Adam Greenlee: Okay. Great question. So I’m going to start with the tinplate to begin with. And so it’s still in process right now. We’re deep in negotiations. And as usual, Gabe, we are fighting like crazy for our customers and for consumers. And I think the guidance we give now is there will be kind of a maybe a mid-single-digit kind of deflation that we’re anticipating for tinplate in 2024. And really, that’s going to probably be a little bit greater in Europe than it’s going to be in the US market. But obviously, most of our — the significant portion of our buy is kind of be US-based in the Metal Container segment. And then I think you raised a really good question on Dispensing and Specialty and the higher value items.
So as we sit here today, we’re seeing a slight shift of customer mix, and we’re going to be able to deliver kind of that same mid- to high single-digit growth rate in 2024 with irrespective of the holiday season. We’ve already seen a little bit of a shift. We’ve seen some customers that are working on destocking activities already, and we’ve been able to offset that volume with market opportunities with other customers in other areas of the market. So it’s a very balanced portfolio that we have that’s consistently been providing kind of mid- to high single-digit growth rates for some period of time now.
Gabe Hajde: Great. Thank you for the color there.
Operator: We’ll take our next question from Matt Roberts with Raymond James.
Matt Roberts: Hi, good morning, everybody and thanks for getting me in here. Maybe I’ll just ask, last quarter, when you discussed some of those labor issues, I mean are there any changes there? Have those been resolved, or as you look forward, are there any potential contracts coming up for renewal that maybe hasn’t been reset for a couple of years? Anything we need to be mindful of there in terms of how that bargaining works?
Adam Greenlee: Hi, Matt, welcome to the coverage universe for Silgan. So, good to have you. As far as the labor issues that we talked about at the — the one food and beverage plants in the US business, on the last call. What we — the guidance we’ve given that the cost improvement that we would see, we estimate it to be about $4 million. So the $10 million cost impact that we had in Q2 would be reduced to $6 million in Q3, and we basically delivered right on that number. We’ve also gave guidance on the last call that, that was reduced to $3 million in Q4. And that’s absolutely what we’ve got embedded to our forecast. It’s absolutely what we are executing upon. So good news, we’ve done exactly what we were going to do and said we were going to do related to that specific labor issue.
And I I’ll answer your question two ways on the major contracts. So again, we always have a normal set of customer contracts that come up, nothing significant as I mentioned earlier. And then from a labor standpoint, our union facilities, nothing significant, I mean, we have our normal course churn that we work through every year or so on the labor agreements that we’ve ratified several this year. We’ll have a couple of them negotiate next year. But that’s all very much normal course for us.
Matt Roberts: Okay. Perfect. Thanks, Adam. And then maybe lastly, in terms of your cash and debt, the buybacks in the quarter were certainly encouraging. Is there any update to where you expect leverage to shake out at year-end or any considerations in 2024 in terms of either paying down debt or more of those shareholder returns? Anything to consider there would be helpful. Thank you for taking the questions.
Kim Ulmer: Okay. I’ll answer the leverage ratio and then pass it on to Bob. From a leverage ratio perspective, for the end of the year, we’ll probably be a little bit over three times. As you know, our stated range is between 2.5 times and 3.5 times. So we’re right in the middle of that and feel like it is not restricting us from any opportunities that we may see.
Bob Lewis: Yes. And on the share repurchases, as you saw, we did buy back upsized amounts relative to maybe what we’ve done historically in open market transactions. But I don’t think, it’s any secret that that we have maintained and continue to maintain a fairly sizable authorization. Historically, it’s been about $300 million over three years. Where we stand today, after buying back roughly $175 million on a year-to-date basis, we’ve got about $100 million left. So where we’ve typically been most in the share repurchase arena is as we start to trend to the lower end of our guidance from a leverage standpoint, 3.1 times we’re kind of right in the middle. That combined with the fact that we saw some market dislocation in the stock performance, it seemed like a good time to be active in the market.
particularly relative to the backdrop around the M&A environment, where I think there’s just some clunkiness in that market right now, given everything that’s going on in the economy and interest rates that the activity has slowed to maybe a few specific ideas that are being floated, but I think generally, the M&A activity is kind of on a on a pause, if you will, likely waiting for the calendar to flip.
Adam Greenlee: And then I think it’s just another example of our kind of disciplined capital allocation program that is intended to create value for our shareholders. And I think, clearly, that did.
Matt Roberts: Okay. Thank you all, again.
Operator: Our next question will come from Arun Viswanathan with RBC Capital Markets.
Arun Viswanathan: Great. Thanks for taking my questions. So I guess I had a broader question. Obviously, the destocking has been a little bit deeper than maybe some of us expected. Now it’s obviously moved over into the Pet food category as well. I guess, what are you hearing from maybe brand owners or retailers as far as some of these issues? Would you say that any of those companies are making structural changes to deal with maybe lower inventories on the retail side and then maybe lower consumption rates on the brand owners side? I mean, is that anything you’re hearing from any of these companies?
Adam Greenlee: No, it’s not. And in fairness to the second point, what we’ve seen is for our product in particular, that the consumer purchases have been pretty resilient. So their consumption still remains fairly robust for our products. And we don’t see, at this point, any structural change to either retail or our customers’ branded products, inventory programs or go-to-market programs that are really any different. What we have seen, which is a positive, is more promotional activity. And we anticipate that to provide a benefit to volume when it’s fully integrated into the sales cycle for our customers. Again, I’m just going to repeat, Arun that really, our customers have been talking about the dollar value of inventory in their system at year-end.
And that’s what’s driving the destocking activity for the most part across our food and beverage and now our Pet Food segment. I’ll talk about two of our largest customers have now publicly stated that they believe 2024 is going to be a year of volume growth, specifically for our products that we provide to them. So, we’re anxious to move on to 2024 and get back to a more normalized volume level. But as we said earlier, we’re not waiting for that. We are going to control our own destiny and take good aggressive action to drive earnings growth for 2024.
