Hello, and welcome to the Graphic Packaging second quarter 2022 earnings call. My name is Katie, and I'll be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star one on your telephone keypad. I'll now hand over to your host, Melanie Skijus, Vice President of Investor Relations, to begin. Melanie, please go ahead. Good morning, and welcome to Graphic Packaging Holding Company's second quarter 2022 earnings call. Joining us on our call today are Mike Doss, the company's President and CEO, and Steve Scherger, Executive Vice President and CFO. To help you follow along with today's call, we will be referencing our second quarter earnings presentation, which can be accessed through the webcast and also on the investor section of our website at www.graphicpkg.com. Before I turn the call over to Mike, let me remind you that today's press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the release and in our filings with the Securities and Exchange Commission. With that, let me turn the call over to Mike. Thank you, Melanie. Good morning to everyone joining us on the call and this webcast this morning. The second quarter of 2022 was a very strong quarter overall. We demonstrated clear progress on our Vision 2025 goals. During the quarter, we advanced our strategic objectives, building upon our three-year track record of sustained net organic sales growth and delivered margin expansion. Financial results benefited significantly from a positive price to commodity input cost relationship, strong contributions from recent acquisitions, earnings on our organic growth, and positive net productivity. Given strong overall performance and execution, we are upwardly revising our full year 2022 Adjusted EBITDA guidance range today. Beginning on Slide 3 of the earnings presentation, we provide key highlights for the second quarter and a few comments related to the full year 2022 guidance. We achieved another quarter of 3% net organic sales growth, matching our year-over-year growth achieved in the first quarter. In addition, in line with our guidance to increase integration rates in 2022, year-to-date integration was up 300 basis points to 74% for the same period in 2021. Adjusted EBITDA moved higher to $396 million, an increase of 60% or $148 million from the prior year period. Adjusted earnings per share, excluding amortization of purchased intangibles, more than doubled from the same quarter last year to $0.60. We operated well in the quarter, servicing our global-based customers. We continue to successfully ramp up our new K2 coated recycled board machine in Kalamazoo, Michigan. The startup has gone extremely well, and full production capacity is expected by mid-2023. Accordingly, we closed the Battle Creek mill and have successfully sold the paperboard inventory. Returns on our transformational investment in Kalamazoo are on track, and I'm excited about the new opportunities we're seeing in packaging applications that will increasingly utilize coated recycled paperboard. Successful execution of our pricing initiatives and modification of certain business terms with customers have positioned us to fully offset the unprecedented commodity input cost inflation experienced over the last two years. We expect to execute $300 million-$400 million of positive price cost in 2022, fully offsetting the $180 million dislocation we experienced in 2021. The resulting higher 2022 Adjusted EBITDA guidance midpoint of $1.55 billion will drive significant cash flow. This will allow us to delever quickly. We expect year-end leverage will be in the range of 3.0x-3.5x, well on our way to a targeted range of 2.5x-3.0x. Turning to Slide 4. During the quarter, we continued to execute the pricing necessary to offset commodity input costs. $278 million of positive price flow through the business, more than offsetting commodity input cost inflation of $185 million. For the first half, we have realized a favorable price cost relationship of nearly $140 million. On this slide, you see full year expectations for commodity input cost and price realization. We refined our expected range for commodity input cost to $550 million-$650 million. Pricing expectations for the full year were increased roughly $100 million. As a result, the favorable price cost relationship for the full year has increased $50 million at the midpoint from our previous guidance. Finally, as we committed last quarter, you will also see we are providing an initial look at current rollover estimates into 2023. Based on known pricing initiatives, we expect $300 million-$400 million in 2023 pricing rollover. At current commodity input costs, rollover input cost inflation would be in a range of $100 million-$150 million. Please note these figures are directional in nature and are point in time estimates. These figures should not be viewed as official guidance for 2023. Turning to Slide 5. Let me walk through some examples of innovation and new products being developed for our customers by our expanded team in Europe. We have shared with you our excitement regarding the growth potential we see with existing and new customers, markets, and geographies. Seeing is believing, and this slide showcases a small sample of fiber-based consumer packaging solutions recently launched by our European team. In healthcare, the tamper-proof testing kit for athletes from LockCon won the 2022 Swiss Packaging Award. Our design team in Europe had to meet fraud security and ease of handling demands. The resulting packaging solution is made entirely from paperboard sourced from responsibly managed forests and replaces the previous plastic packaging solution. When Beiersdorf Healthcare launched its first climate neutral bandages to the market as part of its sustainability agenda, the company wanted new packaging that mirrored the sustainable nature of the new green and protect branded products for wound care. The packaging solution featured here is made from unbleached fibers, comes from 93% recycled paperboard, and has the lowest weight possible. As desired by Beiersdorf, the graphics reflect the product inside and features multi-level 3D embossing and special varnishes to recreate the look and feel of the bandage. The packaging serves to capture consumer attention from the store shelf. You will also see on this slide the new sustainable packaging developed for Procter & Gamble's Gillette line of razors for male and female grooming. The new packaging showcased here is made from recycled paperboard and is 100% plastic free. The package supports the brand's initiatives to increase the use of recycled materials in the composition of its product packaging and meet its commitment to have 100% of packaging recyclable by 2030. Let me conclude my prepared remarks on Slide six. The investments we have completed and the initiatives we are undertaking to advance our capabilities, engage our employees, and optimize our operating infrastructure have and will continue to differentiate the company. We are leaders in sustainable fiber-based consumer packaging. Our integrated packaging