Good morning, my name is Robin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Graphic Packaging First Quarter 2012 Earnings Call. [Operator Instructions] I will now turn the call over to our host for today, Mr. Kevin Crum, Assistant Treasurer. You may begin, sir.

Thanks, Robin. Welcome to Graphic Packaging Holding Company's first quarter 2012 earnings call. Commenting on the results this morning are David Scheible, the company’s President and CEO; and Dan Blount, Senior Vice President and CFO. To help you follow along with today's call, we have provided a slide presentation, which can be accessed by clicking on the Q1 earnings' webcast link on the Investor Relations section of our website at www.graphicpkg.com. I would like to remind everyone that statements of our expectations in this call constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements, including but not limited to, statements relating to the effect of the combination with Delta Natural Kraft and Mid-America Packaging, completion of the Macon biomass boiler project, recovery of raw material inflation costs, consumer demand and pricing trends, capital expenditures, cash pension contributions and pension expense, depreciation and amortization, interest expense, income tax rates, debt and leverage reduction, performance improvement and cost reduction initiatives, are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ materially from the company's present expectations. These risks and uncertainties include, but are not limited to, the company's substantial amount of debt, inflation of and volatility in raw material and energy costs, cutbacks in consumer spending that could affect demand for the company's products, continuing pressure for lower cost products and the company's ability to implement its business strategies, including productivity initiatives and cost reduction plans. Undue reliance should not be placed on such forward-looking statements, as such statements speak only as of the date on which they are made, and the company undertakes no obligation to update such statements. Additional information regarding these and other risks is contained in the company's periodic filings with the SEC. David, I'll turn it over to you.

Thanks, Kevin. Good morning, everyone. We're pleased with our first quarter results and the way in which we position the business for continued growth in what continues to be a sluggish operating environment. What seems to be increasingly important in our market is capitalizing on strong secular trends within the food and beverage product categories that create pockets of opportunity for growth. We are investing capital, people and fixed resources to change our end-use share positions in some of these growing areas while protecting our core business at the same time. A really good example of this effort revolves around our Carol Stream, Illinois carton plant where, during this quarter, we invested to reconfigure the focus of the plant towards our growing pasta-packaging sector. This facility is well situated near our Midwest CRB mills and many pasta producers. Pasta has not been a large category for us in the past, but it continues to grow in a very difficult economy while other categories like frozen pizza and cereal have yet to show significant recovery. We significantly increased our position in this market based on our investments we have made, and we will continue to do so going forward. We'll focus on our performance improvements. We had a good quarter. We achieved $17 million of additional benefits in Q1. We are also investing in new product development to help our customers differentiate their products, lower their distribution costs and improve their sustainability metrics throughout their entire supply chain. By doing these things, we are expanding our addressable market and gaining end-use market share to drive sales growth. Net sales in the quarter increased 7% to $1.1 billion and adjusted EBITDA increased 5% to $150 million. Strong operating performance and cost reductions, along with higher pricing and favorable volume mix, more than…

Thanks, David, and good morning, everyone. David covered the operational highlights of the quarter. I'll focus on the financial results. My comments track our posted presentation. But let's start with Q1 financial highlights on Page 8. Taking a look at the first quarter, we see net sales up 6.7%, or $67 million. The EBITDA increased 5.1% to $150 million. Net operating cash flow increased by $26 million to $33 million. And after normalizing the income tax rate, adjusted net income increased $6.4 million or a $0.01 a share. In terms of the tax rate adjustment that you see, as David did, I'll remind you that, in the fourth quarter of 2011, we recorded a value for our NOL tax shield on the balance sheet. This accounting change has no impact on our cash tax obligation as we will continue to not pay U.S. federal income tax until the NOL is fully consumed. However, we now record nominal income tax expense to our P&L. The offset to the expense is the tax asset set up on the balance sheet. In Q1, you will note that the tax rate at 43% was unusually high. During the quarter, the rate was affected by some special international tax adjustments. Going forward, the tax rate will normalize, and we will be in the 38% to 39% range for our full year 2012. To provide comparable financials, we adjusted 2011 quarterly results to compensate for the tax rate change. Overall, you will see when we review the sales and earnings comparisons, the main drivers of the net income and EBITDA improvement include revenue growth, improved performance, particularly in our mills, and lower interest expense. Please be advised, as has been our practice, we expect the results for nonrecurring debt refinancing and acquisition integration charges. This quarter,…

