Good morning. It's great to see all of you here today.

It's been a while. Thank you for coming, and thank you for everyone that's on the webcast today joining us.

We are going to get started here momentarily. Everyone in?

Okay.

Welcome. So today, speaking on behalf of Graphic Packaging is Michael Doss, President and CEO; Stephen Scherger, EVP and CFO; and Ricardo De Genova, is SVP of Global Innovation and New Business.

Before I hand the call -- the presentation over to Mike, I'm going to go over our forward-looking statements disclosure. We will be making forward-looking statements today.

These statements are based on current expectations that are subject to various risks and uncertainties. For more information on these risks and uncertainties, you can go to our periodic filings done with the SEC.

Now I'll turn it over to Mike.

Great. Thank you, Melanie.

Can you hear me, okay? I need to use this mic, right?

First off, welcome. Great to have all of you here with us this morning.

Those of you who are in person as well as those of you who are listening on Webex this morning, we're looking forward to seeing you in the next couple of weeks and months that come along here as well. It is nice to be back at The Exchange.

It's actually been 2.5 years since we rolled out our Vision 2025 ambitions. And at that time, we didn't even know what COVID was.

So a lot of things have changed in the last 2.5 years. And Steve and I thought it'd be a great opportunity to get together with our investors and hold an Investor Day to talk about some of the things we've accomplished which has been a lot over the last 2.5 years as well as releasing our results here in Q4 today.

So our goal for the day is really to have you leave as excited as we are about the prospects for the company's future as well as our ability to hit our enhanced targets that we put out yesterday as part of our Vision 2025.

Before I get into some of the materials, I want to acknowledge a few of our people who are here today. So we've got Ricardo De Genova here on the far side.

Everybody knows Steve. I always say the great ones only have one name, Steve.

And then we've got Melanie, who just introduced all of us. We've got Roxanne McSpadden in the back.

She's Director of Marketing came up and helped us put the materials together as did Catherine Berich, there's Catherine. Thank you, Catherine.

We've got Brad Ankerholz, who's our Senior VP and Treasurer. And he'll tell you, he touched off $5 billion of our debt last year.

And so he was a busy guy last year. We're glad to have you here with us today as well, Brad.

Lauren Tashma, our Executive Vice President and General Counsel. Good to have you with us today, Lauren as well.

And Brian Davison is in the front by Melanie. Brian joined us a couple of years ago, and he runs strategy for us as Senior Vice President of Strategy.

So just looking around, making sure I didn't miss anybody because they're dispersed.

Okay, great. Let's jump into it.

Really what I want to do today, our agenda for today, since we have some new investors as well as some new employees that I'm sure are listening on the phone. I want to ground everybody in terms of the company we have and the relative competitive positioning of the business that we've built.

Once I do that, Steve is going to come up and talk a little bit about our fourth quarter results as well as our guidance for 2022. And then we're going to spend the rest of the day really focused on our Vision 2025 in terms of our prepared comments.

We really want to take you through the goals that we put out. Why we've got confidence in our 100 to 200 basis points of sustainable organic growth, which we've delivered on here over the past couple of years.

Ricardo will come up and talk about some of the pipeline projects we have. And I encourage you at one of the breaks to look around and take a look at some of the materials on the table.

There's a lot of things to see there as well.

Then I'll come back and talk a little bit about the productivity initiatives that we've got in place, both in terms of the ongoing productivity to fund our growth as well as special projects that we do. The biggest one right now that we're finishing up is our Kalamazoo, K2 paperboard machine and I'll bring you up to speed on how we're doing there.

And then lastly, we'll round out with People and Planet give you some insight into the progress we've made against those objectives. And then Steve is going to spend a fair amount of time before we close or the break with our prepared comments, kind of going through a number of different scenarios in terms of capital allocation and value creation that I think you'll find pretty interesting.

So that's our goal for today.

And I guess as I start, one of the things that you've heard us talk about, given the results that we've generated in the business that we've built is we fundamentally believe that we are in a different race than the rest of our competition. When you look at the fact that we're the leading global fiber-based consumer packaging company, you look at our assets, our asset base and our operating assets that we've got in place, they're really unmatched.

They're well capitalized. They're geographically positioned in the right spots, and they really provide a tremendous amount of benefit for our customers in the terms of materials that we make for them, the products we make for them as well as excellent customer service, innovation, and kind of an enhanced customer experience.

And if you really think about that as society continues to evolve, and you see more of a movement towards sustainability and a circular economy, we're at the intersection where those assets in that operating model really marry up well with what consumers and customers are demanding from packaging companies. And that's really what gives us a lot of confidence in our ability to drive the growth that we're going to talk about today.

Finally, on that point, we've built a really powerful cash generating operating engine, here at Graphic Packaging. Steve will take you through a lot of what that looks like.

And when you combine that with our proven track record of solid capital allocation to create organic growth opportunities as well as enhanced shareholder value over time, we think the runway is multiyear here. And that's really what we want to leave you with today as we wrap up our presentation.

I mentioned the circular economy, and I want to spend a few minutes talking about how we think about that. It's kind of on display on this chart here.

I like this chart because it kind of breaks it down. If you think about fiber-based packaging in general, whether it's industrial or consumer, it's probably the most sustainably based packaging through the life cycle out there.

It all starts with renewable resource and starts with a tree. These trees are grown in a sustainable fashion.

They're sustainably harvested. And then we turn it into a package, a virgin package in one of our mills.

So think about a beverage carton that need strength or tear or a confectionary carton or health and beauty that needs high gloss, really good appearance for it, and we'll do that on bleached paperboard. That really allows that brand to really get that pop that they're looking for.

Once we make those products then we actually collect that material through a variety of different ways and take it back to our recycled mills and recycle it.

And then we turn it into another primary package. So what started as a beverage carton, then the next time you see it, it's going to be a cereal carton or maybe a cake mix carton.

And that process through our recycled mills can take place as you see on there somewhere in the neighborhood of 5 to 7 times. There's even information that says it can be more than that, but we know for sure the science is very supportive of 5 to 7 times recycled.

And then from kind of an end-of-life standpoint, you think about it, these fiber-based packages actually are very environmentally responsible because when they're composted or put in a landfill, they actually revert back to their organic state pretty quickly. So that is a solid message.

And I'll tell you what, it's really resonating with the end-use consumer. That's really what's driving a lot of the demand that we're seeing, and you hear about it in terms of replacing single-use plastics.

This is the tailwind that we're talking about. The consumer knows that the collection rates for fiber-based packaging are some of the highest out there.

Last year, in the United States, that number was 68% of all paper and paper packaging that was created was actually recovered and recycle it again. That's a high number.

The only other category that would be close to that would be aluminum, aluminum cans, in particular. And if you think about plastics, it's really in the mid-teens.

So it's a substantially advantaged market in that. They know that.

And they know they're doing their part when they actually contribute to that recycling process. And again, that's really what gives us confidence that we're going to continue to see the tailwinds of demand through our fiber-based packaging.

It's been a while since we talked about this. And so for some of you who may be new to the story or perhaps some employees who haven't heard us talk about it yet.

If you think about the company, we have right now on a pro forma basis in 2021, it's an $8.1 billion company. You see the geography split there.

74% is in North America, 22% is in Europe, and that number grew quite a bit. I'll comment on that in a minute with one of the acquisitions that we just recently did.

And if you think about those 2 markets, those 2 markets, in particular, are the ones that are really driving and leading in many cases, this move around sustainability and move to a more circular economy.

And the way we respond to that at Graphic Packaging is with an integrated model that really allows us to have leading positions in both North America and in Europe on the converting side. As you see from the slide in the Americas, we also have leading positions on the paperboard side.

And that vertically integrated model really drives what I'll show you here is what we call our flywheel of cash and EBITDA. This is not new.

This is how we've run the company for over a decade now. We've just sped it up.

And that's really our goal all the time is to make this flywheel of cash and EBITDA spin faster.

And if you look at how we run the company, all packaging, as we like to say, is local. We've got over 100 converting plants in Europe and North America now.

And what's great about that is that really allows us to respond to local needs. And so we've got those converting plants and those commercial teams really pick up on the trends that are going on in those markets.

They're able to respond and react to different things that are going on in the ground.

At the same time, that demand really funnels back into our mills. And those mills really -- they need to run full.

And we want them to run full. We want to optimize the mix over time.

So that increased demand every year that we grow through organic growth that we generate as well as M&A really creates that dynamic.

The customers benefit by having an integrated supplier, particularly now that's very present when you think about some of the challenges with supply chain. They know that we've got the paperboard, and we're going to take care of them as we run our business.

So that really works well together.

And across that whole platform, what that really allows us to do is invest for efficiencies over time. If you think about efficiencies, it's really kind of the key milestone of being able to drive growth as well as value creation over time.

So we're constantly upgrading both our mills and our converting plants. And that has a number of benefits that really get unlocked.

It allows us to provide lower cost material over time to our customers. It provides better innovation because we're able to invest for innovation, and you'll hear Ricardo talk about that.

It also provides excellent customer service as we continue to reduce our tack times in our -- our cycle times between the mills and the carton plants. And so we think that, that combination, as you it together, is truly the right way to create long-term shareholder value.

And for us, a lot of people talk about running an integrated company. We've been doing this now for well over a decade, and we live this every single day.

So it's an important distinction I want -- that I wanted to spend a few minutes on this morning.

This is a slide I'm pretty proud of. Over the last 5 years, we've really transformed this company.

You can see it here. We've more than doubled our sales.

Steve will take you through here on our guidance, and our EBITDA is actually going to be more than doubled at the midpoint as well. EPS has grown, compounded over 10% a year over that 5-year period of time.

Importantly, we've really diversified our customer portfolio. You can see it there in terms of the mix and the segments that we actually operate in, and I'll spend a fair amount of time on that here in a few slides.

We also now manufacture all 3 substrates. Why is that important?

Because we don't look at them as just individual substrates. We don't look at just CRB or CUK or SBS.

We look at that in total and how we use the 4 million tons that we manufacture. And that was really on display during the pandemic, where we were able to take over 100,000 tons of our CUK and put it in SBS to service customers.

As we saw demand shifts that happen real-time. And again, back to that integrated model, we have the ability to take care of those customers as that changes, rapidly in some cases.

And I think that really showed the power of our model as well.

Importantly, on this slide, what you'll note there is also the diversification of the actual customers we have. Our top 10 accounts, 5 years ago, were 45% of our revenues.

That's now 30%. So we still have big accounts, but the diversification is pretty significant, as you can tell, and that's been consciously done on our behalf.

We don't have a single customer now that is over 5% of our sales. And some of you who've been around a while know that there was periods of time, we had customers that were close to 10% of our sales.

So that diversification is a big deal and something we've consciously been working on with the M&A that we've been driving.

Let's talk about Europe for a minute. This is another thing that Steve and I are both are very proud of.

When you look at the European market, it really is ground zero for sustainability and circular economy growth. And so we're excited to be there in a big way.

Our acquisition of AR Packaging actually more than doubled our revenues.

And importantly, we have now access to Eastern European markets that we didn't have a presence in before. They're faster growing and they're lower cost.

So that creates optionality for us. You can see it on the map in the different colors that are listed there, the light green being the ones that we just recently acquired from ARP.

We also now convert over 1 million tons of product there, and that gives us a lot of optionality over time to drive integration and further value creation through M&A and other opportunities that we've got. And Steve will profile a few of those as we -- as he comes up and talks about his comments.

I think the other thing I'm really pleased to add, we closed this deal pretty quickly. We got it done and we closed it actually at the end of October.

So we've actually operated the business now for 2 months. We're very pleased with the performance we see so far.

Joe Yost, who you met the last time we were here, actually is going to lead that business. He's going to lead that as an expat.

He's relocating to Belgium as we speak. He's lived in Europe before.

So we've got a very experienced manager that's going to drive that business. I'm very happy about that.

And importantly, 5 out of the 8 general manager jobs that we have in that business are actually now by AR Packaging people, and our CFO for our European business is also an AR Packaging person.

So we've built a very diverse team with both our resources as well as people that we acquired with the acquisition. I'm excited about that.

I think both you and I are very confident in our ability to deliver the $40 million we pushed out there for synergies. And Steve will talk a little bit more about that in his comments.

Let's spend a few minutes talking about that customer segment categorization here that we talked about. This is new.

We haven't looked at it this way before, but we thought it would be a good way to kind of show the diversification that we've developed across the company. We've always done business with large major brands, and you'll see many of those household Blue Chip names on that chart there.

But again, if you went back 5 years and you looked at our beverage and our food business, that was almost 80% of our sales. Today, that's 56%.

So we sometimes get categorized as a food and beverage company. That's good.

Those are important markets for us, but we're more than that. And you really see it here.

The International Paper acquisition of their Consumer Packaging business gave us a excellent platform on foodservice. You see it's 20% of our sales.

And importantly, and you don't think about it this way, most of the time is we've got now 24% of the company that's either in the consumer or the health and beauty categories, and you see some customers we do business with there. You put that all together in that value creation on the flywheel of cash and EBITDA, I talked about, you drop that in on the top along with our organic growth, we drive a lot of integration through the business.

And it really gives us a diverse customer set and it smooths out our revenue profile, and it gives us confidence in our ability to talk about 100 to 200 basis points of growth across a wide range of products. And I'm going to spend a few minutes talking about each one of these categories because I think it's important to give you a little more insight into how we think about it.

I'll start with food. Still a big category, our largest, as you can see up here.

And you can see we do start in the center of the store. That's always going to be important to us, right?

You see those types of products that we've got there. A lot of those use our CRB and our CUK, but we've expanded out from the center of the store around the perimeter of the store with our technologies and some of the acquisitions that we've done as well.

You think about fruits and vegetables, our ProducePack cartons for fruits and vegetable packaging. And you see some of it in the back, you can see it on the break.

We've got some neat options there for people who want to get out of plastic and the single plastic bags that you see so prevalent at the grocery stores in the past. We have Punnet Trays now for vegetables in places like France, where they're outlawing statutorily, the use of plastic in those kind of applications.

So that's creating some real demand for us.

Similarly, in the meat and deli category, we've had tremendous success with our PaperSeal offering, which is a paperboard tray. It's got a film seal on top, but it's easily removed, and the paperboard goes into the recycling bin and can be recycled.

So still not a perfect package, but a much better package than the one that it's currently in, which tended to be polystyrene foam with an over-wrap on it.

Look at bakery, think about bakery. A lot of rigid plastic historically there for donuts and pastries and those kind of options around the perimeter of the store.

Now you're seeing a lot more of paperboard offerings there. So that -- those are the kind of things that really give us confidence that we can continue to grow around the perimeter of the store on the food business.

We're also in multichannel, both club and mass. Our Z-Flute does really well and disappearing pallets on big club store applications.

That's been a growing business for us for a number of years. We've got a great convenience business, which really tends to focus more on private label and store brands.

We bought that business a number of years ago. It's in the U.K., and we've learned a lot from those folks in terms of how to respond to that.

And I think that's an important point because some of you have been writing and asking questions about hey, with prices going up on food, what does it all mean? Are they going to be swapping and trading down in some cases?

I think, look, our customers have been reporting results. Most of them are talking about pretty low price elasticity.

But I mean, if you really think about what we've got there, 20% of all our food business is actually store brand. You see it at the top.

So if that does happen, we're right there with our ability to respond to those needs. And I would actually argue some of these store brands are some of the biggest brands we have, whether that's Kirkland or Great Value and other ones that continue to grow and really resonate with consumers.

So we've got that category covered. And if you take nothing away from this slide, please think of us as more than just center of the store because we really are, and we've invested to make sure that we're able to do so.

