GPK - Earnings call transcript Q1 2024 | Graphic Packaging Holding Company

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Operator

Good morning or good afternoon, and welcome to the Graphic Packaging First Quarter 20204 Earnings Call. My name is Adam, and I will be your operator today. [Operator Instructions] I will now hand the call to Melanie Skijus to begin. Melanie, please go ahead when you are ready.

Melanie Skijus

Good morning, and welcome to Graphic Packaging Holding Company's First Quarter 2024 Earnings Call.

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

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

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

Michael Doss

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

X more joined for portfolio consistent well Graphic leader building of our aware, in are a February to solid the transformation results, stronger, packaging and delivering Packaging's sustainable those us spent last We flow. growth consumer a packaging in As advanced. diverse Investor is cash consumer Day who more years capable global substantial

shift, patterns to in balance on During continue as moved and consumer quarter, that portfolio was the purchasing strength the first full display with the we them.

partner that year the to our in paperboard full deliver sales sustainable facility the of bleach impact are positive prefer. certain manufacturing as in to packaging and XXXX customers excluding And expect we the seeing markets solutions we growth We volume consumers customer with improvement categories. sale, Augusta generate

$X.XX. sales with a was Adjusted $X.X and billion. were was Packaging first results. start Graphic adjusted $XXX the EPS brief million EBITDA Let's quarter, In of overview

the function all was the As the sales EBITDA decline Steve down essentially strength timing the a adjusted margin biggest the paperboard of decision, to to of and accounted of reduce later of XX.X% at of production our demand. fewer and points that of bleach will our context Holiday In discuss decision X% decline for part delivered. shipping an demonstrates portfolio the and about the days sales decline. EBITDA basis outstanding strong team just and result execution XX our is of match

consumer X. our we At Turning have introduced better Day are become. we that Slide February, that to sustainable ambitious in packaging Investor aligned with targets leader the

I if presentation an us. find paperboard February, can bleach of and you a to to Clearwater you Investor Augusta website, Paper. able replay You to weren't listen our to Relations sell we encourage each facility join agreement on announced the manufacturing in Also

to have a that market source for the part tomorrow, earnings been business. of close volatility will us point, sale of We sales, historically May At expect that open which a paperboard X. be significant small very

valuable machine it the and have to the was not at our and Steve and synergies further to line will operations. project recycled in and but making. team to what The paperboard, we only visited pleased That our creates identical we training our competitive reduces supporting progress ago, Turning also a nearly increase real the manufacturing systems Kalamazoo a of in the there and paperboard strategic Waco am I weeks significantly facility. decision costs, recycled engineering advantage site made I decision facility our shortens time and Waco recycled with couple is system. be paperboard

Start. Waco prior could step Kalamazoo KX our to from to Kalamazoo teammates many into train job operator plan the operation an Waco fact, almost and Waco, same our at In immediately we of at

collect paper were from our facilities We in also well plans fiber source $X high-value as as have another the numerous Kalamazoo taking facility. radius facilities fiber advantage in investment competitive around will across advantage, in Waco Waco costs, we wood a within high-value the to Waco manufacturing region. We see Meanwhile, utilize America. billion packaging a long-term already scrap all progressing as the paperboard North of our

consumer in diverse results A categories allowing deliver the and and stronger solutions really consumer beverage as and results household to consumer, portfolio service weaker strength packaging in broad of helping does with continued in our evident purchasing that volumes, offset and sustainable change products. certain consistent to first food move patterns conditions economic food results even us quarter was with

Some gains saw private of with some we of inflation consumers the products, our combined offset in build team grocery one our the were have market what in channel. to the to and of shifting is diversity we and to weakness agility another with by to channel to club portfolio, is product able with in offset in responded declines the the label and The working. we intended or exactly execution strength strength it

pockets contributions growth volume second follow expect see those in see a We delivered who of But all of year-over-year ramping across million you do anticipate the many innovation household volumes for product to in our the of ] product Within growth Novet sluggish is and half platforms. markets, consumer improve in our food material the further staple growth in up and remain and with growth. broader of with quarter X quarter wins we a acceleration across I return categories, did [ $XX innovation volumes across products, consumer customers' first innovation new launch second sales to businesses.

phone ] plastic. contributions Noodles The replacing our and as these Key [ in replacing well from Cup [ canister [indiscernible] are audio solutions. Cup instances Nissin new paperboard while as is came Chick-fil-A ], our cups audio

robust. for we is customer confident of will sales launches, don't And our we growth the timing product pipeline I'm while innovation that the innovation control Our X% meet year. target

of with our We behind. broad become. beverage the markets category our five how service not Slide X growing a largest, portfolio next packaging is far reminder serve food has and food

beauty our portfolio taken products have opportunities and into new growth capabilities into consistency. new markets, us further health enhancing entry provide in and investments further Our balance household and the

on go right sales chart versus this did into we with if reported results little you Let's days, we be sideways. be the the performance sales a want adjust arrow don't sales to at the adjust because the X. the bottom deeper We able for arrows aim our see Slide would total to to

Our days adjusted consumer packaging were sales overall about X%. down

years moment strength As offset quarter, because the in we with weaknesses in the our reflect that fourth want markets do to Augusta. portfolio that. on take to some X I couldn't of ago, in a

allows our more a consistent too across geographies a wide of handful our economic is to results much to of concentrated. conditions. was Our and consumer us diversified range portfolio deliver was across too narrow, customers and Today, this portfolio better exposure customers markets,

both and results us. of drinks Foods foods with in frozen for business. bakery results the marking Americas both in showed the first items. were international and saw quarter a including some international categories in markets. rebound the the dry results strong our fewer Beverage even and beer service Americas some were There We foods, and modest Food days. bright shipping with and quarter soft consecutive impact growth saw of across in both too, prepared year-over-year weaker weakness in we lights improvement pizza cereal saw like ninth strong,

strong for As comps and you've lower price and from market. is heard paperboard XXX third declaration ] me say healthy [ a party's of the removed degrees before, consistently reality

accurate as eliminate same Our and transparent customers customer the thing indices our third-party plan price from time. change want pricing. we ultimately contracts We to a over want mechanism

