International Paper Co (IP) February 26, 2026 Conference Transcript

That our next guest is presenting today. We have Andy Silvernail, Chief Executive Officer of International Paper. It's been kind of an interesting time last couple of weeks. What do you say, Andy? Also in the audience is Lance Luffler, Chief Financial Officer of the company. He's been with the company since 2025. And also from the Investor Relations effort, Michelle Vargas and Mandy Gilliland, who heads up Investor Relations. So welcome, everybody. Thanks for being here. So, Andy. Talk to us a little bit about just What you're trying to share with investors recently, a lot going on. Maybe we'll start first with D.S. Smith. Talk to us about the evolution and your thinking there and how that's progressed.

So the bigger picture is when I joined the company, my goal was to turn this into exclusively a packaging business and to get into a far more stable set of the market dynamics to restructure the company in terms of eliminating excess capacity, eliminating, frankly, inferior capacity and capabilities, and investing in how do you drive down the cost curve in the business. And how do you drive the customer experience up? And then finally, thinking about kind of where and how we compete with a relative market share position, you know, geography by geography, as you think about the converting side of the of the business. And so obviously, with the sale of GCF, we exited our last non packaging business. And with the acquisition of DS Smith, we then became the number one position in North America and tied for number one in terms of EMEA as we combined the businesses. And so the focus really has been driving those three strategic pillars. That has been the focus of the business. And we've made tremendous headway around that in terms of restructuring, getting the cost out of the business, taking out excess capacity. We've invested very aggressively. If you think about everything that we have exited and the things that we have invested in, we've exited in total a cost base of about $700 million that has come out of the business. And we have invested back into the business. We're actually going to spend in North America, we're going to spend about 50% more per mill in converting plant. We did in 2025, we will again in 26 and 27, compared to the run rate, the three years before there, the average before there. So that elimination and investment has been ongoing very aggressively to modernize our system and to drive those three pillars. And so where we ended up was with two regional powerhouses. And as I spent last summer digesting kind of where we were and the progress that we've made, what became very evident was that the benefits and the strength really sat in the regions, and very few, if anything, in terms of value that was going to be created for the customer or value that was going to be created for the shareholder sat in a global construction. And so starting there, when I came to that realization that. Look, you have two really good positions in the marketplace, but they really don't have anything to do with each other. That really started my thinking around that they shouldn't be together. Let them have their own place in the market. Let them have their own focus on customers and people and incentives, and then very importantly, in terms of capital. You think about capital alignment with the mission around customers and shareholders. And so with the combination of the two businesses, we ended up with two really strong regional positions. And as I said, they don't really have much to do with each other, so let's go liberate them. Let's liberate them and let's let them go play and win in their individual markets. And so that's really been where we are now. In terms of where the two businesses sit strategically, I'll start with Europe and then come back to the U.S. So the new EMEA co, so to speak, is, again, tied for number one in the packaging business in that region. It has demonstrated real strength around innovation and sustainability. They built a confidence on the commercial sides of their business, but they got too much cost. Frankly, it's just, and so does the entire European theater. There's too much cost in the system. And so much like we've done in the U.S. We're going to do what a lot of folks have not been willing to do, which is to aggressively take that cost out of that system. So you saw that on the earnings call in terms of the number of facilities. And unfortunately, the number of people are going to be impacted is really substantial. And so you're talking about. Between the end of last year and this year, we'll exit between $250 and $300 million of cost. About 4,000 people, unfortunately, will be impacted by that, and in almost 30 facilities in this first wave of actions. And in doing so, we will change that cost curve very substantially and allow us to reinvest back into the business where we need to, and very importantly, change the profit profile of the business as we prepare to spend it later this year or early next year. And so that's where we kind of stand with Europe right now. The U.S. is further along in terms of that transformation. We've taken out a huge amount of excess capacity on the mill side. We have also taken out aged facilities and underscaled or inferior facilities on the converting side. And are investing back aggressively now on the converting side in terms of a couple of new green fields, some brown fields, most importantly, actually internal capabilities relative to modernization of equipment and facilities to drive productivity and drive service levels at the customer. And then on the mill side, that's where a lot of the heavy lifting is now. So the mill side, you've heard me mention in the past that I believe there's $300 million or $400 million of latent productivity caught in the mill system, and I very much believe that, and we're seeing that day in and day out. So a lot of focus there. And so, what you should expect over the next few years is continued investment, very aggressive investment in the North American side of the business relative to modernization, decapitalization of the business. I think we've made a bunch of changes to the front end. We'll continue to tweak that. But the real focus is on driving productivity at this stage.

