Q4 2023 Graphic Packaging Holding Co Earnings Call & Investor Day

Will be an increasingly smaller part of our business going forward.

And our resolve is very high to make that happen so with that as a backdrop I'm going to pivot now and talk a little bit about our overall results, which also were released last night look by any measure if you're a consumer goods company last year food beverage or or.

Just actual goods it was a very challenging year as consumers really pivoted in terms of their preferences in some cases.

And our customers had to adapt to that.

Real time basis, it really resulted in a fair amount of inventory Destocking, which is well chronicled you're all aware of that.

And against that challenging backdrop graphic packaging held up very very well you see our results here on the page I mean, a few high levels. Our sales were actually flat on a year over year basis, we had $200 million of innovation sales and that number in our value added pricing actually more than offset the the the volumetric.

To claim that I talked about which for the year was about 4% building on fourth quarter third and fourth quarter most pronounced.

You know down around five 6%, Steve will get into those numbers, a little bit more detail, but what we're really encouraged about.

Going forward is the fact that as we've rolled into 2024 are volumes actually to date through today are flat on a year over year basis, which is actually a very good thing because as you recall last year in the first quarter, we were actually up so we've seen some stabilization.

In the fourth quarter was really most pronounced are you in the last probably three weeks of December it was almost like many of our customers just throwing the towel.

And that really manifests itself in Europe in a big way, we saw volumes that were down.

Three weeks pretty substantially and they bounced back really well here to start the year off so that's what really gives us confidence in the year.

But in a return to organic growth, but what I would also say.

And this is youre going to hear the semantically through my my conversation is that.

Our confidence is really more in what we do control versus what we don't know.

And if you think about graphic packaging and I'll go into a lot of detail on this where just a fundamentally very different company than we were just a few years ago.

Our innovation is wide and deep you will touched on it a lot of time talking about that our customer relationships are strong and growing and we're managing them different than we were before and we're getting paid for the value that we bring so with all that as the backdrop.

Really pleased with the results that we generated our EBITDA was up almost 20% on a year over year basis, you see EPS that on adjusted basis is approaching $3 remember in 2019, when we talked to you about this it wasn't even a dollar. So we've made dramatic progress in a very short period of time and that momentum I expect to continue.

To move on look graphic packaging as a leader in sustainable consumer packaging, you all know that.

And are you really touch our products every day, so think about a cup of coffee in the morning or or the the cereal box that are you know your cereal comes in snack you Havent lunch, maybe a frozen dinner eat a young late afternoon soft drink.

That you may have as an afternoon snack or hopefully a beer you have later on in the evening.

All of those things are things that we do you literally touch our products each and every day, it's rare that a U S consumer of almost any different demographic doesn't in some way use our products within a 24 to 48 hour period of time, that's the reach that we've got.

At graphic we really do package.

Life's everyday moments for a renewable future thematically, you'll hear us talk a lot about that and again, that's what gives us a lot of confidence in the company that we've built and that the one that we will build over the next seven years as we rollout our vision 2030 year to you today.

Look you see our 100 facilities, we've got around the globe there.

We package thousands of different customers, but we also do it with some of the biggest brands in the world in order to do that you've got to have scale, you've got to make investments and investments are much more than just physical assets. Yes. We've made those a lot of those were done in as part of our vision 2025 think about the investment we made in Kalamazoo think about the invest.

We're making Waco think about the investment we made in an anr all of those were foundational to kind of build the company that we have today.

And what you're really going to see and what we're going to talk about here is just how that will be leveraged as we bring 2030 to life, our vision 2030 to life here.

You know the investments in people.

And capabilities, sometimes are much harder to see then the physical assets, but they are very real and they're very important you'll see our speakers really bring those to life today with their comments as well.

Okay look this is an impressive customer portfolio by anybody's definition you know the.

The depth and breadth of that is really unmatched in the paper packaging world.

You take a look at.

No.

Really all the different segments. We're in we've true those up now to really reflect the overall impact of Anr packaging at the year end and what those sales are so some you may see some of those are slightly different that's really what we did there.

But our customer is our customer base is really as diverse as our innovation portfolio and that's a big point to make.

And it wasn't that way just Ah.

Mirror, a few years ago I'm going to show you that transient trends.

Relation from one side or the other as we transformed the company over that period of time here in a few minutes.

Look we've got a strong presence in the at home markets. That's always been kind of our core it's gotten stronger over the last few years, you'll see that in food beverage household products health and beauty.

All those things are strong businesses for us, but we also have an increasingly strong and growing position in the foodservice part of the market and really what one of our key themes that we're going to try to strike home today today, if I do my job, but I'll probably hit it on about five times is just how our portfolio moves with the consumer that's a big.

Part of what we purposely built over the last seven years.

Speaker Change: Alright, a little bit about our speakers today in addition to getting Steve who many of you. All of you know I should say, you probably know Steve better than anybody.

Speaker Change: Steve Steve will come up and share, but we've got three other speakers that are actually going to present today are the first one that's going to talk to you is Maggie Midland Mayor She is our.

Speaker Change: Executive VP and president of our Americas business, So Maggie really controls and manages those relationships with the customers that I'm talking about and they've changed and evolved very dramatically over the last few years a lot under Maggie's leadership she'll talk to you about how we are building deeper relationships with customers than we've ever had before and.

Speaker Change: That's really foundational relative to the innovation that we're driving and the sustainability benefits that we bring that are valuable to customers in ways that we couldn't even have those conversations with them. Because it was just kind of a bid ask situation not anymore. So make you bring that to life. She leads our global innovation effort Ricardo.

Speaker Change: Works for her Ricardo where are you right there Heiko hired Ricardo many of you know Ricardo.

Speaker Change: And so shull actually give you a lot of insight and in more depth into what we're really doing there too we have John Francois Roche also here wave your hand, John Francois.

Speaker Change: John Francois I would challenge you to find a more knowledgeable person in terms of the breadth of experience. He has in the European market then John Francois. He is an expert in that market. He's chaired the Ecmo organization for the last three years. So that's the European Carton Manufacturing Association.

Speaker Change: His knowledge around regulation in the EU.

Speaker Change: As well as our large brands in Europe, and the retailers, which is really important in Europe and the intersection of the consumer are unmatched. So he'll do a town hall and will bring some of that out for you and you'll be able to ask them. A lot of questions. Later on look Europe is a great business in and of itself, but what we really love about Europe is this is the most sustainable.

Speaker Change: Consumer in the world. So what that really allows us to do then is to take all we learned in Europe and export it all over the rest of the globe, where we where we compete including North America. The trends there as we like to say start 24 to 36 months before they wind up here, but almost invariably they wind up here, we have that knowledge and we're able to take advantage.

Speaker Change: Have it much faster than many of our competitors are able to do we think that brings real strategic advantage for us Mark Connelly's, our newest member of the team, but he's not new to graphic packaging certainly not to Steven I for the last decade, you know Mark as you followed our company as an analyst.

Speaker Change: And I would also say and I think Steve you'd agree with me that.

Speaker Change: One of the analysts that really helped us frame some of our thought process relative to capital allocation and challenges along the way are you, making the right decisions are you putting money to work to really drive ROIC see he's a key architect of what you'll see today in terms of what we're rolling out we're thrilled to have you on the team Mark Marcon facilitate that our town Hall discussion.

Speaker Change: John Francois and we have Michele Fitzpatrick up here in the front Michel.

Speaker Change: Our leads our sustainability efforts, you'll get a presentation from her that we'll talk about.

Speaker Change: All of the different things, we have to do to make sure. We're compliant in terms of sustainability and regulation that is constantly evolving and changing the good news is she will lay up plan out that you will be able to see that we actually have between now and 'twenty 32 to achieve all of the goals that we made for S. P. I S science based target initiative goals.

Speaker Change: We'll be out there today I challenge you to challenge any other packaging companies to drive a proposal or delay something like that out like we're going to lay out to you today, we're going to deliver on that and it's really important because what you'll also hear from me today and talk a lot about from the speakers as you'll hear from the speakers on this is that not only.

Speaker Change: Do are we going to reduce the amount of greenhouse gases, we generate the amount of fossil fuels that we use the amount of water that is used in our in our facilities. Ultimately almost every product we make helps our customers meet their sustainability goals I'm going to say that again.

Speaker Change: Every product we make helps our customers meet their sustainability goals not very many people can say that that's also one of the things that gives us a lot of confidence in our and our ability to grow our volumes over the next few years and really be a key part of the consumer packaging.

Speaker Change: Leadership position that we want to have because we're at that intersection they need us to do that you think about the ambitions they've laid out some of the targets they've put out there to be a greenhouse gas neutral carbon neutral by 2040 or 2050, they need people like graphic packaging to help them bring that to life and we'll be able to do that.

Speaker Change: Once we're kind of what I'm going to do now is actually lay out kind of the from to where we were give you a little context on the background in terms of.

Speaker Change: The transition we've made over the last seven years, Steve will come up later on in the presentation, bringing financial targets to life in more detail he'll also talk about the large amounts of free cash flow that we're going to generate and the optionality we have for value creation.

Speaker Change: Over the next seven years, which is pretty exciting.

Speaker Change: Okay.

Speaker Change: Let's take a little step back what many of you were here in September of 2019, and thank you for that when we rolled out our vision 2025, it's hard to believe that's almost been five years now and a lot has happened. If you think about it's really been pressure tested over that period of time.

Speaker Change: And for Us.

Speaker Change: That really was an opportunity to kind of re vamp, our growth and our ability to actually compete and transform the company.

Speaker Change: And you know as you look at the company. We have today, it's just very different than what it was in 2025 and as we look at some of what we're laying out with vision 2030. Some of the targets that we had for vision 2025 are no longer ambitious enough and in some cases not as completely aligned with really the company we need to be in.

Speaker Change: We'll be over that period of time, so we'll introduce vision 2030 to you today, but maybe it's helpful to take a little bit of.

Speaker Change: Our review around this journey, we've been on really since 2017. So if you think about 2017 for graphic packaging, who where we had been CEO for one year.

Speaker Change: And the reality of it is is we had a solid business. We had a good business in North America, we had a decent business in Europe, primarily focused on.

Speaker Change: Beverage in the U S. It was more center of the store type stuff, we had a good position on risk.

Speaker Change: No recycled.

Speaker Change: Paperboard as well as on bleached paperboard.

Speaker Change: And we had business in Asia that was principally focused also on the beverage business, we had high customer concentration in our markets. We're also pretty pretty large you know if you think about beverages and examples them as a percentage of our overall.

Speaker Change: Customer concentration it was quite high there were starting to be some some signs in the European market that sustainability was going to be something that could be an opportunity for us in the U S. Not so much yet and yet we had a very big problem.

Speaker Change: Problem was that we weren't growing we weren't generating any real growth and our margins really were quite economically sensitive and really more commodity based.

Speaker Change: Through a cycle.

Speaker Change: And so that impacted our ability to really drive long term sustainable shareholder value.

Speaker Change: Think about that for a minute. So what we were doing for customers was making a highly personalized branded product.

Speaker Change: Excellent pruning in many cases coatings specialty finning.

Speaker Change: Unbelievable delivery terms and yet in many cases, we were getting paid less because of the terms, we had and where the industry operated at that time than really what even a corrugated box was able to get.

Speaker Change: As generic as it comes right. So we had.

Speaker Change: Had to change that that was a key initiative for our company at that time.

So we looked inward what are the levers that we could put we saw this trend around sustainability, we knew we had to invest in innovation.

Speaker Change: We also looked at kind of what we have to do to expand our customer profile. So that we reduce the amount of concentration we had with some of our largest customers as well as we had to make our our portfolio move more with the consumer.

Speaker Change: We didn't know exactly how we're going to do it but that when we knew we needed to be done and then we started doing some work as far back as then around what we thought would be a pretty interesting value creation idea of four.

Speaker Change: A large investment in coated recycled.

Speaker Change: Paperboard.

Speaker Change: And so kind of with that as a backdrop you wind the clock forward to 2018, we had the opportunity to partner with international paper and get their consumer packaging business that was a huge deal for us because it gave us a whole bunch options we didn't have.

Speaker Change: Yes.

Speaker Change: So you know it was a great transaction I think I would say it was great for them. It turned out excellent for us keep milestone for US 2019, we rolled out our vision 2025, and our vision 2025.

It was broad and a lot of ways and to be transformative and has exceeded our expectations in many ways. If you think about the financial goals targets, we put out there we've largely exceeded all of those.

Speaker Change: And then some no I went through some of the results today I think Steve as an example, we had $2 for our EPS, which you know obviously, we've well since surpassed so a lot of those targets. We're done we made real good progress on the other non financial goals as well.

Speaker Change: But again.

Speaker Change: Many of those targets just aren't ambitious enough or consistent with how we want to run the company going forward, but what I would tell you is that within vision 2025, there were really four main objectives objectives. We laid out there first we knew we had to expand our innovation capability in a big way because we wanted to take advantage of being able to leverage the sustainable.

Speaker Change: <unk> movement, which was now starting to take place here in the U S too.

Speaker Change: Our speakers will talk a lot more about how we're doing that envision 2030 today, but that was a key initiative for vision 2025, we had to realign our portfolio to move more with the consumer.

Speaker Change: Meant that we had to make some acquisitions of different businesses that would allow us to actually do that.

Speaker Change: We have to capture more reasonable Val.

Value for reasonable share I should say of the value that we're providing to our customers.

And we had to invest in both our people and our assets. So those were the big things that we laid out there. If you look at vision 2025, I think there were 21 targets that we assigned to it.

Speaker Change: But there were really four big things strategic steps that we took that transformed our company. During vision 2025, the first and I mentioned it already was the IP consumer business that was big for us because if you think about it we had no exposure of any scale to the foodservice business, which you know I think about Americans They love mobile.

Speaker Change: Lloyd Dean on the go we didnt have exposure to the drive through window, we didn't even make a cup. So you put that all together that create a huge optionality for us in a whole new part of our business that we didn't have before secondly, we need to grow our U S and European manufacturing capabilities, and what I mean by that.

Speaker Change: We put out a target as part of our vision 2025 in terms of integration and integration back when we laid out vision 2025.

Speaker Change: Post the IP acquisition was around 67%. We finished this year around 80, so we've kind of grown that integration, but integration is really more was a yardstick for us in terms of how we measure. It there were two things that we're really looking for in terms of building out our business and how we wanted to invest in it first.

Speaker Change: We wanted to acquire businesses and markets that ultimately moved with the consumer different than what our core business did the most recent example, I can give you that as Bell you know Maggie and her team have integrated that business now well into our business, but bell broad consumer mailers that was something we didn't have before and if you look at the prior.

Speaker Change: 10 different acquisitions every one of them brought something along those lines that helped us build out our portfolio and I'll show it to you in a minute and why it's transformed the way that it has secondly, and importantly, any business that we could find that had innovation capabilities that we could lever across a wider group of customers both domestically or.

Speaker Change: Italy was prioritized. The Best example, I can give to you of that was a our packaging. It was an absolute homerun for US yes. It was a good business in its own right and it helped us get into eastern Europe and build out our portfolio in a way that we couldn't do on our own.

Speaker Change: But they were excellent and driving innovation and hit a lot of new products, there that you're going to see us profile today that have allowed us to really scale across the globe and that's really what we need to be able to do as a consumer packaging company. So those two things were really what we were looking for there.

Speaker Change: Our customer relationships had to change as I mentioned earlier, we bring more than just you know.

Speaker Change: Basic design elements in manufacturing.

Speaker Change: When we were getting paid for before because that's what we were charging them for but when you think about the security of supply we bring the sustainability benefits the innovation benefits our customers know that what we bring is more than just raw materials and freight.

Speaker Change: I had a boss one time you said you want you don't want your product to be treated like a commodity stop acting like it is and Thats really what we did and so we put this value based pricing methodology in place you guys know we've done it because the pricing has flowed through our P&L in a way you can't follow based on just movements of paperboard, making.

Speaker Change: Maybe you could go into lot more detail there. So that balance is much more important for us going forward and something that is kind of core to our DNA and you'll see us continue to leverage that as part of our vision 2030.

Speaker Change: Lastly, we saw a significant opportunity to generate an unmatched cost position in the most attractive.

Speaker Change: Part of the paperboard packaging market and that's really the recycled packaging CRB.

Speaker Change: And when you look at what we've done with Calin Xu.

Speaker Change: And the startup on that it's been nothing but a homerun cost positions on matched the grades that we have come off that machine are a fantastic and it's integrated well into our business and we're leveraging those opportunities with customers as we speak so listen all of that really transformed the business very dramatically and what.

Speaker Change: I'm excited about with vision 2030 today is that now as we lay this out our ambitions will line up more with how we're running the company and give you a framework. So that you can hold us accountable going forward in terms of what we're going to do very exciting for us now I'd like to tell you that everything we did with vision 2025 really worked out the way we thought if we executed perfectly.

Speaker Change: There were no mistakes, but there were some things that we learned along the way there that really have helped us.

Speaker Change: Of course this was September 2019, we dealt with Covid kind of during that middle period of time.

Speaker Change: But even before that we started having conversations with customers around innovation. We had some early success and what ended up happening is customers will say look you did this good for us. So why don't you do these two or three things too. So we had to scramble in many cases to add resources back into the company something we did those resources that are now part of our business and part of our innovation engine.

Speaker Change: You know that you'll hear Maggie talk a lot about we also learned a lot of things during COVID-19. Some of them are just hard the first one I'll point out to you was just kind of supply chain resiliency I mentioned earlier that our customers care a lot about security of supply more now than ever. The worst thing you can have a fear of CPG is to have a stock outage and our.

Speaker Change: Some had been optimized because for years everything just kind of flowed nice and we were able to take costs down to the last penny even our supply chain was long and expansive you'd go through Covid and then you add winter storm you're in in February of 2021 and we had a lot of challenges a lot of force majeure letters things, we had to deal with we had to building more.

Speaker Change: Robust supply chain and for a company that prides itself in execution, we took that seriously and those are learnings that we will not forget and our customers know it too and that is a part of what they buy when they buy from graphic packaging.

Speaker Change: Also during Covid, we saw these massive shifts in overall demand casual dining went way down and after about a month or two you saw the foodservice side of the business really take off center of the store kind of came back and again, we had run this kind of perfect ballet, taking facilities down and optimizing our footprint to the point you know our customers had some had some.

Speaker Change: Doing in that as well because they were pushing us for obviously savings and things there as well.

Speaker Change: Which is to be expected, but we learned that we've got to have some flex capacity. So that we can take care of customers demands as they shift and they will shift based on different oh demand pulses that they have to deal with out there and so you'll see us not have everything on three shifts we're going to have some flex capacity that allows us to be able to.

Speaker Change: We're not going to run everything seven days a week because it doesn't give us the ability to to manage their business. We have 100 manufacturing facilities and the balance on that will be reflected there sure. We'll have some that run seven days a week 365 days a year.

Speaker Change: But theres going to be a number of them that have that flex capacity. We also learn some things went by spending $700 million in Kalamazoo, and essentially making and creating a brand new mill.

Speaker Change: We went into that project thinking it was going to be totally an economic play that's how we introduced it and we said look we had this unique opportunity to be able to you know take a bunch of cost out and drive a lot of really top line.

Speaker Change: Product through the marketplace.

Speaker Change: We're uniquely positioned because of the concentration we had with our Midwestern manufacturing facilities of paperboard.

Speaker Change: But what we really found we got those savings, but what we really found there was the grades and the quality coming off that that particular manufacturing process is just superior to anything else. That's out there you've heard us launch for Nir Rainier is not even in a lot of the numbers youre going to see today I think it can be bigger than many of the innovations that we have out there you don't compete with the very best.

Speaker Change: Paperboard out there you know in Sps as an example.

Speaker Change: Brightness the coding characteristics. The smoothness is fantastic and we've got some early wins there maybe you could talk about that when she's up during her conversation.

Speaker Change: The point to make that around an integration though.

Speaker Change: And this is an important point to make is integration for graphic packaging is a bit nuanced.

Speaker Change: And this is important.

Speaker Change: If you think about what we're doing in Kalamazoo, and you think about what we're doing in Waco.

