Good day, everyone, and welcome to the Graphic Packaging Holding Company fourth quarter and full year 2025 conference call. At this time, all participants are placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to hand the floor over to your host, Mark Connolly. Sir, the floor is yours.

Today, Robert Rieprop, President and Chief Executive Officer, and Chuck Lister, Senior Vice President and Interim Chief Financial Officer. During this call, we will reference our fourth quarter and full year 2020g.com. Today's presentation will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 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 today's press release. Now let me turn the call over to Robert. Thank you, Mark.

Good morning, everyone. and thank you for joining us today. Before we review our results, I would meeting global consumers. My teams work closely with the graphic packaging team. I work directly with brand and performance needs. I understand how I am acutely aware of the challenges and opportunities our customers have in the evolution of private labels. I understand the exceptional quality of our packaging solutions and the impact they have in delivering exceptional quality and reliability. It is what attracted me to graphic packaging and it will shape and where i see opportunities to significantly graphic packaging is the world's most respected industry lead provide people and then industry leads in north america in waco and kalamazoo the actions we are taking now and will take place focused on unlocking full potential to drive stronger performance and value for all our taking the company's foot for selected portfolio assets with key customers need for continuity we've taken steps to retain and we have also had reporting changes to enhance transparency led by our new chief transfer it has product without as we evaluate opportunities organization structure and they select now that i have been observations on the most meaningful opportunities one the The extreme over-capacity in commodity-bleached paperboard markets is putting pressure on finished packaging. The demand trend of affordability, while we expect these trends to improve, we also acknowledge that consumer purchasing patterns and the dynamics between brands and private label are evolving. We're simply waiting for markets to repose on what we can control, and where our resources have the best opportunities to create lasting paperboard and finish. We're taking immediate steps to address these issues that we believe will happen over time. However, for these steps, which in turn move more quickly from idea to commercialization, our innovation team is both new, producer and leveraged, and return capital to shareholders.

In 2026, I think that our current adjustability will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. We do ask that participants please ask one question and one follow-up, then re-enter the queue. And once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from Matt Roberts from Raymond James. Your line is live.

Hey, Robert, Chuck, good morning. Robert, welcome, and congratulations on the role. So when you joined, Robert, the board noted your strong CPG background and the timing, of course, coincided with Vision 2030. Those numbers are revised today. So ultimately, as you embark on that 90-day review or look to your longer-term targets alike, what makes your approach different than what has come before at graphic packaging? Would you say it's more operationally focused to reach free cash flow projections or are commercial efforts, more of a priority to ensure you're able to reach flat volumes in 2026.

In America, but also in Europe, I have a global perspective, global manufacturing, and I have ran the Millicent Tissue Towel Mill in Australia when I was running Kimberly Clark, Australia, New Zealand. With regards to the approach, a number of calls with...

All very helpful. Thank you, Robert. Look forward to working with you and seeing the progress there. For my follow-up mechanism, the inventory reduction, I think it was from 15% of sales to 20% to 15%. I think that number implies about 200,000 tons. How are you able to balance that much coming out while Waco continues to ramp? And given that inventory curtailment is a one-time benefit in 26, and then cash from the incentive comp also hits in 27, what other elements are needed to bridge to that 700 million figure again in 2027? Thank you all again for taking the questions.

Yeah, just let me clarify the recycled, bleached, and also reducing, let me pass it to John.

Yeah, hey, Matt, this is John, and I'm in cash flow, it would be a $100 million range.

Robert, check. Thank you all again.

Thank you. Your next question is coming from Gansham Panjabi from Baird. Your line is live.

Thanks, operator. Good morning, everybody, and best wishes to the two of you in your respective roles. You know, Robert, maybe just to start off with you, just given your background at the CPG level and, you know, your unique lens, if you will, how do you think this pricing dynamic situation in paperboard in the U.S. will play out for the industry over the next couple of years? What can you do internally to sort of navigate through this period? Because presumably customers will be pretty opportunistic as it relates to substitution, et cetera, just given the, you know, change in the pricing dynamics. The manner most of us are recycled and unbleached, and both of those markets are in Cooed Town's paper board, which is over the bleached paper, you know, bleached business.

The benefits of the economics are a little tougher, and the overcapacity is impacting the markets.

Yeah.

Okay, thank you. And then, you know, Robert, I do kind of step back a bit. Obviously, a lot going on this year, next, and so on. But, you know, if you look at the company's EBITDA margin profile, you know, 2023, 19.9%, as your slide deck lays out, obviously a huge deterioration that you're projecting over that time period through 2026. Is there anything structurally having changed in the industry that you cannot get back to the sort of high-team, EBITDA margin threshold, or was 2023 just a unique situation?

