Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter 2019 Sonoco Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Roger Schrum, Vice President of Investor Relations. Please go ahead.

Thank you, Sara, and good morning, everyone, and welcome to Sonoco's investor conference call to discuss our fourth quarter and full year 2019 financial results. Joining me today are - is Howard Coker, President and Chief Executive Officer; Rodger Fuller, Executive Vice President; and Julie Albrecht, Vice President and Chief Financial Officer. A news release reporting our financial results was issued before the market opened today and is available on the Investor Relations website of sonoco.com. In addition, we will reference a presentation on our fourth quarter results, which also was posted on our website this morning. Before we go further, let me remind you that today's call and presentation contains a number of forward-looking statements based on current expectations, estimates and projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore, actual results may differ materially. Furthermore, today's presentation includes the use of non-GAAP financial measures, which management believes provides useful information to investors about the company's financial condition and results of operations. Further information about the company's use of non-GAAP financial measures, including definitions as well as reconciliations of those measures to the most closely related GAAP measure, is also available in the Investor Relations section of our website. Now with that, I'd like to turn it over to Howard Coker.

Thank you, Roger, and good morning, everyone. Let me start by saying, frankly, how humbled I am to speak to you today as Sonoco's new President and CEO. Before we get into to the business side of things. I did want to first thank Rob Tiede for all he's accomplished during his 20-year career with Sonoco and for leaving the company with a strong leadership team and businesses that are well positioned for success, and we certainly wish him the very best in his retirement. As for me, I couldn't be more excited about our future, and I'm honored to have this opportunity to work alongside our more than 23,000 teammates globally as we embark on our next chapter together. For those of you who are not familiar with me, I've spent my entire 35-year career working across the globe in a wide range of our consumer and industrial businesses. For the past decade, I've been a member of the company's executive committee and have taken part in helping shape our strategy. I am a believer that great things in business or most of the - in life are not done by one person. They're achieved by a team. Sonoco has an experienced leadership group that is focused and committed to ensuring a vibrant future. Our recent success has not been tied to any single individual, but the contributions of our global team. Because of that, I don't expect a lot of strategy changes in the near future. Certainly, over time, we'll make some adjustments that they will be based on a shared vision for what is best for our customers, our shareholders and our people. I do expect you'll see more urgency around dealing with some of the issues we have been discussing over time. You will find that…

Sure. Thanks, Howard. I'll begin on Slide 3 where you see that earlier this morning, we reported fourth quarter earnings per share on a GAAP basis of $0.44 and base earnings of $0.75 per share, which is the midpoint of the guidance range that we provided last Monday of $0.74 to $0.76 per share. This $0.75 of base EPS is below our $0.84 of EPS in the same period of last year, which that period did benefit from several unique items, including $0.06 of insurance proceeds related to Hurricane Florence and $0.05 due to a notably lower effective tax rate. Overall, we are pleased to have delivered solid fourth quarter operational results in an unpredictable global economic environment. In terms of the $0.31 difference between base and GAAP EPS, $0.10 was due to restructuring activities, $0.11 was from long-term asset impairment charges, $0.04 relates to nonoperating pension costs, $0.03 was from M&A expenses and another $0.03 relates to various nonbase tax items. I'll also highlight on this slide that we delivered $3.53 of base earnings per share to shareholders in the full year of 2019. This reflects a solid 4.7% growth over the prior year and, of course, is in addition to our strong track record of paying dividends to our shareholders. Moving to the base income statement on Slide 4, and starting with the top line, you see that sales were $1,309,000,000, down $47 million from the prior year period. I'll review more details about our key sales drivers on the sales bridge in just a moment. Gross profit was $247 million, $7 million below the prior year quarter as gross profit as a percent of sales was solid at 18.9%. Our SG&A expenses of $133 million were lower year-over-year by $5 million, driven by cost reductions across our…

