Q4 2023 Sealed Air Corporation Earnings Call

Okay.

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to Sealed Air Port's Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Speaker Change: Good day, ladies and gentlemen, thank you for standing by.

Speaker Change: Welcome to sealed air fourth quarter, 2023 earnings conference call.

Speaker Change: At this time, all participants on a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Brian Sullivan, Head of Investor Relations.

Speaker Change: After the Speakers' presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automatic message advising you had this waste please.

Please note that today's conference maybe recorded I will now.

Speaker Change: I'll hand, the conference over to your Speaker House, Brian Sullivan head of Investor Relations. Please go ahead.

Brian Sullivan: Thank you and good morning everyone. With me today are Emil Shamas, Interim Co-CEO and COO, as well as Dustin Cimac, Interim Co-CEO and CFO. Before we begin our call, I would like to note that we have provided a slide presentation to supplement the call. Please visit SealedAir.com, where today's webcast and presentation can be downloaded from our investor relations page. Statements made during this call setting management's outlook or estimates for future periods are forward-looking statements, and these statements are based solely on information that is now available to us.

Thank you and good morning, everyone with me today are Emil Shamus interim co CEO and C O O as well it doesn't simak interim co CEO and CFO.

Brian Sullivan: We begin our call I would like to note that we have provided a slide presentation to supplement the call.

Brian Sullivan: Please visit sealed air Dot Com, where today's webcast and presentation can be downloaded from our Investor Relations page.

Brian Sullivan: Statements made during this call, stating management's outlook or estimates for future periods are forward looking statements.

Brian Sullivan: These statements are based solely on information that is now available to us.

Brian Sullivan: We encourage you to review the information in the section entitled Forward-Looking Statements in our earnings release and slide presentation, which applies to this call. Additionally, our future performance may differ due to a number of factors. Many of these factors are listed in our most recent annual report on Form 10-K, filed or could be filed with the SEC, and as revised and updated in our quarterly reports on Form 10-Q and current reports on Form 8-K. We discuss financial measures that do not conform to U.S. GAAP. You will find important information on our use of these measures and their reconciliation to U.S. GAAP in our earnings release. In the appendix of today's presentation, you'll find U.S. GAAP financial results that correspond to the non-U.S. GAAP measures we referenced throughout the presentation. I'll now turn the call over to Emile and Dustin. Operator, please turn to slide three. Emile.

Brian Sullivan: We encourage you to review the information in the section entitled forward looking statements in our earnings release, and slide presentation, which applies to this call.

Brian Sullivan: Additionally, our future performance may differ due to a number of factors.

Brian Sullivan: Many of these factors are listed in our most recent annual report on Form 10-K filed or to be filed with the SEC and as revised and updated on our quarterly reports on Form 10-Q, and current reports on form 8-K.

Brian Sullivan: We discuss financial measures that did not conform to U S. GAAP.

Brian Sullivan: You will find important information on our use of these measures and their reconciliation to U S. GAAP in our earnings release.

Brian Sullivan: Included in the appendix of today's presentation, you will find U S. GAAP financial results that correspond to the non U S. GAAP measures, we reference throughout the presentation.

Brian Sullivan: I'll now turn the call over to Emil Industrial operator, please turn to slide three and Neil.

Emil Shamas: Thank you, Brian, and thank you for joining us for our fourth quarter and year-end earnings call. Today, Dustin and I will review SEAS's financial performance, provide updates on the markets we serve, discuss relevant trends, and highlight the significant progress made on the transformational actions discussed in our previous call. Lastly, we will conclude with our 2024 Outlook before opening the call for questions. We closed the quarter with sales of $1.4 billion and delivered $274 million in adjusted EBITDA, in line with our expectations.

Neil: Thank you Brian.

Neil: Thank you for joining our fourth quarter and year end earnings call.

Emil: Today, I will review <unk> financial performance provide updates on the markets, we serve discuss relevant trends and highlight the significant progress made on the transformational actions discussed on our previous call.

Emil: Lastly, we will conclude with our 2024 outlook before opening the call for questions.

We closed the quarter with sales of $1 4 billion.

Emil: And delivered $274 million and adjusted EBITDA in line with our expectations.

Emil Shamas: Our fourth-quarter results reflected the continued impact of challenging protein cycles and trade downs in our food business, as well as a muted fourth-quarter seasonal pickup in our protective sector. For the full year, we finished with $5.5 billion in sales and $1.1 billion of adjusted EBITDA, slightly above the midpoint of our guidance. Through the laser-focused efforts of our global team, excluding payments and deposits related to the resolution of certain prior year's tax matters, we delivered $467 million of free cash flow, well above our guided estimates. Dustin will provide a more comprehensive overview of our financial performance in a short. Now, let us move on to our 2024 market and business update. While our end markets in 2024 should be better than 2023, we expect, at best, an L-shaped recovery with no near-term growth catalyst. We are continuing the transformational actions that we detailed during our third quarter call.

Emil: Our fourth quarter results reflected the continued impact of challenging protein cycles and trade downs in our food business as well as a muted fourth quarter seasonal pickup in our protective segment.

Emil: For the full year, we finished with five $5 billion in sales and $1 1 billion of adjusted EBITDA.

Emil: Slightly above the midpoint of our guidance.

Emil: Through the laser focused efforts of our global team, excluding payments and deposits related to the resolution of certain prior year's tax matters, we delivered $467 million of free cash flow well above our guidance estimates.

Emil: Duston will provide a more comprehensive overview of our financial performance shortly.

Duston: Now, let us move on to our 2024 market and business update.

Duston: While our end markets in 2024 should be better than 2023, we expect the best announced shaped recovery with no near term growth catalysts.

Duston: We are continuing to transformational actions that we detailed during our third quarter call.

Emil Shamas: We will continue to focus on our core business and customers, restore underlying fundamentals, and position ourselves for accelerated growth in 2025 and beyond. I will now share some updates across our transformational initiative, furry. As we previously mentioned, we recognize the need to reallocate global resources back into our regions to enhance customer proximity and improve commercial effectiveness. As part of our reorganization efforts, we also determined that blending the protective and food commercial teams contributed to a loss of customer centricity and reduced commercial risk. Consequently, we have reorganized our commercial teams by reestablishing food and protective operating units within each region and shifted global resources to our regional teams.

Duston: We'll continue to focus on our core business and customers.

Duston: Restore underlying fundamentals and position ourselves for accelerated growth in 2025 and beyond.

Duston: I will now share some updates across our transformational initiatives.

Duston: First as.

Duston: As we previously mentioned, we recognize the need to reallocate global resources back into our regions to enhance customer proximity and.

Duston: An improved commercial effectiveness.

Duston: As part of our reorganization efforts, we also determined that blending the protective and food commercial teams.

Duston: Tribute it to a loss of customer centricity and our reduced commercial rigor.

Duston: Consequently, we have reorganized our commercial teams by reestablishing food and protective operating units within each region and shifted global resources to our regional teams.

Emil Shamas: This is an initial step in our broader transformation to improve our commercial executions and capture incremental market share as conditions improve. Thank you. With sustainability as an accelerating megatrend in both food and protection, now more than ever, innovation will play a critical role in driving outsized market growth. To maximize our opportunity, we are shifting our innovation focus from the laboratory to the field. What does this mean?

This is an initial step in our broader transformation to improve our commercial execution and capture incremental market share as conditions improve.

Duston: Second.

Duston: With sustainability as an accelerating mega trend in both food and protective.

Duston: Now more than ever innovation will play a critical role in driving outsized market growth.

Duston: To maximize our opportunity we are shifting our innovation focus from the laboratory for the field.

Duston: What does this mean, we have a strong material science research and development capability, but we need to take the next step forward by better leveraging the voice of the customer to help prioritize and shape our innovation pipeline.

Emil Shamas: We have a strong material science research and development capability, but we need to take the next step forward by better leveraging the voice of the customer to help prioritize and shape our innovation pipeline. Making this shift, combined with our scale, will allow us to outpace our competition, ultimately improving time to market and the commercial success of our new product. Throughout 2024, we will be introducing new recycle-ready products at an accelerating rate, bringing to market full automation solutions within case ready and expanding applications within our fluids and liquids business. Moving to slide four. You can see a practical example of where sustainability pressures driven by new regulations and consumer preferences are driving an unprecedented shift in the protein trade market. In response, we recently introduced the first bio-based, industrially-compostable tray for protein packaging.

Duston: Making this shift combined with our scale will allow us to outpace our competition ultimately improving time to market and the commercial success of our new products.

Duston: Throughout 2024, we will be introducing new recycle revenue products at an accelerating rate.

Duston: Bringing them to market full automation solutions within case ready and expanding applications within our fluids and liquids businesses.

Duston: Moving to slide four.

Duston: You can see a practical example of where sustainability pressures driven by new regulations and consumer preferences are driving an unprecedented shift in the protein space market.

Duston: In response, we recently introduced the first bio based industrial leak in postal both trade for protein packaging.

Emil Shamas: These trays provide comparable performance and stability to traditional expanded polystyrene trays, allowing us to gain share in an estimated $5 billion tray market while supporting our customer sustainability. Max, We have continued our portfolio optimization efforts, investing in core growth products while deprioritizing those that no longer align with our strategic objectives. We have made a lot of progress in redefining the long-term strategy for our portfolio solution, in large part, getting back to C's differentiated material science, automation, and service experience. As our transformation takes hold and markets recover, and the financing environment improves, we will be in a much stronger position to take actions to drive further shareholder value. Meanwhile, our primary focus remains on making improvements we can drive regardless of the operating environment.

Duston: These trades provide comparable performance and stability to traditional expanded polystyrene trays, allowing us to gain share in an estimated $5 billion trade market, while supporting our customer sustainability goals.

Duston: Next.

Duston: We have continued our portfolio optimization efforts investing in core growth products, while prioritizing those that no longer align with our strategic objectives.

Duston: We have made a lot of progress in redefining the long term strategy for our portfolio of solutions.

Duston: In large part getting back to cease differentiated materials science automation and service expertise.

Duston: As our transformation takes hold and markets recover and financing environment improves we will be in a much stronger position to take actions to drive further shareholder value.

Duston: Meanwhile, our primary focus remains on making improvements we can drive regardless of the operating environment.

Emil Shamas: Finally, our cost reduction initiatives within CTO2GROW are progressing as planned. In 2023, we drove actions culminating in an annual run rate savings, largely in 2024, of $50 million, up from $40 million at the end of the third quarter. As part of the effort, we have completed three plant closures in 2023 and are in the process of closing four additional sites as part of our footprint rationalization efforts with more sites on the review. In addition, we are right-sizing our Argentina operation, given recent regulatory and economic instability. With the actions we have driven so far, we are currently at a total of $65 million in annual runway savings.

Duston: Finally, our cost reduction initiatives within CTO to grow are progressing as planned.

Duston: 2023, we drove actions, culminating in an annual run rate savings largely in 2024 of $50 million.

Duston: Up from $40 million at the end of the third quarter.

Duston: As part of the effort we have completed three plant closures in 2023.

Duston: And they are in the process of closing four additional sites as part of our footprint rationalization efforts with more sites under review.

Duston: In addition, we are right sizing, our Argentina operation, given recent regulatory and economic instability.

Duston: With the actions we have driven so far we are currently at a total of $65 million in annual run rate savings.

Emil Shamas: Building upon this momentum, we are confident in our ability to achieve $90 million in year-over-year cost savings in 2020. Moving on to updates in our food and protective segments, we observed ongoing challenges in the food segment where volumes declined year over year.

Duston: Building. Upon this momentum we are confident in our ability to achieve $90 million in year over year cost savings in 2024.

Duston: Moving on to updates on our food and protective segments, we observed ongoing challenges in the food segment, where volumes declined year over year.

Emil Shamas: However, sequential performance improved in Q4 due to increased holiday demand. The challenges we faced in the fourth quarter stem from multiple factors, including the rebuilding of the cattle herd in North America, shifts in European protein production and consumption, and consumer trade downs in retail food. The depressed cattle cycle, coupled with higher interest rates, negatively impacted our equipment business.

Duston: Sequential performance improved in Q4 due to increased holiday demand.

Duston: The challenges we faced in the fourth quarter stemmed from multiple factors, including the rebuilding of the cattle herd in North America shifts in the European protein production and consumption and consumer trade down to the retail foods.

Duston: The depressed capital cycle, coupled with higher interest rates negatively impacted our equipment business as.

Emil Shamas: Its customers scaled by their capital expenditures to preserve it, and we expect these trials to continue to 2022. For Protective, 2023 was a turbulent year. Real industrial production contracted year over year in most advanced economies. High inflation and the subsequent drag on real income continue to squeeze household spending power and are reducing the demand for consumer goods.

Duston: As customers scaled back our capital expenditures to preserve cash.

Duston: We expect these trends to continue into 2024.

Duston: For protective 2023 was a turbulent year.

Duston: Industrial production contracted year over year in most advanced economies.

Duston: High inflation and the subsequent a drag on real income continued to squeeze household spending power and is reducing the demand for consumer goods.

Emil Shamas: Additionally... Sustainability and new business models like shipping your own container and Buy Online, Pick Up, and Store continue to reshape e-commerce packaging choices and demand. However, pricing pressures have intensified as competitors step up to address weak market demand. On a positive note, the de-stocking of downstream inventories is largely complete. However, different from previously expected, while market indicators are signaling an improving 2024, we have not yet seen this translate into improving demand for our customers' businesses and subsequent restocking or uptake in volumes for our packaging solutions. While we do not see an immediate near-term market catalyst, we are anticipating a gradual recovery in our end market throughout 2024, with volume left towards the end of the year and continuing into 2020. As our markets recover, our focus on innovation and sustainability, coupled with our CTO's growth and strategic commercial initiatives, gives us confidence in C's continued recovery. Now I'd like to turn it over to Dustin to review our financial results. Okay, Dustin?

Duston: Additionally, sustainability of new business models like ship in Europe on campaigner.

Duston: And buy online pickup in store continued to reshape e-commerce packaging choices in demand.

Duston: Pricing pressures have intensified as competitors step up to address weak market demand.

Duston: On a positive note the destocking of downstream inventories is largely complete.

Different from previously expected.

Duston: While market indicators are signaling an improving 2024, we have not yet seen this translate into improving demand for our customers' businesses and subsequent restocking our uptick in volumes for our packaging solutions.

Duston: While we do not see an immediate near term market catalysts, we are anticipating a gradual recovery in our end markets throughout 2024.

Duston: With volume lift towards the end of the year and continuing into 2025.

Duston: As our markets recover our focus on innovation sustainability, coupled with our CTO to grow in strategic commercial initiatives.

Duston: Us confidence and fees continued recovery.

Duston: Now I'd like to turn it over to Doug to review our financial results.

Dustin Simak: Thank you, Emil, and good morning, everyone. Moving on to the fourth quarter and full year results. Let's turn to slide five. Net sales were $1.4 billion in the quarter, flat on a constant currency basis, and they were $5.5 billion for the full year of 2023, down 1% at constant currency. Adjusted EBITDA in the quarter was $274 million, down 8% compared to last year. For the year, just EBITDA was approximately $1.1 billion, down 9%. Volumes improved sequentially in Q4 as holiday demand drove a low single-digit seasonality pickup. However, as reported, adjusted earnings per share in the quarter of 88 cents were down 11% compared to a year ago. Our adjusted tax rate was 18% compared to 26.1% in the same period last year, driven by one-time benefits due to the reversal of liabilities related to uncertain tax positions. We did not repurchase any shares in the quarter.

Duston: <unk>.

Doug: Thank you Emil and good morning, everyone.

Doug: Moving to the fourth quarter and full year results, let's turn to slide five.

Doug: Net sales were $1 4 billion in the quarter flat on a constant currency basis and were $5 5 billion for the full year of 2023 down 1% at constant currency.

Doug: Adjusted EBITDA in the quarter was 274 million down 8% compared to last year.

Doug: For the year adjusted EBITDA was approximately $1 1 billion down 9%.

Doug: Volumes have improved sequentially in Q4 as holiday demand drove a low single digit seasonality pick up.

As reported adjusted earnings per share in the quarter of 88 were down 11% compared to a year ago.

Our adjusted tax rate was 18% compared to 26, 1% in the same period last year, driven by onetime benefits due to the reversal of liabilities related to uncertain tax positions.

Doug: We did not repurchase any shares in the quarter.

Dustin Simak: Our weighted average diluted shares outstanding in the fourth quarter of 2023 were $144.9 million. For the year, adjusted earnings per share, $3.18, was down 22%, primarily driven by lower adjusted EBITDA and higher interest expense, partially offset by lower tax expense. Turning to slide 6, in Q4, Localbox contributed 5% to total company sales, or approximately $70 million. However, lower pricing of protectives and lower volume in both businesses were offset by lower margins. The volume declines were driven by continued market pressures in protective, lower automation sales, as well as continued weakness in food, retail, and market. Fourth quarter adjusted EBITDA of $274 million, which included a $15 million contribution from Liquibox, decreased $23 million or approximately 8% compared to last year with margins of 19.9%, down 120 basis points. This performance was mainly driven by lower volumes within both segments, offset by contributions from local boxes. Moving to slide seven.

Doug: Our weighted average diluted shares outstanding in the fourth quarter of 2023 was $144 9 million.

For the year adjusted earnings per share of $3 18 was down 22%, primarily driven by lower adjusted EBITDA and higher interest expense, partially offset by lower tax expense.

Doug: Turning to slide six.

Doug: Q4, local box contributed 5% of total company sales are approximately $70 million.

Doug: It was offset by lower pricing in protective and lower volume in both businesses.

Doug: The volume declines were driven by continued market pressures in protective lower automation sales as well as continued weakness in food retail end markets.

Doug: Fourth quarter, adjusted EBITDA of 274 million, which included $15 million contribution from local box decreased $23 million or approximately 8% compared to last year with margins of 19, 9% down 120 basis points.

Doug: This performance was mainly driven by lower volumes within both segments offset by contributions from local box.

Doug: Moving to slide seven.

Dustin Simak: In the fourth quarter, food net sales of $893 million were down 3% on an organic basis, primarily due to volume declines driven by lower automation sales as customers enforced tighter controls on capital expenditures and by continued weakness in retail demand. Food adjusted EBITDA of $195 million in the fourth quarter was down 3%, with margins at 21.8%, down 130 basis points compared to last year. The decrease in adjusted EBITDA was mainly driven by higher operating costs and lower volumes, partially offset by contributions from Localbox and favorable net price realization of $10 million. Protective four-quarter net sales of $485 million were down 10% organically, driven by lower pricing and volume declines in Americas and EMEA from continued market pressures in the industrial fulfillment market. Protective adjusted EBITDA of approximately $90 million was down 12% in the fourth quarter, with margins at 18.7%, down 50 basis points.

Doug: In the fourth quarter <unk> net sales of $893 million were down 3% on an organic basis, primarily due to the volume declines driven by lower automation sales as customers enforced tighter controls on capital expenditures and by continued weakness in retail demand.

Doug: Food adjusted EBITDA of $195 million in the fourth quarter was down 3%.

Doug: With margins at 21, 8%.

Doug: Down 130 basis points compared to last year.

Doug: The decrease in adjusted EBITDA was mainly driven by higher operating costs and lower volumes, partially offset by contributions from local box and favorable net price realization of $10 million.

Doug: Protective fourth quarter net sales of $485 million were down 10% organically driven.

Doug: Driven by lower pricing and volume declines in Americas, and EMEA from continued market pressures in the industrial fulfillment markets.

