Good day and thank you for standing by. Welcome to the Fourth Quarter and Full Year 2022 Sealed Air Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Brian Sullivan.

Thank you and good morning, everyone. With me today are Ted Doheny, our CEO; Emile Chammas, our COO; and Christopher Stephens, our CFO. Before we begin our call, I would like to note we have provided a slide presentation to help guide our discussion. Please visit sealedair.com where today’s webcast and presentation can be downloaded from our Investors page. Statements made during this call stating management’s outlook or predictions for future periods are forward-looking statements. These statements are based solely on information that is now available to us. We encourage you to review the information in the section entitled Forward-Looking Statements in our earnings release and slide presentation, which applies to this call. Additionally, our future performance may differ due to a number of factors. Many of these factors are listed in our most recent annual report on Form 10-K and as revised and updated on our quarterly reports on Form 10-Q and current reports on Form 8-K, which you can also find on our website or on the SEC’s website. We discuss financial measures that do not conform to U.S. GAAP. You will find important information on our use of these measures and the reconciliation to the U.S. GAAP in our earnings release. Included in the appendix of today’s presentation, you will find U.S. GAAP financial results that correspond to the non-U.S. GAAP measures we referenced throughout the presentation. I will now turn the call over to Ted. Operator, please turn to Slide 3. Ted?

Thank you, Brian and thank you for joining our call today. Today, we will discuss our Q4 and year end results, our 2023 outlook, Reinvent SEE 2.0 and our acquisition of Liquibox. After that, we will open up the call for your questions. Starting on Slide 3, the graphic is showing where we are taking packaging with automation, digital and sustainability solutions. We start with our purpose. We are in the business to protect, to solve critical packaging challenges and to make our world better than we found it. This enables our vision to become a world class company, partnering with our customers on automation, digital and sustainability packaging solutions. Moving to Slide 4, we are excited to announce that on February 1, earlier than originally anticipated, we completed our acquisition of Liquibox, a global leader in sustainable packaging for the fluids and liquids industry and the pioneer innovator of bag-in-box solutions. Fluids and liquids is our fastest growing and highest margin product line within our Cryovac portfolio, is a fast growing, attractive market for us as flexible packaging is disrupting the rigid container market. Liquibox brings to see new competitive capabilities and is highly synergistic with our existing business. The combined Liquibox and Cryovac business in 2023 is expected to exceed $600 million, representing more than 10% of our portfolio. Our plan is to turn the fluids and liquids business into a $1 billion vertical by 2025 with an operating leverage of over 40%. Liquibox will enable us to open significant new opportunities for growth in areas like ready-to-drink liquids, wine and spirits, consumer packaged goods, quick-service restaurants and other attractive spaces as the best suitable and cost-effective alternative to rigid containers. The combined business will leverage upon Cryovac technology for freshness and shelf life extension, broad market access…

Thank you, Ted and good morning everyone. Let’s start on Slide 10 to review our fourth quarter net sales of $1.4 billion by segment and by region. In constant dollars, net sales were down 4%, with 4% growth in Food, while Protective was down 15%. By region, we grew EMEA by 5%, offset by declines in Americas of 7% and APAC of 3%. In constant dollars, full year net sales were up 6% to $5.6 billion. Food was up 11%, while Protective was essentially flat. By region, we were up 6% in Americas, up 7% in EMEA and up 2% in APAC. On Slide 11, we summarize our Q4 and full year ‘22 performance, primarily driven by inventory destocking and lower demand in our protective end markets and FX headwinds, we had a challenging fourth quarter with sales down 8% as reported versus Q4 ‘21. However, for the full year, we delivered reported sales growth of 2%. Q4 adjusted EBITDA of $297 million decreased $33 million or 10% compared to last year with margins of 21.1%, down 40 basis points. For the full year, adjusted EBITDA grew 7% to $1.21 billion with margin expansion of 110 basis points to 21.5%. This performance was driven by positive net price realization, which we define as year-over-year price realization, less inflation on direct material, freight, non-material and labor costs as well as productivity and – as well as productivity gains, which more than offset lower volumes, higher operating costs and unfavorable FX impacts. As it relates to adjusted earnings per diluted share in Q4 of $0.99, our adjusted tax rate was 26.1% compared to 26.2% in the same period last year. On a full year basis, our adjusted earnings per diluted share was $4.10, with an adjusted tax rate of 25.4% compared to…