Speaker Change: If we have the opportunity to really grow with customers and to generate excellent ROIC C and consistent returns for shareholders. We are all in on integration.

Speaker Change: Let me say that again, we are all in an integration where it makes sense system see results in higher IRR are always see however.

Speaker Change: When we don't have a path to do that.

Speaker Change: Well I just outlined with Augusta, then we're better off putting that capital somewhere else.

Speaker Change: So you'll see us put our capital where it will get the greatest return for shareholders hard stop so they're not going to hear us talk a lot about our integration rates anymore. Because we're really focused on our end use markets, where consumer packaging company.

Speaker Change: But ultimately that's how I want you to think about our overall integration strategy in terms of how we're building the business here going forward and that's exciting and the implication for that really kind of comes in in the form of a if you think about in our packaging and that acquisition. We made for a minute. We got a lot of questions from a number of people who are you guys going to integrate with the E R and M C.

Speaker Change: When I answered it this way at the time, when we acquired that we said.

Speaker Change: You know we have no plans to immediately do that but over time. It could be you know provide some optionality. The reality of it is as you've gotten deeper into this and we've watched our European business, which generates outstanding results and excellent ROIC.

Speaker Change: We don't need to integrate that business right now and it doesn't make sense, if things would have to change very dramatically for us to see a scenario, where we would have to backward integrate into Europe. That's a big change and I think the point that I'm, making on these things we've learned through some of the things that we've come through is we form our opinions based on fact and how we act.

Speaker Change: We generate returns for investors and shareholders over the long term.

Speaker Change: And that's really what you want to buy a company that is constantly learning in that regard and that's graphic packaging.

Speaker Change: So.

Speaker Change: I wanted to talk a little bit now.

Speaker Change: About the company that we've actually built from the inside out.

Speaker Change: And I think if you look at the left hand side I think it's yeah. The left hand side, you know that youre looking at there versus the right hand side back to 2017, it's a completely different company.

Speaker Change: Look at that for a minute look at the different segments, we have and I've talked about that March we were on and why we had to build the company at the way that we did our market participation strategies just changed we went from $4 4 billion to last year $9 4 billion and we're going to build on that and ultimately if you think about that growth some of that came.

Speaker Change: [noise] from acquisitions some of it came from an innovation, we averaged about 2% sales growth over that period of time, and our core markets and compare that against any other packaging substrate out there whether it's glass aluminum corrugated that's on par at the very best.

Speaker Change: And it's really drill all driven by the innovation, we see and what you can see there and what I'm excited about is our ability to move with the consumer as the consumer moves will be there and that's the portfolio. That's really been generated and what we have we have the scale to take care of the very biggest customers out there if you're a <unk> operator, and you have 7000 stores.

Speaker Change: In the in North America, you're probably going to do business with two maybe three packaging.

Speaker Change: Packaging suppliers. That's it you don't want to do it with 27.

Speaker Change: Why you can't control the quality you can't control the materials, there and we have the breadth and in investment.

Speaker Change: And the capabilities to take care of the very largest customers as well as take care of the regional business that we have we're uniquely positioned in that regard. That's the company. We built over the last seven years, and it's really going to be on display over the next few.

Speaker Change: So let's talk about what we're doing and why you know the bottom line is our core values have not changed but we have as we've transformed the business our aspirations have grown alongside of our confidence in that just as you look at.

Speaker Change: How that all kind of comes together I'm going to introduce you and a number of key elements of our vision 2030, right now and then the most important one we start with this one here is really are all around innovation and it'll be a global leader in consumer packaging you you have to be a leader in innovation and we're going to continue to invest in our people and our capabilities. So that we are the very best.

Speaker Change: You know our vision 2025.

Speaker Change: Aid out some pretty big investments I've already outlined what they were but what will really define us with our vision 2030 is the investments we've made in innovation and the people and capabilities that we execute on the scale that customers require we set three targets for this one and they are ambitious. The first one is you know.

Speaker Change: 2% of our annual sales growth will come from innovation, we've done that over the last two years, you think about 'twenty 'twenty. Two when you think about 2023, both those years, we grew over $200 million in innovation sales.

Speaker Change: Under a very different market conditions. So we've demonstrated the ability to be able to do that we're pushing our teams to continue to find ways to build that funnel and our confidence level here in 'twenty 'twenty four to deliver the $200 million is high you think about the selling cycle for us many of those things are already in the Q and so we know exactly what they earn their flowing.

Through.

Speaker Change: And maybe you will talk about that in her prepared remarks, a little bit as well.

Speaker Change: Look every new product, we make needs to be more circular functional and convenient than the existing product that it's replacing.

Speaker Change: This is nuanced too I mean, there are certain things from a material science standpoint that obviously you have to be met but it's also pretty simple in many ways I've yet to ever have a customer say, hey, thanks for making that product, that's less sustainable less convenient or or a functional they just won't do it they won't they won't put their customers into that so that's kind of.

Speaker Change: The lens, we put against and all these things are iterative to help us get better over time and then the last one that I would put out there is that our multi generational portfolio is really iterative too and what I mean by that is if you think about things like kill clip as an example that product started over in Europe with the carbonated soft.

Speaker Change: Soft drink and then it moved quickly to beer and it also went to some food applications and each time, we did one of those we learned some things different in that particular case. We also made the machines that went into both of those applications are bourdeo product. What you saw there started with infant formula and now it's gone to confectionery gum, you see the mentos out there as well.

Speaker Change: As well as coffee and again Maggie will take you through that and that's really important that iterative learning that we get there and why it's so important we have a big business in Europe and in the U S. Because those trends go back and forth and we take that knowledge and we can do that a lot faster and that's what a leading consumer packaging company does and that's the company we have built.

Speaker Change: Culture look to be in to be a leader in innovation I can't overemphasize the importance of culture, We've got an incredible team and we've done some really good work, but to stay the best we're going to have to continue to focus on our culture of safety inclusion and take our customer focus to a whole new level.

Speaker Change: This is among my highest priorities as the CEO, we set four targets for this one as well zero life injuries is up first.

Speaker Change: Look I'm proud of the safety record. Our company has is by far one of the best in the industry, but we need to make it better and that really starts with me and my executive leadership team and the tone and tenor we set from the top we invest in well run facilities.

Speaker Change: What we do is incredibly important but it's never important enough for someone not to go home hole at the end of the day, that's something we take real seriously.

Speaker Change: And as an investor in graphic packaging you can rest assured that we do it the right way there.

Speaker Change: We also want need really need second bullet point here, 75% engagement scores. So you say why is that important.

Speaker Change: It really comes down to the fact that you know again those 24000 employees that we have we have to have their very best everyday they come with ideas, we need them, we need them to get better and we need them to get better in safety, we need them to get better in terms of productivity, we need them to get better in terms of innovation when we harness all of that and you can kind of bring that forward, they're proud of what they do.

Speaker Change: Bring that energy to work, they're part of a winning company and it's infectious and it really helps us drive our results so driving that there's something that Elizabeth Spence, who is right. There in the purple who leads our our HR organization, she and I work on all the time.

Speaker Change: So.

Speaker Change: The other part of that that also say as women in leadership is something that is really important for us at graphic packaging right now are our women in leadership around 25% where to take it up over 35% over this next seven years, it's an important element for us we get a lot of inform me you think about.

Speaker Change: What that's like in my staff for them now and we have a staff meeting and it's kind of funny and I joke about this sometimes as you look at women in terms of many family units out there, they're the largest population in terms of making decisions around purchasing decisions as well as provisioning for families and they're they're the people there.

Speaker Change: Part of their family and you know I'll be railing on something I joke about and they say well this is and I'll look over and Elizabeth and Lauren and May you might be laughing you really are.

Speaker Change: Don't work that way and that's important for me to know and it's important for all of our business to have insight like that because it helps us get better it helps us stay very close to the consumer and that's insight that helps us drive our innovation. So it's a big goal for us our ethnic diversity, we want to make sure that that's representative of what we see in the U S.

Speaker Change: Around 40%.

Speaker Change: We've made good progress on that over the last few years, we have more work to do some of our locations are harder than other but this is an important goal we want a very inclusive company and it's one that again, when we have that level of inclusivity and that diversity, we get better insights into what is going on in the marketplace and what we can do to take advantage of it to service.

Speaker Change: Customers better.

Speaker Change: Last bullet point here is really enhancing the communities where we operate in.

Speaker Change: This is really important we've got 100 facilities around the globe and what we want is that logo to mean something in each one of those towns of course, our employees are proud to work there we want the community to be glad the graphic packaging is there you know.

Speaker Change: That is it seen and has a reputation as a safe sustainable company, there's investments employees and in its facility. When we have a job opening we want many people to apply because that's a place where ultimately we want to where they want to work. So that's a key focus for US we've made progress in this regard we're going to make more as part of our vision 2030.

Speaker Change: Transitioning a little bit here to planet consumers want more sustainable functional and convenient packaging I talked a little bit about that and our brand owners and retailers know that we can deliver it and so they're coming to us more and more our commitment to you and to our customers and all our stakeholders is a steadily and measurably.

Speaker Change: Improve our environment foot environmental footprint of our consumer packaging.

Speaker Change: And really as I said earlier why is this so important because it's not just the reductions that we're driving in our business, but ultimately what our customers need in order to hit their objectives and our goals are packaging helps them accomplish their goals and the commitments they've made out there and that's what a true consumer packaging company does that's in a leadership position.

Speaker Change: It's a responsibility we take her it's a responsibility we take very seriously and we've got a high level of confidence that we can hit the plans and targets were and will roll out to you today, we have four targets for our footprint first one up is to hit our SPT eye targets and Youre going to see Michelle take you through a very detailed look around exactly how we're going to do.

Speaker Change: And a big part of that for graphic packaging is the de carbonization effort of our wood manufacturing facilities, it's about 75% of all the electricity that we make as an example comes from those operations.

Speaker Change: Now.

Speaker Change: So that particular part of the business is around 67%, we make our own we're going to take that number up over 90% and all that's reflected the investment that's required to do that's all reflected in the targets youre going to see today, we're really excited about that again that helps our customers hit their objectives and as all of you know.

Speaker Change: The materials that we make tend to be some of the most recyclable out there they starwood trees. They go through our wood manufacturing facilities, and then we're ready to recapture them anywhere between five and 10 times. So it's a circular loop that are truly does have a sitting at the the the prominent spot on a circular economy and that's exciting.

Speaker Change: The remaining electricity that we don't.

Speaker Change: Generate ourselves, we're going to find ways in which is kind of a hedge more than anything else to buy renewable energy. There's a lot of ways. You can do that we're going to do it in Europe, we're going to do it in the U S too, but the big part of it I want you to walk away from Michelle walked through this is just how we're going to do this ourselves with our biggest spend.

Speaker Change: Is that our wood fiber manufacturing knows.

Speaker Change: We're also going to ensure 100% of all the fiber that we use is as it goes through a sustainably sourced methodology. This one I've got a lot of passion around I actually sit on the sustainable Forestry initiative or S. F. EIS. Some of you are familiar with that I've been the chair of the last couple of years, making sure that we can insure and represent.

Speaker Change: Certify to all of our customers that you can use our material you can feel good about it in your end use consumer can really feel good about what they're doing is critical for our business. We're very passionate around that and it's something that we're really not only for ourselves, but for the entire industry take a leadership role and to make sure that they can feel good about that because it's a great story, we need to make sure no.

Speaker Change: One tarnishes it and that's what we're all about a graphic.

Speaker Change: Okay talk a little bit of our results.

Speaker Change: What I can tell you about this is that Oh with vision 2030, we're going to bring the full force of what we built here.

Speaker Change: To be able to whether it's innovation capabilities, our manufacturing capabilities our execution capabilities.

Speaker Change: To bear for customers.

Speaker Change: And ultimately the end use consumers that use them and I believe we can actually compete with the very best consumer packaging companies in the world.

Speaker Change: For sure you know for our shareholders and Steve will talk about some of the specific financial goals, which you can count on from US is that through all economic cycles. You can expect strong financial results I think the last few years have really demonstrated our ability to be able to do that the moves we're making you know what.

Speaker Change: Announced last night and we will go forward here today will further build on that and again, our portfolio will move with the consumer and so it will reflect that balance and that consistency of the results. So of one side of the business is down the other side of the business is performing well that's the balance we saw that's the companies we've built or the.

Speaker Change: Company, we built and it'll be reflected in our results that again as what it means to be a true consumer packaging company and a leader in that market.

Speaker Change: Finally, we're going to prioritize our people.

Speaker Change: And our investment in our people because that's how we'll stay on top we have the company we need today to run it is here in and we're going to bring out some of these investments, we're making in people and our sustainability and innovation process in a way that I think will give you more confidence that we can really do all the things that we're saying and hit this ambitious.

Speaker Change: As a set of targets that we've rolled out as part of vision 2030.

Speaker Change: But I'm really proud of what we've accomplished here is through 2023 I talked about the results earlier today. They were excellent you know against the very challenging backdrop.

Speaker Change: But our company is very different in 2024, then we could have ever imagined when we put together vision 2025, our innovation is stronger it's broader and it's deeper our team has delivered through an exceptionally challenging circumstances and we've been tested along the way and we've been tested we have learned and we're applying that knowledge, which is something that.

Speaker Change: The very best companies always too we've made excellent progress on our own sustainability program, you're going to wear and make more of it over the next seven years as a you know Michelle will walk you through and again, we are a critical part of our customers meeting their sustainability targets. Our goal is to make graphic packaging the undisputed consumer packaging.

Speaker Change: Company in the World and our vision 2020.

Speaker Change: Our vision 2030 got too many visions for vision 2030.

Speaker Change: <unk> really put that stake in the ground today and we're very excited to have you here, so with that I'm going to ask Maggie to come up and she's going to go in a little deeper in.

Maggie Mayor: In terms of bringing some of the things that I talked about the life.

Maggie Mayor: Yes.

Thank you.

Maggie Mayor: Okay.

Maggie Mayor: Okay.

Speaker Change: Good morning, everyone I'm very excited to be here today to share with you information about the innovation capability at graphic packaging.

Speaker Change: As Mike just mentioned innovation is a core component of our vision 2030.

Speaker Change: And after my discussion today I hope you have really three key takeaways there.

Speaker Change: The first is the demand from consumers for more sustainable packaging is accelerating.

Speaker Change: Secondly.

Speaker Change: Our innovation, our global innovation capability is competitively advantaged and ready to meet that opportunity.

Speaker Change: And lastly, we see a $15 billion sales opportunity for paperboard packaging.

Speaker Change: Which gives us confidence in our path to the 2% growth and innovation to achieve our vision.

Speaker Change: As Mike mentioned, our products are in the hands of millions of customers multiple times per day over the last several years, we've made many investments too.

Speaker Change: Dramatically expand our global product and our customer portfolio.

Speaker Change: We work with the leading companies and brands around the world and with them, we meet consumers and many of life's everyday moments.

Speaker Change: We have a great responsibility because our consumer packages are at the interface between our customers' products and the consumer.

Speaker Change: We have to deliver on our product that meet those consumer needs, while also delivering value to the brand owner.

Speaker Change: Our packaging needs to consumers whenever and wherever they consume while also providing convenience freshness and safety and a host of other functions.

Speaker Change: Well, we understand our many trends driving consumer decisions today health and wellness convenience experience, but most importantly consumers are increasingly concerned about the impact their decisions have on the environment consumers want more sustainable.

Speaker Change: <unk> and 68% of them view that paperboard packaging is more sustainable than other alternatives.

Speaker Change: They're putting a lot of care and thought into the decisions, they're making around the products and the brands that they buy and how they impact the environment.

Speaker Change: This is increasingly true for the next generation of consumers. Our recent first inside shared that an astounding, 73% of consumers and Gen Z shoppers are willing to pay more for sustainable products.

Speaker Change: As a result of this pressure youre, saying that other stakeholders are driving action.

Speaker Change: Retailers and brand owners, they're developing their own sustainability strategies to help meet those consumer expectations to support their own environmental vision, while also navigating a very changing regulatory environment.

Speaker Change: This regulatory environment in the Americas is accelerating really being primarily led by areas like Canada as well as the coastal regions and then there are materials like farm that are clearly gaining much broader adoption across the Americas.

Speaker Change: Leading the way by a long shot in terms of scale and scope is Europe, and John Francois will be sharing more about that acceleration when he gets up here.

Speaker Change: That activity across all of these stakeholders is accelerating as consumer demand for more sustainable packaging continues to increase.

Speaker Change: The core at every package, we design is really three things.

Speaker Change: Everything starts with what the consumer wants.

Speaker Change: But we're also obviously very focused on our direct customers and their needs in terms of driving their brand values their operations and overall value proposition, but we're doing all of that while keeping the environment front and center.

Speaker Change: We strive for every new package that we introduce to having smaller environmental impact and what came before and that's whether that's our package or someone else's package.

Speaker Change: I wanted to take a moment to explain how graphic package path.

Speaker Change: Packaging manages their innovation capability, because we believe it's part of our winning winning path here.

Speaker Change: We are very intentional with how we align our people our structure and our process and this is especially true since our acquisition of air packaging as we become more global.

Speaker Change: And while we have become a broader more global footprint, we are still remaining essentially organized.

Speaker Change: At the same time, we clearly understand that within different geographical areas that there are unique consumer you know consumer insights regulatory environments and other other insights that require us to maintain a really sharp focus in terms of those regional trends.

Speaker Change: But to really drive our competitive advantage, we need to be globally connected and ensuring that as we unlock those now that knowledge and insights that we get from one customer in one region that we're sharing that can benefit all of our customers and regions across the globe.

Speaker Change: Today, we have eight innovation hubs, we have a 120 fully dedicated innovation employees and we protect what we create with nearly 8000 active patents.

Speaker Change: We leveraged these investments along with this structure and process that we try to keep accelerating our launches of new unique solutions that help support our customers and the markets that we're in across the global network.

Speaker Change: Next I want to take a couple of minutes to walk you through the innovation journey that we take hand in hand with our customers to develop these solutions.

Speaker Change: Over the past seven years, we've made significant investments in many key areas across this process in terms of people and capability and we are delivering more value for our customers and we have in the past.

Speaker Change: Starting with market insights.

Speaker Change: We have made investments in our consumer insights capability, along with marketing we've made.

Speaker Change: <unk> acquisition from CPG companies like Coca Cola, and Pepsico and as a result, we're seeing faster consumer insights, while also developing stronger relationships with our direct customers and retailers to unlock their unique needs and golf.

Speaker Change: One of the areas that I was most excited about when I joined graphic packaging is in the first few months when it started to unveil to me how deep our talent and our capabilities are within R&D and the creative design group I cant.

Speaker Change: Express how impressive and extensive these capabilities are.

Speaker Change: And more recently, obviously going beyond that really combat competitive foundation that we have we've been investing in things to help accelerate the front part of that funnel things like rapid prototyping.

We can be an ideation session with one of our customer at one of our eight innovation hubs and we can be ideating and creating new packaging concepts and we can turn that into a tangible sample on that day, which is very powerful and it really drives speed and our process.

Speaker Change: When I think about all of the centers of excellence that we have across the company that comprise all of the components of packaging. It's very extensive everything from our paper science capabilities are overall paper packaging capabilities.

Speaker Change: Really strong breadth across material science, and then you take our machine capabilities on top of it and it really is unmatched.

Speaker Change: And what it allows us to do is to really drive innovation across our entire value chain that we operate in.

Speaker Change: And that's really critical important when we think about the creative design process.

Speaker Change: One of the most important things that we do is and we design a new package, we are designing that with the end in mind.

Speaker Change: And what I mean by that is our teams are looking at that package and theyre being able to adjust and understand how to develop that so they can apply seamlessly into our manufacturing and our supply chain as well as to our customers, which is even more critical this is what helps us drive <unk>.

Speaker Change: Cost efficiency and speed to our innovation funnel.

Speaker Change: Also we have some other fun new tools in terms of three D visualization and also using augmented reality and this helps us make design come to life faster than ever before.

Speaker Change: We are leaders in the design and implementation of packaging machinery, which in some cases is a critical component of our overall solution.

