Good morning. It's great to see all of you here today. It's been a while. Thank you for coming, and thank you for everyone that's on the webcast today joining us. We are going to get started here momentarily. Everyone in? Okay. Welcome. So today, speaking on behalf of Graphic Packaging is Michael Doss, President and CEO; Stephen Scherger, EVP and CFO; and Ricardo De Genova, is SVP of Global Innovation and New Business. Before I hand the call -- the presentation over to Mike, I'm going to go over our forward-looking statements disclosure. We will be making forward-looking statements today. These statements are based on current expectations that are subject to various risks and uncertainties. For more information on these risks and uncertainties, you can go to our periodic filings done with the SEC. Now I'll turn it over to Mike.

Great. Thank you, Melanie. Can you hear me, okay? I need to use this mic, right? First off, welcome. Great to have all of you here with us this morning. Those of you who are in person as well as those of you who are listening on Webex this morning, we're looking forward to seeing you in the next couple of weeks and months that come along here as well. It is nice to be back at The Exchange. It's actually been 2.5 years since we rolled out our Vision 2025 ambitions. And at that time, we didn't even know what COVID was. So a lot of things have changed in the last 2.5 years. And Steve and I thought it'd be a great opportunity to get together with our investors and hold an Investor Day to talk about some of the things we've accomplished which has been a lot over the last 2.5 years as well as releasing our results here in Q4 today. So our goal for the day is really to have you leave as excited as we are about the prospects for the company's future as well as our ability to hit our enhanced targets that we put out yesterday as part of our Vision 2025. Before I get into some of the materials, I want to acknowledge a few of our people who are here today. So we've got Ricardo De Genova here on the far side. Everybody knows Steve. I always say the great ones only have one name, Steve. And then we've got Melanie, who just introduced all of us. We've got Roxanne McSpadden in the back. She's Director of Marketing came up and helped us put the materials together as did Catherine Berich, there's Catherine. Thank you, Catherine. We've got Brad Ankerholz,…

You bet. Thanks, Mike. Good morning, everybody, and thanks for everybody who joined us here live as well as virtually. And let me just take a couple of moments and provide you with an update on our 2021 results and a view into 2022. We were very pleased with our finish. If you kind of stand back from the year, organic sales growth, 2% for the quarter and for the year. Over the last 2 years, organic sales growth to the 3%. If you even go back 3 years, it's at 2%. So now a good, strong track record of organic sales growth, driving basically by the innovation activities that Mike was describing. Our price performance and price execution is in a very good place. We saw record inflation come through the business. We've executed on multiple price initiatives. I'll share with you here in a couple of moments, $850 million of price initiatives that we're executing on in '21 and as we look through 2022. And our capital allocation activities were also very, very strong performance in 2021. Obviously, we'll talk more about Kalamazoo, which we are absolutely thrilled is coming to life and is making commercial paperboard as we speak. We'll talk about our visuals into what's possible there. The 2 major acquisitions closed and operating at or above our expectations. The International Paper partnership brought to a conclusion, and we've continued to put significant capital to work back to our stakeholders. Very briefly on the year, just a couple of things of note here on the upper left. Our sales growth across the traditional food, beverage, consumer markets that Mike was just describing, up 21%, obviously, for the quarter, but up 3% organically. And foodservice, the recovery there, as Mike mentioned, very solid, up 16% for the…

Yes. Thanks, Steve. That was great. And yes, I was joking with Steve in the fall of last year. I mean, no one wants to get older faster. But I was pretty darned excited about January 1 to roll around for the reasons he just outlined because I knew that our operating model would be on full display here in 2022. Like you said, we've got the organic growth that just continues to drive through the business. The acquisitions we did between AR Packaging and Americraft, Kalamazoo coming online and $700 million of pricing taking place on January 1. I actually stayed up until New Year's on January 1 because I was pretty excited about all that kicking in just helping us heal that price/cost dislocation we had there. And the great thing for us is we're not done. I mean there's more opportunity for us out there, and that's really where I want to move our comments now and the rest of the day talking about what we've done and more importantly, what we think we can still do here. And for those of you who were with us on January -- or excuse me, September 26, 2019, we laid out our initial Vision 2025, and it's up here on the slide. And just at a high level, we said, listen, we want to grow with customers in the best markets. It's pretty simple and straightforward. Those are the ones that are getting you to grow over time. They got the CapEx budgets to continue to do it. We said, we'll drive organic growth, 100 to 200 basis points. And we're going to also fund that growth with productivity in the neighborhood of $400 million to $500 million over that same period of time. We wanted to reduce environmental…

All right. Thank you, Mike. Appreciated. Good morning, everyone, and thank you for attending today. It's a pleasure to be here in person for a change that is great. As you saw, we have established a good track record at growing organically through sustainable innovation, and that's how we want to phrase this. So over the next few minutes, what I'd like to do is to provide you with a point of view of how we are going to increase the bar of how we innovate in order to sustain that growth moving forward, and why we have the right elements to win. We have the right capabilities, the right substrates. We have our development efforts that are aligned with the consumer trends that drive those behaviors. And we are developing a multigenerational portfolio of solutions that we'll address those changes. So it's a pretty exciting time. But I want to start by saying that the world's largest brands trusted Graphic Packaging to be the main interface between their products and their consumers. And that's a very large responsibility that we take very seriously. So I'm glad to be here today and most importantly proud to be here today, representing a group that is global of over 120 passionate employees that have the coolest job in the company because we've got the inventive future. We are here to deliver the future of sustainable packaging through innovation. And it's not only simply innovation. It's innovation that is aligned and anticipatory of our customer business needs, the desires and needs of the consumers, but most importantly, that can be delivered at scale. I think one of the slides that Mike showed here -- showed that the size of the brands that we deal with. So we want to bring solutions that these…

Well, Ricardo, you're right. It is a great time to be a part of Graphic Packaging. And your team is doing a great job. If you think about 2020 and 2021, we actually averaged 300 basis points of growth, 4% in 2020 and then 2% in 2021. And 7 out of the 8 quarters, we actually hit our objective of 100 to 200 basis points. So our track record is growing, and I know that's something that I really want to strike home today because we want you to see us as a growing integrated fiber-based consumer packaging company because what we are. So thank you, Ricardo, for your comments. I want to spend a little time now talking about how we fund that growth. And we fund that growth really by driving productivity year in and year out. This is part of our DNA. I think most of you will give us credit for this. Our track record is long and quite frankly, quite accomplished. And we do it in a number of different ways, and I want to spend a few minutes on this slide because we're thinking about this even a little differently as we go forward, given some of the realities we have around labor in our business. If you look at the left-hand side of that slide, what you'll see is automation, which in and of itself isn't new. But we're thinking about that in terms of not doing that to eliminate jobs per se. We're doing that to reposition people that we have upstream in our organization. So people that are now working on the back end and kind of low-skilled or semiskilled jobs, we want them running die cutters at high speeds, printing presses at high speeds, paper machines at high speeds. And…