Thanks, Andy. One question that came to mind, you know, as you're taking the cost out and as you're investing aggressively now, and we're seeing it in the margin, certainly in North America, how do you feel about your Talent. Not yours specifically, but your people being able to put in all this capital, deploy it, make sure it comes up the curve the right way. You've been doing this for 20 plus years, living finance and industrial organizations.

What are the pitfalls there possibly? Great question. So I think I've been asked a lot about things that have surprised me. I got asked again last night at dinner. And one of the surprises in a very positive way. Is the, the talent IP is, is dramatically better than the historical results would suggest. So if you kind of look at the people in terms of, do they have the intellectual horsepower? Do they have the drive to get better? They do, but like all of us, we become a function of the system that we sit in, right? In many ways, that system in many ways starts to determine, you know, how, how capable or how high can someone reach. And, and frankly, and this is going to sound. Unfortunately, it's a tough way to say it. The team is learning how to make money. That's just a straightforward comment, which is really understanding that it's not just the process, right? It's not just the investment. It's not just running mills well or box plants well. It really does come down to how those things all intersect with the ability to drive profitability. And so when I say learning to make money, that's a shorthand way of saying you have to be incredibly focused on where resources are being deployed against profit pools. That's how I think of it all the time is where are the profit pools, those profit pools that the customer and where are you sitting in terms of your capabilities internally to drive that business. And so they know how to run the business. They know the customers. They know the mechanics of the business inside and out. And a lot of it is around choices, right? That's the biggest thing is, is how do we make those bigger choices that flow downstream that end up as cash flow and end up as return on invested capital? And so that so much of what myself and Lance are bringing to the table is that discipline, that discipline around capital choices, that discipline around people choices. Do you need to go in and blow up the whole thing and go hire 2,000 new managers? No, you don't need to do that. I would put this team up against a lot of teams that I've been with in the past and certainly against a lot of teams in the industry. But that focus and that tenacity and that aggressiveness, that's where we've had to step up the game substantially.

Thanks, Andy. And just to conclude that point, you feel you've got the engineering and whatever the talents you need to make sure that the reorganization, the capital deployment that occurs on the back end is there?

Yeah, we do. I'd say that the technical skills I feel great about.

Okay, and... You know, you've created the two regional powerhouses, to use your terminology, and as you look at it, really the values in the region, not in the tie between the two, to the extent as you evaluated it. What was the original then premise of putting the two together that, you know, as the organization was doing that, it didn't see that ultimate value in this region being separate as opposed to together?

Yeah, it's a great question. I think that – I think – If it was that obvious. Yeah, well, it's that obvious sitting here. Right, of course. It's that obvious sitting in – as you look back. I think the reality is I think we overestimated a couple of things. If I'm candid about it, one is I think we overestimated the commercial benefits of customers actually being interested and willing to strike deals on a global basis. It's not that those things don't exist at all, but they're more relational than they are directives. And what I mean by that is, you know, a global company, one of the global packaged goods companies, as an example, those decisions around which packaging supplier to use really happen locally. They're influenced globally, but they're really driven locally. And I think that probably that was overemphasized. The other part is I think that the – where everyone in the world sat in early 2024 compared to where we sit today around the impact of global supply chains, that has changed and changed meaningfully, and I think, you know, one of the parts of the underlying thesis was around paper flows, and the reality is if you look as an example, our Savannah mill that we closed, we could have kept that open and we could have shipped paper across the ocean. So you could have done that. But the return on invested capital, that was effectively zero. Right. And so that becomes a reason to keep a plant open or a mill open versus a good economic decision. And I think an example of learning to make money, that's a very clear one. And then the assumptions around global procurement and things like that, the reality is those assumptions were correct, but the assumptions were driven locally, not globally. Right. The leverage point was local, not global. And so as you sit there and you add that up, and You know, one of the questions that I've gotten quite a bit is, hey, what was that conversation like with your board as you broach this topic? And one of the things that I think that we are responsible for is we wake up every day, just like all of you as investors. You wake up every day with a choice to make, and just because you made a choice yesterday doesn't mean you should be anchored to that choice today if the facts are different or if your understanding is different. And I give my board an immense amount of credit for sitting with the facts and for being willing to make a choice that was a very clear choice relative to the industrial logic, but doesn't make it an easy choice relative to your past decision making. And so sitting with that discomfort and making those courageous choices is another thing that we're talking about and doing within international paper is don't get stuck in the past, right? We maintained 20% excess capacity in our business. Frankly, because people were afraid to shut things down, if we're just honest about it, right? You came up with a million different excuses that sounded really good, but the bottom line was you were keeping 20% of excess, inferior capacity, third or fourth quartile cost position. Because you didn't want to do the hard stuff. And we get paid to do the hard stuff. That's what we get paid for. We get paid to do things that other people don't want to do or can't do. And so I applaud my board for having the courage to make that decision and my team for the courage to make that decision.

