Good day, everyone. And welcome to the Graphic Packaging First Quarter 2025 Earnings Call. At this time, all participants are in a listen only mode. And we’ll open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Mark Connelly, Senior Vice President, Investor Strategy and Development. Sir, the floor is yours.

Good morning and welcome to Graphic Packaging Holding Company's first quarter 2025 earnings call. We have with us today, Mike Doss, President and Chief Executive Officer; and Steve Scherger, Executive Vice President and Chief Financial Officer. On this call, we'll be referencing our first quarter 2025 earnings presentation, which is available through this webcast and on the Investors section of our website at www.graphicpkg.com. Today's press release and presentations 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 SEC. Now, let me turn the call over to Mike.

Thank you, Mark. Good morning, everyone, and thank you for joining our call today. Graphic Packaging is a global leader in sustainable consumer packaging. In the first quarter, our business faced considerable pressure, has already stretched consumers pulled back further, promotional activity by our customers did not drive meaningful volume improvement, and we experienced significant input cost inflation. While these challenges won't be resolved overnight, neither are they long-term in nature. We have taken actions to offset higher costs and continue to generate innovation sales growth that is helping us grow faster than the end markets we serve. Despite near-term challenges, we remain well-positioned to generate substantial cash flow in the quarters and years ahead. In the first quarter, Graphic Packaging sales were $2.1 billion, adjusted EBITDA was $365 million, and margins were 17.2%, and adjusted EPS was $0.51. Those results were significantly below our expectations, driven mainly by weaker volumes in the Americas business and broad-based input cost inflation. Turning to slide 3, our Waco recycled paperboard investment is on track for startup. Hiring is effectively complete, and I have been extremely pleased with the quality of the team we've been able to assemble. Training is well underway, and as you may remember, the Waco machine is nearly identical to our K2 machine in Kalamazoo, so we have experienced operators training our new team members on essentially the same equipment they will be running a few months from now. After ensuring an appropriate level of paperboard inventory for the transition, we announced that our Middletown, Ohio recycled paperboard manufacturing facility will close on June 1st. Middletown was built in 1909 and has served our company well. We announced our intention to close Middletown some time ago so the transition was not a surprise to the affected employees. We are…

Thank you, Mike. Turning to slide 10. As Mike has noted, the first quarter was a challenging one with volumes below expectations and inflation pressure across a range of inputs. Sales for the first quarter of 2025 were $2.1 billion. If we exclude the impact of the Augusta divestiture and the impact of foreign exchange in the quarter packaging sales were basically flat year-over-year. Packaging price was approximately 1% lower and volume approximately 1% higher. Price largely reflected the impact of a third-party price recognition in the middle of 2024, which will roll off after next quarter and some minor mixed effects. Behind the 1% volume growth, our Americas business with its higher integrated margins was actually down approximately 1%, while our smaller, non-integrated international business was up approximately 3%. Adjusted EBITDA was $365 million, well below our original expectations, primarily as a result of the weaker than expected volumes and higher than expected inflation. When we spoke on last quarter's earnings call, we described cost inflation as relatively benign. We weren't surprised by the higher costs which came with the cold weather in January. Input costs rise and production efficiency drops with cold weather, and this year's weather was particularly harsh. But as the weather improved, it became clear that the upward pressure on input costs was not going away. The increases that we saw in January in energy, chemicals, logistics, and transportation, and other categories, remained elevated throughout the quarter and have continued into the second quarter. Responding to that input cost inflation, on April 15th, we announced a $40 per ton price increase for recycled and unbleached paperboard. We expect those price increases to help bring margins back to more normal levels over the coming quarters. During the first quarter, the impact price, volume, and mixed together…

[Operator Instructions] Your first question is coming from Ghansham Panjabi from Baird.

