Good morning. My name is Steve, and I will be your conference operator today. At this time, I would like to welcome everyone to the Graphic Packaging Third Quarter 2014 Earnings Conference Call. (Operator Instructions) Vice President and Treasurer, Brad Ankerholz, you may begin your conference.

Thanks, Steve, and welcome, everybody, to Graphic Packaging Holding Company's third quarter 2014 earnings call. Commenting on results this morning are David Scheible, the company's Chairman, President and CEO; Mike Doss, our Chief Operating Officer; and Dan Blount, our Senior Vice President and CFO. Also joining us today is Steve Scherger, our new Senior Vice President of Finance. To help people along with today's call, we've provided a slide presentation, which can be accessed by clicking on the Webcasts and Presentations link on the Investors section of our website at graphicpkg.com I would like to remind everyone that statements of our expectations, plans, estimates and beliefs regarding future performance and events constitute future-looking statements. Such statements 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. Information regarding these risks and uncertainties is contained in the company's periodic filings with the Securities and Exchange Commission. Undue reliance should not be placed on 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. David, I'll turn it over to you now.

Good morning, everyone. We had a solid third quarter. I'm pleased with our results. Third quarter adjusted EBITDA increased 9% to $191 million and our adjusted EBITDA margin increased over 300 basis points to a record 18.2%. During last quarter's earnings call, I said we expected the third quarter EBITDA to look a lot like second quarter, and it's exactly what happened. Demand across some of our core used markets remains challenging, no question about that, but we are executing our global strategy, we're maintaining the bottomline and tracking to a full year EBITDA and cash flow targets. We reduced net debt in the quarter by $140 million and dropped our leverage ratio below 3.0. We think this is a testament to the unique model we built, which combines low-cost paper mill assets with highly efficient converting facilities and industry-leading design development. We spent years honing our strategy in improving our execution and we're beginning to see the results consistently of those efforts as a pure play vertically-integrated paperboard packaging company. Our recent divestitures and acquisitions make it somewhat difficult to understand the underlying fundaments and business trends. For example, sales declined 9.7% in the quarter, and that's what you'll see in the financial table on the back of the press release. However, adjusting for the recently divested businesses, our ongoing paperboard packaging sales actually increased 4.9% principally related to the acquisitions in Europe. Volumes across the paperboard business were down slightly, about 0.5%, in the quarter and the decline was predominantly attributable to continued weakness in the domestic cereal and dry food markets. Consumers continue to closely manage their discretionary spending, while we're beginning to see some major food companies responding with increased promotional and advertising activities to drive volume. Lower grain prices versus last year is allowing these…

Thank you, David, and good morning, everyone. Graphic Packaging is committed to be a leader in the global paperboard packaging business in the food and beverage sectors. We spent the last six years both building and optimizing our core business around this focus. We've divested non-core assets and businesses to free up capital. We invested heavily in our core business and substantially reduced debt levels. We've streamlined and significantly increased our productivity in our low-cost mills. We've optimized our network of global converting facilities around both our mills and marquee customers. We've implemented LEAN and Six Sigma resources to shorten our supply chain and improve efficiencies across the organization. In short, we've built a very unique business model that vertically integrates low-cost mills with a network of highly efficient converting facilities. The net result from all of this work is a pure play global paperboard packaging company with a clear top and bottomline growth strategy. As we've discussed previously, we have an incremental 150,000 to 200,000 tons of low-cost unutilized pulp capacity in our mills that provides us with tremendous operating leverage as we grow. With the amount of build, we are focused on driving our converting volumes and leveraging the additional pulping capacity. We do this in a number of way, through new product development, channel expansion, product substitution, geographic expansion and acquisitions. Over the past few years, we've significantly expanded our penetration into faster growing segments of the markets, focused our new product development on supply chain sustainability and broad-based consumer trends and made three major strategic acquisitions in Europe to further expand our geographic presence in the food and beverage markets. Our European integration is progressing to plan and is already beginning to pay dividends, as we were awarded our first major SUS, conversion contract with a…

