GPK - Earnings call transcript Q3 2024 | Graphic Packaging Holding Company

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Operator

Good day, everyone, and welcome to the Graphic Packaging Third Quarter 2024 Earnings Call. [Operator Instructions]

It is now my pleasure to turn the floor over to your host, Melanie Skijus. Ma'am, the floor is yours.

Melanie Skijus

Good morning, and welcome to Graphic Packaging Holding Company's Third 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 third 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

speaks to morning, XXXX, as we was some $X.XX. you power down modest a margin, portfolio results. Melanie. strength We a packaging growth and sustainable during X%, are quarter volume economic with have packaging company's you, adjusted conditions. Considering Graphic expect the range margins conditions for Packaging consumer environment, million last wide adjusted a EPS to XXXX was strong global a XX.X%, billion. $XXX the to That and a are EBITDA Price leader disruptions, we the and return pivot deliver have and is our consumer last a today. In growth X% call leader. experienced the we Adjusted in saw Good from Europe's The delivering growth third consistent $X.X you to market but solid in up line constructed growth, of and consistency and should the challenging third were indeed quarter. we Packaging volume In Thank sales built. relatively was business the very Graphic quarter, EBITDA delivering of expectations. our weather in solid with joining everyone, the same muted and despite across uneven thank was quarter. after clear

Texas to investment manufacturing Slide the Turning X. for XXXX paperboard on quarter track startup. facility Waco, and recycled remains fourth

service this We Once first hires. pool company of locations: have the is and the will is Waco running, American our we investment. Michigan able up with paperboard will which company's advantage pool we as be quality. both of further competitive long-term for reasons highest expand one cost recently the to applicants In and labor are begun strategic Texas, in hiring the An expected. and key from recycled coated made X market important process the the and entire quality excellent attractive seeing is Waco selected North The

we During recently especially very significantly location is an and in not and and position printing other investment. European ] in ideal facility for an team Poznan complexity health at the foil investments, quarter, of for excellent cold the of important company's which but the high value, press strong only and also of market. and XX color line like customers. are for high a varnish beauty flexibility, health equipment enhances This product designed increases new at kind this our state-of-the-art offerings, manufacturing a made to facility and our also colors, in the particular with beauty XLXXX both strengthens This packaging completed the our double end with packaging Heidelberg Poland. a the of highlight one is [ us and facility We commissioning of Poznan to the I'd number unit.

Zelestra, company's to product carbon footprint of the of take plan renewable to leader announcement August approximately agreement company's electricity by the and key plants with packaging X new XXXX our the and sustainable the as and will gas in of who Spain. XX.X% X and choice company's Reducing Europe emissions in reduce retailers You leading our restaurants. equivalent of may X to a XX%. to mission the agreement us power have in component consumer The seen by virtual purchased is is build will Scope a makes generating solar what purchase a part Scope central power greenhouse consumer supplier companies,

the of After bleached the facility X%. of Georgia in consumer up sales paperboard of with sale representing paperboard manufacturing just divestiture our XX% the May, makes approximately Augusta, packaging

past, As we competitor packaging both in in dramatically, changed has discussed industry and the strategies. paperboard have the and paperboard structure

the related to become parties As paperboard movements third challenging more market a far assess. and have to sale pricing of result, for

surprisingly, are so And results perhaps we not inconsistent market. with what the see their increasingly in

will disclosed, accurate price have we more the customer Beginning in move each previously sales ongoing mechanisms. actively contracts piece all and paperboard we of are price of transition. transparent more XXXX, is longer we new open This first in with change third As change transition enter small market a no contracts sales party our to include paperboard quarter Graphic into working important mechanisms. to that Packaging but

Turning company's to the packaging results.

foodservice and to and solid, volume in improvement health pivot a again, we saw beauty. we noted, year-over-year were, growth. and and positive results I saw household food, As Beverage

Mass are had large expected superstores continue share we both to we gain product private the in geographies. stronger label grocery and across to of that volumes branded number somewhat overall, improvement retail and pleased includes and see and categories category, a While products.

in particularly recent new Boardio paperboard retail, our and proprietary with shift mass multipacks participating with canister a solutions. private are of We in wins number innovation and label this

urgency our deliver the push creating quarter the expectations, new the are more $XX but million, in to results customers remain solutions. sustainable track third and North where for strong. with are is These moving speak Innovation line growth That was the year. remains also sales on sustainable full impressive high solutions, where million in to to and packaging some put for we on more priority Europe for in consumer-driven in true regulations better, packaging especially America, $XXX

just really our reminder are how very held the results broad able why is that of a X Slide products last generate in good at to a least one solid There's your in portfolio of chance company's hours. conditions. XX even and in you've we market challenging is hands the