Thanks, Mike. I'd be glad to do that. We'll wrap up our prepared remarks and then move into Q&A after that. But yes, bringing that all together and looking out over the next several years, as Mike mentioned earlier, we're thrilled that we're able to actually make our goals for 2025 stronger, more enhanced and actually stretched beyond that which we saw was possible back in September with the goals that we're sharing with you today. So what I'd like to do is just kind of give you a sense for what's the path there? What do you have to believe? What do we believe that gives us confidence that this is a trajectory that we can achieve over the next really to 4 years? If you look at progress to date, I'll focus on kind of the 2019 to 2022. The progress that we will have experienced from 2019 to what we expect to achieve here in 2022 is substantial. Integration rates up significantly. We're going to talk about a path to 90%. You've seen us go from 68% to 75%, very significant. Size of the company, up 50%, $6 billion heading towards $9 billion. Margins are going to move significantly positive this year coming off of the price/cost dislocation in '21 to be at or above where we were back in the 2019. Time horizon as such, ROIC above cost of capital on a path to being more significantly. So -- and you can see a more than doubling of EPS on an adjusted basis even stronger as you look at it on adjusted excluding the amortization. And as Mike talked, what we want to talk about a little bit too is the utilization of capital, and I'll come back and talk about that momentarily. But the progress…

Yes. Thanks, Steve and Ricardo for helping bring the Graphic Packaging story to life with me today on the stage. Those are our prepared comments that we had, and I'm hoping that we leave you with the presentation we gave more inspired about like we are, the prospects for our company's future, the opportunities for growth and value creation here over the next few years. With that, what I think we should do is take about a 15-minute break and then come back and importantly, get into Q&A. So I don't have my watch on, what time is it? 10 -- come back at 10:40. Okay. So why don't we come back at Five to? 10:55. That would be great. Thank you so much. [Break]

Okay. Welcome back. For those of you on the webcast this morning, you can go ahead and put a question on the right-hand side of your screen. Please submit your questions and we'll get to you time permitting. We'll start this morning in the room. [Operator Instructions] Catherine, who's on that side of the room and Roxanne over here will pass microphones around. We'll take 3 to 4 questions in the room, and then we'll move to the webcast to take a question and we'll go forth. Okay.

This is Phil Ng from Jefferies. The bridge looked pretty reasonable for 2025 and the cash flow is coming through. The one question I had is your assumption for price cost was neutral, which is pretty reasonable. But you're adding a fair amount of capacity on the CRB side, I think it's about 10% for the broader industry. Your ability to kind of keep that price cost algorithm intact, certainly, you guys have a much lower cost profile than everyone else. And then if a potential new entrant is certainly adding some FBB capacity, SBS from a return perspective, has been a little choppy in the past, but your comfort and your confidence to kind of maintain supply/demand in the next few years?

Yes. Thanks for that, Phil. Why don't I take a cut? I'm going to split those apart. I'm going to talk about CRB and then we'll talk about FBB here because it probably warrants a deeper discussion in terms of what that is for some of the investors that may not be as familiar. But in terms of CRB, I think the distinction I'd ask you to remember that I talked about on that slide, is we're not looking to take those tons to the market. We're looking to drive the tons that we're going to generate by keeping Middletown running through our own internal operations. And we're also integrating in 30,000 tons of URB that we're buying from others. And so those 2 things, along with the growth that I talked about, and I gave you a few examples of what that looks like, gives us confidence that, that actual CRB market is going to grow. I know that might seem a little counterintuitive to some of you who've been around for a while. But if you really take a step back and think about what's happened over the last decade, there's been a big movement out of CRB and into CUK in many ways. And we had CUK capacity in both Macon and West Monroe. Graphic Packaging led a lot of that. There were a lot of old machines that were close to end of life, and they just went away. And so what you're seeing with the new modern machine with modern cost profiles, we're actually able to bring some of those materials back into CRB, and it helps us grow our business. Again, we're not looking to take those tons to the open markets. We're looking to run that business through our integrated packaging operations with sales and orders we already have and commitments from customers that are already online.

And the only thing I'd add to that, Phil, and just maybe a different way to think about it is we just talked about a couple of hundred thousand tons. Think about it in the context of our 4 million. Because at the end of the day, we've got a growing platform, and you've seen us make moves in and out of substrates. And as Mike was just saying, we took things out of CRB, moved it to CUK. We've got a very significant growing CUK platform. We may elect in that environment to move some of CUK into CRB. So you've got to really think about it as a portfolio, which means then you're talking 4%, 5% growth in capacity with us growing 100 to 200 basis points a year. I mean, it's there and it's supported by our organic growth. And so I think it's a distinction that's kind of an important one. That's how we think about it in terms of how we think about the overall portfolio.

Yes. Thanks for that, Steve. And I think maybe on FBB, it makes sense to kind of go back a little bit on this. And maybe I'll describe FBB for everybody, just so you know what it is, and I'll talk a little bit about what Phil has referenced in his question, which is a good one. So thank you for asking it. FBB stands for folding boxboard. Folding boxboard is the predominant virgin sheet in the European market. And it's different than SBS because it's a 3-layer sheet as opposed to a 1-layer sheet, which is the predominant way SBS is made in North America. So on that 3-layer sheet, the middle ply is actually thermal mechanical pulp. And so you take wood logs in particular, and they're ground down and that goes in the middle ply, and it creates a lot of bulk, okay? So the middle ply is where you get the bulk or the caliber on that particular grade. And then chemical pulp is applied to both the top and the bottom layer. So you got a 3-layer sheet, similar to what we're doing in Kalamazoo on our coated recycled paperboard machine. So we know a lot about 3-layer paper machines. We buy, by way of reminder, over 300,000 tons of FBB in Europe every year now with the new acquisition we did with AR Packaging and our existing operations. So we convert a lot of it. We know a lot about the sheet. And we've got a lot of familiarity with it in terms of running it through our carton operations. In Europe, there really isn't a pure CUK sheet. So it's FBB and it's what they call GD board, which is our equivalent to CRB. So there's 2 primary substrates in Europe. In the…

Yes. No. And I think the only thing that we'd add because I think just in terms of kind of factual base, fact base, there's been some conversation around wood cost and wood cost advantage. And I think one of the things that's just relevant for that conversation is I think the public discussions around advantage wood costs were advantaged versus Sweden. I think what you really want to look at is what's the cost structure of wood in the United States. And obviously, we spend a lot of time on that in terms of our competitive advantage. And on a cost basis, the Southern U.S., with where we're located is modestly advantaged from a wood perspective, from a wood perspective versus the Lake States. And so as Mike was mentioning, overall quality of the paperboard -- of the trees themselves fits with what we're doing relative to CUK. But there's just a point of clarity that the Southern United States, where we spend our time, obviously, is modestly advantaged versus the Lake States. So I think there was a comparison there. It's just a point of clarity around kind of how we think about the inherent raw material that services our CUK and SBS mills.

