Adam Greenlee: Hey Dan, and we think it’s pretty broad-based across all of our segments as well. I think the items that we’re talking about and our high-value Dispensing items, you’ve got to think about kind of what percentage of the overall package costs are that we represent to our customers. And really, the consumer that’s buying those items really is not subject to a lot of the challenges that we’re talking about in other areas of our business. So, we do think it’s been very resilient. It’s grown mid to high single-digit every quarter this year, and frankly, it was last year as well. And so we’ve got good confidence and good line of sight that we do continue to have that growth driver for our dispensing and Specialty Closures segment in 2024.
Daniel Rizzo: So, we’re talking about, I guess, beauty and fragrance is kind of the main thrust there is what we’re referring to? And if I missed it, I apologize.
Adam Greenlee: Yes. And really, it’s elements of beauty and fragrance. We are in the prestige/luxury end of those markets. Again, that I think are subject to some different economic drivers, if you will.
Daniel Rizzo: Okay. And I don’t know if I missed this either, but what’s the cash cost of the cost savings plan? Is it kind of a one-for-one basis, or how should we think about that?
Adam Greenlee: I think one-for-one is the right way to think about it. And where we said the savings would be more over the two-year period, kind of 40% year one, 60% year two, that’s going to be flipped for the cash cost associated. So, we’ll have a little bit more cash out the door upfront, preparing to drive the cost out of the business. So, call it 60-40 on the cash cost.
Daniel Rizzo: Thank you very much.
Operator: We’ll now take our next question from Jeff Zekauskas with JPMorgan.
Jeff Zekauskas: Thanks very much. Your SG&A costs were $84 million in the quarter. And in the previous quarter, they were $102 million and the year ago, they were $97 million. How did you get your SG&A down so much and so quickly? Is that management bonuses or you’re already capturing some of your cost savings? Does this number contain any of the $50 million in cost savings? Can you explain it?
Adam Greenlee: Sure. Thanks Jeff. So, it’s a couple of components. One, there is some headcount change there. So, we are driving cost out of the business. The $50 million will be incremental to what we’ve executed on in Q3 and what we will continue to execute upon in Q4. So, you’ve got head count, you’ve got the employee-related costs associated with lower headcount as well. And then we’ve got some other administrative costs that we were able to take action on. So, that includes everything like management bonus and all the other items associated with kind of accruals for the course of the year. And as you drew some of those up, you get a larger impact in Q3 because you’re truing up nine months of costs. So, that was part of why maybe it does look like a little bit outsized reduction versus either prior year or prior quarters.
Jeff Zekauskas: And then I have a question about your $340 million in free cash flow. I was wondering if you could check my math in that through the first nine months, including changes in outstanding checks, your cash flow is negative $660 million. And you’ve got call it 230 in CapEx for the year that’s 890. And so in order to generate 340 in free cash flow, you’ve got to generate a little bit more than $1.2 billion in the fourth quarter. And last year, I think you generated around 900. And this quarter, the fourth quarter, you think is going to be a little bit weak. You’ve got some other things. So is that right? Do you have to do $1.2 billion to get to that 340 in free cash flow?
Kim Ulmer: Yes. So what we’re looking at is we have higher receivables coming into this quarter, which we are expecting to collect through the end of the year. And some of that will be offset by slightly higher inventory levels due to the rationalization programs that we have.
Jeff Zekauskas: What was your accounts payable in the quarter?
Kim Ulmer: It’s included with other outstanding checks on the balance sheet, let’s say, $652 million.
Jeff Zekauskas: Okay. Thank you.
Adam Greenlee: Thanks.
Operator: We will now take a follow-up from George Staphos with Bank of America.
George Staphos: Hi. Thanks for taking the follow-ons. So I just want to come back. So what revenue effect and if you had an EBITDA effect, should we bank on — banks, not the right term? Are you considering for the new customers that come in next year? And then I have a couple of follow-ons.
Adam Greenlee: And George, are you in the Custom Container segment?
George Staphos: Yes, correct. That’s where you said you’re commercializing new customers.
Adam Greenlee: Correct. So look, we were looking to replace the non-renewal of the contract from 2022. And we believe we’ll replace the income associated with that on a full year run rate basis. Obviously, we’re commercializing one in the first quarter, one midyear. So the run rate by the end of the year will fully replace that. So call it something around about $10 million of run rate profit by year end. The revenue will not be a one-for-one replacement just simply because these are going to be smaller bottles that were manufacturing, but really, it’s more of the mix benefit we’re getting. And as the profit will be replacing what we decided not to renew.
George Staphos: Okay. Thanks, Adam. And my last two ones, A lot of your customers in food are not on year end or calendar year ends for their fiscals but mid-years. So back to the destocking question one more time, why wouldn’t we see them do the same destocking, reduce working capital to drive cash flow higher relative to their end of fiscal year, which means you’re still dealing with this through the first half of your calendar and fiscal year for 2024? And then a question we kind of touched on earlier, I’m guessing there’s probably not a heck of a lot to talk about, but for your human food and beverage customers, what do they think on GLP-1. Thanks, guys and good luck in the quarter.
Adam Greenlee: Great. So I think, George, on the year end items, so there’s a couple of things to take into account. You’re right. Several customers are not on a calendar basis or on a fiscal year end. Many customers are on a calendar basis. So clearly, there is a component of that. Really the other piece of this is retail discussions. And as our customers renew their retail conversations about cost and price change for 2024, there is a January element to that discussion that the retail discussions are based on a year-end kind of calendar year. So again, we’re working through that very closely with them, and we do think that is an impact to the destocking activity.
George Staphos: I’m sorry, Adam, do you think it’s really a calendar year-end, that has the impact, not the fiscal which we’re just talking about, which could have some effect through middle of the year?
Adam Greenlee: Yes. I think it is calendar year-end. Again, …
George Staphos: Got it.
Adam Greenlee: …some aren’t on a calendar year and some are in these retail discussions are on a year-end basis. And your other part of the question, George, I apologize.