Doug: Protective adjusted EBITDA of approximately $90 million was down 12% in the fourth quarter with margins at 18, 7% down 50 basis points.

Dustin Simak: The decrease in adjusted EBITDA was driven by unfavorable net price realization in lower volumes, partially offset by favorable productivity benefits. On slide eight, we review our four quarter net sales by segment and by region. In constant dollars, net sales were flat, with 5% growth in food, mainly driven by the local box acquisition, while protective was down 10% due to weak in-market demand. By region, Asia-Pac grew 5% organically, driven by a strong Australian cattle cycle. Americas was down 6% due to lower automation sales, a weak U.S. cattle cycle, and lower pricing and protection. AMEA declined 11% on challenging market conditions across both segments and continued e-stocking within protected areas.

Doug: The decrease in adjusted EBITDA was driven by unfavorable net price realization and lower volumes, partially offset by favorable productivity benefits.

Doug: On slide eight we review our fourth quarter net sales by segment and by region.

Doug: In constant dollars net sales were flat with 5% growth in food, mainly driven by the local box acquisition, while protective was down 10% due to weak end market demand.

By region Asia Pac grew 5% organically driven by strong Australian cattle cycle.

Doug: Americas was down 6% due to lower automation sales, a weak U S cattle cycle and lower pricing in protective.

Doug: EMEA declined 11% on challenging market conditions across both segments and continued destocking within protective.

Dustin Simak: In constant dollars, full-year net sales were up 9% in food, while protective was down 15%. By region, we were up 3% in Asia-Pac, offset by declines of 2% in Americas and 1% in EMEA. Now, let's turn to free cash flow and leverage on slide 9. Through the fourth quarter, excluding the impact of the payments and deposits related to the resolution of certain prior tax matters, free cash flow was $467 million compared to $376 million in the same period a year ago, representing an increase of 24% year-over-year.

Doug: In constant dollars full year net sales were up 9% in food, while protective was down 15%.

Doug: By region, we were up 3% in Asia Pac offset by declines of 2% in Americas and 1% in EMEA.

Doug: Now, let's turn to free cash flow and leverage on slide nine.

Doug: Through the fourth quarter, excluding the impact of the payments and deposits related to the resolution of certain prior year tax matters.

Doug: Free cash flow was $467 million compared to 376 million in the same period a year ago.

Doug: Representing an increase of 24% year over year.

Dustin Simak: The primary driver of this improvement was a significant inventory reduction, partially offset by lower earnings and higher interest costs. Since the peak in the second quarter of 2023, we have reduced total debt by approximately $280 million, ending the year with a net leverage ratio of 3.9 times, down from 4.1 times in the third quarter. Our total liquidity position was $1.3 billion, including $346 million in cash and the remaining amount in committed and fully undrawn revolvers.

Doug: The primary driver of this improvement was significant inventory reduction, partially offset by lower earnings and higher interest costs.

Doug: Since the peak in the second quarter of 2023, we have reduced total debt by approximately $280 million.

Exiting the year with a net leverage ratio of three nine times down from four one times in the third quarter.

Doug: Our total liquidity position was $1 3 billion, including $346 million in cash and the remaining amount and committed and fully undrawn revolver.

Dustin Simak: We will continue to focus on driving net debt to adjust EBITDA to below 3.5 times over the next two years. Now, let's turn to slide 10 to review our 2024 outlook. We expect an L-shaped recovery through 2024 and into 2025. As a result, we expect net sales to be in the range of $5.2 to $5.6 billion, which at the midpoint assumes a 2% decline in organic growth, with flat volume growth offset by negative price. Portfolio exits represent half a percent lower volume in both sectors. While the global protein end markets continue to be challenged, our food volume is expected to grow approximately 1%, driven by competitive wins in our core businesses, momentum in our fluids and liquids businesses, including Liquibox, and our new product launches, offset by price declines of 2%. Our work on integration and operational momentum at Localbox is taking hold.

Doug: We will continue to focus on driving net debt to adjusted EBITDA to below three five times over the next two years.

Doug: Let's turn to slide 10 to review our 2020 for outlook.

Doug: We expect an L shape recovery through 2024 and into 2025.

Doug: As a result, we expect net sales to be in the range of five two to $5 6 billion.

Doug: Which at the midpoint assumes a 2% decline in organic growth with.

Doug: With flat volume growth offset by negative pricing.

Doug: Portfolio exits represent half a percent lower volume in both segments.

Doug: While the global protein end markets continue to be challenged our food volume is expected to grow approximately 1% driven by competitive wins in our core business momentum in our fluids and liquids businesses, including local box and our new product launches offset by price declines of 2%.

Doug: Our work on integration and operational momentum at local box is taking hold.

Dustin Simak: And we expect the business to continue to improve across 2024, further supported by a positive outlook for the food service and market. However, we see a slower market recovery in protective clothing than previously anticipated with a full year volume decline of approximately 1%. Pricing pressures have increased, further reducing the top line by 3% as the competitive landscape has intensified in a lower volume environment.

Doug: And we expect the business to continue to improve across 2024 further supported by a positive outlook for the foodservice end markets.

Doug: We see a slower market recovery and protective than previously anticipated for the full year volume decline of approximately 1%.

Doug: Pricing pressures have increased further reducing top line by 3% as the competitive landscape has intensified in a lower volume environment.

Dustin Simak: Protective volumes are expected to recover toward the end of 2024 as our new commercial model gains traction and market dynamics improve. We expect full-year adjusted EBITDA to be in the range of $1.05 to $1.15 billion, which assumes an adjusted EBITDA margin of approximately 20% at the midpoint. This outlook is lower than our soft guide provided during our Q3 earnings call, mainly driven by lower volume expectations. We anticipate continued softness in the first half of 2024 as volume reaches the trough and gradually improves as market conditions and seasonality improve in the second half. We remain disciplined to drive the necessary cost actions to offset further volume. The midpoint of our adjusted EBITDA guidance is in line with 2023, with 90 million year-over-year cost savings, offsetting flattish overall volumes, negative net price realization, and restoring bonus bulls. Full year adjusted EPS is expected to be in the range of $2.65 to $3.05 per share.

Doug: Protective volumes are expected to recover towards the end of 2024 is our new commercial model gains traction and market dynamics improve.

Doug: We expect full year adjusted EBITDA to be in the range of 1.052115 billion, which assumes adjusted EBITDA margin of approximately 20% at the midpoint.

Doug: This outlook is lower than our soft guide provided during our Q3 earnings call, mainly driven by lower volume expectations.

Doug: We anticipate continued softness in the first half of 'twenty 'twenty four is volume reaches the trough and gradually improves as the market conditions and seasonality improve in the second half.

Doug: We remain disciplined to drive the necessary cost actions to offset further volume weakness.

Doug: The midpoint of our adjusted EBITDA guidance is in line with 2023.

Doug: With $90 million year over year cost savings offsetting flattish overall volumes negative net price realization and restoring bonus pools.

Doug: Full year adjusted EPS is expected to be in the range of $2 65 to.

Doug: The $3 <unk> per share.

Dustin Simak: The lower 2024 adjusted EPS is largely driven by higher depreciation, interest, and tax expense, with an assumed tax rate of 26 to 27 percent. We expect full year 2024 free cash flow in the range of $325 million to $425 million. At the midpoint, our free cash flow conversion as a percent of adjusted net earnings is expected to be 90%. We are assuming approximately $80 million in restructuring charges and approximately $20 million in incremental cash interest payments offset by favorable working capital of roughly $30 million. Lastly, for the first quarter of 2024, we expect net sales in adjusted EBITDA to be ranged around $1.3 billion and $240 million, respectively, with earnings per share between 50 and 60 cents. Our ranges and outlook reflect the dynamic environment we continue to operate in. As we gain more visibility throughout the year, we will be able to adjust and update expectations accordingly.

Doug: The lower 2024, adjusted EPS is largely driven by higher depreciation interest and tax expense with an assumed tax rate of 26% to 27%.

Doug: We expect full year 2020 for free cash flow in the range of 325 million.

Doug: The $425 million.

Doug: At the midpoint, our free cash flow conversion as a percent of adjusted net earnings is expected to be 90%.

Doug: We are assuming approximately 80 million of restructuring charges and approximately $20 million incremental cash interest payments offset by favorable working capital of roughly $30 million.

Doug: Lastly for the first quarter of 2024, we expect net sales and adjusted EBITDA to be ranged around $1 3 billion and $240 million respectively.

Doug: And with earnings per share between <unk> 50, and 60.

Doug: Our ranges and outlook reflect the dynamic environment, we continue to operate in.

Doug: As we gain more visibility throughout the year, we will be able to adjust and update expectations. Accordingly.

Doug: Turning to slide 11.

Operator: Be closed out the year in line with our expectations and remain committed to executing against our cost-to-grow effort. While our expectation for 2024 has been reduced to a weaker and longer recovery period for our end markets, we are encouraged by the feedback from our customers and our distributors that the stocking is largely behind us, and they are more confident in a second half modest recovery in volume. We are focused on driving a transformation at sea in 2024, improving commercial execution, and restoring business fundamentals. We expect 2025 to be the year we return to a normal growth trajectory, and our cost reduction operational excellence initiatives will position us as well to return to adjusted EBITDA growth in 2025 and beyond. Lastly, I'd like to close by thanking the Global Sea Team, who are at the center of our transformation, for their efforts in solving our customers' most critical packaging challenges, day in and day out. With that, Emile and I look forward to your questions. Operator, we would like to begin the Q&A session. Thank you. Ladies and gentlemen, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced.

Doug: We closed out the year in line with our expectations and remain committed to executing against our cost takeout to grow efforts.

Doug: While our expectation for 2024 is reduced to a weaker than longer recovery period for our end markets. We are encouraged by the feedback from our customers and our distributors that destocking is largely behind us and are more confident in a second half modest recovery in volumes.

Doug: We are focused on driving a transformation at <unk> in 2024, improving commercial execution and restoring business fundamentals, we expect 2025 to be the year, we returned to a normal growth trajectory.

Doug: And where our cost reduction operational excellence initiatives will position us well to return to adjusted EBITDA growth in 2025 and beyond.

Doug: Lastly, I'd like to close by thanking the global <unk> team, who are at the center of our transformation further effort solving our customers' most critical packaging challenges day in and day out.

Doug: With that Ah meal, and I look forward to your questions.

Operator, we would like to begin the Q&A session.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen to ask a question you May press star one on your telephone and wait for your name to be announced.

Operator: To withdraw your question, simply press star 1-1 again. As a reminder, given time constraints, please limit yourself to one question only. Please stand by while we compile the Q&A roster. Now, the first question coming from the line of Bill Ng with Jeffrey's Feline is open. Hey, guys. Dustin, did I hear you correctly?

Speaker Change: Your question. Please press star one again.

Speaker Change: Given time constraints. Please limit yourself to one question only please standby while the compounded Kenny roster.

Speaker Change: Okay.

Speaker Change: And our first question coming from the line of Phil <unk> with Jefferies. Your line is now open.

Phil: Hey, guys.

Phil: I hear you correctly, you are guiding to $2 40 of EBITDA for <unk> that implies a pretty steep year over year decline. So help us kind of think through whats driving perhaps a bigger hit to start the year certainly volumes as element of it and the shape of the do you expect EBITDA to inflict positively by wine to be helpful and any color.

Bill Ng: You're guiding to 240 of EBITDA for 1Q. That implies a pretty steep year-over-year decline, so help us kind of think through what's driving perhaps a bigger hit to start the year. Certainly, volumes are an element of it, and the shape of the year. Do you expect EBITDA to inflect positively by 1 to be helpful? And any color breakouts would be helpful in terms of the shape.

Phil: By segments would be helpful. In terms of the shape with you.

Dustin Simak: Hey, Phil, this is Dustin speaking. Again, I appreciate the question on Q1. A couple of comments I would make, you know, one is you hit the nail on the head relative to volume, right? So volume in Q1 is going to be down a couple points, and that negative leverage is impacting EBITDA for the quarter, which is being partially offset by some of the cost takeout program, but that program is going to ramp across the quarters. That's really what's going to drive the sequential improvement as we go throughout Q1, Q2, Q3, Q4 in terms of improving from here. And so then coupled with that, the pricing actions that we talked about in terms of some of the pricing flow through from the prior year coming across 2024 are also going to impact Q1, right?

Speaker Change: Hey, Phil This is <unk> speaking again I. Appreciate the question on Q1, a couple of comments I would make.

Phil: One is youre you hit it now on the head relative to volume rates of volume in Q1 is going to be down a couple of points and that negative leverages impacting the EBITDA for the quarter, that's being partially offset by some of the cost takeout program, but that program is going to ramp across the quarters and thats really whats going to drive the sequential improvement as we go throughout Q1 Q2 Q.

Phil: Three Q4 in terms of improving from here and so and then coupled with that the pricing actions that we talked about in terms of some of the pricing flow through from this from the prior year coming across 'twenty 'twenty. Four is also going to impact Q1, right. So the expectation from here is that we're going to improve EBITDA sequentially quarter to quarter to quarter right coming from the $2 40 that we.

Phil: Mentioned for Q1.

Phil: And that will then obviously when we get to roughly Q3 and Q4 going back to the modest recoveries in the second half volumes, we will see that inflection point again and ill point towards EBITDA growth.

Dustin Simak: So the expectation from here is that we're going to improve EBITDA sequentially, quarter to quarter to quarter, right, coming from the 240 that we mentioned for Q1. And then obviously, when we get to roughly Q3 and Q4, going back to the mass recoveries in the second half volumes, we'll see that inflection point begin, and it'll point towards epidiography. www.larryweaver.com Thank you. And our next question coming from the line of... Ghansham Panjabi from Bear Galen is open. Hi, good morning, everyone. This is Matt Krueger sitting in for Ghansham this morning.

Phil: Okay.

Speaker Change: Thank you.

Speaker Change: Our next question coming from the line of.

Speaker Change: Ghansham Panjabi from Baird. Your line is open.

Speaker Change: Hi, Good morning, everyone. This is Matt Krieger sitting in for Ghansham. This morning.

Matthew T. Krueger: So I was just hoping that you could provide us with some added detail on how volumes trended throughout the quarter on a on a monthly basis and then.

Matthew T. Krueger: Given that we're essentially finished with the first two months of the first quarter here. How is 2024 kicked off for each segment from a monthly volume cadence as well any details there would be super helpful.

Matthew T. Krueger: So, you know, I was just hoping that you could provide us with details on how volumes trended throughout the quarter on a monthly basis. And then, you know, given that we're essentially finished with the first two months of the first quarter here, how has 2024 kicked off for each segment from a monthly volume cadence as well? Any details there would be great.

Matthew T. Krueger: Matt This is Dustin speaking I'll kick it off and again I. Appreciate the question. So if you go back to the fourth quarter and we will start with food as we mentioned underlying volumes throughout the entire year had been trending.

Dustin: See slightly kind of low single digits Q4 was no different with.

Dustin: The exception of our automation sales, which we pointed to during Q3 that we expected that the impact of lower bookings throughout the year due to the capital constraints of our customers really impacted our equipment sales in the fourth quarter. However, we still achieved over $500 million of cells kind of ahead of our own expectations.

Dustin Simak: Matt, this is Dustin speaking. I'll kick it off. And again, I appreciate the question. So if you go back to the fourth quarter, and we'll start with food, as we mentioned, underlying volumes throughout the entire year have been trending, you know, slightly, you know, kind of low single digits. Q4 was no different, with the exception of our automation sales, which we pointed out during Q3 that we expected the impact of lower bookings throughout the year due to the capital constraints of our customers really impacted our equipment sales in the fourth quarter. However, we still achieved over $500 million in sales and were kind of ahead of our own expectations. So when you shift to Protective, Protective, you know, ended where we set expectations around mid-single digits, right?

Dustin: So when you ship to protective protective.

Dustin: Ended where we set expectations around mid single digits right. That's obviously, a big improvement coming off of the prior three quarters that were in the teens and up to almost 20% starting in Q1. So throughout 2023 volumes in that business I would say improve sequentially slightly and wrapped around the prior year, what's important about both.

Dustin: Businesses, that's different in 'twenty in Q4, 23 versus <unk> 22 is that we saw that actual seasonal pickup in volumes right in the fourth quarter and so in both businesses. This is food and protected now as you move into Q1 right January is coming in slightly ahead of expectations and Theres a number of different reasons for that and this is really across both.

Dustin: Businesses of both food and protective that performed quite well in January.

Dustin: And then in February it looks to be in line and this is.

Dustin Simak: That's obviously a big improvement coming off of the prior three quarters that were in the teens, up to almost 20% starting in Q1. So throughout 2023, volumes in that business, you know, I would say improved sequentially, slightly, and wrapped around the prior year. What's important about both businesses that's different in the Q4 of 23 versus 22 is that we saw that actual seasonal pickup in volumes, right, in the fourth quarter. And so in both businesses, this is Food and Protective.

Dustin: Obviously embedded in the current guide that we have.

Dustin: For Q1.

Speaker Change: Thank you.

Speaker Change: Our next question coming from the line of.

Speaker Change: George Staphos with Bank of America Securities. Your line is open.

Yes, hi, good morning, this is actually cash and culinary sitting in for George just travelling for a conference.

Cash: So it doesn't get a meal you talked to it a little bit in your prepared remarks, but perhaps can you get a little bit more specific on what commercial and sales tactics you've changed in each segment.

Dustin Simak: Now, as you move into Q1, January is coming in slightly ahead of expectations, and there are a number of different reasons for that. And this is really across both businesses, so both Food and Protective have performed quite well in January. And then in February, it looks to be in line, and this is, you know, obviously embedded in the current guide that we have for Q1. Thank you. And our next question comes from the line-up: George Staphos, with Bank of America Securities, Yolanda Soltman. Yeah, hi, good morning. This is Kasson Keeler sitting in for George.

Cash: Since taking over and what the competitive response might've been in each business at this juncture.

Hi, Good morning. Thank you for the question this is <unk>.

Speaker Change: Speaking so in terms of the commercial transformation that.

Speaker Change: We've undertaken.

Speaker Change: <unk> announced.

Speaker Change: We recognize that in the old structure that we had when combining both food and protective commercial teams that really contributed to a loss of customer centricity and reduced our commercial rigor. So so to solve this we recently announced that we've reorganized our commercial teams within fluids and protective operating units within each region.

Kasson Keeler: He's traveling for our conference. So, Dustin and Emilio, you talked about it a little bit in your prepared remarks, but perhaps you could get a little bit more specific on what commercial and sales tactics you've changed in each segment since taking over and what the competitive response, you know, might have been. Hi, good morning. Thank you for your question. This is Emil speaking.

Speaker Change: Now these units are not just sales units, but the units combined with sales marketing and dedicated support functions.

Speaker Change: <unk> R&D representation finance and operation the.

Emil Shamas: So in terms of the commercial transformation that we've undertaken and recently announced, we recognize that in the old structure that we had, combining both food and protective commercial teams, that really contributed to a loss of customer centricity and reduced our commercial rigor. So to solve this, we've recently announced that we've reorganized our commercial teams within food and protective operating units within each region. Now, these units are not just sales units, but they're units combined with sales, marketing, and dedicated support functions, including R&D representation, finance, and operations. The other pieces that we talked about in terms of our plans and that we've now implemented are that the old structure really had shifted resources from the regions into the global centers, and that really put the voice of the customer even further away from the decision-making process. So, as part of this reorg that we've announced, we've reallocated those resources from the global teams back to these operating teams.

