Q4 2023 Greif Inc Earnings Call

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Operator: Good day, and welcome to the Greif Fourth Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this call may be recorded. I would like to turn the call over to Matt Leahy. You may begin.

Matt Leahy: Thanks, and good morning, everyone. First let me apologize for the technical difficulties on our side. We were dialed in, and for some reason we lost audio, and we've been troubleshooting for the last several minutes. We truly appreciate your patience. Welcome to Greif's Fourth Quarter Fiscal 2023 Earnings Conference call. This is Matt Leahy, Greif's Vice President of Corporate Development, and Investor Relations, and I'm joined by Ole Rosgaard; Greif's President and Chief Executive Officer, and Larry Hilsheimer; Greif's Chief Financial Officer.

Welcome to Greif's Fourth Quarter Fiscal 2023 Earnings Conference call. This is Matt Leahy, Greif's Vice President of Corporate Development, and Investor Relations, and I'm joined by Ole Rosgaard; Greif's President and Chief Executive Officer, and Larry Hilsheimer; Greif's Chief Financial Officer.

Fiscal 2023 earnings Conference call. This is Matt Lady Gripes, Vice President of corporate development, and Investor Relations and I'm joined by older off Guard Graves, President and Chief Executive Officer, and Larry Hill, Shimer grapes, Chief Financial Officer.

We will take questions at the end of today's call. And in accordance with Regulation Fair Disclosure, please ask questions regarding issues you consider important, because we are prohibited from discussing material nonpublic information with you on an individual basis.

In accordance with regulation fair disclosure. Please ask questions regarding issues you consider important because we are prohibited from discussing material nonpublic information with you on an individual basis.

Please turn to slide 2. As a reminder, during today's call, we'll make forward-looking statements involving plans expectations, and beliefs related to future events, and actual results could differ materially from those discussed. Additionally, we will be referencing certain non-GAAP financial measures, and reconciliation to the most directly comparable GAAP metrics can be found in the appendix of today's presentation. And now with that I'd like to turn the presentation over to Ole on slide 3. 

As a reminder, during today's call, we'll make forward looking statements involving plans expectations and beliefs related to future events and actual results could differ materially from those discussed.

We will be referencing certain non-GAAP financial measures and reconciliation to the most directly comparable GAAP metrics can be found in the appendix of today's presentation.

Now with that I'd like to turn the presentation over to <unk> on slide three thanks, Matt and good morning, everyone and let me also apologize for the technical difficulties we had this morning.

And now with that I'd like to turn the presentation over to Ole on slide 3. 

Ole Rosgaard: Thanks, Matt, and good morning, everyone. And let me also apologize for the technical difficulties we had this morning. Looking back on fiscal year 2023, the second fiscal year onto our Build to Last strategy, I'm humbled and in all of the progress of our global Greif team has made despite extraordinary macroeconomic headwinds.

Looking back on fiscal year 2023, the second fiscal year onto our build to last strategy.

I'm humbled and in all of the progress of our global growth team has made despite extra ordinary macroeconomic headwinds.

This year challenged us to execute with continued precision, and excellence in a complex operating environment. I'm proud to say that in the face of ongoing demand challenges the hard work from our teams resulted in the second best year in Greif's history on an adjusted EBITDA and adjusted free cash flow basis, surpassed only by our exceptional performance in 2022.

Proud to say that in the face of ongoing demand challenges the hard work from our teams were solid in the second best year of Gripes history on an adjusted EBITDA and adjusted free cash flow basis surpassed only by our exceptional performance in 2022.

Year over year, we improved both our EBITDA margins, and our free cash flow conversion, even as primary products sales declined double digits across our businesses, a true testament to the commitment of our teams to operational excellence, and our value over volume philosophy. Fiscal 2023 was a banner year for investing in the long term health of Greif.

Even as primary products sales declined double digits across our businesses.

True Testament to the commitment of our teams to operate through operational excellence and our value over volume philosophy.

Fiscal 2023 was a banner year for investing in the long term delta quite well.

We launched new organic growth projects in both PPS and GIP, completed 4 acquisitions, and announced the fifth an Ipackchem for an aggregate capital commitments of over $1 billion on M&A. We maintained our focus on returning capital to shareholders by increasing dividends per share by 7.5% and completing our $150 million share buyback program earlier in the year. And we did all of this while maintaining our leverage ratio.

We launched new organic growth projects in both PPS and GIP, completed 4 acquisitions, and announced the fifth an Ipackchem for an aggregate capital commitments of over $1 billion on M&A. We maintained our focus on returning capital to shareholders by increasing dividends per share by 7.5% and completing our $150 million share buyback program earlier in the year.

We maintained our focus on returning capital to shareholders by increasing dividends per share by seven 5% and completing our 150 million share buyback program earlier in the year and we did all of this while maintaining our leverage ratio.

And we did all of this while maintaining our leverage ratio within our target range of 2x to 2.5x. At Greif, we often talk about managing the presence while creating the future. We're doing both exceptionally. As we close out fiscal 2023, I'm proud of what we have accomplished, and where we're going. But make no mistake managing the present can be hard, especially when business is under pressure.

Within our target range of two to two and a half times.

At Rice, we often talk about managing the presence while creating the future we're.

We're doing both exceptionally.

As we close out fiscal 2023.

Proud of what we have accomplished and where we're going but make no mistake managing depression can be hot, especially when business is under pressure.

Our business has been under pressure for some time, and we are continuing to face near term headwinds, which Larry will cover with our low end guidance, and modeling assumptions for fiscal 2024. Thus, as proven [Technical Difficulty] 2023, we are built to handle exonerous impacts to our business by controlling what we can control.

Thoughts as proven.

2023.

We are built to handle external risk impacts to our business by controlling what we can control.

Our execution will remain strong, and we will weather this storm, and I have full confidence in our mission and our global Greif team.  After Larry provides a review of the fourth quarter, I will share with you a broader update about our growth strategy for future value creation on the Build to Last. Larry?

Larry provides a review of the first the fourth quarter I will share with you a broader update about our growth strategy for future value creation on the build to last.

Larry Hilsheimer: Please turn to slide 4. Thanks, Ole. In our fourth quarter, we generated nearly $200 million of adjusted EBITDA. $130 million of adjusted free cash flow, and $1.56 of adjusted earnings per share despite the complex operating environment. Our team's execution from the plant floor through corporate functions over the past year was truly extraordinary, and I would like to thank our colleagues for their hard work, and commitment to delivering exceptional results in these difficult times.

And our fourth quarter, we generated nearly $200 million of adjusted EBITDA. 130 million of adjusted free cash flow and $1 56 of adjusted earnings per share. Despite the complex operating environment.

130 million of adjusted free cash flow and $1 56 of adjusted earnings per share. Despite the complex operating environment.

Our team's execution from the plant floor through corporate functions over the past year was truly extraordinary, and I would like to thank our colleagues for their hard work, and commitment to delivering exceptional results in these difficult times.

Later in the presentation Ole will expand commentary around our recent M&A, but for now I'll remind our investors that the ColePack and reliance acquisitions, both occurred during the fourth quarter. Therefore Q4 results did not include the full contribution of these businesses, which along with Ipackchem in early 2024, will provide the benefit to our performance in the coming year.