I like talking about the beverage packaging business because at our core, that is our legacy. It's also kind of neat because if you kind of think about over my whole career, I've been able to kind of stay involved in beer -- are -- really all along and they're really good group of people, great group of customers and they're fun to help build their business with.

And you see it on the slide, we've got a large global share here, almost 60% global share. So we're almost twice the size of everybody else in the category.

And that's our legacy going back to 1991 when we were spun out of the Coors Brewing business, and we've got a very diverse customer offering here or customer proposition that is really grounded and it's foundational in our machinery business.

We design, manufacture, install and maintain the machines that take cylindrical devices, cans and bottles at incredibly high speeds and put them into packages that then are in our customer applications. We've got over -- I think it's now over 1,500 machines around the world today that are operating in various brewing canning operations.

And our backlog is very, very strong.

You take that and you take a look at -- in the 4 platforms that we operate, we have baskets, wraps fully enclosed. And our newest one, which we rolled out to you the last time we were together, which is Clips.

Those 4 platforms really have unique designs and product offerings customers and consumers that actually help them consume this stuff in a very responsible fashion.

And we have seen that kind of tilt a little bit towards the aluminum can, which I don't think is a surprise to anybody given some of the growth of aluminum cans that the producers have been talking about there. Underneath all of that, we've got incredibly low-cost converting.

You think about Perry, you think about West Monroe, many of you have been to those 2 facilities. These are incredibly well-capitalized facilities, very close to our mills.

In one case, it's 15 miles away and in another case, it's 7 miles away. So we're not spending a lot of money moving the paperboard to these converting locations.

Our West Monroe facility will convert over 400,000 tons of CUK this year for beverage customers. And again, that converting plant 7 miles away from the mill.

We think it's probably the largest converting plant in the world.

We also have another facility similar to that, a little smaller that we talk to you about the last time we were together in Sneek, Netherlands. It has actually got the same type of equipment, and we're building that out in the Netherlands to kind of service our beverage customers there, too.

It's fully commissioned and operational, and we will ship over 250,000 tons of CUK to Europe this year and we'll buy another 50,000 tons. So that is a very big growing market.

If you go back to 2012, that number was under 90,000 tons that we actually shipped to Europe. So this is a great franchise, and it's growing is really what I want you to take away from that.

I should actually probably mention, though, that one of the other things that we've got there is we're the world's largest manufacturer of CUK, which kind of matters if you're going to make beverage cartons. And it's roughly a little over 1.5 million tons.

So we know CUK very well. And really what customers are buying there is strength and tear.

They just can't have those handles fail. You think about it if you're carrying a basket and suddenly that fails, and you've got 6 broken bottles there.

Lauren's counterparts are very busy, right? And that's not good.

So we have to have products that actually stand up through the rigor of the supply chain and our products do just that.

Let's talk a little bit about foodservice here. This business is a great one.

And it's been a little up and down, as you can appreciate with COVID, it actually took a pretty big hit. But I can absolutely tell you the drive-through is back.

And the drive-through is really where we spend the majority of our time for our business. The biggest things we manufacture are cups and bowls.

We actually manufacture over 13 billion cups this year. And you see it on the slide there, 75% of our volume is to quick service restaurant.

Why that's great? Because they're the ones with the big capital budgets they can afford to continue to reinvest in new stores, new drive-through methodologies, which I think you're going to see a lot more of based on what we're seeing.

And when you think about that drive-through, think about that also being delivery to home, right? Because we've got different dynamics that are going on with how people are working, where they're working.

We have more at-home workers. DoorDash and Uber Eats and some of these other services are really kind of pairing up with these ghost kitchens that some of our customers are putting in place.

Our products go out and help brand that stuff ultimately to the home.

So we're instrumental in being in that. The American consumer will always want convenience.

If the Starbucks down the street from me is any judge, I mean it's like wrapped around 2 times around the door. They're busy and we see it in our volume recovery here that we've seen today.

We also make some Clamshells and fry scoops and a little bit of cutlery and that type of stuff. And I think, again, as Ricardo talks, you'll hear him talk about some of the statutory things that have happened where different jurisdictions are actually banning some of that single-use plastics, and that's creating some opportunities for us as well.

He'll also talk a little bit about some of the material science stuff we're doing to eliminate the more traditional low-density polyethylene coatings that we use in our cups. We got some water-based dispersion coatings now that work incredibly well that are better from a recycling standpoint.

And we've got a lot of customer interest on. So I'll let Ricardo talk about that during his talk.

I like this slide too, because you don't think about it this way. I mean, if you take a look at the -- I guess, it's the left-hand side of that slide, I like talking about a Filter Frames.

We've built this business by a number of acquisitions kind of quietly over the last 3 or 4 years. So you think about Carton Craft.

The Greif assets were formerly Caraustar, Quad, Americraft. They had a lot of these types of customers that were out there.

We've got a filter frame business now that uses over 50,000 tons of CUK every year. And guess what happened during COVID?

People really figured out they need to be changing those filters much more frequently than they were before. So demand has actually grown quite a little bit there.

We've got 2 facilities that are -- actually 3 facilities that are dedicated to just making filter frames.

A nice example of something that you don't think about a ton. Some other institutional stuff, you can see some automotive.

I think the pet care is really kind of neat because it's really our one area we play in, what I'll call the e-commerce side of the business, home delivery. Where people are on a subscription for pet food or kitty litter or those types of products.

And our heavy caliber SUS and CRB actually can package a lot of those things, then that isn't required a tertiary package or a corrugated box around it. So our customers like that because they're able to brand that stuff, it kind of goes through the mail that way and they like that stuff.

So we're actually seeing some good growth there on the pet food side, on the e-commerce side of the business.

The other consumer categories, I'll let you look through it's kind of a who's who of different things you see around your house. The point being this is 20% of our volume.

And that's a big difference from where we were 5 years ago.

Here's our newest category, health and beauty. And health and beauty is a unique category because you really have to have dedicated facilities and knowledge, commercial skills, that are different than what we do on the general folding carton side.

And we've known that. So we don't try to dabble in that over time.

But with the acquisition of AR Packaging, and I'll cover this here in a little bit, we now have a category where we're the #4 player in that market in Europe with over $250 million worth of sales, dedicated facilities, commercial knowledge and capabilities that we didn't have before.

It's a pretty good-sized market. When you look across both Europe and North America, Smithers estimates that this can be close to $7 billion of total fiber, which is pretty large if you think about it.

And it's incredibly fragmented, a lot of small players that are in this market and it tends to use a lot of SBS paperboard. So we think this is a good opportunity for us to learn and grow, probably most likely in Europe first and then ultimately, maybe back here in the U.S., too, as we drive integration and use our operating model to create value for this customer set.

So really excited about having this capability as part of our company.

So leading our inspired and highly engaged workforce here, this is my senior leadership team. It's a really diverse group.

Folks that have deep industry experience and knowledge and been around quite a while as well as newer people to the company that have a diverse set of skills that really are relevant for the company. We are not only now, but the company we want to become.

And they've joined us from companies like Dow, Procter & Gamble, Koch Industries and ConAgra Brands. And we're excited to have them join and bring these relevant skills as we continue to build a very diverse management team.

And those of you who know me, know that underpinning all of this is the 25,000 employees, both men and women around the globe that just work hard every day to make our company great and service customers. And I have to tell you, it really truly is my honor to be able to lead them and to be a part of their lives as their part of Graphic Packaging.

So we're thrilled to have them, and this leadership team is inspired every day to do that.

And if you ask the people that have joined us, I mean, like I mentioned, 4 out of 10 managers have joined us in the last 3 years, they'll tell you it's really around our organic growth story and culture. And that's pretty exciting for me as the CEO.

So with that, I think, Steve, I'm going to ask you to come up and take us through results and some guidance.

You bet. Thanks, Mike.

Good morning, everybody, and thanks for everybody who joined us here live as well as virtually. And let me just take a couple of moments and provide you with an update on our 2021 results and a view into 2022.

We were very pleased with our finish. If you kind of stand back from the year, organic sales growth, 2% for the quarter and for the year.

Over the last 2 years, organic sales growth to the 3%. If you even go back 3 years, it's at 2%.

So now a good, strong track record of organic sales growth, driving basically by the innovation activities that Mike was describing.

Our price performance and price execution is in a very good place. We saw record inflation come through the business.

We've executed on multiple price initiatives. I'll share with you here in a couple of moments, $850 million of price initiatives that we're executing on in '21 and as we look through 2022.

And our capital allocation activities were also very, very strong performance in 2021. Obviously, we'll talk more about Kalamazoo, which we are absolutely thrilled is coming to life and is making commercial paperboard as we speak.

We'll talk about our visuals into what's possible there.

The 2 major acquisitions closed and operating at or above our expectations. The International Paper partnership brought to a conclusion, and we've continued to put significant capital to work back to our stakeholders.

Very briefly on the year, just a couple of things of note here on the upper left. Our sales growth across the traditional food, beverage, consumer markets that Mike was just describing, up 21%, obviously, for the quarter, but up 3% organically.

And foodservice, the recovery there, as Mike mentioned, very solid, up 16% for the quarter.

In the middle bottom, what you can see is the industry operating rates backlogs remain very high and very strong. The overall industry actually grew 2% in total, driven by the fiber-based demand profiles that we've been talking about with you and our specific growth exceeding that.

Year-end pro forma leverage, 4.6x. That's just a simple view of kind of where we end when you kind of stand back from where we are with the AR Packaging acquisition, and we'll share with you here in a couple of moments a path to significant reduction.

Next couple of slides are just the overview of the quarter and the year, you can see 20% top line growth that's going to continue at that kind of a pace as we look out into next year. And we saw EBITDA improvement driven by significant price starting to be realized.

We saw unprecedented inflation in Q4, $140 million. We'll continue to see that.

We'll talk about that as we embark on the early stages of 2022. But our price/cost realization is going to turn to positive here in Q1, and I'll talk about that in a couple of minutes.

And on a full year basis, you can see overall integration rates moving up, very consistent with our expectations, overall liquidity, fantastic in the top line and the margin profile poised for improvement.

And it's important to note, if you kind of stand back from the year and you look at it in terms of year-over-year EBITDA moving from the $1.070 billion last year to the $1.056 billion, if you kind of look at what was in our control. We had significant price execution or a bit of a standstill, $150 million, now on its way to $850 million over 2 years.

Our overall volume mix, we earned on our organic sales growth and our acquisitions performed exceptionally well.

And our overall performance at $144 million was also outstanding. We had a couple of onetime net positives in there.

We had less maintenance downtime. Because of the challenges of the year, we actually had less management compensation, which will revert to norms as we kind of look out to 2022.

But if you stare at the green bars there, overall performance was actually quite outstanding, and we're poised to offset that significant amount of commodity input cost inflation that came through the business. So we're very pleased with how we finished the year.

Very pleased with how we're poised to execute on the guidance that I'll share with you here as we pivot to '22.

Moving on to 2022 guidance, a format you've seen from us in the past, our guidance range for the year for EBITDA, $1.4 billion to $1.6 billion. Most of the width of that range is driven by inflation in turn and I'll talk about that very specifically in a moment.

That drives $600 million to $800 million of cash flow that we will apply to our debt structure. We ended the year at about $5.6 billion of debt.

We see a path to that moving down into the $5 billion range to move leverage into the 3 to 3.5x range in 2022 on our way back to the 2.5 to 3x leverage that's been our target over time.

You can work through the specifics there. A couple of things I would just note.

Volume mix is a great combination of our acquisitions earning as we expected them to as well as earning on organic sales growth. Net performance, a great combination of earning on the Kalamazoo investment and traditional performance in terms of our core productivity.

Labor and benefits. We've upped that number a little bit, just given some of the realities of the environment for inflation relative to labor as well as items that aren't in commodity costs like insurance and the like.

So that number is in the $70 million to $90 million range. CapEx dropping materially from $800 million in '21 down to $450 million as we execute on the investments that we've made over the last couple of years and the rest of it you can see there.

And I'll talk pretty specifically about the $200 million to $400 million of price/cost recovery that we're committed to in 2022. And we'll be about $9 billion corporation when you stand back from it for the year.

This slide just gives you another visual of it. It's just another way to look at the same numbers that are on the prior slide, 42% EBITDA growth on a year-over-year basis at the midpoint.

You can note there, AR Packaging, $24 million of EBITDA that was over 2 months. We felt very good.

The team performed at a very high level as they finished off the year, it gives us confidence in the overall core economics as well as the acquired and then the components that you can see there. We just wanted to provide another visual as to what's the buildup that gets us to that $1.4 billion to $1.6 billion of EBITDA for 2022.

Let's talk about price/cost for a moment. It's very important.

We've shared this with you quite a bit over the last several quarters as we saw inflation come through the business and significant price that we've been executing on.

On the left side, last year, commodity input cost inflation about a $2.5 billion spend ended up being $330 million. Our current visual and what we're providing in -- and there's some new information here as well is we buy, as Mike mentioned, we buy a lot of paperboards.

If you've seen the materials, we buy almost 1 million tons of paperboard that we purchase.

The inflation on that is quite material. It kind of played out at the end of last year.

We locked in on what we would be paying for the paperboard that we're purchasing, primarily in Europe, there's about $150 million of inflation there. We're passing it through to our customers.

And so those things will be like-for-like. I wanted to share that with you as kind of a new number because we haven't seen that level of inflation across paperboard that we purchase.

Obviously, we're taking our own price actions relative to that, which we provide to our customers. But that's $150 million.

The run rate on the remaining spend for that as we kind of exit out of the year was an additional $150 million. That's kind of the known run rate.

And then we've, in our range, put the potential because we're sitting in February for incremental inflation. We talk about this literally daily in our current kind of mark-to-market for inflation.

So standing here today, and you say if the world kind of stood still, the total inflation right now is in the low-3s, probably $320 million or so based on what we know today. Obviously, things can vary, and we've seen that, but that's kind of where we're at relative to inflation.

On the other side of that, our pricing over time meant to offset the commodity input cost inflation, $150 million last year. $550 million, it was $510 million the last time that we spoke with you.

That increased because of the execution of increases for SBS as well as some of additional cost models. And so $550 million, coupled with the $150 million, we have clear line of sight to $700 million of price execution in 2022.

That does not include the current $50 per ton price increases that we're executing on at -- across all 3 substrates, that is not in the $700 million.

So that's a bit of clarity just around price/cost. We will reflect significantly positive to the $200 million to $400 million range to entirely offset the dislocation that we experienced in 2021.

We received a fair amount of good investor feedback over the last really 12 to 18 months around being a little bit more focused around EPS. Wanted to provide you with a couple of views around adjusted EPS as well as adjusted EPS, excluding the amortization associated with our acquired businesses, so just acquisitions.

And so what you can see there is a bit of a walk down with more midpoint-type assumptions around the adjusted EPS, $1.40 to $1.60, moving down to $1.55 to $2.05. We've made a simplifying assumption for our share count at 307 million shares.

Obviously, we have some minor dilution that occurs associated with management compensation. This would assume that we would acquire that back.

It's relatively modest use of cash.

And the adjusted EPS excludes about $85 million of acquired amortization. It keeps a little bit behind for amortization we have for things like patents and trademarks and pension amortization because those are more indicative of cash, but it's an attempt here, obviously, to provide a visual into the kind of cash generation capabilities that we have, if you just look at it on more of our traditional EPS basis adjusted for the amortization and the midpoint there being $2 per share relative to our guide.

So I wanted to bring this forward. We'll obviously share this with you on an ongoing basis as we look out into 2022.

