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Presentation

Operator: Good day, and thank you for standing by. Welcome to the Q3 2023 Sonoco Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker, Lisa Weeks, Vice President of Investor Relations. Please go ahead.

Lisa Weeks: Thank you, operator, and thanks to everyone for joining us today for Sonoco’s Third Quarter 2023 Earnings Call. Joining me this morning are Howard Coker, President and CEO; Rob Dillard, Chief Financial Officer; and Rodger Fuller, Chief Operating Officer. Last evening, we issued a news release highlighting our financial performance for the third quarter, and we prepared a presentation that we will reference during this call. The press release and presentation are available online under the Investor Relations section of our website at sonoco.com. As a reminder, during today’s call, we will discuss 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. Please take a moment to review the forward-looking statements on Page 2 of the presentation. Additionally, 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 to GAAP measures is available under the Investor Relations section of our website. For today’s call, we will have prepared remarks regarding our results for the quarter and outlook for the fourth quarter, followed by a Q&A session. If you will turn to Slide 4 in our presentation, I will now turn the call over to our CEO, Howard Coker.

Robert Coker: Okay. Well, thank you, Lisa. Good morning, everyone, and thank you for joining our third quarter 2023 earnings call. Let me begin with highlights of the quarter. For Sonoco, we executed well, even with the ongoing market uncertainty. Sales came in at $1.71 billion, adjusted EBITDA was $280 million and adjusted earnings per share was $1.46. Sales were flat sequentially and generally in line with expectations. In the industrial sector, demand remains muted and volumes low. In consumer, volumes were sequentially higher in most businesses, while metal aerosol can volumes continue to underperform driven by lower end market demand and ongoing customer destocking. Our profit results were better than expected from strong productivity and effective cost management by our teams.

Our productivity results are benefiting from the capital investments we are making across our plant network including automation, process improvements and energy cost reductions. We expanded adjusted EBITDA margins to over 16% and delivered strong cash flow during the quarter. We achieved these results even while we continue to invest in long-term value-adding projects and R&D initiatives throughout the portfolio. Overall, I’m pleased with how these results reflect our continued ability to execute simplification, transformation and operational excellence initiatives to build a more resilient company with strong performance through the cycles. We were also pleased to close the RTS Packaging and Chattanooga Paper mill acquisition in September.

These acquisitions is well aligned with Sonoco’s long-term strategy to focus on our core integrated businesses and expand our sustainable consumer packaging portfolio, serving food, beverage and beauty markets. The integration process is well underway, and we are delighted to welcome our new colleagues to Sonoco. And with that, I will turn it over to Rob for more details on the quarter. Rob?

Robert Dillard: Thanks, Howard. I’ll begin on Slide 6 with a review of key financial results for the third quarter. Please note that all results are on an adjusted basis and all growth metrics are on a year-over-year basis, unless otherwise stated. The GAAP to non-GAAP EPS reconciliation is in the appendix of this presentation and in the press release. As Howard said, third quarter financial results reflect Sonoco’s continued ability to deliver strong results in a low volume environment. We generated sequential growth in sales and adjusted EBITDA and improved the adjusted EBITDA margin to 16.4%. Furthermore, we exceeded our expectations and achieved adjusted EPS of $1.46. This strong profitability was broad-based as impactful cost controls and improved productivity drove near-record profitability in both flexibles and rigid paper containers in the Consumer segment and strong profitability in the Industrial segment.

In the third quarter, consolidated sales decreased to $1.7 billion. Sales decreased due to low volumes and index-based price decreases in both Consumer and Industrial. Adjusted operating profit decreased to $213 million and adjusted EBITDA decreased to $280 million. We maintained an above 16% adjusted EBITDA margin due to improved productivity and long-term cost controls associated with our ongoing business transformation program. Adjusted EPS of $1.46 was driven by strong operating performance as well as favorable tax and FX. Adjusted EPS increased sequentially from the second quarter due to modest volume improvement, positive productivity and positive nonoperating factors despite negative price/cost. The sales bridge on Slide 7 explains the year-over-year change in sales in the quarter.

