Graphic Packaging Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
July 30, 2024

There are 14 speakers on the call.

Operator

Greetings. Welcome to the Graphic Packaging Holding Company's 2nd Quarter 2024 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

Operator

I will now turn the conference over to your host, Melanie Stegis. You may begin.

Speaker 1

Good morning, and welcome to Graphic Packaging Holding Company's Q2 2024 Earnings Call. Joining us on our call today are Mike Doss, the company's President and CEO and Steve Scherger, Executive Vice President and CFO. To help you follow along with today's report, we will be referencing our Q2 earnings presentation, which can be accessed through the webcast and also in the Investors section of our website at www.graphicpkg.com. Before I turn the call over to Mike, let me remind you that today's press release and the presentations made by our executives include forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections.

Speaker 1

These risks and uncertainties include, but are not limited to, the factors identified in the release and in our filings with the Securities and Exchange Commission. With that, let me turn the call over to Mike.

Speaker 2

Thank you, Melanie. Good morning, everyone, and thank you for joining us on our call today. Prefect Packaging is a global leader in sustainable consumer packaging. We spent the last 8 years building a stronger, more diverse packaging portfolio capable of delivering consistent results, solid growth and substantial cash flow across a range of economic conditions. The benefits of that portfolio transformation and the commitment and talent of the Graphic Packaging team were clearly evident in our 2nd quarter results.

Speaker 2

In the Q2, graphic packaging sales were $2,200,000,000 adjusted EBITDA was $402,000,000 and adjusted EPS was $0.60 Our reported sales were $155,000,000 below year ago levels. Excluding the impact of the Augusta divestiture and related bleach paperboard sales, net sales from our packaging business were down $73,000,000 or about 3%. Overall volumes are flat in line with our expectation of flat to slightly positive and both price and mix were small negative as Steve will discuss shortly. We ran extremely well and our margins were strong despite the very significant planned maintenance expense we incurred during the quarter. That leaves us well positioned for the second half.

Speaker 2

Innovation sales growth and customer promotional activity are both expected to move higher in the 3rd 4th quarters. Turning to Slide 3, closed on the sale of the Augusta Bleach Paperboard Manufacturing Facility on May 1, eliminating most of our open market bleach paperboard sales. And today, 95% of our sales come from sustainable consumer packaging solutions. Excellence in consumer packaging design, innovation and execution is what drives our sales, our consistency and our growth. We do produce our own paperboard.

Speaker 2

We're doing so drive significantly higher return on invested capital and helps us deliver more consistent results for customers and stockholders. That was the impetus for the Augusta divestiture and a strategic logic behind our Waco recycled paperboard manufacturing project. Construction progress at Waco has been excellent and recent storm activity in Texas caused very little disruption. We remain on schedule and when we be in production in late 2025, we will extend our competitive advantage we have in recycled paperboard in both economics and product quality across all North America. The investments we are making in our global network packaging facilities, while smaller in dollar terms are equally important to our strategy and our success.

Speaker 2

Last quarter, we highlighted the new beverage packaging facility and innovation center in the UK. And today I want to highlight 2 important investments we've made here in North America. Our Heidelberg 3B printing press, one of the most productive in the world reached its target productivity at our Winnipeg food packaging facility in the Q2. This state of the art press replaces 2 older presses and allows us to offer 7 colors or finishes rather than 6 along with a wider range of print and design options. It also gives us greater flexibility in layouts and higher speeds, which reduces costs and raises productivity.

Speaker 2

I'm very proud of the work our Winnipeg team has done bringing this new investment to its full potential so quickly. In Perry, Georgia, we completed the automation of finished goods handling at one of our largest beverage packaging facilities. Product handling in a packaging plant has historically been labor intensive and is the point in the manufacturing process where there is the greatest risk of product damage. The automation project helped us debottleneck, reduce labor costs and handling risk and drive improved service levels. We have a deep pipeline of projects like these, most of which are relatively low capital costs and high returns.

Speaker 2

Turning to our packaging results. While volumes are recovering slowly overall, I am encouraged by what is happening inside our portfolio. Our foodservice results are outperforming the industry, beverage remains strong and food, our largest market was dramatically better year over year than it was in the Q1. As you read in the press, more shoppers are buying groceries at mass retailers and superstores and that includes both private label and branded products. We're certainly participating in that shift.

Speaker 2

Mass retailers and superstores are just as committed as brand owners to giving consumers the sustainable packaging they prefer. The Bordeaux coffee canister we discussed last quarter with Mother Parker, the biggest U. S. Coffee supplier to mass retail and private label is a good example of that commitment. Innovation sales growth was $51,000,000 in the quarter and we are on track to deliver $200,000,000 for the full year.

Speaker 2

I was particularly pleased to see solid contribution from strike packaging including coffee K Cup and snack multi packs for club stores. And we again saw encouraging contributions from both food and beverage cups. Europe was less than a quarter of our overall sales, but contributed roughly half our innovation sales growth in the quarter. European consumers are amongst the most sustainably conscious in the world and that has made Europe the epicenter of global packaging innovation. Our investment to build Europe's best innovation platform are delivering results that we are leveraging globally.

Speaker 2

Our packaging operations ran well and some modest price and inflation headwinds are fully offset by strong net performance as a testament to the quality of the Graphic Packaging team and our commitment to delivering consistent results. Slide 4 is something you're going to see regularly in our presentations because the breadth and depth of our packaging portfolio is the foundation for graphic packaging's consistency and growth. We serve 5 markets. Food is the largest, beverage and food service are next and we see big opportunities to grow the scale of both household products and health and beauty. There's a very good chance that you have held more than one of our products in your hands in the past 24 hours and we'll do so again in the next 24.

Speaker 2

Now let's look at our sales in more detail on Slide 5. I think it's fair to say consumer consumption trends you're reading about we see in our results. Food markets, which represent 40% of our sales saw significantly smaller year over year decline. With more people back in the office, consumers have less time to cook and that is driving the better results we're seeing in categories like frozen pizza and frozen entrees. But consumers are also trying to cut costs where they do cook, which is driving better demand for pasta, rice, mac and cheese, which have lower price points for the consumer.

Speaker 2

Dry food is one of the places where private label is gaining share and that is certainly the case in our portfolio as well. Beverage continues to show strong performance after more than 2 years of positive comparisons. Soft drink growth outpaced beer during the quarter, while sparkling water and juice were both stronger versus a year ago. In foodservice after 9 consecutive quarters of 5% plus year over year growth, we did see very much slowdown, But despite the challenges some of our QSR customers are facing, we actually came pretty close to our 10th consecutive 5% plus quarter. That is a function of the strength of our innovation and our continued investment capabilities and execution.