Thanks for that, Andy. One last question for me, and then I'll see if there's anything in the audience. Can you talk about the $400 million investment that you're going to be making in EMEA before the spin? How much of that is on capital? How much of that is on spending related to optimizing the organization? Help us understand what's in that investment.

And if I get this wrong, Lance, throw something at me. So it's about 60% of it is actually going towards things like severance, right? So you've got a pretty large nut, which, of course, that's one of the reasons that people don't take the actions in Europe, right? Because the cost, quote, unquote, is so much higher than the U.S., which is true, is 100% true. But the return on investment is still outstanding, right? If you gave any one of us a 50% to 100% return on investment of any action, we'd all jump at doing it. It just happens to be in the U.S. It's a 200% return on investment for those same sorts of decisions. So about 60% of it, excuse me, is relative to the cost of changing the overall population of the organization. And the rest of it is going into capital investment in terms of modernization. And or shutting facilities down.

Thank you for that.

Any questions from the audience for Andy?

We'll keep moving on.

Andy, you know, one of the things we've talked a little bit about, but interested in an updated view. As you evaluate your cash flow going forward, there are obviously ways that you're going to deploy it. Certainly, you've been reinvesting in the facilities. You have a dividend. You maintain it. The dividend has been at a relatively high level versus your current earnings and cash flow. As you evaluate everything, which is, I'm paraphrasing perhaps poorly there, but I think you're looking at everything in terms of the spin. How do you look at the dividend? How does the board look at the dividend relative to the earnings power of the company on a going forward basis? Yeah. It would just not be a good time to evaluate that again.

Yeah. So the answer is yes. The answer is it is a good time to evaluate it. And so if I think about that, let's kind of think about regionally where things need to be and then kind of holistically how that comes together. So as you spin the businesses, the first thing is you want to make sure you have a capital structure that's appropriate for the mission of each of the businesses. And what that means, specifically in Europe, That business needs to come out and have a conservative enough balance sheet that they have degrees of freedom. One of the biggest issues and one of the biggest opportunities in Europe is everybody's in the same situation. Their cost base is too high, and they have crappy balance sheets. That's just a general statement. And so what I want to make sure is we actually put Amiaco in a position to have really arguably the best balance sheet in the industry. And then next to that is what are the calls on capital? And so the dividend that we put on Amiaco has to be commensurate with the cash flows of that business. And so we'll spin that business with a very good balance sheet and with a reasonable dividend that we'll decide as we get closer that allows it to go out and compete. Now, what I'm not going to do is spin a wounded animal. I think that's a bad idea, and I think we've got to be smart about that. As you look at the U.S., we have a lot of confidence around the cash flows of what that business is going to look like over time. And so, yeah, the ability to support a reasonable dividend in the ranges that are competitive in the marketplace, we absolutely know we can do that. We feel very comfortable. We feel comfortable with the work that we're doing, that we can afford the aggregate dividend as we look at 2027. We feel very, very comfortable with that. What we're going to do between now and the end of this year is really decide what's the right thing to drive the most value for the business. Like, what is the right ultimate dividend for us to reinvest back into the business aggressively? That's priority one. Priority two is to have a dividend that is predictable and reliable in your ability to grow it over time. And then priority three is to make sure you have that capital flexibility after those two decisions to take advantage of the marketplace, whether that's investing more internally, buying back stock, buying other companies. We want to have that flexibility to be able to do that. My history, for those of you who have known me in the past, is to provide you folks with real clarity of what a capital allocation model will look like. And as we get into that spin, we will do that. We'll provide that very clearly. You folks should be able to look at and understand the algorithm that we are working to in terms of value creation and be able to test that relative to organic growth, to a pricing model, to productivity, and ultimately to capital deployment. And be able to understand what the range of likely outcomes are through a cycle. And that's what I want to be able to make sure that you're all able to do.

