Q1 2024 Sealed Air Corp Earnings Call

Okay.

Unknown Speaker: Good day, and thank you for standing by. Welcome to the first quarter 2024 Sealed Air Earnings Conference Call. At this time, all participants are in a listen-only mode.

Speaker Change: Good day, and thank you for standing by and welcome to the first quarter 2020 for sealed Air earnings Conference call. 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 the session you will need a press star one on your telephone you will then hear an automated message or things in your hands.

Unknown Speaker: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one on your telephone. You will then hear an automated message advising you that your hand is raised.

Unknown Speaker: To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brian Sullivan. Please go ahead.

Is raised to withdraw your question. Please press star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Brian Sullivan. Please go ahead.

Brian Sullivan: Thank you and good morning, everyone. With me today are Emile Chammas, Interim Co-CEO and COO, and Dustin Semach, 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 stating management's outlook or estimates for future periods are forward-looking statements. These statements are based solely on information that is now available to us.

Brian Sullivan: Thank you and good morning, everyone.

Brian Sullivan: With me today are meals shamus interim co CEO and CFO and.

Brian Sullivan: It doesn't seem at interim co CEO and CFO.

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

Brian Sullivan: Please visit <unk> dot com for today's webcast and presentation can be downloaded from our Investor Relations page.

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 this 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, 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 US GAAP.

Brian Sullivan: We encourage you to review the information in this 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, 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 the reconciliation to U.S. GAAP in our earnings release. Also, included 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.

Brian Sullivan: You will find important information on our use of these measures and a 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.

Emile Z. Chammas: I will now turn the call over to Emile and Dustin. Operator, please turn to slide three. Emile?

Brian Sullivan: I will now turn the call over to Aneel industrial operator, please turn to slide three Emil.

Emile Z. Chammas: Thank you, Brian, and thank you for joining us for our first quarter earnings. Today, Dustin and I will review SEAD'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. Finally, we will conclude with our 2024 outlook before opening the call for questions. We closed the quarter with sales of $1.33 billion and adjusted EBITDA of $278 million.

Aneel: Thank you, Brian and thank you for joining our first quarter earnings call.

Aneel: 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 calls.

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

Aneel: We closed the quarter with sales of $1 33 billion and adjusted EBITDA of $278 million.

Emile Z. Chammas: Delivering strong results despite the continued challenging market dynamics in the protective, our first quarter results reflected for the first time since quarter four 2021, year over year, volume growth across all regions of our food business. Continued Volume Stabilization and Protection and Strong Execution Related to our CTO-to-Grow Initiative. Through the focused efforts of our teams around the world, we delivered positive free cash flow of $78 million in the first quarter, compared with negative $13 million in the same period a year ago.

Aneel: Delivering strong results. Despite the continued challenging market dynamics in the protective segment.

Aneel: Our first quarter results reflected for the first time since quarter, four 2021 year over year volume growth across all regions of our food business continued.

Aneel: Continued volume stabilization in protective and strong execution related to our CTO to grow initiatives.

Aneel: Yeah.

Aneel: Through the focused efforts of our teams around the world, we delivered positive free cash flow of $78 million in the first quarter compared with a negative $13 million in the same period a year ago.

Dustin J. Semach: Dustin will provide a more comprehensive overview of our financial performance. Now, let us move on to our market and business update. During the first quarter, our food segment delivered low single-digit volume growth across all regions, primarily driven by our shrink-bag business, which benefited from the carryover momentum of enhanced holiday demand and new customer wins from the fourth quarter. In the US, beef production was down low single digits year over year for the first quarter.

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

Speaker Change: Now, let us move on to our market and business update.

Aneel: During the first quarter, our food segment delivered low single digit volume growth across all regions, primarily driven by our shrink bags business, which benefited from the carryover momentum of enhanced holiday demand and new customer wins from the fourth quarter.

Aneel: In the U S beef production was down low single digits year over year for the first quarter.

Aneel: For the rest of 2024 U S smelter rates are expected to decline at a more rapid pace than the offline quarters.

Emile Z. Chammas: For the rest of 2024, U.S. slaughter rates are expected to decline at a more rapid pace in the up-lying quarter. In South America and Australia, cattle cycles are at their peaks, driven by robust domestic consumption and heightened export activity. Against a flat global proteins market in the first quarter, we delivered volume growth, gained share, and delivered double-digit growth and automation. Following its successful launch last quarter, our new compostable tray continues to gain traction in the market.

Aneel: In South America, and Australia catalyst cycles are their peaks driven by a robust domestic consumption and heightened export activities.

Aneel: Against a flat global proteins market in the first quarter, we drove volume growth gained share and delivered double digit growth in automation.

Aneel: Following a successful launch last quarter, our new compostable trade continues to gain traction in the market.

Emile Z. Chammas: Additionally, we are actively engaged in the development and introduction of more sustainable packaging solutions, such as recycled ready-to-use barrier films, poultry bags, and post-consumer recycled trays to address evolving market needs and support food processors and retailers in meeting their sustainability goals and regulatory requirements. The regulatory landscape concerning plastics continues to evolve rapidly, with recent legislative attention being directed towards polyvinylidene chloride, or PVDC, due to its chemical similarity to P PVDC is used as a very thin burial layer in multilayer films within a protein shrink bag.

Aneel: Additionally, we are actively engaged in the development and introduction of more sustainable packaging solutions, such as restock already barrier display films poultry bags and post consumer recycled trays to address evolving market needs and support food processors and retailers and meeting their sustainability goals and regulatory requirements.

Aneel: The regulatory landscape concerning plastics continues to evolve rapidly with recent legislative attention being directed towards fully vinylidene chloride or PVC.

Aneel: Chemicals similarity to PVC.

Aneel: PVC is used as a very thin barrier layer in multilayer films within our protein shrink bags.

Emile Z. Chammas: Our shrink-bag business that contains PVDC is approximately one-third of our food sector. This barrier material plays a vital role in preserving the quality of fresh proteins, extending shelf life, enabling global distribution, and minimizing food waste and its environmental impact on greenhouse gas emissions. Currently, there is no alternative to PVDC that matches its performance level.

Aneel: Our shrink bag business that contains PBGC is approximately one third of our food segment.

Aneel: This barrier material plays a vital role in preserving the quality of fresh proteins.

Aneel: Pending shelf life, enabling global distribution, and minimizing food waste and its environmental impact on greenhouse gas emissions.

Aneel: Currently there is no alternative to PVC that matches its performance level.

Emile Z. Chammas: In close collaboration with our suppliers, customers, industry associations, and government agencies, we actively advocate for the essential role packaging plays in mitigating food waste and ensuring safety. Horrible Food on a Global scale. For decades, we've been assisting our customers in adapting to the changing regulatory environment and safeguarding their food supply chain. We already provide alternative barrier layers to PVDC, such as EVUH, among others, particularly for applications with lower performance requirements

Aneel: Close collaboration with our suppliers customers industry associations and government agencies.

Aneel: Actively advocate for the essential role package in place and mitigating food waste and ensuring safe affordable food on a global scale.

Aneel: For decades, we've been assisting our customers and adapting to the changing regulatory environment and safeguarding their food supply chains.

Aneel: We already provide alternative barrier layers to PVC, such as EV, which among others.

Aneel: Security for applications with lower performance requirements.

Emile Z. Chammas: As the market leader in string bags, we continue to be best positioned to help food processors navigate the evolving regulatory landscape and deliver market-leading solutions that combine world-class material science equipment and technical services. Transitioning to Protective, revenue performance in the first quarter was in line with expectations. However, industrial portfolios continue to be under pressure across all regions, contributing to a low to mid-single-digit year-over-year volume decline for the sector.

Aneel: As the market leader in shrink bags, we continue to be best positioned to help food processors navigate the evolving regulatory landscape and deliver market, leading solutions that combine world class material science equipment and technical services.

Aneel: Transitioning to protective revenue performance in the first quarter was in line with expectations.

Aneel: Industrial portfolio has continued to be under pressure across all regions contributing to a low to mid single digit year over year volume decline for the segment.

Emile Z. Chammas: As discussed on our last quarter's call, the pricing environment remains pressured as we compete in a low-volume, low-visibility environment. In the Americas, volume growth was less than 1% as growth in box right sizing solutions and recovery in retail and fulfillment sectors were offset by industrial weakness. We may experience continued double-digit volume decline primarily driven by intensified sustainability pressures across all portfolios and the stocking of our APS products. However, the electronic sector in Asia is improving from last year. However, uncertainties around China's economic recovery continue to temper short-term regional growth.

Aneel: As discussed on our last quarter's call the pricing environment remains pressured as we compete in a low volume low visibility environment.

Aneel: In the Americas volume growth was less than 1% as growth in box right charging solutions and recovery and retailer fulfillment sectors were offset by industrial weakness.

Aneel: EMEA experienced continued double digit volume decline, primarily driven by intensified sustainability pressures across all portfolios and destocking from our EPS product line.

Aneel: The electronic sector in Asia is improving from last year.

Aneel: However, uncertainties around China's economic recovery continued to temper short term regional growth expectations.

Emile Z. Chammas: Consistent with our previous discussions, we still anticipate an L-shaped recovery across the protected areas. The organizational changes implemented in February, which established dedicated commercial teams for both food and protection, are beginning to gain traction. The renewed focus on our protective channel and direct customers has created positive momentum internally and has been well received by our customers. Similar to food, we strive to protect products in transit in a sustainable way. Our strategy entails a do-it-from-the-approach.

Aneel: Consistent with our previous discussions we still anticipate an L shaped recovery across the protective segment.

Aneel: The organizational changes implemented in February which established dedicated commercial teams for both food and protective are beginning to gain traction.

Aneel: The renewed focus on our protective channel and direct customers has created positive momentum internally and has it been received by our customers.

Aneel: Similar to food, we strive to protect products in transit in a sustainable way.

Aneel: Our strategy in favor of a dual pronged approach first with in a flexible portfolio. We are continuously increasing the level of recycled content in our product lines.

Emile Z. Chammas: First, within our flexibles portfolio, we are continuously increasing the level of recycled content in our products. Second, we are in the process of adding more fiber solutions to our portfolio, which will enable us to fully serve our channel partners and all segments within our market. As an example, we are expanding our paper mailer offerings with various sizes to match the versatility traditionally associated with plastic and hybrid mailers. Moreover, we've developed more resilient paper coilers as a sustainable fissioning solution to address demands for protecting high-value heavyweight paper.

Aneel: Second we are in the process of adding more fiber solutions to our portfolio, which will enable us to fully serve our channel partners in all segments within our markets.

Aneel: As an example, we are expanding our paper mailer offerings with various sizes.

Aneel: <unk> traditionally associated with plastic and hybrid mailers.

Aneel: Moreover, we've developed more resilient paper corridors as a sustainable efficient solution to address demands of protecting high value heavyweight products.

Emile Z. Chammas: Additionally, we are introducing fiber alternatives within our APS solutions, enabling substrate agnostic capabilities for our automation portfolio. This approach ensures that existing equipment installations can accommodate both substrates, providing our customers with enhanced flexibility in their distribution process. The transformation outlined in previous quarters continues at CEQA. We are focused on improving underlying business fundamentals by improving our commercial effectiveness, innovation processes, and overall talent. Overall portfolio and footprint optimization continues to progress, with three plant closures last year and another four in the process in 2020.

Aneel: Additionally, we are introducing fiber alternatives within our Aps solutions, enabling substrate agnostic capabilities for our automation portfolio.

Aneel: This approach ensures that the existing equipment installations can accommodate both substrates, providing our customers with enhanced flexibility and that distribution processes.

Aneel: The transformation outlined in previous quarters continues to etsy.

Aneel: We are focused on improving underlying business fundamentals by improving our commercial effectiveness innovation processes and overall tenants.

Aneel: Overall portfolio and footprint optimization continues to progress with three plant closures last year and another four in process in 2024.

Emile Z. Chammas: Throughout the first quarter, we continued to wind down pieces of the portfolio announced last year, and we continue to evaluate the rest of the portfolio and footprint for further opportunities. As mentioned earlier, we continue to accelerate our cost takeout initiatives, and it is driving improvements to our bottom line. With the actions implemented so far, we have achieved an annual run rate savings of $78 billion.