Thanks, Mike, and good morning to everyone. As in the past, I will use our posted presentation to aid in our discussion. Let's start on Slide 13. As you see, we reported adjusted third quarter EBITDA of nearly $191 million. This result is in line with the guidance we provided during last quarter's earnings call. Q3 adjusted net income rose to $57.5 million from $42.9 million, a 34% increase. Adjusted EPS at $0.17, up $0.05 over the last year. Improved operating results coupled with lower interest expense drove the earnings increase. In the quarter, EBITDA margins climbed above 18% and interest expense, driven primarily by lower debt levels, declined by $3 million. In looking at net income, income tax expense stands out as needing special mention. At 43%, our effective tax rate was 3 percentage points over our normal rate, cost us about $0.01 per share. I'll go into further details around taxes shortly, but it is important to note that the spike we saw in tax expense is a Q3 event and should not continue into the fourth quarter. Primarily due to our previously announced administrative cost reduction initiative and to a lesser extent expenses related to European integration, we incurred $8.3 million, $4.5 million after-tax of non-recurring charges this quarter. As a reminder, last quarter we announced that we were going to create more value out of the Multi-wall Bag divestiture by rightsizing our support and overhead structure. During Q3, we executed the actions needed to deliver the cost reduction. Starting in 2015, annual savings from these efforts are expected to yield at the higher end of our $10 million to $15 million targeted range. As previously communicated, these reductions will be in addition to our normal $60 million to $70 million annual cost reduction target. Now for…

(Operator Instructions) Our first question comes from the line of Ghansham Panjabi with Robert W. Baird & Co. Mehul Dalia - Robert W. Baird & Co: It's actually Mehul Dalia sitting in for Ghansham. Can you give us some more color on the inter-quarter trajectory for (inaudible) during 3Q? Was there any major deletions month-to-month? I'm wondering if there's any volatility month-to-month?

It was a pretty consistent quarter. I think when we talked on our last earnings call, we were mid-way through the quarter, and I gave the indication we thought it'd be quarter a lot like second quarter from a volume and earnings standpoint. And that's kind of what we saw. We did see of course the traditional pick-up in back-to-school and some beverage pick up, because the Labor Day holidays are in there. But it was pretty consistent. The Multi-wall Bag business, you remember, had a lot of construction elements relative to those products, and that added some volatility historically to us that really just didn't show up in this quarter. And that's sort of our expectations going forward as well. Fourth quarter should be pretty consistent. The trends that we're seeing in beer, soft drink are pretty consistent from what we've seen in the third quarter. There's some evidence that promotional activity is helping in dry foods and cereals and so on and so forth. But I think the volume trends are pretty prescriptive for what we've seen in 2014 year-to-date. Mehul Dalia - Robert W. Baird & Co: Given that you're now within your target net debt to leverage ratio, how do you think capital allocation evolves over the next year? Just wondering of the timing of a move toward dividends or buybacks?

I think we've consistently said that that's something we're clearly going to deal with in early part of 2015. And I have no reason to believe that that timing has changed. I'm pretty confident in our cash flows. We had a good quarter in the third. I expect to have a good quarter as well in the fourth on cash flow. And that would put us in a great place in the first part of 2015 to talk about more externally-focused cash flow return. Our priority is still going to be investment back in the mills, because there's great returns in those projects. We're still looking at acquisitions, bolt-on. That'll be a priority, because they strategically add to the business long term. And then third on that will be the ability to return some cash to shareholders. Dan mentioned on his discussion that until we refinance the revolver, our baskets in past were limited. The restructuring that he just did and completed gives us a lot more flexibility to do some things with return to shareholders that previously until we got this finalized here in the third quarter was not possible for us. So we're in a good shape from a business standpoint. And I think we've got the capital structure flexibility worked out from a timing standpoint as well. So we're focused on that in 2015. Mehul Dalia - Robert W. Baird & Co: Can you give us an update on integration efforts related to the European acquisitions, assuming it's on track, synergies and everything else?

We're right on track with the guidance we provided with the Benson integration. We'll deliver the $15 million to $17 million for Contego and A&R here in '14. And then in '15, we'll deliver the $6 million to $8 million that we outlined in our previous guidance.

We are starting to see some sales advantages in that as well. There's some transitions that occurred. He mentioned some SUS in the pizza and some other applications there. So we're getting some traction with our SUS board, which was, as you remember, strategically important part of the European business. You'll see it in the P&L. It takes a little bit more working capital, because shipping to Perry is a lot shorter than shipping to Liverpool. But at the end of the day, nonetheless, the return on the additional board sales are certainly worth our working capital investment. And that's what you're going to see on a go-forward basis.

Our next question comes from the line of Philip Ng with Jefferies.

On the last call, I think you guys mentioned you expected inflation to moderate a bit. We've seen OCC prices and energy pull back a bit. So I'm surprised to see inflation take up sequentially. Can you give us some color? And if I'm remember, on the last call, you guys guided toward $30 million to $40 million inflation number. Is that just input cost inflation and how much do we tack on for labor?