Thanks, Julie. Let me make a few comments on key issues we're focused on. Starting with the industrial side of our business, I was very pleased with how our global paper tubes, cores and cones business adjusted to slowing global manufacturing activity and was able to produce strong sales and operating profits in 2019 with margins improving slightly to 11.1%. Much of the improvement in sales and earnings were a result of the 2018 acquisition of Conitex and the August 2019 acquisition of Corenso Holdings in Wisconsin. The integration of both of these businesses has gone extremely well, and they will continue to be contributors in 2020. Back in December at our New York Analyst Meeting, I gave you an update regarding our North American paper asset optimization initiative, where we have spent about $68 million over the past several years to modernize our best mills. This program has led to improved margins and increased cash generation. We completed our last project in January, and we are clearly seeing the benefits of those investments. When we said we started this optimization effort that we would likely reduce or rationalize capacity from our lower-performing, higher-cost machines, as market conditions dictated. Since we last spoke, we have taken steps to reduce approximately 50,000 tons of URB production from our Canadian mills and replaced that volume with recycled pulp, which has been shipped to China to meet their need for cost-effective, high-quality recycled fiber. In addition to this action, we expect to take out additional URB capacity in the first half of the year and leverage customer orders across our remaining North American system. Now shifting gears. Julie mentioned we're making a slight adjustment to our 2020 base earnings guidance due to the current impact on our operations in China for the -…

[Operator Instructions]. Our first question comes from the line of George Staphos with Bank of America.

Howard and Rodger, congratulations on your new responsibilities, and congratulations as well to Rob on his retirement. I want to ask a couple of near-term questions, then a couple of longer-term questions quickly, and I'll turn it over. First, as you enter the first quarter, what are your expectations for price/costs for the major businesses? My guess is it's going to be down in aggregate because of what's happened in medium, but if you could provide a bit more color or maybe rebut that based on what you're seeing with some of your contract resets, et cetera. And then the other short-term question on volume. It's obviously, as you mentioned, been kind of a choppy period for Sonoco the last couple of years. You were up against some easy comparisons, as I recall, and yet volume was down. Is there any additional information you could provide in terms of how volumes trended versus your expectations and why we were down this quarter off the easy comp?

Okay. Thanks, George. And I appreciate the - your opening comments of thanks to Rodger and myself. On price/costs for Q1, yes, we expect that we'll see some downward trend as it relates, as you note, particularly on the corrugated medium, at least a $15 impact. And obviously, that was reflected in the commentary and reflected in our go-forward forecast. So I certainly do feel some pressures as it relates to that. But at the same time, we're seeing some positive outlook as it relates to resin potentially dropping. We also think that freight, that will continue to - best or worst, I should say, safe for the best to see a positive for us. As far as volume trends, I would say - and I'll let the others chime in here as well, what I'd say is, from a sequential basis, we feel pretty good about the overall picture as we kind of go through the different sectors. Julie commented about somewhat of a surprise of the destocking that we saw in the can business. At the same time, we saw, again, from a sequential basis, that plastics remain relatively flat actually year-over-year. Excuse me, flexibles, lower, but the run rate is much better. So on the consumer side, I think, the changes that Rodger has taken over the past half of this last year have really started to show. And if I could, I'll just pass it on to Rodger and let him kind of talk through some of that.

Yes. George, I'll just add that, as Howard said, we made a number of changes last year, structural and process changes, and they're taking hold. So as we look at the - Julie mentioned the fourth quarter, we were actually pleased by flat volumes in both rigid plastics and flexibles. So that's the third quarter in a row where we saw improvement in those 2 growth businesses. We expect that trend to continue into the first quarter. And I think as you look at those year-over-year comparisons for 2020, the second quarter is where we really get into, what you would call - what you call the easier comparisons. And then I think the fix on the Perimeter of the Store plastics business that we've been implementing over the last 2 quarters, rebuilding equipment and tooling on the West Coast of that plastics business has been flowing through, through the second half of last year. That will continue into the first 2 quarters of this year. So we see sequential improvement there as well. But I think I'd give you a little bit more flavor on volumes as we head into 2020

Okay. You know what - oh, go ahead.

No. I was just going to say I'm cautiously optimistic maybe is the right way to play in it.

Our next question comes from the line of Ghansham Panjabi with Baird.

And congrats to you, Howard and Rodger as well. Best wishes for the future. I guess, first off, on the paper segment, if you separate out the impact from the insurance recovery, it looks like operating profit was more or less flat in 4Q year-over-year. How should we think about operating profit specific to that segment for 2020? Obviously, corrugated pricing will be a negative variance. What are the positive offsets in the segment for 2020?