Aneel: Throughout the first quarter, we continued to wind down pieces of the portfolio announced last year and will continue to evaluate the rest of the portfolio and footprint for further opportunities.

Aneel: As mentioned earlier, we continued to accelerate our cost takeout initiatives.

Aneel: Driving improvements to our bottom line.

Aneel: With the actions implemented so far we have achieved an annual run rate savings of $78 million.

Dustin J. Semach: Continuing with this momentum, we are confident in our ability to achieve approximately $90 million in year-over-year cost savings in 2021. Finally, we are in the process of pivoting our digital and automation strategies, and we'll have more to share in subsequent sessions. Now, I'd like to turn it over to Dustin to review our financial results.

Aneel: Continuing with this momentum we are confident in our ability to achieve approximately $90 million and year over year cost savings in 2024.

Aneel: Finally, we are in the process of pivoting, our digital and automation strategies and we'll have more to share in subsequent calls.

Aneel: Now I'd like to turn it over to Dustin to review our financial results.

Aneel: Yeah.

Dustin J. Semach: Thank you, Emile, and good morning, everyone. Moving on to the first quarter results. Let's turn to slide four. Net sales were $1.33 billion in the quarter, down 1% on a constant currency basis; adjusted EBITDA in the quarter was $278 million, up 4% compared to last year. Volumes were flat year-over-year for the quarter, with growth in the food segment across all regions offset by declines in protective clothing, primarily in EMEA. As reported, adjusted earnings per share in the quarter of 78 cents were up 5% compared to a year ago. Our adjusted tax rate was 25.9% compared to 24% in the same period last year.

Dustin: Thank you Emil and good morning, everyone.

Dustin: Moving to first quarter results, let's turn to slide four.

Dustin: Net sales were $1 three 3 billion in the quarter down 1% on a constant currency basis.

Dustin: Adjusted EBITDA in the quarter was $278 million up 4% compared to last year.

Speaker Change: Volumes were flat year over year for the quarter with growth in the food segment across all regions offset by declines in protective primarily in EMEA.

Aneel: As reported adjusted earnings per share in the quarter of 78 were up 5% compared to a year ago.

Aneel: Our adjusted tax rate was 25, 9% compared to 24% in the same period last year.

Aneel: The increase in the tax rate year over year was driven by discrete impacts related to our share based compensation.

Aneel: Our weighted average diluted shares outstanding in the first quarter of 2024 was $145 4 million.

Dustin J. Semach: The increase in the tax rate year-over-year was driven by discrete impacts related to our share-based compensation. Our weighted average diluted shares outstanding in the first quarter of 2024 were $145.4 million. Turning to slide five, in Q1, inorganic growth from Localbox contributed 2% to total company sales, or approximately $23 million. As anticipated, we saw lower pricing across both the food and protective segments, primarily in the Americas and EMEA regions, following the reduction of resin costs from the post-COVID peak in 2022 to the middle of 2023.

Aneel: Turning to slide five.

Aneel: In Q1 inorganic growth from local box contributed 2% to total company sales for approximately $23 million.

Aneel: As anticipated, we saw lower pricing across both the food and protective segments, primarily in the Americas and EMEA regions. Following the reduction of resin costs from the post Covid peak in 2022 to the middle of 2023.

Dustin J. Semach: Year-over-year volume improved in the food segment across all regions through carryover momentum from last year's holiday season and new customer wins. Protective volumes were down 4% year-over-year, driven by a rebound in the Americas, more than offset by declines primarily in EMEA.

Aneel: Year over year volume improved in the food segment across all regions through carryover momentum from last year's holiday season, and new customer wins.

Aneel: Protective volumes were down 4% year over year, driven by a rebound in Americas more than offset by declines primarily in EMEA.

Dustin J. Semach: First quarter adjusted EBIDTA of $278 million, which included $4 million in organic contribution from the local box, increased $11 million, or approximately 4% compared to last year, with margins of 20.9%, up 110 basis points. This performance was mainly driven by accelerated savings from our cost to grow and productivity efficiency, partially offset by unfavorable net price realization. Moving to slide six, in the first quarter, food net sales of $868 million were down 1% on an organic basis, primarily due to declines in price, partially offset by positive volumes led by carryover holiday benefits within our food business.

Aneel: First quarter adjusted EBITDA of 278 million, which included $4 million inorganic contribution from local box increased $11 million or approximately 4% compared to last year with margins of 29% up 110 basis points.

Aneel: This performance was mainly driven by accelerated savings from our cost takeout to grow and productivity efficiencies.

Aneel: Partially offset by unfavorable net price realization.

Aneel: Moving to slide six.

Aneel: In the first quarter net sales of $868 million were down 1% on an organic basis, primarily due to declines in price, partially offset by positive volumes led by carryover holiday benefits within our <unk> business solid equipment performance catalyst <unk> in Asia Pac and Latin America, along with share gains of our case ready solutions in the poll.

Dustin J. Semach: Solid Equipment Performance, Cattle Psych Hotel, Wins and Asia Pack, and Latin America, along with share gains of our case-ready solutions in the poultry market. Food Adjustment EBITDA of $190 million in the first quarter was down 3%, with margins at 21.8%, down 100 basis points compared to last year. The decrease in adjusted EBITDA was mainly driven by an unfavorable net price realization of $10 million, partially offset by higher volume.

Aneel: <unk> market.

Aneel: Food adjusted EBITDA of 190 million in the first quarter was down 3% with margins at 21, 8% down 100 basis points compared to last year the.

Aneel: The decrease in adjusted EBITDA was mainly driven by unfavorable net price realization of $10 million, partially offset by higher volumes.

Dustin J. Semach: Protective first quarter net sales of $461 million were down 7% organically, driven by lower pricing in America's NMEA and volume declines, primarily in NMEA, where both industrial and fulfillment markets remain soft and sustainability pressures are accelerating. America's volume rebounded with strong automation solutions offsetting continued industrial weakness. Protective Adjusted EVA Dial revenue of approximately $90 million was up 11% in the first quarter, with margins at 19.4%, up 320 basis points.

Aneel: Protective first quarter net sales of $461 million were down 7% organically driven by lower pricing in Americas, and EMEA and volume declines primarily in EMEA, where both industrial and fulfillment end markets remained soft and sustainability pressures are accelerating.

Aneel: Americas volume rebounded with strong automation solutions offsetting continued industrial weakness.

Aneel: Protective adjusted EBITDA of approximately $90 million was up 11% in the first quarter with margins at 19, 4% up 320 basis points.

Dustin J. Semach: The increase in Adjusted EVA Dial was driven by cost control actions, which included CTO-to-Gross savings, partially offset by unfavorable net price realization of approximately $10 million in lower volume. On slide seven, we will review our first quarter net sales by region. On an organic basis, Americas was down 2% primarily due to lower prices.

Aneel: The increase in adjusted EBITDA was driven by cost control actions, which included CTO tuberose savings, partially offset by unfavorable net price realization of approximately $10 million and lower volumes.

Aneel: On slide seven we review our first quarter net sales by region.

Aneel: On an organic basis Americas was down 2%, primarily due to lower pricing volume turned positive year over year for both segments for the first time since the end of 2021 with robust equipment placements in both businesses and strong volume within <unk>.

Dustin J. Semach: Volume turned positive year over year for both segments for the first time since the end of 2021, with robust equipment placements in both businesses and strong volume within food. AMEA declined 7% organically on lower pricing, persisting market softness, and sustainability challenges in the protective segment, while food volumes grew mid-single digit. Asia Pac was flat organically as tailwinds from the Australian cattle cycle and improving electronics performance were offset by continued weakness in the industrial market.

Aneel: EMEA declined 7% organically on lower pricing for assisting market softness in sustainability challenges in the protective segment, while food volumes grew mid single digits.

Aneel: Asia Pac was flat organically as tailwind from Australia in cattle cycle and improving electronic performance were offset by continued weakness in the industrial markets.

Dustin J. Semach: Now let's turn to free cash flow and leverage on slide 8. Through the first quarter, we generated a strong free cash flow of $78 million compared to $13 million in use of cash in the same period a year ago. The primary driver of this improvement was higher earnings, lower incentive compensation payments, and better working capital management, although partially offset by higher injury. During the first quarter, we further reduced our total debt by $28 million, ending the quarter with a net leverage ratio of 3.9 times plus from the end of 2023. Our total liquidity position was $1.4 billion, including $353 million in cash and the remaining amount in committed and fully undrawn revolvers.

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

Aneel: Through the first quarter, we generated strong free cash flow of $78 million compared to $13 million use of cash in the same period a year ago.

Aneel: The primary driver of this improvement was higher earnings lower incentive compensation payments and better working capital management, partially offset by higher interest costs.

Aneel: During the first quarter, we further reduced our total debt by $28 million ending the quarter with a net leverage ratio of three nine times flat from the end of 2023.

Aneel: Our total liquidity position was $1 4 billion, including $353 million in cash and the remaining amount and committed and fully undrawn revolver.

Dustin J. Semach: We continue to focus on driving net debt to just EBITDA below three and a half times by the end of 2025. Let's turn to slide 9 to review our 2024 outline. We are pleased with the strong finish to the first quarter and encouraged by the momentum that is building in parts of the business. The strength of the first quarter is giving us more confidence in our four-year guidance.

Aneel: We continue to focus on driving net debt to adjusted EBITDA to below three five times by the end of 2025.

Aneel: Let's turn to slide nine to review our 2020 for outlook.

Aneel: We are pleased with the strong finish to the first quarter and encouraged by the momentum that is building in parts of the business.

Aneel: The strength of the first quarter is giving us more confidence in our full year guidance.

Dustin J. Semach: We continue to operate in a low-visibility environment, especially in protective, and we'll have better visibility into how this momentum translates into the second half during our next call. For now, we are reaffirming our full year 2024 outlook. Looking ahead to the second quarter, we anticipate a slight sequential decline in sales, reflecting the dynamic low visibility environment and subsiding holiday demand from last year. As a result, second quarter net sales, adjusted EBITDA, and adjusted earnings per share are expected to be ranged around $1.3 billion, $260 million, and $0.64 per share. Turn to slide 10.

Aneel: We continue to operate in a low visibility environment, especially in protected and we have better visibility into how this momentum translates into the second half during our next call for now we are reaffirming our full year 2020 for outlook.

Aneel: Looking ahead to the second quarter, we anticipate a slight sequential decline in sales, reflecting the dynamic low visibility environment and subsiding holiday demand from last year.

Aneel: As a result second quarter net sales adjusted EBITDA and adjusted earnings per share are expected to be ranged around $1 $3.260 billion and 64, respectively.

Aneel: Turning to slide 10.

Unknown Speaker: We remain committed to restoring underlying fundamentals by executing in the market, progressing our transformation, delivering CTO savings for growth, and deleveraging the balance. Lastly, I'd like to close by thanking the Global C-Team. We're at the center of our transformation for their efforts in solving our customers' most critical packaging challenges day in, day out. With that said, Emile and I look forward to your questions. Operator, we would like to begin the Q&A. Thank you. As a reminder, to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again.

Aneel: We remain committed to restoring underlying fundamentals by executing in the market progressing our transformation delivering CTO to gross savings deleveraging the balance sheet.

Speaker Change: Lastly, I'd like to close by thanking the global <unk> team. We're at the center of our transformation for their efforts in solving our customers' most critical packaging challenges day in day out.

Speaker Change: With that I mean, when I look forward to your questions.

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

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, we ask that you. Please limit yourself to one question one moment, while we compile or Q&A roster.

Unknown Speaker: We ask that you please limit yourself to one question. One moment while we compile our Q&A roster. Our first question is going to come from the line of Ghansham Panjabi with Baird. Your line is open. Please go ahead. See you guys. Say Ghansham.

Speaker Change: Our first question is going to come from the line of Ghansham Panjabi with Baird. Your line is open. Please go ahead.

Ghansham Panjabi: Hey, guys good morning.

Ghansham Panjabi: Hey, Ghansham I guess good morning.

Emile Z. Chammas: I guess. Good morning. Emile, you know, in your characterization of the food segment as relates to the First Quarter.

Ghansham Panjabi: Emil I guess on your characterization of the food segment as it relates to the.

