Q4 2024 Sealed Air Corp Earnings Call

February 25, 2025

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Speaker Change: I would now like to hand, the conference over to your first speaker today Mark Stone. Please go ahead.

Okay.

Speaker Change: Thank you and good morning, everyone before I begin our prepared remarks, I'd like to introduce myself I am Archstone sealed air's, new Vice President of Investor Relations, Brian Sullivan now serves as our company as Treasurer I'm glad to be here. This morning, and look forward to engaging with our investor community with me.

Speaker Change: Good day and thank you for standing by welcome to the Q4 2020 for sealed Air earnings Conference call.

At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question answer session last quick question. During the session you will need to press star one one on your telephone you will.

Speaker Change: Today, our <unk>, our newly appointed President and CEO and Ronnie Johnson, our recently named interim CFO before we begin our call I would like to note that we have provided a slide presentation to supplement the call.

Speaker Change: Then here an automated message advising your hand is raised to.

Speaker Change: To withdraw your question. Please press star one one again.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to your first speaker today Mark Stone. Please go ahead.

Speaker Change: Please visit <unk> Dot com, where today's webcast and presentation can be downloaded from our Investor Relations page.

Speaker Change: Thank you and good morning, everyone before I begin our prepared remarks, I'd like to introduce myself I'm Martin Thiel.

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

Speaker Change: There is new Vice President of Investor Relations, Brian Sullivan now serves as our company's treasurer I'm glad to be here. This morning, and look forward to engaging with our investor community with me today are doesn't seem at our newly appointed President and CEO and Rodney Johnson, our recently named interim CFO.

Speaker Change: These statements are based solely on information that is now available to US. We encourage you to review the information in the section entitled forward looking statements in our earnings release, and slide presentation, which applies to this call. Additionally, our future performance may differ due to a number of factors many of these factors.

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

Speaker Change: <unk> are listed in our most recent annual report on Form 10-K, as revised and updated on our quarterly report on Form 10-Q, and current reports on form 8-K.

Speaker Change: Please visit <unk> Dot com, where today's webcast and presentation can be downloaded from our Investor Relations page.

Speaker Change: We discuss financial measures that do not conform to U S. GAAP you will find important information on our use of these measures and their reconciliation to U S. GAAP in our earnings release and 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.

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

Speaker Change: I will now turn the call over to Dustin and Ronny operator, please turn to slide three duston.

Speaker Change: 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 on our quarterly report on Form 10-Q, and current reports on form 8-K.

Speaker Change: Thank you Mark and thank you for joining us for our fourth quarter earnings call.

Speaker Change: Before we begin I'd like to address the recent CEO transition.

Let me start by saying I am very grateful for the opportunity and privilege to be sold as CEO and I couldnt be more excited about our future.

Speaker Change: We discuss financial measures that do not conform to U S. GAAP you will find important information on our use of these measures and their reconciliation to U S. GAAP in our earnings release included in the Appendix of today's presentation, you will find U S. GAAP financial results that correspond to the non U S. GAAP measures, we reference throughout the presentation.

Speaker Change: I recognize that quick changes at the CEO level can raise concerns for all of our stakeholders.

Speaker Change: Let me assure you our strategy has not changed we continue to execute against the plans developed under my leadership as co CEO and president and those initiatives are already taking hold over.

Dustin: I will now turn the call over to Dustin and Ronny operator, please turn to slide three duston.

Speaker Change: For the past few years, we have stabilized our business performance rebuilt our leadership team strengthened our balance sheet and transform back into two market focus business segments food and protective.

Dustin: Thank you Mark and thank you for joining us for our fourth quarter earnings call.

Speaker Change: Before we begin I'd like to address the recent CEO transition.

Speaker Change: While we have made significant progress there is much work ahead of us to improve outcomes for our customers and shareholders and we plan to accelerate the pace of execution from here.

Speaker Change: Let me start by saying I am very grateful for the opportunity and privilege to be sold as CEO and I couldnt be more excited about our future.

Speaker Change: I'm partnering with our board segment President in the rest of the sealed air team to meet these challenges head on with urgency as we continue our transformation journey.

Speaker Change: I recognize that quick changes at the CEO level can raise concerns for all of our stakeholders.

Speaker Change: With that I am excited to give an update on how we closed out 2024 and provide insight into our ongoing transformation in 2025.

Speaker Change: Over the past few years, we have stabilized our business performance rebuilt our leadership team strengthened our balance sheet and transform back into two market focus business segments food and protective.

Speaker Change: We exceeded our expectations in the fourth quarter, including coming in higher than our guided midpoint across adjusted EBITDA, adjusted EPS and free cash flow and driving constant currency sales growth.

Speaker Change: We have now consistently delivered against the expectations for six straight quarters, reflecting improved discipline in fundamentals and better commercial execution.

Speaker Change: I am partnering with our board segment President in the rest of the sealed air team to meet these challenges head on with urgency as we continue our transformation journey.

Speaker Change: The strength of our food business more than offset the challenges in protective throughout 2024.

Speaker Change: Excluding the restoration of our incentive compensation pools, we drove mid single digit adjusted EBITDA growth. Despite a sales decrease of 2%.

Speaker Change: With that I am excited to give an update on how we closed out 2024 and provide insight into our ongoing transformation in 2025.

During the fourth quarter, we accelerated the operationalization of our food and protective businesses.

Speaker Change: We have now fully integrated our commercial innovation and supply chain teams into each respective segment.

As we completed the full reorganization, we continue to streamline our cost structure to improve organizational agility and our cost positions.

Speaker Change: We have now consistently delivered against the expectations for six straight quarters, reflecting improved discipline in fundamentals and better commercial execution.

Speaker Change: We are getting closer to the markets, we serve and our customers by reducing silos complexity and bureaucracy, while building a culture of accountability and ownership.

Speaker Change: The strength of our food business more than offset the challenges in protective throughout 2024 <unk>.

Speaker Change: Brian will give more detail on our four core performance in a few minutes, but first let me shift to 2025.

Speaker Change: Excluding the restoration of our incentive compensation pools, we drove mid single digit adjusted EBITDA growth. Despite a sales decrease of 2%.

Speaker Change: Our focus this year is to further unlock the underlying potential of each business based on their respective end markets and portfolios.

Speaker Change: During the fourth quarter, we accelerated the operationalization of our food and protective businesses.

Speaker Change: Both businesses and market support consistent low single digit volume growth.

Speaker Change: We have now fully integrated our commercial innovation and supply chain teams into each respective segment.

Speaker Change: With the leverage across our footprint our strategy is to drive mid single digit earnings growth and deliver high cash flow conversion on organic basis over the long term.

Speaker Change: As we completed the full reorganization, we continue to streamline our cost structure to improve organizational agility and our cost positions.

Over the next two years, we are targeting deleverage the balance sheet to three times.

Speaker Change: We're getting closer to the markets, we serve and our customers by reducing silos complexity and bureaucracy, while building a culture of accountability and ownership.

Speaker Change: Once that is accomplished we will be able to return to a more balanced approach to capital allocation, including disciplined M&A and a return of capital to our shareholders.

Speaker Change: Brian will give more detail on our four core performance in a few minutes, but first let me shift to 2025.

Speaker Change: As we are now organized by segment, we have more visibility into the cost structures of each business the resources devoted to each portfolio and the impact of capital allocation, giving us more levers to help each business achieve their potential.

Speaker Change: Our focus this year is to further unlock the underlying potential and in each business based on their respective end markets and portfolios.

Speaker Change: Both businesses and market support consistent low single digit volume growth.

Speaker Change: More importantly.

Speaker Change: We are instilling and end market and customer focus throughout each business, which will guide our allocation of resources innovation and capital towards the portfolios that drive the most long term customer value.

Speaker Change: With the leverage across our footprint our strategy is to drive mid single digit earnings growth and deliver high cash flow conversion on organic basis over the long term.

Speaker Change: Over the next two years, we are targeting deleverage the balance sheet to three times.

Speaker Change: While the shift in investment strategy will take time to yield results. We are in parallel actively improving commercial execution and service levels across the business.

Once that is accomplished we will be able to return to a more balanced approach to capital allocation, including disciplined M&A and a return of capital to our shareholders.

Speaker Change: Shifting our culture to become high performing engaged empowered and accountable is at the center of our transformation within the company.

Speaker Change: We continue to strengthen the end market leadership teams and in parallel pushed decision, making further down in the organization to empower our field and supply chain teams to own their customer outcomes.

Speaker Change: More importantly.

Speaker Change: While we made progress over the last year, especially in food, we will continue to adjust as we have the right talent in our most critical positions and fully make the shift in our culture.

Speaker Change: While the shift in investment strategy will take time to yield results. We are in parallel actively improving commercial execution and service levels across the business.

Speaker Change: We have been operating in a dynamic macro environment, where we have increased volatility due to uncertainty around global trade and its potential impact on our customers' demand patterns and supply chain input cost and foreign exchange movements.

Speaker Change: Shifting our culture to become high performing engaged empowered and accountable is at the center of our transformation within the company.

Speaker Change: On the potential tariff impacts while most of our businesses domestic production for domestic consumption, we do have trade with countries, which could be impacted by the tariff discussions.

Speaker Change: We continue to strengthen and market leadership teams and in parallel pushed decision, making further down in the organization to empower our field and supply chain teams to own their customer outcomes.

Speaker Change: At this time, we plan on mitigating tariff impacts through changes in our supply chain and by passing through additional cost to our customers if necessary.

Speaker Change: While we made progress over the last year, especially in food, we will continue to adjust until we have the right talent in our most critical positions and fully make the shift in our culture.

Speaker Change: More importantly, we are partnering with our customers and helping them navigate the potentially Baxter third business, which is much more difficult to predict at this stage.

Speaker Change: We've been operating in a dynamic macro environment, where we have increased volatility due to uncertainty around global trade and its potential impact on our customers' demand patterns and supply chain input cost and foreign exchange movements.

Speaker Change: Our outlook only contemplates tariffs that are currently in effect.

Speaker Change: With the foundation of each business now fully built it's all about unyielding focus on execution within our markets, our food and protective businesses serve.

Speaker Change: I'll now dive into each businesses outlook in 2025.

Speaker Change: Food is coming off a strong 2024, where we were able to grow volumes mid single digits and gained share.

Speaker Change: This time, we plan on mitigating tariff impacts through changes in our supply chain and by passing through additional cost to our customers if necessary.

Speaker Change: Over the past year, we refocused on the core values that make cryo vac into the brand it is today.

Speaker Change: More importantly, we are partnering with our customers and helping them navigate the potentially Baxter <unk> business, which is much more difficult to predict at this stage.

Speaker Change: Servicing our customers day in and day out and keeping them up and running with the best packaging solutions.

Speaker Change: Our world Class engineering, and manufacturing capabilities enable us to create unmatched packaging solutions that improve our customer outcomes by improving their processing yields and throughput, while extending shelf life, ensuring safety enhancing brand image of their products.

Speaker Change: Our outlook only contemplates tariffs that are currently in effect.

Speaker Change: With the foundation of each business now fully built it's all about unyielding focus and execution within the markets are food and protective businesses serve.

Speaker Change: I'll now dive into each business outlook in 2025.

Speaker Change: While industrial fresh Red meat and markets ended 2024 in a better position than we originally anticipated we see compression in the North American beef cycle, increasing as we progressed through the year, which will put pressure on our shrink back volumes.

