Good morning. I'm Sam Darkatsh. On behalf of Raymond James, we'd like to welcome you to the Graphic Packaging presentation. With us today from the company, Steve Steve Scherger, Chief Financial Officer, as well as Melanie Skouras, Investor Relations. Steve, I think you mentioned your prepared remarks, call it 20, 25 minutes or so- Sure. which will leave us maybe a couple minutes for Q&A, but we also have a breakout session downstairs afterwards. With that, Steve, welcome. Great. Thanks, Sam. Appreciate that. I think you got me lavaliered up. Can you hear me okay? Yes. Good morning, everybody, and thanks, Sam Darkatsh. Thanks for having us. Thanks for hosting, Melanie Skouras as well. We're pleased to be here and talk a little bit about Graphic Packaging, give you a good sense for who we are as a company. Obviously, we'll be doing some forward-looking statements today, and all of you know what that means, and so we'll manage through that appropriately. When you stand back and talk about who we are at a glance, Graphic Packaging is a fiber-based consumer packaging company. That's what we do. We're making the packages that are in your lives every day, from the paper cup that you're drinking out of right there. Thank you, sir, for doing that. I appreciate that. To the cereal box that you may have consumed out of when you left home the other day or the six or 12 pack that you carry home or anything through the drive-through. We're in your life every day at the consumer level. We're just entirely committed to the consumer, entirely committed to fiber-based, recyclable, renewable. We topped through about $9.4 billion last year on our way to 10+ this year. I'll take you through the economics a little bit later. That is really the who we are and obviously a huge commitment to safety and our 24,000+ colleagues around the globe. We're a global company, again, entirely focused around the consumer, about three-fourths of the company in the Americas, most of that in North America. We've got very large and robust positions in our markets, and so in the markets that we choose to participate in, either number one or number two position. We expanded our position in the rest of the world, primarily U.K., Eastern, Western Europe, with an AR Packaging acquisition I'll take you through back at the end of 2021 that is going extremely well and has expanded our footprint in Europe to a little over $2 billion. You can see the manufacturing sites that we have locations, 100+ around the world making the end products. That is really the focus of the company, as I mentioned a moment ago. We completed the AR Packaging acquisition at the end of 2021, expanded our European footprint to about a $2 billion business. Again, entirely focused on making the end products that we, as consumers, take home and off the shelves. Expanded our footprint quite nicely, Eastern and Western European. We're seeing very nice growth trajectory coming from that business. The consumer is in a pretty challenging time, but our overall volumes are holding up quite nicely. Again, we kinda operate in the non-discretionary part of your lives. The day-to-day eating and drinking is kind of where we play. Very strong synergy capture and a growth opportunity for this business. Throughout Europe, we feel very good. It's the early days of consolidation in Europe relative to the world that we operate in around fiber-based consumer packaging. We don't produce paperboard, the raw material in Europe. We send a fair amount of it to ourselves there. These are all end products that we're making, again, focused on the consumer packaging side. We're a very nicely distributed company when it comes to the markets that we participate in, the customers that we do business with. We are working with the world's small, medium, and largest CPGs. It's across a very nice cross-section of food, beverage, food service, consumer packaging products. With the AR Packaging acquisition, also a new entry into the healthcare and beauty segments. We're just a very nicely distributed company. No customer is anywhere near 5% of the top line of the business, and over the last several years with the acquisitions we've done, we've really kind of become consistent with kind of how we consume on a day-to-day basis, whether we're a private label buyer, whether we're a high-end food consumer. Our participation strategies match up with that extremely well. We're selling the end products to the folks that you see there, these are long-standing relationships. Tend to be multi-decade in their orientation. We obviously have to earn the right to grow with them every two or three years. It's a contractual business. Typically, we're in two to four-year agreements with our customers. As I know you can appreciate, assurance of supply has become an absolute imperative, particularly over the last couple of years. We have the scale and the capability to service this great cross-section of CPGs in a way that allows them to make sure they've got assurance of supply for the packages. I'll talk in a moment, helps us and them meet many of their circularity goals, ESG goals because of the role that we play, and I'll take you through that in a moment. We're very pleased and proud of the distribution of the business. Again, it's entirely about the consumer and the day-to-day lives of consumers. We're a pretty unique company in that we really play right in the heart of the circular economy. We, with our