solutions are made primarily from renewable wood fiber from sustainably managed forests in the United States. The paperboard we source for operations in Europe and other geographies outside the U.S. is also made from sustainably managed forests. Greater than 95% of our fiber-based packaging solutions can be recycled today. While there's always room to improve actual recycling rates, we expect the percentage of fiber-based packaging that is recycled in the communities to continue to increase as collection processes are improved and municipalities accept more fiber into the recycling stream. We will continue to invest behind recycling initiatives, consumer education, and new product development through specific company initiatives and through paper and packaging industry associations. The strong performance and cash flow generation expected in our business will result in rapid deleveraging of our balance sheet. This will allow us to continue to execute our long-term balanced approach to capital allocation, including investments back into the business, execution of high return strategic M&A, and opportunistic return of capital to stockholders. We are meeting or exceeding important 2022 milestones on our path to our Vision 2025. We are delivering on new product development opportunities for customers, and to date, we have exceeded our sustainably supported organic sales growth goals. We expect net organic sales growth in 2022 to be at or above the high end of our targeted range. Our ability to help customers reduce their environmental impact and elevate their brands through innovation and improvements in packaging is driving profitable growth for us well into the future. With that, I'll hand the call over to Steve for a review of the financials. Steve, over to you. Thanks, Mike, and good morning. Before diving into quarterly results, let me provide an update on the converting operations we acquired in Russia as part of the AR Packaging acquisition. Production at the converting facility primarily serves multinational food service and tobacco customers. The business is relatively small with roughly $100 million in sales and approximately $10 million in Adjusted EBITDA. As we disclosed last quarter, we have been exploring multiple options for the two plants in Russia. The business is now classified as held for sale for accounting purposes. We took a charge of $92 million during the second quarter to write down the plants to an estimated value pending an expected sale. We are targeting year-end 2022 to complete the sale process. Moving to Slide 8, focused on key financial highlights. Net sales increased 36% or $621 million to $2.4 billion. The year-over-year increase in sales was driven by a second consecutive quarter of 3% net organic sales growth, higher pricing flowing through the business, and contributions from acquisitions. Adjusted EBITDA margin expanded to 16.8%, reflecting an increase of 250 basis points from the same quarter last year. The significant step-up in adjusted EBITDA to $396 million in the second quarter resulted from a combination of positive factors. We experienced an acceleration in the positive price cost relationship as pricing actions taken over the last several quarters were fully realized. Higher volume mix from net organic sales growth materialized. Earnings from acquisitions delivered as planned, and strong operating performance continued. Adjusted earnings per share, excluding amortization of purchased intangibles, more than doubled from last year to $0.60 a share. As stated last quarter, we are including an adjustment for purchased intangibles in the adjusted EPS calculation. As it appropriately reflects the operating earnings and cash flow capabilities of the company. Our integration rate year-to-date was 74%, up 300 basis points from 2021. Driving increased integration in our business is a strategic priority, and you can expect this business metric to move higher in the years ahead as we strengthen long-term relationships with integrated customers and innovate. On Slides 9 and 10, you will find our revenue and EBITDA waterfalls. The drivers of the 36% year-over-year increase in sales were $278 million in pricing and $379 million of higher volume mix from organic sales growth and acquisitions, slightly offset by $36 million of unfavorable foreign exchange. Growth in Adjusted EBITDA accelerated in the second quarter, increasing 60% to $396 million. This was despite commodity input cost inflation hitting a new high in the quarter of $185 million, $25 million of labor benefits and other inflation, and unfavorable foreign exchange of $17 million. More than offsetting these expenses were $278 million of positive price flowing through the business, $81 million of volume mix, and $16 million of net performance. On Slide 11, let me expand on quarterly financials, operating performance, and touch on the industry environment. Our food, beverage, and consumer businesses exhibited strong sales. Growth of 14% before acquisitions was driven by positive price and organic sales growth. Sales from our food service business increased 28% year-over-year. Turning to paperboard market data, the AF&PA will report industry operating rates for the second quarter later this week on July 29. Included on this slide is data from Q1. Industry operating rates across substrates where we participate were 95% and above. The current environment continues to be characterized by strong demand. Backlogs remain above 10 weeks at the end of the second quarter. Our net leverage ratio was 4.36x at the end of the second quarter, while pro forma net leverage was 4.17x. We expect to end the year with net leverage between 3x and 3.5x. Liquidity in the business remains over $1 billion. Turning now to an update on full year 2022 guidance on Slide 12. We are increasing the low end of our Adjusted EBITDA guidance from $1.4 billion to $1.5 billion, raising the midpoint of our guidance range by $50 million to $1.55 billion. Expectations for consolidated sales in 2022 are also moving higher by $300 million to $9.3 billion. Strength in the underlying business and significant pricing actions are driving the higher outlook. On Slide 13, you will see a guidance update for adjusted EPS. As we continue to execute on our growth and margin expansion initiatives, our expectations for adjusted EPS in 2022 have increased to a range of $2 to $2.25, up from our initial guide of $1.75 to $2.25. Let me wrap up on Slide 14, a slide we first presented at our Investor Day in New York in February. We are making great strides, meeting or exceeding the milestones we set for 2022 on our path to an enhanced and strengthened Vision 2025. We are focused on delivering superior returns for stockholders while continuing to advance our leadership and innovative solutions for global customers. That will conclude our comments this morning. Let me now turn the call over to the operator for questions. Operator? Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. Please limit your questions to a maximum of one and one follow-up question. Please ensure your phone is unmuted locally when you ask your question. We take our first question from Mark Wilde from Bank of Montreal. Please go ahead, Mark. Thank you. Good morning, Melanie, Mike, Steve. Hey, Mark. Mike or Steve, I'm just curious, you're de-leveraging faster than expected, and I wondered if you could just help us with the implications of that for capital allocation over the next couple of years in terms of return of capital acquisitions, maybe more organic investment. Yeah, thanks for that, Mark. Yeah, our focus as we headed into 2022, and we were pretty clear on that, at our Investor Day in February, was to de-lever the balance sheet and get ourselves in a really, you know, good spot back down towards our historical, you know, goal of operating between 2.5x and 3x lever. And you know, I'm happy to say that, you know, we're on that track. As you know, we generated a disproportionate amount of our cash in the second half of this year. This year will be no exception. As we model that out, you know, with the puts and takes as we've given in the materials we provided to you, we see ourselves, you know, getting in that 3x-3.5x range, as Steve outlined in his prepared remarks. Once we get there, that does give us optionality to do a number of things. I think our track record is quite good at, you know, finding good investments back into the business. Some of those are larger, a lot of those are kind of steady-state productivity, automation type projects that continue to, you know, help take costs out over time, which is, you know, one of our core operating principles as you well know, also gives us the optionality, to look at, you know, high return M&A. Then it also, you know, funds cash for us to look at, you know, ongoing dividends and, repurchasing of shares. All of those things we've done historically, if you look back over the last five years in various tranches based on trying to, you know, create the greatest amount of value for our shareholders. What we really wanna do this year is get our balance sheet back to that point. I think that's even underscored by the uncertain macro out there, you know, that we're dealing with interest rates starting to rise, and you know, really sets us up, you know, to be opportunistic as we round the turn into 2023, and beyond. We like that. I think Steve, maybe you could, you know, just put a little color on kind of our debt stack and what that looks like here as we finish this year into next year for Mark too. That'd be helpful. Thanks Mike and Mark, good morning. Just talking about that a little bit on the balance sheet, as Mike was saying, I mean, we'll be down in the 3x-3.5x range as we exit out of the year. By year end, I know our debt will be 70% fixed, probably only 30% variable, which is in a good place. Our ability to continue to have a, you know, an interest rate portfolio that's down in that 3% range, as we exit out of 2022 into 2023, we have no maturities coming of any substance over the next couple of years. We've got one that's about $250 million bond that we're retiring this year, that's just under 5%. Actually a net positive for us on an actual interest rate basis. We feel good about that. The debt stack is in a good place. To Mike's point, really the window opens back up quite nicely for us to apply all the critical components of our allocation strategies that we've been deploying to put those back to work as we kind of exit out of 2022 into 2023. And, and- Okay, very good. Oh, sorry, Mark. Just finally, you know, as we've talked in the past, being a material cash taxpayer that isn't gonna be in front of us until we get out into 2024, 2025. Okay, very good. I'll turn it over, guys. Thanks, Mark. Thanks, Mark. Thank you. Our next question comes from George Staphos from Bank of America. Please go ahead, George. Hi, everyone. Good morning. Thanks for the details. Steve, Mike, recognizing this is an official guidance and, you know, it's the old saying, you know, no good deed goes unpunished, right? If we look at the guidance this year at, you know, $1.550 billion at the midpoint, and we consider some of the things that you said in the past about K2 and what it could add next year. You have some remaining synergies from AR and some of the other acquisitions, and you gave us a point in time view on the roll forward. You know, EBITDA for 2023, you know, is a couple hundred million, whatever, somewhat higher than where you're targeting for this year. Recognize you're not gonna give us a point in time or point forecast now. What are some of the things that we should be cognizant of as we're refining our forecast that could be headwind relative to, you know, what would be a quick sort of buildup of EBITDA? For that matter, was there anything that I missed in going through that sort of quick and dirty algorithm? My second question on Slide 12, if we go to it, you know, we noticed that volume has been doing a bit better than prior guidance. What's been driving that? And productivity performance improvement is a little bit below where you have been previously. What's driving that? Thanks, and good luck in the quarter. I'll take the first part, George. This is Mike. Let Steve kind of comment on the second part. Look, I think you've summarized what we put out there very well. I mean, we've got, as we committed to because of the lag that we have on pricing, we historically have given a look at a point in time into both pricing and a kind of a mark to market, if you will, of what the carryover inflation would look like. Having said that, things that could impact us, you know, would be the fact that, if I look at this year, every month, so I'm six for six on this, coming into, you know, kind of the monthly review, we've seen our inflation go up. You know, while that's, you know, sequentially slowed down, it hasn't abated. While there's some things that, you know, you guys see like OCC that you point to that has gone down, you know, if you look at, you know, the second quarter, we saw chemicals and resins continue to accelerate. That was an additional $50 million just in the quarter, from where we thought it would be. I caution everybody that, you know, Steve and I look at this, we're not saying that inflation is in our rear view mirror. As a matter of fact, we're planning for more inflation, because we don't know any different right now, and we think that's a prudent way to do it. That's really why we've been so aggressive on the pricing side to make sure we're staying out in front of it. You know, when you think about 2023, you know, the things that you can count on are the ones you outlined. You talked about, you know, the second half of Kalamazoo, that $50 million, that startup continues to go incredibly well. We're very pleased with the results. You know, we talked Battle Creek down, you know, in May, sold the inventory. Those fixed costs are gone. That'll generate you know, the $50 million incremental here that we expect in 2022, and that'll carry over into 2023. We will have some additional synergies primarily