Speaker 2

And finally, household products and health and beauty are recovering more slowly versus our other markets. In household categories like filter frames, food storage and detergents showed improvement while tissue and cleansers remain relatively weak. Several major producers have indicated plans for higher promotional activity in the second half. Keep in mind that health and beauty is a small business for us, but it has substantial growth potential in North America over the next several years. If you'll turn to me to Slide 6, you'll see the seasonality chart on the left that we shared with you last quarter, which describes the typical seasonal patterns for each of our 5 markets.

Speaker 2

For the most part, the 2nd quarter tends to be pretty average overall with food normally modestly lower than the other quarters and beverage stronger and no other notable outliers. These seasonal differences are not large, just a couple of percent of the annual total. They reflect underlying behavior patterns that follow things like summer and winter weather and holiday activities. You will notice that none of our unusually strong or weak months come in the Q2, but you may recall this past March, which is typically the strongest month of the Q1 was weaker for us because of the timing of Easter. That led to a catch up in April.

Speaker 2

So that was the small timing difference this year versus normal. While overall consumer packaging volume was flat, we saw volume improvement in Europe in each month of Q2, while North America volumes were uneven. You most often hear me talk about the benefits of our European business in terms of innovation, but this quarter is a good reminder that Europe makes a significant contribution to our ability to deliver consistency as well. Promotional activity by our big ramping up in North America, although that trend not as pronounced in our orders during the Q2 as we expect it will be in the second half. I've already mentioned the strength in mass retail, superstore channels we are seeing and private label overall is certainly performing very well.

Speaker 2

We are managing some pricing headwinds, but the impact on our margins has been quite limited as Steve will discuss. We are executing price increases across most of our North American business, which will address that price pressure. In Europe, prices mostly pass through and paperboard prices appear to be rising again. Looking ahead, the 3rd quarter brings more hot weather and back to school. And as you can see on the seasonality chart in a typical year, Q3 tends to be the strongest quarter overall.

Speaker 2

And July is certainly off to an encouraging start across a wide range of products and customers. Even so, consumers have become much more sensitive to price and value and brand owners are responding with plans for higher promotional activity. Meanwhile, value promotions are gaining traction in QSRs and we are beginning to see that in our order books. Mass retail and superstores are benefiting from the search for better value with multi packs that appeal to consumers seeking to keep per unit cost down. Back to school means the end of vacation season, less time spent outdoors and in general more meals prepared at home.

Speaker 2

So we expect to see a positive impact on categories like prepared foods and snacks. At the same time, fewer remote jobs means less time to cook and that tends to drive growth in food service, prepared meals and ready to eat options. We are seeing that in a meaningful way in our European convenience business today and expect to see it again strength in North America in the second half. Slide 7 outlines our 5 innovation platforms, which we are seeing very strong engagement with customers across all of them. Some of you have asked whether the destocking we saw last year has led to any delays new product launches.

Speaker 2

In general, we aren't seeing that. Customers do sometimes adjust timing and pace of their launches in response to market conditions, but we tend to have good visibility at least 6 to 9 months out. As a reminder, the $15,000,000,000 of potential sales we identified here only includes opportunities where we already have product solution that has been commercialized or will be commercial very soon. So it isn't a TAM in the traditional top down sense. These are figures we built based on specific target markets and specific plans we already have in place.

Speaker 2

Most of our large customers have made commitments about the sustainability of the packaging. In Europe, many tell us they want to meet the new standards earlier than they were required to. Our customers' interest in and commitment to packaging that's more circular, more functional and more convenient continues to rise. And the investments we have made to be the global innovation leader in sustainable consumer packaging are paying off. Last quarter, I highlighted our 40 old paperboard canister, which is now helping to reduce plastic consumption in the U.

Speaker 2

S. Coffee market. Today, I want to highlight another innovation that originated in our European business, Paper Seal Shape on Slide 8. Paper Seal was developed in collaboration with our partner G Mondini as a replacement for plastic poles, trays and other difficult to recycle products. Paperseal started out with rectangular trays, a paperseal shape allows us to offer a much wider range of shapes and sizes, including the 8 sided salsa bowl you see on the left side of the slide.

Speaker 2

Paper seal shape can also be configured with multiple compartments to hold dips and crackers for example. The paper seal product line offers outstanding barrier properties and extended shelf life relative to some plastic alternatives that ultimately reduces both cost and waste. It also offers outstanding credibility that makes brand messaging really stand out. Our first paper seal shape customer in the United Kingdom is Sainsbury's, one of UK's top food retailers for their private label breaded chicken line. We and Mondini have been working closely with Sainsbury and Moy Park, one of Europe's top co packers.

Speaker 2

Our trays were designed to run on Moy Park's existing lines, which also handle plastic trays for other customers. Our ability to run on existing lines without expensive modifications is an important and often complex aspect of new product commercialization. Paperseal reduces plastic content in a tray or bowl by over 70% and the lid and liner separate easily from the paperboard for recycling, which is especially important for European recycling programs. This one implementation will reduce plastic consumption by about 300 metric tons per year making it a win for Sainsbury, a win for UK consumers, a win for Graphic Packaging, Modine and Moy Park and importantly a win for the planet. Paper Seal Shape exemplifies our success in creating packaging solutions that are more circular, more functional and more convenient.

Speaker 2

Finally, and before I turn it over to Steve, I want to take a moment to remind you that our vision 2,030 is much more than just a set of financial targets. Slide 9 lays out our 4 pillars of our strategy, which describe our goals and our aspirations. Innovation is at the heart of what we do because better, more sustainable packaging is what our customers are asking for and what consumers prefer. We have an exceptional team and we were working relentlessly to make it even stronger. We have clear plans, not just targets, we're reducing our environmental footprint and our packaging innovations help our customers meet their own sustainability targets.

Speaker 2

We know how to execute and measure our performance against clear goals and aspirations. We are delivering results. Now let me turn it over to Steve for a review of our financials and operations. Steve?

Speaker 3

Thank you, Mike. Turning to Slide 10. In the Q2, we executed very well, generating strong margins and adjusted EBITDA, just as we did in the Q1. While reported sales were down $155,000,000 more than half of that decline represented the impact of the Augusta divestiture and the dramatic reduction in our participation in bleach paperboard sales. Sales from our packaging business were down approximately $73,000,000 Volume was flat, in line with the expectations we shared last quarter.