Hey, guys. Good morning. So, I guess first off, just on the volume component, I mean, clearly, Mike and Steve, I mean, volumes were at a low point to begin with, right? So, you had the COVID surge, you had the destock, you had consumer affordability issues, and maybe we're sort of at the tail portion of that, still feeling the lags of previous price increases, et cetera. But you also have this dynamic of GLP-1 and the impact on packaged food, especially center of the store. So, are you able to see any trends within your own data that would confirm that it's really an affordability issue versus anything else at this point?

Yes, thanks for the question. I guess if you kind of go back and look at the second half of last year, Ghansham, and you look at how we were operating the business, and we talked to all of you at our second quarter call, and what our customers were telling us is that they were going to grow their volumes roughly 3%. And so, we geared up, and they wanted us to gear up for that. That's exactly what we did. And as you saw, we finished the year, the second half of the year, we were slightly up, I think, about a half of 1%, so essentially flat. That was the basis for the plan that we put forward. You heard Steve talk in his prepared comments that our assumption going into this year was kind of a flat volume, to your point, coming off some challenging years in ‘23 and ‘24, and that our innovation would be plus two. And so, we kind of built our business on that. And kind of quickly into the quarter, we saw that really wasn't happening. We talked at a couple of investor conferences about our volumes being flat. And of course, what you have seen in the last two, three weeks, including today, with McDonald's announcement, are the vast majority of our customers have been pointing those volumes down roughly 3% to 4% against relatively easy comp. Now, to your question around kind of what is driving all that, we actually believe affordability is a key part of that. If you think about GLP-1, and you mentioned this, that's a little bit of an opportunity and a challenge for our customers. In some cases, the additional protein creates opportunities, need for protein, I should say, creates additional opportunities for reformulation,…

Okay, that's really good perspective. Thank you for that. And then just quickly on, as it relates to guidance, maybe for Steve, what's the embedded assumption for when price costs will turn at least neutral to positive in 2025?

Yes, thanks, Ghan, it’s Steve. Our embedded assumption in the midpoint of $1.5 billion of EBITDA, just touching on that briefly, is embedded in that is the minus 2% volume assumption. And we've got about $80 million plus of inflation in the business. We are pursuing price actions on multiple fronts. We obviously have our cost models that will inflect with some pricing. We have our new index model, which will inflect positive on pricing. And then we've announced a third-party increase. It's our expectation that we'll flip to positive late this year and recover the inflation as we roll into 2026. So we'll see modest benefit of our pricing actions this year, and it would expect that our pricing initiatives, multiple of them, will recover the inflation that we're seeing as we roll out of 2025 and into 2026. So we have full intent, obviously, to recover the inflation that we're seeing. Just given some of the modest delays, it will take place more as we enter into 2026 relative to that recovery. We've got about $100 million of price actions that we're executing on right now across all of the options that we have for pursuing pricing.

Your next question is coming from Arun Viswanathan from RBC Capital Market.

Great. Thanks for taking my question. I hope you guys are well. I guess I'm just kind of curious, going back to the volume side. So this volume kind of decline has been going on for a little while. You guys have taken some downtime in the past. But I guess just curious if that's still kind of what you're contemplating, and then would you consider, do you think the market is kind of oversupplied? Or maybe you can just kind of go through the supply-demand balance in each of your three grades. I know SPS, you don't have much exposure to, but what's really, do you think there's any footprint actions that have to be undertaken by the industry, yourselves included? Thanks.

Thanks, Arun. So I'd answer the question this way. As I mentioned in my comment, my answer to Ghansham, we are going to run our business to requirements and demands. So that will necessitate from time to time us taking some rolling market-related downtime through our system. And that's reflected in this guide that we've given you. And ultimately, that's the impact of going from a plus two to a minus two at the midpoint. That's 4%. And that's the paperboard that we're pulling out of there. There's a fair amount of absorption, as you know, that ultimately, we generate on that. It'll help us maximize our cash flow in the short term. We believe that's the right way to operate the business. It also makes sure that inventories stay very tight. And along those lines, it really does a nice setup for our Waco project here, which I'll comment on. I'm sure there'll be a question on that later on. In regards to kind of the supply-demand balance by the grades, look, you probably saw that two of our competitors this morning announced closures of coated recycled paperboard mills, which at a capacity level is well over 200,000 tons. That would represent in the North American market, certainly in the U.S., somewhere between 7% and 9% of reduction. And if you look at the actions that we've already announced from Middletown and East Angus as we get Waco up and running and the capacity that comes down the line with Waco, it essentially ties out and there's really no net ton add to the coated recycled paperboard side of the market. So that's really in a good spot. And our confidence level, and Steve said in his prepared comments, the $80 million in 2026 and the $80 million in…