We weakness. look our detail X of sales at let's Now after in X. on Slide more sales quarters overall improve packaging saw

and As health in solid beauty, consumers performance you beverage and can food, we markets. in saw household see, in and continued the improvement

that stronger encouraging. we While and of improvement, volume pivot to positive volume many had expected is even certainly back customers our growth

total others. saw improvement XX% number a of impacted which Food uneven across some by and stronger Performance activity, has of much categories. categories markets, approximately sales in was which than in been represent promotional

to entrees amongst weak, well example, who home, otherwise are working Prepared choosing growth but do from food might Frozen consumers with people grafted seeing are remained but less frozen service expensive fewer value-conscious continues meals, for prepared have options. consumers restaurants. quick [indiscernible]

were mostly both protein, are cheaper including chicken look prices higher and driving for to categories, beef for options. consumers softer, Refrigerated

discretionary have an candy Private demand market label prices overall affordable has have where better And other in U.S. weaker. snacks as been high in making the confectionery flat. been up inroads in dampened while gum food Savory indulgence. held and and Europe, relatively volumes for bakery cocoa remain

and in we down that the our in outperforming wins, we drinks, more multipack results [ In producers reporting spring carriers regulations new plastic ] volumes. These are the [indiscernible]. But phasing single-serve Europe, heard volumes. are market, particularly uneven volumes In than soft market. beverage reflect you've in results, see innovation are beer, out and where

also are categories. pockets seeing We in beverage of U.S. the in strength nonalcoholic

quarter. heard an all Promotional biggest the you question working help so closely to far, volumes Whether fourth quick growth to volume some increased solutions quarter in our our for through foodservice find remains their increased the have promotions restaurants promotional they with but are in open extend sustainable activity the strategies. that business, right service and third customers will plan restore we of

promotional Beyond customers both Europe in our the on or are activity, U.S. plastic and very in eliminating reducing focused foodservice

in a programs range just with highlighting have underway of one and customers, success moment. a we development will a of recent be number We innovation foodservice

products like very household Europe. quarter, is has broadly fill in your results plenty which a but positions, as we and strong portfolio categories an very few portfolio? some in in have tissue, care that Investors significant is in answer have are here the products, gaps. often also And the in to ask, the third to Household food storage. our where But in there America we would grow you improved results exceptionally whole and stronger room pet gaps broad of market, substantial North

attractive the care big health see growth more Rainier with companies while we performs continues is as and slowly. paperboard, and improve finally, beauty some Recently, push businesses to volumes us, the business and And making XXX% as shown European many a PaceSetter care paperboard. which mainly success. for very have our opportunity bleached these seen volumes in North well of in We a health personal improvement. recycled expensive there, for more America relatively weak, remain beauty has with cosmetic a This

the time, packaging been and expect who encouraged so requirements testing demanding see Rainier cosmetics. feedback care like ahead. and more with to from even big the We've health But growth by take change solid customers are are and markets very years very prints in the decisions performance in we getting paperboard and

And what while up typical you seasonality me has XXXX been quarterly with typical held turn many anything will left. reasonably looks will like in you If well. respects, X, the have patterns to these but on see Slide

we flat third a than food but quite aggregate pretty for were the and have quarter, sequentially. was year During quarter, the more but packaging variation know, solid, weakest was this strongest, sales Monthly quiet. patterns this sequentially August, the third year actually shown beverage example, bit was up September to month you the as normally is of see. unusually but was July, usually

The had even volume We the positive growth half turning improve the continuing to Europe expected, easier XXXX. saw second to after return third remains as quite last when however, relatively with we of gradual, comps quarter. we a positive recovery overall quarter the to consider in

are of of levels foodservice across impact having and food of variations explain an and overall activity may demand. promotional promotion some seeing consumer The high but normal is the categories, to patterns, timing from we stretch certainly on

different And the volumes. from so saw was label not continued We translating higher approximately not appear X% pricing into promotional overall, down very far, And saw in strength be and second retail. what mass materially year-over-year. in does quarter, we higher to private activity

see and the volumes driven you've timing become Looking affordable in retail volume. of more and the new to activity, hearing of superstore the ahead we quarter, in as But price estimate. from the difficult improvement promotional customers, our ongoing growth has more rollout strength products recovery at expect mass fourth to been continued to that by continued points

food various The but entertainment, which demand categories in more for holiday to shift from in news portfolio indoor generally strong fall to especially support foodservice coffee. winter and our means also is product tends at demand good

we solutions feel more continue been better never drive today's customers relatively some our with closely more for the and higher. develop higher pinch headwinds also to and strategies has need Consumers to while with that they deliver circular, prices creating of challenges on to new are Packaging to convenient packaging Demand food creating and partner their for more And to volumes. are new to working is packaging solutions. Graphic functional customers affordability develop opportunities high

innovations across a Slide to report outstanding of a is many all the across seeing wide themes and we customer for innovation applications. solutions new our are happy more common level X high X substitution of tested outlines we of commercially of one company's I'm are Plastic having the range X. engagement and platforms, that

and X. McDonald's. Slide to and much recently that better to a the less Last rolled upgrade with in major prepared new Turning company's innovation highlighted product foodservice technology, at I was United plastic. across [indiscernible] States the Today, the paper want way quarter, food visibility I out is packaged a share Canada

less sustainable The is a in American dessert a a soft-serve cup for markets McDonald's McDonald's served choice wanted frozen plastic. a of with toppings. with container McFlurry more North its

same experiences single-use top The user [ easier. team four-flap TMS in a and makes replacement wider fill lid. to solution easier open They design plastic Hobby plastic. and with a at worked reduction with built-in also development and the providing mixing the lid serve. on operational is packaging reduction the a time improved complexity it achieved reduces and closely clear opening the experience, of that while ] improves McDonald's making paperboard employees Plastic with for customer Our

are helping packaging and experiences, for while innovations in goals McFlurry operational for These the sustainability true achieve efficiencies a consumer its advancing brand McDonald's win the improving and environment.