Speaker Change: This is something that we've developed for many years as leaders in the beverage market, but we're finding new homes for this capability in the food segment as well.

Speaker Change: But to be very clear our number one goal when we design new packaging is to get it to work in the existing machine and equipment at our customers, that's what really drives cost effectiveness and speed to the market.

Speaker Change: In the event that we have new innovative solutions that do require machines. Our team is extremely capable to help them both in the testing and the piloting phase as well as a full global rollout when it's ready.

Speaker Change: They are very good at designing machine types that are flexible, which is important to accommodate different different substrates as well as different sizes of substrates. While also minimizing the footprint impact in that machinery for that precious manufacturing space at our customers.

Speaker Change: The final stage of commercialization, which is very complex and this is where this requires a very close working relationship with our customers to make that happen seamlessly we have dedicated technical resources around the globe to help execute on these pilots as.

Speaker Change: Well as you know these experiments and these pilots and at the same time, we have on matched scale.

With over 100 manufacturing facilities with discrete printing and finishing capabilities that allow us to meet our customers wherever they are no. One else can match the scale that we deliver in our large global customers really value that about graphics.

Speaker Change: Packaging.

Speaker Change: At the same time, we provide a lot of benefit to the small and medium sized brands as this as they can benefit from the sophistication of our innovation capabilities and we really value working with the small to medium brands as well because they are often early adopters of some of these innovations.

Speaker Change: All in all this journey that we go on with our customers is anything but linear but it's.

Speaker Change: I hope that you can take away a lot of obviously not able to talk about all the things that we've been doing that I hope you take away and understand that we've made an incredible amount of investments and advancements and again you know having worked for lots of other companies I cannot tell you how impressed I felt like I had the lottery.

Speaker Change: When I started unveiling some of the key technical capabilities and you pair that with the tailwind of sustainability and it's a really exciting place to be.

Speaker Change: Our capabilities our team and our collaborative process is really helping us drive to new and exciting winning solution.

Speaker Change: So speaking of winning solution.

Speaker Change: We have an unmatched portfolio of five global innovation platforms that are competitively advantaged and constitute an opportunity a $15 billion for paper packaging.

Speaker Change: Some of you may recall, the unveiling that Mike was just talking about of our vision 2025.

And that time, we identified a 5 billion dollar opportunity.

Speaker Change: So as part of these investments that we've accelerated the company, we've been able to triple our addressable opportunity during that time.

Speaker Change: In addition, these platforms offer is value proposition over and above sustainability.

Speaker Change: There are discrete value propositions related to functionality and convenience for these products.

Speaker Change: And equally important as they are leveraged at ball across our geography across markets product categories, and they are ready to be deployed at scale.

Speaker Change: Yeah.

Speaker Change: In addition to packaging innovations, we've been busy innovating on paperboard with the launch of our most recent pacesetter Rainier cut.

Speaker Change: Customers and consumers are asking for recycled content.

Speaker Change: As a result of our two transformational investments in recycling paperboard.

Speaker Change: This has enabled us to create a unique sheet that brings many of the advantages that bleach board has today.

Speaker Change: With this new sheet is going to allow us to access underdeveloped markets here in the Americas, like oral and personal care health care and beauty.

Speaker Change: The good news is as a result of our acquisition of air packaging, we have strong strategic relationships with the global brand owners that support these markets.

Speaker Change: I'm very excited about pay centering ear and while it's still relatively new we are getting very positive feedback from our customers and the market.

Speaker Change: And to be clear, we view this as an incremental opportunity that's over and above the 15 billion that I just highlighted for the consumer packaging innovation.

Speaker Change: Next.

I'm going to take a drink of water.

Speaker Change: Okay.

Speaker Change: Next I want to highlight how these five global innovation platforms and pasted, a rainier come to life in the retail and foodservice channels that we operate in.

Speaker Change: Traditionally our strong hall has been packaging in the center of the store and Cook cookies and crackers in cereal in pasta.

Speaker Change: These transformational investments that we've made and recycled paperboard has secured our long term advantage in these categories.

Speaker Change: The expansion of our diverse capabilities and portfolio, let us know with the consumer and their spending habits shifts between traditional grocery store club stores E Commerce and quick service restaurants.

Speaker Change: The next slides I'm going to walk through each of the five platforms and give you. An example of a couple of the innovations and help them become more real for you.

Speaker Change: Our products like paper steel and partners are expanding paperback paperboard packaging, we have a lot of people in this business I've realized.

Speaker Change: Yes, moving does to the perimeter another P outside in the center of the store into areas like the Delhi in the bakery in the produce section and then products like fresh fresh proteins and fresh pasta.

Speaker Change: At the same time consumers are increasingly asking for more convenience when they prepare their food.

Speaker Change: Our proprietary microwave and convection oven technology allow us to work with our top branded customers and provide products that not only can give you that convenience, but they do it without sacrificing quality for themselves as well as their families.

Speaker Change: One of the most exciting developments.

Speaker Change: And our platform here is the work that we've been doing to drive paperboard substitution for phone.

Speaker Change: Both in retail as well as in our foodservice. We expect this opportunity to continue to grow based on film regulation, expanding and this portfolio is well positioned with unique solutions that offer performance characteristics that either meet or exceed farmed today.

Speaker Change: Yes.

Speaker Change: Many of you have seen our chick Fil a colon go cops are some great. Examples out there for you to take a look at and this is an area where obviously it provides benefits in terms of installation for for beverage in the quick service market and we will continue to drive penetration of that across those markets.

Speaker Change: At the same time, we've developed a unique microwave coding that will allow our portfolio to move into the third section of the grocery store and other channels. We have a recent launch with Nissin Cup noodles, let's say microwavable products, which I'll share a little bit more information about that and the debt in a bit.

Speaker Change: But this product is allowing us to move into those types of applications that support things like noodles and other ready to eat microwavable meals.

Speaker Change: Our Bourdeo canister was originally developed by a our packaging.

Speaker Change: Gained early traction in Europe as brand owners were facing oncoming regulation.

Speaker Change: Many of these same global brands are looking to utilize this canister in the Americas market as well.

Speaker Change: In this line as you can see here is being used to replace other types of packaging materials like plastic metal and composite packaging.

Speaker Change: The original package was actually delivered developed for infant formula, but it's finding its way and many new segments just a handful here highlighted.

Speaker Change: As many of you know we have a strong position in the beverage market. Today, However, our new innovative offerings allow solutions for customers, who are looking to replace their plastic rings and shrink film across the globe.

Speaker Change: Our comprehensive portfolio of multipack products and machinery is equipped to accommodate all the beverage formats that are in the market today.

Speaker Change: We've since we've since expand these into newer markets outside of beverage into food as you can see examples here and we're excited about that because we know as club store volume continues to grow we're seeing that the multi pack configuration is gaining in popularity.

Speaker Change: You can see here examples in condiments, and sauces and it works well on other cylindrical food items.

Speaker Change: Called store they are accelerating and the good news is club stores themselves with their private brands have made some traction in adopting paperboard packaging to replace plastic and they are encouraging their suppliers to do the same.

Speaker Change: Speaking of club stores and E Commerce, we're seeing much greater demand for more durable packaging as a result of their robust supply chains and heavy weighted products.

Speaker Change: We have a proprietary strength packaging portfolio that ensures the right level of protection without the overuse of material, which is really key for cost optimization as well as being more friendly to the environment.

Speaker Change: Highlighted here is the integra for it.

Speaker Change: This is a package that replaces commonly used.

Speaker Change: Plastic bags well.

Speaker Change: While also delivering a ship in own container configuration, which is really important for E. Commerce and provides a total omni omni channel package for the brands that utilize this.

Speaker Change: Our unique package also provides an easy to open characteristic for consumers, where you can either poor or scoop, the product directly directly without having to transfer it to yet another.

Speaker Change: Another container.

Speaker Change: This allows the branding on the package to remain in the home throughout as he is.

Speaker Change: I really love. This I Love. This example of a graphic packaging innovation because it helps solve the sustainability challenge on two different dimensions, but at the same time. It offers a benefit to the consumer as well as the brand owner.

Speaker Change: Yeah.

Speaker Change: Lastly, this is there a pace at a rainier will be making its debut at a retailer near you.

Speaker Change: And it will be supporting the key markets that I just highlighted the short vertigo.

To summarize.

Speaker Change: This is where we've been.

Speaker Change: And this is where we are.

Speaker Change: Through the innovation platforms, we have extended the ability for paperboard packaging to reach new areas for consumers and their class to have a more sustainable future.

And it takes a lot of work and a lot of collaboration with our customers to arrive at one of these coveted retail spot and what I wanted to do next is really share with you three examples of how we co create with our customers, while also strengthening and deepening our relationships.

Speaker Change: Here's the first one so kraft Heinz came to us with a challenge how do you make it convenient microwave food deliver the Christmas of a longtime family favorite the grilled cheese sandwich.

Speaker Change: With our innovation teams deep knowledge and microwave science, which.

Speaker Change: But yeah, that's the thing.

Speaker Change: I didn't know until I came to graphic packaging for a really great team of microwaves scientists along with strong capabilities and overall packaging science, we were able to develop a.

Carton that allowed the grilled cheese to peak to be cooked and all the right places, allowing it to have the perfect site throughout the sandwich.

Speaker Change: Our accelerated process. This is to me one of the more impressive things of this examples from the time that we got the challenge from Kraft Heinz to a commercialized product it was nine weeks.

Speaker Change: That's the kind of speed, we need to drive these innovation.

Speaker Change: Platform.

Speaker Change: This is another great example of a more of their innovation and this was in partnership with a co Packer club coffee or Fi, who help support private brands for retailers and coffee lives.

Speaker Change: Their retail partner came to them with a challenge they wanted to increase recyclability, while maintaining a high quality easy to use coffee canister.

Speaker Change: Ultimately he worked very closely with club coffee to develop a bourdeo solution that gave them the recyclability to re close ability paperboard package that also enhanced branding on the shelf.

Speaker Change: And in fact this retailer was so excited about the boreal package that they dedicated advertising time to spot to talk specifically about the Borneo package.

Speaker Change: Even more exciting.

Speaker Change: That was the second time that a brand owner has done that in a matter of months, where they dedicated precious time and money.

Speaker Change: To do nothing but highlight the Borneo package and advertising.

Speaker Change: Lastly, I want to highlight a product that many of you have consumed at some point in your life the beloved Nissin Cup noodle.

Speaker Change: This was a challenge that we got from missing Cup noodles actually I'll walk through for challenges that they asked us to try to solve as part of looking for a new package. One asked if they needed to meet the phone replacement. So for many of you have consumed it you know that today or historically has come in a form and a film.

Speaker Change: Up.

Speaker Change: Secondly, they wanted this cup to work seamlessly in their current manufacturing filling facility.

Speaker Change: Obviously to drive cost inefficiency and time.

Speaker Change: The third thing was they wanted to be Microwaveable.

Speaker Change: So that was something that we had to work on and they wanted to provide obviously that convenience for the consumer and then lastly, if they wanted all of that work to help to ensure they are maintaining their corp. There'd be corp status as a company.

Speaker Change: Our team was able to work on all of these challenges and overcome them and are custom designed cup just hit retail.

Speaker Change: And beloved missing Cup noodles will be microwaveable for the first time in 50 years.

Speaker Change: Yeah.

Speaker Change: So I've shared with you our exceptional innovation capabilities, but at the end of the day, it's our customers without that matters and will change the trajectory of our growth.

Speaker Change: And graphic packaging, we take the voice of our customer very seriously and we consistently go out and survey our customers to understand how we can get better. So we've recently done one where we went to hundreds of contacts across our global customer base.

Speaker Change: And what you see here is an excerpt of the area, where we specifically wanted to understand what they thought about our global innovation capabilities.

Speaker Change: Just to be clear. These quotes are from well known global brands and National brands that you would know.

Speaker Change: One thing that I think is very clear with all of our customers as they have two big challenges in front of them right now one is.

Speaker Change: They need to grow.

Speaker Change: And the second is they have to respond to the consumers' demand for more sustainable packaging, we believe our innovation and our capabilities are critical to helping them solve their biggest challenges.

Speaker Change: In summary demand for sustainable packaging is accelerating.

Speaker Change: Our uniquely positioned with unmatched scale and capability to to take advantage of those opportunities.

Speaker Change: With a $15 billion addressable opportunity, we are confident in our ability to deliver that 2% innovation growth to achieve our vision 2030.

Speaker Change: We are creating more value for our customers than ever before and we are getting paid for that value.

Speaker Change: I'm very excited about the last seven years of the journey that graphic packaging.

Speaker Change: Let's see if it's a P thing graphic packaging is odd, but I'm, even more excited about what's ahead.

Speaker Change: And with that we're going to take a 10 minute break and we'll return to have a fireside chat with Mark Connelly and John Francois. Thank.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: Most people underestimate the value effect, because people tend to think about a box or a cough.

Speaker Change: It's much more complex than that because we are really.

Speaker Change: So between the brand.

Speaker Change: Brand owners.

Speaker Change: When consumers pick up a package and dispenser product if they work perfectly.

Speaker Change: And notice, but when it fails, that's where the problems arise you don't Wanna add frustration you want to take that away and make people's lives better.

Speaker Change: For consumer.

Speaker Change: Different functions.

Speaker Change: Packaging.

Speaker Change: Yes.

Speaker Change: With the convenience.

Speaker Change: Yeah.

Speaker Change: Customers are looking for.

All of them.

Speaker Change: Sure.

Speaker Change: Sure.

Speaker Change: Great.

Speaker Change: Great.

Speaker Change:

Come to us.

Speaker Change: There's a process for design and innovation five steps, we'd look at insights we look at design explore those solutions. We collaborate together we worked through R&D, we get through the machinery validation and we commercialize these ideas that's how we get the breakthrough innovation.

Speaker Change: The most important thing around our culture of inclusion in terms of everybody.

Speaker Change: Are you comfortable in providing input to them how to make things better we are continuously feeling the pulse of that particular customer relative to that solution.

Speaker Change: Jim.

Speaker Change: Yeah.

Speaker Change: For shoppers.

Speaker Change: Decision.

Jim: The discovery.

Jim: In Q1.

Jim: See how we tend to move around and.

Jim: We take the inspiration that we get from consumer insights and the design work and we bring it to life.

Jim: Quickly what if we could change that package from a plastic structure into paperboard, what if we could make the package safer for children. We can do all of those things where they have to start with what is.

Jim: Oh, I'm really proud about the investments that we have made as a company in understanding material science in employee development techniques that are based on design for the environment principles.

Jim: We tend to look at the world from an outside in perspective, and understanding what is happening out there translating those trends and insights into the new product development opportunities.

Jim: <unk> has no finish line, so we will never be done.

Jim: Got to invent the future of sustainable packaging.

Jim: We are all born to this blue planet.

Jim: Into the Great project of life.

Jim: Questionnaires.

Jim: What are we going to do it.

Jim: He along for the ride.

Jim: Or do we worked to make it better.

Jim: Graphic packaging, we choose better.

We choose purpose.

Jim: Ours is to package likes everyday moments for our renewable future.

Jim: This commitment shapes our plant.

Jim: Our relationships drives our actions.

Jim: Packages.

Jim: Sure.

Jim: Where does that.

Jim: Keeping food fresh beverages, Florida.

Jim: Moments easier.

Jim: <unk>.

Jim: We start with trees from sustainably managed forests.

Jim: We also repurpose flavor from the recycling stream designing packaging that can be recycled again and again.

Jim: Our renewable future.

Jim: <unk> to come.

Jim: Graphic packaging.

Speaker Change: Every one of us has a role.

Jim: Good day as an opportunity.

Jim: Pushed the limits of Pos.

Jim: So most people underestimate the value of packaging people tend to think about a box or a cough.

Jim: A much more complex than that because we are really that interface between the.

Jim: Brand owners chemicals the.

Jim: When consumers pick up a package and dispenser product if they work perfectly.

Jim: I don't even notice, but when it fails, that's where the problems arise you don't Wanna add frustration you want to take that away and make people's lives better.

Jim: Packaging for consumer.

Jim: Many different functions.

Jim: Okay.

Jim: Preserve.

Jim: The convenience.

Jim: Yes.

Jim: Customers are looking for.

Jim: All of these.

Jim: Sure.

Jim: Sure.

Jim: The sustainability.

Jim:

Jim: Frank.

Jim: There's a process for design and innovation of the five steps we'd look at insights we look at design explore those solutions. We collaborate together we worked through R&D, we get through the machinery validation would commercialize this idea that's how we get the breakthrough innovation.

Jim: The most important thing around our culture.

Jim: In terms of everybody.

Speaker Change: Are you comfortable in providing input on how to make things better.

Speaker Change: The feeling the pulse of that particular customer relative to that solution.

Speaker Change: Packaging.

Speaker Change: Yeah.

Speaker Change: For shoppers.

Speaker Change: Decision.

Speaker Change: E discovery, what consumers want.

Speaker Change: See how we can take that inspiration that we get from consumer insights and the design work and we bring it to life really quickly.

Speaker Change: If we could change that package from a plastic structure into paperboard, what if we could make the package safer for children. We can do all of those things where they have to start with what is.

Speaker Change: I'm really proud about the investments that we have made as a company in understanding material science in employee development techniques that are based on design for the environment principle.

Speaker Change: We tend to look at the world from an outside in perspective, and understanding what is happening out there translating those trends and insights into new product development opportunities innovation has no finish line. So we will never be done we got to invent the future of sustainable packaging.

Speaker Change: Yeah.

We are all born to this blue planet.

Speaker Change: The great project of life.

Speaker Change: Questionnaires.

Speaker Change: What are we going to do with that.

Speaker Change: I'll be along for the ride.

Speaker Change: We work to make it better.

Speaker Change: Graphic packaging, we choose better.

Speaker Change: We choose purpose.

Speaker Change: Ours is to package likes everyday moments for our renewable future.

Speaker Change: This commitment shapes our plant.

Speaker Change: Our relationships drives our.

Speaker Change: Packages.

Speaker Change: Millions of lives.

Speaker Change: Keeping food fresh.

Speaker Change: To support them.

Speaker Change: Everyday moments easier safer.

Speaker Change: We start with trees from sustainably managed forests.

Speaker Change: Also repurpose flavor from the recycling stream designing packaging that can be recycled again and again.

Speaker Change: Supporting our renewable future.

Speaker Change: Generations to come.

Speaker Change: Graphic packaging.

Speaker Change: None of us has a role.

Speaker Change: Every day is an opportunity.

Speaker Change: We're still limited for Pos.

Speaker Change: No.

Speaker Change: So most people underestimate the value of packaging people tend to think about a box or a car, but it's much more calm.

Speaker Change: Flex did that because we are really that interface between the brand.

Speaker Change: Brand owners.

Speaker Change: When consumers pick up a package and dispenser product if they work perfectly.

Speaker Change: And notice, but when it fails, that's where the problems arise you don't Wanna add frustration you want to take that away and make people's lives better.

Speaker Change: For consumer.

Speaker Change: Many different functions.

Speaker Change: Packaging.

Speaker Change: Yes.

Speaker Change: The convenience and ease.

Speaker Change: What customers are looking for.

Speaker Change: All of these.

Speaker Change: Sure.

Speaker Change: Packaging.

Speaker Change: Great.

Speaker Change: Okay.

Speaker Change:

Speaker Change: Thanks.

Speaker Change: There's a process for design and innovation five steps, we'd look at insights we look at design explore those solutions. We collaborate together we worked through R&D, we get through the machinery validation and we commercialize these ideas that's how we get the breakthrough innovation.

Speaker Change: The most important thing around our culture.

Speaker Change: In terms of everybody.

Speaker Change: He was comfortable in providing input to them how to make things better we are continuously feeling the pulse of that particular customer relative to that solution.

Speaker Change: Jim.

Speaker Change: Yeah.

Speaker Change: For shoppers.

Speaker Change: Precision.

Speaker Change: About the discovery what consumers want.

Speaker Change: See how we can deliver.

Speaker Change: Take the inspiration that we get from consumer insights and the design work and we bring it to life really quickly.

