Greif, Inc. (NYSE:GEF) Q4 2023 Earnings Call Transcript

Greif, Inc. (NYSE:GEF) Q4 2023 Earnings Call Transcript December 7, 2023

Operator: Good day and welcome to the Greif Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to Matt Leahy. You may begin.

Matt Leahy: Thanks, and good morning, everyone. And first, let me apologize for the technical difficulties on our side. We were dialed in and for some reason we lost audio and we’ve been troubleshooting for the last several minutes. We truly appreciate your patience. Welcome to Greif’s fourth quarter fiscal 2023 earnings conference call. This is Matt Leahy, Greif’s Vice President of Corporate Development and Investor Relations, and I’m joined by Ole Rosgaard, Greif’s President and Chief Executive Officer, and Larry Hilsheimer, Greif’s Chief Financial Officer. We will take questions at the end of today’s call. And in accordance with regulation fair disclosure, please ask questions regarding issues you consider important because we’re prohibited from discussing material and non-public information with you on an individual basis.

Please turn to Slide 2. As a reminder, during today’s call, we’ll make forward-looking statements involving plans, expectations, and beliefs related to future events and actual results could differ materially from those discussed. Additionally, we’ll be referencing certain non-GAAP financial measures and reconciliation to the most directly comfortable GAAP metrics can be found in the appendix of today’s presentation. And now with that, I’d like to turn the presentation over to Ole on Slide 3.

Ole Rosgaard: Thanks, Matt, and good morning everyone and let me also apologize for the technical difficulties we had this morning. Looking back on fiscal year 2023, the second fiscal year on our Build to Last strategy, I’m humbled and in awe of the progress of our global Greif team has made despite extraordinary macroeconomic headwinds. This year challenged us to execute with continued precision and excellence in a complex operating environment. I’m proud to say that in the face of ongoing demand challenges, the hard work from our teams resulted in the second best year in Greif’s history on an adjusted EBITDA and adjusted free cash flow basis, surpassed only by our exceptional performance in 2022. Year-over-year, we improved both our EBITDA margins and our free cash flow conversion, even as primary product sales declined double digits across our businesses, a true testament to the commitment of our teams to operational excellence and our value over volume philosophy.

Fiscal 2023 was a banner year for investing in the long-term health of Greif. We launched new organic growth projects in both PPS and GIP, completed four acquisitions, and announced the fifth in Ipackchem for an aggregate capital commitment of over $1 billion on M&A. We maintained our focus on returning capital to shareholders by increasing dividends per share by 7.5% and completing our $150 million share buyback program earlier in the year. And we did all this while maintaining a leverage ratio within our target range of 2.0 to 2.5 times. At Greif, we often talk about managing the present while creating the future. We’re doing both exceptionally. As we close out fiscal 2023, I’m proud of what we have accomplished and where we are going. But make no mistake, managing depression can be hard, especially when business is under pressure.

And our business has been under pressure for some time, and we are continuing to face near-term headwinds which Larry will cover with our low-end guidance and modeling assumptions for fiscal 2024. But as proven [Technical Difficulty] 2023, we are built to handle [exonerous] (ph) impacts to our business by controlling what we can control. Our execution will remain strong and we will weather this storm and I have full confidence in our mission and our global Greif team. After Larry provides a review of the fourth quarter, I will share with you a broader update about our growth strategy for future value creation on the Build to Last. Larry?

Larry Hilsheimer: Please turn to Slide 4. Thanks, Ole. In our fourth quarter, we generated nearly $200 million of adjusted EBITDA, $130 million of adjusted free cash flow, and $1.56 of adjusted earnings per share, despite the complex operating environment. Our team’s execution from the plant floor through corporate functions over the past year was truly extraordinary, and I would like to thank our colleagues for their hard work and commitment to delivering exceptional results in these difficult times. Later in the presentation, Ole will expand commentary around our recent M&A. But for now, I will remind our investors that the ColePak and Reliance acquisitions both occurred during the fourth quarter. Therefore, Q4 results did not include the full contribution of these businesses, which along with Ipackchem in early 2024 will provide a benefit to our performance in the coming year.

