We're ending on a high note. Well, every presentation is a high note, you know that. I'm George Staphos, BofA, Paper and Packaging. Very, very happy to have WestRock here to wrap up the formal presentation. Rob Quartaro from investor relations is here in the front if you have any questions. Very, very pleased to have Alex Pease, Chief Financial Officer for WestRock here from the company. Alex, as you know, has more than 20 years of experience in corporate strategy, M&A, capital markets, portfolio optimization, and broad-based business transformation, which is what is going on at WestRock right now. He joined the company about a year and a half ago. Yep. Is that right, Alex? Again, we're delighted that you're both here to speak with us today. Obviously last earnings call, there was a lot of discussion on the transformation, incremental trends. We'll hit on that to the extent possible and anything else that you see as important. Maybe, maybe to start off, you know, relative to your guidance, and you're now giving guidance on a 1Q basis or one-quarter ahead basis, it wasn't that long ago. The $625 million-$725 million of EBITDA, you know, your own earnings per share range. What do you think the upward and what do you think the downward tensions are? The related question that I'm sure you've gotten a lot, and the question that we've gotten is, you know, why the decision to remove the full year guidance? If you can remind us what those factors were and any other things that you felt the Street didn't quite get from what you- That are forward-looking in nature may constitute non-GAAP financial measures. For information about risks and uncertainties related to our forward-looking statements and reconciliations to non-GAAP measures, please refer to our SEC filings and investor relations website. Now that we've got the housekeeping out of the way. Thank you. You asked a question on what are the biggest sort of headwinds and tailwinds. Mm-hmm. To our second quarter guidance. You know, first off, I would say, we feel very confident in our second quarter guidance. We feel as though the markets have stabilized. In the domestic market, in particular, we feel like a lot of the inventory rebalancing that we've been experiencing is behind us. We think that the corrugated business has certainly stabilized. We see a lot of resilience in the consumer business. Just to remind folks, we've got sequentially four more shipping days. You know, as it relates to the global paper business, we again see the domestic market, which is about 60% of that business, stabilizing sequentially relative to where it was. There's still some inventory destocking or inventory uncertainty, I would say, in the international markets. Again, we expect the business to improve sequentially as we get through the quarter and through the year. In terms of headwinds, obviously the biggest uncertainty really relates to pricing. You know, that dovetails into my answer to your question on the decision to suspend full year guidance. You know, really the two. Well, first of all, let me start by saying I think the market reaction to withdrawing the guidance was really completely overblown. I think it's not uncommon for companies in our industry or in a highly cyclical industry. Sure. To not provide full year guidance. Certainly, some of our competitors don't. Other competitors take an approach to provide more of the costs and the input variables, but then assume price and volume stays constant, which arguably price and volume are the two biggest uncertainties in our guide. That certainly was the case in our situation. Just to remind everybody, from the time we provided our initial outlook for the year, to the time we reported our fiscal Q1, we did see $50 a ton of price decline in the container board market. Subsequently, we saw another $20 a ton in February. That's a total of $70 a ton. That has a material impact on about, you know, on our merchant paper business. It hits our merchant paper business pretty much immediately. On top of that, global paper demand was slower than we anticipated. Particularly in the export market, it was down about 60%. That represents about 40% of the 6 million tons annually that we do in global paper. Alex, I'm sorry, the 60%, what were you saying there? Was down in the international and the export markets. Yep. Understood. You know, the domestic market was slightly stronger than that, really across the board, we saw some fairly significant inventory destocking as supply chains normalized and customers were anticipating some price price down. You know, that was really the driver of the uncertainty. As I mentioned, the corrugated business performs well. We think that's stabilizing sequentially and improving in the back half of the year. Consumer continues to be extremely resilient, particularly on the food and beverage side of the business. We're executing a lot of the cost savings initiatives that we put in place. We did give investors an indication of our productivity assumption, around $250 million of productivity improvements. We're confident that the demand's gonna improve as we get through the year. Just to, you know, give folks some guideposts in terms of the variables that we can control. Inflationary effects are mitigating across a large portion of the commodity stack. Natural gas, we anticipate being down 25% year-over-year to a full year average of right around $5 in MMBtu. That's about a $20 million annualized EBITDA benefit. OCC currently is about $35 a ton. We see that strengthening to exit the year at a full year rate of around $70 a ton, exiting Q4 in line with where Q4 was last year. Generally down 50% year-over-year. That's about a $270 million benefit. Virgin fiber, that's down 4% year-over-year, which is about a $13 million benefit. All of that's offset by wage inflation of around $460 million headwind, up 5% year-over-year, and chemical inflation up about 4% or so, which is about $113 million year-over-year. Hopefully that gives you the building blocks in terms of, you know, how you can think about the cost structure, and then you can make your own assumptions around volume and price outlook. Yeah. No, appreciate that. Very, very thorough. You said, chem as you said was 110. 