Graphic Packaging (GPK) Earnings Transcript

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DATE

Tuesday, Nov. 4, 2025, at 10 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Michael P. Doss
• Chief Financial Officer — Stephen R. Scherger
• Incoming Interim Chief Financial Officer — Chuck Lisher
• Senior Vice President, Investor Relations — Mark W. Connelly

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RISKS

• Michael P. Doss stated, "We also saw some incremental price deterioration, not so much in paperboard, but in packaging pricing," indicating margin risk tied to continued competitive pricing behavior.
• Management acknowledged, "our volumes were down 2% year on year," reflecting soft demand and underlying consumer pressure.
• Guidance was modestly revised to reflect "an increasingly difficult-to-predict volume outlook," according to Michael P. Doss, increasing forward-looking uncertainty on demand trends.

TAKEAWAYS

• Net Sales -- $2.2 billion was reported, capturing company-wide revenue performance.
• Adjusted EBITDA -- $383 million adjusted EBITDA achieved, with an adjusted EBITDA margin of 17.5%, demonstrating current profitability.
• Adjusted Earnings Per Share (EPS) -- Adjusted EPS was $0.58, providing a key per-share earnings benchmark.
• Volume Trends -- Company packaging volumes declined 2% year over year, but management asserted outperformance versus served markets.
• Waco Facility Launch -- First saleable roll was produced at the new Waco recycled paperboard plant on October 24, ahead of schedule; expected ramp to full production in twelve to eighteen months.
• Waco EBITDA Contribution -- Doss stated, I'm very confident in Waco's ramp-up delivering the $80 million we discussed for 2026, and, obviously, there's another $80 million behind that.
• Innovation Impact -- Management cited "another $52 million, roughly 2%," from innovation-driven sales, supporting relative volume resilience.
• Cost and Inventory Control -- Action was taken to reduce $30 million in inventory capital year to date, with an additional $20 million targeted in Q4.
• SG&A and Cost-Focus -- Management is implementing further SG&A and plant cost reductions, aiming to "cement our significant efficiency and margin advantage."
• Share Repurchases -- $150 million was used to repurchase approximately 6.8 million shares year to date, reducing shares outstanding by 2.3% after a similar reduction in 2024, totaling about a 24% reduction since 2018.
• Capital Expenditure (CapEx) -- Capital spending will decline significantly, with 2026 CapEx targeted at approximately 5% of sales; CapEx is $850 million in 2025, dropping to $450 million in 2026 and releasing $400 million in cash flow.
• Free Cash Flow Outlook -- The company targets $700 million to $800 million of free cash flow in 2026, as stated by management, based on CapEx decline, inventory reduction, and cost actions.
• Financing Actions -- A $400 million delayed draw term loan was entered into in October 2025, maturing June 2027, with a rate 35 basis points below the revolver, intended to refinance April 2026 bond maturity.
• Leverage Target -- Year-end net debt to EBITDA ratio is projected at 3.5x to 3.7x. with further deleveraging prioritized for 2026.
• Facility Rationalizations -- Production at East Angus will cease on December 23, following the earlier closure of Middletown, collectively offset by Waco’s incremental 75,000 tons of net new capacity in the industry as of early 2025.

SUMMARY

Graphic Packaging (NYSE:GPK) management stressed the completion of a key capital program, with the Waco mill operational ahead of schedule and positioned for a twelve-to-eighteen-month production ramp, supporting significant expected EBITDA and free cash flow inflection in 2026. Unusual competitive pricing from bleached paperboard producers is directly affecting margins, prompting a sharpened internal focus on inventory, SG&A, and capital discipline, as well as ongoing cost actions. The company is executing substantial share repurchases and has taken steps to address upcoming debt maturities, while reiterating its commitment to deleveraging and returning cash to shareholders as principal capital allocation priorities. Market dynamics remain uncertain due to continued consumer softness and elevated price competition, resulting in company guidance being updated to reflect greater demand unpredictability.

• Doss confirmed, the phasing of that is about two-thirds this year and one-third in 2026. clarifying the expense phasing and its separation from run-rate EBITDA benefits.
• Innovation platforms delivered measurable results, with management noting that recent advances, such as paperboard punnets achieved third-party verified shelf-life extensions exceeding three days for cherry tomatoes.
• Accounts receivable programs are not expected to contribute meaningfully to cash flow in 2026, with the focus on CapEx reductions, inventory levels, and SG&A for cash generation.
• The company’s flexible manufacturing system allows for operational management of supply and demand on coated recycled paperboard, as Waco ramps up quickly. According to Michael P. Doss, "We can toggle our K1 machine. We're able to do that. We're able to do it cost-effectively," to optimize production volumes among its most efficient facilities as demand warrants.
• Strategic facility closures are synchronized with the start-up of Waco to maintain market balance and avoid significant oversupply, limiting Waco’s industry impact to only modest capacity growth.

INDUSTRY GLOSSARY

• CUK (Coated Unbleached Kraft): Paperboard made from unbleached virgin kraft pulp, coated to enhance printability, strength, and product protection, commonly used in packaging.
• CRB (Coated Recycled Board): Paperboard manufactured from recycled fiber, coated for improved surface properties, widely applied in folding cartons and consumer packaging.
• SBS (Solid Bleached Sulfate): High-brightness, fully bleached virgin paperboard, valued for its high quality and appearance, used in premium packaging, cup stock, and other foodservice applications.
• QSR (Quick Service Restaurant): Foodservice businesses specializing in fast, efficient food preparation and service commonly referred to as "fast food" outlets.

Full Conference Call Transcript

Michael P. Doss: Thank you, Mark. Good morning and good afternoon. Thank you for joining our call today. I want to start by taking a moment to acknowledge the enormous contributions that Stephen R. Scherger has made over the past decade as Graphic Packaging Holding Company's Chief Financial Officer. As announced last month, Steve has decided to leave Graphic Packaging Holding Company to take on a new challenge. He has stayed with us through this week to close the books on our third quarter, and I appreciate that. Steve was my partner in the development and execution of our business transformation.

From the acquisition of International Paper's consumer business and more than a dozen acquisitions to our Kalamazoo and Waco investments, his impact on the team we have built and the culture we have created at Graphic Packaging Holding Company will shape our company for years to come. I will miss his counsel. I'm pleased to introduce Chuck Lisher, who Steve hired in 2019 as our Chief Accounting Officer. Chuck will take on the new role of Interim Chief Financial Officer. Chuck has been a key member of our leadership team and involved in every major decision Steve and I have made.

