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Graphic Packaging Holding Co (NYSE:GPK)
Q3 2020 Earnings Call
Oct 20, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Graphic Packaging's Third Quarter 2020 Earnings Call. [Operator Instructions] I'd now like to hand the conference over to your speaker today Melanie Skijus, Vice President, Investor Relations.

Thank you. Please go ahead.

Melanie Skijus -- Vice President, Investor Relations

Good morning, and welcome to Graphic Packaging Holding Company's conference call to discuss our third quarter 2020 results. Speaking on the call will be 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 via self-directed slides and also on the Investors section of our website at www.graphicpkg.com.

I would like to remind everyone that statements of our expectations, plans, estimates and beliefs regarding future performance and events constitute forward-looking statements. Such statements are based on currently available information and are subject to various risks and uncertainties that could cause actual results to differ materially from the Company's present expectations.

Information regarding these risks and uncertainties is contained in the Company's periodic filings with the Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements as such statements speak only as of the date on which they are made and the Company undertakes no obligation to update such statements, except as required by law.

Mike. I'll now turn it over to you.

Michael P. Doss -- President and Chief Executive Officer

Thank you, Melanie. Good morning and thank you for joining us on the call today. We continue to successfully meet growing customer demand in 2020. Third quarter was a continuation of solid financial performance, driven by over a 4% organic sales growth, exceptional customer service, and strong operational execution. We remain on track to meet or exceed our organic sales growth projections for the full year.

As an essential business, our teams continue to adapt to changing consumer demand patterns while providing continuity in the supply chain during these tumultuous times. We are doing this while focusing on the safety, health and well-being of our employees.

I'm very proud of our people and the service levels we continue to provide our customers. Our execution on behalf of customers and focus on innovation is reflected in the strong results year-to-date and a robust new business pipeline.

The pandemic has brought many changes to our daily lives, including the necessity to do more from the protected environment of our homes, whether that'd be working or conducting meetings remotely, helping children with virtual learning, or hosting smaller get-togethers to stay connected with family and friends.

Increased time spent in our homes has elevated demand for food and beverage packaging since the end of the first quarter. While we do anticipate an eventual return to more normal activities outside of the home, modest long term behavior changes in both how and where we consume food and beverages is very supportive of our organic sales growth goals.

Importantly, interest from customers for more sustainable fiber-based packaging solutions remains very robust. Our planning with customers on their packaging conversion programs, including machinery installations for our beverage customers, is proceeding nicely with numerous strategic projects in motion over the next 18 months.

Our product development team is meeting customer demand for innovation and packaging solutions that offer greater recyclability, enhanced safety and hygienic advantages, along with premiumization opportunities to stand out in the marketplace. We see strong demand for our packaging solutions across existing customers as well as prospective customers in new end-markets, including protein packaging and e-commerce.

Our teams are operating very effectively and I'm very pleased with what has been accomplished year-to-date. We completed a number of strategic initiatives in the quarter on time and on budget, including the installation of a curtain coder at our West Monroe mill and a new head box in our Texarkana mill.

In addition, the integration of the converting volume of the two Greif facilities closed in the third quarter is largely complete. Another 100,000 tons of CRB paperboard integration will take place over the next couple of years as supply agreement with Greif unwinds. This will further benefit integration in our CRB business and drive our rates higher for the Company.

During the quarter, we also executed decisions to match our paperboard supply with demand. This included the continued substitution of an annualized 100,000 tons of CUK based packaging to SBS folding carton grades in order to meet increased CUK demand. We also made the decision to take 30,000 tons of market downtime on our uncoated SBS cup stock paper machine at our Texarkana mill to align the production with lower cup demand.

As a reminder, our uncoated SBS paper machine in Texarkana is highly integrated with over 85% of the cup stock produced converted by us for customers in our five cup converting facilities.

Turning to paperboard backlogs, operating rates, and inventory levels; our backlog either held steady or increased during the quarter. In fact backlogs for all three substrates SBS, CRB and CUK are currently at five-plus weeks. As reported by the AF&PA, SBS industry operating rates were 85% during the quarter, with [Phonetic] maintenance and market downtime.

Industry inventory levels in SBS dropped by 86,000 tons during the quarter and CRB industry operating rates consistently improved each month during the quarter and were at 96.5% in September. Industry inventory levels in CRB dropped 21,000 tons during the quarter. Our estimated operating rate for CUK continues to be very strong, above 95% and our CUK inventory levels also declined during the quarter.

Driving our integration rate higher over time remains a strategic priority and we are delivering. Our year-to-date integration rate is 70% across all three substrates we produce, up 200 basis points from 68% last year.

Focusing now on the financial performance of the quarter, you can see the details on Slides 4 and 5. Our sales grew 7% year-over-year, driven primarily by impressive organic growth sales of over 4%. This is the fourth consecutive quarter of organic sales growth. Confidence in our ability to profitably capture growth opportunities continues to increase, given the traction we are seeing in Plastic Substitution, Cooking Solutions, and Strength Packaging solutions we are bringing to the market.

It is good to see our customers remain resolute in meeting their own sustainability goals while converting to packaging that is preferred by the consumer.

Adjusted EBITDA in the third quarter of $250 million improved $6 million. We delivered EBITDA growth by positive volume and improvements in productivity. Steve will go into more detail during his discussion, but productivity improvements were partially offset by the previously mentioned $12 million unfavorable impact of market downtime in our SBS cup stock line.

Before turning the call to Steve, I'll spend a few minutes highlighting the expanding addressable markets we see for our fiber-based packaging solutions. Our three growth platforms outlined on slide 6; Plastic Substitution, Cooking Solutions and Strength Packaging, provide significant runway to capture ongoing organic sales growth.

We've talked to you a great deal over the last several quarters about conversions from plastic packaging to our paperboard solutions. While this remains a competitive market, our solutions are winning, as evidenced by the momentum we are experiencing.

In beverage packaging, we are rapidly expanding our proprietary technology with customers through installations of our high-speed and efficient machinery solutions around the world. Our planned beverage machinery placements are up close to 40% versus a normal baseline year.

Our KeelClip solution which debuted this year offers compelling sustainability advantages and merchandizing benefits compared to other packaging options. AB InBev, Coca-Cola and other large global beverage companies are converting to KeelClip given the consumer appeal of our new solution.