Let’s turn to segment results starting on Slide 5. The fourth quarter in GIP saw more of the same challenges we have now faced for five straight quarters, an extremely weak industrial sector with demand at staggeringly low levels. Compared to Q4 of fiscal ‘22, global volumes in steel drums were off 8%, large plastics off 14%, and fiber drums down 19%. Only IBCs and small plastic volumes increased year-over-year. On a two-year stack basis, nearly all substrates globally in GIP are tracking down mid-teens. A reminder for investors related to this historic demand period in GIP. More than 85% of basic and specialty chemicals globally are consumed by the industrial sector. Global PMIs have been trending negatively since December of 2021 and tracking below 50 since September of 2022.

Existing home sales in the US are tracking at the lowest level since 2010. This is truly an unprecedented time with no comparable period, including The Great Recession, where we saw a steep drop in drum volumes that quickly recovered. While this is sobering data, we take pride in the results we have delivered. Those results have enabled us to continue to invest strategically in our Build to Last initiatives focused on the future while managing costs and operations effectively. We are excited about the results of our GIP segment and what they will deliver when the industry — industrial economy recovers. Please turn to Slide 6. Paper packaging’s fourth quarter sales declined $84 million year-over-year, primarily due to lower volumes and growing price cost pressures.

We took approximately 62,000 tons of total downtime across our mill system in the fourth quarter compared to 35,000 in Q4 of last year. Container board fared better than URB with less economic downtime and better volumes in converting. But overall, the continued low volume environment combined with rising OCC costs during the quarter led to both EBITDA dollar and margin compression compared to the prior year. Our PPS team continues to control the controllable as well and did an extraordinary job on managing working capital to close out the year. Please turn to Slide 7, where I’ll discuss 2024 low-end guidance assumptions. As Ole mentioned in his opening remarks, and I’ve covered as well, we are sitting at a truly historic moment in time for Greif’s businesses with prolonged volume headwinds across GIP and markets we serve and now a material price cost headwind in PPS with rising OCC and lower RISI published prices.

It’s a challenging time to give full year guidance because we do believe the demand environment will turn positively, we just don’t know when. Given these multiple near-term headwinds and low visibility to a sustained recovery, we made the decision to present a low-end guidance to start fiscal 2024 of $585 million in EBITDA and $200 million in free cash flow. This guidance methodology is simple. It presents a continuation of demand, price, and cost trends for both businesses through the duration of fiscal ‘24 at current levels. In addition, this guidance does not include our recently announced price increases in container board, which we don’t include in guidance until recognized by RISI. And it also excludes any impact from Ipackchem, which we expect will close sometime in calendar Q1.

Our hope is that our actual fiscal ‘24 results will end up significantly above this low-end guidance. However, we’ve always stated that we do not guide based on hope. Our downside view is driven by current price cost in PPS and no volume inflections in 2024. We have seen some green shoots, but no identified compelling trends yet to give us conviction that a recovery is emerging. Note that if volumes recover 50% of the GAAP to 2022 volumes, our EBITDA would increase approximately $85 million. And 100% recovery would add approximately $170 million. Our business is designed to weather short-term cycles. We continue to delight our customers. We are firing on all cylinders and controlling what we can control. We’re proud of our teams, and we know that we will continue to execute through this difficult time and come out on the other side a stronger, better business.

The investments we are making under Build to Last are laying the foundation for breakout performance in the years to come, and I’d like to hand it back to Ole to cover more about our long-term strategy and growth plans. Ole?

Ole Rosgaard: Thanks, Larry. If you could please turn to Slide 8. Build to Last is about producing quality results on an annual basis. But it’s also more than that. It’s about leading through our values. Our purpose, vision, and missions all reflect our goal to better serve our colleagues and customers throughout the world. And I would like to briefly highlight a few achievements in 2023 on each of our missions and how they set us up for future success. The Customer Satisfaction Index has long been one of our most reliable measures of success in delivering legendary customer service, which directly aligns to our vision of being the best performing customer service company in the world. Our aspirational target is 95% and we are proud that in 2023 our average score was 94%.