Turning for products. to packaging household everyday

attractive Health brands. leading growth cleansers. declines seen in beauty's market in and have in the and of five opportunities. home local growth categories our smallest care this We offset frame many of Europe, in tissue, where supply pet markets, our current soaps is offers in by some Most very we and air but filter of business the

of the saw Rainier that been are served side a paperboard opened [indiscernible] recycled future, we beauty a to customer time you almost in where if paperboard. some differ a will as Americas, results health the from our we engagement a QX, opportunities exclusively markets currently of Yet are new offsetting in look pockets we portfolio strength and there's our expectations. the As results on that center I customers, pay little sales our and more optimistic our with improve the progresses. with they across whole want has range by on improvement markets. year here pullback our these XXX% with up in high broadly of care level spend to With

so couple while top differences they persistent. pickup there at warmer typical aren't this a and If are matter there most join Again, they Americas summary the in And Food is we but more second are a are third. modest you. months drink colder you me our and weather quarter on X, to if much chart are they seasonality years percent, months. of the drier example, businesses, these seasonal. at a surprise aren't some the is between sales, of and real and a those markets. in won't the five in People won't huge, tend separately. International chart probably change looked the seasonality But less our markets in seasonality in across especially [indiscernible] for Slide page of of

be but parts colder to the somewhat tends to of both be than the quarter, third stronger the stronger quarter than Second year. tend

pronounced selling our we first function quarterly the the part a quarter during and season. variation five markets, colder which home mostly positive the the after of our as any beverage into of up well the is has move us at setting strongest So meals most eating of holidays. performance winter seasonal of more Foodservice months consumers is

strong what's is we typically to third the the had quarter that bringing the real value. driving So the fact in for that and we market the results are a row, have weakest year innovation confirming

are tends the the the a month. Friday best [ extra had month, usually timing U.S. in extra slower on month like February and even to product March negatively for quarter, if adjust nearly Europe. impacting shorter be really much good which One sales an is is haven't of we particularly a holding or Easter and quarter. results now, particular Gold this can of drivers. past But the shape both and hand, and Right Cup is the always other the but the year, X Marks day in with weekend, is in a talked growth our February about the new in introductions ] we thing the that, Chick-fil-A important degree month

reports prepared time us. options. customers, ahead, that a consumers of for pickup with tends that sites support less prepare consistent correlate return and are food at they on to meal are to we with convenience good beverage office the in is meals have the hear from value they Meanwhile, and tend impact to Looking as foods, what inflation and home more higher price at-home more which feeling focused consumption, and consumers to our on-the-go

patterns. order our We are in beginning to see that

to let's Now innovation. turn

or and single-use customers X innovator, capabilities, years from and better with restrictions our and reminder Slide ago our a as already with presentation, it other [ a I Canterbury including market figures passed in have the investments materials very of on new dramatically packaging will partner Europe's well in regulation week, highlighted packaging. that range few customers the execution our new Investor industry. here Day to will reshape called market best our in solution a to Investor plastic where of positioned Those packaging significant Day comply European comes we the at We regulations. included packaging very have be is, and about how of Union us that a need packaging and deliver acquisition to significant new talked our PPWR just packaging packaging a containers. the European consumer will investments with and and our PPWR ] soon. solution opportunities AR new commercialized PPWR represent potential the innovation big growth waste the Last consumer

exciting team I innovations growth. one European to innovation sales contributed Slide to highlight X, our On more the our want from

for the Our developed developed for canister package, announced first We gum week, and Boardio recently for customer. a then specifically Last a coffee. partnership paperboard French was formula third-generation more infant we label private package to canister Mother in the time bring with a adapted candy paperboard Mother coffee the through mass Parker large for the United first to States. coffee our Boardio brands market the largest Parker, coffee U.S. retailers. supplier and will

growing coffee really penetration the the audio of proposition. demonstrates market Our value

For space. customers, warehouse reduces transportation our and Boardio

the pressure and Boardio by has belt leading half roughly Meanwhile, be our for of reduces and degassing coffee plastic been coffee authorities. longer. to by our verified recyclable container keeps recycling two integrated

keeps So consumers attractive be and an that package get tossed with of your recyclables. as coffee the pressure the built-in convenient can in a rest new lid

X, Slide want we we to I aspire moment Finally, Steve, to that spend on before I just who and a summarizes the accomplish. over define which turn pillars to it are what four

do excited with advantages. unmatched consumers' everyday results-driven are We products a scale a competitive moments hands and and renewable substantial I'm in we see years slices and us. and are really for all our for will ahead. by ahead capabilities tremendous and stakeholders future value company day. in the We throughout drive of have XXXX our I confident what the in investors for that

to turn Steve. Now Steve? over it let me

Stephen Scherger

holiday expecting. with and about European Thank business of costs approximately X% days open packaging quarter, our XX. decision basis, to a the improvement X%. in about with the designed In shipping of reduced the sell by first patterns. produce our a portfolio were sales while sequentially, reported leap On pass-through reduced do, Easter sales The changing sales overall fewer calendar our first even somewhat X%. sales you, result what Mike. our of turning More normal the market. But driving Slide and flattish but consistency was shy the input timing year-over-year, by to consumer in it reflected of unusual in less than down modestly drop volumes net X% half were we did the in days adjusted our to quarter managing year good paperboard purchasing

our solid of basis cost paperboard margin. open function Effectively, for a decision delivered control. market of with Turning our impact, Even with all of we stronger. EBITDA matching much That of to our lower sales open kind consistent demand. year just is carbon a reduce than that practice portfolio consistency strong market. and the and a production of XX points was with with were adjusted market margin execution when of XX.X% ago, negative the decline supply a EBITDA. result sales paperboard bleached and the balanced to