113. Okay. Right. Understood. You know, looking at this, looking at the risks, which you're not immune and you're not different than others in the sector, you know, why should an investor want to own WestRock here, right? It's a question I've been asking all the companies. Everyone thinks their company is extra-special good. You know, the outlook, you know, is ultimately going to improve, you know, no matter the market that a company's in. Yet packaging and paper and forest is 0.3% of the S&P 500. Frankly, most of the people in this room don't really have to care necessarily about the sector relative to other stocks that they look at and their indices. Why should they care about WestRock? Why should they wanna own WestRock? Yeah. Coming out of this presentation? I appreciate the skepticism. I would say they ought to care about it, in this room, and they're here at 4:30 on awaiting your happy hour. I'm certain that they do care. Let me start first with the industry. This is an industry that has a number of really strong secular tailwinds. First, the plastics replacement opportunity. That represents about a $9 billion TAM in North America alone. It's about a $40 billion TAM if you think about it internationally. That momentum towards sustainable, recyclable, compostable packaging solutions is just building. We currently have about $375 million of plastic replacements in our portfolio today, and that number's growing, and we expect to double that at least by 2025. Secondly, e-commerce has been growing, you know, mid-teens levels, will continue to be a huge growth driver as not only Amazon continues to expand in the category, but all retailers have an e-commerce platform. I think all of us learned through the pandemic how to shift some of our buying behaviors. Third, secular tailwind is around digital automation and the need that our customers have to really understand what's going on in their supply chain. The example that we point to a lot is, the trend towards freshness in, the protein space as well as the agriculture space, and our ability to embed sensors into the package, so our customers can get real-time visibility into the aging of their inventory, where their inventory is placed, all the interactions between primary, secondary, and tertiary. That's, that's kind of why the industry, is there's a huge number of secular tailwinds that are benefiting us. Why WestRock? We're the most diversified packaging company in the world. We have both a consumer business as well as a corrugated business. The diversity of our substrates is unparalleled by any of our competitors. We also have a full range of solutions that we can sell, which includes a machinery and an automation business. We are the one-stop shop for packaging, and we can enable enterprise selling in a way that nobody can. That number right now is around $8 billion in opportunity of customers, greater than $1 billion that are purchasing both consumer and corrugated products. We play in the global paper market. We have a unique visibility into what's going on in the global merchant paper opportunity. We're the leading player in the plastics replacement opportunity that I pointed to. I will mention we're the only company among our peers that got called out in the Dow Jones Sustainability Index for North America. You know, lastly, we have a huge self-help opportunity in a stock that, you know, is really criminally undervalued. We've talked about in our investor day $1.5 billion in self-help. We haven't committed to that entire unlock, but certainly a substantial portion of that value we anticipate delivering to the bottom line as we drive productivity over the course of the next couple of years. Thanks for that, Alex. Really, really helpful. Very thorough. I wanna dig into a few of these things. Number one, it's been a real common point of discussion, although differing views on it, I guess, depending on what substrate you produce. What's more important to you, do you think, to the consumer in terms of the sustainability argument? Is it the recyclability or is it the carbon footprint or lack thereof? You know, what do you think moves the ball, recognizing it's all the above, and how does that play or play against WestRock's fiber? Yeah. You know, I would say that it's, to your point, it's a bit of both. I think for the consumer, and this is some conjecture, but I think for the consumer, the plastic replacements is a more visible, sustainability play. So, you know, not having this plastic bottle, but having a fiber-based version of this bottle, that we can manufacture. Not having a plastic yogurt cup, but having a fiber-based, yogurt cup. Those would be some examples. And we're seeing that from our customers. A lot of the large consumer packaged goods companies are demanding, sustainable package, sustainable plastic replacement solutions because their, you know, end users are demanding it as you get into the younger generations where this is more, more important to them. Your view is recycling is kind of the more important? For the consumer, I think it is because it's more visible. I think for our customer, the large consumer packaged goods company, I think