The benefit to our performance in the coming year.

Let's turn to segment results, starting on slide 5. The fourth quarter, and GIP saw more of the same challenges we have now face for 5 straight quarters, an extremely weak industrial sector with demand at staggeringly low levels. Compared to Q4 of fiscal '22, global volumes in steel drums were up 8%, large plastics up 14%, and fiber drums down 19%.

The fourth quarter and VIP saw more of the same challenges we have now face for five straight quarters.

Extremely weak industrial sector with demand at staggeringly low levels.

Third to Q4 of fiscal 'twenty, two global volumes in steel drums were up 8% large plastics up 14% and fiber drums down 19%.

Only IBC, and small plastic volumes increased year over year. On a 2 year stack basis, nearly all substrates globally in GIP are tracking down mid teens. A reminder for investors related to this historic demand period in GIP. More than 85% of basic, and specialty chemicals globally are consumed by the industrial sector. Global PMIs had been trending negatively since December of 2021, and tracking below 50 since September of 2022.

On a two year stack basis, nearly all substrates globally in VIP are tracking down mid teens.

A reminder, for investors related to this historic demand period, and VIP more than 85% of basic and specialty chemicals globally are consumed by the industrial sector Global PMI had been trending negatively since December of 2021 and tracking below 50 since September of 2002.

Existing home sales in the U.S. are tracking at the lowest level since 2010. This is truly an unprecedented time with no comparable period, including the Great Recession, where we saw a steep drop in drum volumes that quickly recovered.

Existing home sales in the U S are tracking at the lowest level. Since 2010. This is truly an unprecedented time with no comparable period, including the great recession, where we saw a steep drop in drawn drum volumes that quickly recovered.

While this is sobering data we take pride in the results we have delivered. Those results have enabled us to continue to invest strategically in our Build to Last initiatives focused on the future while managing costs, and operations effectively. We are excited about the results of our GIP segment [Technical Difficulty] and what they will deliver when the industrial economy recovers.

And what they will deliver when the industry industrial economy recovers, please turn to slide six.

And what they will deliver when the industry industrial economy recovers,

Please turn to slide 6. Paper Packaging's, fourth quarter sales declined $84 million year over year, primarily due to lower volumes, and growing price cost pressures. We took approximately 62,000 tons of total downtime across our mill system in the fourth quarter compared to 35,000 in Q4 of last year.

Paper packaging, it's fourth quarter sales declined $84 million year over year, primarily due to lower volumes and growing price cost pressures. We took approximately 62000 tons of total downtime across our mill system in the fourth quarter compared to 35000 in Q4 of last year.

Containerboard fared better than URB with less economic downtime, and better volumes in converting, but overall, the continued low volume environment combined with rising OCC costs during the quarter led to both EBITDA dollar, and margin compression compared to the prior year. Our PPS team continues to control the controllables as well, and did an extraordinary job of managing working capital to close out the year.

<unk>, well and did an extraordinary job of managing working capital to close out the year.

Please turn to slide 7, where I'll discuss 2024 low end guidance assumptions. As Ole mentioned in his opening remarks, and I've covered as well. We're sitting at a truly historic moment in time for Greif's businesses with prolonged volume headwinds across GIP end markets, we served. And now a material price cost headwind in PPS with rising OCC, and lower RISI published prices. It's a challenging time to give full year guidance, because we do believe the demand environment will turn positively we just don't know when.

As already mentioned in his opening remarks, and I've covered as well we're sitting at a truly historic moment in time for great businesses with prolonged volume headwinds across the IP end markets, we serve and now a material price cost headwind.

PPS with rising OCC and lower risk E published prices is a challenging time to give full year guidance because we do believe the demand environment will turn positively we just don't know yet.

Given these multiple near term headwinds, and low visibility to a sustained recovery. We made the decision to present a low end guidance to start fiscal 2024 of $585 million in EBITDA, and $200 million in free cash flow. This guidance methodology is simple, it presents a continuation of demand price, and cost trends for both businesses through the duration of fiscal '24 at current levels.

This guidance methodology is simple it presents a continuation of demand price and cost trends for both businesses through the duration of fiscal 'twenty four at current levels. In addition, this guidance does not include our recently announced price increases in containerboard, which we don't include in guidance.

This guidance methodology is simple it presents a continuation of demand price and cost trends for both businesses through the duration of fiscal 'twenty four at current

In addition, this guidance does not include our recently announced price increases in Containerboard, which we don't include in guidance until recognized by RISI. And it also excludes any impact from Ipackchem, which we expect will close sometime in calendar Q1. Our hope is that our actual fiscal '24 result will end up significantly above this low end guidance. However, we have always stated that we do not guide based on hope.

<unk> recognized by risky and it also excludes any impact from AIPAC Sham, which we expect will close sometime in calendar Q1.

Our hope is that our actual fiscal 'twenty. Four result will end up significantly above this low end guidance. However, we have always stated that we do not guide based on hope our downside view is driven by current price cost in PPS and no volume inflections in 2024, we have seen some green shoots but no.

Our hope is that our actual fiscal 'twenty. Four result will end up significantly above this low end guidance.

However, we have always stated that we do not guide based on hope. our downside view is driven by current price cost in PPS and no volume inflections in 2024, we have seen some green shoots but no. <unk> compelling trend yet to give us conviction that a recovery is emerging.

However, we have always stated that we do not guide based on hope.

Our downside view is driven by current price cost in PPS, and no volume inflections in 2024. We have seen some green shoots, but no identified compelling trends yet, to give us conviction that a recovery is emerging. Note that if volumes recovered 50% of the gap to 2022 volumes, our EBITDA would increase approximately $85 million, and a 100% recovery would add approximately $170 million.

<unk> compelling trend yet to give us conviction that a recovery is emerging.

Note that if volumes recovered 50% of the gap to 2022 volumes, our EBITDA would increase approximately $85 million and a 100% recovery would add approximately $170 million.

Our business is designed to weather short term cycles. We continue to delight our customers. We are firing on all cylinders, and controlling what we can control. We're proud of our teams, and we know that we will continue to execute through this difficult time, and come out on the other side a stronger better business. The investments we are making under Build to Last are laying the foundation for breakout performance in the years to come I would like to hand it back to Ole to cover more about our long term strategy, and growth plans. Ole?

Last our lane.

The foundation for breakout performance in the years to come and I would like to hand, it back to OLED to cover more about our long term strategy and growth plans.

Ole Rosgaard: Thanks, Larry. If you could please turn to slide 8. Build to Last it's about producing quality results on an annual basis. But it's also more than that, it's about leading through our values. Our purpose vision, and mission, all reflects our goal to better serve our colleagues, and customers throughout the world. And I would like to briefly highlight a few achievements in 2023, on each of our missions, and how they set us up for future success.

You could please turn to slide eight. Build to last it's about producing quality results on an annual basis.

Build to last it's about producing quality results on an annual basis.

It's also more than that it's about leading through our values. Our purpose vision and mission all reflects our goal to better serve our colleagues and customers throughout the world and I would like to briefly highlight a few achievements in 2023 on each of our missions.

