GPK - Earnings call 3 2023 | Graphic Packaging Holding Company

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Operator

Hello, everyone, and welcome to the Graphic Packaging Third Quarter 2023 Earnings Call. [Operator Instructions]. I would now like to turn the conference call over to our host, Melanie Skijus, Vice Principal of Investor Relations. Please go ahead.

Melanie Skijus

Good morning, and welcome to Graphic Packaging Holding Company's Third Quarter 2023 Earnings Call.

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

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

Michael Doss

today. and you, the Good on for call Thank joining Melanie. us you thank everyone, morning,

and proud Let's dynamic growth quarter. and on X. begin goals, of our EBITDA future. adjusted for . to expansion, to our the fulfill deliver a we Slide purpose everyday with moments make during margin our for continue Amid I'm the performance environment, very team's package very future the renewable highlights third a life's progress invest on

cautious XXX we of retailers our levels discussed and supply evolving versus growth to and inventory these we in our global has the the near on remains has out months, mix as and organic normalized with consumer a and consumer a are uncertain to have a have a basis as packaging to term. the return resulted listening pointed volume points largely of more in subsided. time, At combination customers As our year quarter, are factors of climate in anticipating challenges The a modest same environment broad last operating in relatively chain have net more recent XXX XXXX. macro ago had dynamic impact customers, targeted sales

Responding scale disciplined and to our execution system active current by and in team and the leveraged Through demand, we capabilities supply factors, to flexibility our commercial team, quarter. targeted XXX,XXX met path inherent strong approach to our external changes. our to paperboard to and during margin provided volume customers the reduce a levels EBITDA the operational stakeholders management our tons meet our of Together, adapting commitments in our while and quarter. production

a markets. the Our performance business to and our growing differentiated servicing and testament to resilience approach consumer of our packaging demonstrates is

optimizing customers with value and growth. provide delivering We packaging to system are solutions to Packaging the our position Graphic we long-term for

of which both driving will of making completion a are and on element strategy the transformation, progress moment, that key I capabilities Incorporated CRB new including Bell through front We supporting lastly, is this growth innovation market in third category the continued our innovations considerable on progress strategic quarter, our A the investments. expansion, multiyear expand made advancing acquisition. and on and system in of

markets example well and good and capabilities Bell our are The is the integration underway, serve. adding of are expanding acquisition new of Bell the is provides. packaging we in by excited a we about and network we investing Acquisition opportunities how customers

long-term demand the As to positioned benefit ahead, of sustainable we packaging. strength for fiber-based are look from we

packaging. We on are Packaging recycled Graphic and gold further recycled as focused distinguishing in leader consumer the

$X.X expect guidance range. midpoint billion, XXXX EBITDA adjusted our to the updated have guidance at We of of and continue our

achieve to sales We goals. to we in tracking the enhanced our our are remain meet Vision financial exceed ability XXXX growth years ahead. organic addition, annual confident targets or In in

retail confident driving iconic innovation replace with and of category. One continued of progress fiber-based resources made innovation many packaging, Cup a using noodle our a we growth outlook packaging expertise plastic sure fiber we work develop and provides serves is solution previously Noodles, environment. we service advancements the to many foam with of in another engine retail as food stable in is organic our innovation shelf a at I'm more continued the the have example sustainable remain effective our in nonrenewable the comfort through our in both and customers. the of Nissin reasons Through and alternative capabilities been leading ramen brand foam. recognize are foam. the food Historically, Slide X cups you and packaging created to the like

Notably, cup for solution provides an the when in consumer it foam. use, is for as meal for our retail convenience safe added required preparation extra Nissin eliminating step microwave using

Nissin with aligned for first entire to launch We begin the more cup over cup to time. product with our product partnership to noodles U.S. upcoming XX-ounce of packaging from retail options today expected noodles preferences their quarter XXXX, are with convert in line foam their cup in solution Foods consumer The our excited proprietary double-wall plans new a sustainable to the the Nissin fiber-based have of solution. share packaging is and we rollout you

continue container more to marks the as within we microwave addressable the billion $X in expand packaging market application than U.S. market cup the our This cups first in in

pasta, markets such across mixes scale and opportunities Our with foam invest solution fiber-based plastic. win. creates where are categories to tremendous dried cereals, are and customers ability foods examples retail our that behind new our has breakfast in dry to and food potential today primarily single-serve various Items serving as history and

has let growth beverage me also new in this highly with market cup currently and favorable program insulated to to discussing Phase its long-term provide additional the continues stores with for the market, of Last solution went and X XX% a broader double-walled and from stores. opportunities consumers approximately update been our as Feedback customer underway program. roll-offs important in on of beverage an While both cup quarter, stores Chick-fil-A. our potential its program

for long-term and using innovation solution We cups be continue currently to containers. Chick-fil-A believe and our a others can foam

with demand use industry and more support more transition to top network, extensive innovation sustainable leaders more packaging are and sustainability prefer. We long-term seeking packaging packaging to solutions of demand with such in pursuing packaging. responding towards transition goals the Through legislation leading as a and consumers consumers jurisdictions, sustainable Foods growing tailwinds believe of Driving packaging, the for design this continued Chick-fil-A sustainable to sustainable and requiring partnering customers Nissin number end-use environmental brands to our transition we demonstrates investing are solutions. how effectively brands that like

Slide Moving to X.

a as Let a in the result system on transformation. Packaging multiyear will CRB America. significant update The Graphic made strategically simplify paperboard our me quality have capacity brief to coated optimization our CRB end we distinguish effort provide on cost and expanding further highest cost. and have progress the XXXX, while North embarked Since lowering producer lowest on we recycled

strategically Our identified are made the consumer expand to early packaging recycled we optimize on, capacity efforts trends of from result materials. and growing demand including for

to this and will sustain will important focused for cost in advantage quality come. we ensure, investments category years unmatched Our