Thanks, Chris. Before we open up the call for questions, I wanted to share some insights from my travels around the world, as we’ve increased our face-to-face meetings in the post-COVID environment. I’ve been able to meet with our employees, our largest customers and see some of our latest automation solutions and action. It was great to see the progress in our own facilities around the world. Our investments in Touchless automation eliminate millions of touches while providing higher quality materials and removing people from harm’s web. It’s also been uplifting for me to see how embedded we are with our customers and hear firsthand how we help them through incredible challenges in their facilities. It was exciting to see our latest automation solutions in action and hear from our customers how much they value our partnership. Our automation, digital and sustainability focus is driving value with our customers and our internal operations. Finally, I’m really energized by the cultural fit in working relationship with the Liquibox team, as we jointly uncover more opportunities. With that, I will open up the call for questions. Operator, Victor, we would like to open up now for the Q&A session.

[Operator Instructions] Our first question will come from the line of Arun Viswanathan from RBC Capital Markets. Your line is open.

Great. Thanks for taking my question. Good morning. I guess I just wanted to understand your thinking on growth this year. So it sounds like there is some challenges on the volume front. You noted a challenging macro economic background. How do you see volumes evolving, I guess, both in protective and food as you go through the year, you will face some easier comps, I guess, in the back half, but – yes, maybe we can just start with that. Thanks.

Thanks, Arun. I’ll open up with that. And so as we shared in our opening comments, we’re seeing the first half of the year still be challenged on the volumes in both business, starting with the protective side. We’ve definitely seen, as you’ve been seeing in the major markets, especially in things like electronics and e-commerce. So we’re still feeling pressure. We’re still going to feel the destocking in the first half of the year into the first quarter. On the second half of the year, we’re actually – we see a rebound. We still think in our guidance, we have our protective still down a couple of percent in our guidance, but we definitely think we should have a strong rebound in the second half of the year, especially with some of our new products coming in place, we think we can power through that. And as we talked about with Reinvent SEE and moving further on digital with their distribution, again, I think we have some upside potential. On the food side, as we see that shifting with the volumes – still under pressure, also having destocking, the same story. The first half would be challenged, but we do think we have some significant opportunity for growth in the second half, and we’re actually guiding to see the food volumes up a couple of percent. On the food side as well as the protective, we really see the automation kicking in. It’s still really tough out there for our customers with getting labor, inflation, etcetera. So we see some of that pick up coming in. We did this. We highlighted. We had strong automation in the fourth quarter. So we see that continuing into the second half of the year. Okay, next question.

Thank you. [Operator Instructions] Our next question will come from the line of George Staphos from Bank of America. Your line is open.

Hi, everyone. Good morning. Thanks for the details. Congratulations on the progress through 2022. My question is on Liquibox. Can you talk to the amount of synergies you’re building into the EBITDA contribution you expect from the business this year? And relatedly, bag and box, you see competition across several key characteristics of the package. Where would you say whether it’s the carton, the valve, the material you’re seeing competitors catch up to Liquibox? Or where are you seeing yourselves putting distance between yourselves and your peers in that market? Thanks, guys. Good luck in the quarter.

