Arun Viswanathan: Great. Thanks for taking my question. And congrats on finishing the ’23 year. So yes, just following up on that last point, I guess, I can appreciate that you are pursuing the fiber-based solutions and the composable tray now. We did see a little bit of a reduction on the automation side. So I guess, another way to think about the volume growth opportunity is exiting these businesses that continue to be a drag. If you look over the last couple of years, you’ve had kind of minus 20% volumes when you stack the last couple of years in Protective. So with these product exits, would you say that you’ve somehow or at least addressed maybe the larger pieces of those volume drags? Or is there more to do there? And is there any timeline on maybe exiting some of those lingering negative headwinds?
Dustin Semach: I appreciate the question and recognize the point that you’re making in terms of multi-stacking Protective and seeing it net down. We fully recognize where the business is at, but I’ll reiterate 1 point, which is that kind of coming — a lot of that obviously declined, it really has happened over the past. Think of it as 18 months in terms of where you’ve seen a hard step down in that whole portfolio holistically. And part of what we’re seeing today, if you look at Q4, it’s a positive sign, right? You’ve seen those volumes of wrapping beginning stabilizing, you’re down mid-single digits. And so a lot of what we’re doing across this year is — we mentioned, kind of if you go back to Emile’s remarks, is that we’ve kind of recognized these areas of portfolio that we do longer term that we say don’t necessarily fit with strategically.
Do we have pieces today still within that portfolio? Absolutely, right? But right now, it’s not the time to take action on those businesses. So what we’re focused on, because there’s a couple of things that we got this year that will become more clear. One is, we feel like we’re hitting a trough. We’re coming out of the cycle. We have a better understanding how those business is going to perform longer term, right? And then as Emile mentioned in the comments, right, the financing markets improves, outlook improves holistically, and then we’ll better understand these fundamentals in this business as time goes on, and we’ll continue to reevaluate that. But with that said, right now, the price of — if you take that and put it to the side, our primary focus going back to the main part of the content today was around really what we’re doing to transform that business because there’s another element of if we are more commercially effective, what does that do from a performance standpoint.
And so there’s a lot of focus and energy going into that right now in terms of our overall transformation.
Operator: And our next question, coming from the line of Gabe Hajde from Wells Fargo.
Gabe Hajde: Emile, Dustin, thanks. I’ll try to be brief here. The protective L-shape recovery, and maybe a little bit worse than what you were expecting, can you kind of bifurcate for us between market-related and competitive landscape? I know it’s sort of tough. And then, I guess, key learnings that you’ve had thus far in evaluating? You alluded to it here in the last question. But just reviewing some parts of the portfolio and strategic optionality there. It sounds like the timeline may be pushed out a little bit, but still a lot of work being done. I just want to make sure we’re clear there. And then reinstituting the incentive compensation, I think it’s $30 million that you talked about, is it more pronounced in any specific quarter? Just curious if that’s depressing Q1 at all relative to the rest of the year?
Dustin Semach: Gabe, I just missed the first part of that question. If you don’t mind, if you can come back to the first part?
Gabe Hajde: You talked about an L-shaped recovery in Protective. And I’m just curious if you can describe more of that weakness to market conditions or giving more competitive landscape more recently?
Dustin Semach: Yes. No, understood. And great question. What I would tell you is, kind of was going into the — so I’ll go back to the positive note, right? Q4 came into that mid-single-digit range relative to volume. But again, when we talked about it, we’re optimistic that we have even a stronger seasonality in terms of a quarter, which is really a good indication of how you’re going to come out the year. So from our perspective, it doesn’t seem from a competitive dynamic in the sense of customers you’re able to win in the marketplace, churn that you’re having in the business. We see that, obviously, if you go back to the past two years, there was a step up, but you’ve seen that normalize out, kind of even across 2023. So if you look at the business in Protective, it somewhat sequentially trended along in 2023 and was wrapping around and showing obviously very negative comps, going back with Q1 being down almost 20% and then kind of mid-teens for Q2 and Q3 now mid-single digits.
So holistically, we feel very good about kind of coming out the gate, right, relative to — in terms of our overall profit. But if Q4 was stronger, it would have pointed towards a much stronger kind of full year guide. And that’s really where — and then candidly, we’re also just being cautious because we’re operating in a limited visibility environment. So that’s point number one. Going to your question around — the next point around the overall executive, kind of our bonus pools and the restoration of those bonus pools. Obviously, we had a very challenging year in 2023. As you can imagine, our incentive compensation came down as a result of that. Now, as you think about this year and executing against our plan, in terms of where that pronouncement is, it’s more of an impact to the overall second half than in terms of first half, right?
In the sense that if you look at 2023, the second half benefited more from that reduction in compensation pools because as you went through ’23, as we all know, our guidance came down our internal — we missed our internal plan, and that was more pronounced in the second half than it was in the first half, right? So you have a bigger hill to climb as you go throughout this year. And then on your last point around in terms of portfolio optimization, there’s nothing really further additive to say then, yes, to your point, there’s still a lot of work going on, but really, now it’s not the right time. And so what do you do? We don’t want that to necessarily be a distraction relative to — so that work is progressing, but we’re really focused on, again, going back to that commercial transformation, restoring underlying fundamentals right, and improving underlying business performance.
Emile Chammas: Okay. And with that, we’re on top of the hour. And I would like to thank everyone for their time today. We are excited about the opportunities ahead for SEE, and we look forward to updating you on the progress of our transformation when we speak together in May. Thank you.
Operator: Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.
