GPK - NYSE

Good morning, everyone. It's great to see all of you here at the New York Stock Exchange. And in addition to all of you here live, we have a large number of investors joining us remotely. I think the number is now 150, but it's climbing. So thank you everyone on the webcast. My name is Melanie Skijus, I'm the Vice President of Investor Relations. Before I kick it off today, for safety, I want you to be aware of 2 stairwells that you can exit if needed, directly behind me down the hallway is a stairwell as well as one by the elevator bay. Before we get started, I just -- I told you about the exits -- the presentation materials you have at your desk. We welcome you to walk through those with us today. On the webcast, you will see it in the webcast view as well as a PDF is available on our Investor Relations website. The presentation this morning are being recorded so they will be available to listen in replay probably later this afternoon. We have a great agenda for you this morning. You'll be hearing presentations from senior leadership. We're going to kick off with 2 and then we'll go into a 10-minute break. when we get back from the break we'll have 3 more and then we'll have a Q&A session. [Operator Instructions] Forward-looking statement. I encourage everyone to read through this. Our presentation today will contain forward-looking statements that will have -- or subject to risks and uncertainties that could cause these statements to not come into reality. So please look through the list of risks, and they're also available in our filings with the SEC. And with that, I'm going to turn it over to our first speaker today, Mike Doss, our President and CEO. I'm sure most of you are familiar and know Mike. He's been with the company since 1990, has been our CEO since 2016. And with that, I'll turn it over to Mike.