Volume/mix was negative $145 million or negative 7.7%. This volume decrease was anticipated and was the product of weakening consumer demand due to the impact of inflationary pricing and destocking at retail and continued low industrial demand. We continue to take steps to improve demand visibility, and we are managing the business to mitigate the impact of low volumes. Price was negative $58 million. Our pricing performance was driven by index-based price decreases, primarily in resin and metals-based businesses. FX and other had a positive impact of $23 million with FX contributing $17 million. The adjusted operating profit bridge explains the year-over-year change in adjusted operating profit in the quarter. Volume/mix was negative $31 million as low volumes impacted profitability.

Price/cost was negative $10 million as index-based prices declined more than overall inputs declined on a year-over-year basis. We continue to experience inflation in fixed costs and variable inputs like labor, while market-oriented inputs that drive index-based pricing such as metal and most resins declined on a year-over-year basis. Productivity was $30 million,due to restructuring activities targeting fixed cost and favorable manufacturing and purchasing performance. Slide 8 has an overview of our segment performance for the quarter. Consumer sales decreased to $938 million. Consumer volumes decreased 8.1% due to inflationary pricing and continued destocking at retail. Customers of our Consumer Packaging remain cautious. We believe that our solutions are winning share.

Rigid Paper Container Sales were flat as continued global growth, especially in Europe and Latin America, was offset by weakness in North America. Flexible sales decreased high single digits as low volume with legacy customers offset share gains with new customers. Metal Packaging sales decreased due to template-based pricing decreases and lower volume in both food and aerosol. Demand from our core customers has stabilized and indications are that destocking with these customers has moderated. Consumer operating profit decreased to $112 million as strong productivity was offset by lower volume/mix and negative price/cost. Consumer operating profit margin increased to 11.9%. Flexibles and rigid paper containers both had near record operating profit due to strong productivity.

Turning to Industrial. Industrial sales decreased to $580 million. Industrial volumes decreased 7.5% due to lower demand in all key markets and geographies. We believe these declines are not share related as indications are that we continue to gain share based on quality and service. Operating profit decreased to $75 million due to lower volumes and negative price/cost. We generated positive productivity due to our focus on improving paper mill utilization and reducing fixed cost and SG&A. Recent capital investments such as Project Horizon have enabled us to focus on the right markets with the right assets. We are operating with agility and continue to evaluate system improvements to maximize profitability. Operating profit margin remained at a a historically strong 12.9% and meaningful improvement from previous economic lows.

All other sales decreased to $192 million due to low volumes. Operating profit increased 66% to $26 million due to strong price cost and productivity. Moving to Slide 9. Our capital allocation framework aligns with our business strategy to drive value creation through earnings growth and higher margins. Our priority is to dynamically allocate capital to long-term strategies to improve growth and profitability in our core businesses. We remain focused on increasing the dividend, which at present is $0.51 per share on a quarterly basis or an approximate 4% annualized yield based on our current share price. After capital investments in the dividend, we prioritize investments in accretive and strategic M&A, balanced against our priority of maintaining strong liquidity and access to capital.

In the third quarter, we increased the size of our revolving credit facility and refinanced our term loans to extend maturities and reduced average interest rates, while also funding the RTS acquisition. We began the fourth quarter with record liquidity and the ability to continue to pay down debt with cash from operations. In the third quarter, we generated operating cash flow of $268 million and invested $93 million in capital expenditures. On Slide 10, we have our guidance update. We are increasing our full year 2023 EPS guidance to $5.25 to $5.40, raising the lower end of the range to reflect our year-to-date performance, but maintaining the top end of the range to reflect the current market instability, especially considering recent weak demand trends in December.

We’re also increasing our full year 2023 adjusted EBITDA guidance to $1.05 billion to $1.08 billion. To reflect these changes and to reflect our expectation of maintaining higher receivables and lower payables than anticipated, we are revising our full year 2023 operating cash flow guidance to $850 million to $900 million. We are managing capital expenditures appropriately and expect to invest between $300 million and $325 million in 2023. Now Rodger will discuss the fourth quarter outlook.

Rodger Fuller: Thanks, Rob. If you please turn to Slide 11 for our view on the segment performance drivers for the fourth quarter of 2023. First, in the Consumer segment for the fourth quarter, we expect stable volume performance versus last year and down slightly sequentially to the third quarter due to seasonality, primarily in our flexible and rigid plastics businesses. In our Global Rigid Paper Containers business, softness in some legacy products is being offset by new products using our proprietary sustainable paper solutions. We’re excited to continue the global expansion of our rigid paper containers as we utilize the new capacity added in our existing operations in Brazil, Malaysia and Poland. These operations are utilizing our state-of-the-art equipment and automation technologies with plans for more investments in 2024 in emerging markets for paper cans.