from our AR Packaging acquisition, you know, with Americraft largely timing out now, having owned it a little over a year, it's been a great acquisition for us. You know, we like the verticals from a sales standpoint, all the things that bought. I think the big caution that I would point out, and we just don't know, is what happens with inflation. You know, you saw you know, natural gas this morning hit the equivalent of $55 in MMBtu on the European exchanges. That ultimately is going to put additional pressure on nat gas in the U.S., you know, as they need more LNG, you know, into, you know, the European continent for heating, you know, particularly heating this fall and into the winter. We're trying to think through those types of things. I think those would be the things, you know, that, you know, could be risks, you know, that, you know, could be things that we have to navigate. I like how we positioned ourselves, you know, being aggressive on the pricing front. Hopefully that gives you a little context, and I'll turn it over to Steve now for the second part of your question. Yeah. Thanks, George. I think just kind of ticking through the EBITDA guidance, just some of the movement in the ranges. As we typically do in the middle of the year here, we kind of refine things, narrow ranges where we can, which we've done with the overall range now as $1.15 billion-$1.16 billion. Volume mix is up a bit. We feel really good about two things. One, we're earning on the organic sales growth, the 3%. So it gives us confidence that we're earning on organic sales. The acquisitions are performing very, very well. Embedded in our year-to-date results, AR Packaging's EBITDA, the acquired business, $80 million, which is really above our expectations at this point. So the acquisition is performing exceptionally well, even in the face of some FX headwinds. That gives us confidence on the volume mix. Net performance, very modestly down. That's just us mark-to-market some of our variable compensation and kind of where we are relative to on the variable side of our compensation, which we put into productivity and net performance. We've just refined that. Labor and benefits up a little bit and our other inflation. A little bit of inflation on the labor and benefit side, obviously attracting, retaining talent and continuing to build out our workforce effectively in an inflationary environment. But also the other inflation, insurance premiums, for example, just continue to be up. We've refined those numbers up modestly. We've refined FX more of a headwind at current rates, and so we've put the range more balanced around what we're actually experiencing and then price costs you've seen. We've kind of refined all the numbers. The net of it all is that performance on price, organic sales growth, execution, Kalamazoo gives us confidence that we are able to actually overcome some of the headwinds we've seen in things like FX and some of the realities of some of the other inflation. Thank you very much, guys. Good luck in the quarter. Yeah. Thank you. Thank you, George. The next question comes from Mark Weintraub from Seaport Research Partners. Please go ahead, Mark. Thank you. Appreciate all the color. As you note, there's this uncertainty about where inflation goes, which has been the case for a while, and you've been getting out in front with pricing. There's a little pause now on pricing. Can you sort of explain perhaps a little bit why there'd be a pause now? Are you at a point where It gets harder just because the prices have gone up as much as they've gone up? Or, if you can give any kind of color on, you know, what's the desire to keep getting out in front in case inflation keeps going? Yeah. Thanks, Mark. I don't wanna speculate about what we would or wouldn't do in terms of pricing on a go-forward basis, but I will tell you this. We look at a wide variety of factors when we look at, you know, making our pricing decisions and, what we decide to do on the various substrates. One of the biggest ones is around operating rates. When you look at the operating rates that we've seen on these substrates and how they've been very firm, actually, you know, at the high end of the range from a historical standpoint over the past, you know, few years, you know, that's informed a lot of our decision-making process along with the backdrop of inflation that's been really unprecedented in terms of what we've seen. We wanna stay out in front of that. We're assessing that. We look at it on a routine and regular basis, as you can imagine. Beyond paperboard, we're looking at our existing contracts we have with customers. You heard Steve talk about, you know, modification of certain business terms and conditions. We continue to look for opportunities to refine that, particularly in a market like the one that we're in now, because it makes sense for us to do that on contractual renewals. Hopefully that gives you a little bit of color on what we're looking to do, and how we do it. That does. Very, very helpful. Thank you. Just one quick follow-up. You talked about there continued to be inflation you saw in the second quarter. If you look sequentially, third quarter versus second quarter, are you anticipating that there will be much additional inflation? So I'm not talking year-over-year, but if we just think about it sequentially. 'Cause you did say there was more, but at the same time, you suggested it was abating. Maybe a little bit more specificity on if we think about 3Q to 2Q. Yeah. Mark, it's Steve. I think from a sequential Q2 to Q3 we'll see probably a little bit of abatement there. I think we were $185 million of inflation. The guide that we've provided is more in the $140, $150, probably heavily driven by the reality of inflation starting to materialize last year in Q3. Yeah, sequential Q2 to Q3 should be down modestly, certainly at the midpoint of the guide that we provided around $600 million for the full year. Okay. Just to clarify, it'll abate year-over-year, but still, if we were just to think about sequentially, you're expecting essentially costs to be higher in the third quarter of this year than the second quarter of this year. Is that correct? Not year-over-year. Just if we were to take prices of things for the third quarter of this year. Yes. Yes versus price of things. Yes. The actual price of things in the third quarter of this year will be higher than the price of things in the second quarter of this year. Then on a year-over-year basis, it will be modestly lower on a year-over-year basis, which is why you get sequentially the increase from Q2 to Q3 on a relative to last year is modestly lower. Actual prices, Q2 to Q3 in 2022 are up on a quarter-over-quarter basis, which is what Mike was talking about. We haven't seen a quarter yet where our full-year expectations of the inflation for the year hasn't moved up modestly. Understood. I know you look at it seasonally, so it's usually the year-over-year comparisons you focus on. Could you quantify? Is there a way to quantify the cost from 2Q to 3Q? Say