But wanted to bring that forward is some good -- what we felt was a very good, positive feedback that we wanted to incorporate into our guidance here for 2022.

So that's a very quick snapshot of the year that was. We couldn't be more excited about the year we're in here in 2022.

The initiatives that we've been investing in for the last several years will now start to inure significant benefit multiple initiatives, as you know, from the acquisitions, from our continuation on the organic growth front, from the Kalamazoo investment that we're very excited about sharing with you here in a couple of moments.

So with that, I'll pause, and we'll turn it back over, and we can start to focus a little bit on the enhanced Vision 2025. Mike?

Yes. Thanks, Steve.

That was great. And yes, I was joking with Steve in the fall of last year.

I mean, no one wants to get older faster. But I was pretty darned excited about January 1 to roll around for the reasons he just outlined because I knew that our operating model would be on full display here in 2022.

Like you said, we've got the organic growth that just continues to drive through the business. The acquisitions we did between AR Packaging and Americraft, Kalamazoo coming online and $700 million of pricing taking place on January 1.

I actually stayed up until New Year's on January 1 because I was pretty excited about all that kicking in just helping us heal that price/cost dislocation we had there.

And the great thing for us is we're not done. I mean there's more opportunity for us out there, and that's really where I want to move our comments now and the rest of the day talking about what we've done and more importantly, what we think we can still do here.

And for those of you who were with us on January -- or excuse me, September 26, 2019, we laid out our initial Vision 2025, and it's up here on the slide.

And just at a high level, we said, listen, we want to grow with customers in the best markets. It's pretty simple and straightforward.

Those are the ones that are getting you to grow over time. They got the CapEx budgets to continue to do it.

We said, we'll drive organic growth, 100 to 200 basis points. And we're going to also fund that growth with productivity in the neighborhood of $400 million to $500 million over that same period of time.

We wanted to reduce environmental footprint that our company has by using less and recycling more, driving more recyclability for the products that we manufacture. You see that in our quadrant there on the left-hand side.

And for our people, we wanted to maintain the excellent momentum we had on safety, world-class safety performance, engaged workforce in training that really allows them to not only do the job that they have, but more importantly, the jobs they want to have within the corporation. And we said if we're really good at doing all of those things, the combination of all that effort will really allow us to become a $10 billion company with enhanced margin profile.

And you see that in the upper right-hand corner in the green.

I'm happy to tell you today that not only do we think we can hit those goals, we actually believe some of them we can do better than based on the results we've had to date and the momentum we've got. And you see it up here on screen, we were saying that, look, we think we can hit the $10 billion as kind of table stakes and as Steve said, we're on a track here in 2022 to be around $9 billion.

And so that will require ongoing organic growth, which we're going to spend some time talking about in that neighborhood of 100 to 200 basis points each and every year as well as strategic profitable M&A that comes with synergies. And I think our track record there has been pretty good.

Steve will model that what that looks like for you.

Importantly, we think we can take EPS by over 50%, up from where it was at $2 a share to $3 a share over this time frame. And that goal was set just 2 years ago.

And I know there was some concern when we rolled that out, that we'd be able to actually hit the $2. We've got a lot of confidence we're going to hit the $2, and that's why we're setting our ambitions even higher.

You see that we edged up CapEx a little bit in terms of our base level at 5%, which is what we're going to spend this year at $450 million that Steve just talked about, to upwards of 7% for the right projects. Think projects like Kalamazoo and the things that we've done here to drive true margin improvement, which is why you see us enhancing our margin ambition to 20% EBITDA margin.

So it's a combination of all those things that really gives us confidence that we can do that.

And if you look at what we've done on that side, best customers, best markets with the acquisition of AR Packaging, we now are the market leader in both North America and in Europe, #1 market share in converted fiber-based consumer packaging. So we've accomplished that over that time period.

We've driven $275 million worth of new product sales through our top line here over that period of time, over that 2.5 years. We funded that growth with $185 million of productivity, something we do a really good job at each and every year.

And that doesn't include the benefits from Kalamazoo, which will start coming online here this year, and I'll cover that in a little bit more detail.

We've done good M&A. You see it on there.

Americraft, AR Packaging. I've already talked about Greif and Carton Craft and Quad, these are all businesses, as I mentioned, that helped us diversify our portfolio and build our business out.

And that momentum is strong. And really, as you look at those categories, what I'd like to do now is have Ricardo De Genova come up and spend a little time talking about those categories and some of the good work you're doing Ricardo with your team globally, driving our growth and why you're excited about 100 to 200 basis points each and every year.

All right. Thank you, Mike.

Appreciated.

Good morning, everyone, and thank you for attending today. It's a pleasure to be here in person for a change that is great.

As you saw, we have established a good track record at growing organically through sustainable innovation, and that's how we want to phrase this. So over the next few minutes, what I'd like to do is to provide you with a point of view of how we are going to increase the bar of how we innovate in order to sustain that growth moving forward, and why we have the right elements to win.

We have the right capabilities, the right substrates. We have our development efforts that are aligned with the consumer trends that drive those behaviors.

And we are developing a multigenerational portfolio of solutions that we'll address those changes. So it's a pretty exciting time.

But I want to start by saying that the world's largest brands trusted Graphic Packaging to be the main interface between their products and their consumers. And that's a very large responsibility that we take very seriously.

So I'm glad to be here today and most importantly proud to be here today, representing a group that is global of over 120 passionate employees that have the coolest job in the company because we've got the inventive future.

We are here to deliver the future of sustainable packaging through innovation. And it's not only simply innovation.

It's innovation that is aligned and anticipatory of our customer business needs, the desires and needs of the consumers, but most importantly, that can be delivered at scale. I think one of the slides that Mike showed here -- showed that the size of the brands that we deal with.

So we want to bring solutions that these customers can deploy across their networks very easily.

And that is only possible through a very strong material science, machine engineering and unique design capabilities. I always say that our design team is part of our secret sauce and enabled by our integrated business model that Mike's shown, that basically enabled us to go from fiber-to-consumer when it comes to developing these new products and new solutions that we bring to the market.

This capability is got better. With the integration of AR Packaging, we are now getting complementary and additional capabilities that will enable us to accelerate the rate with which we innovate as well as satisfy our consumers in a better way.

And speaking of consumers, I would like to spend a little bit of time talking about what is happening today around the globe.

Consumers want to feel good about the choices that they make. And there is increased awareness relative to the social and environmental impact of their choices.

Parallel to that, we see the regulatory environment evolving very rapidly. So those 2 components put together are causing the brand owners and retailers to make choices and to make choices very, very quickly.

So that creates the pool for more environmentally friendly innovations, and that's where we come into place.

At Graphic Packaging, we place consumer needs and these environmental regulations or regulatory environment at the center of how we innovate. And we have what it takes to win.

We start with a substrate that is renewable and sustainably sourced, like Mike indicated. We have the highest recoverability in the industry, paper is one of the highest.

And when it comes to recycling, paper is one of the best materials out there, 5 to 7x going back into the original material.

So just to give you an anecdotal example, the rates of recovery for plastic, for instance, are in the neighborhood of the upper teens, right? And the material recovered from a plastic packaging usually goes into a nondiscrete material, such as a park bench, right?

We turn a box into a box, a cup into another box. And that I think it's an important distinction between -- that explains the reason why we feel very proud and able to drive the innovations that we have and the capability to win.

We put those consumer trends into consideration, and we developed 3 innovation platforms that are here to guide our efforts, make sure that we are focused on the things that we do. And they are plastic substitution, strength packaging and cooking solutions.

So basically, these 3 platforms serve as the lens through which we filter our opportunities to ensure that we are working with -- on the right stuff, right, on the right things.

Within each one of these platforms, we identified growth lanes or segments that we believe are segments that are going to grow. And within each one of those, we are developing innovation strategy for multigenerational product and solutions that will take us to sustain the kind of growth that we expect.

And all of that is enforced or supported by our design and premiumization capabilities that, again, make our packages look better, have the wow factor in front of the consumers.

So over the next few minutes, what I'd like to do is to walk you through a few examples of what we are doing to make these innovations to life. And over the break, I'll be available, and we can also walk through the number of samples that we have here that are representative of the things that we are doing.

One other thing that -- one other thing that I want to mention before I move out of this slide, of course, this is not an exhaustive slide. This is a representative sample of the things that we are working on.

I would be here for 2 days speaking about all the things that we have in our portfolio and our pipeline.

I want to start with our multipack platform. Because here, our objective is really to replace the plastic rings and the shrink film that is normally used in this industry.

And the opportunity here is really large. Because if you go to a supermarket, you see a lot of these materials still being used.

And we are developing, like Mike referred to, we are developing a full portfolio of options here from baskets, Clips, wraps, fully enclosed materials that basically meet the range of needs of the beverage companies that have been historically a core segment for us.

We introduced KeelClip in 2019, and KeelClip is a clever paper fastener alternative that not only replaced plastic rings, but with advantages. First, because it can run at fast-speed machineries.

It runs in a multitude of can designs. So it's not a one-trick pony and the same design can be utilized in any kind of machine or the -- or packaging design.

Offers can orientation for better branding opportunity. And we developed a full portfolio of options here from materials or solutions that offer full billboarding for enhanced shelf differentiation to minimum billboarding for distribution channels as an example.

To date, since 2019, when we launched this, we are -- we introduced or are in the process of placing about 30 machines all over the world, all over Europe, Canada and Brazil, and we have a number of active projects currently in place to see this number growing.

We didn't stop there. Of course, we took the learnings from KeelClip, and we are now introducing what we call Cap-It, which is the same type of paper fastener solution, but now for multi-packing bottles at high speed.

And this is, again, another area where mostly water bottles are packed in a large amount of shrink wrap as well. So great examples of what we are doing here to drive plastic substitution and enhancing sustainability credentials for our customers.

Of course, we are not stopping and not innovating around our line of wraps and fully enclosed packages. We continue to develop solutions that increase, like I said, sustainability credentials as well as enhanced opportunity for branding through differentiated design.

So great opportunity.

Now we are taking the learnings of all of this and looking at where else can we take these innovations? And the food can space is one of interest, and we are looking into opportunities to do there and other containers that are similar to bottles and cans that we can take the same concept.

So exciting opportunity not only in the beverage industry, but also other industries that we are looking at.

Moving on, we talked about growing in the perimeter of the store. So walk into a supermarket today, and what you see is a lot of plastic being used for fruits and vegetables and chilled proteins.

One example here, ProducePack. We introduced ProducePack in 2021 a very good alternative to replace plastic trays that are made out of foam or solid plastic in fruits and vegetables.

It's an all-fiber 100% replace -- 100% recyclable solutions -- a solution that can be used for a multitude of different applications from fruits to vegetables, et cetera. It's being commercially available in Europe now at high -- large retailers such as Tesco, Marks & Spencer, Sainsbury's, and we are commercial in the U.S.

for our apple applications. We are coming to the market now in the first half of the year with our ProducePack Punnet for snacking tomatoes at a top-tier U.S.

grocers, so more to come there.

Similarly, our PaperSeal technology and portfolio of products comes to provide brands and retailers with the opportunity to replace single-use plastic trays with a patented technology that basically offers a paperboard tray that is aligned with a barrier and that allows the replacement of up to 90% of the plastic that is used. And it does that also bringing advantages.

One, of course, is better branding because through high-quality graphics, these trays can be printed inside and outside, offering better shelf differentiation. They can also be processed through high-speed food processing equipment.

They are made out of a single piece of cardboard, so it doesn't require a folding or gluing, which is an important attribute.

And we started with vacuum sealed packaging and modified atmosphere solutions. And we are expanding this portfolio now.

We are going into -- we launched last year, PaperSeal Slice and Wedge for [ geo ] proteins and cheese. And now we are going into ready meals.

So we're also launching PaperSeal Cook that can be used in conventional ovens as well as microwave. And it doesn't stop there.

We have a strong pipeline of products here that are going to be hitting the market over the course of these next few years. We see this as a multigenerational opportunity as well.

Similarly, PaperSeal is readily available in commercial in Europe, in Australia, and we are expecting commercialization here in the U.S. in the second half of 2022.

So very exciting.

We are using -- we are making use of our extensive material science and engineering capabilities as well as working with external partners to develop innovative barrier and insulation technologies that will enable fiber-based products to continue to replace clear plastics and foam in the foodservice market. And I am really happy to say that with the launch of our OptiCycle product line last year, this is an innovative water-based technology that comes to replace the traditional use polyethylene with advantages.

Not only can be applied at thinner gauges, therefore using less material, having the same performance but it's also more easily to recycle. Because we designed it in a way that it can be more easily separated from the paperboard and the rates of fiber recovery when using OptiCycle are upwards of 98%.

And this is good fiber, folks. Like we said, we want to have that fiber back to our mills because we're going to make more packaging out of it.

Most importantly, OptiCycle is part of a portfolio, a very extensive portfolio of solutions that we have in environmentally friendly barriers for cups and cartons. So we continue to expand that pipeline.

And we are also very excited to see that we see more and more cities establishing paper cup recycling programs. Atlanta and Detroit announced last year.

We expect Dallas, Chicago, Houston and Milwaukee to do it this year.

And this is an important factor because what it says, what it signals is that consumers, brands, municipalities, recyclers, legislators, they all want to see a better planet. And that's what we want to strive for as well.

We want to see that coming. We expect OptiCycle to be commercial in the first half of 2021.

Of course, it goes through a number of iteration for market testing and the like. But we are very optimistic relative to the level of interest that we have received there.

Similarly, what we are doing, we are looking at our insulation technologies to replace plastic cups or clear cups as well as foam for both cold and hot drinks as well. So we are developing what we call the double-wall insulation cup technology that not only offers the same thermal property, so we can keep our ice tea or our cold beverage cold for the same time that it would be cold when using a foam cup, but as well as bringing added advantages.

From a consumer perspective, it's more rigid, so it has better hand feel as well as it doesn't -- it avoids condensation on the outside of the cup which, of course, is a positive attribute for the consumer. So we are very excited about that.

And we are leveraging these technologies throughout our other cartons application, things that go into to-go boxes and fiber clamshells to replace the clear clamshells that you see in the market today. So very exciting about this and most importantly, about the impact that all these technologies will have in creating a more circular economy because this is really what we are after.

Our strength packaging platform, here, what we do is we look at solutions that enable basically club stores and mass retailers to keep up with the evolving demands in terms of packaging performance that is required to go to their rigorous supply chains. And for that, the optimization of strength without the use of additional or overuse of material is important from a cost management as well as from an environmental perspective.

So a couple of examples here, our Z-Flute line of folding cartons. They are made with recycled paperboard.

And they are engineered to a patent process technology that basically put the strength at the right spots in the box, optimizing protection without the overuse of materials. And that's an ideal type of solution, for instance, for -- because it's stockable.

So it doesn't require trays or other devices, it can go straight from the pallet into the shelf in the club store with better graphics as well and you see examples out there.

This type of technology is enabling the transition from things like plastic sacks to fiber because it provides the right level of protection. And these transitions can be very large.

And the example that we have here, for instance, alone on the heavyweight CRB, this is an additional 40,000 metric tons of board. So it's very substantial, right.

Now when it comes to e-commerce or omni-channel applications, what we usually see is that CPGs and fulfillment centers often find that these multi-wall plastic bags can be easily damaged. So what that prompts is multi-boxing or over-boxing products before they are shipped.

So we developed our IntegraFlute technology in order to solve that problem. It is a hybrid structure with a flexible element within a structural protection, that it's enabled direct fuel application, and it goes from fulfillment center to the consumer door with better portability, ease of opening and very compelling graphics as well.

