# Graphic Packaging Holding Co: Form 10-Q for the period ended Sep 30, 2023

- Company: [Graphic Packaging Holding Co](/companies/gpk.md) (CIK 1408075)
- Form: 10-Q
- Filed: 2023-10-31
- Accepted by EDGAR: Oct 31, 2023, 15:05 ET
- Period: 2023-09-30
- Accession: 0001408075-23-000041
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1408075/000140807523000041/gpk-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1408075/000140807523000041/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $2.34bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $7.15bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-30 | $1.80bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-01-01 to 2023-09-30 | $5.56bn | us-gaap:CostOfGoodsAndServicesSold |
| Selling, general and administrative | 3 months, 2023-07-01 to 2023-09-30 | $220.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2023-01-01 to 2023-09-30 | $622.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | $287.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | $884.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $62.0m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $180.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $54.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $175.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $170.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $527.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.55 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $1.70 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.55 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $1.71 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 309,200,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 309,300,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $702.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 9 months, 2023-01-01 to 2023-09-30 | $92.0m | us-gaap:PaymentsOfDividends |
| Share repurchases | 9 months, 2023-01-01 to 2023-09-30 | $37.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-09-30 | $146.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $2.86bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $10.90bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $2.44bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2023-09-30 | $4.82bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-09-30 | $737.0m | us-gaap:LongTermDebtCurrent |
| Short-term borrowings | at 2023-09-30 | $17.0m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2023-09-30 | $2.54bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 55,647 characters.

### INTRODUCTION

This management’s discussion and analysis of financial conditions and results of operations is intended to provide investors with an understanding of the Company's past performance, financial condition and prospects. The following will be discussed and analyzed:

- Overview of Business
- Overview of Third Quarter 2023 Results
- Results of Operations
- Financial Condition, Liquidity and Capital Resources
- Critical Accounting Policies
- New Accounting Standards
- Business Outlook

### OVERVIEW OF BUSINESS

The Company’s objective is to strengthen its position as a leading provider of recyclable, fiber-based consumer packaging solutions. To achieve this objective, the Company offers customers its cartons, foodservice containers, cups, lids, paperboard and packaging machines, either as an integrated solution or separately. Cartons, carriers and containers are designed to protect and hold products. Packaging offerings include a variety of laminated, coated and printed packaging structures that are produced from the Company’s coated recycled paperboard ("CRB"), coated unbleached kraft paperboard ("CUK") and solid bleached sulfate paperboard ("SBS"). Innovative designs and combinations of paperboard, films, foils, metallization, holographic and embossing are customized to the individual needs of the customers.

The Company is implementing strategies (i) to expand market share in its current markets and to identify and penetrate new markets; (ii) to capitalize on the Company’s customer relationships, business competencies, and integrated mills and packaging assets; (iii) to develop and market innovative, packaging products and applications that benefit from consumer-led sustainability trends; and (iv) to continue to reduce costs by focusing on operational improvements. The Company’s ability to fully implement its strategies and achieve its objectives may be influenced by a variety of factors, many of which are beyond its control, such as inflation of raw material and other costs, which the Company cannot always pass through to its customers, and the effect of overcapacity in the worldwide paperboard packaging industry.

### Significant Factors That Impact the Company’s Business and Results of Operations

*Impact of Inflation/Deflation.* The Company’s cost of sales consists primarily of energy (including natural gas, fuel oil and electricity), pine and hardwood fiber, chemicals, secondary fibers, purchased paperboard, aluminum foil, ink, plastic films and resins, factoring, depreciation expense and labor. Costs increased for the nine months ended September 30, 2023 by $149 million, compared to the first nine months of 2022 due to higher commodity inflation costs ($18 million), labor and benefits ($74 million) and other costs, net ($57 million). Commodity inflation was primarily due to external board ($53 million), mill chemicals ($40 million), factoring ($32 million), converting chemicals ($5 million), and other costs ($15 million) offset by secondary fiber ($56 million), energy ($32 million), freight ($26 million), and wood ($13 million). Because the price of natural gas experiences significant volatility, the Company has entered into contracts designed to manage risks associated with future variability in cash flows caused by changes in the price of natural gas. The Company has entered into natural gas swap contracts to hedge prices for a portion of its expected usage for 2023 and 2024. Since negotiated sales contracts and the market largely determine the pricing for its products, the Company is at times limited in its ability to raise prices and pass through to its customers any inflationary or other cost increases that the Company may incur.

*The Company’s operations and financial results could be adversely impacted by global events outside of the Company’s control.* The Company’s operations and financial results could be adversely impacted by global events outside of the Company’s control, such as the conflict between Russia and Ukraine. As a result of such global events, there could be unpredictable disruptions to the Company’s operations that could limit production, reduce its future revenues and negatively impact the Company’s financial condition. Global events may result in supply chain and transportation disruptions to and from facilities and affected employees could impact the Company’s ability to operate its facilities and distribute products to its customers in a timely fashion. In addition, these global events may result in extreme volatility and disruptions in the capital and credit markets as well as widespread furloughs and layoffs for workers in the broader economy. During 2022, the Company began the process of selling its interests in its two packaging facilities in Russia, which it expects to be completed in 2023. The Company is adhering to all U.S., U.K., and EU sanctions. For the nine months ended September 30, 2023, the Company's Russian Operations provided approximately 1% of the Company’s Net Sales and less than 1% of the Company's EBITDA. Refer to "*Note 14 - Impairment and Divestiture of Russian Business*" in the Notes to Condensed Consolidated Financial Statements for additional information and Part I, "Item 1A., Risk Factors" of the Company's 2022 Annual Report on Form 10-K, and in other filings with the Securities and Exchange Commission.

*Commitment to Cost Reduction*. The Company has programs in place that are designed to reduce costs, improve productivity and increase profitability. The Company utilizes a global continuous improvement initiative that uses statistical process control to help design and manage many types of activities, including production and maintenance. This includes a Six Sigma process focused on reducing variable and fixed manufacturing and administrative costs and the use of Lean Sigma principles in manufacturing and supply chain processes.