it's probably equal shares both. They clearly have an ESG remit to drive down carbon emissions across all of their supply chain. It's one of the reasons why we've committed to a 25% reduction in our greenhouse gas footprint, and they're holding us accountable for that. To the extent we're able to deliver on the ESG challenges, we help them solve their problems. It's one of the things that makes WestRock unique is, you know, we can solve our customers' problems both through the solutions we provide as well as the sustainability offerings that we have. Okay. You mentioned e-commerce. You know, there's been some trade press recently about some of the larger e-tailers looking perhaps to conserve or perhaps even, you know, put business back up for review. I know you're not gonna go customer by customer here, but, you know, tell us what sort of recognition we should have of this as potentially a headwind or maybe a positive. Sure. You know, it's clearly there's always conversations around pricing and value and, you know, what the nature of the contracts are that we have. I'll say that, you know, we work very collaboratively with our large large e-commerce retailers to make sure we're getting compensated fairly for the value that our products give. We're also helping them manage their cost. One example of this is the Box On Demand product, which is a machinery-driven solution that basically, instead of getting, you know, the toothpaste that you ordered during COVID in a box that's this big filled with plastic bubble wrap, the Box On Demand would form that box to exactly the size of whatever the product is. Mm-hmm. -you bought. In effect, it's a win-win. Not only are we enabling a more sustainable solution, there's a visual appeal with the end user, so they're not getting this massive amount of corrugated waste. It reduces the amount of corrugated that our e-tailer has to use, and they reward us accordingly with that. In all cases, we're again trying to deliver solutions that add value to the customer and make sure we're protecting our margins in doing that. Let me ask it differently. Are you seeing more of this sort of, you know, auctioning of business and/or putting business up for review, or is it no different than what we saw last year, two years ago? No, it's really no different. Okay. Thanks, Alex. Any questions from the audience for Alex? Dan, if you wanna hang on one second for the mic. Hey, Alex, just gonna shift to the balance sheet a little bit. Obviously slightly above your leverage target, but you should get there this year with just even growth. Given how much you have outstanding in term loans right now, is there any thought around potentially coming back to the high-grade market, refinancing that at a lower interest rate? We see a lot of three no-call ones being issued right now to take advantage of that arbitrage opportunity. Yeah. The largest one was put in place to finance the Gondi acquisition. You know, it is fully pre-payable. It's an incredibly attractive rate note. There are higher-cost pieces of capital in the stack that I think we would prioritize over that. We're all the time in the market and evaluating, you know, what's the best way to optimize our cost of capital. We're certainly not averse to contemplating doing that and taking advantage of the current market conditions to the extent they're supportive. I will acknowledge your comment on our leverage being slightly above the target rate of 1.75- 2.25. That's true. That is driven by basically the assumption of debt and the financing of the Gondi acquisition, which was a massively at-attractive strategic acquisition that we did. I was just down there a couple of weeks ago, touring the Monterrey mill and a couple of our box plants. There's more synergy than I think we originally anticipated, not just from the cost side of the equation, but also some cross-border opportunities. The Mexico market is really benefiting from this onshoring trend. They have a really unique relationship with one of the largest beer breweries in the world, where we provide the majority of their packaging solution and are talking with them about extending that business in other parts of the country. We have a huge opportunity in the agriculture region of Mexico to really leverage that high-growth part of the Mexican agriculture region. We have opportunities in our Southwest box plant within America to close down some of our more poorly performing facilities and then leverage some of the really high-performing, well-capitalized Gondi facilities. I couldn't be more excited about what we're seeing in that opportunity and how that's really going above and beyond even the initial estimates, which then just to round out the thought on the balance sheet as it relates to capital allocation. You know, first and foremost, we generate a substantial amount of cash. We did reemphasize the fact that we anticipate delivering around $1 billion of free cash flow this year. We can use that cash flow first and foremost to invest in our business. Our business has about $1 billion of ongoing capital diet, about half of that's sustaining capital, and about half of that is return-generating capital. We're committed to the dividend. We've raised the dividend 37.5% since February of 2021. We just recently announced another increase, so we're committed to that. We're committed to getting our leverage back down within our target levels as EBITDA grows and we continue to grow cash flow. Beyond that, opportunistically we'll entertain share buybacks. While strategic M&A is sort of off the table, small bolt-ons to the extent there's opportunities to increase our levels of integration or invest in unique technology solutions, you