mini size, a new the the packaging, with announced Along smaller McFlurry McFlurry. release McDonald's of

offering new as customer We are support with well. pleased our to this

I'll Finally, where Graphic summary end X. on I usually Packaging's Vision XXXX with do Slide

innovation, commitment for a and company exceptional to are foundation and people on the stakeholders. that a we preserving while our a of of And We protecting customers, do consumer planet. and delivering shareholders results built packaging sustainable exceptional global all

are team is our Vision We excellent challenging towards all and delivering, the in the progress I XXXX results these incredibly markets. proud making am of goals, of particularly

Now company's Steve Steve? let over review to me it a the for turn operations. and financials of

Stephen Scherger

Mike. Thank you,

Slide dramatic to and quarter, we $XXX million decline market open represented Turning bleached the of again sales EBITDA very impact volumes generating XX. that divestiture that solid in were in the . Full well, the Augusta executed participation fell paperboard below of expectations. our In adjusted third XX.X% $XXX down reported margin a million, a sales. reduction despite the

in below expectations Price X%, X%, businesses and to similar while up experiencing start in after North the down in mix with was American quarter Volume the international encouraging was packaging last July. similar outcomes. our [indiscernible] an business our quarter

from Sales were other positive of EBITDA unexpected the There a exchange pressure our combined million adjusted impact foreign results M&A in were and quarter. sources the net in on quarter. $XX X

weather disruptions we EBITDA power which that $XX and disclosed was reduced the impact million. first adjusted The mid-quarter, by of

September the headwinds fully strong softer offset experienced our which impact, was performance price inflation below we volumes and disruption the and expectations. excluding so, power second left sales, quarter. The the during Even net weather

this Augusta XXXX. Bell quarter $X was Bell such, ] was Adjusted EBITDA the and will The at million completed September last in foreign other impact of tailwind. be M&A. is M&A, as that acquisition from included exchange [ And excluding an

November reminder, the place in a took As XXXX. divestiture of [indiscernible]

leverage is is acceptable level. debt Net the And at an X.Xx current cost X.X%. average at of company's approximately

net below with We expect year to the leverage Xx. end

a a strength puts have perspective. destocking the we Slide of experienced under company's and retailer into and broad-based negative the business pressure impact a X customer XX from consumer of of In quarters, past model inflation. the

side You page. could on the see of impact this the volumes left on

see you On challenges, adjusted the strong right generated we consistent and side, that performance. those have EBITDA margin despite

consumer and our down despite X%. XXXX Augusta by of execution, affordability, and sales the packaging year-to-date, at down Looking the with X%, our are just destocking down sale and volume the X%, innovation strength of challenges business driven excluding in price

While below under targets, results strength model demonstration these conditions. our a of of the the less-than-ideal are business

of Prior and maintained have a to business Graphic wide range Packaging's market transformation could volume, consistency was transformation, price deliver margin of designed we across to the not conditions. stability. this level

expect we As operational drive volumes cash to above strong cost margins, significant continued and leverage improve, generation of capital returns.

ran investments capital during global facilities from to packaging quarter. Slide Hurricane or paperboard We experienced. material XX. fortunate also were and operations to on no quarter Turning Milton. The company's despite Helene during either the and operations we the have well ran weather well impact the disruptions manufacturing very company's The power

the that These to investments company continue financial we company's with tend priorities. our customers the noted, facilities high with invest to Mike results allowed for attractive shareholders. relatively As and returns of projects list better modest to in press packaging be on deliver

decision exposure [ very meant were also did are that this and on States well. boxes, Waco in they dryers, et port investment key we the or the head equipment the equipment from accelerate site overseas. schedule year coming on to United to rolls, like orders earlier if already Deliveries cetera, is strikes, either have are not The already much ] progressing

[ is preparation complete machine haul well the for and steel structural point, major for equipment this installation At ] is underway.

hiring as full-time for site We have team. have X,XXX a as begun on many and contractors the process

raised project been able to advantages. $XXX we drive modifications processes and and billion. facility's million expected however, our expected have, elsewhere, Together, will inflation have on that these approximately modest changes cost the by February. to incremental project EBITDA our those yield in details to to upside further plan made have Process original beyond $XXX million provide $X.X benefits front-end cost and the some We quality additional cost experienced estimate, offset not we quarter call fourth to on and changes targeted

XX in the to Turning Slide outlook.

to a growth but volume second third expect the recovery growth noted anticipated. than impact As to of Mike to the X% few expecting had range, where a to of the Augusta what remains now and in X% reality down pivot reflects we relative to we months in the X% the divestiture in we be That excluding the the customers are more volume half, saw from quarter, X%. We were earlier, ago. seeing gradual demand

now range. $X.XX to expecting adjusted are EPS and in We billion year EBITDA full year the billion adjusted range and $X.XX the full $X.XX in $X.XX

In weather of work. addition half pull disclosed well maintenance to made as second disruptions, as reflects the previously decision lower and forward revised the volume power to we expected guidance impact

the [ the issues required facility to the earlier repairs annual than with year, wait will maintenance until paperboard total West we and at this elected During incurred those on manufacturing fourth we secure get specialized additional in maintenance and of When contractors, digester million, which less were to near-term a we rather necessary related given identified was be XXXX. the all than able done impact now $XX EBITDA Monroe ] outage the equipment. adjusted repair The volume quarter. outlook

We EBITDA challenging outcome XX% expect full be environment. the year very range, adjusted good XX.X% the in a considering to volume to margin