And to that end, we actually did a study on this because we were getting a lot of questions. And it really shows -- we hired a company called Forisk, which is one of the leading forestry consulting firms out in the United States, North America, really. And they did a nice study for us, and I think we'd be willing to post that on our website, so you can kind of see what we're talking about. The length of the fibers are a couple millimeters shorter than the loblolly pine. You can see the relative costs and renewability there as well. So look, it's something we have to deal with, but we're going to have a very powerful company that is well positioned to be able to do that. And again, 2025, 2026, that's a long time from now. A lot of things are going to happen between now and then. The most important thing is this market is going to grow.

George Staphos, Bank of America. Two quick questions here. One, to the extent that you more or less answered this through your presentation, Mike and Steve, what gives you the most comfort over the next, whatever, 3, 4 years that the line to 2025 will be, in fact, more linear than cyclical, recognizing, look, the paperboard business has some cyclicality to it. There are no guarantees in life. Of the things that you mentioned, what gives you most comfort in that regard? Relatedly, the 5% to 7% of sales now that's being directed to CapEx and slightly nudging up from the 5% you were at previously, will we see that more around -- and I recognize you can't get too much into this live mic. But is it around these new developmental pulp lines and fiber projects? Is it more around making sure you're integrated so that you've got that larger moat against potential new supply? And then a quick one, with the pickup in the CRB, which already was at a huge backlog as of third quarter, where did you get it out into the 10 weeks? Where did it come from, just supply constraints or we've seen the demand pick up?

Yes. So let's take the last one first because it's the easiest -- the shortest answer. It's really the conversions that we're talking about. Those conversions are coming online and drawing a lot of demand as we're integrating and filling the pipeline for customers that have made those conversions into coated recycled paperboard. We took some of our CUK, as I mentioned, George, and had to put it in CRB because of just balancing out our profile. We've got the ability to do that because we make all 3 substrates, and that's how we think about it. So that one is the answer I'll give you there. I'll hit these and then you can put a finer point on it. I think the way we think about it in the case that we made today is around the circular economy and the move towards that by the principal markets we operate in Europe and North America by the end-use consumers saying, "I want to support these types of products with the types of things I buy. And it's really creating more opportunities, whether that's foodservice or conversions out of foam and into paper, that create a backlog, George, that is different than what we've experienced, certainly even in my career, around a tailwind there that is giving Ricardo and his team a nice funnel of things to attack. And so because of that, that's what really gives us confidence in the 100 to 200 basis points that we put out there. And I think we've been pretty reasonable around that, particularly given the last year, we averaged 300 basis points. And so when you look at how that kind of plays into the waterfall that Steve laid out there, it really does -- if we earn on that volume, it's…

Yes. I think the only thing I'd add to Mike's comments, George, is if you look out over the next couple of years, specifically from kind of where margins should be as we kind of walk out of '22, we can see the ongoing growth that we've talked about. In other words, the organic continuing to earn on that and getting the return on the investment that we've made, particularly in Kalamazoo. I mean that -- those 2, which are linear, if you will, the linear start-up as well as the organic, over the next couple of years, that 100 to 200 basis points and the earning on what's been a patient investment in terms of the patience to now earn on it, those 2 alone really drive good confidence, particularly over the next 12 to 24 months of margin enhancement coming through the company.

Anthony Pettinari from Citi. Mike, Steve, understanding that the '25 goals are company-wide. I was just wondering if you could maybe compare North America with Europe from an ROIC perspective, EBITDA perspective, maybe where you have more wood to chop. And you've done a lot of work in America to improve pass-throughs, tighten up lags. Do you have sort of similar work to do in Europe? And then maybe just finally, from an acquisition perspective, in terms of availability of assets, valuation ability to get synergies, which is the more attractive market here?

I'll start, and then we'll just tag team on that. I think just in terms of the return profile and the growth profile with AR Packaging and now a couple of billion dollar infrastructure in Europe, we really like the growth trajectory of the European platform, really the international platform. A lot of it, as you heard earlier, in Ricardo's comments, a lot of the early growth we're seeing is coming from Europe. And so PaperSeal, KeelClip, I mean we're seeing -- so our European platform, we expect it to grow at, or above the kind of rates that we talked here. And as such, the return profile is at, or above where we're at as a company. So in other words -- and they're not -- the variations are relatively modest. We're talking close, so there's not a big distinction. But overall, we really like the growth trajectory of this larger $2 billion-plus footprint that we have. And we're seeing that, I think, it's fair to say. Obviously, when it comes to the acquisition component to it, we'll be very thoughtful there as well because we'll be asking ourselves, does it drive integration? Can we see the 2 to 3 turns of improvement that comes from it? There are options that exist both in Europe and in the Americas to continue to drive the integration rates up. While it's reasonably consolidated, there is optionality on the converting side to support kind of that move that we talked about there, kind of going from non-acquisition-oriented to acquisition-oriented.

Yes. I'll hit that. I think the -- I'd tell you, and you saw that actually with the paperboard prices going up pretty quick, that pricing goes right through. It's because AR Packaging was largely -- well, it was just a non-integrated converter. So they had to add those terms to pass that stuff through relatively quickly. Terms are good, relatively speaking. And I appreciate you referenced, we made a lot of progress last year in North America in a solid market. And if -- it really created a platform that allowed us to be able to do that. And we did not let that go to waste, and we're going to be very thoughtful going forward how we continue to tighten up those terms. I think the other thing, Anthony, that we've got now with Europe and the U.S. And of course, we've got a smaller Pac Rim business and then one in South America, too. We can approach a customer as truly a global partner for paperboard. And that creates a pretty level playing field for us, where sometimes in the past, we might be disadvantaged because we're only in one geography, we're able to kind of use our platform to kind of scale to create a more balanced set of negotiations with the given customer. So I think that's something else I'd ask you to think about that's a new capability for Graphic going forward here, too.

Did we hit everything Anthony?

Okay. I'm going to take one from the remote audience. This is from Ghansham. Ghansham Panjabi of Baird and he's thanking you, all of you for the event. There are several questions. I'll do 2. First off, how would you characterize your current new product backlog versus the pre-COVID baseline?