Speaker Change: The other pieces.

Speaker Change: In terms of our plans and that we have now.

Speaker Change: Implemented as the old structure.

Speaker Change: Shifting the resources from the regions into the global centers.

Speaker Change: And the.

Speaker Change: And really that put the voice of the customer even further away from the decision making process. So as part of this re org that we've announced we've reallocated those resources from the global teams back to these operating units.

Speaker Change: So inherently the new design is better in terms of us being faster than the market in terms of being closer to the customers, but just as important around thats driving the whole culture, and a culture of discipline and performance in terms to better executes.

Speaker Change: The marketplace and to support that with re aligns the incentives.

Speaker Change: Everybody to be more localized closer to the markets as well as in terms of our global Golar.

Speaker Change: And only two points I'll add on to what our mill with the Mills said, which was is really if you go back to the why the why in terms of both food and protective is that those end markets and those customers are very different in terms of needs from a packaging solutions service.

Emil Shamas: So inherently, the new design is better in terms of us being faster in the market, in terms of being closer to the customers. But just as important around that, you know, we're driving the whole culture and the culture of discipline and performance in terms of better execution in the marketplace. And to support that, we've realigned the incentives of everybody to be more localized, closer to the markets, as well as in terms of our global goal alignment. And the only two points I'll add to what Emil said, which are, really, if you go back to the why, the why in terms of both food and protection is that those end markets and those customers are very different in terms of needs from a packaging solution, service, you know, Thanks.

Speaker Change: <unk> right. So that one is recognizing that those are two very unique.

Speaker Change: Segment end markets customers et cetera.

Speaker Change: One of the primary you've kind of motivations in terms of making that overall decision.

Speaker Change: Thank you.

Speaker Change: And our next question coming from the line of.

Speaker Change: Jeff Zekauskas from Jpmorgan Your line is open.

Jeff Zekauskas: Thanks very much.

Jeff Zekauskas: Can you talk about how your industrial packaging business did in 2023, and how it's beginning the year end.

Jeff Zekauskas: 2024.

Jeff Zekauskas: Can you talk about what your expectation for automation volumes are.

Jeff Zekauskas: This year.

Jeff Zekauskas: And then lastly in Europe post the bowl products that feature in your slides.

Dustin Simak: And our next question, coming from the line of... from J.P. Morgan, Yolana Salvin. Thanks for... Can you talk about how your industrial packaging business did in 2023 and how it's beginning the year 2024?

Jeff Zekauskas: 54% bio based content.

Jeff Zekauskas: What's the other 46%.

Jeff Zekauskas: Okay.

Jeff Zekauskas: So I'm going to start with the overall industrial question right. So if you think about 2023 and I think one of the comments that EMEA. This is Dustin speaking by the way is one of the comments that <unk> made which is really important.

Dustin Simak: And can you talk about what your expectation for automation volumes is this year? And then lastly, for your compostable products that you feature in your slides, they have 54% bio-based content. What's the other 40%?

Jeff Zekauskas: Is around the fact that if you really look at PMI or when you look at PMI equivalent across most of our overall.

Jeff Zekauskas: Advanced economies right, what you see as the contraction right in industrial activity and as a result of that our business is our industrial packaging I think if this is like into packing industrial inflatables and so on and so forth performed poorly and Youre looking at if you look at overall.

Dustin Simak: www.larryweaver.com Okay, so I'm going to start with the overall industrial question, right? So if you think about 2023, and I think one of the comments that Emil, this is Dustin speaking, by the way, one of the comments that Emil made, which is really important, is around, you know, the fact that if you really look at PMI, or you look at PMI equivalent across most of our overall, you know, advanced economies, right, what you see is a contraction, right, in industrial activity. And as a result of that, our businesses, our industrial packaging, think of this as like Instapack and, you know, industrial inflatables, and so on and so forth, perform poorly. And you're looking at, if you look at the overall, you know, impact for 2023, you're looking at volumes that are down in the low teens, right?

Jeff Zekauskas: The impact for 2023, Youre looking at volumes that were down in the in the low teens right and so and then it kind of in line with what's your expectation in terms of double digit for that kind of contraction you would've seen in industrials on an encouraging sign as kind of coming into 2024 is that Europe is beginning to point towards growth, it's modest growth in 'twenty four relative to industrials, but it is.

Jeff Zekauskas: Growth it is more second half weighted and we've seen those businesses already begin to perform better and if you look at even in Q4. It is embedded in that number which is mid single digit decline in volumes in the fourth quarter Youre seeing it open up well in the first quarter and continuing so we see it as optimism in terms of showing signs of stabilization as we as we said earlier.

Jeff Zekauskas: <unk> there are signals right relative to.

Dustin Simak: And so, and then it kind of in line with what your expectation in terms of double digits for that kind of contraction you would have seen in industrials. An encouraging sign is kind of coming into 2024 is that it's beginning to point towards growth. It's modest growth in 24 relative to industrials, but it is growth. It is more second-half weighted.

Jeff Zekauskas: <unk>.

Jeff Zekauskas: No signals that are more positive for the year, but haven't translate yet largely because we think it will take time to work through the system in the first half and then we will begin to inflect more importantly in the second half.

Speaker Change: Let me.

Speaker Change: Jump invested on some of these other points on the Biobased strength sure. So.

Speaker Change: As you mentioned we have.

Speaker Change: We've recently introduced.

Speaker Change: The new bio based <unk> and really this is around addressing the market needs.

Speaker Change: That is.

Speaker Change: Moving away from the expanded polystyrene and as you mentioned.

Dustin Simak: And we've seen those businesses already begin to perform better. And if you look at even Q4, it's embedded in that number, which is a mid-single-digit decline in volumes in the fourth quarter. You're seeing it open up well in the first quarter and continuing.

Speaker Change: 54% of the trait is from city those.

Speaker Change: Our renewable sources and the other portion of the polymers <unk> said another.

Speaker Change: Other processing AIDS. So really in terms of that trade is not only the sources of it that are renewable but the factset industrially compostable certified so it can go into the <unk>.

Dustin Simak: So we see it as optimism in terms of showing signs of stabilization. As we said earlier, there are signals relative to, you know, signals that are more positive for the year, but they haven't translated yet, largely because we think it will take time for the system to work through the system in the first half, and then we'll begin to inflect, you know, more importantly, in the second half. Let me maybe jump in, Dustin, on some of these other points on the biobased tray. Sure.

Speaker Change: Industrial recycling streams and fully decompose into those metro components and I just want to add a point on the automation piece in terms of.

Speaker Change: Where that's headed so despite the external uncertainties in terms of our customers being slow in terms of triggering a new capex spend based on the inflation the interest rate environments as well as muted end markets, we do forecast it to be flat year on year.

Emil Shamas: So, as you mentioned, we've recently introduced the new biobased tray. And really, this is around addressing the market needs that are moving away from expanded polystyrene. And as you mentioned, 54% of the tray is from cellulose renewable sources, and the other portion of the polymers are acetic acid and other processing aids. So really, in terms of that tray, it's not only the sources of it that are renewable, but the fact that it is industrially compostable and certified. So it can go into the industrial recycling streams and fully decompose into those natural components.

Speaker Change: Part of that.

Speaker Change: We are also expanding our offerings. So automation is still a critical part of our total solution sales. So we've signed recently some partnership agreements in the protective space to complement our.

Speaker Change: Bulks right sizing capability, and we are actually growing commercial and we have orders of those based on that new partnership in the Asia Pacific region, and we just recently.

Emil Shamas: And I just want to add the point on the automation piece in terms of where that's headed. So despite the external uncertainties in terms of our customers being slowed in terms of triggering a new capex spend based on inflation, the interest rate environments, as well as muted end markets, we do forecast it to be flat year on year. And as part of that, we're also expanding our offerings. So automation is still a critical part of our total solution sales.

Speaker Change: Signs.

Speaker Change: The IPP show a new partnership in terms of.

Speaker Change: Expanding our automation capabilities and our consumer lending space. So we'll be honest announcing that publicly soon and against automation continues to be.

Speaker Change: A big part of our capabilities and our board about total solutions and materials.

Speaker Change: Equipments as well as service.

Speaker Change: And we're expanding and filling the portfolio gaps that we have with those external partnerships and then one other final point on that question I'll, just say that as a reminder, we kind of closed you've got around $500 million 5 billion in automation sales in 2023, which is a peak for us and to <unk> point, we expected to be flat next year.

Emil Shamas: So we've recently signed some partnership agreements in the protective space to complement our box rightsizing capability, and we are actually going commercial, and we have orders for those based on that new partnership in the Asia Pacific region. And we just recently signed the IPP show a new partnership in terms of investing in our automation capabilities in our consumer-ready space. So we'll be announcing that publicly soon. And again, automation continues to be a big part of our capabilities. You know, we're all about total solutions and materials.

Speaker Change: Despite the challenges.

Speaker Change: Thank you.

Speaker Change: Our next question coming from the line of.

Anthony.

Anthony: From Citi. Your line is open.

Anthony: Good morning.

Anthony: Looking at the 2004 guidance can you just help us quantify.

Anthony: Quantifying the impact to EBITDA from lower net pricing for the year I think you've talked about that on the bridge, but I just want to make sure I got that right and then when you think about pricing potentially stabilizing maybe in the back half of the year. I mean is that just a function of.

Dustin Simak: Equipment, as well as Service, and we're expanding and filling the portfolio gaps that we have with those external partnerships. And Bill, another final point on that question, I'll just say that, as a reminder, we kind of closed the year at around $500 million, half a billion in automation sales in 2023, which is a peak for us, and to Mill's point, we expect to be flat. Thank you. And our next question comes from the line of Anthony Pettinari from City. Your line is open. Good morning.

Anthony: Volume recovery volume stabilization or is there anything else going on in the market or what you're doing internally.

Anthony: You would expect.

Anthony: To help out.

Speaker Change: Yes, absolutely so great.

Speaker Change: Great question. This is Dustin speaking so a couple of comments I would make if you think about net price realization for fiscal year 2024, we're expecting in the neighborhood of about down $60 million. So if you put that in the context of a flat EBITDA guide year over year really it is this $90 million or so of cost takeout benefits that were driving offset by a negative.

Anthony Pettinari: I'm looking at the 24 guidance. Can you just help us quantify the impact to EBITDA from lower net pricing for the year? I think you talked about that on the bridge, but I just want to make sure I got that right. And then when you think about pricing, is actually stabilizing, maybe in the back half of the year, I mean, is that just the Volume Recovery, Volume Stabilization? Yeah, absolutely. So, great question. This is Dustin speaking.

Net price realization of $60 million and an additional and then this restoration of our overall bonus pool. So that kind of gives what net net gets you back to a flat guide.

Speaker Change: And so then the only other piece and determined the price component. If you break down net price realization just to give you. Some of the specifics is really a net negative of about 100 120 million clean offsite offset by an equivalent of benefits in direct materials and then if you think about a net down on kind of labor.

Dustin Simak: So, a couple of comments I would make. If you think about net price realization for fiscal year 2024, we're expecting it in the neighborhood of about down $60 million. So, if you put that in the context of a flat EBITDA guide year over year, really, it is this $90 million or so of cost takeout benefits that we're driving offset by a negative net price realization of $60 million and an additional, you know, and then this restoration of our overall bonus pools. So, that kind of gives you what net net gets you back to a flat.

Speaker Change: On labor and non labor, which you will notice is more muted in the past, which we do see it continuing to normalize kind of out of post COVID-19 because it was at a historic high in 2024 or excuse me 23, then if you think about the pricing environment in general if you think about last year Theres really three components in our pricing are affecting us one is concessions that were given.

Speaker Change: Last year as part of contract renewals et cetera that we talked about in terms of putting a big piece of our business underneath there will be renewed.

Dustin Simak: And so, and the only other piece in terms of the price component, if you break down that price realization, just to give you some of the specifics, it's really a net negative of about $120 million being offset by an equivalent amount of benefits and direct materials. And then if you think about a net down on kind of labor, inflation on labor and non-labor, which you will notice is more muted in the past, which we do see continuing to normalize kind of out of post-COVID, because it was at a historic high in 2024, or excuse me, 2023. Then if you think about the pricing environment in general, you know, if you think about last year, there are three components in our pricing that are affecting us. One is concessions that were given last year as part of contract rules, et cetera, that we talked about in terms of, you know, putting a big piece of our business under the contract that we renewed. The other piece was formula pricing because, if you think about the second half of 23, a lot of resident costs came down.

Speaker Change: The other piece was formula pricing as you think about in the second half of 'twenty three a lot of resin cost came down so formula pricing as a reminder that tracks with.

Speaker Change: Indices began to kind of come into effect at the beginning of really of 2024 and then the third piece is obviously just the pricing environment that CBD can pose at 120, and if you think about the second half that's where there may be in areas of opportunity because right. Now if you look at it being resin prices have kind of stabilized and we see that may be.

Speaker Change: Slightly inflationary in the second half and this is when I say inflationary I mean sequentially as you move throughout the year.

Speaker Change: Still obviously net down from 2020.

Speaker Change: 23.

Speaker Change: Thank you and our next question coming from the line of Matt Roberts with Raymond James Your line is open.

Matt Roberts: Hi, good morning.

Matt Roberts: Discuss the new product focus so could you maybe quantify a little bit what type of addressable market do you think these new products represent.

Matt Roberts: Each segments are they prioritized.

Dustin Simak: So formula pricing, as a reminder, that tracks with, you know, indices, began to kind of come into effect at the beginning of really 2024. And then the third piece is obviously just the pricing environment, so that's if you decompose that 120.

Matt Roberts: In that regard how much of this is a new opportunity for us.

Matt Roberts: Substitution of some of your existing sales thanks for taking my question.

Speaker Change: Alright, Matt.

Speaker Change: Question and I appreciate you raising it so I'll go and start and then available follow on.

Matt: If you go back to the kind of the prepared remarks, we talked about in the prior question as what we talked about the <unk> trade and that for US is if you go back a number of years, we used to actually produce trace and over the past couple of years, we havent and we sell them as part of a package solution. When we think about some things are over at film the train as well as equipment, but those three pieces of the solution.

Dustin Simak: And if you think about the second half, that's where we may be in areas of opportunity, because right now, if you look at it, your resident prices have kind of stabilized, and we see that may be slightly inflationary in the second half. And when I say inflationary, I mean, sequentially, as you move throughout the year, you know, still, obviously, net down from 2020. Thank you. And our next question comes from the line of Matt Roberts with Raymond James. Your line is open. Hi, good morning.

Matt: Given this is a poultry application and so we're actually for us to go back into the trade business, which is really what does it in terms of the proposal trades or step back into manufacturing at that overall addressable market is about $5 million and what's really exciting about it is it's not just that we're entering a market because we think about that market overall, it's a relatively low growth end market, but it's going through an <unk>.

Matt: Unprecedented shift right, where youre seeing whether its consumer preference very similar to fiber and protective is that things shift into protein tray market, where consumers prefer to move out of expanded polystyrene and as well as the market in terms of regulations are coming to effect, which you are already seeing in a number of states in the United States as well across Europe et cetera, which is presenting this opportunity.

Matt Roberts: Discuss the new product focus. Could you maybe quantify a little bit like what type of addressable market do you think these new products represent? In which segments are they prioritized? And in that regard, how much of this is a new opportunity versus substitution of some of your existing sales? Thanks for taking the time.

Speaker Change: Where you need to have a new alternative rate relative to that and so this is a great opportunity there to take a big share in that market and we're heavily invested in it and I'll, let him kind of jump on to some of the other areas that we're focused on yes. Thank you for the question on again gives us a chance to talk about some of these growth areas across multiple segments. So.

Dustin Simak: All right, Matt, yeah, great question, and I appreciate you raising it. So I'll go ahead and start, and then Emil will follow on. If you go back to kind of the prepared remarks we talked about in the prior questions, what we talked about was the compostable tray. And that, for us, is, you know, if you go back a number of years, we used to actually produce trays. And over the past couple years, we haven't.

Speaker Change: Let me hit kind of through some of the key areas.

Speaker Change: Protective.

Speaker Change: A couple of areas I did mentioned that new partnership in terms of.

Speaker Change: Expanding our capabilities and portfolio gaps around three D box right sizing so again.

Speaker Change: As commercial and we have our first orders that we have a pipeline to us it will be small impact this year, but we did mentioned in our past call that we were slow in terms of the shift of the market and protect the fiber we are introducing.

Dustin Simak: And, you know, we sell them as part of a package solution when we think about, you know, something of our overwrapped film, the tray, as well as the equipment. When you think about those three pieces of the solution, think of it as a poultry application. And so for us to go back into the trade business, which is really what this is in terms of compostable trays, our step back into manufacturing them, the overall addressable market is about $5 billion. And what's really exciting about it is that, if you think about that market overall, it's a relatively low growth market, but it's going through an unprecedented shift, right, where you see, you know, whether it's consumer preference, very similar to fiber and protective, it's that same shift in the protein trade market, where consumers prefer to move out of expanded polystyrene, and as well as the market in terms of regulations And so this is a great opportunity for us to take a big share in that market, and we're heavily, you know, invested in it. And I'll let Emil, you know, kind of jump on to some of the other areas that we're focused on. Yeah, thank you for the question.

Speaker Change: Again, it will be small impact this year, but the auto bag.

Speaker Change: Our auto bag.

Speaker Change: Segment, we are introducing a paper auto back solution as well as driving some more sustainability pieces around high recycled content in our protective businesses.

Speaker Change: Let me talk about fluids, because I didn't come up so far so fluids actually.

Speaker Change: A key part of our growth this year, both in our cryo bags.

Speaker Change: Our fluids business as well as on liquid Bulks, so again on <unk>.

Speaker Change: And our traditional prior vac liquids.

Speaker Change: We continue to drive penetration there on a flex prep solution and beyond that we are introducing later this year.

Speaker Change: Further expansion of that capability attacking the rigid squeeze bottle market and we'll be bringing that.

Speaker Change: Two an initial customer later on this year on the protein side.

Speaker Change: And I mentioned the.

Compostable training, we have launched based on customer voice of the customer new capabilities around our chill tunnels.

Speaker Change: Which are end markets right now.

Speaker Change: And there also we're introducing a whole host of second generation of recycling revenue.

Speaker Change: Flexible materials across the markets, where our customers demand.

Speaker Change: And then finally, maybe just the other piece.

Speaker Change: Tagging and and on the innovation question and back into the trade and if you think about our trade launch beyond that.

Speaker Change: It's a great product responding to the market in terms of how we did it we did it in a record time.

Speaker Change: It was really in terms of how we partner strongly on that innovation together with our critical partners. Both on the supply side on the customer side and this is when we talk about our commercial transformation and how do we drive.

Emil Shamas: And again, give us a chance to talk about some of these growth areas across multiple segments. So, let me kind of go through some of the key areas. So on protective, a couple of areas, I did mention that new partnership in terms of expanding our capabilities and portfolio gaps around 3D box life sizing. So again, that is commercial, we have our first orders, and we have a pipeline. Two is, it will have a small impact this year, but we did mention in our past call that we were slow in terms of the shift of the market and protective to fiber. We are introducing, again, it will have a small impact this year, but in the autobag segment, we are introducing a paper autobag solution, as well as driving some more sustainability pieces around high recycled content in our protective business. Let me talk about fluids because that didn't come up so far.