EPS we financial single-digit low consistent EBITDA adjusted company's sales financial XXXX, growth, Looking high to the base mid-single-digit ahead performance growth. and growth model, with single-digit be adjusted to expect

in As heard CapEx, increase the decline spending XXXX CapEx. XXXX approximately million. XXXX of a you anticipated have say, represents us in are anticipating now we $XXX with peak And in

priorities. complete, naturally M&A. growing priorities the share Once company's market. normal and to level North opportunistic investment is unique turn the capital and major consumer dividend, XXXX strategy more company's a reinvestment, and a the outlines in allocation competitive powerful Vision repurchase model the summarizes last tuck-under to long-term asset base capture packaging the our advantage financial XX of in Slide our Waco American capital allocation

Turning to Slide XX.

next a the deploy and Graphic the the shareholders cash expansion strengthen years, to we of to world's flow sustainable we cycle for to incremental than mark several as require substantially multiyear reinvestment. to generate cash position will returns company. that Over expect generate intend consumer more Packaging's beginning XXXX we and cash leading packaging

Slide XX, modeling will may be supplemental useful purposes. information find you that On for

remarks That prepared morning. concludes this our

call the turn operator to the now Operator? begin will We to Q&A. back

Operator

from [Operator Instructions] coming Roberts is question first James. from Raymond Your Matt

Matthew Roberts

the question first XXXX. is on My guide sales into

digits was, months lower, few first So it of, clearly, single believe [ less exiting half low there. in noted Augusta from $XXX and the ] I 'XX second you million XXXX

maybe in early, help contracts overall we end while timing me renewal? from and time innovation, take mechanisms Or So market? could expect to price expectations you on will as change by is of benefit bridge in in of in the that that evolution that up terms you more a that price Any Should volume sales come change mentioned? an regard XXXX? for

Stephen Scherger

color Matt, and Mike start it's there. Why Steve. some can I don't add then

think line very that's overall, for bit points mean does year line couple our $X.X innovation level of at top kind point of that will market the just engine for we in in evolving this an towards single-digit be I billion limited the what kind hundred neutral think or And top is should that the growth. of Page so little adjusting I year. next line, terms modest leap-off And time a a continue terms of enabler of in the for job next to growth a low evolving indicating top nice growth. of XXXX, have down I being the provide market about of basis the year Augusta starting XX point. we're the

open customers. that about very mechanisms about place. in talk the that and market with We're we're in new I'll putting executing mechanisms let Mike the on we're the change price excited

kind low the probably a bit And next little But for that's so that talk about top separately. single-digit of we'll growth year. Mike? line enabler overall

Michael Doss

expand I little think what bit said. Steve Matt, a maybe just on to

growth it the was While below was pivot quarter. expectations, in our to the important

new XXXX. point the month into in as year. in And consistent us through here terms the as the we so at with of least XXXX head we That's of into that jump-off what gives seen we've October confidence head

that. the you pricing go to selling mechanism, covered innovation, paperboard do remember into so of on the we really But that what I the in market X% about won't open paperboard to more only to regards is customers. Steve on detail have side,

terms we've vast third-party been modifying those we relationships away majority of and indexes. So moving where from that of cartons pricing on proprietary flows have, the journey a through cups multiyear customer in

this mechanisms. more wanted given that their to been market, in be really transition expect over transparent we've helps to important wouldn't don't from step, with fair. sell to nature are confidence just all on to just to ability impact we predict And give things but So a be material XXXX, And be the want aiming is of several what our and ongoing years do time, on in I customers away that open to because surprised. really small we move the their want of that they an to an those and what believe they They pricing over types it's those we're be customers. our

Matthew Roberts

Yes, XXXX And for generally that there paperboard into recycled even accelerate beyond Steve. more ROIC looking favorable does landscape maybe the between How is you and alternatives versus Okay. bleached the question, versus than price margin my your is recycled unbleached other that would competitive there, if Mike, maybe business? the products? parts of consider products? side shift that bifurcating or other, or that one are shifting further impact towards recycled out second products in the even how and And

Michael Doss

participants. bleached Augusta where I largely it have market advantage, make or market competitive a distinct you just terms we're was paperboard of the didn't Matt, And positioning move a the Augusta other was we company, a Look, [indiscernible] again, of the big us of seller the mill. appreciate with in the question. from open coated how mill saw sale

way but the did, integrated that's it's is the make strategic majority make there's us of operations. confusion maybe largely Texarkana And ability sell the So think had into some a this, where don't talked have our to we some so important, ] and as own need and maybe We're coated selling what to [ we about We I Texarkana material what own incredibly we in bleach cupstock. to. market. we in around we for our why cupstock mill, cups. still open was vast The to it

us that participate the to fragmented market market, quite so allows bleached us market. in the to challenges fits frankly, have are and in not of open which And really most where side really and the well the biggest paperboard is the

market some Certainly, in messy, back secondary investments benefit, knock-on well can focused but as the we used if that we on unbleached we exposure exceptional and paperboard. don't being make, choose we Augusta we the for grades mill. returns get our make recycled gets coated to paperboard as We've have we where the that our of shareholders to had type when have coated really that

manufacturing in we committed Michigan for both the able the fourth Both as that low-cost some of those Texas. have. will generate systems, real to to to time investments Texas win And we've One excellent those the making come invested new this into being grades and quarter us low-cost the and we've in, life with been America. significant growth year with opportunities next as high-quality be of we've we're to expect in you know, both We returns producer paperboard biggest see to. North of facilities in we those. course, in on the position And

little about a the bit talk arbitrage Steve, margins? maybe on can you

Stephen Scherger

year. you positioned and points got is unbleached, capitalized participation, thing facilities when after at only coated that, to board to are our growth our unbleached well our year there of of that couple support incredibly participation, that I'd actually and coated The the basis Yes. hundred packaging look add you've growth algorithm recycled Matt,

margin it's and I It's returns dynamic, supports and that obviously there advantaged So to to stability. incredible growth a that allow us constructive business. seen paperboard, competitive we very continue consumer to of margin on with from as our exercise above the the you've where generate our and And we capital profile packaging really a choose imperative. as critical can to that's competitively make think pivot cost

tough year, of And XX% in volume advantage that really you're that this that we're competitive to choosing positioned as make speaks to make stability the really, to margin in pretty range, seeing competitively to XX% well packaging. a the paperboard where environment,