Speaker 3

Price was a small headwind, about 2%, and there was a minor negative mix impact of about 1% in our European business. As you will recall, our European business has a significant and profitable Health and Beauty segment. The unit price tends to be quite a bit higher than our average, however, which is also true in parts of our European household products business, both of which were weaker in the Q2. As such, the decline in high price per unit sales drove some negative mix. Mix was not a meaningful factor in the Q1 in Europe and it was not a significant factor in our Americas results in either quarter.

Speaker 3

Keep in mind that our European business operates mainly on a price pass through month, so the mix impact we saw in 2nd quarter sales did not have a material impact on EBITDA or margins. Sales impact from other M and A excluding Augusta and foreign exchange was basically a wash. Graphic Packaging delivered adjusted EBITDA of $402,000,000 in line with our guidance. Dollars 47,000,000 or $51,000,000 decline in reported adjusted EBITDA was due to the Augusta divestiture, the related impact of lower paperboard volumes and prices and incremental planned maintenance expense that we called out last quarter, which together came in broadly as expected. Excluding those items, an EBITDA headwind from lower sales, which was primarily price and some modest cost inflation was fully offset by solid net performance.

Speaker 3

In order to deliver consistent results, we need to manage all of our sales and cost headwinds regardless of which bucket they fall into. And in both the 1st and second quarters, we did just that. EBITDA impact from other M and A, excluding Augusta and foreign exchange was a $4,000,000 headwind. Turning to our balance sheet and liquidity.

Speaker 4

As long as our debt levels

Speaker 3

are reasonable, we compare every potential use of capital against the alternative of share repurchase. On the basis of that analysis, we applied $200,000,000 of the Augusta divestiture proceeds to the repurchase of GPK shares during the quarter. We also addressed upcoming debt maturities. We issued $500,000,000 of senior notes at treasuries plus 188 basis points, our tightest spread to treasuries today. We also extended our bank debt to 2029.

Speaker 3

We currently have no significant debt maturities until 2026. We ended the quarter with net leverage of approximately 2.9 times and expect to end the year at approximately 2.7 times. Our average cost of debt is currently running at 4.6%. Turning to operations and capital investments on Slide 11. The Augusta divestiture took place on May 1st and by the end of the second quarter, we completed the re optimization of our Texarkana bleached paperboard manufacturing facility.

Speaker 3

As you will recall, we sold some open market business that had been produced at Texarkana and filled that gap with production we use internally, which had been produced at Augusta prior to the sale. The planning and execution of those transitions is going smoothly. And as of today, Texarkana is running full, producing a mix of paperboard that we need to serve our customers. As Mike noted, Waco is moving ahead very well. We have nearly 1,000 contractors on-site this month.

Speaker 3

The finished goods warehouse is now substantially complete, 2 pulpers are installed and the boiler and drum pulper were recently delivered and are ready for installation. We are moving as quickly as we can at Waco and with the project going very well, we've accelerated spending on equipment. We now expect total capital spending for 2024 to be approximately $1,000,000,000 up from $950,000,000 We are on track with our recovered paperboard and recovered paper sourcing plans and continue to expect to achieve incremental EBITDA of $80,000,000 in each of 2026 and 2027, a portion of which reflects our plan to shut down 2 of our older, smaller recycled paperboard manufacturing facilities. After

Speaker 4

those closures,

Speaker 3

we will have a total of 5 paperboard manufacturing facilities in our system, all of which will be modern and well invested. Mike shared some details on the kinds of projects we are doing in our global packaging network and those investments are delivering the productivity we target. The benefits from each of these projects are different, but what they share in common is rapid financial payback and expansion of product capabilities or an increase in productivity, greater reliability and improved customer service. These types of projects range from a few $1,000,000 to the low tens of 1,000,000 of dollars and are included in our plan 5% of sales capital spending commitment post Waco. And finally, the Bell Packaging Tuck Under acquisition, which we completed in September of last year is now fully integrated and target synergies of approximately $10,000,000 have been achieved.

Speaker 3

Bell has expanded our foodservice platform and has plenty of room for further volume growth without significant new investment. On Slide 12, we summarize our recent dividend and repurchase activity. In the Q2, we returned approximately $230,000,000 to stockholders through a combination of dividends and share repurchase. We bought back approximately 7,200,000 shares or about 2.4% of our shares outstanding for total consideration of $200,000,000 at an average price of $27.61 per share. For your modeling purposes, we ended the quarter with approximately 300,000,000 common shares outstanding or about 301,200,000 shares on a fully diluted basis.

Speaker 3

Turning to Slide 13 and the outlook. As Mike noted earlier, July is off to an encouraging start in both North America and Europe and customer engagement is high across all of our markets. We continue to expect 3% to 4% volumemix growth in the second half and excluding the impact of the Augusta divestiture, we continue to expect full year volumemix to be modestly positive, although current price headwinds may offset that positive benefit in 2024. We currently expect to return to low single digit sales growth in 2025. We are on track to deliver $200,000,000 of innovation sales growth in 2024.

Speaker 3

And as we indicated last quarter, we expect full year 2024 adjusted EBITDA margins in the 19% to 20% range and expect to deliver adjusted EBITDA in the range of $1,730,000,000 to $1,830,000,000 Our adjusted EPS guidance also remains unchanged. We indicated last quarter that 2024 would feature a pronounced first half, second half pattern that is quite unusual for grafted. After delivering adjusted EBITDA of $845,000,000 in the first half, our $849,000,000 $940,000,000 guidance at the midpoint becomes $935,000,000 of adjusted EBITDA for the second half of the year. That translates to a $90,000,000 increase in the second half or the first half. Keep in mind that approximately $50,000,000 of that improvement will come from less planned payments expense.

Speaker 3

The rest we expect to come from the 3% to 4% volumemix growth I referenced a moment ago and a continuation of the very strong execution and net performance we delivered in the first half. Slide 14 summarizes our Vision 2,030 financial metrics and our capital allocation priorities, which we presented at the Investor Day in February. Low single digit top line growth driven by innovation and execution. Mid single digit adjusted EBITDA growth reflecting the leverage in our financial model as well as the returns we expect from the investment in Waco and the ongoing productivity projects we have in our pipeline. High single digit EPS growth through the combination of higher pre tax earnings, lower leverage over time and to reduce share caps.