In our Flexible Packaging business, we expect seasonally lower volumes after the third quarter holiday pack, but we should see continued solid productivity in flexibles as a result of recent investments in new technology. In metal cans, we expect seasonally lower food can volumes after the peak pack season in the third quarter, and metal aerosol volumes are expected to remain soft in the fourth quarter. We expect positive productivity in metal to continue in the fourth quarter due to capital investments. Turning to the Industrial segment. As we expected for the second half of 2023, global demand for our paper and converted products remains soft. In the fourth quarter, global industrial volumes will be slightly lower versus last year. We have seen some slight demand improvement in our North American paper and converted products business with Europe and Asia remaining quite weak.

Also in the fourth quarter, price/cost benefits will be lower in industrial due to index-based pricing and cost inputs. With the lower volumes in Industrial, productivity improvements remain challenging, but we will continue to aggressively manage variable expenses as a countermeasure to minimize the impacts from volume deleveraging. And finally, in all other businesses, we expect slightly lower volumes from seasonality. So in conclusion for the fourth quarter, the team is focused on cost control, footprint optimization in all forms of productivity will be critical until we see a sustained improvement in customer demand. And with that, back to you, Howard.

Robert Coker: All Right. Thanks, Rodger. In closing, I just want to state that despite all the external demand uncertainty this year, our team is performing extremely well. And we have continued to solidify the foundation of Sonoco and make progress on our strategic initiatives. Speaking further on behalf of Sonoco’s management team, I would like to recognize the dedication and hard work demonstrated through the quarter and year at this point, and thank all of you for the work you’ve done. While transformation is well underway, there is still more to be done, and I know our teams are up to the challenge. And just to further touch on these strategic initiatives, which I’ve been covering through the year, I’ll remind you that we’re only midway through reshaping our portfolio, and we look forward to completing our noncore divestitures when we can maximize value in the marketplace.

On the operating model side, Sonoco is becoming a more focused, agile and operationally efficient company. The continued optimization of our mix and factory footprint, combined with driving productivity and value-added capital projects will sustain and drive margin expansion in the future. Our balance sheet remains strong, and we continue to generate cash and allocate capital in a disciplined and efficient management. And lastly, our commitment to ESG and sustainability initiatives are unwavering and remain wholly aligned to the core values of the company. There are a lot of great things going on in Sonoco and the team, and I generally look forward providing more in-depth updates on our progress during our planned Sonoco Investor Day, which is scheduled for February 22 of next year at 75 Rockefella Plaza in New York City.

We will be sharing key updates on our segments, our markets and our fantastic technology innovations, and we look forward to seeing you there. At this time, operator, we would be happy to answer any questions that folks may have.

Operator: [Operator Instructions]. Our first question will be coming from George Staphos of Bank of America.

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George Staphos: I guess the first question I had, Howard and team, third quarter, you performed better than your guidance. Congratulations on that. It sounded like a lot of that was productivity. So I guess my question would be, what was — if that’s the correct premise, what was the driver of the outperformance? And as we overlay that into the fourth quarter, might we not see that continue? And yet we’re looking at a steeper drop in fourth quarter earnings year-on-year. And the related question to that would be, is that largely because of price/cost becoming a bit more negative for the reason that you mentioned? And if you had color on that, that would be great. I had one follow-on after that.

Robert Coker: Sure, George. Yes, the third quarter volumes were about where we expected them to be a little bit softer, but you’re right, productivity actually covered that. So that’s the real driver as well as how we manage general cost containment, et cetera. As we look into the fourth quarter, we’re seeing seasonal-type declines ahead of us. I expect that productivity still should be pretty solid. The real question mark is all around what the volumes are going to be. And as we hit into that December time frame, that’s the real watchout for us. So we see people taking extended downtime around the holidays, et cetera. So being cautious in that regard. But that’s the main drivers of what we’re looking at for the remainder of the year. Do you guys have any other?