We are seeing growing recognition from industry associations like the Paperboard Packaging Council, Pro Carton and the European Carton Manufacturing Association on the merits of Packaging Innovation to supports sustainability efforts and improve the consumer experience.

Last week, Graphic Packaging's KeelClip was the winner of the top two accolades at the Paperboard Packaging Council's 2020 Carton competition; Paperboard Package of the Year and the Innovation Award. I am proud of our teams that work diligently to commercialize the KeelClip for our customers.

PaperSeal products we discussed last quarter was also acknowledged at the competition, taking home the Paperboard Packaging Council's Sustainability Award. Notably, PaperSeal is now commercial in Europe and Australia with many new trials under way globally. Our PaperSeal tray for chilled protein, produce and fruit uses significantly less plastic resin than traditional foam and is being well received in the marketplace.

Finally within the foodservice market, we see ongoing conversions to paper-based cups and bowl solution. We continue to actively work with customers to commercialize the polyethylene-free cup solution.

In Cooking Solutions, we are benefiting from the enhanced microwave technology and superior Packaging functionality. Frozen foods represent an attractive an expanded market opportunity for consumer's growing desire for ease and speed, along with the availability of more gourmet and organic frozen meal options, creates a compelling market dynamic. We offer an improved sustainability profile and competitive economics versus the current plastic tray offerings.

Finally, in Strength Packaging, we are working on new opportunities in e-commerce and with club stores and mass retail channels. We are winning platform as we expand Strength Packaging solutions for different distribution channels. We are introducing solutions that can reduce excess packaging requirements while maintaining packaging integrity.

To wrap up, I'm pleased with our financial performance and agility demonstrated year-to-date. I look forward to talking to you again in February when we provide full year results and the outlook for the New Year. Consistent with our Vision 2025 goals, we expect to achieve both organic sales and EBITDA growth again in 2021.

Steve, over to you.

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

Thanks, Mike and good morning. Turning to Slide 7, and our sales performance waterfall, net sales in the third quarter increased 7% from the prior year to $1.7 billion, driven primarily by positive volume mix from net organic sales growth and acquisitions. Reported earnings for the quarter were $0.23 per diluted share compared to $0.18 in the third quarter of 2019. Third quarter 2020 net income was negatively impacted by a net $9 million of special charges.

When adjusting for these special charges, adjusted net income for the third quarter was $72 million. Adjusted earnings per diluted share grew 30% to $0.26 compared to $0.20 in the third quarter of 2019, benefiting from a lower effective tax rate and fewer shares outstanding.

Turning to Slide 8, and our EBITDA waterfall, third quarter 2020 adjusted EBITDA increased $6 million to $250 million. Adjusted EBITDA was positively impacted by $15 million of volume/mix; $7 million of positive performance; $3 million of commodity input cost deflation; and $3 million of favorable foreign exchange. These benefits were partially offset by $10 million in unfavorable pricing and $12 million in other inflation primarily labor and benefits.

As you can see on the waterfall, net performance would have been approximately $19 million before taking into account our decision to execute SBS cup stock market downtime. During the third quarter, we, again, experienced a benign inflationary environment across most commodity categories. We are seeing some pockets of inflation in areas like trucking and chemicals, but these areas were offset by modest declines in other commodities.

On Slide 9, you will see the robust list of strategic projects we've completed over the last 24 months. Notably, the maintenance of recovery boilers completed in 2018, '19 and '20, will not need to be repeated for roughly a decade. The capital and resource allocations necessary to complete these projects are behind us and we will benefit from the safety, cost and environmental improvements moving forward. These projects increased operational effectiveness and underpin our goal of achieving $50 million to $70 million in net performance each year.

Looking ahead, we will complete the recapitalization of our converting facility in the Netherlands during the fourth quarter. The $600 million Kalamazoo CRB investment is progressing well and remains on time and on budget for an early 2022 start-up.

Moving to liquidity and our balance sheet, we have total available liquidity of $1.6 billion. Our balance sheet remains strong. Last week, we addressed our $425 million bond maturing in of April 2022 [Phonetic] by entering into a delayed-draw term loan with a number of the banks of the Farm credit system. We closed the $425 million loan last week, but will not fund the loan until January of 2021; the date which corresponds with par call date of the maturing bond.

The new loan is a fixed rate, seven year, non-amortizing loan that is patronage eligible, which should make the net interest rate of the loan less than 2% annually, a meaningful improvement compared to the 4.75% rate for the maturing bond. We ended the quarter with $3.7 billion of net debt. Net leverage was 3.4 times at the end of the third quarter compared to 3.3 times at the end of the second quarter. Based on the guidance we're providing today, year-end net leverage will be just slightly above our targeted 2.5 times to 3 times range.

Moving to a discussion on our return of capital to stakeholders, we returned $367 million to stakeholders during the quarter in share repurchases, dividends, partnership distributions and partnership redemptions. This included the acquisition of $90 million worth of common shares during the quarter, bringing our total open market shares repurchased in 2020 to $247 million at an average price of $13.30. Capital expenditures in Q3 were $119 million and included the ongoing work with our CRB investment in Kalamazoo, Michigan.

Turning now to our guidance on Slide 10. We've tightened our adjusted EBITDA range for 2020 to $1.06 billion to $1.08 billion, reflecting 4% year-over-year growth at the midpoint. We are increasing our free cash flow guidance range. Last quarter, we got it a range of $200 million to $275 million. Our new cash flow guide is a range of $275 million to $300 million, reflecting the progress we have made to decrease paperboard inventory levels year-over-year across all three substrates.

As Mike noted, we look forward to updating you on our full year achievements and 2021 outlook when we speak to you again in February. I will now turn the call back to the operator for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Your first question comes from Debbie Jones from Deutsche Bank. Please go ahead.

Debbie Jones -- Deutsche Bank -- Analyst

Hi, good morning.

Michael P. Doss -- President and Chief Executive Officer

Hi, Debbie.

Debbie Jones -- Deutsche Bank -- Analyst

Hi. So, the first question I wanted to ask about is just the -- in your bridge where you talk about the $10 million lower pricing, can you just walk us through the drivers there and then how you think about that sequentially?

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

Yeah Debbie, this is Steve. Good morning. Yes, the pricing that rolled through in Q3 was as expected and was driven by the two $30 per ton price reductions for CRB and SBS that occurred earlier this year. So that was the natural progression along with -- for the market models and then along with some of the pass-through of the deflation. So it was expected. We'll probably see that again here in Q4, most of that will then be behind us. We'll see a little bit of it roll through to the beginning parts of next year as well.

