Ole Rosgaard: Well, obviously, on that side, we’ve taken a lot of cost out. Some of it is structural. We’ve done rooftop consolidations. We also are able to in that business to flex really, really rapidly as demand goes down. So if demand returns, we obviously have room to — we can increase our capacity, let’s say, 2% to 5% without any cost increases. But if demand goes up further than that, you would have to add shifts. So you will see available cost goes up in line with increased demand, but a lot of the costs we’ve taken out is structural.
Ghansham Panjabi: And then just one final one on ColePak. If you broke out the sales number, I missed that, so if you could please repeat that. And then also as it relates to fiscal year ’24, I mean, obviously, very early big range of outcomes just based on the macro complexity, et cetera. But can you give us some of the known variances that we should keep in mind as we finalize our modeling estimates for fiscal year ’24? You have ColePak, obviously, the EBITDA contribution from there, any flow through from cost savings, price declines in paper? Anything you could share there.
Matt Leahy: On ColePak, we didn’t give a revenue number, but EBITDA — run rate EBITDA is about $17 million, $18 million. And then that does not include kind of the incremental benefits that go to the mills from us absorbing more tons. And you can think about that on a full year run rate basis. We’re not going to give revenue right now around margins but that should be instructive as you build the model for next year. On the other components, you can add a portion of the contribution from Lee, a couple of months a portion from Centurion and then obviously, this when you think about next year from an M&A basis. And then in terms of the other cost elements, I don’t know, you were asking for thinking about next year. I don’t know if we really have that.
Larry Hilsheimer: Yes, I would just say that on the M&A side, between lease and Centurion and ColePak probably have $40 million of incremental revenue this year. We take out two maybe on the Tama things that we’re up net $38 million. And if you look at the numbers we provided on each of those, you had $33 million for Lee, $20 million for Centurion, $17 million on ColePak on a full year basis. So you’d have a lift of maybe $28 million next year, $30 million kind of number. And then on the cost takeouts, we haven’t quantified the rooftop consolidation piece. There’s obviously some permanent cost takeout there. On structural over time, we’ve taken out a significant number this year, call it, roughly $30 million of overtime. Some of that’s shift in volume related. But we think there’s somewhere $10 million to $13 million of permanent structural change in how we’re running the business.
Operator: [Operator Instructions] Our next question will come from George Staphos of Bank of America.
George Staphos: Congratulations on the performance. I wanted to — a lot of the questions have already sort of gotten at the heart of the matter for you and again, what was really, really good performance in light of things. When you’re talking to your customers Ole, what are they saying about why they believe demand isn’t lifting it? Again, I know that’s really, really hard to quantify you cover so many markets and so many customers. But is there a common denominator one or two things that they’re seeing in terms of why we’re not seeing demand lift downstream?
Ole Rosgaard: So first of all, when I speak to a lot of them, our big global customers, they’ve taken plants down, they’ve taken a lot of economic downtime. It’s really back to what we have discussed previously that the economy has shifted from buying things to going out and consumers spending their money on services instead. I saw recently a couple of articles from the big box retailers in terms of how they’re suffering that’s the closest I can get. And then in terms of just the interest rates, people are not moving out as they have been means that they don’t buy goods when they move houses, they don’t necessarily paint and that sort of thing. But to put my finger on one particular item, it’s really, really difficult.
George Staphos: And on the ag side, you said ag is maybe trending a little bit less positive than you normally would like, anything to take away from that?
Ole Rosgaard: What I’ve been told also on ag is that in times of hardship what the individual farmers tend to do is to use less fertilizer and less [indiscernible] and that sort of thing. It’s just part of managing their business.
George Staphos: Can you talk about what price cost benefit you might have gotten from steel in the fiscal third and what you might be expecting in the fiscal fourth? And then back to Ghansham’s earlier question. So should we take away that as things ultimately hopefully pick up, there’s maybe $20 million of cost that will come back into the business on an annualized basis?
Ole Rosgaard: George, there was a slightly better situation. We had it on a year-over-year basis on steel because last year we had a rapidly decreasing steel cost curve. So we had higher inventory walk in through but it was not material for the quarter. As to that $20 million, the differential on that over time number I mentioned, yes, it will come back but that only comes back with sales and that would be leveraging out fixed cost footprint, because we aren’t building new factories to get that. So it will be adding labor back, they won’t be adding anything on depreciation and other cost that go in. So still nice margin lift.
George Staphos: I get that, just in terms of when we do our stack, we need to make sure that we have kind of a small negative slice for the ‘20 is what I’m getting at after volume, after incremental margin and so on…
Matt Leahy: George, it’s important to mention, those costs don’t come back at the same rate sales do. So it’s not one-to-one relationship. Demand improves, sales dollars improve, costs come right back in. They come back a lot more slowly. But there’s a lot of kind of capacity just so we have in our system right now and existing shifts. So we can handle more demand in an inflection but not layering in incremental costs right away. But overtime as sales come back, that’d be good problem to solve but needs the management approval…
Larry Hilsheimer: Yes, that’s what Ole was mentioning. If you go up 2% to 3%, we don’t have at a dime. You go up 20% yet you have to ran a shift or something…
Ole Rosgaard: And George, just a final comment [Multiple Speakers]. Just a final comment on that. Just go back to our strategy of value over volume, we will not take on business. So we are running at, I won’t say full capacity, but healthy capacity utilization in all our facilities. We will not take on business with low margins and then add cost in our plants in terms of another shift to produce products that we make low margins on, that’s not our strategy.
George Staphos: No, makes sense, Ole. My last question, and I’ll turn it over. same theme in terms of okay, let’s get on the other side of the mountain and volumes are better and so on, hopefully a better ’24. Free cash flow conversion has been excellent this year, well above your goal in the last quarter. Is there a chance that maybe realizing you’re not going to guide on ’24 that the conversion in ’24 maybe is a little below 50% because you do have to add back to working capital, you do have to do some other things or no? And then tell me a little bit about the program that you’re offering your employees to buy stock at a discount, what did you compare that with in terms of other ways to incentivize performance and ownership?
Larry Hilsheimer: So two things on that. I mean, it’s all going to depend on the pace of the increase of demand, George. And also then where does the cost of steel end up as the big driver for us in terms of what will be the impact on working capital build. OCC will play into that as well. Obviously, if demand comes back, you would think that’s going to drive steel cost up in OCC. But we would still have our goal to be 50% or better. And we have other opportunities within our supply chain initiatives that we believe can keep us at that — our goal level, so that will be our focus. I mean, obviously, the outsized performance that we had this quarter is substantially above our goal. We would love that, but we don’t see that. But just for another example, ColePak is well above our 50% on free cash flow conversion.