The Company’s ability to continue to successfully implement its business strategies and to realize anticipated savings and operating efficiencies is subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. If the Company cannot successfully implement the strategic cost reductions or other cost savings plans, it may not be able to continue to compete successfully against other manufacturers. In addition, any failure to generate the anticipated efficiencies and savings could adversely affect the Company’s financial results.

*Competition and Market Factors.* As some products can be packaged in different types of materials, the Company’s sales are affected by competition from other manufacturers’ CRB, CUK, SBS, folding box board, and recycled clay-coated news. Additional substitute products also include plastic, shrink film and corrugated containers. In addition, while the Company has long-term relationships with many of its customers, the underlying contracts may be re-bid or renegotiated from time to time, and the Company may not be successful in renewing on favorable terms or at all. The Company works to maintain market share through efficiency, product innovation, service and strategic sourcing to its customers; however, pricing and other competitive pressures may occasionally result in the loss of a customer relationship.

In addition, the Company’s sales are driven by consumer buying habits in the markets its customers serve. The Company has historically reported net organic sales growth supported by its introduction of new packaging products to meet the consumers' desire for recyclable, fiber-based packaging solutions. Changes in consumer dietary habits and preferences, increases in the costs of living, unemployment rates, access to credit markets, as well as other macroeconomic factors, may negatively affect consumer spending behavior. New product introductions and promotional activity by the Company’s customers can also impact its sales.

*Debt Obligations*. The Company had an aggregate principal amount of $5,608 million of outstanding debt obligations as of September 30, 2023. This debt has consequences for the Company, as it requires a portion of cash flow from operations to be used for the payment of principal and interest, exposes the Company to the risk of increased interest rates and may restrict the Company’s ability to obtain additional financing. The Covenants in the Company’s Fourth Amended and Restated Credit Agreement (as amended, the "Current Credit Agreement") and the indentures governing the 0.821% Senior Notes due 2024, 4.125% Senior Notes due 2024, 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029 and 3.75% Senior Notes due 2030 (the “Indentures”) may, among other things, restrict the ability of the Company to dispose of assets, incur guarantee obligations, prepay other indebtedness, repurchase stock, pay dividends, make other restricted payments and make acquisitions or other investments. The Current Credit Agreement also requires compliance with a maximum consolidated leverage ratio and a minimum consolidated interest coverage ratio. The Company’s ability to comply in future periods with the financial covenants will depend on its ongoing financial and operating performance, which in turn will be subject to many other factors, many of which are beyond the Company’s control. See "Covenant Restrictions" in “Financial Condition, Liquidity and Capital Resources” for additional information regarding the Company’s debt obligations.

The debt and the restrictions under the Current Credit Agreement and the Indentures could limit the Company’s flexibility to respond to changing market conditions and competitive pressures. The outstanding debt obligations and the restrictions may also leave the Company more vulnerable to a downturn in general economic conditions or its business, or unable to carry out capital expenditures that are necessary or important to its growth strategy and productivity improvement programs.

### OVERVIEW OF THIRD QUARTER 2023 RESULTS

This management’s discussion and analysis contains an analysis of Net Sales, Income from Operations and other information relevant to an understanding of the Company's results of operations on a Consolidated basis:

- Net Sales for the three months ended September 30, 2023 decreased $102 million or 4% to $2,349 million from $2,451 million for the three months ended September 30, 2022 due to lower organic sales and lower volume of open market sales partially offset by higher pricing, new product introductions and favorable foreign exchange.
- Income from Operations for the three months ended September 30, 2023 decreased $6 million or 2% to $287 million from $293 million for the three months ended September 30, 2022 due to accelerated depreciation and charges related to the Company's decision to decommission its K3 CRB machine in Kalamazoo, Michigan and the discontinuation of the Texarkana swing capacity project, unfavorable other inflation (primarily labor and benefits), higher level of market downtime, lower open market volume, lower organic sales, accelerated depreciation related to the closure of two smaller CRB mills, charges related to the closures of folding carton plants, and additional impairment charges related to the Company's commitment to sell its Russian operations, partially offset by higher pricing, cost savings from continuous improvement and other programs, new product introductions, favorable commodity deflation and favorable foreign exchange.

### Acquisitions and Dispositions

- In January 2023, the Company completed the acquisition of Tama Paperboard, LLC ("Tama"), a CRB mill located in Tama, Iowa, from Greif Packaging LLC for approximately $100 million. It is reported within the Paperboard Mills reportable segment. Subsequently, in the second quarter of 2023, the Company closed this facility.
- During the second quarter of 2023, the Company announced the closure of three packaging facilities by the end of 2023. Production from these facilities will be consolidated into other carton plants.
- On September 8, 2023, the Company completed the acquisition of Bell Incorporated ("Bell"), adding three packaging facilities in Sioux Falls, South Dakota and Groveport, Ohio for $264 million. Bell is reported within the Americas Paperboard Packaging reportable segment.
- During the third quarter of 2023, the Company announced its decision to permanently decommission the K3 CRB machine in Kalamazoo, Michigan as part of its CRB network optimization plan that the Company initiated in 2019.
- During the third quarter of 2023, the Company decided to discontinue the project in Texarkana to modify an existing paper machine to add swing capacity between SBS and CUK in order to focus growth investments in the strategic expansion of coated recycled paperboard capacity.
- In May 2022, the Company committed to sell its two packaging facilities in Russia and classified the facilities as held for sale resulting in cumulative impairment charges of $105 million in 2022 and 2023, including $12 million of goodwill impairment.
- In May 2022, the Company closed the Battle Creek, MI CRB mill.
- In September 2022, the Company closed its Norwalk, Ohio packaging facility, which it had announced to close in March 2022.

