Great to see everybody in the room. Great to see Stephen Scherger here. Thank you, George. Well, you're here. Let's have a, let's have a fireside. What do you say, Steve? I think that's a great idea. Oh, yeah. Yeah, just let's be impromptu. Highlight of the day for sure. we'll take it. As you know, Steve is Executive Vice President and Chief Financial Officer of Graphic Packaging Holding Company that we hold in high regard. From October 1 of 2014 through December of 2014, Steve was Senior Vice President of Finance for the company. Has a long career, both at Graphic as well as within the industry, a font of knowledge, and no pressure, Steve, you know. I appreciate that. We're looking forward to your comments today. you know, coming out of earnings season, there was a lot of discussion about price cost, the outlook for 23. I remember some questions about capacity too. Sure. You know, we'll probably talk a little bit about that perhaps. Thanks for being here. Yeah, no, thanks for having me. We're delighted. For the folks that are joining here this afternoon, it's good to be here and good venue. The plastic guys were all talking smack at the luncheon, you know, it's... Do we need to go longer? We'll get into it as we need. I guess the first thing, relative to your guidance, and it wasn't that long ago that you provided it, the $1.7 billion to $1.9 billion of EBITDA, the $2.50 to $2.90 of earnings per share. Remind us what some of the biggest supports are and perhaps some of the headwinds are as you look at that. You know, again, it's early in the year, your forecast. You know, what do you see as the potential upside or downside tensions there? Yeah. No, thanks for that. You know, obviously coming out of a very good 2022, we were very pleased to pull forward guidance for 2023, kind of the components of which you touched on, heading towards a $10 billion top line, the $1.7 billion-$1.9 billion EBITDA, midpoint of $1.8 billion. That's up $200 million year-over-year, which is consistent with the investments we've been making in the business, generating $600 million-$800 million of cash flow, along with making a three-year investment in a new CRB mill in Waco, Texas, which I'm sure we'll talk about. The ability to do a both/and there is fantastic. As we also mentioned in the guide, taking leverage down towards the 2.5x range coming out of 3.2 at the end of 2022, which was in the 4s when we acquired AR Packaging at the end of 2021. Debt reduction being a very high priority for us. Then EPS $2.50 to $2.90, again, a significant step up from $2.33, I think it was in 2022. Key components are exactly what we've been executing on, which is to continue to execute on pricing that is representative of the value of the products that we produce. By reminder, we're a fiber-based consumer packaging company. We make the end products that you as consumers take home. Our customers are the Anheuser-Busch's and the Kellogg's. We make the end products that we as consumers utilize, the cups that we carry, the six-packs, the twelve-packs, et cetera. Continuing to executing on the price initiatives necessary to offset the commodity input cost inflation environment that we've all been wrestling through. We've done that very successfully. We'll continue to do that in 2023. We've set a target out of continuing to grow organically, 100 to 200 basis points. We now have three years of growing at 3% organically, driven by our innovation engines and a move towards fiber-based solutions, preferred by the customers and we as consumers. Our productivity initiatives. Kalamazoo, our initial CRB investment has gone extremely well. we got the first $47 million of value from that in 2022. We'll get the next $50 million+ in 2023. It's been a phenomenal investment for us and is operating at very high levels. That combination of price, organic sales growth, and earning on it, and then productivity that more than offsets the realities of labor benefit cost inflation is how we'll continue to improve margins this year and continue to do to execute at a level consistent with our Vision 2025 aspirations. Would it be fair to say, recognizing it's only the first of March, not trying to get you to say something that you don't wanna say, given where we are at the moment, would the tensions be maybe to the upper end of your range or the upper half of your guidance? Is that, gee, George, that's even at this juncture, we don't. Well, it's. Recognizing a lot can happen with- Of course. A lot can move, and we've seen incredible volatility on commodities and the like. As we talked on the call, and it's worth repeating, we did put a pretty wide range out- Yep. -on inflation, appropriately so, given the environment that we've all been operating inside of. Currently, the kind of $100 million-$400 million of commodity input cost inflation assumption that we have is operating at the lower end. If there was a bias, you know, it would be midpoint and up if there was a bias on today. That's not a statement of moving anything, obviously, George. No, of course. I think that's the natural bias, as we're, you know, navigating through the realities of a lot of movement, up and down on the commodity side. Okay. Number of people in this room right now, a number of people listening on the webcast, this is over in, you know, 23 minutes and 45 seconds. What do you want people to take away as the reason that they talk to their PM or they talk to their trader, we've got to buy more Graphic Packaging right now or not? Obviously, I think you're probably biased there. What would it be? Yeah, you know, I think if you stand back, there's a few things that who we are as a company, the business that we've been building, the business we continue to build. This