Speaker 3

And once the Waco recycled paperboard manufacturing investment is complete in late 2025, we will hold capital spending of 5% of sales to support growth and drive net performance. We expect to generate cash flow well in excess of our needs over the next 7 years and our priorities for deploying cash are clear. Once we complete the Waco investment, our capital priorities will focus first on maintaining and strengthening our leadership position in sustainable consumer packaging. After reinvestment, our next highest priority is returning capital to stockholders through a growing dividend and share repurchase. Every potential use of cash is measured against share repurchase, which is good basic financial discipline.

Speaker 3

We do plan to reduce leverage over time, but as we have indicated previously, we are comfortable with our current debt levels and satisfied with our maturity schedule and overall cost of debt. We expect leverage to fall over the next couple of years and we'll pursue an investment grade debt rating at the appropriate time. We have the assets, the capabilities and the team we need to deliver on our Vision 2,030 goals.

Speaker 2

We will, of course,

Speaker 3

continue to evaluate Tuck Hunter acquisitions where they can accelerate our growth for driving on higher returns. Last year's Bell acquisition was a good example of that. Slide 15 is from our Investor Day presentation. Over the next several years, we expect to generate roughly $5,000,000,000 of cash flow with 2024 being our peak CapEx year. In 2025, we expect CapEx to be at least $200,000,000 lower than in 2024.

Speaker 3

And in 20262027, we expect to see the healthy returns from the Waco investment and generate substantially higher cash flow, which we will deploy to drive further value creation. On Slide 17, you will find some supplemental information that may be useful for modeling purposes. That concludes our prepared remarks this morning. We will now turn the call back to the operator to begin Q and A. Operator?

Operator

Thank you. At this time, we will be conducting a question and answer Your first question for today is from George Staphos with Bank of America.

Speaker 5

Hi, everyone. Good morning. Thanks for the details. My two questions. First one will be on volume and the second one's on margin.

Speaker 5

In terms of volume, gentlemen, can you talk a bit about what you're seeing? You said July is off to an encouraging start. What are you seeing early in the quarter? And which end markets are giving you the most confidence in terms of that 3% to 4% adjusted growth rate for the second half of the year. Relatedly, how much is the trend towards more promotion, change commercial strategies, etcetera, from your customers driving that?

Speaker 5

And I had a margin question.

Speaker 2

Good morning, George. Thanks for that. Look, as July has kind of come in, we've seen continued strength in our European business for sure. As we talked about in our prepared comments, we saw that every month in the Q2 and that's carried over into Q3. We also see encouraging signs in the Americas business, specifically on the food business, which as you know is our largest.

Speaker 2

I caution you it's early. We're 1 month end date quarter, but we like to see so far. I think you couple that with a number of our large customers who in the last few weeks have reported results and they've talked about their desire to increase promotional activity. And we're starting to see some of that activity as well. Beverage and foodservice were very strong for us in the 2nd quarter.

Speaker 2

And you saw yesterday with McDonald's release, they're going to extend their value meal. So we expect all of that to kind of inform the overall results that we're seeing. And I think the piece that Steve talked about in his prepared comments, again, just to reiterate, as you look at our back half of the year and compare it against 23%, 23% was down anywhere between 5% 6% as you know in Q3 and Q4. And so what we're saying is we're going to come back 3% to 4% this year. And if you put our innovation on top of that, it's roughly 2%.

Speaker 2

So our confidence level in that 3% to 4% is quite high given the factors I just outlined.

Speaker 5

Thanks, Steve. Thanks, Mike. The second question I had on margin again, kind of similar. What gives you the comps at this juncture that you can get to 19% to 20% for the year? Mike, given that you're under 19% in the first half, I recognize maintenance was part of that, so you're going to get a sequential pickup there.

Speaker 5

But what else is driving that, that you can call out? Relatedly on mix, usually Foodservice is pretty strong for mix from what I remember. And so I was just curious along with Europe, if there's anything else in terms of why mix was negative in the first half and why that dissipates in the second half towards your margin goal? Thank you and good luck in the quarter.

Speaker 4

Yes. Thanks, George. It's Steve. Just in terms of the kind of first half, second half as we shared in the comments and just provide a little bit of color here for you, $845,000,000 of EBITDA in the first half, 19% margins, midpoint of our guide, dollars 935,000,000 in the second half, so plus $90,000,000 first half to second half. Dollars 50,000,000 of that is math.

Speaker 4

We will take $50,000,000 less in planned maintenance expense. The Q2 was very heavy for us as we articulated. So $50,000,000 of the $90,000,000 comes through just less planned maintenance expense. The remaining $40,000,000 of improvement really two things. 1, as Mike just mentioned, a return to modest growth, 3% to 4% in the second half compared to the first half.

Speaker 4

We'll earn on that appropriately. And then overall, we expect net performance to continue to be very strong. We're running our overall system both at the packaging level as well as the paperboard manufacturing level quite full here in the second half of the year. Last year, as you know, we were taking quite a bit of market related downtime demand supply and demand. And so really those three things, the $50,000,000 from reduced plant maintenance expense and then the next $40,000,000 from earning on the growth and the ongoing strong performance gives us confidence that we'll operate in the 20% range in the second half and then obviously right in that 19% to 20% range for the full year.

Speaker 5

Okay. I'll turn it over. Thank you.

Speaker 2

Thanks, George.

Operator

Your next question is from Louis Merrick with PNB Paribas.

Speaker 6

Good morning, Mike. Good morning, Steve, and thanks for taking my questions. 2, if I may. Good to hear the really strong performance in Europe and the innovation sales. I was hoping you could share a bit more detail into how your European operations are performing and how the market is playing out there relative to the U.

Speaker 6

S? And also maybe bigger picture, how does that business fit in with the overall portfolio? Any color you could shed down those two points would be appreciated. And then I've got one follow-up. Thanks.

Speaker 2

Yes. Thank you, Louis. I appreciate the question. Look, we were really pleased to see that, as you heard Steve talk about, over half of our innovation sales were in Europe this year. We've talked a lot in the past around the European consumer being the most sustainably conscious in the world.

Speaker 2

There's a proof. You live in that market, so you know exactly what I'm talking about. From that standpoint, it really shows why the acquisition of ANR and subsequent scaling out of our innovation activities in Europe is so important to our business because we get those trends, we see them early, we capitalize on them and ultimately we're able to move them around the globe to other areas where we have operations including our largest market in North America. So that was great. I would tell you our European business is outperforming the broader market in Europe simply because of all the innovation activities we've got in place.