Debbie Jones -- Deutsche Bank -- Analyst

Okay, thanks. That's helpful. And then, you did comment that you are seeing some inflation across your system. And I'm curious if you look back a couple of years ago where you did experience a pretty significant inflationary headwind, can you walk us through how you may be positioned differently during the last kind of inflationary period? Are there things that we should look to around your contracts or pass-throughs that maybe we didn't see the second time around and then comment on your ability to kind of recover it through pricing as well as we think about 2021 if we were to see a more material cost inflation?

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

Yeah. Debbie, let me start and then Mike can add in. Certainly, you summarized the inflationary environment well. It's been very, very benign. We do see some pockets of modest inflation. If the world stopped today, there would be modest inflation in our business. Next year, obviously, that's something that we're monitoring very closely overall relative to price offsetting cost over time.

And certainly I'll let Mike -- Mike can comment here as well, but we've taken significant actions since the last time we had material inflation relative to our contracts and price recovery mechanism. So, overall price offsetting commodity cost inflation is an absolute priority for us.

We know where we are today based upon known pricing. We're obviously in the market today with the price action for CRB. And over time, having those offset with the progress that we've made over the last several years remains a priority as we move out of this year and into next, Mike?

Michael P. Doss -- President and Chief Executive Officer

Yeah. I think, Debbie, just to put a little more point on the comment around the contracts, as you know, coming out of that last period '16 and '17, we made a strategic decision to shrink or collapse, if you will, the legs on the contracts that we have from nine months to six months. So we essentially get a couple of openers a year to recover inflation, as Steve just described. So that's materially different than the last time we saw that as well.

Operator

Your next question comes from Mark Wilde from Bank of Montreal. Please go ahead.

Mark Wilde -- BMO Capital Markets -- Analyst

Good morning. I wondered, Mike, if we could dig in a little bit on the dynamic in the SBS market, because, it seems like we've had a lot of closures announced over the last 12 to 18 months with GP and more recently with WestRock. We've had a lot of big players taking market downtime and the market still seems to be struggling. So, can you just take a minute or two and sort of unwind the thesis for us. And can you also help us kind of reconcile all of that with you reporting five-plus week's backlog in SBS?

Michael P. Doss -- President and Chief Executive Officer

Yeah, happy to do that, Mark. So, I mean, if you think about from Graphic Packaging standpoint, we operate four SBS paper machines. And as you heard Steve say, in this quarter, we actually are at a run rate basis of running almost 100,000 tons of our CUK production on three of those folding carton machines. The fourth machine is the uncoated cup machine.

In the case of Graphic, our uncoated cup machine, it's a highly integrated machine into our own cup operations. As we said, it's over 85% integrated into our own cup making process for customers. So if you kind of look at SBS and what we're seeing, we're seeing strong demand on our coated machines, because we're converting CUK production on those SBS machines, we're selling that to customers, we're managing our supply and demand to our demand requirements on our uncoated machine.

And so, operating rates, if you look at what happened in Q3, SBS as an industry was down around 85% but it was a very busy maintenance season as you saw and Graphic took 30,000 tons of economic downtime. Coming out of that, as you saw here in September, inventories went down by 86,000 tons. And when you look at the backlog report as reported by the AF&PA that grew to five weeks. So that's the math of how we think about it.

Mark Wilde -- BMO Capital Markets -- Analyst

Okay. And Mike, is it possible for you to talk a little bit about this concept to potentially converting some SBS capacity over to CUK at a point?

Michael P. Doss -- President and Chief Executive Officer

Yeah. And so, if you really take a step back and look at what we've done with CUK growth and I'll go back to 2014 and kind of wind that forward to today. We've actually grown our CUK production by over 200,000 tons in that period of time. You don't see that in the AF&PA data because it's commingled with gypsum wall facing, but it's grown to 2% to 3% a year based on solid global beverage sales and other sales that we've seen manifesting itself into this year where because of the growth we're seeing on our global beverage platform, we need to actually run some of that production over on our SBS machines.

So when we take a step back and look at what optionality we have for the Company, what we want to do is take advantage of our low cost virgin pulp. We want to make the substrates that have the highest growth potential and the highest profitability. And so what you'll see us do over time is evaluate how do we push more of that pulp into the grades that we need and what we're looking to do is do that in a capacity-neutral way because it's basically a shift, if you think about it that way, out of one substrate and into the other.

And that's, those types of capex projects, Mark, they're very manageable. It's nothing like what you -- what we're doing in Kalamazoo. It's kind of what you'd see us do as a strategic project on top of our normal maintenance capex. And so it's very manageable. It'd be something that we're looking at and evaluating kind of what the right allocation of that looks like, and how to best meet that need over time. But it is a high-class problem. I mean, we've grown our CUK consistently year-on-year. It's a great substrate. It's growing globally and we've got options to be able to meet it in a very cost effective way.

Operator

Your next question comes from Ghansham Panjabi from Baird. Please go ahead.

Matt Krieger -- Robert W. Baird & Company, Inc. -- Analyst

Hey, good morning. This is actually Matt Krieger sitting in for Ghansham.

Michael P. Doss -- President and Chief Executive Officer

Hey Matt.

Matt Krieger -- Robert W. Baird & Company, Inc. -- Analyst

Hey, good morning. So, I just wanted to start with a question on volume. So I was hoping that you could provide some added detail behind the drivers of the 4% increase in organic sales growth. And then if you could put a particular emphasis on how much of that improvement was driven by the current stay-at-home orders or the consumption at home backdrop that would be really helpful.

Michael P. Doss -- President and Chief Executive Officer

So, Matt, if we kind of take a step back and talk about the concept we shared with you in our second quarter, we see, on our food and beverage business, which is about three-quarters of the volume that we've got out there in a quarter of, again, foodservice. It's a bit of that teeter-totter effect as we talked about in terms of our core volumes. This -- we continue to see our core beverage and food up. In this quarter, it was up almost 8% and then the foodservice business down in this quarter, roughly 14% which was sequentially better than what we saw in the second quarter as well.