How they set us up for future success.

Our customer satisfaction index has long been one of our most reliable measure of success in delivering legendary customer service, which directly aligns to our vision of being the best performing customer service company in the world. Our aspirational target is 95%, and we are proud that in 2023, our average score was 94%.

Our aspirational target is 95%.

And we are proud that in 2023, our average score was 94%.

We also recently completed our 13th Net Promoter Score survey of nearly 5,000 customers receiving a result of 68, a new Greif record, and a leading score within the manufacturing industry. Consider the macroeconomic context of these results, our customers clearly know we are devoted to serving them with excellence, particularly when times are tough, and we are being rewarded for it.

Consider the macroeconomic context of these results our customers clearly know we are devoted to serving them with excellence, particularly when times are tough and we are being rewarded for it.

On the creating thriving communities, we completed our 6th annual Gallup survey this year with over 90% colleague participation, and the results again showed an improvement in engagement, placing us firmly within the top quartile of all manufacturing companies surveyed across the world. We also show our industry leadership through our commitment to sustainability under Protecting Our Future. And this year, we published our 14th annual sustainability report with our new 2030 targets around climate, waste, circularity, supply chain, and DE&I.

On the creating thriving communities, we completed our 6th annual Gallup survey this year with over 90% colleague participation, and the results again showed an improvement in engagement, placing us firmly within the top quartile of all manufacturing companies surveyed across the world. We also show our industry leadership through our commitment to sustainability under Protect Our Future.

We also show our industry leadership through our commitments to sustainability.

Protect our future and this year, we published our 14th annual sustainability report with our new 2030 targets around climates waste, so clarity supply chain and Eni.

And this year, we published our 14th annual sustainability report with our new 2030 targets around climate, waste, circularity, supply chain, and DE&I. This mission is a foundational element of our long term success, and I highly encourage our investors to visit the sustainability page of our website to read more about our initiatives.

This mission is a foundational element of our long term success and I highly encourage our investors to visit the sustainability page of our website to read more about our initiatives.

Please turn to slide 9. Now that we have 2 years under the Build to Last strategy, we want to provide a broader update on some ongoing internal strategic initiatives that we believe are the pillars of driving long term value creation for all stakeholders.

Now that we have two years under the build to last strategy, we want to provide a broader update on some ongoing internal strategic initiatives that we believe are the pillars of driving long term value creation for all stakeholders.

First, we shared with you the benefits throughout 2023 from centralizing, our global operations, supply chain, and IT functions under the One Greif banner. We are building out these functions to serve a larger footprint of businesses in the future, with the expectation of our growing scale advantage. Second, in alignment with our One Greif mentality, we are executing an organizational shifts from geography based operations to substrate based operations.

We are building out these functions to serve a larger footprint of businesses in the future with <unk>.

The expectation of our growing scale advantage.

In alignment with our one growth mentality, we are executing and organizational shifts from geography based operations to substrate based operations.

This structure was piloted in 2023 in GIP North America, and resulted in plants, and regional level operating efficiencies, improved best practice sharing, and better decision making around capital investments and growth. We will use this fiscal year to prepare, and plan to update you with a more complete picture as we get closer to implementation targeted for the beginning of full year 2025.

We will use this fiscal year to prepare.

And plan to update you with a more complete picture as we get closer to implementation targeted.

For the beginning of full year 2025.

Additionally, we plan to change our fiscal year end to September 30th, beginning in fiscal year 2026. This change have been requested by our investors, and analysts for years, and we believe it will better align us to the standard industry calendar, and increase our exposure to the investment community.

This change have been requested by our investors and analysts for years.

And we believe it will better align us to the standard industry calendar and increase our exposure to the investment community.

Importantly, all of these initiatives have been part of our Build to Last strategy from inception, and our expectations is they will make us better at driving results, improving transparency, and increase equity value creation. Enacting these changes takes time, and effort, which will result in some short term SG&A cost inflation in the coming fiscal year. While we firmly believe that these changes will lead to a better, and more successful Greif in the future.

And actually these changes takes time and effort, which will result in some short term SG&A cost inflation in the coming fiscal year.

While we firmly believe that these changes will lead to a better and more successful in the future.

In addition to the internal work being done, I'm also excited about our recent growth through targeted M&A. Please turn to slide 10. At our Investor Day in 2022, we outline Greif's acquisition priorities in 3 areas, unique downstream converting and paper, sustainability alliance reconditioning services, and pursuing a roll up acquisition strategy in the resin-based Jerrycans, and small plastics markets.

Please turn to slide 10.

At our Investor day in 2022, we outline gripes acquisition priorities in three areas.

<unk> downstream converting and paper.

Sustainability Alliance Reconditioning services.

And pursuing a roll up acquisition strategy in the restaurant based Jerry cans and small plastics markets.

These acquisition vertical share the same very attractive attributes. They are aligned to growing end markets, hold strong circularity characteristics, and enjoy an elevated margin profile. With a growing addressable Jerrycan markets of $3.1 billion, we see a great opportunity to be the global leader in this high performance packaging sector, as we have the technical capability product offering, and scale to service customers in all our markets.

With a growing addressable gerrick end markets of $3 1 billion, we see a great opportunity to build a global leader in this high performance packaging sector.

As we have the technical capability product offering and scale to service customers in all our markets.

We accelerated our growth in this market over the past year with the acquisitions of Lee Container, Reliance Products, and look to bolster our position following the close of the Ipackchem acquisition, which we anticipate by the end of our fiscal second quarter. In summary, we will enter 2024 positions to become one of the largest most technically sophisticated small plastic product offerings in the world.

We anticipate by the end of our fiscal second quarter.

In summary, we will enter 2024 positions to become one of the largest most technically sophisticated small planet plastic product offerings in the world.

Please turn to slide 11. Another objective of our acquisition path is to build greater balance in our portfolio from an end market and substrate perspective. The transactions announced in fiscal 2023 give Greif greater exposure to secular growth trends and agricultural, and specialty chemicals as well as exposure to newer markets for us in pharmaceuticals, and medical diagnostics. The Jerrycan, and small plastic product line is extraordinarily versatile, and our teams are excited about the follow on organic growth potential, as we serve and grow with customers in these markets.

And not our objective our acquisition path is to build greater balance in our portfolio from an end market and substrate perspective.

The transactions announced in fiscal 2023 gift drive greater exposure to secular growth trends and agricultural and speciality chemicals as well as exposure to newer markets for us in pharmaceuticals and medical diagnostics.

The Jerry Ken and small plastic product line is extraordinarily versatile and our teams are excited about the follow on organic growth potential as we serve and grow with customers in these markets. Additionally.

The Jerry Ken and small plastic product line is extraordinarily versatile and our teams are excited about the follow on organic growth potential as we serve and grow with customers in these markets.

Additionally, you will notice that nearly 75% of the acquisitions completed, or announced in fiscal 2023, were resin-base improving our overall sustainability profile as most of these products can be recycled ,and reused, and require less energy, and raw materials to manufacture.

Additionally, you will notice that nearly 75% of the acquisitions completed or announced in fiscal 2023, while restaurant base improving our overall sustainability profile as most of these products can be recycled and reused and require less energy and raw materials to manufacturer.