Slide Turning to XX.

few on a minutes our to of take capital and some update investments. an me Let provide operations

sure regularly As our we our Day, review sales sale. make at rationale it to the needs. grow our We network for and capabilities, Investor global discussed strategic we the Augusta matches

here. that repeat not I'll So

paperboard always We run system. have manufacturing our bleach as facilities a

quarter, Augusta the internal support separate to Texarkana necessary the made and align during So the our to facility we needs. to preparations

moving Waco out pointed Mike ahead is As earlier, well.

incoming The machine paperboard Foundations moved of new that complete handle use paperboard fiber are largely Buildings and for in assembling building well track. our is the rest staging the place outgoing and on at for construction for that already and will and into activity. infrastructure advanced being are recycled framing facilities is

our a facilities, reduce our As manufacturing running, reminder, up East Middletown is paperboard once and and overall capital and Waco recycled will lower we anticipate requirements. showing cost which down [indiscernible] future

We in in to incremental XXXX. our delivering the and of to deliver $XX an investment Waco expect are EBITDA we results facilities XXXX the each million continue and packaging

cost expect discipline. customers and excellent Our with performance

Nissin [indiscernible], is One of capacity year our the this as our well of build initiatives new support key our to out noodle as tickle cup.

space necessary consumer U.K. products at packaging to Bristol In size in who the beverage scale Europe, Bristol's a double we new and our we are facility. of We innovation new the growing invest replacing grain are Europe, support our [indiscernible] launches. on the consumer small companies products well our beverage packaging opened roughly like previously had very positioned and group now can to steadily largest is where is plastic business carriers. support

to the outlook -- we us of with to significantly food the Slide allows Bell in showcase co-located extended often. reach facility third production our closed has a packaging in new team XXXX, Having To beverage on more modern innovation customers -- XX. the the more Meanwhile, which markets. capabilities our quarter acquisition,

growth the and an sales full positive see the in volumes to year. progresses expect for as year acceleration We

sale impact of the the Augusta. of is, course, That of excluding

are $XXX has to close X. Mike year. million. are innovation approximately should our to track to and The an expected this sales excellent growth of off we start, mentioned, on sales As tomorrow, deliver million $XXX proceeds are Net innovation May be sale Augusta

We've made Slide XX. on our some updates guidance to

a included production. in provided we guidance the reminder, a year As of Augusta February full

that adjusted are business With will a Again, as operated that our rather and Augusta than historically reflect sold represents the paperboard close $XX of we X for in Augusta. guidance Augusta facilities we months to and updated have we the the at selling manufacturing expected sale the results have owned expected facility keep mind beliefs we to million that EBITDA of $XXX along have might with how million midpoint performed system the book independently. tomorrow,

also narrowed have the We guidance for the range business.

timing million As ownership provide we guidance, of such, the And related second and guidance that that planned will ago year by Augusta. sale to while impact the contribution $XX of the roughly don't months point the Vision approximately to maintenance be reflect second expect quarter Agusta million year quarter year targets only our XXXX exclusion includes but the approximately midpoint our partial impacted $XX is and margins the quarterly EBITDA and $XX continue long-term model. the established quarter which EBITDA to do higher I out we we from X want versus margin, with full of with our to consistent to costs financial to million of change we the expect of

Turning back XX to Slide and moment. a for stepping

Vision Let financial you those of me XXXX remind targets.

our the packaging model high consistency. financial of single-digit the adjusted the several growth, outlook and years. is EPS mid-single-digit consumer business adjusted we built, base EBITDA low Reflecting business growth Our over sales single-digit about have for next growth strength the capture

of customers innovation Our lumpy. product launches. sales the can be timing Therefore, decide

year. lower targets So given these than we in annual could or be a little any higher

more and need assets room sales a target investments have spending of discretionary that our capital leader. for to us consumer will and packaging the of we make capable lose X% better plenty for and the capabilities goals We reach these

Slide to XX. Turning

XXXX's alone as shift benefit investment. the becomes cash the generate XXXX we through year. should EBITDA drop transition flow. Waco in XXXX, the XXXX, We CapEx $XXX peak programs in billion on upwards focus this see a drive from investment of cash flow. expect and And we XXXX, cash. move will really execution between substantial clear Vision million past In and are and CapEx to Vision improvement incremental in In of we $X XXXX, That

drive We leadership always stockholders of will to business to stakeholders. will deploy that Reinvesting first. all for returns our and maintain keep for our come cash our position with benefits strong our to

a over is about the believe strong want I grows about allocation. Equally how position. think that clear solid responsible dividend we represents and maintaining financial leverage. We appropriate capital time to be important

we leverage cash and but may With levels remain plan time, the expect debt fluctuate. to substantial we flow will generate, increasing we to to reduce over opportunistic our

You rise this quarter, modestly saw example. them for

As we see capable business it, investment already we being of a grade. have

investment-grade as share rating pursue We way to every stockholders, the an and cash our return repurchase the to We capital alternative doing against to credit an brings repurchase. deployment we continue view so will when of excess share benefit for only most stockholders. potential attractive review

the reach As I to ago, long capabilities targets. our said assets we need financial have we and

will, that portfolio stronger. of always course, even consumer make We our consider packaging company's can M&A, tuck-under sustainable

the appendix fairly an As M&A included discussed, your for right information for remarks. as bar some supplemental modeling. set we We've high have our That concludes now. is use in prepared