Ghansham Panjabi: Various trends across your geographies as you look out for the rest of the year is that pretty much in line with your initial view coming into the year.

Speaker Change: As it relates to the North American capital cycle, and then related to that what drove the upside specific to food in the first quarter and a lot of companies have called out at the customer level called out timing of Easter et cetera, do you think that played a role as well.

Emile Z. Chammas: You know, a lot of companies have called out at the customer level, you know, the timing of Easter, etc. Thank you, Ghansham. Thanks for your question. Overall, in terms of the underlying market trends, they're more or less in line with our initial expectations. Although, if you look at the North American cattle cycle, even though it's down year on year, it's slightly better than initially thought.

Speaker Change: Thank you Ghansham. Thanks for your question.

Speaker Change: Overall in terms of the underlying market trends are more or less in line with our initial expectations. Although the if you look at the North American capital cycle, even though it's down year on year. It was slightly better than initially thought we have strengths in the other two regions Latin America.

Speaker Change: So our cycle as well as in Australia, and New Zealand is where the market is up double digits and that's it.

Emile Z. Chammas: We have strength in the other two regions, in Latin America, in terms of their cycles, as well as in Australia and New Zealand, where the market is up double digits. And as in our prepared remarks, we did highlight the strengths, and the key one came from a couple of pieces. One is carryover in terms of holiday demand but also in terms of new customer wins across several sectors.

Speaker Change: In our prepared remarks, we did highlight the strength in Q1 came from a couple of pieces. One is carryover in terms of the holiday demands, but also in terms of new customer wins across several sectors and so we're very encouraged in terms of the momentum of that business.

Emile Z. Chammas: So we're very encouraged in terms of the momentum of that. In Ghansham, the only thing I would follow on there too, it was a broad base, you know, as Emile alluded to, in terms of overall regions but also across many of our portfolios, which was, which was, you know, well received, obviously, for the first quarter, and demonstrated some of the strength and not just, you know, our strength-backed business but across the board of roll stock, as well.

Speaker Change: And gone to the only thing I would follow on there too it was a broad base as Neal alluded to in terms of overall regions, but also across many of our portfolios right, which was which was well received obviously for the first quarter and demonstrates the strength and not just our shrink bags business, but across the board roll stock.

Speaker Change: Well.

Emile Z. Chammas: Thank you, and one moment for our next question. And our next question is going to come from the line of Adam Samuelson with Goldman Sachs. Your line is open. Please go ahead. Adam, are you on mute?

Speaker Change: Thank you and one moment our next question.

Speaker Change: And our next question is going to come from the line of Adam Samuelson.

Adam L. Samuelson: Samuelsson with Goldman.

Adam L. Samuelson: Goldman Sachs. Your line is open. Please go ahead.

Adam L. Samuelson: Okay.

Adam L. Samuelson: Adam are you on mute.

Speaker Change: Right, we can move to our next question.

Unknown Speaker: All right, we can move to our next question, and our next question is going to come from the line of George Staphos with Bank of America Securities. Your line is open. Please go ahead. Thanks, everyone. Good morning.

Adam L. Samuelson: And our next question is going to come from the line of George Staphos with Bank of America Securities. Your line is open. Please go ahead.

Unknown Speaker: Thanks for the details. I guess my question centers around sustainability, the transition that you're trying to achieve, particularly within protect. So, I guess the question is this: Sealed Air has always had.

George Leon Staphos: Thanks, Hi, everyone. Good morning. Thanks.

George Leon Staphos: Thanks for the details.

George Leon Staphos: I guess my question centers around sustainability.

George Leon Staphos: Transition that youre trying to achieve particularly within protective.

George Leon Staphos: So I guess the question is this sealed air has always had fiber based solutions and protective packaging.

Dustin J. Semach: Fiber Base. Solutions and Protective Packages. You know, what factors, to the extent relevant in terms of the going forward model, allowed you to, to some degree, maybe fall behind? In terms of share and lose share in fiber-based, what's it going to cost to bring out these new programs and new SKUs? And, you know, what's the uptake been as you've been talking about this with your customers? Said differently, you know, how much is it going to cost and how much volume do you think you can regain as you bring out these new products? And are you seeing more demand for this from your larger or smaller customers in protective packaging? Thank you, guys. All right, George. This is Dustin.

George Leon Staphos: What factors to the extent relevant in terms of the going forward model allowed you to to some degree maybe fall behind in terms of share and lose share in fiber based what's it going to cost to bring out.

George Leon Staphos: These new programs and new Skus and whats the uptake been as you've been talking about this with your customers.

George Leon Staphos: It differently.

George Leon Staphos: How much is it going to cost and how much volume do you think can regain as you bring out these new products and are you seeing more demand for this from your larger or smaller customers and protective packaging. Thank you guys.

Dustin J. Semach: And again, I appreciate the question. So a couple of comments I would make going back, starting with, you know, why haven't we been able to, you know, kind of gain share or loss share of fiber considering our portfolio? So you're correct that, in many cases, we already have a very strong portfolio in fiber. And the statements that Emile alluded to earlier today are that our intention is to really round that out, complete it, and make it more fulsome across the board. He alluded to the paper coiler as an example, as well as continued to extend our fiber-based mailers in terms of sizes, etc.

George Leon Staphos: Alright, George this is Dustin and again I. Appreciate the question. So a couple of comments I would make going back starting with why haven't we been able to kind of gain share with loss share of fibre considering our portfolio. So you are correct that in many cases, we already have a very strong portfolio in fiber and the state has done a mill alluded to earlier today is that our intention is to really round that out completely.

George Leon Staphos: To make it more fulsome across the board he alluded to the pay per quarter as an example, as well as continue to extend our fiber based.

George Leon Staphos: In terms of sizes et cetera, so going back to the past we talked about this a little bit on your kind of towards end of last year around this commercial reorganization. So if you go back three or four years ago, we really consolidate our sales teams into regional teams and as a part of that lost some focus on our overall protective business ramping.

Dustin J. Semach: So going back to the past, we talked about this a little bit at the kind of end of last year around this commercial reorganization. So, if you go back 3 or 4 years ago, we really consolidated our sales teams into regional teams. And as a part of that, we lost some focus on our overall protective business, right? Being, you know, roughly 35% versus food being more dominant in terms of the total portfolio.

George Leon Staphos: Roughly 35% versus through being more dominant towards the total portfolio and so part of that reorganization was really to drive.

Dustin J. Semach: And so part of that reorganization was really to drive that focus, that intentional focus on the protective business holistically. And so right now, our customers, as well as our internal teams, because for them, they're really excited about, you know, the dedicated marketing teams and rededicated focus on I&D and so just being more intentional about driving that business forward. The second piece is from a customer reception standpoint; they're noticing it as well

George Leon Staphos: That focus that intention will focus on the protective business Holistically and so right now on our customers as well as our internal teams because for them. They are really excited about the dedicated marketing teams at re dedicated focus on it and so just being more intentional about driving that business forward. The second pieces from a customer reception there noticing it as well.

Dustin J. Semach: So, we, you know, Neil and I have had an opportunity to sit down with some of our distributors, direct customers, and they're noticing the difference in terms of just focus. And they're very excited about, you know, kind of our recommitment to some of these different offerings, again, to advance that portfolio. And, you know, it's more of a timing issue for us in terms of when we bring it up to market. In terms of cost, think of it as right now in terms of our guidance, our cap allocation from CapEx, et cetera, that's all really today fully baked into our overall guidance and encapsulated in the, you know, our kind of total top line of budget.

George Leon Staphos: <unk> had an opportunity to sit down with some of our distributors direct customers and David They are noticing the difference in terms of just focus and theyre very excited that kind of a recommitment on some of these different offerings again interface that portfolio and its more of a timing for us as we bring it up to market in terms of cost think of it is right now in terms of our <unk>.

George Leon Staphos: <unk>, our capital allocation from a capex et cetera, that's all rig today fully baked into our overall guidance and encapsulated in.

George Leon Staphos: Our total topline and bottom line.

Dustin J. Semach: Thank you, and one moment for our next question. And our next question is going to come from the line of Matt Roberts with Raymond James. Your line is open. Please go ahead. Hey, good morning, Emile, and Dustin.

Speaker Change: Thank you and one moment for our next question.

Speaker Change: And our next question is going to come from the line of Matt Roberts with Raymond James Your line is open. Please go ahead.

Dustin J. Semach: Time. I think, on last call, you previously expected Evita to sequentially... throughout the year. Now, I know one queue impressively came in higher, partially due to some holiday carryover. Could you quantify that holiday carryover or any of the cost takeout acceleration? Decline now, expect it again. Is that more volume-related or have any of the price flows through expectations changed? Yeah, yeah, Matt, this is Dustin.

Matthew Burke Roberts: Hey, good morning, Thank you for the time.

Matthew Burke Roberts: I think last quarter. You previously said you expected EBITDA to sequentially improve throughout the year I believe now <unk>.

Matthew Burke Roberts: <unk> press release came in higher.

Matthew Burke Roberts: Partially due to some holiday carryover could.

Matthew Burke Roberts: Could you quantify that holiday carryover or any of the cost takeout acceleration.

Matthew Burke Roberts: <unk>.

Matthew Burke Roberts: And the decline now expected again in <unk> is that more volume related or have any of the price flows through expectations changed in any puts takes there would be helpful. Thank you, yes, yes, Matt This is Doug and I'll I'll take this one and so a couple of comments I'll make one is we are continuing to accelerate our cost to capital growth program, we're really excited about.

Dustin J. Semach: I'll take this one. And so, here are a couple of comments I would make. One is we are continuing to accelerate our Cost to Cut to Grow program. We're really excited about, obviously, the improvements we've made. We talked about the $78 million in terms of a run rate we're already on and the confidence that gives us at this point in time, really being at the end of Q1 and being able to achieve a full $90 million. And candidly, we're not going to stop there, right? I mean, in general, I think driving that cost-conscious mindset into the organization is driving benefits at the bottom line, and you're seeing some of that.

Doug: Obviously the improvements we've made we talked about the $78 million in terms of a run rate were already on and the confidence that gives us at this point in time really being at the end of Q1 being able to achieve the full $90 million and candidly we are not going to stop there right I mean in general I think driving that cost conscious mindset into the organization is driving benefits to the bottom line and youre seeing some of that that a lot of that.

Dustin J. Semach: A lot of that is going to be continued momentum, right? So that's kind of baked into the forward-looking guidance. But when you go to Q2, right, there are really two impacts, I would say, more broadly overall. One is you have FX coming down roughly, and the US dollar strengthening. So some of that decline is just purely FX for probably roughly about $10 million. The rest is there's a little bit of price pressure in terms of sequential pressure, but it's relatively small. Think of it as roughly $5 million. And then on volume, it's about $15 million.

Doug: He is going to be continued momentum right. So that's kind of baked into forward looking guidance, but when you go to Q2 right. There is really two impacts I would say more broadly overall, one is yes, the FX coming down roughly the U S. Dollar strengthening is that some of that decline is just purely FX, probably roughly about $10 million. The rest of the there is a little bit of price in terms of sequential.

Doug: Pressure, but it's relatively small I think of it as roughly $5 million and then on volume, it's about $15 million Thats really the subsidization of the.

Doug: Holiday demand kind of subsiding from Q1, which was stronger than we really originally expected. However, baked in that is also the momentum of the gains that you saw so you go back to Q1. It was a mix of that carryover, but also a number of gains, particularly in poultry, they're really excited about the continued to ramp throughout the rest of the year, which is again going to continue to drive.

Dustin J. Semach: And that's really the subsidization if the holiday demand kind of subsidizing. From Q1, which was stronger than we originally expected. However, you know, baked in that is also the momentum of the gains that you saw. So you go back to Q1, it was a mix of that carryover, but also a number of gains, particularly in poultry, that we're really excited about that continue to ramp throughout the rest of the year, which is again going to continue to drive some of that.

Doug: Some of that as you kind of get beyond Q2 that you get into Q3, Q4, youre going to see food continue to ramp.

Doug: B in this low single digit range from a volume perspective with pricing subsiding as we go throughout the year.

Doug: In terms of an impact.