KX production our began, the XXX,XXX longest from we higher Kalamazoo, effectively facilities Kalamazoo, made and been CRB our our have have machine XXX,XXX net total running growth. paperboard by CRB project significant ramped with support in to Since tonne less increased our system progress in XX,XXX system. we efficient capacity machine have new in had cost, our tons the of Three, tons removed transformation

of KX As permanent announced machine. noted, decommissioning this total the includes our recently

efficiency success [indiscernible], and cost of look the operating reflects incredible decision the will which upon new of the quality KX to KX when levels. Our in quality with our expand on which We our been has KX above machine, machine Texas, XXXX. late or production forward paperboard it in committed replicating begins and advantages state-of-the-art CRB success at

cost cycle CRB paperboard, consumer in the food, effectively quality and across quality we have to is and we allows available and the within which higher-quality this experiences quarter. more highest ones serve. paperboard grade expand packaging new health, introduced produce of already will us talked new applications. product profitably last recycled facilitate of One about meaningfully [indiscernible] example As beauty markets the improvement CRB pharmaceutical This before, new to opportunities we ability the

to our look sale wins forward first sharing [indiscernible] example of October more come. have and many in are packaging to to pleased in We the quarters

release recycled of own extends the well leading XXXX report and our also including progress of packaging made detailing towards ESG transition strategy third enable our customers, household an business. towards ESG world's The have of included brands integral and Vision solutions. our goals. to Sustainability our recyclable the XXXX impact our business beyond we many the quarter achieving more We is part

start, To through greenhouse in manufacturing intensity that key years the energy of highlights few goals I'd intensity operations. our be like Slide our to We from nonrenewable investments successfully note seen gas expanding can on X. so report scale and did the packaging early. for achieved emission and X efficient a we

For intensity X% emissions helped by example, reduce estimated the associated CRB XXXX. with machine in KX production an

we confidence on ensure we loss. give facilities product packaging certification not management with or forest goal to track of goal to practices forest The our for and our a follow with consumers contribute our are compliant certified also XXX% programs highlighted and that More does sourcing global standard. demonstrates biodiversity compliance. We sustainable have support fiber to our sourcing certification deforestation

we teammates and are worldwide, we work sense diverse am as can I continuous XX,XXX of than more and do, workforce. progress making committed upon centered have growth workplace we we build is and in our to fostering inclusive improvement belonging. and more the the employees' proud There of always more a We remain

which recent with Slide the learned very are XXXX goals, you. X science-based early reduction to that in carbon targets our outlined I'm approved highlights initiative here. October the We share sustainability excited achievement

As more to everyday that, on an Steve? are that by we wallets doing results. to over planet, products increasing renewable With package brands are be right detail their to thing number purpose to for moments financial I'll voting Steve a are purchasing turn for from the filling with call proud our future. provide life's the of the the consumers

Stephen Scherger

good and Mike, Thanks, morning.

key for the very results macro our a overview highlights effectively Net to X and quarter Let me of start declined the billion. through Slide third X to first sales dynamic Overall, ability financial months operate year-over-year environment. the demonstrate with our business of on X% and of an $X.X XXXX. the resiliency

impacted by fluctuations and behavior the by quarter and during foreign positive sales efforts inventory adjust some discussed, exchange. were were partially in pricing Mike to Those by headwinds purchasing consumer from impact levels. of the retailers execution As offset

our was or be With quarter. Net in innovation an to minus number anticipated sales organic days X% during to to and organic same in return sales XXX net fuel targeted period, growth organic in organic to as sales our net the expect for prior our year in X.X% ability pipeline opportunities to now confident down fourth plus quarter. commercial the of our ahead. growth We points adjusted We XXXX. on years XXX the basis the execute growth in of the remain shipping

Our expected established range at with organic XXXX. growth X-year average of of end from cumulative X% approximately XXXX annual and the to high XXXX our remains Vision rate sales

Our diverse top benefiting and is customers. line markets our end portfolio of performance from

While in when period, sales for the for heating service mobile beverage the and sales markets drinking X% convenience the grew X% quarter go. consumer in looking on decreased as year are continue our to markets the our packaging from win solutions food as and food, consumers prior

relationships focusing our on are the meet to and managing minimizing their current servicing production demand, cost and customer while We exercising discipline doing of packaging needs. long-term actively so, with supply

disciplined as the exercised anticipated we strong Given despite reported as short-term packaging the is environment. business, profitability to in we our consumer throughout fluctuations approach production,

basis Adjusted to adjusted points million Adjusted year-over-year and to by $X.XX. EBITDA continued year-over-year XX% XX.X%. grow, EPS $XXX XXX margin expanding EBITDA to to X% grew also expanded year-over-year

our sales and of in a today's appendix are waterfalls for presentation. available As reminder, the reference EBITDA

nearly $X.X Global liquidity strong at remains billion.

higher integration was year increase consumer in paperboard with quarter of from Our prior success into evident XX%. period. is integration packaging This rates XXX our business at points an the the driving basis

Packaging Paper's International of X,XXX completed basis from January this American we increase XXXX, Consumer since a when business. the an combination As XX% North reminder, with points is

we growth execute and consumer will rates drive We higher in continue as packaging. capture to integration opportunities

XX of fundamentally guidance Slide of reflecting for updated current Most XXXX, and the outlines remains Incorporated. midpoint expectations adjusted guidance acquisition as adjusted our notably, EBITDA full the our recent unchanged. well Bell EPS year as

Turning to XX. Slide

focuses We capital continue which return. allocation, on capital our growth approach balanced and to

capital as to our such the during of remain of discussed while in returning leverage and today's the on growth, and As in advancements to we end the shareholders. recycled focused range targeted call, innovation new for paperboard Bell, acquisition recent facility also lower investing ongoing reducing Waco,

As million of of today, we have repurchased stock $XX year-to-date.

and With capital to approach back value balanced for I call Our business Mike. our to turn success for the the that, will allocation stakeholders. delivers continued positions

Michael Doss

I'd commitments positions the February we for in Thanks, around on I'm deliver to pleased and to Steve, Their Packaging to Investor team hosting share packaging. York XXXX. talented like execution to that Graphic in customers, value leadership thank continue our and globe. New strong our be stakeholders an fiber-based will meet our Day with you consumer XX,

strategic full aspiration our we and year provide to the the a for and business, looking new addition on update results, into XXXX and XXXX In Vision XXXX will goals. further financial QX future, guidance

the plans turn We question-and-answer many and person of the on see to are . I back the providing details session. the look will in call to excited more begin to operator now our you forward Operator? to for future.