[Operator Instructions] Your first question comes from the line of Philip Ng with Jefferies. Philip Ng - Jefferies & Company, Inc., Research Division: Just a quick question. I know the Flex business is pretty small, but you got more cost cutting in the pipe and whatnot and pricing coming in, in the back half, should we expect profit -- to actually earn a profit in Q2 and things improve a little bit in the back half?

I think what you'll see, Philip -- is you'll improvement in the second quarter. For instance, we expect some recovery in the price area on that in particular. And we expect the business to continue to improve throughout the year. I mean, we have already announced the shutdown of our plant in Ohio, and we expect to start to reap some of the benefits on the back half of the year.

You will get purchasing savings flowing in and that type of thing, so I don't know that we have a second quarter forecast by segment that we're going to talk about, but your question for the year, yes, we expect to be profitable for the year.

Just a reminder that 2013 is a big year for that as we in-source the paper supply. Philip Ng - Jefferies & Company, Inc., Research Division: I got you. And then just on the demand side, I mean you guys are obviously taking share on the CUK side and that's very helpful to your numbers, but you're seeing, kind of, a bifurcation of like demand trends in food versus beer. I just want to get your sense on what's driving that and have your customers stepped up promotional activity and have they throttled back a little bit on pricing?

Well, I mean, that's a better question for Kellogg's general mills and Kraft, and I'm reading the same thing you are and they continue to say that they're -- the pricing -- they've raised the price on those products and it's created some demand and they expect to address that. And so I'll leave that to them. What I would say is that in the early part of the recession, the food business held up better than beverage. Now you've got a little bit of recovery in some of the industrial sectors so -- and it's been hot in [indiscernible] this week, so beer and soft drink are up. I don't think -- we're not projecting a huge change or turnaround in things like cereal or in frozen pizza, but I'm a great fan of my customers. So I'm hoping that those demand trends change. What we're trying to do is make sure that we are skating to where the puck is going. And that's why we've made investments in some of these other sectors or segments that do seem to be pretty more resilient in this economy than cereals, snacks and pizza for example. Philip Ng - Jefferies & Company, Inc., Research Division: I got you. And then just lastly, I know one of the big carbonated soft drink companies has been vocal about reinvesting in their brand and whatnot, but I haven't seen much flow-through. Have you seen that marketing or promotional activities pick up for CSD?

Let me say without [Audio Gap] yes.

Your next question comes from the line of Ghansham Panjabi with Robert W. Baird & Company. Matthew R. Wooten - Robert W. Baird & Co. Incorporated, Research Division: It's actually Matthew Wooten sitting in for Ghansham today. Acknowledging that it is difficult to predict, are your chemical costs downwardly biased in the near-term [Audio Gap] I know you spoke about some of your other input costs.

I think the primary driver of our chemical cost really was TiO2. If you look across the board, that's the one that was the most volatile on our stage, actually latex and so on and so forth was really pretty flat. It is really TiO2 and that's [Audio Gap] I think our projection for TiO2 is to continue to increase somewhat throughout the year. But on a year-on-year basis, this is probably the biggest change you'll see in TiO2 vis-à-vis 2011 input costs. Matthew R. Wooten - Robert W. Baird & Co. Incorporated, Research Division: And then following onto that, is it possible for you guys to substitute away from TiO2? I know that some people in some other industries have been able to do that.

Yes. Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division: And then the last question is, once your leverage ratios have been reached and assuming that you can do so in 2012, have you started to think about preferred methods of free cash flow allocation in 2013, whether it's M&A, buybacks or dividends?

Yes, we have.

Your next question comes from the line of Joe Stivaletti with Goldman Sachs.

Just 2 things. One is you talked about acquisitions possibly, I just wondered if you could put some context on that, possibly, in terms of potential size and what types of things you might want to look at and would you consider anything more in Flexible or would that be out of the question?