Speaker Change: We could change that package from a plastic structure into paperboard, what if we could make the package safer for children. We can do all of those things where they have to start with what is.

Speaker Change: I'm really proud about the investments that we have made as a company in understanding material science in employing development techniques that are based on design for the environment principles.

Speaker Change: We tend to look at the world from an outside in perspective, and understanding what is happening out there translating those trends and insight into the new product development opportunities innovation has no finish line. So we will never be done we got to invent the future of sustainable packaging.

Speaker Change: Yeah.

Speaker Change: We are all born to this blue planet.

Speaker Change: The great project of life.

Speaker Change: Questionnaires.

Speaker Change: What are we going to deal with that.

Speaker Change: He along for the ride.

Speaker Change: Or do we work to make it better.

Speaker Change: Graphic packaging, we choose better.

Speaker Change: We choose purpose.

Speaker Change: Ours is to package lives everyday moments for our renewable future.

Speaker Change: This commitment shapes, our plant guys our relationships drives our actions.

Speaker Change: Packages remake.

Speaker Change: Dozens of lives for the better keeping food fresh beverages are supportive.

Speaker Change: Everyday moments easier.

Speaker Change: Paper.

Speaker Change: We start with trees from sustainably managed forests.

Speaker Change: Also repurpose fiber from the recycling stream designing packaging that can be recycled again and again.

Speaker Change: Supporting our renewable future.

Speaker Change: Generations to come.

Speaker Change: Graphic packaging.

Speaker Change: One of US has a role.

Speaker Change: Every day is an opportunity.

Speaker Change: Let's push the limits of Pos.

Speaker Change: Well most people underestimate the value of packaging people tend to think about a box or a cough.

Speaker Change: It's much more complex than that because we are really that interface between the.

Speaker Change: Brand owners and consumers.

Speaker Change: When consumers pick up a package and dispenser product if they work perfectly.

Speaker Change: But notice, but when it fails, that's where the problems arise you don't Wanna add frustration you want to take that away and make people's lives better.

Speaker Change: For consumer.

Speaker Change: Many different packaging.

Speaker Change: Packaging.

Speaker Change: The convenience and ease of use.

Speaker Change: Our customers are looking for how do we combine all of these functional aspect.

Speaker Change: Thank you.

Speaker Change: The sustainability.

Speaker Change:

Speaker Change: They come to us to find synergies.

Speaker Change: There's a process for design and innovation of the five steps we look at insights we look at design explore those solutions. We collaborate together we worked through R&D.

Speaker Change: Machinery validation and we commercialize these ideas that's how we get the breakthrough innovation.

Speaker Change: The most important thing around our culture of inclusion in terms of everybody.

Speaker Change: Who's comfortable in providing input on how to make things better we are continuously feeling the pulse of that.

Speaker Change: Customer relative to that solution.

Speaker Change: <unk>.

Speaker Change: Yeah.

Speaker Change: Shoppers.

Speaker Change: It is about discovering what consumers want.

Speaker Change: See how we tend to move around.

Speaker Change: Inspiration that we get from consumer insights and the design work and we bring it to life really quickly what if we could change that package from a plastic structure into paperboard, what if we can.

Speaker Change: Could make the package safer for children, we can do all of those things where they have to start with.

Speaker Change: I don't know.

Speaker Change: Okay, let's get let's get started so.

Mark Connelly: I'm Mark Connelly.

Speaker Change: John Francois Roche, who is our head of international sales of graphic packaging.

Speaker Change: Jumpers, while I spent most of his career at our packaging or graphic packaging. He's also as Mike said, the chairman of the European.

Speaker Change: Carton manufacturers Association, so welcome Jean Francois.

Jean Francois: Thank you.

Speaker Change: Mark Good morning to everyone and good morning to everybody on the webcast and.

Jean Francois: Truth is very any French speaking verifone in the audience or on the webcast.

Jean Francois: So what I'd like to do jump as far as is start off with just give us an overview of the European business and where graphic fitter yep. Thank you Mark So in Europe, we are roughly a 2.2 billion.

Jean Francois: Business in paperboard market, which is in the range of $15 billion.

Speaker Change: If we look at the total consumer packaging markets.

Speaker Change: The size of the European consumer packaging market is in the range of.

Speaker Change: 100 billion. So these gave us plenty of room to grow.

Speaker Change: We operate in 18 different countries.

Speaker Change: Which include Indonesia, Australia, and New Zealand.

There are some who market patterns and customer base all the same.

Speaker Change: And we operate as well across our six segments, which are <unk>.

Speaker Change: Food health care beauty.

Speaker Change: Beverage food service and what we called the household and that's quite a benefit for us because you know you might have some volatility in some.

Speaker Change: Seasonality into segment and that helps us to balance out with the beat those market fluctuation. So when you think about the difference between the U S business in Europe.

Speaker Change: We have a very well established health care and beauty business in Europe.

Speaker Change: Our relationships with all of the major pharmaceutical companies there.

Speaker Change: And of course, how much smaller foodservice component than we have here in the U S. Trumpf as to why you chose the sales progression and it was looking pretty good up until 2022 but can you give us a sense of what the recent performance is going on there yeah. So if we step back a bit and look at the who was the markets before something called coffee to happen you know it was pretty much straight.

Speaker Change: For them. They know, it's it's a European view of the things but.

Speaker Change: For Western European part of Europe, We were looking at GDP goes and some who is a market where it's performing like a clock on the GDP calls if we look at developing countries in Europe, which was more the eastern Bob because it was a market where they're getting structured we were looking at twice GDP goes for.

Speaker Change: It was a market development.

Speaker Change: Then 2020, you happen Covid came on stream consumer behavioral wins all over the place.

Speaker Change: Pit hopefully more substitution stocks he does well at that time. So you can see on the graph. The market went up pretty dramatically is specifically in 2022 that was driven as well by further things because we sold finished goods stock increasing the old materials took increasing because people were wondering we have seen our <unk>.

Speaker Change: <unk> as well.

Speaker Change: Increasingly our goods took from six to nine months and then we use the price went up a bit and we were just wondering at the end of 'twenty two when the room will bounce back.

Speaker Change: Because a two week work so in beginning of 'twenty three we saw clearly your malls, we saw somewhat resilient in the first quarter, but then we had to unwind or what was in the pipe. So.

Speaker Change: In 'twenty threes or performance of the market was in the range of minus seven 8%, but that was compensated as whereby innovation and what I would call pit hole, putting a substitution which is the beginning of what I will discuss later on which is a packaging and packaging with regulation.

Speaker Change: And that both the beta.

Speaker Change: But as to the market. So we ended up in the range of minus two minus 4% on the total market.

Speaker Change: For 'twenty for you know I think we just consider the 23 will be the base and we go back a bit to the basic so I looked at the numbers from the European some European Central Bank, what piece to forecast of GDP.

Speaker Change: For 24 weeks Raffi will point, 91%. So when he sees who's a base market will evolve, but we see a strong.

Speaker Change: Strong trends still on.

Speaker Change: On innovation and what they call the hole, putting a substitution and we believe because as Mike said, we have a pipeline which is already filled you know we believe that this will drive a 3% to 4% goes so we are fairly confident about plentiful.

Speaker Change: So John first of all you spent 24 years at a our packaging he left.

And then you joined later you joined graphic packaging than graphic packaging bought a our packaging.

John Francois: So there's probably nobody out there who understands the impact of air packaging on graphic better than than you do and I know that when I was sitting out here in the audience I didn't really appreciate the impacts. So can you walk us through what what the real impact was.

John Francois: And this was all planned basically you know when I moved to a Gothic.

John Francois: Yeah.

John Francois: So before we went to the equity we made the acquisition of on daily and in 'twenty one.

We will do so the operator on the market, we were operating suite 14 different converting facilities.

John Francois: We were operating in food and convenience and beverage we were quite successful in the beverage on the beverage items of business and.

John Francois: And we were what I said on briefings.

John Francois: Some.

John Francois: So European channel.

John Francois: Between between U K, and the rest of Europe, and as well as the Iberian Peninsula.

John Francois: And then we made the acquisition of a company can cause R&D and that was we were adding 30 facilities 40 facilities. It was what I called a game changer for us.

John Francois: We entered into a new market, which we are at scale.

John Francois: <unk>.

John Francois: And household as when we entered into new technology, we enter into paper kidney stone we entered into.

John Francois: <unk> technology, because they are the flexibility vision, which was highly knowledgeable about by your technology and just for the ease to agencies with hip hop back with developing 1968, but they had an imminent knowledge and buy your technology, which has been quite a loss right now.

John Francois: And they as well they had a good note.

John Francois: Oh, finishing capability because of the beauty market and as well of security device on the on the hydrant kept market. So clearly.

John Francois: That was a game changer, and then we supply no multinational customer regional customer local customer across 50 different countries.

John Francois: Good about that merger is that there was very little overlap on the customer base.

John Francois: And when it comes to the footprint it was perfect perfect might show it with something which was.

John Francois: Really good and we became number one on the market in Europe after that acquisition.

John Francois: So Maggie you talked quite a bit about changing customer relationships and it's been it's been less than two years, but how is how are our relationship is starting to change in Europe. It's a very interesting point you made.

So I remember you know right after the acquisition of choice to back to my choice of R&D and they went to you know to meet some of the large healthcare and beauty care company in Europe and the <unk>.

John Francois: I had a bit of coal to feed the first time I met them because he told me why do U K on what are you doing here, you know really where does that make sense and they said guys. So we took time to listen to their expectation to understand the market trends and to set up the strategy and we moved very detail here will position reduce customer because for most of them we are seeing.

John Francois: The partner for the future. So it was a very big change in the way they were approaching goes.

John Francois: And a short period of time in a relatively short period of time as well when I'm seeing which is a bit unique in my tours in voters and that's the key we have been chosen by Danone.

John Francois: Oh.

John Francois: We are one of five should play a worldwide, which will help them to drive their transition in Gulf strategy towards packaging, which is quite often achievement to what we call the Jordan business month business development plan.

John Francois: And then just recall one thing which was set by my friend, we use a CPU of Danone.

John Francois: And the fuel made equal them that when he said, even though you are a large international company U S kept an entrepreneurial spirit, which is a bit unique in that he sees what we are looking for and that was a bit of oh.

John Francois: Complement is waiting for us so we will.

John Francois: You said, one five suppliers that want to five packaging company in our wildfire she players worldwide.

John Francois: Not sure how many packaging companies were on that list of five.

John Francois: We are the only one.

John Francois: Okay.

And then one thing which has changed a bit.

John Francois: Dramatically in.

John Francois: So we have seen the number of applications you know.

John Francois: For people.

John Francois: To join the company increasing dramatically over the last 18 months.

John Francois: And then you you would just wonder you know because oh are we becoming attractive because of we are number one.

John Francois: Are you becoming attractive because of all the amazing innovation, we are launching in the market or it's just because you want to be a bit selfish.

John Francois: You'll get to hear to attractive because of the amazing management that we are in Europe.

John Francois: And I suspect, it's a bit of all of that it's really something which has been which is a very big challenge because it's coming not from one specific company, but it's a number of reputation we had from the industry with is clearly.

John Francois: Clearly interest even we have taken on the votes from people because at the end, it's all about people.

John Francois: It's all about kind of what to make company successful.

John Francois: So as chairman of the European Carton makers Association, you're right in the middle of all of the regulatory Yep swirl and there's a lot going on what is the most important thing for investors should be thinking about in terms of European regulation right now yeah. I think it's just too so let's just talk about.

John Francois: With the Green deal and they Wouldnt go into the detail because its quite a complex, but it's it's something which is made out of 11 initiative.

John Francois: And you have a lot of Beatles was in Asia, you, Hulu regulation directive, which will which will be set but the aim of the green deal is too painful carbon neutrality by 2050 in Europe by the way some of their large food and consumer goods company knew about what would be a meaningful capital in Detroit at younger scope, one and two image.

John Francois: In $2035 2040.

John Francois: But let's focus on the zinc six which are on the screen up one back.

John Francois: Oh.

Speaker Change: Yes, so let's focus on the switch out there. This is what we would have an impact for our industry.

Speaker Change: So part of the year live in and out of the six will be just focusing on focus on the one which is.

The packaging with liquidation because that's the one which is important for you to understand.

Speaker Change: So where are we right now on the packaging with regulation are they are we have had several iterations of both the law and what would be the implication I think what you have to understand there are three governing bodies in Europe when he's a commission. The other one is the parliament and the third one is a complete a few of you have all had to sort of different appreciation of what should be.

Packaging with regulation and they even until the right knowing to Thailand phase because he wanted to issue one common takes which will be voted in them.

You may have an issue.

Speaker Change: And as the Parliament is due for reelection in.

Speaker Change: June and as the actual precedent, you'll Sudan garlic and.

Speaker Change: She has a play to be reelected if there is a lot of pressure to get that seems food and we want full crews on the headwind the tailwind because it's a bit too complex I will just ask you to focus on the on the Green books, because it's a bit more simple.

Speaker Change: So on the consumer packaging, what would be the impact on the consumer by catching it might have a bit of headwind impacted because of the reuse and.

Speaker Change: We recycle which is involving in the packaging with regulation when it comes to the paperboard industry for the paperboard industry I think it would be modest headwinds because of the inherent did swell, that's what benefits of fiber based packaging compared to two two plastic.

Speaker Change: And as us as a company.

Speaker Change: Thank you it's good tailwind because we have an innovation provider in packaging and paper packaging and this is what it was.

Speaker Change: The packaging with regulation right. So I am extremely confident about let's headwinds. So so the regulation for us as a tailwind AAR has dramatically expanded our innovation capabilities, but Europe is slow right now is that slowing down our ability to get our customers to get products in the market at all.

Speaker Change: Not at all.

Speaker Change: Well as I said before you know 2023 was unexpected reset because we know that the market end of 'twenty towards would be told us they see that.

Speaker Change: That's the way and our sales.

Speaker Change: Sales were up on the innovation by nearly 3% to 4%. This is what I said for 423. So we are still fairly confident the pool for 24 and as well if we look at long term objective you know three to five years, we know that <unk>.

Speaker Change: <unk> to 80% of our goals, we come from innovation and that's what gave us a bit of confidence and there is one noticeable seems to change that we have noticed across several multinational company.

Speaker Change: Normally large multinational company offloading innovation because of who they are because of their processes because of what made them. You know, it's a bit something which is a navy calls a discussion I had once upon a time, we succeeded to Luke's he puts his mobile phone on the top of the whiteboard because he said any breakthrough innovation, we'd never come to my desk because of.

Speaker Change: We are and I think the large multinational company of understanding that and there is a clear change in the way people address innovation took management is involved because they want to get it done and what they don't want it to be a 345 years passes as Maggie said they wanted quick and that's a major shift in the way people are addressing innovation.

Speaker Change: Just some highlights about what we have done in term of innovation leaky, So kingklip stuff either at the right time in the middle just at the beginning of coffee, we cannot to heat a bit abate.

Speaker Change: In Europe, and it became extremely successful.

Speaker Change: I think the capacity we are being installed today in Europe in terms of.

Speaker Change: He is in the range of three 300 Hudson billion packs. He sees what the installed capacity we have on the machinery side and we have seen a very strong clip, it's something which is new.

Speaker Change: You know developing in the in in North America. So we see great traction and this is what we just because it was launched in Europe in notes.

Speaker Change: It moves to a North America paper steel was developed for the retail industry in early 2020.

Speaker Change: To replace SIPA trace.

Speaker Change: And we got good traction inflation. Then came then we have to rework a bit and then we have developed a new technology, which is called Paypal seeded shape, where we have seen an amazing demand in Europe, and we see as well a lot of traction on the north American market as well on with that technology, because its cheaper trace replacement broad you as Mike said in his.

Speaker Change: Maybe you said it was developed for infant nutrition in Europe for a customer who's been done because it's public knowledge and then it was reiterate we developed it and clearly we have seen them.

Speaker Change: Unexpected traction on the on the U S market on board, you'll you have seen multiple shifts even clip coffee I couldn't I don't want to make any T cell, but you might see many new things soon if I may say that the way, which is clearly because it's a replacement to blow molding technology. So we are getting great great traction and then we launched music Unilever's is China.

Speaker Change: You've solution for that puts you know in Europe and Asia.

Speaker Change: Because it's Unilever, but it was a large large launch in Europe.

Speaker Change: Speaking to launch that product worldwide, which would give us the capability is with two manufacturers that product because of the network. We are having a b to order closer world.

Speaker Change: And we are getting traction with those customers as well.

Speaker Change: North America.

Speaker Change: What I want to say that you know when they look at the pipeline of opportunity we are having at sometimes I am wondering when they see the volume.

I'm just scratching my head because I have never been exposed in and you have to be balanced in what you promise because you know the opportunities are so big that you want to be careful but it is something where we are fairly confident in what we tried to do at the same time, it's two managers with resource.

Speaker Change: In an appropriate manner, because when it eat to grown in when the things go you'd better be really you know to us to manage that.

Speaker Change: The goals of the innovation and they just want to make it less commentary that slide because I have it.

Speaker Change: Before you know when we talk about but hopefully more substitution in Europe. If some people think it's a miss I was way too because I missed is good that you understand that you know it's different.

Speaker Change: And I just want to tell you.

Speaker Change: G clip was shrink replacement.

Speaker Change: The procedure is super trades replacements Bourdieu is blow molding technology replacement and what we have done with Unilever is a rigid plastic replacement. So it's just the reality of what's happening right now one which is driving the innovation.

Speaker Change: Jennifer So switching gears a little bit every couple of days with Wall Street Journal has a story that says that sustainability is over.

Jennifer: It's too expensive it doesn't make any sense nobody wanted it in the first place and lately, they're pointing to the German and French protests Hussein, even Europeans have figured it out this stuff just cost too much. So you know have we seen our 15 minutes of fame for sustainability or we're onto the next thing yeah.

Jennifer: Just a smaller.

Jennifer: It's not differentiate defense the German Italian this tonnage as a check in the Polish.

Jennifer: And they are not.

Jennifer: Does it have been a bit noisy in Europe and they are not.

Jennifer: I'm not against that regulation they might have some question on the pace of the regulation, but not because they understand that certain things have to be done I think that if you look at the demonstrations out more boats. The fairness of the regulation because what's happening today is that you can import good goods from outside Europe, which are not under the same regulation so as the field.

Jennifer: Disadvantage.

Jennifer: The first one so I don't see that that's something slowing down and then when you deal with multinational company in Europe, and I can guarantee I leave with that everyday. So first thing is you have to be competitive the signaling things ask you is what his U S E T.

Jennifer: <unk> and capability.

Jennifer: Servicing this by order of importance. The searching is what are your innovation capability and who can you help us too.

Jennifer: Too much too much what the market is demanding and the first one the first one is the market.

Jennifer: Your capability to supply to market zoos hours of key elements, which are in any discussion that you're having in Europe.

Jennifer: And if you're not able to take all of them.

Jennifer: You all be good and then if you look at the top 10 food.

Food multinational company in the World.

Jennifer: Five of them are European base, and Ginger DNA I leave with Dakota me everyday between you know what how much we are push from those companies in Europe.

Jennifer: It might choose a different as well from North America, and I don't see any.

Jennifer: Reason for them to slow down on that are on that process and I would even say what I feel especially for pockets of packaging with regulation is coming to us.

Jennifer: As Lou its my conviction the large multinational company will push because they believe that the accused of European what they wanted to be sure that if you choose company because they understand that it's part of that brand equity and they further understand that what the customer wants.

So if I understand what you're saying the European Cpg's are simply giving consumers what they want if they are not backing away. We heard Maggie say that U S consumers want more sustainable packaging and that's what the U S. C fisheries and our customers are doing and that's what we're working with them to provide.

Jennifer: So it sounds like a change in U S administration, if it were to happen. It doesn't have a whole lot to do with what graphic packaging is to it today and where we're going yet you just wrap it up in a way that they would never have been able to do so yes, you are spot on.

Jennifer: Well. Unfortunately, that's all we've got time for so next up we're going to hear from Michele Fitzpatrick, our chief sustainability Officer.