Dustin J. Semach: As you kind of get beyond Q2, then you get into Q3, Q4, you're going to see food continue to ramp and, you know, kind of be in this low single-digit range from a volume perspective with pricing subsiding as we go throughout the year. Thank you, and one moment as we move on to our next question. And our next question comes from the line of Jeff Zekauskas with J.P. Morgan. Your line is open. Please go ahead. Thanks very much.

Speaker Change: Thank you and one moment as we move on to our next question.

Speaker Change: And our next question comes from the line of Jeff Zekauskas with Jpmorgan. Your line is open. Please go ahead.

Jeffrey John Zekauskas: Thanks very much.

Jeffrey John Zekauskas: Yes.

Unknown Speaker: You were talking earlier in the call about the risks connected. PVDC. Unknown Speaker Is the issue, the bill in California, that's being weighed, or is it, the European issue, have your competitors already?

Jeffrey John Zekauskas: You were talking earlier in the call about risks connected with.

Jeffrey John Zekauskas: PBGC.

Jeffrey John Zekauskas: Is the issue.

Jeffrey John Zekauskas: The Bill in California.

Jeffrey John Zekauskas: That being waived or is today.

Jeffrey John Zekauskas: European issue.

Jeffrey John Zekauskas: Heavier competitors already.

Jeffrey John Zekauskas: Changed over to.

Jeffrey John Zekauskas: Different material.

Jeffrey John Zekauskas: That is do you feel like you're lagging behind in technology are there.

Jeffrey John Zekauskas: <unk> dates that.

Jeffrey John Zekauskas: That it may be good to be aware of in terms of.

Jeffrey John Zekauskas: When this packaging may or may not be used.

Unknown Speaker: Transcribed by https://otter.ai, that it may be good to be aware of in terms of when this packaging may or may not be used. All right, Jeff, thank you for that question. I'll try to be as comprehensive as possible. So, you know, when we're addressing PBDC, there are a couple comments I'll make. We talked about, you know, a third of the overall business in food specifically being PBDC. But another point is about a third of it is also EDOH, right? And to hit your question directly, are we lagging behind? Absolutely not, right?

Jeffrey John Zekauskas: Alright, Jeff. Thank you for that question I'll try to be as comprehensive as possible. So yes.

Jeffrey John Zekauskas: We're addressing PVC, there's a couple of comments I think we've talked about a third of the overall business in foods, specifically being PVC, but really the point is about a third a third a is also Epo H right in to hit your question directly will be lagging behind absolutely not right. Then turn of the conversation is to really to demonstrate one is that our offerings.

Dustin J. Semach: The intent of the conversation is to really demonstrate one is that our offerings are these really, you know, the PBDC specifically, our shrink bag business is really, is really around three pieces, right? It's the strength of the material science, and that can be whether it's PBDC or EDOH, we offer both today, as well as the technical services capability. And then you combine that with our automation.

Jeffrey John Zekauskas: Really the PDC, specifically, our shrink back business is really is really around three pieces right is the strength of the materials science and that can be whether it's <unk> or <unk> <unk> offer both today as well as the technical services capability and then you combine that with our automation Thats really the strength was driven us to become the market leader in that segment and we'll continue to be.

Dustin J. Semach: That's really the strength that has driven us to become the market leader in that segment and will continue to be. And so we're continuing to navigate that landscape and make sure that, whether it's our manufacturing footprint or other aspects, we are able to do both. And that's generally the way you would update the technology across our manufacturing footprint. And as it relates to your specific question about California itself, at this point in time, there are no specific dates.

Jeffrey John Zekauskas: And so we're continuing to navigate that landscape and make sure that whether it's our manufacturing footprint or other aspects are able to candidly do both and necessarily the way you would update the technology across our manufacturing footprint and as it relates to your specific question around California itself. At this point in time, there is no specific date, California recently.

Dustin J. Semach: California recently, in roughly Q1 of this year, earlier than Q1, kind of announced what's called AB2761, which is a bill related to, it's really a toxics bill broadly that speaks to both PFAS, which we've already eliminated within our food packaging, and then as well as, as well as PBDC. And the broader comment is we're continuing to work. At this point in time, that bill is not in a place where it's enacted, and we're continuing to make sure that we advocate with agencies and our coalition to make sure people understand the impact that you have more broadly, you know, with how we, PBDC plays an important role in mitigating food waste, you know, across the globe. Maybe I'll just jump in to add a couple of pieces.

Jeffrey John Zekauskas: And roughly Q1 of this year earlier in Q1 kind of announced what's called <unk> 2761, which is a bill related to its really a toxins bill broadly that speaks to both PFS, which we've already eliminated within our food packaging and then as well as as well as <unk> and the broader comment is we're continuing to work at this point in time that bill is not.

Jeffrey John Zekauskas: In a place where it's enacted and we'll continue to make sure that we advocate with agencies and our coalition to make sure people understand the impact that you have more broadly with how we have PTC plays an important role in mitigating food waste.

Jeffrey John Zekauskas: Cross sell across the globe and maybe I'll just jump into to add a couple of pieces. So one it is ultimately we offer our customers what they would like them in many cases, we help them in terms of coming up with different solutions to address any potential regulation. So we approach it multi fronts right. One in terms of working with industry associations do.

Emile Z. Chammas: So one is, ultimately, we offer our customers what they would like, and in many cases, we help them in terms of coming up with different solutions to address any potential regulations. So we approach it from a number of angles, right? One, in terms of working with industry associations to... Make sure the legislators understand the benefits of the different packaging. PBDC, in this example, is the best barrier layer out there.

Jeffrey John Zekauskas: Sure.

Jeffrey John Zekauskas: Caesars understand the benefits of the different packaging.

Jeffrey John Zekauskas: <unk> seen. This example, it is the best barrier layer.

Jeffrey John Zekauskas: Out there.

Emile Z. Chammas: Two, within our portfolio, we are offering multiple solutions, both on the food and the non-food side. We talked earlier about the fiber part of the portfolio. So, [inaudible] from end-to-end and back and forth.

Jeffrey John Zekauskas: Two is within our portfolio, we are offering multiple solutions both on the fluids in the non food side that we talked earlier about the fiber part of the portfolio.

Jeffrey John Zekauskas: So.

Jeffrey John Zekauskas: Okay.

Jeffrey John Zekauskas: Okay.

Unknown Speaker: In some cases customers are reaching out to us to solve problems.

Jeffrey John Zekauskas: We're not in our portfolio. When we gave the example of the compostable fiber trade that we launched.

Emile Z. Chammas: Last quarter. So again this was in response to specific customer coming up coming to us and asking us to help them solve that problem with the EPS, China, So really approaching it from <unk>.

Unknown Speaker: Thank you, and one moment as we move on to our next question. And our next question is going to come from the line of Michael Roxland with Trua Securities. Your line is open, please go ahead.

Emile Z. Chammas: And impacting those issues.

Speaker Change: Thank you and one moment as we move on to our next question.

Speaker Change: And our next question is going to come from the line of Michael <unk> with <unk> Securities. Your line is open. Please go ahead.

Unknown Speaker: Thank you, Dustin, Emile, Brian, and Luis, for taking my questions. You already touched on it a little bit in terms of momentum building in the business. You already spoke about food in terms of new customer wins, especially around poultry. Any other pieces that you could comment on that have deteriorated or that are doing better?

Michael: Thank you Destiny, Brian Luis for taking my questions.

Michael: You already touched on it a little bit in terms of momentum building in the business you already spoke about fluid in terms of new customer wins.

Emile Z. Chammas: And then secondly, Emile, you mentioned pivoting your digital and automation strategies, and you said you have more comments on our future quarters, but can you get a sense of what's happening there? What are you re-evaluating? Anything I can provide about the strategy around digital and automation? Yeah, thank you.

Unknown Speaker: Wishing around poultry.

Michael: The other pieces that you could comment on that have inflicted or they're doing better and then secondly, I know you mentioned.

Speaker Change: Pivoting your digital and automation strategies and you said your comment on more comments later on on our future quarters, but can you give us a sense of what's happening there. What are you reevaluating any any color you can provide about what the strategy around digital and automation.

Dustin J. Semach: And I'll take the first part, and then Emile's going to take the second part of that question. So just in terms of, you know, kind of what's doing better and underlying, I would tell you, in general, across the business, particularly within food and bags, specifically, right? So if you think about despite some of the issues that you're having in the overall protein cycles that we talked about holistically, you know, our bags business, think of it as poultry is more on the overwrap.

Speaker Change: Yes, Thank you and I'll take the first part and then a mill is going to take the second part of that question. So just in terms of kind of what's doing better than underlying I would tell you in general across the business, particularly within food back specifically right. So if you think about despite some of the issues that youre, having in the overall protein cycles that we talked about holistically.

Emile: Our bags business, so think of it as poultry is more on the over App and then think of it is in our roll stock portfolio. If you think about our bags business.

Dustin J. Semach: And then think of it as in our whole stock portfolio, if you think about our bags business, you were really firing on all cylinders across all three regions. And so that's really the momentum. And I think what you've seen is, it's obviously no surprise to anybody in terms of where protein cycles around, particularly around beef, but what you're still seeing is strong retail demand. And so you're seeing a lot more exporting activity right now happening across the globe as a result of that, as you think about, you know, the major industrial food processors trying to make sure that they're getting the right supplies where the strongest demand is.

Mill: Firing on all cylinders across all three regions and and so thats really that momentum and I think what's happening is that <unk> seen is it's no is often a surprise anybody in terms of our protein cycles around particularly around before but what you are still seeing a strong retail demand and so youre seeing a lot more exporting activity right now happening across the globe as a result of that.

Speaker Change: As you think about the major industrial food processors trying to make sure that they're getting the right supplies that were the strongest demand is it. So we are obviously, helping them helping them through that so let's say that's the biggest area and as you go back to protective I'm talking about some of the areas that were that were better in Q1, we really strong around our Aps offerings, where we talked about a lot during <unk>.

Dustin J. Semach: And so we're obviously helping them, you know, helping them through that. So I would say that's the biggest area. And as you go back to protection, I'm talking about some of the areas that were, you know, that were better in Q1. We were really strong around our APS offerings, which we talked about a lot during 2023, some of the de-stocking activities that happened. There's still some of that in EMEA, but in general, we talked about Strength in the Americas, as well as Asia-Pacific, you know, again, APS Our box-rectifying solutions performed very well.

Speaker Change: 23, some of the Destocking activities that happened there is still some of that in EMEA, but in general when we talk about strength in Americas as well as Asia Pac again, Aps plays a part in that our box right sizing solutions performed very well, but we also had pockets of green shoots and think of it as shrink films Inflatables and a couple of the areas that we're reflecting back to positive.

Dustin J. Semach: But we also have pockets of green shoots, and think of this as strength films, inflatables, and a couple other areas that are inflecting back to positive volume. So, again, we're remaining cautiously optimistic. If you look at kind of the outline periods for protective, you're going to see volume kind of improve. Q2 will be very similar to Q1, but then Q3 and Q4, you know, our expectation right now is that business will continue to improve.

Dustin J. Semach: Positive volume. So again, we're remaining cautiously optimistic if you look at kind of the outline periods for protective youre going to see volume kind of improved Q2 will be very similar to Q1, but in Q3 and Q4, our expectation right now that business will continue to inflect and all food Q2, Youre looking at a little bit of flattish volume going back to the reasons, we discussed earlier, but then there.

Dustin J. Semach: And on food, you know, Q2, you're looking at a little bit of flattish volume, going back to the reasons we discussed earlier, but then Q3 and Q4 will be strong, you know, kind of low single-digit volume growth, driven off the back of those wins and just the momentum that's building in that broader area. And I'm jumping in on digital automation.

Dustin J. Semach: At Q3, and Q4 will be strong kind of low single digit volume growth driven off the back of those wins and just the momentum is building in that broader business.

Emile Z. Chammas: Again, as we said, we will talk more about this on future calls, but let me just hit a couple of those key points to you on the things that we already started discussing in the last call, First one on automation. So if you think about our business, where we build strength is where we have superior materials and technology to offer to our customers, accompanied by strong automation solutions as well as service, and that's been the driver.

Speaker Change: Yes, and I was hoping on on the digital automation again as we said we will talk more about this in future calls, but let me just hit a couple of those highlight points.