Well, certainly, as I went through the completion of the neos [ph] project, that was a three year initiative that we finished the last of that $68 million project, in fact, in January. The whole point behind that investment was to take out lower-cost mills and to be able to improve our overall supply chain from a cost perspective. So we see that as being a nice pickup. We've talked about Corenso and the great onboarding that we've seen there and the impact it had in the fourth quarter. What we have yet not done with Corenso is take advantage of its low-cost position. So as we complete neos, we have now, within our legacy mill network some much improved cost structures. We've got Corenso added through that. And now we're in the process of rationalization and making sure that those volumes end up in the most low-cost mills within our network. So we feel very good about the profit profile going forward from that perspective. The other thing I'd note is that last year, particularly through the first 3 quarters of the year, we really struggled in our recycling sector. Not to say that they weren't - the team was not actively engaged and working to improve the situation under the current environment. And what we saw in the fourth quarter was a very nice improvement from a run rate perspective. We saw it again in January. And we're seeing that, that will continue. And what I'm reflecting here is under the current low-cost commodity environment, changing from a pay basis to a charge basis as it relates to a lot of the commodities we've been picking up, you're seeing that across the total recycling sector as well. So you put all these together and I feel pretty good about the go forward.

Okay. So just to quantify, based on what you just said, you realized $47 million of productivity in '19 on a full year basis for the company. How should we think about 2020 specifically relative to that $47 million number? And how much of that will flow through the paper segment?

So do you have that accounted at that level?

Yes. Well, from - at a total company perspective, in 2020, we've kind of got, obviously, a similar amount of total productivity in the budget for the company. And that really is spread across the segments. Every business works on procurements and fixed cost productivity. I guess, having said that, just to broaden the comments a little bit, there's a little more room for productivity improvement this year in our consumer business really specifically related to some of the operational challenges we've had in parts of our plastics business. So I guess, that manufacturing productivity is maybe a little more weighted in our consumer business. But again, at a high level, though, for the company, it's a pretty similar year-over-year productivity improvement.

Our next question comes from the line of Adam Josephson with KeyBanc Capital Markets.

And Howard and Rodger, let me add my congratulations to you as well. Howard, just one question just on strategy. You mentioned we shouldn't expect wholesale strategy changes. You talked about, I think, more urgency in dealing with certain issues. I was just hoping you could expand on that comment a little bit and then just somewhat relatedly address the company's outstanding long-term targets, including the 16% EBITDA margin. Is that something that you still think stands?

Yes. Thanks, Adam. And - yes, and thanks for your earlier comments. Strategy, yes. Right now, we're staying the course. As I said in my commentary, you will see some tweaks along the way. The - I guess the biggest point, as it relates to urgency, is ties to some of the topics that you've heard us talk about year in and year out. And one great example of that, and I'll use this only as an example, is the #10 situation and the volatility that is driven through the years, quite frankly. As you all are aware, it is the one machine that it does not have an integrated value to the company. And we're exposed as it relates to what's going on, on the broader packaging side of the paper sector. And so that is a great example where I expect in the next couple of months, you'll be hearing from us with a solution in hand. So that is exactly where that comment was coming from. On the second comment, 16% target, absolutely. I think we've made really nice progress over the last several years sequentially. And that remains, I'd like to say, at the bottom end of our targets. But the point is that we are absolutely committed to growing our OPBDA margins year on, year out, quarter on and quarter out. So that does not change in any regard.

And just two other questions, one on volume. You talked about customer order patterns having been choppy. You said activity in January, I think, was slightly better than your expectations. And I think on the last call, Rob talked about having seen some customer destocking last year. So do you think you're seeing any kind of restocking? Or what would you attribute perhaps January having been slightly better than your expectations, too, if anything?

I'd say, Adam, it's pretty much been relatively stable. I guess, from our - my comments as it relates to better performance. Certainly, from a bottom line perspective, the volume right now is pretty much too early to call and relative to what we've seen in the last couple of months.

Sure. And just my obligatory OCC question for whoever wants to deal with it. Obviously, export OCC has surged in the last couple of months. China got a disproportionate percentage of their import permits in the first quarter. Can you just talk about what you're expecting in March and beyond with respect to export OCC and domestic OCC for that matter, and if your full year OCC price forecast has changed at all as a result of what we saw in January and even more so in February?

Right. Well, of course, we're still at $5 a couple of weeks ago. And you're right, it has to do with the export side of things. India is now following some of the other, particularly China. Indonesia, markets not taking mix. So that's where we're seeing the driver. It's really too early for us to say. Right now, we're managing through. I think we will manage through successfully the $5 increase. But what's going on globally with the coronavirus, there's just so many uncertainties. It's really tough to try to nail a target to share with you at this point in time.