know, we certainly are always in the market looking for those as well. Thanks for the question. Thanks, Dan. You know, in that regard on investments, you know, in the last number of years, you did Florence, you did Gondi, along with the new Monterrey mill, Porto Feliz, Três Barras. You know, what can you share? I mean, you can't talk about what's you haven't discussed yet, but what should we take away in terms of those projects and what it means going forward, particularly as regards, you know, there's been some announcements of investments, either new capacity or cost reduction related capacity in the consumer markets and the boxboard markets. How do we put that all together in terms of what it could mean for WestRock? Sure. On a going forward basis? I'll just talk about some things that we've talked about. Mm-hmm. Give you some ideas of other things that are sort of ongoing discussions. You know, we are looking to upgrade our asset footprint. We're constantly looking at how we optimize our overall portfolio of assets. One example of this is the Longview box plant that we've talked about. Right. This is gonna be a world scale, box plant. The investment is north of $100 million. It's gonna be located right by the Longview mill, so it's gonna eliminate a lot of the transportation and logistics costs. It's gonna be a highly automated facility. Mm-hmm. It's gonna enable us to do things with the asset footprint that we wouldn't be able to do, but for that investment in the Pacific Northwest, which is a very attractive market for us and growing where we've been demand constrained. Another example that we've pointed to is the upgrade of the wood yard at Hodge. This'll enable a lot more productivity out of the front end of the process for a mill that's, you know, extremely important for us. Those are a couple things that we've talked about. We're continuing to look at opportunities to increase the flexibility in our network, adding coating capacity as an example, converting machines as another example. We're looking at other regional consolidation opportunities both on the mill side as well as the converting footprint side. You know, when we talk about the $1 billion of capital, sort of base level, we actually have in our minds an additional $300 million-$500 million earmarked for these kinds of strategic investments that fundamentally transform the nature of the business. It seems like on that front, this year you're maybe gonna do a little bit less than that. I mean, I kinda remember the $1 billion and then an indication that maybe you'd see some of those strategic projects, and now we're at $1 billion, which suggests some of the strategic projects might have come off the table. Am I right in that characterization? Yeah. A lot of what we're seeing, which I think isn't unique to WestRock, is because of some of the labor and the supply constraints. Okay. These projects just tend to take a little bit longer to deploy. Continuing to evaluate it, we continue to manage our capital, you know, in a very disciplined way. This year will likely be more in the line of $1 billion of capital as opposed to a bigger number than that. Alex, again, remind me if you've already talked to this and I'm forgetting it, apologies in advance if that's the case, but are we likely to see over the next couple of years more investments in converting versus sort of becoming more productive on the mill side broadly? Should we expect more of the investment to be on the consumer side or the corrugated side? How should we try to bucket that, if you will? Um... If the answer is all of the above and you can't really go there, I get it. Yeah, the answer is kind of all the above. Let me give you a sense, a flavor of what types of things we're doing. Yep. Can get a sense. On the mill side, a lot of the investments are in sort of automation and digital, as well as upgrading some of the more obsolete equipment, which will improve reliability and unplanned downtime. There's the necessary safety stuff around boiler retrofits. There's also upgrading the winders as an example. There's adding sensors across the mill network. There's upgrading the digital manufacturing system so that we can manage the assets more effectively, eliminate line breaks. Mm-hmm. Improve quality, those sorts of things. On the corrugated side of the business, there's a couple things. One is, you know, investing in world-class corrugator capacity and eliminating and harvesting some of the older machines, as well as upgrading and state-of-the-art EVOs, which you've heard us talk about before, which enable us to run, you know, much more efficiently. Then on the consumer side, a lot of the investment is really around some of our machinery solutions. It's around, you know, a lot of the plastics replacement work, falls into the consumer space. So those are the types of the investments. You know, we are trying to feed all aspects of this business. Yeah. With an appropriate level of capital to drive the productivity that we've been talking about. On the consumer side, do you need to have any better sheet, as you're coming up with these new plastic replacement, and that presumes that you don't, no, no offense intended. Were you pretty happy with the board that you're getting out of your mills relative to the plastic replacement opportunities that you have on the corrugated side in terms of upgrading corrugators, why is that the case? Is that because you have a mismatch between corrugators and your converting equipment, or you just need to become more productive? You know, when you're upgrading corrugators, you're trying to improve speed and throughput, improve reliability, and optimize width. Yeah. That's really when you