Great, thanks. And just to clarify, so the $1.4 billion to $1.6 billion of EBITDA guidance for this year, would you consider that kind of $1.4 billion level worst case scenario? And I guess if volumes do say go to, is the midpoint kind of assumed kind of flattish volumes and $1.4 billion is down to, or how should we think about that? Thanks.

Yes, Arun, it’s Steve, specifically, the $1.4 billion low end of the case would be an extremely unusual case. We bracketed it because we didn't want to take off the table. But it would actually be a 4% volume decline, and upwards of $150 million of inflation. So that would be a truly unique environment not seen before, where we have both a combination of inflation and significant volume erosion, kind of a deep recessionary inflation type scenario. The midpoint assumes the minus 2% volume, which is, and then roughly $80 million or so of inflation, which we will recover. It just will get recovered in 2026 and beyond. The $1.6 billion assumes roughly flat volume and a more modest level of inflation, something in the $50 million range. So everything is bracketed around volume and inflation assumptions. With inflation planning to be recovered, it will occur late this year and into next year. But that's the bracket. It's basically flat to minus 4% volume and a bracket around inflation, $50 million to $150 million, with kind of the midpoint being more into the $80 million range, slightly below the average of the two.

Your next question is coming from Matt Roberts from Raymond James.

Mike, Steve, Mark. Good morning. Steve, you gave some color on the inflation, but I was wondering if you could dig into those buckets a little bit further. I mean, if I think about it, it seems like OCC is flat, fuel is down, natural gas has certainly been volatile. But is a portion of that hedged to protect there or any cost benefit pull forward you're expecting from either Middletown or net performance offsets? I was just trying to think about the bucket contribution and any offsets you may have, excluding that price impact that benefits 2026 or so.

Yes, Mark. It’s Steve, thank you. As we mentioned on our prepared remarks, the inflation was a little bit across the board for us. So the $20 million was in really four or five categories. Energy was up, chemicals were up modestly, the external paper that we acquire was up, logistics was up modestly, and then some of our other inputs. So you kind of had five categories all up modestly, $4 million or $5 million. And then, as you mentioned, wood OCC was modestly favorable. So it wasn't fiber, and that's important. So it wasn't wood cost, it wasn't OCC, but it was across the rest of the other major categories. We've assumed that will continue on at the midpoint of our guide, $20 million roughly becomes $80 million. To your point, there will be variability there. We do have some hedges in place as well for things like nat gas, but we have assumed that the $20 million that we saw in the quarter would continue on for the year across a basket of commodities, really not focused around wood or OCC.

That's helpful. Thank you, Steve. Steve, if I may stick with you, but switch gears a little bit. In the remarks yesterday there was on the rate repurchase program, like you noted there was optionality in how you approach that. The review said even in the coming months so as you look at the CapEx timing, target leverage of 3.5 by year end and weigh that versus where the stock sits currently. Are there any leverage limits or spend buckets that you need to get through before you really start executing on that shareholder return agenda? Thanks for taking the questions.

