Good morning. Thank you for attending the Graphic Packaging Third Quarter 2022 Earnings Call. My name is Matt and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity to questions-and-answers at the end. [Operator Instructions] I would now like to pass the conference over to our host Melanie Skijus.

Good morning, and welcome to Graphic Packaging Holding Company's third quarter 2022 earnings call. Joining us on our call today are Mike Doss, the company's President and CEO; and Steve Scherger, Executive Vice President and CFO. To help you follow along with today's call, we will be referencing our third quarter earnings presentation, which can be accessed through the webcast and also on the Investors section of our website at www.graphicpkg.com. Before I turn the call over to Mike, let me remind you that today's press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include but are not limited to the factors identified in the release and in our filings with the Securities and Exchange Commission. With that let me turn the call over to Mike.

Thank you, Melanie. Good morning to everyone joining us on the call and this webcast this morning. Let me begin my remarks on Slide 4 of the presentation. We delivered exceptional financial results in the third quarter. Our continued strong performance in net organic sales growth can be attributed to the global business portfolio we have built diversified by both end markets and brands, strategic investments we have made and the robust innovation pipeline we are cultivating. In the third quarter, net organic sales growth picked up sequentially, accelerating to 5% year-over-year. This represents another quarter of outperformance versus our long-term net organic sales growth goals. I remain very encouraged by our significant new product development pipeline and consumer demand for highly functional and increasingly more sustainable packaging. Interest and engagement from existing and new customers remains robust. As demand for fiber-based packaging to replace other packaging alternatives increases, we are capturing new business across our low-cost well capitalized highly integrated platform. As such, our integration rate commence to grow was 74% of our paperboard production integrated into our packaging today compared to 72% at this time a year-ago. Vertical integration is a competitive differentiator today's challenging global supply chain environment. We benefit from the flexibility we have established by producing all three paperboard substrates and the assurance of supply we can offer customers. Importantly, our vertically integrated business model provides runway to further enhance operating efficiencies and supports our Vision 2025 margin expansion goals. Adjusted EBITDA increased by 55% year-over-year to $441 million resulting in an 18% EBITDA margin. Adjusted earnings per share excluding amortization improved 76% to $0.67 per share. Strong performance year-to-date is resulting in an increase to our previous $1.5 billion to $1.6 billion adjusted EBITDA guidance. We now expect adjusted EBITDA for the full year…

Thanks, Mike, and good morning. Turning to slide nine and key financial highlights in the third quarter. Net sales increased 38% or $669 million to $2.5 billion. Notably, net organic sales growth accelerated from 3% in the first half of 2022 to 5% during the third quarter. A positive price/cost relationship and our European acquisition also drove performance. Adjusted EBITDA margin expanded by 210 basis points year-over-year to 18% of sales. Adjusted EBITDA moved higher by $157 million to $441 million, an increase of 55% over the prior year period. Adjusted earnings per share, excluding amortization of purchased intangibles, increased 76% from last year to $0.67 a share. Our paperboard integration rate year-to-date improved to 74%, up 200 basis points from 2021. On slide 10 and 11, please find our sales and adjusted EBITDA waterfalls. Sales increased $669 million year-over-year, or 38%, driven by $334 million in pricing and $380 million in volume mix from organic sales and acquisitions. Foreign exchange was a $45 million sales headwind in the quarter. Adjusted EBITDA increased $157 million, or 55%, to $441 million in Q3. Drivers of EBITDA growth during the quarter were $334 million in price and $61 million in volume mix. We are earning on our organic sales and acquisitions are meeting expectations. Partially offsetting pricing improvements and volume mix in the quarter were $162 million of commodity input cost inflation, $28 million of labor benefits and other inflation, $27 million of unfavorable net performance and $21 million of foreign exchange. Within the net performance category, we recorded $38 million of increased year-over-year incentive accruals in the quarter and incurred some higher costs to meet accelerated organic sales growth. EBITDA from our CRB optimization and K2 machine ramp contributed positively during the quarter, adding $17 million to performance. As Mike discussed,…

Before I provide instructions on Q&A, please note that, due to global connection issues being experienced this morning, if you experience any difficulties on this call please contact Melanie Skijus and Investor Relations via e-mail. [Operator Instructions] The first question is from the line of Ghansham Panjabi with Baird. Your line is now open.