Speaker Change: To hear the things that we've already started discussing.

Emile Z. Chammas: In the last quarters. So first one on automation. So if you think about our business, where we build strength is where we have superior materials technology to offer to our customers the company and by strong automation solutions as well as service and Thats been the driver and we mentioned last call that.

Emile Z. Chammas: And we mentioned on the last call that the big gaps in that portfolio are a couple of areas. One, if you think on the protective side, we've announced partnerships around getting the 3D right. Transcription by Trans-Expert at Fiverr.com; More partnerships to come to complete that offering, but also on the fluid side, on the liquid box. Liquid box automation sales are a very small percentage in terms of the overall portfolio, and then we're working on a couple of partnerships, which we hope to announce in the next couple of quarters around being able to offer a full automation solution. So, again, if you think about it, our approach to the market is superior materials. Automation Company with Surface.

Speaker Change: A big where we have gaps in our portfolio as a couple of areas one of few things.

Emile Z. Chammas: Protective side that we've announced partnerships around getting the <unk> write offs.

Emile Z. Chammas: Solution and we are starting to get some gains from that partnership.

Emile Z. Chammas: We announced recently and one part of our roll stock portfolio, where we've announced a partnership around trade and overlap and we are working there with.

Emile Z. Chammas: More partnerships to come to complete that offering but also on the fluid side on the liquid bulks liquid box automation sales are very small percentage in terms of the overall portfolio and then we're working on a couple of partnerships, which we hope to announce in the next couple of quarters around being able to offer a full automation solutions.

Emile Z. Chammas: If you think about it our approach to the market is superior materials.

Emile Z. Chammas: Then jumping in on digital, again, two pieces there that we're going to be exploring further in the next upcoming calls. One is on digital commerce. So today we have about 22% of our sales that are going through that channel. And as we talked about in the past, we pivoted from just continuously investing in more capabilities in terms of using the investments we've made to drive commercial success, both from the top and bottom lines.

Emile Z. Chammas: Automation.

Emile Z. Chammas: Company.

Emile Z. Chammas: Surface.

Emile Z. Chammas: Jumping in on digital again two pieces there.

Emile Z. Chammas: We're going to be exploring further to the next.

Emile Z. Chammas: Coming calls one is on the digital commerce. So today, we have about 22% of our sales that are going through that channel.

Emile Z. Chammas: As we've talked in the past, we pivoted from a just continuously investing in more capabilities and services using the investments we've made to drive into commercial success, both from a top and bottom line and then the second piece.

Emile Z. Chammas: And then the second piece that we've talked about, which will come to market in the back half of the year is around our digital training technology, where we're introducing, for flexible, shrinkable materials, the first, commercial-scale, digital printing capability with water-based inks.

Emile Z. Chammas: We've talked about which will come to market in the back half of the year is around our digital printing technology, where we're introducing for flexible strength of materials. The first.

Emile Z. Chammas: So again, more to come, but those are two key pillars in terms of our growth. Thank you, and one moment as we move on to our next question. Our next question is going to come from the line of Edlain Rodriguez with Mizzou Health Securities. Your line is open. Please go ahead. Thank you. Good morning, everyone.

Edlain S. Rodriguez: Commercial scale digital printing capabilities with water based inks, so again more to come.

Edlain S. Rodriguez: But those are two key pillars in terms of our growth strategies.

Edlain S. Rodriguez: Thank you and one moment as we move on to our next question.

Edlain S. Rodriguez: Our next question is going to come from the line of Edlin Rodriguez with Mizuho Securities. Your line is open. Please go ahead.

Unknown Speaker: So Dustin and Emile, just kind of looking ahead, like the next, you know, two, three years, just wanted to get a sense of, like, What keeps you awake at night? Like, what do you see that has the most opportunities and what concerns you the most? Like, when you're thinking about the business portfolios, again, what keeps you awake at night? Or do you think like a baby?

Speaker Change: Thank you good morning, everyone. So Dustin and amounts I just kind of looking ahead like the next two to three years, just wanted to get a sense of that.

Unknown Speaker: What keeps you awake at night.

Unknown Speaker: What do you see ways.

Unknown Speaker: How does that go most opportunities in what concerns you the most.

Unknown Speaker: You're thinking about the business portfolio as I get what keeps you awake at night.

Dustin J. Semach: I appreciate the question. So I would say a couple of things. You know, it's what we're really talking about on our call today. A lot of things that we're working on as part of our overall transformation are really to address those, you know, really maximize the opportunities we have and minimize the risks that we see ahead of us. And, you know, if you really think about that, break it down into a number of different areas.

Dustin J. Semach: Tycho Baby.

Dustin J. Semach: I appreciate the question.

Dustin J. Semach: I would say a couple of things.

Dustin J. Semach: What we're really talking about our call today, a lot of things that we're working on as part of our overall transformation really to address those really maximize the opportunities we have and minimize the risk that we see ahead of us. If you really think about that and break it down a number of different areas. One is we recognize kind of coming off the volume losses in 'twenty, two and 'twenty three now with there was work to be done to the overall cost structure.

Dustin J. Semach: One is we recognize kind of coming off the volume losses in 22 and 23 that there was work to be done in the overall cost structure. We thought we had that well under well underway. And, you know, the 78 go into the 90.

Dustin J. Semach: The second piece is around the commercial reorganization, where, you know, there was a sense that we had lost some focus on the overall protective business. We completed that reorganization in the first quarter of the year, in February. We're really excited about the traction that's gained, but that work will be ongoing in terms of us continuing to drive commercial execution and commercial excellence. And so those areas, you know; it's too early to call in terms of the intangible benefit that we'll get relative to driving overall growth. But we're quite optimistic already as we sit here in April, just a few months away from that initial organization. The second piece is around the overall portfolio. Right.

Dustin J. Semach: We feel like we have that well under well underway and the 78 go into the 90. The second piece is around the commercial reorganization, where there was a sense that we had lost some focus on the overall protected business. We completed that reorganization in the first quarter of the year in February we're really excited about the traction thats, gaining but that work will be.

Dustin J. Semach: Ongoing in terms of us continue to drive commercial execution commercial excellence and so those areas. We it's too early to call in terms of intangible benefit that we'll get relative to driving overall growth, but we're quite optimistic already as we sit here in April just a few months away from that initial organization. The second piece is around.

Dustin J. Semach: And I think that area, as we talked about, we're excited about some of the things we're going to drive in 2024, but that work will be ongoing. And you think about completing the portfolio from an overall fiber perspective. It's not just the fiber piece of going back to the earlier question I believe George had.

Dustin J. Semach: Around the overall portfolio right and I would say that area as we've talked about we're excited about some of the things we are available to drive in 2024, but that work will be ongoing as we think about completing the the portfolio from an overall fiber it's not just the fiber piece if they go back to the earlier question I believe George had it's also about making sure that we can commercially execute.

Dustin J. Semach: It's also about making sure that we can commercially execute well in that area, not just across our direct customers but our channel partners. We're continuing that work. And then we feel incredibly well positioned, as we mentioned earlier, about some of the sustainability challenges that we're facing with food and protective, fiber and protective on food. As we talked about earlier today around PBDC and focus on certain plastics. But we feel incredibly well positioned.

Dustin J. Semach: Well in that area not just across our direct customers that are our channel partners and we're continuing on that work and then we feel incredibly well positioned as we mentioned earlier about some of the sustainability challenges that we're facing on food and protective of the fiber and protected them on food as we talked about earlier today around <unk> and focus on certain certain classics, but we feel incredibly well positioned.

Dustin J. Semach: But, you know, we'll also have to continue to manage that transition and from here on. Thank you.

Dustin J. Semach: <unk>, but we will have to obviously continue to manage that transition and.

Unknown Speaker: And one moment as we move on to our next question. And our next question is going to come from the line of Gabe Hajde with Wells Fargo. Your line is open. Please go ahead. Good morning, Emile and Dustin.

Gabrial Shane Hajde: From here on.

Gabrial Shane Hajde: Thank you and one moment as we move onto our next question.

Gabrial Shane Hajde: And our next question is going to come from the line of Gabe <unk> with Wells Fargo. Your line is open. Please go ahead.

Unknown Speaker: I have one confirming question for us non-material scientists on the call. So this PBDC discussion, to be clear, it's a middle layer within a multi-layer 9-11 layer film with no direct food contact. And more importantly, yep, prevent contamination and food waste.

Gabrial Shane Hajde: Good morning.

Unknown Speaker: Awesome.

Gabrial Shane Hajde: I have one confirming question for us non material scientists on the call. So PV DC discussion to be clear, it's the middle layer within a multi layer 911 layer film with no direct food contact.

Gabrial Shane Hajde: More importantly.

Gabrial Shane Hajde: Yes prevents contamination food waste and you Ken today change the formulation at your customer request.

Dustin J. Semach: And you can today change the formulation at your customer request, although it may compromise some of these again, extended shelf life attributes. Dave, to answer that question, the answer is yes. It's a thin barrier level that manages the oxygen transmission rate within our multi-layer films.

Unknown Speaker: Although it may compromise some of these again extended shelf life.

Dustin J. Semach: Attribute.

Speaker Change: You have to answer that.

Speaker Change: Sorry apologies.

Dustin J. Semach: To be clarifying, we already offer both today, right? And it's really based on customer preference and market need. And so at any point, if something changes in the regulatory environment, we'll be well positioned to manage that transition. But it is that there's no food contact.

Dave: Yes. So thanks for that question. The answer is yes is it then barrier level managers oxygen oxygen transmission rate within our our multilayer films did to be clarifying we already offer both today right and it's really based on customer preference market need and so at any point, if something changes from a regulatory environment will be well positioned.

Dustin J. Semach: It's obviously fully FDA compliant. Thank you. And one moment as we move on to our next question. And our next question comes from the line of Adam Samuelson with Goldman Sachs. Your line is open. Please go ahead.

Dustin J. Semach: To manage that transition, but it's already all for today. It is that there is no food contact associated with it.

Adam L. Samuelson: It is obviously fully FDA compliant.

Adam L. Samuelson: Thank you and one moment as we move on to our next question.

Dustin J. Semach: Yes.

Unknown Speaker: Yes, thank you. I appreciate you guys getting me back in the queue. I guess I wanted to just get an update on price-cost. Certainly, there is still pricing pressure on Protective as well as food, but if I'm looking at the business for the quarter, price-cost seems like it was a much smaller drag on the business year-on-year than maybe had been previously contemplated and maybe, put another way, can help us bridge some of the year-on-year margin expansion in the Protective business and just No, Adam, great question.

Dustin J. Semach: And our next question comes from the line of Adam Samuelson with Goldman Sachs. Your line is open. Please go ahead.

Speaker Change: Yes. Thank you I appreciate you kind of hit me back in the queue.

Unknown Speaker: I guess I wanted to just get an update on price cost is.

Unknown Speaker: Certainly there is still pricing pressure.

Unknown Speaker: And in protective and as well as the other as well as food but.

Unknown Speaker: Could you just priced if im looking at the business over the quarter price cost seemed like it was a much smaller drag on the business year on year than maybe had been previously contemplated.

Unknown Speaker: Maybe put another way you can help us bridge some of the year on year margin expansion in the protective business.

Unknown Speaker: And just help us think about where the volumes are still we're still negative help us think about how you got that much kind of leverage.

Dustin J. Semach: And I'll start by just kind of giving you a bridge holistically around net price realization. So I appreciate the question. And just to start there, you know, we expect net price realization to be in the order of magnitude around $80 million negative year-to-year, right? That's about $140 million of price offset by benefit and direct materials of about $100 million and then offset by some of that inflationary, albeit much smaller than prior years around, think of it as labor and non-material costs as well. So it's about negative 40; it gets you to that negative 80.

Dustin J. Semach: And EBITDA expansion in the protective side. Thank you.

Dustin J. Semach: Adam Great question I'll start with just kind of giving you a original mystically on around net price realization. So I. Appreciate the question that is historic there we expect net price realization to be in the order of magnitude around $80 million negative year over year.

Dustin J. Semach: That's about $140 million of price offset by a benefit in direct materials of about $100 million and offset by some of that inflationary, albeit much smaller than prior years around I think of it as labor and nonmaterial.