Yes, Mark, I'll start. Mike can add some commentary here. I think with everything that we've provided you, it's a bit intentional. We've taken our leverage acceptable yearend target from three prior to kind of just sub 3.5x. That gives us some opportunity for share repurchase optionality as we roll through the rest of this year. Given that we have no debt coming due, we're in a good spot on our borrowing, we don't necessarily see the need for that to be taken down in the short to medium term. And so it does open up the window for opportunistic share repurchases, particularly given our confidence in the future cash flows and given what we see as we were just talking about Vision 2030 and Waco coming to life and the significant cash flow generation. So we are providing ourselves with the optionality around share repurchases here in the short term. And then obviously what we've just really committed to is a multi-year vast majority of our cash flows being applied to share repurchases, modest growing dividend for the next several years. So optionality in the short term, real strong commitment, very strong commitment with our board providing us with confidence in the $1.8 cumulative billion of share repurchase authorization over the next couple of years.

Maybe Matt, the only thing I'd add to that is that every investor conference I've gone to in the last two years, I've been asked, okay, what's the next Waco? And my answer has been, there isn't one. We have everything we need to run the company that we want to deliver on our Vision 2030. It's about execution and innovation. Obviously, we need our customers volumes to cooperate and get back to at least a flat level here. And I believe they will, even though we're dealing with the dislocation right now. But if there was ever any question around what our intention is, it should be clear. We're focused on delivering and turning that cash flow back to our investors and debt holders. Hard stop.

Your next question is coming from Mark Weintraub from Seaport Research.

Thanks very much. So just wanted to follow up on the change in the guidance at the midpoint. It's about $210 million. You mentioned $80 million from inflation. And I think that's going from zero to 80. So I think that $80 million is a change. Just wanted to confirm that. And then that would leave $130 million. And you've talked about 2% volume declines. So I recognize there's presumably mill downtime as well related to that. But is that what's driving the rest of that? That $130 million? It seems like a pretty big number. Or are there other variables that we should be thinking about at the midpoint for your change of guidance?

Yes, Mark. It’s Steve here. You're fundamentally right. As Mike mentioned, we're going to run to demand this year. We'll be matching supply and demand. We will be taking inventory out of the business. So the inflation assumption from zero to 80 is correct. That's $80 million of the roughly $200 million call down at the midpoint. There's a 400 basis point call down at the midpoint on volume. Plus 2 going to minus 2. That's a solid $350 million top line call down. 30% margins we've talked historically at just kind of a simple math gets you at above $100 million. And then the aggressively matching supply and demand for the remainder of the year, as Mike mentioned, kind of picks up the rest. So it's all about volume and inflation. Inflation we will recover. The volume aggressively matching supply and demand for the year. It's really all about volume, Mark.

Got you. I apologize. That 4% makes perfect sense then to the $130 million. Okay. That's it. I'll stop there.

Thanks, Mark. Thank you. Thanks for clarifying that, Mark.

Your next question is coming from Lewis Merrick from BNP Paribas.

Morning, Mike. Morning, Steve. Thank you for taking my questions. Just on the revised guidance, the upper and the lower end of the range now implies EBITDA margin of 17% to 19% down from the prior 19% to 21% ambition. How should we think about the sort of midterm sustainable margin in the more longer term? Based on your comments, I think this is not a structural change in your thoughts, but maybe you could perhaps elaborate or lay out the building blocks to get back to that 19% to 21% range. Thank you.

Yes, Louis, it's Steve. I'll start again and Mike can add on. But you touched on it actually extremely well. If you look at the midpoint of our guide, it's 18%. About 100 basis points of that is the temporary realities of inflation coming into the business that we would plan to recover, which would return margins back towards that 19% range. Then as we've articulated our confidence in the value of Waco coming to life, that $160 million of EBITDA over a couple of years is really the path back towards those 19%, 20% margins that we have experienced over the last couple of years. So it's really why our commitment to Vision 2030, our commitment to the cash flows remains intact. We've got to get through this inflation environment and recover that with price. But Waco, very de-risked as Mike talked about a couple of moments ago, given the supply demand dynamic. And so that combination of price realization and then of course, returns on ongoing investments in Waco is really the path back towards the kind of margins that you just articulated.