Thanks, George. I’ll open it up. And since I have a Emile here on the call, I’ll let Emile give some insight to that. As far as the growth on the synergies that we have in the model, we have the $30 million of cost out there. We feel pretty confident on that, Emile can talk to you about that. What we’re most excited leading to the second part of your question, of where we see the growth synergies for what Liquibox already has. And in talking with them and learning with them and actually hearing much more in the marketplace, their market position is actually something that we could actually extend. The teams have met with our internal teams on what we’re doing on liquids and what we’ve done, especially with our – products and where we’ve had some significant penetration in the quick service market. And bringing a full solution, we think we could actually extend their market leadership with the two teams together. And what I’m excited about, just our first month together with the team is what the growth opportunities are. But Emile, if you want to cover that a little bit?

Absolutely. Thank you, Ted. And thanks, George, for the question. I guess just to remind ourselves, we’re only day 8 after – since we closed the acquisition. But let me address the question in a couple of different ways. First of all, there is obviously the competitive set of Liquibox. But really, the piece around that is a $7 billion of addressable market and how we convert rigid to liquids. Within the Liquibox capabilities and strength, it’s really around the fitments, the lightweight and downgauging even of existing solutions, and it’s all about the sustainability. This Liquipure is a unique product in the market that allows for the full recyclability. And as the team I’ve met over the last couple of weeks, pretty close only to certain extent, what we could share that since a 8 days ago, we now can fully work together. The teams are just incredibly excited in terms of the opportunities. Bringing the Liquibox expertise into the market and coupling that with Sealed Air’s capabilities around extrusion, around sourcing and footprint so we see tremendous opportunities in terms of the short-term ones, leveraging the footprint of Sealed Air, around markets where Liquibox are present today the customer relationships on both sides – Fluids segment as well as in terms of how we drive the synergies since [indiscernible] synergies. So on synergies side, we’re unpacking the entire fees. Obviously, the market piece that I’ve just talked about, but also internally, how do we collectively buy better. Obviously, Sealed Air, as you know, George, we buy more than 1 billion pounds of resins versus a smaller size of Liquibox around the film expertise, this is what the Cryovac extrusion, the film structure piece of it. And then really, the company – the small company, they have done a tremendous job with the resources they had and now bringing in a much larger company, how we can even accelerate the path even in terms of the touchless automation within their plans and then bringing them into our digital capabilities in terms of how we go to market using MySEE as well as digital. So again, day 8, but many great opportunities that we hope to update you in the upcoming quarterly calls.

Thanks, Emile. Next question?

Our next question comes from the line of Ghansham Panjabi from R.W. Baird. Your line is open.

Thanks. Good morning, everybody. I guess first off, back to the 2023 question. How should we think about the weighting between the first half and second half on EBITDA and EPS? Excuse me. And then on your 2027 financial targets, which is obviously very helpful, kind of keep focus on the algorithm. How do you think the weighting changes between food and protective from a portfolio standpoint? And I guess I’m just asking because you have some of the internal initiatives outlined and acquisitions, etcetera, will the portfolio become more effectively recession – resistant than what we have currently?

Thanks for your question, Ghansham. So maybe address your first part there. So as we typically do to try to provide, although we don’t give quarterly guidance, we try to provide with our investors in understanding of first half, second half. And we made some prepared remarks – in our prepared remarks, just thinking about the first half softness is what we expect to see. So talk about maybe 46%, 47% in terms of the first half, followed by a rebound and expected rebound in the second half is somewhat reflected in our guidance for the full year. And I’ll have – let Ted add some additional color. But as we continue to drive the business in terms of putting expectations out there in our operating model, we had 2025. We’ve now adjusted that to 2027. Main item in there is coming in with the Liquibox being added to our portfolio and expect we have in terms of driving that growth. And the expectation that automation is going to continue to be a big portion of our overall sales, as we pursue that. But Ted, maybe some additional thoughts.