Dustin J. Semach: That's actually about, you know, $15 million worse than we originally anticipated. And a lot of that's coming from a little bit of, you know, I'd say increased price pressure that we see overall. And that's being offset by the productivity benefits more broadly in the business, not because keep in mind, while we're driving our cost takeout to grow program, which is restructuring the entire business, we're always continuously driving productivity and underlying business. And a lot of what you're seeing in protective, if you go back to that cost takeout program, and you go back to Q1, which keep in mind was a very low quarter, 2023 specifically for Q1 specifically for protective, a lot of the actions that we've been taking in terms of cost control, productivity, footprint, rationalization, SG&A optimization, have all really been targeted at that protective business.

Dustin J. Semach: Cost as well as by negative four I get you to that negative 80, that's actually about $15 million worse than we originally anticipated and lot of thats coming from a little bit of let's say increased price pressure that we see our overall and that's being offset by the by the productivity benefits more broadly of the business not because keep in mind, while we are driving our cost you got to grow program, which is restructured holistic.

Dustin J. Semach: <unk>, we're always continuously driving productivity in underlying business and a lot of what youre seeing in protective if you go back to that cost takeout program can you go back to Q1, which keep in mind with a very low quarter in 2023 for Q1, specifically for protective that a lot of the actions that we've been taking in terms of.

Dustin J. Semach: And that's why you're seeing some of the benefits. Thank you, and one moment as we move on to our next question. Our next question is going to come from the line of Christopher Parkinson with Wolf's Research. Your line is open. Please go ahead.

Christopher S. Parkinson: In terms of cost control productivity footprint rationalization SG&A optimization have all really been targeted in our protective business and Thats why youre seeing some of the benefits youre seeing today.

Christopher S. Parkinson: Thank you and one moment as we move on to our next question.

Dustin J. Semach: Our next question is going to come from the line of Christopher Parkinson with Wolfe Research. Your line is open. Please go ahead.

Unknown Speaker: Great, thank you so much. Can you just take a step back and just, you know, looking at some of the businesses, you know, that you're referencing and the movement in food and improvements, can you take a step back and talk about a little bit more how you are thinking about your product portfolio, what you're seeing by geography, you know, obviously, there's been a lot of noise across protein markets the last few years, you know, it seems like things are turning generally for the positive, but I'd love to hear your perspective on, you know, how confident you are, to fully benefit from these improvements, or at least stabilization, let's say, you know, for the balance of 24. Thank you. Yeah, thank you, Chris.

Speaker Change: Alright, thank you so much.

Speaker Change: Can you just take a step back and just looking at some of the businesses.

Unknown Speaker: You are referencing in the moment in food and improvements can you just take a step back and talk about a little bit more on how you are thinking about your product portfolio, what you're seeing by geography, obviously theres been a lot of noise across protein markets. The last few years and it seems like things are turning generally for the positive, but I'd love to hear your perspective on how confident you are to <unk>.

Dustin J. Semach: And so I'll start with food; then I'll move on to protective clothing. And so we feel really strong about food holistically, going back to where our strength is, you know, we continue to be the market leader in our overall bags business, continue to gain share, and feel really good about that outside of kind of being the market ebb and flows on, you know, kind of global proteins, particularly as it relates to fresh red meat, specifically beef. And in this note, you know, we talked about the fact that this year is obviously a down year in the cattle cycle, and it's going to take a couple years to work through that.

Unknown Speaker: Fully benefit from these improvements or at least stabilization, let's say for the balance of 24. Thank you.

Speaker Change: Yes, Thank you, Chris and so I'll start with our fluids and I'll move to protective and so we feel really strong about fluid holistically going back to where our strength as we continue to be the market leader in overall bags business continue to gain share feel really good about that outside of kind of lead the market ebbs and flows on kind of global proteins, particularly as it relates to fresh red meat.

Dustin J. Semach: Specifically beef and it's no we've talked about the fact that this year is I'll say it down here in the cattle cycle and it's going to take a couple of years of work through that but we feel really good about our placement and from a portfolio perspective again, it's that combination that drive the raw materials science automation as well as technical service. When you think about it when we talked about in Q1 or excuse me in <unk>.

Dustin J. Semach: But we feel really good about our placement and from a portfolio perspective. And again, it's that combination that drives it around material science, automation, as well as technical service. You know, when we talked about in Q1, or excuse me, during the Q4 earnings call, and what we're still focused on, and Emile alluded to it a little bit earlier, is really rounding out our roll stock portfolio. We see that as an area of continued growth.

Dustin J. Semach: During Q4 earnings call and we're still focused on in our mill alluded to it a little bit earlier is really rounding out our roll stock portfolio, we see that as an area of continued growth.

Dustin J. Semach: The market leader in that space today, and Thats part of what creates a much larger market as well much more fragmented and so we still our focus from a portfolio perspective is continuing to round out that offering set and make sure thats competitive in the marketplace and so we're targeting specific applications that we're going after.

Dustin J. Semach: You know, we're not the market leader in that space today. And that's part of what creates it's a much larger market as well, much more fragmented. And so we feel, you know, our focus from a portfolio perspective is continuing to round out that offering set and make sure that it's competitive in the marketplace. And so we have specific applications that we're going after.

Dustin J. Semach: Example would be today, the strength of our our poultry business that you've seen that in to other areas.

Dustin J. Semach: And, you know, an example would be today's strength of our poultry business, but extending that into other areas. Then when you move to another third piece, just from a category perspective, it's the trades, right? We see a huge opportunity, think about sustainability themes around EPS, you know, that kind of the band's coming in place for that, the possible trade relaunch, but there are many other formats from a trade perspective that we're working on, that we're excited about. And so we continue to see that as a potential opportunity for just true net new growth going forward. And think of that as multi-year beyond just 2024 but into 25 and 26, right?

Dustin J. Semach: And then when you move to.

Dustin J. Semach: And then the other third pieces just from a category perspective is the trends right. We see a huge opportunity think about sustainability themes around EPS that kind of the bands coming in place for that but the postal trade relaunch, but there's many other formats from a trade perspective that we're working on that we're excited about and so we continue to see that as a potential opportunity.

Dustin J. Semach: It is true net new growth going forward and think of that multi year beyond just 2004, but into 'twenty five 'twenty six right and then as we shift gears and you go to a protective when you think about the portfolio. There it really is that completion.

Dustin J. Semach: And then as we shift gears and you go to protective, and you think about the portfolio there, it really is that completion in completing the overall fiber-based portfolio and, you know, continuing to extend some of the automation capabilities that we have. And, you know, the focus there, and Emile alluded to it earlier around, you know, the paper mailers, which are huge opportunities. Think about the e-commerce trends around a shift away from boxes and towards mailers more broadly.

Dustin J. Semach: The overall fiber based portfolio and.

Dustin J. Semach: Continuing to extend some of the automation capabilities that we have in the.

Dustin J. Semach: <unk> focus there to bill alluded to it earlier around the paper mailers, which is huge opportunity as you think about the e-commerce trends around a shift away from boxes into mailers more broadly if you think about we talked about <unk> rights right sizing that we already have today <unk> that we're beginning to generate sales on that will come into play in the second half of the year is those areas that.

Dustin J. Semach: If you think about, you know, we talked about 2D right-sizing that we already have today, and 3D that we're beginning to generate sales on that will come into play in the second half of the year. It's those areas that give us optimism. The area that we're still looking at and cautiously optimistic about is the rest of that broader portfolio. Think of it as utility. This is classically bubble wrap, foam, et cetera, where you still see some kind of weakness in Q1.

Dustin J. Semach: Give the optimism the area that.

Dustin J. Semach: We still.

Dustin J. Semach: We're still looking at and cautiously optimistic that as the rest of that broader portfolio. I think it is utility. This is classically bubble wrap foam et cetera, where you still see kind of weakness in Q1 and in a lot of the channel checks were doing and talking to our distributors kind of as you think about the rest of the back half of the year. They continue to be no different than we talked about in Q4 optimistic about the second half, but no one at this.

Dustin J. Semach: And a lot of the channel checks we're doing and talking to our distributors, kind of as you think about the rest of the back half of the year, they continue to be no different than we talked about in Q4. Optimistic about the second half, but no one at this point in time has true line of sight, right?

Emile Z. Chammas: So that's the area that we're continuing to work on and gain momentum. And I'm gonna turn to Emil. Yeah, I'm just gonna add one area that, you know, we haven't talked a lot about in the last few months, but it's in the fluid segment as well. We continue to be excited about the fluid segment and the growth there, be it through some of our innovations around FlexPrep for the food service area, but also, if you think about it holistically with all the sustainability and recycling pressures out there, there's going to be more and more pressure for people who are in the rigid business, be it plastic or non-plastic, to go towards flexible.

Emil: And time has true line of site right. So thats the area that will continue to work and gain momentum and I will turn to the mill, yes, just to add.

Emil: One area that we haven't talked a lot about the lost amongst but it's on the fluids segment as well we continue to be excited about the fluid segment of the growth therapy. It through some of our innovations.

Emil: <unk> flex prep for the foodservice area, but also if you think about it holistically with all of these sustainability.

Emil: Our recycling pressures out there that's going to be more and more pressure for people who are in Richard's business via plastic or non plastic to go towards flexible. So we're well positioned in terms of not only driving growth through our own innovation, but also how do we take advantage of those sustainability trends.

Emile Z. Chammas: So we're well positioned in terms of not only driving growth through our own innovations, but also how do we take advantage of those sustainability trends to penetrate further in terms of rigid and flexible. Thank you, and one moment as we move on to our next question. Our next question is going to come from the line of Anthony Pettinari with Citi. Your line is open. Please go ahead. Good morning.

Anthony James Pettinari: To penetrate further in terms of rigid and flexible coopervision.

Anthony James Pettinari: Thank you and one moment as we move on to our next question.

Emile Z. Chammas: And our next question is going to come from the line of Anthony Pettinari with Citi. Your line is open. Please go ahead.

Unknown Speaker: Dustin, on the last call, you talked through the net pricing outlook for 24. And I'm just wondering if there's any update on those items. I think you talked about 60 million negative net price and some moving pieces from raw material prices and the bonus pool restoration. So I'm just wondering if there are any material changes there. And then the 20 million EBITDA drag from net price in 1Q, was that, in line with your estimates, you know, better or worse? Any thoughts there? Yeah, great question.

Speaker Change: Good morning.

Unknown Speaker: Duston on the last call you talked through the net pricing outlook for 'twenty, four and I'm just wondering if theres any update on those items I think you talked about $60 million negative net price and with some moving pieces from raw material prices in the bonus pool restoration.

Unknown Speaker: Just wondering if theres any material changes there and then the $20 million EBITDA drag from net price in <unk> was that.

Unknown Speaker: In line with your estimates better worse any thoughts there.

Dustin J. Semach: So I mentioned a little bit earlier, and I'll break down kind of where we're at today. We're about $15 million worth, 15 to 20, year over year. Our net price realization is driven primarily by that increase in pressures from a pricing standpoint, where we're at roughly negative $140 million in price, offset by $100 million of benefits of direct material costs. And then that's being offset by inflationary pressure and non-material, non-labor costs, as well as labor costs. And that kind of brings you back down to roughly a net $80 million number for the full year.

Speaker Change: Yes, great question, So I mentioned, it a little bit earlier, and I'll break down kind of where were at today were about $15 million worth 15 to 20 year over year on net price realization is driven primarily by the increase in pressures a little bit from a pricing standpoint.

Dustin J. Semach: Roughly negative $140 million of price offset by $100 million of benefits of direct material costs, and then that's being offset by inflationary pressure and non material non labor costs as well as labor cost and that kind of brings you back down to roughly a net.

Dustin J. Semach: Q1 was really driven by, so that's net price realization. We feel good about that for the remaining of the year, as we kind of manage throughout this. And again, we're obviously really focused on cost control right now. When you think about Q1, the benefits, in a lot of ways, were just kind of the performance from a volume perspective, the leverage that drives the business. We've talked about it, but not enough in the sense that as volume comes back and it's restored, particularly as you've seen food in Q1, but you're seeing it even somewhat protective as that business is stabilized, is that you're seeing the ability for the business to drive leverage in it, operating leverage. And then that's also benefiting from just continued focus on CTO to grow, being cost-conscious, and broader productivity benefits in the And you're seeing that materialize in Q1, right?