that again, Mark. I'm not sure I'm following your bouncing ball. Yeah. If we were to look at the business sequentially, not year-over-year, and we look at the types of buckets, price, cost, et cetera. If you were to try and quantify the input cost bucket, how much might that be up? I realize that's not how you normally are presenting it, so it may not be a fair question, but if you had that handy. Well, I think the way to think about it, Mark, is that sequentially price cost, which is really the critical relationship. We were $93 million favorable in Q2. We'll be a little over $100 million favorable in Q3. The relationship is in a similar place, Q2 to Q3, as we execute on our pricing initiatives that you would expect similar in Q4. We're now in a place where we're in that $100 million plus or minus range on a price cost basis per quarter for Q2, Q3, Q4. Thank you. As a reminder, please limit your questions to a maximum one and one follow-up question. We now move on to Ghansham Panjabi from Baird. Please go ahead. Hey, guys. Good morning. Thanks for fitting me in. You know, I guess, Mike, just going back to the inflation question. You know, many commodities have pulled back, just given the weaker macroeconomic backdrop. There's a good chance that some of this, you know, might lead to some level of deflation, just given the very high levels we're coming off of. If investors, as they sort of evaluate paperboard, as a commodity as well, you know, how should we think about a deflation cycle if one were to manifest, in terms of maybe the industry structure having changed in the U.S. over the last three years or since the previous deflation cycle? Yeah. Thanks, Ghansham. Again, we're being cautious here around making sure that we're not trying to predict what's gonna happen from an inflation standpoint, because as you well know, you know, things change, you know, real time, as recently as yesterday relative to what nat gas was doing. You know, here's a big, you know, spend for us, and it, you know, shot up pretty good with, the news coming out of Europe. That's why we do what we do. Having said all that, I mean, if that was to occur and we started to see input cost deflation, you know, what we'd have to look at is, you know, to take a look at the operating rates on paperboard and how well that's holding up. I think as you look at what we've been able to do, we've grown our top line here, organic volumes now for the past three years at a 3% level. That's chewing up a lot of paperboard, you know, that we're making and also that we're buying, you know, on a geographic basis. You know, that really informs the overall pricing of, you know, boxboard, you know, globally is, you know, how well, you know, operating rates are and what's going on with inventory. That's what I would, you know, say needs to be monitored and watched. You know, coming out of the second quarter, as Steve said, you know, our backlogs on all our substrates are unmoved at 10 weeks. We're actually above historically where we have seen them to service customers. You know, we used to think about a very balanced and strong market being 6-8 weeks. That allowed us to service our customers real well. This growth has consumed a lot of that and it's put pressure on it. To be fair, we actually have some customers that we're not able to service quite as well as we'd like to right now because of the fact we don't have enough, you know, paperboard available to us to process. You know, that is all part of the calculus and how we look at it. It's very clear. For my second question on elasticity, I mean, three months ago, many of your customers downstream from you, including the retailers, you know, were talking about record low consumer elasticity, and that has clearly changed very quickly. Yeah. Including Walmart yesterday and Conagra last week and so on. How do you see that impact, you know, from an end market perspective across. I know you're exposed to consumer staples, but you know, the consumer is pulling back. Just your thoughts in terms of product development, have you seen any changes there? Have you seen any inventory reduction efforts at your customer levels? You know, anything you can share. I'll start with the inventory reduction question. Of course, we've got limited visibility into that, but we've been hand-to-mouth with most of our customers, so I don't expect that there's been a big inventory build of any appreciable nature, you know, in the supply chain of the things we provide to our customers. Having said that, you know, elasticity rates have adjusted. We have had a couple customers that have reported here recently. You know, I think what you're referencing is their core volumes were down 1%-2%. Yet, when you look at us, you know, we performed at 3%. The question is why? Well, what we've been trying to do is provide, you know, detailed examples. Like I said in my prepared remarks, seeing is believing. We've been showing, you know, the types of single-use plastic replacement options that we've got and new product development activities that are underway and commercial. That's really on the margin, what's driving our demand. Gotcha. It's real. You know, Europe is kind of, you know, ground zero for that. That's why we talk on our slide number five that you see there, all the examples we listed there. The vast majority of those things were in plastic, and now they're in, you know, fiber-based, you know, paperboard. We talked about our punnet trays continuing to penetrate the retail outlets. We've profiled PaperSeal, you know, replacing polystyrene trays. We've talked about foam-to-paper conversions that are ongoing. Of course, our KeelClip and some of the things we're doing on the beverage business. Our machine sales for beverage in Europe are, you know, at a record, you know, pace this year. You know, really substituting, not just KeelClip, but fully enclosed baskets and wraps. When you put that all together, you know, the end result of that is we're bullish on our goal of 100-200 basis points of true organic growth year-on-year as part of our Vision 2025. The key component of that is, you know, single-use plastic replacement, and we're winning. Thanks, Mike. Bye. The next question comes from Cleve Rueckert from UBS. Please go ahead. Great. Thanks very much for taking my questions. Good morning, everybody. I just have two on organic growth. You know, I just sort of wanted to dig into, you know, this very strong organic growth that we've been talking about. I'm just curious if you can give us a sense of whether that's coming from all the new product launches that we've been discussing over the last couple of quarters. You know, you sort of lay them out in the slide deck every quarter. Or if it's sort of like accelerating adoption of products that you've already brought to the marketplace. Yeah, Cleve, it's Steve. I think one of the things we're very pleased with is that, a lot of the network organic sales growth has come from new to the market products, things like Mike was just referencing on his comments and in