So, Europe seems to be going through a rationalization period that is augmented or offset by continued growth in Asia, particularly China, where, although their growth has slowed down over recent years, it’s still a growing region, India as well. So, on balance in that, look, printing and writing grades still come down a little bit, but not a lot. It seems to be a gradual decline. On packaging, we’ve seen a shift that’s gone on as people have converted some of that old capacity into making some packaging. So, the packaging overall consumption, it kind of depends on the type of packaging. The way we look at it is, there’s these high-end boxes that hold the iPhone or crate up a box of golf balls. That seems to be pretty steady or growing at a slight rate.
The recent shift has been brown boxes have come down slightly since the pandemic era, and there’s people taking a pause and seeing how that goes. But long term, that’ll probably grow at a GDP plus sort of rate. And then what’s been supplementing that or growing at a greater rate than that is this kind of in-between box. It’s a white top box. That’s where we’ve had recent applications, both in Europe and North America, where that Amazon box that you’re getting is no longer just a brown box. It’s well printed. So, that’ll be growing as well. So, it’s overall, packaging still growing. The overall printing and writing probably flat, but that flat is deterioration, especially in Europe, growth in Asia. Does that balance out the thought?
David Silver: I asked you an impossible question to answer. So, I really appreciate you handling that on the fly. That’s all for me. Thanks very much.
Operator: Our next question comes from the line Steve Ferazani with Sidoti. Go ahead.
Steve Ferazani: Thanks. Morning, Doug. Erik, or about to be afternoon. Wanted to ask about the updated free cashflow target. Anecdotally, we’re certainly hearing cases where, I know traditionally your second half you benefit from receivables conversion, but we’re hearing anecdotally that maybe those conversion cycles are stretching out a bit. Everyone’s trying to hang on to cash a little bit longer. Are you seeing that and is that playing at all into your cashflow guidance?
Erik Aldag: Yes, thanks, Steve. The answer is no, we’re not seeing that. I mean, we look at our receivables balances very closely, and our DSOs. They’re staying around 60, 61 days, and that’s been consistent over the last several years. So, we are not seeing those stretch out.
Steve Ferazani: Okay. Perfect. Thank you. And then in terms of your margin targets, at least for end of year, what are the variables that may affect that? It sounds like you’ve gotten the pricing in pet care. Certainly, we’ve heard that it’s getting harder to get more pricing on the consumer side, and I know you have some contractual resets. What’s the variables that could affect you get exceeding or missing the year-end targets at this point, or the most likely variables?
Erik Aldag: Well, I would say, in terms of the things that are within our control, we feel confident we’ve got everything in place to get there. I would say that again, if you look at our bridges for the second quarter, the volume impact, the variations we saw on some of the end market volumes in the second quarter, if you just do the math on that, that’s 190 basis points of margin that we offset in the second quarter. So, once those end markets that we spoke about start to come back, that’s the biggest upside I would say to our margins, getting that volume leverage back on some of the softness that we saw in the second quarter.