And so, on the core volumes, we expect that phenomenon to continue to be that way. If foodservice grows a little bit, we would expect to see a little bit of a reduction on the beverage -- or on the beverage and food side of the business. But where the growth is really coming from and I point to our Slide 6 in the materials we provided to you, it on our growth platforms and we are seeing good organic growth on our Plastic Substitution platform, our Cooking Solutions platform, and our Strength Packaging platform and we've shown you some pictures and some examples of things that we're seeing.

We profiled a couple of things in the comments in our prepared remarks around what we're seeing with KeelClip as an example and we sold over 20 machines that are ramping up as we speak. Some are already in service. So we've got really good momentum on the new product, our new product innovation. I mean our backlogs and pipelines are full on those kind of things. So the core volumes. Think about it a bit as that teeter-totter, but where the growth is going to come, the organic growth is going to come is on those platforms. And that's as really where we're seeing it.

Matt Krieger -- Robert W. Baird & Company, Inc. -- Analyst

Great, great. Thant's helpful. And then flipping over to pricing, with some of the price hikes creeping into a variety of the adjacent kind of product categories across the paper-based packaging space, can you provide some updated thoughts on the outlook for pricing across your various paperboard grades over the next several months and even kind of end of the medium term. Are there any areas where you feel that the industry is under earning more than usual or earn most at current?

Michael P. Doss -- President and Chief Executive Officer

So, Matt. I'm not going to talk about forward facing pricing decisions other than the fact you are aware and publicly we were out with an increase on our CRB grade of $35 a ton. So beyond that, as Steve said in his prepared remarks, as we see inflation flow through the business, we're going to be aggressive in recovering that inflation, so that it offsets over time.

Operator

Your next question comes from George Staphos from Bank of America. Please go ahead.

George Staphos -- Bank of America Merrill Lynch -- Analyst

Hi, everyone. Good morning. Thanks for all the details. Hope you're doing well. I wanted to take a different approach on the growth outlook question if we could. Mike, can you -- you mentioned e-commerce as being something that you're trying to leverage, can you talk about, aside from maybe just the pantry load that's occurring as the consumer is ordering direct to consumer. Is there anything specifically that you're doing to leverage e-commerce?

And then, I think maybe back to Matt's question relatedly, can you talk about, I think in the past you said sustainability the growth platforms could add 1 to 2 points of organic growth going forward, are we getting to a point where maybe you should be increasing, if I refer to it correctly in the first place, the growth outlook from these platforms and from sustainability?

Michael P. Doss -- President and Chief Executive Officer

Thanks for that. I think if you kind of look at a couple of the examples we showed you on Strength Packaging, what you're seeing us really go after in that space are kind of what we'll call a routine replenishment type products. So if you think about lot of pet food and some of the consumer staples, these things tend to be on order and they're pretty consistent in terms of how the consumer really needs them and how they use them.

And so, as we look at the types of products that we're able to provide an that relationship that the customer wants to have with the end use consumer in an e-commerce channel, we're providing excellent graphics and merchandising capabilities to kind of keep that connection tight and you can see some of the examples that we shared with you there, that do just that.

And on the other side of things, as other types of packaging continue to increase in cost, we're replacing tertiary packaging with a carton and that results in a cost reduction for the retailer in this case or the end use consumer. So that's how we think about e-commerce, we think we've got a bit of a tailwind there as we talked about in the past, George, and we're pretty focused in terms of where we're going after those niches and looking for that growth.

And relatively to the 100 basis points to 200 basis points, look, I think we've told you in the past that growth can be a little lumpy. This was indeed a very good quarter for us. Our teams are executing well. Our backlogs are good. But Steve and I are holding to the 100 basis points to 200 basis points of growth over our -- over the horizon because we put that out there for our Vision 2025.

So I'd ask you guys to keep that as the target as we kind of go forward here, realizing, of course, there's going to be some quarters like the one we just had. And then obviously there'll be some where the conversions may not happen quite as fast, but over time, we've got a lot of confidence in that 100 basis points to 200 basis points. And I think three quarters of growth in a row, they quite frankly exceeds that. You know validates that that's the right goal for us.

George Staphos -- Bank of America Merrill Lynch -- Analyst

Thank you. And my...

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

George, it's Steve, just one thing [Speech Overlap] one thing to add to Mike's point is, one thing we do see is the confidence in the 100 basis points to 200 basis points driven by what for us appears to be an increasing addressable market when we look at where and -- where we're participating from what we would have articulated a year ago. Our confidence that the addressable market is of substance and that optionality in places like new categories like proteins represent more potential for us. So the addressable market is certainly there in total, which is why we have the confidence in the overall 100 basis points to 200 basis points over time.

George Staphos -- Bank of America Merrill Lynch -- Analyst

Thanks, Steve. My other question and I'll turn it over. And you mentioned looking out to next year, you expect to see organic sales growth. Obviously, the comps are tough and organic EBITDA growth or EBITDA growth. I know you're not going to be able to provide a line item detail beyond those points, but can you give us some thoughts in terms of what kind of growth, what kind of mixture between foodservice and traditional food and beverage you might see in terms of volume growth. And most importantly, as foodservice comes back, what kind of lift do you get in the mix? Thank you, guys.

Michael P. Doss -- President and Chief Executive Officer

So, George, I'll start with your question there, and then Steve can add some commentary as well. But I think, look, we would expect -- and we saw as a matter of fact here -- sequential growth in foodservice in our Q3. We would expect that to continue into 2021. It's going to take some time for that category to completely recover. As you can appreciate, there is a lot of verticals there like off-premise consumption of those products, events, hotels, sporting events and that kind of stuff. So it will take a while for that to really come back. But, as we kind of look at what we're seeing even within that category, we are seeing opportunities where we're continuing to win share and expand the pie through foam conversions on our cups. And so, we'll be in a good position as that comes, and it will be a source of growth for us again going -- going into the future. And, Steve, I'll let you handle this question on mix.

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

Yeah, George, the only thing I think I'd add to that is, obviously, we'll provide details in February, but when we look at the potential for organic sales and EBITDA growth next year, earning on volume mix and driving productivity are going to be the two primary categories that we'll share with you in February. We expect to have a strong productivity year next year. We'll have less downtime, particularly on the maintenance side as we talked in the comments, not doing it -- not needing to do some work around recovery boilers, as an example, that drives year-over-year productivity improvement for us because of the need not to make those investments. So it's going to be a volume mix and productivity discussion that we'll be having as we share those details with you coming up in February.