Yeah.

Please turn to slide 12. A final note on acquisitions. In addition to the improved end market mix, and sustainability benefits, we are also buying great businesses. These companies are the companies, we acquired, and those in our M&A pipeline are materially margin accretive, and have better free cash flow characteristics than our legacy Greif business. Over time, this path along with the work our teams are doing to continuously improve our base business everyday will drive our performance towards our long term goals of 18%, plus EBITDA margins, and well over 50% free cash conversion.

A final note on acquisitions. In addition to the improved end market mix and sustainability benefits. We are also buying great businesses. These companies are the companies, we acquired and dose and our M&A pipeline, Amit serially margin, a creative and have better free cash flow characteristics than our legacy <unk> business overall.

In addition to the improved end market mix and sustainability benefits. We are also buying great businesses. These companies are the companies, we acquired and dose and our M&A pipeline, Amit serially margin, a creative and have better free cash flow characteristics than our legacy <unk> business overall.

These companies are the companies, we acquired and dose and our M&A pipeline, Amit serially margin, a creative and have better free cash flow characteristics than our legacy <unk> business overall.

Overtime. This path along with the work our teams are doing to continuously improve our base business everyday will drive our performance towards our long term goals.

18%, plus EBITDA margins and well over 50% free cash conversion.

We will continue to utilize our strong balance sheet, and remain disciplined on acquisitions going forward, while actively lowering our leverage through a combination of debt paydown, and EBITDA growth. Our capital allocation strategy will remain balanced ensuring the financial strength, and growth of the business for years to come. In closing on Slide 14, let me remind you of the reasons I'm. So excited for the long term growth prospects at <unk> and why we remain well positioned to weather this historically soft demand and pricing environments.

We will continue to utilize our strong balance sheet, and remain disciplined on acquisitions going forward, while actively lowering our leverage through a combination of debt paydown, and EBITDA growth. Our capital allocation strategy will remain balanced ensuring the financial strength, and growth of the business for years to come.

Our capital allocation strategy will remain balanced ensuring the financial strength and growth of the business for years to come.

In closing on Slide 14, let me remind you of the reasons I'm so excited for the long term growth prospects at Greif, and why we remain well positioned to weather this historically soft demand, and pricing environments. I have full confidence in our ability to control, what we can control, and excel through successful execution of our Build to Last strategy. We have proven over the past 2 years that we have the team, and strategy to perform in complex operating environments.

In closing on Slide 14, let me remind you of the reasons I'm. So excited for the long term growth prospects at <unk> and why we remain well positioned to weather this historically soft demand and pricing environments.

I have full confidence in our ability to control, what we can control and excel through successful execution of our build to last strategy.

We have proven over the past two years that we have the team and strategy to performing complex operating environments.

We have managed the business tightly while also investing for the future. We have accelerated our growth through M&A, and high impact organic growth projects. And lastly, we are keeping a long term lens regarding our operations, and business strategy. The cumulative impacts of our efforts will result in a more robust, efficient growth orientated, and defensible business model, which we believe positions Greif for success, and strong earnings growth as the cycle normalizes. We thank you for your interest in Greif. And operator will you please open the line for questions?

We have accelerated our growth through M&A and high impact organic growth projects and lastly, we are keeping a long term lens regarding our operations and business strategy.

The cumulative cumulative impacts of our efforts will result in a more robust.

<unk> gross orientated and defensible business model, which we believe position scribed for success and strong earnings growth as the cycle normalizes.

We thank you for your interest in Greif. And operator will you please open the line for questions? Certainly as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster. One moment for our first question.

We thank you for your interest in Greif. And operator will you please open the line for questions?

Operator: [Operator Instructions] And our first question comes from Ghansham Panjabi of Baird. Your line is open.

Certainly as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

One moment for our first question.

Okay. And our first question comes from Ghansham Panjabi of Baird. Your line is open.

And our first question comes from Ghansham Panjabi of Baird. Your line is open.

Ghansham Panjabi: Hey, guys good morning. Just making sure the audio is working. I guess, first off, on the EBITDA bridge Larry, $819 million generated fiscal year '23. Can you just give us more color in terms of the non volume variances? I'm just trying to reconcile down to your $595 million, which would be a pretty significant step down relative to the almost $200 million generated in EBITDA in Q4.

Hi, good morning, guys.

Morning, just making sure the audio is working.

I guess first off on the EBITDA Bridge Larry.

$890 million generated fiscal year 'twenty three.

Can you just give us more color in terms of.

The non volume variances.

Trying to reconcile down to your $5 95, which would be a pretty significant step down relative to the.

$200 million generated an EBITDA of <unk>.

Larry Hilsheimer: Yes, sure thing. Got some obvious question, right? So if I walk through it, we have a year over year impact, because of the strengthening dollar against our bucket of currencies of about $29 million. We also had throughout the year, a series of sort of one off onetime items. For example, we had insurance recovery of about $6 million related to a fire where the costs were actually in '22. We had another fire recovery, same thing before we had some legal recoveries, we had utility refunds that EMEA issued, because of the high cost there were some governmental initiatives, and then a tax recovery down in Brazil of about $6 million that was an operating type of tax.

<unk>. I walked through it we have a year over year impact because of the strengthening dollar. Against our that bucket of currencies of about $29 million.

I walked through it we have a year over year impact because of the strengthening dollar.

Against our that bucket of currencies of about $29 million.

We also had throughout the year a series of sort of one off onetime items. For example, we had insurance recovery of about $6 million related to a fire where the costs were actually in <unk>.

We had another fire recovery, same thing before we had some legal recoveries, we had utility refunds that EMEA issued, because of the high cost there were some governmental initiatives, and then a tax recovery down in Brazil of about 6 million that was an operating type of tax. So all of those were they.

We had another fire recovery, same thing before we had some legal recoveries, we had utility refunds that EMEA issued, because of the high cost there were some governmental initiatives, and then a tax recovery down in Brazil of about 6 million that was an operating type of tax.

Add another fire recovery same thing before we had some legal recoveries, we had utility refunds that EMEA issued because of the high cost there were some governmental initiatives and then a tax recovery down in Brazil of about 6 million that was an operating type attacks. So all of those were they.

So all of those, they flowed in throughout the year. They weren't like big lumps. But they total up to $29 million. So we don't anticipate those to reoccur. So between those 2 items you have almost $60 million. We then have just the paper pricing element in cost price squeeze in PPS is roughly $140 million year over year to where we are right now. Now again, that does not take into account the price increase we just announced, which we will be implementing on January 1st.

Float in throughout the year, they werent like big lumps. And but they total up to 29 million Bucks. So we. We don't anticipate those to reoccur so between those two items you have almost $60 million.

And but they total up to 29 million Bucks. So we. We don't anticipate those to reoccur so between those two items you have almost $60 million.

We don't anticipate those to reoccur so between those two items you have almost $60 million.

We then have the gist of that paper pricing.

Element in at cost price squeeze in PPS is roughly a $140 million year over year to where we are right. Now now again that does not take into account the price increase we just announced.

We will be implementing January one.