Great. Thank you, Melanie, and I also want to thank Alexandria, who's over in the corner here, as all of you know it takes a lot of work to pull together one of these Investor Day. They've been working really hard to pull things -- all the materials together that you see today, and we're going to cover. So thank you guys for all that. I also want to acknowledge Mike Ryan, one of our senior designers who is -- drove all the way down from Philadelphia -- a lot of the samples you see here today out in the lobby. So Mike, I don't know where you are, wave your hand. Thank you very much for doing that. Much appreciated. I'm going to start with a few comments around a few announcements we made last night, and then I'll jump right into the presentation, and then I'm going to introduce our speakers that you'll see today. And then as Melanie said, we'll go through that cadence and ultimately -- we'll have a few breaks in there. And then I'm sure there will be a very robust Q&A session, which we're really looking forward to. Let's start by talking a little bit around the first announcement that went out last night, and that's the sale of the Augusta mill to Clearwater Paper Company. Now what you need to know is that really, over time, Arsen Kitch and I've had a number of conversations around kind of the overall fit of some of the mills that we've got. And for them in the vision of the future, they have for their company, it became pretty clear that the Augusta mill, which is an outstanding mill with excellent people and a very good infrastructure is a better fit for them and what they really want to do over the long term than it is for Graphic Packaging. And so as we kind of went through those dialogues, we worked through a deal. You saw it announced last night. We're happy to go into whatever level of detail you'd like to do in terms of talking about that in the Q&A. But the reality of it is for Graphic Packaging, the Augusta mill, the Augusta manufacturing facility didn't offer the same strategic benefits over the long term as some of our other wood fiber manufacturing facilities or our recycled manufacturing facility. So it's the right thing to do for our shareholders to monetize that, which we'll do. And again, we'll talk a lot more in detail about what that means during Q&A. Second thing I want to hit on real quickly and there's a few questions I got in the lobby here was the pricing declarations from RISI over the weekend. And many of you know because I've expressed a fair amount of frustration on this over time in terms of how they do it. And I can absolutely tell you that on cupstock they got it wrong. We're in that market every single day. It's one of our strongest markets. If you look at over the last 3 years, what we've done with our Foodservice business, it's grown every quarter, and it's growing here in Q1. So that made no sense to us, it's a 180 degrees out from what we're currently experiencing. And really -- and you've heard Steve and I talk about this, it just strengthens our resolve to continue to move away from third-party indices that really lack any level of what we believe to be accuracy as well as transparency. And so over time, third-party indexes that really aren't accurate or have transparency hurt packaging companies and they ultimately hurt the customers as well. So we are going to strengthen our resolve to continue to march away. We've been doing it for a number of years. It's one of the reasons why several of the analysts in the room, you guys have had difficulty trying to track our pricing because we've been moving to a more value-added pricing model, which we'll get into a lot of detail today in terms of how we look at that, and it's going to continue to be the case. So third-party indices 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 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 in a 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 in that number. And our value-added pricing actually more than offset the volumetric decline that I talked about, which for the year was about 4%. Fourth quarter -- third and fourth quarter, most pronounced down around 5.6%. Steve will get into those numbers in a little bit more detail. But what we're really encouraged about here going forward is the fact that as we've rolled into 2024, our 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. Fourth quarter was really most pronounced in the last probably 3 weeks of December. It was almost like many of our customers just threw in the towel. And that really manifested itself in Europe in a big way. We saw volumes that were down the last 3 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 -- and a return to organic growth. But what I would also say -- and this is -- and you're going to hear this thematically through my conversation is that our confidence is really more in what we do control versus what we don't. And if you think about Graphic Packaging, and I'll go into to a lot of detail on this, we're just a fundamentally very different company than we were just a few years ago. Our innovation is wide and deep. You will -- [indiscernible] spend 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 is the backdrop. I'm 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 an adjusted basis is approaching $3. Remember, in 2019, when we talked to you about this, it wasn't even $1. 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 is a leader in sustainable consumer packaging. You all know that, and you really touch our products every day. So think about the cup of coffee you have in the morning or the cereal box that your cereal comes in, the snack you have at lunch, maybe a frozen dinner you eat 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 you're a U.S. consumer of almost any 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 7 years as we roll out our Vision 2030 here 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 as part of our Vision 2025. Think about the investment we made in Kalamazoo, Think about the investment we're making in Waco. Think about the investment we made in A&R. 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. The investments in people and capabilities, sometimes are much harder to see than the physical assets, but they're 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, that's an impressive customer portfolio by anybody's definition. The depth and breadth of that is really unmatched in the paper packaging world. If you take a look at -- really all the different segments we're in, we've trued those up now to really reflect the overall impact of A&R packaging at the year-end and what those sales are. So some of you may say some of those are slightly different. That's really what we did there. But our customers -- 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 a mere few years ago. I'm going to show you that translation from one side to the other as we transform 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 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, and if I do my job right, I'll probably hit it on about 5x is just how our portfolio moves with the consumer. That's a big part of what we purposely built over the last 7 years. All right. 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. Steve will come up in chat, but we've got 3 other speakers that are actually going to present today. The first one that's going to talk to you is Maggie Bidlingmaier. She is our Executive VP and President of our Americas business. So Maggi 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 Maggi's leadership. She'll talk to you about how we're building deeper relationships with customers than we've ever had before. And 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 in conversations with them because it was just kind of a bid-ask situation, not anymore. So Maggie bring that to life. She leads our global innovation effort. Ricardo works for her, Ricardo where are you? Right there, Ricardo, many of you know Ricardo. And so she'll actually give you a lot of insight and more depth into what we're really doing there too. We have Jean-Francois Roche also here. Wave your hand, Jean-Francois. Jean-Francois, I would challenge you to find a more knowledgeable person in terms of the breadth of experience he has in the European market than Jean-Francois. He is an expert in that market. He's chaired the ECMA organization for the last 3 years. So that's the European Carton Manufacturing Association. His knowledge around regulation in the EU 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 we'll bring some of that out for you and you'll be able to ask him a lot of questions later on. Look, Europe is a great business in and of itself. But what we really love about Europe is it's the most sustainable consumer in the world. So what that really allows us to do then is to take all we learn in Europe and export it all over the rest of the globe where we compete, including North America. The trends there is 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 of it much faster than many of our competitors are able to do. We think that brings real strategic advantage for us. Mark Connelly, is our newest member of the team, but he's not new to Graphic Packaging, certainly not to Steve and I. For the last decade, Mark has followed our company as an analyst. And I would also say, and I think Steve, you'd agree with me that 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. He's the 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. Mark can facilitate that town hall discussion with Jean-Francois. And we have Michelle Fitzpatrick up here in the front. Michelle leads our sustainability efforts. You'll get a presentation from her that will talk about all the different things we have to do to make sure we're compliant in terms of sustainability and regulation that's constantly evolving and changing. The good news is she will lay a plan out that you will be able to see that we actually have between now and 2032 to achieve all of the goals that we made for our -- science-based target initiative goals that will be out there today. I challenge you to challenge any other packaging company to drive a proposal or to lay 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 is -- you'll hear from the speakers on this is that not only do -- are we going to reduce the amount of greenhouse gases we generate, the amount of fossil fluids that we use, the amount of water that is used in our facilities. Ultimately, almost every product we make helps our customers meet their sustainability goals. I'm going to say that again, 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 ability to grow our volumes over the next few years and really be a key part of the consumer packaging 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 put out there to be greenhouse gas neutral or 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. 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 background in terms of the transition we've made over the last 7 years. Steve will come up later on in the presentation, and bring the 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 over the next 7 years, which is pretty exciting. Okay. Let's take a little step back. Look, 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 5 years now, and a lot has happened. If you think about it, it's really been pressure tested over that period of time. And for us, that really was an opportunity to kind of revamp our growth and our ability to actually compete and transform the company. And 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 and will 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 a review around this journey we've been on really since 2017. So if you think about 2017 for Graphic Packaging, who are we? I've been CEO for 1 year. 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 beverage in the U.S. It was more center of the store type stuff. We had a good position on recycled paperboard as well as unbleached paperboard. And we had a business in Asia that was principally focused also on the beverage business. We had high customer concentration. In our markets, we're also pretty large. If you think about beverage as an example, as a percentage of our overall customer concentration, it was quite high. There were starting to be 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. Our 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 through a cycle. And so that impacted our ability to really drive long-term sustainable shareholder value. Think about that for a minute. So what we were doing for customers was making a highly personalized branded product with excellent printing, in many cases, coatings, specialty thinning, unbelievable delivery terms. And yet in many cases, we were getting paid less because of the terms we had and the way the industry operated at that time than really what even a corrugated box was able to get, which is generic as it comes, right? So we had to change that. That was a key initiative for our company at that time. So we look inward. What are the levers that we could pull. We saw this trend around sustainability. We knew we had to invest in innovation. 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 portfolio move more with the consumer. We didn't know exactly how we were going to do it, but that -- we knew it needed to be done. And then we started doing some work as far back as been around what we thought would be a pretty interesting value creation idea for a large investment in coated recycled paperboard. And so kind of that is the 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 of options we didn't have then. And so it was a great transaction. I think IP would say it was great for them. It turned out excellent for us, key milestone for us. 2019, we rolled out our Vision 2025. And our Vision 2025 was broad in a lot of ways to be transformative and has exceeded our expectations in many ways. If you think about the financial goals that we -- targets we put out there, we've largely exceeded all of those and then some. I went through some of the results today. I think Steve, as an example, we had $2 for EPS, which obviously, we've well since surpassed. So a lot of those targets were done. We made real good progress on the other nonfinancial goals as well. But again, 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 4 main 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 sustainability movement, which was now starting to take place here in the U.S. too. Our speakers will talk a lot more about how we're doing that on Vision 2030 today, but that was a key initiative for Vision 2025. We had to realign our portfolio to move more with the consumer, which meant that we had to make some acquisitions of different businesses that would allow us to actually do that. We had to capture a more reasonable value -- for reasonable share, I should say, of the value that we are 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. But there were really 4 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 I think about Americans, they love mobility, they like being on the go. We didn't have exposure that drive-through window. We didn't even make a cup. So you put that all together, that created 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 was we put out a target as part of our Vision 2025 in terms of integration. And integration back when we laid out Vision 2025, kind of 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. There were 2 things that we were really looking for in terms of building out our business and how we want to invest in it. First, we wanted to acquire businesses and markets that ultimately move with the consumer different than what our core business did. The most recent example I can give you that is Bell. Maggie and her team have integrated that business now well into our business, but Bell brought consumer mailers. That was something we didn't have before. And if you look at the prior 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 internationally was prioritized. The best example I can give to you of that was AR packaging. It was an absolute home run 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. But they were excellent at driving innovation and had a lot of new products there that you're going to see as 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 2 things were really what we were looking for there. Our customer relationships had to change. As I mentioned earlier, we bring more than just basic design elements and manufacturing. That's what we were getting paid for before because that's what we were charging them for. But when you think about the security supply we bring, the sustainability benefits, the innovation benefits, our customers know that what we bring is more than just raw materials and freight. I had a boss one time who said, you don't want your product to be treated like the commodity, stop acting like it is. And that's 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. Maggie you go in a 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. Lastly, we saw a significant opportunity to generate an unmatched cost position in the most attractive part of the paperboard packaging market, and that's really the recycled packaging, CRB. And when you look at what we've done with Kalamazoo and the start up on that, it's been nothing but a home run. Our cost position is unmatched. The grades that we have come off that machine are 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 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 it. We executed perfectly, there were no mistakes. But there were some things that we learned along the way there that really have helped us. Of course, this is September 2019, we dealt with COVID kind of -- during that middle period of time. 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 2 or 3 things, too. So we had to scramble in many cases, to add resources back into the company, something we did. Those are resources that are now part of our business and part of our innovation engine that you'll hear Maggie talk a lot about. We also learned a lot of things during COVID. Some of them were just heard. 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 if you're a CPG is to have a stock outage. And our system had been optimized because for years, everything just kind of flowed nice and we were able to take costs down to the last penny, and our supply chain was long and expensive. You go through COVID. And then you add winter storm Uri 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 build a more robust supply chain. And for a company that prides itself in execution, we talk 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. Also during COVID, we saw these massive shifts in overall demand, casual dining went way down. And after about a month or 2, 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 [indiscernible] taking facilities down and optimizing our footprint to the point, our customers had some doing in that as well because they were pushing us for obviously, savings and things there as well, which is to be expected. But we learned that we 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 demand pulses that they have to deal with out there. And so you'll see us not have everything on 3 shifts, we're going to have some flex capacity that allows us to be able to do it. We're not going to run everything 7 days a week because it doesn't give us the ability to manage our business. We have 100 manufacturing facilities, and the balance on that will be reflected there. Sure, we'll have some that run 7 days a week, 365 days a year. But there's going to be a number of them that have that flex capacity. We also learned some things by spending $700 million in Kalamazoo essentially making and creating a brand-new mill. 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 take a bunch of costs out and drive a lot of really top line product through the marketplace, and we're uniquely positioned because of the concentration we had with our Midwestern manufacturing facilities of paperboard. But what we really found -- we got those savings, but what we really found there was the grades and the quality coming off that particular manufacturing process is just superior to anything else that's out there. You've heard us launch Rainier. Rainier is not even in a lot of the numbers you're going to see today. I think it can be bigger than many of the innovations we have out there. It will compete with the very best paperboard out there and SBS is an example, the brightness, the coding characteristics, the smoothness, it's fantastic. And we've got some early wins there. Maggie will talk about that when she's up during her conversation. The point to make that around integration, though, and this is an important point to make, is integration for Graphic Packaging is a bit nuanced, and this is important. If you think about what we're doing in Kalamazoo, and you think about what we're doing in Waco, if we have the opportunity to really grow with customers and generate excellent ROIC and consistent returns for shareholders, we are all in on integration. I'm going to say that again. We are all in an integration when it makes sense, consistency results in higher ROIC. However, when we don't have a path to do that, like I just outlined with Augusta, then we're better off putting that capital somewhere else. So you'll see us put our capital where it will get the greatest return for shareholders, hard stop. So you're not going to hear us talk a lot about our integration rates anymore because we're really focused on our end-use markets. We're a consumer packaging company. 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 the form of -- if you think about A&R packaging and that acquisition we made, for a minute. We got a lot of questions from a number of people, "Hey, you guys are going to integrate with AR." And Steve and I answered it this way, at the time when we acquired that, we said, we have no plans to immediately do that, but over time, it could be -- provide some optionality. The reality of it is, is as we've gotten deeper into this, and we've watched our European business, which generates outstanding results and excellent ROIC, we don't need to integrate that business right now. And it doesn't make sense. 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 points 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 actually generate returns for investors and shareholders over the long term. And that's really why you want to buy a company that is constantly learning in that regard, and that's Graphic Packaging. So I want to talk a little bit now about the company that we've actually built from the inside out. And I think if you look at the left-hand side, I think it's -- yes, on the left-hand side that you're looking at there versus the right-hand side back to 2017, it's a completely different company. Look at that for a minute. Look at the different segments we have, and I talked about that march we were on and why we had to build the company out the way that we did. Our market participation strategies have 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 from acquisitions, some of it came from innovation. We averaged about 2% sales growth over that period of time in 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. And it's really, really 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, we'll 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 QSR operator and you have 7,000 stores in the -- in North America. You're probably going to do business with 2, maybe 3 packaging suppliers. That's it. You don't want to do it with 27. Why? You can't control the quality. You can't control the materials there. And we have the breadth and investment 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've built over the last 7 years and it's really going to be on display over the next few. So let's talk about what we're doing and why. 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. And that's just -- as you look at how that all kind of comes together, I'm going to introduce you 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 all around innovation. You're going to be a global leader in consumer packaging. 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're the very best. Our Vision 2025 laid 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 3 targets for this one, and they're ambitious. The first one is 2% of our annual sales growth will come from innovation. We've done that over the last 2 years. You think about 2022 and you think about 2023, both those years, we grew over $200 million in innovation sales under 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 2024 to deliver the $200 million is high. If you think about the selling cycle for us, many of those things are already in the queue. And so we know exactly what they are, and they're flowing through. And Maggie will talk about that in her prepared remarks a little bit as well. Look, every new product we make needs to be more circular, functional and convenient than the existing product that it's replacing. This is nuanced too. I mean there are certain things from a material science standpoint that obviously 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 functional." They just won't do it. They won't put their customers into that. So that's kind of 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 will put out there is that our multigenerational portfolio is really iterative to. And what I mean by that is if you think about things like KeelClip as an example, that product started over in Europe with carbonated 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 those applications. Our Boardio product, which you saw out there started with infant formula. And now it's gone to confectionery, gum, you see the Mentos out there as well 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. Culture. Look, 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. This is among my highest priorities as the CEO. We've set forward targets for this one as well.

Good morning, everyone. I'm very excited to be here today to share with you information about the innovation capability at Graphic Packaging. As Mike just mentioned, innovation is a core component of our Vision 2030. And after my discussion today, I hope you have really 3 key takeaways. The first is the demand from consumers for more sustainable packaging is accelerating. Secondly, our innovation -- our global innovation capability is competitively advantaged and ready to meet that opportunity. And lastly, we see a $15 billion sales opportunity for paperboard packaging, which gives us confidence in our path to a 2% growth in innovation to achieve our vision. 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 to dramatically expand our global product and our customer portfolio. We work with the leading companies and brands around the world. And with them, we meet consumers in many of life's everyday moments. We have a great responsibility because our consumer packages are at the interface between our customers' products and the consumer. We have to deliver on a product that meets those consumer needs while also delivering value to the brand owner. Our packaging meets consumers whenever and wherever they consume while also providing convenience, freshness, safety and a host of other functions. We understand there are 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 packaging and 68% of them view that paperboard packaging is more sustainable than other alternatives. 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. This is increasingly true for the next generation of consumers. A recent first insight shared that an astounding 73% of consumers and Gen

Okay. Let's get started. So I'm Mark Connelly. I'm with Jean-Francois Roche, who is our Head of International Sales at Graphic Packaging. Jean-Francois spent most of his career at AR Packaging or Graphic Packaging. He's also, as Mike said, the Chairman of the European Carton Manufacturers Association. So welcome Jean-Francois.