We also recently completed our 13th Net Promoter Score survey of nearly 5,000 customers, receiving a result of 68, a new Greif record, and a leading score within the manufacturing industry. Consider the macroeconomic context of these results. Our customers clearly know we are devoted to serving them with excellence, particularly when times are tough and we are being rewarded for it. Under creating thriving communities, we completed our Sixth Annual Gallup Survey this year with over 90% colleague participation and the results again showed an improvement in engagement, placing us firmly within the top quartile of all manufacturing companies surveyed across the world. We also show our industry leadership through our commitments to sustainability under Protect Our Future.

And this year, we published our 14th annual sustainability report with our new 2030 targets around climate, waste, circularity, supply chain, and DE&I. This mission is a foundational element of our long-term success and I highly encourage our investors to visit the sustainability page of our website to read more about our initiatives. Please turn to Slide 9. Now that we have two years under the Build to Last strategy, we want to provide a broader update on some ongoing internal strategic initiatives that we believe are the pillars of driving long-term value creation for all stakeholders. First, we share with you the benefits throughout 2023 from centralizing our global operations, supply chain, and IT functions under the One Greif banner. We are building out these functions to serve a larger footprint of businesses in the future with the expectation of a growing scale advantage.

Second, in alignment with our One Greif mentality, we are executing an organizational shift from geography-based operations to substrate-based operations. This structure was piloted in 2023 in GIP North America and resulted in planned and regional level operating efficiencies, improved best practice sharing, and better decision making around capital investments and growth. We will use this fiscal year to prepare and plan to update you with a more complete picture as we get closer to implementation targeted for the beginning of full year 2025. Additionally, we plan to change our fiscal year end to September 30th, beginning in fiscal year 2026. This change has been requested by our investors and analysts for years. And we believe it will better align us to the standard industry calendar and increase our exposure to the investment community.

Importantly, all these initiatives have been part of our Build to Last strategy from inception and our expectations is they will make us better at driving results, improving transparency and increase equity value creation. Enacting these changes takes time and effort, which will result in some short-term SG&A cost inflation in the coming fiscal year. But we firmly believe that these changes will lead to a better and more successful Greif in the future. In addition to the internal work being done, I’m also excited about our recent growth through targeted M&A. Please turn to Slide 10. At our Investor Day in 2022, we outlined Greif’s acquisition priorities in three areas. Unique downstream converting in paper, sustainability alliance reconditioning services, and pursuing a roll-up acquisition strategy in the resin-based jerrycans and small plastics markets.

These acquisition verticals share the same very attractive attributes. They are aligned to growing end markets, hold strong circularity characteristics, and enjoy an elevated margin profile. With a growing addressable jerrycan market of $3.1 billion, we see a great opportunity to be the global leader in this high-performance packaging sector as we have the technical capability, product offering, and scale to service customers in all our markets. We accelerated our growth in this market over the past year with the acquisitions of Lee Container, Reliance Products, and look to bolster our position following the close of the Ipackchem acquisition, which we anticipate by the end of our fiscal second quarter. In summary, we will enter 2024 positions to become one of the largest, most technically sophisticated, small plastic product offerings in the world.

Please turn to Slide 11. Another objective of our acquisition path is to build greater balance in our portfolio from an end market and substrate perspective. The transactions announced in fiscal 2023 give Greif greater exposure to secular growth trends in agricultural and specialty chemicals, as well as exposure to newer markets for us in pharmaceuticals and medical diagnostics. The jerrycan and small plastic product line is extraordinarily versatile and our teams are excited about the follow-on organic growth potential as we serve and grow with customers in these markets. Additionally, you will notice that nearly 75% of the acquisitions completed or announced in fiscal 2023 were resin-based, improving our overall sustainability profile as most of these products can be recycled and reused and require less energy and materials to manufacture.