Operator

Instructions]. [Operator

line the comes Panjabi of of So from our Baird. first Ghansham question

Ghansham Panjabi

price margin such back maybe better look pricing And on just Mike, led destocking you some and ? seems margin as growth productivity of the variances line to than any and XXXX then on so industry? at correlate looking of based see XXXX, what elasticity of comparison markets weaker us was the basis, like you consumer any on in a initiatives. the what price EBITDA kind volumes just 'XX with does cost be it of for share expansion back Would that level just forecast trend on this Steve, based given point, can your and that for this internal and an as it level year some at offset Based of just perhaps cost end like? much give the

Michael Doss

you. to Good hear

But almost third the of say and end as going I'd basis, [indiscernible] question 'XX, up 'XX as here the exiting in adjusted mean, quarter with quarter, how in you we really We are came this. volumes this we're quarter. 'XX. we just -- is X%. a I about kind to going at into talking the told what 'XX, we your this and little up our break toughest the there. thinking indicated I quarter, be quarter about think we're second of [indiscernible] got into we're I them second

in [indiscernible] in much QX. with So a thought line our here we less little last year pretty QX. a what in X% and get were We up easier little than

as the is X. a just there X know, is reason of the says. to It real -- recovery anybody So a we've out got range not minus linear. rate plus little than And tends really, that, for you be bit lumpier

better else's from ball the And no worse of occurs. than terms crystal our inflection standpoint, anybody in is our when or actual

We about elongated an customers have are recovery. that talking some

are in promotions going and have occur We about to that QX some customers are that drive volume. talking

XXX long-term head between a into there ability So our at things. out give basis those to balance XXX confidence [indiscernible] around it's growth. to 'XX medium- us as we to grow our of to X points put advertises

of year. not just this The get the course, off coming easier, first, of comps

X here that's almost pipeline. usually Chick-fil-A, like number robust updates very cup Examples today, and we've are another cups, gold and innovation noodles there's to a and we been packaging. deep there got the X out going So our point Point gave cold doing number thing [indiscernible] we to we're replace every that is the of and others one.

So we innovation. our grow know we'll with

well. what really because our third don't is work as ultimately, the us. growth customers into also make point They line they that that's don't have translates to then if grow need top that too telling And stocks I'd are volumes their

give can go So XXXX. we into those X really confidence us as things

high take confidence step And a will if time. that QX? a Now exactly over back not. of grow 'XX X-year period in really in Probably what's But you going to is again. to our happen

that a year of you we're step just at QX, back look the here grew X-year -- if high at the out XXX stack we're at years a X% midpoint on you our take put Now volumes points. target for there at the our and that to XXX X.X%. kind say This a if But this the basis into we we coming end of of year. [indiscernible] we X in for year, guide X%

put aspiration there'd be in that with So trajectory growth that in occurred. over the we But pleased we that Vision and the . business and and a overall expect we've like downs out knew long-term goal ups overall, we're XXXX, some the experienced that continue to very 'XX

Stephen Scherger

Steve, of it's I do got to a [indiscernible], Ghansham, you repeat sure right? just want just to bit make little it your

Ghansham Panjabi

on the EBITDA, at cost curious just and on was whatever price I this variances else on can you point. Yes. share

Stephen Scherger

will just out as to said. XXXX, you thank as want of a you the would some Bell kind to said, beneficial be to Mike No, I full what Yes. listen, look We there's look acquired thought that. mean, sure if the next we I make acquisition. that into that quarter. that's [indiscernible] I you expect for we have of the in We'll year year. P&L fourth just

modest a year. EBITDA So this

Just $XX of we $XX million million and EBITDA of synergy. of bought by way reminder,

probably the up year an from with that [indiscernible] incremental pick we'll along So next synergies.

think of $XX XXX to plus organic growth. sales basis that a So million of XXX [indiscernible] points as

As value or you know would at what we margins that generate. our be as above it perspective,

productivity have very should here. we And strong a

to less [indiscernible] that We [indiscernible] which certainly, return less was weather-related of to plan as downtime planned event substance, growth repeat. will don't we have and for market-related that we maintenance

get So X running benefits and expect to [indiscernible] [indiscernible] year, benefits levels. We'd those this are positive as very inflation little normal. bit a labor we that

operate committed cost environment, SBS, the environment to of operating band to we're XX% of just on obviously, a pretty year, benign if so we and can in very [indiscernible] mark on all the to very EBITDA thin we've a XX%, we And around you that [indiscernible] would in certainly, towards year inflationary And current as move XXXX. talked, related the the narrow $XX mark-to-market this company look range to price pricing out in we're we margins. expect as a pretty it

of gives to I We'll that some components. when you think, granular in the detailed we're you look the those together level. a more at of year guidance provided hopefully, points are, ahead. So you that obviously the in February provide and if kind But high

Operator

line next Roxland. ahead. Our Please Mike go the from comes of question

Michael Roxland

to that you Mike, your have congrats backdrop. despite the X there resets questions, number contract that on the a was years. particularly the need it America, Steve have over still duration [indiscernible] the out And On mentioned and you North which in way good be to think, meaningful of yet you last XX you that the X reflect call, months, quarter Melanie to mentioned, I prices. contracts next long there's phrased but to addressed XX higher

So could prior also trying is that on of just XXXX. just some And there EBITDA any year? all that? you XX% next be driving But is answered for to Steve drivers to the that size reason question the beneficial contract because growth way XX% us contracts. contracts, the wouldn't of Is I'm those drill on of help that all down resets

Stephen Scherger

Steve. it's Mike, And year. benefit next [indiscernible] Yes, drive

also don't we XX% negotiations having our and quarter, to time, coming that got contracts tend into the at your -- XX% and in are kind and we've to market put point, those we As due. talked discussions as we just the last on mark-to-mark or were of any of

those So the late this as guidance. that there articulating here [indiscernible] out, out some we'll those in those play are year play certainly if

appropriate continue for point, customers. value kind products customers engage producing long-term with have we and put to relationships many the with actively we that enjoyed to have But to the we're in our of of your that our