Operator

Your next question comes from Mark Connelly from Stephens. Please go ahead.

Mark William Connelly -- Stephens -- Analyst

Thank you. So the #7 Curtain Coater is the second of three. How quickly do you know whether you've gotten the savings that you targeted? And I think you also talked about improving sheet quality. Does that -- does that expand your customer potential or is that really just sort of keeping -- keeping the margins where they were?

Michael P. Doss -- President and Chief Executive Officer

Yeah. Thanks, Mark. So we're actually now -- it's the third of four. And so both curtain coaters are done in Macon. We did #7 in the West Monroe that you just mentioned. We have #6 still to do over in Monroe.

Relative to the savings that we see, it's pretty instantaneous, within 30 days. I mean, basically -- and we've got these pretty well dialed in, as you would expect. This is the third of four. So the latex and TiO2 reductions -- we see the material reductions occur very quickly and start showing up in our performance results. And so you'll see that in our comp year-over-year on that.

And relative to the fiber usage, in particular, in the case of what we did in Texarkana, the head box there, we actually see a reduction in the amount of fiber that we need to use now to make our cup, and we'll dial that in. That's a little longer period of time as you got to run through trials and kind of work through that to our own integrated cup operations. But it increases the consistency of our formation and the profile of the sheet which then in turn allows us to run with a lighter basis weight over time.

Mark William Connelly -- Stephens -- Analyst

Okay. And just a question on alternative beverage carriers. This summer, we started to see more of those heavier plastic, six-pack carriers with -- where the plastic covers the top of each can, and now we're starting to see trade press about bioplastic ring carriers that will biodegrade. I was hoping you could talk about where those two fit against a system like yours which is geared toward more higher volume because we're really only seeing that plastic stuff in low volume applications. Is this -- given the sort of business you do, how competitive are these new products that we're starting to see?

Michael P. Doss -- President and Chief Executive Officer

Yeah. So it's a competitive market, for sure. But I think you've got the read on it the right way. I mean, the high volume production really needs to go down in integrated line like the ones that we make that allows our customers to do this at incredibly high speeds with high levels of efficiency given how they have to run their operations. And our KeelClip does in fact do just that. You will see different types of options, kind of one-offs, particularly on the craft side, where these are hand-assembled and kind of put together. And again, we compete with those types of products and expect to compete with those types of products. But from a volume standpoint, those are relatively small in nature.

Operator

Your next question comes from Adam Josephson from KeyBanc. Please go ahead.

Adam Jesse Josephson -- KeyBanc Capital Markets -- Analyst

Mike and Steve, good morning. Hope you and your families are well.

Michael P. Doss -- President and Chief Executive Officer

Thank you, Adam.

Adam Jesse Josephson -- KeyBanc Capital Markets -- Analyst

Mike or Steve, just on commodity costs. I know you give the annual consumption in the supplementals in the -- in the presentation, but can you give us a sense just in light of the deflation you're guiding to this year of $10 million to $30 million? Where your input cost basket is relative to normal? In other words, are your -- is your input cost basket in its entirety at normal levels, below average, above average? Just trying to get a sense of where you are input cost-wise versus whatever you consider normalcy.

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

Adam, it's Steve. Obviously, it varies by category, and you know the categories well. There are certainly some categories that are at what would be considered historic low level like you've seen OCC move toward it appears to be there for the foreseeable future given the global dynamic. On OCC, wood very steady and has returned to more normalized levels, we would say. You are seeing, as you mentioned, logistics costs, truck particularly, does have volatility in it, and we've seen some of that in the short term it will chronicle. There's just been some movement up in spot rates. So right now, it would be moving above the norms in the short term here.

Energy, I would characterize, you kind of got a sense from nat gas being at now kind of more normalized and consistent level. So the net of all of that for us, as you mentioned, this year, modestly deflationary, was pretty neutral in Q3. We would expect it to be neutral to modestly inflationary in Q4. As we mentioned earlier, when you take the entire basket, and if the world stop rotating on an instantaneous basis, it would be -- would be in a modestly low inflationary environment next year based upon the full basket of those commodity costs.

Adam Jesse Josephson -- KeyBanc Capital Markets -- Analyst

I appreciate that. Just to follow up on that, on the CRB increase. So if -- if you're not really seeing much inflation across the business, I guess I wonder why the need for the CRB increase. And relatedly, I'm just trying to understand the timing and the amount of it. So you announced a $50 one in the spring. Obviously, RECE [Phonetic]did not recognize it. I don't know how much you implemented of the $50. So I'm just wondering how that translates to your announcing a $35 a ton increase versus the previous $50, why the timing of it in August. I'm just trying to understand the timing and the magnitude of that increase versus the previous attempted increase, how much you realize and if any of this has to do with cost inflation, given that you're experiencing input cost deflation this year. Thank you.

Michael P. Doss -- President and Chief Executive Officer

Yeah. So Adam, I guess the way I would answer that, if you look at our Q3 AF&PA data, as we talked about, I mean, the operating rates are quite strong, finishing September at 96.5%. Demand actually outstripped production in the quarter by 21,000 tons. And backlogs are strong at five-plus weeks. So when you look at all of that together, supply and demand has a bearing on pricing, as you know, and so that's why we did what we did.

Operator

Your next question comes from Brian Maguire from Goldman Sachs. Please go ahead.

Brian P. Maguire -- Goldman Sachs Group -- Analyst

Hi. Good morning. Thanks for taking the question. Could you -- I was hoping to get some more real-time color, if you could provide it on trends in the foodservice business. I know it was weak through most of the summer. I just wonder if you're seeing any signs of improvement in October or do you think that more economic downtime might be needed in 4Q if passing any increase in that market?

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

Hey, good morning, Brian. So, as you saw, we saw sequential improvement, albeit slight, in our Q3 over our Q2, and we continue to see that trend continue on here into Q4. Relative to any downtime that we would take relative to our cupstock line, we're not planning on any right now in our fourth quarter. But as we've said in the past, we'll match our supply with our demand based on what we're seeing there. It's a highly integrated machine that is over 85% integrated in our own cup operations.

So if you think about that for a minute and just kind of parse it out a bit, we make 3.8 million tons as a corporation, and of those 3.8 million tons, around 10% of that would be that cup machine in Texarkana. The rest of our portfolio is quite busy. Our CRB is busy, our CUK is busy and the three coated SBS machines are busy. So that's how I would have you think about that. And what we're doing to balance our supply and demand on the cupstock line, you just saw through Q3 and we'll continue to monitor that as we go forward.

