That will really help us focus on maintaining our cash balance and growing it as we exit next year.
Ghansham Panjabi: Thanks so much.
Operator: Thank you. [Operator Instructions] Our next question comes from Adam Samuelson from Goldman Sachs. Adam, please go ahead.
Adam Samuelson: Yes, thank you. Good morning, everyone.
Omar Asali: Good morning, Adam.
Adam Samuelson: Hi. So I guess, first, just going back to the cash flow discussion and that path to deleveraging. Can we talk about the free cash flow margins when you get to those target EBITDA margins, Omar, that you talked to earlier in the high 20s? What do you think kind of the CapEx to sales looks like at that run rate? What do you think the free cash flow, the EBITDA to free cash conversion actually looks like?
Omar Asali: Sure. I’ll let Bill take that one, Adam. But just — I want to just reiterate again that as we get to that profile, and we have some scale in automation and some scale in cold chain, both of these businesses do not require the same upfront CapEx for our razor/razor blade business in PPS. So that will move the numbers a little bit to improve sort of the cash profile. But I’ll let Bill walk you through it.
Bill Drew: Yeah, Adam. I think the way to think about it, right, is that the PPS business, which we expect to continue to grow, as Omar mentioned, in that kind of high single-digit, low double-digit area, the CapEx as a percentage of sales, I think, in the near term should be in that high single digit to double digit, right? We’re focused on a lot of refabrication and refurbishment of machines to minimize the converter spend. And then over the longer term, we would expect that to get back to close to that 10% to 12% of sales, right, for the PPS business just on the converter spend. Overall, right, as automation grows, that business, it’s a bit of a different profile than the PPS business. The gross margins for that business should be in the high 20s, 30%, EBITDA margins of around 20%, high teens.
But the nice thing about it is there’s minimal CapEx, right? We’re not investing in CapEx in order to grow that business outside of the facilities, which we’ve already done. So over time, the CapEx as a percentage of sales for that business should be low single digits. So if you think about your model over the next number of years, getting that CapEx as a percentage of sales down from the low double digits to kind of the mid- to high single digits is what we’re planning for here. So if you think about kind of a 30% EBITDA margin, high 20s, 30% EBITDA margin minus the overall CapEx, you should be in the high teens area as a percentage of sales, if that helps you.
Adam Samuelson: Yeah, it does. And then maybe just coming back to the core PPS business. And as you think about the installed base, the growth has slowed some more recently given economic conditions. But it’s interesting that you’re actually seeing some sequential declines in cushioning but you’re not — the most meaningful declines in throughput and pressure seems to be in wrapping. And I guess, just as you look at that wrapping footprint today, clearly, there’s economic challenges with it and volume challenges with your customers and their sales. But is there any view towards some optimization of that installed base where you get to a point where you say, look, this is not as productive of an asset base as we intended when we made these investments, and we’ve got to right size kind of the placements at customers in a more significant way to drive the business forward?