Both Z-Flute examples of things that are packed in Z-Flute technology can be seen today in club stores across the U.S. IntegraFlute, like Mike mentioned, is very applicable for pet care, lawn care, swimming pool care, wood briquettes and the like.

And we can see examples of materials and products that are packaged with these solutions today in the lawn and garden section of Amazon. So they are there today.

Last but not least, I want to speak a little bit about our -- thank you, microwave technology or cooking solutions platform. And here, we are developing solutions that are addressing the growing microwave and frozen food category, particularly in the U.S.

So what we see is that consumers want to have more and more convenience, particularly in the -- with the busy lives that we live today. But of course, we don't want to sacrifice quality or taste in the interest of convenience.

So at Graphic, we have developed a line of patented technologies for microwave. In fact, we are the leaders in this space.

We make extensive use of material science in this regard where we develop new technologies that enable a better overall consumer experience from freezer to table, involving better browning, better crisping, more evenly heating of those meals to enhance and make sure that the consumer has an experience that is close as possible to being at a restaurant. So very exciting about this as well.

Several examples in the bag.

We are very proud of what we've been able to accomplish so far. And it's very nice to be here giving you the examples of things that we develop and bring to the market.

But we are even prouder about the fact that all these developments are being recognized by the industry. And in 2021 alone, we received over 40 global awards from prestigious organizations, recognizing the value of the packages and the innovations that we bring to market.

And credit here goes to the 120 global employees that have the coolest job in the world and the rest of the 25,000 that helps us makes the -- bring these technologies to market. So we are very glad about that.

But we are not stopping there, right? I think we've been able to demonstrate that we created, and we're bringing to the market a number of different innovations, and we plan to continue to do so.

We have what it takes to do what I said in the beginning of my presentation to elevate the bar on how we innovate and enhance our planet, make our planet a better place to be. And we have a very robust innovation funnel that will continue to fund this growth.

And this funnel continues to be big.

Like I said, this is by no means an extensive representation of what we have, but gives you a glimpse of the multigenerational approach that we are taking in multiple areas that will enable us to bring us to the finish line. A great time to be part of a Graphic Packaging, and we are looking forward to bring these innovations and more to the market and contribute to our organic growth aspirations.

So with that, I'll bring it back to Mike.

Well, Ricardo, you're right. It is a great time to be a part of Graphic Packaging.

And your team is doing a great job. If you think about 2020 and 2021, we actually averaged 300 basis points of growth, 4% in 2020 and then 2% in 2021.

And 7 out of the 8 quarters, we actually hit our objective of 100 to 200 basis points. So our track record is growing, and I know that's something that I really want to strike home today because we want you to see us as a growing integrated fiber-based consumer packaging company because what we are.

So thank you, Ricardo, for your comments.

I want to spend a little time now talking about how we fund that growth. And we fund that growth really by driving productivity year in and year out.

This is part of our DNA. I think most of you will give us credit for this.

Our track record is long and quite frankly, quite accomplished. And we do it in a number of different ways, and I want to spend a few minutes on this slide because we're thinking about this even a little differently as we go forward, given some of the realities we have around labor in our business.

If you look at the left-hand side of that slide, what you'll see is automation, which in and of itself isn't new. But we're thinking about that in terms of not doing that to eliminate jobs per se.

We're doing that to reposition people that we have upstream in our organization. So people that are now working on the back end and kind of low-skilled or semiskilled jobs, we want them running die cutters at high speeds, printing presses at high speeds, paper machines at high speeds.

And we'll give them the training to be able to do that. The -- look, it's been well chronicled, the challenges around labor in the North American market and in Europe, I would say.

And so we're trying to think about that differently.

We've got the balance sheet to be able to do this. We know what we need to do here, and we've got a good path forward here on automation and will continue to provide those benefits.

Below that, you see something new. We haven't talked to you about yet, and that's called equipment monitoring.

The realities of having 65 facilities, converting facilities spread across the U.S. in somewhat small towns.

I mean, I'd like to say we're in [ 'villes ] and 'burbs, create some challenges versus when I came out of school, that's what you did. You move there and then you moved here and then you move there.

And our ability to get highly talented engineers, mechanical and electrical into these locations has been more of a challenge in recent years. And I anticipate that, that will continue to be the case.

The good news is we've got a pilot that we're doing right now that really allows us to do more remote monitoring of our converting facilities in places where we can actually get that labor to work. Think Atlanta as an idea there.

And what we're doing then is tying it together through the Internet of Things that we have, tying in our machines and doing real-time monitoring that then goes back with pulse response and different types of directions to our electronic technicians and our machinists and mechanics at are each one of these facilities. And it eliminates the need for us to actually have those types of resources at every one of our locations.

We think it will really create competitive advantage over time. I'm pretty excited about it.

You can see some of the visuals that we're building at a control center right now as we -- as we're going through some remodeling at our corporate headquarters in Atlanta as we're a bigger company now. So really excited at that.

And then on the right-hand side, you see more of the traditional things that we do and do well. We've got investment into paperboard.

These are things like ongoing curtain coaters, head boxes that use less fiber or less water, less coatings and less electricity. It's all around the fact that we do use a lot of raw materials.

And how do we use less each and every year and do that at a very high-quality product for our customers.

On the bottom below that, you can see we've acquired a number of facilities with the acquisitions we've done. We now have over 65 across the U.S.

We need every one of them right now to service our customers because we are very busy. Having said that, as we make some of these investments and drive ongoing productivity, as has been our track record in the past, low-cost wins and high cost loses.

We talk about that very openly within our company. And we know which ones of these facilities, we want to make the investments in and we'll operate some for cash for a while until we no longer need them, and then we'll absorb that volume into our that drives ongoing fixed cost reduction.

There's not a lot of drama around it. It's just what we do.

We do it each and every year. We look at our footprint and make sure that we know what makes sense and what it's doing.

But again, right now, every one of those facilities is pretty busy because our backlogs are strong.

Now on top of those type of kind of productivity targets that we put out every year of $50 million to $70 million, will from time to time come forward with larger projects. Of course, the biggest one that we're working on right now has been our new paperboard machine in Kalamazoo.

I'm excited to tell you today we've been making paper on that machine since February 1. First week, we did uncoated papers, we were shaking down the machine.

In the last week, we've been running coated paper.

We've actually had a couple of days over 1,000 tons already of salable product that's gone downstream to our converting facilities and is in the process of being commissioned. It's early days.

We're going to have some challenges as the operators get familiar with the equipment, it will continue to get better. But what I'm really encouraged about is the quality.

Quality of the material coming off the machine is superior to anything that we currently make or certainly anything that's currently in the North American market. What I mean by that is really smoothness and appearance and formation.

And what that's going to allow us to do is actually provide a product that is superior to what anybody else has.

As a matter of fact, our K1 machine, which was built over 30 years ago, when I was a rookie with the corporation, we've actually, to use the words maybe had to dumb down that machine a little bit in terms of its overall capabilities. Because we had a lot of older machines within our system and what we didn't want to wind up with is a situation where our customers said, only run my product on that machine.

We're going to be able to let that machine actually fill its full potential now. We're actually taking our brightness up on that machine information to match what we're doing on our K2 machine.

So it's a really exciting time.

From a quality standpoint, when you see the brightness and the formation on this paperboard and how it prints, it's going to be a real game-changer for our customers, and I know they're going to love it. And we've seen that in the early print trials that we've done.

We're upping our commitment in terms of savings. We talked about originally.

We drive $100 million worth of savings. We actually have a number now that's approaching $130 million.

I'll show you how we're getting there.

And one of the things I'm really proud about on this is -- we rolled this out in August of 2019. And again, that's before we even knew what COVID-19 was.

And through that whole period of time, the team working on this project has just demonstrated an amount of grid and tenacity that kept this machine on schedule. We're a little off of what Steve and I hoped would be a little bit more of an ambitious start-up at the end of the year.

Real reason for that is we couldn't get technicians out of Europe because of Omicron from about mid-December to mid-January because of some of the positive tests that were happening there. But once we were able to do that, we've got the machine up and going, and it will continue to run -- ramp up here over the weeks and months to come.

This really shows our cost leadership position here. This is a FisherSolve curve.

FisherSolve, as you know, are Fisher Consulting and our industry is the one that does the vast majority of cost modeling in terms of relative cost positioning. The width of that bar actually shows the size of the mill.

So our Kalamazoo mill is 40% of the North American market, when I say North American, I'm counting Canada and the United States.

Our plan now is to run our Middletown mill. So that's a change from where we were before.

And it's all driven around the growth we have on CRB through our own internal operations. We're not taking that material to the open market.

We're actually driving it through our own operations. And I'll talk about what that looks like in a minute.

But it's not hard to imagine how when you've got that kind of cost advantage, what you're going to be able to do through our advantaged, integrated converting businesses that we're going to continue to be able to grow our business and take share where it makes sense for us to do so.

I like this project when we announced it in August of '19, I like it better today, and I'll tell you why because it's really, we looked at, in '19 around how we were going to do it all based on cost. And we had a profile that worked for us to be able to do it.

This one is better because it's really done with growth. And you can kind of see where that growth is actually coming from.

The acquisitions we've done deliver over 100,000 tons of CRB. We've got some supply agreements that will unwind starting now and over the next 2 years so that will allow us to integrate all that material into our low-cost mill system, again, that's our operating model.

I took you through that flywheel of cash flow and EBITDA early on. We're seeing conversions of material autoplastic and into paperboard.

You heard Ricardo talk about that. There's a sample in the back.

One of our customers converted some chips out of a paper sack as they call it, and put it in a cube or one of our packages. That particular conversion alone, 40,000 tons of CRB.

It's a big one for us. And we have those types of things that are kind of queuing up along the way.

Ricardo talked about some of the new product development, that's all factoring into this.

And importantly, we're going to make our own URB. So uncoated recycled paperboard.

We buy 30,000 tons right now from various suppliers there. And our philosophy is to integrate the substrates where it makes sense for us to do so.

We're not going to pay someone cash for something we can do ourselves, particularly because the Middletown mill, as you saw, and there's second quartile cash cost mills. So we want to operate that.

And you see that on the slide here, what we look like kind of now or kind of pre this announcement. In '19, actually, we don't have the White Pigeon mill on there and we should versus the post announcement, which has East Angus and the Middletown mill running.

East Angus really does a nice job servicing the Canadian market. We've got 5 facilities up there.

It's a pretty -- nationalism is strong up there. They like having a local source of supply.

We have it, and that certainly benefited us during COVID as well.

If you look at where the savings come from on this project, we're going to get there slightly differently, but the total is going to be higher. As I mentioned, 2 of our facilities will go down.

One already has, that's a White Pigeon mill in Michigan. Battle Creek will go down sometime this summer.

If you see it go down sooner than that, it's because the ramp-up in Kalamazoo has gone better than our plan. But sometime in the summer, that facility will go down as production on our K2 machine exceeds what we're currently doing in Battle Creek.

You can see the variable cost reduction remains the same. So this machine is much more efficient.

It's going to use less coating because it's got a curtain coater on it. But as does our K1 machine, it will be more fiber conservative because it's got a dilution control head box on it.

The math is much better from a trim standpoint. It's a 220-inch machine versus a 144-inch machine on K1.

So we generate less side rolls, less trim ribbons. And we're going to take all that stuff and obviously, put it into prime tonnage.

Lastly, the demand growth. At 240,000 tons, it's easy math.

You guys can do it. We make around $350 of EBITDA per ton.

So you can see how that kind of all comes together into $130 million worth of savings that will tier in starting this year with $50 million and as Steve said, then another $50 million into 2023 and then ultimately, the remaining $30 million into 2024. So really excited about that.

And -- like I said, I give our team a lot of credit for having grit and tenacity to kind of bring that project to life. Really proud of what they've done.

This is a game changer for us. I mean, when we talk about margin profile going to 20%.

These are the types of projects within that 5% to 7% range on the CapEx we need to do to structurally change our cost structure and create competitive advantage over time that's really sustainable.

Okay. Let's talk about a few of our other goals in terms of our Vision 2025 when we rolled it out.

What we've done and more importantly, what we plan to do here going forward. Spend a few minutes on people and culture.

Look, one of the things we said is we're going to maintain a world-class safety environment, and we're doing that. We're in the top quartile of the last 5 years for our overall safety performance in our industry.

It's something that's really important to us.

At the same time, we also really recognize the diversity of thought and opinion makes us a better company. So we're spending a fair amount of time on diversity and inclusion within our company.

As a matter of fact, Lauren Tashma, our GC actually Chairs our Diversity and Inclusion Council. We have 4 affinity groups or business resource groups that are operational right now, all chaired by members of my staff.

Steve Chairs our Black Employee Global Network, and Ricardo Chairs our Alianza Latinx, see my Portuguese isn't as good as yours, but nonetheless, I'm happy to have you chairing that. Thank you for that.

And I'm, of course, an ally to all of those groups. And it really helps us better.

Think about the products we make and the diversity of thoughts and opinions that come at these purchase decisions, we learn a lot. As a matter of fact, some days I'll be on a role talking about something that's going on in the business.

And this is how it happens in the grocery store, and I look over and Lauren's laughing at me and I'll say, what's so fun? She goes, "Yes, that really doesn't work that way."

And so you think about who makes a lot of these purchase decisions, that diversity helps us become better as a supplier, and we're embracing it. Our Board is heavily involved in all matters relating to human capital.

They provide oversight on that process.

As a matter of fact, our Compensation and Management Development Committee rechanged their -- or rechartered their charter this past year to include an annual oversight and update on our diversity and inclusion activities. So we're really trying to live that from top to bottom with the corporation.

One of the things I'm most proud of is the fact we've received a couple of awards based on our employees actually voting for us. It's not something we sponsored as a company.

It's something that they felt strongly about, and they actually cast a vote, and we were recognized, as you can see here, by being a great employer and female-friendly employer. As a CEO, I got to tell you, that makes me feel really, really proud.

So happy to see the progress we're making there, and we've got more to continue to do.

Maggie Bidlingmaier joined us from Koch Industries. Maggie is replacing Joe Yost, to, as I mentioned earlier, went over to Europe.

Maggie has -- is a great example of a manager that brings a relevant skill set to our company at a point in time where we need additional thinking. She had a very accomplished career at Koch.

And before that at Avery Dennison, understands about driving new innovation, growth and new product development. So we're thrilled to have Maggie joining our team.

And we're also spending a lot of time training and developing all of our employees.

I mentioned earlier we want them to know not just to have the skills for their current jobs, but also the jobs they want to have. So we've partnered with LinkedIn, and we're doing courses for our low and mid-level -- lower and middle level managers.

And I think we've completed maybe, what, 6,000 courses so far already to date. And we seem to be getting pretty good positive feedback on that.

We'll look to continue to build on that as we build out our GPI University in the years to come.

In terms of planet, we're not only helping our customers solve those challenges we talked about. We have to look internally as a business to make sure we're doing the right things for the planet.

And we've made some real progress in the last 2.5 years. Starting with one of the biggest things we did at both the power islands in Augusta and Texarkana, the 2 mills we acquired from International Paper, we had to rebuild those power islands and redo the recovery boilers.

And in doing so, we put in much more modern equipment. As you can see, it had a big impact on our overall greenhouse gas generation here, a 7% reduction.

And as we bring our K2 machine online, you'll see a pretty material movement in the amount of purchased electricity that we need because we won't run inefficient smaller machines. The machine's all modern with brand-new drives and motors that use a lot less electricity.

And we're going to use a lot less water as well, almost 300 million gallons less water a year as we fully ramp that, shutdown Battle Creek and optimize our overall system.

I'm proud of the fact we use less low-density polyethylene in our process. You can see we've made significant progress against our 40% goal, 16%.