is a packaging company. We're a fiber-based consumer packaging company. We're in all of your lives every day, we're in it in kind of the nondiscretionary part of your spending. It's how we eat, it's how we drink, it's how we drive through the Starbucks or the Chick-fil-A. That's the business that we are. If you believe in the resiliency of the consumer, and in how they spend their nondiscretionary dollars day in and day out, if you believe that there's just a natural bias, not an always, but a natural bias at the consumer level for products that are modestly better for the planet, recyclable, renewable, if you believe that fiber-based recapture rates at 60%-80% is a good thing and allows us to make products the first time and then make them 7 to 8 times again, as probably one of the unique circular economy companies that we are, and if you believe that we're good, solid allocators of capital, then you should continue to invest in the company. I think it really comes down to a confidence in the consumer, a reasonable confidence in a circular economy, a confidence in our ability to allocate capital thoughtfully. Yep. I think you believe those things, you should be absolutely weighing in hard on us. Thank you. Appreciate that, Steve. Any questions from the audience to start? You know, maybe a quick question here coming out of our luncheon discussion. I don't know if you had a chance to sit in on that. I did not, by the way, so my apologies. You have a busy day today. We were talking about fitness of purpose, not every package can serve every purpose. Even though fiber is recycled significantly more than other materials, it might not work in some applications. That is a true statement. Where are you beginning to push further on the edge to make fiber fit for purpose in some applications that might not have been the domain of fiber-based, which could be pretty meaningful for you in the next few years? Yeah, no. In fact, by the way, I agree with the broad statement that everything does need to be appropriate fit for purpose. I think what we have found interesting is that when we brought Vision 2025 to life in September of 2019, we worked hard on what's an identifiable, addressable market for where we can grow fiber-based solutions in our markets: food, beverage, food service, closer in consumer packaging type products. The answer was $5 billion. Over the last three years, as we've refined where are the real tangible opportunities where we can win that identifiable market now, addressable market for us is twelve and a half billion dollars, much larger. It's because we see very real examples where fiber-based solutions can fit for purpose extremely well and broaden out our participation in categories. What I mean by that is we're much more involved in the on-the-go consumption at the grocery store with bowls and trays that are now fiber-based as opposed to other alternatives. We've seen significant movement from, you know, foam cups into fiber-based cups. We're seeing much more activity perimeter of the shopping experience with fruits, vegetables, meats, cheeses. Where we play is widening out very substantially. It's also gone into some adjacent but new consumer categories. You know, we're involved in, you know, packaging of batteries, you know, that we've never played in before. We're evolving with some of our fiber-based solutions to some can replacements and things like coffee and baby formula, baby foods. As we look at what's possible, and again, to your point, don't win every jump ball, but the addressable market being much larger really has given us the confidence to say, "You know what? There is 100 to 200 basis points of organic sales growth over the mid to long term that we can and should stay committed to innovate behind, as well as, you know, really commit ourselves to earning on with the new products." Over the last 3 years, the 3% organic sales growth, 200 basis points of that are new to the market products fitting exactly the categories we've talked about. You know, it comes in, you know, pieces and parts at a time, but that's really what gives us the confidence that there's a net- Yeah. Positive organic sales potential here for the business that we've been executing on and can continue to. Don't spend a lot of time on this, Steve, but just a quickie. You know, Part of your move towards, not move, where the impression you want us to have is you're a packaging company, not a paper forest company. You've moved off of the tons data. Yeah. I'm not phrasing it the right way, but wouldn't it be a good thing to also provide that along with the organic revenue? Said differently, why not provide tons along with organic revenue? Well, we made the move because we are, our customers are the CPGs, we're really measuring ourselves like they do, which is, are we making more products that are in the marketplace as measured by the volume of the end products that we sell? Keep in mind that of our $10 billion top line this year, 85% of it is gonna be making that end product. Making the actual box, the cup, the tray, the bowl. That's how we measure volume growth and mix enhancement. We actually break price out entirely separately, as you know, because we wanna know that we're getting appropriate value for the products and offsetting inflation that's been coming through the business or more than offsetting it. I think it's the right metric. The reason also tons have kinda gone by the wayside, it's a bit of a dated language for the business, to be candid. Yep. We're not a paper board producer. We actually produce paper board. We produce 4.2 million tons. We buy 1 million tons, we're always optimizing the totality of the system. I think oftentimes, candidly, paper board tonnage metrics