Our next question comes from the line of Mark Wilde with BMO Capital Markets.

Howard, Rodger, congratulations on those new roles. I wondered, can we go back to the - just the industrial market? I think I heard Julie say that, in aggregate, the tube and core volumes were flat globally, which seems to be, by my recollection, a better number than we've had in recent quarters. So can you just confirm that, and maybe give us some sense of what you're seeing in terms of industrial activity?

Yes, Mark, this is Julie. Yes. You are right. Our global tubes and core volumes have been really in the three prior quarters of 2019 kind of down more in that 4% to 5% range. So it was an improved - right point, an improved quarter from a year-over-year perspective there. So I don't know if Rodger or Howard will add any more comments on that, but that is a good observation.

Yes. And this is Roger Schrum. Just to kind of give you where the areas - we're pretty much flat in North America. Europe is also relatively flat. And then we were seeing some growth in Latin America and Brazil and Asia as well. So that's kind of how the - how it worked out through the quarter.

Okay. All right. That's helpful. And then I wondered if you could just - you flagged a couple of times in the release the kind of consumer security business. Can we give a little bit more color on what's going on there? Is that simply kind of a part of that a plastics backlash issue, and that's why you're bringing in some of these paper-based alternatives now?

Yes. Basically, no. It is not related to anything as it relates to sustainability of that type of - I believe, Rodger, it's basically - we had one customer that...

Yes. We had one customer, Mark, in our retail security business that we lost. It goes back to the exit of the Fairburn pack center. And end of 2018, we retained some of the material into that center for some time last year, and then that business went away in the fourth quarter. So nothing to do with sustainability, just churn of that one customer. We have released, as you said, the paper-based package, and we think that will be very successful. We think very little impact from a sustainability point of view on that on the retail security business.

Okay. And then finally, Julie, just you brought down the EPS guidance slightly, but you didn't adjust the free cash flow number at all. Can you help us understand what the offset there might be?

Yes. We just, quite frankly, feel like the EPS change was really that material when it came to free cash flow or operating cash flow. And so we continue to target strong working capital performance. We've really done a really good job across the business in '18 and '19, actually, I'll say generating cash flow from lower working capital in each of those years. So while our outlook officially is flat, working capital in 2020, I am optimistic that we will actually, once again, lower our working capital through really across the board. AR inventory and AP. We continue to have opportunities there. So really, I think, just again, we didn't view - the EPS change is material to cash flow, and again, are very bullish on working capital management.

Our next question comes from the line of Debbie Jones with Deutsche Bank.

Congratulations, Howard and Rodger. I wanted to - you talked about volumes a couple of times here in consumer. I just wanted to touch on the guidance that you gave for the full year in December, the 4% growth in flexibles and the 4% to 5% in rigid and see if anything's changed there or for the full year, you're still holding that. Is there anything about the cadence that we should think about as the year progresses?

Rodger, why don't you take that?

Yes. I think no. The guidance has not changed, Debbie. This is Rodger, by the way. You will see it weighted to the second half of the year, as we talked about some of the self-help actions, we've taken in our rigid plastics business that are taking hold. But we've got more investments to make in the first half of the year, so you'll see that flow more into the second quarter and beyond. We've seen good improvement in flexibles, which we've already talked about. And then the rigid paper and closures, the trends will be basically the same that we've seen in the last 4 or 5 years. We're counting on sustainability. They give us a nice kick. Every business unit, rigid paper, flexibles, rigid plastics, has a full suite now of the EnviroSense products. Every customer conversation we have today involves sustainability. As we said in New York, we view that as a tremendous opportunity for Sonoco to be the leader. And the feedback we're getting from a number of CPGs is we're headed in that direction. So I think through the self-help from last year, the focus on sustainability, the improvements we've made in the organization. And we've got a number of new products that we talked about - Rob talked about last year that were delayed, and those are hitting in the first half of this year. So I think we're sticking with the guidance. So I think you will see it ramped in throughout the year, throughout the 4 quarters.

Okay, that's helpful. My second question, for Howard, yes, you said that the strategy really isn't changing. But I hope that if you could just frame for us your view around the consumer business, specifically the need for M&A going forward or what the outlook is for that business and how you see that progressing.