And then GIP, a little bit of just index timing on our forecast on cost is about $17 million drag year over year. And then we have some investments in, Ole mentioned that's going to a segment structure we get cost of that, about $6 million that we believe will generate a lot of benefits for us from that concentrated focused on different segments going forward. We also are investing as we've talked a lot about our digitization efforts.

And then GIP, a little bit of just index timing on our forecast on cost is about $17 million drag year over year. And then we have some investments in, Ole mentioned that's going to a segment structure we get cost of that, about $6 million that we believe will generate a lot of benefits for us from that concentrated focused on different segments going forward.

It's a little bit of just index timing on our forecast on cost is about $17 million drag year over year. And then we have some investments in. Ali mentioned Thats going to a segment structure will get cost of that about $6 million that we believe will generate a lot of benefits for us for Mac concentrated focused on different segments going forward. We also are investing as we've talked a lot about our digitization efforts.

And then we have some investments in.

Ali mentioned Thats going to a segment structure will get cost of that about $6 million that we believe will generate a lot of benefits for us for Mac concentrated focused on different segments going forward. We also are investing as we've talked a lot about our digitization efforts.

We also are investing as we've talked a lot about our digitization efforts in IT that we anticipate future strong benefits of the capitals require us to expense it. We view it more as an investment, but it's that net of the benefits. So we believe we'll start to see some benefit this year is about $8 million, that will turn around to more benefit generation in '25, '26, and going forward. And then there is just a $5 million of other inflationary things, those kind of matters. So that should get you from the $819 million to $585 million.

Yes. <unk> future strong benefits of the GAAP rules require us to expense. It we view it more of as an investment but that net of the benefit. So we believe we'll start to see some benefit. This year is about $8 million that will turn into turnaround to more benefit generation in 'twenty five.

<unk> future strong benefits of the GAAP rules require us to expense. It we view it more of as an investment but that net of the benefit. So we believe we'll start to see some benefit. This year is about $8 million that will turn into turnaround to more benefit generation in 'twenty five.

Six and going forward.

And then there is just shy of $5 million of solar or other inflationary things those kind of matters. So that should get you from the. <unk> thousand 19 to $5 85.

<unk> thousand 19 to $5 85.

Okay. That's super helpful and then the volume recovery. Hundred percent up a $170 million like the scaling that you gave us is that relative to two years ago. Just to make sure I have that right. That's just relative to 'twenty, two so I guess that would be two years ago 24 months. If we went back actually to what we look at sort of over the last normalized year because of that.

Ghansham Panjabi: Okay. That's super helpful. And then the volume recovery of the $100% of the $170 million like the scale that you gave us, is that relative to 2 years ago? Is that, just to make sure I have that right?

Hundred percent up a $170 million like the scaling that you gave us is that relative to two years ago. Just to make sure I have that right. That's just relative to 'twenty, two so I guess that would be two years ago 24 months.

Just to make sure I have that right.

Larry Hilsheimer: That's relative to '22. So I guess that would be 2 years ago, '24, '22. If we went back actually to what we look at sort of over the last normalized year because of COVID, everything else going on to go back to '19, the volume recovery would be even higher numbers. But yes, the $174 million is relative to '22.

That's just relative to 'twenty, two so I guess that would be two years ago 24 months.

If we went back actually to what we look at sort of over the last normalized year because of that.

Covid everything else going on to go back to 19, the volume got re vive in higher numbers, but but.

But you had 174 is relative to 'twenty two.

Ghansham Panjabi: Okay. Got it. Perfect. Thank you. And then in terms of your comments on green shoots, more color there. And then lastly on the CAPEX guidance, is that reflective of the low end assumption? And if so, is that something that would be scaled up if the year turns out to be better than you think?

Sure. And if so is that something that would be scaled up. Turns out to be better than you think.

And if so is that something that would be scaled up. Turns out to be better than you think.

Turns out to be better than you think.

Larry Hilsheimer: Yes. On the green shoots, it's mostly just to what we started to see in our in our Containerboard business Ghansham, we've seen, I don't think we're ready to call it a trend yet, or an inflection point, but certainly, the last couple of months have been much better and our mill system is full at the moment and backlogs are good. So that's what we're talking about. We really haven't seen it any place else. And then, I'm sorry, what was the second part of it?

In our in our <unk>. Linerboard business Ghansham, we we've seen I don't think we're ready to call. It a trend yet or an inflection point, but certainly the last couple of months have been much better in our mill system is full at the moment and backlogs are good. So that's what we're talking about we really haven't seen it any place else.

Linerboard business Ghansham, we we've seen I don't think we're ready to call. It a trend yet or an inflection point, but certainly the last couple of months have been much better in our mill system is full at the moment and backlogs are good. So that's what we're talking about we really haven't seen it any place else.

And then.

Im sorry, it was the second part of it.

CAPEX guidance. Thank you.

Ghansham Panjabi: CAPEX guidance.

Larry Hilsheimer: CAPEX guidance. Thank you. Yes, Ghansham. We've said, hey, look, if we actually end up with a year that's at the low end, we're going to manage our CAPEX spend to just not have anything to do with our strength, because obviously, we could do more, but more just to manage it for appropriately for investors. So if we do see an inflection point, we would probably up our CAPEX, but it wouldn't be proportional on that same ratio. Obviously, there is a core amount of CAPEX that we have to do every year to make sure we maintain critical maintenance, and obviously, that's what impacts our cash generation ratio.

Capex guidance, Yes, Ghansham, we've said hey look right.

Actually end up with a year that's at the low end, we're going to manage our capex spend.

To just.

It does not have anything to do with our strength because obviously, we could do more but more just to manage it for appropriately for investors. So if we do see an inflection point, we would probably up our capex, but it wouldn't be proportional on that same ratio.

Obviously, there is a core amount of capex that we have to do every year to make sure we maintain critical maintenance and obviously, that's what impacts are.

Cash generation ratio.

Ghansham Panjabi: Okay, perfect. Thank you so much. And happy holidays to all of you.

Larry Hilsheimer: Thank you, Ghansham.

Operator: Our next question will come from Cashen Keeler of Bank of America. Your line is open. Yes, hi, good morning, this is cash on for George. This morning business related. So just on containerboard I know youre, not including that in guidance here, but I guess can you generally just speak to your rationale behind the price increases and then.

Operator: Our next question will come from Cashen Keeler of Bank of America. Your line is open.

Yeah. Yes. Okay. Our next question will come from Kashi and Keeler of Bank of America. Your line is open.

Yes. Okay. Our next question will come from Kashi and Keeler of Bank of America. Your line is open.

Okay. Our next question will come from Kashi and Keeler of Bank of America. Your line is open.

Cashen Keeler: Yes, good morning. This is Cashen on for George, he had a conflict his morning business related. So just on Containerboard, I know you're not including in guidance here, but I guess can you generally just speak to your rationale behind the price increases? And then you also talked to some improvement just on Containerboard it's trending relative to URB. So just on the demand front there, can you talk at all just how that maybe trended throughout the quarter, and what are you hearing from your customers on that front as well?

Our next question will come from Kashi and Keeler of Bank of America. Your line is open.