Please turn to Slide 12. A final note on acquisitions. In addition to the improved end market mix and sustainability benefits, we are also buying great businesses. These companies are the companies we are acquiring and those in our M&A pipeline are materially margin-accretive and have better free cash flow characteristics than our legacy Greif business. Over time, this path, along with the work our teams are doing to continuously improve our base business every day will drive our performance towards our long-term goals of 18% plus EBITDA margins and well over 50% free cash conversion. We will continue to utilize our strong balance sheet and remain disciplined on acquisitions going forward while actively lowering our leverage through a combination of debt paydown and EBITDA growth.

Our capital allocation strategy will remain balanced, ensuring the financial strength and growth of the business for years to come. In closing on Slide 14, let me remind you of the reasons I’m so excited for the long-term growth prospects at Greif and why we remain well positioned to weather this historically soft demand and pricing environments. I have full confidence in our ability to control what we can control and excel through successful execution of our built-to-last strategy. We have proven over the past two years that we have the team and strategy to perform in complex operating environments. We have managed the business tightly while also investing for the future. We have accelerated our growth through M&A and high-impact organic growth projects.

And lastly, we are keeping a long-term lens regarding our operations and business strategy. The cumulative impact of our efforts will result in a more robust, efficient, growth-orientated, and defensible business model, which we believe positions Greif for success and strong earnings growth as the cycle normalizes. We thank you for your interest in Greif. And, operator, will you please open the line for questions?

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Q&A Session

Operator: Certainly. [Operator Instructions] And our first question comes from Ghansham Panjabi of Baird. Your line is open.

Ghansham Panjabi: Hey, guys. Good morning.

Ole Rosgaard: Good morning, Ghansham.

Ghansham Panjabi: Good morning. Just making sure the audio is working. I guess first off on the EBITDA bridge, Larry, $819 million generated fiscal year ‘23. Can you just give us more color in terms of the non-volume variances? I’m just trying to reconcile down to year $595 million, which would be a pretty significant step-down relative to the almost $200 million you generated in EBITDA in 4Q.

Larry Hilsheimer: Yeah, sure thing. Ghansham, obvious question, right? So if I walk through it, we have a year-over-year impact because of the strengthening dollar against our bucket of currencies of about $29 million. We also had throughout the year a series of sort of one-off one-time items. For example, we had insurance recovery of about $6 million related to a fire where the costs were actually in ‘22. We had another fire recovery, same thing before. We had some legal recoveries. We had utility refunds that EMEA issued because of the high cost. It was some governmental initiatives. And then a tax recovery down in Brazil of about $6 million that was an operating type of tax. So all of those were — they flowed in throughout the year.

They weren’t like big lumps, but they totaled up to $29 million. So we don’t anticipate those to reoccur. So between those two items, you have almost $60 million. We then have just the paper pricing element in cost price squeeze in PPS, it’s roughly $140 million year-over-year to where we are right now. Now again, that does not take into account the price increase we just announced, which we will be implementing January 1st. And then, GIP, a little bit of just index timing on our forecast on cost is about a $17 million drag year-over-year. And then we have some investments in, Ole mentioned us going to segment structure. We’ve got cost of that about $6 million that we believe will generate a lot of benefits for us from that concentrated focus on different segments going forward.

We also are investing as we’ve talked a lot about our digitization efforts in IT that we anticipate future strong benefits. The GAAP rules require us to expense it. We view it more as an investment. But it’s that net of the benefits, so we believe we’ll start to see some benefits this year is about $8 million. That’ll turn into — turn around to more benefit generation in ‘25, ‘26 and going forward. And then there’s just $5 million of other inflationary things, those kind of matters. So that should get you from the $819 million to $585 million.

Ghansham Panjabi: Okay, that’s super helpful. And then the volume recovery, the 100% of $170 million, like the scale that you gave us, is that relative to two years ago? Is that just to make sure I have that right?

Larry Hilsheimer: That’s just relative to ‘22. So yeah, I guess that’d be two years ago, according to what we’re going to do. If we went back actually to what we look at sort of the last normalized year because of COVID, everything else going on, and go back to ‘19, the volume recovery would be even higher numbers. But yeah, the $174 million is relative to ‘22.