Food is coming off a strong 2024, where we were able to grow volumes mid single digits and gain share.

Speaker Change: Over the past year, we refocused on the core values that make cryo vac into the brand it is today.

Speaker Change: The situation is dynamic as the cost of feedstock has increased significantly over the last couple of quarters, putting pressure on our customers' businesses.

Speaker Change: Servicing our customers day in and day out and keeping them up and running with the best packaging solutions.

Speaker Change: However, with the breadth of our portfolio, we are focusing on higher growth businesses, such as case ready and fluids, whose end markets are less volatile and represent a growth opportunity this year and beyond.

Speaker Change: The share gains made in these portfolios in 2024 will continue to ramp this year, giving us positive momentum right out the gate.

Speaker Change: Foods growth will be further supported by new innovations in automation and sustainable offerings.

Speaker Change: Leverage across the footprint combined with our recently streamlined structure will drive the business to a projected mid single digit earnings growth in 2025.

Speaker Change: The situation is dynamic at the cost of feedstock has increased significantly over the last couple of quarters, putting pressure on our customers' businesses.

Speaker Change: While we expect foods and markets to be more dynamic this year I'm confident this business is on the right trajectory and we are well positioned to fully achieve its underlying long term potential.

Speaker Change: I'm now going to shift to our protective segment.

Speaker Change: While we made progress last year repositioning this business by refocusing on our customers and our markets. There is more work ahead of us to stabilize the business and drive an inflection point in volumes.

Speaker Change: The share gains made in these portfolios in 'twenty 'twenty four will continue to ramp this year, giving us positive momentum right out the gate.

Speaker Change: Foods growth will be further supported by new innovations in automation and sustainable offerings.

Speaker Change: We have completed several transformation programs initiated last year to restore customer focus.

Speaker Change: First we reorganized our north American go to market team to simplify our coverage and minimize customer touch points internally.

Speaker Change: Leverage across the footprint combined with our recently streamlined structure will drive the business to a projected mid single digit earnings growth in 2025.

Speaker Change: As part of the reorganization, we strengthen our relationships with our distribution partners by aligning our field leaders to ensure we are going to market together.

Speaker Change: Lastly, we implemented many commercial excellence initiatives, including streamlining our pricing approach to improve time to quote.

Speaker Change: I am now going to shift to our protective segment.

Speaker Change: And implementing a more simplified growth oriented incentive program for our field among many others.

Speaker Change: The combination of these market oriented actions as laid the foundation to give us more flexibility and control over the mix of products, we sell into the market.

Speaker Change: We have completed several transformation programs initiated last year to restore customer focus.

Speaker Change: First we reorganized our north American go to market team to simplify our coverage and minimize customer touch points internally.

Speaker Change: We will focus on shifting our portfolio over time to the solutions that deliver the most customer value like auto back in <unk>.

Speaker Change: As part of the reorganization, we strengthen our relationships with our distribution partners by aligning our field leaders to ensure we are going to market together.

Speaker Change: Beyond the focus on the go to market approach, we continue to shape the solution portfolio by becoming more substrate agnostic in the portfolios that are sold into consumer facing end markets like E Commerce.

Speaker Change: Lastly, we implemented many commercial excellence initiatives, including streamlining our pricing approach to improve time to quote.

Speaker Change: Our immediate focus is on commercializing the fiber mailer offerings, we have previously discussed and bringing to market our hybrid auto bag offerings.

Speaker Change: And implementing a more simplified growth oriented incentive program for our field among many others.

Speaker Change: While we've made progress on our Mailer development with the second iteration of our fiber Mailer now call the jiffy and boss Mailer, we have been slow to fully industrialize and bring to market.

Speaker Change: The combination of these market oriented actions has laid the foundation to give us more flexibility and control over the mix of products, we sell into the market.

Speaker Change: We will focus on shifting our portfolio over time to the solutions that deliver the most customer value like auto back in <unk>.

Speaker Change: We plan to accelerate the expansion of our moving into multiple markets within the U S, giving us the ability to serve local as well as national accounts.

Speaker Change: Market traction with customers and distribution partners has been strong following the product launch at pack Expo last November.

Speaker Change: Total mailers market represents more than $3 billion with fiber offerings outpacing their flexible and hybrid counterparts.

Our immediate focus is on commercializing the fiber mailer offerings, we have previously discussed and bringing to market our hybrid auto bag offerings.

Speaker Change: As we scale up our offerings and our mailers and auto bagging you will be able to fully participate in the underlying growth in E Commerce, where we have been losing the most share over the past few years.

Speaker Change: While we've made progress on our Mailer development with the second generation of our fiber Mailer now called the Jiffy and boss Mailer, we have been slow to fully industrialize and bring to market.

Speaker Change: Our current outlook is targeting a second half inflection in volumes in protective we believe we are taking the right actions to stabilize the business and ensure we are participating fully in the markets. We serve so it's not a matter of if but a matter of when we inflect our performance.

Speaker Change: We plan to accelerate the expansion of our moving into multiple markets within the U S, giving us the ability to serve local as well as national accounts.

Speaker Change: Market traction with customers and distribution partners has been strong following the product launch at pack Expo last November.

Speaker Change: It is difficult to predict the exact timing we are focused month to month on improving our win rates, reducing customer churn and improving service levels as well as taking a more proactive approach to our cost structure.

Speaker Change: Total mailers market represents more than $3 billion with fiber offerings out patient and flexible in hybrid counterparts.

Speaker Change: As we scale up our offerings and our mailers and auto bagging, we will be able to fully participate in the underlying growth in E Commerce, where we have been losing the most share over the past few years.

Speaker Change: As we continue to see the actions we are taking make an impact on our performance our confidence on timing will improve.

Speaker Change: We will continue to give you updates throughout the year as we make progress.

Speaker Change: Finally, as I mentioned earlier the reorganization by segment has provided us more clarity on protective support structure, giving us the ability to set the right level of resourcing tailored to each segment.

Speaker Change: We are leveraging this visibility to ensure we are maximizing productivity in the field and within our production facilities.

Speaker Change: It's difficult to predict the exact timing we are focused month to month on improving our win rates, reducing customer churn and improving service levels as well as taking a more proactive approach to our cost structure.

Speaker Change: Part of our ongoing cost takeout efforts, we will close two plants by the end of the year to further optimize our footprint.

Speaker Change: When you pull all of this together we are returning to topline growth on a constant currency basis with continued momentum in food, partially offset by challenges in our protective business.

Speaker Change: As we continue to see the actions we are taking make an impact on our performance our confidence on timing will improve.

Speaker Change: We will continue to give you updates throughout the year as we make progress.

Speaker Change: When you combine the cost actions at the end of last year with ongoing productivity initiatives. Throughout 2025, we are targeting mid single digit EBITDA growth at constant currency.

Speaker Change: We will continue to drive strong free cash flow conversion and strengthen our balance sheet through debt paydown.

Speaker Change: We are leveraging this visibility to ensure we are maximizing productivity in the field and within our production facilities.

Speaker Change: With uncertainty around tariffs and their impact on our customers' business and unfavorable FX movements, we are staying focused on controlling the controllable.

Speaker Change: Part of our ongoing cost takeout efforts, we will close two plants by the end of the year to further optimize our footprint.

Speaker Change: Ensuring we are taking care of our customers, taking a proactive approach to our cost structure and increasing the pace of execution.

Speaker Change: I am excited about where we're taking this business and the benefits we will drive over time for all stakeholders.

Speaker Change: Before I turn it over to Ronnie to give a more detailed update on our fourth quarter and full year 2024 results and 2025 outlook I want to first welcome her in her new position as our interim Chief Financial Officer.

Speaker Change: We will continue to drive strong free cash flow conversion and strengthen our balance sheet through debt paydown.

Ronnie Johnson: Ronnie over to you.

Speaker Change: With the uncertainties around tariffs and their impact on our customers' business and unfavorable FX movements, we are staying focused on controlling the controllable.

Ronnie Johnson: Thank you Dustin and good morning, everyone. It's a privilege to step into this interim CFO overall and I look forward to engaging with you all let's turn to slide four to review <unk> fourth quarter performance.

Speaker Change: Ensuring we are taking care of our customers, taking a proactive approach to our cost structure and increasing the pace of execution.

Ronnie Johnson: Net sales were $1 4 billion in the quarter up 1% on a constant currency basis, and $5 4 billion for the full year down 1% at constant currency.

Speaker Change: I am excited about where we're taking this business and the benefits we will drive over time for all stakeholders.

Adjusted EBITDA in the quarter was $271 million down 1% compared to last year as reported.

Ronnie Johnson: For the full year adjusted EBITDA was $1, one 1 billion relatively flat with prior year.

Speaker Change: Ronnie.

Speaker Change: To you.

Speaker Change: Thank you Dustin and good morning, everyone. It's a privilege to step into the interim CFO role and I look forward to engaging with you all let's turn to slide four to review <unk> fourth quarter performance.

Ronnie Johnson: As reported adjusted EPS in the quarter of 75.

Ronnie Johnson: Was down 15% compared to a year ago.

Ronnie Johnson: Our adjusted tax rate was 28% in the quarter compared to 18% in the same period last year, which benefited from the reversal of liabilities related to uncertain tax position.

Speaker Change: Net sales were $1 4 billion in the quarter up 1% on a constant currency basis and were $5 4 billion for the full year down 1% at constant currency.

Ronnie Johnson: We did not repurchase any shares in the quarter.

Speaker Change: Adjusted EBITDA in the quarter was $271 million down 1% compared to last year as reported.

Ronnie Johnson: Our weighted average diluted shares outstanding with 146 million.

Ronnie Johnson: For the year adjusted EPS of $3 2014 was down 1%, primarily driven by higher tax expense, partially offset by lower net interest.

Speaker Change: For the full year adjusted EBITDA was 111 billion relatively flat with prior year.

Speaker Change: As reported adjusted EPS in the quarter of <unk>, 75 was down 15% compared to a year ago.

Ronnie Johnson: Turning to slide five we reported sales were flat in the quarter as volume growth was negated by FX headwind.

Speaker Change: Our adjusted tax rate was 28% in the quarter compared to 18% in the same period last year, which benefited from the reversal of liabilities related to uncertain tax position.

Ronnie Johnson: On a constant currency basis sales were up 1% on higher volumes, reflecting strength in food.

We offset by continued declines in protective.

Speaker Change: We did not repurchase any shares in the quarter.

Ronnie Johnson: Fourth quarter, adjusted EBITDA of $271 million decreased $3 million or 1% compared to last year with a margin of 19, 7% down 20 basis points.

Speaker Change: Our weighted average diluted shares outstanding with 146 million.

Speaker Change: For the year adjusted EPS of $3 in 2014 was down 1%, primarily driven by higher tax expense, partially offset by lower net interest.

Ronnie Johnson: Adjusted EBITDA performance reflects positive volume and productivity benefits, including cost takeout actions offset by the restoration of our incentive compensation pools and unfavorable net price realization.

Speaker Change: Turning to slide five we reported sales were flat in the quarter as volume growth was negated by FX headwind.

Speaker Change: On a constant currency basis sales were up 1% on higher volumes, reflecting strength in food.

Ronnie Johnson: Moving to slide six.

Ronnie Johnson: Food sales of $923 million for the quarter were up 5% on an organic basis, primarily due to volume growth in all regions driven by strength in our shrink bags business and continued share gain in case ready solution.