really get lost in the interpretation because of downtime and weather-related incidents, and you get an overreaction. I think we've made a good pivot towards the organic sales growth metric that we put in place in 2019. Thanks for the thoughts there, Steve. You had a relatively weaker December. It was pretty consistent across most of the consumer packaging companies that we track. You saw a bit of a rebound in January. Again, not trying to put words in your mouth. You know, what should give us confidence that that continues, if you can talk to that, and how it maps to your 100-200 basis points? Yeah. No, good news, no change. Yeah, from what we talked about on the call, you said it well, December was a slow month for us. I think broadly, I think everybody went home and took some inventory and working capital out of our respective cumulative industry at the customer level. We snapped back nicely in January, and our commitment, sitting here with you, of to the 100 to 200 basis points for 2023 is quite sound. Okay. Yeah. A question that we've gotten recently, it's a tough one. Answer where you feel you can, and feel free to punt if you need to. Obviously, some of the other box board grades that really aren't as consumer-oriented as yours have started to weaken a bit. Should we view that as a precursor for potentially at least some things you'll need to manage against across your grades or? I'm not trying to get you to make a forward-looking comment on pricing, which you can't, but. No. I don't need to actually have any forward-facing commentary to kind of draw the distinctions, because I think where you're going is all that we do is about the consumer, and as I mentioned, kind of the non-discretionary part of the consumer's life. Our demand profile is holding up extremely well, as we just talked, and we expect that to continue to be the case. Over the next several years, there's very little capacity coming into the markets that we're participating in from a paperboard perspective to your question a moment ago. The supply-demand environment, as such, the pricing environment, has upheld itself very consistent with what you've seen to date. That distinguishes itself a bit. This, there's not comparisons, but you asked the question. we have, obviously, CRB, CUK, SBS in the categories I was just talking about. URB, while a very good substrate, it participates in the industrial side of packaging much more so, you know, tubes, cores, and the like. So it has, market participation that looks more like that, and you've seen some of the slowing there. I think that. We don't produce URB. We consume very modest, quantities of it that we acquire. Then to the other side, the corrugated side there, I think you're really managing through a much more distributed business when it comes to consumer discretionary and non-discretionary. You know, you don't need your second Peloton bike probably, given the good shape you're in. Did the Well, how do you like that, huh? But boy. That could be looked at if you're trying to influence me, Steve. I'm sorry. Thank you. You don't need your second Peloton bike. Right. That side of the discretionary spend and the industrial bent. I think there's the where we are, which is what we're focused in on, the demand profile is maintaining itself quite positively. Thanks, Steve. Any questions from the audience for Steve? If you can just wait for the microphone. Thanks, Linda. Yeah. You mentioned organic growth quite a bit. I'm just trying to understand what you mean by that. Is that comparable sales growth? Where do acquisitions play in your growth forecast? Yeah. Thank you for that. Thanks for asking 'cause it helps to distinguish. It excludes acquisitions, so when we acquire a business, we count those earnings separately in their entirety. We also exclude price. It's actually a very pure definition of real top line, and then, of course, earnings, real top-line growth that's driven by new to the market products that we can lay eyes on, and it is no price, no acquisitions. It's just true organic sales. As I mentioned earlier, it's, we kind of identify it very specifically. Would you care to expand on what your revenue targets might be? Well, as we were talking earlier, I think for this year, we will continue to see, we expect 100 to 200 basis points of organic sales growth. That on top of a positive price momentum that we have in the business of, I think, $400 million-$500 million kinda moves us from the $9.4 billion that we were last year into the, you know, modestly above $10 billion this year, excluding any to-be activities acquisition-wise, but, you know, we don't have anything that we're talking about here today other than what we announced, which was a small acquisition of the Tama CRB mill that we completed in January. Anytime you see our waterfalls, if you will, you'll see them in exactly that category. Price, volume mix. We talk about acquisition top line separately, and it's not in the organic sales calculation. Thank you. Thank you. On to capacity. Why should investors, I mean, and you talked about this, but why should we view Waco as the right next step for Graphic, even though the returns on paper look to be lower than what you saw with Kalamazoo? You know, why does this, why does this make Graphic a more highly returning company longer term? Yeah, no, thanks for asking that. I think for one just point of clarity, when we initially announced Kalamazoo, which I think was your reference point. Yep. We said we'd spend $600 million and get $100 million of EBITDA. When the project was completed, we said $130 million of EBITDA, but we had spent $700 million. This is spend $1 billion, get $160 million. The initial Kalamazoo investment and this investment are