Michele Fitzpatrick: Thank you Mark.

Michele Fitzpatrick: Yeah.

Michele Fitzpatrick: Yeah.

Michele Fitzpatrick: Okay.

Michele Fitzpatrick: Okay.

Michele Fitzpatrick: Thank you.

Michele Fitzpatrick: Yeah.

Speaker Change: I appreciate you, making sure that I don't check of an attack.

Speaker Change: Got it.

Speaker Change: Thanks, Mike.

Speaker Change: I can't tell you how excited I am to be here and to be able to talk about one of my favorite subjects and be able to share with you all of the amazing things that we're doing to transform our sustainability program and approach and the goals that we've got in front of us between now and 'twenty 30.

Speaker Change: So as we think about where we want to start with updating our strategy and how we best build that strategy into our business strategy and have it become part.

Speaker Change: An integral part of vision 2030, it starts with first understanding what that global landscape looks like what aren't those external sustainability trends that have the potential to create both opportunities and challenges for consumer packaging.

Speaker Change: Yeah.

And as we look at that and we see four actually I said, three before where major golf and it really where we see there's the potential to create impact on consumer packaging. The first there's population growth.

Speaker Change: It's a lot about people want packaging well, we're going to have a lot more people on this planet in the very near future.

Speaker Change: Most recent study by the United Nations that was released in November of 2023 says that there's going to be $8 6 billion people on our planet and 2030, and that's going to grow to $9 8 billion people by 2030, that's a lot of people and not only are we going to have more people, but we're also seeing growth in socio economic status. So then.

Speaker Change: It'll classes getting bigger and those people are moving from world that's communities into cities and so what does that mean for packaging well that means they're going to want more goods, they're going to need more food they've got more buying power, they're going to want more consumer goods and those goods are going to have to travel further to get from where they are produced to where they're going to be consumed.

Speaker Change: And that means we need more and better packaging to safely get those products to those consumers.

Speaker Change: And as Maggie laid out in some cross jump that's why I have laid out our stakeholders.

Speaker Change: Our customers the brands the regulators Theyre all taking action in response to these trends.

Speaker Change: And.

Speaker Change: And thinking about how they're going to adapt and we have the solution for them. Our innovative packaging is going to provide the solutions to help them embrace the opportunities in front of them and mitigate any potential challenges that they may have.

Speaker Change: Got it.

Speaker Change: Sip of water.

Speaker Change: Right.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Okay. So our promise and how we think about sustainability you know you've heard us bike share our purpose statement that we package.

Speaker Change: Everyday on that for a new home or renewable future and what we want our promise to be is that every single one of those moments is going to be better for people and for the planet and we're doing this they were taking action in our three pillars that you see up there, we're creating better packaging by innovating, our packaging and our manufacturing operations to drive out waste.

Speaker Change: Improved recyclability and circularity by packaging and really fuel a circular economy.

Speaker Change: We're doing better for people, we're creating safe and engaging workplaces that foster people's growth and development and we're engaging our communities while we do this.

Speaker Change: And we're creating a better future for our planet by taking action to mitigate climate change in our in our contributions and reducing our footprint as well as by being responsible in the way we source forest products. So that we're protecting valuable forest ecosystems.

Speaker Change: And as we do this you know we've got a really good plan in place to achieve all of our goals in each of those three areas.

Speaker Change: And we've laid it out so that step by step we're going to make life everyday moments better every day.

Speaker Change: Okay. So how are we going to do that yeah.

Speaker Change: <unk> already seen might lay out for you our vision 2030 plants.

Speaker Change: Along with three impacts of better packaging better better for people and better future and when.

Speaker Change: When we think about this not only are our goals tied to delivering against those four global sustainability trends, we talked about they are also embracing and addressing some of the broader societal aspirations for us to have a more fair and Johnson equitable Society.

Speaker Change: And there are underpinned by our commitment and our long history of operating with integrity and with responsible business practices and are reinforced by our commitment to United Nations Global compact to implement the principles 10 principles of the compact that address human rights and protection of the environment and to the way we operate and also.

Speaker Change: To help do our part to advance the Gulf the United Nations Sustainable development goals and I hope that you can see the connections that we have to our contributions to those U N. S. P. G has come through and how we've mapped our.

Speaker Change: Our 2030 calls to where we can drive impact and where we think we're going to deliver the most impact is with <unk>.

Speaker Change: Providing decent work and economic growth through our better for people and our better future pillars, and how we're going to advance progress against responsible consumption and production a climate change and life on land through our better packaging and better feature golf.

Speaker Change: Mike Maggie and Sean I saw have already really laid out a good roadmap for you for a better packaging and better for people pillars, and I'm gonna be spending my time with you today talking about how we're going to bring our better future calls to life.

Speaker Change: Okay, but before we dive in I want to just take a step back and say, we know that being a sustainable company. It's about a journey and we've been on this journey for quite a while and I share a few milestones and we're really proud of the fact that in 2020. One we joined as a participant in the UN global compact really solidifying our.

Speaker Change: It meant to embrace and act on those principles.

Speaker Change: Last year, we delivered on our commitment to have set new science based targets and has been validated by the science based target initiative. We're very pleased that our progress has been recognized with favorable ratings by MSCI sustain I'll, let X and ISS and we are committed to continuing to assess our progress and transparently share. However.

Speaker Change: Doing through participation with organizations like CDP and glass.

Speaker Change: Okay. So now let's dig in a little bit to that our conversation to talk more about our better future platform.

Speaker Change: Yeah.

Speaker Change: And through this just spend a little more time on our climate goals in particular and help them come to life for you.

Speaker Change: So we think about our better future pillar in our schools and our climate golf. The great thing about them is the way that we've structured them theyre going to touch packaging at every single point in our lifecycle of packaging, it's going to start with how we source our raw materials to find more sustainably sourced materials that are more renewable materials.

Speaker Change: Recycled materials that go into the beginning to start that.

Speaker Change: Circularity engine from very start then we're going to look at how we optimize our manufacturing operations to make sure that we're using resources efficiently and reducing emissions, we're generating less waste you've heard a lot about our innovation team and they're awesome and how they are thinking about designing packaging that is going to.

Speaker Change: We see a more sustainable alternative to nonrenewable packaging formats that are out there today and then we think about how we transport our packaging products to our customers to.

Speaker Change: To the brand and the retailers, but then use our packaging to ship their products to the consumer we look at not only how do we optimize the transportation footprint as it's moving through that cycle, but also you have to kind of get back to our florists skull that the packaging that we purchased to ship our packaging products into has to be just a sustainable.

Speaker Change: Our packaging we've produced and then lastly, we think about that end of life piece of it and how do we design our packaging to be more recyclable and more easily recovered or to help put the infrastructure in place to recover it and take it back. So we can close that loop and drive the circularity of fiber based consumer packaging.

Speaker Change: Sure.

Speaker Change: The great thing in the paper based packaging is a great story, roughly 80% of paper based packaging in the United States and Europe are collected and recycled today and once collected yeah that packaging has five to 10 lifetimes and it can be recovered and recycled and that it's just something that is just amazing I mean packaging paper based packaging.

Speaker Change: It could change has the highest recovery rate of all packaging materials more than aluminum and metal packaging more than glass and far more than and plastic packaging.

Speaker Change: So yeah, we are really invested in making sure that we're keeping our commitments to.

Speaker Change: Put facilities in place like Waco to further drive the circular it make sure that we can take back even more complicated types of packaging and reprocessed them and put them back in there and just continuing to close the loop and feel the circularity of paper based packaging.

Speaker Change: Right.

Speaker Change: So now let's talk more about climate.

Speaker Change: When we think about how our commitment to climate action is now we're looking to reduce our carbon footprint and we're going to do that in a way, where we're reducing our greenhouse gas emissions and increasing our use of renewable energy.

Speaker Change: And if you look back to where we've been we've had we've had climate goals for quite a long time you know our original goals were set in the 2016 2017 timeframe, there intensity baseball, which where the rate goes to set at that time, we achieved those goals three years early in 2022, and then we followed up with that by delivering on our commitment to set new.

Speaker Change: That space targets have been validated by the science based target initiative. So that the world can see that yes. These are the right goals there in line with what's needed and we're doing the right thing. If we look forward how are we going to actually achieve those goals and what are we going to do well. Our plan is we're going to reduce our scope one and scope two emissions by just a little over 50%.

Speaker Change: By 2032, and then I know 54 is a weird looking number that's all buckets. The science based target initiative, they're very precise but that is what we're going to do and then we're going to reduce our scope three emissions mission and it turns out in our value chain not within our direct control. So it's going to take a lot of collaborative effort to work with our partners to reduce those.

Speaker Change: Emissions by 30% and then through that process, we're going to look to increase the amount of renewable energy, we use but within our fuels that we source as well as yet, especially that we purchase for our operations.

Speaker Change: Okay. So.

Speaker Change: Finance people really like a waterfall chart.

Speaker Change: No.

Speaker Change: I decided to put it in a familiar format as I break down for you I think carbonization pathway for our scope one and two when that shifts as we think about how do we approach that because 50% reduction between now and 'twenty 32. It seems really daunting. That's a lot of work we have in front of us. So it all starts with understanding where you are today and when we look at our footprint we see.

Speaker Change: See that about 60% of our scope one emissions come from using fossil fuels in our paperboard manufacturing studies.

Speaker Change: We've done I mean, we've done a lot of good work does he Carbonite says operations don't get me wrong I mean, they're currently at about 75% renewable fuel, but yeah, we still 60% of our scope. One emissions are combined scope, one and two emissions come from burning fossil fuels.

Speaker Change: Yeah that target and got to work on that a lot of very talented engineers in our manufacturing division in and they are you know they went to work and they came up with three very great projects and those projects are going to take us from using 75% renewable fuel and our wood fiber and paperboard manufacturing.

Speaker Change: As to <unk> 90 per cent renewable fuel between now and 2032, so that combined with the natural grid dreaming that we're going to see just as the world around us gets screen or between now and 'twenty 32, it's going to get a 70% to 75% of the way to our 2032 target.

Speaker Change: So we're almost there where do we lift next well our next largest source of emissions comes from our scope to the category and it comes from our purchased electricity across all of our operations and that represents about 30% of our greenhouse gas emissions. So if we look at transitioning half of that to renewable electricity and wrapped up.

Speaker Change: It up with modest year over year energy efficiency improvements in our operations that gives us a clear line of sight to hit our 2030 to target and achieve that 50% reduction.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: So I'm not sure you're saying so that's all great got a roadmap, but what is that going to look like and how is that going to play out over time. So.

Speaker Change: Let me show you.

Speaker Change: Right now we are busy.

Completing the construction and startup of our Waco facility heard a lot about it on the web.

Speaker Change: While we're doing that and we're laser focused on getting it keeps it out on schedule of getting that built and up and running our engineers are working on the engineering design, they're working on the front end loading there working on taking those three projects that they've identified to get them into the queue to start executing against them once we get post wake up.

And.

Speaker Change: The great thing about these projects I mean, I think even more exciting than the fact that they're going to help reduce our emissions is that they are already built into our capital plan and they all deliver a positive return on invested capital.

Speaker Change: I mean, how great is that you know we're not only doing good for the planet, we're doing good for our business and ultimately that's going to be good for our customer and the end consumer, but you can't ask for anything better than that.

Speaker Change: Then at the same time line, while they've got my engineers working on the capital plan and capital execution birthrate projects. Our procurement teams are actively working on trying to identify attractive renewable electricity projects.

Speaker Change: And.

Speaker Change: Given that it takes a lot of times, one identify them and then through.

Speaker Change: Through the contract Phase and then the permitting phase and then the construction phase because we only just take any old racks off the market, we want to make sure that we're continuing to do our part to help decarbonize, which means looking for good projects that add additionality additional renewable generation capacity. So that you know they are truly removing emissions.

Speaker Change: A replay and not generally just shuffling them from one place to another so when you look at the lead times. It takes to execute against all of that we expect and project that will start to see the benefits of those projects along the same timeline as our capital projects, which shows you know acceleration of emissions reductions following Waco.

Speaker Change: Towards the second half of her period here.

Speaker Change: All right. So we'll move on to scope three.

Speaker Change: And just for your benefit you have another waterfall chart.

Speaker Change: Our same coach that we followed when we looked at our scope one and scope two pathway starts with understanding your current footprint and when we look at our footprint for scope three emissions, there's really four categories, where that really stand out if our largest sources of scope three emissions. One comes from all of the purchased goods and services.

Speaker Change: We buy everyday that we need to make our products. The second one comes from transporting our packaging products to the brands and retailers. So that they can put their products into it and ship it to the consumers. The next one comes from what happens to our packaging at the end of life when the consumer is done with it.

Speaker Change: And the fourth category comes from the upstream emissions that are associated with all of the fossil fuels or grid electricity that we purchase.

Speaker Change: The nice thing is that if we execute well against all that scope. One has got two projects. We talked about just now that automatically will reduce that that bucket of emissions for those upstream emissions, because we wont be buying those fossil fuels and that dirty grid electricity anymore.

Speaker Change: And then they'll get to the other groups our procurement team Theyre actively at work working on their map to understand where are the hotspots in our category one purchase goods and services emissions. So that we can then put together and engage our suppliers to work with them. If they don't have science based targets to get them to help set science based targets.

Do you start emissions and then help them.

Speaker Change: Reduce their emissions, which then benefits us.

Speaker Change: And the.

Speaker Change: Same thing is going to happen with our transportation network, we're gonna be working with our transportation vendors to understand where do we have opportunities to maybe shift transportation modes from truck to rail, which would have a lower footprint or to take advantage of some of the newer emerging technologies around electric trucks or hydrogen powered trucks or biodiesel trucks.

Speaker Change: We're then going to help us get our packaging consumer packaging ships to the brands and the retailers with fewer emissions than what we do today and lastly, and probably the most exciting one is how we're going to think about that end of life and Waco comes back here too is that there's this perception that a lot of foodservice packaging and cops in particular are not recyclable.

Speaker Change: Today I I don't know why this urban myths continues to persist, but I was in a Starbucks recently I mean at the Starbucks R&D Center recently, not even just a starbucks that their R&D center recently, where they are developing their new reusable cups, and I said, Hey, you know this is great. But there are just times when consumers are going to want.

Speaker Change: It's a grab and go paper Cup, they're not going to want the burden of a reusable Cup. We can recycle them, let's talk about partner aimed to recycle them and the R&D engineer at Starbucks told me paper Cups are not recyclable and like what you guys are.

Speaker Change: Seattle, Seattle was one of the first city used to accept paper cups into curbside recycling. How can you tell me that it's not recyclable. So we are going to partner with many in our value chain, where actually you know working on doing this to be able to increase cup recyclability and acceptance and bring them back and be able to transform them.

Speaker Change: I'm into new packaging and our Waco facility were even better is that when we do that we can create beautiful packaging that uses fewer materials, because we don't need as many coding materials on the top surface the packaging and that kind of get so when we look at all of those four things together that gets us about 70% to 75% of the way.

Speaker Change: Two our scope 330 per cent reduction target.

Speaker Change: We do have a little gap and we have some ideas right now that we're working on how to address that gap. The first is how do we think about using our raw materials more efficiently and improving the yield on that because if we get more out of them and we have less waste that we have to deal with the second gets to the waste. Okay. We do a really great job today of recovering and Reaper.

Speaker Change: In recycling the paperboard waste in our manufacturing facilities, almost 100% I think we're at 98% right now gets recovered and recycled either by us or by third parties, but we want to look at the rest of the waste that we send to landfills and how are we going to move that out of landfills and into beneficial reuse.

Speaker Change: And then the last thing we tend to think about doing it we're really looking to right. Now is how do we get more recycled content into our unbleached and bleached paperboard and increase the recycled content, they're all getting back to that consumer need or desire to want to have more recycled content in our paperboard and we're convinced that with all of our very smart and talented people working on.

Speaker Change: This that we're going to close that gap and hit that 30% reduction by 2032.

Speaker Change: So with my last slide it's what it brings back full circle been talking a lot about consumers and what the consumers want and consumer packaging, how our customers are responding many of our customers have set very aggressive greenhouse gas reduction goals. In addition to their sustainable packaging golf the plan that.

Speaker Change: I've just laid out for you on how we're going to reduce our greenhouse gas footprint not only reduces our emissions, but it helps reduce our customers' scope three emissions and helps them achieve their net zero greenhouse gas targets that many of them upset and in addition to all of the work that we're doing to provide them packaging that is more recyclable has more recycled content.

Speaker Change: It meets all of their expectations around what they're trying to do to make their packaging more sustainable.

Speaker Change: But but it's even more than just helping our customers achieve their goals, it's helping our customers meet the end consumers desire their desires to have more functional packaging more convenient packaging packaging that comes with a lower environmental footprint and packaging with less plastic so.

Speaker Change: As we do our part to get better every day, we help our customers also get better every day and with that I'd like to turn it over to Steve Scherger, Our Chief Financial Officer.

Speaker Change: Yeah.

Speaker Change: Yeah.

Stephen Richard Scherger: Thank you.

Stephen Richard Scherger: Thanks Michelle.

Stephen Richard Scherger: Great to see everybody and thanks for taking the time to join US today, we've covered a lot as you would expect this too including some new things that I.

Stephen Richard Scherger: I want to touch on here in just a moment.

Speaker Change: Mike did a phenomenal job of course laying out to the transformation of what we have become a global consumer packaging company and the path forward for us to continue to exit costs execute on that with vision 2030, I think Maggie John Francois.

Speaker Change: Provide us enormous confidence that we have the innovation capabilities to grow consistently 200 plus basis points a year in real new to the market growth every year and the pipeline continues to evolve and grow.

Speaker Change: And Michelle I think beautifully laid out for us that our commitment to the planet our commitment to our customers our commitment to the consumer is real and it is investable and I.

Speaker Change: Think that's very unique relative to who we are as graphic packaging.

Let me touch on for a moment some of the things that we did.

Speaker Change: John last night.

Speaker Change: Mike touched on at Augusta.

Speaker Change: We're very pleased that we're entering into an agreement with Clearwater paper.

Speaker Change: For them to acquire our Augusta.

Speaker Change: Bleach paperboard facility.

Speaker Change: It's a facility as you know about 600000 tons of capacity as Clearwater paper indicated it's operating today at roughly 70% to 80% of that.

Speaker Change: The acquired EBITDA about $100 million, we'll work through all the regulatory environments over the next few months and would expect to close the transaction in the second quarter.

Speaker Change: Importantly.

Speaker Change: On a pro forma basis and this is important as you're thinking about what we're about to share on our financial model.

Speaker Change: Post the Augusta sale, that's kind of the company that we are.

Speaker Change: Roughly 8.8 billion EBITDA.

Speaker Change: EBITDA in the $1 $8 billion range, plus or minus margins in the 20%.

That's the business, we're going to build from here.

Speaker Change: What kind of start there great balance sheet 2.6 times Levered. This assumes we take the cash provided from the divestiture and put it against debt.

Speaker Change: And that's the business upon which we will grow and I'll share those financial metrics with you are in.

Speaker Change: In just a moment, but it's important.

Speaker Change: Very important inside of that pro forma.

Speaker Change: Probably the last time I'm going to use the word integration with you ever.

Speaker Change: Because this is a 90% integrated business.

Speaker Change: And 95% of our sales will be products that you as a consumer interact with.

Speaker Change: A six pack 12 pack a comparable a canister its the products that we utilize.

Speaker Change: 95% of the company.

Speaker Change: The Augusta transaction.

Speaker Change: Let me touch briefly on the results you've seen them I won't overdo. This.

Speaker Change: Yes, it had all the challenges of a year all the things we saw Destocking and all of those all of the activities three quarters of down volume growth quarters two through four.

Speaker Change: But the business performed at an exceptionally high level during that period of time.

Speaker Change: We're working with our customers to get paid for the value that we create for them.

Margins increased 300 basis points.

Speaker Change: And as Mike mentioned.

Speaker Change: We're off to a good start this year and it's important.

Speaker Change: Because pivoting.

Speaker Change: Two back to organic sales growth in 'twenty, 'twenty, four which we're confident we will do.