Ghansham Panjabi: Okay, got it. Perfect. Thank you. And then in terms of your comments on green shoots, more color there, and then just lastly, on the CapEx guidance, is that reflective of the low end assumption, or — and if so, is that something that would be scaled up if the year turns out to be better than you think?

Larry Hilsheimer: Yeah, on the green shoots, it’s mostly just what we started to see in our container board business, Ghansham. We’ve seen, I don’t think we’re ready to call it a trend yet or an inflection point, but certainly the last couple of months have been much better and our mill system is full at the moment and backlogs are good. So that’s what we’re talking about. We really haven’t seen it anyplace else. And in, I’m sorry, what was the second part of that?

Ole Rosgaard: CapEx guidance.

Larry Hilsheimer: CapEx guidance. Thank you. CapEx guidance, yes, Ghansham, we’ve said, hey look guys, if we actually end up with a year that’s at this low end, we’re going to manage our CapEx spend to just not have anything to do with our strength because obviously we could do more, but more just to manage it for appropriately for investors. So if we do see an inflection point, we would probably up our CapEx, but it wouldn’t be proportional on that same ratio. Obviously there’s a core amount of CapEx that we have to do every year to make sure we maintain critical maintenance. And obviously, that’s what impacts our cash generation ratio.

Ghansham Panjabi: Okay, terrific. Thank you so much and happy holidays to all of you.

Larry Hilsheimer: Thank you, Ghansham.

Operator: And one moment for our next question. Our next question will come from [Cashen Keeler] (ph) of Bank of America. Your line’s open.

Unidentified Analyst: Yeah, hi. Good morning. This is Cashen on for George. He had a conflict this morning, business-related. So just on container board, I know you’re not including it in guidance here, but I guess can you generally just speak to your rationale behind the price increases and then, you also talked to some improvement just on container board. It’s trending better relative to URB. So just on the demand front there, can you talk at all just how that may be trended throughout the quarter and what you’re hearing from your customers on that front as well?

Ole Rosgaard: Yeah, I mean, we are raising the prices because we, like everybody else, have faced inflationary cost pressures. Obviously, OCC is up. We deliver great services to our customers, and demand’s been up. So we are — we’ve gone out with that, and it will be effective January 1. That’s essentially it.

Unidentified Analyst: Okay. And then on — just on demand and container board.

Ole Rosgaard: Yeah, you’ve got that trend stuff there.

Larry Hilsheimer: You’re talking about fourth quarter?

Ole Rosgaard: Yeah.

Larry Hilsheimer: Yeah, so the mills, let’s see here, yeah, mills are 0.5% and in sheets and CorrChoice, 2.8%. In boxboard, we were down 6.9%, and tube and core down 7.6%.

Ole Rosgaard: Yeah, so sequentially a significant turnaround because we’ve been running negative, so.

Unidentified Analyst: Okay, understood. Appreciate that color. And then, I know you’ve done a number of acquisitions or announced a number this year, and, Ole, you talked to M&A being part of the story, kind of longer term here. And on past calls, you’ve talked to stuff maybe in the kind of immediate term pipeline. So at this point, is there anything that you could potentially execute on in the coming year? Or how can we kind of think about that?

Ole Rosgaard: We haven’t closed on Ipackchem yet. That will close here in the first calendar quarter. [Technical Difficulty] Ipackchem they operate in nine countries. And given the volume situation we have at the moment and our guidance, we’re not sort of going out aggressively to buy, but we have the means to do something, and we remain opportunistic over the next six months in terms of what’s available. And we’re not going to miss a good opportunity to do a good deal.

Larry Hilsheimer: Yeah, the thing I would also just share is even if we had hit this low end, if that’s all that happens this year, we still are well within any of our debt covenants and will be in great shape going forward. I mean, even if we got to just like recovering 50% of our volume this year, we would, with Ipackchem, we’d still be right around 3 on a leverage ratio. Obviously as we recover, we think there’s significant upsides. And to put a little point on that, so we’re out at $585. If we recovered paper and pricing margins to the average of the last five years, we’d pick up $101 million. If we recapture the volume, we already said that’s $174 million. If we add Ipackchem in there, say roughly $60 million, we’re up to $920 million. If those things happen, we’re already back down in our debt ratio target.

