Stephen Scherger: Yes, Mike. it’s Steve. And [Technical Difficulty] to drive benefit next year, as we also talked on the last quarter, we don’t tend to put those into the kind of mark-to-market discussions that we were just having. And at any time, to your point, we’ve got 20% or 30% of our contracts that are in negotiations and coming due. So, as those play out, we’ll certainly articulate those. If there are some that play out here, late this year [Technical Difficulty] incorporate those in the guidance. But to your point, we continue to actively engage with our customers to put in appropriate value for the products that we’re producing and have a kind of long-term relationship that we have enjoyed with many of our customers.
Mike Roxland: Got it. I appreciate that, Steve. And just one quick follow-up. Any comment you have on trends we were seeing thus far in October? Has there been any improvement at all sequentially? I know one of you appeared reportedly yesterday and basically noted no improvement thus far in 4Q. So, any commentary or color you can provide around what’s happened thus far in October in terms of order patterns, destocking come to an end, CPD promotional activity. Anything that would be helpful. Thank you.
Michael Doss: Well Mike, we’ve obviously gotten a look into October and with October, it’s consistent with the plus or minus 2%. So, we do expect to see sequential improvements quarter-to-quarter and as Mike said, we’ve got customers, who are seeing a positive move volumetrically already. We’ve got others, who are seeing it taking a little bit longer. and so we’re thinking it’s a good mix of customers, who are starting to see some promotional activity, material items in Q4, others aren’t quite there yet, as Mike articulated earlier. But sequential improvements in Q4 we can see happening.
Mike Roxland: Thanks very much.
Operator: Thank you. So, our next question comes from the line of George Staphos of Bank of America. Your line is now open. Please go ahead.
George Staphos: Hi everyone. Good morning. Thanks for the details. Steve and Mike, I don’t know if everyone is hearing it, but your phone has been cutting in and out a bit, at least on our end. And I just wanted to make sure when you’re answering Ghansham’s question, did you put out a — at least mark to market on pricing that you see for ’24? Because if you did, we didn’t hear that before we get into our questions.
Stephen Scherger: Yes, George, it’s Steve. and our apologies if there’s experience in some technical challenges here, but let me end with line to Ghansham’s question. What we did indicate is that if you just do a pure mark-to-market on price cost, we’ve got very little happening on inflation. So pretty benign and if you sequentially just look at the price impact year-over-year, it’s down roughly about $80 million year-over-year. And as Mike Roxland just mentioned, obviously, we’ve got other customer negotiations that we’re always involved with and improving terms and conditions, where they are in our negotiations. And so, I think that hopefully you were able to get that in response to anything that may have cut out. Did that work, George?
George Staphos: That’s perfect. Actually, that’s kind of where we were modeling and doing some back down. So, thank you for that. So, two questions here very quickly. First of all, in terms of the noodle cup and related markets, what do you think that market opportunity is for you and maybe, what kind of tonnage you expect maybe for ’24 and ’25 from those markets? The coding in that cup, is that a biocoding or is that a polycoding and how will you handle that? And then the other question is just sort of near term, we noticed that and again, performance was good given the backdrop. We don’t want to take away from that. The free cash flow guide came down a little bit this year, and you mentioned labor and benefit is running a little bit hotter this year than your prior guide. What were the factors in that? Thanks guys, I’ll turn it over from here.
Michael Doss: Okay. the first part of that, George, and then all that Steve handled questions that are on working capital in particular. But the reality of it is, if you look at our total addressable market and we put out there, $12 plus billion and within that addressable market, there’s $4 billion segment of it. That’s what we call cups and containers. So, that’s really where that sits. And so it’s a very big opportunity for us and one that we can work on for years to come. In fact, the vast majority of our cups, including the cup noodles, has some form of a low-density polyethylene or polyethylene area or coating inside. And as we talked about, what we’re really excited about is our ability to take those cups back to Waco and we can process with new vertical drum pulper that we’re installing.
There are 15 million of those paper cups today. With that coating on the inside, clean them up, take advantage of the fiber. It’ll be on the top wire. It’ll be the first fiber we put down and we’ll recycle those cups. So, we’re working with our customers within about a 200-mile radius of the mill to be able to have that capability. And eventually, you can expect that we’ll be able to do that in Kalamazoo as well. That’s our plan. So, we feel like we’ve got our focus.
George Staphos: Could that be 50,000 — I’m sorry, could that be 50,000 tons next year, do you think this new market? Just a new customer?
Michael Doss: I don’t know. We’re not going to put a ton of number up there right now. I mean, I can tell you this, that the fully transition, the cup noodles is 15.
George Staphos: Okay.
Michael Doss: So, I mean, these are meaningful numbers that come forward. So, it depends on kind of what Chick-fil-A’s trajectory looks like and some of the other conversions that are out there. But over the medium term, we expect that we’ll be able to make a pretty strong pivot out of our coded SBS and get more into manufacturing, the cup stock, which as you know, George, the split right now is of our 1.2 million tons. It’s roughly 400,000 tons to 800,000 tons. So every time, we sell a cop is something that we integrate into our own operation. Did you get all that, George?
George Staphos: Thank you, Mike. Yes, that’s perfect. Thank you. And on the [Technical Difficulty]?
Stephen Scherger: Yes. And let me just touch on that a couple of things. Really, on cash flow, we’re just dialing in our working capital. We’re running very much to demand, as you know, and all we were really doing is saying, okay, we’re just going to continue to service customers, make the products that we need to make, carry the inventory that we want to carry to make sure we’re servicing customers. So, we were really just dialing in that cash flow. I also will remind folks that when we had talked about 2.5 times leverage ratio, that excluded Bell, we [Technical Difficulty] as we mentioned, we’ve got to be up in that 2.6 range. We put 2.6 to 2.7, because we’ve also been acquiring some shares as you saw in the modeling that we were chaired with you on the guidance.
So hopefully, that gives you a sense for — we’re real pleased with where we’re generating the cash flow and as we look into 2024, it sets us up well to make sure we’re servicing customers as they return towards the bureau.
George Staphos: Okay. thank you very much.
