Good day, ladies and gentlemen, and welcome to the Graphic Packaging Holding Company first quarter 2026 conference call. At this time, all participants are on a listen-only mode and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. And please note, this conference is being recorded. I will now turn the conference over to your host, Melanie Skeegis, Vice President of Investor Relations. Mom, the floor is yours.

Good morning. Thank you for joining Graphic Packaging's first quarter 2026 Earnings Results Conference Call. 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 and in our SEC filings. We have with us today Robert Reaprook, President and Chief Executive Officer, and Chuck Fischer, Senior Vice President and Interim Chief Financial Officer. During this call, we will reference our first quarter 2026 earnings presentation that can be found in the Investor Relations section of our website at www.graphicpkg.com and company-directed slides if you are participating today through the webcast.

Now, let me turn the call over to Robert. Thank you, Melanie, and good morning, everyone. As many of you know, Melanie has just rejoined Graphic Packaging as Vice President of Investor Relations. We are excited to benefit from her leadership in the role. I've been getting to know the team, visiting our facilities both domestically and abroad, and meeting with many of our customers around the globe. Separately, I'm pleased to report that we've now completed our 90-day review of the business. Our review has confirmed foundation is strong, a point that is consistently validated during my site visits and in discussions with our major customers to support growth. Our integrated, high-quality asset base and production footprint enhance our service capabilities, expand innovation opportunities, and provide a competitive advantage. we see meaningful opportunity ahead. We're taking decisive. We delivered strong. Net sales were up two percent year over year to 2.2 billion with volume performance improving as the quarter progressed. Adjusted EBITDA was 232 million dollars. Adjusted EBITDA margin was 10.8 percent and adjusted EPS was $0.09. While adjusted cash flow was a negative $183 million in the quarter, this represents a significant year-over-year improvement from negative $442 million in the same period last year. As we look at the demand environment this quarter, scanner data across our markets continues to reflect a more selective and value-conscious consumer. Our innovative packaging solutions that span the grocery store and on-the-go food service items meet consumers wherever they go. As we proceed through the first half of the year, we are encouraged to see customers increasingly taking actions to restore volume growth. Looking across our end markets with higher packaging volumes and consumption of everyday essential ready meals due to more protein products protein diets health and beauty 2025 continue to prioritize small indulgences like skincare and perfume our beverage business remains stable while food service and household reflect ongoing consumer affordability trends of the business the decisive of actions we have begun taking to achieve our strategic priorities and an update on our views and expectations for 2026. To walk through each of these topics, you will note that we are focused on accelerating the pace of execution across our business and generating free cash flow to drive shareholder value in an evolving market. Tactical improvements to drive efficiency. There are still The path forward is organic growth and customer service. Second, we intend to drive profitability improvements, efficiencies, and select pricing, footprints, and portfolio mix to better focalization and reduced capital spending and return capital to Russell's offices. Counted teams across our technical capability to Michigan who deeply value our long-standing companies. Flexible market, supported by sustainability trends. We are taking decisive steps and impose discipline and operate through our key takeaways. We will continue to focus our efforts. Strategically, our review has reinforced America and European markets, and we will make selective discipline while maintaining our scale advantage. That means expanding to our portfolio. We have started to simplify and streamline our business and organization. We recently reached an agreement to divest our non-core assets, which we expect to complete in a second. We are executing this transformation of optimization and better align our global workforce separations. The changes we have made are based on structural improvements while maintaining vital. These actions will not impact our committed focused initiatives. Reductions represent less than 3% of all global roles, though they account for over 10% of global full-time salaried roles, one that demands every dollar of spend be justified against our... ...to continue to progress. We are confident we will deliver on our full-year 2026 capital spend commitment of approximately four years. We are deploying management, leveraging machine learning to generate predictive analytics and enable proactive maintenance, reducing unplanned downloads last December, and enhance our agility and decision-making, enabling us to move faster, reduce complexity for additional cost. More accountability is the greatest impact for our customers, our people, and our business. Reflect a company focused on driving disciplined organic growth by building on our strong customer relationships and capturing new business through our commercialization effort. We have recently reorganized our commercial team through different stages. Demand is relatively resilient. We are continuing to prioritize 47% of global shoppers now considered value-seekers. Shoppers are switching to private label options or sizing down to smaller pack sizes at lower price points. To appeal to this value-seeking population, consumer brands and retailers, and value perception. Leveraging price while also focusing on selling through value-oriented channels, creating meaningful opportunities for our retail partners, strategies, retailers using our Pacesetter, Rainier, sustainable packaging. Bleached paper cycle alternative, the large retailer is making measurable progress, print quality, market share. We continue to see customers selectively upgrade to our premium packaging solutions as our innovative, differentiated designs allow their products to stand out and premium package for their coffee collective cake-up launch. They wanted a premium unboxing to match the elevated coffee blends. We created a custom two-piece box set utilizing our unbleached paperboard for stiffness and applied matte and gloss coatings and foil stamping to enhance the look of the carton and