Thank you, Mark. Good morning to everyone. Good morning to everybody on the webcast and [Foreign Language] If there are any French speaking person in the audience or on the webcast.

So what I'd like to do, Jean-Francois is start off, which is, give us an overview of the European business and where Graphic fits in?

Yes. Thank you, Mark. So in Europe, we're roughly a -- So in Europe, we're roughly a $2.2 billion in the paperboard market which is in the range of $15 billion. If we look at the total consumer packaging market. I think the size of the European consumer packaging market is in the range of $100 billion. So this gives us plenty of room to grow. We operate in 18 different countries, which include Indonesia, Australia and New

So when you think about the difference between the U.S. business and Europe, we have a very well-established health care and beauty business in Europe, relationships with all of the major pharmaceutical companies there and, of course, a much smaller foodservice component than we have here in the U.S. Jean-Francois, you show us the sales progression, and it was looking pretty good up until 2022. But can you give us a sense of what recent performance is going on there?

Yes. So if we step back a bit and look at who was the market before something called COVID happen, it was pretty much straightforward. And I know it's a European view of the things. But for Western European part of Europe, we were looking at GDP growth and somehow the market was performing like a clock on the GDP growth. If we look at developing countries in Europe, which was more the Eastern part, because of the way the market was getting structured, we were looking at twice the GDP growth for the market development. Then 2020 happened, COVID came on stream. Consumer behavior went all over the place. Petro-polymer substitution started as well at that time. So you can see on the graph, the market went up pretty dramatically, specifically in 2022. That was driven as well by further things because we saw finished good stock increasing raw material stock increasing because people were wondering, we have seen our customers as well, increasing the good stock from 6 to 9 months, and then we -- the price went up a bit, and we were just wondering at the end of '22 when the pendulum will bounce back because that's the way it works. So in beginning of '23, we saw clearly -- we saw some resilience in the first quarter, but then we had to unwind all what was in the pipe. So in '23, the performance of the market was in the range of minus 7%, minus 8%, but that was compensated as well by innovation and what I would call petro-polymer substitution, which is the beginning of what I will discuss later on, which is the packaging and packaging waste regulation. And that brought a bit of bonus to the market. So we end up in the range of minus 2%, minus 4% on the total market. For '24, I think we just consider that '23 will be the base, and we go back a bit to the basic. So I looked at the number from the European Central Bank, what is the forecast of GDP for '24. It's roughly 0.91%. So this is how the base market will evolve, but we see a strong -- strong trends still on innovation and what I call the petro-polymer substitution. And we believe because as Mike said, we have a pipeline which is already filled. We believe that this will drive a 3% to 4% growth. So we are fairly confident about '24.

So Jean-Francois, you spent 24 years at AR Packaging, you left, then you joined -- later you joined Graphic Packaging, then Graphic Packaging, bought AR packaging -- so there's probably nobody out there who understands the impact of AR Packaging on Graphic better than you do. And I know that when I was sitting out here in the audience, I didn't really appreciate the impact. So can you walk us through what the real impact was?

And this was all planned, by the way, when I moved to Graphic. No. So before we went through the -- we made the acquisition of -- in '21. We were the third operator on the market. We were operating through 14 different converting facilities. We were operating in food, in convenience and in beverage. We were quite successful on the beverage -- on the beverage side of the business. And we were what I said, embracing the European channel between U.K. and the rest of Europe and as well the Iberian Peninsula. And then we made the acquisition of a company called [indiscernible] and that was -- we were adding 30 facilities. It was what I call a game changer for us. We entered into new markets, which were health care, duty and household as well. We entered into new technology. We enter into paper canister, we entered into [indiscernible] technology because they had a flexible division, which was highly knowledgeable about [indiscernible] technology. And just for the history, this is where Tetra Pak was developed in 1968, but they had an immense knowledge in [indiscernible] technology, which is being quite a loss right now. And they -- as well, they had a good knowledge of finishing capability because of the beauty market and as well of security device on the health care market. So clearly, that was a game changer, and then we supply no multinational customer, regional customer, local customers across 50 different countries. The good about that merger is that there was very little overlap on the customer base. And when it comes to the footprint, it was perfect nearly a perfect match. So it was something which was really good, and we became #1 on the market in Europe after that acquisition.

So Maggie talked quite a bit about changing customer relationships, and it's been less than 2 years, but how our relationship starting to change in Europe?

It's a very interesting point you made. So I remember right after the acquisition, so I stepped back to my choice of [AR] I want to meet some of the large health care and beauty care company in Europe. And I had a bit of cold feet the first time I met them because they told me, why do you care and what are you doing here? -- where does that make sense? And I said, guys, so we take time to listen to their expectation, to understand the market trends and to set up the strategy. And we moved radically our position with those customers because for most of them, we are seeing the partner for the future. So it was a very big change in the way they were approaching us...

Over period of time.

In a relatively short period of time as well, one thing which is a bit unique and Mike was involved not lately, we have been chosen by Danone. We are 1 of 5 suppliers worldwide, which will help them to drive their transition and their strategy towards packaging, which is quite of an achievement. It is what we call a joint business -- business development plan. And I just recall one thing which was said by my friend, who is the CEO of Danone and the CEO made echo on that when he said, even though you are a large multinational company, you have kept an entrepreneurial pivot, which is a bit unique, and this is what we are looking for. And that was a bit of a complement as well for us. So we were...

You said 1 of 5 suppliers or 1 of 5 packaging companies...

5 suppliers worldwide.

Not -- so how many packaging companies are on that list of 5.

None. We are the only one. And then one thing which has changed a bit dramatically. And so we have seen the number of applications for people to join the company, increasing dramatically over the last 18 months. And then you just wonder because are we becoming attractive because of we are #1? Are you becoming attractive because of all the amazing innovation we are launching on the market or it's just because you want to be a bit selfish, -- you're getting a lot attractions because of the amazing management that we are in Europe. And I suspect it's a bit all of that. And it's really something which has been -- which is a very big change because it's coming not from one specific company, but the number of applications we had from the industry was -- is clearly interesting. And we have taken on board some people because at the end, it's all about people, and it's all about talent, and this is what makes the company successful.

So as Chairman of the European Carton Makers Association, you're right in the middle of all of the regulatory swirl and there's a lot going on. What is the most important thing for investors to be thinking about in terms of European regulation right now?

Yes. I think that's just -- so let's just talk about the green deal, and I won't go into the detail because it's rather complex, but it's something which is made out of 11 initiative, and you have a lot of [indiscernible] initiatives, law regulation directive, which will be set. But the aim of the green deal is to aim for carbon neutrality by 2050 in Europe. By the way, some of the large food and consumer goods company in Europe are already aiming for carbon neutrality on the Scope 1 and 2 emissions in 2035 or in 2040. But let's focus on the 6 which are on the screen, one back Yes. So let's focus on the 6 which are there. This is what will have an impact for our industry. There are 6 out of the 11. And out of the 6, we will just focus on the one, which is what we call the packaging waste regulation, okay? That's the one which is important for you to understand. So where are we right now on the packaging waste regulation? There -- we have had several iterations about the law and what would be the implication. I think what you have to understand, there are 3 governing bodies in Europe. One is a commission. The other one is a parliament and the third one is a Council of Europe. They have all had a sort of different appreciation of what should be the packaging waste regulation, and they have entered right now into a dialogue because they want to issue one common text, which will be voted in the April, May of this year. And as the parliament is due for re-election in June. And as the actual president, [indiscernible] she has applied to be reelected, there is a lot of pressure to get that thing through. And we won't focus on the headwind and on the tailwinds because it's a bit too complex. I will just ask you to focus on the green box because it's a bit more simple. So on the consumer packaging, what would be the impact on the consumer packaging, it might have a bit of headwind impact because of reuse and the recycle, which is involving in the packaging waste regulation. when it comes to the paperboard industry, for the paperboard industry I think it will be modest tailwinds because of the inherent -- I did it well, that was -- benefits of fiber-based packaging compared to plastic. And as us, as a company, I think it's a great tailwind because we are an innovation provider in packaging and in fiber packaging, and this is what the packaging waste regulation will drive. So I am extremely confident about the tailwinds.

So the regulation for us is a tailwind. AR 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?