We are fortunate to have someone with Chuck's deep knowledge stepping in as we pivot from Vision 2025's investment to Vision 2030's free cash flow. Now let's turn to the quarter. Graphic Packaging Holding Company sales were $2.2 billion, adjusted EBITDA was $383 million, adjusted EBITDA margin was 17.5%, and adjusted EPS was $0.58. While the challenges of a stretched consumer and the impact on grocery volumes are well chronicled, we are focused on what we can control. We executed well in the quarter, made progress on costs, and reduced inventory. Meanwhile, our innovation platform continues to open up new markets for paperboard packaging, once again allowing us to outperform the broader markets we serve.

Turning to slide three, I'm pleased to announce that we produced the first commercially saleable roll of paper at our Waco Recycled Paperboard manufacturing facility on October 24. That was significantly earlier than our plan, and faster even than our highly successful K2 start-up in Kalamazoo in 2022. I could not be more proud of our team, many of whom were part of our team that built our Kalamazoo K2 machine. I want to thank our contractors, and I'm incredibly grateful for the strong support we received from the Waco community and from Governor Abbott and the state of Texas.

Waco was Graphic Packaging Holding Company's largest capital investment, extending our economic and quality advantage in recycled paperboard across all of North America. Waco is a critical enabler for the consumer packaging we sell, improving surety of supply, reducing waste, allowing us to offer the highest quality packaging materials, and expanding the markets our recycled paperboard packaging can serve. Having Waco in our system gives us a competitive advantage that will last for decades. The Waco facility sits in the Texas Triangle, which is a highly attractive location for recovered fiber sourcing given its proximity to four major cities.

Our team also developed an internal fiber sourcing plan, which allows us to bring scrap paperboard from our packaging facilities to Waco. This is exceptionally clean and very low-cost pipe. True circularity isn't just about the environment. Done right, it's also about sound business economics. By closing the loop between our own manufacturing system scrap and Waco's recovered fiber sourcing, we dramatically reduce overall system waste while simultaneously improving our production economics. And with the inclusion of paper cups in the Recycled Materials Association's recently updated guidelines, a key strategic investment we made at Waco looks even better.

We designed Waco to have the capability to process up to 15 million paper cups a day, and as cup collection ramps up, Graphic Packaging Holding Company will play a key role in assuring this high-value fiber source is put to good use rather than ending up as landfill. As previously announced, the ramp-up to full production of Waco is expected to take twelve to eighteen months. The start-up of Waco marks the end of our Vision 2025 transformation program.

We now have everything we need: strong positions across a wide range of markets to drive top-line consistency, the packaging industry's best innovation team to open new markets for paperboard, and an integrated packaging platform with durable, substantial long-term competitive advantage. On October 30, we formally announced our East Angus recycled paperboard manufacturing facility will cease production on December 23. Taken together with our earlier Middletown closure and the recent closures by others, Waco will add just a couple of percent to total capacity, only about 75,000 tons more than the industry had at the start of 2025. As was the case in Kalamazoo, we do not expect the start of Waco to materially impact recycled paperboard market balance.

Graphic Packaging Holding Company has a long and consistent practice of matching our board production to our demand for our packaging. Turning to Slide four, the pressure on the consumers is evident by the grocery volumes. Increasingly, we hear from our CPG customers that the consumer market has bifurcated. Upper-income consumers are still spending or are spending differently and more carefully. Lower-income consumers continue to cut back as food prices rise further. And in the third quarter, we also saw more of our CPG customers timing their purchases as a way to manage cash, which has made order flows less predictable.

In the third quarter, our volumes were down 2% year on year, again outperforming most of the markets we serve. We also saw some incremental price deterioration, not so much in paperboard, but in packaging pricing. Recycled and unbleached packaging markets are in good balance, but we continue to see highly unusual competitive pressure from bleached packaging producers who normally wouldn't choose to compete directly with recycling because their costs are so much higher. Yet we are seeing competitors offering discounts on bleached packaging that essentially matches recycled packaging pricing, despite the obvious lack of profitability that those kinds of prices imply.

Given that bleached capital costs and annual sustaining capital requirements are dramatically higher, we don't believe that the situation is sustainable. With the investments we have made at Kalamazoo and Waco, we can match bleached paperboard's appearance and print performance with a sheet that costs significantly less to make on equipment that requires a fraction of the capital to maintain. We believe that our investments have put us in the sweet spot for all three packaging substrates and that our economics and quality create a durable, long-term competitive advantage. Over time, we expect our recycled paperboard to replace more expensive bleached paperboard in a range of markets.

As we discussed last quarter, we are not a meaningful participant in open market bleached paperboard. But the impact of a large imbalance in that market has been to reduce the pricing power in recycled and unbleached packaging. Recycled and unbleached are our primary markets, and both are healthy and in good balance. So this is really about margin pressure rather than market share. Looking at our markets, food and household products were steady overall, beverage and foodservice were weaker. Health and beauty, which is mostly a European business for us, was again solid.

Beverage promotion returned to a relatively normal pattern this year, but promotional activity for food and foodservice remains highly targeted, an approach which has not driven meaningful volume or foot traffic. Mass retail, superstores, and discount grocers continue to take share from traditional grocers. This is one of the driving forces behind the surge in private label offerings, although traditional grocers have increasingly embraced store brands as well. In the past two years, literally thousands of private label and store brand SKUs have been introduced, and trademark data suggests the trend will continue into 2026, from household products to protein to produce. Turning to slide five, the breadth and depth of our consumer staples packaging.

We are at every grocery aisle and supermarkets and superstores and are a major packaging supplier to quick service restaurants. We are introducing recycled paperboard packaging to more markets and more categories, including household products and health and beauty. Customers increasingly embrace our paperboard as a less expensive, responsible choice that consumers prefer. Turning to slide six, excluding the effect of FX, third quarter packaging sales were down approximately 2% year over year, a modest deceleration from second quarter market trends. Food results were roughly flat overall, with continued uneven performance in The Americas, partially offset by strength in international, although, as we have previously noted, consumers in our international markets are also feeling the stress of high prices.

As in past quarters, no clear category trends are emerging. We see targeted promotion as shifts from product to product and brand to brand. This has been insufficient to drive overall volumes higher. As our customers evaluate the effectiveness of promotion, they are also developing clearer insights into price points where customer purchases either grow or decline rapidly. So, for example, a $0.25 price increase from $4.50 to $4.75 might not cause a big change in demand, but a $0.25 increase from $4.75 to $5 might cause a major decline in sales. Getting a better handle on that sort of price sensitivity should help our customers as they work to reposition, resize, and reformulate.