Michael Doss

Steve, capitalized facility. when down, are we're and to facilities we're that with low capital cost be well And all these manufacturing you paperboard manufacturing making in done we'll stated, expenditure Again, paperboard X as incredibly Waco. this

we're based we the on win marketplace So uniquely positioned, Matt, to think in that.

Operator

Your is coming Kjellberg next question Lars . from Stifel. from

Lars Kjellberg

Just to question. going a with start short-term

Your below your volumes expectations. came third quarter in

So QX. in where out can called you also, in provide growth that any happened And end geography-wise markets? you continued in color

think and please? and that you specifically, slowdown What looking that market? driving called the that is markets September, With out October, in in seeing geographies, I in you now recovery mentioned happened September I end happening guess, But October what was better. you're in then is what in that

Michael Doss

and Steve I that take of can missed. anything I'll first add part on it, Lars, the Yes.

talked customers little We And of that X% fourth his number when what to think more now. and a looks in Steve was volumetric the around in July. I quarter we bit started muted. August this kind of it telling comments. -- look see September and pretty was our off strong average prepared more very on we X% like, based are kind quarter being at what us about

based we customized out majority initiating were have was vast printed everything That them is on do we of that their to They hearing plan. And remember, stronger that. things we the second the sales. would see packaging. Now quarter, of number we of what a you promotions, heard like from coming were

they to to when going have that grow, So have say make they're they us packages. ready those to

to them issues, out-of-stock which or do supply that, able be to cost issues, have to they we with prepared So be chain retailers. have money

expecting, to were as of third we the they customers have that didn't quarter seen released muted see And they have were or we of our seriously. about expecting played what that as out, and you've take we number as these already stuff a So much of volumes. very talked some

we're there fall really hurt very that's very be us, coordinated when us. it. got they with to that they We've in us third closely tight that's with impact But the the dynamic drives it does when need them and So what short, sure that quarter. them, to make

Stephen Scherger

is see Europe by international positive And Last we European add our growth the driven of thing only Lars, our from operations volume innovation. XX% continue quarter, and were I'd geographically, to our activities innovation there.

This as gives we growth said, substantial. But it's XXXX. customers pivot, of but steady we've heading confidence But improvement got and will by it's the saw very expected, in pockets heading I below And QX of expectations as quarter uneven. quarter us some still of for quarter. to was positive was We've as shared, XX%, actual growth sometimes a be the bit then the then, and the necessarily so good, said a sell-through. course, mean, important, that we real don't strong, then into into and and the see Mike much what volume they

Lars Kjellberg

Sure. And my follow-up related sustainable packaging. to question was actually

have You in visibility seem that business. to better

You in talking spite this with [indiscernible] highlighting had recurrently delivered you, line of ahead. itself in slower Again, importance And the about that that called repeat overall out years for something you as business what right? of market. over that you're

kind adoption the can you innovation growth So a talk line in seeing be What give you the your driver to of terms increased gives of would that what solutions should for this the continued and/or down for that are you ahead? confidence that you? benefit years of

Michael Doss

and years, of But to now, really you telling which on a sales I you mark. would years that, we'll make be go that so going miss $XXX take million the through track be pipelines. you X%, our we're X you Steve, jump commercial innovation look back I'll back and additional can hit in step to And if anything. X a about mean, we're here this take I Lars, year, take if at

is informs that that of overall level got we've us. and So the of have generating algorithm there confidence some out market kind the we in as kind consistency of front opportunities we sales look the those of and at

total. in It's that of almost And $XX profile selling. have already we a number the you or In saw we're define what the we now we way grown TAM, modified has very deck, Remember something TAM. call that to quite a close billion of sold a kind bit. [indiscernible]

market, we has creates at kind is opportunities us, drive So that of continue we the bigger. Lars, more gotten products addressable to with to projects. and the it manufacture for those look make that And market the

that I high. customers, I When the at from the us in front of funnel see it's interest look and

it's lumpy time. say from bit will to I Now time a

launch, have McFlurry. You in third really the product like one was a of in the wanted, in we a they through the national the in, time, marketplace, U.S. came X-month did profiled period it like get one the and quarter to and in and here a flowed what they about Canada. wanted both they and knew that fast And that

that made for was cup premium the to the was decision geographies multiple Chick-fil-A do the side, up, past, other all cup to wall to the stores, multiple the decided important choice. part a we the in we've testing. supply. rationale about that talked double end, we market a that And In and you and that of is they On test We they a customer's a that year take an single-wall ultimately, will a took that tested was test that premium over in and did. Chick-fil-A single-wall

coffee time, kind in good. a works see double that they're bit get through kind can in to compare even technology some on but going of of actually and the And shakes cup, high milks take the got more a These kind you a particular. and too, really little but end, that So iced the are launch, important. some they're of wall important. on couple contrast, out a really, marketplace. we've of customers, quickly, really and customers smaller We'll it are now move It's

a bottles. of didn't move of of anybody. XX we me at market actually kind of and out bit where We have to the for because invented you're in are years now into It market that went the XXXX. in our little reminded replacement got a to [indiscernible] is was consumers polyester high actually seen. sales that rates. that a we've [indiscernible] and going greatest market European European of changed with ever And things product the it number I've And It one customers sell the