Thanks, Andy. Let's get maybe to some of the near-term developments and news, and I guess first off, Can you talk a little bit about, if you're in a position to comment, what the impact of storms has been in the first quarter? You guided for the first quarter EMEA to around $220 million, a billion-ish for the year. North America was guided to about $530 million for the quarter, $2.5 million, $2.6 billion for the year. How do you stand?

Obviously, we've all done this a long time. No guarantees in life. We get it. Yeah, I'll just give you a sense of kind of where we are right now. January, I think, as we talked about the earnings call, was pretty darn strong in the U.S. And we saw that strength all the way through the storms. So commercially, we saw that strength. I would say that as we're looking at February, February is softer than January was. And that's not unexpected in terms of just what to see there. I think what we have to do is kind of, as this normalizes through, I believe that there was, I believe January, as I mentioned on the earnings call, was impacted positively by inventory correction. I mean, too much inventory was drawn down in December, from a week December. So, as I mentioned before, I thought that the results were overstated relative to a trend line, and we're seeing that normalized as it comes to February, and so not surprising there. I think March will be a real telltale of where the business really sits on a year-over-year basis. Our expectation remains that the industry is going to be zero to one this year in North America, as we see there. So I expect things to kind of normalize downward versus what we saw in that strength in January. In terms of the storm itself, the biggest impact for us is natural gas. That spike, that big spike in natural gas. And so we had said that we thought at the earnings call, we were literally in the middle of the storm, right? That was just happening. And we called $20 to $25 million of impact. It will definitely be bigger than that because of natural gas. You know, what that spike is. Unmitigated is probably in that $40 to $50 million range, is my guess, is somewhere in there. But we'll see how that plays itself through, you know, through the year or through the quarter, rather. In terms of Europe, the market in Europe has stayed soft. So no surprise there. That stayed soft. The big question in Europe is really going to be what happens with pricing. For those of you who understand the European market, it's different than the U.S. market. There's been a real push and pull around pricing in the European market. And so our expectation has been that you would see an early attempt at paper pricing moving, and then it would tail off much like you saw over the last couple of years. That's still our belief is that that's likely to happen and that the market will remain soft. You've got a couple pockets of things that have been good. I'm skeptical. I'm skeptical until you have a real trigger. And frankly, I think across both businesses. And we get this question a lot. If you look in the U.S., right, about 75% of our business is sitting in markets. If you think of that case-shaped economy that we all keep talking about and reading about, about 75% of that business is sitting in the lower side of that case shape. So if you're looking at housing, if you're looking at consumer packaged goods, you're looking at light industrial. Of those three, the one that's really shown real promise so far is the light industrial, right? So that spike we saw in the ISM. In there, the other two really haven't moved much. I think that, you know, my optimism around this, as I think about the intermediate term, is I find it unlikely that we're going to find ourselves, you know, some months or a couple of years from now with those things as depressed as they are. What releases them? That's outside of my expertise. But from that perspective, you know, it feels like there's a lot of pent-up demand there, and given where capacity utilization is in North America, I think that's a really good overall place to be. You know, Europe is more challenged relative to all of the trade noise and relative to the war, right? Those two things have really bound Europe in terms of spending. You continue to see individual spending hampered. People are saving a lot more money. Savings rates have gone up substantially in many parts of Europe because of uncertainty. And so I think that uncertainty has to break there.

Understood. Just a point of clarification, Andy, again, the zero to 1% in North America, again, market, market.

Yeah, I think we end up being probably a couple points better than that over time, over the year.

And then I guess I'd be remiss if I didn't talk a little bit about the recent price news out of Risi, who does the most widely tracked index. Any thoughts that you can share in terms of how that affects your pricing strategy for this year? Remind us what you're out in the market with. I believe it's $70 a ton. Do you have letters now to customers on box pricing to help us understand how that is all going to churn, in your view, without going where you can't go? Right. Thank you.