### Share Repurchases and Dividends

- On July 27, 2023, the Company's board of directors authorized an additional share repurchase program to allow the Company to purchase up to $500 million of the Company's issued and outstanding shares of common stock through open market purchases, privately negotiated transactions and Rule 10b5-1 plans (the "2023 share repurchase program"). The previous $500 million share repurchase program was authorized on January 28, 2019 (the "2019 share repurchase program"). During the first nine months of 2023, the Company repurchased 1,584,515 shares of its common stock at an average price of $23.57, all under the 2019 share repurchase program. During the first nine months of 2022, the Company repurchased 1,090,765 shares of its common stock at an average price of $20.99 under the 2019 share repurchase program. As of September 30, 2023, the Company has $582 million available for additional repurchases under the 2023 share repurchase program and the 2019 share repurchase program.
- On July 28, 2023, the Company's board of directors declared a regular quarterly dividend of $0.10 per share of common stock payable on October 5, 2023 to shareholders of record as of September 15, 2023.

### RESULTS OF OPERATIONS

*In millions*

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net Sales | $2,349 | $2,451 | $7,179 | $7,054 |
| Income from Operations | 287 | 293 | 884 | 638 |
| Nonoperating Pension and Postretirement Benefit Income (Expense) | (1) | 2 | (2) | 5 |
| Interest Expense, Net | (62) | (53) | (180) | (143) |
| Income before Income Taxes | 224 | 242 | 702 | 500 |
| Income Tax Expense | (54) | (49) | (175) | (134) |
| Net Income | $170 | $193 | $527 | $366 |

### THIRD QUARTER 2023 COMPARED WITH THIRD QUARTER 2022

### Net Sales

The components of the change in Net Sales are as follows:

*In millions*

|  | Three Months Ended September 30, 2022 | Variances Price | Volume/Mix | Exchange | 2023 | Decrease | Percent Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Consolidated | $2,451 | $92 | $(223) | $29 | $2,349 | $(102) | (4)% |

29

The Company’s Net Sales for the three months ended September 30, 2023 decreased by $102 million or 4% to $2,349 million from $2,451 million for the three months ended September 30, 2022 due to lower organic sales and lower volumes of open market sales partially offset by higher pricing, new product introductions, favorable foreign exchange, primarily the Euro, British Pound, Mexican Peso, offset by the Canadian dollar, Australian Dollar and Japanese Yen, and the acquisition of Bell Incorporated in September 2023. Core packaging volumes were lower in beverage, cereal, dry foods, frozen foods, dairy, pet care, frozen pizza, healthcare, and convenience partially offset by higher packaging volumes in foodservice.

### Income from Operations

The components of the change in Income from Operations are as follows:

*In millions*

|  | Three Months Ended September 30, 2022 | Variances Price | Volume/Mix | Inflation | Exchange | Other (a) | 2023 | Decrease | Percent Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Consolidated | $293 | $92 | $(66) | $(11) | $3 | $(24) | $287 | $(6) | (2)% |

(a) Includes the Company's cost reduction initiatives, market downtime costs, planned mill maintenance costs, expenses related to acquisitions and integration activities, exit activities and shutdown and other special charges.

Income from Operations for the three months ended September 30, 2023 decreased $6 million or 2% to $287 million from $293 million for the three months ended September 30, 2022 due to accelerated depreciation and charges related to the Company's decision to decommission its K3 CRB machine in Kalamazoo, Michigan and the discontinuation of the Texarkana swing capacity project, unfavorable other inflation (primarily labor and benefits), higher level of market downtime, lower open market volume, lower organic sales, accelerated depreciation related to the closure of two smaller CRB mills, charges related to the closures of folding carton plants (refer to "*Note 13 - Exit Activities*" in the Notes to Condensed Consolidated Financial Statements for additional information), and additional impairment charges related to the Company's commitment to sell its Russian operations, partially offset by higher pricing, cost savings from continuous improvement and other programs, new product introductions, favorable commodity deflation and favorable foreign exchange.

Inflation increased for the three months ended September 30, 2023 by $11 million, compared to the three months ended September 30, 2022 due to increased labor and benefits ($22 million) and other costs, net ($21 million), offset by commodity deflation costs ($32 million). Commodity deflation was primarily due to energy ($24 million), secondary fiber ($14 million), freight ($8 million), wood ($4 million), and converting chemicals ($1 million) offset by factoring ($10 million), external board ($4 million), mill chemicals ($2 million), and other costs ($3 million).

### Interest Expense, Net

Interest Expense, Net was $62 million and $53 million for the three months ended September 30, 2023 and 2022, respectively. Interest Expense, Net increased due to higher interest rates, partially offset by lower debt balances. As of September 30, 2023, approximately 23% of the Company’s total debt was subject to floating interest rates.

### Income Tax Expense

During the three months ended September 30, 2023, the Company recognized Income Tax Expense of $54 million on Income before Income Taxes of $224 million. The effective tax rate for the three months ended September 30, 2023 is different from the statutory rate primarily due to the tax impact of the charges associated with the planned divestiture of the Company’s operations in Russia that results in no corresponding tax benefit, U.S. federal provision to return true up tax benefits of $3 million, decrease in the Company's valuation allowance against the net deferred tax assets in the Netherlands and the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

During the three months ended September 30, 2022, the Company recognized Income Tax Expense of $49 million on Income before Income Taxes of $242 million. The effective tax rate for the three months ended September 30, 2022 was different from the statutory rate primarily due to discrete tax benefits of $7 million associated with the recognition of differences between the Company’s outside tax basis in its investment in GPIP and the Company’s inside tax basis in individual assets and liabilities due to the internal restructuring that was completed during the quarter, and provision to return tax benefits of $2 million. In addition, the recognition of deferred tax assets and liabilities on unrealized FX activity related to intercompany loans where the entity functional currency and the loan denomination is different than the tax reporting currency, resulted in an increase in the effective tax rate for the period.