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

Operator

from Research first from Instructions] [Operator Partners. Weintraub Our question Seaport Mark comes

Mark Weintraub

question. First, simple a real math quick

million $XX $XX second mean the million? to that million million you highlighted year, to does only a $XX seems second $XX balanced million I'm quarter, sorry, to in impact the it EBITDA half $XX million since So is that on -- Augusta $XX the

Stephen Scherger

Mark, it's Steve.

with year. your in the last market-related second took half we think the I of half in the had half of incurred market-related of meaningful year the downtime facilities year. right. very the million Most the almost year. first We directionally downtime the math of in earnings is of second lead -- paperboard our $XXX profile

to Most the half facility as well the the So the EBITDA comparisons earnings where of reduction. yes, more is not see also most second is modest. here began much in relative QX where to own decline of as you QX in we

Mark Weintraub

Paper CUK the year, at in the Week. have not increases of Pulp start second, these then reflected hikes and And February on announced and To you Okay. guys date, been CRB. price

increases be dynamics of did how that. you than they kind still X I'm or made One, you related be look business And good speaking, look those as questions would versus to second, still they on then need to they you live? now do how if did announcing again? you consider better to then, So the announcements? Or do when practically February

Michael Doss

Yes. Thanks, Mark.

standpoint, in half quarter just second business we we you've seen guide then we the a as the from the second out year. in kind today, So strengthening continuing that of expect the of -- laid in and

the high So that's in. that sell at viewing a we we're level, markets how

we reminder, And about talk again, by of way when

markets, about speaking that specifically of sell we're we about not talking have And might a the package. everything been paperboard. we're

no be an and that's I market, we particularly tomorrow, both make buy paperboard given, longer paperboard today to as We choose we that important make, now But ROIC to also Augusta have we that year and think about own. distinction where we in something of the competitive Europe. come talked the higher advantage. on open mill lot a

and how agreements I And and you I'd implementing success. think have, like, that that of the still or earlier had going so regards actively in what have we a how announcements we're kind we that really to going got it model the modeling made this to that's you those as we forward year, think forward looks ask about

leave to going at I'm it So that.

about I take. we actions talk we future pricing don't -- would that don't

that going here. But a we to and back So I'd that quarter. I'm And margin with also it. generated fact in I execution, that you point XX.X% the that strategy general, first think EBITDA not see in the do to

do. with along So consumer finding and it's is input our us over moving what inflation you'd to customers pass cost expect end-use working. We the to really time, ways we to which are are

Mark Weintraub

just Pulp right could, outside, clear understand of I if know been this eliminating moving you're be the about, that I with reflected to from getting to you from Paper announcements replaces what as announced and well. necessarily increase accomplished much not distinct your Week appreciate whether might towards from I I and how it's because just come or you increases cost indexes perhaps am them that's and that price Not that But of talked by being some -- Okay. to customers, with? clarify, them third-party but like price it. you inflators that, things that and from the you've that

Michael Doss

are assumption That make. would be for a you again, proprietary. relationships safe And to those all

breakout increases actively not to we we the implementing percentages, for but those do where are we're So have opportunity so.

Operator

The from next question BNP from Lewis Pariba. comes Merrick

Lewis Merrick

may. I if Two,

Focusing on the the and the market. a question. some my heard to items. of food of customer premium does impact this end We've ask growth service major follow-up talk end the foodservice and service to about I'll traffic in How from from slowdown food players the food shift more to cheaper this you? menu be value shift And service

Michael Doss

Okay.

our as that in quarter from quarter-on-quarter in ninth we of seeing saw category. So a Louis, an in gains row acceleration, still are QX, in standpoint, sales you our

we in So trade that we're per there down seen not have to a customers. our the se, selling at least products

Lewis Merrick

fully contribution? be that $XXX And X EBITDA run bit can clear. of operations. that ramped into find after rate for the Waco years will trailing the more a million Or also year project? third Is that you Okay. expect we

Stephen Scherger

out, Steve. lower direct overall and vertical of years utilizing support kind to the of see of produce Waco. cost of is will The to We capabilities. the take of our lot similar we is growth. with to first be of same combination it's ramp up given we saw that It be some will Kalamazoo we to that in occurring million saw cost the ramp to $XXX Lewis, have a the a with Kalamazoo X line in what what sight

over upon years is that and and X to Beyond But year-over-year the expect that, we through the what our you to million would see growth. sight more first efficiencies. cost us line business productivity our of to through continue first of initiatives to see improve $XXX the can own supportive

Operator

Ghansham from question Baird. The comes next from Panjabi

Ghansham Panjabi

a So I the we're least X, in beverage and at on. go breakdown back and end quarter in the better? the of clearly, foodservice, markets to household, you destocking have not level given Slide we improving the across like and so are QX cetera, if But food we other that first guess all surprised bit some was track that the of year-over-year. et did categories little

Michael Doss

though, kind the food from X% indicated Well, we side was of would see improvement, and and mean, frozen I Americas there in dry in the certainly, standpoint, we was international. bit there little market, where did of pizza of specifically both business, bakery cereal we on be, little saw items. off and a the We a foods yes. that weaker the were some

So it out these Easter was kind a and played we're sure. Good the hard. for bit I really it way of bag some look a yes, there. really was But we of shipping Easter as strong mixed it, think at just little years, is -- busy. Friday,

running Our are this not. customers year. They did

this second on quarter, and us second impacted we've correction in it in year seen here of so And side and the good a but the in half that quarter [indiscernible]. the April our confidence will growth inflect

Ghansham Panjabi

mean, year, for inflation, just you then Augusta, OCC, the basis guidance so a volumes on maybe a forth. for if EBITDA reiterating little pulse a And we're bit are little are tracking cetera. so et a is But you sort are the I if energy bit and sequential lower. offsets rest so What sort What inflation many across different the EBITDA? comfort of of of of inflation in the on inputs, have that higher, give terms the an positive clearly, you're and on I know seeing Okay. upstream offsets?