Speaker Change: That capability to accelerate our innovations. This is really the model. We're trying to re apply it's not doing innovations internally and then going out there trying to sell them, it's really bringing in the those customers in those early adopters as partner with them and our supply base to get to the market faster with more relevant.

Speaker Change: Yeah.

Speaker Change: Innovations that will drive commercial success.

Speaker Change: Okay.

Speaker Change: Thank you and our next question coming from the line of.

Speaker Change: Edlin Rodriguez from Mizuho Group your line is open.

Edlin Rodriguez: Thank you good morning, everyone.

Edlin Rodriguez: So as you look past 2024 and into 2005.

Edlin Rodriguez: Do you see the volume power of the portfolio. If you no longer have destocking going on and demand is gradually picking up.

Edlin Rodriguez: What does volume will look like on a normalized basis.

Emil Shamas: So, fluid is actually a key part of our growth this year, both in our cryovac fluids business as well as in liquid box. So, again, on our traditional cryovac liquids, we continue to drive penetration around a flex prep solution. And beyond that, we are introducing later this year a further expansion of that capability, which will be attacking the rigid squeeze bottle market, and we'll be bringing that to an initial customer later this year. On the protein side, Dustin and I mentioned the compostable tray.

Edlin Rodriguez: 25 2026.

Edlin Rodriguez: So it's a great question and I'll make a couple of comments right going back to the prepared remarks. This is dustin speaking by the way so.

Dustin: One is <unk>.

Dustin: Look we still continue to operate in a very limited visibility environment right our guidance reflects that.

Dustin: And some of the progression over the next two kind of two half via reflect that so the reason I say that is just take that into account because one of the expectations to once we get to a place where.

Emil Shamas: We have launched, based on customer, most of the customer new capabilities around our chill tunnels, which are in the market right now. And there, also, we are introducing a whole host of second generation recycler ready, flexible materials across the markets where our customers are. Now, finally, maybe just the other piece, you know, tagging in on the innovation question and back into the trade. If you think about our trade launch beyond that, it's a great product responding to the market. In terms of how we did it, we did it in record time.

Dustin: You have demand comes picks back up there is an opportunity for potentially for some restocking right, which will also create an outside at least EBIT, even if it's transitory uptick in overall volumes, but if you think about a normalized basis. If you think about the end markets, we serve and I'll break it down into three categories. When I give this perspective, one is in our food markets on a normalized basis I E you're not you're.

Dustin: Not winning more business than you are losing and think of it as a net term perspective youre looking at low single digit volume growth right and so your opportunity set in that if you are performing well commercially is GDP plus right very similar if you look at protective I put it in that same kind of category slightly ahead of food, but again.

Dustin Simak: It was really in terms of how we partnered strongly on that innovation together with our critical partners, both on the supply side and the customer side. And this is when we talk about our commercial transformation and how we are driving it. That capability to accelerate our innovations is really the model we're trying to reapply. It's not doing innovations internally and then going out there trying to sell them. It's really bringing those customers in, those early adopters, and partners with them and our supply base to get to the market faster with more relevant innovations that will drive business. Thank you. And our next question, coming from the line, at Landmark Request, from Miss O'Hare Group, Yolanda Salford. Thank you. Good morning, everyone.

Dustin: Low single digit volume growth now in our fluids and liquids business, it's different in a sense very similar to the comments, we made about trade where you have an opportunity for mid single digit high single digit growth. Because you are shifting other applications into that particular space is not just underlying demand because those markets are also very similar in terms of the end markets and the worst foodservice where.

Dustin: Low single digit growth, but because youre disintermediation rigid and converting them into flexible.

Dustin: You can see an uptick that will will will be there for quite some time as that market continues to shift into the fluids illiquid space.

Speaker Change: Thank you.

Speaker Change: Next question coming from the line of.

Current Lindbergh: Current Lindbergh with UBS. Your line is now open.

Current Lindbergh: Yes. Thank you good morning.

Operator: So as you look past 2024 and into 2025, like how do you see the volume power of the portfolio? You know, if you no longer have this talking going on, and the man is gradually picking up, like what does volume look like on a normalized basis in 2025-2026? So it's a great question, and I'll make a couple of comments, right? Going back to the prepared remarks, this is Dustin speaking, by

Current Lindbergh: I was hoping you could unpack a little bit more I guess.

Current Lindbergh: Some of the structural dynamics at play in fulfillment and you talked about the fiber taking share as well as.

Current Lindbergh: Companies seeking more optimization and pack type or changing the way they are kind of going to market is that.

Current Lindbergh: How structural use of those trends and then what's your opportunity to maybe.

Current Lindbergh: Is it more into fiber based solution.

Speaker Change: So I'll start with some of the market trends and then they don't have a meal kind of jump onto some of the other the fiber base pieces from a portfolio perspective. So if you start with the trend. There is really there is an obvious and when I speak about this I'm speaking really which is the portion of protective overall, which really serves that fulfillment kind of E Commerce and markets Records industrials.

Dustin Simak: So one is, look, we still continue to operate in a very limited visibility environment, right? Our guidance reflects that, and some of the progression of the next two, you know, kind of two halves, you know, reflect that. So the reason I say that is to take that into account because one of the expectations is, too, once we get to a place where demand picks back up, there is an opportunity for potentially some restocking, right? Which will also create an outside, at least even if it's a transitory, uptick in overall volumes. But if you think about a normalized basis, if you think about the end markets we serve, and I'll break it down into three categories when I give this perspective. One is in our food markets, on a normalized basis, i.e.

Speaker Change: Behave very differently, it's actually quite unique in 2023 that they both behaved very similarly.

Speaker Change: So when you think about.

Speaker Change: Kind of fulfillment E. Commerce is really very huge positive up and then a net down right and the net down as the items. We mentioned, which is if you think about overall ecommerce to continue it's kind of back on its normalized growth trajectory right. So I went through a transitory phase during COVID-19, where it picked up dramatically fell back in line with historic growth rates, but is still continuing to grow.

Dustin Simak: You're not winning more business than you're losing, think of it as a net term perspective, you're looking at low single-digit volume growth, right? And so your opportunity set in that, if you're performing well commercially, is GDP plus, right? Very similar, if you look at protective clothing, I put it in that same kind of category, slightly ahead of food.

Speaker Change: ROE in this kind of mid single digit high single digit kind of structural growth rate that continues to move right, which obviously drives more consumption around our packaging solutions right. If you think about void fill Friday air pillows that go into the box. If you think about whether it's flexible as Andrew fiber based solutions. If you think about mailers and so on and so forth.

Dustin Simak: But again, you know, low single-digit volume growth. Now, in our fluids and liquids business, it's different in the sense, very similar to the comments we made about trades, where you have an opportunity for mid single-digit, high single-digit growth because you are shifting other applications into that particular space. It's not just underlying demand because those markets are also very similar in terms of the end markets. In other words, food service would have low single-digit growth. But because you're disintermediating rigids and converting them into flexibles, you can see an uptick that will be there for quite some time as that market continues to shift into fluids and liquids. And our next question, coming from the liner... Kurt Woodwork with UBS, Fiona Salfin. Yeah, thank you. Good morning.

Speaker Change: Now what comes off that growth rate right is the shift to fiber, which we had not done a great job of capturing in the past that we're looking to accelerate and make sure that we participate in.

Speaker Change: In the marketplace going forward and.

Speaker Change: And the second piece, which is ship in own container and kind of by by now and then pick up at the store and so both of those pieces netted down, but we still see it as a low single digit growth. Once you net that down right and so thats the opportunity set and within it with the exception of the moves that we need to make in the fiber place to make sure we participate.

Speaker Change: And I'll just add a couple of pieces to that so obviously <unk>.

Speaker Change: Fiber is one piece of it right.

Speaker Change: We were late to the game, but we are introducing there both in terms of the <unk>.

Speaker Change: Mailer with our paper bubble Mailer on our <unk> platform, which is a great platform because not only it addresses the shipping needs, but also the automation benefits.

Kurt Woodwork: I was hoping you could unpack a little bit more of, I guess, some of the structural dynamics at play and fulfillment. You talked about fiber taking share as well as, you know, companies seeking more optimization of pack type or changing the way they're kind of going to market. Is that, you know, how structural do you view some of those trends?

Speaker Change: And we're just coming out with our first generation of.

Speaker Change: Paper auto bag, but also in terms of addressing the sustainability trends, we are launching our high recycled content.

Speaker Change: For void fill as well as for for Cushioning solutions and we have in our but these are early in our R&D pipeline in terms of.

Dustin Simak: And then what's your opportunity to maybe pivot more into fiber-based solutions? So I'll start with some of the market trends, then I'll have Emil kind of jump on to some of the other fiber-based pieces from a portfolio perspective. So if you start with a trend, there's really, you know, there's an obvious, and when I think about this, I'm speaking really about, which is a portion of the protective overall, which really serves that fulfillment, you know, kind of e-commerce in markets, right? Because industrials behave, you know, very differently. It's actually quite unique in 2023 that they both behave very similarly.

Speaker Change: New paper forming capabilities.

Speaker Change: We are.

Speaker Change: China.

Speaker Change: Development on the automation side. So that's why I mentioned, our partnership there around the box right sizing. So today, we have with <unk>.

Speaker Change: Fox right sizing capability in our B plus platform and we signed a partnership to expand that capability to bring in that <unk> right sizing. These again.

Speaker Change: <unk>.

So depending on the customer and the markets are different needs there.

Speaker Change: We are actively working to address them either through recycled content recyclability as well as.

Speaker Change: Further accelerating our capabilities in fiber and automation.

Dustin Simak: So when you think about fulfillment e-commerce, there's really a very huge positive upswing and then a net down, right? And the net down is the items we mentioned, which is if you think about overall e-commerce, it continues to, it's kind of back on its normalized growth trajectory, right? So it went through a transitory phase during COVID where it picked up dramatically, fell back in line with historic growth rates, but it's still continuing to grow at this kind of mid-single digit, high-single digit, kind of structural growth rate that continues to move, which obviously drives, you know, more consumption around our packaging solutions, right? If you think about void fill, right, the air pillows that go into the box, if you think about whether it's flexible and or fiber-based solutions, if you think about mailers, and so on and so forth.

Thank you.

Speaker Change: Our next question coming from the line of <unk> <unk>.

Speaker Change: Michael Matson with Cowen Securities. Your line is now open.

Michael Matson: Thank you, Doug and the meal, Brian and Luis for taking my questions. Congrats on a nice finish to the year.

Michael Matson: Thank you my question is this.

Michael Matson: Can you talk about the competitive advantage you have in protein and while your peers may not be able to compete as effectively as you can is it due to equipment is due to service.

Michael Matson: Is only enroll stock where there's less differentiation or are there other places other parts of the business to where you have more effectiveness.

Michael Matson: Could be competitive effectiveness relative to your peers. Thank you.

Michael Matson: Hi, Max this is Dustin speaking I'm going to start off and ill give me an opportunity to jump in but first thank you for the comment on finishing the year jumping into your question to heart of it which is what is our competitive differentiation within the protein space you actually nailed two legs of the stool already right. So if you think about those three legs. It really is it starts with.

Dustin Simak: Now, what comes out of that growth rate, right, is the shift to fiber, which we have not done a great job of capturing in the past that we're looking to accelerate and make sure that we participate, you know, in the marketplace going forward. And the second piece, which is shipping a container and, you know, kind of buy, you know, buy now and then pick up at the store. And so both those pieces netted down, but we still see it as a low single-digit growth once you net that down. And so that's the opportunity set within it, with the exception of the moves that we need to make in the fireplace to make sure. So go ahead, Emil.

Michael Matson: <unk> and materials right. So we do we still believe we are best in class relative to competition in terms of our differentiated materials science and the our ability to produce those films that helped increase the shelf stability of the proteins that are packaged in.

Michael Matson: The second piece, which you mentioned raised automation capability right and then the third is service.

And it's really those three aspects there are best in class each on their own but then when they come together they really truly create that differentiated solution set that really puts a competitive moat around that particular business now when I say that business I'm really specifically talking about and a lot of ways.

Emil Shamas: Yeah, and I'll just add a couple of pieces to that. So obviously, you know, fiber is one piece of it, right? And we are, we were late to the game, but we are introducing there both in terms of the mailer with our paper bubble mailer on our Autobag platform, which is a great platform because not only does it address the shipping needs, but also the automation benefits. And then we were just coming out with our first generation of paper Autobag. And also, in terms of addressing the sustainability trends, we are launching our high recycling content for void fill, as And we have in our, but these are early in our R&D pipeline in terms of new paper forming capabilities that we are trying to develop on the automation side. So that's why I mentioned our partnership there around the box right-sizing. So today we have a 2D box right-sizing capability in our B plus platform, and we signed a partnership there to expand the capability to bring in that 3D right-sizing piece.

Michael Matson: Fresh red meat if.

Michael Matson: If you think about other applications, whether it's poultry and so on and so forth.

Michael Matson: Think about it going back to roll stock, whether it's film over at film or if you think about different roll stock applications. We are working to continue to build those three legs of the stool, what Emil alluded to in our prior conversation, which is were working to build a complete solution set and one of the differentiated approaches that we're taking the alluded to it with the partnerships and even in protected in the <unk>.

Michael Matson: Box right sizing as well as you think about the solutions and roll stock is that in the past, we havent had that full solution, where as an example, when he did itself an equipment manufacturer may be coming in and bringing the therma former or whatever type of roll stock type equipment, and then we're bringing in the materials and somewhat predictable, particularly bringing service we.

Dustin Simak: So again, depending on the customer and the markets, there are different needs there, and we are actively working to address them either through recycled content, recyclability, as well as further accelerating our capabilities in fiber and automation. www.larryweaver.com. And our next question, coming from the line of... Michael Moxlin, the withdrawal security line is open. I thank you, Duncan, Emile, Brian, and Luis, for taking my questions. Congratulations on a nice finish to the year. My question is, you know, can you talk about the competitive advantage you have in protein? And why your peers may not be able to compete as effectively as you can? Is it due to the equipment?

Michael Matson: We're now building those partnerships, which is great because it's an asset light approach from a capital allocation perspective to build those solutions and go into market with those three legs of the stool in other areas. So we're replicating the strength of what we already have in our <unk> business and other areas of the portfolio.

Michael Matson: Yes.

You said, it very well with us and just.

Michael Matson: Complementing to that so again.

Michael Matson: On the roll stock side, we were playing in the consumer.

Michael Matson: Consumer revenue space in a niche area in terms of those very high value added and we were only selling the materials science fees.

Michael Matson: Dave there in terms of <unk>.

Michael Matson: Going after that market, which is a much larger market.

Michael Matson: Today, we play in is about bringing more materials innovation again.

Michael Matson: Compostable trading as one example, so.

Michael Matson: Two as those equipment partnerships. So that we can leverage the equipment, but also our services and there certainly is seasonal we haven't talked about because again it will not have <unk>.

Michael Moxlin: Is it due to service? Is it only in roll stock where there's less differentiation? Or are there other places, other parts of the business, too, where you have more effectiveness in order to be competitive? Thank you. Hey Max, this is Dustin speaking.

Michael Matson: Impact yet in 2024 is the work we're doing on the digital printing side for consumer ready.

Dustin Simak: I'm going to start off and I'll give Emile an opportunity to jump in, but first, thank you for the comment on finishing the year. Jumping into your question, the heart of it, which is what is our competitive differentiation within the protein space, you actually nailed two legs of the stool already, right? If you think about those three legs, it really is, it starts with differentiation and materials, right?

Michael Matson: We are still ahead of the game in terms of what the capabilities in the market in terms of introducing.

Michael Matson: Hi, speed economical digital printing capability to the consumer ready markets, but that's going to be more of a.

Michael Matson: End of 'twenty, four 'twenty five impact.

Speaker Change: Thank you.

Speaker Change: Next question coming from the lineup.

Speaker Change: Lawrence de Maria from William Blair. Your line is now open.

Speaker Change: Thanks, Good morning, everybody.

Dustin Simak: So we do, we still believe we're best in class relative to competition in terms of our differentiating material science and the ability to produce those films that help increase the shelf stability of the proteins that they're packaged in. The second piece, which you mentioned, is the automation capability, right? And then the third is service.

Speaker Change: I know you discussed some of these things, but if you wanted to.

Speaker Change: Dial down on where are we really with an e-commerce side.

Speaker Change: <unk> and the ability to drive.

Speaker Change: More.

Dustin Simak: And it's really those three aspects that are best in class, each on their own, but then when they come together, they really truly create that differentiated solution that really puts a competitive moat around that particular business. Now, when I say that business, I'm really specifically talking about, in a lot of ways, fresh red meat. If you think about other applications, whether it's poultry and so on and so forth, and think about it as going back to roll stock, whether it's film, over-wrapped film, or if you think about different roll stock applications, we are working to continue to build those three legs of the stool. What Emil alluded to in a prior conversation, which is that we're working to build that complete solution set.

Speaker Change: And with ecommerce.

Speaker Change: Secondly, there's a lot of pressure with Amazon or Walmart to reduce void fill I know you have some automation there is there any traction with that automation or is that more.

Speaker Change: Later 'twenty four 'twenty five can you just talk about some of the commercial opportunities in those specific lanes. Thank you.

Speaker Change: Hey, Larry This is Dustin speaking so a couple of things.

Dustin: We discussed last year in 2023 that we began to really step into.

Dustin: You kind of bring in paper paper mailers to market right and one of the things that if you think about 2023 is a lot of wages introduction of some of our fiber solutions and if you think about 'twenty four it's about scaling right and what I mean by that is that even if you say hey, I have paper mailers. It's not just is the combination of the equipment is the combination in terms of how many different sizes.

Dustin Simak: And one of the differentiated approaches that we're taking, he alluded to it with the partnerships and even in protective packaging in the 3D box, right sizing, as well as you think about the solutions in roll stock is that in the past, we haven't had that full solution where, for example, when you did a sale, an equipment manufacturer may be coming in and bringing the thermoformer or whatever type of roll stock type equipment, We are now building those partnerships, which is great because it's an asset-light approach from a capital allocations perspective to build those solutions and go into market with those three legs of the stool in other areas. So we're replicating the strength of what we already have in our street bag business and other areas of the portfolio. Yeah, you said it very well, Dustin, just complimenting on that.

Dustin: How will you can print on it and so those aspects of it we're beginning to bring up in a more scaled up way in 2024. However, it's still a small part of overall portfolio right. So having a meaningful impact to the business is really if you think about <unk> 25, and 26% relative to be able to do that now on the flip side is the mill related to the partnership in <unk>.

Dustin: <unk> right sizing some of the automation opportunities, we see those as opportunities when there's big boxes like you've talked about Walmart, we are seeing traction that space, it's still performing quite well the backlog in that business is still strong relative to where we're at in terms of equipment that we deliver so it's a bright spot in the automation portfolio that that customers are still buying I'll say despite.

Emil Shamas: So again, on the Rolstock side, we were playing in the consumer ready space in a niche area in terms of those very high value added products, and we were only selling the materials science space. So again, there in terms of going after that market, which is a much larger market than we play in today, is about bringing more materials innovation. Again, the compostable tray is one example.

Dustin: Some of the capital constraints part of it is the cost of solution, where some of our solutions are absolutely that catheter to shrink goes up as you you tend to buy higher pieces of equipment and so thats.

Dustin: But to give you some of the detail there.

Speaker Change: Thank you.

Speaker Change: Our next question coming from the line of Adam Samuelson with Goldman Sachs. Your line is now open.

Adam L. Samuelson: Yes, Thank you and good morning, everyone.