Based on the final 2022 U.S. federal income tax return, the Company's remaining U.S. federal net operating loss carryforward was approximately $292 million. As such, based on the remaining net operating loss carryforward as well as tax credit carryforwards, which are available to offset future U.S. federal income tax, the Company expects its U.S. federal cash tax liability in 2023 to be reduced by approximately $112 million.

### FIRST NINE MONTHS OF 2023 COMPARED WITH FIRST NINE MONTHS OF 2022

### Net Sales

The components of the change in Net Sales are as follows:

*In millions*

|  | Nine Months Ended September 30, 2022 | Variances Price | Volume/Mix | Exchange | 2023 | Increase | Percent Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Consolidated | $7,054 | $516 | $(382) | $(9) | $7,179 | $125 | 2% |

The Company’s Net Sales for the nine months ended September 30, 2023 increased by $125 million or 2% to $7,179 million from $7,054 million for the nine months ended September 30, 2022 due to higher pricing and new product introductions partially offset by lower volumes of open market sales, lower organic sales and unfavorable foreign exchange, primarily the Canadian dollar, Australian Dollar and Japanese Yen partially offset by the Mexican Peso. Core packaging volumes were lower in beverage, cereal, dry foods, frozen foods, dairy, convenience, and healthcare partially offset by higher packaging volumes in foodservice, frozen pizza, tissue and beauty.

### Income from Operations

The components of the change in Income from Operations are as follows:

*In millions*

|  | Nine Months Ended September 30, 2022 | Variances Price | Volume/Mix | Inflation | Exchange | Other (a) | 2023 | Increase | Percent Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Consolidated | $638 | $516 | $(137) | $(149) | $(15) | $31 | $884 | $246 | 39% |

(a) Includes the Company's cost reduction initiatives, market downtime costs, planned mill maintenance costs, expenses related to acquisitions and integration activities, exit activities and shutdown and other special charges.

Income from Operations for the nine months ended September 30, 2023 increased $246 million or 39% to $884 million from $638 million for the nine months ended September 30, 2022 due to higher pricing, cost savings from continuous improvement and other programs and new product introductions partially offset by lower open market volume, unfavorable commodity inflation and other inflation (primarily labor and benefits), higher level of maintenance and market downtime, unfavorable foreign exchange, lower organic sales, accelerated depreciation related to the closure of three smaller CRB mills, charges related to the closures of folding carton plants (refer to "*Note 13 - Exit Activities*" in the Notes to Condensed Consolidated Financial Statements for additional information) and accelerated depreciation and charges related to the Company's decision to decommission its K3 CRB machine in Kalamazoo, Michigan and the discontinuation of the Texarkana swing capacity project during the third quarter of 2023. Income from Operations also increased due to a reduction in impairment charges in the first nine months of 2023 compared to 2022 related to the Company's planned divestiture of its Russian operations. Refer to *"Note 14 - Impairment and Divestiture of Russian Business"* in the Notes to Condensed Consolidated Financial Statements for additional information.

Inflation increased for the nine months ended September 30, 2023 by $149 million, compared to the first nine months of 2022 due to higher commodity inflation costs ($18 million), labor and benefits ($74 million) and other costs, net ($57 million). Commodity inflation was primarily due to external board ($53 million), mill chemicals ($40 million), factoring ($32 million), converting chemicals ($5 million), and other costs ($15 million) offset by secondary fiber ($56 million), energy ($32 million), freight ($26 million), and wood ($13 million).

### Interest Expense, Net

Interest Expense, Net was $180 million and $143 million for the nine months ended September 30, 2023 and 2022, respectively. Interest Expense, Net increased due to higher interest rates, partially offset by lower debt balances.

### Income Tax Expense

During the nine months ended September 30, 2023, the Company recognized Income Tax Expense of $175 million on Income before Income Taxes of $702 million. The effective tax rate for the nine months ended September 30, 2023 is different from the statutory rate primarily due to the tax impact of the charges associated with the planned divestiture of the Company’s operations in Russia that result in no corresponding tax benefit, a tax benefit of $2 million related to excess tax benefits on restricted stock that vested during the period, U.S. federal provision to return true up tax benefits of $3 million, an increase in the Company's valuation allowance against a portion of its net deferred tax assets in Sweden along with a decrease in the Company's valuation allowance against the net deferred tax assets in the Netherlands, and the mix of earnings between foreign and domestic jurisdictions, including those with and without valuation allowances.

During the nine months ended September 30, 2022, the Company recognized Income Tax Expense of $134 million on Income before Income Taxes of $500 million. The effective tax rate for the nine months ended September 30, 2022 is different than the statutory rate primarily due to the impairment charges associated with the Company’s Russia business that results in no corresponding tax benefit. Additionally, discrete tax adjustments were recorded during the period, including discrete tax benefits of $7 million associated with the recognition of differences between the Company’s outside tax basis in its investment in GPIP and the Company’s inside tax basis in individual assets and liabilities due to the internal restructuring that was completed during the period, provision to return tax benefit of $2 million, a tax benefit of $2 million recorded to reflect the decrease in the state statutory tax rate, tax expense of $10 million, recorded to release the lingering tax expense remaining in Other Comprehensive Income after the settlement of certain swaps and a tax benefit of $2 million related to excess tax benefits on restricted stock that vested during the period. In addition, the recognition of deferred tax assets and liabilities on unrealized foreign currency activity related to intercompany loans where the entity's functional currency and the loan denomination currency are different than the tax reporting currency resulted in a decrease in the effective tax rate for the period.

### Segment Reporting

The Company has three reportable segments as follows:

*Paperboard Mills* includes the seven North American paperboard mills that produce primarily CRB, CUK, and SBS, which is consumed internally to produce paperboard packaging for the Americas and Europe Packaging segments. Paperboard not consumed internally is sold externally to a wide variety of paperboard packaging converters and brokers. The Paperboard Mills segment Net Sales represent the sale of paperboard to external customers only. The effect of intercompany transfers to the paperboard packaging segments has been eliminated from the Paperboard Mills segment to reflect the economics of the integration of these segments.