No. Not at all. And we as I said before, 2023 was an expected reset because we know that the market end of '22 was a bit over speeding, if I may say it that way. And our sales were up on the innovation by nearly 3% to 4%. This is what I said for '23. So we are still very confident for '24. And as well, if we look a bit long-term objective, 3 to 5 years, we know that 70% to 80% of our growth will come from innovation and that's what give us a bit confidence. And there is one noticeable things to change that we have noticed across several multinational company. Normally, large multinational company are slow in innovation because of who they are, because of their processes, because of what made them. It's a bit something which is -- and I recall a discussion I had one upon the time with a CEO of Kellogg. He put his mobile phone on the top of the white board because he said any breakthrough innovation would never come to my desk because of who we are. And I think the large multinational company have understand that. And there is a clear change in the way people address innovation. Top management is involved because they want to get it done. They don't want it to be a 3, 4, 5 years process, as Maggie said, they want it quick. And that's a major shift in the way people are addressing innovation. Just some highlights about what we have done in terms of innovation lately. So KeelClip started at the right time in mid -- just at the beginning of COVID, we cannot hit a better date in Europe, and it became extremely successful. I think the capacity we have installed today in Europe, in terms of -- is in the range of 300 million, 3.5 billion packs. This is what the installed capacity we have on the machinery side, and we have seen a very strong type performance in KeelClip. It's something which is now developing in North America. So we see great traction. It is a bit what we discussed. It was launched in Europe, I know it's -- it moves to North America. PaperSeal was developed for the retail industry in early 2020, to replace CPET trays. And we got great traction, inflation then came, then we have to rework a bit. And then we have developed a new technology, which is called PaperSeal Tray, where we have seen amazing demand in Europe, and we see as well a lot of traction on the North American market, as well and with that technology because it's CPET tray replacement. Boardio, as Mike said, and as Maggie said, was developed for infant nutrition in Europe for a customer called Danone because it's public knowledge. And then it was reiterate, we developed it. And clearly, we have seen a unexpected traction on the U.S. market on Boardio, you have seen Mentos, you have seen Club Coffee. I don't want to make any teaser, but you might see many new things soon, if I may say it that way, which is clearly because it's a replacement to blow-molding technology. So we are getting great traction. And then we launched with Unilever, this childproof solution for the pods in Europe. And it's -- because it's Unilever, it was a large launch in Europe, but they are expecting to launch that product worldwide, which will give us the capability as well to manufacture that product because of the network we are having a bit all across the world. And we are getting traction with other customers as well in North America. What I want to say is that when I look at the pipeline of opportunity, we are having, sometimes as I'm wondering when I see the volume. I'm just scratching a bit my head because I have never been exposed and you have to be balanced in what you promise because the opportunities are so big that you want to be careful. But, it's something where we are fairly confident. And what we try to do at the same time, it's to manage the resource in an appropriate manner because when it hits the ground and when the things go, you better be ready to manage the growth of the innovation. And I just want to make the last comment on that slide because I have had that before. When we talk about petro-polymer substitution in Europe, some people think it's a myth, I was right, because...

Myth is good.

If you understand a myth, it's different. And I just want to tell you, KeelClip was shrink replacement. PaperSeal is CPET tray replacement. Boardio is blow molding technology replacement. And what we have done with Unilever is rigid plastic replacement. So it's just the reality of what's happening right now and which is driving the innovation.

Jean-Francois, switching gears a little bit. Every couple of days, the Wall Street Journal has a story that says that sustainability is over. 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 and saying, even Europeans have figured it out, this stuff just costs too much. So have we seen our 15 minutes of fame for sustainability? Are we on to the next thing?

Yes. So I -- Just a small adjustment. It's not the French, it's a French, it's the German, the Italian, the Spanish, the Czech and the Polish. And they are not -- because it has been a bit noisy in Europe. And they are not -- they are not against the regulation. They might have some questions around the pace of the regulation but not -- because the understand that certain things have to be done. I think if you look at the demonstration, they are more about the fairness of the regulation because what's happening today is that you can import goods from outside Europe, which are not under the same regulation. So they feel a bit disadvantage. So that's the first point. So I don't see that as something slowing down. Then when you deal with multinational company in Europe, and I can guarantee, I live with that every day. The first thing is you have to be competitive. The second thing they ask you is what is your ASG strategy and capability. The third thing and it's by order of important. The third thing is what are your innovation capability and how can you help us to - to match what the market is demanding. And the fourth one is the market -- your capability to supply the market. Those are the key elements which are in any discussion you are having in Europe. And if you are not able to take all of them, then you -- you are a bit gone. And then if you look at the top 10 food multinational company in the world, 5 of them are European based. And it's in the DNA. I live with that dichotomy every day between what -- how much we are pushed from those companies in Europe, and I might see the difference as well from North America. And I don't see any reason for them to slow down on that process. And I will even say what I feel, especially if the packaging waste regulation is coming into as a law, it's my conviction. The large multinational company will push because they believe that at least the European -- they want to be sure as a virtuous company. They understand that it's part of their brand equity, and they further understand that is what customer wants.

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

Yes. You just wrap it up in a way that I would never have been able to do so -- you are spot-on.

All right. Well, unfortunately, that's all we've got time for. So next up, we're going to hear from Michelle Fitzpatrick, our Chief Sustainability Officer.