Yes, hi, good morning, this is cash on for George. This morning business related. So just on containerboard I know youre, not including that in guidance here, but I guess can you generally just speak to your rationale behind the price increases and then.

This morning business related.

So just on containerboard I know youre, not including that in guidance here, but I guess can you generally just speak to your rationale behind the price increases and then.

You also talked to some improvement just on containerboard. Better relative to your base or just on the demand front. There can you talk at all just how that maybe trended throughout the quarter and what are you hearing from your customers on that front as well.

Better relative to your base or just on the demand front. There can you talk at all just how that maybe trended throughout the quarter and what are you hearing from your customers on that front as well.

Larry Hilsheimer: Yes. I mean, we are raising the prices, because we like everybody else are faced inflationary cost pressures. obviously, OCC is up. We deliver great services to our customers, and demand has been up. So we've gone out with that, and it will be effective January 1st.

We are raising the prices because. We like everybody else are faced inflationary cost pressures, obviously OCC is up. We deliver great services to our customers and demand has been up. So we are we've gone out with that and it will be effective January one.

We like everybody else are faced inflationary cost pressures, obviously OCC is up.

We deliver great services to our customers and demand has been up. So we are we've gone out with that and it will be effective January one.

Ole Rosgaard: Yes, that's essentially it.

Cashen Keeler: Okay. And then on just on demand in Containerboard?

Are you talking about fourth quarter? yes, yes. So. The mills.

Ole Rosgaard: Are you talking about fourth quarter?

<unk> got a trend. Yeah. When you're talking about fourth quarter, yes, yes. So. The mills.

Yeah. When you're talking about fourth quarter, yes, yes. So.

When you're talking about fourth quarter, yes, yes. So.

Yes.  , yes. So. The mills.

Cashen Keeler: Yes. 

Yes. The mills 0.5%. And sheets and CorrChoice,  2.8%. Boxboard, were down 6.9% and tube and core, down 7.6%. so sequentially a significant turnaround because we've been running negative so.

Larry Hilsheimer: Yes. The mills 0.5%. And sheets and CorrChoice, 2.8%. Boxboard, were down 6.9% and tube and core, down 7.6%.

The mills.

Let's see here.

Our mills.

Half a percent and and sheets and core charge two 8%.

<unk>, we were down $6 nine and children called down seven six yes, so sequentially a significant turnaround because we've been running negative so.

Ole Rosgaard: Yes. Sequentially a significant turnaround, because we've been running negative, so...

Cashen Keeler: Okay. Understood. I appreciate that color. And then I know you've done a number of acquisitions, or announced the number this year, and Ole you talked to M&A being part of the story kind of longer term here. And then on past calls you've talked to stuff maybe in the kind of immediate term pipeline. So at this point, is there anything that you could potentially execute on in the coming year? Or how can we kind of think about that?

And then I know you've done a number of acquisitions or announced the number this year.

And I'll, let you talk to M&A being part of the story kind of longer term here.

And on past calls you've talked a soft maybe in the kind of immediate term pipeline. So at this point is there anything that you.

Potentially execute on in the coming year.

Or how can we kind of think about that.

Ole Rosgaard: I mean we haven't closed on Ipackchem yet, that will close here in the first calendar quarter. We believe [Technical Difficulty] to dive back in. They operate in 9 countries. And given the volume situation, we have at the moment in our guidance, we are not sort of going out aggressively to buy. But we have the means to do something, and we remain opportunistic over the next 6 months in terms of what's available, and we're not going to miss a good opportunity to do a good deal.

We haven't closed on AIPAC cabinets that will close here.

First calendar quarter.

We believe <unk> can they operate in nine countries.

And given the volume situation, we have at the moment in our guidance, we are not sort of going out aggressively to buy box. We have the means to do something and we remain opportunistic over the next six months in terms of.

What's available.

And we're not going to Miss a good opportunity to do it with you yes. The thing I would I would also just shares even if we had hit this low end if thats all that happens this year, we still are well well within any of our debt covenants and we will.

And we're not going to Miss a good opportunity to do it with

Larry Hilsheimer: Yes. The thing I would also just share is even if we had hit this low end, if that's all that happens this year, we still are well within any of our debt covenants, and we we'll be in great shape going forward, I mean, even if we got to just like recovering 50% of our volume this with Ipackchem, we'd still be right around 3% on leverage ratio.

Be in great shape going forward, even if we got to just like recovering 50% of our volume this year, yes.

We would with AIPAC, we'd still be right around three.

<unk>. Leverage ratio.

Leverage ratio.

Larry Hilsheimer: Obviously, as we recover, we think there's significant upside. And to put a little point on that, we're out at 585. If we recovered paper and pricing margins to the average of the last 5 years, we've picked up a $101 million. If we recapture the volume where we said it's a $174 million. If we add Ipackchem in there, say roughly $60 million, we're up to $920 million. If those things happen, we're already back down in our debt ratio target.

We think theres significant upside in the pillow point on that.

So we're out at $5 85, if we recovered pay.

Paper in pricing margins to the average of the last five years, we've picked up a $101 million.

<unk> recapture the volume where he said that's a $174 million.

If we add AIPAC Chem and their say roughly 60 were up to $920 million.

If those things happen, we're already back down and our debt ratio.

Cashen Keeler: Got it. Understood. And then just one last one, I'll turn it over. Just with the change in terms of your fiscal year. Is it possible at all to quantify what the inflation might be or what costs you might incur related to that?

Okay got it understood.

And then just one last one and I'll turn it over just what the change in terms of your fiscal year is.

Is it possible at all to quantify what the inflation might be in.

Or what costs, you might incur related to that.

Yes. The fiscal year change thing is relatively minor. A couple of million dollars kind of thing for that element of it.  Got it thanks, I'll turn it over.

Larry Hilsheimer: Yes. The fiscal year change thing is relatively minor. It's a couple of million dollars kind of thing for that element of it.

Fiscal year change thing is relatively minor. A couple of million dollars kind of thing for that element of it.

A couple of million dollars kind of thing for that element of it.

Cashen Keeler: Got it. Thanks. I'll turn it over.

Got it thanks, I'll turn it over.

Operator: Our next question will come from Aadit Shrestha of Stifel. Your line is open.

Our next question will come from Eddie threshold of Stifel. Your line is open.

Aadit Shrestha: Good morning. Thanks for taking my questions. If you could just talk about what you're watching as indications have changed in the business fundamentals, and what needs to happen to support a positive churn is coming, and you would feel more comfortable providing the guidance range.

If you could talk about what you're watching as indications of change in the business fundamentals and what needs to happen to the portal positive churn is coming.

And you would feel more comfortable providing guidance range.

Ole Rosgaard: Well, what needs to happen is, I mean, obviously, there's a lot of factors involved. But if we see an interest rate reduction, we will probably see some improvements in the housing sector, and the housing sector when people move houses drive sort of a lot of the business we see from our paints, and segments but also on Containerboard that will be. That would be a very huge positive, probably the biggest, I would say. And then you have all the issues on geopolitical conflicts we have around the world that has an effect as well. Those would probably be the biggest.

Interest rate reduction, we will probably see some improvements in the housing sector.