Emil Shamas: So two is those equipment partnerships so that we can leverage the equipment, but also our services in there. And then thirdly, a piece we haven't talked about because, again, it will not have much impact yet in 2024, is the work we're doing on the digital printing side for consumer ready. We are still ahead of the game in terms of what the capability is in the market in terms of introducing high speed, economical digital printing capability to the consumer ready markets, but that's gonna be more of a end of 24, 25. And our next question comes from the line up: Lawrence DeMaria, Romulan Blair, Yelena Salfin. Thanks.

Adam L. Samuelson: So I guess my question is I think duston and in your prepared remarks, you alluded to about 50 basis points of lower volumes in each segment related to product exits.

Adam L. Samuelson: Just hoping for a little bit more context on that and I guess, specifically in protective where youre seeing some different substrate shifts.

Adam L. Samuelson: That are moving you've been maybe a little slower to <unk>.

Adam L. Samuelson: Adapt to and you're also seeing more pricing pressure in pockets of that portfolio kind of as we sit here today I know the company has been taking a closer look at this what how would you size kind of protective portfolio and the proportion of the business that you really think is.

Lawrence DeMaria: Good morning, everybody. I know you discussed some of these things, but I wanted to just dial down on, you know, where are we really? On the eCommerce side of paper mail. I'm going to give you guys some more.

Dustin Simak: Commerce. Secondly, you know, there's a lot of pressure with Amazon and Walmart. I know you have some automation there, but is there any traction with that automation, or is that more? 24, 25, we can just talk about... Hey Larry, this is Dustin speaking.

Adam L. Samuelson: <unk> seen more commoditization over the last over the last couple of years, and maybe has more diminished growth growth prospects than it would have five five or five years ago, our pre COVID-19.

Dustin Simak: So a couple things. You know, we discussed last year in 2023 that we began to really step into, you kind of bring in paper mailers to the market, right?

Adam L. Samuelson: Yes.

Speaker Change: Great question I mean can you go back to just the first part of the question that that piece of didn't come through clearly share just just.

Speaker Change: Any color on the product line exits that you think talking about a 50 basis points in each segment impacting just any clarity on that what you were actually moving out of yes.

Dustin Simak: And one of the things that if you think about 2023, in a lot of ways, it's about the introduction of some of our fiber solutions. And if you think about 24, it's about scaling, right?

Speaker Change: Yeah, absolutely so a lot of this.

I'm really glad you raised that question because a lot of it relates to things that we've already announced right. So we talked about the exit of our chemotherapy will.

Dustin Simak: And what I mean by that is that, you know, even if you say, hey, I have paper mailers, it's not just the equipment, the combination in terms of how many different sizes, how well you can print on it. And so those aspects of it, we're beginning to bring up in a more, you know, scaled up way in 2024. However, it's still a small part of our overall portfolio, right?

Speaker Change: Temperature assurance business in 2023, right just as a reminder, those are refrigerated kind of panels that would be used.

Speaker Change: Keep refrigeration around things like Covid vaccines business performed very well during Covid and then trailed off.

Speaker Change: Proposed post Covid and so we exited that business. So it's having a follow on impact from a volume perspective, because a lot of businesses exited towards the end of 2023 or candidly even at the beginning so that's the first one to protected thats by far having the biggest impact the second piece.

Dustin Simak: So having a meaningful impact on the business is really, if you think about 25 and 26, you know, relative to being able to do that. Now, on the flip side, Emil related to the partnership in the 3D box, right? Sizing some of the automation opportunities. We see those as opportunities, whether it's big boxes, like you talked about Walmart. We are seeing traction in that space. It's still performing quite well.

Speaker Change: And protective is there some other some other reductions that we have smaller pieces that were trending relative to our <unk>, our fabrication business that we have.

A little piece of this in the EMEA region right now that we're coming back on it it is not a whole scale in terms of different areas, but very regionally specific and where some of the solutions. We have seen what we see to be a permanent drop off in demand that it be shift to our overall food business. The first pieces takes back to is take back to the.

Dustin Simak: The backlog in that business is still strong, you know, relative to where we're at in terms of equipment that we deliver. So it's a bright spot in the automation portfolio that customers are still buying, I would say, despite some of the capital constraints. Part of it is the cost of solutions, you know, where some of our solutions that are obviously that capital constraint go up as you, you tend to buy higher pieces of equipment. And so that's. I'm going to give you some of the details.

Speaker Change: The plant based roll stock that we talked about exiting during Q3.

Speaker Change: And that business really is beginning to at this point in time really so once we announced it you begin the ramp down that ramp downs really concluding now at the beginning of kind of right Ryan right now around January February and Youre seeing that are impactful year to food volumes as a result of that and the only other piece that we really discussed today for the first time is our overall Argentinian.

Speaker Change: Today and thinking about it you are looking at.

Speaker Change: It's kind of low <unk> kind of low double digits relative to revenue impact there relative to specific pieces related to business that we're importing into Argentina, that's due to some of the FX issues as well as economic instability. It doesn't make sense at this point in time to continue to pursue that business that we're exiting going forward and that primarily impacts food.

Dustin Simak: Thank you. Our next question, coming from the line of Adam Samuelson with Goldman Sachs, is open. Yes, thank you. Good morning, everyone.

Adam L. Samuelson: So, I guess my question, I think, Dustin, in your prepared remarks, you alluded to about 50 basis points of lower volumes in each segment related to product exits. We're just hoping for a little bit more context on that. And I guess specifically in protective, where you're seeing some different substrate chips... that are moving – you've been maybe a little slower to adapt to, and you're also seeing more pricing pressure in pockets of that portfolio. As we sit here today, I know your company's been taking a closer look at this. How would you size the protective portfolio and the proportion of the business that you really think is... We've seen more commoditization over the last couple years and maybe have more diminished growth prospects than it would have five years ago or pre-COVID. Great question!

Speaker Change: And then going back to your point about protective in terms of Commoditization. If you think about it we've talked consistently around this 30% to 40% of the overall portfolio where are you seeing pricing pressure is what we call our utility business and you think about lightweight foam if you think about.

Speaker Change: Bubble wrap so on and so forth Thats, where youre seeing the most pricing pressure right and going back to your question about substrate transfer it really goes back to some of the prior questions that we had and where youre seeing the most predominantly is.

Speaker Change: And void fill right. So you think of it as the air pillows continuing to shift into paper, which is also being disintermediation by shipping in own container rates. So the removal of all secondary packaging and shipping and just primary packaging right and then the second is even when you don't have a box that's an overlap that secondary packaging becomes a mailer and theres a big.

Dustin Simak: Can you go back to the first part of the question, that piece that didn't come through clearly? Sure, just any color on the product line exits that you think talk about 50 basis points in each segment, impacting volume. Do you have any clarity on that, what you're actually moving out of? Yeah, absolutely.

Speaker Change: Shift, obviously from flexible or hybrids into into pure fiber based mailers right and those are the two areas that where we have behalf paper systems today that compete directly as an example, with the Ram pack.

Speaker Change: And then on the void fill side and then on the paper reemphasize, we talked about earlier.

Speaker Change: We have products in market, but it's about scale right in terms of how how broad that offering set is and how many different businesses you can actually work with and that our solutions can actually fit within those business models and then again 2024 23 is a year of introductions in 24 hours a year scaling in those particular areas.

Dustin Simak: So, you know, a lot of this, I'm really glad you raised that question, because a lot of it relates to things that we've already announced. Right. So we talked about the exit of our chemothermal temperature assurance business in 2023. Right. Just as a reminder, those are those refrigerated kind of panels that would be used to keep refrigeration around things like COVID vaccines.

Speaker Change: Thank you and our next question coming from the lineup.

Speaker Change: Alright.

Speaker Change: Hudson from RBC capital markets. Your line is open.

Dustin Simak: That business performed very well during COVID and then trailed off post-COVID, and so we exited that business. So it's having a follow-on impact from a volume perspective because a lot of these businesses exited towards the end of 2023, or candidly even in the beginning. So that's the first one to protect us, by far, having the biggest impact.

Hudson: Great. Thanks for taking my question.

Hudson: Congrats on finishing the 23 year. So yeah, just following up on that last point.

Hudson: I guess I can appreciate.

Hudson: That you are pursuing the fiber based solutions and the compostable trait now.

Dustin Simak: The second piece, and Protective is there's some other reductions that we have, smaller pieces that we're trimming relative to our IFS, our fabrication business, that we have a little piece of this in the EMEA region right now that we're trimming back on. It's not a whole scale in terms of different areas but very regionally specific, and where some of the solutions we've seen have what we see to be a permanent drop in demand. Then if you shift to our overall food business, the first piece is it takes back to the plant-based roll stock that we talked about exiting during Q3. And that business really is beginning to, at this point in time, really, so once we announce it, you begin the ramp down.

Hudson: We did see a little bit of a reduction on the automation side.

Hudson: So I guess another way to think about the volume growth opportunities.

Hudson: Existing these businesses that continue to be a drag if you look over the last couple of years.

Hudson: <unk> had kind of minus 20% volumes when you stack the last couple of years and protected so.

Hudson:

Hudson: With these product exits would you say that.

Hudson: Somehow or at least at least address maybe the larger pieces of those volume drags or is there more to do there and is there is there any timeline on maybe.

Dustin Simak: That ramp down is really concluding now at the beginning of kind of right now around January, February, and you're seeing now the impact full year on food volumes as a result of that. And the only other piece that we really discussed today for the first time is our overall Argentinian business today. And thinking about it, you're looking at, you know, it's kind of low, you know, kind of low double digits relative to revenue impact there, relative to specific pieces related to business that we're importing into Argentina that, due to some of the effects issues, as well as economic instability, it doesn't make sense at this point in time to continue to pursue that business that we're actually going forward with. And that primarily impacts

Hudson: Exiting some of those.

Hudson: <unk> negative headwinds.

Speaker Change: I appreciate the question and <unk>.

Speaker Change: Recognize the point Youre, making in terms of multi stack in protective and seeing it net down we fully recognize where that business is at and ill reiterate one point, which is.

Speaker Change: That kind of coming a lot of that's obviously declines it really has happened over the past I think of it is 18 months in terms of where you are seeing a hard step down in that whole portfolio Holistically and part of what we're seeing today. If you look at Q4 is a positive sign right <unk> seen those volumes wrapping beginning stabilizing you're down mid single digits and so a lot of what we're doing across this.

Dustin Simak: And then going back to your point about protection in terms of commoditization, you know, if you think about it, we've talked consistently around this 30 to 40% of the overall portfolio. Where are you seeing pricing pressure? It's what we call our utility business. And if you think about lightweight foam, if you think about, you know, bubble wrap, so on and so forth, that's where you're seeing the most pricing pressure, right? And then going back to your question about, you know, substrate transfer, it really goes back to some of the prior questions that we had, and where you're seeing it most predominantly is, and Voidfil, right?

Speaker Change: Years, we mentioned kind of if you go back to Neil's remarks is that we've kind of recognized as areas of the portfolio that we do longer term that we say don't necessarily fit with strategically do we have pieces of date is still within that portfolio absolutely right, but right now is not the time to take action on those businesses. So what we're focused on because theres a couple of things as we go through this year that'll become more.

Speaker Change: Clear one is what we feel like we're hitting a trough we're coming out of the cycle, we'll have a better understanding how this business is going to perform longer term right and then as Emil mentioned in the comments right the financing markets improve outlook improves holistically and they will better understand the fundamentals of this business as time goes on and we'll continue to reevaluate that but with that.

Dustin Simak: So you think of it as the air pillows continuing to shift into paper, which is also being disintermediated by shipping in its own container, right? So the removal of all secondary packaging and shipping in just primary packaging, right? And then the second thing is even when you don't have a box that's an overwrap, that secondary packaging becomes a mailer.

Speaker Change: That said right now the price if you take that and put it to the side our primary focus going back to the <unk>.

Speaker Change: The main part of the content today was around really what we're doing to transform that business because theres. Other element of if we are more commercially effective what does that do from a performance standpoint, and so theres a lot of focus and energy going into that right now in terms of our overall transformation.

Dustin Simak: And there's a big shift, obviously, from flexibles or hybrids into pure fiber-based mailers, right? And those are the two areas where we have paper systems today that compete directly, as an example, with RANPAC. And then on the Voidfil side, and then on the paper mailer side, as we talked about earlier, really, we have products in the market, but it's about scale, right? In terms of how broad that offering set is and how many different businesses you can actually work with and that our solutions can actually fit within those business models. And again, 2023 is a year of introductions, and 2024 is a year of scaling in those particular areas. Thank you. And our next question comes from the line-up: Arun Viswanathan from RBC Capital Markets. Your line is open.

Speaker Change: Last question.

Speaker Change: Thank you and our next question coming from the line of.

Speaker Change: Gabe Hudson from Wells Fargo. Your line is now open.

Gabe Hudson: Neil Dalton Thanks.

Gabe Hudson: I'll be brief here.

Gabe Hudson: The protective L shaped recovery and maybe a little bit worse than what you were expecting.

Gabe Hudson: Can you kind of bifurcate for us between market related and competitive landscape I know, it's sort of tough and then.

Gabe Hudson: I guess key learnings that you've had thus far in evaluating <unk>.

Gabe Hudson: You alluded to here in the last question, but just.

Gabe Hudson: Reviewing some parts of the portfolio.

Gabe Hudson: Strategic Optionality there it sounds like timeline, maybe pushed out a little bit, but still a lot of work being done I just want to make sure. We're clear there and then re instituting the incentive compensation I think it's $30 million that you talked about is it more pronounced in any specific quarter. Just curious if that's depressing Q1 at all relative to the rest of the year. Thank you.

Arun S. Viswanathan: Great, thanks for taking my question. Congratulations on finishing the 23rd year. So yeah, just following up on that last point. You know, I guess I can appreciate that you are pursuing fiber-based solutions and the compostable tray now. You know, we did see a little bit of a reduction on the automation side. So I guess, you know, another way to think about the volume growth opportunities is to exit these businesses that continue to be a drag. If you look over the last couple years, you've had kind of minus 20% volumes when you stack the last couple years in protective. So you know, with these product exits, would you say that you've somehow or at least addressed maybe the larger pieces of those volume drags? Or is there more to do there?

Speaker Change: You gave us I missed the first part of that question. If you don't mind, if you can come back into the first part.

Speaker Change: You talked about an L shaped recovery in protective and I'm just curious if you can describe.

Speaker Change: More of that weakness to market conditions or got.

Dustin Simak: And is there, you know, any timeline on maybe, you know, exiting some of those, you know, lingering negative headwinds? Thanks. I appreciate the question and recognize the point you're making in terms of multi-stacking protective and seeing it net down. We fully recognize where that business is at, but I'll reiterate one point, which is that you're kind of coming at it from a point where a lot of that's obviously declined and really has happened over the past, think of it as 18 months, in terms of where you've seen a hard step down in that And part of what we're seeing today, if you look at Q4, is a positive sign, right? You've seen those volumes wrap, are beginning to stabilize, and you're down mid single digits. And so a lot of what we're doing across this year is, you know, we mentioned kind of, if you go back to Emile's remarks, we've kind of recognized those areas of the portfolio that we do longer term that we say don't necessarily fit in strategically. Do we have pieces of data still within that portfolio? Absolutely not, right?

Speaker Change: Got it any more intense competitive landscape more recently, yes.

Speaker Change: Yes, no understood great.

Speaker Change: Great question, what I would tell you is.

Speaker Change: It kind of was going into the so I'll go back to the positive note right Q4 came in to that mid single digit range relative to volume.

Speaker Change: Again, when we talked about it we're optimistic that we would have even a stronger seasonality in terms of a quarter, which is really a good indication of how you're going to come out the year. So for from our perspective, it doesn't seem from a competitive dynamics in the sense of customers Youre able to win in the marketplace churn that you're having in the business. We see that absolutely. If you go back to the past two years, there was a step up but <unk> seen that normalize.

Speaker Change: Out kind of even across 2023. So if you look at the business and protective is somewhat sequentially trended along in 2023 and was wrapping around and showing obviously very negative comps going back with Q1 being down almost 20% and then kind of mid teens for Q2 and Q3 now mid single digit. So holistically, we feel very good about kind of coming out the gate.

Speaker Change: Right relative to.

In terms of our overall profit, but if Q4 was stronger it would have pointed towards a much stronger kind of full year guide and Thats really where we are and then candidly. We're also just being cautious because we are operating in a limited visibility environment. So that's point number one.

Speaker Change: Going to your question around.

Dustin Simak: But right now is not the time to take action on those businesses. So what we're focused on, because there are a couple of things. As we go up this year, they'll become more clear. One is, you know, we feel like we're hitting a trough, we're coming out of the cycle, and we'll have a better understanding of how those businesses are gonna perform longer term, right? And then, as Emile mentioned in the comments, right?

Speaker Change: The next point around the the overall executive kind of our bonus pools and the restoration of this bonus pools. Obviously, we had a very challenging year in 2023 as you can imagine a compensation came down as a result of that now as you think about this year in executing against our plan in terms of where that pronouncement is it's more of an impact.

Speaker Change: Overall second half then in terms of first half right in the sense that if you look at 2023, the second half benefited more from that reduction.

Dustin Simak: The financing markets improve, the outlook improves holistically, and then we'll better understand those fundamentals in this business as time goes on, and we'll continue to reevaluate that. But with that said, right now, the price of, if you take that and put it to the side, our primary focus, going back to the, you know, the main part of the content today was around really what we're doing to transform that business, because there's another element of, you know, if we are more commercially effective, what does that do from a performance standpoint? And so there's a lot of focus and energy going into that right now in terms of our overall strategy. Thank you, and our next question comes from the line of... Gabe Hajde from Wells Fargo, Yolanda Sullivan, Neal Belton. Tragedy Brief here.

Speaker Change: Compensation pools, because as you went through 'twenty three as we all know our guidance came down our internal we missed our internal plan and that was more pronounced in the second half than it was in the first half right. So you have a bigger hill to climb as you go throughout this year and then on your last point around in terms of portfolio optimization Theres nothing really further additive to <unk>.

Speaker Change: Say then yes to your point, there's still a lot of work going on but really now is not the right time and so what do you do we don't want that to necessarily be a distraction relative to so that work is progressing but we're really focused on again going back to that commercial transformation, restoring underlying fundamentals right and improving underlying business performance.

Gabe S. Hajde: The protective L-shaped recovery may be a little bit worse than what you were expecting. Can you kind of bifurcate for us between the market-related and the competitive landscape? I know it's sort of tough, and then, I guess, key learnings that you've had thus far in evaluating, you alluded to it here in the last question, but just, you know, reviewing some parts of the portfolio and strategic optionality there. It sounds like the timeline may be pushed out a little bit, but there is still a lot of work being done. I just want to make sure we're clear there. And then reinstituting the incentive compensation. I think it's the $30 million that you talked about. Is it more pronounced in any specific quarter?

Speaker Change: And with that we're on top of the hour and I would like to thank everyone for their time today. We are excited about the opportunities ahead foresee and we look forward to updating you on the progress of our transformation when we speak together in May.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

Speaker Change: Okay.

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Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Dustin Simak: Just curious if that's just pressing Q1 at all relative to the rest of the year. Thank you, www.larryweaver.com, Gabe. I just missed the first part of that question. If you don't mind, if you could come back to the first part.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Sure.