Our input inflation this quarter was a little less than $16 million, which I think was pretty consistent than what we saw before. I will tell you our primary driver this quarter on inflation was actually external board sales. We buy SBS and some COB outside and there were some pricing there that's lapping the quarter. Energy costs were pretty moderate. They were less than $3 million. Our second biggest was wood. Woods costs were up about $2.4 million. So if you look on a forward basis, I think we expect our input inflation going forward to be around $30 million, $35 million. And that's probably a good conservative estimate. I don't see a lot of drivers in OCC. Wood prices are clearly moderated quarter-on-quarter. I don't think you'll see much in the fourth quarter all relative to wood increase. And Dan has hedged out a good part of our energy for next year right around $4 per MMbtu, which will be year-on-year flat on energy costs, I think, for the most part. So I think a $30 million increase in '15 looks about right. Labor and benefits, we've always said, is generally around $30 million to $35 million. We had a spike up in this quarter. It had to do with some timing on medical costs year-on-year. But as you go forward, we won't see that kind of increase next year on a sequential or on an annual basis. And I think there were some other things in there like we've been encouraging more participating in the 401(k) and we had sort of a spike up in the quarter for increased employee participation in the 401(k). So I would tell you if you look forward, if you look at total inflation going forward, we're probably in that $60 million to $65 million. Performance next year, $60 million to $70 million plus whatever the integration activity in Europe and pricing will be a lot more moderate, but it'll be $10 million to $15 million or something like that on a carryover basis. I mean we've been averaging, guys, around 5% EBITDA year-on-year growth is kind of what we've shown historically, and it's kind of where we're at. From what we know right now, that's kind of where we look.

Phil, I know it's a trend to try to predict every type of inflation category and all the pricing categories and build it into your models. You're going to have to have an IQ of about 200 to be able to do that accurately. But in any event, I think if you pay attention to how we're improving the margins in the business, we're managing inflation, we're managing pricing, we're managing the improvements in the cost reduction. You'll see that we've taken the right actions given all those inputs going forward. And additionally just to add on to David's comments, in terms of natural gas, we see an opportunity to lock in natural gas at what we consider to be a very, very favorable price. And not only have we gone into 2015, we've gone into 2016. So you're looking at, taking natural gas inflation really off the table for close to two years as we implement this strategy. I think we're on top of our game here. If you look at margin increase and the way we're managing the business, I just wanted to add those comments on to David's.

I think the key question is really sort of what does the volume do and some of the markets did very well. Some of them not so well, but some of the acquisition growth, which has been a part of our plan on a go-forward basis, will continue to add to the topline. We have a lot of fixed cost to blow through. It's why the margins were up 300 points, because there's fixed cost blowing through increased volume through the integrated acquisitions. And that's sort of the story. We sort of told you guys what we thought the quarter was going to look like. We bought $190 million in much like the second quarter. And that's kind of where it was and the breakdowns are pretty much what we said it would be. Inflation was moderate. Pricing was good. Performance was excellent and margins were up 300 basis points. We're overall pretty pleased with that performance.

Can you give us an early look on how you think about free cash flow for 2015, weight at least some of the moving pieces? Just want to get a little color on how you think about CapEx next year as well.

I think it's a little early to do that. We're still in our planning cycle. I can give you some overall comments and my expectations here. I expect cash flows in terms of the percentage of EBITDA that you're going to deliver us cash flows to be consistent with what we've done in 2014. And to David's point, we're going to look at capital allocation very closely. We've got cash and investing back into the business, pursuing really smart acquisitions and then giving back to shareholders is a priority. So we've always been very transparent with how we're running the business and how we're allocating cash. And I expect that to continue in 2015.

I think one of the things Dan and I talked about with you all before too was we have cash to invest back in the mills, things we've not really had money to do in previous years. And we're going to invest back in the mills to address the same issues you talked about, which was inflation. So we're going to look at way to take energy, fiber, digesting capacity, those kinds of things reduced, because mainly due to those input inflations. The stuff that ends up in the mills and cost reductions, those we keep in our profit. And that's what we're going to continue to invest in. I don't think our CapEx is going to spike up. We've talked, what $200 million to 220 million sort of a range. And everything we need to do in the next couple of years to be able to make investments to be able to better the business. On an ongoing basis or long-term basis, we should be able to run this business at about $200 million worth of CapEx and do absolutely everything we need to do. And that's consistent with our guidance in the past.