Well, those are really good questions. But the answer is the same. I like what we did in 2011. As you saw the 2 acquisitions, probably, we're $80 million to $100 million in total top line revenue. They were relatively good acquisitions. So that's sort of the right thing, and they were both in areas where we felt like we were strategically shoring up the business. The Flexible thing Dan talked about. You remember the one we did last year with Sierra Pacific was to be able to get into craft beer. So those are the kinds of things that we're looking at. And we have an active list of those things going on right now. So it would be those things that we can get some synergies, additional integration, geographically important acquisitions. And they are out there. They are relatively small. They're bolt-ons. But they make a good impact on top line and bottom line because we can integrate them pretty quickly.

And the other question I have was just now that you've done a lot of work with your bank -- the bank side of your debt structure, I wondered where your -- what your current thinking was, given where your bonds are trading, about doing some refinancing there? It looks like there's obviously a lot of opportunity there.

If you look at our bonds, I mean, they've become callable, at least the first bonds in 2013. So we'd look at the economics at that point whether or not we thought the economics were attractive to call that bond and reissue some other type of debt, whether it's the bonds or something else.

But probably for 2012, it's not [indiscernible] we are aware that those bonds are higher cost interest at this point in time. We clearly understand that. But it's really not a good return to be able to do anything other than wait until they are callable, and then we'll deal with them with wherever the financial markets look like in '13.

Your next question comes from the line of George Staphos with Bank of America.

I joined the call a little bit later, so I apologize if you already covered this. I guess the first question I have, within CUK, would it be possible to somehow size the interest appetite from your customers in terms of using the substrate in new applications relative to what you would have seen, say, 6 months ago? Just some sort of frame of reference in terms of the new product activity and penetration that you're seeing in that substrate, guys.

What I would say is, clearly, we've had some large wins on the CUK substitution side, and we talked about those. I will tell you that, George, some of those are really things we've been working on for a long period of time. And some of that is kind of chunky, right? You work on it for a long period of time. There's intellectual property involved. There's a lot of transition in -- or transition work that needs to be done. I don't think that any -- I don't think that the people making CUK right now are necessarily having a difficult time selling the CUK. It's a good substrate. We can sort of attack SBS on the top. And with the caliper improvement, we can address the CRB as well. So it's a good substrate model for us. We have a fair amount of focus in that business because it's a more positive mix when we sell CUK. But we are not -- and so we're in good balance. We made 16,000 more tons in the quarter, most of that was all CUK and they all got sold year-on-year. So I feel good about those trends on a go-forward basis for the new product activity. And that's where a lot of our focus is really on expanding the CUK pie, if you will.

David, is the gestation period on these sorts of arrangements, a couple of years, 3 years, 9 months?

It really depends. On something as large as the work that we're doing on the pouch, it's taken a couple of years to get that thing work. But a lot of Litho-lam things that are going on in club store, I mean, that can be 60 to 90 days. It's a better model. It saves a lot of cost. And the transition costs are pretty easy for customers so they just sort of substitute right under their packaging line. It's when we need to modify the packaging line to be able to use a different footprint for that fiber. It takes a little bit longer. So they're all over the board. But I will tell you, this is not -- we had a good quarter on substitution across the board. And if I -- we just did our new product development quarterly review, and I like the pipeline. I like what's in there vis-à-vis substitution. And this is substitution that's not necessarily driven at competitors in our current space. It's really more addressable. It's expanding an addressable market and that is stickier. It's harder to do. But we also keep it a lot easier because you're really changing the economics and the environmental spot. So that's our primary focus, not really so much CRB and SBS.

Dave, one last question on that and then one on Macon, is there a way to quantify broadly what the new pipeline looks like there versus, say, what would have been the case a year ago? I'm just trying to think about it from our -- where we sit how to project this going forward? That's the reason for the question.

Yes, I mean, we certainly internally have a very good feel for that. But we have a lot of customer interaction there and I would be uncomfortable giving you that data. We just -- it would require a lot more confidential disclosure than what we are willing to do in that space.

Okay, understand that. On Macon, have any of the changes that have occurred in energy prices here in the last 6 to 12 months changed at all what you think the return improvement might be from the Macon biomass boiler project or not at all?