Gabe S. Hajde: You talked about an L-shaped recovery in protective, and I'm just curious if you can ascribe, you know, more of that weakness to market conditions or, you know, providing a more competitive landscape, more, Yeah, no, understood. And a great question. What I would tell you is, I kind of was going into the, so I'll go back to the positive note, right? Q4 came in at that mid-single-digit range relative to volume. But again, when we talked about it, we were optimistic that we'd have even more seasonality in terms of a quarter, which is really a good indication of how you're going to come out the year. So, from our perspective, it doesn't seem from a competitive dynamics in the sense of customers you're able to win in the marketplace, or the turn that you're having in the business.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Gabe S. Hajde: We see that, obviously, if you go back to the past two years, there was a step up, but you've seen that normalize out kind of even across 2023. So, if you look at the business and protective, it's somewhat sequentially trended along in 2023 and was wrapping around and showing, obviously, very negative comps, going back with Q1 being down almost 20% and then kind of mid-teens for Q2 and So, holistically, we feel very good about kind of coming out the gate relative to our overall profit, but if Q4 was stronger, it would have pointed to a much stronger kind of full-year guide. And that's really where – and then, candidly, we're also just being cautious because we're operating in a limited visibility environment. So, that's point number one.

Speaker Change: Yes.

Speaker Change: Yeah.

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Speaker Change: Okay.

Speaker Change: [music].

Dustin Simak: Going to your question around the next point around the overall executive, you know, kind of our bonus pools and the restoration of those bonus pools, obviously, we had a very challenging year in 2023. As you can imagine, you know, our incentive compensation came down as a result of that. Now, you know, as you think about this year and executing against our plan, in terms of where that pronouncement is, it's more of an impact on the overall second half than in terms of the first half, right? In the sense that if you look at 2023, the second half benefited more from that reduction in compensation pools because, as you went through 23, you know, as we all know, our guidance came down, our internal, we missed our internal plan, and that was more pronounced in the second half than it was in the first half, right?

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: [music].

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Speaker Change: Okay.

Dustin Simak: So you have a bigger hill to climb, you know, as you go throughout this year. And then on your last point, in terms of portfolio optimization, there's nothing really further additive to say than yes, you know, to your point, there's still a lot of work going on, but really now it's not the right time. And so what do you do?

Speaker Change: Thanks.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Dustin Simak: We don't want that to necessarily be a distraction relative to, so that work is progressing, but we're really focused on, again, going back to that commercial transformation, restoring underlying fundamentals, right, and improving underlying business, Okay and with that we're on top of the hour and we'd like to thank everyone for their time today. We are excited about the opportunities ahead for SEA and we look forward to updating you on the progress of our transformation when we speak together in May. Thank you, www.larryweaver.com, Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect. ??? ??? ??? ??? ??? ??? ?? Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day, ladies and gentlemen. Thank you for standing by. Welcome to Sealed Air Port Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Speaker Change: Okay.

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Speaker Change: Thanks.

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Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automatic message advising that your hand is raised.

Speaker Change: Sure.

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Brian Sullivan: Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Brian Sullivan, Head of Investor Relations.

Speaker Change: Yes.

Speaker Change: Okay.

Brian Sullivan: Thank you, and good morning, everyone. With me today are Emil Shamas, Interim Co-CEO and COO, as well as Dustin Simak, Interim Co-CEO and CFO. Before we begin our call, I would like to note that we have provided a slide presentation to supplement the call. Please visit SealedAir.com, where today's webcast and presentation can be downloaded from our investor relations page. Statements made during this call setting management's outlook or estimates for future periods are forward-looking statements, and these statements are based solely on information that is now available to us.

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Brian Sullivan: We encourage you to review the information in the section entitled Forward-Looking Statements in our earnings release and slide presentation, which applies to this call. Additionally, our future performance may differ due to a number of factors. Many of these factors are listed in our most recent annual report on Form 10-K, filed or could be filed with the SEC, and as revised and updated in our quarterly reports on Form 10-Q and current reports on Form 8-K. We discuss financial measures that do not conform to U.S. GAAP. You will find important information on our use of these measures and their reconciliation to U.S. GAAP in our earnings release. Included in the appendix of today's presentation are U.S. GAAP financial results that correspond to the non-U.S. GAAP measures we referenced throughout the presentation. I'll now turn the call over to Emile and Dustin. Operator, please turn to slide three. Emile?

Speaker Change: Okay.

Speaker Change: Yes.

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Speaker Change: Good day, ladies and gentlemen, thank you for standing by.

Speaker Change: <unk> fourth quarter 2020 earnings conference call.

Speaker Change: At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you laid to westar one one on your telephone you will then have automatic message advising Johan <unk> Suisse.

Today's conference maybe recorded I will now hand, the conference over to your Speaker host Brian Sullivan.

Brian Sullivan: Relations. Please go ahead.

Brian Sullivan: Okay.

Brian Sullivan: Thank you and good morning, everyone with me today are our mill Shamus interim co CEO and COO as well as Duston Simak interim co CEO and CFO.

Emil Shamas: Thank you, Brian, and thank you for joining us for our fourth quarter and year-end earnings call. Today, Dustin and I will review CEAS's financial performance, provide updates on the markets we serve, discuss relevant trends, and highlight the significant progress made on the transformational actions discussed in our previous call. Lastly, we will conclude with our 2024 Outlook before opening the call for questions. We closed the quarter with sales of $1.4 billion and delivered $274 million in adjusted EBITDA, in line with our expectations. Our fourth quarter results reflected the continued impact of challenging protein cycles and trade downs in our food business, as well as a muted fourth quarter seasonal pickup in our protective sector. For the full year, we finished with $5.5 billion in sales and $1.1 billion of adjusted EBITDA, slightly above the midpoint of our guide.

Brian Sullivan: Before we begin our call I would like to note that we have provided a slide presentation to supplement the call.

Brian Sullivan: Please visit sealed air Dot Com, where today's webcast and presentation can be downloaded from our Investor Relations page.

Brian Sullivan: Statements made during this call, stating management's outlook or estimates for future periods are forward looking statements.

Brian Sullivan: These statements are based solely on information that is now available to us.

Brian Sullivan: We encourage you to review the information in the section entitled forward looking statements in our earnings release, and slide presentation, which applies to this call.

Brian Sullivan: Additionally, our future performance may differ due to a number of factors.

Brian Sullivan: These factors are listed in our most recent annual report on Form 10-K filed or to be filed with the SEC and as revised and updated on our quarterly reports on Form 10-Q, and current reports on form 8-K.

Brian Sullivan: We discuss financial measures that do not conform to U S. GAAP.

Brian Sullivan: You will find important information on our use of these measures and their reconciliation to U S. GAAP in our earnings release.

Emil Shamas: Through the later focused effort of our global team, excluding payments and deposits related to the resolution of certain prior year's tax matters, we delivered $467 million of free cash flow, well above our guided estimates. Dustin will provide a more comprehensive overview of our financial performance in a short. Now, let us move on to our 2024 market and business update. While our end markets in 2024 should be better than 2023, we expect, at best, an L-shaped recovery with no near-term growth catalyst. We are continuing the transformational actions that we detailed during our third quarter call. We will continue to focus on our core business and customers, restore underlying fundamentals, and position ourselves for accelerated growth in 2025 and beyond. I will now share some updates on our transformational initiative.

Brian Sullivan: Included in the appendix of today's presentation, you will find U S. GAAP financial results that correspond to the non U S. GAAP measures, we reference throughout the presentation.

Brian Sullivan: I'll now turn the call over to Emil Industrial operator, please turn to slide three and Neil.

Neil: Thank you Brian.

Neil: And thank you for joining our fourth quarter and year end earnings call.

Neil: Today, Dustin and I will review <unk> financial performance provide updates on the markets, we serve discuss relevant trends and highlight the significant progress made on the transformational actions discussed on our previous call.

Neil: Lastly, we will conclude with our 2024 outlook before opening the call for questions.

Neil: We closed the quarter with sales of $1 4 billion and delivered $274 million and adjusted EBITDA in line with our expectations.

Neil: Our fourth quarter results reflected the continued impact of challenging protein cycles and trade downs in our food business as well as a muted fourth quarter seasonal pick up in our protective segment.

Emil Shamas: 3, As we previously mentioned, we recognize the need to reallocate global resources back into our regions to enhance customer proximity and improve commercial effectiveness. As part of our reorganization efforts, we also determined that blending the protective and food commercial teams contributed to a loss of customer centricity and reduced commercial risk. Consequently, we have reorganized our commercial teams by reestablishing food and protective operating units within each region and shifted global resources to our regional teams.

Neil: For the full year, we finished with five $5 billion in sales and $1 1 billion of adjusted EBITDA.

Neil: Slightly above the midpoint of our guidance.

Neil: Through the laser focused efforts of our global team, excluding payments and deposits related to the resolution of certain prior year tax matters, we delivered $467 million of free cash flow well above our guidance estimates.

Neil: Duston will provide a more comprehensive overview of our financial performance shortly.

Emil Shamas: This is an initial step in our broader transformation to improve our commercial executions and capture incremental market share as conditions improve. Thank you. With sustainability as an accelerating mega trend in both food and protection, now more than ever, innovation will play a critical role in driving outsized market growth. To maximize our opportunity, we are shifting our innovation focus from the laboratory to the field. What does this mean?

Duston Simak: Now, let us move onto our 2024 market and business update.

Duston Simak: While our end markets in 2024 should be better than 2023, we expect the best announced shaped recovery with no near term growth catalysts.

Duston Simak: We are continuing to transformational actions that we detailed during our third quarter call.

Duston Simak: We will continue to focus on our core business and customers.

Duston Simak: Restore underlying fundamentals and position ourselves for accelerated growth in 2025 and beyond.

Emil Shamas: We have a strong material science research and development capability, but we need to take the next step forward by better leveraging the voice of the customer to help prioritize and shape our innovation pipeline. Making this shift, combined with our scale, will allow us to outpace our competition, ultimately improving time to market and the commercial success of our new product. Throughout 2024, we will be introducing new recycle-ready products at an accelerating rate, bringing to market full automation solutions within case ready and expanding applications within our fluids and liquids business. Moving to slide four. You can see a practical example of where sustainability pressures, driven by new regulations and consumer preferences, are driving an unprecedented shift in the protein trade market. In response, we recently introduced the first bio-based, industrially-compostable tray for protein packaging.

Duston Simak: I will now share some updates across our transformational initiatives.

Duston Simak: First as.

Duston Simak: As we previously mentioned, we recognize the need to reallocate global resources back into our regions through enhanced customer proximity and.

Duston Simak: An improved commercial effectiveness.

Duston Simak: As part of our reorganization efforts, we also determined that vending the protective and food commercial teams.

Duston Simak: Tributary to a loss of customer Centricity and our reduced commercial rigor.

Duston Simak: Consequently, we have reorganized our commercial teams by reestablishing food and protective operating units within each region and shifted global resources to our regional teams.

Duston Simak: This is an initial step in our broader transformation to improve our commercial execution and capture incremental market share as conditions improve.

Duston Simak: Second.

Duston Simak: With sustainability as an accelerating mega trend in both food and protective.

Duston Simak: Now more than ever innovation will play a critical role in driving outsized market growth.

Duston Simak: To maximize our opportunity we are shifting our innovation focus from the laboratory for the field.

Emil Shamas: These trays provide comparable performance and stability to traditional expanded polystyrene trays, allowing us to gain share in an estimated five billion dollar tray market while supporting our customer sustainability. Max, We have continued our portfolio optimization efforts, investing in core growth products while deprioritizing those that no longer align with our strategic objectives. We have made a lot of progress in redefining the long-term strategy for our portfolio solution, in large part, getting back to C's differentiated material science, automation, and service experience. As our transformation takes hold and markets recover, and the financing environment improves, we will be in a much stronger position to take actions to drive further shareholder value. Meanwhile, our primary focus remains on making improvements we can drive regardless of the operating environment.

Duston Simak: What does this mean, we have a strong material science research and development capability, but we need to take the next step forward by better leveraging the voice of the customer to help prioritize and shape our innovation pipeline.

Duston Simak: Making this shift combined with our scale will allow us to outpace our competition ultimately improving time to market and the commercial success of our new products.

Duston Simak: Throughout 2024, we will be introducing new recycle revenue products at an accelerating rate.

Duston Simak: Bring them to market full automation solutions within case ready and expanding applications within our fluids and liquids businesses.

Duston Simak: Moving to slide four you.

Duston Simak: You can see a practical example of where sustainability pressures driven by new regulations and consumer preferences are driving an unprecedented shift in the protein sprague's market.

Duston Simak: In response, we recently introduced the first bio based industrial Lee composed to bulk trade for protein packaging.

Emil Shamas: Finally, our cost reduction initiatives within CTO2GROW are progressing as planned. In 2023, we drove actions culminating in an annual run rate savings, largely in 2024, of $50 million, up from $40 million at the end of the third quarter. As part of the effort, we have completed three plant closures in 2023 and are in the process of closing four additional sites as part of our footprint rationalization efforts with more sites on the review. In addition, we are right-sizing our Argentina operation, given recent regulatory and economic instability. With the actions we have driven so far, we are currently at a total of $65 million in annual runway savings.

Duston Simak: These trends provide comparable performance and stability to traditional expanded polystyrene trays, allowing us to gain share in an estimated $5 billion trade market, while supporting our customer sustainability goals.

Duston Simak: Next we have continued our portfolio optimization efforts investing in core growth products, while prioritizing those that no longer align with our strategic objectives.

Duston Simak: We have made a lot of progress in redefining the long term strategy for our portfolio of solutions.

Duston Simak: In large part getting back to cease differentiated material science automation and service expertise.

Emil Shamas: Building upon this momentum, we are confident in our ability to achieve $90 million in year-over-year cost savings in 2020. Moving on to updates in our food and protective segments, we observed ongoing challenges in the food segment where volumes declined year over year.

Duston Simak: As our transformation takes hold and markets recover and financing environment improves we would be in a much stronger position to take actions to drive further shareholder value.

Emil Shamas: However, sequential performance improved in Q4 due to increased holiday demand. The challenges we faced in the fourth quarter stem from multiple factors, including the rebuilding of the cattle herd in North America, shifts in European protein production and consumption, and consumer trade downs in retail food.

Duston Simak: Meanwhile, our primary focus remains on making improvements we can drive regardless of the operating environment.

Duston Simak: Finally.

Duston Simak: Our cost reduction initiatives within CTO to grow are progressing as planned.

Duston Simak: In 2023, we drove actions, culminating in an annual run rate savings largely in 2024 of $50 million.

Emil Shamas: The depressed capital cycle, coupled with higher interest rates, negatively impacted our equipment business, with customers scaling back their capital expenditures to preserve. We expect these trials to continue to 2020. For Protective, 2023 was a turbulent year. Real industrial production contracted year over year in most advanced economies. High inflation and the subsequent drag on real income continue to squeeze household spending power and are reducing the demand for consumer goods.

Duston Simak: Up from $40 million at the end of the third quarter.

Duston Simak: As part of the effort we have completed three plant closures in 2023.

Duston Simak: And they are in the process of closing four additional sites as part of our footprint rationalization efforts with more sites under review.

Duston Simak: In addition, we are right sizing, our Argentina operation, given recent regulatory and economic instability.

Emil Shamas: Additionally... Sustainability and New Business Models like Shipping Your Own Container and Buy Online, Pick Up, and Store continue to reshape e-commerce packaging choices and demand. However, pricing pressures have intensified as competitors step up to address weak market demand. On a positive note, the de-stocking of downstream inventories is largely complete. However, different from previously expected, while market indicators are signaling an improving 2024, we have not yet seen this translate into improving demand for our customers' businesses and subsequent restocking or uptake in volumes for our packaging solution. While we do not see an immediate near-term market catalyst, we are anticipating a gradual recovery in our end markets throughout 2024, with volume left towards the end of the year and continuing into 2020. As our markets recover, our focus on innovation and sustainability, coupled with our CTO to grow and strategic commercial initiatives, gives us confidence and sees continued recovery. Now I'd like to turn it over to Dustin to review our financial results. Okay, Dustin?

Duston Simak: With the actions we have driven so far we are currently at a total of $65 million in annual run rate savings.

Duston Simak: Building. Upon this momentum we are confident in our ability to achieve $90 million in year over year cost savings in 2024.

Duston Simak: Moving on to updates on our food and protective segments, we observed ongoing challenges in the food segment, where volumes declined year over year.

Duston Simak: However, sequential performance improved in Q4 due to increased holiday demand.

Duston Simak: The challenges we faced in the fourth quarter stemmed from multiple sectors, including the rebuilding of the cattle herd in North America shifts in the European protein production and consumption and consumer trade downs in retail food.

Duston Simak: The depressed capital cycle, coupled with higher interest rates negatively impacted our equipment business as.

Duston Simak: As customers scaled back our capital expenditures to preserve cash.

Duston Simak: We expect these trends to continue through 2024.

Duston Simak: For protective 2023 was a turbulent year.

Dustin Simak: Thank you, Emil, and good morning, everyone. Moving on to the fourth quarter and full year results. Let's turn to slide five. Net sales were $1.4 billion in the quarter, flat on a constant currency basis, and they were $5.5 billion for the full year of 2023, down 1% at constant currency. Adjusted EBITDA in the quarter was $274 million, down 8% compared to last year. For the year, just EBITDA was approximately $1.1 billion, down 9%. Volumes improved sequentially in Q4 as holiday demand drove a low single-digit seasonality pickup. However, as reported, adjusted earnings per share in the quarter of 88 cents were down 11% compared to a year ago. Our adjusted tax rate was 18% compared to 26.1% in the same period last year, driven by one-time benefits due to the reversal of liabilities related to uncertain tax positions. We did not repurchase any shares in the quarter.

Duston Simak: Industrial production contracted year over year in most advanced economies.

Duston Simak: High inflation and the subsequent drag on real income continued to squeeze household spending power and is reducing the demand for consumer goods.

Duston Simak: Additionally, sustainability of new business models like ship in Europe on campaigner and.

Duston Simak: And buy online pickup in store continued to reshape e-commerce packaging choices in demand.

Duston Simak: Pricing pressures have intensified as competitors step up to address weak market demand.

Duston Simak: On a positive note the destocking of downstream inventories is largely complete.

Duston Simak: Different from previously expected.

Duston Simak: While market indicators are signaling an improving 2024, we have not yet seen this translate into improving demand for our customers' businesses and subsequent restocking our uptick in volumes for our packaging solutions.

Duston Simak: While we do not see an immediate near term market catalyst, we are anticipating a gradual recovery in our end markets throughout 2024.

Dustin Simak: Our weighted average diluted shares outstanding in the fourth quarter of 2023 was $144.9 million. For the year, Adjusted Earnings per First Share, $3.18, was down 22%, primarily driven by lower adjusted EBITDA and higher interest expense, partially offset by lower tax expense. Turning to slide 6.

Duston Simak: With volume lift towards the end of the year and continuing into 2025.

Duston Simak: As our markets recover our focus on innovation sustainability, coupled with our CTO to grow in strategic commercial initiatives gives us confidence in <unk> continued recovery.

Duston Simak: Now I'd like to turn it over to Doug to review our financial results.

Dustin Simak: In Q4, Localbox contributed 5% to total company sales, or approximately $70 million, but lower pricing of protectives and lower volume in both businesses. The volume declines were driven by continued market pressures in protectives, lower automation sales, as well as continued weakness in food, retail, and manufacturing. Fourth quarter adjusted EBITDA of $274 million, which included a $15 million contribution from Liquibox, decreased $23 million or approximately 8% compared to last year, with margins of 19.9%, down 120 basis points. This performance was mainly driven by lower volumes within both segments, offset by contributions from local boxes. Moving to slide seven.