The housing sector when people move houses drive sort of a lot of the business, we see from our paints and segments.

But also on our container box that will be.

A huge positive.

Probably the biggest I would say.

And then you have all the issues on geopolitical conflicts we have around the world that has an effect as well. Those would probably be the biggest  yes I would just ask you to reflect on last year. We came out at our first quarter call with lowering guidance by the second quarter, we gave a range.

And then you have all the issues on geopolitical conflicts we have around the world that has an effect as well. Those would probably be the biggest yes

Larry Hilsheimer: Yes. I would just ask you to reflect on last year. We came out at our first quarter call with low end guidance. By the second quarter, we gave a range. I mean, when we see something we will react, and get everybody the information that you would rather see. But I'll also tell you, a year ago on this call, at this time, our paper customers were telling us they thought business was going to bounce back in January.

Yes, so we're not I mean, when we see something we will we will react and get everybody. The information that you would rather see but I'll also tell you a year.

Year ago on this call at this time, our paper customers were telling us they thought business was going to bounce back in January our chemical companies were saying first or second quarter calendar last year and by the time, we got to the first quarter everybody was like Oh, my what's going on and it started extending further.

Year ago on this call at this time, our paper customers were telling us they thought business was going to bounce back in January

Our chemical companies were saying first, or second quarter calendar last year. And by the time we got to the first quarter, everybody was like, Oh my, what's going on, and it started extending further out. And I'll also reflect on the Great Recession, when we did see an inflection point, it was rapid. The demand kicked off aggressively. So hopefully, we start to see a recovery that ties to some of the things that Ole just mentioned, and we are well positioned to respond.

They're out so.

And I'll also reflect on the great recession, when we did see an inflection point it was rapid.

Yes, the demand kicked off aggressively so hopefully we start to see a recovery there.

Tied to some of the things that always just mentioned and we are well positioned to respond.

Matt Leahy: And Aadit, I'll just add to that. This is Matt. So when you look globally at industrial production, ISM PMIs were peaking in May of 2021, and trending down almost since then. They've actually been trending negatively globally since September of 2022 in a contractionary period for over 12 months. Our global industrial business is levered to some of those trends if not directly. So I think if you look for a turn or recovery in PMI or ISM that could also indicate we're probably seeing a demand recovery as well.

<unk> PMI were peaking in may of 2021 and trending down almost since then they've actually been trending negatively globally. Since September of 2022, and a contractionary period for over 12 months, our global industrial business is levered to some of those trends if not directly so I.

I think if you look for a turn on a recovery in PMI are our ISN that that could also indicate we're probably seeing a demand recovery as well.

Aadit Shrestha: All right. Thanks, a lot. And just about the cadence of pricing volume by quarter, maybe within each segment like it seems, like within both, they have the toughest comp in Q1, and sequentially improves and maybe it's flat year over year, sort of kind of what you built into your guidance. Am I thinking about this correctly?

And just about the cadence of price and volume by quarter, maybe within each segment like seems like within both we have the toughest comp and Warne, Ken sequentially improves and maybe it's flat year over year sort of kind of what.

What you built into your guidance am I thinking about this correctly.

Yes. We didn't really look at the price cost, I am not ready to answer that on a quarter by quarter basis. I mean, we didn't take that. I didn't go back, and look at where we were on each. But I guess, just off the top, things trended throughout the year, obviously, with OCC going up in the paper business throughout the year, and we got price cuts more we had a back half of the year. So Yes. That would say that you'd be better at the end of the year than at the beginning. But then we've got our <unk>.

Larry Hilsheimer: Yes. We didn't really look at the price cost, I am not ready to answer that on a quarter by quarter basis. I mean, we didn't take that. I didn't go back, and look at where we were on each. But I guess, just off the top, things trended throughout the year, obviously, with OCC going up in the paper business throughout the year, and we got price cuts more we had a back half of the year.

Look at the price cost I don't I am not ready to answer that on a quarter by quarter basis, and we didnt make that yes, I didn't go back and look at where we were on each but I.

I guess just off the top things trended throughout the year, obviously with OCC going up on the paper business throughout the year and get price cuts more.

So if we add back half back half of the year. So yes.

So that would say that you'd be better at the end of the year than at the beginning. But then we've got our price increase announced that we are implementing on January 1st. So that would obviously help more in the second quarter than the first.

Yes. That would say that you'd be better at the end of the year than at the beginning.

That would say that you'd be better at the end of the year than at the beginning.

But then we've got our <unk>.

<unk> increase announced that we are implementing on January one so that would obviously help.

In the first and more in the second quarter than the first and I did all that.

In the first and more in the second quarter than the first

Ole Rosgaard: And Aadit, the first quarter tends to be the lowest in our business cycle as well.

First quarter tends to be the lowest in our business cycle as well.

All right. And just one last one for me. So the deals that you've already closed, what is the rollover contribution to sales EBITDA, and free cash flow assumed in the guidance from that? And I can give you EBITDA is roughly $20 million. In terms of the contribution to 2024. Generally these businesses collectively are running at 60% free cash flow conversion, we havent guided to that but I'm not sure what their capex needs are next year, but that's directionally accurate from an EBITDA perspective.

Aadit Shrestha: All right. And just one last one for me. So the deals that you've already closed, what is the rollover contribution to sales EBITDA, and free cash flow assumed in the guidance from that?

So the deals that you've already closed what is the rollover contribution to sales EBITDA and free cash flow assumed in the guidance from that.

And I can give you EBITDA is roughly $20 million.

Larry Hilsheimer: Aadit, I can give you-- EBITDA is roughly $20 million in terms of the contribution to 2024. Generally, these businesses collectively are running at 60% free cash flow conversion. We haven't guided to that, but I'm not sure what the CAPEX needs are next year, but that's directionally accurate in terms from an EBITDA perspective.

In terms of the contribution to 2024. Generally these businesses collectively are running at 60% free cash flow conversion, we havent guided to that but I'm not sure what their capex needs are next year, but that's directionally accurate from an EBITDA perspective.

Generally these businesses collectively are running at 60% free cash flow conversion, we havent guided to that but I'm not sure what their capex needs are next year, but that's directionally accurate from an EBITDA perspective.

Aadit Shrestha: All right. Thank you for taking my questions.

Operator: Our next question will come from Roger Spitz of Bank of America. Your line is open.

Yeah. Our next question will come from Roger Spitz of Bank of America. Your line is open.

Our next question will come from Roger Spitz of Bank of America. Your line is open.

Roger Spitz: Thank you. Good morning. First what was IBC's fiscal Q4 volume increase on a percentage basis? And would you have for steel, plastic, fiber, in IBC's the full fiscal year 2024 volume change on a percentage basis?

Abc's fiscal Q4 volume increase on a percentage basis and would you have for steel plastic fiber and <unk>.

Full fiscal year 2024 volume change on a percentage basis.

Hi, Roger. I can give you that, the first one in Q4 was a contraction of 4.3%. On IBCs.  Okay I thought you said, okay, Mike My fault. And you don't have the full year Johanna is what youre, saying for all four.