optimize width and you close narrower, older corrugators, you're reducing your trim loss. It's backward to your paper machine as opposed to forward to what you need on your converting side. Correct. Okay. Yeah. and then- On. On the board side for plastics replacements, a lot of what's enabling the plastics replacement solution are the coating, the barrier coating attributes. Got it. it. Got it, got it. That's capability that in some cases we use a third party for, and in other cases we have dedicated production processes for it. There, no, there's not a need to upgrade that. That capacity exists today. Thank you for that. Very, very helpful. Any questions from the audience? Ron, if you wanna hang on for a second. Any thoughts you might offer on level of integration. Are you on track for where you're headed? I've talked about it before. I'm just curious how you feel about where your progress is. We're driving integration continues to be a big focus for us. There was a comment in one of the one-on-ones where we were asked if we deviated from that strategy because it didn't feel as though we were articulating it as much, and the answer is no. We continue to drive integration as much as we possibly can. That's a portion of my answer to the capital allocation question is in reaction to that. To the extent there are opportunities to buy converting assets that make sense economically, that would be a way for us to increase our levels of integration. That's clearly an opportunity. There's also opportunities to grow in underserved markets like the Pacific Northwest, just grow organically, which we're certainly after. The numerator math around how we drive growth is clearly very important. There's also denominator math to the extent there are substrates that are less attractive for us, or there's assets that are not delivering on our return expectations. We're certainly always evaluating that as well to understand what can be done there. You know, I just would like to use an opportunity with the question to highlight, you know, global paper is a strategic asset for us. It wasn't three months ago that it finished the year, or four months ago, that it finished the year at 20%+ margin, and it peaked in the, you know, mid to low 20s. As we saw the tightness in the market, it was, you know, extremely valuable for the company. That being said, the export market in particular is volatile, and that's what we saw as we delivered our fiscal year Q1 results. Through the cycle, we're still ahead of where we were in 2019. Continues to generate significant cash flow and gives us a bit of a rheostat on the broader market. We do view that as an attractive asset. Thanks, Ron. Maybe a last question to finish up. I've got a couple parts to it, not necessarily related, but one... I think you've got Enterprise. I don't know if you wanna take. Oh, I did not see. Sorry, Troy, go ahead. Could you just elaborate on that? Is the export market in paper getting worse or better, and how's the inventory picture there? We continue to see some choppiness in the export market, as I mentioned in my remarks on the full year outlook. The domestic market, we feel as though the inventory issue has largely stabilized and order rates, you know, are more in line with historical patterns. That domestic market is about 60% of our global paper business. The 40% that's in the export market, you know, there's still some opacity in terms of inventory levels. For us, the export market is largely Latin America. There's a little bit that's in Europe, but it's really largely Latin America. You know, the combination of interest rates and FX is driving some choppiness there, but we do expect sequential improvement as we get into the back half of the year. We do expect the situation to be more favorable, really as we look to Q2, and then increasingly favorable as we get into the back half of the year. Thanks, Troy. Thanks, Alex. Maybe a last one then to wrap up here. Enterprise sales, you said about $8 billion. Yep. What's been the growth rate that you've seen out of that? What kind of growth rate should we expect in that category of customer? Look, I would envision us pushing enterprise sales pretty significantly. I don't think it's unusual or wouldn't be unrealistic to expect that number growing, you know, in the mid to high single digits. Okay As we drive that. The way we drive that is, you know, first of all, the primary, secondary, tertiary packaging emphasis that we're focused on. It's integrating a lot of our machinery sales so that we can provide a holistic solution. I think it's some of the work we're doing around just driving cross-selling across our business segments. Again, we see that as a very under-leveraged source of value for the business and a key part of our overall strategy going forward. Last one, I lied. Are you seeing any signs of, and what would you point to in terms of reshoring or nearshoring in terms of what that would mean for [Argyle]? Huge, huge trend. There was a survey recently of, forget the number, but a significant number of, you know, international market participants, 83% of them said they intended to shorten their supply chains and engage in some sort of, you know, onshoring, reshoring, nearshoring strategy in response to the combination of tariffs and COVID. That's a huge trend. We're seeing it as, again, as I toured around in Mexico. Yep. There's evidence of it everywhere you go, and I think that's gonna, again, play very favorably into the business case for the Gondi acquisition. Thank you. Rob, Alex, thank you so much. Everybody, please join me in thanking WestRock. Thank you. Thank you. Onward and upward to the cocktail reception in a little while. Thank you.