Duston Simak: Duston.

Doug: Thank you Emil and good morning, everyone.

Doug: Moving to the fourth quarter and full year results, let's turn to slide five.

Doug: Net sales were $1 4 billion in the quarter flat on a constant currency basis and were $5 5 billion for the full year of 2023 down 1% at constant currency.

Doug: Adjusted EBITDA in the quarter was 274 million down 8% compared to last year for.

Doug: For the year adjusted EBITDA was approximately $1 1 billion down 9%.

Doug: Volumes have improved sequentially in Q4 as holiday demand drove a low single digit seasonality pick up.

Doug: As reported adjusted earnings per share in the quarter of 88 were down 11% compared to a year ago.

Doug: Our adjusted tax rate was 18% compared to 26, 1% in the same period last year, driven by onetime benefits due to the reversal of liabilities related to uncertain tax positions.

Dustin Simak: In the fourth quarter, food net sales of $893 million were down 3% on an organic basis, primarily due to volume declines driven by lower automation sales as customers enforced tighter controls on capital expenditures and by continued weakness in retail demand. Food adjusted EBITDA of $195 million in the fourth quarter was down 3%, with margins at 21.8%, down 130 basis points compared to last year. The decrease in adjusted EBITDA was mainly driven by higher operating costs and lower volumes, partially offset by contributions from Localbox and favorable net price realization of $10 million. Protective fourth-quarter net sales of $485 million were down 10% organically, driven by lower pricing and volume declines in Americas and EMEA from continued market pressures in the industrial fulfillment market. Protective adjusted EBITDA of approximately $90 million was down 12% in the fourth quarter, with margin The decrease in adjusted EBITDA was driven by unfavorable net price realization in lower volumes, partially offset by favorable productivity benefits.

Doug: We did not repurchase any shares in the quarter.

Doug: Our weighted average diluted shares outstanding in the fourth quarter of 2023 was $144 9 million.

Doug: For the year adjusted earnings per share of $3 18 was down 22%, primarily driven by lower adjusted EBITDA and higher interest expense, partially offset by lower tax expense.

Doug: Turning to slide six.

Doug: In Q4 local box contributed 5% to total company sales are approximately $70 million.

Doug: But was offset by lower pricing in protective and lower volume in both businesses the.

Doug: The volume declines were driven by continued market pressures in protective lower automation sales as well as continued weakness in food retail end markets.

Doug: Fourth quarter, adjusted EBITDA of 274 million, which included $15 million contribution from local box decreased $23 million or approximately 8% compared to last year with margins of 19, 9% down 120 basis points. This.

Doug: This performance was mainly driven by lower volumes within both segments offset by contributions from local box.

Doug: Moving to slide seven.

Doug: In the fourth quarter <unk> net sales of $893 million were down 3% on organic basis, primarily due to the volume declines driven by lower automation sales as customers enforced tighter controls on capital expenditures and by continued weakness in retail demand.

Dustin Simak: On slide eight, we review our four-quarter net sales by segment and by region. In constant dollars, net sales were flat, with 5% growth in food, mainly driven by the local box acquisition, while protective was down 10% due to weak in-market demand. By region, Asia Pac grew 5% organically, driven by a strong Australian cattle cycle.

Doug: Food adjusted EBITDA of $195 million in the fourth quarter was down 3%.

Doug: With margins at 21, 8%.

Doug: Down 130 basis points compared to last year.

Doug: The decrease in adjusted EBITDA was mainly driven by higher operating costs and lower volumes, partially offset by contributions from local box and favorable net price realization of $10 million.

Dustin Simak: Americas was down 6% due to lower automation sales, a weak U.S. cattle cycle, and lower pricing in protected. Media declined to 11% on challenging market conditions across both segments and continued de-stocking within protected. In constant dollars, full-year net sales were up 9% in food, while protective was down 15%. By region, we were up 3% in Asia-Pac, offset by declines of 2% in Americas and 1% in EMEA. Now, let's turn to free cash flow and leverage on slide 9. Through the fourth quarter, excluding the impact of the payments and deposits related to the resolution of certain prior tax matters, free cash flow was $467 million compared to $376 million in the same period a year ago, representing an increase of 24% year-over-year.

Doug: Yeah.

Doug: Protective fourth quarter net sales of $485 million were down 10% organically driven.

Doug: Driven by lower pricing and volume declines in Americas, and EMEA from continued market pressures in the industrial fulfillment markets.

Doug: Protective adjusted EBITDA of approximately $90 million was down 12% in the fourth quarter with margins at 18, 7% down 50 basis points.

Doug: The decrease in adjusted EBITDA was driven by unfavorable net price realization and lower volumes, partially offset by favorable productivity benefits.

Doug: On slide eight we review our fourth quarter net sales by segment and by region.

Doug: In constant dollars net sales were flat with 5% growth in food, mainly driven by the local box acquisition, while protective was down 10% due to weak end market demand.

Dustin Simak: The primary driver of this improvement was a significant inventory reduction, partially offset by lower earnings and higher interest costs. Since the peak in the second quarter of 2023, we have reduced total debt by approximately $280 million. Exiting the year with a net leverage ratio of 3.9 times, down from 4.1 times in the third quarter. Our total liquidity position was $1.3 billion, including $346 million in cash and the remaining amount in committed and fully undrawn revolvers.

Doug: By region Asia Pac grew 5% organically driven by a strong Australian cattle cycle.

Doug: Americas was down 6% due to lower automation sales, a weak U S cattle cycle and lower pricing in protective.

Doug: EMEA declined 11% on challenging market conditions across both segments and continued destocking within protected.

Doug: In constant dollars full year net sales were up 9% in food, while protective was down 15%.

Doug: By region, we were up 3% in Asia Pac offset by declines of 2% in Americas and 1% in EMEA.

Dustin Simak: We will continue to focus on driving net debt to adjust EBITDA to below 3.5 times over the next two years. Now, let's turn to slide 10 to review our 2024 outlook. We expect an L-shaped recovery through 2024 and into 2025. As a result, we expect net sales to be in the range of $5.2 to $5.6 billion, which at the midpoint assumes a 2% decline in organic growth, with flat volume growth offset by negative price. Portfolio exits represent half a percent lower volume in both sectors.

Doug: Now, let's turn to free cash flow and leverage on slide nine.

Through the fourth quarter, excluding the impact of the payments and deposits related to the resolution of certain prior year tax matters.

Doug: Free cash flow was $467 million compared to $376 million in the same period a year ago.

Doug: Representing an increase of 24% year over year.

Doug: The primary driver of this improvement was significant inventory reduction, partially offset by lower earnings and higher interest costs.

Doug: Since the peak in the second quarter of 2023, we have reduced total debt by approximately $280 million.

Doug: Exiting the year with a net leverage ratio of three nine times down from four one times in the third quarter.

Dustin Simak: While the global protein end markets continue to be challenged, our food volume is expected to grow approximately 1%, driven by competitive wins in our core businesses, momentum in our fluids and liquids businesses, including Liquibox, and our new product launches, offset by price declines of 2%. Our work on integration and operational momentum at Localbox is taking hold, and we expect the business to continue to improve across 2024, further supported by a positive outlook for the food service and market. We see a slower market recovery in protective clothing than previously anticipated with a full year volume decline of approximately 1%. Pricing pressures have increased, further reducing the top line by 3% as the competitive landscape has intensified in a lower volume environment.

Doug: Our total liquidity position was $1 3 billion, including 346 million in cash and the remaining amount and committed and fully undrawn revolver.

Doug: We will continue to focus on driving net debt to adjusted EBITDA to below three five times over the next two years.

Doug: Let's turn to slide 10 to review our 2020 for outlook.

Doug: We expect an L shape recovery through 2024 and into 2025.

Doug: As a result, we expect net sales to be in the range of five two to $5 6 billion.

Doug: Which at the midpoint assumes a 2% decline in organic growth with.

Doug: With flat volume growth offset by negative pricing.

Doug: Portfolio exits represent half a percent lower volume in both segments.

Doug: While the global protein end markets continued to be challenged our food volume is expected to grow approximately 1% driven by competitive wins in our core businesses momentum in our fluids and liquids businesses, including local box and our new product launches offset by price declines of 2%.

Dustin Simak: Protective volumes are expected to recover toward the end of 2024 as our new commercial model gains traction and market dynamics improve. We expect full-year adjusted EBITDA to be in the range of $1.05 to $1.15 billion, which assumes an adjusted EBITDA margin of approximately 20% at the midpoint. This outlook is lower than our soft guide provided during our Q3 earnings call, mainly driven by lower volume expectations. We anticipate continued softness in the first half of 2024 as volume reaches the trough and gradually improves as market conditions and seasonality improve in the second half. We remain disciplined to drive the necessary cost actions to offset further volume weakening. The midpoint of our adjusted EBITDA guidance is in line with 2023, with 90 million year-over-year cost savings, offsetting flattish overall volumes, negative net price realization, and restoring bonus pools. Full year adjusted EPS is expected to be in the range of $2.65 to $3.05 per share.

Doug: Our work on integration and operational momentum at local box is taking hold.

Doug: And we expect the business to continue to improve across 2024 further supported by a positive outlook for the foodservice end markets.

Doug: We see a slower market recovery and protective than previously anticipated for the full year volume decline of approximately 1%.

Doug: Pricing pressures have increased further reducing top line by 3% as the competitive landscape has intensified in a lower volume environment.

Doug: Protective volumes are expected to recover towards the end of 2024 is our new commercial model gains traction and market dynamics improve.

Doug: We expect full year adjusted EBITDA to be in the range of 1.052115 billion, which assumes adjusted EBITDA margin of approximately 20% at the midpoint.

Doug: This outlook is lower than our soft guide provided during our Q3 earnings call, mainly driven by lower volume expectations.

Doug: We anticipate continued softness in the first half of 2024 as volume reaches the trough and gradually improves as the market conditions and seasonality improve in the second half.

Dustin Simak: The lower 2024 adjusted EPS is largely driven by higher depreciation, interest, and tax expense with an assumed tax rate of 26 to 27 percent. We expect full-year 2024 free cash flow in the range of $325 million to $425 million. At the midpoint, our free cash flow conversion as a percent of adjusted net earnings is expected to be 90%.

Doug: We remain disciplined to drive the necessary cost actions to offset further volume weakness.

Doug: The midpoint of our adjusted EBITDA guidance is in line with 2023.

Doug: With $90 million year over year cost savings offsetting flattish overall volumes negative net price realization and restoring bonus pools.

Doug: Full year adjusted EPS is expected to be in the range of $2 65 to.

Dustin Simak: We are assuming approximately $80 million in restructuring charges and approximately $20 million in incremental cash interest payments offset by favorable working capital of roughly $30 million. Lastly, for the first quarter of 2024, we expect net sales in adjusted EBITDA to be ranged around $1.3 billion and $240 million, respectively, with earnings per share between 50 and 60 cents. Our ranges and outlook reflect the dynamic environment we continue to operate in. As we gain more visibility throughout the year, we will be able to adjust and update expectations accordingly. Turning to slide 11.

Doug: The $3 five per share.

Doug: The lower 2024, adjusted EPS is largely driven by higher depreciation interest and tax expense with an assumed tax rate of 26% to 27%.

Doug: We expect full year 2020 for free cash flow in the range of 325 million to $425 million.

Doug: At the midpoint, our free cash flow conversion as a percent of adjusted net earnings is expected to be 90%.

Doug: We are assuming approximately $80 million of restructuring charges and approximately $20 million incremental cash interest payments offset by favorable working capital of roughly $30 million.

Dustin Simak: Be closed out the year in line with our expectations and remain committed to executing against our cost-to-grow effort. While our expectation for 2024 has been reduced to a weaker and longer recovery period for our end markets, we are encouraged by the feedback from our customers and our distributors that the stocking is largely behind us, and they are more confident in a second half modest recovery in volume. We are focused on driving a transformation at Sea in 2024, improving commercial execution, and restoring business fundamentals. We expect 2025 to be the year we return to a normal growth trajectory, and our cost reduction operational excellence initiatives will position us as well to return to adjusted EBITDA growth in 2025 and beyond. Lastly, I'd like to close by thanking the Global Sea Team, who are at the center of our transformation, for their efforts in solving our customers' most critical packaging challenges, day in and day out. With that, Emile and I look forward to your questions. Operator, we would like to begin the Q&A session. Thank you. Ladies and gentlemen, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 1-1 again.

Doug: Lastly for the first quarter of 2024, we expect net sales and adjusted EBITDA to be ranged around $1 $3 billion and $240 million respectively.

Doug: Earnings per share between 50 and 60.

Doug: Our ranges and outlook reflect a dynamic environment, we continue to operate in as.

Doug: As we gain more visibility throughout the year, we will be able to adjust and update expectations. Accordingly.

Doug: Turning to slide 11.

Doug: We closed out the year in line with our expectations and remain committed to executing against our cost take out to grow efforts.

Doug: While our expectation for 2024 has reduced to a weaker than longer recovery period for our end markets.

Doug: We are encouraged by the feedback from our customers and our distributors that destocking is largely behind us and are more confident in a second half modest recovery in volumes.

Doug: We are focused on driving a transformation at <unk> in 2024, improving commercial execution and restoring business fundamentals, we expect 2025 to be the year, we returned to a normal growth trajectory.

Doug: And where our cost reduction operational excellence initiatives will position us well to return to adjusted EBITDA growth in 2025 and beyond.

Doug: Lastly, I'd like to close by thanking the global seating we're at the center of our transformation further effort solving our customers' most critical packaging challenges day in and day out.

Doug: With that Ah meal, and I look forward to your questions.

Operator: As a reminder, given time constraints, please limit yourself to one question only. Please stand by while we compile the Q&A roster. Now the first question coming from the line of Bill Ng with Jeffrey's Feline is open. Hey guys. Dustin, did I hear you correctly?

Speaker Change: Operator, we would like to begin the Q&A session.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen to ask a question.

Speaker Change: One one on your telephone and wait for your name to be announced.

Speaker Change: John Your question simply press Star one again.

Bill Ng: You're guiding to 240 of EBITDA for 1Q. That implies a pretty steep year-over-year decline, so help us kind of think through what's driving perhaps a bigger hit to start the year. Certainly, volumes are an element of it, and the shape of the year. Do you expect EBITDA to inflect positively by 1 to be helpful? And any color breakouts would be helpful in terms of the shape.

Speaker Change: A reminder, given time constraints please limit yourself to one question only please.

Speaker Change: The compounded Kenny roster.

Speaker Change: Okay.

Speaker Change: And our first question coming from the line of Phil <unk> with Jefferies. Your line is now open.

Dustin Simak: Hey Phil, this is Dustin speaking. Again, I appreciate the question on Q1. A couple of comments I would make, you know, one is, you hit the nail on the head relative to volume, right? So volume in Q1 is going to be down a couple points, and that negative leverage is impacting EBITDA for the quarter. That's being partially offset, you know, by some of the cost takeout program, but that program is going to ramp across the quarters. And that's really what's going to drive the sequential improvement as we go throughout Q1, Q2, Q3, Q4 in terms of approvals from here. And so then coupled with that, the pricing actions that we talked about in terms of some of the pricing flow through from the prior year coming across 2024 are also going to impact Q1, right? So the expectation from here is that we're going to improve EBITDA sequentially, quarter to quarter to quarter, right? Coming from the 240 that we mentioned for Q1. And then obviously, when we get to roughly Q3 and Q4, going back to the MOS recoveries in the second half volumes, we'll see that inflection point again, and it'll point towards epidacrosis.

Phil: Hey, guys.

Phil: I hear you correctly, you are guiding to $2 40 of EBITDA for <unk> that implies a pretty steep year over year decline. So help us kind of think through whats driving perhaps a bigger hit to start the year, certainly volumes and an element of it and the shape of the or do you expect EBITDA to inflect positively by wind to be helpful and any color.

Phil: Segment would be helpful. In terms of the shape of the year.

Speaker Change: Hey, Phil This is <unk> speaking again I. Appreciate the question on Q1, a couple of comments I would make.

Phil: One is youre you hit a nail in the head relative to volume right. So volume in Q1 is going to be down a couple of points and that negative leverages impacting the EBITDA for the quarter, that's being partially offset by some of the cost takeout program, but that probably is going to ramp across the quarters and thats really whats going to drive the sequential improvement as we go throughout Q1 Q2 Q.

Phil: Three Q4 in terms of improving from here and so then coupled with that the pricing actions that we talked about in terms of some of the pricing flow through from the from the prior year coming across 24 is also going to impact Q1, right. So the expectation from here is that we're going to improve EBITDA sequentially quarter to quarter to quarter right coming from the $2 40 that we.

Phil: <unk> for Q1.

And that will then obviously when we get to roughly Q3 and Q4 going back to the modest recoveries in the second half volumes, we will see that inflection point again and ill point towards EBITDA growth.

Phil: Okay.

Dustin Simak: Thank you. And our next question coming from the line of... Ghansham Panjabi from Bear Galen. Hi, good morning, everyone. This is Matt Krueger sitting in for Ghansham this morning.

Phil: Yes.

Speaker Change: Thank you.

Speaker Change: Our next question coming from the line of.

Speaker Change: Ghansham Panjabi from Baird. Your line is open.

Speaker Change: Hi, Good morning, everyone. This is Matt Krieger sitting in for Ghansham. This morning.

Matthew T. Krueger: So, you know, I was just hoping that you could provide us with detail on how volumes trended throughout the quarter on a monthly basis, and then, you know, given that we're, you know, essentially finished with the first two months of the first quarter here, how has 2024 kicked off for each segment from a monthly volume cadence as well? Any details there would be great, Matt. This is Dustin speaking. I'll kick it off.

Matthew T. Krueger: So I was just hoping that you could provide us with some added detail on how volumes trended throughout the quarter on a on a monthly basis and then.

Matthew T. Krueger: Given that we're essentially finished with the first two months of the first quarter here. How is 2024 kicked off for each segment from a monthly volume cadence as well any details there would be super helpful.

Matthew T. Krueger: Matt This is Dustin speaking I'll kick it off and again I. Appreciate the question. So if you go back to the fourth quarter and we will start with food as we mentioned underlying volumes throughout the entire year had been trending.

Dustin Simak: And again, I appreciate the question. So if you go back to the fourth quarter, and we'll start with food, as we mentioned, underlying volumes throughout the entire year have been trending, you know, slightly, you know, kind of low single digits. Q4 was no different, with the exception of our automation sales, which we pointed out during Q3, that we expected the impact of lower bookings throughout the year due to the capital constraints of our customers really impacted our equipment sales in the fourth quarter. However, we still achieved over $500 million in sales and were kind of ahead of our own expectations. So when you shift to Protective, Protective, you know, ended where we set expectations around mid-single digits, right?

Dustin: See slightly kind of low single digits Q4 was no different with.

Dustin: The exception of our automation cells, which we pointed to during Q3 that we expected that the impact of lower bookings throughout the year due to the capital constraints of our customers really impacted our equipment sales in the fourth quarter. However, we still achieved over 500 lean ourselves.

Head of our own expectations.

Dustin: So when you shift to protective protective.

Dustin: <unk> ended where we set expectations around mid single digits right. That's obviously, a big improvement coming off of the prior three quarters that were in the teens and up to almost 20% starting in Q1. So throughout 2023 volumes in that business I would say improve sequentially slightly and wrapped around the prior year, what's important about Boe.