In beverage, we saw a return to more normal promotional activity this summer, which helped drive soft drink multipack demand. The longer-term trend towards less beer consumption continued, both in The Americas and in international markets. Keep in mind that while trends in multipack demand do track references like Nielsen over the medium term, leads and lags can vary, particularly when beverages are purchased and when they're consumed. A 12-pack, for example, will tend to be consumed more quickly if it goes directly into the refrigerator. So when you have a two-for-one promotion, it can be a bit harder to predict when consumers will be back to buy more.

Some of the normal second quarter beer production shutdowns that typically occur around the July 4 holiday were deferred this year and are now scheduled for the fourth quarter. The impact of that shift is difficult to predict, but represents an effort by our customers to match their own production to demand. We serve beverage producers of all kinds and sizes, with multipacks for cans, bottles, and plastic. Over time, we expect to outperform the overall beverage market, both in The Americas and in our international business, thanks to our innovation portfolio and the strength of our integrated beverage packaging model. Foodservice results were broadly weaker, as has been well telegraphed by the media.

Affordability has been the primary challenge for foot traffic and volumes. This is also the category with the most bleached paperboard packaging, and bleached packaging is where we have seen the most unusual competitive behavior, which is affecting sales as well as profitability. Our smaller international foodservice business continues to perform very well, with new product innovation and strong execution driving continued volume improvement. In household products in The Americas, we see consumers reducing purchases and shifting to private label alternatives. Our international business continues to provide a significant offset, largely driven by our product innovation. Health and beauty is relatively small and mostly international for us, but has significant potential to grow over time in The Americas.

Slide seven highlights our five packaging innovation platforms. Innovation is a critical component of our strategy. Because our innovation team is opening up entirely new markets for paperboard packaging, in the past couple of years, our innovations have taken us into meat protein, freshly prepared food, ready meals in Europe, ground coffee, and a host of markets which were traditionally dominated by plastic and foam. Innovation is why we are confident in our ability to grow faster than the QSR and CPG markets we serve. In the produce aisle, plastic punnets are the traditional packaging standard. But while plastic punnets are cost-effective, their performance and consumer appeal is mixed at best.

As our customers look for better functionality and greater consumer appeal, we have developed a family of paperboard punnets, including open, top seal, and clamshell designs, that use up to 95% less plastic and are recyclable in most existing programs. On this slide, we highlight our produce path, top-sealing punnet. These examples are from two of our large store brand customers, Marks and Spencer, and Tesco in the UK. Fruits and vegetables are packed in many different ways depending on the grower, the scale, and the market. So we design our punnets to work on the same automated lines as plastic punnets and minimize switching costs to be superior plastic alternatives. More handling is involved.

Our clamshell design, for example, serves a hand-packed market. But unlike the plastic clamshell, ours can be locked into a closed position with one hand, improving labor efficiency. When we began this project, our team studied the science of food ripening and developed containers that have a meaningfully positive impact on how long some fruits and vegetables stay fresh. In cherry tomatoes, for example, third-party testing has verified an increase in shelf life of more than three days, a really big advantage for a highly perishable product. Other testing demonstrated that our paperboard punnet slowed the mold growth compared to plastic alternatives. Our punnets also offer outstanding printability, inside and out, something you can't get with plastic.

That gives the growers and retailers a way to increase their brand marketing impact, to distinguish more easily between products and quality levels, and to educate consumers about what they are buying. Our paperboard punnets, along with other new innovations like our paper seal line, are a perfect fit for today's trends towards healthier eating and the growing use of GLP-1. And they're great examples of just how effectively Graphic Packaging Holding Company moves with the consumer. Turning to slide nine, our vision for Graphic Packaging Holding Company is clear. And my confidence in our business model remains strong.

Innovation, culture, and the commitment to making packaging that is better for the planet are fundamental to driving best-in-class results for our customers and for all of our stakeholders. With Waco now ramping up, we have everything we need to reach our Vision 2030 goals. And that means we can turn our full attention to execution and driving cash flow. On slide 10, we summarize our financial results. I've already described the big drivers of sales and margin performance. Slide 11 highlights the still challenging consumer packaging environment on the left, and the strength of our business model and execution on the right.

Delivering margin improvement in the face of sequential price-volume pressure is a testament to the strength of our model and the value we bring to our customers. While we are not satisfied with our earned results, we are confident that we can meaningfully improve margins as demand and competitive behavior normalize. Turning to slide 12, we used $150 million to repurchase approximately 6.8 million of the company's outstanding shares year to date, reducing shares outstanding by 2.3% in 2025 after a similar reduction in 2024. We have repurchased approximately 24% of the company since 2018.

Turning to the outlook on slide 13, we have modestly revised our guidance to reflect performance to date and our best view of what's been an increasingly difficult-to-predict volume outlook. In this environment, we are focused on the things we can control, and that includes cost and inventory. We are assessing opportunities to further reduce SG&A and finding other opportunities to reduce costs, which I believe will further cement our significant efficiency and margin advantage over competitors. You saw us take action to reduce inventory in the second and third quarters, and we will continue to drive inventory out of our system as we reoptimize around Waco and Kalamazoo.

In the fourth quarter, we will take further action to balance production with customer demand, and we expect to have approximately a $15 million impact on EBITDA. These decisions are intended to protect our margin profile and to protect our volume. At a time when competitors are running for cash, signing contracts that we believe carry margins well below the cost of capital, we are focused on protecting our industry-leading margins and protecting share where we are the best and most logical supplier in the medium and long term. We are using this period of unusual competitive behavior to align our order books with customers who understand the durable competitive advantages that we have in innovation, cost, efficiency, and quality.

Our year-end leverage target is up modestly. That is mainly a function of the change in our EBITDA expectations as well as our decision to take advantage of the dislocation in our share price with additional share repurchases in the third quarter. Graphic Packaging Holding Company has doubled in sales and EBITDA since 2017, and maintaining prudent debt levels has always been a major factor in the company's success. With our Waco investment nearing completion, we expect a significant free cash flow inflection and will prioritize deleveraging alongside our other uses of cash in 2026 and beyond. In keeping with our commitment to prudent use of leverage and maintaining financial flexibility, we made an important financing transaction in October.