And Ricardo as got good ideas, as you heard, around material science that will help us continue to build on that momentum we have.

And we're also doing a nice job having a lens towards the recyclability of the products we make. He talked a little bit about paper cups and some of the cities that are putting in recycling programs.

In the last 3 years, recycling of paper cups is up almost 50% across the United States, and we're working with our partners and our customers to continue to build on that momentum because as he said, we need and want that fiber back in our process.

So we're hitting it both ways. Material science and the recyclability and recovery of these particular cups.

So make sure you take that paper cup and put in the recycling bin when you leave the meeting here because hopefully, it makes its way back to Kalamazoo and we'll turn it into carton in the next time you see it.

Companies have a choice to make around sustainability. It's just that simple.

They can either do the minimum requirements to comply or they can decide they're going to lean in because it's going to make them a better business and really take a look at the ESG reporting aspects of it and decide, look, as a leadership team, can that really help our company be better? We're choosing the latter than the former.

And to that end, we actually are proud to announce that we hired our very first VP of Sustainability and ESG Reporting, Michelle Fitzpatrick that you see on the page here.

Michelle comes to us from Chemours with a wide breadth of experience, both in terms of her educational background as well as her industry experience on sustainability. And early on, you're seeing that we're starting to organize ourselves perhaps a little differently than we have even as a legacy company.

We've been doing a sustainability report for 10 years. Last year, we did our first real full-blown ESG report.

And what we saw is the amount of touches that you have across the corporation that really are required to do it and do it right. And so we need a quarterback.

We need a quarterback that's going to help us do that. Michelle is that person.

And what you saw us do is actually become signator on the UN charter here for sustainability, the Compact for Sustainability, which really is all around better business practices and driving sustainability. We also said in December that we're going to push out science-based targets here.

We're still in the process of developing those and anticipate that we'll be able to provide you a lot more detail when we release our next ESG report in the fall of this year.

So real progress here. Really proud of that.

You can see we've got some recognition from Newsweek on that. We like that as well and thrilled to have Michelle on our team, I know she's going to help us become better there.

And then now what I'd like to do, Steve, is have you come up and kind of show how all these models into value creation for our shareholders.

Thanks, Mike. I'd be glad to do that.

We'll wrap up our prepared remarks and then move into Q&A after that.

But yes, bringing that all together and looking out over the next several years, as Mike mentioned earlier, we're thrilled that we're able to actually make our goals for 2025 stronger, more enhanced and actually stretched beyond that which we saw was possible back in September with the goals that we're sharing with you today.

So what I'd like to do is just kind of give you a sense for what's the path there? What do you have to believe?

What do we believe that gives us confidence that this is a trajectory that we can achieve over the next really to 4 years?

If you look at progress to date, I'll focus on kind of the 2019 to 2022. The progress that we will have experienced from 2019 to what we expect to achieve here in 2022 is substantial.

Integration rates up significantly. We're going to talk about a path to 90%.

You've seen us go from 68% to 75%, very significant.

Size of the company, up 50%, $6 billion heading towards $9 billion. Margins are going to move significantly positive this year coming off of the price/cost dislocation in '21 to be at or above where we were back in the 2019.

Time horizon as such, ROIC above cost of capital on a path to being more significantly. So -- and you can see a more than doubling of EPS on an adjusted basis even stronger as you look at it on adjusted excluding the amortization.

And as Mike talked, what we want to talk about a little bit too is the utilization of capital, and I'll come back and talk about that momentarily. But the progress from 2019 to 2022 and what we can see possible this year sets the stage for what we believe can be a path towards the updated and enhanced Vision 2025 that we'll talk about here in a moment.

The path that we can see from 2022 out to 2025, just a couple of things to lay out for you. 2022 kind of on the left side of the chart there, that's for the most part, our guidance for the year.

With what we have in front of us today, excluding any additional acquisitions, we can see a path to the middle there. We can see a path from $9 billion into the mid-9s driven by our organic growth profile predominantly.

We can see a path of EBITDA from $1.4 billion to $1.6 billion, up into the $1.8 billion, $1.9 billion range, margins approaching the aspirational 20%. Another $1-plus of EPS over that 4-year period of time.

And CapEx more likely to be putting money to work thoughtfully with returns in mind, and I'll take you through that here in a moment in that 5% to 7% range. But the middle column ends up in a few years with a business that's levered in the 1.5 to 2x range, which is interesting.

But we'll put that to work where we identify thoughtful acquisitions to allow us to then move to the enhanced goals that we've described is $10 billion to $12 billion putting some of the balance sheet and the cash generation to work and move towards those 20% margins and $3-plus on adjusted EPS basis, even higher excluding amortization, and all within the window of the 2.5 to 3x leverage that we like to operate inside of.

So I wanted to give you kind of a trajectory of that, which we have and know, without acquisitions, gets us a long way there, then put the money to work thoughtfully relative to acquisitions that help drive integration, help drive returns and build up, really, the packaging company that we are at the 90% integration rate that I'll take you through here in a moment.

One thing that we wanted to share that is new when it comes out of the acquisitions that we've done, the global footprint that we've expanded, AR Packaging very specifically. If you kind of look at who will be in 2022, our $9 billion in top line will require about 5 million tons of paperboard.

We'll produce 4 million tons of that. We'll purchase 1 million tons, a lot of it's in Europe, but it's really around the globe.

It supports our businesses in places like Brazil, Australia, New Zealand, parts and certainly in Europe and even here in the U.S., as Mike mentioned, through some of the relationships that we have through some of our acquisitions.

So the optionality that we have to drive integration rates from a midpoint of 75% this year to 90% are clear. They're clear to us because when we grow organically at 100 to 200 basis points, we'll drive up towards 80%.

We then have incredible optionality with the purchase -- the purchase paperboard that we have to bring some of that in-house as we know that we can. Mike shared some of those ideas and concepts around how we do that, for example, with our CRB investment in Kalamazoo.

And then beyond that, additional acquisitions to support increased integration. So it was one of the reasons that we elected to move towards 90% is that we can see the path there through organic sales, internalization or integration of that, which we're purchasing elsewhere today as well as the potential for acquisitions.

And that's a packaging company.

That 90% of all the paperboard we produce turns into an end product that we, as a consumer, take off the shelf. That's probably 95% of the top line when you stand back from it, and that's the business that we will be building over the next several years.

I know it will surprise you that there's a lot of numbers on this chart. It's kind of who we are.

We tend to be pretty transparent in our aspirations, not conceptual. But let's talk about the path.

The path from a midpoint of 1.5 really has multiple components to it. And will it play out exactly this way?

Of course, not. But it's really the underlying assumptions that are consistent with the vision that we've laid out.

Price/costs relatively neutral given the recovery that we'll have this year. Doesn't require price to be more than commodity input cost inflation over that period of time given what we'll be doing this year.

We earn on our organic growth 100 to 200 basis points, drives a couple of hundred million dollars a year at the high end. We earn on that, $50 million to $100 million.

That's earning on what Ricardo was sharing with you around an innovation engine that we have.

We have a long history of our net performance, our core performance plus the synergies that we have, more than offsetting labor and benefits inflation. That combination will drive increased EBITDA over the period of time, you can see the $50 million to $100 million there.

We'll earn on Kalamazoo. The next $80 million after this year's $50 million will come in over the next couple of years.

A lot of confidence that the cost structure, the quality, the characteristics of what we've built with Kalamazoo investment will yield that $80 million.

We've got a range that says if we spend beyond 5% for CapEx, we put at 6%, 7%. You can do the math, $300 million to $600 million of CapEx that drives returns and drives margins.

Those are returns consistent with our past investments, about a 6x return if you put the math behind it, earning on capital investments drives additional improvement. And then the balance sheet is in a great spot that on a post-synergy basis, that's $1.5 billion to $3 billion, probably of acquisition capital put to work in total, that allows us to have the path to the $2 billion to $2.4 billion of EBITDA.

So I just wanted to provide a path, the assumptions and the characteristics that will allow us to achieve the enhanced vision that we've established for the business.

Requires cash flow to do so, I wanted to also just kind of share with you, and this is if you look out 2022 to 2025, and you kind of assume $1.5 billion moving into the low end of our range, $1.8 billion. That generates mid-6s in terms of EBITDA and put $350 million or so to work in terms of interest costs, pension, et cetera, all consistent with things we've shared with you in the past.

We've got $5 billion to work with, and that has us supplying $1.8 billion of it to put 5% of our CapEx to work that allows us to maintain our assets as well as invest for some of that core productivity that we have a great line of sight to. We've kept the dividend common in this particular period of time.

We've got $3 billion to put to work back into the business, to invest back in the business. And that's what we'll do.

We'll invest back in, obviously, this year, debt reduction, an absolute critical priority. And so we'll embark on a lot of that cash flow for debt reduction.

Some of the strategic investments that we're talking about that allows us to put capital to work thoughtfully while still generating very significant cash flow every year between here and 2025.

Balance sheet has the capacity to do M&A. And then if we're in a position, obviously, we have the optionality to buy back the company.

And so the opportunity that we have to put the cash to work in a very balanced way, consistent with our history is there. I just kind of wanted to give you a sense for how we would deploy it over the next several years.

So that's just a bit of the inherent assumptions and the economics that give us confidence in sharing with you today the enhanced goals that we've established financially that go beyond those which we originally had brought to life back in September of 2019.

Hopefully, what you've seen in the last 90 minutes or so is why we have confidence that we're running a different race, that we have a compelling investment case. And that we've shared that with you at a level of specificity that's important because it has to give you and, of course, us the confidence to invest back in the business in the kind of way that's consistent with our history, but also advancing forward as we operate in a sustainability-driven environment that allows us to grow organically, invest back in the company and really build the packaging business that we're sharing with you today.

So with that, Mike, why don't I just turn it back to you for a wrap and then we can move to a break and Q&A.

Yes. Thanks, Steve and Ricardo for helping bring the Graphic Packaging story to life with me today on the stage.

Those are our prepared comments that we had, and I'm hoping that we leave you with the presentation we gave more inspired about like we are, the prospects for our company's future, the opportunities for growth and value creation here over the next few years.

40. Okay.

So why don't we come back at Five to? 10:55.

That would be great. Thank you so much.

[Break]

Okay. Welcome back.

For those of you on the webcast this morning, you can go ahead and put a question on the right-hand side of your screen. Please submit your questions and we'll get to you time permitting.

We'll start this morning in the room. [Operator Instructions] Catherine, who's on that side of the room and Roxanne over here will pass microphones around.

We'll take 3 to 4 questions in the room, and then we'll move to the webcast to take a question and we'll go forth. Okay.

This is Phil Ng from Jefferies. The bridge looked pretty reasonable for 2025 and the cash flow is coming through.

The one question I had is your assumption for price cost was neutral, which is pretty reasonable. But you're adding a fair amount of capacity on the CRB side, I think it's about 10% for the broader industry.

Your ability to kind of keep that price cost algorithm intact, certainly, you guys have a much lower cost profile than everyone else.

And then if a potential new entrant is certainly adding some FBB capacity, SBS from a return perspective, has been a little choppy in the past, but your comfort and your confidence to kind of maintain supply/demand in the next few years?

Yes. Thanks for that, Phil.

Why don't I take a cut? I'm going to split those apart.

I'm going to talk about CRB and then we'll talk about FBB here because it probably warrants a deeper discussion in terms of what that is for some of the investors that may not be as familiar. But in terms of CRB, I think the distinction I'd ask you to remember that I talked about on that slide, is we're not looking to take those tons to the market.

We're looking to drive the tons that we're going to generate by keeping Middletown running through our own internal operations.

And we're also integrating in 30,000 tons of URB that we're buying from others. And so those 2 things, along with the growth that I talked about, and I gave you a few examples of what that looks like, gives us confidence that, that actual CRB market is going to grow.

I know that might seem a little counterintuitive to some of you who've been around for a while. But if you really take a step back and think about what's happened over the last decade, there's been a big movement out of CRB and into CUK in many ways.

And we had CUK capacity in both Macon and West Monroe. Graphic Packaging led a lot of that.

There were a lot of old machines that were close to end of life, and they just went away.

And so what you're seeing with the new modern machine with modern cost profiles, we're actually able to bring some of those materials back into CRB, and it helps us grow our business. Again, we're not looking to take those tons to the open markets.

We're looking to run that business through our integrated packaging operations with sales and orders we already have and commitments from customers that are already online.

And the only thing I'd add to that, Phil, and just maybe a different way to think about it is we just talked about a couple of hundred thousand tons. Think about it in the context of our 4 million.

Because at the end of the day, we've got a growing platform, and you've seen us make moves in and out of substrates. And as Mike was just saying, we took things out of CRB, moved it to CUK.

We've got a very significant growing CUK platform. We may elect in that environment to move some of CUK into CRB.

So you've got to really think about it as a portfolio, which means then you're talking 4%, 5% growth in capacity with us growing 100 to 200 basis points a year. I mean, it's there and it's supported by our organic growth.

And so I think it's a distinction that's kind of an important one. That's how we think about it in terms of how we think about the overall portfolio.

Yes. Thanks for that, Steve.

And I think maybe on FBB, it makes sense to kind of go back a little bit on this. And maybe I'll describe FBB for everybody, just so you know what it is, and I'll talk a little bit about what Phil has referenced in his question, which is a good one.

So thank you for asking it.

FBB stands for folding boxboard. Folding boxboard is the predominant virgin sheet in the European market.

And it's different than SBS because it's a 3-layer sheet as opposed to a 1-layer sheet, which is the predominant way SBS is made in North America. So on that 3-layer sheet, the middle ply is actually thermal mechanical pulp.

And so you take wood logs in particular, and they're ground down and that goes in the middle ply, and it creates a lot of bulk, okay? So the middle ply is where you get the bulk or the caliber on that particular grade.

And then chemical pulp is applied to both the top and the bottom layer. So you got a 3-layer sheet, similar to what we're doing in Kalamazoo on our coated recycled paperboard machine.

So we know a lot about 3-layer paper machines. We buy, by way of reminder, over 300,000 tons of FBB in Europe every year now with the new acquisition we did with AR Packaging and our existing operations.

So we convert a lot of it. We know a lot about the sheet.

And we've got a lot of familiarity with it in terms of running it through our carton operations.

In Europe, there really isn't a pure CUK sheet. So it's FBB and it's what they call GD board, which is our equivalent to CRB.

So there's 2 primary substrates in Europe. In the middle of December, a competitor by the name of BillerudKorsnas, announced they were going to buy Verso Corporation, which is a large printing and writing manufacturer of paper and they were going to convert one of the mills that they acquired with that acquisition, they announced they were going to spend roughly $1 billion to convert the Escanaba, Michigan mill to make FBB.

And they also said, CUK, I'll come back to that a little later, in 2 phases.

The first phase was going to be one machine that they brought online in 2025. Now that was with their prepared comments with the acquisition.

Then they had an earnings release here for their fourth quarter, and they seemed to kind of walk that back to '25, '26. So it might be a little bit delayed from their original numbers that they put out.

And then they said the second machine would come online in the '29 time frame, '29, '30, '31. So over the medium term, you'd have roughly 1.2 million tons of capacity come online, which rightfully so created a number of questions we got from a number of people around what that means for our market.

I think, Steve, why don't you go to the company that we just got done talking about that we're going to be in 2025. I think it's important to look at the company we're going to be in 2025 when that tonnage starts coming online.

Assuming it comes on as they said it would, okay.

We've got a company that's 90% integrated. It's a $10 billion-plus company, making over $2 billion of EBITDA.