differentiate it on the shelf. Capabilities and commitments to helping customers achieve their goals. QSR brands are increasing from offers. We are supporting a number of our QSR customers across multiple geographies in these initiatives. My experience leading and growing CPG companies and their brands will supplement and strengthen the team's efforts, we are supporting our customers' pursuits in order to grow volume and expand market share. There are many ways we partner with our customers to successfully elevate their brands. Customers rely on us to lead with innovation and accelerate their adoption to more sustainable packaging solutions preferred by consumers. and their decision-making processes will enable our teams to better anticipate customer needs and leverage insights to drive our commercial and innovation engine. Graphic packaging has a unique ability to partner more effectively on pack design or actively strengthening partnerships, taking a proactive commercial strategy and having conversations with top CPGs, QSRs, and retailers around the globe. We continued to build innovation with 13 new patents, adding to our portfolio of approximately 3,100 patents. Looking ahead, we remain committed to growth of intellectual property and extending our capabilities in sustainable packaging, are truly differentiated, and position the company for continued leadership. Graphic packaging is seen as the premier sustainable packaging partner by the brands we serve. We are differentiated with our skill and capabilities, superior innovation and technical expertise, and talented people to bring even more innovative products. Our soundproof laundry pod box to our double-wall cups that retain heat and cold to our produce pack. Our addressable paper opportunity is an estimated $15 billion, with roughly 85% of it plastic-to-paper packaging conversion, representing opportunities we have solutions for right now. Over time, we anticipate regulatory, retailer, consumer, and NGO scrutiny on the use of single-use plastics and foam packaging to increase. With a continued customer focus on innovation and an evolving regulatory environment, this market opportunity is expected to grow and will be an area of differentiation for us emerging brand. We are supporting their transition from plastic to a more sustainable air environment. The plastic back-to-box transition is available today on shelves at leading retailers. As customers increase commitments and their desire to move to more sustainable packaging, they often evaluate solutions that move away from plastic or greatly reduce its usage. transitions to paperboard alternatives can increase brand equity without compromising product to help these advancements and for the recognition we have received for our leadership and support of customers on their sustainability journey. In January 2026, two of our solutions earned WorldStar PaperSeal Shape, deployed with leading European retailers, delivers roughly an 80% reduction in plastic per tray while maintaining full shelf life performance and runs on existing car. Our produce-packed planet tray was also recognized for replacing PET with renewable recyclable paperboard, eliminating more than 17 million plastic trays annually in a single retail application. In addition, EnviroClip design, reflecting our continued ability to replace plastic, while preserving functionality and shelf appeal. This award was one of eight PACT Global Awards we received. From an operational standpoint, this quarter was marked by a number of wins. We continue to make meaningful progress, ramping production. Commercial performance is meeting expectations, customer qualifications, and more efficiently support existing geographies while taking advantage of available recovered fiber streams in our Texas triangle. In parallel, we advance our customers' sustainability goals. It's going to be a durable, competitive advantage for us over time. We're excited to help prepare large events like the upcoming World Cup. Twenty-four brands across our food and beverage customer base are spectators and fans. Like these, customers rely on a consistent, trusted partner who can deliver to time-sensitive. They are prepared to provide the excellent customer service graphic packaging is known for. Energy strategy. Purchase agreement with Nextera Energy Resources. This agreement increases renewable electricity coverage across our North American operations and supports discipline execution against our long-term emissions targets. The 250-megawatt solar energy plant in West Texas is expected to begin commercial operations at the end of 2027. This agreement better positions us to support consumer brands in making progress towards their sustainability goals. We continue to build an award-winning culture and be recognized for our values. In March, we were recognized as one of the world's most ethical companies by ethosphere. This recognition, alongside our placement on the 2026 ranking of America's most just companies by Just Capital and Fortune, world's most admired companies, people put into action every day. our team with highly selective new hires to ensure that we have the right talent and leadership roles as we drive performance across our business. As I mentioned, Starline Eskijas has rejoined Graphic Packaging to lead investor relations. Additionally, we recently appointed Randy Miller. Randy will lead Global Treasury with a focus on cash flow generation and capital structure optimization. We just announced that Daniel Fishbein will join as General Counsel in two decades of legal experience on strategic transactions and securities law matters. He most recently served General Counsel of Corpay, where he oversaw the company's global legal appointments and talent upgrades. We aim to deliver a significant cash-generative business we operate with our immediate priority to reduce leverage and while continuing to return capital to our shareholders. Progress gives me confidence and opportunities ahead. Our first priority is to strengthen our strong strategy. You can expect future investment in growth to be more disciplined and focused on the highest return opportunities. and improve accountability by focusing on driving profitability and business excellence, including and reduce our inventory from 20.5% at the end of 2025 to between 17% to 18% of sales this year, toward our long-term goal of 15% to 16% of sales. We will also continue to innovate and develop world-class products, we remain on track to generate 700 free cash flow in 2026. Moving forward, we need to grow alongside our customers and partner with them to achieve their goals. We are a uniquely positioned engine and integrated network. We are on offer to provide more details on our financials.