Yes. Ghansham, on the second part of the question is we’re moving the portfolio as you look at 2027. So you see the shift, and we’re very consciously talking about Cryovac and that their food business and moving at the portfolio, moving it from where it was 45%, 55% to now over 60%. The fluids portfolio, if you look at it being over 10%, it’s actually another percent because part of the fluids is into our medical space. So you can see it’s becoming a very strong part of our portfolio going forward in shifting that strong growth to the food side of the business and our portfolio. But the other side of our portfolio to highlight, it’s in the Reinvent SEE, as we drive to digital and the automation is really looking at our portfolio to be a full automation portfolio. So what does that mean? Where we’re leading with equipment where we can automate our customers’ facility and have that pull-through materials. One of our fastest-growing product lines has been in the fiber-based solutions, both food and the protective in bringing automation into that space. And as Emile was talking about with Liquibox, right now, they do very well, and we do very well with bags. And now we have fittings but the box part is a significant opportunity, as we bring some of our auto boxing, digital, technology and to pull that material through. So the portfolio is shifting in two ways, shifting to be a stronger portion of our portfolio to that very stable, high profitable business, as we’re adding fluids. But also as we continue to shift the portfolio to a full solutions model with that automation and pull-through on materials so we think, exciting for where the portfolio shift. One other piece just to highlight it – I highlighted in the – my prepared remarks is looking at the liquids and fluids portfolio is now going to be leveraging at a 40% where the operating engine despite all of our issues, the engine has been performing and operating at a really strong leverage over and now putting a part of our portfolio that’s actually going to be more profitable than the existing base. So that 40% leverage is really going to be driving earnings over the next 5 years. Okay, next question?

Thank you. [Operator Instructions] Our next question will come from the line of Phil Ng from Jefferies. Your line is open.

Hey, guys. Good morning. In your full year guidance, I believe you’re baking in some share gains by a few points versus the market. Just want to get a little hand on what’s driving that? Have you kind of recapture some of the share that you may have lost last year on the food side? And it’s good to see equipment sales bounced back pretty nicely in the fourth quarter. Are most of the supply chain issues on the equipment side behind you, and that’s the opportunity as well as the access to materials, I think, on the specialty chemical side?

Yes. So just to – the – we were getting ahead on those supply chain issues on the equipment side. So I think we’re in a good shape. I think we can grow that business, and you’ll see that strong growth coming back and expecting more. The first part of the question, remind me Chris?

So on the – just thinking through the food, remember, we talked about the...

Okay. The share gain on food, yes, definitely, we see that in our guidance. The part of the food we have it at 2% for the full year growth on food. And part of that is the share gain. But on the second half, we see some of that market coming back. We now have that specialty resin that we highlighted before. We definitely – we’re in a really good position with our food business. I mean our Cryovac materials and automation is the preference in the marketplace and as we’re driving that. Now having the material, we think we can get that share back, and that’s in part of our guidance. But it’s against a tough first half outlook. So short answer is yes, we expect that share gain back, both on materials and we expect more share gain on the automation.

Have you won that share any at this point?

Well, partly, we identified that in the first to fourth quarter with the equipment coming in, that’s identifying that, that’s coming. So part of that strong fourth quarter gain on the equipment – the answer is yes. More to come now. More to come.

Right. And then specific on the food side, given the specialty resins challenges, getting that back online, getting that in place, the business that went elsewhere for us in terms of dual sourcing or loss of share, we have been making slow gains in the fourth quarter and expect that to continue every quarter as we execute in 2023.

On the protective side, just if you’re asking you – was focused on the food, but we also think same thing as we get through the destocking and again, just really highlighting is we move specialty on the protective side where we have a distribution. Moving those distributors to online partners as we go further digital with MySEE, we definitely think it’s going to expand our reach and our capability when we get through some of this destocking on the protective side. So, we think we have some share opportunities there as well.

Okay. Next question.

One moment for our next question. Our next question comes from the line of Anthony Pettinari from Citi. Your line is open.

Good morning.

Hi.

Hey. Following up on, I think Ghansham’s question, and I appreciate all the detail on first half versus second half. But I was just wondering if you could provide any color or put a finer point on how 1Q EPS might compare to 4Q. You talked about the protective volume weakness and I guess the cost saves are more second half weighted, and I think you have two months of Liquibox. So, just wondering how 1Q EPS might compared to 4Q? And then just some packagers have talked about steep slowdown in December, but then kind of pretty strong start in January. I am just wondering if you saw a similar dynamic across either of your businesses.