As detailed in a recent 8-K, we've entered into a $400 million delayed draw term loan, which will be used to repay the bonds maturing in April 2026. This loan has a floating rate 35 basis points lower than our revolver and matures in June 2027. This new financing addresses the upcoming bond maturity while giving us more time to decide whether longer-term financing is needed. Given the substantial cash flow we expect to generate in 2026 and beyond, the flexibility of prepayable debt is particularly attractive now. Our current cost of debt is approximately 4.5%. As a reminder, with the Waco investment effectively complete, our capital spending will decline significantly to approximately 5% of sales.

Capital spending is the largest driver of our expected cash flow inflection. With the team we now have in place and the levers we have to pull, I'm confident in our ability to generate our targeted $700 million to $800 million of free cash flow in 2026. Let me be very clear about this. We can't control demand, and lately, we can't predict it any better than our customers or our competitors can. Graphic Packaging Holding Company is at a very different place today. With Waco complete, we have the industry's best assets and best cost position. And we have far greater control over our ability to generate free cash flow than we did a year ago.

While competitors are restructuring, spending, and lately making short-term deals that don't generate cost of capital returns, Graphic Packaging Holding Company continues to focus on delivering results for our customers and our stockholders. We have everything we need, and the next five years are about innovation, execution, and free cash flow. Graphic Packaging Holding Company is in a better place to create lasting value for our stockholders than ever before. In the appendix that begins with slide 15, you'll find some additional information you may find helpful. That concludes our prepared remarks. Operator, please begin with Q&A.

Operator: Certainly. Ladies and gentlemen, the floor is now open for questions. If you wish to join the queue to ask a question at this time, please press 1 on your telephone keypad. Should you wish to remove yourself from the queue, you may press 2. In the interest of time, we do ask that you limit yourself to one question and one follow-up. Once again, that'll be 1 on your keypad at this time if you wish to join the queue to ask a question. Please hold a moment while we poll for questions. And the first question today is coming from Ghansham Panjabi from Baird. Ghansham, your line is live. Please go ahead.

Ghansham Panjabi: Thank you, operator. I guess, first off, just wanted to congratulate Steve and wish him the best for the future. Obviously, a great run at the company, and I look forward to your next role. So congrats again. So my first question, Mike, you know, just kind of looking back at March, did the end markets track pretty much what you thought, but the difference was just the share shift because of the Bleachboard conversion? And, you know, related to that, why would that dynamic change near term barring some sort of inflection higher in volumes?

Michael P. Doss: Hey, Ghansham. It's Steve. Just thank you for those very kind words, and I'll let Mike jump into the response here in a moment. But it has been just a phenomenal opportunity over the last ten years. I want to thank Mike personally, just a phenomenal partnership, a true opportunity to work hand in hand with him, which has been just a wonderful and honorable experience. Probably looking ahead, though, I'm as excited for the business as I could be. If you look out now with the investments that have been made, Waco coming to life, above cost of capital returns out into the future, the business is incredibly well positioned for success going forward.

And the cash flow inflection that's happening as we sit here on this call with you today is outstanding. So my thanks to Mike personally for all that we did together and look forward to what lies ahead as well. So thanks for that, Mike.

Michael P. Doss: Thank you, Steve. It's been a real honor. To your question, Ghansham, in terms of expectations in the quarter versus the results we realized, first, I want to clarify there was no share loss for us there. That was really a function of customer purchasing patterns. And when you look at their volumetric performance, you know, through the second quarter and into the third quarter, in the third quarter, material that's been released so far by a handful of our large customers, it shows we're actually outperforming their overall volumetric performance. And that's really a function of our innovation. Our innovation in the quarter was another $52 million, roughly 2%.

So that's helping us kind of outperform some of the challenges that they're seeing in terms of their volumetric performance.

Ghansham Panjabi: Okay. And then in terms of, you know, with all the dynamics that are occurring, do you still feel confident with the, you know, Waco EBITDA contribution specific to next year? Or does that depend on some of the dynamics in the marketplace that are taking place at this point?

Michael P. Doss: No, thank you for that. Look, I'm very confident in Waco's ramp-up in delivering the $80 million that we talked about, and obviously, there's another $80 million behind that. By way of reminder, the first $100 million of those savings was really a function of the mill closures. Middletown, which was closed in May, as you know, and now we formally announced our East Angus facility in Quebec will close by year-end. So that's all in line. Relative to the total impact of that in 2026, I mean, the volumes are largely flat year on year, that's a different outcome than when they're down 2%.

So if they're down a little bit next year, then we will need to look at our Kalamazoo K1 machine, and we'll run that in a way that allows us to optimize operating our K2 machine in Kalamazoo, which is our most efficient, and Waco, which would be our most efficient paperboard manufacturing facility. And if we do need to toggle a little bit, we can take some downtime on our K1 machine, and we're able to do that at a very reasonable cost.

Ghansham Panjabi: Thanks, Mike.

Michael P. Doss: Thank you.

Operator: Thank you. Your next question is coming from George Leon Staphos from BofA. George, your line is live. Please go ahead.

George Leon Staphos: Thanks so much. Appreciate all the details. Also, want to make a quick shout-out to Steve. Really important driver, as you mentioned, Mike, of what Graphic Packaging Holding Company has become the last ten years. And really thank him, want to thank him for all the support he's given us all on this phone, both in terms of our industry research and our research on Graphic Packaging Holding Company. So, Steve, thanks so much. You know, in terms of my questions, you mentioned, Mike, the opportunity perhaps to further improve productivity and the like. And that's my phrasing, not necessarily yours. You know, what opportunity do you think you have? How important is that in terms of Waco?

And the commercial opportunities and, to some degree, the commercial challenges now that you're facing in the market to getting to that $80 million plus? How much of that additional cost reduction, SG&A, and so on is required, or would it be added? And then I have a follow-on.

Michael P. Doss: Yeah. I think the big part of that, my confidence in the $80 million on the Waco ramp-up for '26 is very high, George. I mean, the facility is, as I said in my prepared comments, has come up a little faster than we even expected. We're very happy with what we see so far. So that's there. I think the bigger question is around our visibility and what end-use markets are doing as we head into 2026. And as I said in my prepared comments, what we're really going to focus in on are the things that we can control. We've got some unusual competitive activity going on right now. As I mentioned, around bleached paperboard.