Michael Roxland

any improvement sequentially. whatever far yesterday on you thus that, Any there you Steve. appreciate XQ. just at far improvement all comments X follow-up. basically that it. know quick no October? And I report noted in Got thus I trends peer Has in been seeing you're have

any or in would I can you promotional thus in So what's order that be happened [indiscernible] commentary patterns think color terms October, provide around far helpful. of activity,

Stephen Scherger

a the with look it's October. And into Mike, X%. October, consistent Well, obviously with plus gotten minus or we've

it volumetrically improvement see We've are who got already. sequential we've got a do little quarter-to-quarter. others positive move said, longer. as taking customers a So expect And bit to seeing Mike we seeing are who

we're starting in who Mike yet mix some aren't QX. promotional as quite articulated Others it's happening. but so earlier, see seeing sequential see And customers of QX, improvement a materialize there we good are to can activity in

Operator

Our comes ahead. Staphos America. next George Bank question go of the line of from of Please

George Staphos

our know Good don't details. Thanks sure for when didn't been answering for everyone. we just I and question, I to everyone at but our a you hearing on phone is if that mark-to-market into hear morning. your wanted the cutting has out you before did, on And we at end. bit, Mike, Stephen, 'XX. you it, Because least questions. Hi, in if pricing make did Ghansham's put see you're out that get least

Stephen Scherger

let $XX benign. Ghansham's experiencing it's a obviously, if roughly mark-to-market got technical million Roxland in apologies we've pure Yes, Mike as that mentioned, just always And Steve. on just with did inflation, what about and where price conditions replying challenges And if that you involved they're got little customer in down other George, negotiations it's terms our at we've you and we're they're sequentially improving negotiations. happening year-over-year. indicate here. impact do we the And look our year-over-year, me on so question, if some But is very cost, pretty just price

hopefully, cut Did may in work, that to response think were George? that have you I so get And anything able that to out. that

George Staphos

That's modeling [indiscernible], where were perfect. for kind doing actually, And -- of we that's that. thank you

very here questions quickly. X So

bio Or cup from coating? 'XX kind a do you handle markets, tonnage do expect that? related and noodle coating you and and that that First of is the in is that for maybe how of 'XX for and those The will terms think market all, of cup coding what poly is that you markets? in opportunity what you a maybe

prior benefit that. near we year, labor is was we The What is other this And and a given sort again, than free noticed then cash that? and were -- performance the bit backdrop, your of that and year running hotter just term, question came away want down guide. factors take a this from in good little little don't guide mentioned the you the the flow bit to

Michael Doss

handle I'll within look take I'll and $XX-plus at and our and is it cups the addressable market, billion the $X what capital, the reality But then addressable segment containers. and out there that market working Steve of there's total questions on it, first part if let in you we of particular. a there, we that, billion call put George, of that's

that's So really that is. where

it's And to that opportunity big on so a years . and work come. very we for can us X for

In fact, the pulper cups. vast ability and drum polyethylene we Waco, talked majority coating about recycle as of and our that, inside, cups, cleam down, the on advantage will a including what of fiber put the back the really up With to paper [indiscernible] there, inside. be new polyethylene [indiscernible] our is process And wire. take about, cups with has of on can those those coating we up, we're some million form them or be of fiber those excited to the vertical we'll barrier first XX we're that to will that we installing top today. take the It cups

able to So a the do that plan. That's radius Kalamazoo within we're and with able to can capability about expect to well. as we'll of in our eventually, that working XXX-mile mill that you customers have be our be

So we feel ... like

George Staphos

you tons think year, Could that market customers? new new next do be XX,XXX is I'm this sorry.

Michael Doss

can I I fully going up put to tonnage transition a mean, tell not this don't that I you know. now. there [indiscernible]. We're number right

that come mean [indiscernible] forward. I So numbers

the are like out some which, our it get Chick-fil-A we'll X.X of of pivot coated and medium looks what cup right other to you manufacturing kind trajectory expect conversions tons make able stock, tons, of there. about depends But now and to XXX,XXX out as pretty tons. So know, be a million it's on the that George, to over SBS the we that into roughly of more strong term, split then XXX,XXX

So something we our integrate every sell operation. own a that we into time cup is

Stephen Scherger

all get [indiscernible]? you . Did that

George Staphos

. Yes, And that's on perfect. the variance

Stephen Scherger

doing flow, Really we on we're running true things. [indiscernible] on that and to Yes. a make dialing we're our in And inventory customers. servicing make make, you sure really that were continue just products just want saying, just couple going me We're let working the demand, to we cash know, of need okay, to customers, that carry all as very touch service we're capital. to to and much we

flow. we dialing cash really were So just in that

I leverage on ratio, about we've saw up modeling also the acquiring in that some when to range. put also that had X.Xx got we've you we we Bell that as the X.X shared you as [indiscernible] we with mentioned, to in remind the been will excluded folks because talked be X.X shares guidance. We X.X

gives sense we're that they generating look with hopefully, the as And well cash make a So to it growth. we're itself we sure you -- for real pleased servicing where customers XXXX, flow. we're into towards sets as return

Operator

[Operator Instructions].

Goldman Sachs. Our next question Samuelson comes from the Adam of line of

Adam Samuelson

what quarter, first Steve, to. up in the it mix guess talk -- you're of to on wanted or slides. the I taking was same about to and Thank the the down like question, that just the in organic Yes. X% fourth slides clarify plus talking fourth thing was just the to you. quarter, thing about volume sounded kind same same we're the seeing talking the about make I make hearing sure I year, I up sure

Stephen Scherger

No, Yes. X issues. X% No, plus the and midpoint. maybe to Adam, something lost got some QX, of for clarity with is X%, minus we're the saying at there what that technical so

And so we've quarters. seen over X see minus last improvement that the over the we will X sequential

out as of playing X October plus the ]X is and consistent [ was look it so that with minus we towards fourth kind And itself quarter.