Sure, Anthony. As you know, we don’t actually give quarterly guidance, but we would like to give – you guys as well as investors just to feel for the first half and second half. But we definitely, from a sequential point of view, expect earnings per share in Q1 to be down going into the year. So, you kind of – from a modeling point of view, think of it as 46%, 47% first half. And then as you may split it, we would expect Q1 to be a softer quarter, given what is going on mostly on the protective side. Coming off some pretty strong growth on automation in Q1, I don’t necessarily expect to see that same level of growth in Q4 of it in terms of Q1. So, anyway, some headwinds faced us in Q1 that is reflected in our view of that first half and second half.

Operator, next question.

One moment for our next question. Our next question will come from the line of Angel Castillo from Morgan Stanley. Your line is open.

Hi. Good morning. Thanks for taking my question. I was just hoping we could unpack a little bit more of the kind of 2023 growth. You talked about volumes, but I guess if I look at the organic growth that was outlined of maybe minus 1% to plus 3% kind of implies flattish to modestly up. And then I think the Liquibox contribution, if I – if we just look at the EBITDA margin that, that business has, implies that the EBITDA full year guide based on those two factors would be – would kind of put you at the high end of the guide just with that starting point. So, just curious, should we kind of view that as conservatism, or is there any other kind of factors that as we think about maybe a more base business kind of flattish and contribution from Liquibox that maybe are offsetting some of it, whether it’s anything on the cost side or kind of cost of ramping up that business or integrating it?

Okay. Thanks for the question Angel. So, let me – so, to your point, let me unpack it. So, we talk about overall food being up in ‘23, low-single digits from a volume perspective as well as a price, as we continue to benefit from some price actions that we took in 2022 that will continue to benefit us in ‘23. That’s on the food side. FX is for both segments providing some level of headwind when you think about it on a reported basis. But when you get to protective, protective is where the pinch point is. I mean we saw it in the second half of last year. We continued that that outlook to be negative for us, unfortunately, in the first half of this year, so roughly down low-single digit growth. We don’t expect much in the way of price activity in the first half given where we are recovering, the inflationary pressures that we have seen and that will continue to evolve as we execute in 2023. So, hopefully that gives you – provides a little bit of color. And then the automation piece of it, just to overlay and recognize automation for both food as well as protective is less than 10% of each segment sales, but that overall growth algorithm growing that business double digits is what we expect that we shared on slide , something – Slide 9 in our earnings supplement.

Yes. And just again to highlight to your second part of your question on Liquibox. So basically, the simple story is we are seeing a flat year first half being challenge, second half being recovery. So, the question of the conservatism could be is just are these markets that we are facing in the first half are they as tough as we are seeing. The optimism is moving on to the high end of the guide is if we get through that first half, we definitely see the opportunity in the second half. On Liquibox alone, you saw in the model, we put the $30 million of cost-out in the first 3 years. Emile is in the room, and Emile is definitely working on the cost side of that, even though we have said eight days official. But I think we really see some good opportunities on the costs out there quick on the Liquibox. But the part on the Liquibox that we are really excited about is the growth side. That’s we are working with the team right now. That’s been fairly resilient, it’s into the markets that we really like with the quick service. It is converting rigid container market. So, that’s really the upside, can we do more. And I will just highlight again, if you look at the numbers what we have in for Liquibox, that’s going to be leveraging better than the rest of the core business. So, that’s the upside on the earnings. And I just want to highlight it, we didn’t mention it, but paying down that debt quickly that’s how we are going to get the EPS back to where the model says it should be, and we want to pay down that debt very fast, and that’s what we are focused on.

Okay. Next question.

One moment for our next question. Our next question will come from the line of Adam Josephson from KeyBanc. Your line is open.