Unidentified Analyst: Got it. Understood. And then just one last one and I’ll turn it over. Just with the change in terms of your fiscal year, is it possible at all to quantify what the inflation might be or what costs you might incur related to that?

Larry Hilsheimer: Yeah, the fiscal year change thing is relatively minor. It’s a couple million dollars kind of thing for that element of it.

Unidentified Analyst: Got it. Thanks. I’ll turn it over.

Operator: And one moment for our next question. Our next question will come from [indiscernible] of Stifel. Your line is open.

Unidentified Analyst: Good morning. Thanks for taking my questions. If you could just talk about what you’re watching as indications of change in the business fundamentals and what needs to happen to support a positive [churn] (ph) is coming, and you would feel more comfortable providing guidance range.

Ole Rosgaard: Well, what needs to happen is, I mean, obviously there’s a lot of factors involved, but if we see a interest rate reduction, we will probably see some improvements in the housing sector. And the housing sector, when people move houses, drives a lot of the business we see from our paint in segments, but also on container boards. That would be a huge positive, probably the biggest, I would say. And then you have all the issues on geopolitical conflicts we have around the world, that has an effect as well. Those would probably be the biggest.

Larry Hilsheimer: Yeah, I would just — you asked me to reflect on last year. We came out in the first quarter call with low end guidance. By the second quarter, we gave a range. So we’re not, I mean, when we see something, we will react and get everybody the information that you’d rather see. But I’ll also tell you, a year ago on this call, at this time, our paper customers were telling us they thought business was going to bounce back in January. Our chemical companies were saying first — our second quarter calendar last year. And by the time we got to the first quarter, everybody was like, what’s going on? And it started extending further and further out. So it’s — and I’ll also reflect on The Great Recession. When we did see an inflection point, it was rapid. The demand kicked off aggressively. So hopefully we start to see a recovery that ties to some of the things that Ole just mentioned and we are well positioned to respond.

Matt Leahy: And [indiscernible], I’ll just add to that. This is Matt. So when you just look globally at industrial production, [ISM] (ph) PMIs were peaking in May of 2021 and trending down almost since then. They’ve actually been trending negatively globally since September of 2022 in a contractionary period for over 12 months. Our global industrial business is levered to some of those trends, if not directly. So I think if you look for a turn or recovery in PMI or ISMs, that could also indicate we’re probably seeing a demand recovery as well.

Unidentified Analyst: Thanks a lot. And just about the cadence of pricing volume by quarter, maybe within each segment, it seems like within both, they have the toughest comp in 1Q and sequentially improves and maybe it’s flat year-over-year, sort of kind of what you built into your guidance. Am I thinking about this correctly?

Ole Rosgaard: Yeah, we didn’t really look at the price cost. I don’t, I’m not ready to answer that on a quarter by quarter basis. I didn’t go back and look at where we were on each, but I guess just off the top, things trended throughout the year, obviously with OCC going up in the paper business throughout the year and we got price cuts more, back half of the year. So, that would say that you’d be better at the end of the year than at the beginning. But then we’ve got our price increase announced that we are implementing on January 1st. So that would obviously help in the first, more in the second quarter than the first.

Larry Hilsheimer: And [indiscernible], the first quarter tends to be the lowest in our business cycle as well.

Unidentified Analyst: All right, just one last one for me. So the deals that you’ve already closed, what’s the rollover contribution to sales, EBITDA and free cashflow assumed in the guidance from that?

Larry Hilsheimer: I can give you, EBITDA is roughly $20 million in terms of the contributions to 2024. Generally these businesses collectively are running at a 60% free cash flow conversion. We haven’t guided to that, but I’m not sure what the CapEx needs are next year, but that’s directionally accurate in terms from an EBITDA perspective.

Unidentified Analyst: All right. Thank you for taking my question.

Operator: And one moment for our next question. Our next question will come from Roger Spitz of Bank of America. Your line is open.

Roger Spitz: Thank you. Good morning. First, what was IBC’s fiscal Q4 volume increase on a percentage basis? And would you have for steel, plastic, fiber and IBCs the full fiscal year 2024 volume changes on a percentage basis?