Brian P. Maguire -- Goldman Sachs Group -- Analyst

Okay. And then just a question on the -- the EBITDA guidance components. It looks like the performance bucket is kind of going the wrong way by about $20 million. I just wonder if you could comment on what the drivers are there versus the prior guide. And then related to that, just any kind of initial thoughts on where 2021 capex might fall?

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

Yeah, Brian, all we were doing on the guide was just tightening up all of the numbers. We are very pleased that we were earning on the volume mix, and so we moved that up a little bit. We recognized in the guide on performance that we took the economic -- or the market downtime for SBS that's now in there. There is a little bit of year-over-year comp that is in the net performance numbers. So we're really just cleaning those up. In total, there was -- there was no move.

And then obviously, we'll come forward -- you know the major projects that we have under way with Kalamazoo and kind of our core capex -- we'll be more definitive on capex as we -- as we roll into February.

Operator

[Operator Instructions] Your next question comes from Steve Chercover from D.A. Davidson. Your line is open.

Steven Pierre Chercover -- D.A. Davidson & Co. -- Analyst

Thanks. Good morning, everyone.

Michael P. Doss -- President and Chief Executive Officer

Hi, Steve.

Steven Pierre Chercover -- D.A. Davidson & Co. -- Analyst

The first question. Did the hurricanes that hit Louisiana and other parts of South have any impact on your operations or log costs in the third quarter? And going forward, might there be a benefit from inexpensive salvage logs?

Michael P. Doss -- President and Chief Executive Officer

Yeah. So Steve, we incurred a very, very modest amount of downtime or precautionary downtime at our converting plant in West Monroe that we shut down as a result of one of the hurricane preparations. But we did not lose any time at our West Monroe mill or are Texarkana mill.

Relative to salvage log recovery, we're in those markets every day. A lot of that was south of where we we're at. As a reminder, we buy all softwood material in Monroe. We do buy hardwood obviously Texarkana. But I think our costs for wood have been very good this year, and we expect, based on what we see right now, as we go into Q4 for that continuing to be the case.

Steven Pierre Chercover -- D.A. Davidson & Co. -- Analyst

Great. And then with respect to Kalamazoo. It's good to hear that is on time and on budget. Since the models will soon be looking into 2022, can you help us understand how that $100 million benefit is going to flow through? I think some of the savings might start from Battle Creek and Middletown might start to accrue in 2021. So if you can kind of tell us the cadence, so to speak.

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

Yeah, Steve, it's Steve. At a high level, what we've conveyed previously is that of the $100 million of expected EBITDA improvement, roughly half of it would come in in '22, with the other remaining $50 million coming into '23. That's right now the right operating and modeling assumption, to your question. No real benefit in '21.

Operator

Your next question comes from Anthony Pettinari from Citi. Please go ahead.

Anthony James Pettinari -- Citigroup -- Analyst

Good morning.

Michael P. Doss -- President and Chief Executive Officer

Hi, Anthony.

Anthony James Pettinari -- Citigroup -- Analyst

Hey. Just following up on George and Brian's questions. You mentioned a number of customer channels that may have to come back before you can run more fully in SBS. I there one or two that are particularly important or that we should watch and whether it's coffee chains or institutional or big events that we should focus on? And when you think about sort of a post-COVID recovery, we've seen a lot of retail closures, big coffee chains closing, a big chunk of stores. Just wondering if you think there could be any sort of permanent impact to cup demand even if we get somewhere back to normal in '21? Or how you think about offsets?

Michael P. Doss -- President and Chief Executive Officer

Yeah, again, Anthony, what I'll go back to is talk about the four SBS machines we operate. Three coated machines actually are quite busy because we're running a lot of our CUK material over there. In regards to our cup line, in particular, you said it. We're seeing some declines obviously in some of those verticals that we talked about already relative to a year-over-year comp basis. And it is true if you think about on the coffee channel, well, the drive-through window remains quite robust. The actual consumption within some of those stores is down and some of those stores just have not reopened. And so we're anticipating that to be the case as we go into the fall here and into 2021. We expect that that would recover here as there is a vaccine and a treatment plan that works and get people comfortable with.

When that is, it's very hard to actually put your finger on. But we would expect that particular vertical to be a source of growth in the future again, but it's going to take some time for it to recover. In the meantime, the good news for us is, we've got a highly integrated paper machine into five integrated plants and we've demonstrated an ability to grow our top line quite well even with that as a headwind. So we think we're positioned very well to respond through this pandemic.

Anthony James Pettinari -- Citigroup -- Analyst

Okay. That's helpful. And then, you have a fairly sizable European business, and we're seeing some of those markets go into increased restrictions or lockdowns. I'm just wondering if you could talk about your exposure there, whether it's sort of on-premise or consumer/grocery and how current conditions are or maybe are not impacting your business in Europe.

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

Yeah. Our business in Europe is actually much lower indexed to foodservice, and it's much more indexed to food and beverage. Beverage is a very big business for us in Europe, as a matter of fact. And so when you think about kind of the pandemic and what we saw in Q1 and early Q2 of this year when Europe was a little bit ahead of where North America was relative to the COVID-19 pandemic, we saw solid volumes, and we would expect that in that kind of a situation for that to be the case again here going into the fall.

Operator

Your next question comes from Neel Kumar from Morgan Stanley. Please go ahead.

Neel Kumar -- Morgan Stanley -- Analyst

Hi, good morning. Thanks for taking my question. You talked about moving 100,000 tons from CUK to SBS. What has the customer receptivity been to switching grades given the perception that CUK is a more sustainable product? And can you just remind us following the closure of the medium machine at West Monroe, how much incremental CUK volume can you get out of this and the timing of that?

Michael P. Doss -- President and Chief Executive Officer

Yeah, Neil. So I guess if you think about customer receptivity, what -- our customers have been thrilled that we've run a robust supply chain for them. Particularly as you look at what happened in Q2 and into Q3, we've been able to keep them in -- and products. In some cases, their volumes have grown dramatically, and we've been able to supply their needs. And so we did that in a way that kind of used our substrates that we manufacture in a way that kept them in business, and obviously they've been able to excel with our support. So it's been very high in that regard.