*Americas Paperboard Packaging* includes paperboard packaging, primarily folding cartons, sold primarily to consumer packaged goods ("CPG") companies, and cups, lids and food containers sold primarily to foodservice companies and quick-service restaurants ("QSR") serving the food, beverage, and consumer product markets in the Americas.

*Europe Paperboard Packaging* includes paperboard packaging, primarily folding cartons, sold primarily to CPG companies serving the food, beverage and consumer product markets, including healthcare and beauty products, primarily in Europe.

The Company allocates certain mill and corporate costs to the reportable segments to appropriately represent the economics of these segments. The Corporate and Other caption includes the Pacific Rim and Australia operating segments and unallocated corporate and one-time costs.

These segments are evaluated by the chief operating decision maker based primarily on Income from Operations, as adjusted for depreciation and amortization. The accounting policies of the reportable segments are the same as those described above in "*Note 1 - General Information"* in the Notes to Condensed Consolidated Financial Statements.

*In millions*

| NET SALES: | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Paperboard Mills | $236 | $345 | $804 | $933 |
| Americas Paperboard Packaging | 1,569 | 1,577 | 4,684 | 4,533 |
| Europe Paperboard Packaging | 498 | 488 | 1,553 | 1,467 |
| Corporate/Other/Eliminations(a) | 46 | 41 | 138 | 121 |
| Total | $2,349 | $2,451 | $7,179 | $7,054 |
| **(LOSS) INCOME FROM OPERATIONS:** |  |  |  |  |
| Paperboard Mills(b)(c) | $(36) | $12 | $(42) | $17 |
| Americas Paperboard Packaging(b)(c) | 286 | 229 | 829 | 589 |
| Europe Paperboard Packaging(d) | 38 | 40 | 85 | 31 |
| Corporate and Other(c) | (1) | 12 | 12 | 1 |
| Total | $287 | $293 | $884 | $638 |

(a) Includes revenue from customers for the Australia and Pacific Rim operating segments.

(b) Includes accelerated depreciation related to exit activities in 2023 and 2022. See "*Note 13 - Exit Activities*" in the Notes to Condensed Consolidated Financial Statements for further information.

(c) Includes expenses related to business combinations, shutdown and other special charges, and exit activities. See "*Note 1 - General Information*" in the Notes to Condensed Consolidated Financial Statements for further information.

(d) Includes impairment charges related to Russia. See "*Note 14 - Impairment and Divestiture of Russian Business*" in the Notes to Condensed Consolidated Financial Statements for further information.

### 2023 COMPARED WITH 2022

### Third Quarter 2023 Compared to Third Quarter 2022

#### Paperboard Mills

Net Sales decreased due to lower open market volume partially offset by higher pricing.

Income from Operations decreased due to lower open market volume, higher levels of market downtime, accelerated depreciation related to the closure of two smaller CRB mills (refer to "*Note 13 - Exit Activities*" in the Notes to Condensed Consolidated Financial Statements for additional information), and accelerated depreciation and charges related to the Company's decision to decommission its K3 CRB machine in Kalamazoo, Michigan and the discontinuation of the Texarkana swing capacity project. The decrease is partially offset by higher pricing, favorable commodity deflation and productivity improvements, including benefits from capital projects.

#### Americas Paperboard Packaging

Net Sales decreased due to lower organic sales, partially offset by higher pricing, new product introductions driven by conversions to our fiber-based packaging solutions and the acquisition of Bell Incorporated in September 2023. Lower packaging volumes in beverage, cereal, dry foods, frozen foods, dairy, pet care, and frozen pizza were partially offset by higher packaging volumes in foodservice. In beverage, packaging volumes decreased in big beer and soft drinks partially offset by increased volumes in craft beer and specialty beverages.

Income from Operations increased due to higher pricing and cost savings from continuous improvement and other programs partially offset by inflation (primarily labor and benefits and other costs offset by commodity deflation), higher levels of market downtime and charges related to the closure of folding carton plants (refer to "*Note 13 - Exit Activities*" in the Notes to Condensed Consolidated Financial Statements for additional information). The commodity deflation was primarily due to energy, secondary fiber, freight and wood offset by factoring and external board.

#### Europe Paperboard Packaging

Net Sales increased due to higher pricing, mix and new product introductions driven by conversions to our fiber-based packaging solutions, and favorable foreign currency exchange partially offset by lower packaging volumes in food, beverage, and healthcare partially offset by higher foodservice sales.

Income from Operations decreased due to commodity inflation primarily related to energy and external board, other inflation (primarily labor and benefits), and lower organic sales partially offset by higher pricing and cost savings from continuous improvement and other programs. Income from Operations also decreased due to an increase in impairment charges in the third quarter of 2023 compared to 2022 related to the Company's planned divestiture of its Russian operations. Refer to "*Note 14 - Impairment and Divestiture of Russian Business*" in the Notes to Condensed Consolidated Financial Statements for additional information.

### First Nine Months of 2023 Compared to First Nine Months of 2022

#### Paperboard Mills

Net Sales decreased due to lower open market volume partially offset by higher pricing.

Income from Operations decreased due to lower open market volume, higher levels of maintenance and market downtime, accelerated depreciation related to the closure of the three CRB mills (refer to "*Note 13 - Exit Activities*" in the Notes to Condensed Consolidated Financial Statements for additional information), other inflation (primarily labor and benefits) and accelerated depreciation and charges related to the Company's decision to decommission its K3 CRB machine and the discontinuation of the Texarkana swing capacity project. The decrease is partially offset by higher pricing, productivity improvements, including benefits from capital projects, and commodity deflation, primarily secondary fiber, energy, wood and freight partially offset by chemicals.