Thank you. Good morning, everyone.

Good morning, Ghansham.

Yes. Good morning. I just make sure you could hear me. I guess first off Mike obviously very strong momentum on the volume side during the third quarter as well. But we are starting to see some sort of concern on the consumer staple side especially in the beverage side. Can you just give us a sense as to how volumes progress throughout the quarter what you're seeing in terms of new product activity maybe across both Europe and the US as well?

Yeah. Sounds good. I'll start and then Steve you can add some color to that. I think we saw a pretty broad-based strength across our overall business in the third quarter. It didn't change much materially from month-to-month. It was strong. Some of that Ghansham was a function of the fact that, we had Kalamazoo up and running. We are creating more paperboard. We had Middletown running. So it created an opportunity for us to really service our business incredibly well, with the fact we had paperboard to meet customer demand. As you kind of look through the different verticals we saw food and beverage growth. We saw mobility continue to be strong on the foodservice side of the business here in North America. Europe grew in certain categories. And a couple of them they were down slightly. But overall, Europe had a positive growth trajectory, which we're pleased with. And as we've kind of rounded out of third quarter and into early fourth quarter, today here we're seeing our growth at the top end of our kind of long-term target, so 2%, call it 200 basis points. And if we finish the year at that kind of level that will be fantastic, because what that will be then is for the third year in a row we'll be above 3% organic growth. If you do a three-year stack on that it's over 10% in terms of organic growth. And as you know that's a real pivot from the kind of trajectory we had before that time period. So that's kind of how we're thinking about it and what we're seeing. And Steve I don't know if you have anything else to that.

Nothing to add Mike, I think described it well. I think the broad-based nature of it was positive for us both food service and kind of core food and beverage. And probably the only thing to add is we can continue to identify a couple of hundred basis points of real new-to-the-market innovation products primarily plastic replacements that are supporting the net organic sales growth.

Okay. Fantastic. Thanks for that. And then just for my second question in terms of how -- what you sort of think about capital allocation in 2023 falling obviously you're focused on debt paydown this year. And then just related to that on AR packaging, can you just touch on some of the opportunities you see to cross leverage some of the innovation that they have some of which highlighted that topics earlier this week. Just anything you can share there as it relates to the US?

I'll start with that. I mean, I think that's been really one of the positives we've seen on the AR acquisition. We anticipated that we would learn and be able to kind of move trends that we're seeing across the globe much faster. That was part of our investment thesis. And as we talked about when we made the investment, Europe is really ground zero for sustainability. And we see a lot of those trends come out of Europe and that's part of what you see on the slide in the deck that showed the expansion of our TAM. We've got the ability to be able to increase that because we got line of sight into additional plastic replacement opportunities and expanded that now to $12.5 billion. So we're very pleased with what we see there. You saw an example of one of those products when we put in the deck that had detergent in what we did there with paperboard for Unilever. We're really pleased with that one and we anticipate we'll see continued acceleration of those kind of trends and be able to leverage that really on a global platform. So we're excited there too. In regards to capital allocation, this was a year where we told everybody, we were going to focus on debt reduction. And that's in fact what we've done as you've heard Steve say in his prepared remarks, will finish at the midpoint of our guide around 3.2 times. We want to get down in the 2.5 to three times long-term target, which will be sometime next year probably early next year. And then as we kind of look at what's due with a strong healthy cash flow generation, what I love is the optionality we've got in the business. We've got the ability…

Great. Perfect. Thanks so much, Mike.

You bet.

Thank you for your question. The next question is from the line of Mark Wilde with Bank of Montreal. Your line is now open.

Thanks. Good morning, Mike. Good morning, Steve and Melanie.

Hi. Good morning, Mark.

I wondered just to start off Mike, can you just give us a little more color on what you're seeing over in Europe right now. It does seem like the economic pressure there is even greater than we're seeing in North America. And I wondered, kind of, when you talk about Europe if you can also talk about what you're seeing from your customers in front of the winter season and prospects of energy cuts?