We don't necessarily control that. We don't necessarily control what the overall volume performance of our customers is. We're working very heavily on that. You hear and read about things they're trying to do to get their businesses going in the right direction. So we're obviously cheering for them. But in the meantime, we've got a number of levers that we can pull to really make sure that we operate the business as efficiently and effectively as possible. And those, kind of in order, are first thing is CapEx is going to revert back to a more normalized level, to 5% or below. That's going to generate in excess of $350 million of free cash flow just by that.

And ultimately, even though, as you well know, we've got a very low-cost structure here, we're looking at every cost, SG&A, and plant cost, that really allow us to make sure that we don't impact customer service levels. But given some of the realities we've got going on in the market, we've got to challenge all those things. And we're doing that stuff internally here, so we'll continue to do that. And ultimately, taking a look at our inventory situation, you've seen we've released had a capital release so far this year of about $30 million. We expect upwards of another $20 million here in Q4.

And as we go into next year, that'll be another area we're really looking at hard. Because with Waco and Kalamazoo online, if you think about it, we now have five very well-capitalized manufacturing facilities. And that gives us a unique perspective to be able to look at our overall system, look at our supply chains, take a step back, and really make sure that we're challenging kind of where we're at and what we can do. So those are the levers that we really have in our control. That's how I'm thinking about it.

As I mentioned to Ghansham, if we need to take a manage our supply and demand on our coated recycled paperboard, as Waco really ramps up quick, we can toggle our K1 machine. We're able to do that. We're able to do it cost-effectively.

George Leon Staphos: Thanks, Mike. My other question, just more of an end-market question. So foodservice, I think, from the chart, was one of the end markets that wasn't doing as well for you in the quarter. Foodservice is kind of an interesting market from our observations. Right? You've had fast casual not doing so well, but quick service has been picking up some steam. What kind of trends were you seeing into the fourth quarter? And to the extent that customers can know and you can share, you might be limited in either ability. What do you think is the outlook for foodservice there? And if that picks up, it's actually a relatively higher margin end market for you. Thanks so much.

Good luck in the quarter. Again, Steve, thanks much.

Stephen R. Scherger: Thanks, George.

Michael P. Doss: Thanks for that question. I think you said it well. I mean, the fast casual is definitely under pressure. I mean, last week, we had pull-through release. I won't go through all the comments, but the CEO really talked about the twenty-five to thirty-five-year-old consumer unemployment levels being higher, disposable income being lower, and in his words, that was driving him back into the grocery store. And again, I think that's a worthwhile comment to make, and I bring it up because, as you know, we've built our portfolio to move with the consumer. So if that shift happens, given we're in every aisle of the grocery store, we actually are okay.

We do see that trend around more of the QSR impact, which makes sense given the price points of QSR versus fast casual. And we're there. And we also think that we've got a number of innovation ideas that we're working with those customers that ultimately will allow us to continue to earn a place at the table and grow our volume. So that's how we're thinking about that dynamic.

George Leon Staphos: Do you think it grows, Mike, next year? I guess just to draw a bow on it or tie a bow on it.

Michael P. Doss: Boy. I'd like to believe so. But, you know, again, George, it's just difficult for me to talk about demand. I mean, every time I think about a quarter, our customers have a hard time doing it. If it does for us, it'd be most likely because of innovation.

George Leon Staphos: Okay. Thanks so much.

Operator: Thank you. Your next question is coming from Matthew Burke Roberts from Raymond James. Matt, your line is live. Please go ahead.

Matthew Burke Roberts: Mike, Steve, Mark, good morning. So Steve, I'll echo everybody else's thanks. Appreciate your comments and all the time over the years. And if you want to get a risky comment on this last question, I'll cede the floor to you. But maybe on the competitive price pressure on SBS and CUK on CRB. I apologize if I missed it. How much of a drag was that in 4Q? How long are you expecting it to last? And while I believe your SPS is mostly cup stock, are you able to sell incremental SBS or CUK similar to your competitors at the expense of CRB given that price spread?

Or how has your own sales mix by paper types changed in this environment? Or do you expect any shift in 2026? Any incremental color on how the tons from Waco layer in over 2026 that impacts your mix would be helpful. Thank you again.

Michael P. Doss: Yeah. Thanks, Matt. So I'm going to address the SBS CRB CUK, you know, comments. We've had a fair amount of inbound on that, as you can imagine, over the last week or so. So the first thing you need to know, you've seen in our volumes, we have not lost any share. And we're going to be very focused on making sure we don't lose any share because if you think about it, you've got product making SBS, and we make it. We've got a mill that does it, Texarkana, so we know the cost structure on that. It's much more expensive to make than recycled paperboard.

So from our standpoint, we would never substitute SPS for CRB given the cost advantage we have. In fact, it's lower cost to make CRB, coated recycled paperboard, than it is to make bleached paperboard. So, you know, the margin profile is just simple there in terms of what that looks like. And again, we're operating that mill, and we operate Kalamazoo and Waco. And what I'll tell you is that the CapEx requirements of a virgin paperboard manufacturing facility are four times what they are in a coated recycled paperboard facility. That is, again, part of the decision we made when we invested so heavily in Kalamazoo and in Waco because of that phenomenon.

So over the medium to long term, we're highly confident that we can continue to not only protect our share but win share from bleached because the cost of capital returns start to get in the way there. And ultimately, that's something that needs to find its own level. There's, you know, I think RISI in their last article or so talked about 500,000 tons of excess fleet capacity in the North American market. We'd agree with that, if not a little bit more. So that's got to be dealt with. That's really not something that Graphic Packaging Holding Company will deal with, as you know. Our focus is on packaged sales.

We make cartons, we make wraps, we make cups. We sell value-added packaging. 95% of everything we do is in that area. So from our standpoint, I mentioned this in my prepared comments, most of this was on the package price and not on the actual paperboard level itself, which makes sense, given the dynamic we saw and what you saw happen with the pricing in the quarter. We're confident in our ability to over time, not only protect our share but continue to grow it. With the high quality, low-cost material we have coming out of our coated recycled platform. So hopefully, that gives you a little bit of color into how we're thinking about it.

Matthew Burke Roberts: Certainly. Really appreciate it. Mike, as always, thank you. And then maybe I could squeeze one quick follow-up in, on the cash flow for next year. Any flexibility in terms of the CapEx number? You said, I think, 5% of sales or lower. Any growth projects that you could potentially defer and bring that 5% in? Any lower or any other cash costs associated with the ramp-up? Thanks again for taking the question.