#### Americas Paperboard Packaging

Net Sales increased due to higher pricing and new product introductions driven by conversions to our fiber-based packaging solutions and the acquisition of Bell Incorporated in September 2023, partially offset by lower organic sales. Lower packaging volumes in beverage, cereal, dry foods, frozen foods, and dairy were partially offset by higher packaging volumes in foodservice, frozen pizza and tissue. In beverage, packaging volumes decreased in big beer, craft beer, specialty beverages and soft drinks.

Income from Operations increased due to higher pricing and cost savings from continuous improvement and other programs, partially offset by commodity inflation and other inflation (primarily labor and benefits) and higher levels of maintenance and market downtime. The commodity inflation was primarily due to higher prices for external board, chemicals, and factoring partially offset by secondary fiber, energy, freight and wood.

#### Europe Paperboard Packaging

Net Sales increased due to higher pricing, mix, new product introductions driven by conversions to our fiber-based packaging solutions partially offset by unfavorable foreign currency exchange and lower organic sales in beverage, convenience, healthcare and food partially offset by higher volumes in foodservice and beauty.

Income from Operations increased due to higher pricing and cost savings from continuous improvement and other programs partially offset by commodity inflation primarily related to external board and energy, other inflation (primarily labor and benefits), unfavorable foreign currency exchange and lower organic sales. Income from Operations also increased due to a reduction in impairment charges in the first nine months of 2023 compared to 2022 related to the Company's planned divestiture of its Russian operations. Refer to *"Note 14 - Impairment and Divestiture of Russian Business"* in the Notes to Condensed Consolidated Financial Statements for additional information.

### FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Company broadly defines liquidity as its ability to generate sufficient funds from both internal and external sources to meet its obligations and commitments. In addition, liquidity includes the ability to obtain appropriate debt and equity financing and to convert into cash those assets that are no longer required to meet existing strategic and financial objectives. Therefore, liquidity cannot be considered separately from capital resources that consist of current or potentially available funds for use in achieving long-range business objectives and meeting debt service commitments.

### Cash Flows

*In millions*

|  | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Net Cash Provided by Operating Activities | $702 | $620 |
| Net Cash Used in Investing Activities | (875) | (367) |
| Net Cash Provided by (Used In) Financing Activities | 188 | (331) |

Net cash provided by operating activities for the first nine months of 2023 totaled $702 million compared to $620 million for the same period in 2022. The favorable increase was mainly due to an increase in income from operations offset by higher levels of working capital. Pension contributions for the first nine months of 2023 and 2022 were $13 million and $21 million, respectively. In the first quarter of 2022, the Company made a $6 million contribution to its remaining U.S. defined benefit plan by effectively utilizing the excess balance related to its U.S. defined benefit plan terminated in 2020.

Net cash used in investing activities for the first nine months of 2023 totaled $875 million compared to $367 million for the same period in 2022. The Company completed the acquisition of Tama, a CRB mill located in Tama, Iowa on January 31, 2023, from Greif Packaging LLC for approximately $100 million. The Company also completed the acquisition of Bell Incorporated, adding three packaging facilities in Sioux Falls, South Dakota and Groveport, Ohio for $264 million on September 8, 2023 including cash acquired of $3 million. For further discussion of the Company's newly acquired CRB mill and Converting facilities, see "*Note 3 - Business Combinations"* in the Notes to the Condensed Consolidated Financial Statements. Capital spending was $592 million and $445 million in 2023 and 2022, respectively. The increase in capital spending has been driven by the construction of the Company's new CRB mill in Waco, Texas. For more information on the construction of the new CRB mill in Waco, Texas, refer to the Capital Investment section below. Net cash receipts related to the accounts receivable securitization and sale programs were $83 million and $81 million in 2023 and 2022, respectively.

Net cash provided by financing activities for the first nine months of 2023 totaled $188 million compared to net cash used in financing activities of $331 million for the same period in 2022. Current year financing activities include borrowings under revolving credit facilities primarily for capital spending, repurchase of common stock of $37 million and payments on debt of $18 million. The Company also paid dividends of $92 million and withheld $22 million of restricted stock units to satisfy tax withholding obligations related to the payout of restricted stock units. In the prior year the Company also made borrowings under revolving credit facilities primarily for capital spending and interest and payments on debt of $10 million. The Company also paid dividends and distributions of $69 million and withheld $18 million of restricted stock units to satisfy tax withholding payments related to the payout of restricted stock units.

### Supplemental Guarantor Financial Information

As discussed in “*Note 4 - Debt”* in the Notes to Condensed Consolidated Financial Statements, the Senior Notes issued by GPIL (the “Issuer”) are guaranteed by certain domestic subsidiaries (the “Subsidiary Guarantors”), which consist of all material 100% owned subsidiaries of GPIL other than its foreign subsidiaries, and in certain instances by the Company (a Parent guarantee) (collectively "the Guarantors"). GPIL's remaining subsidiaries (the “Nonguarantor Subsidiaries”) include all of GPIL’s foreign subsidiaries and immaterial domestic subsidiaries. The Subsidiary Guarantors are jointly and severally, fully and unconditionally liable under the guarantees.

The results of operations, assets, and liabilities for GPHC and GPIL are substantially the same. Therefore, the summarized financial information below is presented on a combined basis, consisting of the Issuer and Subsidiary Guarantors (collectively, the “Obligor Group”), and is presented after the elimination of: (i) intercompany transactions and balances among the Issuer and Subsidiary Guarantors, and (ii) equity in earnings from and investments in the Nonguarantor Subsidiaries.

*In millions*

| SUMMARIZED STATEMENTS OF OPERATIONS | Nine Months Ended September 30, 2023 |
| --- | ---: |
| Net Sales(a) | $5,446 |
| Cost of Sales | 4,151 |
| Income from Operations | 799 |
| Net Income | 482 |

(a) Includes Net Sales to Nonguarantor Subsidiaries of $397 million.