Adam Samuelson

optimistic can the about of you recycled offering you applications. that a in of if Okay. volumes do commercialization [indiscernible] bunch of opportunities and from and perspective Board from a away kind How into how that and think be that that [indiscernible] No, bridge? board that next a into switched we these in that, products that's helpful. And can the our of for talked unlock -- year, then think as on calls about moving been can CRB-based quality new about we think about 'XX should meaningful that about margin type the the you've what and

Michael Doss

what Yes, is our 'XX, encouraged actually longer a I which it's than is you great. play I'm about I'd we really is QX, will the tell just Adam, customer quarter. extremely think sale shift here that in first It had high. that really fact interest the in

and got we as expect, on have continue going its a calls. you'd underway to lot interest, trials given many prior as have of characteristics We described

with Waco So know, 'XX us and confidence end really able out gives as that to business that couple got, we doing that thousand That's we 'XX around grade be the the got we expect is grow in what adding to will some as get it grow. you up at of look things we're a as the we've that have this that mailer we new work CRB. all our tons of of work into from going And hundred and the does we're trial Bell, we going. that with we're

We've of got up we're of the Kalamazoo. are demand, making all growth, on. that in great. We're weeks chance couple building really And So and spot. was It's there nice ago optimized Waco. I tour schedule. a coming site. to got out really a on It's along on the got we machine that sure that that focused show take when going we've start advantage of we've will that XXX,XXX the tons efforts on here a

Adam Samuelson

I'll Okay. color, pass that I appreciate on.

Operator

Viswanathan next comes Our go of RBC from Arun ahead. Please Capital. question

Arun Viswanathan

around volume. I guess first question

inventories reductions your you were take interest there? that you both that going the level is we've any noticed at this ongoing? to comments had would X as have consider What year. reducing seen, some customers as And in retail areas level. think I maybe rate you made environment similarly, is do just prior And then the of those well things should I really call, high mean given inflation brand expect get really it that reductions those as materialize again? to do structural the you and the that next that

So maybe we'll that. with start

Michael Doss

first Yes, Steve commentary I'll he's cut and it, got. that any then can add at Arun, take the

pricing second and played on view of industry second little our referencing there what kind quarter, you're and a was really, phenomenon Ghansham, rearview destocking We're of selling. now, having third. dealing We products about that top else with on what line more our into than some question. our with QX quarter with in customers to That's look, think, as of I in the his now. sales the of I started of with bit right impact destocking are the an some hit that about talked talked we probably elasticities our mirror out anything end and largely call

don't of sense. lot a that America see we yet, and makes down, in North it Trading

If less than here. think still have unemployment we it, you X% about

actually So sales wants from anybody That's volume grew And a they a have the standpoint, a from quarter. in organically foodservice why Mobility up really it our is course, standpoint. job, job. net of almost business that a high. was X%

So that's solid.

expect, pressures which trading in we're to able well given inflationary of there, have. and Europe, the you'd the be to positioned they're we're handle down we that anywhere, If with seeing portfolio it's that seeing, business too, that

Arun Viswanathan

pricing. that that maybe topic I another reduction normalization we've on know these then of any all customers. And be, was follow-on about expect just reductions just seen front? then year. that have the from Is was side SBS a curious on next a carton folding Okay. in just activity grades. would or pricing increased some more was promotional And the price Do seen kind that I you of there some we of an

So the maybe well as pricing as address environment. the you environment . just can promotional

Michael Doss

Yes.

the customers have their said, said right that as doing it's lumpy. expect side a things, around elongated -- are and an they're some it's protecting of of promotional more of recovery. mean pricing I more a I of and bit some now So

bit earlier. customers as as I their most have a told of grow of want to next commented volumes I mixed expect our year, us bag it's they a there. So

to in expect available to to do ability XXX figure I'd to usually ways And think this room points that this different and I any comes gives that. that time. form them basis do out us don't to year promotions or next our they've will got a be the different too. merchandising options grow XXX So what in of us, That's confidence they

is down In CUK ton. have and SBS pricing, $XX CRB that's this regards you total down decoded. year. to mentioned moved folding the $XX a That in

is as our of prognosticate not light we're what are know. that are X SBS. So that actually actually happened would And call. businesses CRB, The summary you of CUK was was at I for X that the overall and substrates it And a us, cup you what of highly [indiscernible] tell XX%, as expect, Packaging, which to here integrated our of those in mean the But our those our that was slides, going that being would all we saw were I on we you of down XX% X stock, as we pretty around has that in operate in to assets too. plan the forward complete our at you Graphic match pricing and would XXXX. supply chose be operating a demand, here, good. rates pricing to be on would case, X terms manufacture, around going really

a buying and of run think Because on back we last geographies what's globally years, and CUK If from of of to export we you terms take paperboard tonnes operation Europe the going we our adjustments efficiencies as business well now to own those have over in step our that our service demand about that couple the see place, New were and there, integrate different really taken and into in customers. additional of some tons Zealand. some as more to of to Australia the some and can all

on And the side. helps so that really us CUK

produce a days. in now being Kalamazoo our have X with and significant both we it but on did from outage in our quarter, didn't down to actually CRB, very And dump third machine X machines paper the ranging KX annual

in have, days and QX, XXXX our And as mid-XXs. that service our expect we we that mills our and out, factor running well. to case Middletown in the to we're the Angus actually XX% East Kalamazoo, you wide X the CRB we into as go open business was on X system, be If to

our business, solid standpoint, business. quarter in a volume organically as and we stock, about, with the a that's Chick-fil-A talked very XX%. like foodservice and overall grew which over from our [indiscernible] things Cup It's integrated, highly

that our chronicled. coated coated So need to run ] I we of XXX,XXX been in case, the [ well of business. gave about the that But SBS $XXX,XXX high-level a for XXX,XXX our is challenge math tonnes numbers, on has tons cup, George, our

market So Graphic for of XXX,XXX portion it the open is tons.

our of it's So overall XX% That's it. volume. about

to we're side. find out plastic ways And grow of transitions business, continue we're fiber grow to on ultimately cup capacity the continue as and service earlier, and I've to as stated that to our trying to customers foam going to need these

usually should profile, some is of overall to So the think about you pricing. tied I demand that's how level which think

Operator

Our question from the comes from go ahead. James. Matt next Please line Roberts of Raymond .