Robert, and good morning, everyone. I'm pleased with our performance in the first quarter, including the strengthening of packaging volumes we experienced as we progressed through the quarter. Total volumes were up 1% from the same period in 2025. Top-line growth and higher packaging volumes are a direct result of the resilience of our business, the markets we serve, and the execution of our team. Sales increased 2% year-over-year to $2.2 billion, driven by the volume increase and a $50 million benefit from favorable foreign exchange. Partially offsetting these gains, price experience. The pricing decline reflects third-party index changes in Bleach paperboard of 2025, along with the continuation of unusual competitive packaging pricing experienced in the last few quarters. Innovation sales growth was $42 million in the quarter. Innovation pipeline continues strong partnerships and engagement with customers. Adjusted EBITDA in the first quarter was $232 million, including a $6 million foreign exchange benefit. This represents a $133 million decline from the first quarter of price, volume, and mix combined were a $46 million headwind and, again, were a result of the unusual competitive price. Commodity input and operating cost inflation of approximately $37 million was roughly $10 million. Favor gold net performance in January across and the domestic disturbances in Mexico during the quarter caused an approximately $25 million impact from disruption and downtime in our facilities. In addition, heavier scheduled maintenance in the quarter and our decision to curtail production to reduce inventories resulted in additional costs of $20 million each as compared to $20 million. As Robert discussed, we are executing cost reduction and efficiency initiatives, which drove about $10 million of savings in the quarter. And though these savings were all set in the quarter by the factors mentioned, adjusted EPS in the first quarter was nine cents and included a higher tax rate due to the vesting of employee equity awards between 25% seasonality of cash flow, which is an improvement of $259 million from the first quarter of 2025. First quarter adjusted The cash flow results included heavier capital spending than we expect attributed to the work to complete our recycled paperboard mill in Waco, Texas. As Robert alluded to, our operating environment remains dynamic with geopolitical uncertainty and inflation impacting the business. During the quarter, we experienced incremental commodity cost inflation resulting from the conflict in Iran, which impacted our logistics, energy, and resin spend. With NRG, we're about 60% hedged for both natural gas purchased in North America and electricity purchased in Europe and have commodity cost recovery mechanisms embedded in many of our contracts. However, these recovery mechanisms are actively addressing the inflation and working on initiatives to offset it. On April 9th, we announced a $60 per ton price increase for bleach cup stock effective May 8th. While this price increase will be realized in Q2, for non-index base of our affected contracts require price recognition by the industry's third-party index before we can pass it through our packaging. From the volume standpoint, our expectation for Q2 is consistent with our full-year range of down 1% to up 1%. We'll be pricing similar to Q1 and expect foreign exchange to be a slight benefit. With adjusted EBITDA, we anticipate certain commodity costs before moderating towards the end. Accordingly, we estimate a sequential $10 million incremental inflationary impact in the second quarter versus the first quarter, totaling third inflation in the first half of 2026 compared to our original expectations. Q2 adjusted EBITDA is now expected to be in the range of $230 million to $250 million. The many initiatives that we laid out today, in addition to the contractual recovery mechanisms to be realized in the second half of the year and our pricing actions, are expected to help offset the incremental inflationary impacts throughout the remainder of the year. As a result of these efforts, we remain confident and our ability to deliver 2026 adjusted EBITDA in the range of $1.05 billion to $1.25 billion in line with our prior guide. Our 2026 adjusted free cash flow outlook remains unchanged in the range of $700 million to $800 million, a significant step. Cash flow generation is back and weighted, consistent with the seasonality of our business, timing of capital expenditures, and timing of inflationary cost. We intend to pay down approximately $500 million of debt in 2026 and remain committed to our dividend. We understand that our dividend is important to many of our shareholders and also reflects the confidence that we have in the future cash flows of the business. Capital expenditures in 2026 are expected to be approximately $450 million. As a result of our completed 90-day review, we identified certain projects and investments, so we canceled them. In a one-time, and is a prudent return threshold, since we will be operating with less of a heavy investment cycle to a cash harvesting cycle. This is an exciting and much-anticipated next phase. The past few years have been characterized as building years, with capital investments and acquisitions made to differentiate our packaging and service offerings in the marketplace and position the company for long-term growth. Now we are focused on optimizing our footprint in operations, executing disciplined capital allocation, expanding profitability in the business, and to our packaging and to execution and operational excellence.