his prepared remarks. These are new products, whether it's punnet trays, whether it's PaperSeal, KeelClip, meal trays, bowls, other plastic conversions. It's clearly for us consistently been 100-200 basis points of our organic sales growth. As we've talked in the past, we track that on a new product basis every month, every quarter. It's an important part of why we've been fundamentally outperforming the broad-based markets because of the conversions to fiber-based. It's heavily around the new side in terms of new conversions. If you kind of go underneath at the market level, the good part of the portfolio functioning as it has been is that our traditional, you know, beverage consumer food business has consistently been growing 2%-3%. Our food service business, particularly this year, has rebounded quite materially on the volume front, growing closer to 10%. The portfolio of products that we've kind of built over the last several years, both regionally, as well as from a market participation strategy has held up very well in terms of where the growth is actually coming from. Got it. That's very clear. You know, just sort of building on the success of the new product launches that you have, you know, how should we think about market penetration, adoption, and then maybe, you know, whether there's like an economies of scale margin opportunity behind the recent success? I mean, is that sort of like the next phase of this, you know, 2025 journey that we've been talking about for a couple of years now? Yeah, Cleve, I'll start, and Mike can add on. I think one of the inherent positives of our Vision 2025 is that our addressable market is in fact quite large. When the addressable market is measured in mid-teen billions, and we're putting up $100 million-$200 million of organic sales growth on an annualized basis, I think it does show the runway that's available, particularly in plastic replacement, which is the largest of the components of the addressable markets that we've talked about. I think that's why, as Mike just said, our confidence in 100-200 basis points on a sustained basis over a multi-year journey gives us confidence that it's there because of really the question that you're asking. I don't know, Mike, anything you want to add? No, I think, Steve, look, the other part of that is we're earning it. I mean, when you look at the margin profile of the new products that we've launched, and you see that, you know, Cleve, in the waterfall that we presented there, you know, here for the second quarter, is not only are we growing the top line, we're growing the bottom line. It's the stuff's in our wheelhouse. It's part of our integrated, you know, packaging, you know, platform that we have. It's kind of a virtuous cycle we continue to work on where we find, you know, these opportunities, you know, and really fit what we do. Got it. That's very clear. Thank you. Thanks, Cleve. Next is a question from Kyle White from Deutsche Bank. Please go ahead, Kyle. Hey, good morning. Thanks for taking the question. I wanted to just quickly go back to George's question and ask it again in a little bit different way. Appreciate the price cost outlook for 2023 with the caution on commodity costs as well. When you think about the other buckets, is it fair to assume that performance should mostly offset labor and currency? Really only other wild card that we have for next year is what happens on volume? Look, Kyle, you know, from an intellectual standpoint, you're right when you look at it that way. All I'll say is that, you know, six months between now and the end of the year is a long time, so things can come up. Directionally, our track record about being able to offset our labor and benefit inflation with our productivity is solid. Our confidence you're hearing from us relative to Kalamazoo is very high, you know, based on what you've seen us do, you know, to date. As Steve mentioned, you know, our AR Packaging acquisition is performing quite well. Look, let's not forget, you know, Europe's got a war going on in the Ukraine, and that's got other implications that could happen here relative to, you know, big geographies where we participate, like Germany as an example, with nat gas prices going up. There are variables here that, you know, could hit us and, you know, we're watching those, and, you know, trying to make sure that we countermeasure those as an example. We're putting LNG capability into a number of our factories, you know, in Europe, you know, to allow us to kind of mitigate and continue to operate under those kind of scenarios if you can't get natural gas, but they're out there. That's the caution that we're providing here. Yeah. Just adding on to that, Kyle, I mean, obviously we're not providing guidance on 2023 today in the middle of 2022, but we'll also dial in things like our traditional maintenance downtime. We do have years where it's +$10 million or $20 million on a year-over-year basis. You know, we'll dial that in obviously as we move out into early next year. Fundamentally, the model for the business really hasn't changed based upon the key components and the confidence we have in the, you know, in the items, if you will, that offset inflationary. The volatility in Europe that Mike's referencing is important. Got it. That makes perfect sense. Just as a follow on, I think a lot of investors in the paperboard space are concerned about, you know, potentially being at peak pricing, with potential for pricing cuts later on. Maybe can you just talk about some of the levers that you have to keep your markets in balance if demand were to soften? I know you have some options on the CRB side following the Kalamazoo project. Kind of what's the latest with Texarkana investing for flexibility to switch between CUK and SBS there? Yeah, thanks for that. We continue to look at all those projects. You know, we look at Texarkana as a swing machine to CUK right now. You know, as I've indicated here, we're very busy on our SBS, you know, needs and requirements, both our internal and external customers that we have to service. We continue to look at FBB options. You know, for Augusta, we told you some trials we were running. They would continue to work on those kind of things. Those are options for us. The biggest thing, Kyle, we need to do is to continue to drive our organic growth profile, you know, here. You know, we've been doing that now for over the last three years. Now if that was to change, you know, our confidence is high that we'd be able to outperform in a market. We've also, you know, shown a proclivity, you know, in the past to make sure that we're matching our supply with our demand. This would be no different if we got into that kind of a situation because we wanna make sure, you know, that we've got, you know, the material we need to service the demand that we have. That's how we operate the company. Kyle, just to add to Mike's comments, I think one of the things you've seen us do a lot of over the last couple of years, particularly as COVID played out, was to move products