Ole Rosgaard: Hi, Roger. I can give you that, the first one in Q4 was a contraction of 4.3%. On IBCs. 

Traction of four 3%.

On Rbcs.

Roger Spitz: Okay. I thought you said up. Okay, my fault. And you don't have the full year to hand is what you're saying for all 4?

Oh, Okay I thought you said, okay, Mike My fault.

And you don't have the full year Johanna is what youre, saying for all four.

Ole Rosgaard: Full year is a contraction of 9.5%.

Roger Spitz: Okay. Why does small plastic packaging businesses have higher margins than your legacy large packaging? Is it small package plastic packaging more fragmented, and large packaging really only has maybe 3 producers with maybe 80% global market share. So a less fragmented business?

Why does small plastic packaging businesses.

Higher margins than your legacy large packaging.

Is it small package plastic packaging more fragmented and large large packaging really only has.

Three producers with maybe 80% global market share so.

A less fragmented business.

Ole Rosgaard: Yes. Number 1, it is a less consolidated business across the globe. There's a lot of players. It's also a more sophisticated product to produce. On small plastic and the other kind, you could kind of split it up in 3 buckets. You have a commodity markets, then you have the middle, a little bit commodity a little bit premium, and then you have the premium market, which is really where we operate, where you have things like barrier technologies, you have special designs, and that sort of thing.

A lot of players it's also a more sophisticated product to produce.

You could on small plastic and Eric and you could kind of split it up in three buckets you have a commodity.

The markets when you have the middle in a little bit commodity a little bit.

Premium and then you have the premium market, which is really where we operates where you have things like barrier technologies, you have special designs and that sort of thing.

Larry Hilsheimer: One thing to supplement Ole's answer, because Ole was answering on IBCs on a same store basis without the impact of Centurion acquisition. So on Centurion, with Centurion in, our volumes on IBCs were up 2%. And for '24 we would expect them to be up 12% year over year.

Same store basis without.

The impact of Sydney Korean acquisition, so on Centurion whitson carrying in our volumes on <unk>.

<unk> up 2% and 424.

We expect them to be up 12 year over year.

Roger Spitz: Got it. Thank you very much for your time.

Larry Hilsheimer: Thank you. You're welcome.

Operator: [Operator Instructions] Our next question comes from Gabe Hajde of Wells Fargo. Your line is open.

And as a reminder, if you would like to ask a question. Please press star one one and wait for your name to be announced.

Yes.

Our next question comes from Gabe.

<unk> of Wells Fargo. Your line is open.

Good morning, guys. Hey, Gabe periods been called worse.

Gabe Hajde: Good morning, guys.

Good morning, guys. Hey, Gabe periods been called worse.

Larry Hilsheimer: Hi, Gabe. I'm sure you have been called worse.

Hey, Gabe periods been called worse.

Gabe Hajde: I wanted to ask something a little bit that's been in the publications here recently about imported uncoated recycled board, and just historically speaking not being really a paper grade that's been imported, I think for a variety of reasons, one of which is there are probably other paper grades that are higher price points that could be justified to be imported. But I'm just curious if you all have seen this in the past, or if in fact, you can confirm that it's something that you've seen in the marketplace. Now I'll stop there.

Okay. I wanted to ask something a little bit that sit in the publications here recently.

I wanted to ask something a little bit that sit in the publications here recently.

Imported.

Coated recycled board and just historically speaking not being really a paper grade that's been important I think for a variety of reasons one of which is.

There are probably other paper grades that are higher price points that can be justified to be imported but I'm. Just curious if you all have seen this in the past.

Or if in fact, you can confirm that it is something that you've seen in the marketplace.

Now I'll stop there.

Larry Hilsheimer: Yes, Gabe. It's really minor in the overall market. We've seen a little bit more but it's not substantial.

It's something that there's always been some it is really minor in the overall market.

We've seen a little bit more but it's not substantial.

Gabe Hajde: Okay. And I guess to revisit the bridge question, I apologize in advance, but you Larry laid out, I think a lot of the negative factors to get to the $585 million but weren't necessarily giving yourselves credit for any of the positives that would be included even taking into account sort of what you're assuming the guidance and/or what's you're experiencing today at least on the Containerboard side. And what I mean by that is it sounds like the system is full at this point, which would imply no economic downtime in the containerboard mill system.

And I guess to revisit the bridge question.

I apologize in advance, but you Larry laid out I think a lot of the negative factors.

To get to the $5 85.

Werent necessarily giving yourselves credit for.

Any of the positives that would be included even taking into account sort of what youre assuming.

And the guidance and what's you're experiencing today at least on the containerboard side and what I mean by that is it sounds like the system is full at this point, which would imply no economic downtime in the containerboard mill system.

So math throughout plus 20 for acquisitions, I don't know if I have the exact number correct. I want to say that it was about 120,000 tons of economic downtime in your seaboard system, assuming some of that comes back, those will all be additive sort of just based on what your assumptions are today. Is that the right way to think about it?

I don't know if I have the exact number correct I want to say there was about 120000 tons of economic downtime in your seaborne system.

Assuming some of that comes back.

Those are all additive sort of just based on what your assumptions are today.

Yes, the right way to think of it.

Ole Rosgaard: Partially. I mean, we have build in some relatively minor growth from containerboard in the year. But it's like $60 million now. We also are closing down our Santa Clara mill. So that would take a little bit out. But yes, you're right. We're being relatively conservative in that low end guidance. I mean, it's low end, because it's low end.

Relatively minor growth. And again from containerboard.

And again from containerboard.

In the year.

But its AI.

Okay.

$60 million now we also are closing down our Santa Clara mill, So that would take a little bit out, but yes, youre right. We.

We're being relatively conservative in that low end guidance I mean, it's low end because it's low end.

Gabe Hajde: Okay. Santa Clara remind me, is that CRB?

Okay. Santa Clara remind me is that CRB.

Santa Clara remind me is that CRB.

Larry Hilsheimer: Yes, yes.

Yes.

Ole Rosgaard: No, it's Containerboard.

Peter for it.

Great. Our CRB. No it's containerboard.

Our CRB. No it's containerboard.

No it's containerboard.

Gabe Hajde: [Inaudible] Matt.

Let me check. we will get that data yet.

Matt Leahy: Let me check.

Ole Rosgaard: We will get back to you.

Gabe Hajde: Okay. All right. That'll be it. Thank you.

Alright. That'll be it thank you.

That'll be it thank you.

And I'm showing no further questions. I would now like to hand the call back to Matt Leahy, for closing remarks. Alright, well. Thank you everyone again for your patience today and our challenges at the beginning of the call. We hope you all have a wonderful holiday.

Operator: And I'm showing no further questions. I would now like to hand the call back to Matt Leahy, for closing remarks.

Matt Leahy: All right. Well, thank you, everyone again, for your patience today, and our challenges at the beginning of the call. We hope you all have a wonderful holiday.

Alright, well. Thank you everyone again for your patience today and our challenges at the beginning of the call. We hope you all have a wonderful holiday.

Operator: This concludes today's conference. Thank you for participating. You may now disconnect.

Today's conference. Thank you for participating you may now disconnect.

Okay. [music]. Okay. Okay. Okay. [music].

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