Sure, Debbie. Again, our focus has been on ultimate consumer trends and what's been going on. You just saw the TEQ acquisition, again, that we're extremely pleased with. And quite frankly, we see it very additive to our health care base. If you look at what we're doing in Rotterdam on like basis, we're claiming activities there, tier one. We've got good connectivity with the alloy business as well as with our ThermoSafe business. So certainly, you're going to see continued focus in that direction remaining on the consumer side certainly as we see tack-ons, those type of things. But everything really relate - is going to relate to either 1 or 2 things, I guess, 3 things that we're focused on right now, and that's sustainability. And we've got some things in the queue right now that we hope to be talking to you about in the very near future. The health care side of things are really the main focuses right now. On the industrial side, it's pretty much more of the same, how do we continue to add those tack-ons that leverage up our positions around the world? So effectively, that's where we stand at this point in time.

Our next question comes from the line of Brian Maguire with Goldman Sachs.

Just between the - yes, the nickel cut to the full year guidance. I'm wondering if you could kind of break out between the 2 components. You talked about the pulp and paper weak price cut versus coronavirus. And then specific to the coronavirus impact, are you just including kind of what you've seen to date from disruptions around the extension of the Lunar New Year holiday? Or are you also kind of projecting out potentially either supply chain or end demand weakness that could come as - looking forward?

Yes. Right now, we are looking at the corona as where we have visibility to. So we have modeled it out, and it's reflective within that net nickel. And of course, as noted, the #10 corrugating impact that we see going forward that we have visibility going forward to weighted, it's just roughly a 50-50 type weighting to get to that $0.05 variance.

Okay. And then just a follow-on to Debbie's question on the consumer business and the M&A pipeline. You were very active there in the Perimeter of the Store a year or 2 ago. It seems like there's been some challenges in either integrating those businesses or their performance out of the gate. Just wondering if that makes you a little bit more gun-shy about doing acquisitions in that part of the portfolio. And the kind of growing conversation around sustainability, does that make you a little bit more hesitant to do acquisitions in the plastics space in general?

Yes. Let me start. We ended on the sustainability side, not necessarily, no. We think plastics area, there's always going to be a home. I mean, as Rodger pointed out, we think we have some really good opportunities to - particularly if you add - if you look at our integrated basis with our recycling capabilities, et cetera. So from a sustainability side of it, that is lesser of a concern. As it relates to Perimeter of the Store, yes, I think it's, again, as Rodger pointed out. It's - and you guys know very well, we've got our issues or have had our issues. And right now, all hands on deck on let's turn in what we have around today. And I feel extremely encouraged by the actions that Rodger and the team have taken starting back to mid last year. And we're - as Rodger noted, we're starting to see some of that show. And that will continue to flow through this year, but I think it would be - well, it's the right direction for us right now, is to focus on what we have and let's turn it around. And that's the plan. Rodger, you have anything you want to...

No. just to add that we're also seeing some good wins in our flexible business, Perimeter of the Store, with open reclose features for fresh fruits, fresh vegetables that also offer some sustainability for our customers. So a broader discussion than the clamshell business that we have that we've had some operating issues with. So we still view that as a growth area, is selecting the right areas and then executing on our plans going forward.

Okay. And just last one for me. Just on the #10 machine, obviously, conditions were a lot more favorable a year or two ago there. Sort of water under the bridge at this point, but conditions are not too great at the current moment and the outlook for this year as part of where the guidance is being cut. Just kind of maybe explain why you think now is the right time to be taking action on this. Obviously, I think it's probably - you wish you had done it a little bit sooner. But why now versus kind of waiting for these markets to recover a little bit?

Again, it's been a conversation for multiple years now. And we have finally reached a point where we felt like we have uncovered or looked under every opportunity rock, if you will, for a long-term solution. Fortunately, the team has presented to us what looks like a very, very, very rock solid - sorry to keep using the word, rock, but a very, very solid solution to the issue. And the why, it's just we are a very, very small player in this market. It's not strategic to us in any way. And it has been - as pointed out, has been extremely volatile. And I can just say that I'm thrilled that - with the work that the team has done, as I noted, with outside help with a lot of resources to say we've got a solution for this. And it's going to be coming soon. So I'll leave it there.

Our next question comes from the line of Steve Chercover with D.A. Davidson.