Hi, Mark. Good morning. It's Steve. I'll start and then Mike can add on to it. As Mike mentioned, we saw modest organic sales growth in Europe in the quarter, which was given the macros and the challenging environment there was net favorable to us in terms of the consumer-based food beverage consumption holding. We saw a slight weakening on the core beverage business in the quarter as folks actually returned to being out and about a little bit. But as we move around towards the winter we actually expect that to kind of come back to the positive given the amount of investment that's been made in fiber-based packaging for at-home consumption of beverage. As Mike mentioned just adding on to it AR Packaging specifically those economics actually are on our expectations $118 million of EBITDA year-to-date we expect to be at the $150 million to $160 million level for the year even in the face of foreign exchange and the environment that we're in. So really outperformance at the operating level there and as Mike mentioned the innovation component. Now certainly we're turning towards what can be some challenging winter months ahead. We can talk -- Mike can talk briefly about the energy and ability to run basis. But to date because we're not as energy dependent as some other manufacturing of -- type businesses in the region. We have been operating successfully in meeting customer demand. I don't know if anything to add to that Mike?

No. I think maybe just to add Mark so we buy 25 million MMBTUs in natural gas as a company a little less than one of those is in Europe because it's converting only as you know and so our exposure there on the nat gas side isn't real high. We buy a fair amount of paperboard one million tons on a global basis. So we're watching that. And obviously, you've seen the ability for those producers to push those prices along and we've got that reflected in our contracts and really in the mark-to-market that we gave to you here as part of our prepared remarks. So look I think all our customers are watching what's going on right now the weather is good in Europe. It's been very good the last couple of weeks and their injection levels are high nat gas prices have come down over the last couple of weeks from their all-time highs in June and July as you well know. But that can change quickly. And so we're monitoring closely. \ We've got really good communication between that business and Steve and myself and in some cases it's changing on a daily and weekly basis and that's part of why you saw in the mark-to-market we have a range there of $100 million and it's largely due to the fact that that inflation in Europe is just a little hard to call right now. And so we'll continue to watch it. We'll be aggressive around our pricing actions and make sure we cover that as we've been. And that's kind of how I think we're thinking about that operating environment.

Okay. That's helpful Mike. And then just for my follow-on I wondered if you could just give us an update on a couple of conversion projects that you've talked about. One is using that mechanical pulp mill that you bought down in Augusta to potentially make FBB at Augusta and the other I think is the talk we've had about converting from SBS to CUK over at Texarcana. And I guess I'm asking those questions just in the context of all of this particular boxboard capacity. We're seeing the Scandinavians talk about adding.

Sure. Yes. Thanks for that. And it is a very good question. I mean in terms of what we're doing we continue to run trials on FBB pulp type that we've got in Augusta. As you mentioned we acquired a thermomechanical pulping operation right adjacent to our property. So we've got some optionality there and we're continuing to look at that over what the cost would be what the benefits would be those kind of things. Same thing with the swing machine in Texarcana that we talked about a couple of years ago. We've still got that optionality to convert one of those machines over. But to be fair with eight week backlogs and the strong growth we've seen we haven't seen the need to really take any action on those. We're also looking at our CRB platform to be fair. It's the start-up of Kalamazoo has been very good. We like what we see so far with the new machine. And so I think as you think about Graphic we've got a number of levers that we can pull and we're trying to really make sure, we're being smart about what we do, how we allocate capital and having a medium long-term perspective in mind, relative to what we make and integrate into our own operations as well as, what we would buy externally, which is roughly one million tons. So that is -- we kind of look at that. We look and study that as a leadership team and talk about it with our Board and that will be something we continue to do here, as we grind forward. Q – Mark Wilde: Okay. Very good. I’ll turn it over. Thank you.

Thank you for your question. The next question is from the line of Mark Weintraub with Seaport Research Partners. Your line is now open.

Thank you. First, kind of a smaller question, but on the incentive accruals $80 million this year, what would be more typical? And so, do we then therefore, get some sort of assuming it's a lower number next year, do we get a almost like a double catch up next year. We get a bump next year on the bridge?

Yes. Mark, it's Steve. As you know, last year, we had significant underperformance on incentives driven by the inflation that rolled through the business, this year I'd characterize this as a return to more normalized incentives, both short and long term as we kind of put the bridge together. Obviously, we'll look to continue to perform at that level. I wouldn't assume a significant snapback in 2023, to consider this a little bit more at the more normalized level. There might be a modest one. We'll be able to articulate that with guidance in January, but that's really a return to more normalized compensation.