Speaker Change: We offset by continued declines in protective.

Speaker Change: Fourth quarter, adjusted EBITDA of $271 million decreased $3 million or 1% compared to last year with a margin of 19, 7% down 20 basis points.

Ronnie Johnson: In the fourth quarter, the industrial food processing end market outperformed our expectation coupled with volume growth within our fluids business.

Speaker Change: Adjusted EBITDA performance reflects positive volume and productivity benefits, including cost takeout actions offset by the restoration of our incentive compensation pools and unfavorable net price realization.

Ronnie Johnson: Food adjusted EBITDA of $208 million in the fourth quarter was up 7% with a margin of 22, 5% up 70 basis points.

Speaker Change: Moving to slide six.

Ronnie Johnson: Productivity benefits and volume growth more than offset the impact of higher incentive compensation and unfavorable FX.

Speaker Change: Food sales of $923 million for the quarter were up 5% on an organic basis, primarily due to volume growth in all regions driven by strength in our shrink bags business and continued share gain in case ready solution.

Ronnie Johnson: Transitioning to the protective business fourth quarter net sales were $450 million down 7% from the prior year and up slightly on a sequential basis.

Speaker Change: In the fourth quarter, the industrial food processing end market outperformed our expectation coupled with volume growth within our fluids business.

Ronnie Johnson: Protected sales continued to be impacted by weakness in certain industrial portfolios and pressure within our void fill product line.

Speaker Change: Food adjusted EBITDA of $208 million in the fourth quarter was up 7% with a margin of 22, 5% up 70 basis points.

Ronnie Johnson: Protective adjusted EBITDA of $67 million was down 26% in the fourth quarter. The decrease in adjusted EBITDA was mainly driven by lower volumes and unfavorable net price realization.

Speaker Change: Productivity benefits and volume growth more than offset the impact of higher incentive compensation and unfavorable FX.

Ronnie Johnson: On slide seven we review our fourth quarter net sales by segment and region on.

Speaker Change: Transitioning to the protective business fourth quarter net sales were $450 million down 7% from the prior year and up slightly on a sequential basis.

Ronnie Johnson: On a constant dollar basis Americas was up 1% driven by strength in food, partially offset by continued softness in protective portfolios.

Speaker Change: Protected sales continued to be impacted by weakness in certain industrial portfolios and pressure within our void fill product line.

Ronnie Johnson: Constant dollar growth of 1% in EMEA was driven by solid volume performance in food.

Ronnie Johnson: Constant dollar growth of 1% in APAC was driven by strong Australian cattle and land cycles offset by continued weakness in Asia protected application.

Protective adjusted EBITDA of $67 million was down 26% in the fourth quarter. The decrease in adjusted EBITDA was mainly driven by lower volume and unfavorable net price realization.

Ronnie Johnson: With the reorganization behind US starting in Q1 2025, we will no longer report sales by region, focusing only on our segments to better reflect how we manage the business.

Speaker Change: On slide seven we review our fourth quarter net sales by segment and region on.

Speaker Change: On a constant dollar basis Americas was up 1% driven by strength in food, partially offset by continued softness in protected portfolio.

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

Ronnie Johnson: We consistently generated free cash flow throughout the year, which totaled $454 million compared to $467 million a year ago when adjusted for the impact of the resolution of certain prior year tax matters in both years.

Speaker Change: Constant dollar growth of 1% in EMEA was driven by solid volume performance in food.

Speaker Change: Constant dollar growth of 1% in APAC was driven by strong Australian cattle and land cycles offset by continued weakness in Asia protected application.

Ronnie Johnson: This was particularly strong cash flow conversion, considering our restructuring and associated payments increased to $58 million from $19 million a year ago as we accelerated our cost takeout actions.

Speaker Change: With the reorganization behind US starting in Q1 2025, we will no longer report sales by region, focusing only on our segments to better reflect how we manage the business.

Ronnie Johnson: We maintained our capital allocation discipline through our focus on deleveraging the balance sheet and ended 2024 with a net leverage ratio of three six times compared to a peak of $4 one times in the second quarter of 2023.

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

Speaker Change: We consistently generated free cash flow throughout the year, which totaled $454 million compared to $467 million a year ago when adjusted for the impact of the resolution of certain prior year tax matters in both years.

Ronnie Johnson: We are well on track to exceed our previously communicated target of three five times net debt to adjusted EBITDA by the end of 2025.

Speaker Change: This was particularly strong cash flow conversion, considering our restructuring and associated payments increased to $58 million from $19 million a year ago as we accelerated our cost takeout actions.

Ronnie Johnson: Our total liquidity position was $1 4 billion, including $372 million in cash and the remaining amount in a committed and fully undrawn revolver.

Speaker Change: We maintained our capital allocation discipline through our focus on deleveraging the balance sheet and ended 2024 with a net leverage ratio of three six times compared to a peak of four one times in the second quarter of 2023.

Ronnie Johnson: We are now committed to bringing down net debt to adjusted EBITDA to approximately three times by the end of 2026.

Ronnie Johnson: Let's turn to slide nine to review our 2025 outlook.

Ronnie Johnson: As Dustin mentioned several internal initiatives are underway to drive low single digit top line growth.

Speaker Change: We are well on track to exceed our previously communicated target of three five times net debt to adjusted EBITDA by the end of 2025.

Ronnie Johnson: Some of these actions will take time to materialize.

Ronnie Johnson: As a result, we expect net sales to be in the range of five one to $5 5 billion, which assumes 1% growth at the midpoint, excluding the impact of FX, which we expect to represent a 2% headwind for the year.

Speaker Change: Our total liquidity position was $1 4 billion, including $372 million in cash and the remaining amount in a committed and fully undrawn revolver.

Speaker Change: We are now committed to bringing down net debt to adjusted EBITDA to approximately three times by the end of 2026.

Ronnie Johnson: Within food, we expect constant dollar sales growth of 2% primarily from price.

Speaker Change: Let's turn to slide nine to review our 2025 outlook.

Ronnie Johnson: Within protected we project full year sales to be down 3% year over year.

Speaker Change: As Dustin mentioned several internal initiatives are underway to drive low single digit top line growth.

Ronnie Johnson: We expect challenges in the first half to continue and are targeting an inflection in volumes in the second half, which will result in a full year decline of approximately 2%.

Speaker Change: Some of these actions will take time to materialize.

Speaker Change: As a result, we expect net sales to be in the range of five one to $5 5 billion, which assumes 1% growth at the midpoint, excluding the impact of FX, which we expect to represent a 2% headwind for the year.

Ronnie Johnson: We expect pricing pressures to persist further reducing top line by 1%.

Ronnie Johnson: We expect full year adjusted EBITDA to be in the range of 1.0, 75 to $1 175 billion, representing approximately 1% year over year growth at the midpoint, which assumed a margin of approximately 21%.

Speaker Change: Within food, we expect constant dollar sales growth of 2% primarily from price.

Speaker Change: Within protected we project full year sales to be down 3% year over year.

Ronnie Johnson: FX is expected to be 2% approximately $25 million unfavorable on adjusted EBITDA.

Speaker Change: We expect challenges in the first half to continue and are targeting an inflection in volumes in the second half, which will result in a full year decline of approximately 2%.

Ronnie Johnson: On a constant currency basis, the midpoint of our guidance assumes year over year growth of approximately three 5%.

Speaker Change: We expect pricing pressures to persist further reducing top line by 1%.

Ronnie Johnson: The midpoint of our adjusted EBITDA guidance includes $90 million year over year cost savings more than offsetting negative net price realization and FX headwinds.

Speaker Change: We expect full year adjusted EBITDA to be in the range of 1.0, 75 to $1 175 billion, representing approximately 1% year over year growth at the midpoint, which assumed a margin of approximately 21%.

Ronnie Johnson: Full year adjusted EPS is expected to be in the range of $2 90.

Ronnie Johnson: <unk> to $3 30 per share with the midpoint, representing constant currency growth of 2%.

Speaker Change: FX is expected to be 2% approximately $25 million unfavorable on adjusted EBITDA.

Ronnie Johnson: The adjusted EPS Guide assumes an adjusted tax rate of approximately 27% and relatively consistent year over year net interest expense.

Speaker Change: On a constant currency basis, the midpoint of our guidance assumes year over year growth of approximately three 5%.

Ronnie Johnson: We expect full year 2025 free cash flow to be approximately $400 million, reflecting continued strong cash generation, while absorbing higher restructuring payments associated with our cost takeout actions.

Speaker Change: The midpoint of our adjusted EBITDA guidance includes $90 million year over year cost savings more than offsetting negative net price realization and FX headwinds.

Speaker Change: Full year adjusted EPS is expected to be in the range of $2 90 to $3 30 per share with the midpoint representing constant currency growth of 2%.

Ronnie Johnson: Our capital expenditures are expected to be approximately $220 million.

Ronnie Johnson: For the first quarter 2025, we expect net sales and adjusted EBITDA to be range around $126 billion and $260 million and adjusted EPS between <unk> 65, and <unk> 70 per share.

Speaker Change: The adjusted EPS Guide assumes an adjusted tax rate of approximately 27% and relatively consistent year over year net interest expense.

Ronnie Johnson: Our Q1 expectations reflect FX headwinds of approximately 3% on the top and bottom line continued.

Speaker Change: We expect full year 2025 free cash flow to be approximately $400 million, reflecting continued strong cash generation, while absorbing higher restructuring payments associated with our cost takeout actions.

Ronnie Johnson: Continued volume pressures and protected and downward pressure in the north American beef market impacting our shrink bags visits.

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

Speaker Change: Our capital expenditures are expected to be approximately $220 million.

Ronnie Johnson: As we gain more visibility throughout the year, we will adjust and update expectations accordingly.

Speaker Change: For the first quarter 2025, we expect net sales and adjusted EBITDA to be range around $126 billion and $260 million and adjusted EPS between <unk> 65, and <unk> 70 per share.

Ronnie Johnson: Turning to slide 10.

Ronnie Johnson: We closed out the year ahead of our expectations and have built a strong foundation for further growth in 2025.

Ronnie Johnson: Uncertainty and limited visibility remain we are executing well within food and we are accelerating our efforts to stabilize our protective business.

Speaker Change: Our Q1 expectations reflect FX headwinds of approximately 3% on the top and bottom line.

Speaker Change: Continued volume pressures and protected and downward pressure in the north American beef market impacting our shrink bags business.

Ronnie Johnson: This year represents an important milestone as we returned back to sales and adjusted EBITDA growth with a longer term focus on outperforming the markets we serve.

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

Ronnie Johnson: Our leadership organizational structure and strategy are in place and we are now focused on executing in market, helping our customers navigate this dynamic environment and driving returns to our shareholders.

Speaker Change: As we gain more visibility throughout the year, we will adjust and update expectations accordingly.

Speaker Change: Turning to slide 10.

Speaker Change: We closed out the year ahead of our expectations and have built a strong foundation for further growth in 2025.

Ronnie Johnson: With that Dustin and I look forward to your questions.

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

Speaker Change: Uncertainty and limited visibility remain we are executing well within food and we are accelerating our efforts to stabilize our protective business.

Speaker Change: Thank you at this time, we will conduct a question and answer session.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Speaker Change: This year represents an important milestone as we returned back to sales and adjusted EBITDA growth with a longer term focus on outperforming the markets we serve.

Speaker Change: Will allow one question and one follow up for participants.