Dustin J. Semach: Net $80 million number for the full year Q1 was really driven by net.

Dustin J. Semach: Net price realization, but we feel good about that for the remainder of the year.

Dustin J. Semach: As we kind of managed throughout this and again, we're obviously really focused on cost control right. Now when you think about Q1 and the benefits and a lot of ways.

Dustin J. Semach: Kind of the performance from a volume perspective to leverage that drives in the business, we've talked about it but not enough in essence of that is as volume comes back and as for store, particularly you've seen a food in Q1, but you're seeing it even somewhat protective as that business has stabilized is that youre seeing that the ability for that.

Dustin J. Semach: The business to drive leverage in it and operating leverage and then that's also benefiting from just continue.

Dustin J. Semach: Focus on CTO to grow being.

Dustin J. Semach: And so from the bonus restoration perspective, it's really just in line right now for the full year. So we're still driving towards, you still have that impact, that impact is already embedded in everything that we just talked about in our guidance. Thank you, and one moment for our next question. And our next question comes from the line of Yaron Viswanathan with RBC Capital Markets. Your line is open. Please go ahead.

Dustin J. Semach: Being cost conscious broader productivity benefits in the business and you saw that materialize in Q1.

Arun Shankar Viswanathan: And so from the bonus restoration perspective, it's really just in line right now for the full year. So we're still driving towards you still have that impact the impact is already embedded in everything that we just talked about in our guidance as well.

Arun Shankar Viswanathan: Thank you and one moment for our next question.

Arun Shankar Viswanathan: And our next question comes from the line of urine does one Nathan with RBC capital markets. Your line is open. Please go ahead.

Unknown Speaker: Great, thanks for taking my question. I guess I just wanted to come back to a similar line of questioning around the bridge. So my understanding was that you're expecting about plus 90 million from cost takeout to grow. And it sounds like you're now expecting minus 80 million for net price cost. So that's a plus 10 net. And then you have the minus 60 for incentive comp.

Speaker Change: Great. Thanks for taking my question.

Unknown Speaker: I just wanted to come back to a similar line of questioning around the bridge. So my understanding was you.

Unknown Speaker: We're expecting about plus $90 million from cost takeout to grow.

Unknown Speaker: And it sounds like Youre, now expecting minus $80 million for <unk>.

Unknown Speaker: Net price cost.

Unknown Speaker: So that's a plus 10 net and then you have the minus 64.

Unknown Speaker: Comp and so that's a minus 17 that and so when you think about volume.

Unknown Speaker: Looks like you.

Unknown Speaker: If you think about flat volume.

Unknown Speaker:

Unknown Speaker: Really it would be kind of a negative volume that would get you to that kind of flattish EBITDA year on year outlook. So could you just update on how you. How you guys think volume should progress from here I know food outperformed a little bit but protective is still down it looks like it's down about 22% on a two year stack. So does that kind of flatten out as you move forward.

Unknown Speaker: And so that's a minus 70 net. And so when you think about volume, it looks like, you know, you, you know, if you think about flat volume, really, it would be kind of negative volume that would get you to that kind of flattish EBITDA year on your outlook. So could you just update on how you guys think volume should progress from here? I know, you know, food outperformed a little bit. But protective is still down.

Unknown Speaker: Or how do you think about volume and relate that to the bridge.

Speaker Change: Sure, Yes, so I'll come back to the bridge as a last point.

Speaker Change: But just talking about volume progression throughout the year. If you look at the total company level right. When you think about how volume is going to continue to progress you think about right. Now today, we drove about half a point of growth in Q1, and then if you think about as you go to Q2, where we're down about a point of happened then you're going to expect the rest of the second half of the year really in this.

Unknown Speaker: Think of it as.

Unknown Speaker: Total round to two 5% per quarter.

Unknown Speaker: And that drives you to about a point of volume growth in the full year is really being driven all by foods. If you break it down by overall businesses and you go back to food for a second food volume Youre looking at 3% and that's the strength that we talked about earlier today at length and if you think about Q2 is flattish and the reasons that we've already outlined and then those wins coming through in the broader business.

Unknown Speaker: Youre looking at low single digit growth that gets you to about 2% to 3% for the full year and then if you go to protective Q2 is going to be a similar result, its improved year over year from Q4. So if you think it was down five now you are down for the it will be continue to be down for in Q2, and as you get to the second half of the year begins to improve right and we talked about that to where we think that will have.

Unknown Speaker: Looks like it's down about 22% on a two-year stack. So does that kind of flatten out as you move forward? Or how do you think about volume and relate that to the bridge?

Unknown Speaker: <unk> kind of during the Q4 timeframe.

Unknown Speaker: So if you think about bridging for the full year Holistically.

Unknown Speaker: Net price realization of <unk> NEK.

Unknown Speaker: Negative $80 million that we talked about the plus $90 million.

Unknown Speaker: And then you have a negative $40 million roughly right to the bones restoration and a positive <unk> 20 related to the volume and these are all again rough numbers.

Unknown Speaker: Thanks. Sure, yeah. So I'll come back to the bridge as my last point.

Unknown Speaker: But just talking about volume progression throughout the year, if you look at the total company level, right, and you think about how volume is going to continue to progress, if you think about right now, today, we drove about half a point of growth in Q1. And then if you think about as you go to Q2, we're down about a point and a half, and then you're going to expect the rest of the second half of the year, really in this, you know, think of it as total around two, two and a half percent per quarter. And that drives you to about a point of volume growth for the full year; it's really being driven all by food.

Speaker Change: Thank you and one moment for our next question.

Unknown Speaker: So if you break it down by overall businesses, and you go back to food for a second, food volume, you're looking at, you know, 3%. And that's the strength that we talked about earlier today, at length. And if you think about Q2, it's flattish for the reasons that we've already outlined.

Speaker Change: Our next question comes from the line of <unk> <unk> with Jefferies. Your line is open. Please go ahead.

Speaker Change: Hey, guys congrats on a strong quarter in a choppy environment.

Speaker Change: I guess my question's on protective.

Unknown Speaker: It looks like volumes have stabilized, but you did call out perhaps emea's little weaker youre seeing some destocking and sustainability pressure is that a material risk and how do I think about your demand profile this year.

Unknown Speaker: Appreciating.

Unknown Speaker: Comments around being refocus on the commercial team on protective in Canada, driving fiber on the Deco side, how does that margin profile look and aspirational when we think about 2025.

Speaker Change: Give us some perspective as to how big this could be and when we look at the recovery next year or some of these headwinds that you've called out limiting your ability to grow or we should see a typical cyclical recovery in that business like we've seen in past cycles.

Unknown Speaker: And then those winds coming through in the broader business, you're looking at low single-digit growth that gets you to about two to 3% for the full year. And then if you go to protective, you know, Q2 is going to be a similar result, it's improved year over year from Q4. So if you think it was down five, now you're down four, and you'll continue to be down four in Q2. And as you get to the second half of the year, it begins to improve, right?

Unknown Speaker: And we talked about that where we think that will inflect kind of during the Q4 time. Right, so if you think about, you know, bridging for the full year holistically, that net price realization of about, you know, negative 80 million that we talked about the plus 90 million, then you have a negative 40 million roughly raised to the bonus restoration and a positive 20 related to the volume. And these are, again, rough numbers.

Speaker Change: Yes, so a great question I'll start with the EMEA comment and you are right, we did rightly call that out.

Unknown Speaker: It was down.

Unknown Speaker: Down significantly in Q1, and really that's an extension coming out of 2023, where I would say if you go back to 'twenty, two where the volume really came down that business EMEA came a little bit later in that cycle in terms of actual volume decline and it's kind of kind of think of it as last in last out relative to us as we as we progress we see Q1, we see that business.

Unknown Speaker: To substantially improve as we go to Q2 Q3 and Q4 on the sustainability pressures are still still being overall.

Unknown Speaker: We did make the comment around the acceleration in nextel ratios that shift to fiber, where you see it more quickly happening within the EMEA business than you do you see it relative to our Asia Pac or obviously, our U S and North American business, our Latin American business.

Unknown Speaker: And right now we don't see that because keep in mind our EMEA.

Unknown Speaker: Protective businesses I'm going to say roughly 20% of the total total total protective business that we see one the work that we're doing from an overall portfolio perspective, which will allow us to begin to participate in a more meaningful way and the growth in that transition, which will help offset some of the sustainability of pressures that we just discussed and then more broadly we still believe that.

Unknown Speaker: Business is set up for a cyclical rebound.

Unknown Speaker: Ill go back to we're anticipating an L shape recovery, we're still expecting that throughout this year a lot that will be dependent on how we perform in the second half and as we mentioned on the prepared remarks.

Unknown Speaker: Also you were looking forward to come back in that discussion in August that give you more clarity because again, we still are operating in a low visibility dynamic environment, but there is nothing from our point of view as we think about the underlying market growth trends that come with a rebound that we should be able to participate in that albeit in EMEA. As an example, maybe at a slightly lower rate until we get our portfolio, where we needed to be.

Unknown Speaker: Thank you, and one moment for our next question. The next question comes from the line of Philip Ng with Jeffrey. Your line is open. Please go ahead.

Philip H. Ng: Thank you and one moment for our next question.

Unknown Speaker: Hey guys, congrats on a strong quarter and choppy environment. I guess my question is about protective gear. Looks like volumes have stabilized, but you did call out that perhaps EMEA is a little weaker, seeing some destocking and sustainability pressure. Is that a material risk, and how should you think about your demand profile this year? Appreciating, you know, comments around being refocused on the commercial team on protective and kind of driving fiber on the protective side. How does that margin profile look?

Unknown Speaker: Our next question is a follow up question from George Staphos with Bank of America Securities. Your line is open. Please go ahead.

Unknown Speaker: An aspiration when we think about 2025, you know, give us some perspective on how big this could be. And when we look at the recovery next year, are some of these headwinds that you've called out limiting your ability to grow, or should we see, you know, a typical cyclical recovery in that business like we've seen in the past? Yeah, so a great question. And I'll start with the Mia comment

Mia: Thanks, So much hi, guys I just wanted to come back to my earlier question.

Unknown Speaker: Really around what are your customers asking you in particular in both segments relative to your product offerings.

Unknown Speaker: And of a broad question, but within protective.

Unknown Speaker: Do you see any difference between what youre smaller distributor customers are asking for from seal there relative to the larger ones. So for example are the larger ones really more focused on fiber and the smaller guys are really more focused on pricing where service is there a way to differentiate and in turn.

Unknown Speaker: And you're right, we did rightly call that out. It was, you know, it was down significantly in Q1. And really, that's an extension coming out of 2023, where I would say, you go back to 22, where the volume really came down at business, you know, Mia was a little bit later in that cycle in terms of actual volume decline. And it's kind of, you know, kind of think of it as last in and last out relative to, as we progress, we see Q1, we see that business substantially improve.

Speaker Change: I know what's in your guidance, but what is it costing you and then when you get that fixed maybe piggybacking a little bit on what Phil was getting at what's the uplift when you get that resolved what does that mean in terms of revenue and earning similarly in food.

Unknown Speaker: We know you have the product offering that.

Unknown Speaker: You think you need we know that customers basically dictate whether they want <unk> any other barrier layer in their bags or whatever do you have given your portfolio right now basically offering whatever the customer needs. If they want to pivot to some other structure you are not <unk>.

Speaker Change: Constrained from a supply chain standpoint, you can offer whatever they want and not have an impact your earnings or would it thanks and I'll turn it over and good luck in the quarter. Yes, yes. Thank you George so to come back to the point about protective I would say that keep in mind. When you think about our distribution footprint by your larger distributors tend to kind of offer the full <unk>.

Unknown Speaker: As we go to Q2, Q3, and Q4, the sustainability pressures are still, you know, still being overall, you know, we did make the comment around the acceleration and acceleration of that shift to fiber where you see it, you know, more quickly happening within the media business than you do, you see it relative to our Asia packer, obviously, our US and North American business or Latin American business. And, you know, right now, we don't see that, because keep in mind that our MIA, you know, protected businesses, I want to say roughly 20% of the total, total, total protective business that we see.