Got it. Thank you. And also when you're doing the mark-to-market when was the date that was as of? Is that as of kind of very recent? Does that capture, what's been some pretty big declines in recovered paper pricing in the recent past?

Yes, Mark, it's Steve. It's mark-to-market as of the moment we're talking, as we kind of pull things together as we head into this conversation. So, it's very current. So it takes into consideration latest SBS pricing on the pricing front, it takes into consideration what we know. As Mike just mentioned, though one of the reasons we've got a bit of a range on it, on the cost side into 2023, is just because of variability in Europe. We're obviously, in a day-to-day mode in Europe, in terms of knowing even what the mark-to-market is for certain costs that we're managing through. And so, we think that overall, the midpoint of the price and cost is very representative of if you truly did mark-to-market that would be -- those would be the numbers, both price and cost but the variability is a bit wide right now, primarily repeating it just driven by Europe.

Okay. Appreciate the added color. Thank you.

You bet. Thanks, Mark.

Thank you for your question. The next question is from the line of George Staphos with Bank of America. Your line is now open.

Hi, Thank you. Hi, guys, good morning. Hope you’re doing well. Thanks for the details. First question is on, sort of top line and volume growth expectations. And Mike, could you give us a bit of color in terms of, how the addressable market grew from $9 billion to $12.5 billion. What were the -- I know it's going to be a lot of things, but if there was one or two or three markets that in particular drove that? And relatedly, how are you seeing the new products that you are bringing into the market allowing you to generate growth that the consumers are willing to pay for, in an environment where we have lots of stress related inflation? And how do you prevent against the demand that you're seeing, being just your customers double ordering, double booking because backlogs are at eight weeks and we've seen signs of the cell where there's ordering in anticipation as precaution then that ultimately dissipates. And then, I had a question on capital allocation.

I'd take that latter part first, George. And as you remember, our growth been kind of in that 3% range. This last quarter was exceptionally strong. Quite frankly, we've been outperforming our medium and long-term goal of 100 to 200 basis points, which we believe over the medium to long-term, is the right target for our company. So we've outperformed that in the last three years. That's, how we look at it. And if you look at kind of what we did, we didn't see growth of 10% or double-digit increases like some other packaging firms and segments saw, during the last couple of years. Ours is pretty steady there. As a matter of fact, we were actually as we disclosed in the first quarter and the second quarter this year a little behind where we wanted to be in terms of our ability to serve customers. Our backlogs were up at 10 weeks plus, which is just too long for us to get the customer what they need to run their business. So, actually we're quite pleased with our backlogs now being strong at eight weeks. That's historically where strong backlogs would be for our industry and that allows us to service our customers quite well. So, look we've got limited visibility into our actual customer inventory building process. But in this kind of macro it's a little hard to see that anybody really wants to build a bunch of working capital. So, if it's happened we don't think it's broad-based. And obviously we're going to continue to work with our customers to make sure they have what they need. And we're seeing our service levels actually correct themselves are on time and in full are actually moving back into the 90% range which is where we'd expect them…

And George just to add to Mike's point specifically on the $12.5 billion, it's plastic replacement is a category so the actual broad-based category and of course it's consumer based. And so I think it speaks right to the heart of our food beverage, foodservice consumer packaging. So, consumer and plastic replacement are really the kind of what's been honed in on to allow us to increase that addressable market.

Okay. Just a quickie, it's not a huge number, but the increase in CapEx can you talk about what drove that any key end markets to the extent that you can share on life Mike? Thanks guys and good luck in the quarter.

No, thanks George. And we're pleased to actually take it up a little bit because it's all about organic sales growth both known projects that we're investing behind at the $2 million to $5 million type of investment out of time. These are typically modest-sized investments that are high return for us to have the capacity mostly converting capacity in the case to capture the growth. And so think of it as categories like we were just talking about a fiber bowl replacement or that kind of a replacement or a cup replacement into fiber. So, these are primarily organic sales growth capture investments that will give us confidence in the 100 to 200 basis points on a multiyear basis.

Okay. Thanks. I'll turn it over.

You bet.

Thanks George.

Thank you for your question. The next question is from the line of Kyle White with Deutsche Bank. Your line is now open.