Go ahead, Ricardo.

Yes. so I think one of the things -- and first of all, thank you for the question and for on connecting remotely. So if I understand the question right, in terms of our development pipeline, pre-COVID and -- COVID for us in terms of innovation was a nonevent because what we are trying to do is to create a pipeline that is strong enough to take us through these economic cycles. So we created and we have this front-end innovation funnel that is multiples of the results that we want to deliver at the end, understanding that not every initiative that it starts goes all the way through the end. So we feel very comfortable and very strongly about that pipeline. Also, during a period when the industry stops or the world stopped, that gave us a lot of opportunity to do internal developments as well. So we put our best brains to work in terms of material science. And I keep referring that as one of the biggest competitive advantages that we have from an innovation perspective because we create a lot of knowledge relative to how paperboard behaves in the final application. So we feel pretty good about it, that didn't have a big impact and we launched a bunch of new products during the pandemic. So we feel pretty good about it.

I think the other thing maybe, Ricardo, that you guys really did a nice job on here is that you embraced the technology tools that allow us to move information around the globe in a much faster way. And of course, COVID created that as a necessity, right? We all had to go virtual. And the question was how do you do that quickly? And what that allowed Ricardo and his team to do is really real-time move these trends around the globe. And that gave Steve and I a lot of confidence when we were looking at AR Packaging around a truly innovative company in Europe that, given the fact that Europe is ground zero for circularity and sustainability, that we could do the same thing and move those trends faster and you're starting to see some of that in the products that we're looking at here. And I know we'll pick up on that momentum as the year goes on.

Yes. And to speak of those trends, if you look simply at the size of the total available market, for innovation, right? So with the AR acquisition, we went from $7.5 billion to $9 billion. And I believe that when we came here in 2019, that estimate was $5 billion. So we continue to find opportunities, primarily driven by plastic substitution, and you see that as represented here at the end -- at the back of the room. But we see that continue to grow, and that gives us even more momentum to find development opportunities to bring these innovations to the market.

Okay. And more, Steve, this one is for you. A few people have written in about this. The $200 million in potential inflation. If you could just talk more about what that encapsulates and some of our assumptions?

Yes. No, I'll be glad to. I think what you kind of saw and what we shared there is, on a run rate basis, when we kind of pulled it together, we know the paperboard inflation in terms of what we purchase. And the $150 million beyond that, so the $150 million -- the $150 million beyond that was kind of what we knew was the run rate heading into the year. And we're going to see -- I'll talk about kind of the quarters here just to help with that answer a little bit. But that was the $300 million that we had real line of sight to and knew. Given the realities of what we saw in 2021, we don't know what could conceivably run as we've seen in the past. And so really, the $200 million was a what's possible. And -- but it's not pointed at any particular commodity. It's not. It's more of a listen, if we saw another 10% move up on what we spend -- 8% or so on what we spend to acquire commodities, we could see that level of inflation. But we're not predicting it. As I mentioned in the remarks, the mark-to-market for us right now, based upon where everything has landed is about $320 million. So that's kind of where we are today based upon what we have line of sight to. But we've seen inflation become -- get on a tear at times. And so we just wanted to make sure that we were putting this into context about what was plausible. We will see, just to kind of put it into Q1 for just a moment, the $700 million of price that we're executing on, we're going to see $200 million of that in Q1. And we do expect inflation to be material, probably in the $150 million range for the quarter coming off of the $140 million last quarter in Q4. So because inflation ran when it ran, the highest year-over-year is very likely to be in Q1. But we're going to pivot to price/cost positive, which gives us confidence in the overall price/cost positive. It gives us confidence that we will inure that benefit starting right here in Q1 and given that we're in mid-February, we're seeing that come through our results mid-quarter.

And really because of that uncertainty, Ghansham, that's why you've seen us so aggressive in terms of our overall pricing. We've continued to push pricing and we've got pricing actions out there on all 3 of our grades right now because we don't know for sure. Our backlogs are strong. Demand is really solid. We're very busy. And so it makes sense for us to continue to push and pursue that given the uncertainty that, quite frankly, the operating environment has been over the last 24 months.

Kyle White with Deutsche Bank. A question for Ricardo on the innovation. I appreciate all the details with the PaperSeal and the OptiCycle cup. I believe you said the OptiCycle cup uses a water-based coating, but the PaperSeal still has a plastic lined coating that you peel off. Is there anything in the pipeline and innovation where you could have a water-based coating on the product similar to the PaperSeal that -- and keeps the product -- keeping it shelf stable and able to go through the grocery retail channel? Just any details on what you guys are working there?

Thank you very much for the question. I appreciate it. So let's talk a little bit about PaperSeal and the applications where it goes. So we started, like I said, in vacuum sealed packaging applications, modified atmosphere packaging applications. And we recognized that to go from point A to point B, sometimes it's not a straight line. So we -- ideally, and our objective is to go to an architecture for that particular platform that is going to be entirely recyclable, compostable, et cetera. But we are not letting the perfect be enemy of good. We're seeing the sustainability as a journey, right? And we're making improvements as we go. So if you think about the fact that as a first step, we are able to go from 100% plastic to 90% paper, right? That is already a very good step. This is one point. Second point is, as I mentioned in my remarks, we are constantly working internally, but we are now being much more deliberate about working with external partners to develop this new step-changing innovations that are going to enable us to get there. If it's going to be a water-based material or some other type of application, it's yet to be determined. But we have currently active projects in place to make sure we take the steps in that direction. And the prospects are very good because technology continues to evolve.

Gabe Hajde, Wells Fargo. I'm curious if you can talk about, I guess, the conversion -- the pace of conversion across some of the different end markets that you serve? And I'm specifically thinking about foodservice relative to kind of -- not center of the aisles, but just the grocery store channel. And any investment that's needed to be made on your customers' behalf to adapt a paper or fiber-based solution versus foodservice, where it seems like it's probably a little bit easier to replace a clamshell. It's just a different purchase order?