And got time. not it out. a stream how we've enough have me in on gives so But that linear plays confidence. you've all these terms working got things but them the be of and bets to steady it it's of

Operator

coming is from question Lewis next Paribas. BNP Your from Merrick

Lewis Merrick

Mike, based that, away Can okay. roughly new after on Steve, as us of contracts you've got indexes. these update your our just if structures? from [indiscernible] representative index transitioning talked an base. about give cost before, I've packaging follow-up And on a priced more customers Point that's you're your of contract is currently much you how is business operated

Stephen Scherger

kind up I'll Steve. back Lewis, little Yes. bit. a it's of

of value sure contractual mentioned, a customers of As making journey Mike been really our with packaging. relationships our representative are the the we've of multiyear in that

in good our So along making XX% well sure renegotiating every value we're XX% the keep with that we're pricing a of package. And the year, to customers. of or our that mind inherent in we're products

have we very business their to re-earn So routinely.

us . About is And an where that our opportunity customers, already negotiations us correlate now of products, some new attached packages And a relationship. annual pricing a for sure make very it's large with a attached so couple structure. known multiyear their half cost-based we're for next a to or that's that's to models models. is index this index, that type bringing great what's always large of our commodities business that's spot got We've that our value. to for the more global right underway development with where in more of actually we're into nicely cost either

value-based journey. step. in But a be imply as it's pricing will the multiple well that We've of we it want we've new for talked journey. This a before, years. is don't next been So to kind along

from where on. that proof current and a index this third-party our is a transitioning X%, transparency well alternative is remaining mentioned, interest just life that will negotiations bringing open-market our the is that be and customer change point in high. away moving price large-scale But Mike we're all paperboard, nice to consistency a the multiyear part mechanism of an interest that customers' of our initiative As

Michael Doss

did Remember, earn to RFPs. What mechanism. he Steve change think And expound bit. have a business Lewis, with to that. we thing one little and upon tenders was maybe this I just a the nice price job outlined outlining

All we're the period we're is time between tender. So time. of in talking competitive point the movement that about market we know the in between at

Lewis Merrick

And on technicals. Perfect. just the

adjusted that Is movement? somewhat. But to just contributing call other effects, the On X.Xx, taking the working understand raised possibly some out the previously We Xx. believe, quarter seems been must that there's change CapEx has those on be there guidance, guidance. and anything now to guidance into were leverage like I less EBITDA I it than last account on items guidance capital.

Stephen Scherger

nothing to call out. There's

the think -- I a $X.XX the midpoint was from on ] [ X.Xs combination really low it's of $XXX and billion that million guide went CapEx. extra the in an

but think, a So a the spot, good keep And obviously, sub-X we to going we're in unusual balance out. call to end. place good to sheet is, nothing

Operator

Markets. Arun Your coming is question next from from Viswanathan RBC Capital

Arun Viswanathan

So just be would I first my question a guess clarification.

I So slides, think range of note on contribution Then guidance slide, that for one the the 'XX includes on the billion. subsequent $X.X says you Augusta. from updated the it

reason base $XX the when billion? 'XX? EBITDA the from guess for contribution 'XX asking include is should ] out the something have on growth because And I'm EBITDA. million you mid-single-digit is be I [ billion $X.X in And for called say that does that you $X.XX Augusta base So for 'XX, like so real

to if for we more to you billion, $X.X $X.XX it just range. billion billion that the And we say, the us? apply billion. to clarify billion, $X.XX into or would if Could we only get get And or $X.XX $X.X so billion we maybe the $X.XX applied it

Stephen Scherger

to, be Yes. glad I'd Arun.

the point think months Page bit everything did. what was X a for in Page guide XX, you is It little of XX you of course, where the first do in Augusta year. to is just is work as bit on XXXX, have that XXXX, I includes which the intentional. the leap-off would a of the

would a as [ ] X.X a for year, $X.X the tier be functioning of little There's from that point will roughly you. where a slightly of little below year business be the we see this it. for leap-off to Augusta billion of purposes bit generally off right obviously, would is this the Augusta. leap But We've So back math in for exclude doing, headwinds $X.X here not guide. billion low very bit we speaking, kind next $X.X for $X.XX of the year that point grew you're got billion. couple that around the the or [indiscernible] billion modeling

Arun Viswanathan

some on Europe. had some players of there's then into that Northern question And the exports outlook. pricing European Okay. been in from demand in was the weakness increase We've in I America of because just another obviously, Europe out noticed, of North

also is think remarks paperboard. Asia exports Suzano, big some I entering we've into we've strong Europe And some and seen a who then foodservice from of making seen way. about in cupstock

that X you may differences indices wanted But be fact what of see wanted XX kind I So your on a push pricing that light market supply/demand thoughts these in outlook? on some get see especially I are are seeing your on did bit customers. dynamics worry getting of from higher. little the months seeing. of thoughts CapEx that we that just inflation in understand But just to some the ] mean ago, does that, the and are that requirements the month in of as to we read some your we're on your necessarily down the CUK [ may you not X or same

