Rob Dillard: This is Rob. I don’t know if I’d even describe it as a quick improvement, but I think Rodger’s already said, if you look at our rigid paper can business globally, we’re seeing strength as we head into January. A lot of it’s coming from the investments that we’ve made in capacity expansions and some new products that are being introduced, so the paper can business looks up for the first quarter, and what we see after one month is meeting expectations. Flexibles also, just like the fourth quarter, continues the strong growth. We expect another strong year from flexibles – they’re volumes’ coming in. They are putting new products into the marketplace and we’re seeing that as additive in the first quarter. Metal cans, we didn’t own the metal can business in first quarter last–in January of last year, but we have seen recovery.
Our metal food can business is strong, so in that case we assume it was just inventory reductions end of last year. If you look at aerosol last year, we were somewhat heavily weighted to a couple of segments like disinfectants, spray paints that built up inventory through COVID and they worked that off last year, so we’re seeing some recovery there as well. Again, the only exception is our Primrose Store plastics business for fresh fruits and vegetables, it continues to be very soft. Other than that, we’ve seen a nice start in consumer to the year from a volume standpoint.
Matt Krueger: Okay, great. That’s helpful. Then switching over to the cost side of things, what do you expect from cost inflation overall for 2023? What do you expect from cost inflation for the raw material basket specifically, and then can you talk through some of the key constituents and the dynamics there for the upcoming year? Thanks.
Rob Dillard: Yes, we have our base case assumptions for what we think is going to happen for cost. I can tell you kind of discretely with a couple segments, resin we’re anticipating that down with a front-end orientation really kind of driven by a broad basket that we buy. It’s a meaningfully broad basket that we buy, we anticipate that’s going to be down high single digits to double digits. OCC, obviously less important than it has historically been because it’s not really driving price, but as a cost factor, we talked about kind of a meaningful deflation that we saw at the end of last year. We think that that will somewhat recover just to a normal level because the handling cost around OCC is probably $60 to $80 a ton, and so we think that it has to go up to that kind of level in order to just have some stasis.
Otherwise, things that you should know is just employee variable labor has definitely gone up and we’re anticipating it to go up, and that will be an inflation headwind through the year. Other costs like fixed and depreciation will also be going up.
Matt Krueger: Got it, so what is that too for the overall inflation budget for Sonoco?
Rob Dillard: We don’t–I mean, we look at kind of business by business, and we also measure it against where the price and the ability to get recovery on productivity is, so we don’t have a discrete number that I have off the top of my head, but we can definitely follow up with you.
Matt Krueger: Okay, great. That’s it for me. I’ll turn it over, thank you.
Operator: Thank you. As a reminder, to ask a question at this time, please press star-one-one on your touchtone telephone. Our next question comes from the line of Anthony Pettinari with Citi. Your line is now open.
Anthony Pettinari: Good morning. Just a couple follow-ups. I guess on the industrial segment and the volume guidance for industrial volumes down low single digits for the full year, apologies if I missed this, but is there a specific view on volumes for 1Q on a year-over-year basis?
Rob Dillard: It’s going to be flat sequentially, which is kind of about the same magnitude down as it was in fourth quarter.
Anthony Pettinari: Okay, and on RTS, there was some discussion of synergies, and I’m just wondering, you’ve been kind of minority owner of that for a number of years, if you could talk to maybe sources of synergies or maybe just more broadly how you can run that business differently, now that you’re the full owner.
Rob Dillard: Well, so we’re not the full owner yet. We’re anticipating closing it in the second half of the year. We’re excited about that project as much as we ever have and anticipate the synergies will be–you know, justify the transaction.
Anthony Pettinari: Okay, that’s helpful. I’ll turn it over.
Operator: Thank you. Our next question comes from the line of Gabe Hajde with Wells Fargo. Your line is now open.
Gabe Hajde: Howard, Rodger, good morning. I’ll leave the Plato references out, I guess, but just from a philosophical standpoint, you guys did a really good job in 2022, you were able to beat and raise over the course of the year. Given the economic backdrop uncertainty and some of the headwinds that you’re facing in tin plate, I guess what some of us are trying to struggle with is why be aggressive seemingly out of the gate, again when Q1 is a little bit below, and/or what gives you the confidence? I mean, you mentioned conversations with customers but just from our vantage point, there is a lot of uncertainty. And then from a geographic perspective in industrial, maybe there’s a knock-on effect from trying to reopen and that’s why you’re feeling better about the second half? Just anything from a geographic standpoint that you could talk about.