actually very similar in their return profile. What we're really doing here is focused in on what we know is gonna happen with Waco. What I mean by that is it's very clear what the fixed cost reduction is from closing higher cost facilities, what the variable cost reductions are from having, you know, very efficient paper-making, paperboard-making capabilities, and then optimizing what will be a 6 mil system. The $160 million we've got clear line of sight to. We'll, of course, refine that over the next couple of years, but I think you would agree that a clearly defined doesn't require growth of any substance investment where you can get 11%, 12% returns at a competitive, distinctive advantage for the next 30 years is one you'd do. We believe the outcome of that will be the lowest cost, highest quality, network of paperboard that supports the packaging company that we are. It also allows us to support the 100 to 200 basis points of growth for the foreseeable future. One point of clarity, too, that's come up quite a bit that we didn't convey necessarily when we announced it. We expect, you know, capital spending to be at 7%-8% of sales for about a 3-year period, and then it's gonna drop down into that 5% of sales ZIP Code in 2026 and beyond because we will have optimized the system that we have to support our consumer packaging business. That's a good thing because it obviously we can support the volumetric growth that we expect to see over that period of time. You know, Steve, I mean, one thing, right? Your middle name is packaging, right? One of the moats that you've got relative to other companies that might consider coming into the market is that, yet you did Waco, which is more paperboard. What are you doing to build the moat on converting which, you know, SBS newsprint that now decides it wants to get to SBS paperboard can't do? Or you don't need to worry about me 'cause I don't know what I'm doing in packaging anyway, and better to lower the cost profile à la Waco. Yeah, no, you're absolutely. I think the great thing about Waco is that it's highly supportive of building out the integrated company that we are. We are confident now that we've made the Kalamazoo investment, that over time, the world's lowest cost, highest quality CRB is going to actually win in more places than it has historically, which supports the 100-200 basis points of organic sales growth. Today, coming out of 2022, 73% of all the paperboard we produce got turned into an end package. 85% of our top line did. As we continue to grow organically 100 to 200 basis points and have the balance sheet to continue to do some tuck-under acquisitions to support integration, you know, our integration rates will move to maybe 90% over the next several years, which really puts us in a very strong position to continue to retain the relationships and grow the relationships that we have with our customers. 'Cause I mentioned earlier, our customers are the CPGs. Other participants may just make paperboard and then have to work through the network of independent converters and then selling to the CPGs. Our relationships are with them. Today, when we're renegotiating our 2 to 4-year contracts with our customers, with the Kellogg's, the Anheuser-Busch, the others, we're having that initial discussion is so often around assurance of supply. Is can you supply me? Are you gonna be able to weather storms and give us what we want at the quality level on time, in full, and our network and our track record of being able to do that is very good, and it's one of the walls and, you know, and the moat, if you will, that we're building up around the company. You know, pushing back on that, not that I disagree, but, there's at least a couple new machines coming on, converted machines, I guess I should say, you know, by mid-decade. One could argue there's gonna be plenty of supply, and less concern about surety. How do you answer that? Well, it's only half the answer, because bringing on paperboard doesn't bring on a package. I think you raise a very important distinction. Listen, we operate in a highly competitive environment, as paperboard, additional incremental paperboard comes into a growing market, over the, you know, probably in the 2026 time horizon, there'll be an appropriate need for it, but you've only answered half the equation. You have to not only produce the paperboard, but it has to go into the hands of a converter who can turn it into the package that the CPG wants. Today, we have those relationships. Those will have to be nurtured and built, by those that are looking to make or contemplating making, those investments. Listen, we don't underestimate those investments at all. It's why we're, you know, as you've seen us doing, we're playing a lot of offense and a lot of defense, as good teams do, to really create the business that is the consumer packaging business that we have. Steve, I, if you mentioned this, I forget. How much of Waco actually is around freeing up bleached capacity or virgin capacity since so much, again, of the growth has been in fast-moving, more food service-oriented products, and Waco is obviously CRB? Help me square that circle. Yeah. Yeah, I think the way to think about that is today, over the last 3 years, the 3% organic sales growth has been broad-based. Yeah. It's been across CRB, CUK, SBS. That's good. We expect that to continue to be the case. Critical to your question is when Waco is done, we will have six mills, low cost, highest quality that we can actually manage across that network to move on the edges things around so that we're optimizing the whole. If we need more products that would historically have been in SBS, you know, do we need to move someone into it from CUK over into