And again, congratulations to everyone.

Thanks, Steve.

So it's a bit late in the session. So I have just 2 quickies. First of all, you had a nice turn in the margins in Protective Solutions despite the lower volumes. I'm just wondering if that's sustainable, and if it's something you can build off.

Yes. Roger, why don't you go? now

Yes. It's Roger. Yes, it is. Really strong performance for our ThermoSafe business in 2019. That will continue into 2020. We took a hard look at drug launches. They'll be solid for 2020, maybe down slightly, but ThermoSafe has had compounded annual growth on the top line of almost 9% for the last 5 years. We expect that to continue. And then the teams in our consumer business and our auto business did an outstanding job of taking costs out of the business last year. So volumes were down, higher than we expected, but they did a good job of taking costs out. So we're rolling into 2020. So to answer your question, I think those margins are sustainable.

Terrific. And then, I guess, a variation on a theme that's been touched on, but recognizing that there are unlikely to be major strategic shifts and the importance of sustainability, do you have any thoughts on growth? Or - and are there any opportunities to grow in paper-based consumer packaging?

Absolutely. We're already - and we've talked about this in previous quarters. We're seeing some really positive - Europe is ahead of everybody. And we've engaged in more than a few conversations, direct activities with folks that are looking for a paper solution as opposed to a plastic. So we see this as a tremendous opportunity for us on the consumer side of the business with our paper-based container. On the industrial side, similarly, we think we have some opportunities to look at, for instance, our protective packaging solution here in North America expanding that elsewhere. If you think of EPS, particularly in Europe, right now, there's some major retail chains that are seeing no more EPS. And obviously, that leads you straight towards a - at least to us, in our minds, straight towards a paper solution. So we're quite bullish about this - the whole narrative right now, and we see it as more of an upside than a downside as we look at our portfolio and global capabilities.

We do have a follow-up question from the line of George Staphos with Bank of America.

Howard, you mentioned several times in your opening remarks something around the theme of team, teamwork, teammates. And look, it's obvious that great companies build off of their teams, but is there anything unique or specific to your management style that you're trying to get across if I read kind of your commentary correctly?

Well, I appreciate that, George, picking up on it. And, yes, it is directly related to my management style. The guy I've got a lot of respect for years ago came up with a phrase that people build businesses. And that's been the marching order of - or the overarching theme of how we operate our businesses globally. So yes, it's all - it starts with people. That does not end. It's embedded in the culture of our company. I'm very fortunate to sit here today with an executive committee that I couldn't be more prouder of in terms of the diversity and mix that we have on it. And I mean that in terms of a lot of different experiences as well as they're willing to participate in terms of how we're going to grow this company going forward. So look, this is - our culture is built on a culture of inclusion and values, and I intend to continue that forward. We've got a great team all the way through, and I see it on a global basis. And what really pleases me, as we've been involved in the international side of the business so long, is we look at our culture and values here in North America, see how they've resonated around the world. And I think that's what it would take to really carry this business forward. It is all about the people, bottom line.

Okay. Second question, Howard. On Perimeter of the Store, a couple of people have asked different questions around this, and a lot of the answer comes back to we need to fix our operating problems. You feel like you have that in hand, and that will be the base from which you can grow. Over time, one of the things that we've seen is when companies say they have operating issues, what it really means is the cost structure wasn't aligned well relative to what was going to happen in the market either in terms of demand, competition and pricing. Was there any of that in terms of what needed to be reset, restructured, use whatever term you want to use, in terms of Perimeter of the Store? And if you take a step back, whenever the strategy began, and looked at what you thought the horizon was for Perimeter of the Store for Sonoco and what it is now, is it equivalent, less or more?