Why don't you give some color on how trends are shaking out in Europe, certainly certain concerns on the macro front? I appreciate that you guys are getting some market share. And then in North America, you sound a bit more upbeat. But one of your largest Euro customer did announce a plant closure. Just want to get a sense if that will have any impact going forward on your business.

I don't know that I would use the word upbeat relative to US demand. What I said is we've got programs to help fill in where our customers are struggling. What I would say is that it's really by sector. Actually for us, beer and soft drinks still are pretty good business for us. Tissue business, pretty good business. Some of those dry foods segments really good. Cereal is still struggling. Obviously we know that they shut down the facility. But on the other hand, if you go into the stores right now, you're going to see those same customers promoting cereal and they're doing bogo, buy one get one free type things. So you're seeing those kinds of activities, which are traditionally driving volumes, as I said in my comments. Let's see how that works out. Right now, those trends look okay. But I don't believe anybody is suggesting US economy is particularly hitting on all cylinders. Mike will talk more about Europe, but overall, yeah, Europe is struggling overall, but we're in a pretty small slice of the European market. We're doing food and beverage and those trends are not necessarily materially different than what we're seeing in United States. If anything, the beverage market is stronger in Europe and here.

That's right, David. I mean our overall beverage volumes year-over-year in Europe were actually up. Our consumer products both in the UK and Continental Europe has held up pretty well. And we've had a couple of wins as we outlined here. So we like the momentum as we head into 2015 in that business.

Your next question comes from the line of Anthony Pettinari with Citi.

You talked about mill system with 150,000 to 200,000 tons of spare pulp. And I was just wondering if you could remind us when you would expect that to get utilized? Maybe by the end of 2015, how many tons would you expect to have utilized in your system?

I think what we've said is that if you look at our comments that we expected over the next three years to be able to build out those tons and use them. I didn't give guidance. But what I will tell you is certainly with the growth in Europe in some of the transitions, for example, Mike mentioned on the call that Miller Coors is transitioning to a Tite-Pak. They're transitioning from a corrugated structure to Tite-Pak. We're going to have to figure out 15,000 tons, 16,000 tons of incremental business, because that's the transition. And so over the next three years, we'll build out those tons. And it will be a pretty consistent increase right now in our planning each of those years. But it will take that long. First of all, we will not build those tons ahead of sales. And then there is some lead time in building the tons as well, simply because we'll want to do all that during maintenance downtimes. We can't really take our mills offline to be able to do larger construction projects because we need the paper. So we'll do it consistently over a two to three-year period to generate those tons as demand increases. So right now, if you look at SUS year-on-year, 40,000 tons of SUS demand year-on-year. And so I sort of like those trends on a go-forward basis.

And for instance, the pizza contract, have you already shipped tons for that already or is that Q4 or next year?

Yeah, we're completely qualified and that product is commercial in the marketplace.

Maybe just a follow-up on big beer. You described trends as stable. You've produced carriers for, I guess, bottles as well as cans. And I wondering if you're seeing a meaningful shift between those two containers and from your perspective, from a volume and margin perspective, is there a big difference between the two, or are you seeing any kind of substitution out of bottles into cans?

We're not a primary packaging supplier. We're secondary. So the whole issue of cans and bottles to some extent we're agnostic to that transition. What we're a lot more interested in, Anthony, is the transition from plastic to paper, and that is what we're seeing in Europe and in markets like Brazil. We're also seeing more baskets sold to craft beer even in beer. In Germany, for example, we just placed a couple of machines making baskets, and that's a new paperboard application. Certainly we've talked about it before and others have as well that in areas like China and in Brazil, we're seeing a move towards premunization, which is really a transition from plastic to paper. And that is more exciting to us, because that's net new tons whether we make our machines really or don't really know whether we're making a can pack or a bottle pack. We've seen some improvement in the craft beer business or transitions from bottles to cans, but that's all new growth, because they're not substituting. They're still making their bottle. They're also making cans, which allow them to expand their business. Obviously some of that comes at the share of big beer, but ultimately as long as our share in both of those sectors is good, then we're sort of gaining as they gain. And so we feel good about that.

Maybe just one follow-up to Phil's question on early view on 2015. I guess you got $22 million in operational improvements in the quarter without flexibles, as you've been planning for '15. Do you have any initial view on what the performance improvement could be?

