Gregory Lovins: Yes. Thanks, John. So I think you called out a lot of the buckets, really, the big driver of margin we would look year-over-year and even sequentially is the volume increase. So year-over-year, obviously, it’s very significant. And sequentially, we had an improvement as well as we still had some destocking back in Q4 that we talked about is behind us now. The other thing that the Materials business has been significantly doing is driving productivity. So we’ve got some large restructuring actions as well as just ongoing ELS [ph] type of productivity initiatives that the team is continuing to drive. So those volume and productivity initiatives are really driving the significant margin expansion and they’re largely offsetting wage inflation in that incentive comp headwind I talked about a minute ago.
So the teams have been doing a really good job driving that. When we look forward, I think I talked about last quarter, we set our targets back in 2021 for the cycle that ends in 2025. We talked about materials margins getting around that 17% EBITDA level. Clearly, we’ve delivered that here in the first quarter and gotten pretty close to that in the back half of last year as well. And our focus is continuing to deliver on that long-term target as we stated. And as always, in the Materials business or in all our businesses, really, it’s a focus on balancing our top line growth, balancing our margins, our capital efficiency, to drive EVA growth over time. And this business has been a big EVA driver for us for a long time, and we’re going to continue balancing all those drivers to deliver incremental EVA into the future as well.
Deon Stander: And John, let me just add from a market perspective, we were very clear that we thought destocking ended in Europe last year in the third quarter and the U.S. roughly in the end of the fourth quarter of the year. And we’re seeing that play out in conversation with our customers where there had been more limited visibility to end CPG demand that has expanded. They’re seeing more confidence there. And their own volumes of inventory are much more normalized now than they have historically been over the last sort of one and a half years as it were. And so that also underpinned the fact we’re starting to see more normalized volumes. I put that also in the context of we continue to see macro retail volumes still being relatively low, both in the United States and in Europe. And so I think that speaks to also just the forward outlook being while confident in our continued normalization, there is still some caution out there as well.
Operator: Our next question comes from the line of Anthony Pettinari from Citigroup. Please proceed with your question.
Bryan Burgmeier: Hi, it’s actually Bryan Burgmeier sitting in for Anthony. Thank you for taking the question. Just on the rising paper costs in Europe, I know you cited a bit of a margin headwind next quarter. Can you just remind us how Avery has handled this type of inflation in the past? Or how long it typically takes you to get caught up on net price? And do you believe with the finished strikes now resolved, order patterns and paper costs can kind of normalize maybe in the second half of the year? Thanks.
Gregory Lovins: Yes. Thanks, Bryan, so traditionally, we’ve talked about it taking about a quarter to implement pricing from the time we start to see some of that sequential inflation, and we expect to stick at least. Back in ’21, ’22 time frame when we were seeing pretty significant sequential inflation each quarter, we had narrowed that gap a bit from that three months to a much smaller amount. I think we’re just starting to see this sequential inflation over the back part of Q1. So we would expect it to take a couple of months to get that in place in some points in the mid to late part of Q2. So overall, we don’t see in our visibility on materials markets, our raw materials aren’t that far in front of us. So we’re really focused on what we’re seeing right now in Q2. So right now, we don’t have a lot of visibility past that, but not expecting too much to happen past Q2 from a raw material perspective at this point.
Deon Stander: And Bryan, all I’d add is that unlike in ’22 and then into when we saw that significant inflation period and then followed by deflation. This one over here, in particular in Europe is related to the finished port strike, which has now ended and concluded. That’s the good thing. I think we’re still going to see some of those ripple effects come through, as Greg has alluded to. But as the market leader, we tend to be very disciplined in our pricing approach. And so when we see inflation, we tend to respond both with productivity and price increases. And when we tend to see deflation, we tend to unwind those as well appropriately to make sure that the custodians of the industry, we’re managing the health and the balance of the industry as well.
Operator: Our next question comes from the line of Jeff Zekauskas from JPMorgan. Please proceed with your question.
Jeff Zekauskas: Thanks very much. I was looking at your Slide 11 in your description of the organic growth in Solutions. And I looked at your percentages. And so if Intelligent Labels is 32%, growing 17%, that’s up 5.5%. And if your high-value categories are 28%, growing at low-double digits, that’s up another 3% and then you get something from base categories. So if you simply follow your percentages, it looks like your organic growth should be, I don’t know, close to 9%. Is there some acquisition that’s included and maybe the solutions, high-value categories? Or is it something else? And then secondly, did your intelligent labels revenues shrink? Were they flat? Did they grow sequentially?
Gregory Lovins: Yes. Thanks, Jeff. So I think to your point, high-value categories in total that includes Intelligent Labels and Solutions on that chart shows it’s around 60% of the segment. So when you look at that, it is a large portion or a significantly large portion of the overall growth in the quarter. And as we said, the base business is up kind of low-single digits there on in addition to that. There are acquisitions in the high-value categories last year. We did three acquisitions in our external development space. which is part of that high-value segment category piece that’s in our ex currency growth year-over-year as well.
Deon Stander: And Jeff, to your second question, our Enterprise IL revenue in dollar terms was sequentially lower than Q4. Recall Q4 is a high watermark for logistics. And for the apparel business, Q1 sequentially is a lower quarter from an overall both apparel and logistics as it were.
Operator: Our next question comes from the line of Josh Spector from UBS. Please proceed with your question.
Josh Spector: Yes, hi. Thanks for taking my question. So I wanted to dig in a little bit more on the cadence of earnings into the second quarter. So if I look at history, typically, you’re up something like $0.20 sequentially. Greg, you called out the $0.05 to pull forward. I guess if I say materials margins are down modestly, maybe that’s $0.05. I guess what else would be the other factors that would drive that lower sequentially and offset frankly, all of the normal seasonality here?