Hi Chris. Good morning. Thanks very much for taking my question. In terms of guidance, just a two-pronged question. One is, obviously, there are cost levers you can pull and you are able to achieve your EBITDA guidance, I think volume and free cash flow obviously, last year were a lot harder for you. How much confidence would you say you have in the various components of your guidance, just given your experience last year with – specifically with volume and free cash flow? And just, Chris, could you tell me what your pro forma leverage is now as well as what exactly your working capital expectations are for the year? Thank you very much.

Yes. So, good. So, let me just answer the second half of your question and we will come back to the overall guidance, but for purposes of – we anticipate right now, Q1 to end at a leverage ratio of roughly 3.5x and also continue to kind of work that down recognizing our working capital improvements in terms of the normalization that we talked about, getting inventory reduced, selling through that inventory, collecting those receivables. We would see that working capital cash generation come through using that excess cash to pay down debt. It would be priority one. So, the overall guidance, as you see on Slide 16, when we provide our full year view, we have got outlook ranges that we would like to provide to give you guys as well as investors a sense of what we are seeing on the potential downside of our guide versus the upside range, and I will let you – you can kind of read through them yourself. But specific to your question on sales, pretty confident that – recognize the first half, second half discussion, we discussed for – if I break it down on a regional basis. One reason I wanted to highlight for us is APAC recognizing China opening up again. And Ted recently been over in Asia, just listening to our team over in APAC, is that although it is somewhat muted initially, we are not too bullish in terms of how quickly that’s going to come back, but we would expect second half improvement out of our business in China to help give us some confidence in terms of that top line sales. Food will continue to be resilient regardless of what happens in terms of the consumer behavior, in terms of what they choose to buy…

Maybe let me just add on the working capital, just to kind of give the confidence. So, in a nutshell, what happened last year, first six months disruptions across the world on every single category of items we are buying. And our lead times to our customers on many product lines were extended by more than 5x the normal lead time. So, we had to build the inventory to make sure that we are not starving the growth. And as we got over that hump essentially our inventory peaked in the Q3 period last year. At the same time, the end market started softening customers started destocking as they saw the lead times were returning back to normal. And that’s where we got caught in that trench. But from that peak to trough at year-end, we did take out more than $150 million in inventory. The second piece is all those material supply issues are behind us. There is ample supply of materials. One area is much better, but still impacts a little bit on long lead times, that’s on the electronics side, but we are managing through that. And so, we are going to continue driving our working capital where at least. That’s a short story what happened last year. It wasn’t a fluke, is a couple of things that happen exactly at the same time, and we just power through it and make the rest happen.

Very good. Thanks for the question, Adam.

Next question operator.

One moment for our next question. Our next question will come from the line of Adam Samuelson from Goldman Sachs. Your line is open.

Hi. Thank you. Good morning everyone. A lot of ground has been covered, a couple of just cleanup type questions, if I may. Maybe first, in the new SEE 2.0, the contribution from digital growth is anticipated. I mean is that a – so I think about that being a pretty meaningful mix driver and how digital plays into your revenue growth and value capture that coming with pretty healthy incremental margins and that probably being a disproportionate driver of some of the operating leverage that you are forecasting? And then I just want to be clear on some of the changes in the way guidance is now being couched that restructuring costs are going to be included in the EBITDA guidance, not stripped out as a special item. So, like Chris, there is a $23 million restructuring that’s included in the 2023 outlook. I just want to be clear that that’s in the $1.25 billion to $1.3 billion of adjusted EBITDA?