Matthew Roberts

with how assumptions of seems of in regard some you're played to permanently what question timing are that and KX of you And XXXX. or expectations? initial Middletown the in Wako? initial Angus the versus machine plan while consistent My East scenarios quarter, your you discuss out ahead out shutting in the Can the on closing timing of considering the laid that the

Michael Doss

our take standpoint, of And mean do so and I question the plan KX our down could question. always we I appreciate The customers. facility. from care when to our shut our was was

and June exceeding And so were able of on our we quality, to with that KX terms do the XX. expectations of productivity and ramp-up in

just And run mentioned, timing was care and of I the to business good. our take mills have. that need to assets remaining we well that So we as

shutting times do to business mills of to running, because on to simply on plan side. Waco just need facility any we we're so the CRB the going And those not and prior . our our service down up

Stephen Scherger

step a last Yes. And a How XXX,XXX for of if the our shared we've those X there years. is since need got at We Matt, of and slides, I mean, as different, just XXX,XXX but CRB. XXXX grown we tons. we've kind the this of you it out the on really demand tons out that, on X% couple we to course, of described. little played back got and we've in tons CAGR over expand

to the because And solutions. strong CRB planned taking, so global with original outages outcome platform and very our mentioned, But applies repeating commitments a for demand of mentioned we'll there's full, to same Mike of appropriate. as just where our relative maintenance [indiscernible] something continue typical there the I run real CUK course,

Matthew Roberts

if Steve sense. makes longer-term like That A announced thinking to and supply citing on here. Mike I seems could maybe conversion market competitor softness. follow about delaying [indiscernible] Right. that, it they're the

supply that so, longer-term So and changed your [indiscernible] how has through estimate action beyond? If XXXX industry

Michael Doss

which the all the they're weakest FBB the of seeing margin, where what to describing, exactly is grades. the on is think was I going I done just side, compete SBS the got on coated

can take going our causing incredibly CRB. SBS actually our and out the XX% We're pause. for business. Western have So case, of to that cup shifting competitive integrated. In In our lowest we some as the is to a business, integrated them CUK highly growing probably platform we're coated and over Hemisphere, stock cost

together. we're we're to race a that dollars terms it capital of going different where So in just how isn't to emphasis. running place we're our putting And spend our

a good see sell We want And actually return company. make allocate to to we earn paper cup. us we'll sell We're the you'll grades that's our can carton. for We a packaging how investors. capital. a where a of And want our

Stephen Scherger

if you've bring take levels I'm now the capacity that that perspective, capacity back to Canton a the that up to conversion has through. and that fully Obviously, capacity mean in project roll through very here little a some incremental a and assume are long-term kind there's X were they capacity. limited delay the down, some referencing capacity will Mike's market. there's you you just that being competitor some [indiscernible] SBS. Matt, closed happening our of step the support And mill point, on sure market. to in is into the I inventory of playing we from managed was coming And bit incremental themselves add actually underway Yes. growth. There's with then reductions that time had are to is on the out

X time that or So over to X any actual all not X other across look out the may modest years, the next knowing decisions lines someone substrates, additions very for capacity time. may make over if you

Operator

next comes ahead. Seaport of Weintraub Our Research Please from the of question go line Mark Partners.

Mark Weintraub

get bit everything. Ghansham's I of apologize, when didn't And I had There a questions. you're quite static answering been

on framework [indiscernible]. the of some review bridging quickly to wanted just I So

I baseline. $XX EBITDA basis was and of think your Bell to positive mentioned synergies million being XXX points you about including then XXX kind

-- historically, labor give lost productivity specifics used much of too X sort year? a -- I a So sort that out apologize, you of of on didn't be I hear . I for next I those to and versus did those hear Did netting on wash. the -- bit

Stephen Scherger

Yes. Why a don't I was that. given like with there it problem sounds

you the it just kind the What you back we the repeat have that of context front, indicated articulated, answer positive on of me was to Let you, just as whole Mark, just playing that so for again. be but the Bell you sales probably in basis points our on growth. incremental earn combination we we'll synergies again, year, range, a an acquired XXX plus to million XXX the business $XX the next will positive organic of

$XXX if $XXX of price basis. a on is million assume to counterbalance we'll top to So bit that. mark-to-market actually million a the line on growth, That you a of cost earn relationship

executed we've last net known headwind just offsetting all about years. next would productivity the year. . And to significant an So the then very million our over pricing price X $XX strong probably be actions, expect that on we

a XXXX we event in occurred for in And to less market-related return as less We that have the planned won't maintenance growth. downtime weather-related will downtime. quarter. first We plan

more towards would as probably that towards And that so it we fully offset and range. to $XXX our expect back labor benefits million inflation normalizes

so themselves playing were that out see Mark, XXXX. those the components, we would And in

and different it are in XX% expect range repeating it, But we're be that that this to range, terms pluses of on minuses. a operate some the year. will executing a tight of range, than EBITDA around also year XXXX So a that in is in margins tight we

Mark Weintraub

talking and just how lastly, et then I were cetera. from And a And Great. I about resets, you clear. were think, [indiscernible] there follow-up, Mike, quite Okay.

resets the of bias the determined? a question on is that necessarily to it's to is . positive, Or the and So magnitude? be

Stephen Scherger

Mark. This is Steve,

those if the positive, some obviously, the renegotiating because to increases someone the be been to what And couple know, undertaking under the on because them. done don't executed until has because generally is may have of we're bias for contract on course, we've quite of that. And continue not that moving executed on full look time and Our beyond that those that's it or net might we're X model we we've seen been don't we be outlook I And successful XXXX. reasons would to you'd expected price favorable as were them. there's you've Mike, last we've of of negotiations resets you, we anything you on out expect as the we what for embark repeating would have if of years. renegotiate to successfully until add from as the they earlier,