Speaker Change: Our leadership organizational structure and strategy are in place and we are now focused on executing in market, helping our customers navigate this dynamic environment and driving returns to our shareholders.

Speaker Change: Please standby will be compile the Q&A roster.

Speaker Change: Our first question comes from Anthony Pettinari of Citi. Your line is now open.

Speaker Change: With that Dustin and I look forward to your questions.

Anthony Pettinari: Good morning.

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

Speaker Change: Duston, assuming protective volumes remained negative in the first half are there parts of that business that you expect to be maybe a significantly larger drag on volumes than kind of the segment average or Conversely are there parts of the business that are already seeing a volume inflection.

Speaker Change: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, we will allow one question and one follow up for participants please.

Duston: Yes, so Anthony again, thank you for the question and a couple of comments on that if you actually look at the past year is very similar trends that we've talked about in 'twenty four as youre going into 25, if you think about in 'twenty for our industrial portfolio was largely down in kind of the mid single digits perspective from a volume and there were some bright spots in there largely are <unk>.

Speaker Change: Standby will be compile the Q&A roster.

Speaker Change: Our first question comes from Anthony Pettinari of Citi. Your line is now open.

Speaker Change: Good morning.

Duston: <unk> films and then the fulfillment it was down in the high single digits and that was really the areas. We've talked about historically around a poly void fill as well as our poly mailers being a pressure point on the fulfillment side being offset by our ABS business, which again was positive volumes in 'twenty for when you think about 25, we expect a similar trend to continue with one major difference.

Speaker Change: Duston, assuming protective volumes remained negative in the first half are there parts of that business that you expect to be maybe a significantly larger drag on volumes and kind of the segment average or Conversely are there parts of the business that are already seeing a volume inflection.

Duston: Yes, so Anthony again, thank you for the question and a couple of comments on that if you actually look at the past year is very similar trends that we talked about in 'twenty four as youre going into 25, if you think about in 'twenty for our industrial portfolio was largely down in kind of the mid single digits perspective from a volume and there were some bright spots and there are larger.

Duston: Which is part of what youre experiencing in the first half relative to having lighter volumes and we kind of through the first half being in that core.

Duston: Core first quarter will be in the high single digit and you're looking at a mid single digit range in the second quarter and then evening out in the second half of what Youre doing there is wrapping on some of the large churn we had in the prior year and these are the items, we discussed publicly around some of the filler business, particularly from Amazon that we lost as they converted into fully paper void fill.

Duston: Our shrink films and then the fulfillment it was down in the high single digits and that was really the areas. We've talked about historically around our poly void fill as well as our poly mailers being a pressure point on the fulfillment side being offset by our ABS business, which again was positive volumes in 'twenty for when you think about 25, we expect a similar trend to continue with one major difference.

Anthony Pettinari: Okay. That's very helpful. And then just switching gears I think in your guidance. You said that you are only contemplating tariffs that have been enacted and I guess theres all kinds of scenarios. We can imagine but can you talk about maybe just some of the sensitivities in terms of.

Duston: Which is part of what youre experiencing in the first half relative to having lighter volumes and we kind of through the first half being in that.

Duston: What regions.

Duston: Are you moving product cross border or maybe customers have specific sensitivities or I mean, when you look at Mexico, Canada Europe, China.

Duston: Our first quarter would be in the high single digit and you're looking at the mid single digit range in the second quarter and then evening out in the second half of what Youre doing there is wrapping on some of the large churn we had in the prior year and these are the items, we discussed publicly around some of the filler business, particularly from Amazon that we lost as they converted into fully paper void fill.

Duston: Where is the.

Duston: The potential impact to sealed air.

Duston: Sure and so anything to keep in mind I will go back to some of the frame of the script, which is the.

Duston: The comments, we made around the tariffs aren't in fact this is largely the new Chinese tariff that was put into effect by about 30 days ago, which we don't have we don't see as having any material impact on our business. This is a small portion of protected that'll be important to the U S. As it relates to the broader comments I made which is most of our businesses domestic production for domestic consumption, which really prevents that issue holistic.

Speaker Change: Okay. That's very helpful. And then just switching gears I think in your guidance. You said that you are only contemplating tariffs that have been enacted and I guess theres all kinds of scenarios, we could imagine but can.

Duston: Can you talk about maybe just some of the sensitivities in terms of.

Speaker Change: What regions.

Duston: Lee, but in our North American business, we do do trade, both with Mexico, as well as Canada, which is where you would see the most pronounced potential impact for us as a potential because again if you go back to the comments in the script.

Speaker Change: Are you moving product cross border or maybe customers have specific sensitivities or I mean, when you look at Mexico, Canada, Europe, China Lake.

Speaker Change: There is.

Speaker Change: The potential impact to sealed air.

Duston: Right now at this point in time, we're making shifts in our supply chain to accommodate that as well and then obviously, if we need to pass through cost to our customers, we will do that if necessary.

Speaker Change: Sure and so and then it keep in mind I will go back to some of the frame of the script, which is.

Speaker Change: The comments, we made around the tariffs are in effect. This is largely the new Chinese tariff that was put into effect by about 30 days ago, which we don't have we don't see as having any material impact on our business. This is a small portion of protected that'll be important to the U S. As it relates to the broader comments I made which is most of our businesses domestic production for domestic consumption, which really prevents that issue Olin.

Duston: Okay. That's helpful I'll turn it over.

Duston: Thank you.

Duston: For our next question.

Speaker Change: We have ghansham panjabi of Baird I want to reiterate we will allow one question per participant.

<unk>, but in our North American business, we do do trade, both with Mexico, as well as Canada, which is where you would see the most pronounced potential impact for us as a potential because again if you go back to the comments in the script right.

Speaker Change: Hey, everyone. Good morning. This is actually Josh on for Gautam. Thanks for taking my question.

Speaker Change: And congratulations on the new role.

Speaker Change: And I know you gave some detail in the prepared remarks remarks, but if you could just from a high level standpoint give us some additional color on what your initial priorities will be for the company as CEO and whether that might be potentially right sizing any recent changes within the organization maybe.

Speaker Change: Right now at this point in time, we're making shifts in our supply chain to accommodate that as well and then obviously, if we need to pass through cost to our customers, we will do that if necessary.

Speaker Change: Okay. That's helpful I'll turn it over.

Speaker Change: Celebration and cost outs et cetera, just any color there would be great.

Speaker Change: Thank you.

Josh: Hey, Josh.

Speaker Change: For our next question.

Speaker Change: And thank you for the question and congratulations so.

Speaker Change: We have ghansham panjabi of Baird I want to reiterate we will allow one question per participant.

Josh: Couple of comments I'll make and I'll go back to what we discussed earlier, which is really I break it down into three buckets.

Josh: First being this is acceleration around our customer focus and again I'll go back to the comments, we made which is what's been great in the fourth quarter as we finally brought to market fully our food and protective business and operationalized both of those businesses in terms of fully integrating our commercial innovation and supply chain teams as I think about the priorities going forward. It's about this relentless focus on the customer I talked about some of the.

Speaker Change: Hey, everyone. Good morning. This is actually Josh on for Gautam. Thanks for taking my question and definitely congratulations on the new role.

It doesn't I know you gave some detail in the prepared remarks remarks, but if you could just from a high level standpoint give us some additional color on what your initial priorities will be for the company as CEO and whether that might be potentially right sizing any recent changes within the organization maybe.

Josh: Initiatives in protective that were already in place and we're protected is largely about executing against those initiatives now that they're fully fully kind of implemented within food.

Speaker Change: Celebration and cost outs et cetera, just any color there would be great.

Speaker Change: Hey, Josh.

Speaker Change: And thank you for the question and congratulations so.

Josh: Specifically, we talked about the fact that we see some pressure shrink bags largely due to our exposure to the industrial protein markets and our focus is really on taste ready and fluid solutions because the retail end markets. They serve represent higher growth for us but to do that effectively you have to rethink in your go to market. If the recent innovation and and that's been a combination of the work that we're doing with Steve.

Speaker Change: Couple of comments I'll make and I'll go back to what we discussed earlier, which is really I break it down into three buckets.

Speaker Change: First being the acceleration around our customer focus and again I'll go back to the comments, we made which is what's been great in the fourth quarter as we finally brought to market fully our food and protective business and operationalized. Both those businesses in terms of fully integrating our commercial innovation supply chain teams as I think about the priorities going forward. It's about this relentless focus on the customer I talked about some of the.

Josh: We're working through that process now and we expect that yield results in 2025. So first acceleration is really making those two pivots the higher growth areas for food and as well as protective continuing to stabilize that business. The second piece as we mentioned in the script as well is really around your point around accelerating cost takeout and one of the really positive about.

Speaker Change: Initiatives in protective that were already in place and we're protected is largely about executing against those initiatives now that they're fully fully kind of implemented within food.

Speaker Change: Specifically, we talked about the fact that we see some pressure shrink bags largely due to our exposure to the industrial protein markets and our focus is really on case ready and fluid solutions because the retail end markets. They serve represent higher growth for us but to do that effectively you have to rethink in your go to market. If the recent innovation and that's been a combination of the work that we're doing with Steve.

Josh: Going to this new operating models that gives us more visibility to the cost structures of each business and so we're more intentional now going for but again trying to be proactive, particularly in protective where you may see more volume weakness as we go and making sure that we're getting ahead of that going forward in combination with the cost takeout that we took in the fourth quarter as well.

Speaker Change: We're working through that process now and we expect that yield results. In 2025. So first acceleration is really making those to pivot to higher growth areas for food and as well as protective continuing to stabilize that business. The second piece as we mentioned in the <unk>.

Josh: So the third piece and the last comment I'll make is around again this piece around leadership.

Josh: Really pleased where we're at from a total company leadership as well as some of our end market teams, but we're going to have to as we go forward throughout this year, we're going to continue to make those adjustments to make sure we get the right people in the right positions to ensure that we're successful going forward and largely thinking around having that kind of growth oriented mindset.

Speaker Change: In the script as well is really around your point around accelerating cost takeout.

Speaker Change: They are really positive about going to this new operating models that gives us more visibility to the cost structures of each business and so we're more intentional now going for but again trying to be proactive, particularly in protective where you may see more volume weakness as we go and making sure that we're getting ahead of that going forward.

Speaker Change: One moment for our next question.

Speaker Change: Our next question is for Phil <unk> of Jefferies. Your line is now open.

Speaker Change: Combination with the cost takeout that we took in the fourth quarter as well so the third piece and the last comment I'll make is around again this piece around leadership.

Speaker Change: Congratulations duston, Ronnie and Mark in your respective roles and good luck with that.

Speaker Change: My question is on <unk>.

Speaker Change: Again really pleased where we're at from a total company leadership as well as some of our end market teams on but we're going to have to as we go forward throughout this year, we're going to continue to make those adjustments to make sure we get the right people in the right positions to ensure that we're successful going forward and largely thinking around having that kind of growth oriented mindset.

Speaker Change: On protective.

Speaker Change: Dustin I guess youre, calling for a back half ramp up volumes a little more pressure in the first half is the weakness in the first half largely the Amazon hangover or youre seeing more pressure in certain pockets. It just feels like demand has been a little choppy here and then on the on the pricing side too what are you seeing on that front are you seeing more.

Speaker Change: One moment for our next question.

Speaker Change: Competition, and then lastly, you talked about scaling up auto bag and your fiber mailer.