Stephen Scherger

Yes, Ghansham, it's Steve.

of logistics you think as an obviously, were noted. we I as the touched quarter, OCC, In some inflation, it. costs example, up. you first had on

were overall and chemicals in deflation more in us, offset For that by residents. our saw wood, those we gas and than energy, nat primarily

out there to playing modest. looking expectations. said, were you're of about mark-to-market being will those modest. said, correct, today and That shy relatively to X% The were So actively as manage that relatively our Mike some there we're remains volumes is inflation continue

you and the good. else demand margins. expected, business, as everything overall matching Obviously, were with the up setup on out for bit we just with insight XX% the really which little we nearly to was were because half we very maybe 'XX-'XX give pleased our add try top a very 'XX, Overall, to our played half, productivity normal think line distinct. business packaging EBITDA Inside we I was than kind that. very really, the paperboard the us supply terms bit first the strong performed second on major was it destocking but inflationary Productivity little of in for offset little in It's the which side, We other is a packaging of a usually on market more items. business. and business, of And the of occurred our kind well that successfully across open year, to sets not in core seasonality to chronicled a but on platforms. well of of [indiscernible]

of see we to the on And too that's orders open one based on half forward going to confidence an not running, the with. don't as fair now going second a And what market-related the a amount fair that be downtime, of the in see paperboard side And us again, have bleached you something year. we downtime took economic in we is we're heard amount of we because Steve gives say, of and exposure market we how back that that. things again, that last manage

setup together, nice things for a of So you put balance those and year. all the see the we

Operator

The is in next from Jefferies. from question Phil

John Dunigan

would again lighter -- the mean, on for conversations little that but ramping at in? talked have it's the the some into John off year? assurance I already about obviously, gives be this ongoing ask and the of actually got thought a would I that that Or is innovation is bit sales. year, wins in you have have. than how you you This about Phil. some the wanted start first it's up already visibility to there Are to for much just those I on those back pipeline half just point you locked are to of

Michael Doss

I we in X the appreciate X, and selling The is cycle terms $XX sales John. of I question, innovation of mentioned you those achieved that QX. on months. sales in out mean kind million

put high, kind out of meet is flow-through $XXX And So looks we've got of really good for there million visibility like. confidence our that level the number that into we'll what our XXXX. we

John Dunigan

million be little Augusta out changed the originally? I I correctly, had to you of was in of on thinking the little if then note proceeds high the kind I Is bit were calling more than that a net value now line $XXX I bit the million, in range, was was been expecting five. transaction sales, there something to lower that supposed Okay. over a remember your out? think tax at expectations number Or call I $XXX and $XXX, with although the know Great. in was And you're or expecting, Anything somewhere there? $XXX

Stephen Scherger

Steve. it's John, Yes,

we Day, million net and Investor $XXX our at at in change to proceeds were think that. no I

after $XXX million So million on the business. associated tax taxes $XXX transaction, with the gain the

to tomorrow. So that to available relative million no we'll have the us change $XXX

Operator

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

George Staphos

you've Thanks. a earlier on I take had similar different maybe today. a question guess

nice said in rebound your at As you're first had you've had big biggest the the was second Can And you look where a April types us the what you you the the to? volume early quarter that seeing quarter markets, surprise? ultimately it end what quarter. into you the tell of you across attribute markets? volumes And do and and end across

Michael Doss

Yes, little that, I into a give can insight you George.

So And pull things was us is [indiscernible], into couple was and our some level, de with about comments strong beverage. of e-mailed got forward. that foodservice for us, high prepared was minimis. pretty around talked we and in we a reality quarter it of for Beverage today again, at we've The stronger saw a a us.

the start very solid to So a quarter. our beverage is second off into

we food that said the up. above categories I destocking, as Foodservice And to frozen expect ways. can categories, are ramp usually, little it's those all mentioned, [indiscernible] largely continues you cereal pizza, good. you're us. QX. in being in the with really is you behind us And So a to more. I mean, and many that I big tell for see slower be were

change back during expect as course them We doesn't the to much. the year of bounce that something

things. of Sometimes it to their those run production can be schedules how our choose types customers and

an on it. So can have impact that

usually filter In there. on the of than of strong But we for market cleansers, saw household, tissue, a detail other a side and frames. that, terms air in soaps give some little we declines more we saw you

off to we're to important to So And where mixed from the day. end close I is darn middle about which bit at it's remember think of pretty what a bag. a of in we'd of the be February, there And... be, relative thought the were we tends X% we

George Staphos

underneath guys if your model at so picking from to not you trying you from may I customers' Mike, that up, forecast. not pick I'm perspective from on the I'm out be hood what figure may, or reported off the were basis. going-forward a going on we trying I'm on to what

consumption or and I'm really this sounds but seeing, inflation underlying like see frozen don't I'm change is relative cereal a weak, see go what that.? like what anything don't it your ahead. i.e., in were at. customers sorry, getting So and they're versus from

Michael Doss

a fair a That's or of And course, see statement. the leases the anything week. next many their seen what of more prints we've to been from we've we'll largely we, that so, you many over read over and XXXX, that's difference last recovery suggest coming in of customers. like out and those here occurred week the heard. some And of from the have destocking for not that No, kind their

mean, in And were our that's a the comps. do right a year, some again, the easier I in we of if I think second I expect QX remember, back? [indiscernible] fast lot From and quite QX see how year. half accelerate year-on-year. now, respectively, becomes to comps kind state. quickly. really know you second And then in it of of bounce X%, last the bit our to wants the I that modeled quarter, we've off a it steady does X%, think, In of little question standpoint we'll kind everybody improvement.