So, I mean, first of all, I will say that we were surprised. We were surprised by last Friday's publication. Did not expect to see that. You know, there's a lot of people have a lot of speculation about things. I'm just going to avoid that. I don't think that will be helpful in any way, or at least not helpful to me. And so I'll stay away from that. I don't think anything has fundamentally changed in terms of the dynamics. So, if you look at operating rates through the industry, if you look at where we sit in the marketplace, the $70 price increase that we put into the market effective March 1st, we don't see any change in that. Obviously, now, with that announcement, you'll have to overcome that. But it's hard to imagine, given where operating rates are and the long-term correlation between pricing and operating rates, it's hard to imagine that our thesis is materially different than what we've seen. And that continues to be in a pretty weak environment, right? When you look at it over the last six months, we'll take January, we'll hold that and say, that's good news, but let's be skeptical. And so with any pickup in demand, obviously on the paper side, things are tighter than they've been in a very, very long time. And so I think that the probability of our pricing moving into the market and being successful is relatively high in terms of the mechanics of it. Effectively, you have a price increase that goes through in paper, and then that has to migrate its way through box, right? Right. Mechanically, again, 70% of our customers, that's contractually in place. And so that mechanism is going to play. So you're going to end up with two different things happening at the same time for a short period of time. You're going to have the pub down, the 20, and you're going to have the push of the 70 going to the marketplace. And then we'll see what happens with publications in March and April. We'll see where those go. So those two will be fighting each other a little bit over the next quarter, right, if you just kind of think about the mechanics of it. But it really is about us moving that $70 through the box system.

And you made an interesting, an important point, which is... Your 70 will be effective March 1, but theoretically, that would be from the new starting point to January. That's correct. Okay. That's correct. And I would, again, be remiss if I didn't bring up what's been discussed in the past by some of the independents that, you know, Phrasing, sure, the paper makers like to raise container board pricing, but they don't always transfer that price through in box pricing. Again, can you comment as to why they might have that, what your overall determination would be to make sure that converting prices Match at least paper pricing. Again, wherever you can go, wherever you can't go, don't go.

I think the most important thing to recognize here, and this is a little bit of the anomaly of this marketplace, is that, you know, we used to be one of the largest suppliers to the market of paper. Right? That's a role that we play, you know, outside of our own consumption. We are not anymore, right? We actually are buying paper on the open market right now. Not a lot, but a little bit because of the capacity that we've taken out. And so while we do still sell about, what, 5% or so that goes into, you know, of our paper that gets made, there are grades that we really can't consume for one reason or another. So we're both a buyer and a seller in the market. So we're seeing both the signals. And that's why last Friday was, frankly, pretty confusing to us because the signals that are being talked about of why that happened, we don't experience and we're 30% of the market. So it's an interesting anomaly. And so, you know, from that perspective, as we think of it, we're effectively taking our own box pricing. We're taking our own paper pricing, right, and it's being passed through the market. And 80% of the market is integrated today. And so what's really happening, right, is RECI is setting a price point on a relatively small sample size, if we're just honest about it. And so from that perspective, we've got to kind of say a small sample size is going to have more volatility to it than the 80 percent of the market that's integrated. We are almost 100 percent integrated at this point. And if you look at, you know, the top five players that are 80 percent of the market, most of that is integrated also. Right. There are a couple of players that are still selling paper into the open market that would cause some volatility, but not a ton. So, you know, from that perspective, we effectively, to get your question nailed, is we're pushing our own. Container board into our own box system. So we don't have to rely really on anybody else. We do sell the independents that are our partners, right? They're not just random independents.

So how do you incentivize your, if it's done at the local level or if it's done at a regional or national level, your commercial officers, how are you incentivizing them to make sure that if prices go up, whatever per ton, that that gets transmitted in boxes?

Yes. So first of all, remember that 70% of it's mechanical. So it's only 30% that you're actually pushing that through the system. And so it's a real focus on that 30%. To make sure that you are raising those prices and sticking to the discipline of those prices going through the marketplace, right? So what you're avoiding is the negotiation of, okay, it's 70, but let's cut a deal for 50. It is effectively, no, it's a $7 price increase, and we're going to stick to that. With that 30% of the market, it's really the variable part of the market.

Thanks, Andy. Any questions in the audience?

All right. Well, I've got a couple to wrap. I'm going to go a little bit of reverse order.

Keep your employees motivated and focused during this period where there's going to be a lot of transition. After two years where there was already a lot of transition, you know, are there KPIs, you know, are there other things that you're looking at to make sure that the troops You know, affect the change that, in aggregate, everyone knows that IP needs to get done. So that's question number one. And question number two, I mean, I think I know what the answer is going to be, but I want to know what you think the pluses and minuses are in the puts and takes. Do you think you can get to the margin levels of your peers, both in North America and EMEA, by, you know, call it 20-28? Yeah, good questions.