Speaker Change: Our next question is for Phil <unk> of Jefferies. Your line is now open.

Speaker Change: That process has been probably a little slower than I would've expected, how do you kind of see see that ramping perhaps this year going to 2026.

Phil: Hey, guys, Congratulations duston, Ronnie and Mark in your new respective roles and good luck with that.

Speaker Change: Alright, so I appreciate that and I'll break down your question of the three parts of kind of laid out. The first one is just kind of the first half and protective and in it. It's a mix of continued I would say underperformance, but more but split between underperformance of the business that we're experiencing kind of in Q4 as well as the hangover from Amazon, but also a cup.

Speaker Change: My question is on <unk>.

Phil: Protective.

Phil: Duston, I guess youre, calling for a back half ramp up volumes a little more pressure in the first half is the weakness in the first half largely be Amazon hangover or youre seeing.

Phil: More pressure in certain pockets just feels like demand has been a little choppy or and then on the on the pricing side too. What are you seeing on that front are you seeing more heightened competition.

Speaker Change: Other customer turns that we had in Q1 and I think the really important point to leave you with there is that going into this year, we're in a better position from a churn perspective than.

Phil: Sure.

Phil: And then lastly, you talked about scaling up auto bag and your fiber mailer.

Speaker Change: And then we had been in the prior two years right. So on a positive note, particularly as it comes to more material customers and so thats been a positive piece and then the second piece is we talked about that change in the go to market model, particularly in North America and some of the changes, we're making and it does take time to work through that transition. We expect some choppiness as we continue to work through that in the first quarter.

Phil: That process has been probably a little slower than I would've expected, how do you kind of see see that ramping perhaps as you go into 2026.

Phil: Alright, so I appreciate that and I'll break down your question of the three parks have kind of laid out. The first one is just kind of the first half and protective and.

Speaker Change: And then you expect the benefits starting in the second quarter. So you'll benefit from those initiatives kind of fully emotion, coupled with the fact that you are kind of fully ramped now on the churn that happened last year.

Phil: It's a mix of continued I would say underperformance, but more but split between underperformance of the business that we're experiencing kind of in Q4 as well as the hangover from Amazon, but also a couple of other customer turns that we had in Q1 and I think the really important point to leave you with there is that going into this year, we're in a better position from a term perspective than.

Speaker Change: As it relates to <unk>.

Speaker Change: The fiber piece of it or excuse me I'll give the pricing piece first so pricing overall as you know holistically from a RASM perspective, youre seeing residence slightly on flight right now <unk>.

Phil: Then we had been in the prior two years right. So on a positive note, particularly as it comes to more material customers and so thats been a positive piece and then the second piece is we talked about that change in the go to market model, particularly in North America and some of the changes, we're making and it does take time to work through that transition. We expect some choppiness as we continue to work through that in the first quarter.

Speaker Change: Competition in protective, particularly in our <unk> areas, where competition is still if you think about the pressure you have on poly void fill youre seeing more pressure there from competition, but everywhere else. If you think about this kind of lower for longer volume environment protective you still feel that but I wouldn't say that difference from 2024 and with resins now beginning to slightly slightly in play.

Phil: And then you expect the benefits starting in the second quarter. So you'll benefit from those initiatives kind of fully emotion, coupled with the fact that you are kind of fully ramped now on the churn that happened last year.

Speaker Change: <unk> you were expecting.

Speaker Change: <unk> to potentially take more price in the market and it's reflected in our guidance in both food and protective.

Phil: As it relates to.

Phil: The fiber piece of it or excuse me I'll give the pricing piece first so pricing overall as you know holistically from a RASM perspective, youre seeing resin slightly inflate right now <unk>.

Speaker Change: Second piece and the last part of your question is on the fiber Mailer I acknowledge the fact that we're we've been slower even ourselves we are not happy with where we're at relative to the scale up but on a positive note. The market is receiving the mailer very well we've talked about some of the wins in the <unk> in the fourth quarter and those were largely just demonstrating that we have those proof points now not just from a local customers but also.

Phil: Competition in protective, particularly in a format areas where competition is still if you think about the pressure you havent poly void fill youre seeing more pressure there from competition, but everywhere else. If you think about this kind of lower for longer volume environment protective you still feel that but I wouldn't say, it's a difference from 2024 and with resins now beginning to slightly slightly in <unk>.

Speaker Change: Large national accounts, and so the focus and I'll go back to acceleration of the pace of execution, which you've seen in the script in the press release really what I'm talking about areas like this where we can increase that scale. We have the products. The innovation portion of it's done it's really about implementing the lines and getting out in the market and in filling them up and that's what we're focused on.

Phil: <unk> you are expecting.

Phil: <unk> to potentially take more price in the market and it's reflected in our guidance in both food and protective.

Phil: Second piece and the last part of your question is on the fiber Mailer I acknowledge the fact that we're we've been slower even ourselves we're not happy with where we're at relative to the scale up but on a positive note. The market is receiving the mailer very well we've talked about some of the wins in the <unk> and the.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Our next question comes from ethylene Rodriguez of Mizuho. Your line is now open.

Ethylene Rodriguez: Good morning, everyone and again congrats.

Phil: Fourth quarter and those were largely just demonstrating that we have those proof points now not just from a local customers, but also large national accounts and so the focus and I'll go back to acceleration of the pace of execution, which you've seen in the script in the press release really what I'm talking about areas like this where we can increase that scale. We have the products. The innovation portion of it's done it's really about.

Speaker Change: Then.

Speaker Change: I think in the prepared remarks, you've talked about enhancing the profitability of each business.

Speaker Change: Do you like what is the earnings power of each business in terms of volume.

Speaker Change: And in margins as we look into 2026 and beyond.

Phil: Implementing the lines and getting out in the market and filling them up and that's what we're focused on.

Speaker Change: Hey, there again appreciate the congratulations and I'll start here. So there's a couple of comments I'd make one is we have not issued longer term.

Phil: One moment for our next question.

Phil: Okay.

Edlin Rodriguez: Our next question comes from Edlin Rodriguez of Mizuho. Your line is now open.

Speaker Change: Guidance for both individuals segments, right and Thats something that as a leadership team. We're working through in terms of how we see the business shaping up over the next two to three years, but what I will tell you and what we put in the script.

Edlin Rodriguez: Good morning, everyone and again congrats Dustin.

Speaker Change: I think in the prepared remarks, you've talked about enhancing the profitability of each business.

Speaker Change: Is around the fact that in both businesses and markets that we currently serve are in the low single digit range and that is from a volume perspective, and if you think about pricing over time being somewhat linear.

Speaker Change: Do you like what is the earnings power of each business in terms of <unk>.

Speaker Change: Volume.

Speaker Change: And what you would expect on that has the ability to drive low single digit and mid single digit kind of earnings power both based on where they are at today the markets. They serve the portfolios we have as well as the footprint. We have right now in the capacity within that footprint longer term. So if you think about the first phase and I think what we talked about in 2025 is really we need to fully realize that we recognize if you look at our food <unk>.

Speaker Change: And in margins as we look into 2026 and beyond.

Speaker Change: Hey, there again appreciate the congratulations and I'll start here. So there's a couple of comments I'd make one is we have not issued longer term.

Speaker Change: <unk> very positive performance, we added 24, we're expecting another strong year in that similar vein and 25 were a protected business, where we're still obviously working through the turnaround trying to stabilize it.

Speaker Change: Is around the fact that in both businesses and markets that we currently serve are in that low single digit range and that is from a volume perspective, and if you think about pricing over time being somewhat linear.

And get it back to a place where it's really achieving its underlying potential before we enhance it further with further capital deployment as well as innovation and there'll be more to come on these topics as we progress throughout the year.

And what you would expect on that has the ability to drive low single digit and mid single digit kind of earnings power. Both based on where they are at today from the markets. They serve the portfolios we have as well as the footprint. We have right now in the capacity within that footprint longer term. So if you think about the first phase and I think what are we talked about in 2025 is really we need to fully realize that we recognize if you look at our food <unk>.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Josh Spector of UBS. Your line is now open.

Speaker Change: Yes, hi, good morning.

Speaker Change: Wanted to ask on the pricing within food I think from your comments earlier, you said, 2% growth in most of that price I'm, just curious about the visibility of that either through contracts or pass throughs or if there's anything unique that is happening to drive pricing up I mean, I know resins are up a little but not a ton and that seems.

Speaker Change: <unk> is very positive performance. We added 24, we're expecting another strong year in that similar vein in 'twenty, five where our protective business, where we're still obviously working through the turnaround trying to stabilize it.

Speaker Change: And get it back to a place where it's really achieving its underlying potential before we enhance it further with further capital deployment as well as innovation and there'll be more to come on these topics as we progress throughout the year.

Speaker Change: At one point better than what it typically is soon to that segment. So if you can unpack that a bit that'd be helpful. Thank you.

Speaker Change: Thank you.

Hey, Josh this is doesn't speaking so a couple of comments I would make on that is we are.

Speaker Change: Our next question comes from Josh Spector of UBS. Your line is now open.

Speaker Change: We're already benefiting from our formula pricing heading into the year. So just keep in mind, we talked about this in the past, but a big portion of this is in our North American business.

Josh Spector: Yes, hi, good morning.

Josh Spector: Want to ask on the pricing within food I think from your comments earlier, you said, 2% growth in most of that price I'm, just curious about the visibility of that either through contracts or pass throughs or if there's anything unique that is happening to drive pricing up I mean, I know resins are up a little but not a ton and that seems.

Speaker Change: Do you have the pass throughs and really based on how resins and as indices and move to the back half of 'twenty four.

Speaker Change: You'll see that benefit now heading into 'twenty five right and if you expect resins to continue its like Theres, a lag, but that lag will continue to drive beyond that we have been able to take.

Speaker Change: Price in that business again, it's very modest, but reflecting some of the underlying inputs, we have and it really speaks to the value proposition of the portfolios, but its really a mix a mix it to those two dynamics sitting within that business today, that's driving that outcome and I think that also the point I would leave you with is that for the first time heading into 2025, we are operating in a more.

Josh Spector: At one point better than what it typically is soon to that segment. So if you could unpack that a bit that'd be helpful. Thank you.

Edlin Rodriguez: Hey, Josh This is doesn't speaking so couple of comments I would make on that is we are already benefiting from our formula pricing heading into the year. So just keep in mind, we've talked about this in the past, but a big portion of this is in our North American business.

Speaker Change: More stable environment, where you've kind of why you have some inflation of resins, it's more fully wrapped than you experienced all the volatility from got.

Edlin Rodriguez: You have the pass throughs and really based on how resident as indices and move to the back half of 'twenty four.

Speaker Change: Got it think of it is pre COVID-19 all the way to 2024.

Edlin Rodriguez: You'll see that benefit now heading into 'twenty five right and if you expect resins to continue its like Theres, a lag, but that lag will continue to drive beyond that we have been able to take.

Speaker Change: Yeah.

Speaker Change: One moment for our next question.

Speaker Change: Stefan DFS of Morgan Stanley. Your line is now open.

Edlin Rodriguez: Pricing that business again is very modest.

Edlin Rodriguez: Some of the underlying inputs, we have and it really speaks to the value proposition of the portfolios, but its really a mix a mix of those two dynamics sitting within that business today.

Speaker Change: I, just said Ron and Mark Thanks for taking my question and congrats on the new roles.