Speaker Change: It is important for us because that's how we'll earn on.

Speaker Change: On the model that we'll talk about here in a moment.

Speaker Change: But the innovation pipeline is working $200 million of sales last year high confidence in the next 200 million this year and beyond and we're off to a good start years off to a good start as Mike mentioned earlier, a little flattish right now that's good because last year in the first quarter we were.

Speaker Change: Actually up modestly.

Speaker Change: And most of the headwinds that we felt through Destocking and inventory management and the like.

Curt in quarters, two through four which gives us confidence that we'll return to organic growth as we pivot and take advantage of the innovation pipeline.

Speaker Change: As well as the turn returned to more normalized inventory management at our customers levels and at the consumer level.

Speaker Change: You've seen the numbers you've seen the financials I won't overdo. These at the end of the day.

Speaker Change: Top line for the business relatively neutral significant execution on getting paid for the value that we create for our customers.

Speaker Change: Volumetric growth down a few hundred basis points, 20% EBITDA margins those are margins that we aspired to several years ago. When we got to and so we're going to talk about how that pivot creates opportunity for us to grow EBITDA from here going forward balance sheet in a good spot at two eight.

Speaker Change: <unk> Levered and margins very very strong coming out of the year so execution.

Speaker Change: And it worked in an environment, where we were very actively matching supply and demand.

Speaker Change: So if you stand back from it.

Speaker Change: We ran our manufacturing facilities to match the demand of our customers.

Speaker Change: And that demand in some case was down and so we match that supply and demand and when we did it we were able to do it cost effectively wisely and still generate 20% EBITDA margins and it's a testament to the resiliency of the model the nature of how we're working our business every day.

Speaker Change: Let me touch on guidance, we've provided guidance.

Speaker Change: <unk> EBITDA adjusted EPS 1.75 billion to $1 95 on the adjusted EBITDA. All of this of course assumes currently the Augusta mill being a part of the portfolio and so of course down the road, we'll adjust that for you and lay that out depending upon the timing of the close.

Speaker Change: Adjusted EPS in the $2 57 to $3 range, we provided the normal some additional modeling stats for you. It's there wants you to have that in hand.

Speaker Change: One of the things that we'll talk about here in a moment and I'll just point to it. This is peak capex for graphic packaging.

Speaker Change: This is absolutely peak capex for graphic packaging.

Speaker Change: It will be driven down from here and we'll talk a little bit about that.

Speaker Change: In a moment.

Speaker Change: Just briefly on Q1, we're obviously actively continuing.

Speaker Change: To manage and balance supply and demand.

Speaker Change: And kind of look through the first quarter.

Speaker Change: The open market paperboard sales that we have today will be down on a year over year basis, probably 60 $70 million or so.

Speaker Change: We're managing and balancing inventory quite wisely here in the first quarter through that as such EBITDA in Q1 relative to last year, probably down 35 $45 million and that's going to be very consistent with the guidance that we're providing for you today. So just to give you a sense for kind of where Q1 is landing will feel.

Speaker Change: Good about that we'd like to start that we're off to with our consumer packaging volumes are returning to more normalized levels and that kind of sets the stage for the year that we're looking forward to have.

Speaker Change: So let me drill a little deeper on the result side as Mike said and he said it extremely well.

Speaker Change: Results are actually quite wide. This is about our people our capabilities the who we are as a company.

Speaker Change: The impact we're having on society of the impact we're having on our customers.

Speaker Change: And then of course underneath that are the financial results that come along with that and you heard us talk a lot about the portfolio that we have now moving with the consumer is critical.

Speaker Change: Moving with the consumer is an imperative for us and we have the portfolio to do so and it is vital for us as we look forward because we've got this great balance.

Speaker Change: Of consumer Staples products, where in your life everyday eating drinking enjoying the home life that you have been on the go we're in your life on our staples basis on a day to day consumption basis, which gives us incredible stickiness.

Speaker Change: On the volumes and the capabilities of the business.

And so let me drill down a little bit here for Ya with something new.

Speaker Change: A lot of arrows here.

Speaker Change: But you're going to hear us talk a very different language.

Speaker Change: As we kind of move forward with our business.

Speaker Change: We're gonna be talking to you about.

Speaker Change: How are things going in the food market, what's happening there what's happening with beverage whats going on with the consumer on foodservice.

Speaker Change: What's happening with our household business.

Speaker Change: And so this is going to be a new disclosure, it's gonna be a new conversation for us with you.

Speaker Change: What's going on here inside of these markets.

Speaker Change: And let me give you a couple of examples.

Speaker Change: 2022 talked fair amount about it.

Speaker Change: All the arrows are up by the way up is greater than 5% growth of sales sideways two to five.

Speaker Change: Sideways this way or up this way to two to five.

Speaker Change: Diagonal plus or minus to the opposite direction on the red pretty straightforward.

Speaker Change: 'twenty 2022.

Speaker Change: Ever Air was up.

Speaker Change: Or 2% to 5%.

Speaker Change: That was the year that we just talked about it was the realities of Covid. It was the realities of supply chain challenges inflation price needing to move up to deal with the realities of inflation some of the onboarding of folks buying more than they necessarily needed. So every arrow. There is just up but in 2020 three so a little bit more of a normal.

Speaker Change: <unk>.

Speaker Change: It's our ability to articulate to you.

Speaker Change: As an investor what is happening in this business.

Speaker Change: Talk about food for a moment first part of 2023 pretty solid volumes are hanging in there.

Speaker Change: And then we kind of went through the Destocking and it showed up as shown up because volumes came down quarters two through four more than offset the pricing that we that we were working through with our customers and you saw some downs for the year relatively flat pretty good outcome actually given everything that we worked through on food.

Speaker Change: Beverage, it's a great business, it's a business that continues to grow growth globally, all but innovation activities that we talked about and really throughout this.

Speaker Change: Growth up, but a little neutral in 'twenty, three pretty well chronicled actually in terms of what was going on with at home consumption, which is where we play in beverage and so yeah pretty neutral.

Speaker Change: Foodservice, it's a franchise.

Speaker Change: It's a phenomenal business it's on the go consumption.

Speaker Change: It's innovation it's.

It's our cups that you're driving through the drive thru.

Speaker Change: Up consistently and up again here in the first quarter of 'twenty 'twenty four.

Speaker Change: Household think about that things like <unk>.

Speaker Change: Laundry detergent and think about filter frame to think about pet food, we don't put pet food and the food we put it down in household everybody bought a put in and how in the 2022 time frame, we didn't fall out of level, our pet, but we didnt buy as many trades and so we actually saw a little bit of activity on our household business and so a little bit less growth.

Speaker Change: Okay got it kind of played itself out to a draw, but we want to call those things out for you to articulate what are we seeing and what are we doing about movement in those categories and as John Francois said.

Speaker Change: We've got a great health care and beauty platform that came with a our packaging it's powerful it creates opportunity for us to grow globally, particularly here in North America, and it's been very steady our beauty business inside of that has been outstanding as Mike said, we saw a real step back in Q4, just overall consumption in Europe Europe is really.

Speaker Change: Very very slow in Q4, but it has returned back to more normalized levels. So I gave you a lot of examples there because we're going to talk more about this when we talk about the company when Mike talks about the company when we're sharing what's going on we're going to be talking about all of this.

Speaker Change: And this is the business we are because we're 95% of our sales are basically making products into these markets, we need to be able to inform <unk>.

Speaker Change: Divide confidence that we're winning in these markets with examples so I wanted to take a little bit of time on a something you're going to see us talk more about.

Speaker Change: The base financial model for the business.

Speaker Change: Post the sale of Augusta.

Speaker Change: We have the business we.

Speaker Change: Need to have in hand today.

Speaker Change: To execute against this week.

Speaker Change: We have the business.

Speaker Change: We've been building it.

Speaker Change: Through the investments we've talked about Kalamazoo Waco, a R. Bell the investments in people capabilities talent value based pricing all of those things have come together to create a business that we believe going forward.

Speaker Change: Can keep it simple.

Speaker Change: Grow the topline consistently low single digits.

Speaker Change: A couple of hundred basis points of growth inside of that.

Speaker Change: Make that work year in and year out.

Speaker Change: That will drive mid single digit EBITDA growth and I'll talk about how we believe and why that's relevant on a go forward basis that then can drive.

Speaker Change: Significant EPS growth high single digits.

Speaker Change: So we're going to talk a lot about low mid high single digit growth in key categories sales adjusted EBITDA adjusted EPS all in the context.

Speaker Change: Of Capex migrating to 5% of sales, which allows us to invest for growth in the business to.

Speaker Change: To grow at those levels and that's very important.

Speaker Change: And we'll get paid for the value and so let me just walk through these a little bit with a little bit more.

Speaker Change: The low single digit topline.

Speaker Change: It's right there.

Speaker Change: It's right there Maggie talked about it it's.

Speaker Change: It's a 15 billion dollar addressable market.

Speaker Change: And this isn't a tam that some number that's developed off of some berry pie in the Sky, though these are identifiable real products that exist today they're.

Speaker Change: They are in the market.

Speaker Change: They are in an alternative and we believe that there the.

Speaker Change: The environment, where we will create solutions that we already have.

Speaker Change: That we will apply into these markets.

Speaker Change: And if you look at this.

Speaker Change: I think one of the most powerful things about this particularly as Mike was tell him.

Speaker Change: Our journey going back.

Speaker Change: The history going back to the 16 and 17, you really only thought about graphic packaging as.

Speaker Change: As a cereal box and a 12 pack.

Speaker Change: That's how you thought about the company.

And now trays bowls cups containers canister.

Speaker Change: That's an entirely different portfolio of packaging solutions that we're inventing we're creating and we're bringing to life in the marketplace, which creates confidence in the low single digit sales growth.

Speaker Change: I didn't even talk about Rainier, it's Maggie did a phenomenal job of talking about that as incremental beyond that we're in the early days, we couldnt be more excited about what the ability the opportunity that exists by having the world's lowest cost highest quality most capable coated recycled paperboard.

Speaker Change: That we can apply in places where it just hasn't been able to win in the past that's powerful.

Speaker Change: So going back to this.

Speaker Change: And the simplicity of it.

Speaker Change: 2025 is in 2020 five we set an EBITDA margin target, 18% to 20% there was a target it was important because we needed to improve upon the business we needed to change the model value based pricing getting paid for what we're creating all the things that Mike and Maggie and John Francois I talked about in their comments and we got there.

Speaker Change: We got there through <unk>.

Speaker Change: <unk> pricing M&A all the good work that we've been executing on well now we're in the we're in that margin Zip code.

Speaker Change: So we're going to pivot because from here it's about.

Speaker Change: Low single digit sales growth, creating EBIT dag growth dollar growth in that mid single digit.

Speaker Change: And that.

Speaker Change: Speaks to the fact that we're not hear about selling paperboard is about a consumer packaging company selling packages.

Speaker Change: To our customers that result in products that we as consumers eventually take off the shelf.

Speaker Change: The mid single digit EPS or EBITDA growth.

Speaker Change: Nicely leverages in the high single digit EPS growth, it's just the math.

Speaker Change: It allows us to leverage our great balance sheet.

Speaker Change: And to invest back in the business.

Speaker Change: And we're looking forward to the 5% Capex, because just recreating where peak capex this year and I'll take you through that here in a moment it'll start to cycle down in 'twenty 'twenty five as we bring Waco to life.

Speaker Change: And then it's on the way to 5% of sales.

Speaker Change: In 2026 and beyond.

Speaker Change: And it allows us to grow 5%.

Speaker Change: Is.

Speaker Change: All that we need.

Speaker Change: Because for us that ability to generate the kind of growth couple of hundred basis points, a year put money to work to do that.

Speaker Change: We really need with all of the investments we've made in our infrastructure and our facilities, we need 2% of sales to maintain them well. So it gives us the ability to invest behind it and to grow.

Speaker Change: And so 3% of sales to invest behind growth as well as continued to be world class at the manufacturing that we that we do allows that to be in place.

Speaker Change: And the cash flow generation, that's coming I'll share with you here in a moment.

Speaker Change: So what do we do with this.

Speaker Change: How are we allocating capital.

Speaker Change: Got the model.

Speaker Change: The model is going to have that $8 8 billion dollar business growing steadily.

Speaker Change: It'll have those EBITDA, the EBITDA, but they're growing steadily.

Speaker Change: Cash flow generation will become very material over the next couple of years as we wind down the capital required to bring Waco to life.

Speaker Change: And so these are the priorities.

Speaker Change: The priorities invest in who we are.

Speaker Change: First and foremost put the money to work it out.

Speaker Change: You've seen a cross section of the capabilities, we have here today.

Speaker Change: And we've got 24000 colleagues, who are rowing in the same direction and are committed to building the business that we've been collectively building.

Speaker Change: And so we'll continue to invest.

Speaker Change: Innovation capabilities R&D capabilities to kind of work that's required to have a margin profile that allows us to have a good narrow band of consistent margins that allow us to grow.

Speaker Change: EBITDA consistently.

Speaker Change: And so first and foremost we'll invest in ourselves prudently.

Speaker Change: We have an incredible opportunity to grow our dividend.

Speaker Change: Increased it a few times in the past, but as we come through this peak capex cycle, probably about 'twenty 'twenty four but as we move towards 2025.

We're setting our own expectation of a good steady consistent growing dividend, we have the cash flow to do it smart to do it turns appropriate capital to our investors and it's an opportunity that we have and that we've created with the investments that we've made and we're going to set that expectation on ourselves obviously approved by.

Speaker Change: Our by our board, but we see absolute line of sight to a good steady consistent and growing dividend.

Speaker Change: Part of who we are as graphic packaging.

Achieve investment grade we've talked about this a fair amount, it's not an imperative, but we have the balance sheet and we'll have the balance sheet.

Speaker Change: Well achieve investment grade also basically fundamentally says this lowered that.

A clean balance sheet.

Speaker Change: Drive leverage below the two and a half times range. It's been in the low end of our range you should expect us to apply cash flow create that opportunity.

Speaker Change: Because it exists.

Speaker Change: And we will pursue investment grade at the right time in the right place where it makes good sense, where there's value that comes from it relative to borrowing relative to investor interest and the like.

Peak Capex, probably not the time to do that we've got to show the realities of Delevering and we'll we'll do that we'll do it at the right time over this vision 2030 time horizon, but that speaks to a.

Speaker Change: A very long balance sheet and leverage.

Speaker Change: That is at or below the range that we've talked about historically.

Repurchasing the company buying back shares.

Speaker Change: We've got a history of doing that.

Speaker Change: Where there's value to be created.

Speaker Change: Since 2018, we bought back $900 million of graphic packaging.

Speaker Change: You can look that up against our market cap, that's a lot of the company.

Speaker Change: And we did it at times, where it was very value creating.

Speaker Change: And we did a big chunk of it coming out of the international paper transaction, where we created some equity.

Speaker Change: As part of that transaction as part of the partnership and.

Speaker Change: And we actually ended up acquiring back the company more cost effectively even then there was part of that transaction.

Speaker Change: And so we're going to hold and you should expect us to hold all of our investment decisions up against buying back the company because that's what you've Gotta do you guys just smart balance capital allocation approach how does it stack up what you're doing relative to that so we'll be thoughtful about it will be smart about it but the cash flow generation that's about to emerge for the business. It's a tool that will.

Speaker Change: Keep handy for us.

Speaker Change: We've been acquisitive, you've seen us be acquisitive.

Speaker Change: But the bar is pretty high right now on acquisitions.

Speaker Change: And as such we'll be very thoughtful and they'll end up being about capabilities it'll be about things that accelerate growth. If we choose to do so here in the certainly in the short to medium term.

Speaker Change: Because that's the opportunity to extend leadership.

Speaker Change: They've got a strong business.

Speaker Change: Invest in capabilities.

Speaker Change: And what's interesting and I'm sure. Many of you understand it and I'll say the word integration one more time, just because I will and then it'll be done.

Speaker Change: But our acquisition lens was in the lenses integration.

Speaker Change: Because it had to be because that's what we're driving.

Speaker Change: Post Augusta, 90% integrated 95% of the topline, making an end product you don't have to have that as the lens around which you look to acquire it actually opens up the aperture quite nicely for capabilities. If we choose to do so but I'll repeat we have the company in hand today to exit.

Speaker Change: Acute against.

Speaker Change: The goals that we're aspiring to on the financial model.

Speaker Change: It's not on this page.

Speaker Change: There's not another Kalamazoo.

Speaker Change: There's not another Waco.

Speaker Change: Because we've made those investments.

Speaker Change: We've made the investments necessary to create the business.

Speaker Change: And as Mike said earlier.

Speaker Change: Have a business that has the capabilities to grow as a consumer packaging company.

Speaker Change: And Tom make.

Speaker Change: Paperboard raw materials, where we have ROIC the advantage competitive advantage, our right to win and the ability to do so and we've made those decisions around recycled paperboard and.

Speaker Change: And we've made them around some of our wood fibre paperboard in the businesses those facilities that will be a part of our infrastructure going forward and it's important.

Speaker Change: Because we want them to be a part of our business, where there's a reason for it better returns.

Speaker Change: Our ability to grow that's why you do it that's why and that's why there's not another one on the list because we don't need to have another one on the list and there won't be.

Speaker Change: And then Augusta, obviously, we took a decision with Augusta.

Speaker Change: To actually.

Speaker Change: Exit out of.

Speaker Change: The essence of making something that made it very well, it's a world class facility by the way with phenomenal teams, but it's not required for us to execute on our vision going forward.

Speaker Change: And arrow with a few numbers on it.

Speaker Change: This is the next seven years.

Speaker Change: Will it play out exactly like this probably not.

Speaker Change: But is this where we're heading.

Speaker Change: The cash flow that we're about to generate is very substantial.

Speaker Change: We're still generating strong cash flow by the way, even while investing at peak Capex.

Speaker Change: But the trajectory for the business 'twenty 'twenty four peak Capex 2025 starts to starts to narrow down.

Speaker Change: During that period of time will still continue to grow at low single digits, how our innovation pipeline have our margins continue to stay in a very narrow band and grow them.

Speaker Change: And then it creates an opportunity in 2026 to begin to earn on Waco.

Speaker Change: Which actually has an opportunity for margin enhancement, which is great because it allows us to have confidence.

627 to.

Speaker Change: To bring to life, the next hundred and $60 million of EBITDA.

Speaker Change: And earn on it.

Speaker Change: In that business.

If you stand back from it and model it start with your eight eight moved from there.

Speaker Change: Gross EBITDA grows cash flows move from made $100 million towards 1 billion.

Speaker Change: That's what we're focused on.

Speaker Change: And so over the next four years, we'll generate two and a half a billion dollars of cash flow that we can put to work.

Speaker Change: Under the allocations that we just chatted about in the prior slide.

Speaker Change: About $8 a share in today's work in today's environment and they will do it again in the following three years.

Speaker Change: So $5 billion of cash flow.

Speaker Change: That we are.

Speaker Change: We're confident we can create.

Speaker Change: The model is there for us to grow.

Speaker Change: Very steady and consistent basis top line.

Speaker Change: EBITDA EPS.

Speaker Change: Generate the cash flow.

Have exceptional returns on invested capital.

And build the business and return significant value to our shareholders.

Speaker Change: That just gives you a little bit of a sense for where to from here and with that let me turn it back over to Mike to wrap up and then we'll move to Q&A Mike.

John Francois: This is John.

John Francois: Yes.

John Francois: Okay.

John Francois: This.

Mike: Well, thank you, Steve and really thank you all are.

Speaker Change: Excuse me I took this off I don't like having a mic on when I'm not talking.

Speaker Change: A general counsel advises against it.

Speaker Change: There. We go look now is the part of the presentation, where I'm I'm, usually supposed to say boy I Hope you are excited about our future as all of US are here at graphic packaging, but what I'm really hoping you took away from our presentation. Today is just how much stronger we become in the last seven.

Speaker Change: Years, and now you can begin to appreciate what it really means to have the ability to provide real lasting value for our shareholders our customers and our employees.