Thanks. And I've just got one more. Just on pricing, I believe last quarter you spoke about a stable or neutral pricing environment. With today's announcement, are you now guiding to a net positive price contribution in 2025?

No, we didn't. I think what's inherent in the guidance, Lewis, we knew we would be modestly negative on pricing here this year when we provided our original guide. That really hasn't changed. I think what Ghansham was asking earlier is when you start to see some inflection, we would expect to see some inflection late this year and then recovery as we roll into 2026. So we will have some modest negative pricing here in 2025. And we had expected that. There's been no real change in that expectation.

Lewis, the combination of all those pricing mechanisms that Steve outlined here, as you're aware, have about a six month offset between when we actually get the inflation and we ultimately go recover it. So it'll have a minimalist impact on 2025, but it's the setup for 2026 that we're focused on.

Your next question is coming from Mike Roxland from Truist Securities.

Thank you, Mike, Steve, Mark, for taking my questions. Just one from me. Just looking at slide 14 in terms of the cash flow trajectory, I'm wondering if there's any change in that trajectory given that you're starting from a lower base now. So in terms of 2024, I believe it was negative cash flow given a high CapEx year. 2025, your EBITDA as pointed out earlier, it was $200 million lower at the midpoint. So in terms of trying to hit that $2.5 billion of free cash flow for 2024 and 2027, can you help us understand how do you get there given the last few years have been a little more challenging than expected?

Yes, thanks, Mike, it’s Steve. You're correct in terms of that trajectory for us. We haven't moved off that trajectory of the business being capable of inflecting into that $800 million to $1 billion. You're correct. The leap off point right here in 2025 would be at the lower end of that range. But the positive cash flow inflection for us is a bit undeniable given that CapEx will come down materially next year. The rest of the cash required to run the business, interest taxes, et cetera, is pretty well bracketed. And so our long-term confidence in those cash flows remains very high. The leap off point coming out of 2025 into 2026, modestly below that. But as Mike was mentioning earlier, we're being very aggressive about cash flow generation this year. Inventory will be going down as the year plays itself out. So actual cash flow generation this year is going to be really at or above where we originally had expected it. It's just we're getting there with a little different EBITDA outcome given the challenges our customers are facing volumetrically. Mike?

No, I think you summarized it well, Steve. I mean, Michael, you know last year we did $1.2 billion of CapEx. This year, $700 million. And next year, we'll ramp to 5% or below. So those are hard numbers. I mentioned the Waco startup being de-risked. And I saw your note about the capacity that's been removed. I mean, you're absolutely right. From a net standpoint, when you look at the Waco ramp, the coated recycled paperboard market is in balance. And so our confidence that we'll deliver that $160 million on that project is incredibly high. And so you put the combination of those things together, focus on running to demand, expecting that our customers will do better in 2026. We need them to get back to at least a flat volumetric balance there or better. Look, they've been doing this for decades. And they've been through tough times before. And while this is a challenge for them, for the reasons I've articulated earlier in the call, my confidence level that they will figure it out is high. And so you put that all together, our confidence in our Vision 2030 and the cash flows that are going to be generated is extremely high. And that's really why the board of directors, along with management, made the decision to announce today the share buyback that we're putting in place. So hopefully that gives you a little bit more context.

That's great color. Thanks. And one quick follow-up. Just in terms of the incremental $80 million of Waco EBITDA, both in 2026 and 2027, can you just help us understand the volume assumptions underlying that EBITDA?

Well, it's a couple of things. As we've talked about, I think, in the past, close to $100 million of it is just fixed cost removal. Again, smaller, older facilities of our own that will be closed down. And then the balance of it was incremental tons that would flow through it. And again, I think today's announcement by several of our competitors about them removing capacity from the marketplace should, again, give a lot of confidence that remaining $60 million is solid. So that's how it works. And it's over a two year period of time. We've already announced the Middletown closure. It will be down by the end of May, June 1st. And then our East Angus facility in Quebec will also be closed. We're taking a look at the timing just slightly. It might just change modestly depending on trade and tariffs there. We need to make sure that we take care of our customers, our Canadian customers. But ultimately, it will also go down. And that's a key part of the ramp of the EBITDA.