forward to taking your questions and continued engagement to hear your perspectives as we continue to enhance and streamline the business. Let me take this opportunity to thank our dedicated team around the world for their hard work in delivering a strong start to 2026. With that, operator, let's open it up for questions.

Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue, and you may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We do ask that during the question and answer session, you try and limit yourself to one question plus one follow-up in the interests of time. One moment, please, while we poll for questions. Thank you. Our first question today is coming from Ganshan Panjabi with Baird. Your line is live.

Thank you, Operator. And first off, welcome back, Melanie. We look forward to working with you. I guess, you know, first off on the heat map on slide five, you know, can you just touch on if you're actually seeing any sort of inflection in food, or is it just, you know, easy comparisons from several quarters of just minimal growth? Just trying to get a sense as to what you're seeing in that market specific to that category, which has been weak for several years at this point. And then second, as it relates to the realigned commercial teams, can you just give us a bit more insight into what's going on there? Thank you. Thank you, Ganshav. And thanks for

welcoming Melanie back. We're very happy to have you back, Melanie. With regards to your first question on food, let me just resume in on food. What we're hearing from our customers, gaining share, investing in product quality, and there is an increased emphasis on overall across as well as novel pack designs and obviously a localized, reliable supply chain. The consumer environment remains signals got shot and we're seeing select row customers and key segments everyday essential categories like yogurt forming well as consumers continue to prior skin care perfume and food service was a little slow you know due to the weather and consumer affordability trends but is expected to gain momentum throughout the year so that's that with regards to the real we We are seeing a big need for, in some cases, interactions of our large CPG customers. It's really doing a great job in getting me in front of customers as well. I've met six. That's really given me a good perspective on how our commercial organization is now organized and how well we're serving customers.

Okay, thanks for that. And then just for my follow-up question, on the EBITDA reconciliation in the press release, what is the 71 million add-back specific to the first quarter of 26? You know, it's just quite a bit higher than the first quarter of last year. And then just to clarify, as it relates to the commodity cost comment, are you expecting a sequential moderation in commodity costs? Is that what you're assuming in that $30 million incremental, you know, impact in the first half? What would that number be comparable in the second half?

Hey, gotcha, Ms. Chuck. I'll take those. So on what we have in the special charges bucket, I mentioned on the prepared remarks, the $40 million from the automated roll warehouse write-off, so that was the biggest component of it. We also had severance from the actions that we took that we talked about in the quarter. That's about $20 million. And then for the Croatia business that we're divesting, we had about a $13 million write-off of assets, and that's primarily for intangibles that we had acquired, so that those components are the majority of what you see in the quarter. On the inflation, so yeah, what we've called out is $10 million of incremental inflation in Q1, $10 million incremental to that in Q2, so for a total of $30 million versus our original expectations in the first half. And at this point, we see about the same number, about $60 to $65 million of incremental inflation for the full year. That environment, of course, remains very fluid and dynamic, so it changes every day. But what you see us doing is pulling several levers to offset that inflation. We talked about on the call the contractual recoveries and pass-throughs, and that will account for about a cup stock price increase. And then we're further evaluating some packaging price increases. And then, as Robert mentioned, we're looking at other cost savings, procurement initiatives to provide a further buffer. So with all of those offsets, we're confident that we can neutralize the inflationary impact that we see.