Speaker 2

Our team does doing a really nice job finding these opportunities. We profiled the Sainsbury opportunity this earnings call with Paper Seal Shape. And we've talked a lot about OREO in the past. They also have a very big business on trays and containers that's continuing to grow. So we like our pipeline there and expect to continue to see it grow.

Speaker 2

I think the other point and Steve called this out again during his comments is that Europe is not our biggest business, but it was it's a real big important part of our ability to deliver consistency and results. Every month in the Q2, we saw month on month gains. And so we like seeing that important part of our portfolio and you're going to see us continue to invest there.

Speaker 6

All right. Thank you. And maybe building just on George's question. Can you maybe give us some color on what sort of exit rate for volumes were in June? And has there been any acceleration throughout the quarter?

Speaker 6

Thanks.

Speaker 4

Yes, Lewis, it's Steve. I think as we are articulating as the quarter played out, we kind of saw flat to modest growth. We ended up at flat. And so May, June played out roughly as expected. I think importantly, as Mike mentioned in his commentary and in mine as well, July has come in consistent with our guide.

Speaker 4

So we're pleased with what we're seeing in July consistent with that 3% to 4% second half volume growth. And so July is meeting those expectations and obviously gives us support for those expectations existing for the second half of the year.

Speaker 2

Thanks.

Speaker 4

Thank you.

Operator

Your next question for today is from Ghansham Panjabi with Baird.

Speaker 7

Yes. Hey, guys. Good morning. On Slide 5, where you have all the end markets nicely broken out, food, beverage, etcetera. What drove the outperformance in beverage that you call that as something that was let's do that for 2Q?

Speaker 7

And then as you kind of think about the back half of the year, how do you think those arrows trend, at least in color, 3Q and 4Q across those end markets?

Speaker 2

Yes. So I'll take the first part and let Steve handle the second, Ghansham. In our case, beverage again, there's a big part of innovation there that we were able to drive new sales and some of the opportunities that were in front of us. And look, it doesn't hurt that the market was hot in North America. So demand was solid and we saw a good pull through there.

Speaker 4

Yes. Ghansham, I think as you look out and take the 3% to 4% volume growth we're articulating, obviously that chart includes price as well. So it's a sales view. So we've got a little bit of headwind on the sales side, the 2% that we've articulated. So it's our expectation that the kind of the bottom right arrows, if you will, will turn more green, kind of in that sideways zone, 0 to plus 2.

Speaker 4

Obviously, it could even be a little bit higher than that. But keep in mind, it's a sales slide. And so we would expect that those arrows to kind of move nicely. Certainly foodservice, beverage, we would expect to continue to see positive. As we mentioned, food got materially better, but still down in the second quarter.

Speaker 4

So that inflection more towards neutral will be important. And then obviously, household goods and the health and beauty side, we would expect to see some reasonable inflection. So not everything will move perfectly up at the same time, but I think if you look across the portfolio, we'd expect the arrows to be moving in a positive direction as we kind of embark on Q3 and Q4.

Speaker 2

Okay, great. Thanks for that.

Speaker 7

And then if you can compare and contrast 2023 versus 2024, 2023 obviously was impacted by aggressive inventory destocking and then as you unfolded consumer affordability issues, etcetera. Is the reason you're not seeing a more pronounced increase in volumes in context of the inventory destock comp? Is it just because consumer affordability and weakness has just gotten worse and so your customers are still running at very low inventory levels? How are we thinking about those dynamics?

Speaker 2

I think you've answered it pretty well. I mean, look, the consumer is definitely changing some of their buying habits in terms of in response to some of the pricing they've seen in the marketplace. Having said that, I think the thing that we continue to make the point of here is just our broad based portfolio has really big reach into a number of verticals outside of the center of the store. Now we purposely built that out over the last 10 years. I mean, as a general statement, if you're seeing movement in Nielsen we're participating in that.

Speaker 2

We're seeing that in our backlog. So and that's really the company we've worked hard to build. So we're almost agnostic around how that kind of shifts and where it goes. And ultimately, we're seeing that play out. I would agree with your statement that our customers have been pretty cautious around building in the inventories.

Speaker 2

So that's been a part of it. But overall, we see our backlogs continuing to grow on the paperboard side based on the orders we've got on packaging. So our confidence is pretty solid here in this 3% to 4% inflection on the back half of the year as a result.

Speaker 7

Okay. Thanks so much.

Speaker 2

Yes.

Operator

The next question is from Lars Kjellberg with Stifel.

Speaker 8

Thank you for taking my question. I just wanted to get some incremental clarity on the volume component that you're talking about in H2. Clearly, you have an easy comparable, as you pointed out. So how should we think about that in sequential terms? And also coming back to that, if you're talking about a low single digit growth in 2025, how does that fit in with a potential continuation of a, call it, 200,000,000 dollars innovation growth in 2025?

Speaker 8

Any color on that? And then I have a follow-up.

Speaker 4

Yes, Lars, it's Steve. I'll start and then Mike can add anything addition. I think you touched on it. Obviously, we're down 5%, 6% last year, so a positive 3% to 4% this year. Really, we view that as an appropriate assumption.

Speaker 4

Just as Mike said, the consumer is under reasonable pressure. So it's not really a substantial volume assumption at the true consumer level. We expect some modest return to promotional activities by our customers. And then importantly in the second half, our innovation engine, hence your part

Speaker 3

of your question for 24%

Speaker 4

and 25%, we'll be at over $100,000,000 of innovation growth in the second half. That alone is a little over 2% growth. That's a real stabilizer for that 3% to 4% assumption in the second half. Importantly, given the model out in 2025, our pipeline of innovation based projects remains to be very good, fundamentally sound. It's diverse across our portfolio of products and markets.

Speaker 4

And so we'll continue to see out into 2025 and beyond that couple of 100 basis points of growth coming from the innovation engine, which is important for us just given that that's a real enabler for the low single digit top line growth.

Speaker 8

Got you. And the follow-up is more so on the upstream business. Of course, there's been talks about the import penetration for a fairly long period of time. And we're now seeing, of course, your competitors, mainly in Europe, are seeing surge in wood costs, etcetera. So are you seeing any change in their behavior in terms of trying to win business in the U.

Speaker 8

S? And generally, how do you see more potentially then a more increase in the domestic market in terms of the paperboard developing for your total business in the North America, but potential risk for input penetration, has that reduced or how do you view that?

Speaker 2

Thank you, Lars. I appreciate the question. We've talked in the past that there's been imports into the U. S. Market of various different grades for some time.