Yes. So, let me answer maybe the second half of your question, I will let Ted comment around the digital piece. That’s very much a big portion of what we are identifying as opportunities for Reinvent SEE 2.0. So, on the restructuring side, what we have profiled out on Page 16 is that restructuring mainly consists of the continuation of Reinvent, the program from several years ago, kind of concluding on that particular transaction as well as some of the restructurings we have got identified on the integration given the M&A deal. What we are specifically identifying to your point, is that Reinvent SEE 2.0 costs as well as the cash profile as we continue to execute that over the next 12 months to 18 months, you could see what we have targeted for overall structural changes and benefits. That will – it is currently not reflected in our guidance. But at the same time, we view it as potential upside as we continued to manage costs in terms of what is in our control and how we are looking to change the structural dynamic of our company to buy it for margin expansion. So, on future calls, we will continue to update yourselves as well as investors on how we are executing that particular program.

And on the digital side, if you look at Slide 7, and as you highlight on 2.0, we are highlighting where digital is hitting. And on the sales side, incremental sales and there is a few things that we would identify as a digital sale. The one that is very clear is when we start bringing our digital printing and actually put digital printing connected to our equipment and adding digital incremental sales to our automation. Digital also shows up as we work with our packaging and be able to actually put digital coding on our packaging, letting our customers be able to mark the products, as we have talked before about track and trace as we get our digital printing deployed around the world. But also the digital is our access to market, going with MySEE, we think we can actually increase our capability. And then the last piece is on the digital printing, especially as we have talked about, even with our fiber-based products that actually doing the printing with corrugated, fiberboard, pulling it into some of our other solutions. So, we think we have some growth opportunities there. So, that’s 1% incremental to what we are already doing in the model. But the second part is also in there that we are putting digital into the savings, as we are driving our operating engine. As we are creating our digital platform on MySEE, working more effectively and efficiently, some of our largest customers want to interact with us digitally, just like they have done in the COVID, whether it’s designing a product online, using our design studios, being fully Touchless from designing the product and actually sending those digital signals to our factories extreme, but not significant savings to our customers. So, it’s part of that engine of how we are going to convert those additional sales to a more efficient and effective operation. And it’s also connected to the Touchless piece that Emile’s team is just really doing some exciting stuff with our factories as driving Touchless automation. And the digital is a big piece of making all that happen. Okay. Operator, I think we have a chance or time for one more question.

Thank you. One moment for our last question. Last question will come from the line of Larry De Maria from William Blair. Your line is open.

Okay. Thank you and good morning. First, a clarification and a question, $275 million D&A versus run rate, it seems like a big jump. Can you just clarify what’s in there, why the jump? And then secondly, you highlighted 18% EPS growth CAGR over the prior 5 years. We just did an acquisition. We invested heavily in digital, driving automation. Are you only committing to over 10% growth? But it seems like the step up for the next 5 years is arguably better than it was in the prior 5 years. So, can you just talk to that and why it shouldn’t be better than over 10%?

Sure, Larry. Let me address your kind of the D&A related question, and then we will get into the growth aspect. So first, as it just relates to the D&A, really, a reflection of the investments, incremental investments we have made in our business. As you know, we have increased pretty meaningfully the CapEx profile in our business. So, the jump in D&A is primarily driven by those investments in the amortization.

Yes. Okay. So, I will take the second part, Larry. If you – if we look at our operating model slide, so exactly as you said, if you look at that backward slope of the last 5 years at 18%. And then you see the challenge we have in 2023 on EPS, as Chris has highlighted in the bridge, specifically the biggest one being the interest rates. And again, how do we pay down that debt as fast as possible. So, if you look at the slope of that curve from where it is in 23 to 27. It’s actually the 15% growth rate. But that target that we had out there is greater than 10%. Let’s continue to go beat what we say we are going to do. So, it actually the slope of that curve is higher than 10%, but we are also recognizing we took the dip in 2023 to get there. We think the model to your point, especially as we are adding higher margin as we continue to have margin expansion, we think beating that 10% EPS growth into 2027 is more than possible.

Okay.

I want to thank everyone for the entire call for today. We are in hope you feel the excitement, we are really excited about the opportunities what Liquibox brings to us and how it’s going to accelerate our growth to the future. And we look forward to speaking with all of you in May. Thank you everybody.