Yes, sure. So you got to remember that Macon is really not -- is based on coal. And you know probably better than me that the energy cost on coal still maintains pretty high. And so our energy profile for Macon has not changed nearly as much as it has for West Monroe, which is based on natural gas. If you sort of think about for an investment similar in our West Monroe facility, just on a relative scale, natural gas would need to be somewhere around $7.50 to $8 to break even in a biomass investment in West Monroe. But in Macon right now, that biomass project is still very positive because it's coal-based. The energy in Georgia is predominantly coal-based, I should say. And we buy that electricity from Georgia power, which has other things going on. They're building a couple of nukes. I don't -- Paul Powers [ph] did not give me any break on energy cost in Georgia.

Your next question comes from the line of Alex Ovshey with Goldman Sachs & Company.

Taking into account all the puts and takes, you guys have spoken to on the pricing side and the raw material inflation side, so as we think about the balance of the year, is price relative to your raw material inflation? Or are you looking at it to be largely flattish?

If you mean -- you mean, balance sort of?

Yes, so second quarter through the fourth quarter?

I mean, that's sort of of our view right now that pricing and inflation cost sort of balance.

And then on the volume side, this is really the first quarter in many quarters where we see a nice positive contribution of both the top line and the EBITDA line, so as we think about the balance of the year for volumes, are we thinking about the sustainable number?

Well, first of all, that's a 2-part question. One is we actually have seen pretty good growth on volume and EBITDA in previous quarters, so I'll leave that alone. What I would say on a go-forward basis, is that, yes, I think we are cautiously optimistic. It's so darn hard to forecast the macroeconomics. I mean, tell me what you think the second half on a macro basis is going to be and I will help you with the volume recovery. But unemployment needs to continue to get better for our volumes to change materially. To the extent that unemployment rates sort of stays where it is, I think our -- the kind of volume gains that we've seen will be predominantly driven by new products and acquisitions with some secular demand improvement in beverage and some sectors of food. But I don't expect frozen pizza and cereal to all of a sudden have huge changes in their volume trends. I'd love it, but I don't necessarily count on the second half of the year.

David, last question, is there an early read you can provide on CapEx for 2013, especially on the context of you getting that rebate back on the biomass project, and the capital associated with the biomass project being largely behind you after 2012?

Our guidance on -- by no means, we're barely giving you a view on 2012, but what I would say is our normalized CapEx numbers really are more around $150 million to $175 million. That's sort of -- you can think of that sort of like $100 million or so of maintenance and then $50 million to $75 million for good cost reduction improvement projects. It will be back at that sort of level in 2013. It'll be strange to see because we will get a cash payment in 2013 from that. But I don't -- I think you should think about ongoing CapEx in that $170 million range on an average basis.

[Operator Instructions] Your next question comes from the line of Phil Gresh with JPMorgan. Ariel Avila - JP Morgan Chase & Co, Research Division: It's actually Ariel sitting in for Phil. First question is in terms of the demand trajectory throughout the quarter, did you see any differences between January and, let's say, March where one was stronger than the other, excluding any seasonal factors?

It was totally sectoral. So we definitely saw a stronger demand in beverage as we headed into the end of the quarter. I would say the food business, cereal, pizza and so on and so forth was pretty much the same from January to February. Backlogs didn't really change materially. There's -- I mean, I would say our backlogs are good. We are solid. We managed -- as you know, as I said, we made a fair amount of extra SUS tons and we sold them all. The CRB tons were more challenging in the process, so we sort of managed our inventory in that space. Ariel Avila - JP Morgan Chase & Co, Research Division: And then early reads on April trends, much of the same as in the first quarter?

Yes, I've learned a long time ago not to give you mid-month trends because it doesn't do any good. What I will tell you is our backlogs are solid. If we thought there was going to be some major change, negative change in the quarter, I'd be letting you know. That's not what -- that's not our early look on the quarter.

At this time, there are no audio questions. I will now turn the call back over to Mr. Crum for closing remarks.

Thank you, Robin, and thanks to everyone for listening. We'll talk next quarter.