George, this is Rodger. I think what you need to keep in mind is when we talk about Perimeter of the Store, I think we're talking about primarily the 2 acquisitions we made, right? The 2 acquisitions we made. So Peninsula was a west-based coast acquisition with 4 operations up and down the West Coast. Highland Packaging was based out of Florida, Plant City, Florida with one mega plant. If you break those apart, the Highland acquisition, the Plant City operations has performed exactly as we expected. So we talk in general about Perimeter of the Store issues, but that operation is performing. We're the leader in the southeast, solid base, solid cost positions. What we found in the West Coast is we simply had the wrong level of equipment that we needed from an operating capability. And we're going back and we're rebuilding the equipment and the tooling, and we replaced the manufacturing leadership up and down the West Coast. The West Coast is more competitive, but I think it's fair to say when we get the operating improvements in place, we'll take a hard look at where we are from a cost position overall versus our competition. But you can't just do a broadbrush on Perimeter of the Store. You've got to break it down into those individual buckets. And again, we're confident. You'll see incremental improvement this year. And then we'll step back and say, "Okay. How - where are we versus where we originally thought we were?" But there are other parts of Perimeter of the Store that we're playing in with rigid paper, that we're playing in with our plasma packaging business. That's been very successful. So I just want to make sure that people understand, when we talk about the issues, we're talking about very specific operating issues with that part of the business that we bought on the West Coast.

Last question, and I'll finish up. Health care, I think at one point, you targeted back to the Analyst Day roughly around $350 million of revenue currently. Where do you see that in the portfolio, Howard? How quickly do you think you can grow it? What are maybe the leverage points that haven't been tapped efficiently - not efficiently, but the things that you think you can maybe amplify the growth in that business? And how big do you see it getting to over the next 5 years?

Thanks, George. Yes, exactly. As we roll up the current portfolio, we are roughly in that $350 million range. I'm not prepared to answer the question in terms of where we will be this time next year or 3 years down the road. We bought TEQ for a very specific reason. And it brings with it a great team, great set of portfolio - a great portfolio and, frankly, a vision of where they intend to go. So I think it's really too early to talk about any specifics, but what I will say is it is certainly something that we are definitely focused on in terms of continuing from an investment and an overall organic growth perspective.

We do have a follow-up question from the line of Adam Josephson with Keybanc Capital Markets.

Howard, just back to sustainability and plastic packaging for a moment. Investors seem to have become increasingly concerned about volume trends among the plastic packaging companies. And every time one of them reports the volume decline, investors seem to attribute the decline to sustainability issues, whether true or not. Does this growing perception among investors, that just plastic is bad, affect your thinking about the business at all, specifically with respect to future M&A? I know Brian asked a variation of that question, but I just figured I'd ask it this way. And just relatedly, how much misunderstanding do you think is still out there among investors and the general public about the future role of plastic compared to, say, aluminum beverage cans or other substrates?

Again, from our perspective, we're not seeing any type of issues as it relates to volume and sustainability. I can't say for some of the larger companies, but the data that we have been looking at says that plastics is actually growing on a global basis. And we've got pretty good granular from a country market perspective and forecasted out to continue to grow. So there is some confusion out there of actually what is happening today in terms of the impact that sustainability's having on volumes. Going forward, I think there's so much activity related to how to solve these issues, recycling, et cetera. For me, I think more about the bigger conversation around carbon footprint and how that's impacting the world. It is so nice and so easy to look at a format, a bag, a bottle or whatever and say, "A-ha”. There's our problem. There's the solution." There's another side of that story that, frankly, I think, is more concerning to us. And that has to do with just what I said, is the carbon footprint that is being created, not only from the packaging sectors, but others. And I am - I personally am reading more and more about that, and that message is starting to take home. So to just kind of summarize, no. I don't think that there are any serious switches, at least in the formats that we are participating in. There has been some, of course, in the aluminum side, but then that drops back down to that real fundamental question, is how serious is this problem around carbon emissions and global warming, et cetera?

We do have a follow-up question from the line of Brian Maguire with Goldman Sachs.

I know it's late. Just one quick one. I was hoping you could quantify the - what benefit, if any, you got in the fourth quarter from the drop in resin prices and the timing lags? And any expected benefit in 1Q from the same?

Yes. Brian, this is Julie. I think I mentioned our consumer segment did have positive price/costs in the fourth quarter even though, as a company, we were net negative there, driven by industrial. But a part of that was driven by dropping or declining resin prices and some other slight deflation and other material or kind of support costs. So again, a little bit of positive price/costs there on the consumer side. And we'd expect some of that to continue, again, more specifically in the consumer segment in the first quarter. Not terribly material, but slightly positive, yes.

Thank you. This concludes today's question-and-answer session. I would now like to turn the call back to Roger Schrum for closing remarks.

Thank you, again, Sarah. Again, let me thank everyone for joining us today. We certainly appreciate your interest in the company. And as always, if you have any further questions, please don't hesitate to contact us. Thank you again.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.