business today, we have paperboard mills that make the paperboard, and then we convert it, we turn it in to the end products. We're uniquely positioned because the mills are in the United States, we have the ability to make the paperboard the first time from very well-managed, sustainably managed forests. We produce what's called virgin paperboard, or basically paperboard the first time. We make it the first time, turn it into that paper cup, turn it into that six-pack or 12-pack, and then here in the United States, particularly throughout Europe as well, it's recycled. You put it into the recycling process, 60%-80% of all fiber is reclaimed, it's found again. We take it back into our coated recycled paperboard mills, and we make the product five-seven more times, and we'll turn it into the cereal box or the Cake Mix box or some of the other products that we make. We're very uniquely positioned business in the circular economy because we've got a renewable resource in the forests. We make the product the first time, and then we reclaim it, get to make it over and over again. It uniquely positioned relative to our role in basically fiber-based packaging, the role that it plays in a circular economy, as well as reducing food waste and other positives that come along with the role that we play as a fiber-based packaging company. We identified back in September of 2019, we brought Vision 2025 to life, which was a vision for the company to grow very materially. I'll take you through our progress in a couple of moments. At the time, we thought there was about a $5 billion market, addressable market for growth for our business. Over the last few years, with the acquisitions and with a lot of attention to what is possible, we now believe there's about a $12.5 billion addressable market for real innovation, real new to the market products, new to the market relative to fiber-based solutions. The majority of it is plastic substitution in terms of where the majority of those opportunities have come from, very real, tangible, identifiable products. Think about a six-pack that used to have the plastic rings around it. It's now around the globe, moving to a package we call KeelClip, which is fiber-based, holds those six cans together in a very nice and circular way, makes it a recyclable and renewable product. We continue to assess the size of the market. We try to make it extremely identifiable. Real products, real solutions, real size, as opposed to kind of a theoretical large opportunity. We tend to make it very specific. These trays, these bowls, these solutions, these kind of innovations. It's in the markets that we actively participate in today. Every year, of course, we have to be more productive and do better in terms of making our products the very highest quality at the lowest cost. We've got a long history of being highly productivity driven, $50 million-$70 million a year of real cost improvement across the business. It's a bit of the history of the company. We've kinda got that very ingrained. We don't lose it while we're also growing organically. On the prior slide, that $12.5 billion addressable market, for the last three years, we've been growing at 3% a year organically. That excludes price, that excludes acquisitions. That's real new to the market growth. Our goals and aspirations are to consistently grow 100 - 200 basis points a year, and then couple that with an ongoing strong stream of productivity initiatives that drive the business year in and year out. We made a pretty significant announcement along with our Q4 earnings. Few years back, we brought to life the world's lowest cost, highest quality co-coated recycled paperboard facility in Kalamazoo, Michigan. Brought it to life throughout 2022. It's a $700 million investment that'll yield about $130 million of EBITDA improvement. We really like where that is taking us, and so we're gonna do it again. We're putting a new facility into Waco, Texas. We'll put $1 billion to work over the next three years to dramatically alter the cost structure and the cost advantage and competitive advantages we will have in the production of coated recycled paperboard and then turning it into those end products that we were talking about a couple of moments ago. Great location in Waco. It's within 200 miles of 80% of the population of Texas. As you know, Texas is quite a growing population. It's got a great secondary fiber market. What that means is recycling. If you're going to make recycled paperboard, you have to be where the people are because it's who we are that generate the waste that we can then reclaim and take back to this facility and make the very high-quality coated recycled paperboard over and over again, as we were just talking. We've just started construction. Everything's in place because we just did this investment a couple of years ago. It's a known investment, known technology. We've got great muscle memory on how to do it, high confidence in the returns that I'll talk about here in a moment, and it'll come to life in early 2026. About a three-year investment cycle, $1 billion, about $300 million a year. I'll take you through the guidance here in a moment. We can do that and still generate significant cash flow year in and year out. We'll have a very substantial cost and quality advantage. The dark green that you see there is once Waco's brought to life, and then our Kalamazoo facilityAnd this is on a per ton basis, but the