Unknown Speaker: One, the work that we're doing from an overall portfolio perspective will allow us to begin to participate in a more meaningful way in the growth and that transition, which will help offset some of the sustainability pressures that we just discussed. And then, more broadly, we still believe that business is set up for a cyclical rebound. I go back to we're anticipating an L-shaped recovery; we're still expecting that throughout this year, a lot of that will be dependent on how we perform in the second half.

Unknown Speaker: Breadth and depth of the entire portfolio, where you could have regional distributors offering different pieces of it not holistically. So some of the needs are dictated by obviously the pieces of the portfolio that they all collectively cell and I would tell you in general.

Unknown Speaker: There is there is a desire to have a broader fiber footprint, which is what's leading to us means obviously that customer feedback, whether it's direct or within our distribution that are leading us to kind of think about and shape. Our overall portfolio where are they seeing demand, where we don't have it right now more broadly and so I think that that's really been the focus area and going back to your question around <unk>.

Unknown Speaker: Tangibilitate.

Unknown Speaker: I wish when he'd come back to that one point. She also made a comment about is service different et cetera. It depends it really depends again on the portfolio as they sell because the service models that you have are really structure around those individual areas, where if somebody is selling a lot more of our automation portfolio. You also have a lot more technical service as it relates to surveys and those machines, but it's really dependent on that portfolio mix. So.

Unknown Speaker: We're focused on is getting that optimum mix in each individual distributor and and then the rest of it will kind of follow suit I mean again, our technical service has always been a bright spot in terms of competitive differentiation and it continues to be in our distribution as well as direct customers recognize that when you think about our overall food business more broadly.

Unknown Speaker: I think that.

Unknown Speaker: A couple of comments I would make the answer is yes, we obviously offer both today are customers dictate what they want in our portfolio. We feel really good about because you specifically the question you're asking about really relates to our shrink bag business and we feel well positioned to continue to offer either taco materials or bags that they would like that at any given point in time.

Unknown Speaker: And so we're in constant dialogue no different when our distributors were constant dialogue I know myself with our direct customers our largest customers to really understand what their needs are how sustainability pressures are shaping their thinking around their overall needs in terms of what's also important for their supply chain. So I'd say, that's the most important for a lot of these those discussions are less about sustainability and more.

Unknown Speaker: Performance.

Unknown Speaker: And we continue to be well positioned there is roll stock that we mentioned that we need to continue to do more work.

Unknown Speaker: And then again, we're really excited about the play that we have.

Unknown Speaker: Our fluids and liquids business and the opportunity that presents to continue to displace Richards and from an application perspective, and so I feel really well positioned there right now going back to your question about cost. It is embedded in there is nothing in our portfolio to think about it over time. This isn't the first time that we've had some type of pressure we've shifted our portfolio our navigate these two.

Unknown Speaker: The scenarios, it's embedded in our current capital outlay for 2024, and as part of our broader kind of as we think about kind of getting to where we need to from a deleveraging standpoint 25. It is embedded in that as well.

Speaker Change: Thank you and one moment for our next question.

Unknown Speaker: Our next question is a follow up question from Gabe Poggi with Wells Fargo. Your line is open. Please go ahead.

Speaker Change: Thank you for taking the follow up.

Unknown Speaker: We didn't spend a whole lot of time talking about automation I mean, when you kind of teased out that you guys will be.

Unknown Speaker: Updating us in the second half in terms of our strategy of resources there but.

Unknown Speaker: Was that a drag here in the first half we're reading a lot about delayed capex projects from industrial companies and general lack of visibility higher costs.

Unknown Speaker: Financing costs et cetera.

Unknown Speaker: And then just kind of what the book to Bill.

Unknown Speaker: The ratio has been trending like and could that be.

Unknown Speaker: Things normalize into 2025, I think on the food side of your customers are pretty well incentive to use your equipment.

Unknown Speaker: And as we mentioned in the kind of prepared remarks, you know, we're obviously looking forward to coming back into that discussion in August to give you more clarity because, again, we still are operating in a low visibility dynamic environment. But there's nothing from our point of view as we think about the underlying market growth trends that come with a rebound that we should be able to participate in, albeit, in the MIA, as an example, maybe at a slightly lower rate until we get our portfolios out where we need them.

Unknown Speaker: Could that be kind of an incremental tailwind for you in 'twenty five.

Speaker Change: Yes. Thank you for that question. So actually we did say in our prepared remarks actually in the first quarter, we sold in the food business.

Unknown Speaker: Automation sales up double digits, but for the year, we're sort of in line in terms of where we guided it is going to be flattish driven.

Unknown Speaker: Driven by all of those factors that you highlighted in terms of book to Bill ratio. We're at one right. So some of that is burning through some of the backlog.

Unknown Speaker: Thank you, and one moment for our next question. Our next question is a follow-up question from George Staphos with Bank of America Securities. Your line is open. Please go ahead. Thanks so much.

Unknown Speaker: Hi Guys, I just want to come back to my earlier question. And it's really around, you know, what are your customers asking you in particular in both segments, relative to your product offerings? I know it's kind of a broad question, but within protective, do you see any difference between what your smaller distributor customers are asking for from sealed air relative to the larger ones? You know, so for example, are the larger ones really more focused on fiber, and are the smaller guys really more focused on pricing or service?

Unknown Speaker: Is there a way to differentiate and, in turn, you know, kind of, I know it's in your guidance, but what's it costing you? And then, when you get that fixed, maybe piggyback a little bit on what Phil was getting at, what's the uplift when you get that resolved? What does that mean in terms of revenue and earnings? Similarly, in food?

George Leon Staphos: So again, there our hesitation is out there in terms of triggering.

Unknown Speaker: We know you have the product offering that you think you need. We know that customers basically dictate whether they want PVDC or EVOH or any other barrier layer in their bags or whatever. Do you have to, given your portfolio right now, basically offer whatever the customer needs? If they want to pivot to some other structure, you are not constrained from the supply chain standpoint; you can offer whatever they want and not have it impact your earnings? Or would it?

Unknown Speaker: Investments from our customers, but if you look at our customers profitability profile that is significantly improving so we are still optimistic about the future.

Unknown Speaker: This business as you can imagine is lumpy in terms of.

Unknown Speaker: When exactly as Tom was when you install when you can recognize the revenue so again our outlook on automation for this year has not changed.

Unknown Speaker: We're off to a good start.

Unknown Speaker: And we do believe that.

Unknown Speaker: <unk> will come back.

Unknown Speaker: And I'll turn it over and good luck in the quarter. Yeah. Yeah. Thanks. Thank you, George.

Unknown Speaker: We're going to be ready to take advantage of them.

Unknown Speaker: So to come back to the point about protection, I would say that, when you think about our distribution footprint, your larger distributors tend to offer the full breadth and depth of the entire portfolio, while you could have regional distributors offering different pieces of it, not holistically. So some of the needs are dictated by, obviously, the pieces of the portfolio that they all collectively sell.

Unknown Speaker: And I would tell you, in general, there is, you know, there is a desire to have a broader fiber footprint, which is what's leading us to mean obviously that customer feedback, whether it's direct or within our distribution, they're leading us to kind of think about and shape our overall portfolio. Where are they seeing demand where we don't have it right now more broadly? And so I think that that's really been the focus area. And I want to go back to your question around the intangibilities, you know, and I just want to come back to that one point. So you also made a comment about a different service, et cetera. It depends.

Speaker Change: Thank you I would now like to hand, the conference back to MS. Sherman for closing remarks.

Unknown Speaker: It really depends, again, on the portfolio itself, because the service models that you have are really structured around those individual areas where if somebody is selling a lot more of the automation portfolio, you're also going to have a lot more technical services that relate to servicing those machines. But it's really dependent on that portfolio mix. So what we're focused on is getting that optimum mix in each individual distributor, and then the rest of it will kind of follow suit.

Unknown Speaker: I mean, again, our technical service has always been a bright spot in terms of competitive differentiation, and it continues to be in our distribution, as well as direct customers recognize that. When you think about our overall food business, you know, more broadly, I think there are a couple of comments I would make. The answer is yes.

Unknown Speaker: You know, we obviously offer, you know, both today; our customers dictate what they want in that portfolio. We feel really good about, specifically the question you're asking about really relates to our shrink bag business, and we feel well positioned to continue to offer any type of materials or bags that they would like at any given point in time. And so we're in constant dialogue, no different than when our distributors were in constant dialogue, Emile and myself, with our direct customers, our largest customers, to really understand, you know, what their needs are, how sustainability pressures are shaping their thinking around their overall needs in terms of what's also important for their supply chain. Because I'll tell you, that's the most important part.

Unknown Speaker: A lot of those discussions are less about sustainability and more about performance, and we continue to be well positioned there. It's the roll stock that we mentioned that we need to continue to do more work. And then again, we're really excited about the opportunities that our fluids and liquids business presents to continue to displace ridges from an application perspective. And so I feel really well positioned there.

Speaker Change: I'd like to thank everyone for their time today.

Unknown Speaker: Just to reiterate we are pleased with our first quarter results and we're excited about the momentum building in the business and the progress we're making on transformation and we look forward to speaking to all of you again in August thank.

Unknown Speaker: You know, right now, going back to your question about cost, it is embedded, and there's nothing in our portfolio. Because think about it, over time. This isn't the first time that we've had some type of pressure or shifted our portfolio or navigated these types of scenarios. It's embedded in our current capital outlay for 2024, and as part of our broader, you know, as we think about kind of getting to where we need to from a deleveraging standpoint in 2025, it's embedded in that as well.

Unknown Speaker: Thank you, and please wait one moment for our next question. Our next question is a follow-up question from Gabe Hodgey with Wells Fargo. Your line is open. Please go ahead. Thank you for taking the follow up. We didn't spend a whole lot of time talking about automation. Emile, you kind of teased out that you guys will be, I guess, updating us in the second half, in terms of strategy or resources there. But just was that a drag here in the first half?

Unknown Speaker: We're reading a lot about delayed CapEx projects from just industrial companies in general, lack of visibility, higher costs, financing costs, etc. And then just kind of what the book to bill ratio has been trending like. And then could that be, you know, things normalize in 2025? I think on the food side, your customers are pretty well incentives to use your equipment. Could that be kind of an incremental tailwind for you in 2025?

Emile Z. Chammas: Thank you. I would now like to hand the conference back to Emile Chammas for his closing remarks. I'd like to thank everyone for their time today, and just to reiterate, we are pleased with the first quarter results, and we're excited about the momentum building, the business, and the progress we are making on transformation. We look forward to speaking to all of you again in August. Thank you. Yeah, thank you. This concludes today's conference call.

Unknown Speaker: Thanks. Yeah, thank you for that question. So actually, you know, we did say in our prepared remarks that, actually, in the first quarter, we saw double-digit growth in our automation sales in the food business, but for the year, we're still in line in terms of where we got it, it is going to be flattish, driven by all those factors that you've highlighted in terms of book to bill ratio. We're at one, right

Unknown Speaker: So some of that is burning through some of the backlog. So again, there are hesitations out there in terms of triggering investments from our customers. But if you look at our customers' profitability profiles, it is significantly improving, so we are still optimistic about the future. But this business, as you can imagine, is lumpy in terms of when exactly it comes, when you install it, and when you can recognize the revenue. So again, our outlook on automation for this year has not changed. We're off to a good start, and we do believe, you know, that cyclicality will come back, and we're going to be ready to take advantage of it.

Speaker Change: Thank you yes. Thank you.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Unknown Speaker: Yes.

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Unknown Speaker: Okay.

Emile Z. Chammas: Thank you for participating. You may now disconnect. , , , , , , , , , , , , , , , ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Copyright © 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.

Emile Z. Chammas: Okay.

Emile Z. Chammas: Yes.

Emile Z. Chammas: Yeah.

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Emile Z. Chammas: Yes.

Emile Z. Chammas: Yes.

Emile Z. Chammas: Yes.

Emile Z. Chammas: Okay.

Emile Z. Chammas: Yes.

Emile Z. Chammas: Okay.

Emile Z. Chammas: Okay.

Emile Z. Chammas: Okay.

Emile Z. Chammas: Yeah.

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Emile Z. Chammas: [music].