that product category? That optimization of this 4.4 million ton network is really a value creator for us by having all three substrates at a cost and quality advantage net. This is an oversimplification, but what could that ability to optimize further add to your ability to swing, and grade shift? Is it a few 100,000 ton? Yeah, it tends to be on the edges of those. In other words, 'Cause to your fit for purpose discussion earlier, there are certain things that are always gonna be in a certain substrate. On the edges of them, at the 200,000 ton edges of each of them, there is opportunity to optimize and move. You saw us do that when the unfortunate, you know, realities of COVID hit, and we saw this massive movement to the home and away from food service, we actually moved a fair amount of SBS need, you know, or excuse me, CUK demand into SBS, to service that. We're uniquely positioned to be able to do so. I don't see anything that want to see anything that radical as we saw with COVID, but we're prepared to handle that. The potential SBS line in Augusta and Texarkana, and that swing capacity, those back burner right now? Yeah, they are. They're great projects. We talked about them openly as we always do to try to be very transparent on things we're assessing. Good news is they're good projects. They're just, they don't need to be priority projects for us here in the short to medium term. As we really over the last several years, assessed where's the best place to go, we obviously reached the Waco decision. Yeah. as the highest, return and best both medium and long-term investment for the business. Let's wave a wand, it's now 2026. You know, stock's at $100. Just, well, who knows? We'll see. Absolutely. Take that from the question. It's back to 2026. How is the strategy on capital allocation changing in terms of how you drive return for your shareholders? Yeah. Well, I think it's a great point, and I think as you move out to, let's call it 26, 27, right? At the end of 25, we'll have this large capital allocation behind us. You know, the aperture just opens up. Here in the next several years, we've got great capacity to continue to drive debt down into the, you know, 2.5. We're targeting 2.5 times leverage by the end of this year. We are generating significant cash flow. We bring Waco to life. We continue to then have, you know, the margin profile and the cash flow generation to allocate capital in ways to drive the next generation of value creation. The tools, you know, whether that's, you know, tuck-under acquisitions to really drive integration rates even further at that point to support the infrastructure or, you know, to obviously on the, you know, there's the dividend, there's the share repurchases. We really like the flexibility that we have even during this time of investment in Waco. I don't wanna underestimate that, 'cause we're still generating very significant cash flow while we shape the next 30 years with CRB. I think you're gonna see us continue to have those tools readily available. I mean, just probably overly simplistically, isn't it by that point in time, it becomes much more of a, an inorganic strategy or strategy below the line where, you know, you've got your paperboard, you've probably built your converting moat, and now it's about either taking, you know, buying stock back, increasing returns through the dividend or buying stuff? Supporting the organic sales growth. Well- Yes. You will have already done that. Yeah. Yeah. Well, there's, yes. In supporting it. No. Listen, George, I agree with you. I think that the flexibility that we have to invest for the next decade is high. This attachment to the consumer is critical to that. Thanks, Steve. Rob, quick one as we're at the end? Wait for the mic. Sorry, Rob. Just a quick one. Waco sounds like quite an exciting investment, particularly with the success at Kalamazoo, and congrats on that. Yeah, thank you. I'm just curious, when we think about the Vision 2025 targets, does that become a little bit of a stretch goal in light of the fact that the EBITDA uplift is, you know, more 26 and perhaps some of that capital have been earmarked for, you know, bolts on, so maybe there's a little less capital there? Tied to that, I'm just curious what you're seeing on small tuck-ins, the opportunity set that you're looking at there? Yeah. Thanks. Yeah. Thanks, Rob. Thanks for that. I think for, just for clarity there, I think we're really pleased that, you know, we're on the verge of achieving some of our Vision 2025 goals in 2023. So much of what's in 2025 is still in sight as we, as we look, even though now we're investing with 2026 and beyond. One of the things that we are talking about is when is Vision 2030, the right conversation to be having because we have investments now that take us into 26, and beyond. The second question, say that again. Just the bolt-on. Like, I would love- Oh, yeah. -more capital for bolt-ons maybe this year to drive 2025. Maybe it's a little less now with Waco and the $500 million in CapEx. Yeah. I think that there's still tuck-under opportunities that exist in the context of what we're discussing here. I think if you talk integration rates between here and 2025, organic sales growth gets us into the probably the 80% range as you grow organically, and then kinda leaning up towards 90 does require, you know, some of the tuck-unders over the next few years. Horsepower is good. I mean, at 2.5x levered, there's still the potential when there's buyers and sellers, you know, for tuck-unders to make good sense from an integration perspective. Thanks, Steve. Rob, thank you. Everyone, please join me in thanking Graphic Packaging and Steve Scherger for a great presentation. Yeah. Thank you. Thanks.