Graphic Packaging Holding Company

good morning thank you for attending the graphic packaging third quarter 2022 earnings call my name is matt and i will be your moderator for today's call all lines will be muted during the presentation portion of the call open opportunity for questions and answers at the end if you would like to ask a question please press star followed by one on your telephone keypad i would now like to pass the conference over to our host melanie ski just

Good morning and welcome to Graphics Packaging Holding Company's third quarter 2022 earnings call. Joining us on our call today are Mike Doss, the company's president and CEO, and Steve Scherger, executive vice president and CFO. To help you follow along with today's call, we will be referencing our third quarter earnings presentation, which can be accessed through the webcast, and also on the investor section of our website at www.graphicpkg.com. Before I turn the call over to Mike, let me remind you that today's press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the release and in our filings with the Securities and Exchange Commission. With that, let me turn the call over to Mike.

Thank you, Melanie. Good morning to everyone joining us on the call and this webcast this morning. Let me begin my remarks on slide four of the presentation. We delivered exceptional financial results in the third quarter. Our continuous strong performance and net organic sales growth can be attributed to the global business portfolio we have built diversified by both end markets and brands, strategic investments we have made, and the robust innovation pipeline we are cultivating. In the third quarter, net organic sales growth picked up sequentially, accelerating 5% year over year. This represents another quarter of outperformance versus organic sales growth goals, I remain very encouraged by our significant new product development pipeline and consumer demand for highly functional and increasingly more sustainable packaging. Interest and engagement from existing and new customers remains robust. As demand for fiber-based packaging to replace other packaging alternatives increases, we are capturing new business across our low cost, well capitalized, highly percent at this time a year ago. Vertical integration is a competitive differentiator in today's challenging global supply chain environment. We benefit from the flexibility we have established by producing all three paid-for substrates and the assurances supply we can offer customers. Importantly, our vertically integrated business model provides runway to further enhance operating efficiencies and supports our Vision 2025 margin expansion goals. Adjusted EBITDA increased by 55% year-over-year to $441 million, resulting in an 18% EBITDA margin. Adjusted earnings per share, excluding amortization, improved 76% to 67 cents per share. Strong performance year-to-date is resulting in an increase to our previous $1.5 to $1.6 billion adjusted EBITDA guidance. We now expect adjusted EBITDA for the full year of $1.6 billion at the midpoint increase over 2021. Our financial results are underpinned by a secular demand tailwind for more sustainable consumer packaging solutions globally. Importantly, and specific to graphic packaging, our ongoing execution of strategic initiatives and platform investments has strengthened and extended our global fiber-based packaging offering and has positioned us to capture growth in demand. cost inflation continue to be executed globally. As a result, we now expect $425 to $475 million in positive price-cost relationship in 2022. The significant step-up in adjusted EBITDA resulting from the business drivers I've walked through on slide four will drive strong cash flow generation. This year, as committed, we are focused on driving the year in the 3.1 to 3.3 times range. Slide 5 provides additional detail on the inflationary environment and pricing outlook. In the quarter, we continue to realize the pricing necessary to offset higher commodity input costs and recover the dislocation from 2021. $334 million of positive price flowed through the business during the quarter, more than offsetting commodity Pricing expectations for the full year are approximately $1.05 billion, up $100 million from guidance provided last quarter. Additional SPS pricing along with other pricing initiatives were realized and implemented during the third quarter. Our 2023 rollover price and commodity input cost ranges, mark to market as of today, are are $375 to $475 million and $150 to $250 million, respectively. As we have stated, we believe we will see inflation again next year, particularly in Europe. Similar to last quarter, I want to reiterate the rollover figures on slide five are directional in nature and our point-in-time estimates will provide guidance. Let me provide a progress update of our K2 coated recycled board machine production ramp. We were pleased to host many of you in September for a look at 100 years of paper-making technology culminating with our largest capital investment in history, the transformational K2 CRB machine. As analysts and investors were able to clearly see during the tour, the machine truly does transform Kalamazoo into the most advanced manufacturing operation with day-to-day technology automation and advancement in energy efficiencies. It is the largest and lowest cost producer of coated recycled ore in North America. Production on K2 is ramping steadily and is ahead of plan. We have hit our targeted output of 1,500 tons per day on multiple days, averaging over 1,400 tons per day in September. With the new production on K2, we realized $17 million in EBITDA in the third quarter and expect to meet our $50 million target Slide seven is an example of how our global innovation engine and customer partnerships continue to drive new business and organic sales growth. Established as part of Vision 2025, our partners pillar is focused on growing with the best customers in the best markets. We're excited to be doing just that by working with Unilever on a new product as part of the company's 1 billion euro Clean Future initiative. Unilever announced its Clean Future strategy in 2020 and its intent to change the way some of the world's best-known cleaning and laundry products are created, manufactured, and packaged. When Unilever's largest detergent brand transformed its laundry capsule with new technology to be its most sustainable yet, they wanted a new package solution that was both recyclable and plastic-free. Our packaging developed for Unilever delivered those enhancements and will reduce over 6,000 metric tons of plastic from entering the waste stream each year. We are thrilled to have partnered with such a purposeful brand and company on this product launch. The laundry capsules along with the product's new packaging were launched in July and can be found in various outlets throughout France. Reception has been enthusiastic and we expect to see new growth opportunities with different brands and in additional countries. Current design product protection and printability of our high-quality fiber-based packaging enhances marketing appeal for customers. The renewable aspect of the paperboard solution and the high collection and recyclability rates of paper provide proof points to our customers and our customers' customers that the sustainability efforts are making a positive impact. Turning to slide eight and reflecting on new opportunities we see across our markets for plastic substitution, we have raised the expectation of our total addressable market to $12.5 billion. You can see here many different products and packaging configurations under plastic substitution. This speaks to our diversified portfolio and the variety of packaging solutions we produce for a wide array of global customers and consumers. I will wrap up my prepared remarks by noting that our overall business remains resilient and we continue to grow with our innovative solutions. We are meeting a need in the marketplace as local communities become increasingly more focused on sustainability. We are very pleased with our results in the quarter, strong outlook for the full year, and continued progress towards achieving our enhanced Vision 2025 aspirations. We are creating value through leadership with Vision 2025. The investments we have made to advance our capabilities and optimize our mill and converting infrastructure differentiate us. Our 24,000 employees are highly engaged and are truly running a different race. With that, I will now turn the call over to Steve.