Patrick Cunningham: Thank you so much. I will pass it on.
Celeste Mastin: Thanks, Patrick.
Operator: Our next question comes from the line of Mike Harrison with Seaport Research Partners. Please go ahead.
Celeste Mastin: Hi, Mike.
Mike Harrison: Hi. Good morning. Happy New Year to you. I was hoping that maybe we could dig in a little bit on the HHC segment. I am really trying to get a sense of what the margin cadence there could look like versus this 20 — very strong 20%-ish level you achieved in Q4. Can you maybe give us a sense of whether there were some one-time positives in there in terms of reduced incentive comp, lower discretionary spend or maybe some of this price-cost that was positive in Q4, but is starting to roll over into next year? And then, I guess, as we see maybe some better volume performance in that segment going forward, what kind of incremental margin contribution could we expect from that HHC segment?
John Corkrean: So, Mike, I will try to provide a little color on that. I would say, there were no real unusual one-time favorable items in the fourth quarter. Variable comp was lower across the company so that benefited HHC. Looking forward, they delivered these margins in a year where volume was a real challenge. So, I think, we are really confident that they can maintain margins in this zip code, maybe not 19% every quarter, but I think we have shifted our focus from maybe three years or four years ago when we viewed HHC as sort of a mid-teens type of EBITDA margin to upper-teens and I think that we should be able to maintain that particularly when volume starts to return.
Celeste Mastin: Yeah. I mean, there the HHC team is just doing an excellent job executing. They have continued to win business throughout the over 2023 and the wins just keep piling up coming into 2024. They have done really a nice job in their growth segments, bringing innovation like in the beverage labeling space. They have introduced a beverage labeling adhesive that allows labels to come off bottles more quickly in the washing process, more quickly and at lower temperature. So they have got some growth segments that are really bringing solid innovation to customers. And then they also have just really managed how they run their leverage segments. Good example is tape and label. I mean, we never used to sit here and talk about tape.
So tape and label, we have a new market segment leader there and he’s just very successfully choosing what parts of tape and label we really want to play in and that’s part of us succeeding in these leverage segments, picking where we truly add value and we can generate margins — better margins and better profitability for our products, as well as continuing to leverage effectively our plant network and our raw material network. So they did a nice job demonstrating the power of leverage, and you are going to continue to see that with that HHC team.
Mike Harrison: All right. Thank you for that. And then, maybe a broader question just on what you guys are seeing in terms of destocking activity. I am well aware that you guys have a December month that is going to be contributing probably to some weakness at least starting your fiscal first quarter. But just curious what you are seeing across some of your key market areas, like, packaging and maybe some other consumer related areas where you had been seeing destocking, as well as what you are seeing in Construction. Are you encouraged that as we start the calendar year that we are getting order patterns more back to normal or is that going to take a few more months still?
Celeste Mastin: Yeah. So let me talk a little bit about kind of how we are seeing all three of these businesses pulling out of this des — past — I am going to call it past destocking phenomena. So in Q4, what was really interesting to me as I looked at the development in Q4 month-over-month and providing a lot of transparency here. The CA businesses each and every month of Q4 were positive volume. Our EA business was positive in two of those three months in progression. And our HHC business was positive in the last month of our fourth quarter. And so, you just — we kind of just watched that destocking rolling back. I am confident it’s complete in CA. We never really saw a big impact of it in our EA business. It’s really not the nature of most of that business. But we certainly did saw it dramatically in HHC and feel comfortable coming to a conclusion there.
Mike Harrison: All right…
Celeste Mastin: Does that answer your question, Mike? Yeah.
Mike Harrison: Yes. Appreciate the additional color there. Thanks very much.
Operator: Our next question comes from the line of Jeff Zekauskas with JPMorgan. Please go ahead.
Celeste Mastin: Good morning, Jeff.
Jeff Zekauskas: Hi. Good morning. Thanks very much. Just I guess first a question about the guide. The adjusted EPS is $4.15 to $4.45. What’s the guide for GAAP EPS? And secondly, the interest expense for next year is $115 million to $125 million. In the fourth quarter, you were at $33 million, which would push you higher than that. Why should — I get maybe you are doing net interest, but even net interest for this year is in the $130 million. So why should interest expense come down to $115 million to $125 million? And then, you talked about this indexed pricing. So is the meaning of that that your raw materials continue to decline and then what you do is you give some of that back or in a sense, did you over-earn a little bit in 2023 and now you have to give a little bit of that back? So maybe we can try those to begin with.
John Corkrean: Sure. Thanks, Jeff. I will try to handle the first two and I will let Celeste comment on the pricing question. So adjusted EPS, yes, so we don’t really guide on GAAP EPS. but I would say, if you are looking at kind of non-GAAP items or items that are adjusted. I think we expect it to be in the $35 million to $45 million range next year pre-tax, so I didn’t do the calculation and what that means from an EPS standpoint. So lower than this year, but we do still have some of the integration-related costs and some of the restructuring that will happen in 2024. So interest expense, we are projecting it to be lower. Two dynamics there. One is the strong cash flow that we had in the year, particularly in the second half has reduced our debt balances going into 2023 — 2024, excuse me.