Speaker 2

We historically and this is certainly true for 2024 just have not seen much of that in the end use markets that we participate in. In. Just not a big factor for us. But having said that, it has received a fair amount of press. And I think maybe it's worthwhile to take a little bit of a step back and talk about where that is really coming from.

Speaker 2

I mean in our case in North America the dominant place where we would see any imports from would be the Scandinavia countries, not Asia, as an example, or Latin America. It's really pretty limited to Scandinavian countries. And if you really look at the overall cost structure, there it shifted dramatically in the last couple of years with the Russian sanctions that have been put in place by the EU. Roughly 10% of the wood that used to be assumed in Scandinavia now is no longer available because it can't be imported. On top of that, in Scandinavian countries almost another 10% has gone into pellets as opposed to pulp.

Speaker 2

I shared that with you just by way of background. So if you think about it, almost 20% of

Speaker 4

the wood that was there a couple

Speaker 2

of years ago is there now. It's not available for us to use for different purpose. As a result, Scandinavian producers have well chronicled this. They've seen their cost go up 40% to 50% over that 24 month period of time on their primary input costs, which is wood. On top of that, you see container costs continue to escalate.

Speaker 2

You put that all together, you're putting your product on the water and trying to cheapen into a market that's already well supplied. Probably isn't a great medium to long term strategy. Maybe in the short term, it can work for a little bit. But overall, I'd say that those dynamics probably work against them along those lines. One of the trade publications talked about in addition being a substitute for SBS, could it also replace coated unbleached paperboard, which we're a big producer in.

Speaker 2

That didn't make a lot of sense to me, to be honest with you given predominantly when you use that grade of course it's really around tear and strength characteristics. And I asked our packaging engineering team, if we've seen any of that application and anything that we do and they couldn't think of it. So it's certainly on a list of things we're watching, but it's not very high up on the list of things that we're concerned about. And I'd say there's more pressure on imports today from a cost standpoint than certainly 6 months ago. And I would expect that to continue to be the case.

Speaker 2

So it's very manageable from our point of view.

Speaker 8

That makes sense. Thank you.

Operator

Your next question for today is from Mike Roxanne with Truist Securities.

Speaker 9

Thank you, Mike, Steve and Melanie for taking my questions and congrats on a good quarter. Just wanted to start with foodservice. I'm just wondering if you could help me reconcile the foodservice growth that you're showing in the chart of 2% to 5% versus recent industry stats for 2Q, which showed a mid single digits decline. Is your outperformance versus those stats and the new innovation customer mix? Just trying to help reconcile what the stats showing versus what you're showing in that client comes to your own book of business.

Speaker 2

Yes, Mike, I appreciate the question. It's really 2 things. It's the innovation that we've been driving as well as our Bell acquisition that contributed to that. So you put those 2 together and that's really what's driving our outperformance in the marketplace. And we'd expect that to continue along those lines.

Speaker 9

Got it. And then just on cup stock, I believe that Suzano is buying some U. S. Assets that produce comp stock. I believe that comp stock that's looking to buy is currently a small part of what those assets ultimately do, but it seems to be a focus area

Speaker 2

or could be

Speaker 9

a focus area with them buying those assets. Any concerns there, any concerns over the Chick Fil A business or any future potential business given this new entrant?

Speaker 2

I'm aware of the purchase, the announced purchase. I believe you're talking about Susano's purchase of the Pine Bluff Mill from Active Evergreen. I'm not knowledgeable of course what their long term plans are for that facility. For the most part that facility has been focused on liquid packaging board, which really tends to be more milk carton stock. Having said that, if you think about the implications for Graphic Packaging, as you heard Steve talk about in our prepared comments, really with the Augusta sale and the consolidation of our business into our Texarkana mill, we're full.

Speaker 2

We're making the grades of paper that we need there, including cup and our bleached paperboard material. So our strategy is working exactly as we expect it would, driving high levels of utilization and good ROIC where for our investors based on the greatest paper that we want to make. So again, that all that cup stock that we make goes into our own cup facilities. So it's in addition to even if you decide you're going to make a grade of paper, you got to have an outlook like where you're going to sell that stuff to. And we've got 5 very well capitalized cup facilities that are integrated well into our Texarkana paperboard manufacturing facility.

Speaker 2

So our strategy is very different.

Speaker 7

Got it. Thank you.

Operator

The next question is from Matt Roberts with Raymond James.

Speaker 10

Hey, Mike, Steve, Melanie, good morning. Steve, I apologize if I missed this in a response earlier, but the 3% to 4% second half growth, is that purely a volume number with mix neutral? And in second half, what are you embedding in price following the recently announced increase? And on that price increase, is there anything different in the environment now versus February when you took the prior increase?

Speaker 4

Yes. Thanks for that, Matt. I'll start and Mike can add here as well. That 3% to 4% is a volume assumption. Mix is neutral.

Speaker 4

We expect mix to be as it's really been pretty modest to neutral. Overall, right now, we've got a little bit of the pricing headwinds as we talked that's kind of running in the 2% range, so a modest offset to the 3% to 4% net volume mix assumption, which cumulatively would make all that modestly positive. And as you referenced, we are executing on price increase moves in the marketplace that we're executing on currently.

Speaker 10

Okay, great. Thank you for the clarification there. And then one more clarification for me. On the innovation sales target for second half,

Speaker 2

how much

Speaker 10

of that incremental lift is dependent on volumes from newly introduced products versus new products coming to market? And on the latter point, are there any delays or anything that you could foresee that could push any timing into 2025? Or is that $200,000,000 in 2024 looking pretty solid?

Speaker 4

Yes, Matt. At this point in time, it's really solid. Basically, if it's in motion, it's a part of the $200,000,000 I'd say there's very little that would be what we'd characterize as something that's not commercial today. It may be on the verge of commercial and it's in our outlook into the second half of the year. But that $200,000,000 we obviously track it every month is rock solid for the year.

Speaker 4

Importantly, as we talked earlier, a pipeline to support the next $200,000,000 into 2025 remains robust. No major moves across the portfolio of projects that we're working on. And I think we remain very positive on how diverse that portfolio of projects remains both in terms of markets as well as the product portfolio that we're executing on.

Speaker 2

Very good. Thank you again for the color, Steve.

Speaker 3

Yes. Thanks, Matt.

Operator

Your next question for today is from Mark Weintraub with Seaport Research Partners.