Robert Dillard: Yes, George. That’s a good question. I think that Howard hit it right. If you think about next quarter, what we’re thinking as volume will be a little bit weaker just generally because of the seasonality, and we always have been cautious about projecting December in the last couple of years. But the productivity performance has been really strong, and it is due to some of the strategic investments we’ve been making. So we’re hitting really on all 3 cylinders of our procurement, manufacturing and really getting after fixed cost. And that’s what all the activity the team has been doing. So if you think about year-over-year in the fourth quarter, we’re expecting to have pretty similar year-over-year performance and productivity of between $0.20 and $0.25 of improvement. And so we feel really good about how all that’s starting to flow through the P&L.

George Staphos: I guess one related question and then a quick one on metals. So you mentioned that legacy flexible was weak or — meaning your legacy customers in flexible where. You picked up some new business that helped offset. Rigid paper was down in North America. It’s sort of the same novel we’ve been all reading in terms of all the companies. But what are your customers in those key consumer markets were you saying about whether we’re done with destocking, where the consumer demand is looking sequentially better as we get into ’24? And then last question, metal, where is that performing versus your deal model at this juncture given all the volume degradation we’ve seen?

Robert Coker: Yes. What our customers are saying right now, George, and what we’re seeing is and you can see it as well that we’re starting to see more promotional activity on the shelves, more discounting. And the part of what we’ve been dealing with, and I think the sector, in general, is the price inflation through the course of the year and trying to maintain that. And so we’re starting to see breaks in that. Don’t expect that that’s going to be a material impact in the first quarter. We’re still early to kind of looking at what does next year going to look like. But certainly, we’re seeing — I’m in conversations with customers, and you’re seeing it on the shelf as it relates to exchanging price for volume at our customer level.

As it relates to the deal model on metal, we’re right where we said or we thought we would be, particularly if you look at the ebbs and flows of year 1 and as we encroach the end of year 2. We had just a phenomenal year last year, and it’s really relative to the the well-publicized inventory variances that we had year-over-year positive versus negative. You take them and you average amount, and we’re right on top of exactly where we thought we would be. So we feel very good about that. But even more importantly, as we continue, the integration has gone fantastically. The synergies that we identified are there and being obtained. And frankly, really pleased with the incremental synergies that we didn’t anticipate that we have ahead of us. And I’ve said this before, the market reaction has been very, very positive.

And frankly, this is a marathon, not a sprint. But really pleased on how it’s been integrated, really pleased with the overall financial performance and looking forward to continuing with the synergies and other opportunities that we see over the coming period.

Operator: And our next question will be coming from Anthony Pettinari of Citi.

Anthony Pettinari: Just following up on George’s question. In Consumer, you obviously sell into a lot of different end markets and customers. I’m just wondering, are there specific markets where destocking maybe is a bit closer to an end or others where maybe you’re seeing new rounds of destocking or pullback that’s surprising you? And I’m sorry if I missed this, but is it possible to quantify what you’re expecting for 4Q in Consumer on a year-over-year basis?

Rodger Fuller: Anthony, it’s Rodger. Yes, Consumer fourth quarter, we’re looking at flat on a year-over-year basis with some improvement in the metals and the can side of the business, both metal and paper, and some continued volume struggles in flexible, but flat year-over-year. And you really have to look at it almost SKU by SKU. But in the flexibles area, confection and snacks have been very weak. I wouldn’t call that destocking. I think that’s more of a price on the shelf issue. And then if you think about where the inventory and the destocking is really more on our metal side of our business where you have a longer shelf life, on products. And as Howard said, we’re seeing that start to ease and come to a — not come to an end, but ease up. So again, in the fourth quarter, we see slightly better metal volumes than the fourth quarter of the last year.

Anthony Pettinari: Okay. That’s very helpful. And then in Industrial, you talked about maybe some improvement in the U.S. I don’t know if that’s just purely a function of easier comps or there’s maybe some organic growth there. And I’m just wondering if you can comment on that. And then in Asia and Europe, understanding you don’t have great visibility and there’s a lot of macro uncertainty, do you have any sense whether those markets are getting worse or sort of stable or getting better or any other comments you can give there?

Rodger Fuller: Yes, Rodger, again. Yes, North America, I said slight improvements, and I think that’s what we’ve seen. We’ve certainly seen we feel like the bottom in North America from a volume standpoint in industrials. If you look at our URB system, we operated at about 85% capacity in the third quarter, which was 5% better than the marketplace. So we felt good about that. That’s coming from our integrated system as well as some really good, strong, long-term customer relationships. So North America, a little sign of improvement. I wouldn’t call it a trend yet, but we’ll see how it goes in the fourth quarter and move into the first quarter. Europe and Asia remain weak. It’s not getting worse, which is nice, but they remain weak.