Thanks so much.

Thank you. Our next question is coming from Mark Weinstraub with Seaport Research. Your line is live.

Thanks very much. Chuck, just a point of confusion for me. So I think that 71, that was on adjusted EBITDA. Was the warehouse in Croatia, were those not non-cash write-downs primarily? Or maybe if you could just clarify for us.

Yeah, it's primarily non-cash, but just in the add-back to get to effectively the number. The EBITDA is, of course, an all-in number. It does include depreciation and amortization, but it does include non-cash charges.

before you. And then second, and I know you were kind of answering this in Ganshan's question as well. So basically, you have about $200 million of improvement in the second half of the year to the first half of the year. If you'd be willing, would you kind of share in terms of the way you provide those buckets, volume, price, you know, the big drivers, where the majority of that $200 would be showing up?

Yep, happy to do that. So broadly we see the year playing out similar to what we laid out in the original year-end call other than inflationary impact that I already talked about. But if you look at first half to second half, as you mentioned, there's a step up, second half versus first half. Think about a few things. So, first of all, our first half includes several unfavorable items, as we talked about in the January weather. It calls facilities downtime that we don't expect to recur in the second half. Second, our first half has a larger unfavorable impact from several items, including scheduled higher maintenance. And then also the market downtime that we're taking the lower inventory levels is higher in the first half. And then finally, the second half has a bigger impact from some of the positive items that we're seeing. For example, we mentioned the contractual cost recoveries, the packaging price initiatives, and some of the procurement and other cost savings initiatives. So, several moving parts, but of course, with our current expectations for inflation, we are confident that we'll be able to hit our full-year GBDOT guidance.

Okay, super. I mean, any chance getting a little bit more granular? I think you talked about weather being 25 in the first quarter. I think on the last quarter's call, roughly, downtime would be about 50 million. Inventory-related downtime, about 50 million lower. Are those numbers about right? And then if we're kind of left with like 125 in the drivers you were providing, kind of just round numbers to where they might come from, if not understood, but just trying

to get a bit more granular. Yeah, I'll just give you a couple more nuggets and then we can talk more offline. The phasing of the cost savings, we called out $10 million in Q1, it'll pick up a little bit in Q2, but then the majority of that will be back in loaded. You mentioned the downtime, that of course is more market downtime in the first half than the second half. So we can...

Thanks, Chuck.

Thank you. Our next question is coming from Hilary Kakanondo with Deutsche Bank. Your line is live.

Hi, thank you for taking my question. So just the breakdown that you were talking about to get to your guidance. Last quarter, you actually had guided to $100 million incentive compensation impact for 2026. And I didn't see that in today's presentation. Is that included anywhere? And maybe in, like, net performance in the first quarter? And, like, what type, you know, what phasing should we expect for incentive compensation through the year?

Yeah, that's all included within the year-over-year final.

It's all included in the first quarter? So you're not expecting any additional incentive comp this year for the remainder of the year?

Of course, it will roll throughout the year. It's the Q1 impact that we have.

And then how much should we expect for the remainder of the year?

Again, we embedded about the $100 million in our full-year guide.

Okay, got it. And then just pricing, I know you had asked for, you know, price increase. Does that have to go, like, is RISI involved in this, or do you have, is it pretty set? Like, is it just between you and the customer, or is RISI involved? Like, is it, like, is it going to depend on what they come up with, you know, in terms of, like, what the final number will be, or if there will actually be an increase?

Or is it pretty confirmed?

Yeah, a couple of components of our price, specifically what I talked about, an increase and cup stock paperboard price, and that is something that will impact our open market business, packaging business, that will be once REC recognizes it and then whatever the contractual starts getting reflected. And then on the other...

Got it. Great. Thank you very much.