between and among all three substrates where we needed to. It's really given us the visibility into really a 4 million ton production capacity that we can move between and among where necessary. To your question, in an economic slowdown to match supply and demand, we have the levers to pull between and among our facilities. Our flexibility today, I think, Mike, we'd probably argue is as high as it's been on our ability to take those kind of decisive actions on supply demand if we see that as something that's required to uphold, you know, a good appropriately balanced supply and demand environment. Absolutely correct. Sounds good. Congrats on the strong quarter. Thanks, Kyle. Thank you, Kyle. The next question comes from Gabe Hajde from Wells Fargo. Please go ahead. Mike, Steve, good morning. Hi, Gabe. I was curious, there's been a lot of ground covered here, but if you were to force rank kind of the variables that would cause you to be at the low end of your guidance for 2022 and/or at the high end, I'm picking a few out here, one being price cost relationship, two, kind of volumes in Europe, maybe foreign exchange as a related item there, and the Kalamazoo ramp up and/or productivity. Are there other factors that we should be mindful of, number one? Then number two, just like I said, the order of priority or where you see the biggest risks to those? Yeah. Gabe and Steve, I'll start. I mean, I think based upon the last 18 months, the most volatility and variability has been in inflation. That's the one that can move materially here in the quarter. Not seeing much movement, but we've got another quarter beyond that. Over the last 18 months, inflation has clearly been the most volatile, which would be both high end and low end to your question. FX has more variability here in the short term, which means that it has the ability to move. We've certainly seen a strengthening dollar, which increased our range, and that tends to be measured in, you know, low $10s of millions, but that is something that's not in our control. Obviously, our line of sight to our volumes, and at this point, labor and benefits inflation and generally volumes is pretty accurate. I'd say probably those two are the least controllable for us, and as such, would probably have the highest degrees of potential variability. Maybe just to add on, Gabe, I think you know, price cost obviously very important in terms of some of the swings that Steve just talked about, and I think he's bounded those properly for you. What I really am excited about for us is we've got a fair amount of self-help you know, in going into an uncertain macro with the things we've done in the past. I mean, when you look at Kalamazoo, that'll deliver the better part of $130 million over the next, you know, two and a half year period of time, which is huge, right? You know, to kind of bring that on and fully integrate it into our supply chain the way that we plan to do it. And then we've got, you know, the AR Packaging acquisition, which Todd referenced a couple of times here. It's going well, but our confidence in that $40 million in synergies that we outlined is incredibly high. You know, in addition to kind of pricing and kind of managing the, you know, the inflation side of this to the best degree we can, you know, we've got these self-help opportunities, and, you know, that gives our team something to grind on, something to really focus on, you know, and you want that as, you know, a CEO going into this kind of a, you know, environment so that everybody can stay heads down and really, you know, focus on execution, which is what in fact they're doing. Well, thanks, Mike. I appreciate that. The second one, and real quick on the Kalamazoo project. I think when that kicked off, it was meant to be capacity neutral. You mentioned in your prepared remarks that Battle Creek had come offline. I guess the question is, you know, you're still running Middletown, and the other mill up there in the Northeast. Despite that, you're still at 10 weeks of backlogs in CRB as it sits right now? That's correct. That's the supply side of it is you've accounted for it. It's you know our mill in Quebec you know in East Angus. Then you know the Middletown mill and then obviously Kalamazoo with the new machine online. The net of that on a net basis is an incremental call it 180,000 tons, and that's factored into the 10 weeks of backlog and you know the growth that we're seeing here over-indexed really to you know CRB in 2022 and heading into 2023. All right. Thank you. Thanks. Thanks, Gabe. Next, we have a question from Adam Samuelson from Goldman Sachs. Please go ahead. Sure. Yes, thanks. Good morning, everyone. Morning, Adam. Good morning. A lot of ground has been covered, and I wanted to maybe go back to Europe a little bit. You alluded to industry operating rates in North America. We'll get the official data for the second quarter later this week. What's your sense about industry operating rates in Europe? You talked about kind of looking at gas supply kind of mitigation and contingencies for some of your plants over the next few months, given gas prices in Europe. What's your sense on kind of what your paper suppliers and board suppliers in Europe, what they're able to do from a contingency perspective to deal with the really dramatic energy price moves there? You know, it's a great question, Adam. I appreciate you asking it. If you take a step back and think about in North America here, you know, this morning, you know, nat gas on the exchange is around $9/MMBtu. On the European exchanges, that number hit $55/MMBtu, you know, overnight and into this morning. Just to put that in perspective a little bit for you, what that means, that $9/MMBtu at our most efficient CRB mill in Kalamazoo, Michigan, that would equate to roughly $50 a ton. That gas would cost, you know, in terms of our overall cost, around $50 a ton. If you do the math on that, you know, you've got, in assuming that a GD board or a CRB manufacturer in Europe was as efficient as Kalamazoo, which, you know, most are not, that'd be $275 a ton on an equivalency basis. Just put that into perspective. When you think about cost structures and trade flows on, you know, like FBB and virgin paperboard and where it goes and what, you know, people would have to do over the short and medium term, you know, that's a challenge for, you know, the CRB manufacturers in Europe for sure. Now, we don't make any board over there on CRB or any other substrate, as you know. We're insulated from that. We're obviously paying higher prices, you know, for the paperboard that we buy from them. You know, but it creates some interesting, you know, trade flow opportunities if you look at kind of the FBB board and what that could, you know, potentially replace in terms of, you know, the higher cost producers of GD board, CRB board in Europe. That's on our minds. I can't speak to what they could do from a contingency standpoint if they could run LNG. That would be an awful lot of LNG you'd have to procure at a converting plant. It's