I think we said that we expect to do that $60 million to $70 million plus something from Europe stuff. So that's pretty much the same. If you look at where our mills are, if you look at the productivity, I don't see a jump-up, but I also don't see a drop. I have said before it's shifting a little bit. More of it's coming from the mills, because those are bigger projects. And now that we have, as you all continually point out to me, additional free cash flow, we're putting some of that back into the paperboard mills, because we have the money to do so and the returns on those projects are great. A number of projects are mills, they're one to two-year return projects and they're big projects. And the Macon biomass, we haven't talked about, but that turned out to be just a really, really good project in the process. And we have those kinds of things in the mills. So I'm comfortable on a go-forward, we've got good productivity improvements. Again, more capital-driven and predominantly in the mills, but we're not changing our guidance on CapEx materially to do it. I think it's just a shift in our focus and direction.

Your next question comes from the line of Mark Wilde with Bank of Montreal.

I wanted to just turn back to capital allocation. Just first of all, kind of thoughts on sort of dividend versus buyback activity, Dave?

Well, of course, that's a Board of Directors discussion, as you well know. And I don't know right now whether I have an opinion on one or the other. We are one of the few companies in this space that of course does not have a dividend. I'm not sure as to meaningful driver of share value, but it might attract different level of investors or at least open us up to a newer group of investors. We just got back from Europe. Dan and I and Mike did a road show over there, because there's lot of European interest, and a number of those investors sort of have checked the box. So we'll assess that. Clearly in the space, buying back shares has been more leveraging for shareholders than dividends. And we see the same map, Mark. So we're going to have to assess that. I think it just depends upon whether or not there's the dividend expectation for different group of investors, but I think we would lend or lean more towards shareholder return in terms of buyback, because it just seems to be more leveraging, Mark.

I also wanted to talk a little bit about acquisitions. I wondered if you could talk about converting assets versus maybe picking up mill assets. And on the converting side, I wondered if you could talk specifically about Mexico. I mean we've seen a couple of deals in the last couple of months where brewers have sold other packaging assets. And I know that some of those brewers actually have paperboard packaging assets.

Yeah, that's still a priority for us. I will tell you we've done well in Europe. I mentioned on one of the other calls. I mean our focus right now for acquisitions is probably of Europe at least for a good part of 2015, because my team over there has got a plenty to grace. First of all, they're integrating the acquisitions. Second of all, they're doing good on the sales side of the equation, but that takes some time as new product transitions. They've got some work to do and we just don't want to overload them. As you have pointed out to me on a number of times, the list of people that have done well by converting assets in Europe is very small, and we don't want to join that list. I think what we want to make sure that we do is that we've done a good job with our acquisitions in Europe and so we're very much focused on it, which means our acquisition focus will be in North America. So Canada, the United States, Mexico is sort of the areas we're looking at predominantly on the converting side with the same philosophy of pulling board through those converting assets. Mexico is something we're interested in. I told you before we're a long way down the path in Mexico. But we sort of lost that acquisition at the last. We couldn't confirm that the numbers were the actual numbers. And so we sort of walked away, but we expect to find something in Mexico to build on our base. We'd like to be a much higher percentage of that market. And we'll look to find the right assets. But you know this that buying in Mexico, you need to be patient and you need to make sure that what you're getting is what you're buying and it takes a little while to do so. But we're not walking away from investment in Mexico.

With the dollar rallying, Dave, have you seen any impact from that on either sort of export volumes around the world or any impact on export pricing to this point?

We don't export a lot of board other than to ourselves, and I think that's where that manifests itself. So we haven't really seen it. We also haven't seen a lot more imported board. I mean that's always a possibility, but since we're in the carton business, you still got to quality, got to get the customers to get okay with it. These are the same issues that make it sticky for us to transition business, makes it difficult for anybody else as well. So we haven't really seen an impact. Paperboard for folding cartons is really not sort of a scale-up, scale-down. Customers really don't like changing their printed paper stock that touches their products on a regular basis. So you have to begin it, but on the long haul, it's kind of tough to arbitrage a paperboard transition based on currency, because you and I both know it's great that the currency is strong right now, but we're putting money like there's no tomorrow. So long term, you got to wonder about whether the strengthened dollar is something you can count on over a three or four-year period of time. And our customers are really not that interested in the short-term gain on a currency evaluation if that board might not be there.

We've had a wet autumn down at some parts of the Southeast. And I wondered if that was having any impact on kind of wood cost, particularly around Macon. And then I wondered also with this highway bill, any change in cash pension contribution next year?

We've seen no material impact in our wood basket in Macon or West Monroe.