Your next question is coming from Gabe Hajde from Wells Fargo Securities.

Mike, Steve, Mark, good morning. Bear with me first. Thanks for taking the question. Bear with me for a second. If I were putting together a case study and thinking about the North American consumer board market, one could argue you had a competitor that maybe your largest that was undergoing a pretty big transition, change of ownership, et cetera. You had another one that was transitioning their strategy. You have a new entrant in North America, et cetera. Meanwhile, you guys were really kind of had offense on the field. You had low-cost assets, incumbent supplier position, et cetera. I'm curious, Mike, if we play that forward for the next couple of years, now these folks have got their feet under them. Are you seeing more RFPs come into the business, your customers may be coming back to you and kind of asking for better terms as they're facing their own inflationary headwinds? And somewhat related, you mentioned SNAP and MAHA. I don't think we've yet seen any impact of that directly. So I'm just curious if that's in your forward guide or if you've seen anything and we're just not aware of it.

Well, I'll take that one first. The answer, that's all relatively new stuff. So the answer is that's considered in the guide, but it isn't something we've seen yet, which is part of why you see our move to the minus two for the full year because there's a lot of headwinds out there in the near term, Gabe. So I'll start with that. In terms of the competitive landscape, look, I think in the last 24 hours, you see that the move that we're making in Waco, it's not just the cost structure we've got, it's the quality and the capability that we have on that paperboard manufacturing facility that we have in Waco and the one we have in Kalamazoo. They're tough to compete with and people are deciding where they want to put their CapEx and how they want to spend their money. The new entrant you're talking about, to be fair, they just bought somebody else's mill that was already there. So it's not like they may be new to this market, but it's not new capacity in here. We've been competing against that already. The one that is new is the SPS piece that I referenced earlier in my comments, and that'll come online in the second quarter of this year. That has had 450,000 tons, so that'll have to be dealt with. And I already kind of gave the answer there, so I won't repeat myself. But look, our customers, they're always trying to find value. They have to. These are very sophisticated, global consumer goods companies and beverage companies. This is not new. We've dealt with that kind of competitive pressure for a long time. We do well in that environment. We've got a well-invested, low-cost, well-geographically covered footprint in North America and Europe that really help us take care of those customers. And again, now more than ever, they need to make sure that they've got regional supply chains that actually take care of them, particularly on this tariff and trade imbalances that are kind of going on right now and well documented and discussed. So I like how we're positioned, and I would actually argue we're still on offense and focused on taking care of our customers each and every day. So we don't mind that kind of competition. As a matter of fact, we embrace it.

Thank you for that, Mike. One last one. We talked about bridges for this year's EBITDA, but I didn't hear much in the way of startup costs associated with Waco. Is there a number associated with that? Is it in the 1.5? Thank you.

Yes, Gabe, it’s Steve. In the appendix of our materials we've provided, there's some startup cash costs. We've provided the range in the appendix, $65 million to $75 million. Most of that will be below the line, just kind of startup-related associated with that. It's also embedded, obviously, in our cash flow expectations for the year. So that's coming in about where we expected it to be. I think it's moved around a few million dollars. We just wanted to provide the clarity. But the 1.5 has within it our expected adjusted EBITDA midpoint for the year. So we have some cash startup costs, obviously, below the line. And the 1.5 is the operating go-forward expectations for this year.

Your next question is coming from George Staphos from Bank of America.