Yes. Thanks for that, Gabe. I'll hit it and you can put some color on it. I think you're right in that it's a lot of hand packaging type stuff. So it doesn't have to go through some of the trialing that takes place on the foodservice side. Having said that, you'd be surprised at how integrated these QSRs have their overall operations. And as you can appreciate, Gabe, they want to get that drive-through out right away. So anything that slows them down is a problem. It needs to be worked on. And so we're learning more about what that all looks like, and we're working with our customers to help them with some of those time elements around the packaging that they use. As I mentioned in my prepared remarks, in certain jurisdictions, I mean it's statutory they've got to get out of some of this plastic, single-use plastics. And so they're working quicker on that type of thing. And then there's a longer pipeline around foam to paper that's really one of our primary focuses, certainly on foodservice. But what I mentioned that sack to cube conversion over there, what I think you see on some of that stuff is when it happens, it's a big number. It's 40,000 tons. That's like half of one of those smaller CRB mills all at once. George asked the question around 10-week backlogs, that's the kind of thing that occurs. And the customers want to do that, but they can't have a 10-week backlog forever. We've got to shorten that down because they don't know the ability to be able to predict their demand and their pull. And so that's why we're excited about our Middletown mill continuing to run, because it's going to help us make sure that we're able to service our integrated carton operations with those types of conversions that are kind of ongoing. So I don't know that we can really parse it down to any one thing. I think that's probably what gives us competitive advantage because we're trying to work all of them but be focused on how we're working all of them. As I talked to Ricardo about -- when he took this job, we just need to make sure we're not the dog chasing every truck that goes past the farm. So we try to neck that down into the critical few in each one of these platforms that really can move the needle. And I think we've made pretty good choices along those lines. I guess you could ask, well, could you go faster? If you add more resources, we have those kind of debates internally and with our Board. But look, so far, so good, 300 basis points over the last 2 years.

Yes. And just to bring an example to life, because I mentioned the way we operate in terms of innovation. We don't look at it from a -- it's an R&D perspective, right? So we have certain core competencies in terms of material science, machine engineering and design. So let me give you just an example where we are using all these in conjunction. I mentioned that we're going to come to market now with ProducePack Punnet in the U.S. for snacking tomatoes. So if you go to the supermarket today, it's going to be a clear plastic with a film lid, right, that is used to package those tomatoes. We were smart about it. We developed a design and configuration that enables the growers to use the same sealing equipment that they currently have to run a paperboard option instead of a plastic board, right? So we are looking at this holistically, and looking at the geography dynamics as well. So we don't take the one-size-fits-all approach because we have a portfolio of solutions.

Thanks for that. And then one, just because earnings are married up with the I Day presentation. Maintenance costs, I don't think I saw anything specifically in there. If you can just give us a view for what that looks like relative to 2021. And then the TRA payment, I think, was 109 this year. Is there anything left on that? And then your perspective on cash taxes. I think you said $60 million to $80 million this year, how that trends over the kind of forecast period.

Yes. No, let me touch on those. Cash taxes from a U.S. cash taxpayer, very modest in '22. We expect to be modest in '23. We would expect to have some ramp-up beginning in '24. And so that's kind of the trajectory there. Remind me again, say that again, the other one, I want to make sure.

Tax receivable.

Oh, the tax receivable. Yes, that's behind us. Yes, everything with International Paper is now complete. So the tax receivable agreement that we had in place in '21 is part of the debt structure of the company. And so no change there at all.

And maintenance?

Maintenance, it's in the back of the materials back in the appendix, it's fundamentally flat year-over-year. There's a little bit -- Q1 is flat to last year. There's a little bit of plus or minus $10 million and $20 million. But overall, our planned maintenance for the year is flat year-over-year.

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

David Paige from RBC. You mentioned the benefits of being a global company after the AR Packaging acquisition. So when you get back to your target leverage of the 3, 3.5x, do you have plans to do another significant acquisition? And what region would it be or what end market? Do you have any color on that?

Look, I think the first thing we have to do this year, to your point, is pay down the debt and get our debt down to our established range of 2.5 to 3x, and Steve took you through kind of our plan to be able to do that through a combination of EBITDA growth this year, and free cash flow being applied to debt reduction, as CapEx normalizes with Kalamazoo in our rearview mirror and ramping up. In terms of markets, like we said on the slide for partners, best customers, best markets, those haven't changed. They're North America and it's Europe. And Europe is still a very fragmented market. For us, we're the #1 market share, but we're 21% or 22%. So there's a lot of work still to be done there. We're happy to be there. And as the other thing that I'd say in terms of capital allocation that we'll look at over time, and Steve outlined this too, is we're buying 1 million tons of paperboard, a lot of those tons are in Europe. What's the best solution for us over time to drive our integrated model? We can continue to ship stuff out of the U.S. there. We could ultimately look to acquire a mill. It's not a strategic mandate, but it's something we would look at in the context of any other capital equation. So I think you'll see us continuing for the next 2 to 4 years for sure, focusing on those principal markets of North America and Europe, and not moving materially outside of them.

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

Okay, we can take a couple from the audience. This is from Adam Samuelson of Goldman Sachs, also on capital allocation, and you'll like this one. Assuming you achieve your targeted deleveraging in 2022, your stock does not seem to be barely reflecting the growth potential of the company longer term. How, if at all, could share repurchases factor in the capital allocation in 2022 and 2023?

If we're not appropriately valued, we'll buy back the company. I think it's just one of those things that we -- you've seen us do that over time. It's one of the tools that we have available to us. And so we have a forward view of the company, and the investment community will determine the value of it. And it's a tool that we'll utilize if we believe that it's the right one. We do have job one here in 2022 is to move the leverage back down approximating that 2.5 to 3x. We see the line of sight to make a big advancement to that direction. But we'll always be -- and it's why it's balanced, and you've seen us do it in the past a few years ago. We bought back 20% of the company when we were at $12, $13 stock, and we believed in the future value creation. So it's always a tool that's available to us, yet we're very confident in the return profile of the investments that we know we can make into the business to drive the organic growth, to drive the margin improvement up towards what we see as possible in today's Vision 2025 goals.

Yes, I think, Adam, look, thanks for the question. I agree with all the comments Steve made. I think the biggest thing we're going to do in 2022 is have another year where we deliver on that growth. As I said, 7 out of the 8 last quarters, we've done that, 300 basis points. Sooner or later, we need to start being able to get credit for the fact we're a growing, integrated packaging company. And as I mentioned in my prepared remarks, we've got a cash-generating engine that's very solid and gives us a lot of optionality. So Steve profiled the various different allocations we can do, and we'll do those as we always do in a very thoughtful manner over time. But we recognize we have to earn that, and we think this year will be a year where all the things we've done to get to this spot are really on full display. And I think that will be pretty exciting for our investors and our shareholders that have been with us over that period of time. We really do appreciate it.

Okay. And one more from Mark Wilde of BMO. Actually, 2 questions. Can you update on prospective Texarkana conversion? And applicability of new K2 board for wet strength packaging and with digital printers?