We're well aware of the highway bill and the possibility that your minimum contribution level could be lower. Currently our strategy is to continue to fund our pension at our current funding rate. It's like $40 million to $60 million per year. And that's what our expectation is for 2014 and we expect to continue to do that in 2015. Clearly, our target at this point is to have our plan fully funded by somewhere in 2017 and we're well on track to do that.

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

Of all the innovations that you're bringing to the market right now, David, what are you most uplifted about, what do you think has the best ability to drive traffic to the center of the store? You said that the investments in the mills will be done around normal maintenance downtime. But should we be planning for more maintenance downtime in the next couple of years as we model out? And then thirdly, what are your thoughts on MLPs and their sutaibility for Graphic Packaging?

New product side of the equation, a couple of things I would tell you, a level what's going on in Microwave, that's clearly center of the store stuff, and we're definitely winning in that space. Our teams there are doing a really good job. Mike talked about the corrugated or the strength transition. The stuff that we're doing in the last four to five years or last three years or so, things like Capri Sun and Tite-Pak transition, these are all building long-term markets for our SUS. And I like those a lot. The other thing I like right now in Europe is that we've never had a platform over there to sell our SUS board. And so in pizza, even somewhat in cereal, in cakes and crackers, over there we've had an opportunity to do stuff that we're just getting started in, we've already got a number of great wins in Europe, because we've got a really strong manufacturing platform over there. So those substitutions all make great sense to me. Extra downtime in the mills, no, we're not going to see extended outings in our mills from a maintenance standpoint unless it would be something unplanned in the process, because the problem with that is that we need the tons. So it's not just the cost of taking the mill down, but it's the fact that we run in pretty tight in extended downtime, means we don't make the paper. And that's not good if you're actually selling folding cartons. So I would not expect it. What we will do is we will probably realign some of the activities that we do at that point in time, but that's going to be pretty transparent to the external community. That's really more of a nit and nat for our mill guys. And if Alan Nichols was on the call instead of working in Macon and West Monroe today, he would tell you that all stuff was well within our bandwidth. And then the third thing was, what, MLPs. I have been pretty outspoken about the fact that Graphics is not a leader in the MLP stuff. It's really difficult when you're as integrated as we are to manage the process with MLPs and split our virgin and restock. But because we don't really look at the business that well that way. I mean if there's any juice in that, it's probably the bigger guys, larger cap guys that have got more flexibility than we do and manage it. So we're not actively evaluating MLP structures for Graphic Packaging.

In terms of incremental acquisition benefit, I realize you have synergies from Benson, but can you remind us what would be the amount of EBITDA that you'll bring into next year that you didn't incur this year, because you've made the acquisitions forward through the year?

$10 million to $12 million.

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

Do you know where working capital will come in this year, what are you targeting for maybe?

The key on this is where we're going to end up cash-wise. And we're going to manage working capital to such an extent that we're going to deliver the $350 million in cash flow. I think what you're going to see is that our ratios are going to be pretty much consistent with what we adjusted for seasonality, for where we are in the third quarter. But remember, you need to adjust it for seasonality. Generally, our inventories are going to grow as we head out into 2015, because we're planning for really the beverage volume that's going to come later in the year. So if you're planning for it, you're going to see inventories grow, you're going to see accounts receivable shrink, because business volume is going down. And you're going to see us achieve the $350 million in cash flow from operations as we manage both of those.

Dan is right. We have to build board inventory in the fourth quarter to be able to meet the demand in beverage ramp-up in the first quarter as well as the increase in Europe. So we will need to build it or otherwise we would not have sufficient board stocks as we got into the first quarter to do with that seasonality. So you see that every year and we would be expect to be building board inventory. I mean I'm talking 10,000 tons to 15,000 tons or something like that and we make 2.3 million tons. So I mean it's not repressive, but it needs to be done to manage the business or otherwise you get into a herky-jerky first quarter where you're up and down, up and down, trying to meet customer demand. And we did that a couple of years and it was not particularly fulfilling.

David, you talked about the new terms of the debt, giving you a lot more flexibility around what you can do with the big cash flow profile. Are there any restrictions that you have in place right now or are you going to essentially do whatever you want with the cash flow in the business now?

The senior secured facility we just put in place, which is the bulk of our debt profile, find that once you dip below 3 times leverage, you pretty much have all the flexibility you need to do whatever you want in terms of capital investment, acquisitions or giving back value to shareholders as well.

We're going to close it off. It's after our appointed hour and I'm sure there's other analysts callers you want to get to. So we're going to let you go and then we'll talk to you all in February.

This concludes today's conference call. You may now disconnect.