obviously much smaller. You know, those are the types of things that'll play out over the next six to nine months. You know, we're watching that and making sure that, you know, we've got, you know, clear line of sight for that. Hopefully that gives you a little color. Yeah. Adam, it's a great question. Yeah, yeah. I mean, as we look at it, as Mike just outlined, I think the broader implications are yes, relative to our buying paperboard, but also the trade flows from an import-export perspective, just given the realities of right now costs moving up in Europe pretty significantly. We're obviously taking the price actions necessary to offset that with our customers, but I think the trade flow components are actually probably as equally important. Okay. Well, maybe just as a follow-up to that. Just how do you think about kinda your own contingencies on a surety of supply if some of your suppliers in Europe have to make some tough choices on operating given energy constraints? Yeah. The primary market we want to supply our low cost, high quality CRB out of Kalamazoo is North America, hard stop. Having said that, we have had several customers that from contingency standpoint really want us to qualify some of our material, you know, in Europe. We will do that. That isn't a market we're looking to necessarily penetrate. For security of supply, for some of our largest accounts, we will look to, you know, find a, you know, way to make sure that that is done. All right. Great. That's some really helpful color. I'll pass it on. Thank you. You bet. Next question comes from Mike Roxland from Truist. Please go ahead. Thanks, guys. Good morning, Mike, Steve, Melanie. Appreciate allowing me to take some questions here. Yeah. Good morning. Good morning. Just on Middletown, obviously, you at one point were expecting that mill to be closed, and you decided to keep it running given the demand that you're experiencing. You know, once the K2 is at nameplate capacity, is Middletown something that you would again consider closing? And can you also give us a sense of maybe the profitability differential between K2 and Middletown? Just, you know, roughly speaking. Yeah. We factored the nameplate capacity in when we made the decision to say we're gonna continue to operate Middletown. We have that demand, Michael. Again, as I just kinda outlined, there's uncertainty on a geographic basis here that we wanna keep our options as open as we possibly can. In terms of differential and cost, obviously the new, you know, equipment, you know, consumes significantly less electricity, uses less gas, all those things that we've talked to you about. The biggest difference is we make 1 million tons of material in Kalamazoo. We make 180,000 in Middletown. It's really from a fixed cost standpoint quite different. I think I'd point to if you look at the cash cost curves, you know, we estimate that we've got, you know, the better part of $100 a ton advantage in Kalamazoo versus the balance of the industry. Middletown would be in that balance of the industry on an aggregate average. Got it. No, that's helpful. Just one quick follow-up. Just on the FBB you mentioned. I'm just wondering if you have any update on the thermomechanical pulp production that you were contemplating at your Augusta mill. I think it was you, as you mentioned, Mike, you were gonna do trials in March and April. You know, how did they progress? Do you have any increased confidence that at some point you might actually proceed with FBB production? You know, like I said, at the Investor Day, Michael, we're gonna run trials. We're gonna look at a bunch of different things. That's what we do to make sure that we've got optionality. We don't have a project that we're ready to talk about, you know, with FBB right now. We like kind of the optionality that we've got with our existing mill footprint that we have. As Steve alluded to, we've got a lot of levers that we can pull, you know, here, depending on how things develop over the next year or two. You know, you can count on us to continue to look at those types of things. If we ever do conclude that it makes sense to do so, we'll obviously roll it out. Right now we're just, you know, doing internal work and studies. Got it. Good luck in the balance of the year. Thank you, Michael. The last question comes from Arun Viswanathan from RBC Capital Markets. Please go ahead. Great. Thanks for taking my question. Squeeze me in here. Two quick ones. First off, I guess just on the operating rate side, do you expect operating rates to kind of maintain in this kind of mid-90%s level for all three substrates as you go into 2023? You know, just given that the demand has actually been a little bit better than expected, would you expect any kind of debottlenecking projects or increase to capacity as we look out a couple years? Then secondly, that's somewhat related, do you expect CapEx to remain kind of in the $450 million-$500 million range? Or maybe you can just comment on those two items. Thanks. Arun, good to hear from you, and thanks for the question. I'll take the operating rate. I guess, look, we're not gonna speculate on what's gonna happen on operating rates in 2023 right now. You know, with our 10-week backlogs, you know, we'll get the full look on that from the AF&PA here on Friday after markets close. That'll be another data point that's out there. I expect it to be solid given what we're seeing, and we're a large component of that, as you well know. You know what, in regards to debottlenecking projects, I think, look, everybody works on creep, you know, every year. You know, that number tends to be somewhere between half of one percent, maybe one percent, you know, that people, you know, look to do. The only major new capacity that was coming online in the near term was our mill in Kalamazoo, and it's up and operational, and we're ramping it up rather quickly, as I alluded to. The next major tranche of anything domestically, you know, if they end up doing it is, you know, what Billerud brothers announced, and that won't come online until probably 2026 based on their most recent comments. That's what we know. Arun, on CapEx, as we've talked, you know, CapEx in the 5% of sales, so $450 million-$500 million is clearly good baseline CapEx that allows us to maintain our assets appropriately as well as invest for kind of core productivity. Any projects that would be beyond that, we would call out very specifically with identifiable returns as part of our overall, you know, approach to capital allocation. The fundamentals of the kind of 5% doing what it's doing and anything above that, if we chose to, being called out separately is how we've continued to operate. Thanks. I'll now hand the call back over to Mike Doss for any closing remarks. Thank you, operator, and thanks for joining us on the call this morning. We look forward to updating you next quarter on progress towards achieving our Vision 2025 goals. Have a great day. Thank you all for joining. This now concludes today's call. Please disconnect your lines.