Hey good morning. Thanks for taking the question. I wanted to go back to I believe was Ghansham's earlier question. We had a beverage can peer report some weak volumes especially in September. Curious if you guys saw a noticeable drop off in September on your CUK grade, or was this being offset elsewhere, or is it something that maybe you expect to occur in October?

Hi Kyle, it's Mike. We had a little problem there. Can you repeat the question please?

Yeah. Apologies about that do you hear me better now?

Yeah. Yeah we got you. Good.

Got you, I wanted to go back to Ghansham's question on -- we had a beverage can peer report some weakness here especially in September. And I was curious if you guys saw a noticeable drop-off in demand on your CUK grade in September, or is it something that you expect to occur in October, or anything you can give us in terms of details that you're seeing on that grade specifically?

Yeah. No we have not seen a meaningful drop-off on our CUK. As a matter of fact our demand remains strong. But remember, it's much more broad-based than just beverage. Beverage is a big market for us, but we're now in the frozen food market. That's really strong there. There's, a lot of strength applications for CUK. And we buy a fair amount of it as you know Kyle, globally too. And so every time that we're making out of making in West Monroe we've got a plan for both in 2022 and 2023.

Got it. And then a lot of the volatility on OCC here recently, just curious what your near-term outlook is for that and then, what you think it will average out for next year. And then, more importantly how should we think about the relationship between OCC costs versus kind of a code recycle board pricing over the long-term?

Yeah. So why don't I take that, Steve you can jump on with anything to add. But look, paperboard pricing like all commodities is based on supply and demand. And we just got done talking about the fact that we've got eight week backlogs on all our materials and we grew 5% in the quarter. And we're growing here at least month to-date in October we're at the 2% range. So we continue to grow and that requires paperboard because every package needs paperboard. That's what we do. And so if you look at what that means I saw the we got a few on the early write-ups around OCC and how does that square with some of the comments made in one of the trade organization magazines. From our standpoint, I can see why someone who's buying paperboard might want to poke around on that, given OCC has gone down a little bit, but they're probably not on the call with the same responsibilities that Steve and I are, here be able to kind of talk about what's actually happening. And if you look at our backlogs here they're eight weeks plus. And that's with Kalamazoo accelerating and we're still running our Middletown mill, and we plan to continue to do that and we need those tons to run our business. So look, as Steve mentioned, in his prepared comments the FPMA data will come out here on Friday, so we'll get another look on it. But our -- we're actually about half of that market as you know. And so we feel like we've got a pretty good beat on it. And relative to OCC pricing to the actual pricing of paperboard again it all comes down to supply and demand. And right now demand is strong.

And Kyle, the only thing I'd add is just specifically for you is that OCC on a year-over-year basis will turn into a deflationary environment in Q4, but it's been more than offset by the ongoing inflation we're seeing for external paperboard chemicals net energy et cetera, so hence the continuation of net inflation that we're managing even here in Q4. And then, for our mark-to-market, we're just assuming as is.

Got it, it’s helpful. I'll turn it over.

Thanks, Kyle.

Thank you for your question. The next question is from the line of Cleve Rueckert with UBS. Your line is now open.

Hey. Good morning guys. Thanks for taking my questions. I just wanted to go back to organic growth. And I guess, specifically just sort of looking at slide 8. In the past we've said that most of this growth is mainly driven by new products and not necessarily accelerating growth within the existing portfolio. Steve, you touched on it a minute ago in sort of response to George. But I'm just wondering, what do you have to do now to access this addressable market? I mean, is it mainly that sort of incremental investment in the downstream converting capacity as you sort of explore opportunities in R&D with your customers? Is that what we should expect you to focus on for the next couple of years?

Yeah. No, Cleve, I think that's right. I mean the reality is as you know innovation in our segments take time. And so the team as we continue to look at that, ongoing 100 to 200 basis points, it's multiyear in its orientation. It's what's our line of sight in 2023 to give us confidence that there's at least a couple of hundred million dollars there. Do we have line of sight to even convergence in 2024, 2025 because some of these conversions for our customers are multiyear in their orientation like you've seen with KeelClip, it takes years for it to totally play out. So that's why that backlog of opportunities is significant. It's -- we're looking out even today probably out to 2025 for certain projects that we already some of the investments we're talking about making are to support multiyear initiatives. So it is about today but also it's multiyear. I don't know, Mike anything to add.