X% we're Yes, which that in kind back in, model about you it's how view. put when X% it. So thinking of for to pretty is bounce XXXX, a conservative

George Staphos

just April, relatively EBITDA. second point, said $XX state, then follow-up. far Mike, bit? or a so because Augusta, should that on have The so understandably of of you're I that had a up question million my little to you we my you're running because second And flat Okay. you're actually impact in you're largely going going to Augusta, steady have assume then and to

when for the low you're $XXX the the somewhere millions we year-on-year of in first we versus what either or terms in are quarter? sequentially look expecting So sort EBITDA quarter of in

Michael Doss

of first up expect it And find to I'll Yes. Thanks, kind ion is let a we're on the Easter a weekend, [indiscernible] yes, be George. Steve QX. little I'll bit the as it. part coming take answer here will the April and holiday of we in

Stephen Scherger

It's in George, QX pretty you reminder. maintenance planned No, low it, us. downtime Xs a summarized by for intensive Yes. quarter

We one for fiber them have two facilities maintenance. of of wood our down being at Texarkana normal planned

is what had quarter. very activity And the have the maintenance second the we limited And that's we of in year. downtime half So expect half elimination second downtime market related half of supply/demand of other the in in the then a last of amount planned we significant normal of year. second in year, a which the the

XXX manufacturing X%, kind holds can there's the volumetric midpoint growth, expectations the continuing have facilities confidence [ it of our retention the in strong the demand. yes, overall we and kind the to what see the can margin and of the good, just be that you X% do Mike us that to And on to range midpoint from XX% EBITDA, guide EBITDA. So a -- you in on up ], well is of productivity gives ability and of for very run indicated, ] as XXX midpoint [

Operator

comes Raymond question from Roberts James. from Matt Next

Matthew Roberts

the certain Thanks able inputs on a for customers, on to for price Or near-term when warrant metrics demonstrate that you you any strategy, present your touch initiatives have share? new little bit changes? near-term could been seen And do price. question. you're the any has any If cost to volumes those there market impact there pricing are in trade-off to I or

Michael Doss

Yes.

that the way we've That's a industry, I been of things that's different years backdrop I'd compete competitive with same almost look, started the with a new. we since it's that faced substrates that ago Matt, different not question, this marketplace. But and XX now. ever variety competitors in So answer is, the We really that make do.

our converting of -- tends facilities we sell what have what really is the be different got to have the them a network cartons, take we've care to broad-based quality. exceptional So to need, be service that the those things to capabilities and need manufacturing customers they able the [indiscernible], provide and packaged trays, very able them in that

post be in makes with competitive that and the and manufacture And manufacturing. then sense, where types Beyond and able can about, paperboard higher of get return, each able talked clearly Augusta, the are that grades, it that that, of us as drive the we're do we competitive Steve producer ROICs we invested day. low-cost talked We've create advantage. we cost of that deal we situation to be acceptable those allows margins and every capital to to about grades

there. are of take loss, those share pretty of here you terms a in so few And de or some minimis. it's that next There things

wins. You also some get

got kind out. something our day the And driven there. standpoint, product that balance new drive I that do target success time a that $XXX our is our this of and won't will million in you to of we've know, then sales. spend dynamic. future be day It's our by thinking And going from really ability of year just about so and our is that as And lot we really, that innovation and

Matthew Roberts

That's helpful, Waco. I that. about think Maybe Mike. I I little think appreciate a longer term

$XX methods? day You cuts the consider? to about about potential that trade-off versus the percent What million costs margin per think that cut procuring recycling trade-offs does what's capabilities. there cost any your And procurement there. Are represent? output talked should trying with existing like incremental we the I'm of those

Michael Doss

our the value more and customers. back our we ultimately, step for and are And circularity, consumer really with more and a more think convenience. about Take for customers sustainability driving how end-use price

that we've within about Our are Triangle, ability region. Texas that to work collect the Waco, talked think with case And cups of our that customers. in the about

Our revenue, some customers for revenue just some get will OCC. get retailers the like

leached at understood not to completely their because think down. going manufacturing for and of it's high ability paper have positive Waco. but exactly of had things When value when and cleaned of we'll And that the a to that is recycled in use level an gets a to And got it the that's office very paper expensive, difficult get, coated would difficult source And down really part been consumers. what fiber to that's feeling first that is to paper buy an producers fiber we of is paper high we're paperboard that without office sort And for So back to that that which that incredibly like lay DLX increasingly they fiber. cup it's make put Waco. on the more not be the we historically, get and has them. it's of go it that's I to sort answer They've kill being us top to get recycled happening. going a become license also

than And with standpoint, period what control helps a pricing, a circularity multi-decade doing. our any destiny it's us our with competitors own there. us So very really create that's of sustainability excited. of from so really differentiated their our to competitive customers advantage gets model and stable our time, helping are our goal over And ability their really

will We package, stability with create really our see there. work a and ultimately, it's So sustainable more customers some we'll cost exciting. and

Operator

The Arun Viswanathan Capital comes RBC from from Markets. next question

Arun Viswanathan

the to rest to about think your on, that just going the the and of back again, thoughts observed some of get i you year. volume wanted developments we've how

versus like seems so as Day at little your including, commentary it and categories, in there bit food of Investor was you in slowdown these frozen certain of on. the and February maybe a a So noted,

