is the infrastructure. increased Well, function the increase have

Island, things, returns capabilities Michael, a got we've have kinds is the and mill. as So actually enhanced to And ability here going those construct. pulping the we own generate our too, terms ratio. wastewater in our to But our electricity of within in said, to both capabilities we're of Power overall treatment

about If what you think Kalamazoo, in substantially about the we in and spent it's spending similar. talked Kalamazoo what public

Michael Roxland

that are remind looking particularly I the the you with of mentioned a what metrics you're to at the whether to here been start remember that determine mill, domestically? on Texarkana, at And just you Okay. has can given potential us would favorable that's if quickly announced current proceed as you days that something all U.S. conversion on of that capacity because are about given conversion XX just for postponed the the downtime. the tight of that's your in well, targeted line Obviously but take supply partly capacity radar it demand, not additions wondering

Michael Doss

Yes.

said CRB to we've tell CRB, see FBB, machine those Obviously time, you're looked publicly we're I took correctly. a we at over got projects We points. capacity. is talked be in project that reasons you because near quite expand our CUK we that, both that do projects to we've already But busy today our as that on need all those is won't I've going I'll to at for Texarkana that to Right capacity. talking our good different projects we expand So our about downtime recover substrates having Michael, those. at on term looked the now, CRB. focus mill referencing this we've got, about for looked outlined, the

into growth. January accelerating in last when were all during of since, and the course, and here the terms substantially. year was And through So in our down is of and food reopening the service that service U.S. business food volumes here, pandemic volumes your

tons need now. ultimately, And so that's thinking how coming those of that And about out mill we're that. we

Michael Roxland

Thank you.

Michael Doss

You bet.

Operator

Next question from comes UBS. from Cleve Rueckert

Your line is open.

Cleveland Rueckert

advantage here in thought Hey. it. thought sneaking something Thanks on said, the I you for Maybe could or you hear me I in morning, said advantage cost expand that the the or a in past heard remarks. you other your Did is I right? little I My Good CRB. CRB that exceeds potential everybody. hour. follow-up you Like prepared something Appreciate cost on said think substrates bit?

Stephen Scherger

Steve, I'll Yes, Cleve. start. It’s

investment that distinctive a with articulating opportunity Waco differences were cost is you we unique in other that substantial remaining tends I others. a these level maintaining making there that what there's and very think be current Whereas you're with your investments whether and KX that with to virgin to produce to and the capabilities we in began of the When industry, smaller, our CRB. difference substrates, for assets. exists compare own or

would capable virgin were what see, there. being unique CRB is think differentiation So I competitive articulating larger paperboard with there's than with that we is or being substrates you a captured of investments,

Michael Doss

Right.

if the for SBS, cost is the Cleve, that America larger you $XX if same if SBS, at which, and much slide, so cost curve Steve on between a CRB highest you what saw that's can cash low, the on within North is is curve bill. look cash lowest the advantage Fisher cost look And the that it's that cost the you in curve, referencing you go at get

so advantage And to done, when a this be our ton. is going is $XXX

we're that it that's the nature substantial talking about. So of

Cleveland Rueckert

make was versus I earlier intensity point capital point about Mike, lower to of recycled liked virgin… your I really then that just Yes. the And clear. wanted grain sure

Michael Doss

sorry. true, So it's really

Cleveland Rueckert

there's the go In quick but areas buy, what is the you I'm now just you'd and in markets think as follow integration you us for if talking integration. Yes, integration, Mike, of of factor no, the being a and it just a paper then X of XX% quantify just maybe for to business vertical you And one restricting We're And I that about think more reminder. year. could as we million restriction, us downstream point. were a guys integration, on other it's from then of remind your little great does kind talking a what wondering, every to bit about means up. what XX% other tons

you. it's integration? it it's, maybe enables So, and that, for really this that's me. investment Thank And that just that upstream

Michael Doss

Yes.

optimize a versus if on and change really question, make the X look, go of here at we're buy the with will Waco that we buy think, we particularly some mill as you million this we we'll calculus that and about paperboard based purchase able if I appreciate and our over that once that that, into do be other take want places look the investment. network, things time which to I tons think to freight globe, the around we around done

next be quality thing low we we we growth. rates cost, So need integration done able high for over Every the our we've driving have year each have we our paperboard up convert the for I more tons last think material to three, customers. to year grow and organic grow, biggest is time to like it

really appreciate chain ultimately difficulties. vertical some supply how and the during with customers Our that were associated through reminded and the they of these was of the integration important dislocations pandemic

So integrated being an brands overall to and supplier their de-risk profile. these large chain retailers really large helps these supply

that of an part it's so And important calculus.

we've make to you the good that We plants done on that your that, packaging too, in are customers years. to your To got over and said got, say that is like all converting you've where Having invest local. a located are. converting to that good job sure geographically

end to selection in service here them a back into we've way mentioned, it's West facilities of and location Mexico, and great that XXX to Waco U.S. has conversion helps facilities east, because as for our got done Midwest. again, that, be to so I us And able our plants. is, up And great into that service customers converting the in upper even geographically, the be and a down the Coast, a

of that's about integration over we such how has decade well key think part now. a why it, strategy really for Cleve, and vertical our a is been So

Cleveland Rueckert

Thank very Appreciate much. you it.

Michael Doss

bet. You

Operator

turn for today closing and now Doss, Mike I'll remarks. and call the concludes back CEO This the call to President

Michael Doss

of end April great you, a want for for Have our you joining We'll again to talking our Elliot. day. the first forward towards results. call I quarter And today. everybody to Thank to look updated thank with us do

Operator

is to call for your We participation. like concluded. Today's you thank now

disconnect lines. You may now your

Graphic Packaging Holding (GPK) 7 Feb 232022 Q4 Earnings call transcript