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

Thanks for taking my question. I guess maybe I can just clarify, you know, maybe the walk on free cash flow. So it looks like you have, you know, kind of harvested some out of working capital and inventory. But does that maybe reverse as you take, you know, some downtime? And then maybe next year also, would you have to kind of rebuild those inventories? And do you expect, you know, kind of less contribution from working capital? And then just related to that point, just kind of curious if you still expect kind of an $80 million uplift from Waco, and is that being offset by maybe some downtime at Kalamazoo?

The last part. First of all, on Waco, what we're seeing there is the business case for Waco is indeed playing out in terms of the variable cost. But the benefits, we haven't recommitted to the specific benefits number because until we're able to cover the fixed cost with the volume that we need, then that's when you'll see the additional impact. Robert talked about on the call, the operations are running well, the ramp-up is going well, and everything is going very well. And in terms of the first part of your question, inventory will not be rebuilt in next year, as we talked about, or as Robert mentioned, we expect to get the 17% to 18% of inventory or inventory's percentage of sales this year on our way towards a longer-term target of 15% to 16%. So we will continue to see some working capital benefit. and next year from lower inventory. And then also 2027, if you think about 2027's cash flow, that will continue to benefit from lower cash taxes and then, of course, lower interest expense. So some of the items will come back. And then, as we talked about at the year-end call, we're a post-2027 free cash flow number of $700 million plus.

Thanks for that. And then if I could ask on supply-demand, so obviously there's been some changes in SBS. Our understanding is, I guess, that, you know, may not necessarily have the impact as to reduce supply to tighten up that market enough to get pricing power. Would you agree with that? And are you still kind of facing some pricing headwinds in SBS? And is that weighing on Cuk and CRB as well? Maybe you can just comment on, you know, kind of potential pricing across the different substrates to cover inflation.

Yeah, let me take that. You know, the two grades, that's what we primarily use, dynamics bleached on recycled with regards to cannibalization. Switching is rare. And with our new Paysetter Rainier grade to make, We continue to believe that face set of rainier will take volume from bleached over time. And when it comes to, you know, the balancing, you know, I just want to remind you in 23, we decommissioned our K3 machine in Kalamazoo in 23, the CRB mill in 25. Then we closed East Angus in Quebec in 25 and 26, and we sold the Augusta mill, as you know. So bleached capacity, as you know. So what we do here is we actively match our internal supply with our demand profile, and that's supported by our integrated system, and our portfolio as a result is structurally advantaged.

Thank you. Our next question is coming from Anthony Petanari with Citi. Your line is live.

Good morning. Just following up on, I think, Hillary's question, if you look at your total tonnage, is it possible to say what percentage is on a RECI index versus like a custom index? maybe what the lag is in terms of price increases, you know, if it's realized in RECI versus, you know, you see it in a custom index. And then how much of your volumes would be covered by that cut stock price increase that you talked about earlier?

We have more of our packs of RECI than we do in our other models, and so tied to RECI, 1,000 tons, and generally would be RECI, depending on the timing during the quarter that is recognized by REESE.

Okay, we don't have details around the percentage of our contracts that are tied to REESE,

but Chuck did refer to the billion dollars of non-contractual sales, and we do have a cup stock business as well where we sell a big part of that on the external market.

Got it, got it. And then I guess, you know, fiber is up, diesel is up. You've indicated that you're You're not seeing big cannibalization of SBS in the CRB. I mean, obviously, you can't talk about, you know, forward pricing or anything like that. But can you just talk about maybe your philosophy on pricing? You know, do you expect graphic to be a price leader? How do you think about it? You know, we've seen price improvement in other, you know, container board, graphic paper grades this year. Can you just talk to us kind of how you think about pricing generally?

Yeah, you know, the majority of our business is – unbelief, sorry – and taking –

Okay, that's very helpful. I'll turn it over.

Thank you. Our next question is coming from Phil Ng with Jeffries. Your line is live.

Hey, guys. Thanks for squeezing me in. Robert, appreciate the 90-day post-review. Volumes are up, so that's great. You got some headwinds this year that you're going to work through, but it sounds like de-stocking inventory could potentially still be a drag when we think about 2027. So with some of the levers that you may have a better appreciation now, is there a path where you could grow EBITDA next year without prices going high? I just want to think through that just because obviously it's a big earnings reset this year.