Ole Rosgaard: Hi, Roger, I can give you that the first one in Q4 was a contraction of 4.3% on IBCs.

Roger Spitz: Okay. I thought you said — okay, my fault. And you don’t have the full year to hand is what you’re saying through all four?

Ole Rosgaard: Full year is a contraction of 9.5%.

Roger Spitz: Okay. Why does small plastic packaging businesses have higher margins than your legacy large packaging? Isn’t small plastic packaging more fragmented and large packaging really only has maybe three producers with maybe 80% global market share? So a less fragmented business.

Ole Rosgaard: Yes, number one, it is a less consolidated business across the globe. There’s a lot of players. It’s also a more sophisticated product to produce. On small plastic and you can kind of split it up in three buckets. You have a commodity market, then you have the middle, a little bit commodity, a little bit premium, and then you have the premium market, which is really where we operate, where you have things like barrier technologies, you have special designs and that sort of thing.

Larry Hilsheimer: One thing to supplement Ole’s answer because Ole was answering on IBCs on a same-store basis without the impact of Centurion acquisition. So on Centurion, with Centurion in, our volumes on IBCs were up 2% and for ‘24 we would expect them to be up 12% year-over-year.

Roger Spitz: Got it. Thank you very much for your time.

Larry Hilsheimer: Thank you.

Operator: One moment for our next question. [Operator Instructions] Our next question comes from Gabe Hajde of Wells Fargo. Your line’s open.

Gabe Hajde: Good morning, guys.

Ole Rosgaard: Hey, Gabe. I’m sure you’ve been called worse.

Gabe Hajde: I wanted to ask something, a little bit that’s been in the publications here recently about imported uncoated recycled boards. And just historically speaking, not been really a paper grade that’s been imported and I think for a variety of reasons, one of which is there are probably other paper grades that are higher price points that could be justified to be imported but I’m just curious if you all have seen this in the past, or if in fact you can confirm that it’s something that you’ve seen in the marketplace. And I’ll stop there.

Ole Rosgaard: Yeah, Gabe, it’s something that there’s always been some, it is really minor in the overall market. We’ve seen a little bit more, but it’s not substantial.

Gabe Hajde: Okay. And I guess to revisit the bridge question, I apologize in advance, but you, Larry, laid out, I think, a lot of the negative factors to get to the $585 million, but weren’t necessarily giving yourselves credit for any of the positives that would be included, even taking into account sort of what you’re assuming in the guidance and what you’re experiencing today, at least on the containerboard side. And what I mean by that is it sounds like the system is full at this point, which would imply no economic downtime in the containerboard mill system. So, Matt threw out plus $20 million for acquisitions. I don’t know if I have the exact number correct. I want to say there was about 120,000 tons of economic downtime in your seaboard system. Assuming some of that comes back, those are all the additive, sort of just based on what your assumptions are today. Is that the right way to think about it?

Ole Rosgaard: Partially. I mean, we have built in some relatively minor growth in from containerboard in the year, but it’s like $60 million. Now we also are closing down our Santa Clara mill, so that would take a little bit out. But yeah, you’re right. We’re being relatively conservative in that low end guidance. I mean, it’s low end because it’s low end.

Gabe Hajde: Okay. Santa Clara, remind me is that CRB?

Ole Rosgaard: Yes.

Matt Leahy: No, it’s containerboard.

Larry Hilsheimer: CRB?

Ole Rosgaard: No, it’s containerboard.

Gabe Hajde: Is there a tonnage on that?

Ole Rosgaard: Oh, boy, we have that somewhere. We’ll get that, Gabe.

Gabe Hajde: Okay. All right. That’ll be it. Thank you.

Operator: And I’m showing no further questions. I would now like to hand the call back to Matt Leahy for closing remarks.

Matt Leahy: All right. Well, thank you everyone again for your patience today and our challenges at the beginning of the call. We hope you all have a wonderful holiday.

Operator: This concludes today’s conference. Thank you for participating. You may now disconnect.