Michael Doss

No, . I think it you said well

Mark Weintraub

Got SBS you've on. just kind it. shifting top carton mean over Totally the of Very understand to I time. at folding you already hitting lastly, of cup helpful. maybe are and of stock been some over And the XX%. operating idea

be needs Can So coded to and is that I what make just so in is would guess the it there's prior better give you to that it gets of alluded year, improved comments? that And -- of running kind part to is that selling it what full next also us more opportunity happen were the you expecting in business? you'd for productivity that that market get market better, as that board. that if

Michael Doss

Yes.

demand things. a up. pick of X variety We different that obviously really where And to it's happen. So need there's verticals could

as historically side of the coated that the has of paperboard. On SBS, used of you stuff, been more know, some high-end that kind for

supply sales. pick costs. operate if I under how absorbed And that going on did match been actually mean, we to we're to . do works the that yes, if only we But exactly to it going that. the able have we're orders fixed if itself match and up inerts that's it here, would the that to here and earn we'd our as about our has those that's our approach So be we and demand quarter. talked ultimately, But we're -- what we in we had mill.

Stephen Scherger

the And Mark, SBS folding least integrated. fragmented, as cartons, Yes. specific to is so you that global grade know, most Mike's most point,

of which buy, you out, that plays rolling return We're sell, supply XX%. And get XXXX, as an speaks should pattern last and And over towards be so depth think it normal to it was the overproduction if so a out the more the when to value it volumes your the to of into demand. more little all will, plays with down, there point, you magnitude down obviously that of I when given that year, there you go to of into matching normalized is, XXXX. there does whether a creation our

Operator

from Our Anthony Citi. line Pettinari next go question comes the Please of ahead. of

Anthony Pettinari

grocery you any was down, but wondering I . vol/mix you markets organic as comps. separately, think, a easier headwind. shift then maybe I did it talk just I think I top mix year-over-year, saw about guess, And expect X% XQ XQ, to similarly during Is end Foodservice if you in line those volumes they in quarter? saw the could on XQ? reasonable net X% outperformed was could perform in

Stephen Scherger

Steve. Anthony, it's Yes,

think you're the is describing which that all I were the paperboard down sales, year-over-year. there open differential market

So we outlined on net sales performance. that the third quarter

little open got sales market You've a over down $XXX million.

So and sell find that's acceptable. have paperboard consistent into us market demand, matching producing supply orders and where we the only we pricing we at that open that

that's so really point the And there.

as we sales, make package. know, organic The you described when is an as end on consumer it we've

you. it that so And kind out breaks of for hopefully,

Anthony Pettinari

the XQ? Got to mean, grocery, XQ then maybe it. it. play similarly foodservice I versus out you Got And would think

Stephen Scherger

Yes.

win, the to I and said fiber-based shared winning. has the you, think articulating. is think yes, we've just is continues drive-thru and the all I it relationship will were be better through But as sequentially probably, as we Mike with packaging drive-thru

was business year-over-year. improvement And outcome modestly the organically of so in up of our as overall, been It X% the a actually which was part has quarter, very favorable performance the Foodservice good.

to to good they want them also through So there mostly drive-thru. there's momentum as are and that to delivered mobile, be want the products consumers effectively have

momentum very that articulated well innovation the is And activity think by then I Chick-fil-A you we to others. and it's here there as like the So strong. supported

Anthony Pettinari

or wondering And space using mix kind impact level of any shifting have maybe products more around or and your or in or initial lot you buying high if their anecdotes less GLP-X long-term that if how of CPG just helpful. GLP-X shifting packaging I'm business of thoughts foodservice There That's questions gears. consumers provide of you potential this if Okay. or then on had been for? the a drugs. any or impact could

Michael Doss

Yes.

So gotten because said know a done they think yet. impact, and they releases they lot on the innovate on ask many be Anthony, -- of can this that if customers business. questions over even actually weeks, they've of don't expect you it. And an that they've of been really it's a drug, early our perhaps have of all And can the this to and terms have having we them commented in many be have several to said anticipate their questions watching I on last of said, all, couple But you've lot it. of area don't if and that, behind it their much that an at days

or seen gives points and rates to over plays organic long to that we've pause medium to to we're think, just relative time, going out. ability all it to term. the over out So wait read basis plays I how there's that growth have see there of XXX and what us adoption are to XXX nothing But drive how the our volume our

Operator

Phil Our line Ng next the of comes of question Jefferies. from

Philip Ng

here. Appreciate squeezing me in

you've you having open broadly through be impact [indiscernible] of just curious out, the through imports, How tons around to mean you any seems in RESI on I'm organic stripped do volume under that up the see Midwest? the the on obviously your more if to seen trends tons have number. how October small SPS pressure. I that since sales an and comments to your at given And you, way least are a of net you've market dialing . nonintegrated certainly, progressing Sorry this. quite harp color kind its some little and year? maybe more for be but on And making more and impact seems progressed

Michael Doss

with continue That's we're rate for open on coated graphic that. the way we're side, operate do would I particularly business. we terms XX% matching relative dealing think to we'll supply plan as And our to the the our our in demand. SBS how is seen and the market, operating of you've the

and I've you our CUK already are cup businesses, integrated. and strong told those business, uncoated highly CRB

solid I'd that to Our be And case, continue some growth. as there. particularly operating get are we expect rates to the

like particularly to it you there's great how the from question around I and I it's recent of a imports. X coming. Europe. relative they most some wave Yes. trade And mean on a sounds talk Western coming When imports, interested was read journals the about CRP

in and last look terms our back X couple X census a the market. So data. year years. went team it XX,XXX We tons like. of million-ton years looked It's less the like It's pulled of or Bill, back a all X%. what for a

