Packaging analyst. Joined by my colleague, I think here, Bailey Gordon. Richard is walking around as well. We'd like to welcome today Graphic Packaging, and representing the company is CEO Robbert Rietbroek, who has just over five months, I guess, tenure as company president CEO, and also attending, Chuck Lischer, interim CFO, and Melanie Skijus in the audience with us. GPK, as many of you may or may not know, world's largest manufacturer of sustainable consumer packaging, primarily made from paperboard. Currently close to two thirds of sales are in food and beverage applications. About another 20% coming from food service, generally speaking, should be pretty resilient. This is intended to be a fireside chat. To the extent there are questions in the audience, please blurt it out, raise your hand, throw something at me. That's fine. With that introduction there, Robbert, I think you had maybe a couple of opening remarks, and then we can jump into Q&A. We can go right into Q&A if you want to. Okay. Yeah. Fair enough. I'm asking all my companies this question. You were at a different seat when all this happened, but how would you compare the current acceleration in input costs, inflation, however you kind of want to describe it, and maybe the durability of that? Because I think at least as we're thinking about it, looking out over kind of the next 6- 12 months, we've learned that inflation is not ideal for the low end of the K for the consumer, which then translates into a more challenging volume environment. Just thinking through that piece of it as you guys are kind of experiencing it real time. Yeah. The question obviously is this inflation more permanent in nature, or is it more inflationary or transitory in nature? As I think Chuck mentioned in the earnings call, we were about $65 million more inflation than originally anticipated in the annual operating plan and the guidance, which we're trying to work through and offset now. I think part of it is probably going to be there for a while- given the fact that some capacity has been taken out of the market, and there's a time to start that back up. Part of it is transitory. It's not entirely clear yet how much of that, but definitely some of it will be permanent. We're doing a lot of work in productivity, so we've announced in the first quarter, in the earnings call for the first quarter, we announced that we executed a reduction in force. We reduced 500 roles to drive better costs in our SG&A. We are currently working through a number of other initiatives in procurement. For instance, where we're looking at all of the direct and indirect cost to see if there's any immediate savings that we can generate. We've announced the sale of our Croatia facility, as part of our footprint optimization effort to really get the right network of production facilities. Chuck and I are working on a weekly basis to manage our Opex, to really look at costs across the board to drive savings, and CapEx as well. CapEx is obviously related to our free cash flow, but all of the CapEx projects that were in flight were re-litigated, if you will, reevaluated and requested for new approvals. We are treating this inflation like it's permanent in the way that we're re-engineering our cost structure, but we are hopeful that part of it is transitory. Understood. We're going to have a couple different angles and bites at demand, is there anything that you've seen kind of post February 28th from a demand cadence standpoint when you look at the business that would suggest to you customers are either trying to pre-build some inventory ahead of potential price increases, potential shortages, anything like that that stands out to you all? We have seen our demands in the market be very resilient. We have not seen spikes in any way that would suggest inventory buildup. We feel that given the fact that we're so diversified across food, beverage, household, we're even outside of the perimeter now in fruits and vegetables. We're in health, we're in beauty, we're in nicotine, we're in Europe, we're in Asia, we're in Africa, we're in North America. That geographic spread, that portfolio diversification, has created quite a bit of a calm in our top line. We've had the luxury of not worrying so much about our top line so far and really focused on the cost side of things. That's where all the volatility sits in the business. You know that our margins are more depressed than they were maybe two years ago. We're laser focused on productivity and driving our cost structure down to restore EBITDA margins. Part of that obviously is impacted by the fact that we're taking inventory down this year. It's $130 million. That's the right decision from a free cash flow generating standpoint. Okay. All right. Back at the ranch. New CEO, about five months. It's been a difficult time to come into the organization as an outsider, obviously you get hit with the conflict. Yeah. There's some winter storms. It's probably easier to run, I'm going to say, a water cooler business and a Versus running paper machines during winter storms. As you're settled down now, what excites you most about what brought you, what drew you into