Speaker Change: Look we aren't just a paperboard packaging company anymore, Steve kind of talked about that 95% of everything we do is some kind of package. We don't sell paperboard. We are a global consumer packaging company, it's a big shift from where we've been in the past and a big shift from many of the conversations.

Speaker Change: And we've had with a number of you over time I hope you've been able to see that today. We believe that paper packaging is really the most sustainable median of packaging out there and ultimately would become a partner of choice for many of the biggest brands in the world. They understand that both in the packages that they're making today and the ones that we believe will package again in the future.

Speaker Change: For them.

Speaker Change: Okay.

Speaker Change: Look we packaged consumer staples, we do it well and we get paid for that which means as Steve just outline you can have confidence when we outline the types of gains and free cash flow and overall profitability. Both in terms of sales growth and what you'll see on the bottom line in the years to come it's a proud moment for me to stand up here in front of all of you today is we.

Speaker Change: Kind of look back over the last seven years look seven years ago I Couldnt have stood up here and made the types of commitments that we're making you today I just couldn't we didn't have the investment in capabilities. We didn't have the investment in innovation and certainly we didn't have the investment in people that we bring to the party today I can stand here and make these commitments to you today with a lot of confidence and I'm even.

Speaker Change: Even more excited about what the next seven years looks like for our company.

Speaker Change: Hopefully really as you kind of think about this in kind of put it in context, you know the last seven years has been an incredible period of time of heavy investment strategic change and transformation and what's really going to become apparent over the next couple of years is just all the results that are going to be generated from the investments that we've made with the hard work that we put.

Speaker Change: In today.

Speaker Change: Actually U S C and touch our products every day, you've got many of them in front of you right now and I love our tagline that basically says we package everyday moments for renewable future and as shareholders you've had the opportunity to benefit in that and you'll continue to have the opportunity to get a benefit in that from what is truly a fantastic.

Speaker Change: The company that we're building here with that thank you for listening and I'm going to ask my team to come up here and join us on the stage and where where does that part where we get to take your questions now.

Speaker Change: A couple more of these.

Speaker Change: Yeah.

Speaker Change: I have no true right.

Speaker Change: Oh.

Speaker Change: Yes.

Speaker Change: Perfect.

Okay.

Speaker Change: Yeah.

Speaker Change: Perfect Yep.

Speaker Change: Melanie I think youre going to handle Q&A.

Speaker Change: Yeah.

Speaker Change: And Alexandra and the Blue jacket, they will be carrying around microphones will start here in the room and then we'll go to the questions coming in from the webcast.

Speaker Change: Yeah.

Speaker Change: Hey, guys filling from Jefferies. Thanks for the awesome presentation.

Speaker Change: You talked about spending a lot of capital last few years, and it's gonna be pretty elevated still Steve give us a sense of how much of that drops off in 2025, and 2026 could it be more normalized in that 5% range and I guess the bigger picture question. I had is you guys have invested a lot I think you guys should have a pretty substantial.

Speaker Change: Versus the industry and most of your competitors give you some perspective, what you can do as a graphic packaging company with all the investments you've made that your competitors, perhaps you can't do that'd be helpful. Thank you.

Stephen Richard Scherger: So let me start and then Dallas I'd point out I mean, I think you know cadence wise as we just talked to here in 2024 high watermark probably into the into the nine.

Stephen Richard Scherger: We spent about $300 million last year by the way on Waco, So well along with it which is great and so its our expectation.

Stephen Richard Scherger: You kind of cut it in the middle don't have the exact numbers, but in the nine probably moves into the seven range and then back to back two 5% and that'll be 5% so think about that.

Stephen Richard Scherger: If we continue to grow the company.

Stephen Richard Scherger: The math is pretty obvious for four or $500 million a year. So it's a good cadence down will generate good cash flow are obviously still generating cash flow here in 2024.

Stephen Richard Scherger: And then in 2025 start to really see that accelerate and then 26 and beyond it really really drives so that's a little bit of just the cadence piece of it I think capabilities wise.

Speaker Change: I want to touch on that I look at our packaging manufacturing facilities are incredibly well capitalized and if you think about our paperboard manufacturing facilities. They are as well, particularly with what we've done with Kalamazoo in with Waco, Oh, We've got a significant cost advantage as I mentioned in the most attractive parts of the market and really.

Speaker Change: Where our growth will come from Phil in terms of the games, we make is all about innovation and driving this whole sustainability.

Speaker Change: Message that we have and what we talked about you heard Maggie go through a lot of the different examples in the markets, where we compete and that's why we broke that chart out because we want to talk more about the markets and how we're actually going to win in those those different verticals, because where the consumer goes we go and we built that business purposely to allow us to be able to do that.

Speaker Change: Okay. I'll go ahead and take one from me I remember audience. The first question is from Ghansham Panjabi of Baird.

Ghansham Panjabi: When you when you established vision 2025 targets back in 2019, you gave a specific threshold for E. P. S. Vision 2030 is more of an algorithm on EPS why is that is it basically now and acknowledging that that margins have reset higher and going forward earnings will be more correlated towards and mark.

Ghansham Panjabi: <unk> routes and perhaps internal improvement initiatives.

Ghansham Panjabi: Steve wanted to go ahead and get Yeah, I mean, thanks gautam for a for that.

Stephen Richard Scherger: I think part of it is a little bit of what Ghansham is raising his is with vision 2025, we were setting margin goals and targets and EPS that came along with that I think one of the things. We're very excited about is now that we've gotten to that level of margin capabilities, so think towards plus or minus 20% that we can add.

Stephen Richard Scherger: Actually because of the value based pricing because of the organic growth. We can actually consistently operate the company had pretty narrow band of margins and as such we're pivoting more towards an ability to maintain good strong margin capability and allowing the topline growth to provide step.

Stephen Richard Scherger: And consistent EBITDA growth as well as EPS growth and so I think it's the it's an important pivot to the model.

Stephen Richard Scherger: Around earning the right. If you will earnings have and the margin profile that we can build upon and having the top line to generate EBITDA growth consistently.

Stephen Richard Scherger: But should we get a lot of levers to pull there to cash flow that you outlined I was joking with George at the break I said I don't know that we've really established ourselves as a cause a consumer packaging company. When we move off the paper packaging list and we move into the packagers portion of it and so that's also part of how we're thinking about the go.

Stephen Richard Scherger: So we laid out there today, because you would think about it our goals and targets our aspirations the algorithm really lines up well with the customers that we're servicing.

Stephen Richard Scherger: Hi, I'm, Mike Roslund true Securities.

Mike Roslund: When I go with Phil So thank you for the great details in the presentation.

Speaker Change: Can you help us frame.

Phil: Some of them bigger moving pieces around your EBITDA guidance.

Mike Roslund: 1.75 to $1 95 billion does it reflects organic sales growth does it reflect the $40 per ton decline in SBS Cup Comstock does it also reflect a $50 per ton increase that you guys announced last month.

Mike Roslund: The U K and C or b, just trying to get a sense of what you're embedding within that guidance is for for my first question and then the second question is on free cash flow for 2024 can you help us frame some of the larger pieces there in terms of.

Mike Roslund: Free cash flow conversion and working capital just to give it can you give us a sense of what type of level of cat free casually you see you can generate this year realizing that it is a peak capex year.

Speaker Change: Sure Yeah, No. Let me, let me take that I think it obviously in terms of the cash flow generation I think the modeling that we provide provides pretty good clarity that there's still positive cash flow generation $3 million to $500 million. If you kind of just stack through.

Speaker Change: The the the EBITDA and the like one of the things you're going to see US do a lot more of us are kind of changed the dialogue too on how we respond to your first question.

Speaker Change: And we're not going to talk about whether the riskiest 40 up or down is in the numbers because at the end of the day, we're operating in a value based pricing mechanism and we have an enormous number of initiatives underway always with our customers in terms of the value we're getting paid for our products.

Speaker Change: Obviously, when you manage through like that like the $40, you're referencing obviously that works through our economics, we're executing on other price initiatives that we've announced we are executing on those and so overall the algorithm for the business next year is really what you said, we're going to grow organically and earn on.

We expect to have a good strong productivity year with our manufacturing facilities in a growing environment. The innovation, we're bringing we will we will earn on and as such the overall top line growth from the packaging that we have will be good we are because of some of the things that we're managing through.

Speaker Change: Matching and doing the right thing on supply and demand for the paperboard sales that we still have that's a little bit of the the early headwind that works that we conveyed to you, but really the model for the business as we talk about it we're going to talk more about sales and we're going to talk about it in a way that provides you and us the confidence that.

Speaker Change: We're growing that top line through the totality of how we're investing in the business.

Speaker Change: [noise] based pricing the volume that we're growing and the like but in essence the guidance has in it a full portfolio of what we're working on today on the pricing front on the volume front and our ability to earn on it and as such the business. This year in many ways as currently configured which includes Augusta has margins and topline.

Speaker Change: That are quite similar to the year, we just completed.

Speaker Change: Yeah.

Speaker Change: Thanks, very much everyone. Good morning, George Staphos Bofa.

George Leon Staphos: Echoing everybody else. Thanks for all the detail and thought you put into your analyst days are not just a bunch of slides a bunch of goals that we forget about in three years, and we come back and have noodles.

Speaker Change: I had a bunch of questions on vertical integration, but I believe those to the side. Thank you for that yeah. So.

Grown low single digits is hard right I mean, we can do the math on your addressable market, if I take 1% on that eye drop it into your revenue growth to get you, 2% more law and a analyst day, but the reality is there's churn uh-huh right youre not going to win every jump ball as you said.

Speaker Change: So we're in your markets do you feel the other substrates has the best opportunity to compete against Paperboard, where do you feel really through innovation sustainability, you've got more tailwind incrementally and you can separate and talk to us about Rainier, which said isn't really in the goals but could be.

Speaker Change: Important in terms of that next analyst day in terms of what the growth is so if you could talk to those points that would be great.

Speaker Change: Second question is nearer term. So obviously foodservice is a wonderful business for graphic packaging.

Speaker Change: What we've seen in recent months as the CPR on foodservice products generally has far outstripped, what you've seen for center store what are your thoughts about how that my I'm pretty sure I know, what you're gonna say, but what do you think that's going to mean in terms of your business. This year in terms of mix in terms of volumes in terms of the shifts across your you're five categories. Thank you very much.

Speaker Change: Thank you for the question George maybe would you like to give us a little insight into some of the attractive markets that you're seeing in some of the growth we see.

George Leon Staphos: Long those verticals, yeah, I think to your question around you know our paper is relative to other materials and it's clearly a lot of the key markets that we've highlighted here as part of this innovation platforms and some of those examples obviously many of those are in plastics.

George Leon Staphos: Plastics substances today, but.

George Leon Staphos: See the consumer demand for more sustainable and consumers looking for paper as the primary.

George Leon Staphos: The primary driver of that there you know there really leaning in and our customers are leaning in and paperboard is that solution and when we look at the total cost of ownership.

George Leon Staphos: Not always on the unit price, but on that total cost of ownership for some of those innovations it becomes clear in terms of those being our solution that they're moving forward with so we feel good about our overall portfolio relative to other material alternatives.

George Leon Staphos: Yeah.

George Leon Staphos: Yes.

Speaker Change: Well look I might take a piece of that I think George you sum that question a perfectly.

Speaker Change: It's a competitive landscape out there we compete every day for the right to win and really when you look over the last seven years. The fact, we've been able to post a 2% stack average over that period of time, I think should give investors confidence that we've got some really good momentum and being able to do it our confidence level that we can deliver the $200 million of innovation growth that you've heard.

Speaker Change: Maggie and Jennifer is what I'll talk about that for 'twenty 'twenty four is high because as Steve said, we kind of know that locked in going into the year. The conversions have happened. So it kind of flows through Ricardo smiling because he always has to give that to us in advance. So that we can kind of go on it and we've done that in some very different economic environments.

Speaker Change: 22, arguably a lot easier than twenty-three, but we got it done in both years. So I think that's there to your question around foodservice and it's a good one and that's really why I opened up with my comments about the price declarations for risky we expect our foodservice business to be very busy. This year. You know again, there is no less than 4% unemployment.

In the U S market, the American consumer loves mobility to lobbying on the go there a lot of things they are doing and they appreciate the drive through window, a lot and the convenience that provides we've given you. Some good insights into some of the trials, we've got going on with Chipotle and others and that we expect to be a flywheel for us for years to come and that's why our techs are.

Speaker Change: Cannot paperboard manufacturing facility is so important to us because we'll have the raw materials that we're able to use all the way through that whole supply chain and it's another great example, around the differentiation, we make around where we choose to be backward integrated in where we don't because we can provide good growth to our customers and ultimately high.

Speaker Change: For like using cash flow.

Speaker Change: You bet, Okay I've got the next question here from the audience and Steve you've talked a little bit about price, but mark Weintraub seaport wants to ask.

Mark Weintraub: About different component component items, as we bridge EBITDA from 'twenty to 'twenty three to 2020 four volume again, we've talked about price labor productivity.

Speaker Change: Yeah, and you know this is not going to be easy.

Speaker Change: But we're just not going to go there and what I mean by that is is.

Speaker Change: We're gonna grow organically, we're going to earn on it.

Speaker Change: Yes of course, the fundamentals of what we've shared with you in the past there the fundamentals and so.

Speaker Change: As we look out to 'twenty 'twenty four of course, we're going to earn on our organic sales were going to continue to be highly productive will have labor and benefits inflation will be running more than we ran this year. So we'll be we'll have the opportunity to earn and take less of the of the natural downtime that we take across our manufacturing facilities.

Speaker Change: Right now that pricing environment relative to the commodities it isn't very different than the last time, we talked.

Speaker Change: We've got a lot of activity underway on as we value based price of work with our customers and move through some of the pricing not much has happened on the commodity cost front. So the fundamentals of how you came in the room are still the fundamentals and it's why our midpoint is looks like it is in terms of the expectations we've set.

Speaker Change: But we're gonna go down a path where that language is going to change and I know that that will be challenging, but we're going to and so it's just important and the algorithm for the company important it's on us.

Speaker Change: To earn the <unk>.

Speaker Change: Wow you for our products.

Speaker Change: In environments, where costs move.

Speaker Change: So that our margins are able to maintain themselves it's kind of levels that we're at today. So the fundamentals of the midpoint of our guide are very similar to the last time, we've talked about the company and not much has changed but we are going to change the dialogue along the way and I'll look forward to those conversations.

Speaker Change: Hi, Good morning, Matt Roberts with Raymond James I'll Echo everybody else all the hard work that went into the presentation as well as over the past six to seven years that have really changed the business.

Matt Roberts: That being said.

Matt Roberts: Another question on price, but really the value added price actions that you've done.

Matt Roberts: You know you've done a very good job holding onto margin over the past couple of years via price mechanisms.

Matt Roberts: And then the February price increase seemed like it was due to a certain raw material cost changes in certain substrates.

Matt Roberts: So how exactly is the value added price implementation different I mean are there ways, we can quantify things like innovation or supply chain dependability or consumer insights that Maggie brought up or is it something that your customers are now more inelastic because of more innovative products.

Speaker Change: No I wouldn't say, they're in elastic I mean again, it's a competitive market, it's packaging, but what I would say is that theres, a general appreciation, particularly by our largest customers around the need for security of supply the need for innovation and the need to help them accomplish their sustainability goals I hope when you see that waterfall up there I mean, you know graphics DNA, we measure every.

Speaker Change: And so being able to put that in the context around no. This is real we're actually going to reduce this down and you saw the scope III Michel had that on there we need our suppliers to do the same thing guests, who we are for most of our customers where that bar and so the fact, we bring those things is really valuable to them and they understand that like I said, we expect them to buy a well.

Speaker Change: But they are willing to compensate us for those types of things that we do and if we do start to see input cost inflation in the market and I know that was a question we had over here from Mark earlier, we'll take price and that's been our track record is really good at doing that look at what we did in 'twenty two look at what we did in 'twenty three so I think we've demonstrated.

Speaker Change: The ability to do that but it also comes back to making sure. We're getting paid for the value we provide our customers and have an equal sharing on that so it's a number of things.

Speaker Change: Thank you certainly appreciate that my my second question on as you in your remarks, you said that.

Speaker Change: Innovative products like the goal is to not have any switchover costs correct have them work on the exact same machinery.

Speaker Change: Is there a certain percentage where it does not work and in those cases I mean, how do those conversations go I imagine a lot of incremental investment machines at a certain lifespan themselves.

Speaker Change: So what what percent is that and how our customers receptive to it. Thanks, Greg Yeah, No. It's a really good question. It's very I think the percentage is evolving because I'm thinking about a lot of projects that are in queue right now, but I would if I ran into a range, maybe 30% to 50% it could go higher and certain of those innovation platform.

Speaker Change: But I think it's obviously something we continue to try to take the.

Greg: To hit the Mark on our ability to do that into the Nissin Cup was a great example of our ability to commercialize that quickly we can get onto their filling lines and do that pretty seamlessly and so we're going to continue to focus on doing that you know there's obviously.

Greg: In a different machine capabilities that we're trying to develop to help make that as efficient as possible when it is required.

Greg: Also partner with co Packers, who can help leverage that so they may make an investment and they might be supplying to multiple different customers. So we're really trying to utilize that as a leverage point. So we're getting creative around that and honest and at the end of the day. It's the value proposition is there and if it's regulation and Theres other.

Greg: Things that they have to drive or it's bringing them better performance on shelf for there at retail to help drive top line performance, that's going to overcome a lot of those and that's what counts.

Greg: Yeah.

Speaker Change: If I may just have one comment on the <unk>.

Speaker Change: It's one of the reason why we are getting a lot of traction on pitocin shape, because some who we are matching what she patrice ease in the volume of cheaper tracer extra.

Speaker Change: Extremely large and the seating technology at the end of the same.

Speaker Change: And that's why we are getting traction because in terms of capex for those people. They use technologies as they are having and we are just replacing a base.

Speaker Change: Super trades by you pick a ctrip, which as you know these are some capabilities in terms of seating and that's way on that specific we are getting.

Speaker Change: A little bit of traction in Europe, It's a great point.

Speaker Change: Yeah.

Speaker Change: Thank you all gave me D Wells Fargo as per usual you guys provide good detail a question about becoming a packaging solutions provider and I know, it's been a journey, but you guys kind of initiated let's call. It five to six seven years ago.

Speaker Change: Almost like packaging as a service if you will.

Speaker Change: But the question is you know the last three years, we're pretty conducive to maybe transition to a value based pricing methodology or strategy versus historically, how businesses had been conducted so the question is how would you instruct us to think about some of them again I know you're not gonna it's tough in a format like this to give us specifics, but to think about.

Speaker Change: How frequently either or openers for contracts or how how long those may run.

Speaker Change: <unk> to.

Speaker Change: Maybe think about go forward as opposed to just sort of as simple algorithm of 2% translates to 5% to 10%.

Speaker Change: Yeah. So I think look gave we've got a certain percentage of our portfolio. That's up for contract renewal every year, it's almost like clockwork some years, a little heavier than others, but you know for the most part I'd say, it's you know 25%.

Speaker Change: It is constantly rolling through so it's not like that ever stopped during that process, but what I was trying to do in my prepared remarks is really kind of paint a picture for where we were kind of bid ask which is really the market. We were in versus where we are now which is a much more holistic.

Speaker Change: Supply position, we have with our customers deeper relationships with customers because it's needed for them to accomplish their goals as the world has gotten more no enthralled.

Speaker Change: With regulation.

Speaker Change: And it's been harder to reach customers, we have solutions that will help them do that so it's really not so much that we're just trying to hey look we're changing all of inaccurate because we want to.

Speaker Change: And that's why vision 2025 doesn't really even apply right now in many ways. Because it's you know some of those targets are ambitious enough and it's not aligned with how we run the company.

Speaker Change: <unk> algorithm well simple in nature is really hard to do but if you can do it you know year in and year out and Thats, what where we put the stake in the ground today, it's incredible value, creating and that's what we want you to take away from that's the commitment we're making today and that means we have to manage a whole bunch of those in a little indiscreet things that you're talking about price cost you know what.

