Anthony Pettinari: Okay, okay. that’s helpful. And then shifting gears, there have been a lot of questions in the CPG and food service space around potential long-term impact of GLP-1 drugs. I’m just wondering if you had any kind of high level or initial thoughts on if or how this could impact your business or any anecdotes of consumers using GLP-1 or maybe, buying less or more or shifting their mix of products that you provide packaging for.
Michael Doss: Yes. So Anthony, if you really — and you’ve been watching many of our customers have done their releases over the last couple of weeks and they’ve commented a lot on this, because they’ve gotten a lot of questions on it. It’s early days in terms of that drug and I don’t think we even know all the questions to ask yet. But having said that, many of them have actually said, they don’t expect it to be much of an impact at all on their business and several have said they anticipate that this can be an area that perhaps they can innovate behind it. So, I think we’re just going to have to wait and see how that plays out over time, what the adoption rates are and how it all plays out. But there’s nothing there we’ve seen or read that gives us pause relative to our ability to drive our 100 basis points to 200 basis points of organic volume growth over the medium to long term.
Anthony Pettinari: Okay. That’s very helpful. I’ll turn it over.
Michael Doss: Thanks, Anthony.
Operator: Thank you. Our next question comes from the line of Phil Ng of Jefferies. Your line is open. Please go ahead.
Phil Ng: Hey, guys. I appreciate you squeezing me in here. Sorry to harp on this, I mean, the non-integrated tons are obviously quite small for you, but you’ve given some color on how your volume strength has progressed through October and since you stripped that out in your net organic sales number, and certainly, SBS folding carton seems to be a little more under pressure. How do you kind of see the open market tons progressing through the year? And I’m curious if you’ve seen any more impact just broadly on imports, at least RISI seems to be dialing up comments around that and maybe, it having more impact and making its way to the Midwest.
Michael Doss: I think the way we’re dealing with the open market, particularly on the coded SBS side, as you’ve seen in terms of the 70% operating rate for graphic is, we’re matching our supply and our demand, and we’ll continue to do that. That’s a plan relative to how we would operate the business. I’ve already told you our CUK and CRB, and uncoded cup business, those are strong businesses, highly-integrated, our operating rates are solid there. and I’d expect that thing to be the case, particularly as we get some growth.
Stephen Scherger: Yes. I mean, it’s a great question around imports. When you read, some of the trade journals and how they talk about imports, it sounds like there’s a wave coming. And I was interested, particularly on the most recent one relative to CRB coming from Western Europe. So, our team went back and pulled all the census data. We looked back a couple years in terms of what it looked like. Phil, 20,000 tons are less a year for the last three years. It’s a two-million-ton market. It’s like 1%. So, what’s most surprising to me on that is just the amount of airplay that got, and because we don’t see it, in the marketplace, and we’re out there every day with the biggest producer of coded CRB, as you know, and we’re getting bigger.
And maybe, even to build on that a little bit, we’re the lowest cost CRB producer in North America. And if you compare net gas against Europe even today, it’s almost five times more expensive. It’s almost $20 in MMBTU. And it’s more expensive to get a container from Europe than it is to go from the United States to Europe, almost 2X. And so if we thought selling CRB to ourselves, where we buy over 100,000 tons of material in Europe was a good long-term plan, we’d be doing it and we’re not, because it just isn’t economically profitable over the cycle to be able to do that. So, there’s some stuff maybe around the margin out there. It gets a lot of airplay, but when you really look at the data and the numbers, it doesn’t support the hype.
Phil Ng: Okay, that’s helpful. That’s a great color. And then since you brought up Europe, just curious how is your business holding up there, appreciating your — on the converting side. Maybe, you’re able to work through all this, but your ability to kind of manage price costs in the medium term as well.
Michael Doss: Our overall volumes in Europe were substantially similar to those in the United States. And I’ll tell you what I, in a word — well, a couple of words maybe. Our strategy is working there. And if you look at how we’re doing it, we’ve got a non-integrated business there, where we’re one of the largest buyers of paperboard in Europe and that puts us in a great spot right now, where the markets are a little bit softer as you’ve already mentioned here. And so, we’re buying paper board very effectively. We’re able to export our CUK into that market profitably and have for a long time as we continue to grow our beverage business. So, when you really look at it, and Steve and I talk about it a lot, having a non-integrated business over there, we don’t have as much capital tied up to drive the revenue line in our European business.
So, when you look at our return on invested capital and compare Europe to North America, which is obviously heavily integrated, in our own paperboard, they’re on top of one another. So, our overall strategy is actually delivering good results for shareholders.
Phil Ng: Okay, appreciate the color. Thank you.
Michael Doss: You bet.
Operator: Thank you. Our last question comes from the line of Gabe Hajde of Wells Fargo Securities. Your line is now open. Please go ahead.
Gabe Hajde: Mike, Steve, good morning.
Michael Doss: Good morning.
Stephen Scherger: Good morning.
Gabe Hajde: I had a question about backlogs. And I know you guys don’t necessarily express it this way. but the three to four weeks, I think historically speaking, you guys have talked about is probably being towards the low end of what you’d consider to be sort of a healthy-balanced market. I’m just curious for this time of year, taking into account seasonality, is there anything different, unique about that number? You called out the 15,000 tons that would be associated with Nissan, and I appreciate that was, I think, full adoption. So, more thinking about Chick-fil-A, I think you’ve identified that as maybe an 80,000-ton opportunity, and correct me, if I’m inaccurate. Is there anything in that backlog number, sort of for a pipeline fill into ’24 associated with those two products? And then sort of when we were talking in February, would you expect to see that backlog number changed materially from where we’re at today again, just taking into account seasonality?