It's a strong, powerful company that's capable of actually working through a cycle on that type of thing. And our industry, if you look at it over time, has actually done a decent job of shutting down old, inefficient assets.

That happened on SBS over the last couple of years. One mill and another machine were shut down by a couple of our competitors.

So it's natural to think that, that kind of dynamic occurs. What we agree with BillerudKorsnas on is that the market is going to grow.

They said that the market is going to grow 1% to 2% over that period of time, it's going to create more demand. We agree.

We just got done making the case of that over the course of the last 90 minutes or so. So we're aligned in terms of what that looks like.

What I know about paper machines, and I've said this publicly for years is you can convert any paper machine to do anything you want it to do. It comes down to how much money you're willing to spend, how much time it takes to do so, what your cost structure is going to be when you're done and most importantly, where are you going to sell those tons?

Again, Graphic Packaging is going to be 90% integrated. In terms of that particular mill, we're not going to run any of that production through any of our converting plants in North America.

Why would we? We're going to make our own stuff, right?

I'll come back to that in a minute and let you know what that all looks like. But that's point number one that I would ask you to think about.

The other side of it, and Steve and I spent a lot of time talking about this is, in that particular wood basket and in that particular mill, I grew up in Northern Michigan. So I'm well familiar with it.

Steve worked for Mead Corporation in Westvaco for 25 years. He knows that mill quite well.

So it's not like we're not knowledgeable about what's going on there. What I'll tell you is the way we tend to think about relative cost advantage or competitive advantage over time, there's kind of 3 things on fiber you want to know.

It's the renewability of that fiber, so how fast it grows, how fast it regenerates itself, the cost profile of that fiber and importantly, the quality of that fiber.

And so one of the things they said, they were going to make CUK on that machine. We have a big question mark around whether that ever happens.

And I'll tell you why. Because in Northern Michigan, the most prevalent source of softwood is the jack pine and the yellow pine.

The fibers are substantially shorter than that of the loblolly pine which is indigenous to the southern mills. Think about how many uncoated freesheet machines have been converted in the Great Lake states to make linerboard.

I'm not saying they can't make something that's brown. But remember what I told you on the slide is that the beverage customers, they buy strength and tear.

They're not buying brown. They could care less if it was brown.

They care about whether or not it's got the strength characteristics of -- that are necessary for that handle performance and to hold the bottles and cans up in the air. So as we think about it, we'll give them that if they spend enough time and money, and it's probably more time and money than what they've talked about publicly so far, given our experience with converting machine.

And I'd question if this is really even a conversion. It's almost more of a complete rebuild given the amount of money they're talking about here, that they can make an FBB sheet that probably does work in this market.

We struggle to see a CUK threat to anything that we're doing for the reasons I just talked about. And like I said, Phil, over time, the markets are going to grow and low-cost wins, high-cost loses at a mill structure and there will be some balancing, I'm sure, over that period of time with mill assets to kind of keep that in balance.

Having said that, one other thing that we haven't talked about publicly, you'll hear is that a little over 1.5 years ago, we acquired a thermal mechanical pulp on our property at our Augusta mill. And we acquired that from the Resolute Corporation.

They had a newsprint mill that was actually adjacent to our mill, and we actually did the fibering of that mill, long-term contract, and we treated the water for them.

And when they shut that mill down, we purchased it from them for a couple of reasons. One, they had a brand-new chipping operation that allows us to actually lower our cost of wood into Augusta because we're able to take roundwood in on the property.

As a matter of fact, we're just finishing a long track belt that will go from that chipping operation to our mill and will be operational in the month of March. So we're excited about that.

But also it had this thermal mechanical pulp that was modern and well capitalized. And so we've actually been studying FBB for well over a year.

We've been looking at it in terms of what it could be for our company. And Steve talked about the 5% to 7% capital.

We've got a lot of optionality in our large virgin mills to create different products that will help us drive our integration over time. We're going to run some pulping trials here in the months of April and March and take a look at it and see what -- how that all looks and see what that makes sense for us to do.

We don't have a project to talk to you about today. But what I want you to walk away with is we have a lot of optionality because this is the company that they're going to be competing with when that comes online.

And it's something that we believe that we can actually manage and do so well.

Again, we make -- what we acquire -- or as Steve said, buy 300,000 tons of FBB and we ship 250,000 tons of our own CUK to Europe every year. It's not a reach to think we can supply our own facilities.

Now think about things passing in the Atlantic. No one really likes that, right, because there's a lot of cost and shipping transportation that goes along with that.

But having that capability could create some interesting trade opportunities for us. It all starts with the sale of cup and a carton.

That's why we grow our packaging business because it gives us tremendous optionality for value creation over time. And I'll pause.

Yes. No.

And I think the only thing that we'd add because I think just in terms of kind of factual base, fact base, there's been some conversation around wood cost and wood cost advantage. And I think one of the things that's just relevant for that conversation is I think the public discussions around advantage wood costs were advantaged versus Sweden.

I think what you really want to look at is what's the cost structure of wood in the United States. And obviously, we spend a lot of time on that in terms of our competitive advantage.

And on a cost basis, the Southern U.S., with where we're located is modestly advantaged from a wood perspective, from a wood perspective versus the Lake States.

And so as Mike was mentioning, overall quality of the paperboard -- of the trees themselves fits with what we're doing relative to CUK. But there's just a point of clarity that the Southern United States, where we spend our time, obviously, is modestly advantaged versus the Lake States.

So I think there was a comparison there. It's just a point of clarity around kind of how we think about the inherent raw material that services our CUK and SBS mills.

And to that end, we actually did a study on this because we were getting a lot of questions. And it really shows -- we hired a company called Forisk, which is one of the leading forestry consulting firms out in the United States, North America, really.

And they did a nice study for us, and I think we'd be willing to post that on our website, so you can kind of see what we're talking about. The length of the fibers are a couple millimeters shorter than the loblolly pine.

You can see the relative costs and renewability there as well.

So look, it's something we have to deal with, but we're going to have a very powerful company that is well positioned to be able to do that. And again, 2025, 2026, that's a long time from now.

A lot of things are going to happen between now and then. The most important thing is this market is going to grow.

George Staphos, Bank of America. Two quick questions here.

One, to the extent that you more or less answered this through your presentation, Mike and Steve, what gives you the most comfort over the next, whatever, 3, 4 years that the line to 2025 will be, in fact, more linear than cyclical, recognizing, look, the paperboard business has some cyclicality to it. There are no guarantees in life.

Of the things that you mentioned, what gives you most comfort in that regard?

Relatedly, the 5% to 7% of sales now that's being directed to CapEx and slightly nudging up from the 5% you were at previously, will we see that more around -- and I recognize you can't get too much into this live mic. But is it around these new developmental pulp lines and fiber projects?

Is it more around making sure you're integrated so that you've got that larger moat against potential new supply?

And then a quick one, with the pickup in the CRB, which already was at a huge backlog as of third quarter, where did you get it out into the 10 weeks? Where did it come from, just supply constraints or we've seen the demand pick up?

Yes. So let's take the last one first because it's the easiest -- the shortest answer.

It's really the conversions that we're talking about. Those conversions are coming online and drawing a lot of demand as we're integrating and filling the pipeline for customers that have made those conversions into coated recycled paperboard.

We took some of our CUK, as I mentioned, George, and had to put it in CRB because of just balancing out our profile. We've got the ability to do that because we make all 3 substrates, and that's how we think about it.

So that one is the answer I'll give you there.

I'll hit these and then you can put a finer point on it. I think the way we think about it in the case that we made today is around the circular economy and the move towards that by the principal markets we operate in Europe and North America by the end-use consumers saying, "I want to support these types of products with the types of things I buy.

And it's really creating more opportunities, whether that's foodservice or conversions out of foam and into paper, that create a backlog, George, that is different than what we've experienced, certainly even in my career, around a tailwind there that is giving Ricardo and his team a nice funnel of things to attack.

And so because of that, that's what really gives us confidence in the 100 to 200 basis points that we put out there. And I think we've been pretty reasonable around that, particularly given the last year, we averaged 300 basis points.

And so when you look at how that kind of plays into the waterfall that Steve laid out there, it really does -- if we earn on that volume, it's a source of EBITDA generation each and every year. It picks up the [ creep ] tons coming out of the mills, drives those efficiencies and really drives our overall margin performance as it kind of drops through.

So that part of it is really one of the biggest changes we started seeing about the time we were together here. We thought it would happen, and it's actually developed that way.

And I also like the fact it's been tested through COVID.

If you think about a huge disrupting event, COVID was certainly that, right? And we saw foodservice go way down.

We saw our home consumption go up. And now we see kind of normalizing back, and I mentioned earlier the drive-through window is back in a big way here as customers ultimately think about how they want to eat, where they want to eat and the type of convenience that they want to have.

So that, on the organic side, is certainly something that helps us get a little bit more linear. Having said that, growth is not totally linear.

It tends to be lumpy. But 7 out of the last 8 quarters, we've delivered our growth ambition.

In terms of CapEx, above the 5%, it will be projects like the ones that we just talked about, most likely in our Virgin Mills. I mentioned the TMP line because I want you to know that we're not just sitting around on our hands, looking at this stuff.

We buy a lot of that board. And it makes sense that we would look at that from a competitive standpoint here as a project.

And we've got a lot of work to do still on that. As I mentioned, we've got the pulp trials to do.

But if we decided we were going to do a project like that, that would be the type of project that would filter into Steve's bar for the capital investments that we would make and do.

Having said that, we're improving the company at 5%. We get better every year because of that in our converting and in our mills.

So that's a healthy number that we've got there. And as I mentioned in my prepared remarks, the efficiencies that we generate, it's really important because it creates and unlocks a whole bunch of benefits for us down the road, that allows us to enhance our customer experience, drive our cost down and our customer service up and really creates that virtuous cycle of spinning that flywheel of cash and EBITDA that we've built over the better part of a decade.

Yes. I think the only thing I'd add to Mike's comments, George, is if you look out over the next couple of years, specifically from kind of where margins should be as we kind of walk out of '22, we can see the ongoing growth that we've talked about.

In other words, the organic continuing to earn on that and getting the return on the investment that we've made, particularly in Kalamazoo. I mean that -- those 2, which are linear, if you will, the linear start-up as well as the organic, over the next couple of years, that 100 to 200 basis points and the earning on what's been a patient investment in terms of the patience to now earn on it, those 2 alone really drive good confidence, particularly over the next 12 to 24 months of margin enhancement coming through the company.

Anthony Pettinari from Citi. Mike, Steve, understanding that the '25 goals are company-wide.

I was just wondering if you could maybe compare North America with Europe from an ROIC perspective, EBITDA perspective, maybe where you have more wood to chop. And you've done a lot of work in America to improve pass-throughs, tighten up lags.

Do you have sort of similar work to do in Europe?

And then maybe just finally, from an acquisition perspective, in terms of availability of assets, valuation ability to get synergies, which is the more attractive market here?

I'll start, and then we'll just tag team on that. I think just in terms of the return profile and the growth profile with AR Packaging and now a couple of billion dollar infrastructure in Europe, we really like the growth trajectory of the European platform, really the international platform.

A lot of it, as you heard earlier, in Ricardo's comments, a lot of the early growth we're seeing is coming from Europe. And so PaperSeal, KeelClip, I mean we're seeing -- so our European platform, we expect it to grow at, or above the kind of rates that we talked here.

And as such, the return profile is at, or above where we're at as a company.

So in other words -- and they're not -- the variations are relatively modest. We're talking close, so there's not a big distinction.

But overall, we really like the growth trajectory of this larger $2 billion-plus footprint that we have. And we're seeing that, I think, it's fair to say.

Obviously, when it comes to the acquisition component to it, we'll be very thoughtful there as well because we'll be asking ourselves, does it drive integration? Can we see the 2 to 3 turns of improvement that comes from it?

There are options that exist both in Europe and in the Americas to continue to drive the integration rates up. While it's reasonably consolidated, there is optionality on the converting side to support kind of that move that we talked about there, kind of going from non-acquisition-oriented to acquisition-oriented.

Yes. I'll hit that.

I think the -- I'd tell you, and you saw that actually with the paperboard prices going up pretty quick, that pricing goes right through. It's because AR Packaging was largely -- well, it was just a non-integrated converter.

So they had to add those terms to pass that stuff through relatively quickly.

Terms are good, relatively speaking. And I appreciate you referenced, we made a lot of progress last year in North America in a solid market.

And if -- it really created a platform that allowed us to be able to do that. And we did not let that go to waste, and we're going to be very thoughtful going forward how we continue to tighten up those terms.

I think the other thing, Anthony, that we've got now with Europe and the U.S. And of course, we've got a smaller Pac Rim business and then one in South America, too.

We can approach a customer as truly a global partner for paperboard. And that creates a pretty level playing field for us, where sometimes in the past, we might be disadvantaged because we're only in one geography, we're able to kind of use our platform to kind of scale to create a more balanced set of negotiations with the given customer.

So I think that's something else I'd ask you to think about that's a new capability for Graphic going forward here, too.

Did we hit everything Anthony?

Okay. I'm going to take one from the remote audience.

This is from Ghansham. Ghansham Panjabi of Baird and he's thanking you, all of you for the event.

There are several questions. I'll do 2.

First off, how would you characterize your current new product backlog versus the pre-COVID baseline?

Go ahead, Ricardo.

Yes. so I think one of the things -- and first of all, thank you for the question and for on connecting remotely.

So if I understand the question right, in terms of our development pipeline, pre-COVID and -- COVID for us in terms of innovation was a nonevent because what we are trying to do is to create a pipeline that is strong enough to take us through these economic cycles. So we created and we have this front-end innovation funnel that is multiples of the results that we want to deliver at the end, understanding that not every initiative that it starts goes all the way through the end.

So we feel very comfortable and very strongly about that pipeline. Also, during a period when the industry stops or the world stopped, that gave us a lot of opportunity to do internal developments as well.

So we put our best brains to work in terms of material science. And I keep referring that as one of the biggest competitive advantages that we have from an innovation perspective because we create a lot of knowledge relative to how paperboard behaves in the final application.

So we feel pretty good about it, that didn't have a big impact and we launched a bunch of new products during the pandemic. So we feel pretty good about it.

I think the other thing maybe, Ricardo, that you guys really did a nice job on here is that you embraced the technology tools that allow us to move information around the globe in a much faster way. And of course, COVID created that as a necessity, right?

We all had to go virtual. And the question was how do you do that quickly?

And what that allowed Ricardo and his team to do is really real-time move these trends around the globe. And that gave Steve and I a lot of confidence when we were looking at AR Packaging around a truly innovative company in Europe that, given the fact that Europe is ground zero for circularity and sustainability, that we could do the same thing and move those trends faster and you're starting to see some of that in the products that we're looking at here.

And I know we'll pick up on that momentum as the year goes on.

Yes. And to speak of those trends, if you look simply at the size of the total available market, for innovation, right?

So with the AR acquisition, we went from $7.5 billion to $9 billion. And I believe that when we came here in 2019, that estimate was $5 billion.

So we continue to find opportunities, primarily driven by plastic substitution, and you see that as represented here at the end -- at the back of the room. But we see that continue to grow, and that gives us even more momentum to find development opportunities to bring these innovations to the market.

Okay. And more, Steve, this one is for you.

A few people have written in about this. The $200 million in potential inflation.

If you could just talk more about what that encapsulates and some of our assumptions?

Yes. No, I'll be glad to.

I think what you kind of saw and what we shared there is, on a run rate basis, when we kind of pulled it together, we know the paperboard inflation in terms of what we purchase. And the $150 million beyond that, so the $150 million -- the $150 million beyond that was kind of what we knew was the run rate heading into the year.