GPK? Yeah. I know you've been asked on the conference call, anything that now comes to mind, five months in, what gets you excited about working at GPK and the opportunity? Gabe, thanks for that question. I was attracted to Graphic because I was excited about the prospect of leveraging my three decades almost in consumer packaged goods at Procter & Gamble, Kimberly-Clark, and PepsiCo, and to serve my previous employers and other big players in the CPG industry, be a vendor, and work so closely with them. At the same time, the sustainability aspect of this company. We make fiber-based biodegradable packaging, all the secular trends are in our favor. In Europe, by 2030, single-use plastics will be largely eliminated from grocery. We anticipate similar trends to come to at least certain states in the U.S. and potentially broader. I think the long-term prospect of this company. When I look at the last five months, as you know, I've told you this, I've traveled a lot. I've been to various markets. In fact, in one week, I was in six countries. I did eight flights in a week. This was really eye-opening. I've visited four of our five mills. I've visited a number of converting facilities. What I realized as I was traveling the world is what a big moat we have. We have five mills that have a massive replacement value and just under 100 converting facilities. Just the sheer replacement value of those facilities is a enormous competitive advantage. It's really hard to replicate. The second thing is, if you look at the demand side, as I said before, it's far more resilient, as I've seen it, than what you read in the media. The media, you read the media, you think all of the consumer packaged goods companies are in a severe decline. That's a little bit of the headline. We see a far more resilient demand picture, where we see all of the turbulence is on the cost side, the inflation side- Particularly driven by transport, logistics, oil and gas prices, and obviously related to the conflict. From a consumer side, there is a challenge consumer, we can talk about it maybe a little later, but there is a value orientation now that we see that can be addressed through price tiers, that can be addressed through pack price architecture and simple promotions, end caps, et cetera. The customers are really engaged with Graphic. I visited a number of customers in the Northeast and the Midwest, in the Netherlands, in Switzerland, in France. I've visited facilities in the U.K. and France as well. What we see there is that we are absolutely one of their preferred vendors because of our capabilities. We talk a lot about paperboard pricing, but we are actually a packaging company, so more than $8 billion of our sales is finished product. We have 3,100 patents, and we have proprietary products, like the Fridge-Pak for beverages is one of our inventions. Really, we got to think less about this constant focus on pricing of paperboard and much more about what we do in the market with our customers, the innovation we drive, the products we launch, the innovation centers we have in places like Colorado, Atlanta, Bristol, U.K. That's where the energy is, and that's where our customers are engaging with us. The net of it is I'm incredibly encouraged by the last five months. It was difficult walking into this assignment. It was definitely, I'm not going to deny that. As where I sit now, five months later, I'm far more optimistic, but also realistic about the challenges that we have on the cost side. I want to double-click on that a little bit because I think Smucker was out today talking about, they gave their fiscal 2027 guide, and I think volumes they pointed to would be down one across the organization or on a consolidated basis. Just, if that's the new normal and we can kind of tick down the list of, is it population trends? Is it GLP-1? Is it health and wellness? I think sometimes there's winners and losers within those buckets, right? Sometimes we make healthier decisions, and that means more around the perimeter. Just as you look across the portfolio, as you challenge the teams, what are you seeing in terms of real-time feedback- Yeah I'll say absent the macro in terms of. Yeah demand we hear, like you said, reading in the market, the headlines. Gabe, I think what we need to do and what we are doing is expand our portfolio beyond the center store. We are more and more active in the perimeter of the store. We've developed a very large fruit tray business in Europe, where products like berries are now marketed not in plastic, but in paper trays. Again, towards the 2030 regulatory change in Europe. We have talked about the fact that we have a $15 billion potential addressable market of plastic-to-paper conversion and foam-to-paper conversion. Whether you're replacing a styrofoam cup or styrofoam food container that you get maybe when you're going to pick up your food at a restaurant, or whether we're looking at expanding beyond center store from the traditional cereals businesses and the cookies businesses where we have such strongholds, that's the focus. We're trying to grow the category, and there are a lot of plastic-to-paper conversion projects in