As are you there year, the and that be activity? rest customers maybe into was that that increased look transitory from promotional potentially the hearing of will your some out you

on you half you it Or higher like of that second point, to that is the will the lot look side? of some a volume think be when Augusta get gains just to related be year, as think going the the is maybe do different rest back of QX sale going QX about the to and given And those you

Michael Doss

the talked our the from production downtime Investor anticipated day, talked it April, I the end has that a more they bounced we all was about our at So as we little about the the about. really around X% at around bit mean to would miss Day, expectation had of here standpoint, customers Easter back really, was in our seeing Easter. holiday than we

and the to stronger quarters than second in QX. but strongest expect be QX will be sequentially QX quarter We our

case that the the for few be given ran George you'd that a expect I through ago. minutes kind And to comps of

little second unusual. year. that's So will half a definitely be strongest and our biometrically

they As sure and seems selling it's you we've a we're I in heard based everything as we're mentioned, need, that chains, their of them, all square phenomenon but supply function customers, really And that on from to what Ghansham, close occurs. our destocking 'XX, 'XX and that with pretty have managing making know, new to well. driving they terms innovation, of products pretty that them,

Unknown Analyst

Great. And just then follow-up. if have one I could

to Waco X. from next getting the or you're over be be down guess Augusta. I will the winding year the you cash going investment So

it's thoughts the could How your in next guess, and capital profile? to out you stronger about I return? look you leverage you're as return how there? out maybe you've are maybe nice So aggressive. relate does year, what So that potentially you pivot thinking future, plan, XXXX Vision think Or a more capital a to laid

Stephen Scherger

we the that as we're capital comfortable funds conveying the with levels. confidence as our context forwards we we the sitting in you debt prepared today, our have have. of against And the the as in always here in we think and decisions the with measure obviously, discussed repurchase, from I Augusta remarks, example, business allocation an we're today share that

level in capital us XXXX optionality with are with we repurchase basis, that comfortable funds thing generation then But way make that we that are today. around And overall, 'XX the or always that beyond. allocation good in tomorrow so gives debt by more more in share go-forward generate That's we'll, a decisions very supported around significant the we've a come of and you on debt primarily significantly and the have from it's do, whether on to as shared cash because flow course, versus trade-offs. we it the we

Operator

Pettinari Citi. The comes from from Anthony next question

Anthony Pettinari

imports grades and We've any you've not boxboard domestic I Paper seen on other wondering number in of mean heard and CRB CUK, the a Week, hikes CRB, the from with CUK lot relatively this about imports of impacting SBS. I being impact if or Pulp small meaningful reflected really And or I'm just mean producers. those

anything environment just I'm the wondering different import the different or about if is years? that's there's and than So meaningful if previous dynamic competitive in

Michael Doss

I'll for take Thanks that, that. Anthony.

mean up, which countries, answer. think, really is you transportation I take a you you at energy the the if right? the from primarily you asked would look if Northern I'll all back I imports, give look, are step since question, complete a

markets. structural I were QX and through you of that we're wood ultimately, issues there costs producers here as some year, in reset mean, about all last call port those know, with the the they're year. talking And this dealing

actually where other category remember tracked those And that year-on-year don't the thing a in to grades as marketplace imports is we're of that QX. so about down many competing. even the compete And in

different what it's sheet understand that category I things. little So And I'll that an top there. And is you a is. example, comes in give item a you like big know blue

you So I'll give little a that. color on

our buy [indiscernible] Europe, spent have pass do. a contracts. that we We But and from about and through you standpoint, time thinking than into our it we FBB in lot normal guys pass-throughs more

do. packaging is, those always see. in And Europe in us in This we are a that run of some part with fair. that competing converter pass to pretty our announce If ever they into there little But what the allow like really using down we we small that. will prices quarter, bit were because to it's had down. for hardly America, increases it's anybody be normal gone small a reasons They're it starting pass-throughs to North through,

excuse from that indicated markets, impacting [indiscernible] put I there. question me, our don't recycled And we're we the implementing you out our increases it as or on. earlier, actively or asked, And as so the unbleached paperboard paperboard CRB that see standpoint, I

that's on. But And most the the I that always there's our EBITDA the the we're able grow those managing important XX.X% pluses occur. to and I'll with how we approach, top point did that's were And So and way we line, it. again, and become. back that away negatives to to, that's take company things we've going all think it, think about are generate ultimately revenue margin

Now that's kind, those things really with are as a to a of kind in some to cases, wrap some [indiscernible] in or our being and what sell package all XX% tray cup, of opposed the of dislocations customers. our of that's And dynamics we how where how some sales can purchases whether focus where of of the given those [indiscernible] demand all company folding terms just our we supply we've operate up set now it. win and actually, we

So the And it's us. big will see tomorrow different is than for a But was day guys a for it to little you that. past. while take it structurally in

Anthony Pettinari

market Europe of Got health in talked it. demand very on performed quickly like in And helpful. That's I little about, Got a a quarter. how care end pullback bit year-to-date, business that it. mean, business think, terms of sort EU, European generically, you your specifically? just the I in has then

Michael Doss

North to continuing with produce. the to appreciate care, President, was that His they health markets be general, America it this can how Julio, demographics largely pretty to forward. don't and stable. both good chose are bit You little materially We in Europe, our European tends I in to change age is of a going that. expect timing to going about people asked those view just be