And we're going to see -- I'll talk about kind of the quarters here just to help with that answer a little bit. But that was the $300 million that we had real line of sight to and knew.

Given the realities of what we saw in 2021, we don't know what could conceivably run as we've seen in the past. And so really, the $200 million was a what's possible.

And -- but it's not pointed at any particular commodity. It's not.

It's more of a listen, if we saw another 10% move up on what we spend -- 8% or so on what we spend to acquire commodities, we could see that level of inflation. But we're not predicting it.

As I mentioned in the remarks, the mark-to-market for us right now, based upon where everything has landed is about $320 million. So that's kind of where we are today based upon what we have line of sight to.

But we've seen inflation become -- get on a tear at times. And so we just wanted to make sure that we were putting this into context about what was plausible.

We will see, just to kind of put it into Q1 for just a moment, the $700 million of price that we're executing on, we're going to see $200 million of that in Q1. And we do expect inflation to be material, probably in the $150 million range for the quarter coming off of the $140 million last quarter in Q4.

So because inflation ran when it ran, the highest year-over-year is very likely to be in Q1. But we're going to pivot to price/cost positive, which gives us confidence in the overall price/cost positive.

It gives us confidence that we will inure that benefit starting right here in Q1 and given that we're in mid-February, we're seeing that come through our results mid-quarter.

And really because of that uncertainty, Ghansham, that's why you've seen us so aggressive in terms of our overall pricing. We've continued to push pricing and we've got pricing actions out there on all 3 of our grades right now because we don't know for sure.

Our backlogs are strong. Demand is really solid.

We're very busy. And so it makes sense for us to continue to push and pursue that given the uncertainty that, quite frankly, the operating environment has been over the last 24 months.

Kyle White with Deutsche Bank. A question for Ricardo on the innovation.

I appreciate all the details with the PaperSeal and the OptiCycle cup. I believe you said the OptiCycle cup uses a water-based coating, but the PaperSeal still has a plastic lined coating that you peel off.

Is there anything in the pipeline and innovation where you could have a water-based coating on the product similar to the PaperSeal that -- and keeps the product -- keeping it shelf stable and able to go through the grocery retail channel?

Just any details on what you guys are working there?

Thank you very much for the question. I appreciate it.

So let's talk a little bit about PaperSeal and the applications where it goes. So we started, like I said, in vacuum sealed packaging applications, modified atmosphere packaging applications.

And we recognized that to go from point A to point B, sometimes it's not a straight line. So we -- ideally, and our objective is to go to an architecture for that particular platform that is going to be entirely recyclable, compostable, et cetera.

But we are not letting the perfect be enemy of good. We're seeing the sustainability as a journey, right?

And we're making improvements as we go. So if you think about the fact that as a first step, we are able to go from 100% plastic to 90% paper, right?

That is already a very good step. This is one point.

Second point is, as I mentioned in my remarks, we are constantly working internally, but we are now being much more deliberate about working with external partners to develop this new step-changing innovations that are going to enable us to get there.

If it's going to be a water-based material or some other type of application, it's yet to be determined. But we have currently active projects in place to make sure we take the steps in that direction.

And the prospects are very good because technology continues to evolve.

Gabe Hajde, Wells Fargo. I'm curious if you can talk about, I guess, the conversion -- the pace of conversion across some of the different end markets that you serve?

And I'm specifically thinking about foodservice relative to kind of -- not center of the aisles, but just the grocery store channel. And any investment that's needed to be made on your customers' behalf to adapt a paper or fiber-based solution versus foodservice, where it seems like it's probably a little bit easier to replace a clamshell.

It's just a different purchase order?

Yes. Thanks for that, Gabe.

I'll hit it and you can put some color on it. I think you're right in that it's a lot of hand packaging type stuff.

So it doesn't have to go through some of the trialing that takes place on the foodservice side. Having said that, you'd be surprised at how integrated these QSRs have their overall operations.

And as you can appreciate, Gabe, they want to get that drive-through out right away. So anything that slows them down is a problem.

It needs to be worked on. And so we're learning more about what that all looks like, and we're working with our customers to help them with some of those time elements around the packaging that they use.

As I mentioned in my prepared remarks, in certain jurisdictions, I mean it's statutory they've got to get out of some of this plastic, single-use plastics. And so they're working quicker on that type of thing.

And then there's a longer pipeline around foam to paper that's really one of our primary focuses, certainly on foodservice. But what I mentioned that sack to cube conversion over there, what I think you see on some of that stuff is when it happens, it's a big number.

It's 40,000 tons. That's like half of one of those smaller CRB mills all at once.

George asked the question around 10-week backlogs, that's the kind of thing that occurs. And the customers want to do that, but they can't have a 10-week backlog forever.

We've got to shorten that down because they don't know the ability to be able to predict their demand and their pull. And so that's why we're excited about our Middletown mill continuing to run, because it's going to help us make sure that we're able to service our integrated carton operations with those types of conversions that are kind of ongoing.

So I don't know that we can really parse it down to any one thing. I think that's probably what gives us competitive advantage because we're trying to work all of them but be focused on how we're working all of them.

As I talked to Ricardo about -- when he took this job, we just need to make sure we're not the dog chasing every truck that goes past the farm. So we try to neck that down into the critical few in each one of these platforms that really can move the needle.

And I think we've made pretty good choices along those lines. I guess you could ask, well, could you go faster?

If you add more resources, we have those kind of debates internally and with our Board. But look, so far, so good, 300 basis points over the last 2 years.

Yes. And just to bring an example to life, because I mentioned the way we operate in terms of innovation.

We don't look at it from a -- it's an R&D perspective, right? So we have certain core competencies in terms of material science, machine engineering and design.

So let me give you just an example where we are using all these in conjunction. I mentioned that we're going to come to market now with ProducePack Punnet in the U.S.

for snacking tomatoes. So if you go to the supermarket today, it's going to be a clear plastic with a film lid, right, that is used to package those tomatoes.

We were smart about it. We developed a design and configuration that enables the growers to use the same sealing equipment that they currently have to run a paperboard option instead of a plastic board, right?

So we are looking at this holistically, and looking at the geography dynamics as well. So we don't take the one-size-fits-all approach because we have a portfolio of solutions.

Thanks for that. And then one, just because earnings are married up with the I Day presentation.

Maintenance costs, I don't think I saw anything specifically in there. If you can just give us a view for what that looks like relative to 2021.

And then the TRA payment, I think, was 109 this year. Is there anything left on that?

And then your perspective on cash taxes. I think you said $60 million to $80 million this year, how that trends over the kind of forecast period.

Yes. No, let me touch on those.

Cash taxes from a U.S. cash taxpayer, very modest in '22.

We expect to be modest in '23. We would expect to have some ramp-up beginning in '24.

And so that's kind of the trajectory there. Remind me again, say that again, the other one, I want to make sure.

Tax receivable.

Oh, the tax receivable. Yes, that's behind us.

Yes, everything with International Paper is now complete. So the tax receivable agreement that we had in place in '21 is part of the debt structure of the company.

And so no change there at all.

And maintenance?

Maintenance, it's in the back of the materials back in the appendix, it's fundamentally flat year-over-year. There's a little bit -- Q1 is flat to last year.

There's a little bit of plus or minus $10 million and $20 million. But overall, our planned maintenance for the year is flat year-over-year.

So heads down, run the mills year, we need all the tons we've got to service customer demand that we have as we ramp up Kalamazoo.

David Paige from RBC. You mentioned the benefits of being a global company after the AR Packaging acquisition.

So when you get back to your target leverage of the 3, 3.5x, do you have plans to do another significant acquisition? And what region would it be or what end market?

Do you have any color on that?

Look, I think the first thing we have to do this year, to your point, is pay down the debt and get our debt down to our established range of 2.5 to 3x, and Steve took you through kind of our plan to be able to do that through a combination of EBITDA growth this year, and free cash flow being applied to debt reduction, as CapEx normalizes with Kalamazoo in our rearview mirror and ramping up.

In terms of markets, like we said on the slide for partners, best customers, best markets, those haven't changed. They're North America and it's Europe.

And Europe is still a very fragmented market. For us, we're the #1 market share, but we're 21% or 22%.

So there's a lot of work still to be done there. We're happy to be there.

And as the other thing that I'd say in terms of capital allocation that we'll look at over time, and Steve outlined this too, is we're buying 1 million tons of paperboard, a lot of those tons are in Europe. What's the best solution for us over time to drive our integrated model?

We can continue to ship stuff out of the U.S. there.

We could ultimately look to acquire a mill. It's not a strategic mandate, but it's something we would look at in the context of any other capital equation.

So I think you'll see us continuing for the next 2 to 4 years for sure, focusing on those principal markets of North America and Europe, and not moving materially outside of them.

Yes, to that point, what you won't see us do is making a big bet in an emerging market, because we really don't see the need given the opportunity that exists in the Americas and as well as throughout Europe. So it will be more mature-market oriented because there's still room to maneuver there.

Okay, we can take a couple from the audience. This is from Adam Samuelson of Goldman Sachs, also on capital allocation, and you'll like this one.

Assuming you achieve your targeted deleveraging in 2022, your stock does not seem to be barely reflecting the growth potential of the company longer term. How, if at all, could share repurchases factor in the capital allocation in 2022 and 2023?

If we're not appropriately valued, we'll buy back the company. I think it's just one of those things that we -- you've seen us do that over time.

It's one of the tools that we have available to us. And so we have a forward view of the company, and the investment community will determine the value of it.

And it's a tool that we'll utilize if we believe that it's the right one. We do have job one here in 2022 is to move the leverage back down approximating that 2.5 to 3x.

We see the line of sight to make a big advancement to that direction. But we'll always be -- and it's why it's balanced, and you've seen us do it in the past a few years ago.

We bought back 20% of the company when we were at $12, $13 stock, and we believed in the future value creation.

So it's always a tool that's available to us, yet we're very confident in the return profile of the investments that we know we can make into the business to drive the organic growth, to drive the margin improvement up towards what we see as possible in today's Vision 2025 goals.

Yes, I think, Adam, look, thanks for the question. I agree with all the comments Steve made.

I think the biggest thing we're going to do in 2022 is have another year where we deliver on that growth. As I said, 7 out of the 8 last quarters, we've done that, 300 basis points.

Sooner or later, we need to start being able to get credit for the fact we're a growing, integrated packaging company. And as I mentioned in my prepared remarks, we've got a cash-generating engine that's very solid and gives us a lot of optionality.

So Steve profiled the various different allocations we can do, and we'll do those as we always do in a very thoughtful manner over time. But we recognize we have to earn that, and we think this year will be a year where all the things we've done to get to this spot are really on full display.

And I think that will be pretty exciting for our investors and our shareholders that have been with us over that period of time. We really do appreciate it.

Okay. And one more from Mark Wilde of BMO.

Actually, 2 questions. Can you update on prospective Texarkana conversion?

And applicability of new K2 board for wet strength packaging and with digital printers?

Yes. Thanks for that, Mark.

I appreciate the question. In terms of Texarkana, we had talked about doing that project this year.

We're too busy. We need all the SBS that we have right now to run our business.

And if we were to take that machine down in Texarkana and do that conversion, we wouldn't service customers.

So we made the decision to delay that. Certainly in 2022, we won't do it.

We believe it's a great project still we need more CUK. It's another option we've got around some of the things Phil's question earlier around our big virgin mills in the capital that would be above the 5% towards the 7% range that could have real solid returns for us.

So we've actually purchased a curtain coater, we're going to store it for a while because right now, we're just -- we need all the tons that we have to be able to operate the business. And what was...

Kalamazoo, in terms of optionality.

Thanks, Mark. Yes.

So as you can appreciate, right now, we're running kind of more standard CRB because we want to crank the tons and get the crews real comfortable with the ramp-up on that machine. Having said that, there are options for both freezer grade material that we think could be really interesting for some of our customers as well that have expressed interest as well as a beverage grade that could actually work along those lines.

The beverage grade most likely would probably be something that we would look at for Europe. It gives us some good optionality there, and Joe has got some pretty good ideas there.

But right now, focus is really around ramping up that machine, getting Battle Creek down and delivering our $50 million of synergies this year with that run ramp going out into '23 and '24. And as we get more and more comfortable with that, we'll look to create some more capability as we're on that journey.

And to Mike's point, and it's an important one around CUK, we have such strong growth for CUK paper-based packaging globally, and we're highly integrated. We're a buyer of CUK-type board in Europe.

We prefer to service ourselves. And so the opportunity and optionality to -- Mark, to your question to potentially move demand that's currently in CUK into CRB, where we have the need and a freezer grade being a nice example, allows us to service ourselves and our growth around the world.

And so that's again why this 4 million-ton infrastructure is so critical because those are the levers that we can pull between and among, to Mark's question, around what's possible relative to where those substrates apply relative to the markets in which they participate, all driven by the fact that the demand growth is there.

One here from or George again.

George Staphos, Bank of America. I wanted to, Ricardo, piggyback on the question I think Kyle had started on, on OptiCycle.

And I remember, OptiCycle was supposed to be commercialized starting in 2020. Now COVID might have had a big impact in terms of that rollout.

But can you talk about where the rollout might have been delayed if you, in fact, believe that? Generally speaking, when you look at new products, and you often say you're not going to win every jump ball.

Of the jump balls that are out there, your product versus plastic, how many of those are you winning would you say? And when you don't win recognizing it's the minority, I think, based on what you had on the slide, what are the things that brand owners push back against paperboard for plastic?

And then last one from me. Just with all the tension geopolitically in Europe right now, you do have a few facilities that are relatively close or in the region, what are your contingency plans for running Europe?

Thank you for the question. Let's start with OptiCycle, it's just a matter of correction.

We launched OptiCycle in Q3 of last year, so 2021 and not 2020.

To be fair to George, we had talked about PLA coatings before then...

Yes, he talked about it.

Yes, yes. So that's really what you're referencing there.

And we do have the capability to make those, but that isn't really where the customer wants to move to because they see that as more of a synthetic plastic.

Correct. Yes.

And in terms of OptiCycle, so we have currently, as you might imagine, a paper cup has a lot of engineering behind it. So these brand owners want to make sure that they do their due diligence in terms of market testing, acceptability, performance, et cetera, and that's a time-consuming operation.

So we are very confident that we're going to start seeing commercializations now in the first half of 2022 for OptiCycle.

Yes. And in terms of the Eastern European footprint, we actually have 2 facilities that are in Russia.

I think we calculate the revenue to be around $125 million. And it services all Western companies, principally some health care and tobacco applications.

And so yes, we're working on contingencies like everybody else is around what that would look like, but it's a relatively small part of our overall revenue stream. I think the bigger implications would be the energy shocks and things like that, that would go through both Europe and the U.S., if that was to happen.

And of course, we'd have to respond to that with pricing that recovers those types of things.

And in a market that's as tight as this one is, we would do that. Like Europe is currently doing right now, they're paying over $30 an MMBtu for natural gas versus us paying what we think is high at $5 in MMBtu.

So I think, George, that's the most, most likely scenario there. Not that we can predict what's going to happen on a geopolitical standpoint, but we're thinking through contingency plans.

And again, it's a pretty small part of our portfolio.

And jump ball's would be, estimate?

It's a great question, and I appreciate you framing it that way because we do say that. We never would expect that we'd win every jump ball.

It's a competitive market. Packaging is always going to be competitive.

There's been a couple of our QSR customers that have actually moved a portion of their cups into plastic.