*In millions*

| SUMMARIZED BALANCE SHEET | September 30, 2023 | December 31, 2022 |
| --- | ---: | ---: |
| Current assets (excluding intercompany receivable from Nonguarantor) | $1,603 | $1,386 |
| Noncurrent assets | 6,310 | 5,852 |
| Intercompany receivables from Nonguarantor | 1,341 | 1,399 |
| Current liabilities | 1,949 | 1,355 |
| Noncurrent liabilities | 5,549 | 5,360 |

### Liquidity and Capital Resources

The Company expects its material cash requirements for the next three months will be for capital expenditures, periodic required estimated income tax payments, periodic interest and debt service payments on associated debt, as discussed in *"Note 5 - Debt"* of the Notes to the Consolidated Financial Statements of the Company's 2022 Annual Report on Form 10-K, lease agreements which have fixed lease payment obligations, as discussed in *"Note 6 - Leases"* of the Notes to the Consolidated Financial Statements of the Company's 2022 Annual Report on Form 10-K, and minimum purchase commitments as discussed in *"Note 13 - Commitments"* of the Notes to the Consolidated Financial Statements of the Company's 2022 Annual Report on Form 10-K along with ongoing operating costs, working capital, share repurchases and dividend payments. The Company expects its primary sources of liquidity to be cash flows from sales and operating activities in the normal course of operations and availability from its revolving credit facilities, as needed. The Company expects that these sources will be sufficient to fund our ongoing cash requirements for the foreseeable future, including at least the next twelve months.

Principal and interest payments under the term loan facilities and the revolving credit facilities, together with principal and interest payments on the Company's 0.821% Senior Notes due 2024, 4.125% Senior Notes due 2024, 1.512% Senior Notes due 2026, 4.75% Senior Notes due 2027, 3.50% Senior Notes due 2028, 3.50% Senior Notes due 2029, 2.625% Senior Notes due 2029 and 3.75% Senior Notes due 2030 (the “Indentures”), represent liquidity requirements for the Company. Based upon current levels of operations, anticipated cost savings and expectations as to future growth, the Company believes that cash generated from operations, together with amounts available under its revolving credit facilities and other available financing sources, will be adequate to permit the Company to meet its debt service obligations, necessary capital expenditure program requirements and ongoing operating costs and working capital needs, although no assurance can be given in this regard. The Company's future financial and operating performance, ability to service or refinance its debt and ability to comply with the covenants and restrictions contained in its debt agreements (see “Covenant Restrictions” below) will be subject to future economic conditions, including conditions in the credit markets, and to financial, business and other factors, many of which are beyond the Company's control, and will be substantially dependent on the selling prices and demand for the Company's products, raw material and energy costs, and the Company's ability to successfully implement its overall business and profitability strategies.

Accounts receivable are stated at the amount owed by the customer, net of an allowance for estimated uncollectible accounts, returns and allowances, and cash discounts. The allowance for doubtful accounts is estimated based on historical experience, current economic conditions and the creditworthiness of customers. Receivables are charged to the allowance when determined to be no longer collectible.

The Company has entered into agreements to sell, on a revolving basis, certain trade accounts receivable to third party financial institutions. Transfers under these agreements meet the requirements to be accounted for as sales in accordance with the *Transfers and Servicing* topic of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (the "Codification"). The loss on sale is not material and is included in Other Expense, Net on the Condensed Consolidated Statements of Operations. The following table summarizes the activity under these programs for the nine months ended September 30, 2023 and 2022, respectively:

*In millions*

|  | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Receivables Sold and Derecognized | $2,811 | $2,422 |
| Proceeds Collected on Behalf of Financial Institutions | 2,697 | 2,230 |
| Net Proceeds Received From Financial Institutions | 59 | 212 |
| Deferred Purchase Price at September 30(a) | 19 | 7 |
| Pledged Receivables at September 30 | 173 | 161 |

(a) Included in Other Current Assets on the Condensed Consolidated Balance Sheets and represents a beneficial interest in the receivables sold to the financial institutions, which is a Level 3 fair value measure.

Receivables sold under all programs subject to continuing involvement, which consist principally of collection services, were $827 million and $753 million as of September 30, 2023 and December 31, 2022, respectively.

The Company also participates in supply chain financing arrangements offered by certain customers that qualify for sale accounting in accordance with the *Transfers and Servicing* topic of the FASB Codification. For the nine months ended September 30, 2023 and 2022, the Company sold receivables of $869 million and $824 million, respectively, under these arrangements.

The Company has arranged a supplier finance program ("SFP") with a financial intermediary, which provides certain suppliers the option to be paid by the financial intermediary earlier than the due date on the applicable invoice. The transactions are at the sole discretion of both the suppliers and financial institution, and GPHC is not a party to the agreements and has no economic interest in the supplier’s decision to sell a receivable. The range of payment terms negotiated by the Company with its suppliers is consistent, irrespective of whether a supplier participates in the program. The agreement with the financial intermediary does not require the Company to provide assets pledged as security or other forms of guarantees for the supplier finance program. Amounts due to the Company’s suppliers that elected to participate in the SFP program are included in Accounts Payable on the Company’s Condensed Consolidated Balance Sheets and payments made under the SFP program are reflected in Cash Flows from Operating Activities in the Company’s Condensed Consolidated Statements of Cash Flows. Accounts payable included $32 million and $34 million payable to suppliers who elected to participate in the SFP program as of September 30, 2023 and December 31, 2022, respectively.

### Covenant Restrictions

Covenants contained in the Current Credit Agreement and the Indentures may, among other things, limit the ability to incur additional indebtedness, restrict the ability of the Company to dispose of assets, incur guarantee obligations, prepay other indebtedness, repurchase shares, pay dividends and make other restricted payments, create liens, make equity or debt investments, make acquisitions, modify terms of the indentures under which the Notes are issued, engage in mergers or consolidations, change the business conducted by the Company and its subsidiaries, and engage in certain transactions with affiliates. Such restrictions, together with disruptions in the credit markets, could limit the Company's ability to respond to changing market conditions, fund its capital spending program, provide for unexpected capital investments or take advantage of business opportunities.