Thanks, Mark. Good morning. 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 2030. 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 -- an integral part of Vision 2030. It starts with first understanding what that global landscape looks like. What are those external sustainability trends that have the potential to create both opportunities and challenges for consumer packaging. And as we look at that, we see 4, actually, I said 3 before, or major goals that are really where we see there's the potential to create impact on consumer packaging. The first is population growth. Talked a lot about people want packaging. Well, we're going to have a lot more people on this planet in the very near future. 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 in 2030, and that's going to grow to 9.8 billion people by 2050. That's a lot of people. And not only are we going to have more people, but we're also seeing growth in socioeconomic status. So the middle class is getting bigger. And those people are moving from rural 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're produced to where they're going to be consumed, and that means we need more and better packaging to safely get those products to those consumers. And as Maggie laid out and Jean-Francois has laid out our stakeholders, our customers, the brands, the regulators, they're all taking action in response to these trends 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. I got to have a sip of water. Okay, so our promise in how we think about sustainability. You've heard Mike share our purpose statement that we package life's everyday moments for a 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 through taking action in our 3 pillars that you see up there. We're creating better packaging by innovating our packaging and our manufacturing operations to drive out waste, improve recyclability and circularity of our packaging and really fuel a circular economy. 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. And we're creating a better future for our planet, by taking action to mitigate climate change 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. And as we do this, we've got a really good plan in place to achieve all of our goals in each of those 3 areas. And we've laid it out so that step by step, we're going to make life's everyday moments better every day. Okay. So how are we going to do that? You've already seen like lay out for you, our Vision 2030 plans, along with 3 impacts of better packaging, better for people and better future. And when we think about this, not only are our goals tied to delivering against those 4 global sustainability trends we talked about. They're also embracing and addressing some of the broader societal aspirations for us to have a more fair and just and equitable society. And they are underpinned by our commitment and our long history of operating it with integrity and with responsible business practices, and they're reinforced by our commitment to the United Nations Global Compact to implement the 10 principles of the Compact that address human rights and protection of the environment into the way we operate and also to help do our part to advance the goals of the United Nations, like the sustainable development goals. And I hope that you can see the connections that we have to our contributions to those UN SDGs come through in how we've mapped our 2030 goals to where we can drive impact. And where we think we're going to deliver the most impact is with 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, climate change and life on land through our better packaging and better future goals. Mike, Maggie and Jean-Francois have already really laid out a good road map for you for better packaging and better for people pillars. And I'm going to be spending my time with you today talking about how we're going to bring our better future goals to life. 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 just want to share a few milestones. We're really proud of the fact that in 2021, we joined as a participant to the UN Global Compact, really solidifying our commitment to embrace and act on those principles. Last year, we delivered on our commitment to have set new science-based targets and have them validated by the science-based target initiative. We're very pleased that our progress has been recognized with favorable ratings by MSCI, Sustainalytics and ISS, and we are committed to continuing to assess our progress and transparently share how we're doing through participation with organizations like CBP and EcoVadis. Okay. So now let's dig in a little bit, pivot our conversation and talk more about our better future platform. And through this, just spend a little more time on our climate goals in particular and help them come to life for you. As we think about our better future pillar and our forest goals and our climate goals. The great thing about them is the way that we've structured them, they're going to touch packaging at every single point in the life cycle 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 or recycled materials that go into the beginning to start that circularity engine from the very start. Then we're going to look at how we optimize our manufacturing operations to make sure that we're using resources efficiently, the 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 be 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 the brands and the retailers that 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 we kind of get back to our forest goal that the packaging that we purchased to ship our packaging products into, has to be just as sustainable as the packaging we produce. And then lastly, when 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 and take it back so we can close that loop and drive the circularity of fiber-based consumer packaging. The paper-based packaging is a great story, roughly 80% of paper-based packaging in the United States and Europe are collected to recycle today. And once collected, that packaging has 5-10 lifetimes, that can be recovered and recycled. And that is just something that is just amazing. I mean a paper-based packaging has the highest recovery rate of all packaging materials, more than aluminum and metal packaging, more than glass and far more than in plastic packaging. So we are really invested in making sure that our commitments to put facilities in place like Waco, to further drive the circularity make sure that we can take back even more complicated types of packaging and reprocess them and put them back in there and just continue to close the loop and fuel the circularity of paper-based packaging. Okay. So now let's talk more about climate. When we think about how our commitment to climate action is, we're looking to reduce our carbon footprint, and we're going to do that in a way where we are reducing our greenhouse gas emissions and increasing our use of renewable energy. And if you look back to where we've been, we've had climate goals for quite a long time. Our original goals were set in the 2016, 2017 time frame. They are intensity-based goals, which were the right goals to set at that time, we achieved those goals 3 years early in 2022, and then we followed up with that by delivering on our commitment to set new science-based targets and have them validated by the science-based target initiative. So that the world could see that, yes, these are the right goals. They're in line with what's needed and we're doing the right thing. Now 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 1 and Scope 2 emissions by just a little over 50% by 2032. And I know 50.4% is a weird-looking number. That's all about a 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 3 emissions, emissions 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 emissions by 30%. And then through that process, we're going to look to increase the amount of renewable energy we use, both in the fuels that we source, as well as the efficiency that we purchase for our operations. Okay. So I heard finance people really like a waterfall chart. So I decided to put it in a familiar format as I break down for you our decarbonization pathway for our Scope 1 and 2 emissions. As we think about how do we approach that? Because 50% reduction between now and 2032, 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 that about 60% of our Scope 1 emissions come from using fossil fuels in our paperboard manufacturing facilities. I mean, we've done a lot of good work to decarbonize those operations don't get me wrong. I mean they're currently at about 75% renewable fuel, but we still -- 60% of our Scope 1 emissions, or combined Scope 1 and 2 emissions come from burning fossil fuels. So that's a big target we got to work on. We've got a lot of very talented engineers in our manufacturing division and they went to work and they came up with 3 very great projects. And those projects are going to take us from using 75% renewable fuel in our wood fiber paperboard manufacturing facilities to 90% renewable fuel between now and 2032. So that, combined with the natural grid greening that we're going to see just as the world around us gets greener between now and 2032, is going to get us 70% to 75% of the way to our 2032 target. So we're almost there. Where do we look next? Well, our next largest source of emissions comes from our scope 2 category, and it comes from our purchased electricity across all of our operations. And that represents about 30% of our greenhouse gas emissions. So we look at transitioning half of that to renewable electricity and wrap that up with modest year-over-year energy efficiency improvements in our operations that gives us a clear line of sight to hit our 2032 target and achieve that 50% reduction. So I'm not sure you're saying, Michelle, that's all great. You've got a road map. But what is that going to look like? And how is that going to play out over time? So let me show you. Right now, we are busy completing the construction and startup of our Waco facility. You've heard a lot about it. But while we're doing that, and we're laser-focused on getting -- keeping that on schedule, getting that built and up and running, our engineers, they're working on the engineering design, they're working on the front-end loading. They're working on taking those 3 projects that they've identified to get them into the queue to start executing against them once we get post Waco. And 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. I mean how great is that? 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. So you can't ask for anything better than that. And then on the same time line, while we've got my engineers working on the capital plan and the capital execution for our 3 projects, our procurement teams are actively working on trying to identify attractive renewable electricity projects. And given that it takes a lot of time to; one, identify them and then enter through the contract phase and then the permitting phase and then the construction phase because we don't want to just take annual RECS 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 they are truly removing emissions and not generating -- 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 we'll start to see the benefits of those projects along the same time line as our capital projects, which shows acceleration of emissions reductions following Waco in sort of the second half of our period here. All right. So we'll move on to Scope 3. And just for your benefit you have another waterfall chart -- same approach that we followed when we looked at our Scope 1 and Scope 2 pathway starts with understanding your current footprint. And when we look at our footprint for Scope 3 emissions, there are really 4 categories where that really stand out as our largest sources of Scope 3 emissions. One comes from all the purchased goods and services that we buy every day that we need to make our products. The second 1 comes from transporting our packaging products to the brands and the retailers so that they can put their products into it and then ship it to the consumers. The next 1 comes from what happens to our packaging at the end of life when the consumer is done with it. And the fourth category comes from the upstream emissions that are associated with all of the fossil fuels or grid electricity that we purchase. So the nice thing is that if we execute well against all that Scope 1 and Scope 2 projects we talked about just now, that automatically will reduce that bucket of emissions for those upstream emissions because we won't be buying those fossil fuels in that dirty grid electricity anymore. And then we get to the other groups, our procurement team, they are actively at work, working on their maps to understand where are the hotspots in our category 1 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 to reduce their emissions, and then help them reduce their emissions, which then benefits us. And same thing is going to happen with our transportation network. We're going to 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 that are then going to help us get our packaging, consumer packaging shipped 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 cups, in particular, are not recyclable today. I don't know why this urban myth continues to persist. But I was in Starbucks recently -- I mean, at the Starbucks R&D Center recently, not even just a Starbucks, but at their R&D Center recently, where they are developing their new reusable cups. And I said, "Hey, this is great, but there're just times when consumers are going to want 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 partnering to recycle them." And the R&D engineer at Starbucks told me paper cups are not recyclable. And I'm like, what? You guys are in Seattle. Seattle is one of the first cities 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. We're actively working on doing this to be able to increase cup recyclability and acceptance and bring them back and be able to transform them into new packaging in our Waco facility, where even better is that, when we do that, we can create beautiful packaging that uses fewer materials because we don't need as many coating materials on the top surface of the packaging. And that's going to get -- so when we look at all those 4 things together, that gets us about 70% to 75% of the way to our Scope 3, 30% reduction target. So we do have a little gap, and we have some ideas right now that we're working on and 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, then we have less waste that we have to deal with. The second gets to the waste, okay? We do a really great job today recovering and repurposing and 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? And then the last thing we can think about doing that we're really looking into right now is how do we get more recycled content into our unbleached and bleached paperboard and increase the recycled content there, all getting back to that consumer need or desire to want to have more recycled content in their paperboard. And we're convinced that with all of our very smart and talented people working on this, that we're going to close that gap and hit that 30% reduction by 2032. So with my last slide, I just want to bring us back to full circle. We're talking a lot about consumers and what the consumers want in 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 goals. The plan that 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 3 emissions and helps them achieve their net zero greenhouse gas targets that many of them have set. And in addition to all of the work that we're doing to provide them packaging, that is more recyclable, has more recycled content and meets all their expectations around what they're trying to do to make their packaging more sustainable. But it's even more than just helping our customers achieve their goals. It's helping our customers meet the end consumers' desire. Their desire is to have more functional packaging, more convenient packaging, packaging that comes with a lower environmental footprint and packaging with less plastic. So 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, Chief Financial Officer.