Speaker Change: Maybe duston can you, let us know how much automation revenue you had in 2024 and then maybe what your expectations are for this part of the business in 2025. Like for example are you seeing any green shoots or any conversation changes with customers.

Edlin Rodriguez: Driving that outcome and I think that also the point I would leave you with is that for the first time heading into 2025, we are operating in a more stable environment, where you've kind of why you would have some inflation in resin, it's more fully wrapped than you experienced all the volatility from got.

Edlin Rodriguez: Got it think of it is pre COVID-19 all the way to 2024.

Speaker Change: Given the increased focus on near shoring and then maybe longer term are you still thinking about this part of the business as a material growth vector for steel there going forward. Thanks.

Edlin Rodriguez: Yeah.

Speaker Change: One moment for our next question.

Speaker Change: Stefan DFS of Morgan Stanley. Your line is now open.

Speaker Change: Hey, there I appreciate the comments and the questions. So I'm going to start with kind of your second question first just to frame it up.

Justin Rodney: Hi, Justin Rodney and Mark Thanks for taking my question and congrats on the new roles.

Speaker Change: Automation continues has been historically and continues to be an incredibly important part of the business, but it's one again I go back to one of the three legs to that total stool between.

Speaker Change: Material Science service as well as the equipment offering with automation offering itself is really that combination that creates the strength of the value proposition to our customers for our packaging solutions and so has continued to be that way and I know in the past and maybe a focus on potentially on that particular piece of the way. We see it is really it's an enabler of again pulling through materials.

Speaker Change: Yes, and we've talked about over the past couple of years, where the parts and services businesses continue to perform really well, but the actual equipment sales declined historically thats been driven by some of the capital constraints of our customers in terms of where we're at in terms of the investment cycle.

Speaker Change: Hey, there I appreciate the comments and the questions. So I'm going to start with kind of your second question first is to frame it up.

Speaker Change: What I would tell you is going forward, we're actually optimistic break it down because you are talking about it together it really is more meaningful as you think about it between food and protective when you think about protective overall elliptically.

Speaker Change: The materials science service as well as the equipment offering at automation offering yourselves really that combination that creates the strength of the value proposition to our customers for our packaging solutions and so has continued to be that way and I know in the past there has been maybe a focus on potentially on that particular piece of the way. We see it is really it's an enabler of again pulling through materials.

Speaker Change: Youre looking at a business that is.

Speaker Change: Are we expecting to derive equipment growth going into 'twenty, five and that's really coming off the back of our renewed.

Speaker Change: A renewed focus on our auto vacuum equipment, we've talked about in the script a little bit about the new hybrid <unk>, which are really substrate agnostic, allowing it around run poly as well as fiber with really limited changeovers.

Speaker Change: Yes, and we've talked about over the past couple of years, where the parcel services business have continued to perform really well, but the actual equipment sales declined historically thats been driven by some of the capital constraints of our customers in terms of where we're at in terms of the investment cycle.

Speaker Change: Same thing on the food side, where I would say, we still see some pressure in that business, but again, it's more reflective of the dynamics of the industry and less about the strength of our portfolio and in both of them are really focused on net new placements suraj as you think about aegis more around new customers, new placements that drive new materials sales rather than they give it as replacing older equipment. So that's that's kind of our folk.

Speaker Change: And what I would tell you is going forward, we're actually optimistic I'll break it down because really talking about it together. It really is more meaningful as you think about it between food and protective when you think about protective overall elliptically.

Speaker Change: We're looking at a business that is.

Speaker Change: Right now, but and again all in the spirit of driving more more material sales longer term.

Speaker Change: We're really expecting to derive equipment growth going into 'twenty, five and that's really coming off the back of our <unk>.

Speaker Change: Thank you.

Speaker Change: Renewed focus on our auto vacuum equipment, we've talked about it in the script a little bit about the new hybrid <unk>, which are really substrate agnostic, allowing it around run poly as well as fiber with really limited changeovers.

Michael Rock: Our next question comes from Michael Rock Fund of Truth Securities. Your line is now open.

Michael Rock: Thank you Dustin and Mark for taking my questions and congrats on the new rules.

Speaker Change: Same thing on the food side, where I would say, we still see some pressure in that business, but again, it's more reflective of the dynamics of the industry and less about the strength of our portfolio and in both of them are really focused on net new placements to rise as you think about aegis more around new customers, new placements that drive new materials sales rather than they give it as replacing older equipment. So that's that's kind of our folk.

Michael Rock: In terms of.

Michael Rock: You mentioned shifting the culture to become a high performing and gauge and accountable.

Michael Rock: Push decision, making down into the organization.

Michael Rock: The comment.

Speaker Change: Right now, but again all in the spirit of driving more more materials sales longer term.

Michael Rock: You ended up with as to how you made progress last year, especially food hotels like progress and protective was more muted. So I'm just wondering did anything occur that hinted more notable progress.

Speaker Change: Thank you.

Michael Rock: Our next question comes from Michael Rock Fund of Truth Securities. Your line is now open.

Michael Rock: In protective that Youre trying to do is currently.

Michael Rock: Great question, Michael and Scott a couple of comments I would make as part of this.

Speaker Change: Thank you Dustin.

Speaker Change: And Mark for taking my questions and congrats on the new rules.

Michael Rock: One is this is really important and I want to leave you with it over the past two years, we've been on a journey in this area and every every step that we've taken relative to leadership structure strategy at the center of that is really making sure that we're enabling this culture because longer term, we really need all 16000 plus of us to really be rolling in the right direction in the car.

Speaker Change: Yeah.

Speaker Change: In terms of.

Speaker Change: And you mentioned shifting the culture to become a high performing and gauge and accountable.

Speaker Change: Push decision, making down into the organization.

Speaker Change: The comment.

Speaker Change: We ended it with US now you've made progress last year, especially food.

Michael Rock: But I made specifically in food is.

Speaker Change: It sounds like progress and protective was more muted. So I'm just wondering do you anything to occur that hinted more notable progress.

Michael Rock: It was not intentional in essence, a way the way it kind of came to came to be but we really got to the structure and food much more quickly than we have yet to protective and it's really also a statement about the complexity of protective as a business. We've talked about this in the past, albeit it's a 30% 40% of the overall business. It is a much better.

Speaker Change: In protective that Youre trying to do is currently.

Speaker Change: Great question, Michael and Scott couple of comments I would make as part of this one is this is really important and I want to leave you with it over the past few years, we've been on a journey in this area and every every step that we've taken relative to leadership structure strategy at the center of that is really making sure that we're enabling.

Michael Rock: Very complex business with multiple portfolios are operating across many geographies. So it's more of a statement about the complexity of the business and how you navigate that and as we think about the structure of the company at the very top Theres a lot more work as you kind of work it down all the way down to the field and again really positive stuff I would say the north American go to market transformation that was put into place the beginning of year is material.

Speaker Change: This culture is longer term, we really need all 16000 plus of us to really be rolling in the right direction and the comment I made specifically in food is.

Speaker Change: It was not intentional in essence, a way the way it kind of came it came to be but we really got to the structure and food much more quickly than we have yet to protective and it's really also a statement about the complexity of protective as a business. We've talked about this in the past, albeit it's a 30% 40% of the overall business. It is a much very.

Michael Rock: We've gotten really.

Michael Rock: Positive feedback from our end customers about our distribution partners. So it's moving in the right direction. There is more work ahead of us to tackle and not just to make sure that that piece of it is actually working and you are seeing in our results, but the rest of it is actually in a similar similar place.

Speaker Change: Thank you.

Speaker Change: Complex business with multiple portfolios are operating across many geographies. So it's more of a statement about the complexity of the business and how you navigate that and as we think about the structure of the company at the very top Theres a lot more work as you kind of work it down all the way down to the field and again really positive step I would say the north American go to market transformation that was put into place to begin the year is material.

Speaker Change: Our next question comes from Jeff.

Michael Rock: Zekauskas of Jpmorgan. Your line is now open.

Jeff Zekauskas: Thanks very much.

Michael Rock: <unk>.

Can you talk about the protective segment in 2020 for that as well.

Michael Rock: What's the growth rate was on the industrial side and what the growth rate was on the E Commerce side and maybe what the split is now between those two businesses.

Speaker Change: We've gotten really positive feedback from our end customers about our distribution partners. So it's moving in the right direction. There is more work ahead of us to tackle not just to make sure that that piece of it is actually working and youre seeing in our results, but the rest of it is actually in a similar similar place.

Ronnie Johnson: And then for Ronnie.

Ronnie Johnson: Cost of goods sold was down about 80 million euro per year can.

Speaker Change: Thank you.

Speaker Change: Can you talk about what was behind that was that raw materials or cost reduction or how do you all have a lifestyle.

Speaker Change: Our next question comes from Jeff.

Speaker Change: Zekauskas of Jpmorgan. Your line is now open.

Jeff Zekauskas: Okay. So Jeff Great question and thank you for that if I go back to some of the earlier questions around this particular piece of it.

Speaker Change: Thanks very much.

Speaker Change: <unk>.

Speaker Change: Can you talk about the protective segment in 2024 that is.

Jeff Zekauskas: If you looked at the split between the two is roughly 60% industrial 40% fulfillment. That's what's in the protective segment right now relative to 2024 and as I mentioned earlier, our industrial portfolio was down from a volume perspective, and kind of that low single digit kind of mid single digit range and then on the fulfillment side. It was a step higher.

Speaker Change: Whats the growth rate was on the industrial side and what the growth rate was on the E Commerce side and maybe what the split is now between those two businesses.

Speaker Change: And then for Ronnie.

Cost of goods sold was down about $80 million year over year can.

Jeff Zekauskas: On the other side of it which was it was down in.

Jeff Zekauskas: Yes, mid single digit high single digit range, depending on the portfolio now in both areas there were bright spots and they could give you an idea in a couple of areas. You had shrink film is an example of it called out we've talked about our Inflatables and we've also talked about our auto bagging equipment and materials sales, which were all very positive.

Speaker Change: Can you talk about what was behind that was that raw materials or cost reduction or how do you all have a lifestyle.

Speaker Change: Okay. So Jeff Great question and thank you for that if I go back to some of the earlier questions around this particular piece of it.

Speaker Change: If you looked at the split between the two is roughly 60% industrial 40% fulfillment. That's what's in the protective segment right now relative to 2024 and as I mentioned earlier, our industrial portfolio was down from a volume perspective, and kind of that low single digit kind of mid single digit range and then on the fulfillment side. It was a step higher.

Jeff Zekauskas: Yeah from a cost of goods sold perspective as a percentage of sales we do see correlation in the reduction of cost of sales aligning with the overall sales reduction.

Jeff Zekauskas: However that is combined with a little bit of favorability on the raw material pricing side.

Speaker Change: On the other side of it which was it was down in.

Speaker Change: Yes, and then Jeff just a complement keep in mind too that we talked about the cost takeout actions that we took last year. We started out the year talking about roughly $90 million. We ended the year at $89 million a significant portion of the cost takeout as well as other productivity is also hitting the cost of goods sold.

Speaker Change: Yes, mid single digit to high single digit range, depending on the portfolio now in both areas. There were bright spots and give you an idea in a couple of areas you had shrink film as an example, what we called out we've talked about our Inflatables and we've also talked about our auto bagging equipment and materials sales, which were all very positive.

Jeff Zekauskas: Thank you.

Speaker Change: Yeah from a cost of goods sold perspective as a percentage of sales we do see correlation in the reduction of cost of sales aligning with the overall sales reduction.