Speaker 11

Thank you. So just on this second half sales or volume increase I should say, I'm sorry. So I think if we look at your organic sales from last year, they were about 1.5% lower in the second half than the first half. And so since you noted that you were about 2% lower in the first half year over year, I assume it's fair to say that the sequential improvement 1Q first half to second half is pretty similar to the year over year, maybe it would be slightly more. Is that a fair assumption?

Speaker 4

[SPEAKER DOUG MURPHY CHUTORIAN:] It would be better, Mark, if I'm following your logic. I think as we mentioned earlier, year over year plus 3% to 4% came off of last year's second half, which was kind of minus 5%, 6%. So it's not even a full recovery of the destocking and the headwinds that we experienced last year. From a first half to the second half level, it is an acceleration in terms of volume metrically. We'll have sequentially first half to second half higher sales across the packaging platform, that will support it.

Speaker 4

So I think to your question, it's a positive first half to second half. I think 3% to 4% is obviously year over year coming off of last year's comparison of minus 5%, 6%.

Speaker 11

Right. And so just to clarify and I think given the information you provided to us, we can calculate that it is roughly to be more exact, a 3.5% to 4.5% increase second half versus first half. Is that in the ballpark?

Speaker 4

That's directionally correct, yes.

Speaker 11

Okay. And then, given that you are this is sort of a recovery mode, how should we think about incremental margins on the sales increase? Because I'm sure it's better than your underlying normal EBITDA margin. How should we think about that?

Speaker 4

It is higher, Mark. It's higher than our 19%, 20% obviously, and because you get good strong absorption across the totality of the platform. So yes, I think if you're doing the math you're doing and you're putting value on that 3.5% to 4%, if you're in that 25%, 30% range, you're getting to the back half that we're talking about earning on with the incremental $40,000,000 of EBITDA first half, second half that's supported by the 3% to 4% and the ongoing performance that including full absorption of our assets.

Speaker 2

That's a good question, Mark. It's Mike. I think the other thing you saw this in the data that was released by the AFK here on Friday. And you see it in the coated recycled and the uncoated paperboard coated unbleached, I should say, up 400 basis points sequentially, Q2 to Q1 backlogs are growing and inventories are down on those grades of paper. And really that's a function of these orders starting to flow back through.

Speaker 2

And so if you think about the second half we had last year, we took a fair amount of market related downtime. It was mostly on the bleached paperboard side, but it also affected these other grades to some degree. And so as Steve said, now you run steady, you don't incur those costs. So that's got a big positive margin impact.

Speaker 11

Great. And one last one.

Speaker 2

Go ahead, Mark. Go ahead.

Speaker 11

Sorry. One last one, hopefully not burying myself too deep in the weeds here. But so also you don't have Augusta in the second half. And I think you'd originally talked about I think $30,000,000 to $35,000,000 And so is that productivity gains that sort of is going to get us that last part to get us to the midpoint potentially? Or is there some other potential lever to be thinking about?

Speaker 4

No, it really is Mark, because if you think about it here in the second half, Texarkana is running absolutely full. We'll earn very well there. And last year, we were taking an exorbitant amount of downtime across the 2 facilities. So actually our earnings power on the bleached platform in the second half of the year will look a lot like last year's cumulative second half where we had 2 paperboard manufacturing facilities. And that's also one of the big enablers for the $50,000,000 of reduced maintenance expense.

Speaker 4

A lot of that was taken at Texarkana. So the bleached capabilities, the earnings profile of the business is supported by less maintenance expense, running full of Texarkana, a busy cup business, and obviously supportive of what we're seeing on the recycled paperboard damp bleach side. So that overall volume is allowing our system as we've now defined it to be running quite full here in the second half of the year, hence generating significant net performance.

Speaker 11

Super. Thank you.

Speaker 4

For the operator, we'll go another 10 minutes or so given there are some additional questions out there. So go ahead and proceed please.

Operator

Certainly. Your next question for today is from Anthony Pettinari with Citi.

Speaker 2

Good morning. Can you talk about kind of

Speaker 4

the level of inflation you're currently seeing across your major cost categories? And I guess directionally what level of inflation you're

Speaker 2

kind of assuming for the second half?

Speaker 4

Yes, Anthony, it's Steve. As we've talked kind of cumulatively, we have a relatively modest amount of inflation running through the business. We've got areas where we've got costs moving down like wood and energy and chemicals and the external paperboards that we acquire to support our business. For example, in Europe, we've got inflation in areas like resin and OCC, logistics and labor and benefits. So it's remained reasonably benign.

Speaker 4

We're not making any assumptions for large movement in those costs in the second half of the year. So it kind of is a steady as you go. Obviously, if we see movement up or down, we'll take that into consideration when we talk about the business. But broadly speaking, if you're talking historical terms, the little bit of modest price headwinds as well as a little bit of inflation that's coming through the business is being offset by and even labor benefits in place is being offset by the good strong performance we were just charging about a couple of minutes ago.

Speaker 2

Got it. Got it. And then just following up

Speaker 4

on the price hikes in the North American business,

Speaker 2

I guess to the extent you can, can

Speaker 4

you talk about how those are sort of being accepted? And is it fair to say that the benefit would show up for you more in 2025 or any thoughts on kind

Speaker 2

of potential lag there? Yes. So Anthony, I will confirm that we're actively implementing price increases on a number of the substrates that we manufacture. I'm not going to talk about forward looking comments in terms of how those will go other than to tell you that we're working hard to recover those, implementing those increases. As we do as Steve said, we do have inflation coming into the business.

Speaker 2

It's benign now. But ultimately, we did see things like OCC that's at an elevated level. We need to recover those costs and be in a position in 2025, as you said. And you know how this works. I mean, we're basically a 6 month delay, offset or lag, if you will.

Speaker 2

So ultimately, the vast majority of the pricing that would be recognized would ultimately show up in 2025 as you alluded to. Okay. That's helpful. I'll turn it over.

Operator

The next question is from Arun Viswanathan with RBC Capital Markets.

Speaker 12

Great. Thanks for taking my question. I guess I just wanted to review how you're thinking about Q4. Last year, you had some accelerated or elevated downtime levels. But this year, it seems like you will be exiting maybe in the 460 to 460 EBITDA range.

Speaker 12

From there, do you see the likelihood of strong growth? Maybe you talked about 1% to 2% or low single digit volume growth for next year. Would you be able to leverage that maybe to mid single digits? Is that how we should be thinking about how your EBITDA could potentially grow next year?