the pipeline. I can't name any of them because that's obviously proprietary information. Think about replacing a plastic tray in a execution with a paper tray. Think about fruit, vegetables, tomatoes, cherry tomatoes, blueberries, things of that nature. There's a tremendous upside. I just came back from Bristol and Chaulnes, France, and we're making some of those products there, and I was surprised to see the size of that business. It's actually very meaningful already. We're now obviously trying to globalize those businesses. I think rather than only competing where we've historically competed, we are going to start growing the paper convertible packaging category instead. That's much more exciting for the team. It's much more exciting for the industry. Also, we have some excess capacity, as you know, in Waco for recycled board, so we'd like to make sure that we complete and fill that mill. Okay. I guess two questions off of that. The value orientation that you talked about from the consumer, your products, when you think about relative cost to whether it's polymer or otherwise, polymer's up right now, and actually, I think polypropylene, polyethylene were down a little bit on a spot basis in May. Just cost competitiveness of your product, are there offsets if it's more expensive, sort of the initial upfront cost, whether it's throughput, whether it's efficiency somewhere else? Yeah. I've had this conversation in the boardrooms with my top customers several times in the last couple of months, where we typically look at a certain product category where they're currently in plastic- They express a desire to go to paper, then the question is this cheaper or more expensive? I've seen both. All right. The first is, let's take the Styrofoam beverage container. A plastic single-use microwavable cup can be more expensive than a paper microwavable cup. For instance, if you're in the ready-made meals category where you add a little water and you have mac and cheese or something like that, or it's rice-based or something like that, pasta based, you may be better off with a paper cup. There's a lot of gray area where we may be a fraction more expensive than plastic, that's obviously evolving with the resin prices and coming up in oil and gas prices, there's a lot of variability. Beyond that, all of these large customers have tremendously high aspirations from a sustainability standpoint in a carbon emission reduction and recyclability. That's the angle where it's a multidimensional discussion. It's not only, hey, what's the cost, how can we make the footprint better and how can we drive more recycling? You know 70% of our products are made of recycled material. Approximately, I think just in the mid-90s are recyclable. We really are well positioned in that discussion. I'm actually engaging, in some cases, with the Chief Sustainability Officers of some of these large corporations directly to understand their needs, the process, how they engage with procurement, how they track performance. Shrinkflation. You sell converted product surface area. I would assume that goes up on a per calorie basis or however we want to measure it. Are there some analytics behind that that you all have done internally or a way to think about it, net positive, neutral? Yeah. I think that the shrinkflation word, I've seen it, I've read it. We like to call it pack price architecture. It's actually a much more friendly word. We like to call it portion control. Yep. When you look at the best examples of portion control are, for instance, mini cans of. CSDs, which we all love because all of us like, most of us like the occasional CSD, but we may not be feeling like drinking a full can. Those are all very favorable for Graphic Packaging because that's a lot more packaging material and packaging boxes for us because you sell a lot more of those units. When we look at downsizing portion control, we are very much in favor of that. When our customers go there, we can support that and make that economically viable. Also, we have such a big global footprint, and we have the lead times that they require for both promotional packaging as well as we can really be agile. We have some customers where we work on a two-and-a-half week lead time. That's pretty incredible. We can even move faster in the food service side of the business. We're going to switch gears a little bit. We'll try to maybe talk some dollars and cents in the first half and the second half. We've got a lot of investor questions about it. You mentioned $130 million of de-stock on the cash flow side. Our math says roughly maybe $400 a ton of under-absorbed fixed overhead directionally. I know the math doesn't always work out right. Just Q1 came in, I think, at 234, and you're guiding 230 to 250 for the second quarter. Anything on the production side? Is the de-stocking tracking with what you were kind of projecting at the beginning of the year? Any color or context around that? Yeah. This is Chuck. I'll take that. A couple of things. If you looked at our Q1 inventory decline, Q1, we saw about a $50 million decline in inventory from year-end, whereas in the prior year, it was a $60 million