cost to produce for us will have a $135 a ton advantage over the entire industry. Most of the rest of the industry is older technology between 30 and a 100+-year-old technology, most of it in the 30, 40-year range, smaller facilities. As part of this, we will close facilities. We have three facilities there, Middletown, East Angus, and the Tama facility that will close. That's the assumption. So we'll bring on some modest net capacity to support our growth as a business, that 100 - 200 basis points of consistent growth, and we'll do so by having the world's lowest cost, highest quality coated recycled paperboard. We really like what we're seeing because making this very high-quality paperboard, we believe that there'll be more recycled packages in more places than it has historically been. I'll give you an example of that here in just a moment. A really compelling long-term competitive advantage, and we're uniquely positioned to make the investment that allows us to seize on that. When we're done with this, kind of the core of the company, the making of the raw materials, the paperboard that we then convert into the end products that we then sell on to our, onto our customers. When done, we produce about 4.2 million tons of paperboard today. Those are those two categories, making it the first time as virgin paperboard. You'll hear other words, SBS, CUK. Those are the kind of the names of them, and then CRB, coated recycled paperboard. We will reduce our footprint down to six very well-capitalized highest quality, lowest cost infrastructure to support what we do, to support our ability to service you as consumers with the packages that we produce. As we'll close down the three facilities that are higher cost, as I mentioned a moment ago, we'll migrate with a modest incremental capacity, 200,000 tons across this infrastructure to support our growth. What's great about this too, is it gives us a lot of levers to pull. If growth accelerates, we actually have some latent capacity. We could keep things open if we wanted to. If things go the other direction for some reason, we have the ability to tether that as well. A lot of flexibility as you kinda look at this infrastructure, this very substantial infrastructure to support our ability to make consumer fiber-based packaging. We're doing two things with this investment that are a little unique beyond what we did in Kalamazoo. One, for those that are looking at technical names, we're investing in a drum pulper. What that really means is that we will have the ability to take an increasingly large diversity of recycled fiber and turn it into the raw material capable of making that coated recycled paperboard product. A good example of this, you can recycle your cups today. That cup is recyclable. There's just not enough of it happening. We're gonna have the ability to recycle up to 15 million cups a day beyond that which is available today, which is what will happen probably throughout Texas and in the region and then expand out, is we will be able to take more and more of the raw materials that we need, what's called OCC in terminology purposes, and put it to use. We're actually gonna also take more of our own internally generated waste. When you make a six-pack or twelve-pack, for example, you generate some waste that is part of the process. A lot of that today just leaves the country because it isn't being recycled, and we're gonna actually be able to recapture it to increase recovery rates for fiber that's available here in the United States. We're gonna put more and more of it to use as we build this out. We're also gonna generate our own energy with the gas turbine investment that we're making, so we'll generate our own energy. Why important? One, obviously consistency in terms of the runnability of this facility, generating our own energy. Also we're gonna reduce absolute greenhouse gases by 12% across this platform, which is very significant. It's significant relative to our own role on the planet and our own role from an ESG and circularity perspective. Real greenhouse gas reductions is something that's material and it's substantial. It also plays with our customers who are trying to meet their own sustainability commitments. Fiber-based solutions, lower greenhouse gases, it is part of, literally from a circular economy perspective, all of us having a lower impact on the planet year in, year out. This is a great investment that does that, and it does it in a material way. It will fit inside of our Science-Based Targets that we'll be coming out with later this year in support of our circularity commitments. Exciting in terms of some things we're doing in addition inside of inside of this investment. The returns on it occasionally be like, "Oh, gosh, really? You're gonna only get 11%-12% returns. This is a 30-year investment, and it's got absolute clarity of return, which is great. The returns come from real fixed cost reductions and real variable cost reductions. We use less water. We use less coatings. You basically make a better product with less variable commodity utilization. We also are closing those three facilities. We get a significant reduction in the fixed cost to operate these facilities, and then we'll optimize that six mil system and obviously continue to grow at 100-200 basis points. This is absolutely good clarity of return. Over the next three years, we'll continue to refine it. The Kalamazoo investment yield a little higher return than this once we kinda got it dialed in. I kind of expect that to be the case here too, but we've got great line of sight. $80 million of that'll come in in 2026, and the other $80 million will come in in 2027. Good margin-enhancing opportunity for us as we look out over the next several years. Financially, 2022 was a very good year for Graphic Packaging. Our top line grew over 30%. That combination of price execution to offset the realities of the inflationary environment that we've been working through, that 3% organic sales growth and a full year of the AR Packaging acquisition. 