And the reason they've given us isn't really around the sustainability side, it's around cup consolidation between their cold drinks, their cold coffees and their cold drinks, which again, to Gabe's question, creates a faster experience and less SKUs that they've got to have at the store. So that's been the rationale that they've provided to us.

And I mean, you'd have to ask them around how they're thinking about that from a sustainability standpoint.

Yes. I think, George, again, to your question as well to both of you, kind of around the jump balls.

I think what we would say is that in the world of beverage packaging, the conversions into fiber based, those jump balls are being won very significantly. In other words, the moves are happening.

If you talk kind of at the perimeter of the store, if a decision is going to be made to move away from the existing product, we're seeing a lot of wins on the perimeter of the store, moving out of alternatives, resin-based into fiber.

The QSR foodservice area is where you do see some jump balls that go up and go the other direction on occasion, just as Mike said, because someone might be making an SKU rationalization decision in the center of the country where they believe that that's the appropriate balance decision to make, and we see those happen on occasion.

I would also say that in the areas of, like e-commerce and some of the pet food and the like, we're seeing real movement there positively towards the fiber-based solutions. So on balance, it's the confidence we have in the overall organic growth profile.

I'd say QSR and foodservice is where you'll tend to see -- and in the world of cups is where you'll tend to see, on occasion, those things maybe move one way or another.

It's a good point, as you see packaging costs go up, there'll be more pressure on tertiary packaging and more emphasis on the primary package. And usually in that kind of environment, we hold our own.

Okay. I've got a couple here.

Mark Weintraub from Seaport. He says he understands that you are assuming price to cost in 2023 through 2025.

That said, is there a potential cushion there? And as much of any success on February boxboard pricing initiatives will show up either later this year or in 2023?

Yes. So thanks for the question, Mark.

It's always difficult for us to try to project our pricing in the outlying years. As I mentioned, in terms of the actions we're taking right now, we've got a $50 a ton increase on all 3 substrates effective really back in January.

It will be scored on Friday night by RISI. And so we'll see what they say.

We know what we've done. I've given you some insight into the backlogs of our 3 substrates, and the fact we've been very aggressive around our pricing actions because we just don't know what the future holds in terms of those types of things, and supply and demand is in really good balance for us, meaning there's a lot of demand for the tons that are out there, and that's why you're seeing some of these grades continue to go out in terms of the lead times.

So we expect that we'll continue to be very thoughtful and measured in our pricing activities, and it's all centered around supply and demand.

Yes. And I think to Mark's question, right, consistent with what Mike just said, this year, we will fully recover the dislocation, either at or above full recovery.

What we wanted to convey is between '20 -- beyond '22 to '25, it's not required to be a net positive, if you will. Neutral gets us to a spot where we can then earn on the other components of driving the march, if you will, towards 2025.

Okay. Let's do another from the remote audience.

Arun from RBC Capital Markets says it appears you were able to increase your 2022 guidance range slightly even in the face of rising inflation pressures. Would you attribute that to mainly a slightly better-than-expected volume outlook, which also helped you beat Q4 estimates?

And then what else would you consider as the swing factors in guidance for 2022?

I think what I'd focus on is, as Mike was just touching on, price execution throughout 2021 and into 2022 has been very good, meaning that we're obviously operating in a very good, balanced supply-demand environment. We've seen inflation.

And as such, we've really worked the entire portfolio of price actions.

A portfolio of actions, it's not just about RISI recognition, it's terms, conditions, cost models, renewals, negotiations. And it's that portfolio of pricing initiatives that gives us confidence in the $850 million, which is meant to cover and recover the realities of the inflationary environment.

And so I'd say that, that, coupled with the demand being strong and the 200 basis points of growth, that combination really has inured the inherent value. And the teams did a phenomenal job of operating in a very difficult supply chain environment.

And that's really applause goes to really the day-to-day.

Cleve Rueckert from UBS asks how, if at all, will you manage the newly acquired European business differently from the U.S. model?

Yes. So thanks for that question, Cleve.

I mean as you heard me say, we're sending really one of our most experienced operational leaders over to Europe, and he's already lived in Europe for 4 years. So he knows that market quite well.

That combined team is really a combined team, a lot of AR Packaging folks. As I said, 5 out of the 8 positions at the general manager level are filled by members from AR Packaging, as well as our CFO for Europe, who will work directly for Joe.

So the primary difference in how we operate those businesses is that one is much more integrated than the other, meaning that we don't make the FBB board right now, so we buy that. We don't make the GD board, so we buy that.

We ship over our CUK board, so that feels like an integrated piece. And as I mentioned, this year, that number will be over 250,000 tons that will ship into our European market as that market continues to grow the way Steve just talked about for our beverage business.

So there's not a lot of difference in terms of our governance structure in terms of how we operate the business between what Maggie will do in North America, and what Joe did there before and what Joe was going to do in Europe. What I'm really excited about for both of them is the overlap on the customer set is almost 50%.

So think about that for a minute. I talked about that with Anthony's question around how we look at these customers in a more global fashion.

They will actually share some of the negotiation and commercial aspects of the job, given the geography where the headquarters is in, and that's going to create some real scale for us, too, in a closer touch point with people that are knowledgeable about those markets and able to kind of balance the workload.

So I think that's really how I'd ask you to think about it, Cleve.

Got one back here. Why don't you yes, there you go.

Jesse Barone with BMO. Just on beauty and health care, I guess, first, I recognize that it's pretty small and you guys are pretty new to the business.

[ Clearly ], one is it a long-term business for GPK? And two, if so, where could it eventually grow?

I know it's only kind of 4% or 5% of the business now? Could it be kind of a 10% of GPK in the future?

Yes. So thanks for the question, and you're right.

Right now, it's a bet. Think about it as a bet.

But we were thrilled to get it when we acquired ARP, because Steve and I have been making cartons a long time. What we know is that you just don't try to make health care and pharmaceutical cartons in Kalamazoo, Michigan.

It doesn't work, right? I mean they make cereal boxes at incredibly high speeds and high-speed web presses.

This is a high touch, very detailed selling process. Leaflets have to be printed on paper.

There's -- in some cases, you got to do embossing to put Braille on it so that the consumer can actually read it. You don't run it in facilities that aren't set up to do it.

And so the fact we acquired a number of these facilities and the commercial people that know how to do it in a meaningful position, the #4 position in Europe, $250 million, we're looking to learn. And we do think we can scale that business over time, not just in Europe but hopefully eventually here in the U.S.

It's a very fragmented business, as I mentioned, a lot of small converters in the neighborhood of $50 million to $100 million that service that business.

But we've got a lot of experience kind of rolling those kind of spaces up. So I like your number.

It's kind of the number that Steve and I were talking around, could this be a 10% business, $1 billion business for us over time? Yes, we think that, that probably is true.

It uses paperboard we manufacture, mainly the bleached paperboard that we make here in our mills in Augusta and Texarkana, and it's a big market.

You saw Smithers, they basically calculated between Europe and the Americas that it's somewhere in the neighborhood of $7 billion all in between health care, pharma and beauty care as well. So yes, we like it, and we're going to learn a lot over the next 12 months.

I've got a few more. Brian Hawkins of Millennium Management.

It's a clarification question, Steve. He wants to know if the $320 million in inflation, mark-to-market, does this include the $150 million from external paperboard?

Or does it exclude it?

No, that's inclusive. So think of it as $150 million and $170 million across the kind of non -- non-carryover.

So no, it is not -- so I'll repeat, it's not $320 million plus $150 million, it's not $470 million. It's $320 million for the total basket of commodity costs.

So we're -- right now, mark-to-market, we're at the low end of the $300 million to $500 million based upon what we know. And so that's being very specific to the question.

And thank you for asking it if there was any uncertainty around or that wasn't clear.

Okay. And then Beth Mallette from Manning & Napier asked what do you think is the potential for additional unprofitable paper mill conversions to profitable paperboard mills to be announced, similar to the Verso announcements?

That's a tough question for us to answer. I mean over time, you do see conversions.

And I know when they happen, it's like this big shock and awe and for good reasons because people worry about the supply and demand dynamic. But what you have to remember, as I said in my comments, is how much money you're going to spend?

How much time it's going to take? Where are you going to be on the cost curve?

And most importantly, who are you going to sell the product to?

And again, what Graphic is going to be by the time that next machine comes online is, aspirationally, we're saying we're going to be 90% integrated. We're going to have some of the lowest-cost virgin mills in North America and ultimately in the world by definition along those lines.

And we know we've got the lowest-cost CRB machine. So people have to think about those types of decisions when they make those calculations.

Not to say they won't happen. Clearly, we have one going on right now.

We'll see how that turns out for them over the medium term. But we know that we've got a lot of cash flow generation that's going to give us optionality over time to continue to strengthen our business.

So I think it's probably manageable.

And I think what you should also think about with Graphic is we're not just working the top line on price just because we got a good market here. We're working the bottom line on cost.

And we put a lot of money to work in Kalamazoo to create the world's lowest-cost, highest quality CRB mill. We already had a good market there.

And we got some questions, rightfully so, from somebody, is that a great allocation of capital?

As I said, I like it better now than when we did it because it creates this growth opportunity for us. And many of those assets are small, they are at the end of life, that, and their capabilities are very, very limited on that, the FisherSolve chart you saw.

So that's how we're going to do it. We need to work both the top and the bottom line.

If we do a good job with that, our customers will let us earn towards 20% EBITDA margin. If we do it all on price, sooner or later, someone comes in and disrupts us.

And that was really one of the things that was on our mind around CRB over time, to be fair.

So I appreciate the question. It's something we will have to deal with from time to time.

But with the strategy we're developing, being an integrated packaging company, we think that over the medium and certainly long term, we can win in that kind of an environment.

Gabe Hajde, Wells Fargo. I don't see tobacco in here, and I'm sorry to put you on the spot in advance as it relates to the end market.

But from an ESG lens perspective, I'm curious if you've got any feedback from investors in terms of -- if that's something they would be open to or would not like? Question number one.

And then question number two, how do you think about it, I guess, internally, it might fit some of the bill in terms of helping increase vertical integration but not necessarily help on the growth front?

Yes, Gabe, I appreciate the question. And we have gotten a little bit, it's been very minor around the edges, people asking questions more so than anything else.

The reality of it is, is outside in Europe and in other parts of the world, smoking is still pretty common and uses a lot of paperboard. We're a public company by definition.

And so when those opportunities arrive, we need to look at it through the lens of creating value for our shareholders.

And so -- look, we'll be thoughtful in terms of what that looks like, but it's still a relatively small part of our overall portfolio. It did come along with AR Packaging.

The margins are good. It throws off a lot of cash.

And what that cash flow allow us to do is invest in [ other ] parts of our business that is growing faster and obviously have a better growth profile going forward here. So think about it that way.

Yes. And just actually, Gabe, I mean, it's under 4% of the company.

just in terms of size, it's in the consumer conversation that Mike was having earlier in terms of the markets, in terms of where is it. But also the assets that deploy there oftentimes are assets that can be deployed in some of our other markets.

It's one of the things that we're looking at, the assets that are utilized there oftentimes work very well for long-run.

Beverage business, as an example, works for some of the food applications. So as we look at the footprint, that's also one that we're really assessing what's the highest long-term return opportunity from having those assets in the portfolio, particularly in Europe.

It's kind of an ROIC dance we need to do between taking the cash we're making now and applying it into the better growth opportunities for us. So that's how we square from a strategy standpoint.

Okay. I've got another pricing question, and it's more of a confirmation.

Brandon Teel from ArrowMark Partners asked if you could just confirm that the updated $550 million of '22 pricing is implemented and recognized, and is it fully accepted as of today?

Implemented, recognized, went into effect on January 1. It's -- and we saw it in our January results coming through.

So write that $550 million down.

And the $150 million and the $850 million. And no, it does not include the $50 per ton for all 3 substrates that has not yet been recognized, which we will hear the first feedback on tomorrow.

Okay. And on that one, if pricing is recognized on Friday, when would that flow through the business?

Would it flow through in 2022?

So it will be a combination of 2022 and 2023. The way our contracts work, as you saw last year, when that happened.

And what we'll do, as we've consistently done in the past, is when it's recognized, we will update everybody in terms of what that means, in terms of overall pricing recovery.

I've got more.

Anything else out there, Melanie?

Yes. Blair Cooper from Aberdeen asks while you talk about the high percentage of fiber-based packaging that is recovered, the amount of CRB as a total of your revenues is still relatively low and so most of your products are reliant on virgin fiber.

Can you talk through how this links into your sustainability goals?

Yes, I really appreciate that question. Thank you for that.

And if I can go back, one of my favorite topics here. Maybe you can kind of click through that the circular economy -- it's core to our strategy.

It's core to who we are to have both virgin and recycled mills. Because really, what we do is, as I mentioned here, all the wood that we harvest is grown in sustainable forestry tracks.

And what that means is there's strict requirements for how it's harvested and how it's brought to market. And by definition, the tree itself, particularly in the U.S.

South, as you see, it grows fast enough, sometimes you can hear it at night growing in the middle of the summer. It renews and adds inches as we see in the industry every year, and these baskets are actually quite healthy.

And so what might start as that beverage carton I talked about or that confectionery carton, then we'll go downstream to Kalamazoo or Middletown or East Angus, our recycled mills that will have, kind of, post our new footprint here, and we can recycle that 5 to 7x. So it fits squarely into that.

And if anything, the fact we're bringing on more CRB because we're going to run our Middletown mill longer, shows that, that's appreciated by the end-use consumer.

We've got good opportunities to convert things into it. And as I mentioned, we were one of the big people that converted stuff into CUK the first time, and now we see some of that coming back.

So it really -- this is a great visual. It's resonating well with consumers.

Customers get that the recovery rates of paper are really high here in North America and in Europe. And they feel like they're doing their part when they put their stuff in their bin.

And ultimately, they know that goes back and it's reused to primary package as Ricardo said in his comments.

So thanks for the question. We think this model is really a great one for our company and differentiates us from really many other types of packaging as truly being probably the most sustainable across the entire life cycle for the reasons I mentioned.

All right. Well, one last question.

Jesse Barone from BMO. Just thinking about inflation, if it reverses either second half of this year or '23, how should we think about kind of your price/cost spread there?

And if you could kind of differentiate between the RISI-based contracts and then cost-based model contracts.

Yes. So I guess the high-level answer to that is supply and demand is really what drives pricing at the end of the day.

So as we continue to drive 100 to 200 basis points of growth or the 300% that we've been over the last couple of years, you saw 2% more paperboard last year generated in North America than the year before.

So it's kind of tracking along those lines. Prices will continue to remain solid.

And ultimately, if inflation was to recede a bit, we'd see that in terms of a margin profile advantage. We do have a combination of pricing contracts that Steve talked about.

They're not all RISI. Some are in cost models.

Others are in different forms of that. So it's a mix.

We'll keep you informed on it.

But, look normally, when we do see inflation go down, we see a little bit of margin pick up in that process. And the key there for us -- and what really matters from a pricing standpoint, is that is our demand holding strong?

And if our demand is holding strong, we'll keep that margin.

All right.

If we didn't get to your questions for those on the webcast that have submitted questions, we will certainly get back to you shortly. And in the interest of time, we're going to wrap it up.

Well, listen, I really want to thank everybody for participating today coming here. Those of you who came today, thank you so much for that.

It's great to see all of you again in person.

Melanie tells me we had high watermark, we had over 400 people on our webcast. So hopefully, we've inspired you to think about the company a little differently, a little broader than maybe what you thought about us coming in.

And if we did our jobs, you're walking away feeling pretty inspired about our growth prospects and why we've got confidence in raising our 2025 vision goals here. So thanks for coming.

Hope you have a great day.

Thank you.