increase. You're clearly seeing the inventory come out of the business, and that's something that is helping to support our free cash flow. Due to the seasonality of the business, we do generally have more of an inventory build in the first half, and then we harvest that more in the second half. Even though it was a negative almost $250 million positive to where it was last year at the same time. All that will take us a long way to getting to the $700 million-$800 million of free cash flow that we see in 2026 versus the just under $200 million that we saw in 2025. Okay. I think there's a SBS price increase on the table for folding carton as well as cup stock for June implementation. Seems like, at least from the feedback that we've been getting, folks are fairly optimistic that that will be implemented. I guess maybe two-part question. One, to the extent you can comment whether it's contract business versus non-contract business, what you've been doing on the price side to offset some of that $65 million of inflation that you've seen. By our math, I think even just on the transportation side for paper, there's probably $25-$30 a ton, excuse me, of inflation flowing through the system. You've got the normal, I call it the inflation treadmill, labor, et cetera. Just how you're tracking. You reiterated the $65 million, so I'm assuming that's still a good number. Anything else you want to call out? Yeah. On the pricing side and all that, as you said, we are out with both cup stock increase on the bleach side and folding carton side, also out with unbleached price increase as well. That's all on the paperboard. We will see how that gets recognized, first opportunity in a couple of weeks. We don't speculate on that, as you pointed out, and as Robbert talked about earlier, there's a tremendous amount of inflation in the business. That's clearly what's driving the need for the price increase, and that's well-chronicled both in our business and in the broader industry. That is something that certainly shows the need for the price increase. The way that'll all show up in our individual contracts, just as a reminder, the way the index works for us, that's really a price change mechanism. We set the price of a package at the time that we negotiate a contract with a customer, the price change mechanism during the contract is partially driven by the paperboard price. There's some other pieces of that price change mechanism as well, a piece tied to CPI and a few other items as well. That's driving the majority of it. For us, from a bleach standpoint, there is a greater business that's tied to open market, we do have a greater percentage of our overall business that is tied to an index in the bleach business than it is in some of the other businesses. That's on that portion of the price increase. We also talked about on the Q1 call that we are out with a $1 billion of packaging price increase. We also have contractual pass-through mechanisms to offset some of the inflation that we see. All of that will help us bridge from the first half to second half guide. As it relates to paperboard supply, you talked about we sell packages. We've heard this for a while. We don't sell raw boxboard. There was a tragedy in the Pacific Northwest that took some capacity out. To clarify for investors and folks that are asking questions, we continue to get questions about it to this day. Our understanding is that liquid packaging board was the majority of what that mill was making. It's a little bit different characteristics and capabilities that you need within a mill to make that, lamination and extrusion, et cetera. Maybe talk about what your capabilities are. Have you heard anything in the marketplace in terms of trying to source alternative supply? Our understanding was that the majority of that mill's production was going back to Japan. I know it's not your asset, but to the extent it affects you. We've all heard and read about the extraordinary tragedy that occurred. For those that are unaware, there was an accident in the state of Washington at a mill. Our thoughts go out to those affected and the victims. The impact on our market is minimal. We'd probably get a couple of orders here and there where we can help out, we'll help out. Most of that production was going back to Japan. That was being used in an integrated fashion. The closest thing we make to that product is our cup stock paper, bleached paper, and Texarkana. We do not believe that there's a major impact on our business from that. Okay. If you were to kind of put your old consumer hat on, right now we've got the World Cup, we've got America 250, which I think most people are pretty excited about. Just maybe things that you would be thinking about from a marketing standpoint, from a commercial standpoint, that maybe is an opportunity for Graphic today. Then maybe one or two key things that you're worried about. Yeah. We think about, again, we continue to read the low end of the K is struggling. Yeah. As you know, I worked in CPG for about just under 30 years, and I've not only worked in the North America and Europe, but also in some of the emerging markets like Venezuela. We dealt with a