30% top line, we leveraged it to 50% EBITDA growth from a little over $1 billion to $1.6 billion. Margins grew 200 basis points into the 17% range. EPS up very materially. That's an EPS excluding amortization of the intangibles. A strong balance sheet. We ended the year 3.2 x levered. We like to operate in the 2.5 - 3 x range. When we completed the AR Packaging acquisition, we were in the fours, and so we literally took an entire turn out in 2022, as we generated the EBITDA, turned it into the cash flow, and had left the balance sheet in a very strong position. Great liquidity to do what we need to do. That word integration rate there, that is the percentage of the paperboard that we produce that we turn into the end product that we as consumers utilize. That is a goal we have there to drive that 73 up towards 90%. To put it into context, 85% of our sales today are making this end product that, again, that is we as consumers are making full utilization of. A great year in 2022, and the momentum sets up for a very strong 2023. We have a lot of confidence in 2023. We've brought the guidance out along with our Q4 earnings. As I mentioned, we'll probably pass through the $10 billion mark on the top line. Importantly, an EBITDA range of $1.7 billion-$1.9 billion. That's a $200 million increase in EBITDA on a year-over-year basis at the midpoint. Strong confidence that we can continue. As such, margins will continue to grow. As I mentioned, inside of that, even at spending kind of an incremental $300 million or so to march down the path of the Waco investment, we'll still generate $600 million-$800 million of cash flow, and as such, can see our way to net leverage down in the 2.5x range from 3.2 at the end of 2022, and a continued, strong advancement of Adjusted EPS. Good, strong, identifiable guidance, or we're committed to it, and our line of sight to it, here early in the year is very good. It's all in the context, and I apologize for the numbers here, but it's in the context of the Vision 2025 goals that we established back in 2019, and then enhanced at the beginning of 2022. We actually increased the goals because of the progress we've made. You can see there the progress from 2019, which is when we brought it to life with the 22 actuals and 23 guide, we're well on our way to many of the goals and aspirations that we identified several years ago. As I mentioned, top line moving from $6 billion a few years ago to $10+. Margins moving into the 18% range as we kinda march out of this year with aspirations towards 20%. We can see that over the next couple of years. Very substantial Adjusted EPS growth, the near tripling of that over this period of time in terms of out towards 2025. CapEx is gonna be in that 7%-8% of sales as we make the Waco investment. Have every expectation you go out to 2026, that'll drop down to more normalized levels at about 5%. For kind of a long-term perspective on what it takes. When we're done, as I mentioned, with this investment, these six incredibly well-capitalized mills will be able to sustain themselves very, very well at CapEx at those types of levels. ROIC moving from modestly above cost of capital to into the 10%-12% range, line of sight to that, and then the integration rates. In terms of how to get to 90%, grow organically and continue to grow organically, and then over time, there's probably some tuck under acquisitions in there as well that drive integration. When we acquire businesses that are making the packages, they help to drive integration rates up, us using more of our fiber to actually make the end products. We're contemplating a move to investment grade. We are one notch below. We've been there by the design for quite some time. We now have the scale, as well as the geographic distribution, the margins, the balance sheet, to contemplate that, and it's something that we're working through this year. It's not an absolute, but it's something that we think we have earned the right to pursue that if we choose to pursue it. That's something that we're putting out there as well. We're excited about the progress that we've made. We've had very good progress up until 2022. We're actually looking forward to the year we're in, 2023, despite many of the challenges that are existing relative to a little bit of heat on the consumer, mostly because we kinda operate on the non-discretionary side of our lives. Most of what you do as a consumer is you're making your $5, $10, $15 decisions when you buy something that we've packaged, as opposed to something that's a material investment that you would be making on a more discretionary basis. That's really the overview. I think I did that in the roughly the time that you had in mind there, Sam. I think that leaves us with a couple of minutes. Thanks, everybody. Terrific. We have about five minutes for any questions in