Over the long run, we will be restoring our even at margin to the higher teams level as a result of restored demand, managing that back towards that original Vision 2030.

Best wishes for the future. Thank you.

Thank you. Your next question is coming from Arun Viswanathan from RBC Capital Markets. Your line is live.

Great. Thanks for taking my question, and I guess I'll add my congratulations on the new roles as well. Yeah, I guess just kind of going along a similar line of questioning, maybe we could get your perspective and insight on what you're hearing from your customers. Specifically, are they talking about few rationalization, changing packaging strategy? What are you hearing on how they're dealing with Maha and maybe other changes to consumer behavior? You know, obviously, we've seen some, you know, relatively lower volumes on the food side and food service. And are you hearing any kind of customer response to address that?

Conversations with three various other industries and food service gain volume share at retail

and a lot are reviewing their back price architecture that the right price points with smaller portion to gain momentum even in some private label growth by the number of formats so thanks for that comprehensive answer I guess I'm just as a quick follow-up back onto the SPS question so you know I understand that it's it's a very small grade for you but I guess our perception or my perception is that you know there the oversupply is kind of also pressuring unbleached and maybe customers are getting the option to switch into SPS because there's you know not much premium there so how do you do you see that as well and you see that kind of oversupply and SPS continuing to weigh on other grades as well or is it not really impactful thanks and it is the result themselves down time

consolidation and we haven't lost boy long term is not sustainable and we're focused on driving volume but we have the right to win and we control thank

Thank you. Your next question is coming from Louis Merrick from BNP Paribus. Your line Morning, Robert, Chuck, Mark.

Thank you for taking my questions, and congratulations on the appointment, Robert. Can you just go into the portfolio review comments that you had in the deck and in your statement? Can you just give us a sense or expand on the factors in what you would consider as elements which would determine a core or non-core asset in your business today but it could be quite a long I think it could be quite a long very good question Louis as part of any company strategy we use strong growing for you win have you and the board had any thoughts as to whether you may look to revisit your dividend policy for 20% thank you from Mark Weintrebb from Seaport Research Partners your line is live thank

Welcome both. Questions, since you did mention that overcapacity in Bleach Board has been putting downward pressure on finished packaging pricing across your grades, I guess one of the questions I have is that if the trade journals show, for instance, CRB prices were to go down or something like that, if to some extent it's already been reflected that the pressures in the business because of over-capacity and SPS, do you get hit a second time or can you help us understand how the prices we might see in trade publications can affect what you end up realizing on a go-forward basis?

Yeah, hey, Mark, this is Chuck, I'll take many of our contracts.

Okay, and so just a thought, so if there are changes, is it modest because of the direct impact, modest because of the adjustments you've made in your contracts or any help you can give and I recognize if you're not comfortable understood but figured I'd ask. Okay and just one other follow-up then on Waco I know originally you had outlined some you know relatively significant startup costs I think 60 million or something like that. Could you just update us how you know what has happened and how you're reporting that and it seems like you're just putting that in net productivity now how should I be understanding that? Thank you.

Yeah. So the good news on that, if we do not.

And just one clarification, so the Waco startup costs were excluded from the adjusted EBITDA number you gave us or included?

Our next question is coming from Gabe Hajj from Wells Fargo. Your line is live.

Hey, good morning. Welcome. I had a question about seasonal working capital changes and then obviously the very concerted efforts to reduce inventory. Seems like a decent amount of that production will hit and the reduced production will hit in the first half. But normally you consume cash and working capital in the first quarter. And if I look at kind of what you gave us, you know, the 40 to 45 percent of EBITDA earned in the first half, it looks like leverage can in fact tick above, you know, closer to mid fours or or higher. Can you talk about that a little bit? And then I have a follow-up. Thank you.

Our cash flow is...

Okay. Thank you. And then the 200,000 tons roughly of inventory reduction this year, and obviously you gave us a dollar equivalent. I guess, Chuck, for 27, can you give us a reference point? I think you talked about some moving parts to bridge to the $700 million of free cash flow, But will you still be sort of underproducing next year? And, again, I appreciate it. It depends on demand. But – and unlocking some inventory. And if so, do you have an order of magnitude as it sits right now?

Thank you. Thank you. We have reached our allotted time for Q&A. I'll now hand the conference back to Robert Reedbrook for closing remarks. Please go ahead.

It was truly a pivotal time for our company. Graphic packaging serves markets with attractive sub-segments, solid secular trends, with the best-in-class assets. We're global leaders. For the actions we're taking, we plan to grow our market share. While I've had the opportunity to engage with several of you already, I look forward to connecting with others.

Thank you. Everyone concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.