Michael P. Doss: Yes. We're looking at all that, as you expect, and we'll dial that in next time we talk to you. We'll give you a little bit, you know, clearer view into what that looks like for 2026, obviously. But it's a good question and something we're looking at all the time. You know, but what I'm very confident in is the $350 million inflection that will occur year on year.

Operator: Thank you. Your next question is coming from Charlie Muir Sands from BNP. Charlie, your line is live. You may go ahead.

Charlie Muir Sands: Yeah. Good morning, guys. Thank you for taking my questions. Just firstly, on Waco, can you just give some clarification around the phasing you've obviously guided the start-up cost for the $65 to $75 million? Have they been largely incurred now, or do they step up sequentially into the fourth quarter? And how should we be thinking about those in this year versus next year? I mean, effectively, is the step-up reversal bodies plus the $80 million, or would that be double counting? That's the first question. Thanks.

Michael P. Doss: Charlie, good afternoon to you. My apologies if I don't hit this properly. I'm having a difficult time hearing you. I think your question was from the phasing of the one-time cost associated with Waco, which is outlined in the materials to be $65 million to $75 million. Assuming that was your question, the phasing of that is like two-thirds this year, one-third in 2026. Yeah. Yeah. Yeah. If I didn't get it right, please come back.

Charlie Muir Sands: Great. Yeah. Thanks very much. Hopefully, you can hear me. Can you also give us an update on the progress in selling your Pacesetter Premier CRB? Are you achieving a specific price premium for that now? And then one final piece is can you just talk about the deleverage that you're expecting in the fourth quarter to get to the 3.5 to 3.7 times net debt EBITDA at year-end? Thank you.

Michael P. Doss: Yeah. Thanks for that. So I'm going to address the question around Premier first, then I'll cover the leverage. Listen, on Premier, it's a great product. And one of the great things we have is we've got the most modern cleaning systems in both Kalamazoo and in Waco. That gives us tremendous competitive advantage over anybody else in the North American market. We've got curtain coaters on all three of our paper machines that give us the ability to really have brightness that approaches bleached paperboard levels. Now, Premier has actually been used as one of the tools we're using to make sure we don't lose any share as we're competing against the SBS guys.

Now ultimately, that does have some margin impact. The pricing we would expect to get is a little lower, as you'd appreciate, because they're lowering their package prices to compete with CRB. So that's something we have to work our way through, but we have the levers to pull, we have the capabilities to do it. So I really am confident that we've got that great product in our portfolio of mix. And relative to year-end leverage, yeah, we've got a range of 3.5 to 3.7, you know, for year-end. Numbers in terms of overall debt. That's really a function of a little bit of reduced EBITDA number, as you can imagine.

And the fact that we wanted to be opportunistic to buy back some shares this year given the dislocation. We talked to our Board about that. And given the ultimate inflection of free cash flow that will happen here in 2026, that made sense to do. And as I said in my prepared comments, as we go into 2026 with that free cash flow, we'll be looking to delever as well as return cash to shareholders in a way that makes sense and drives long-term shareholder value.

Mark W. Connelly: Charlie, this is Mark. You'll recall that Q4 is a positive free cash quarter for us. And so that will help us get that leverage down to the range we're looking for.

Charlie Muir Sands: Right. But fine.

Operator: Thank you. Your next question is coming from Gabrial Shane Hajde from Wells Fargo. Gabe, your line is live. Please go ahead.

Gabrial Shane Hajde: Mike, good morning. Steve, pleasure working with you. Mark, good morning as well. I had a question about working capital and cash flow as well into next year. Steve, can you help us with some of the AR factoring that's been done or reverse factoring? Just give us a sense of what that looks like. And maybe how that will be managed into 2026.

Mark W. Connelly: Mark, why don't you handle that if you would?

Stephen R. Scherger: Yeah, Mark will handle it. Oh, I'm sorry. This is Steve. The question is around AR finance accounts receivable finance. Gabe, there won't be any material changes year over year relative to that in terms of the expectations of where we would be at the end of '25 versus '26. That's not really an enabler for cash flow in '26. As Mike mentioned in his comments, the '26 cash flow enablement is really about reduced CapEx, reduced inventory levels, and also some managing of SG&A costs. Those are going to be the levers that will be pulled to drive cash flow, that confidence in the $700 to $800 million.

So it won't be around it won't be about accounts receivable programs being materially different.

Michael P. Doss: And just to clarify, Gabe, CapEx this year is running $850 million, $450 million next year, so that delta is $400 million of cash flow inflection.

Gabrial Shane Hajde: Okay. And then unfortunately, I feel like there's still some confusion around these start-up costs. The $65 to $75 million. Can you give us a little bit more specificity around if that's capitalized interest cost? Those are kind of I'll call them wasted tons. But you know, rolling test tons off and recycling them through. And if I heard you right, Mike, there's $65 to $75 million this year. And that reduces down to $35 million next year. So for a net positive of 30. And again, is that the same as the $80 million that we're talking about in terms of contribution from the investment? Thank you.

Michael P. Doss: Okay. So there's a number of things to unpack there. The $80 million EBITDA run rate. So that's out on the EBITDA line into next year. The $65 million to $75 million is we've talked about this a number of quarters now, are the one-time costs, cash costs associated with the start-up of the machine. Charlie's question was, what's the phasing of that $65 million to $75 million? Two-thirds of that's in this year. One-third of it is next year. And I'm going to ask Chuck Lisher to give a little bit of detail on the breakdown of that just high-level buckets so that you kind of understand what we're talking about there, Gabe.

Chuck Lisher: Yeah. That's mostly just operating costs associated with running the facility prior to start-up. So as we train the team and bring the team on board to have the facility ready to be up and running, anything that does not get capitalized is what we've been capturing in that $65 to $75 million. And yes, that is a multi-year number, not just a single-year number, the $65 million to $75 million. The other point on the capitalized interest, that, of course, is something that we do during the period of construction. That will, of course, stop once the asset comes into service. So we won't see capitalized interest again in 2026. Well, a little bit potentially in Q4.

A little bit in Q4 as the asset came in service during Q4. And there's a little bit of continued spend, but and then just regular capitalized interest. But for the primary Waco asset, then that would cease.

Gabrial Shane Hajde: Thank you.

Michael P. Doss: You're welcome. You're welcome.

Operator: Thank you. Your next question is coming from Arun Shankar Viswanathan from RBC. Arun, your line is live. Please go ahead.