Under the terms of the Current Credit Agreement, the Company must comply with a maximum Consolidated Total Leverage Ratio covenant and a minimum Consolidated Interest Expense Ratio covenant. The Current Credit Agreement, which contains the definitions of these covenants, was filed as an exhibit to the Company's Form 8-K filed on April 1, 2021.

The Current Credit Agreement requires that the Company maintain a maximum Consolidated Total Leverage Ratio of less than 4.25 to 1.00. At September 30, 2023, the Company was in compliance with such covenant and the ratio was 2.74 to 1.00.

The Company must also comply with a minimum Consolidated Interest Expense Ratio of 3.00 to 1.00. At September 30, 2023, the Company was in compliance with such covenant and the ratio was 7.98 to 1.00.

As of September 30, 2023, the Company's credit was rated BB+ by Standard & Poor's and Ba1 by Moody's Investor Services. Standard & Poor's and Moody's Investor Services' ratings on the Company included a stable outlook.

### Capital Investment

The Company’s capital investments in the first nine months of 2023 were $587 million ($592 million was paid) compared to $313 million ($445 million was paid) in the first nine months of 2022. The capital investments incurred during the first nine months of 2023 were for plant, machinery, and equipment. The increase is primarily driven by the ongoing construction of the Company's new CRB mill in Waco, Texas. For further discussion of the Company's new CRB mill and continued investments made as part of the integration of acquisitions, see "*Note 13 - Exit Activities"* in the Notes to the Condensed Consolidated Financial Statements. For the first nine months of 2022, capital investments were primarily due to planned asset upgrades at the U.S.-based mills, including the now completed CRB paper machine in Kalamazoo, Michigan.

Interest is capitalized on assets under construction for one year or longer with an estimated spending of $1 million or more. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life. During the first nine months ended September 30, 2023, the Company incurred $3 million in costs as it relates to capitalized interest. For the nine months ended September 30, 2022, $4 million in capitalized interest costs were incurred.

### Environmental Matters

Some of the Company’s current and former facilities are the subject of environmental investigations and remediations resulting from historical operations and the release of hazardous substances or other constituents. Some current and former facilities have a history of industrial usage for which investigation and remediation obligations may be imposed in the future or for which indemnification claims may be asserted against the Company. Also, closures or sales of facilities may necessitate further investigation and may result in remediation at those facilities. The Company has established reserves for those facilities or issues where a liability is probable and the costs are reasonably estimable. The Company believes that the amounts accrued for its loss contingencies, and the reasonably possible loss beyond the amounts accrued, are not material to the Company’s consolidated financial position, results of operations or cash flows.

For further discussion of the Company’s environmental matters, see *"Note 9 - Environmental and Legal Matters"* in the Notes to Condensed Consolidated Financial Statements.

### CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. Actual results could differ from these estimates, and changes in these estimates are recorded when known. The critical accounting policies used by management in the preparation of the Company’s condensed consolidated financial statements are those that are important both to the presentation of the Company’s financial condition and results of operations and require significant judgments by management with regard to estimates used.

The Company’s most critical accounting policies, which require significant judgment or involve complex estimations, are described in the Company's 2022 Annual Report on Form 10-K for the year ended December 31, 2022.

The Company performed its annual goodwill impairment tests as of October 1, 2022. The Company concluded that all reporting units with goodwill have a fair value that exceeds their carrying value, and thus goodwill was not impaired. The Foodservice and Europe reporting units had fair values that exceed their respective carrying values by 83% and 42%, respectively, whereas all other reporting units exceeded by more than 50%. The Foodservice and Europe reporting units had goodwill totaling $43 million and $462 million, respectively at September 30, 2023.

In 2022, the Company began the process of divesting its interests in its two packaging plants in Russia. The Company reviewed the goodwill assigned to these facilities for impairment and recorded a $12 million non-cash impairment charge, thereby reducing the carrying value of goodwill for these facilities to zero. Refer to "*Note 14 - Impairment and Divestiture of Russian Business*" in the Notes to Condensed Consolidated Financial Statements for additional information.

### NEW ACCOUNTING STANDARDS

For a discussion of recent accounting pronouncements impacting the Company, see "*Note 1 - General Information"* in the Notes to Condensed Consolidated Financial Statements.

### BUSINESS OUTLOOK

Total capital investment for 2023 is expected to be approximately $800 million.

The Company also expects the following in 2023:

- Depreciation and amortization expense between $615 million and $625 million.
- Pension plan contributions between $10 million and $20 million.

## Market risk

As filed, 655 characters.

For a discussion of certain market risks related to the Company, see Part II, “*Item 7A, Quantitative and Qualitative Disclosure about Market Risk”*, in the Company's 2022 Annual Report on Form 10-K for the year ended December 31, 2022.

The Company is exposed to changes in interest rates, primarily as a result of its short-term and long-term debt, which include both fixed and floating rate debt. The Company uses interest rate swap agreements effectively to fix the SOFR rate on certain variable rate borrowings. At September 30, 2023, the Company had active interest rate swap agreements with a notional amount of $750 million expiring April 1, 2024.

## Controls and procedures

As filed, 823 characters.

#### Evaluation of Disclosure Controls and Procedures

The Company’s management has carried out an evaluation, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as amended. Based upon such evaluation, management has concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2023.

#### Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 165 characters.

There have been no material changes from the risk factors previously disclosed in the Company's 2022 Annual Report on Form 10-K for the year ended December 31, 2022.

Filed Oct 31, 2023.
Source: SEC EDGAR, the filing index for accession 0001408075-23-000041. Last ingested by Listed: Nov 3, 2026, 19:28 ET. No prices; not investment advice.