Yes. Thanks for that, Mark. I appreciate the question. In terms of Texarkana, we had talked about doing that project this year. We're too busy. We need all the SBS that we have right now to run our business. And if we were to take that machine down in Texarkana and do that conversion, we wouldn't service customers. So we made the decision to delay that. Certainly in 2022, we won't do it. We believe it's a great project still we need more CUK. It's another option we've got around some of the things Phil's question earlier around our big virgin mills in the capital that would be above the 5% towards the 7% range that could have real solid returns for us. So we've actually purchased a curtain coater, we're going to store it for a while because right now, we're just -- we need all the tons that we have to be able to operate the business. And what was...

Kalamazoo, in terms of optionality.

Thanks, Mark. Yes. So as you can appreciate, right now, we're running kind of more standard CRB because we want to crank the tons and get the crews real comfortable with the ramp-up on that machine. Having said that, there are options for both freezer grade material that we think could be really interesting for some of our customers as well that have expressed interest as well as a beverage grade that could actually work along those lines. The beverage grade most likely would probably be something that we would look at for Europe. It gives us some good optionality there, and Joe has got some pretty good ideas there. But right now, focus is really around ramping up that machine, getting Battle Creek down and delivering our $50 million of synergies this year with that run ramp going out into '23 and '24. And as we get more and more comfortable with that, we'll look to create some more capability as we're on that journey.

And to Mike's point, and it's an important one around CUK, we have such strong growth for CUK paper-based packaging globally, and we're highly integrated. We're a buyer of CUK-type board in Europe. We prefer to service ourselves. And so the opportunity and optionality to -- Mark, to your question to potentially move demand that's currently in CUK into CRB, where we have the need and a freezer grade being a nice example, allows us to service ourselves and our growth around the world. And so that's again why this 4 million-ton infrastructure is so critical because those are the levers that we can pull between and among, to Mark's question, around what's possible relative to where those substrates apply relative to the markets in which they participate, all driven by the fact that the demand growth is there. One here from or George again.

George Staphos, Bank of America. I wanted to, Ricardo, piggyback on the question I think Kyle had started on, on OptiCycle. And I remember, OptiCycle was supposed to be commercialized starting in 2020. Now COVID might have had a big impact in terms of that rollout. But can you talk about where the rollout might have been delayed if you, in fact, believe that? Generally speaking, when you look at new products, and you often say you're not going to win every jump ball. Of the jump balls that are out there, your product versus plastic, how many of those are you winning would you say? And when you don't win recognizing it's the minority, I think, based on what you had on the slide, what are the things that brand owners push back against paperboard for plastic? And then last one from me. Just with all the tension geopolitically in Europe right now, you do have a few facilities that are relatively close or in the region, what are your contingency plans for running Europe?

Thank you for the question. Let's start with OptiCycle, it's just a matter of correction. We launched OptiCycle in Q3 of last year, so 2021 and not 2020.

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

Yes, he talked about it.

Yes, yes. So that's really what you're referencing there. And we do have the capability to make those, but that isn't really where the customer wants to move to because they see that as more of a synthetic plastic.

Correct. Yes. And in terms of OptiCycle, so we have currently, as you might imagine, a paper cup has a lot of engineering behind it. So these brand owners want to make sure that they do their due diligence in terms of market testing, acceptability, performance, et cetera, and that's a time-consuming operation. So we are very confident that we're going to start seeing commercializations now in the first half of 2022 for OptiCycle.

Yes. And in terms of the Eastern European footprint, we actually have 2 facilities that are in Russia. I think we calculate the revenue to be around $125 million. And it services all Western companies, principally some health care and tobacco applications. And so yes, we're working on contingencies like everybody else is around what that would look like, but it's a relatively small part of our overall revenue stream. I think the bigger implications would be the energy shocks and things like that, that would go through both Europe and the U.S., if that was to happen. And of course, we'd have to respond to that with pricing that recovers those types of things. And in a market that's as tight as this one is, we would do that. Like Europe is currently doing right now, they're paying over $30 an MMBtu for natural gas versus us paying what we think is high at $5 in MMBtu. So I think, George, that's the most, most likely scenario there. Not that we can predict what's going to happen on a geopolitical standpoint, but we're thinking through contingency plans. And again, it's a pretty small part of our portfolio.

And jump ball's would be, estimate?

It's a great question, and I appreciate you framing it that way because we do say that. We never would expect that we'd win every jump ball. It's a competitive market. Packaging is always going to be competitive. There's been a couple of our QSR customers that have actually moved a portion of their cups into plastic. And the reason they've given us isn't really around the sustainability side, it's around cup consolidation between their cold drinks, their cold coffees and their cold drinks, which again, to Gabe's question, creates a faster experience and less SKUs that they've got to have at the store. So that's been the rationale that they've provided to us. And I mean, you'd have to ask them around how they're thinking about that from a sustainability standpoint.

Yes. I think, George, again, to your question as well to both of you, kind of around the jump balls. I think what we would say is that in the world of beverage packaging, the conversions into fiber based, those jump balls are being won very significantly. In other words, the moves are happening. If you talk kind of at the perimeter of the store, if a decision is going to be made to move away from the existing product, we're seeing a lot of wins on the perimeter of the store, moving out of alternatives, resin-based into fiber. The QSR foodservice area is where you do see some jump balls that go up and go the other direction on occasion, just as Mike said, because someone might be making an SKU rationalization decision in the center of the country where they believe that that's the appropriate balance decision to make, and we see those happen on occasion. I would also say that in the areas of, like e-commerce and some of the pet food and the like, we're seeing real movement there positively towards the fiber-based solutions. So on balance, it's the confidence we have in the overall organic growth profile. I'd say QSR and foodservice is where you'll tend to see -- and in the world of cups is where you'll tend to see, on occasion, those things maybe move one way or another.

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

Okay. I've got a couple here. Mark Weintraub from Seaport. He says he understands that you are assuming price to cost in 2023 through 2025. That said, is there a potential cushion there? And as much of any success on February boxboard pricing initiatives will show up either later this year or in 2023?

Yes. So thanks for the question, Mark. It's always difficult for us to try to project our pricing in the outlying years. As I mentioned, in terms of the actions we're taking right now, we've got a $50 a ton increase on all 3 substrates effective really back in January. It will be scored on Friday night by RISI. And so we'll see what they say. We know what we've done. I've given you some insight into the backlogs of our 3 substrates, and the fact we've been very aggressive around our pricing actions because we just don't know what the future holds in terms of those types of things, and supply and demand is in really good balance for us, meaning there's a lot of demand for the tons that are out there, and that's why you're seeing some of these grades continue to go out in terms of the lead times. So we expect that we'll continue to be very thoughtful and measured in our pricing activities, and it's all centered around supply and demand.