lot of economic volatility in those markets. The first thing that we would've looked at would've been getting the right price tiers in the market, the right portfolio to serve the high end of the market, the middle end of the market, and the lower end of the market, to really offset and fight back against the private label growth from a branded standpoint. Having the right portfolio, and that's usually enabled by formulation, but also by price pack architecture. that we talked about earlier, to have more accessible variants. You look at what channels you want to operate in. Certain channels tend to grow in. In growth periods and other channels tend to grow in more recessionary or economically challenged periods. You want to make sure you're in those channels. e-com is continuing to go from strength to strength. Particularly the younger generation tends to get a lot of home delivery. It's unbelievable how that's taken off and how that continues to grow, and that requires new formats, new pack formats, and new product executions. I would focus there, then I would try to drive and reignite growth, right. There's a lot of categories that we see that are contracting right now from a consumption standpoint. It is possible to restore growth in those markets. You just have to get very creative and you have to get differentiated. Marketing, brand building, product innovation are really important right now. We see that, for instance, the protein products, particularly helped by GLP-1s, are winning. That's been a trend that's been going on for a while. I remember when gluten-free was the big idea, protein came in early beginning of the decade, became really big. I launched a number of protein products myself in oats, for instance, and that continues to be very popular. When we look at our business, and we talked about it in the earnings, some of the protein areas have grown much faster, and we tend to be over-represented in that space. I would also then really take advantage of the World Cup. We have 24 brands that we serve in our portfolio that are doing World Cup thematic events, and that is a worldwide event with billions of viewers that happens to be in North America this year, in Canada, Mexico, and U.S. I'm personally planning to be there this Sunday at the game in Dallas. Can't wait. It's exciting. I hope all of you are going to tune in, and if you see brands that are doing promotions in the World Cup, just buy them. Just go all out. Just support them because we do want to make sure that we continue to market our brands and that everybody's excited about what's going on in the world. This is a very positive event where all the nations come together. Yeah, I would be focused there. Pack price architecture, product priced to your portfolio, winning in the right channels, specifically in e-commerce, I would really drive thematic promotions. The last thing I'll say is value meals are really in demand right now. We obviously have a very big business in food service with the biggest companies in the world. There's a lot of activity in thematic value meals, there is still a lot of room to do exciting marketing promotions there. Protein forward. Yes. Maybe one or two things that would keep you up at night? I think the last five years have been, we've seen a lot of inflation. In the beginning of COVID, there was a lot of demand-driven inflation. Remember, everybody's filling their pantries with beans and rice and oats and spaghetti, and there was just a shortage, and there was just not enough inventory around. That was then followed by supply-driven inflation when we saw shortages in shipping pallets and transport issues and stuff like that. Remember all the containers on the ship in Los Angeles. The consumer is fatigued when it comes to inflation. They're sort of tapped out, and that's exacerbated by the fuel prices. Now you have to make choices. Everyday consumers, moms and dads out there, have to make choices. As manufacturers, we have to be empathetic. We have to make sure we provide the right value propositions to enable consumers to buy what they need. It goes back to the earlier conversation. Overall, I think the inflation in transport, oil and gas diesel. Diesel affects everything. It touches all the ag sectors, et cetera. If that would come down, it would be very beneficial to everyone. Got it. Going back to the guidance, like I said, $230 million-$250 million for Q2. Kind of puts you, let's say, at $470 million for the first half of the year. The midpoint of the guidance is $1,150 million. Again, we talked about being back end-weighted. Non-repeat of weather, you got some pricing that should be coming through. Can you walk us through some of the puts and takes, H2 to H1, and if there's any more clarity today than there was maybe at the earnings call in April? Yeah. I think you touched on several of them, and it's the same items, some of it in additions and some of the same pricing that I touched on earlier. Yeah, the weather impact in the first half is $25 million. There was additional about $20 million of higher maintenance in the first half than there is in the second half. Additional production curtailments, about