Arun Shankar Viswanathan: Great. Thanks for taking my question. Steve, great working with you. Thanks for all the help and insight over the years. And I look forward to the next chapter as well. So, I guess my question is around maybe initial thoughts on '26. And specifically around Waco. Maybe you can just kind of give us some of the assumptions underlying the $80 million EBITDA uplift and if those are still intact. I believe most of those are around cost per ton. But is there any volume component? And then related matter, I guess, you know, do you still feel the same way about '27 as well? Another $80 million uplift? Or is that also somewhat volume dependent? Thanks.

Michael P. Doss: So, Arun, I'm going to take a step back and make sure I walk through this again so that I want to make sure that my points are clear here. We're very confident in our ability to deliver $80 million in Waco as it ramps up next year. And then in 2027, there'd be another $80 million. By way of reminder, that's $160 million in total. You know, $100 million of that, as I mentioned, is focused on kind of the fixed costs of not running Middletown and East Angus. That'll come in there next year. We'll be ramping up.

We won't be at full run rate, as I said in my prepared remarks, from a volumetric standpoint for twelve to eighteen months. But our confidence level in the 80 for next year is very high. We had always said that as we kind of brought it online in the outlying years, we'd need some volumetric growth. That hasn't changed. The way we're going to deal with that, as I mentioned to George earlier, is we'll toggle between running our K2 machine in Kalamazoo, which is the new one we just operated now for the last four years. The Waco Mill, those are going to run wide open.

And we'll service our business on our lowest cost assets, highest quality, lowest cost. We'll use our K1 machine, which is the smaller of the three machines, to take any downtime that we need to take to make sure that we match our supply and our demand. Of course, we'll be working quickly to make sure that we fill that out. A lot of it depends on kind of our customers' volumetric performance, as I mentioned earlier. They're able to get back to at least flat volumes in 2026 or 2026, that's a big deal for us because our innovation is consistently added close to 2% of volume.

So that's really how to think about Waco and how we're planning for 2026 and beyond.

Arun Shankar Viswanathan: Okay. Thanks for that, Mike. Just on the markets then, it sounds like, you know, beverage was a little bit weaker in Q3 and foodservice was as well. Do you expect that to continue to remain weak as you move into Q4 and '26? And maybe you can also comment on some of the other markets, food and household and health and beauty. I guess I'm and have you seen any change in innovation sales in those markets? We've been hearing anecdotally that there may be some trade down, you know, amongst the consumer packaging companies into traditional substrates, maybe a little bit less willingness to test the waters with some new innovation-led products.

I don't know if that's what you're hearing as well, but maybe you can just comment on what you're seeing on that side. Thanks.

Michael P. Doss: Yes. I'll start by saying I don't expect to see much change in Q4 versus what we saw in Q3. I mean, October started off substantially similar to what we saw in Q3. You get to read our customers' excerpts as I do. And as I talked about earlier, fast casual is down a little bit. QSR may be a little better. It's hard for us to know exactly what our customers' volume performance is right now, and I said that in my prepared remarks, given some of the things that they're doing to manage their balance sheets and production schedules around the holidays and so on and so forth.

So that's part of why we're being a little bit deliberate in calling that out. As we head into 2026, look, I know every one of these customers, as we talk to them all, are very focused on getting their volumetric performance back. They got to grow. And they're doing the things that they believe are required to do that. We see a lot of new CEOs. We see a number of restructurings that are going on. We see agitation at different levels. So hopefully that unners itself in its volumetric performance as we head into 2026. For sure.

Mark W. Connelly: I would just add a couple of things. Arun, I'd just add a couple of things, Mark. In the beverage market, typically you see promotion activity in the fourth quarter, but we also saw some changes in production schedules by our customers, you know, sometimes taking downtime around the July 4 holiday. That didn't happen to all of our customers this year. Some of that may have in the fourth quarter. So that adds a little bit of variability. We're also certainly in the food business continuing to see a lot of unevenness. Customers moving from one category to another to try to save money.

And not so much destocking by the food suppliers, but strategic stocking, as Steve as Mike mentioned, in terms of trying to get their year-end numbers and cash where they want it. So a lot of unusual behavior, but no real change in any of the trends.

Arun Shankar Viswanathan: Thanks for that, Mark. And just to clarify, so it sounds like you will have the $80 million next year. And then aside from that, it's mainly volume and price that we should be keeping in mind as far as what the drivers are for any kind of EBITDA bridge. Is that correct?

Michael P. Doss: Yes. That's exactly right.

Operator: Thank you. Your next question is coming from Mark Adam Weintraub from Seaport Research. Mark, your line is live. Please go ahead.

Mark Adam Weintraub: Thank you, and thank you, Steve, for your help over the last few years. So I just wanted to revisit again. On Waco, in terms of the ramp, order of magnitude, how much tonnage would you be expecting to produce in 2026?

Michael P. Doss: Yeah. Mark, I'm not going to call that out. So that's pretty quick.

Mark Adam Weintraub: 400,000 to say something. So I guess what I'm just trying to think through is that East Angus is 100,000 tons. Middletown, I think, a little less than 200, but was down. So we're talking about, like, 200,000 tons of replacement board effectively. And so I just is the rest because you're bringing down inventory, inventory this year? Or maybe if you can just kind of walk through the math where the Waco tons what they fill in for to meet the full production that you're and that'd be super helpful.

Michael P. Doss: If you really look at East Angus, which is our facility, it'll shut down at the end of the year, our Middletown facility, which closed in May. And then what others have announced that they're closing, it's 475,000 tons. Waco, of course, adds 550,000 tons to the overall market. So on a net basis there, it's about 75,000 tons of additional capacity that's coming online. I'll tell you this, Mark, I need Waco to come up right now to make sure that I'm able to service my customers. You saw the eighth APA data. Our inventories are down pretty dramatically on CUK and CRB. That's a deliberate plan on our behalf here relative to what we did.

So we need those tons coming off the Waco mission to help service our customers and make sure that we take care of our overall demand. But you had a good note out earlier this week. You talked a little bit about and balancing that production with our K1 machine. I think you got it pretty right, so I don't have a whole lot more that I think I need to add.

Mark Adam Weintraub: Okay. And I fully appreciate that, you know, once everything is reset, we should be, you know, at the target levels of profitability. I'm just trying to make sure that I fully understand the transition period, though, as we go, you know, hopefully into kind of a better 2027 demand environment, etcetera, and everything is sort of kicking into gear. And I guess I'm a little I just want to clarify because implicit in what you're saying, and I don't mean to be oppositional in any way here, but implicit in what you're saying is that you basically have gotten a lot of the business from the other capacity that was shut.