Yes. And I think to Mark's question, right, consistent with what Mike just said, this year, we will fully recover the dislocation, either at or above full recovery. What we wanted to convey is between '20 -- beyond '22 to '25, it's not required to be a net positive, if you will. Neutral gets us to a spot where we can then earn on the other components of driving the march, if you will, towards 2025.

Okay. Let's do another from the remote audience. Arun from RBC Capital Markets says it appears you were able to increase your 2022 guidance range slightly even in the face of rising inflation pressures. Would you attribute that to mainly a slightly better-than-expected volume outlook, which also helped you beat Q4 estimates? And then what else would you consider as the swing factors in guidance for 2022?

I think what I'd focus on is, as Mike was just touching on, price execution throughout 2021 and into 2022 has been very good, meaning that we're obviously operating in a very good, balanced supply-demand environment. We've seen inflation. And as such, we've really worked the entire portfolio of price actions. A portfolio of actions, it's not just about RISI recognition, it's terms, conditions, cost models, renewals, negotiations. And it's that portfolio of pricing initiatives that gives us confidence in the $850 million, which is meant to cover and recover the realities of the inflationary environment. And so I'd say that, that, coupled with the demand being strong and the 200 basis points of growth, that combination really has inured the inherent value. And the teams did a phenomenal job of operating in a very difficult supply chain environment. And that's really applause goes to really the day-to-day.

Cleve Rueckert from UBS asks how, if at all, will you manage the newly acquired European business differently from the U.S. model?

Yes. So thanks for that question, Cleve. I mean as you heard me say, we're sending really one of our most experienced operational leaders over to Europe, and he's already lived in Europe for 4 years. So he knows that market quite well. That combined team is really a combined team, a lot of AR Packaging folks. As I said, 5 out of the 8 positions at the general manager level are filled by members from AR Packaging, as well as our CFO for Europe, who will work directly for Joe. So the primary difference in how we operate those businesses is that one is much more integrated than the other, meaning that we don't make the FBB board right now, so we buy that. We don't make the GD board, so we buy that. We ship over our CUK board, so that feels like an integrated piece. And as I mentioned, this year, that number will be over 250,000 tons that will ship into our European market as that market continues to grow the way Steve just talked about for our beverage business. So there's not a lot of difference in terms of our governance structure in terms of how we operate the business between what Maggie will do in North America, and what Joe did there before and what Joe was going to do in Europe. What I'm really excited about for both of them is the overlap on the customer set is almost 50%. So think about that for a minute. I talked about that with Anthony's question around how we look at these customers in a more global fashion. They will actually share some of the negotiation and commercial aspects of the job, given the geography where the headquarters is in, and that's going to create some real scale for us, too, in a closer touch point with people that are knowledgeable about those markets and able to kind of balance the workload. So I think that's really how I'd ask you to think about it, Cleve.

Got one back here. Why don't you yes, there you go.

Jesse Barone with BMO. Just on beauty and health care, I guess, first, I recognize that it's pretty small and you guys are pretty new to the business. [ Clearly ], one is it a long-term business for GPK? And two, if so, where could it eventually grow? I know it's only kind of 4% or 5% of the business now? Could it be kind of a 10% of GPK in the future?

Yes. So thanks for the question, and you're right. Right now, it's a bet. Think about it as a bet. But we were thrilled to get it when we acquired ARP, because Steve and I have been making cartons a long time. What we know is that you just don't try to make health care and pharmaceutical cartons in Kalamazoo, Michigan. It doesn't work, right? I mean they make cereal boxes at incredibly high speeds and high-speed web presses. This is a high touch, very detailed selling process. Leaflets have to be printed on paper. There's -- in some cases, you got to do embossing to put Braille on it so that the consumer can actually read it. You don't run it in facilities that aren't set up to do it. And so the fact we acquired a number of these facilities and the commercial people that know how to do it in a meaningful position, the #4 position in Europe, $250 million, we're looking to learn. And we do think we can scale that business over time, not just in Europe but hopefully eventually here in the U.S. It's a very fragmented business, as I mentioned, a lot of small converters in the neighborhood of $50 million to $100 million that service that business. But we've got a lot of experience kind of rolling those kind of spaces up. So I like your number. It's kind of the number that Steve and I were talking around, could this be a 10% business, $1 billion business for us over time? Yes, we think that, that probably is true. It uses paperboard we manufacture, mainly the bleached paperboard that we make here in our mills in Augusta and Texarkana, and it's a big market. You saw Smithers, they basically calculated between Europe and the Americas that it's somewhere in the neighborhood of $7 billion all in between health care, pharma and beauty care as well. So yes, we like it, and we're going to learn a lot over the next 12 months.

I've got a few more. Brian Hawkins of Millennium Management. It's a clarification question, Steve. He wants to know if the $320 million in inflation, mark-to-market, does this include the $150 million from external paperboard? Or does it exclude it?

No, that's inclusive. So think of it as $150 million and $170 million across the kind of non -- non-carryover. So no, it is not -- so I'll repeat, it's not $320 million plus $150 million, it's not $470 million. It's $320 million for the total basket of commodity costs. So we're -- right now, mark-to-market, we're at the low end of the $300 million to $500 million based upon what we know. And so that's being very specific to the question. And thank you for asking it if there was any uncertainty around or that wasn't clear.

Okay. And then Beth Mallette from Manning & Napier asked what do you think is the potential for additional unprofitable paper mill conversions to profitable paperboard mills to be announced, similar to the Verso announcements?

That's a tough question for us to answer. I mean over time, you do see conversions. And I know when they happen, it's like this big shock and awe and for good reasons because people worry about the supply and demand dynamic. But what you have to remember, as I said in my comments, is how much money you're going to spend? How much time it's going to take? Where are you going to be on the cost curve? And most importantly, who are you going to sell the product to? And again, what Graphic is going to be by the time that next machine comes online is, aspirationally, we're saying we're going to be 90% integrated. We're going to have some of the lowest-cost virgin mills in North America and ultimately in the world by definition along those lines. And we know we've got the lowest-cost CRB machine. So people have to think about those types of decisions when they make those calculations. Not to say they won't happen. Clearly, we have one going on right now. We'll see how that turns out for them over the medium term. But we know that we've got a lot of cash flow generation that's going to give us optionality over time to continue to strengthen our business. So I think it's probably manageable. And I think what you should also think about with Graphic is we're not just working the top line on price just because we got a good market here. We're working the bottom line on cost. And we put a lot of money to work in Kalamazoo to create the world's lowest-cost, highest quality CRB mill. We already had a good market there. And we got some questions, rightfully so, from somebody, is that a great allocation of capital? As I said, I like it better now than when we did it because it creates this growth opportunity for us. And many of those assets are small, they are at the end of life, that, and their capabilities are very, very limited on that, the FisherSolve chart you saw. So that's how we're going to do it. We need to work both the top and the bottom line. If we do a good job with that, our customers will let us earn towards 20% EBITDA margin. If we do it all on price, sooner or later, someone comes in and disrupts us. And that was really one of the things that was on our mind around CRB over time, to be fair. So I appreciate the question. It's something we will have to deal with from time to time. But with the strategy we're developing, being an integrated packaging company, we think that over the medium and certainly long term, we can win in that kind of an environment.