In regards to pulp in Monroe, as I mentioned, if you look at the paper machine we shut down in 2015, which was a bag machine and now the liner machine, liner medium machine, we've consumed the vast majority of that pulp. In fact, we've grown 2% to 3% from a Group standpoint every year over 200,000 tons between Macon and West Monroe, with West Monroe being the largest gaining item. So we've been quite active in taking advantage of that pulp that we have.

Operator

Your next question comes from Arun Viswanathan from RBC Capital Markets. Please go ahead.

Arun Shankar Viswanathan -- RBC Capital Markets -- Analyst

Great. Thanks. Good morning. Congrats on the quarter. I guess I just wanted to ask about foodservice to begin with. So maybe you could characterize where you are in that recovery on a down year -- year-on-year basis. Have your -- have your monthly trends kind of slowly, steadily improved? And how do you see that business kind of trending over the next little while? And do you think there's been any structural damage there that would require that you kind of shift your focus? I know you highlighted potentially moving some SBS into CUK, but what are some of the things you're considering there and how should we think about your foodservice evolving over the next, say, six months or so?

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

Yeah. Arun, Steve. Mike touched on a fair amount of that just a moment ago. I think 14% down in the quarter was modestly improved. We're down 11% year to date. We would expect for a slow and consistent improvement, but it will take some time. And as such, we're taking the actions that we've talked about. We'll match supply and demand on that singular one machine that's 85% integrated to match it with our cup production. Those are actions that we'll clearly take. And then we'll consistently assess the other three machines which are very busy today; five plus week backlogs on them driven by CUK conversions. And as Mike articulated earlier, we're obviously exploring options for investing in the pulp capabilities on those other machines as well to create very cost-effective solutions in growing applications.

Arun Shankar Viswanathan -- RBC Capital Markets -- Analyst

Okay. Thanks for that. And I also wanted to ask about -- I guess, longer-term, if you're thinking about this business and -- I just lost my train of thought here, but yeah, so maybe we can just add some pivot toward M&A then. Are you seeing any opportunities for bolt-ons in Europe on the converting side or are you kind of solely focused internally on your organic investment? What should we expect on that front?

Michael P. Doss -- President and Chief Executive Officer

So, if you really look at the two acquisitions we did earlier this year, both Quad and the Greif converting assets, we're thrilled with those acquisitions, and they're largely integrated into our operations, as you heard Steve say in his prepared remarks. We shut down two facilities and two converting facilities and we've largely completed those activities. That business is where it belongs in its new location. And we're driving synergies through the business. We've got a supply agreement that will unwind over the next couple of years. And so that whole part of how we thought about the business, driving our integration rates up, is really working to plan and as we expected it to.

Relative to ongoing M&A, as we said last quarter, the bar is really high. We've got a lot to do here already. We're executing well. We're growing organically. We're investing in our R&D and new product development activities. We're investing heavily back into our own corporation, our converting operations. If you think about what we've done in Monroe and how differentiating that is from anything else anybody else is doing in the industry or what we're doing in Kalamazoo, it's going to have a whole different profile for us. And so we like our ability to drive this organic growth for the next few years for sure as part of our Vision 2025 and that 100 basis points to 200 basis points. So what we'll compare and contrast against is more investment organically versus M&A. And like I said, it's a really high bar. Not to say we don't look, because we do, but we're very thoughtful in terms of how -- how we will allocate capital in that kind of an environment.

Operator

Your next question comes from Mark Weintraub from Seaport Global. Please go ahead.

Mark Adam Weintraub -- Seaport Global Securities -- Analyst

Thank you. Just a couple, kind of clean-up questions. One was, last quarter you had an outage cost impact table. I don't see that this quarter. Is what we saw last quarter still relevant for what would be in Q4 or is there going to be downtime at Texarkana to factor in?

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

Yeah. Hey, Mark, it's Steve. We eliminated the table because it was kind of there more to help with the quarters. So apologies for that. All that was there [Indecipherable] quarters. Since we're now talking about Q4, there has been no real change. And as Mike articulated earlier, we don't have plans for downtime across the cup machine in the quarter.

Mark Adam Weintraub -- Seaport Global Securities -- Analyst

Okay. Great. And then lastly, as you point out on slide 9, lots of projects in 2019 and 2020, which would have impacted maintenance, how much higher would you say have maintenance expenses been this year and/or last year versus what would be more normal or kind of reasonable, recognizing perhaps you haven't fine-tuned it, but as we think about next year?

Michael P. Doss -- President and Chief Executive Officer

Yeah, Mark, I think about it and we touched on it. Significant investments that we have been making certainly in recovery boilers and the curtain coaters in the headbox. Think of it as probably a $20 million year-over-year improvement opportunity by not having to do as much of that from '20 to '21. We'll come back and talk about that in more detail, but it's in that kind of a range.

Operator

Your next question comes from Philip Ng from Jefferies. Please go ahead.

Philip H. Ng -- Jefferies -- Analyst

Hey, guys. Good morning, everyone. If I heard you guys correctly, it sounds like you're not taking any downtime in bleached board in the fourth quarter. So curious if the WestRock Evadale line closure, is that a big deal for you? Because I don't have a great feel for the overlap that line may have, whether it's foodservice or folding cartons.

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

So, Phil, we had a competitor that announced they were taking a machine down. It's 200,000 ton machine, 5.2 million ton market. So you can do the math on that. It's 3% to 4% of the capacity that comes out. We talked about in the case of Graphic, how we are operating our three folding carton grade machines and then our cup machine. So what [Indecipherable] over time is that operating rates would improve as the denominator gets adjusted on that.

Philip H. Ng -- Jefferies -- Analyst

Okay. So, you know any color from your perspective, your intelligence, whether that was -- was there a lot of overlap in like folding cartons or cups as it relates to that line that they idled? I just don't have a good feel for it.

Michael P. Doss -- President and Chief Executive Officer

We don't know.

Philip H. Ng -- Jefferies -- Analyst

Okay. That's fine. And then, the momentum you guys called out in your business and backlogs. Part of that is driven by some of these conversions into this growth platform. So I'm curious, are you seeing more wins come through recently or is this more of the wins that you had last year -- last year that's actually finally flowing through?