Michael Doss

asked take of Yes, data it's I'm to a range use going stab a our Arun. help at us some decision. think numbers I'll we questions this. I here some there. broad of kind important you've unpack to of inform because the And

million But are it's tons just XXX,XXX look all look at in as relevant across been of now ] percent. data, most you almost look single into that call. Before imports that the us. is market. question coated around which the kind when I've unpack [ grades. drop has right grades at I at the X.X ones would at for of for census I a you catch-all the you X we a U.S. and imports. start, I imports done unbleached data look And as that, of ton XXth There's kind are up to on this because to it if imports say the every we be total of yet will kind of bit a the and number that through come The and a And this think call a best few CEO, Scandinavian have tends paperboard paperboard, is

small. roughly, X% that call So pretty

is of would that's which X what case And in go imports, about after. It's in SBS, at tons the market a year-to-date. ton look the FBB U.S. XXX,XXX You million

So again, into come most divested we already That's that again, mill. fact that's talked X.X%. the the Augusta I about about our that. And

the really open all. bleached material market in sale not a paperboard So at we're way of in

a might being add, X.X largely paperboard Then X%. ton from imports about million about I you've recycled got being Canada, market, with

small. So pretty it's

it look data and You put that it's XXXX at the all compare down. you 'XX, to even and together

read you based are market. when makes these the increasing, and like numbers you the 'XX, it the of got. same high it some sound into kind which on watermark back story, go the also things, And is if this to that but So data of they're for it's not we've imports

we call, look the from on at the really up fiber I'm the I'll States surprised, of and to get to United talked last because of more imbalance trade. are Containers Scandinavia, Europe they've Xx our as not why. Because gone cost you you when expensive about in dramatically. tell

that to high. get that they here is have profile cost very, the very material do So to

tell implications the to short-term a a high-cost short will market. these just because time, medium that on X-decade Of in have for short Absolutely. make term? a could low-cost that's wind experience term, in over in loses I you could because away But ultimately they're facilities the of that dealing over seeing this with that go long wins, a the economics. number you course. strategy Now someone basic based will us market? And tough term. up And

Maybe. a for amount market. could not spend so huge it's not because the we part of of time it's implications? be some something big But on And a us, there short-term

of a couple really other too. There's period that have changes happened of that over time,

the supply. paperboard North transpired on what's in American You market look at

suppliers XX back the go ago, years there were U.S. you paperboard If XX in of

-- there's to XX. continue Now, Of exist. X only number that only that XX

all about leadership. market. to entrants, as in to how you this want Some they They'll new have [indiscernible] some new talked have compete There's here. decide

was of bought almost that market, years also of open consolidation of that there's But transpired XX market the have estimate that the the X here things impact into that the sold nonintegrated suppliers that paperboard ago, we meaning is market it. as XX% probably was other open converting. that well. and One

like XX% that companies integrated goes consolidation that, Packaging. a estimate We've would of that's packaging part been that through we happened. big Graphic Now

you're So case and a to you to about, up. sell run tons, figure And we those got as where out stuff going in we're if the to supplier. non-integrated integration you're own talked our Graphic, going we've drove rates of our

the so their not so, we in But more disconnect brokers a into the there's their At And that who talking could of variety in and opinion ours open looks much to off-grade all our material and our up, market it does process. the talking go and strategies same years brokers. like getting that take anymore. completely a We it for put actually they're do. ago, It do motivations of and back pulp to and what do third-party X seconds brokers. we to, what to our selling terms different that's you see reasons. quit in we and do, indexes information than more broker be time, from what They paperboard they

second good, those that We that efficient That's be that never part expenditure of more what when processing in going actually we've the to ultimately they'll he our We're bit customers. high-quality as even a Waco. fiber Steve to found market. more benefits got some about so talked said use little go ways to in materials

ways may take and you making I but kind return. together. we wanted nuance, hit the all I'll into you we're paperboard that. get where to pricing, that your moves long we've that know to have of answer and but any I see facilities converting it, done have different we're moves and this tuck-under acquisitions we you comes about all. think with can making sure to manufacturing the I we of an outsized kind that's back strategies got on And The make our follow-ups it it's make So question, around a investments the the different

Arun Viswanathan

The still quick 'XX. on pretty you're like million only No, light just especially still I CapEx? appreciate that's see was to Looks $X CapEx. that that. billion that guiding had in Do I some on you in Or in still confident the of $XXX inflation that? really likely, to awesome. follow-up as

Stephen Scherger

it's XXXX, clear given million. sub-$XXX Steve. a million our chas inflection down which No, then of from sub-X% year is sales, X% to investment free free to flow And Arun, the step be cash step would quite the confidence $XXX in down to No, high. today's limited Waco flow in next

cash week. $XXX XXXX, literally that in billion long-range absolute. in million confidence our reviewing our plans it's $X capital again to so And flow We're of this

[ it have those As the that's We where know you $X.X know billion, know the generation We And We we're step ] $XXX know, million, know path we by the flow that this the place. going, in sub-XXX. cash project. to projects. We is always committed down. to.