The URB systems ran in that 75% to 80% capacity area, but we expect the same for the fourth quarter. And if you look at year-over-year Industrial volumes for the fourth quarter, we’re calling it down about 1.5% to 2%, and that’s versus down 7.5% in the third quarter year-over-year. So incrementally, we’re seeing a little improvement, plus, of course, the comps are getting easier as we move quarter-to-quarter, and that will continue into the first half of next year.

Robert Coker: Yes. And Anthony, I’d just add to that. As we talk about the volume side, and we feel like we’ve been in manufacturing depression or recessions really since December or so of last year. Our volumes, as you have seen through the course of that period of time on Industrial, have been challenged to say the least. But I can’t tell you how impressed I have been with the team performance. We talk about productivity. We talk about the investments that we’ve made. I guess you guys are probably glad we’re not talking about Project Horizon every moment that you see us or hear from us, but that’s just a poster child of not being in the corrugated medium market up right now, vertically integrated and how does that flatten out and then will, frankly, improve, particularly in times like this our overall Industrial margin profile.

So we’re seeing some degradation, very high levels last year from a price/cost perspective even with difficult volumes. You’ve seen Tan Bending Chip has dropped by $20 a ton, but we are extremely confident that we’re going to maintain those double-digit type margins even in difficult times. And what excites me about where we stand today is there will be a recovery. We’re not losing share. The market is not shifting in any way and there will be a recovery. And when that happens, the leveraging effect we are not enjoying right now in our productivity will come into play. And looking forward to getting out of the situation that we’re in, hopefully, that will be — and for us, as far for anybody that has a crystal ball that maybe next year, we start seeing some type of improvements on the Industrial side, and with that will come added leverage as it relates to the investments and the productivity that we have.

Operator: Our next question will be coming from Mark Weintraub of Seaport Research Partners.

Mark Weintraub: First question was, the RTS transaction getting completed. Obviously, the world’s changed a little bit. OCC higher, URB a bit lower. Can you update us kind of on what type of accretion or EBITDA contribution in the current environment is it reasonable to be anticipating?

Robert Dillard: Yes, Mark, that’s a good question. Really no change. I mean we’ve been really pleased with how those assets have come over to our portfolio. When we talked about it last year, we said it was $50 million of EBITDA with about $16 million of targeted synergies, but $10 million of those were kind of day 1 and what we’re seeing is that those synergies are coming through day 1. So the business is performing well. I would say the TSA load is probably a little bit more than you probably were anticipating. We think that this is — that it’s give or take $0.05, plus or minus a couple of cents, per quarter next year. And so we feel really good about how that’s coming through and how the business is operating. And as Howard said, I think that that is additive to the system in this low volume environment because the mill is relatively covered, but it gives us more tons to spread across the system. So we feel really good about that.

Mark Weintraub: Okay. Great. And that includes Chattanooga when you’re talking in this conversation?

Robert Dillard: Yes, that’s a good question. I was talking about both. I mean we think about it all as one kind of integrated transaction.

Mark Weintraub: Got it. Makes sense. And then second, maybe what are some of the other actions that you’re taking that can move the dial that are outside of business getting better that are going to be flowing through next year that you’d want to highlight as we think about bridging out ’24 versus ’23?

Robert Coker: Mark, yes. We continue on our journey as it relates to, as you know, 3 years ago, 3.5 years ago, we really started kicking up our capital related to the growth in productivity. And with pre-COVID, a normal capital cycle can run 1.5 to 2 years. COVID has extended that. So we’re — the expectation is we’re going to see incremental improvement from those investments going in next year. And we’ve talked a lot about the restructuring, how we manage our businesses from the center and what is the portfolio going to look like going forward. So we’ve been busy over the last 18 months or so. The term around there is clearing the underbrush, but doing small divestitures, closing facilities that are dilutive to to the overall company and nonstrategic.

That’s going to continue. And when we’re together in February, we plan to try to — we will present to you guys, it’s not mission accomplished, it’s where we stand at this point in time. And I think you’ll be pretty impressed with some of the restructuring activities that we’ll announce at that point in time and how we’re going to be managing the company going forward. From a modeling perspective, sorry, I can’t help you with how that all equates economically quarter-by-quarter or through the year. But hopefully, more information will be coming as we get together in February.