Speaker Change: The volumes do how did this happen over here all of that gets encompassed in there and we think it's a better way to talk about what we're doing and that's why we want to make that shift to talk more about the markets because that's really what will drive the overall performance of the company over the long term.

Speaker Change: I'll go again this is another one from Mark Weintraub.

Speaker Change: Again he.

Speaker Change: He didnt like the birthday [laughter] is the anticipated impact of reinvesting excess free cash flow captured in the vision 2020 vision 2030 base financial model growth expectations, whereas the impact potentially accretive.

Speaker Change: Can you read that question to give you at least say that again.

Speaker Change: Is the anticipated impact every investing excess free cash flow captured in the vision 2030 base financial model growth expectations is it in the growth expectations, whereas the impact potentially accretive to what we laid out earlier.

Speaker Change: Well I think the way I would talk about that if you kind of look at how we how we shared it with you today is the base model of low mid and high single digits results and.

Speaker Change: And ability of the business to generate very substantial cash flow and what we shared is that that actually allows us to allocate capital in such a way that potentially says put cash in to drive innovation, even faster more capabilities and have the have the flywheel spin.

Speaker Change: And even faster if we see those opportunities or increase the dividend because we have every opportunity to do so through the cash flow or repurchase the shares where it makes sense to do because it's the best way to provide return to shareholders. So I think the way we would articulate that as the base model does a great job.

Speaker Change: Job of indicating that we believe.

Speaker Change: As Mike said.

Speaker Change: On an easy thing to do but we believe that we can actually generate you know low mid and high.

Speaker Change: And if there's opportunity to invest faster back in the business capabilities grow faster organically, we'll absolutely do that but we'll hold it up against the other capabilities to return value to shareholders.

Speaker Change: Evidently chairs low debt so.

Speaker Change: So I think it's really that's how you think about the model and I guess I know March not here asking about addressed his question.

Speaker Change: Anything you know maybe I just might add there really good response or Steve made a couple of points in his prepared remarks that I just want to put a little emphasis on you talked about five 5% of sales as capex in 2% being a robust amount for kind of maintaining those assets. These are well invested assets.

Speaker Change: When you look at what we've done over the last seven years, we're proud of our.

Speaker Change: Package converting facilities in our paperboard manufacturing facilities and if you think about it [laughter] Kalamazoo in Waco will be brand new so that's a pretty long tail as you kind of wind that forward. So that that difference between the two and the five is substantial in terms of the things that we can invest back in the business. So as we grow on the foodservice side, making each cup plans to kind of fill out that geo.

Speaker Change: Graphic piece, that's all in that 5% that we've rolled out there what Michelle talked about the de carbonization those three big projects that you've put out there that's in the 5%. So the cash flow that Steve kind of outlined on the on the Ark I guess, it was which is pretty darn impressive you know I mean, it anticipates those.

Speaker Change: And the things that we need to do to continue to deliver on those things for our customers and so you asked about how we're positioned against other competitors. It's not just our paperboard packaging peers, it's really all consumer packaging companies and we love the relative competitive positioning that we're in right now.

Speaker Change:

Speaker Change: Thank you guys for all the information John Dunn again at Jefferies here.

Speaker Change: If I understood Marsh question, maybe I can just asking a little bit differently D.

John Dunn: CAGR that you're expecting with division 2030.

John Dunn: You know maybe is it more backend weighted given all the projects you have now where you see more of the growth coming in that 'twenty six 'twenty seven 'twenty time frame after waco's already up or do you think that you can achieve some of these our EBITDA growth.

John Dunn: With the projects still in the investment stage now is this is this growth potential mid single digits and high single digits here in the next couple of years with everything you have going on thank you.

Speaker Change: Oh sure Yeah. So again the way to think about it excellent question is look we've got Waco, that's going to come to life here and a 25% to 26 and in on so it was $160 million of EBITDA, we committed to do that that'll be there that'll drive some additional sales growth. The rainier piece of that's you know accretive on top of that.

Speaker Change: But look where we're committed to growing our volumes each and every year that starts in 'twenty four and we gave you some insight into how we're thinking about it and why our confidence is there that we'll be able to do that and we see that is accelerating and continuing to be accretive over over that entire seven year planning horizon and our track record as I took you through is solid.

Speaker Change: For being able to do that.

Speaker Change: Yeah, it's definitely not a back end loaded adulthood scenario at all.

Speaker Change: And I think the only thing that's backend loaded a little bit of the cash flow because we're still in the <unk> right.

Speaker Change: The investment phase, but if you adjust for 25 and 26, you know you kind of saw that ramp up to $1 billion of free cash flow a year and those outlying years and that's why.

Speaker Change: Okay I have another question from never Mount audience.

Speaker Change: So from your remarks. This is from an investor So from your remarks today, what is your approach with risky moving forward.

Look I think I'd characterize that in the beginning pretty sharply.

Speaker Change: It's not new for graphic packaging to not like third party indexes, we've been talking about that for years and as you can see by our value based pricing model. We have been moving away from third party third party indexes for years. So what I'm, saying is that we don't agree with your assessment on foodservice for all the reasons that I've outlined here Foodservice Cup stock from <unk>.

Speaker Change: <unk> and it just strengthens our resolve to continue to move away from third party indexes that are you know in our opinion historically inaccurate and Barry you know non transparent in terms of how those things are generated and how their score. So I'd just say, that's how I would answer that question.

Speaker Change: Yeah.

Speaker Change: Hello, everyone. This is gregory and drop offs from Citi.

Gregory: For the detail in the presentation.

Gregory: I just had a few points of clarification around the Augusta sale and then a bigger picture question about your substrate mix going forward.

Gregory: So just on Augusta, you know briefly.

Gregory: You expect any dis synergies from Michelle I know you mentioned the $1 8 billion dollar of pro forma EBITDA number so I need to synergies there and then any retained liabilities, we should be aware of post sale and then just kind of bigger picture.

Gregory: The sale would reduce your Sps footprint by about half are with my mouse and you know you've made investments you know seemingly focused on CRB over the last two years with Q2 and our Waco.

Speaker Change #100: So the question for me is.

Speaker Change #100: Do you see an opportunity to move customers from Sps, maybe even see U K to CRB.

Speaker Change #100: And what role do you see Sps playing in the long term.

Speaker Change #100: 2030 vision acknowledging that there is some import competition from SBB, you know and you know the market.

Speaker Change #100: See some capacity coming online in 'twenty five plus so.

Speaker Change #101: I'll start yeah, well I'll start and then Mike can add on I think to your first part of your question, we don't see any dis synergies with the with the sale of the asset to what we'll have is a little bit of a transition because our internal needs. Our packaging needs. We were running between two facilities and will be.

Mike Roslund: Great those are to Texarkana, so there's a little bit of transition, but not anything on the dis synergies front.

Mike Roslund: And there are no retained liabilities I think that was probably just a normal boiler plate.

Mike Roslund: Statement, there's nothing that we're retaining.

Mike Roslund: That is of any substance at all so it's actually quite clean in terms of the transaction the mill paperboard facility stands on its own.

Mike Roslund: Quite nicely, it's got an outstanding team.

Mike Roslund: And that team's in place and very committed to our to the success of that facility. So there's nothing there of dis synergy wise or retained liabilities that would be impactful for us will just be managing through a little bit of transition here in 2024 relative to really.

Mike Roslund: Servicing our capabilities and our needs are that we have at the texarkana facility to create packaging.

Mike Roslund: And really the way I'd answer the second part of your question, which is a really good probing question in terms of how we think about that from a strategy standpoint is ultimately this is consistent with our view our view is that recycled products.

Mike Roslund: In particular are going to be at the heart of the most attractive part of the paperboard packaging market and so the result was we made the investment in Kalamazoo and then we couldn't even see some of the things that we've got in Waco before we made the K two investment so as we take that as a follow on our ability to continue to ramp up like a rainier grade you heard Maggie.

Mike Roslund: Talk about which competes with the very best.

Mike Roslund: Hum premium Sps grades that are out there it puts us in a situation, where we're not doing those kind of trade offs, that's where we're going to spend our time will always convert some sps. It's important it's a good grade we will make some of it ourselves in Texarkana and where we need more we can always go to the open market and buy it because people are continuing to invest in that market.

Mike Roslund: North American producer that's building some theres a European producer that's discussed about you know, bringing other mill online. So we like how that positions us and what you don't want to do with a new grade of paperboard like Rainier is start to cannibalize, what you're already doing so this really fits us well and it's consistent with our overall strategy around driving long term customer.

Mike Roslund: <unk> investments that help them drive the innovation as well as higher hurdle higher rois sees more consistent cash flow.

Mike Roslund: They might do to the point, you're making to the Texarkana facility is a phenomenal manufacturing facility for making the cup.

Mike Roslund: Raw materials that we need to really support what is going to be a long growth trajectory for our foodservice business. So cups bowls trays and that's the right raw material for that Texarkana does that exceptionally well and has a long growth trajectory of the ability to make that raw material that paperboard.

Mike Roslund: To support our growth trajectory for foodservice.

Mike Roslund: Yeah.

Okay I've got one more this is from an international investor.

Speaker Change #103: As you increase your focus on end markets as a driver of your topline performance will you be able also to get a better measurement of customer inventories for each of the end markets.

Mike Roslund: As you grow your growth should be much more aligned with your customers is that a crack statement.

Speaker Change #102: Yeah, So I'm going to hit that first and then you can add on that you know when you look we work with our customers all the time to try to get the best insights that they've got around what their overall demand profile is going to be but there are times. There are quite frankly, they don't necessarily know I mean things shift kind of quickly here and they want to be able to be responsive.

Speaker Change #102: Concept to you know their end use consumer and so that was that flex capacity that I talked about that we've got to make sure that we have something we learned as we kind of came through COVID-19, our customers need us to be able to do that I love. The question, though because ultimately the closer we get to the the customer here. The deeper we have the more integrated we earned their business.

Speaker Change #102: And there are some cases, where overall demand planning models are actually connected now and Youll see us do more of that in the future where we're closer do they sell one we make one.

Speaker Change #102: Ultimately something that we strive to achieve and you probably yeah. I think you said it really well there I think coming out of Covid a lot of companies just like Mike was talking about ours are looking at the you know how robust their supply chains are so one of the good outcomes that we have is in working even closer with our customers is that we are getting better visibility and <unk>.

Speaker Change #102: Terms of some of their aspects of their supply chain and we would expect that to continue to evolve I mean, that's really a goal that we have with our top customers. So that we can have a much tighter theres efficiency, obviously from both companies and being able to do that so we feel good about that overtime.

Speaker Change #102: It's a question in the back half.

Speaker Change #102: It's a woman with greenlight.

Speaker Change #102: I'm going back to what Steve just mentioned on versus Carton and he says you put a finer point on where were your mix sits post Augusta, maybe spend a minute on how those two markets are different I think your intuition is that the comp side is a little more attractive but.

Speaker Change #104: Well, Yeah, I think look if you look at Augusta I mean, both mills are roughly the same size.

Speaker Change #104: No Mark.

Speaker Change #104: $20.

Speaker Change #104: I've said, it twice and notice that I have to change to I'm not using that word and we have paperboard manufacturing facility.

Speaker Change #104: Oh, but they're they're both about the same size roughly 600000 tons. You know if you look at our the Texarkana AR facility. It actually is indexed about 400000 tons of.

Speaker Change #104: Cup stock and then the balance of course coded so it fits us perfectly with what we're doing and as Steve said.

Speaker Change #104: We've talked about publicly is our pivot is we would prefer to run more cop out of that facility and we'll either make rainier you know for the grades that need that kind of premium paperboard and Maggie showed you. The kind of end use markets that were really targeting for that or if we need to buy some.

Paperboard on the market, we can do that and as we've demonstrated in Europe. You know, we can get really good ROIC by doing that we're one of the largest purchasers of paperboard in the world, we buy it well, we know who to source it from and ultimately we benefit in being able to do that.

Speaker Change #104: So we have got a lot of great options I guess is the is the punch line.

Speaker Change #105: Does that answer your question as well.

Speaker Change #105: Hum.

Speaker Change #106: I guess I'm more wondering about the actual market structures.

Speaker Change #106: Customers for Comstock versus car O liner companies sort of supply demand. If there's if it's a more attractive market to be selling into less competitive so on and so forth or if it's not it's just that's the wrong thing there's less people that make it for sure is a complicated grade because one of the things you've got to be able to do is make the brim around the top and that requires some real knowledge of materials.

Speaker Change #106: <unk> and the type of furnish you use in that whole process and in the case of our business. It's a highly integrated model almost 95% of all of that material goes through our own Cup plants, which again gives me.

Speaker Change #106: The higher that I talked about earlier around the third party.

Speaker Change #106: Scoring a market like that when we know exactly where all that material is going so most of it is coming to ourselves. So.

Speaker Change #106: It's a very attractive market and one that is growing as I talked about in my answer to George you know in terms of overall demand every quarter over the last three years, we've shown growth in our foodservice business, including the one we're in now.

Speaker Change #107: Thanks for that well.

Speaker Change #107: I've got one more and then I think we're gonna end with George.

Speaker Change #107: Last question coming in remotely is from Mark Weintraub.

Speaker Change #107: Alright.

We need them.

Speaker Change #107: No Mark I mean, my he referring to slide 65, which is the arrow slide and this is good just for us to confirm this he's talking about the sales performance by market is very helpful. Thank you.

But it seems to be dollar sales driven rather than net organic sales first of all is that right and going forward does it make sense to drive the analysis using dollar sales or net organic sales yeah. Thanks for that Mark and it'll be dollar sales, but what we'll do is of course to describe what's happening inside of.

Speaker Change #108: Those so we'll raise it up the dollar sales, but where it's material when appropriate we're actually looking forward to kind of talking about what are we seeing a layer now or what are we seeing volumetric Lee what are we seeing on value pricing.

Mark: So we'll talk about those things when we describe what's happening with those arrows, but it's a it's a really important though that I. Appreciate I'm asking that question. It will be dollar sales, but we won't lose the ability to speak about what's happening with the company organically and we will I mean, you can count on US will know exactly where we're at we'll talk about it appropriately.

Particularly when it when it has an impact on the business and so we'll definitely be prepared to do so.

Mark: We'll definitely share our innovation sales on a quarterly basis. So we'll talk very specifically about how are we doing against that.

Mark: At 2% and we track that very methodically literally month to month, and so it'll it'll be dollar sales, but we won't lose the ability to articulate what's happening underneath that where where its appropriate and balanced in terms of sharing it.

Mark: Thanks, George Staphos Bofa I wanted to one of my last questions just piggybacking off of Mark's question, So along with the arrows and probably percentages or at least ranges in terms of the growth by end market will you be giving us revenue every quarter by end market.

George Leon Staphos: Or maybe every year in other words, where percentages. So that if we want to build you want us to build a model is based on revenue by end market will you give us more tools to be able to do that on going forward basis. So that's question number one question number two again with Rainier, what could that be in terms of an opportunity for you three years.

George Leon Staphos: From now if if if you once again to think about revenue and opportunity.

George Leon Staphos: And lastly.

George Leon Staphos: Our perception, perhaps incorrectly is the plastic is who we all love and as well are talking a lot about carbon footprint and that seems to be the narrative that comes from the plastics industry not so much recycling rates the carbon footprint in terms of defending their position why they're sustainable.

Speaker Change #110: Maggie or Michelle.

Speaker Change #110: Where does paperboard stand in terms of aggregate carbon footprint versus plastics, recognizing it's dangerous to talk about in aggregate.

Speaker Change #110: And where does paperwork, particularly stand up well versus plastics in that regard to tie their view. Thank you guys and great presentation. Thank you George why don't you take the first I'll I'll do the first one George.

George Leon Staphos: We're definitely we're working through what you just.

George Leon Staphos: Asked around and what we provided today is kind of the big buckets. So what percentage of the company falls into each of those categories will be providing the arrows what's happening inside of there I don't know that we'll necessarily get to a spot where every quarter. We're articulating the exact dollar thing because I don't know that.

George Leon Staphos: Well that's probably.

George Leon Staphos: Not necessary, if you will but what we will do is articulate to you and to all kind of what's happening inside of those categories. So that you have a sense for okay, where are we for the quarter, where are we year to date and you know and you know the baseline and then of course, you know as we worked through I'm sure will reconcile that in a way that.

George Leon Staphos: That provides visibility into hey, what's going on inside of food Holistically. So it's I appreciate you raising it because as you know with this new disclosure and it's one that we're looking forward to we're obviously open to feedback on that as well, but we're looking forward actually to talking about it in a way that allow.

George Leon Staphos: As you can to constructively build.

George Leon Staphos: The model for the for the company.

Speaker Change #111: Yeah look we've got the customer base and their you'll look to true that up so I get the point, it's a good one and we'll give some thought to that and how best to do that in terms of the other two questions. I mean in terms of Rainier I'm really excited about that one as you know I'm a printer.

Speaker Change #111: And when we look at kind of the surface of that particular sheet and make you did a really nice job going through the different markets, where we think we can penetrate that I'm hesitant to give you a tonnage figure because I want to move away from that but it's definitely all.

Speaker Change #111: Nerves to our benefit in terms of package sales and that is actually one of those substrates that we would seek to sell on the external market because it's not available from anybody else, we make it others don't have it and so it makes sense for us to actually make that available and we'll do that kind of going forward here. So I think it's got a lot of promise and we've already got our first commercial application.

You've got a.

Speaker Change #111: Dozen or so trials underway.

Speaker Change #111: So we're quite encouraged with what we see I'll hit the first part and then Michelle I'd like you to kind of respond to this.

Michelle: George It's a good point everybody's sustainable every presentation you go to they've got it out there I wanted to know do they have the detail that we laid out here. We just laid out a very good waterfall with discrete bespoke projects that show you, how we're going to get there and we told you all were going to pay for it.

Michelle: Within the Capex that we laid out there. It's one thing to say it. It's another thing to do it and so from our standpoint, you know that's what you can count on US you know doing Michel laid it out really well, we know exactly what we need to do in order to do it and it comes with cost of capital type returns, it's not knock your socks off stuff, but the mere fact, we can decarbonize.

Michelle: The way, we did and we can earn cost of capital that's a pretty great position to be in and so you know I think the best way I can answer your question I don't know everybody else's stuff, but I know ours and you know I think the more transparent other companies are in terms of the claims that they're making actually I think shines a light on it and I'll, let you as analysts and ultimately.

Michelle: The investors and our customers.

The end use customers actually be able to make those decisions in tumors and consumers. Thank you yeah, that's really a good point Maggie.

Michelle: Michel anything you would add over and above that yeah. So I think what I would say about carbon footprint and when they're really trying to get at like the product carbon footprint calculation is you know these are our.

Michel: Our models and the models are only as good as the how you define the boundaries of the models and the quality of the input data that you put into the models and with lifecycle assessment models. In particular, you have a lot of flexibility in terms of how you define the boundary and input conditions that you use and unlike any model even statistical models.

Michel: If you want a desired outcome of your answer there's a great way to configure the model to give you the answer that you want and what's interesting with the plastic packaging manufacturers is not only are the Virgin plastic manufacturers trying to say that their products are better and paper. They're also trying to say that their products are better and the bioplastics.

And the Bioclastic people are saying that their models are better in their footprint is better than the Virgin plastic people. So there's a lot of misinformation out there most of the data that gets published isn't third party validated and they don't provide the details behind their assessment, where you can reproduce their analysis and show that they've had a really good and thoughtful approach to it and so I.

Michel: Thank you need to take lifecycle assessment models, you know with a grain of salt because there's a lot of smoke and mirrors going on right now and that's an area that we plan to invest in.

Michel: And build our capability.

Michel: And be able to help bring some more clarity and transparency do a lot of the misinformation.

Speaker Change #114: I just wanted to add one comment because that's part of it. He 11 initiative, we are having in Europe and the one off hit Ofer, Okay got it.

Speaker Change #114: If you don't agree wishing you know who you will provide information and who you would disclose information because we have seen a bit everything what I can just sit from a customer experience with Keith Cozza logical appeared in international company. They are only I mean, you cannot claim some.