Operator

The comes Fargo. Hajde Wells from Gabe from next question

Gabe Hajde

will you you Mike, concept. just your additional all your three. recognition [indiscernible] the I of they're us how for sales of it you as sales price I'm volume on In positive increases Steve, business success outside versus being basis. from and world, But downtime that a innovation a do kind benefit you for on then volumes domestic the to when guys induce appreciate And versus half the us one be I monetize that converting on your an wonder as not commentary then maybe about from and these, price third-party be proprietary away as year-over-year is, up to given positive individual on that talking in describe migrate being sales find public I ramp the the of took. volume words, the for appreciate And basis. today able the do other combination announce of conducted all price production well like, is you can based last second are will an likely much sounds having of strategy to envision with non-index that

Michael Doss

you Yes. game, talked question we expect kind play That's Look, Investor regards to not we're to of Day, at just about I pricing In the accurately. think out. exactly relative model that anymore part percentages answered our the index of as how them model second customers it planning to disclose whether cost of our all it a it's proprietary. works, index we them that other to work form as with we've or do with we how got we view because some

we've a look that targets our we've And fact have maybe to how going kind just EBITDA about Vision there, got type it's you I XXXX. it the that the working. we perform put of been variety It's consistency little at talk by can be bit I way XX% target there. a actually able of demonstrated works. continue things. to Take to that at color best as And part give on do how think and it's a of more margin, the of out to our

renewal something, and us. if about talk thing a or with contract on in is with we pricing mechanism a the the itself with we So isn't first that We with with establish, situation them customers. customers new that both

moves really inflation up from talking been different methodologies down, We've we're there's years. it. how input away variety moving is over indexes of and to about cost time, third-party or What a for

And about forward. been we've going that going As now very accelerate public process we're you that. just know, to

provide And us. an and transparency a want and between ideas have working accuracy two they that to between the customers parties we have number that how so and value ultimately two they agreement better with shares that parties. the different we're for the from and bring we that More of

that's approaching going customers, in understand making. really our vast on we've a get we the majority so that It's just is the process that beyond doesn't the key Mike opinion. how of a got. finance down our not we're it. really that discussions percentages you we're that's help with are vast necking And that, it the to to majority commercial And just multifaceted And because not -- pricing-related The value the into point them. of business better of package focused of of have repeating kind

a contract, minority contract, and the about mechanism, the asking on renegotiating customers, contract, price X-year the of a change X-year whether discussions with are constantly which We're is you're you're X-year about. what

we'll so to obviously business. as holistically profile to continue with that And to margin business talk grow. the just maintain how Consumer about Packaging a and we're operating we're committed continuing running and the

Gabe Hajde

margin Okay. clarification, Real of I the Steve. quick appreciate point comments.

I I apologize, XXX think million you of an in you Augusta XXX,XXX down mean tons responded a mill, the I EBITDA. about just -- $XXX downtime. Did to answer to I tons question missed of timing And it. second of the half?

Stephen Scherger

this do of repeat we $XXX year expect second about we half to year, market-related the year. not in of had Last that million downtime the

question, second generated of context some ran profile earnings business Weintraub's think bleach of the in just the year. the first year, Mark paperboard first half providing a half significantly was year the than I of more the as profitability Mark as to last half, system kind half we second around the

be facility that half needs operate our that with what needs own support quite as our facility the will first the effective negative full much the run the here our half second Hence, we're minimis through becomes which being de comp the tomorrow. from of own managing year we in own internal more in literally Texarkana to packaging

Operator

Goldman today Adam Sachs. question from from comes Samuelson final Our

Adam Samuelson

today. a covered lot ground been There's of

for actually million would juncture? a year Or in this at first of kind second ramp a still be juncture half year. into much growth just And with uplift doesn't is Chick-fil-A supply Nissin and or which like from that the big to may $XXX $XX we in some you future at the that in or pacesetter sales be the back think quarter, try is the implies -- brief. as So how us of to it be Can realized year, of seeing about innovation million, you share the I'll this on Boardio applicable value versus are items incremental pacesetter that? seem it on of source The just the of of Waco? dependent incremental the

Michael Doss

Yes. Adam. Thanks for the question,

about to actually We and Rainier got continue balance Boardio. described. is. conversions trays XXXX, Pacesetter X $XXX in 'XX, and Boardio, building the see Admittedly, of 'XX traction we're it absolutely, you -- $XXX is be things really million to are paper types The yes. the just of but It's We with a excited We commercial [indiscernible] already for momentum into have that applications. it's cuts, to chunk huge of million and it total it because phone won't

that coffee kind or at look as [indiscernible] It's a it really it got fits of items, confectionery and it that's started or well. like $X.X French formula rigid us. Boardio like You for I we've granular mean anything opportunity in

customers sales million of that And that helps There's sale. we'll a with worth sticky over brand for really And we're confident wind goes with alone. category of machine couple our with years them next merchandising and quite in in a it's the and need. $XXX up

So that's focus our is. where really

ultimately, making pointed correctly exciting. of excited very very paperboard, have that machine as 'XX in paperboard which yes, Rainier you greater You capable we'll drive another about is out, Pacesetter that up and

Operator

Q&A to closing today's for to would session. I remarks. hand like back Mike the concludes now And This Doss call

Michael Doss

is the our outlook for call are good on we today. growth the you optimistic making to about a off sales. execution, and us we Thank start. progress joining Vision XXXX and innovation all pleased with about are I'm with

value Have getting just good was Packaging mentioned story than and listen very if find the I which earlier, few a on a I to today Day, replay, company much different ago, Investor started. As I believe you'll creation is day. Graphic Investor our website. can Relations years and you the you a is hope take time it our our a truly just in Thank safe you. to missed

Operator

your This attendance. very Thank concludes today's for call. much you

You may now disconnect your lines.

Graphic Packaging Holding (GPK) 30 Apr 242024 Q1 Earnings call transcript