So the first one on keeping people focused. I'm a huge believer in ownership and incentives. I think those things matter tremendously. And two, both of those things were broken at international paper up until 2024. And what do I mean by that? We had a very large centralized command and control structure, you know, within IP. And so the MILS system and the box systems existed. To serve the center. That's really how it was set up. Um, and what we have done and we did that in the in the fall of 2024 is we completely separated that. Um, completely we, we broke that apart. Um, 100% the, uh, with the sale of GCF, we will have half as many people at the corporate center as we had in May of 2024. And those people, you have a very clear delineation between who sits in Memphis. You are either part of the North American packaging business or you are part of corporate. And the reason for corporate, if you think about it, is basically raising as cheap a capital as you can, right? That's really the job of corporate is that how do we get as low a cost of capital as we possibly can? And the job of the business is to sell packaging that meets and exceeds the needs of our customers. And so you have to separate those things out. So, we've separated that. There is no center, as they say today. There is none. There are businesses and the corporate, and you each have jobs to be done. And incentives matter. And so, as we've separated those things out, as an example, on the sales side, we have completely changed the incentive structure. We had an incentive structure in sales that was really about keeping your job, if you're honest about it, versus you get paid for performance. That has completely changed. The incentive systems that existed for those who received part of our annual incentive plan, those were really around. The hybrid between some metrics and a bunch of subjective, and the example that I use often is if you look at the 11 years, and that's the only reason I picked 11 is because it's the data that I was given. The 11 years that I looked at before I started, the two years before I started, the bonuses were 30% and 20% of target. That's two years. And then the nine years before that. The company was paid on average 100%, a little over 100% of bonus while profits were cut in half. So think about that reality. So as you guys are experiencing profits cut in half, for nine years, people received 100% of their bonus. And that's because it was a complete mismatch between ownership and incentives in the system. And then what happened? Chris Conner, my lead director, he became lead director in those two years before there. And he basically said, we're going to make this change. And we're going to make this change to align incentives with performance. So we've continued that down through the system. So today, in terms of incentives, you are paid on sales. Our 2026 system is 30% sales, 60% EBITDA, and 10% cash conversion cycle. That's what you get paid on. And the two businesses have their own bonus structures. They don't share a bonus structure. They share metrics, but they don't share the bonus structure, right? So they have the same metrics, but they're local. Very important. In terms of stock compensation. So myself and Lance and my team, 100% of our stock compensation are PSUs, performance shares. They're tied to an index, right? So our competitive index. And that's the way I believe it should be. I think it should be, we should eat our same cooking that you guys have to eat. There should be no difference in those things. So I think you keep people motivated. I have ownership. I have clear line of sight to what I own and what I'm responsible for. And I am rewarded or I am punished in alignment that there's no confusion. And I think, you know, I grew up playing sports. I love sports. And the thing I love about sports is there's a scoreboard, right? I love it. You are either winning or you're losing. There is no in between. And so, you know, when I came to the business, you had, you know, green, yellow, and red everywhere. Well, guess what? There was a lot of yellow. So one of the very first things we did is say, get rid of yellow. Right? Because I don't care if you win by one point or you win by 50. I don't care if you lose by one point or you lose by 50. You've either won or you've lost. There's no frickin' in between. And let's get figured out how you're going to win or you're going to lose. Second question. I forgot what it was.

Margins versus peers by 28.

Yeah, so I think, you know, in North America, absolutely believe that we have the ability to be best in class in terms of margin structure. It'll happen a little bit differently than our best in class friends who were up here a minute ago. They have a higher percentage of local markets that tends to have a higher variable margin and a higher cost to serve, and we have a much larger footprint and more scale around that business. I think structurally, though, in terms of can you get to, you know, that low 20s EBITDA margin, can you get to, you know, into the teens in terms of ROIC, structurally, there's really no reason why that can't happen. It's not easy. And the point that we are now in the journey is we've taken out the really big chunks, how that gets realized to the P&L, it's still making its way through the P&L. But now the work of margins is really around productivity and around pricing optimization, as you kind of think about that. You know, that's where that hard work comes at. And that's more of continuous improvement than it is kind of big structural changes. Okay. In Europe, it's a little bit different. I actually think that we're at a slight structural disadvantage because we're really not in the craft business in Europe. So I think our ability to be into that low to mid-teens in terms of EBITDA margin, I think we have the ability to be in that 15% range in Europe. I don't think that gives us the liberty to be in that kind of 16, 17, 18. I think that's probably not realistic mid-cycle. I don't think that's realistic, given the profile. But still a decent business. We look forward to the progress.

Everybody, please join me in thanking Andy Silvernail and IEP. Thank you very much.