No. Well said Steve. I think the other part of it Cleve, Steve mentioned this earlier on the call regarding the increased CapEx is we're investing behind this. And we've got to have the capabilities to drive that level of growth and those innovations and it requires investment on our behalf but that also makes us quite sticky with that end-use customer. And those are categories we really want to win in because we believe that our fiber-based solution has a unique competitive positioning to be able to do it in many cases replacing plastic as we've talked about here. So it's a combination of really strong innovation and design capabilities that we've invested in heavily over the last three or four years in terms of human capital and process capabilities as well as the CapEx and the investments that we've made in our converting operations to support that. And you really got to do both. And I think that we're really hitting our stride along those lines and making a pivot away from what historically had been a company that had great operating problems and focused on cost reduction in a flat market and we did a really good job with that to one where now we truly are driving meaningful top line growth that's been over a number of years and that's the DNA we're really trying to build and the pivot that we've made as a corporation. Hopefully that's coming through and you're seeing that.

Yeah. I mean low cost highest quality well-capitalized tends to win the day over time and our customers recognize that too, because they want to invest behind a company that's willing to put the dollars to work.

Yeah, that's a great point. Thanks for making that clear. And just one, I guess another follow-up on an earlier question, but we get the question all the time. So I want to pose it to you. It relates to paperboard capacity especially from competitors. I know we've talked extensively about the North American market on these calls before. But I guess just thinking about capacity expansions in Europe and also in China, how does that affect your business? I mean, how should we think about it? And how are you thinking about it and planning for some of these changes? And then more so outside the US than inside?

I appreciate the question. It's an important one. And I guess parse apart a little bit. You talked about both China and Europe because they're different in terms of what's going on there. But first what I'm going to say is we share a common view that the market is going to continue to grow. I think we've demonstrated that over the last three years of what we've been able to do. So there's going to be a need for more paperboard here in the future. The question, of course, on investors' minds is it should be is what do those operating rates look like? Are the tons covered, where do they go? And what are the implications? As we think about China and those of you on the call who've followed that market for a long time, I mean ivory board has been overbuilt in China for the last two decades plus, and a very modest amount of that actually makes its way to North America. I think last year it was less than 25,000 tons. And the primary reason for that is the vast majority of the mills in China or non-integrated in both cost and energy, which makes them high cost. And so they tend to service that local market quite well. But that stuff just really doesn't export well to different geographies, because of the costs associated with it. So it's not to say that it can never show up here, but the cost structure and the cost curve over the medium-term just, it's disadvantage. There's no other way to say it against North American and European consumers. So that's how we think about China. In terms of Europe and some of the announcements that have been made and to be fair some of these have…

Yeah. Appreciate it.

And Cleve, the only thing to add kind of -- to round it out to Mike's point just, in North America probably as of this morning, any additional investments here in North America are probably out in the 2026 time frame at the earliest based upon at least most recent facts from other competitors.

Appreciate it. Thank you very much, guys.

You bet.

Thank you for your question. The next question is from the line of Mike Roxland with Truist Securities. Your line is now open.

Thanks Mike, Steve, Melanie. Congrats on another good quarter.

Thank you, Michael.

Mike, just wanted to follow-up quickly with you on some of the -- you mentioned CRB and the eight-plus weeks, you have in backlog. I'm wondering, obviously, some noise around some of the trade rags mentioning moderating CRB demand. So, I'm wondering if you can just kind of elaborate on really what you're seeing real time in your business with respect to CRB. And whether the backlog moderation really has to do with moderating demand, or is it more of a function of maybe easing supply chain constraints that allowed you to really clear out the backlogs that have been extended?