Thank you. Thanks, Michelle. Great to see everybody, and thanks for taking the time to join us today. We've covered a lot, as you would expect us to, including some new things that I want to touch on here in just a moment. Mike did a phenomenal job of, of course, laying out to the transformation of what we have become as a global consumer packaging company and the path forward for us to continue to execute on that with Vision 2030. I think Maggie, Jean-Francois provided 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. 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's investable. And I 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 touch on last night, Mike touched on it, Augusta. We're very pleased that we're entering into an agreement with Clearwater Paper for them to acquire our Augusta bleached paperboard facility. It's a facility, as you know, about 600,000 tons of capacity as Clearwater Paper indicated. It's operating today at roughly 70% to 80% of that. 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. Importantly, on a pro forma basis, and this is as important as you're thinking about what we're about to share in our financial model. Post the Augusta sale, that's kind of the company that we are, roughly $8.8 billion, 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. So we'll kind of start there, great balance sheet, 2.6x levered, this assumes we take the cash provided from the divestiture and put it against debt. And that's the business upon which we'll grow, and I'll share those financial metrics with you in just a moment, but it's important. Very important inside of that pro forma, probably the last time I'm going to use the word integration with you ever because this is a 90% integrated business, and 95% of our sales will be products that you, as a consumer, interact with. A 6-pack, a 12-pack, a cup, a bowl of canister. It's the products that we utilize, 95% of the company post the Augusta transaction. Let me touch briefly on the results. You've seen them. I won't overdo this. Yes, it had all the challenges of a year, all the things we saw, destocking and all the activities, 3 quarters of down volume growth quarters 2 through 4, but the business performed at exceptionally high level during that period of time. We're working with our customers to get paid for the value that we create for them. Margins increased 300 basis points. And as Mike mentioned, we're off to a good start this year, and it's important because pivoting to -- back to organic sales growth in 2024, which we're confident we will do, is important for us because that's how we'll earn on the model that we'll talk about here in a moment. 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, year is 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 actually up modestly. And most of the headwinds that we felt through destocking, inventory management and the like, occurred in quarters 2 through 4, which gives us confidence that we'll return to organic growth as we pivot and take advantage of the innovation pipeline as well as return to more normalized inventory management at our customers' levels and at the consumer level. You've seen the numbers. You've seen the financials. I won't overdo these. At the end of the day, top line for the business, relatively neutral significant execution on getting paid for the value that we create for our customers. Volumetric growth down a few hundred basis points. 20% EBITDA margins, those are margins that we aspired to several years ago and 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 is in a good spot, at 2.8x levered, and margins, very, very strong coming out of the year. So execution worked, and it worked in an environment where we were very actively matching supply and demand. So if you stand back from it, we ran our manufacturing facilities to match the demand of our customers. 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. Let me touch on guidance. We've provided guidance, adjusted EBITDA, adjusted EPS, $1.75 billion to $1.95 billion on the adjusted EBITDA. All of this, of course, assumes currently the Augusta 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. Adjusted EPS in the $2.50 to $3 range. We provided the normal -- some additional modeling stats for you. It's there. I want you to have that in hand. 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. This is absolutely peak CapEx for Graphic Packaging. It will be driven down from here, and we'll talk a little bit about that in a moment. Just briefly on Q1, we're obviously actively continuing to manage and balance supply and demand. And kind of look through the first quarter, the open market paperboard sales that we have today will be down on a year-over-year basis, probably $60 million, $70 million or so. 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 million, $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. And we feel very good about that. We'd like the start that we're off to with our consumer packaging volumes returning to more normalized levels, and that kind of sets the stage for the year that we're looking forward to have. So let me drill a little deeper on the results side. As Mike said, and he said it extremely well, results are actually quite wide. This is about our people, our capabilities, who we are as a company, the impact we're having on society, the impact we're having on our customers. 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. It's critical. Moving with the consumer is an imperative for us, and we have the portfolio to do so. And that's vital for us as we look forward because we've got this great balance of consumer staples products. We're in your life every day, eating, drinking, enjoying the home, life that you have, being on the go, we're in your life on a staples basis, on a day-to-day consumption basis, which gives us incredible stickiness on the volumes and the capabilities of the business. And so let me drill down a little bit here for you with something new. A lot of arrows here. What you're going to hear us talk a very different language as we kind of move forward with our business. We're going to be talking to you about how are things going in the food market? What's happening there? What's happening with beverage? What's going on with the consumer on foodservice? What's happening with our household business? And so this is going to be a new disclosure. It's going to be a new conversation for us with you, which is what's going on here inside of these markets? And let me give you a couple of examples. 2022, talked a fair amount about it. All the arrows are up. By the way, up is greater than 5% growth of sales, sideways 2% to 5%, sideways this way or up this way 2% to 5%, diagonal, plus or minus 2%, the opposite direction on the red, pretty straightforward. 2022, beverage was up over 2% to 5%. 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 2023, there's a little bit more of a normalization, it's our ability to articulate to you as an investor, what's happening in this business? Talk about food for a moment. First part of 2023, pretty solid. Volumes are hanging in there. And then we kind of went through the destocking, and it showed up. It showed up because volumes came down quarters 2 through 4, more than offset the pricing 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 work through on food. Beverage, it's a great business. It's a business that continues to grow, grow globally, all the innovation activities that we talked about and really throughout this growth up, but a little neutral in '23, pretty well chronicled actually in terms of what was going on with at-home consumption, which is where we play in beverage. And so yes, pretty neutral. Foodservice, it's a franchise. It's a phenomenal business. It's on-the-go consumption. It's innovation. It's our cups. It's you driving through the drive-thru. Up consistently, and up again here in the first quarter of 2024. Household, think about that, things like laundry detergent. Think about filter frames, think about pet food. We don't put pet food in the food. We put it down in household. Everybody bought a pet in the 2022 time frame, we didn't fall out of level of our pets, but we didn't buy as many treats. And so we actually saw a little bit of activity on our household business. And so a little bit less growth. Okay, got it. It's kind of played itself out to withdraw, 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 Jean-Francois said, we've got a great health care and beauty platform that came with AR 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 was really 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 this. And this is the business we are because when 95% of our sales are basically making products into these markets, we need to be able to inform, provide confidence that we're winning in these markets with examples, so wanted to take a little bit of time on something you're going to see us talk more about. The base financial model for the business. Post the sale of Augusta, we have the business we need to have in hand today to execute against this. We have the business. We've been building it through the investments we've talked about, Kalamazoo, Waco, AR, Bell, investments in people, capabilities, talent, value-based pricing, all of those things have come together to create a business that we believe, going forward, can keep it simple, grow the top line consistently low single digits, a couple of hundred basis points of growth inside of that, make that work year in and year out. 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 significant EPS growth, high single digits. 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 of CapEx migrating to 5% of sales, which allows us to invest for growth in the business to grow at those levels, and that's very important. And we'll get paid for the value. And so let me just walk through these a little bit with a little bit more. So low-single-digit top line, it's right there. It's right there. Maggie talked about it. it's a $15 billion addressable market. And this isn't a TAM that some number that's developed off of some very [indiscernible]. Though these are identifiable real products that exist today. They're in the market. They're in an alternative, and we believe that there -- the environment where we will create solutions that we already have that we will apply into these markets. And if you look at this, I think one of the most powerful things about this, particularly as Mike was telling our journey going back, the history going back to '16, '17 really only thought about Graphic Packaging as a serial box and a 12-pack. That's how you thought about the company. And now trays, bowls, cups, containers, canisters. 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. I didn't even talk about Rainier, which Maggie did a phenomenal job of talking about, that's incremental beyond that. We're in early days. We couldn't 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 that we can apply in places where it just hasn't been able to win in the past. That's powerful. So going back to this and the simplicity of it,in 2025, we set an EBITDA margin target, 18% to 20%. It 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 Jean-Francois have talked about in their comments. And we got there. We got there through value pricing, M&A, all the good work that we've been executing on. Well, now we're in that margin

Well, thank you, Steve. I really thank you all -- I took this off. I don't like having a mic on when I'm not talking General Counsel advises against it. SP999 There we go. Look, now is the part of the presentation where I'm usually supposed to say, "Boy, I hope you're 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 7 years. And that 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. 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. That's a big shift from where we've been in the past, and a big shift from many of the conversations that 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 we'll package again in the future for them. Look, we package consumer staples. We do it well, and we get paid for that, which means, as Steve just outlined, you can have confidence when we outline the types of gains in 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 as we kind of look back over the last 7 years. Look, 7 years ago, I couldn't 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 more excited about what the next 7 years looks like for our company. Hopefully, really, as you kind of think about this, and kind of put it in context. The last 7 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 in today. Actually, you have seen 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 a renewable future. And then shareholders, you've had the opportunity to benefit in that, and you'll continue to have the opportunity to benefit in that from what is truly a fantastic 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 we're to that part where we get to take questions now.

Melanie, I think you are going to handle Q&A.

Alexander in the blue jacket, they will be carrying on microphones. We'll start here in the room, and then we'll go to the questions coming in from the webcast.

Phil Ng from Jefferies. Thanks for the awesome presentation. You talked about spending a lot of capital the last few years, and it's going to be pretty elevated still -- so it 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 have is you guys have invested a lot. I think you guys should have a pretty substantial lead versus the industry and most of your competitors. Give us some perspective what you can do as a Graphic Packaging company with all the investments you've made that your competitors perhaps can't do, would be helpful?

Let me start and then [indiscernible] I mean I think cadence-wise, as we just talked, here in 2024, high watermark probably into the [9s]. We spent about $300 million last year, by the way, on Waco. So well along, which is great. And so it's our expectation. If you kind of cut it in the middle, I don't have the exact numbers, but in the 9s, probably moves into the 7 range and then back to 5%. And that will be 5%. So we think about that. If we continue to grow the company, obviously, the math there is pretty obvious. $400 million, $500 million a year. So it's a good cadence down. We'll generate good cash flow, obviously, still generating cash flow here in 2024. And then in 2025, we'll start to really see that accelerate, and then 2016 and beyond, it really drives. So that's a little bit of just the cadence piece of it. I think capabilities-wise -- You want to touch on that?

Yes. Look, our package manufacturing facilities are incredibly well capitalized. And if you think about our paperboard manufacturing facility, they are as well, particularly with what we've done with Kalamazoo and with Waco, we've got a significant cost advantage, as I mentioned, in the most attractive parts of the market. And really where our growth will come from Phil, in terms of the gains we make is all about innovation and driving this whole sustainability 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 different verticals because where the consumer goes, we go and we built that business purposely to allow us to be able to do that.

Okay. I'll go ahead and take one from the remote audience. The first question is from Ghansham Panjabi of Baird. Would you establish Vision 2025 targets back in 2019, you gave a specific threshold for EPS. Vision 2030 is more of an algorithm on EPS. Why is that? Is it basically now an acknowledgment that margins have reset higher. And going forward, earnings will be more correlated towards end market growth than perhaps internal improvement initiatives.

Steve, why don't you go ahead and take it.

Yes. Yes. I mean, thanks, Ghansham, for that. I think part of it is a little bit of what Ghansham was raising is with Vision 2025, we were setting margin goals and targets and EPS 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 I think plus or minus 20%, that we can actually -- because of the value-based pricing, because of the organic growth, we can actually consistently operate the company in a pretty narrow band of margins. And as such, we're pivoting more towards an ability to maintain good, strong margin capability and allowing the top line growth to provide steady and consistent EBITDA growth as well as EPS growth. And so I think it's an important pivot to the model. around earning the right, if you will, earning -- having the margin profile that we can build upon and having the top line generate EBITDA growth consistently.

It's really true. We got a lot of levers to pull there, too, with the cash flow that you outlined. And I was joking with George at the break. I said, I'll know that we've really established ourselves as 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 goals that we laid out there today because you think about it, our goals and targets, our aspirations, the algorithm really lines up well with the customers that we're servicing.

Mike Roxland, Truist Securities. I want to go with what Phil said. Thank you for the great details in the presentation. Can you help us frame some of the bigger moving pieces around your EBITDA guidance of $1.75 billion to $1.95 billion. Does it reflect organic sales growth, does it reflect the $40 per ton decline in SBS comp stock. Does it also reflect the $50 per ton increase that you guys announced last month in CUK and CRB. Just trying to get a sense of what you're embedding within that guidance, that's 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 free for cash flow conversion, working capital, just give us a sense of what type of -- level of free cash flow you think you could generate this year, realizing that it is a peak CapEx year.

Sure. Yes. No, let me take that. I think obviously, in terms of the cash flow generation, I think the modeling that we provided pretty good clarity that there's still positive cash flow generation, $300 million to $500 million if you kind of just stack through the EBITDA and the like. One of the things you're going to see us do a lot more of is kind of change the dialogue, too, on how we respond to your first question. And we're not going to talk about whether RISI's $40 up or down is in the numbers because at the end of the day, we're operating 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. Obviously, when you manage through 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 it. We expect to have a good strong productivity year with our manufacturing facilities in a growing environment, the innovation we're bringing, 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 on matching, doing the right thing on supply and demand for the paperboard sales that we still have. That's a little bit of the early headwind 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 we're growing that top line through the totality of how we're investing in the business, value-based pricing, the volume that we're growing and the like. But in essence, the guidance has in it the 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 top line that are quite similar to the year we just completed.