Xx you surprising it's And little is what's almost $XX to North So the we're America. MMBtu. [indiscernible] got, a as you of most there almost maybe in And almost the the on United Xx. a CRB, States of biggest we're the get me it that from every container [indiscernible] just go we're marketplace, to producer more lowest-cost expensive compare more it's even amount we the getting today, bit, out an Europe we're on CRB to producer Europe from because if that and even And Europe, build see than to to is it in against know, day, don't and coated bigger. that expensive,

plan. And be doing it, of and over cycle able thought material a buy selling ourselves Europe so good Because just in over long-term that. to not. be where the tons economically we're was We'd to do CRB isn't XXX,XXX to it we we profitable

the maybe stuff margin the really and around numbers, a hype. But out gets some airplay. there's at when So you doesn't it the data It there. lot look the of support

Philip Ng

you And cost holding but work price able then great kind just match is business through on ability color. up term all to That's Appreciating kind the how of maybe there? as in . since your the medium this, helpful. you're Europe, That's up to you're well? side, converting Okay. of brought curious your

Michael Doss

you've And strategy there buyers maybe, Europe largest paperboard doing look well, little -- words if the in now are in -- in it, working what in how to already where great we're the substantially in you right as softer, States. of puts business I'll spot a similar us and X we've Our here. were overall word at tell of our the got a a those nonintegrated where that is Europe, couple of markets a you mentioned And volumes we're bit United a there.

beverage continue as grow very long business. our And so to we're buying paperboard for market able CUK time a and effectively. export have We're profitably that we to our into

Steve to it business nonintegrated you there, the when capital and up I in So having tied and as it, European line look a we talk business. don't drive really revenue about lot, at much over our a have

and So X of in is Europe when another. invested you on at return on North compare which our integrated, obviously heavily look they're capital own our to paperboard, America, top

actually good shareholders. strategy So is our for results delivering overall

Operator

Wells last Securities. comes from question Fargo Gabe ahead. the of Please Our line go of Hajde

Gabe Hajde

healthy have X be this Mike, about X balanced I market. about a time express weeks, into there guys sort talked as to what don't seasonality. And just Steve. the backlogs. had question that you'd number. you taking curious, anything being of the Is know historically a for unique guys different end I probably necessarily low way, account consider I the about of speaking, you it think this to towards of I'm year, but

You I the Nissin, that think, I adoption. full associated called appreciate out XX,XXX tons with would that and be was,

thinking more So about Chick-fil-A.

identified fill me backlog of a into that for I'm sort I think products. XX,XXX opportunity. you've an Is that in those there associated 'XX with anything ton if correct And inaccurate. as maybe number X pipeline

in number would backlog materially today? of taking seasonality? we're you're Again, sort change to just into see then that expect from at where talking account And when February, you

Michael Doss

talked those directionally least full operating and be, to would got In correct you're downtime about you demand. what we're the talking for the rates your accurate of taking think first. match and take now step I -- backlog, numbers conversion regards I to adoption answer about to they're your part modeling. think you and back question about Well, at a rates supply second when some are mean overall relative I'll to of

are to that downtime them the take. on whatever amount be because So of be you they artificial backlogs, want quite based frankly, you can

that is that's X the more the the here, we've as the us challenges already of of those. point we coated reasons of try -- germane SBS very X for articulate chronicled. X we're biggest out X So the to is Gabe, It's substrates, for on the got busy it's

get That X, X, both. the coated won't up And So I overly matters SBS particularly whether hung around side, weeks. we're right now, it's X, not. X when on you're running

out our is XXX to CUK so on that in those as And is there already development tons the and tons and many operating those where QX XXXX overall because side. what watch other buy that I that's see rates going mentioned the internationally we're watch here growth no really grow thing points, And longer come. as looks into we like to XXX basis and I'd

So that to will help some . drive back that of actually

Stephen Scherger

has Yes, Gabe, company, of as the back. the articulating, just that appropriate was well under the of just it's in headwinds, got rounded I the which mean XX% well playing market, XX% under kind just you carton open we've company. Mike and folding of SBS fundamentally

organic to we've of we'll got so here good company return on percent and been earn that's this an you've XX-plus volume you morning of growth sales XXXX. in articulating a that expectation And to as functioning with the

Gabe Hajde

half $XX the notes, into appreciate it of of bridging sort additional The If my quick. correct free last one, I flow about million real had my gentlemen. I in [indiscernible] could cash or squeeze model that, if you Okay. of last is number. XXXX second this

So know -- don't versus that like HX on I'm front assuming what I relationship the IC looks XXXX.

$XXX Just this And put you million sort helping use bridge. on flow million, a second of, $XXX curious the of to point really, it, all? capital the Are year? assuming some half again, component if then cash at our call working that's finer

Stephen Scherger

Steve. it's Gabe,

the component, similar. incentive is year-over-year On the very compensation first

or tailwind. So not there's a there anything that headwind is a

the XX% to number it's of all working and levels, on demand. cash get exact XX%, we be midpoint we the don't the year the inventory in front our do do of But to to the dial supply to yes, end guide. So pretty have on to run consistent there as capital, will in kind where it's want me. all I of some to of capital use meet working where front we in want

your on pension where are. the knowing sure expenses, use I'm taxes expenses, So model where interest where

a You may on light taxes. little be

taxpayer. up that. U.S. We're cash do taxes as we right are moving on Our a cash year the to this become

end some But leverage cash a end Bell. detail we we'll midpoint $XXX after company is our of going pro our to that's the going generate forma. year. So It's the It's way, I of to of as the that the for modeling next to provide spending key real at year not leverage is we're work calculation. lower the raw of million And think more flow, kind the range. that the by through [indiscernible] and leverage

Operator

additional questions Mike at for the [indiscernible] time, the no are back There to Doss like CEO, President I'd hand to closing remarks. this call and

Michael Doss

February to New we I want for the to technical experience on you call on those York to Event in all all talking the look if thank of us your joining And at apologize today. you City. forward in of We you for difficulties end. Investor our

So safe Happy day I . and today. a hope great everybody fall has Halloween. a

Operator

and Ladies Earnings Call. gentlemen, Packaging of the Quarter a for Have thank your day. rest Graphic you great joining Third XXXX

You your may lines. disconnect now

Graphic Packaging Holding (GPK) 31 Oct 232023 Q3 Earnings call transcript