Gabe Hajde, Wells Fargo. I don't see tobacco in here, and I'm sorry to put you on the spot in advance as it relates to the end market. But from an ESG lens perspective, I'm curious if you've got any feedback from investors in terms of -- if that's something they would be open to or would not like? Question number one. And then question number two, how do you think about it, I guess, internally, it might fit some of the bill in terms of helping increase vertical integration but not necessarily help on the growth front?

Yes, Gabe, I appreciate the question. And we have gotten a little bit, it's been very minor around the edges, people asking questions more so than anything else. The reality of it is, is outside in Europe and in other parts of the world, smoking is still pretty common and uses a lot of paperboard. We're a public company by definition. And so when those opportunities arrive, we need to look at it through the lens of creating value for our shareholders. And so -- look, we'll be thoughtful in terms of what that looks like, but it's still a relatively small part of our overall portfolio. It did come along with AR Packaging. The margins are good. It throws off a lot of cash. And what that cash flow allow us to do is invest in [ other ] parts of our business that is growing faster and obviously have a better growth profile going forward here. So think about it that way.

Yes. And just actually, Gabe, I mean, it's under 4% of the company. just in terms of size, it's in the consumer conversation that Mike was having earlier in terms of the markets, in terms of where is it. But also the assets that deploy there oftentimes are assets that can be deployed in some of our other markets. It's one of the things that we're looking at, the assets that are utilized there oftentimes work very well for long-run. Beverage business, as an example, works for some of the food applications. So as we look at the footprint, that's also one that we're really assessing what's the highest long-term return opportunity from having those assets in the portfolio, particularly in Europe.

It's kind of an ROIC dance we need to do between taking the cash we're making now and applying it into the better growth opportunities for us. So that's how we square from a strategy standpoint.

Okay. I've got another pricing question, and it's more of a confirmation. Brandon Teel from ArrowMark Partners asked if you could just confirm that the updated $550 million of '22 pricing is implemented and recognized, and is it fully accepted as of today?

Implemented, recognized, went into effect on January 1. It's -- and we saw it in our January results coming through. So write that $550 million down.

And the $150 million and the $850 million. And no, it does not include the $50 per ton for all 3 substrates that has not yet been recognized, which we will hear the first feedback on tomorrow.

Okay. And on that one, if pricing is recognized on Friday, when would that flow through the business? Would it flow through in 2022?

So it will be a combination of 2022 and 2023. The way our contracts work, as you saw last year, when that happened. And what we'll do, as we've consistently done in the past, is when it's recognized, we will update everybody in terms of what that means, in terms of overall pricing recovery.

I've got more.

Anything else out there, Melanie?

Yes. Blair Cooper from Aberdeen asks while you talk about the high percentage of fiber-based packaging that is recovered, the amount of CRB as a total of your revenues is still relatively low and so most of your products are reliant on virgin fiber. Can you talk through how this links into your sustainability goals?

Yes, I really appreciate that question. Thank you for that. And if I can go back, one of my favorite topics here. Maybe you can kind of click through that the circular economy -- it's core to our strategy. It's core to who we are to have both virgin and recycled mills. Because really, what we do is, as I mentioned here, all the wood that we harvest is grown in sustainable forestry tracks. And what that means is there's strict requirements for how it's harvested and how it's brought to market. And by definition, the tree itself, particularly in the U.S. South, as you see, it grows fast enough, sometimes you can hear it at night growing in the middle of the summer. It renews and adds inches as we see in the industry every year, and these baskets are actually quite healthy. And so what might start as that beverage carton I talked about or that confectionery carton, then we'll go downstream to Kalamazoo or Middletown or East Angus, our recycled mills that will have, kind of, post our new footprint here, and we can recycle that 5 to 7x. So it fits squarely into that. And if anything, the fact we're bringing on more CRB because we're going to run our Middletown mill longer, shows that, that's appreciated by the end-use consumer. We've got good opportunities to convert things into it. And as I mentioned, we were one of the big people that converted stuff into CUK the first time, and now we see some of that coming back. So it really -- this is a great visual. It's resonating well with consumers. Customers get that the recovery rates of paper are really high here in North America and in Europe. And they feel like they're doing their part when they put their stuff in their bin. And ultimately, they know that goes back and it's reused to primary package as Ricardo said in his comments. So thanks for the question. We think this model is really a great one for our company and differentiates us from really many other types of packaging as truly being probably the most sustainable across the entire life cycle for the reasons I mentioned. All right. Well, one last question.

Jesse Barone from BMO. Just thinking about inflation, if it reverses either second half of this year or '23, how should we think about kind of your price/cost spread there? And if you could kind of differentiate between the RISI-based contracts and then cost-based model contracts.

Yes. So I guess the high-level answer to that is supply and demand is really what drives pricing at the end of the day. So as we continue to drive 100 to 200 basis points of growth or the 300% that we've been over the last couple of years, you saw 2% more paperboard last year generated in North America than the year before. So it's kind of tracking along those lines. Prices will continue to remain solid. And ultimately, if inflation was to recede a bit, we'd see that in terms of a margin profile advantage. We do have a combination of pricing contracts that Steve talked about. They're not all RISI. Some are in cost models. Others are in different forms of that. So it's a mix. We'll keep you informed on it. But, look normally, when we do see inflation go down, we see a little bit of margin pick up in that process. And the key there for us -- and what really matters from a pricing standpoint, is that is our demand holding strong? And if our demand is holding strong, we'll keep that margin. All right.

If we didn't get to your questions for those on the webcast that have submitted questions, we will certainly get back to you shortly. And in the interest of time, we're going to wrap it up.

Well, listen, I really want to thank everybody for participating today coming here. Those of you who came today, thank you so much for that. It's great to see all of you again in person. Melanie tells me we had high watermark, we had over 400 people on our webcast. So hopefully, we've inspired you to think about the company a little differently, a little broader than maybe what you thought about us coming in. And if we did our jobs, you're walking away feeling pretty inspired about our growth prospects and why we've got confidence in raising our 2025 vision goals here. So thanks for coming. Hope you have a great day.

Thank you.