George Staphos, BofA. Echoing everybody else, thanks for all the detail and thought you put into your Analyst Days, they're not just a bunch of slides or a bunch of goals that we forget about in 3 years, and we come back and have new goals. I had a bunch of questions on vertical integration, but I'll leave this to the side.

Thank you for that.

Yes. So growing low single digits is hard. Right? I mean, we can do the math on your addressable market, if I take 1% on that, I drop that into your revenue growth, you get your 2% [indiscernible] end of Analyst Day. But the reality is there's churn, right? You're not going to win every jump all as you said. And so where in your markets, do you feel the other substrates have 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 important in terms of -- at next Analyst Day in terms of what the growth is. So if you can talk to those points, that would be great. Second question is near term. So obviously, foodservice is a wonderful business for Graphic Packaging. What we've seen in recent months is the CPO on foodservice products generally has far outstripped what you've seen for center of store. What are your thoughts about how that might -- I'm pretty sure what -- I know what you're going to 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 5 categories.

Thank you for the question, George. Maggie, would you like to give us a little insight into some of the attractive markets that you're seeing and some of the growth we see along those verticals?

Yes. I think to your question around our papers relative to other materials. Clearly, a lot of the key markets that we've highlighted here as part of these innovation platforms and some of those examples. Obviously, many of those are in plastic substances today, but obviously, the consumer demand for more sustainable and consumers looking as paper as the primary driver of that. They're really leaning in, our customers are leaning in as paperboard is that solution. And when we look at the total cost of ownership, it's 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 a solution that they're moving forward with. So we feel good about our overall portfolio relative to other material alternatives.

And where do you feel less [indiscernible].

Well, look, why don't I take a piece of that. I think, George, you sum that question up perfectly. It's a competitive landscape out there. We compete every day for the right to win. And really, when you look over the last 7 years, the fact we've been able to post that 2% stack average over that period of time, I think, should give investors confidence that we've got some really good momentum in being able to do it. Our confidence level that we can deliver the $200 million of innovation growth that you heard Maggie and Jean-Francois talk about for 2024, 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 is 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. '22, arguably a lot easier than '23, 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 RISI. We expect our Foodservice business to be very busy this year. Again, there's less than 4% unemployment here in the U.S. market. The American consumer loves mobility. They love being on the go. They got a lot of things they're 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 Chick-fil-A and others. And that we expect to be a flywheel for us for years to come. And that's why our Texarkana paperboard manufacturing facility is so important to us because we'll have the raw material 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 and where we don't because we can provide good growth to our customers and ultimately higher ROICs in cash flow.

Okay, I've got the next question here from the audience. And Steve, you've talked a little bit about price, but Mark Weintraub at Seaport wants to ask about different component items as we bridge EBITDA from 2023 to 2024 volume. Again, we've talked about price, labor productivity.

Yes. And this is not going to be easy, but we're just not going to go there. And what I mean by that is, we're going to grow organically, we're going to earn on it. Yes, of course, the fundamentals of what we've shared with you in the past, they are the fundamentals. And so as we look out to 2024, of course, we're going to earn on organic sales. We're going to continue to be highly productive. We'll have labor and benefits inflation. We'll be running more than we ran this year. So we'll be -- we'll have the opportunity to earn and take less of the natural downtime that we take across our manufacturing facilities. Right now, that pricing environment relative to the commodities, it isn't very different from the last time we talked. We've got a lot of activity underway on as we value-base price and 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. But we're going to 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 to earn the value for our products in environments where costs move so that our margins are able to maintain themselves at the 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, not much has changed, but we are going to change the dialogue along the way, and I look forward to those conversations.

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 6 to 7 years that have really changed the business. That being said, another question on price, but really the value-added price actions that you've pinpointed. You've done a very good job holding on to margin over the past couple of years via price mechanisms. And then the February price increase seemed like it was due to certain raw material cost changes in certain substrates. So how exactly is the value-add 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.

No, I wouldn't say they're inelastic. I mean, again, it's a competitive market. It's packaging. But what I would say is that there's 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 Graphic's DNA, we measure everything. And so being able to put that in, and the context around no, this is real, we're actually going to reduce this down, and you saw the Scope 3. Michelle had that on there. We need our suppliers to do the same thing. Guess 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 well, but they're 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 -- our track record is really good at doing that. Look at what we did in '22, look at what we did in '23. So I think we've demonstrated an 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.

Certainly. I appreciate that. My second question, Maggie, I want to ask you, in your remarks, you said that innovative products, the goal is to not have any switchover cost, correct? Have them work on the exact same machinery. Is there a certain percentage where it does not work. And in those cases, I mean how do those conversations go? I imagine there's a lot of incremental investment, the machines have a certain lifespan themselves. So what percent is that? And how are customers receptive to it?

Yes. 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 if I were to do a range, maybe 30% to 50% could go higher in certain of those innovation platforms. But I think it's obviously something we continue to try to hit the mark on our ability to do that. The Nissin Cup was a great example. Our ability to commercialize that quickly, we could get on to their filling lines and do that pretty seamlessly. And so we're going to continue to focus on doing that. There's obviously different machine capabilities that we're trying to develop to help make that as efficient as possible when it is required. We 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, if the value proposition is there and if it's regulation and there's other things that they have to drive where it's bringing better performance on shelf for their -- at retail to help drive top line performance, those could overcome a lot of those investment costs.

If I may just ask one comment on the -- that's one of the reasons why we are getting a lot of traction on PaperSeal shape because somehow we are matching what [indiscernible] is and the volume on [indiscernible] are, it's extremely large. And the sealing technology at the end is the same. And that's why we are getting traction because in terms of CapEx for those people, they use technology that they are having. And we are just replacing base [indiscernible] by a PaperSeal shape, which has nearly the same capabilities in terms of sealing. And that's why on that specific, we are getting a high level of traction in Europe.

Gabe Hajde, 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 that you guys kind of initiated, let's call it, 5 to 6, 7 years ago, almost like packaging as a service, if you will. But the question is, the last 3 years were pretty conducive to maybe transition to a value-based pricing methodology or strategy versus historically how business have been conducted. So the question is, how would you instruct us to think about some -- again, I know you're not -- it's tough in a format like this to give us specifics, but to think about, how frequently there are openers for contracts or how long those may have run to maybe think about go forward as opposed to just sort of the simple algorithm of 2% translates to 5% to 10%.

Yes. So I think, look, Gabe, we've got a certain percentage of our portfolio that's up for contract renewal every year. It's almost like clockwork. Some years are a little heavier than others. But for the most part, I'd say it's 20%, 25% that 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 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 enthralled with regulation, 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 the vernacular because we want to and that's why Vision 2025 doesn't really even apply right now in many ways because it's -- some of those targets aren't ambitious enough and it's not aligned with how we run the company. That algorithm, well simple in nature, is really hard to do. But if you can do it year in and year out, and that's why 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 little industry things that you're talking about, price cost, what 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.

I'll go again. This is another one from Mark Weintraub for Steve again.

He didn't like the first answer.

Is the anticipated impact of reinvesting excess free cash flow captured in the Vision 2020 -- Vision 2030 base financial model growth expectations? Or is the impact potentially accretive?

Can you read that question again please.

Yes. Say that again.

Is the anticipated impact of reinvesting excess free cash flow captured in the Vision 2030 base financial model growth expectations? Is it in the growth expectations? Or is the impact potentially accretive to what we laid out earlier?

I think the way I would talk about that, if you kind of look at how we shared it with you today, is the base model of low, mid and high single digits results in 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 flywheel spin 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'd articulate that is the base model does a great job of indicating that we believe -- as Mike said, it's not an easy thing to do, but we believe that we can actually generate low, mid and high. 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, dividend, shares, low debt. So I think it's really -- that's how you think about the model. And I guess -- I know Mark is not here, ask me if that addressed his question or anything you'd add.

No, maybe I just might add the really good response there. Steve made a couple of points in his prepared remarks that I just want to put a little emphasis on. He talked about 5% of sales is CapEx and 2% being a robust amount for kind of maintaining those assets. These are well-invested assets. We look at what we've done over the last 7 years. We're proud of our package converting facilities and our paperboard manufacturing facilities. And if you think about it, Kalamazoo and Waco will be brand new. So that's a pretty long tail as you kind of wind that forward. So that difference between the 2 and the 5 is substantial in terms of the things that we can invest back in the business. So as we grow on the foodservice side, Maggie needs cup plants to kind of fill out that geographic piece, that's all in that 5% that we've rolled out there. What Michelle talked about, the decarbonization, those 3 big projects that you put out there, that's in the 5%. So the cash flow that Steve kind of outlined on the ARC, I guess it was, which is pretty darn impressive. I mean it anticipates those investments 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.

John Dunigan at Jefferies here. If I understood Mark's question, maybe I can just ask it a little bit differently. The CAGRs that you're expecting with the Vision 2030, maybe is it more back-end weighted given all the projects you have now where you see more of the growth coming in that '26, '27, '28 time frame after Waco is already up? Or do you think that you can achieve some of these EBITDA growth with the project still in the investment stage now? Is this growth potential mid-single digits and high single digits here in the next couple of years with everything you have going on.

Sure. Yes. So again, the way to think about it, excellent question is, look, we've got Waco that's going to come to life here, ended '25 into '26 and on. So there's $160 million of EBITDA we committed to that will be there, that will drive some additional sales growth. The Rainier piece of that's accretive on top of that. But look, we're committed to growing our volumes each and every year, and that starts in '24, 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 as accelerating and continuing to be accretive over that entire 7-year planning horizon. And our track record, as I talked you through, is solid for being able to do that.