Mark Weintraub: Okay. Fair enough. And just lastly, recognizing it’s a dynamic environment, but given where tin plate is, et cetera, did you have a perspective on whether there’s likely to be additional inventory impacts that flow through metal benefits or negative impacts next year? Or any help there? I mean it would seem like that could be another negative, but…

Robert Coker: Yes. Well, it’s early. And everybody is aware of what’s going on from a supply side perspective there, tariffs, acquisition discussions, et cetera. A lot of noise, which is causing delays in terms of our negotiations. So it’s really not there yet to talk about what we think from a direct inflationary impact. What I would say is from — a inflation or deflation impact. What I would say is that the — our customer profile from an inventory perspective is much more favorable. Major customers are saying in one case — so I was with a customer a couple of weeks ago who has halved their inventory to our detriment in the first half of the year as they brought it down and they’re coming in. So we’re seeing that across the board that the inventories are starting to normalize. So whatever happens on steel pricing up or down, the relative impact should be less favorable or negative as inventories at our customer locations have decreased.

Operator: [Operator Instructions]. And our next question will come from Gabe Hajde of Wells Fargo Securities.

Unidentified Analyst: This is Alex on for Gabe. I appreciate all the promise you guys made on Q4. But maybe just if I were to kind of think about 2024, can you kind of comment on how you’re thinking about the working capital and your inventory?

Robert Dillard: Alex, for Q4?

Unidentified Analyst: For Q4 and 2024, if you can comment on that.

Robert Coker: Next year’s inventory.

Robert Dillard: Yes. So for Q4, how we’re thinking about it and what we thought is — and I think Howard kind of hit the point on metal is that we have taken out and made a real concerted effort to take inventory out of the business. And so at this point, the inventory is a little over $250 million less than what it was. We expect that will be stable through the end of the year. A big part of that reduction was in metal. For the other working capital categories, you see from last year Q3 to Q4, we released $100 million of AR. That’s something that, while we don’t expect it to be that magnitude every year, that’s just part of the normal cycle for us. And so we expect to release another $100 million of of AR in Q4, which will put us about taking out about $148 million of working capital, give or take.

For next year, it’s really early days. We are really managing inventory really aggressively and have been, and we’re managing AR and AP really aggressively as well. We feel like we’re at the right level of of days at this point and don’t feel like we need to be too aggressive in pulling inventories down any further in the businesses, especially as some businesses are expecting growth next year. So I think the days, the metrics for working capital will stay constant next year, and would be the guidance we would give on working capital in 2024.

Unidentified Analyst: Okay. Can you just remind me again or remind us again what portion of COGS is labor?

Robert Coker: Portion of the COGS? Can you say that again, Gabe? You’re breaking up just a little bit.

Unidentified Analyst: Sorry. Can you just remind us again what portion of COGS labor? And I guess, how should we kind of think about the mid-single-digit labor inflation next year? Do you have anything in your contracts to kind of pass this through to your customers through price increases.

Robert Coker: We do have the opportunity to pass on labor, but we’re having to carry it until those until the timing of price adjustment coming into place, typically quarterly. But certainly, labor inflation is continuing to roll over through this year and then early next year. So it will be a timing issue with the customers.

Unidentified Analyst: Okay. And sorry, lastly, just what portion of COGS is labor?

Robert Dillard: It varies by business. I mean, I’d say that in some businesses, it’s in the 10% to 20% range most of the COGS is really material. And there’s a component of that, that certainly fits. But it’s definitely less than 25% in every business and in some businesses, it’s really in the single digits.

Operator: Okay. And I would now like to turn the conference back to Lisa Weeks for closing remarks.

Lisa Weeks: Thank you for joining us today. If you have any follow-ups, we’ll be around after the call to answer your questions or please feel free to contact me to schedule a follow-up. We look forward to seeing you on the road at our planned conferences and events in the coming weeks, and we will look forward to reporting our fourth quarter and full year results on February 15, 2024. 1 week later, we will be having our Investor and Analyst Day on February 22, 2024 in New York, as Howard referenced. This will be an in-person event, and a webcast will also be available. Registration details for the in-person event as well as the webcast will be available on our website soon. And with that, we’ll close the call, and hope you all have a great day.

Operator: This concludes today’s call. Thank you for participating. You may now disconnect.