the same number, about $20 million in the first half versus the second half. Of course, on the cost side, we committed to the $60 million of cost takeout, and that's a 2026 number, not an annualized number, and we saw about $10 million of that in Q1, and then a little bit more of that in Q2. That'll accelerate the pricing that I already talked about earlier on the $1 billion, the packaging price, and the contractual pass-through mechanisms will all contribute. As you can tell, there's a long list of things that are going to help us bridge from first half to second half, but a high level of confidence that we can bridge the inflation that we see. Okay. I think the $15 billion of addressable market on conversion opportunities that you talked about, I think, Robbert, you called out some converting capacity that it'd be nice to have or maybe that it seems like it's growing pretty quickly. I think you said France on fresh produce. I'm assuming the answer is yes, but just maybe lay out for us, I'm going to bring up Vision 2030 only because we talked about, I think, 5% of revenue and CapEx. All within that spend wallet of 5% that we can achieve what you'd like to. Yeah. The fruit tray business was actually initiated in the U.K. market. Okay. Is now rolling out in Europe, and we have those capabilities to produce those things in France as well, in the Chaulnes factory, where I was recently. When you look at the 5% CapEx, it's what we said is five or below, which is really a big part of becoming free cash flow generative. We want to return money to our shareholders, obviously, over the years to come. We are going to pivot a little bit and allocate a little bit more of that to the converting side of the business. When you are engaging in a project with Graphic, there's three ways you can do that. The first way is we sell you or lease to you a piece of CapEx. For instance, for KeelClip for cans or bottles, the clips that used to be plastic, they're now paper, the rings around the cans. It's a great example of such a project. The second type of project, we would put the CapEx in-house. Those are low amounts usually, with really aggressive returns, very fast paybacks. The third, and those are things we design for, is that we use existing equipment. Of manufacturers that's making cookies, and they want a tray that looks and gets handled the same way as the plastic current execution. We will design for that so that it goes through the same machinery or minor adaptations. Those are obviously preferred by our customers. With regards to the mills, we will continue to invest the necessary maintenance and repair, but there's also regulatory investments. I think water treatment is a big deal. We're still working on the cogen facility in Waco. We will complete that cogen facility. We will invest in regulatory requirements. We will invest in repairs, maintenance, and make sure that we have the right outages to do the maintenance, which is required on an annualized basis, where you go into the equipment, and you look for cracks, and you do welding, and you do inspections. To keep it all operating well and safely and at a higher performance level. In the converting side, it's really exciting because there's some projects that Chuck and I get on our desks that we look at that have a payback under a year. You simply go and build the equipment, and you launch the product, and it's already contractually agreed, obviously. You have that instant payback. That is going to be part of, A, becoming a much more free cash flow generative business over the next years, and B, a higher ROIC. As I looked at the ROIC over the last five years, I don't think it is where it should be with regards to the industry average and industry standard. We can get there. Last one for you. I think we got about a little over a minute left. You talked about some divestitures to maybe accelerate deleveraging or things that, I'm going to say non-core, but just as you look across the portfolio, anything that's become more evident to you? Again, I know it's only been six weeks or so since we last caught up. Yeah. We have announced the divestiture of the Croatia facility. Croatia. We are always going to look at our footprint globally to understand where there are opportunities to, let's call it unlock cash that is trapped. This could be consolidating facilities. This could be selling facilities or parts of our business. It could even be a sale of a building and doing a leaseback. All of the above will be part of our ongoing business process. We did conclude a 90-day review, which resulted in, obviously, not only the sale of Croatia, but also the reduction in force, where we reduced 500 roles to drive productivity and our SG&A number down. Yeah, this will be an ongoing process. Europe was determined to be strategic. Yes. We deliberately went out in earnings to say we are very committed to our Europe business. We believe our core is North America and Europe. We serve a lot of the same customers in both continents. We are very happy with our European business. Excellent. Puts us out of time. Thank you all for your attention. Thank you, Robbert, Chuck. Thanks, Gabe. Thank you.