Michael P. Doss -- President and Chief Executive Officer

We're seeing more wins, and we're seeing more opportunities. I mean, the addressable market, as Steve said, continues to grow, and we'll put a little bit more emphasis on that when we talk to you again in February. We're doing a lot of work on this. We're investing, as I said, in terms of resources that will help drive new product development, growth in commercialization. So you're going to see us really get over our skis here and we're going to lead, be the clear leader here on fiber based consumer packaging, and we're investing behind it to make sure that that happens, both in terms of people and in terms of our capabilities, and that's pretty exciting.

Operator

Your next question comes from Mark Wilde from Bank of Montreal. Please go ahead.

Mark Wilde -- BMO Capital Markets -- Analyst

Yeah. Just a couple of follow-ons again over on foodservice, Mike. I wonder if you guys can give us a sense of where you're at with volumes just in the cup business versus where you expected to be at this point. And then, is the kind of stress in foodservice, could that be creating some opportunities to maybe consolidate and rationalize in the space? It's a space you've long wanted to grow in.

Michael P. Doss -- President and Chief Executive Officer

Yeah. So I'll start and then Steve can comment. I guess in terms of, like I said, the drive-through windows, Mark, has remained quite busy as we've seen the -- kind of we've opened back up again. Where we're seeing the -- the issue or the reduction is the event based stuff, the on-premise stuff. I mean, that's a wide range of category. Think about movie theaters, think about sporting events, think about hotels and that kind of stuff. So it's difficult to know exactly how that comes back or how fast it comes back. As we said, we still believe that this will be a source of growth for us again in the future, but it's going to take some time.

Relative to conversion opportunities, I mean, we talked a little bit about what we see on the SBS side of the business for CUK. So I believe that's what you were talking about. So I won't repeat my comments on that. But the other part of it is, we're pretty aggressive, as you know, taking a look at our footprint every year, our converting footprint every year and making sure that we're lined up with where our customer demand is coming from. So we'll continue to be very thoughtful in terms of what that looks like. But when you're driving the kind of growth that we're driving now, we need that capacity to help us make sure that we're ensuring customer service and meeting their demand needs. So we're repurposing some of that capacity maybe a little differently than how it was originally intended to be used.

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

And Mark, to your question on consolidation, M&A type consolidation. As Mike said, we have a high bar, but certainly, we're always opportunistic and thoughtful. If there was an opportunity for consolidation, that would be something we would take a serious look at because there is the possibility, of course, businesses being disrupted and may have a need for a change. So that's always on our radar as you you'd expected. And generally, our integrated cup business is down in very similar percentages as what we articulate for the whole foodservice business. So there's not a material change there, as Mike said. It's really that last 15%, 14% is driven by theaters, airlines, hotels events. That's kind of what is really driving that component.

Michael P. Doss -- President and Chief Executive Officer

It's pretty long tail.

Operator

Your last question comes from George Staphos from Bank of America. Please go ahead.

George Staphos -- Bank of America Merrill Lynch -- Analyst

Thanks for taking my final question. Hi, guys. I want to take another approach to that question that Mark had teed up. You see one of the other traditional B2B packaging companies in the market in a different substrate developing a consumer cup business with a very large investment. You have some potentially excess capacity right now in bleach board, in your cup business for obvious reasons within foodservice. I recognize you don't want to make a decision for the next three years based on the last two quarters, but is there an opportunity to creatively use maybe your bleached capacity in your cup-making for a consumer offering either at retail or direct to consumer? Have you looked at that at all? And what's the return payoff if you have? Thank you, guys, and good luck in the quarter.

Michael P. Doss -- President and Chief Executive Officer

George, just for clarification, are you talking about kind of moving out of institutional cups and into retail cups?

George Staphos -- Bank of America Merrill Lynch -- Analyst

Yeah, that's what I was thinking about. I don't know if you have available cup-making capacity. But my guess is you might because of what's been happening in foodservice volumes overall. So there is an opportunity to take that capacity and offer it either to retail for the consumer or direct to the consumer in some way to fill up that capacity, not knowing what investments you'd have to make on, web platforms, marketing and so on, maybe it's not worth it, but just I figured out I would tee the question up.

Michael P. Doss -- President and Chief Executive Officer

Yeah. So thank you for that. I understand it. From our standpoint, as you know, we're over-indexed on the institutional side, which is really where we are set up and we've got the ability to really have scale and drive cost efficiencies through our business there. So relative to building a brand, you won't see us do that. Relative to a customer that comes to us and maybe want -- some private label consumer, as an example, and wanted some cups made, we could absolutely and we would look at those kind of opportunities. So that's how I believe we would approach that in the marketplace and would happen.

Operator

We have no further questions. I'd like to turn the call over to Mike Doss for closing remarks.

Michael P. Doss -- President and Chief Executive Officer

Our solid results in 2020 are reflective of the long-term value our packaging solutions provide to the food, beverage and foodservice industries. We are delivering on our promises, advancing our strategic priorities and posting growth in both organic sales and EBITDA. We're excited about the business and expect the extending our clear leadership in fiber based consumer packaging through new product rollouts, consistent execution and service to customers. Our dedication to employees and partners is unwavering as we pivot to a growth culture. Our role in advancing the global sustainability movement is nothing short of exciting and energizes our employees and partners.

And with that, we look forward to talking to you again in February.

Operator

[Operator Closing Remarks]

Duration: 66 minutes

Call participants:

Melanie Skijus -- Vice President, Investor Relations

Michael P. Doss -- President and Chief Executive Officer

Stephen R. Scherger -- Executive Vice President and Chief Financial Officer

Debbie Jones -- Deutsche Bank -- Analyst

Mark Wilde -- BMO Capital Markets -- Analyst

Matt Krieger -- Robert W. Baird & Company, Inc. -- Analyst

George Staphos -- Bank of America Merrill Lynch -- Analyst

Mark William Connelly -- Stephens -- Analyst

Adam Jesse Josephson -- KeyBanc Capital Markets -- Analyst

Brian P. Maguire -- Goldman Sachs Group -- Analyst

Steven Pierre Chercover -- D.A. Davidson & Co. -- Analyst

Anthony James Pettinari -- Citigroup -- Analyst

Neel Kumar -- Morgan Stanley -- Analyst

Arun Shankar Viswanathan -- RBC Capital Markets -- Analyst

Mark Adam Weintraub -- Seaport Global Securities -- Analyst

Philip H. Ng -- Jefferies -- Analyst

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