Jeff Zekauskas: Yeah.

Speaker Change: Our next question comes from Arun Viswanathan of RBC capital markets. Your line is now open.

Arun Viswanathan: Okay. Thanks for taking my question congrats on the neuro as well.

Speaker Change: However that is combined with a little bit of favorability on the raw material pricing side.

Ronnie Johnson: And Ronnie.

Jeff Zekauskas: Mark.

Jeff Zekauskas: So I guess just wanted to understand the guidance range is a little bit more so it looks like youre up about three 5% for EBITDA at the midpoint to 5% for EPS.

Speaker Change: Yes, and then Jeff just to complement keep in mind too that we talked about the cost takeout actions that we took last year. We started out the year talking about roughly $90 million. We ended the year at $89 million a significant portion of the cost takeout as well as other productivity is also hitting the cost of goods sold.

Jeff Zekauskas: And what would really drive you to the upper end of your range was that is that kind of very macro dependent is it maybe continue.

Speaker Change: Thank you.

Continued outperformance in food.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Arun Viswanathan of RBC capital markets. Your line is now open.

Jeff Zekauskas: And maybe the stoppage of underperformance and protective or how should we think about.

Jeff Zekauskas: Attaining that range or is the mid point really.

Arun Viswanathan: Okay. Thanks for taking my question congrats on the neuro as well.

Jeff Zekauskas: More what you have line of sight towards thanks.

Speaker Change: And Ronnie.

Speaker Change: Hey, Ron discussed in speaking and I would tell you I'll break it down into three individual components. So the first in our food business as we kind of alluded to if you go back to last year, we entered the year thinking that the north American beef cycle will be a headwind to the business.

Speaker Change: Mark.

So I guess just wanted to understand the guidance range is a little bit more so it looks like youre up about three 5% for EBITDA at the midpoint to 5% for EPS.

Speaker Change: And what would really drive you to the upper end of your range was that is that kind of very macro dependent is it maybe continue.

Speaker Change: We were down probably in the 4% range at least at the beginning of the year and we ended up being flat even benefited the fourth quarter as we think about next year when a similar position right, where the hurt hasnt been rebuilt.

Speaker Change: Continued outperformance in food and maybe the stoppage of underperformance and protective or how should we think about.

Speaker Change: And so what you are hearing at least the initial thinking is it youre down 2% to 4% again going into the full year. We wanted to your point about macro dependent I think one of the areas that gets you to the higher in the range is the food business. If you see that actually become much better for the full year.

Speaker Change: Attaining that range or is the mid point really.

Speaker Change: More what you have line of sight towards thanks.

Speaker Change: Which is always a possibility again, Bob I'll, just caveat being that we're in a dynamic environment. The second piece on protective is to your point is the acceleration of.

Speaker Change: Independent on when can we inflect volumes as I mentioned in the script you know the timing is difficult to predict and as part of the reason you're calling a second half inflection point, but we do believe that we're taking the right actions in the business to make that happen is at what rate and pace of speed do you actually see that improvement right and then the third piece is as we.

Speaker Change: We're down probably in the 4% range at least at the beginning of the year and we ended up being flat even benefited the fourth quarter as we think about next year when a similar position right, where the hurt hasnt been rebuilt.

Speaker Change: And so what you are hearing at least the initial thinking is it youre down 2% to 4% again going into the full year.

Speaker Change: We alluded to in the script, we're still thinking through while we're already committing to roughly $90 million of cost savings in 2025, and we're really now.

Speaker Change: To your point about macro dependent I think one of the areas that gets you to the higher in the range is the food business. If you see that actually become much better for the full year.

Speaker Change: Taking a look at both businesses and making sure that our cost structure for fit for purpose, which could offset yield going back to the EBITDA line not necessarily on the sales side that gives you.

Which is always a possibility again, Bob I'll, just caveat being that we're in a dynamic environment.

Speaker Change: The second piece on protective is to your point is the acceleration of <unk>.

Speaker Change: It gives you a potential further lift as we think about the back half of 2025.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Matt Roberts of Raymond James Your line is now open.

Speaker Change: Hey, Justin Ronnie Mark Good morning, I'll Echo everyone else's sentiments.

Speaker Change: We alluded to in the script, we're still thinking through while we're already committing to roughly $90 million of cost savings in 2025.

Speaker Change: It doesn't.

Speaker Change: There are two plants closing I believe by year end and this specific product lines that you are reducing the contribution mix from in those closures and maybe when you think about that portfolio rebalance or the complexity and the protective segment that you discussed.

Speaker Change: Now.

Speaker Change: When you look at their facilities footprint is there a major overlap in terms of assets or sales functions or even resins from underperforming lines versus areas that are not structurally challenged.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Matt Roberts of Raymond James Your line is now open.

Speaker Change: Basically when you think of facilities in relation to the total portfolio. How do you weigh tradeoffs in either maintaining the underperforming assets versus investing in the areas of innovation that you discussed.

Speaker Change: Hey, Justin Ronnie Mark Good morning, I'll Echo everyone else's sentiments.

Speaker Change: It doesn't.

Speaker Change: There are two plants closing I believe by year end and this specific product lines that youre, reducing the contribution mix from in those closures and maybe when you think about that portfolio rebalance or the complexity and the protective segment that you discussed.

Speaker Change: Or is there potentially more closures coming with cost take out or how you weigh the tradeoff there. Thank you for taking the question.

Speaker Change: Matt Great question and that was a very complex one.

Speaker Change: And I appreciate you asking because it's a very it's very thoughtful in what I would tell you is that.

Speaker Change: When you look at their facility footprint is there a major overlap in terms of asset sales functions or even resins from underperforming lines versus areas that are not structurally challenged.

Speaker Change: As it relates to the two specific ones. This is around specifically network optimization, we've put it in reference largely to protective and and is largely consolidation, it's not reducing contribution from an individual product line. Its all about improving your cost position relative to those particular products, which is what largely most of our net.

Speaker Change: Work optimization has been done as it relates to that thus far we were down about <unk> five is it kind of mid single digits in terms of facilities over the past few years and so as it relates to your question around as you said about kind of going forward and how you weigh these options.

Speaker Change: Or is there potentially more closures come in with cost take out or how you weigh the tradeoff there. Thank you for taking the question.

Matt Roberts: Matt Great question and that was a very complex one.

Matt Roberts: And I appreciate you asking because it's a very it's very thoughtful in what I would tell you is that.

Speaker Change: Largely in as specific as it relates to protective we feel good about keep in mind that domestic production for domestic consumption and if you really take some protected.

Matt Roberts: As we as it relates to the two specific ones. This is around specifically network optimization, we've put it in reference largely to protective and is largely consolidation, it's not reducing contribution from an individual product line. Its all about improving your cost position relative to those particular products, which is what largely most of our <unk>.

Speaker Change: The metropolitan market and so what's important is we evaluate those things is largely which geographic markets you want to go into and then which metropolitan markets you want to serve within the countries that we operate in today, which is obviously sprawling and broadly international.

Speaker Change: So we feel good about the footprint, we have and in terms of where we're at today. There is always potential for more network optimization and we're very thoughtful about how we evaluate that those are very big decisions that we spend a lot of time really thinking through and as part of the reason today, we are not announcing that and again I'll go back to it's not just about Linda cost take out for cost takeout sake, it's got to create longer term.

Matt Roberts: Optimization has been done as it relates to that thus far we were down about <unk>.

Matt Roberts: Five is kind of mid single digits in terms of facilities over the past few years.

Matt Roberts: And so as it relates to your question around as you said about kind of going forward. How you weigh these options.

Matt Roberts: Largely in as specific as it relates to protective we feel good about keep in mind I go back to that domestic production for domestic consumption and if you really take a protected.

Speaker Change: <unk>. So again when you think about our protected market last do you want to do is exclude yourself from a metropolitan market that you think may have longer term growth. Because you are short term challenges and so as I mentioned beforehand, we feel really good about the portfolio, we have in protective and it's largely right now focusing on commercial execution as we move forward and so in making sure that we obviously put volume.

Matt Roberts: Metropolitan market and so what's important is we evaluate those things is largely which geographic markets you want to go into and which metropolitan markets you want to serve within the countries that we operate in today, which is obviously sprawling and broadly international.

Matt Roberts: So we feel good about the footprint, we have and in terms of where we're at today. There is always potential for more network optimization and we're very thoughtful about how we evaluate that those are very big decisions that we spend a lot of time really thinking through and as part of the reason today, we are not announcing that and again I go back to it's not just know Linda cost takeout for cost take out sake, it's got to create longer term.

Speaker Change: Back into our plants.

Speaker Change: So we can benefit from the other side of this and Incrementals going all the way up versus the deleveraging we've experienced and so that's that's where our heads at today.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Chris Parkinson of Wolfe Research. Your line is now open.

Matt Roberts: Value so.

Speaker Change: Great. Thank you. So much can you just talk a little bit more about global protein markets and kind of what you expect in 2025, what's embedded in your guidance just given some of the noise on the red meat side as well as potential headwinds to poultry just any dynamics that you think are worth noting would be very helpful. Thank you.

Matt Roberts: When you think about our protective market philosophy, you want to do is exclude yourself from a metropolitan market that you think may have longer term growth because you have short term challenges and so as I mentioned beforehand, we feel really good about the portfolio, we have in protective and it's largely right now focusing on commercial execution as we move forward and so in making sure that we obviously put volume back into our plants.

Speaker Change: Sure, Chris So a great question and.

Matt Roberts: So we can just benefit from the other side of this and Incrementals going all the way up versus the deleveraging we've experienced and so that's that's where our heads at today.

Speaker Change: And again kind of piggyback off of comments that I made earlier, if you think about particularly in I.

Speaker Change: Lets say, our Latin America, and Australia cycles, we're kind of around the peaks and then if you think about.

Matt Roberts: Thank you.

Our next question comes from Chris Parkinson of Wolfe Research. Your line is now open.

Speaker Change: Our North American cycle, that's the area that last year, we thought was going to be three or four down and then now ended up being flat and now we're kind of looking at this year. It has three or four down kind of what's baked into our current outlook. The flip side is that when you go back to last year. When you look at most of the markets whether it was dairy smoked and processed food service, even poultry they were slightly down for us globally.

Chris Parkinson: Great. Thank you. So much can you just talk a little bit more about global protein markets and kind of what you expect in 2025, what's embedded in your guidance just given some of the noise on the red meat side as well as potential headwinds to poultry just any dynamics that you think are worth noting would be very helpful. Thank you.

Speaker Change: Keep in mind beyond North America, now and as we go into next year those areas have slight upsides, which is really playing well to the strategy go back that we had very strong gains in our portfolio is outside of shrink bags, but going into next year those markets, which in many cases actually lend themselves more to retail end markets versus industrial food processing.

Matt Roberts: Sure.

Speaker Change: So a great question.

Speaker Change: And again kind of piggyback off of comments that I made earlier, if you think about particularly in I would.

Speaker Change: Lets say, our Latin American Australian cycles, we're kind of around the peaks and then if you think about.

Speaker Change: Our North American cycle, that's the area that last year, we thought was going to be three or four down and then now ended up being flat and now we're kind of looking at this year. It has three or four down kind of what's baked into our current outlook. The flip side is that when you go back to last year. If you look at most of the markets whether it was dairy smoked and processed food service, even poultry they were slightly down for us globally.