Yes, it's definitely not a back-end loaded scenario at all.

And I think the only thing that's back-end loaded is a little bit of the cash flow because we're still in the investment phase. But if you adjust for '25 and '26, you kind of saw that ramp up to $1 billion of free cash flow a year in those outlying years, and that's why.

Okay. I have another question from the remote audience. So from your remarks -- this is from an investor. So from your remarks today, what is your approach with RISI moving forward?

Look, I think I characterized that in the beginning pretty sharply. I mean 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've been moving away from third-party indexes for years. So what I'm saying is that we don't agree with the assessment on foodservice for all the reasons that I've outlined here, foodservice cup stock, in particular, and it just strengthens our resolve to continue to move away from third-party indexes that are, in our opinion, historically inaccurate and very nontransparent in terms of how those things are generated and how they're scored. So I'd just say that's how I would answer that question.

This is Gregory Andreopoulos from Citi. Thanks for the detail in the presentation. I just had a few points of clarification around the Augusta sale and then a bigger picture question about your substrate mix going forward. So just on Augusta, briefly, do you expect any dissynergies from the sale? I know you mentioned the $1.8 billion pro forma EBITDA number. So any dissynergies there and then any retained liabilities we should be aware of post-sale. And then just kind of bigger picture, the sale would reduce your SBS footprint by about half with my math. And you've made investments seemingly focused on CRB over the last 2 years with K2 and now Waco. So the question for me is, do you see an opportunity to move customers from SBS, maybe even CUK to CRB. And what role do you see SBS playing in the long-term 2030 Vision, acknowledging that there is some import competition from FBB now and the market may see some capacity coming online in '25 plus.

I'll start. Yes. I'll start and then Mike can add on. I think to your first part of your question, we don't see any dissynergies with the sale of the asset. What we'll have is a little bit of a transition because our internal needs, our packaging needs we were running between 2 facilities, and we'll migrate those to Texarkana. So there's a little bit of transition, but not anything on the dissynergies front. And there are no retained liabilities. I think that was probably just a normal boilerplate statement. There's nothing that we're retaining 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 quite nicely. It's got an outstanding team. and that team is in place and very committed to the success of that facility. So there's nothing there dissynergy wise or retained liabilities that would be impactful for us. We'll just be managing through a little bit of transition here in 2024 relative to really servicing our capabilities and our needs that we have at the Texarkana facility to create packaging.

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 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 K2 investment. So as we take that as a follow-on, our ability to continue to ramp up like our Rainier grade, you heard Maggie talk about, which competes with the very best premium SBS 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. We'll always convert some SBS. It's important. It's a good grade. We'll 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. You've got a North American producer that's building some, there's a European producer that's discussed about bringing another 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 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 investments that help them drive the innovation as well as higher ROICs and more consistent cash flow.

And I think, Mike, to the point you're making, too, the Texarkana facility is a phenomenal manufacturing facility for making the cup -- 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 to support our growth trajectory for foodservice.

Okay. I've got one more. This is from an international investor. As you increase your focus on end markets as a driver of your top line performance, will you be able also to get a better measurement of customer inventories for each of the end markets and as your growth should be much more aligned with your customers? Is that a correct statement?

Yes. So I'm going to hit that first and then you can add on, on that. When you're -- 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 profiles going to be. But there are times that, quite frankly, they don't necessarily know. I mean, things shift kind of quickly here, and they want to be able to be responsive to 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. Our customers need us to be able to do that. I love the question, though, because ultimately, the closer we get to the customer here, the deeper we have, the more integrated we are into their business, and there are some cases where our overall demand planning models are actually connected now, and you'll see us do more of that in the future where we're closer to they sell one, we make one. It is ultimately something that we strive to achieve. And you probably want to add on that one.

Yes. 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 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 in terms of some of the 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, there's efficiency, obviously, for both companies and being able to do that. So we feel good about that over time.

There's a question in the back.

It's Will Miller, Greenlight. Going back to what Steve just mentioned on cup versus carton. I think you could put a finer point on where your mix sits post Augusta, maybe spend a minute on how those 2 markets are different. I think the intuition is that the cup side is a little more attractive, but...

Well, yes, I think, look, if you look at Augusta, I mean, both mills are roughly the same size. [indiscernible] $20 because -- I've said it twice. You noticed that I have to change too. I'm not using that word. And we have paperboard manufacturing facilities. But -- they're both about the same size, roughly 600,000 tons. If you look at the Texarkana facility, it actually is indexed about 400,000 tons of cup stock and then the balance, of course, coated. So it fits us perfectly with what we're doing. And as Steve said, and we've talked about publicly is our pivot is we would prefer to run more comp out of that facility, and we'll either make Rainier for the grades that need that kind of premium paperboard and Maggie showed you the kind of end-use markets that we're really targeting for that. Or if we need to buy some of paperboard on the market, we can do that. And as we've demonstrated in Europe, we can get really good ROICs 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 and being able to do that. So we've got a lot of great options, I guess, is the punch line.

Does that answer your question, Will?

I guess I'm sort of more wondering about the actual market structures of the customers for cup stock versus carton, 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, if that's the wrong thought.

There's less people that make it for sure. It's a complicated grade because one of the things you got to be able to do is make the brim around the top, and that requires some real knowledge of material science 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 that material goes through our own cup plants, which again gives me the ire that I talked about earlier around the third-party scoring a market like that when we know exactly where all that material is going. So most of it is coming to ourselves. So it's a very attractive market and one that's growing, as I talked about in my answer to George in terms of overall demand. Every quarter, over the last 3 years, we've shown growth in our foodservice business, including the one we're in now.

I've got one more, and then I think we're going to end with George. The last question coming in remotely is from Mark Weintraub of Seaport. 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.

Yes. Thanks for that, Mark. And it will be dollar sales, but what we'll do is, of course, describe what's happening inside of those. So we'll raise it up to dollar sales. But where it's material and appropriate, we're actually looking forward to kind of talking about what are we seeing a layer now? Or what are we seeing volumetrically? What are we seeing on value pricing. So we'll talk about those things when we describe what's happening with those arrows, but it's a really important pivot. I appreciate him 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. We'll know exactly where we're at. We'll talk about it appropriately, particularly when it has an impact on the business. And so we'll definitely be prepared to do so. We'll definitely share our innovation sales on a quarterly basis. So we'll talk very specifically about how we're doing against that 2%, and we track that very methodically, literally month-to-month. And so it will be dollar sales, but we won't lose the ability to articulate what's happening underneath that, where it's appropriate and balanced in terms of sharing it.

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 or maybe every year, in other words, or percentages so that if we want to build -- you want us to build a [indiscernible] based on revenue by end market, will you give us more tools to be able to do that on a 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 3 years from now if you want, again, to think about revenue and opportunity. And lastly, our perception, perhaps incorrectly, is the plastic guys who we all love 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 and why they're sustainable. To Maggie and Michelle. Where does paperboard stand in terms of aggregate carbon footprint versus plastics, recognizing it's dangerous to talk about in aggregate. And where does paperboard particularly stand up well versus plastics in that regard to either of you. Thank you guys and great presentation.

Thank you, George, why don't you take the first one.

I'll do the first one, George. And we're definitely -- we're working through what you just asked around. And what we've provided today is kind of the big buckets, so what percentage of the company falls into each of those categories. We'll 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 that's probably 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 the baseline. And then, of course, as we work through, I'm sure we'll reconcile that in a way that provides visibility into, hey, what's going on inside of food holistically. So it's -- I appreciate you raising it because this is a new disclosure, and it's one that we're looking forward to, we'll obviously open to feedback on that as well. But we're looking forward actually to talking about it in a way that allows you to constructively build the model for the company.

Yes. And look, we've got the customer base in there, 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 2 questions, I mean, in terms of Rainier, I'm really excited about that one. As you know, I'm a printer. And when we look at kind of the surface of that particular sheet, and Maggie 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 [indiscernible] 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 got a dozen or so trials underway. 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. George, it's a good point. Everybody is sustainable. Every presentation you go to, they've got it out there. I want 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 how we're going to pay for it 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, that's what you can count on us doing. Michelle laid it out really well. And 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 effect, we can decarbonize the way we did, and we can earn cost of capital that's a pretty great position to be in. And so I think the best way I can answer your question, I don't know everybody else's stuff, but I know ours. And I think the more transparent other companies are in terms of the claims that they're making, actually, I think, shines light on it and I'll let you as analysts and ultimately, the investors and our customers, the end-use customers actually be able to make those decisions.

And consumers.

And consumers. Thank you. Yes. That's really a good point, Maggie. Michelle, anything you would add over and above that?

Yes. So I think what I would say about carbon footprint and when they're really trying to get at, like the product carbon footprint calculations is -- these are 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 life cycle assessment models, in particular, you have a lot of flexibility in terms of how you define the boundary and the input conditions that you use. And like any model, even statistical models, 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 than paper. They're also trying to say that their products are better than the bioplastic models. And the bioplastic people are saying that their models are better and 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. So I think you need to take life cycle assessment models 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 and build our capability and be able to help bring some more clarity and transparency to a lot of the misinformation that's out there.

I just wanted to add one comment because that's part of the 11th initiative we are having in Europe. And one of that initiative is on [indiscernible] who you provide information and who you disclose information because we have seen a bit everything. What I can just say from a customer experience, at least for the large European multinational company, they are on it. I mean you cannot claim something they are into the detail of all the calculation and they are very advanced underway the assessing. So -- because they don't want to be stuck in something that they are claiming which is not the truth.