And I'm not or is there something I'm missing? Is it again, is it that inventory reduction, which you're doing this year, and therefore, you're not doing it next year? And so that's why because those would be pretty big numbers. So just trying to fully understand.

Michael P. Doss: I think that's fair. We have work to do, in our opinion, you know, with some of the other substrates we have. And Waco and Kalamazoo help enable that as well. Relative to our overall supply chain. But I think, like I said, you've got the math pretty well.

Operator: Your next question is coming from Michael Andrew Roxland from Truist Securities. Mike, your line is live. Please go ahead.

Michael Andrew Roxland: Yeah. Thank you, Mike, Steve, Chuck, and Mark for taking my questions. And I'll just echo what everybody else has said. Steve, thank you for all your help over the years and wishing you the best of luck in the future. In terms of the 26 free cash flow bridge, obviously, you guys expressed confidence in the $700 million to $800 million of free cash flow next year. Just try to get some more color around that because year to date, adjusted free cash flow, as you pointed out in the press release, is minus $332 million. You have the $400 million of CapEx step-downs. You're looking at a starting point of $68 million in terms of free cash flow.

I know you get a few $100 million of free cash flow in 4Q due to working capital unwind. But also, you are contending with, I think, a higher working capital, cash taxes, and interest. You called that on your call last quarter about $30 million, $350 million. So reconcile those moving pieces I just mentioned with the $700 to $800 million you're still confident you will achieve next year.

Michael P. Doss: Yes. I'm going to focus in on 2026 and give you a little bridge. You have to remember, Michael, and you know this, Q4 is always our big cash quarter. So we'd expect that gap to close dramatically. As it always does every year. And as we look at next year, we've got the contribution from Waco, we've already talked about that. And then, you know, the bridge is really pretty straightforward. It's around the CapEx reduction, which you've already talked about, which is close to $400 million here. As Mark just mentioned.

We've got cost control that we've got at our disposal, both in terms of SG&A as well as things we would do at the plant levels and discretionary spending. And we've got inventory that we're really going to focus in on too. And like I said, I'm really excited about our new platform with five large, well-capitalized paperboard manufacturing facilities that there's more capital release that we can work on both in terms of roll stock as well as finished goods. As we roll into next year. And that's the bridge. And that's what gives me really a high level of confidence in the $700 to $800 million next year.

Michael Andrew Roxland: Got it, man. So when you say I'm sorry. Go ahead.

Chuck Lisher: Hey. This is Chuck with Travis just gonna add that this is one of the areas that I've dug into over the last few weeks, and I share Mike's high level of confidence in this area. He mentioned the levers. We know what they are. We're gonna pull them. In addition to that, cash federal cash taxes are be very favorable for us next year, near zero. And so we know what the levers are. We're ready to pull them, and we have a high level of confidence in the number.

Michael Andrew Roxland: Thank you for that, Chuck. And I didn't mean to interrupt you there. So it sounds like last call you mentioned $300 million to $350 million interest, cash taxes, working capital. That sounds like that's coming down significantly as well.

Michael P. Doss: We're gonna have to take that bridging offline, Michael. You know, let's do that. Again, I'm focused and as I said, the levers that we're pulling here, the $700 to $800 million will help you get your model right so that it works. But let's take that offline after the call.

Michael Andrew Roxland: Oh, yes, Sam. No problem. One quick follow-up. I know we're running out of time here. Just in terms of the 550,000 tons for Waco, I mean, how comfortable are you bringing on that full amount over this twelve to eighteen months in a market that's depressed? Or are you assuming that we're not going to be in the same place twelve months from now? And so just get it's a lot of capacity. Understand on that basis, it's $75 in time to get that. But the market itself, as you pointed out, your competitors are acting irrationally.

How you know, would you I mean, are you do you tend to bring this the $5.50 full amount by eighteen months, or do you have flexibility to basically push that out further if SBS, the folding cards, does not improve materially in the near term?

Michael P. Doss: We're going to ramp Waco as fast as we can. It's our lowest cost, highest quality mill along with our K2 machine in Kalamazoo. As I've said a number of times here now, if I need to match my supply and our demand, we'll do it on our K1 machine. So I want to bring it on as fast as we can. It's a great facility. It's going to allow us to compete in markets that, quite frankly, we haven't been able to compete in before. It's going to help us deal with some of that behavior by some of the bleach board producers in a way that allows us to protect our industry-leading margins.

So you want us to do that. It really makes sense to do so. Look, you'd love to bring a brand new machine on like we brought the K2 machine on into a really snug market. But you make a decision, it takes a number of years. In our case, two and a half years to bring it on. This is what we've got. And we've got a lot of levers to pull. And our confidence level is high to deliver the free cash flow next year. That's really what our focus is.

Michael Andrew Roxland: Thank you.

Operator: Thank you. Next question is coming from Anojja Aditi Shah from UBS. Anojja, your line is live. Please go ahead.

Anojja Aditi Shah: Oh, hi, guys. Good morning. Just one quick one for me. When I think about capital allocation priorities, next year, it's going to have a lot of free cash flow. You talked about deleveraging, of course, share repurchases. CapEx goes down significantly. Is there anything else in there we should be thinking about? Like, I don't know. Is there room for bolt-on M&A or expansion in international markets? How are you thinking about it?

Michael P. Doss: Good morning, Anojja. It looks, from my standpoint, it's really two things that are our priorities. It's delevering our balance sheet, which we've talked about, as well as returning cash to shareholders. That's our focus.

Anojja Aditi Shah: Great. Thank you very much.

Michael P. Doss: Thank you.

Operator: Thank you. That was all the time we have for questions. I would now like to pass the floor back to Michael P. Doss for closing remarks.

Michael P. Doss: Thank you, operator. Thank you, everyone, for joining us on our call today. With Waco up and running, we have five of America's very best paperboard manufacturing facilities, the strongest and most capable global packaging manufacturing network, and the world's best packaging innovation team. We are uniquely positioned to deliver exceptional results for our customers and to generate strong, steady cash flow across the next half-decade and beyond. I want to thank our employees for their dedication and our stockholders for their confidence in Graphic Packaging Holding Company. Thank you, and have a great day.

Operator: Thank you. This does conclude today's conference call. You may disconnect at this time, and have a wonderful day. Thank you once again for your participation.

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