I that high, we'll So think cash free up projects step exceptionally know what and on. we confidence and we in the the multiyear flow know execute is

and the the move growth or know CapEx agenda can how low for things company. to for mid have growth our model edges and the single-digit with projects you. where what support around overall, the we financial we'll high These invest But

Operator

Panjabi Ghansham from from Baird. coming is question next Your

Ghansham Panjabi

it that innovation base you're the base your as going point? this low adjusted relates as market guidance? to by Is What charts and the Yes. I to and case sales basically it relates assuming What's just to of flat? at Slide to kind way. for that's the XXXX single-digit conditions, the is it drive XX, back your guess you margins, have the packaging going very where EBITDA volumes and nice is case market

Stephen Scherger

said No, it Yes. you well, Ghansham.

of I case it a X. and to year, X to are up from a from if you innovation step this innovation think volumes our be points back engine and to of with our be minus flat kind would that couple up X% going the modestly base consumer given very basis hundred overall,

in got X%, a X% You've consumer minus minus of the that's kind range.

single-digit top the growth, good on which line So side the on basis Page of to gives innovation, us of were is left which what XX. for low were X a base us convey points volume And a top of thanks single-digit rest, chart. couple low add. case for is the hundred is we recognizing X line trying It the to

Ghansham Panjabi

are signs consumers sort Terrific. it in some consumer Has obviously, to and relates going customers Okay. we that it is component building around. relates on that's food, been then the Because it as next year? itself? thinking Is What your that as affordability et not to cetera. the And of to plateaued? promotional of seeing term, change And as is that to on dynamic, activity are right? it into foodservice chart and extent, near going throw

Michael Doss

great we're out mean examples. meals a figure foodservice trying that give on It's to Like well-chronicled Ghansham. that have side, the I too. really these few a out, you question, been there. I'll value

mix an changes. seen overall seen haven't We We've lift.

promoting well quite they're sell and So what sells as means else something doesn't quite that well.

other change the too the as overall down and to, bars, Meaning will like serial maybe little shift doesn't customers refrigerated well. we're is of category is a the be products. in case branded on side, of We maybe too, won't. that categories sell doesn't seeing bit see some the see that, and promotion out there we'll one will there. where our that one terms But on the the promotions some branded the really of much promote that But other are numbers a where are what obviously,

right keep I had can this of growth we've that low like is drive just relatively innovation, a we've stable degree it if we into numbers good ability what right that which better to our the a you answer on, we're seeing about And is market X%. strong. use got wish What So the inflection single-digit question. that is today. I I feel That's now. for XXXX the seen confidence revenue of high and to

Operator

question from next Staphos is from Your America. Bank coming George of

George Staphos

information them back, talking your Is not customers last you that's if on and the only that perhaps your a get I from. still need leveraging manage pricing there retailers, can integrated lifeline points to relate your had where that? get can But that obviously, do very, their packaging, How you with customers to price one. you you're are promoting to, the from innovation The they you not getting question where you and suggestions promotion? further on related downstream, -- the way, is there and very Mike, to could

think And the about related if question pricing. we there,

to talked as what consumer of a additional to over the model You they have the where contracts? more their doing lot of lot consumer the terms if you you're some model. moved of that A navigating companies being in a adjust don't, How that other commercial they you're about in managing your for years And their packaging pricing volume periods. your customers indicated. at terms terms that your take building subsequent of are or in journey into level packaging

Michael Doss

Yes, George.

and CPGs So that market you kind are can tied the that of into appreciate their large our sell pretty their retailers materials materials.

We are well. as

for too. customers are retailers we make items those ours and label them, brand of store in private items of that Some terms of

within to for really to No. customers. a imagine? our we're what really design. in innovation confines that's trying we and they always win we activities our at of part we can as challenging there's any try marketeers, existing marketplace. That's So our But trends customers Are can have of focused big here the move a that try A ideas, provide the that what's to of and the part quite Graphic room and marketing do. norms big help we capable to appropriate, Packaging service you

In think true regards question, high referencing, this I cost is to yes, and pricing part what the business. you're us, for it's fixed a of your

So absorbed. costs are those if the down, under volume goes

these you're I'm individual around and customers mechanisms, have in but getting are our that have sure we making consider into proprietary relationships get pricing a right. deal going is they. we with That So to fair factor we're as not a

through, their things, transparency looking for. too. customers and should If are us. And up fairness, quite are when favorable expect from volumes those pulls our they talk part really other I offering the about then value and that The are of that more dramatically,

George Staphos

'XX, to reversal, year, the Mike, if got from I we quarter, items. 'XX. digester third as bridge next have issue look that's that's are the the you've you outage could, power Those

preliminary net where would pricing are negative? be 'XX? is it building a should If of you sort things hold constant there we analysis any And or positive for our today, be that for other with in pricing

Stephen Scherger

it's George, Steve.

overall, through now, flow you're to practices as briefly, right basis models. commodity is kind just thinking neutral a look probably pricing on and pretty similar those the labor of and all pretty through benefits next Just year inflation the traditional neutral, in past and mark-to-market inflation,

us positive strong come in to earning improvement items. will much inflationary for So year traditional on volume driving offsets of productivity other the from growth that commitment our every

pricing in both commodity pretty are So now. terms and right traditional inflation neutral

Operator

you. closing ahead. conference concludes hand back our I now Thank will That to go remarks. Mike Please the session. for Q&A Doss

Michael Doss

day. about restaurants. call XXXX Thank outlook. Thank our have a year is a consumer and about I'm companies despite you, But our products delivering solid challenging and for quick operator. thank our very excited you, and Graphic for and optimistic these headwinds, Packaging today. great us joining everyone, you, team, is service innovation results. our pipeline on for proud of

Operator

event. concludes everyone. you, Thank today's This

participation. this at disconnect Thank you day. may wonderful You time, a have and your for

Graphic Packaging Holding (GPK) 29 Oct 242024 Q3 Earnings call transcript