Let me turn it over to Stan to kind of take you through how we bridged some of the aspects around gross margin and operating margin.
Stan Sutula: Sure. Thanks, Noel. And on gross profit margin, you started to see some progress, right? North America, Latin America and Africa, Eurasia, you saw improvements in the operating margin in the fourth quarter. As we look at gross profit, Noel, highlighted the pricing, that significant flow-through will help in 2022. The productivity will be a tailwind here and while material and Ranpak in particular will still be a headwind that moderates coming off of 2022. So, as you look at gross profit margin expansion, that’s going to be a benefit. But keep in mind, as you work down, we are going to have investments in advertising. We expect to increase that on a dollars and percent of sales. But also keep in mind, as you go down the income statement that interest expense is going to be up year-to-year.
That’s driven predominantly by increase in rates and also by slightly increased debt levels as we carry Red Collar in for the full year. And also taxes, so taxes around the world, in particular in recessionary environments, potentially being out there, we expect our tax position will be slightly higher on a year-on-year basis. So, while the operating margin or EBIT margin we expect will be up nicely, that will be partially offset by interest and taxes, delivering low-to-mid single-digit EPS growth.
Operator: Our next question today will come from Peter Grom of UBS. Please go ahead.
Peter Grom: Thanks, Operator, and good morning, everyone. So I wanted to ask on the gross margin as well, which for the quarter was a bit of a surprise. So in your prepared remarks, you mentioned a number of key drivers as to why it came in below your expectations. But can you maybe unpack where the biggest variance was, whether it be sales mix, commodities versus some of these startup costs and manufacturing variances? And then just maybe following up on Chris’ question, when we think about the path-forward, you mentioned several hundred million dollars of inflation for raw materials and packaging. Is there any way to kind of frame that, is that $300 million to $400 million, is it something higher? I just think it’s kind of important to understand kind of the gross margin bridge as we think about next year? Thanks.
Noel Wallace: Sure. As you saw in the fourth quarter, obviously, a continued difficult environment in terms of raw material inflation, another 900 basis points on top of what we had in the third quarter in terms of a headwind on gross profit. A good percentage of that continues to be ag prices, which obviously, have continued to move south on us. And in fact, if you look at the first half versus second half, Peter, ag prices were up 25%. So, obviously, that continued to impact the Hill’s business. On top of that, as we integrated the three Red Collar facilities and began transitioning some of the high capacity volume business that we had in our own plants. We obviously incurred some startup costs and some variances moving through the P&L that obviously impacted margin in the quarter as well.
And then I’d also characterize, as I mentioned, that obviously, the inventory reductions we saw in skin health and the drag from China on the skin health business likewise had a mix impact in the quarter. With that, let me turn it over to Stan to see if he has any more information in terms of how he wants — we want to characterize how we are thinking about raw materials for next year.