And then I'll talk a little bit about how it's all going to impact EBITDA. Opportunity to drive better financial and operational performance, as we talked. And we've taken 500 roles out of the organization, as Chuck talked about, that's going to primarily impact the second half of this year. We are advancing higher return opportunities. We've reorganized a commercial team. We've deployed AI. you know so we are very confident is going to that we have which is 60 million no we have mitigation actions in place which include contractual cost recovery mechanisms those have some timing actual business that we just discussed and then we just announced and primarily cost reductions and operational efficiency actions that we're taking obviously an EBITDA hit this year to reduce our inventory setting the base of this through you know we will continue to rely on protocol EBITDA so you it sounds like you you feel like you

got enough levers to grow next year from EBITDA standpoint Robert just quickly

summarize or well we are not giving guys for next year at this point it's early we're still early days in 2026 so give us give us a couple of months to get a better understanding but we're doing all the right things in the right work to

set ourselves up for a great 2027. Fair enough. A question for Chuck. Your guidance, you reiterated, which is encouraging. Certainly, you're seeing some inflation here. Your guidance, does that embed the SPS cup stock sticking? You know, granted, there's a lag. I don't know how impactful it's going to be. And in some of the packaging price increases that are not tied to research or some of these contracts, you know, is it embedded that you get price? I ask just because in your prepared remarks you mentioned you've seen some unusual price declines in packaging prices, right, not necessarily tied to SPS but some of the other grades. Have you seen that component, like, stabilized? Like, what are you seeing on some of that packaging price in the last few months?

Yeah, a couple of things there. So we don't embed anticipated RECI moves until they are – any impact of that on our contracts from our RECI move would not be reflected. We will embed what we see in the open market business, of course. From time to time, we would embed packaging prices, but right now we're still – so we'll embed that as we go.

Have you seen a stabilization there, Chuck, on the packaging price, what you've said that's been unusual coming in the year?

Yeah, I think what we see there is our customers, whenever there's geopolitical uncertainty, that the assurance of supplier becomes a bigger deal to our customers. And they talked about local supply, and our integrated model really sells well to them. And so it certainly gives us the opportunity to stop any negative trends or to introduce the idea of a packaging product.

Okay, very helpful. Thank you so much.

Thank you. Our final question today will be coming from Gabe Haida with Wells Fargo Securities. Your line is live.

Hey, Robert and Chuck. I'm curious if we can go back to the cup stock announcement. I find it interesting, I think, in the slide that you gave us. It's the one category that decelerated. It was pretty strong over the last two quarters. So I guess is there something unique about that supply-demand dynamic in cup stock that would afford you all to the industry to get price, or maybe something unique about the input cost structure that makes it such that you can recover costs faster than maybe some of the other two grades you participate in?

Yeah, there is a higher input cost, of course, than an impact.

Okay. And then as you have conversations with your customers, I mean, you guys are trying to reduce inventories. Maybe they were looking around the corner at oil above 100, saying we might envision some price increases. Do your sales folks envision any sort of pre-buying activity that happened in the summer? And then one last one on CapEx. It sounds like the entire $200 million that you called out is specifically associated with that one discrete or those two discrete winder projects. I seem to remember there were some, I guess, greenhouse gas initiatives later in the decade, and it seems pretty hard right now to get some projects still on the drawing board.

You can talk, Chuck, about how we got to the $200 million investment reduction and what that entails if that's one project or more projects. So the question around customer stock is a good one. We haven't really seen one as a result of anticipated price increases. We are having assurity of supply or assurance of supply. That's primarily related to having multiple site packaging so that they're not a natural disaster, more so than anything related to oil and gas right now. And, you know, as Chuck said, our integrated business model, you know, you need certain properties in the packaging. They want sustainability, and they're looking for ways to optimize packaging formats, reduce material usage and a proof cost I'll build on the capex the 200 million

that we call it out that was those two projects specifically but that was over the next several years that that 200 million would come out I'm not primarily this year that the 450 million is the the number that we had originally guided to for this year and and then clearly we've gone in and showed up our path to to get there and we'll continue to look for opportunities to even cut further

so you know with regards to capital we are implementing a very rigorous and disciplined approval process we will be evaluating prioritizing investments that promote the safety and fulfill regulatory obligations but we will continue to consider investments that generate the right returns for our portfolio. So that's how we're viewing this, and they're obviously currently evaluating, including the one you're referring to. Thank you. Ladies and gentlemen, this does conclude

today's Q&A session and also our call. You may disconnect your lines at this time. Have a wonderful day, and we thank you all for your participation.