Speaker 2

So I'm going to parse that out into 2 responses, Arun. Thanks for the question. If you really look at the second half of this year as I've commented on, we expect our paperboard manufacturing facilities to run full. We've taken the vast majority of our planned maintenance, as you heard Steve talk about. That was $50,000,000 more from a cost standpoint in the first half than it will be in the second half.

Speaker 2

And we ultimately need to run those paperboard manufacturing facilities in Q3 and Q4 to make sure that we've got the paperboard we need to continue to service our customers. It's way too early to prognosticate about 2025. And what we are committed to is our vision 2030 that we've rolled out there. You heard Steve talk about low single digits is kind of our focus for 2025. Could it be more?

Speaker 2

Sure. Could it be less? I mean, there's a lot of macro factors out there that ultimately impact that as you know. But I think we've got pretty good visibility 6, 9 months out our business given its consumer index as opposed to industrial index. And as a result of that, our confidence level in our 3 to 4 right now going into the second half of the year is high.

Speaker 2

You know that in Q1 of this year, we were down a little bit versus the prior year. So you got to factor that into how we'll head into 2025 too in terms of how you look at your modeling. But that's how we're thinking about it. And of course, we're quite aggressive on trying to make sure that we're capturing all those innovation opportunities that we see out there and continue to stay very focused on our ability to do so.

Speaker 12

Thanks for that, Mike. And then just a quick follow-up. So just wondering how you guys are thinking about cash flow from here. It sounds like, again, you pointed out an 800 to $1,000,000,000 level maybe in $26,000,000 CapEx should be coming down next year. What kind of magnitude of reduction in CapEx are you expecting from that $1,000,000,000 this year?

Speaker 12

And then, opportunities where you could deploy that cash flow? Maybe could something come out of recent transactions or is it mainly buyback focused? Thanks.

Speaker 4

Yes. Arun, I'll start and then Mike can add on. Yes, we expect cash flow to improve in 2025 because CapEx will step down at least $200,000,000 year over year. So really the vision that we laid out for improving cash flow and then obviously 2026 to 2027 we see all the benefits of the Waco investment driving towards the kind of very substantial cash flow that we expect to generate over those couple of years. So really no change at all in kind of the direction of Vision 2,030 from a cash flow generation.

Speaker 4

And Mike, do you want to take

Speaker 2

this? Yes. I think look, if you look at Vision 2,030, Arun, we really talked about CapEx as a percentage of sales once we got past Waco and into 2026, let's just call it as a baseline year, being at 5% or below in terms of CapEx as a percentage of sales. And post Waco, in Steve's prepared comments, he made the statement, we end up closing the 2 smaller coated recycled paperboard mills that we've targeted to do as part of that project. We have 5 very well invested mills and our ongoing CapEx requirements for maintenance is around 2%.

Speaker 2

I want to repeat that around 2%. And so ultimately, we've got a fair amount of money there to drive the decarbonization that we've outlined as part of our Vision 2,030 initiatives as well as to continue to pursue some of these smaller CapEx projects like we profiled a couple of them in our prepared remarks replacing presses 2 for 1, that's a nice trade. Looking at automation activities in our warehousing operations that ultimately reduce the amount of outside warehousing we need and the labor associated with it. You're going to see us work on those kinds of things. So we really love the positioning we've got coming out in Waco, both in terms of how our paperboard manufacturing facilities will be positioned as well as the ongoing cash flow that we'll have to invest in smart projects in the business because our maintenance requirements will be pretty off there.

Speaker 11

Great. Thanks.

Speaker 3

I think we have time for one more question.

Operator

Your final question for today is from Phil Ng with Jefferies.

Speaker 13

Good morning, Mike, Steve. This is John on for Phil. Thank you for all the details and squeezing me in here. I just wanted to start off, the price in the quarter was a little bit more negative than I was expecting. Is that all from the index moves that are just flowing through?

Speaker 13

Is there anything else that's in there? And then just also we were pretty impressed with the productivity that was able to offset that negative price plus the cost inflation in the quarter. Obviously, you're talking about having less economic downtime in the back half and some of the throughput and efficiencies from the converting projects and investments that you've made. So I would think that the productivity line to be probably stepping up a bit and should be more than enough to offset negative price of about 2% that you noted and maybe some of that ongoing inflation. Is that appropriate or is there any way to help us quantify how we should think about net productivity in the back half?

Speaker 4

Yes. Let me take the price piece. I can touch on the performance piece, which we are very pleased with obviously in terms of how we're functioning across the platform. The only thing I'd probably note for you on the pricing, the minus 2%, keep in mind that 1% of that is really a price pass through reduced paperboard costs in Europe. And so that for us is really a pass through, that's half of it.

Speaker 4

The other half, the 1% is a little more related to the whole portfolio of prices that we have across the Americas, the models that are out there, etcetera. So that'd be the only nuance for you because that pass through is relevant because it's really margin neutral. Boris, it is half of that price reduction. Mike, do you want to talk performance?

Speaker 2

Yes. Look, John, you mentioned it. I'm really proud of the efforts that our team put forth in the first half of this year in terms of overall execution. As I mentioned, we took a lot of our planned downtime. So there's a lot of things we had to move around to support our paperboard manufacturing facilities in that process of the second half with us running full and volumes stepping up a little bit.

Speaker 2

I like to say, we're going to continue to drive good productivity here in the second half of the year.

Speaker 13

That's great. And if I could just add on one quick clarification because I appreciate that you've calling out the ending share count after reducing the shares by about 2.4 percent. Are you done with deploying those proceeds from the Augusta Mill sale? Or are you still looking to buy back more shares here in the second half?

Speaker 4

Yes. We don't really forecast or embed share repurchase into our guidance or into the go forward. So, we'll continue to be appropriate in measuring everything that we do against share repurchase, but there's not an incremental share repurchase assumed in or embedded in our forward statements.

Speaker 13

All right. That's helpful. Thank you very much.

Speaker 3

Thank you.

Operator

We have reached the end of the question and answer session. And I will now turn the call over to Mike Doss for closing remarks.

Speaker 2

Thank you, operator. Thank you, everyone, for joining us on our call today. I'm proud of the results our team is delivering, excited about our innovation pipeline and optimistic about our growth outlook. Graphic Packaging is leading the way in sustainable consumer packaging. Vision 2030 is about execution and delivering results across a wide range of economic conditions and we are demonstrating that we can do that exactly.

Speaker 2

Thank you and good day.

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Earnings Conference Call
Graphic Packaging Q2 2024
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