Yes. It's hard to know for sure what other people are seeing. So, I'll speak to Graphic Michael, but we have an eight-week backlog on our CRB business today, and that's with a ramp in Kalamazoo that's gone better than planned, and the Middletown mill continues to operate as we said it would into the future here. So, those combination, two factors are really what we're seeing. And so I don't know, as I kind of indicated earlier, what someone else is seen when they say they've got a four to five-week backlog. Again we don't have clear visibility into all that. All I can say, as a producer of about roughly half of that material, we haven't seen that. Our demand has remained strong. The center of the store is actually pretty good. I think you've seen some of our customers. They've taken a lot of price, but their volumes are holding in there, maybe down 1%. And I think the other thing to remember Michael for us is that, over 20% of our actual portfolio business here in North America fits into the store brand or private label sector. So, if a customer is trading down for whatever reason, we tend to participate at an equal level there, if not a little bit more, which is purposeful on our behalf and we built the company over the last really decade to be able to do that is that portion of the business continues to grow. So we might be benefiting more than others, it's hard for me to know we will look on Friday and see what the data says, but I think overall the robustness of our backlog on three substrates remains very good.

And to repeat something Mike said earlier, actually moving from 10 weeks to eight was actually benefit for us in terms of our ability to meet customers' expectations still significant demand, but it's actually a healthier customer relationship experience as well for them in terms of ability to get them product on time in full.

Got you. I appreciate the color there. And just one quick follow-up on Kalamazoo. Mike, you mentioned this in your commentary that it's ahead of schedule. I think you mentioned the same thing on the field trip as well. If the mill is running better than you anticipated, I guess, can you provide some color around why you're reiterating your EBITDA guidance and don't see upside to those numbers that you've laid out there if it's actually running a lot better than you anticipated?

Well, I think on a day-to-day operating basis, as we mentioned in the prepared remarks, I mean we're very pleased with the ramp-up into the 1,400-plus tons a day and line of sight to the -- it's a big strong ramp-up with 17 million in Q3, 30 million plus in Q4. So I guess we'd reiterate that we have a lot of confidence in the 50 million and in the next 50 million. And so at this point, just consider that high confidence in the context of our overall guidance the returns are there.

Yeah. I think that's well said, Steve. I mean, when you look at 2023 Michael, we said there was $50 million there. We feel really confident in that.

Got you. Good luck for the balance of the year.

Thank you so much.

Thank you for your question. The final question will be from the line of Gab Hajde with Wells Fargo. Your line is now open.

Good morning, Steve.

Good morning.

Good morning.

And I apologize I joined a little bit late. So but I'm a little surprised I take to the last question to try to take a peek around the corner into 2023. And I guess I apologize, if I missed it. But if I take the midpoint of the mark-to-market on price cost seeing to apply 225, even if I assume kind of flat volumes, we assume that the 50 million from Kalamazoo plus maybe a little bit more of normal graphic productivity. It seems to me like inflation non-material-related or non-input costs related might be running maybe 80 to 100 would seem to imply I don't know directionally a EBITDA number? And then I guess on the bottom end, if I were to annualize and I appreciate this isn't the best way to do it, but maybe the midpoint of Q4 call it 405 410, would it kind of get me to I don't know 16 20 number. Are there pieces parts in there that we're missing and I appreciate that you're trying to forecast in the future and we don't know the biggest component which is price cost or swing factor I should say?

Yeah, Gabe, it's Steve. I mean, obviously, I think we provide more transparency into 2023 than certainly anyone in our respective space and I know you appreciate that we're not in guidance mode yet. We'll do that at the end of January and we'll provide it. Something we have talked about public a few things. You're correct on all your basic assumptions the company is going to look like a lot of -- like it looks like in the past in terms of how we'll execute. But next year, obviously FX headwinds, the potential for not owning the Russian business. And we are likely to have a little more maintenance downtime. And we've talked in other public environments that that's probably a $50 million type year-over-year headwind. So we'll provide full detailed guidance when we round the corner here get out of the quarter and move into 2023.

I appreciate that. All right. Thanks guys. Good luck.

Good bye.

Thanks, Gabe. End of Q&A:

Thank you for your question. There are no additional questions waiting at this time. So I will pass the conference back to Mike Doss for any closing remarks.

I want to thank everybody for participating in the call today. I apologize to anybody we were not able to get to in terms of the queue and for any issues with sound quality that may have been out there given some of the web problems we're experiencing today. I hope you're all able to join us in January for our fourth quarter and full year 2022 results and an update on our continued progress towards achieving the goals established with our enhanced Vision 2025. And with that, I hope you have a great day. Thank you.

That concludes the conference call. Thank you for your participation. You may now disconnect your lines.