Dustin Simak: That's obviously a big improvement coming off of the prior three quarters that were in the teens, up to almost 20% starting in Q1. So throughout 2023, volumes in that business, you know, I would say improved sequentially, slightly, and wrapped around the prior year. What's important about both businesses that's different in the Q4 of 23 versus 22 is that we saw that actual seasonal pickup in volumes, right, in the fourth quarter. And so in both businesses, this is Food and Protective. Now, as you move into Q1, January is coming in slightly ahead of expectations, and there are a number of different reasons for that. And this is really across both businesses, so both Food and Protective have performed quite well in January. And then in February, it looks to be in line, and this is, you know, obviously embedded in the current guide that we have for Q1. Thank you. And our next question, coming from the line-up: George Staphos, with Bank of America Securities, Yolanda Solson. Yeah, hi, good morning. This is Kasson Keeler sitting in for George.

Dustin: Businesses, that's different in 'twenty in Q4, 23 versus <unk> 22 is that we saw that actual seasonal pickup in volumes right in the fourth quarter and so and both businesses. This is fluid and protected now as you move into Q1 right January is coming in slightly ahead of expectations and Theres a number of different reasons for that and this is really across both.

Dustin: Businesses of both food and protective that performed quite well in January and then in February it looks to be in line and this is.

Obviously embedded in the current guide that we have.

Dustin: For Q1.

Speaker Change: Thank you.

Speaker Change: Our next question coming from the line of George.

George Staphos with Bank of America Securities. Your line is open.

Speaker Change: Yes, hi, good morning, this is actually cash and keeler sitting in for George who is travelling for a conference.

Kasson Keeler: He's traveling for our conference. So, Dustin and Amil, you talked about it a little bit in your prepared remarks, but perhaps you could get a little bit more specific on what commercial and sales tactics you've changed in each segment since taking over and what the competitive response, you know, might have been. Hi, good morning. Thank you for your question. This is Emil speaking.

Cash: And Emilio you talked to it a little bit in your prepared remarks, but perhaps can you get a little bit more specific on what commercial and sales tactics you've changed in each segment.

Cash: Since taking over and what the competitive response might've been in each business at this juncture.

Emil Shamas: So in terms of the commercial transformation that we've undertaken and recently announced, we recognize that in the old structure that we had, combining both food and protective commercial teams, that really contributed to a loss of customer centricity and reduced our commercial rigor. So to solve this, we've recently announced that we've reorganized our commercial teams within food and protective operating units within each region. Now, these units are not just sales units, but they're units combined with sales, marketing, and dedicated support functions, including R&D representation, finance, and operations. The other pieces that we talked about in terms of our plans and that we've now implemented are that the old structure really had shifted resources from the regions into the global centers, and that really put the voice of the customer even further away from the decision-making process. So, as part of this reorg that we've announced, we've reallocated those resources from the global teams back to these operating teams.

Emilio: Hi, Good morning. Thank you for the question this is <unk>.

Speaker Change: Speaking so in terms of the commercial transformation that.

Speaker Change: We've undertaken a REIT.

Speaker Change: Simply announced.

Speaker Change: We recognize that in the old structure that we had when combining both food and protective commercial teams that really contributed to a loss of customer centricity and reduced our commercial rigor. So so to solve this we recently announced that we've reorganized our commercial teams within fluids and protective operating units within each region.

Speaker Change: Now these units are not just sales units, but the units combined with sales marketing and dedicated support functions.

Speaker Change: <unk> R&D representation finance and operation the.

Speaker Change: The other pieces.

Speaker Change: In terms of our plans and that we have now.

Speaker Change: Implemented as the old structure really on the <unk>.

Speaker Change: Shifting the resources from the regions into the global centers.

And the.

Speaker Change: And really that put the voice of the customer even further away from the decision making process. So as part of this re org that we've announced we've reallocated those resources from the global teams back to these operating units.

Emil Shamas: So, inherently, the new design is better in terms of us being faster in the market, in terms of being closer to the customers. But just as important around that, you know, we're driving the whole culture and the culture of discipline and performance in terms of better execution in the marketplace. And to support that, we've realigned the incentives of everybody to be more localized, closer to the markets, as well as in terms of our global goal alignment.

Speaker Change: So inherently the new design is better in terms of us being faster than the market in terms of being closer to the customers, but just as important around that's what driving the whole culture and a culture of discipline and performance in terms to better execute.

Speaker Change: The marketplace and to support that to realign the incentives.

Speaker Change: Everybody to be more localized closer to the markets as well as in terms of our global Golar Island, and only two points I'll add on to what our mill, where the Mills said, which was is really if you go back to the why the why in terms of both food and protective is that those end markets and those customers are very different in terms of needs from a packaging solutions serve.

Dustin Simak: And the only two points I'll add to what Emil said, which are, really, if you go back to the why, the why in terms of both food and protection is that those end markets and those customers are very different in terms of needs from a packaging solution, service, you know, capability, right? So, the one is recognizing that those are two very unique segments, end markets, customers, et cetera, is one of the primary, you know, kind of motivations in terms of making that a role. Thanks. And our next question, coming from the line of... from J.P. Morgan, Yolanda Sullivan. Thanks very much.

Speaker Change: <unk> <unk>.

Speaker Change: Capability right. So that one is recognizing that those are two very unique segment end markets customers et cetera.

Speaker Change: As one of the primary you've kind of motivations in terms of making that overall decision.

Speaker Change: Thank you.

Speaker Change: And our next question coming from the line of.

Speaker Change: Jeff Zekauskas from Jpmorgan Your line is open.

Dustin Simak: Can you talk about how your industrial packaging business did in 2023 and how it's beginning the year 2024.

Jeff Zekauskas: Thanks very much.

Jeff Zekauskas: Can you talk about how your industrial packaging business did in 2023, and how it's beginning of the year end.

Jeff Zekauskas: 2024.

Dustin Simak: And can you talk about what your expectation for automation volumes is this year? And then lastly, for your compostable product that you feature in your slides, it has 54% bio-based content. What's the other 40%?

Jeff Zekauskas: Can you talk about what your expectation for automation volumes are.

Jeff Zekauskas: This year.

Jeff Zekauskas: And then lastly in your composed of all products that feature in your slides.

Jeff Zekauskas: 54% bio based content.

Dustin Simak: www.larryweaver.com Okay, so I'm going to start with the overall industrial question, right? So if you think about 2023, and I think one of the comments that Emil, this is Dustin speaking, by the way, one of the comments that Emil made, which is really important, is around, you know, the fact that if you really look at PMI, or you look at PMI equivalent across most of our overall, you know, advanced economies, right, what you see is a contraction, right, in industrial activity. And as a result of that, our businesses, our industrial packaging, think of this as like Instapack and, you know, industrial inflatables, and so on and so forth, perform poorly.

Jeff Zekauskas: What's the other 46%.

Jeff Zekauskas: Okay.

Jeff Zekauskas: So I'm going to start with the overall industrial question right. So if you think about 2023 and I think one of the comments that EMEA. This is Dustin speaking by the way is one of the comments at a meal made which is really important.

Jeff Zekauskas: Is around the fact that if you really look at PMI or when you look at the PMI equivalent across most of our overall.

Jeff Zekauskas: Advanced economies right, what you see as the contraction right in industrial activity and as a result of that our business is our industrial packaging I think if this is like <unk> industrial inflatables and so on and so forth performed poorly and Youre looking at if you look at overall.

Dustin Simak: And you're looking at, if you look at the overall, you know, impact for 2023, you're looking at volumes that are down in the low teens, right? And so, and then it is kind of in line with what your expectation in terms of double digits for that kind of contraction you would have seen in industrial. An encouraging sign is kind of coming into 2024 is that it's beginning to point towards growth. It's modest growth in 2024 relative to the industrials, but it is growth. It is more second-half weighted, and we've seen those businesses already begin to perform better. And if you look at even Q4, it's embedded in that number, which is a mid-single-digit decline in volumes in the fourth quarter. You're seeing it open up well in the first quarter and continuing.

The impact for 2023, Youre looking at volumes that were down in the in the low teens right.

Jeff Zekauskas: So and then it kind of in line with what's your expectation in terms of double digit for that kind of contraction you would've seen in industrials on an encouraging sign as kind of coming into 2024 is that Europe is beginning to point towards growth. It's modest growth in 'twenty four relative to industrials, but it is growth. It is more second half weighted and we've seen those businesses already begin to perform better.

Jeff Zekauskas: And if you look at even in Q4, it's embedded in that number which is mid single digit decline in volumes in the fourth quarter Youre seeing it open up well in the first quarter and continuing so we see it as optimism in terms of showing signs of stabilization as we as we said earlier there are signals right relative to.

Dustin Simak: So we see it as optimism in terms of showing signs of stabilization. As we said earlier, there are signals relative to, you know, signals that are more positive for the year, but they haven't translated yet, largely because we think it will take time for the system to work through the system in the first half, and then we'll begin to inflect, you know, more importantly, in the second half. Let me maybe jump in, Dustin, on some of these other points on the biobased tray. Sure.

No signals that are more positive for the year, but haven't translated yet largely because we think it will take time to work through the system in the first half and then we will begin to inflect more importantly in the second half.

Jeff Zekauskas: Let me.

Boston: Maybe jump in Boston on some of these other points on the Biobased strength sure. So.

Emil Shamas: So, as you mentioned, we've recently introduced the new biobased tray. And really, this is around addressing the market needs that are moving away from expanded polystyrene. And as you mentioned, 54 percent of the tray is from cellulose renewable sources, and the other portion of the polymers are acetic acid and other processing aids. So really, in terms of that tray, it's not only the sources of it that are renewable, but the fact that it is industrially compostable and certified. So it can go into the industrial recycling streams and fully decompose into those natural components.

Boston: As you mentioned we have.

Boston: We've recently introduced the new bio based <unk> and really this is around addressing the market needs.

Speaker Change: That is a.

Speaker Change: Moving away from the expanded polystyrene.

Speaker Change: And as you mentioned.

Speaker Change: 54% of the trait is from cellulose.

Speaker Change: Our renewable sources and the other portion of the polymers, our acetic acid and other.

Speaker Change: And other processing AIDS, so really in terms of the trade. It is not only the sources of it that are renewable but the factset industrially composted certified so it can go into the industrial recycling streams and fully decompose into those metro components and I just wanted to add a point on the automation piece.

Emil Shamas: And I just want to add a point on the automation piece in terms of where that's headed. So despite the external uncertainties in terms of our customers being slowed in terms of triggering a new capex spend based on inflation, the interest rate environments as well as muted end markets, we do forecast it to be flat year on year. And as part of that, we're also expanding our offerings. So automation is still a critical part of our total solution sales. So we've recently signed some partnership agreements in the protective space to complement our box rightsizing capability, and we are actually going commercial, and we have orders for those based on that new partnership in the Asia Pacific region. And we just recently signed the IPP show a new partnership in terms of investing in our automation capabilities in our consumer-ready space. So we'll be announcing that publicly soon. And again, so automation continues to be a big part of our capabilities. You know, we're all about total solutions and materials.

Speaker Change: In terms of.

Speaker Change: Where that's that's headed so despite the external uncertainties in terms of our customers being slow in terms of triggering a new capex spend based on the inflation the interest rate environments as well as muted end markets, we do forecast it to be flat year on year.

Speaker Change: Part of that.

Speaker Change: We are also expanding our offerings. So automation is still a critical part of our total solution sales. So we are signing recently some partnership agreements in the protective space to complement our.

Speaker Change: Box right sizing capability, and we are actually growing commercial and we have orders of those based on that new partnership in the Asia Pacific region, and we just recently.

Speaker Change: Signs.

Speaker Change: The IPP show a new partnership in terms of.

Speaker Change: Expanding our automation capabilities and our consumer revenue space. So we'll be honest announcing that publicly soon and against automation continues to be.

A big part of our capabilities and our board about total solutions and materials equipments.

Emil Shamas: Equipment, as well as service. And we're expanding and filling the portfolio gaps that we have with those external partnerships. And Bill, another final point on that question, I'll just say that, as a reminder, we kind of closed the year out around $500 million, half a billion in automation sales in 2023, which is a peak for us. And to Neal's point, we expect to be flat. Spiker.

Speaker Change: Equipment as well as service and we're expanding and filling the portfolio gaps that we have with those external partnerships and then one other final point on that question I'll, just say that as a reminder, we kind of closed the year at around $500 million 5 billion in automation sales in 2023, which is a peak for us into mills point, we expected to be flat next year.

Dustin Simak: Thank you. And our next question comes from the line of Anthony Pettinari from City. Your line is open. Good morning.

Speaker Change: Despite the challenges.

Speaker Change: Thank you and our next question coming from the line of Anthony <unk>.

Anthony: From Citi. Your line is open.

Anthony Pettinari: I'm looking at the guidance 24. Can you just help us? Quantify the impact to EBITDA from lower net pricing for the year. I think you talked about that on the bridge, but I just want to make sure I got that right. And then when you think about pricing... is actually stabilizing, maybe in the back half of the year, I mean, is that just the Volume Recovery, Volume Stabilization? Yeah, absolutely. So, great question. This is Dustin speaking.

Anthony: Good morning.

Anthony: Looking at the 2004 guidance can you just help us.

Anthony: Quantified the impact to EBITDA from lower net pricing for the year I think you talked about that on the bridge, but I just want to make sure I got that right and then when you think about pricing.

Anthony: Potentially stabilizing maybe in the back half of the year I mean is that just a function of.

Anthony: Volume recovery volume stabilization or assertion or anything else going on in the market or what you're doing internally.

Anthony: Would expect.

Anthony: Bob.

Bob: Yes, absolutely so.

Dustin Simak: So, a couple of comments I would make. If you think about net price realization for fiscal year 2024, we're expecting it in the neighborhood of about down $60 million. So, if you put that in the context of a flat EBITDA guide year over year, really, it is this $90 million or so of cost takeout benefits that we're driving, offset by a negative net price realization of $60 million, and an additional, you know, and then this restoration of our overall bonus pools. So, that kind of gives you what net net gets you back to a flat.

Bob: Great question. This is Dustin speaking so a couple of comments I would make if you think about net price realization for fiscal year 2024, we're expecting in the neighborhood of about down $60 million. So if you put that in the context of a flat EBITDA guide year over year really it is this $90 million or so of cost takeout benefits that were driving offset by a negative.

Bob: Net price realization of $60 million and an additional and then this restoration of our overall bonus pools and so that kind of gives what net net gets you back to a flat guide.

Dustin Simak: And so the only other piece in terms of the price component, if you break down that price realization, just to give you some of the specifics, it's really a net negative of about 120 million being offset by an equivalent of benefits and direct materials. And then if you think about a net down on kind of labor, inflation on labor and non-labor, which you will notice is more muted in the past, which we do see continuing to normalize kind of out of post-COVID because it was at an historic high in 2024, or excuse me, 2023. Then if you think about the pricing environment in general, if you think about last year, there are three components in our pricing that are affecting us.

Bob: And so then the only other piece and determined the price component. If you breakdown net price realization just to give you. Some of the specifics is really a net negative of about 100 $120 million being offsite offset by an equivalent benefits in direct materials and then if you think about a net down on kind of labor.

<unk> on labor and non labor, which you will notice is more muted in the past, which we do see it continuing to normalize kind of out of post COVID-19 because it was at a historic high in 2024 excuse me 23, then if you think about the pricing environment in general if you think about last year Theres really three components in our pricing are affecting us one is concessions that were given.

Dustin Simak: One is concessions that were given last year as part of contract rules, et cetera, that we talked about in terms of putting a big piece of our business under the new one that we renewed. The other piece was formula pricing, because if you think about the second half of 23, a lot of resident costs came down. So formula pricing, as a reminder, that tracks with, you know, indices, began to kind of come into effect at the beginning of really 2024. And then the third piece is obviously just the pricing environment. That's if you decompose that 120.

Bob: Last year as part of contract renewals et cetera that we talked about in terms of putting a big piece of our business underneath that we renewed.

Bob: The other piece was formula pricing is if you think about in the second half of 'twenty three a lot of resin cost came down so formula pricing as a reminder that tracks with.

Bob: Indices began to kind of come into effect at the beginning of really of 2024 and then the third piece is also just the pricing environment that CBD can pose at 120, and if you think about the second half that's where we can be and there may be in areas of opportunity because right. Now if you look at it being resin prices have kind of stabilized and we see that maybe.

Dustin Simak: And if you think about the second half, that's where we may be in areas of opportunity, because right now, if you look at it, your resident prices have kind of stabilized, and we see that may be slightly inflationary in the second half. And when I say inflationary, I mean, sequentially, as you move throughout the year, you know, still, obviously, net down from 2020. Thank you. And our next question comes from the line of Matt Roberts with Raymond James. Your line is open. Hi, good morning.

Bob: A slightly inflationary in the second half and this is when I say inflationary I mean sequentially as you move throughout the year.

Bob: Bill obviously net down from 2020.

Bob: 23.

Bob: Thank you and our next question coming from the line of Matt Roberts with Raymond James Your line is open.

Matt Roberts: Discuss the new product focus. Could you maybe quantify a little bit, like what type of addressable market do you think these new products represent? In which segments are they prioritized? And in that regard, how much of this is a new opportunity versus substitution of some of your existing sales? Thanks for taking the time. All right, Matt, yeah, great question, and I appreciate you raising it. So I'll go ahead and start, and then Emil will follow on.

Matt Roberts: Hi, good.

Matt Roberts: Good morning.

Matt Roberts: Discuss the new product focus so could you maybe quantify a little bit what type of addressable market do you think these new products represent and which segments are they prioritized.

Matt Roberts: In that regard how much of this is that a new opportunity versus substitution of some of your existing sales. Thanks for taking my question.

Speaker Change: Alright, great.

Speaker Change: Great question and I appreciate you raising it so I'll go and start and then available follow on.

Dustin Simak: If you go back to the kind of prepared remarks we talked about in the prior questions, what we talked about, the compostable tray. And that, for us, is, you know, if you go back a number of years, we used to actually produce trays. And over the past couple of years, we haven't. And, you know, we sell them as part of a package solution when we think about, you know, something of our overwrapped film, the tray as well as the equipment. Think about those three pieces of the solution.

Speaker Change: If you go back to the kind of the prepared remarks, we talked about in the prior question as what we talked about the component will trade and that for US is if you go back a number of years, we used to actually boost race and over the past couple of years, we havent and we sell them as part of a package solution. When we think about some things that are over at film the trait as well as equipment, but those three pieces of the solution.

Dustin Simak: Think of it as a poultry application. And so we're actually for us to go back into the trade business, which is really what this is in terms of compostable trays, our step back into manufacturing them. That overall addressable market is about five billion. And what's really exciting about it is it's not just that we're entering a market, because we think about that market overall. It's a relatively low growth market, but it's going through an unprecedented shift, right, where you're seeing, you know, whether it's consumer preference, very similar to fiber and protective. It's that same shift in the protein trade market, where consumers prefer to move out of expanded polystyrene and as well as the market.

Given this is a poultry application and so we're actually for us to go back into the trade business, which is really what does it in terms of the proposal trades are step back into manufacturing at that overall addressable market is about $5 million and what's really exciting about it is it's not just that we're entering a market because we think about that market overall, it's a relatively low growth end market, but it's going through an <unk>.

Speaker Change: Precedented shift right, where youre seeing whether its consumer preference very similar to fiber and protective is that things shift into protein tray market, where consumers prefer to move out of expanded polystyrene and as well as.