Speaker Change: Kind of end markets that presents more opportunity and we see those being positive even poultry because largely what most people referring to an ultra there's concerns around largely Turkey, where we have less exposure on and that's really tied to the ovarian fluid. So I think that for us we still see poultry poultry consumption moving up it plays well into our strategies around case ready and we can.

Speaker Change: <unk>.

Long term source of growth not just in the short term and $25 26 and beyond.

Speaker Change: Thank you.

Speaker Change: Our final question comes from Gabe <unk> of Wells Fargo. Your line is now open.

Speaker Change: Good morning.

Speaker Change: So congratulations from everyone.

Speaker Change: Kind of end markets that presents more opportunity and we see those being positive EBIT poultry because largely what most people are referring to in poultry. There is concerns around largely Turkey, where we have less exposure and that's really tied to the ovarian fluid. So I think that for us we still see poultry poultry consumption moving up it plays well into our strategies around case ready and we can do.

Speaker Change: Two hopefully quick ones.

Speaker Change: Boston first the large player in E. Com made an investment in one of your pure play kind of fiber based competitors I think this move is pretty unique at least relative to what we've observed historically so two questions.

Speaker Change: Does this change your view at all on how to maximize value part of maybe the protective segment and are you seeing increased activity in the M&A world and either the suite of protective segments and second.

Speaker Change: That is a long term source of growth not just in the short term and $25 26 and beyond.

Speaker Change: Thank you.

Speaker Change: Our final question comes from Gabe <unk> of Wells Fargo. Your line is now open.

You called out 89 million I think of cost out in 2024, I think Rodney mentioned $90 million was embedded in the outlook.

Speaker Change: Good morning, I will echo the congratulations from everyone.

Speaker Change: Two hopefully quick ones.

Speaker Change: I don't know if you're specifically ascribing all call it 180.

Speaker Change: The cost out to grow but I think you were initially targeting 150, where is the upside coming from and then maybe if you're willing to quantify.

Speaker Change: What that run rate looks like thank you.

Speaker Change: Thank you gave us a great question so.

Speaker Change: So I'm going to start with talking about specifically ramp Act, which I believe is what you're referring to and then and then I'll turn it to Ronnie to not only walk you through the cost out to get clarity there, but walk you through kind of the EBITDA bridge for the year and then talk you through a little bit about net price realization that plays into that EBITDA bridge as well.

Speaker Change: You called out 89 million I think of cost out in 2024, I think Rodney mentioned $90 million was embedded in the outlook.

Speaker Change: So when you think about.

Speaker Change: I'll go back to the comment around ramp back specifically in Amazon, while it's unusual for Amazon to operate this way I would say with their industrial partners on the retail side is actually quite comment on how they operate this way on their on their AWS or cloud services, our cloud infrastructure business with our services partners. So it's very similar and if you could go back to it.

Speaker Change: I don't know if you're specifically ascribing all call it 180.

Speaker Change: The cost out to grow but I think you were initially targeting 150, where is the upside coming from and then maybe if you're willing to quantify.

Speaker Change: What that run rate looks like thank you.

Speaker Change: Thank you gave us a great question so.

Speaker Change: Really what we see from this is that it is one is continuity of supply.

Speaker Change: So I'm going to start with talking about specifically Ram pack, which I believe is what you're referring to and then and then I'll turn it to Ronnie to not only walk you through the cost out that give you clarity there, but walk you through kind of the EBITDA bridge for the year and then talk you through a little bit about net price realization that plays into that EBITDA bridge as well.

Speaker Change: But also the from ramp back specifically and this goes back to the business. They won last year on the paper side, which is paper void fill but a much more simplified version of that in terms of how they're offering it to Amazon.

Speaker Change: As you're talking to are a natural reaction to a keep in mind that paper void fill today is a relatively small part of our overall portfolio, where we see growth from a fiber perspective, and particularly in fulfillment is less around the box and what's in there and how you solve for void fill in the box is more around the actual packaging formats, particularly on the mailers, which is the reason why.

Speaker Change: So when you think about.

Speaker Change: I'll go back to the comment around ramp back specifically in Amazon, while it's unusual for Amazon to operate this way I would say with their industrial partners on the retail side, it's actually quite comment on how they operate this way on their on their AWS or cloud services, our cloud infrastructure business with our services partners. So it's very similar and if you could go back to.

Speaker Change: Why are we talking about doubling down to fiber discrete mailers itself as well as our auto bagging equipment, which is in itself a form of a mainland right, which is we've already had a lot of success with and so we see it we don't see it as unusual what theyre doing now what it does do for us.

Speaker Change: Really what we see from this is that it is one is continuity of supply.

Speaker Change: Simply creating opportunity relative to just kind of publicly doubling down of shrinking their relationship which gives us an opportunity for others that may not that may not respond well to it but it doesn't change our strategy doesn't change our thinking about how the opportunity we see in our business. We believe in what we're doing we believe it will it will yield results.

Speaker Change: As you're talking to are a natural reaction to a keep in mind that paper void fill today is a relatively small part of our overall portfolio, where we see growth from a fiber perspective, and particularly in fulfillment is less around the box and what's and how you solve for void fill in the box is more around the actual packaging formats, particularly on the mailers, which is the reason why.

Speaker Change: And then going back to your question around the cost out I think.

Ronnie Johnson: I'll clarify one point that 89 versus 90 in 2024 was just talking about where we set out to begin the year, where we landed I'm going to turn it over to Ronnie to talk about the EBITDA bridge for the full year, because it's similar I think that may create some of the confusion and then talk about net price realization.

Speaker Change: While we talk about doubling down the fiber discrete mailers itself as well as our auto bagging equipment, which is in itself a form of a mailer right, which is we've already had a lot of success with and so we see it we don't see it as unusual what theyre doing now what it does do for US is you can potentially create an opportunity relative to get you know just kind of publicly doubling down on shrinking their relationship which gives us an opportunity.

Thanks Dustin.

Ronnie Johnson: Thanks for the question from an EBIT Bridge perspective, as you are aware, we are facing FX headwinds of roughly $25 million and combined with that we are seeing a favorable net price realization of roughly 65 million. This is split them.

Speaker Change: Others that may not that may not respond well to it but it doesn't change our strategy doesn't change our thinking about how the opportunity we see in our business. We believe in what we're doing we believe it will it will yield results.

Speaker Change: And then going back to your question around the cost out I think.

Ronnie Johnson: This is driven rather by an increase in cost of $105 million.

Speaker Change: Clarify one point that 89 versus the 90 in 2024 was just talking about where we set out to begin the year, where we landed I'm going to turn it over to Ronnie to talk about the EBITDA bridge for the full year because the similar things that may create some of the confusion and then talk about net price realization.

Ronnie Johnson: Due to inflation offset by price increases of roughly $40 million.

Ronnie Johnson: A combination of FX and net price realizations are effectively offset by the $90 million of savings that we referenced in the script.

Ronnie: Yeah. Thanks, Doug Thanks for the question from an EBIT bridge perspective.

Ronnie Johnson: $90 million in savings can be split between $65 million of cost take out actions and $25 million of.

You are aware, we are facing FX headwinds of roughly $25 million and combined with that we are seeing unfavorable net price realization of roughly $65 million. This it splits.

Ronnie Johnson: Productivity efficiencies.

Ronnie Johnson: When we think about the CTO programs, we set out to achieve the 140 to 160 million of savings.

Ronnie: This is driven rather by an increase in cost of $105 million.

Ronnie Johnson: And you had mentioned through 2024, we did realize a 100 million of CTO savings any incremental 65 will bring us to the high end of that range.

Ronnie: Due to inflation offset by price increases of roughly $40 million.

Ronnie: A combination of FX and net price realizations are effectively offset by the $90 million of savings that we referenced in the script.

Ronnie Johnson: When it comes to the productivity savings.

Ronnie Johnson: Definitely talked a little bit about in plant optimization et cetera, the $25 million is largely driven by that.

$90 million in savings can be split between $65 million of cost take out actions and $25 million of.

Ronnie Johnson: From a comparative perspective.

Ronnie Johnson: Generally difficult to guide on it because it's a heavily contingent on what we do within the plan.

Ronnie: Productivity efficiencies.

Ronnie: When we think about the CTO programs, we set out to achieve the $140 million to $160 million of savings.

Ronnie Johnson: And so we gave you just a follow up to that point. So if you think about holistically and what he's referring to is really the productivity that we're driving within our plants.

Ronnie: And you had mentioned through 2024, we did realize a $100 million.

Ronnie Johnson: That particular piece of it but broadly speaking it's the same categories. We have been going on for the past two years, which is now with the new structure in place we have a lot more visibility each cost structure. So it's giving us more tailored opportunity to make adjustments. If you go back historically some of the comments, we've talked about which is whether it's for their back office optimization, which we continue to go after and then.

Ronnie: CTO savings any incremental 65 will bring us to the high end of that range.

Ronnie: When it comes to the productivity savings.

Jeff: Jeff you talked a little bit about our plant optimization et cetera, the $25 million is largely driven by that.

Ronnie: From a comparative perspective.

Ronnie Johnson: Then also areas around.

Ronnie Johnson: Further automation within most of our functions and other G&A type productivity enhancements and so what I'll leave you with on this particular pieces that.

Jeff: Generally difficult.

Jeff: To guide us because it's a heavily contingent on what we do within the plan.

Jeff: So we gave you just a follow up to that point. So if you think about holistically and what he's referring to is really the productivity that we're driving within our plants.

Ronnie Johnson: We're staying flexible as we go throughout the year to make sure that we're proactive and so while this is the starting point of our outlook for the year.

Jeff: On that particular piece of it but broadly speaking it's the same categories. We have been going on for the past two years, which is now with the new structure in place we have a lot more visibility each cost structure. So it's giving us more tailored opportunity to make adjustments. If you go back historically some of the comments, we've talked about which is whether it's for their back office optimization, which we continue to go after and.

Ronnie Johnson: So we're taking another hard look at the protective cost structure, particularly as we progress throughout the year for not seeing our initiatives take hold as quickly as we would have planned and so I would say on this particular topic stay tuned.

Ronnie Johnson: Thank you.

Speaker Change: Im showing no further questions at this time I would now like to turn it back to Dustin for closing remarks.

Jeff: And then.

Jeff: Areas around.

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

Jeff: Further automation within most of our functions and other G&A type productivity enhancements and so what I'll leave you with on this particular pieces that.

Dustin: I'm incredibly excited about our future and I look forward to updating you throughout 2025 as we execute on our strategy to return <unk> to growth.

Jeff: We're staying flexible as we go throughout the year to make sure that we're proactive and so while this is the starting point of our outlook for the year.

Dustin: Lastly, I'd like to close by reiterating my appreciation for all the <unk> team members for their tireless efforts in solving our customers' most critical challenges and their continued commitment to our transformation. Thank you.

Jeff: We will be taking another hard look at the protective cost structure, particularly as we progress throughout the year for not seeing our initiatives take hold as quickly as we would have planned and so I would say on this particular topic stay tuned.

Dustin: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Jeff: Thank you.

Speaker Change: Im showing no further questions at this time I would now like to turn it back to Dustin for closing remarks.

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

Dustin: I am incredibly excited about our future and I look forward to updating you throughout 2025 as we execute on our strategy to return <unk> to growth.

Dustin: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Dustin: [music].

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Dustin: Okay.

Q4 2024 Sealed Air Corp Earnings Call

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