Thanks very much, everyone. Good morning. Thanks for the details. Mike, Steve, first question, just a point of clarification. So you talked about the optionality on cash flow and the fact that you like your balance sheet position. You've given yourself a little bit of additional headroom. That's my phrase, not yours, for the end of the year in terms of where leverage should be. And the fact that you have optionality now, but then on going repurchases. But I also thought I heard you say at one point that you want to see the volume picture improve for your customers. So I just want to make sure whatever options you have right now, you have them. If you'd like to buy stock back, you could do right now. You're not waiting on your customers' volumes to improve, or are you? How should I think about that? And I had a question on sort of volume in the rest of the year.

Yes, George, thank you for that point of clarification. No, we don't need to wait for customers to have volume inflection for us to be opportunistic in buying back shares. So if there was an implied correlation there, unintended. We obviously believe over time that our customers will address the issues around them, return to more normalized volumes. But no, we don't need to wait for that. Our cash flow generation capabilities this year are very good. Balance sheet's in a good place. And obviously we have the optionality to do so now.

Okay. Thanks for that, Steve. The second question I had, as we look out to the rest of the year, if I did the math right, I think you're looking at roughly about an 8% drop year-on-year in EBITDA over the remaining nine months. And I think the first quarter when we adjusted for Augusta was down over double digits, like 12%, 13%, somewhere in that range. Yet, even though the EBITDA year-on-year comparison is getting better, I mean, it's still worse than you would have liked, but it is getting better. The volume picture has seemingly gotten a bit worse in terms of your guidance change. The pricing effect that you talked about doesn't really happen until later in the year. It's really more of a ‘26 phenomenon. So what else might help you close the gap on performance over the rest of the nine months that's embedded in your guidance, even as volume has gotten a little bit worse? How would you have us think about that? Thanks, and good luck in the quarter.

Yes, thanks, George. The first half for us is more assertive relative to planned maintenance downtime. We have very large normal maintenance downtime at Texarkana in Q2. And obviously we were matching supply and demand pretty aggressively here in Q1, and we'll continue into Q2. The second half of the year does allow us to run a little more efficiently at a little higher rate, even with the volume assumptions that are here. So it's more of a maintenance cost issue, first half, second half, such that margins in the first half will be modestly below, kind of in that 17% range, and then we expect to inflect back into the 19% range in the second half of the year in the midpoint of our guide. So it's a little more maintenance-oriented as opposed to a difference in volume assumptions.

I think maybe the only thing I would add to that, George, is that usually what we see when we see a volumetric slowdown, we see our input costs go down. In this case, we actually saw them go up. And if you look back to 2008, inflation went from 3% down to like 0.5% by 2010. So if we do in the back half of this year see less inflation than the $80 million at the midpoint that we've targeted, that could be a positive too. But it's just, this one's a little different because just the dislocation of some of the trade flows is causing some distortion of some of the things that we buy. But maybe that settles down, it gets a little bit more normalized here in the months to come, and that could be a tailwind.

Thank you. We have reached the allotted time for Q&A. I will now hand the conference back to Mr. Doss for closing remarks. Please go ahead.

Thank you, operator. And thank you, everyone, for joining us on the call today. 2025 will be a challenging year for our CPG and QSR customers. High food prices and an uncertain economic environment cause consumers to pull back and embrace private label alternatives. New medical developments like GLP-1 and the new MAHA policy initiatives are both a risk and an opportunity. Yet if we stand back, we can put these near-term pressures into better perspective. Product reformulation is nothing new. Our customers are experts at that. Aligning and realigning products to deliver what consumers want and need and at a reasonable price point is a skill set that helped make our customers the global leaders they are. Finding the right formula for success doesn't happen overnight. At Graphic Packaging, we spent the last eight years building and expanding our innovation and execution capabilities, and we are exceptionally well-positioned to meet our customers' changing needs to support their growth strategies. We are positioned to generate cash well in excess of our needs and to use that cash to provide substantial value for our stockholders for years to come. I want to thank our 23,000 employees for their dedication and our stockholders for their confidence in Graphic Packaging. Thank you and have a good day.

Thank you, everyone. This concludes today's event. You may disconnect at this time. And have a wonderful day. Thank you for your participation.