the room here. When you originally talked about Kalamazoo K2, the returns on that project at that time were projected to be that same kind of 11%-12% or so. Yep. that you're forecasting for Waco, and ultimately those returns look like they're gonna be more like mid to high teens. Yeah. Give some similarities or maybe some differences between the two projects and what sort of circumstances might occur for Waco to have higher returns than you're originally forecasting? Yeah. No, thanks for that, Sam. I think we're. You're right. We've kind of when we announced Kalamazoo, you said it. It was right in the wheelhouse of the returns we just described, and we're operating several hundred basis points above that is our expectation. We'll get the second tranche of EBITDA this year. One of the reasons our EBITDA is growing in 2023 is because of Kalamazoo running at full speed and capabilities as we had expected it to. It's gonna be what you just talked about in terms of our confidence in the fixed cost reduction. Variable cost reduction is exceptionally high. Where there'll be upside, we believe, is in some of the incremental investments that we're making. The gas turbine driving high efficiency day in and day out, I think there's upside to that. This drum pulper, the ability to take a much wider variety of recycled content, basically the raw material, and putting it to work. We haven't really sized that yet in terms of what that is, what that creates from a what's possible perspective. I think it could lower the actual variable costs and to bring those recycled fibers to bear and together, and just ongoing and consistent growth. We, you know, as we continue to grow at 100 - 200 basis points, fully expect this investment to come to life quickly, with returns, you know, certainly at the level that we've described and as we've mentioned over the next few years. When we see line of sight to it being potentially even higher, we'll bring that forward. There's been a slow but steady conversion from plastic more towards fiber. What areas of plastic conversion, over the near to intermediate term? Yeah. your biggest opportunities? Yeah. What's really good to see is it's nicely distributed across the market segments that we're participating in. As opposed to it being a singular home run, in baseball terms, it's a lot of singles and doubles. We continue to see around the globe, more conversions out of either the plastic rings or a resin-based wrap around cans, bottles, et cetera, moving to fiber-based. We continue to see wins like at the club store. PepsiCo had a very large move last year out of a large resin bag that you used at your Costco or your large shopping experience that held 30 of the snack bags for either yourself or your kids. They put that into a recycled box, and it raised brand awareness, more recyclable, and a big move as an example. We're gonna continue to see moves from foam cups into fiber-based cups, so the food service side of the business will continue to grow. The drive-thru is winning. As COVID kind of played itself out, less folks in the QSR, is more driving through. That's a win for us because more of it is getting into packaging that tends to be fiber-based, more bowls, more trays, other containers moving to fiber-based. Those are just good examples as we look out. We expect it to continue to be a series of small wins that have accumulated up to the 3% over the last three years and 100 - 200 basis points going forward. One of the common pushbacks is that there has been a lot of announced industry capacity additions, at least over the next three, four years or so. Yeah. which has given some folks some concern. Why do you believe that the market can absorb these additions? Very specifically, there's two capacity announcements in the U.S. on the virgin paperboard side, SBS, think about it as white on both sides, for some of the packaging that we've described. Those two investments are announced, kind of in motion, probably more around 2026 and beyond in terms of the timing, so we've got a good three years before it advances. In many ways, the business that we're building is the business that you've seen there. It's highly integrated. We make the end products that we as consumers utilize every day. Bringing on just paperboard capacity doesn't make you a packager. You have to actually make the paperboard and then work with others who can then turn it into that end package. We like our competitive position. We like where we're positioned. We've got fantastic and long-term relationships with our customers. Over time, you know, one, it's a growing market. As we kind of grow into it, if you will, yes, there'll be some more capacity in 2026 than might be needed in that moment. In some ways, our expectation is that high cost will lose, low cost wins, and there'll be some capacity that comes out of the market. In fact, last night, a participant who makes SBS announced the closure of a mill, and so 300,000 tons of SBS will be removed from this market by the middle of this year. It's a good example of, I think, just prudent and mindful supply demand. That over time, if you have a high cost paperboard mill, you make paperboard and you are high cost, eventually a capital call shows up where the cash flow generation just doesn't exist. That was an example of one where the cash required to invest in and maintain it was beyond the capability of it to generate cash. With that, we're out of time.