SON
#<UNK>, I would tell you that relative to when we were in New York, trends are pretty much on what our expectations were.
I think the one issue might be that corrugating medium machine and what's going on in that industry would be the only difference.
Fourth quarter was a pretty tough comp for us, especially on Consumer, but even on the Industrial side.
And we fared coming out of that with growth over that quarter, so I felt good about that.
I think as we're entering this new year we're well within expectation on volumes, both sides of the business.
Again, corrugated medium notwithstanding.
Yes, I think financially, because of the pass-through mechanisms and some other things, there may be slight benefit from lower OCC prices.
But it's not going to be significant because of the amount of OCC we sell externally offsets some of the benefit that we have internally.
Well, again, we continue to expand composite can internationally and you're seeing benefit now from ---+ as these facilities begin to be better leveraged, and we're putting more volume through them.
Some of that benefit is definitely coming through in 2016.
But offsetting some of that, further expansion.
Further expansion of the facility in Poland, and opportunities to continue to expand in Asia as well.
So we're ahead of the curve.
We're excited about the expansion; but until they are fully utilized you're not going to get to that full margin potential.
But I'd rather be chasing the growth curve on this one.
Well, I think that the margins this year were a little bit lower than what we would expect going forward.
As this business ---+ the Display piece of this business has done very well over the last several years, been steadily improving, continue to be pleased with the progress.
As that business continues to improve, I would see margins in this segment also continuing to improve, moving back in 2016 probably into that 3%, 4% range and then longer-term getting above that, getting above the 4% number as we, again, shift more to Display inside this business.
Good.
How are you.
I didn't get the last part of the question.
What.
Well, new products is a difficult thing to quantify, so we talk about volume growth year-over-year regardless of where it comes from.
I think that what's actually happening in Consumer is we're continuing to see shifts out of certain formats into different formats.
In flexibles, a lot of different format changes are impacting the growth in flexibles; so we're definitely ahead of the market here in flexibles from a volume perspective.
Are we picking up share.
Potentially, but not necessarily share inside flexibles.
We're picking up share as they transfer from perhaps a rigid plastic container or a glass container, moving into a flexible-type container on that side of the business.
The same would be true ---+ well, in plastics I think we actually may be picking up some share in our thermoforming operations.
So a bit of mix of both.
I was just going to say new products are absolutely critical to all this.
When I say a new product I'm really talking about a customer engagement where they come to us with an opportunity and we're able to create a solution that meets their needs.
Both.
I think this certainly presents opportunities we may not had before.
But there is no doubt obviously when these companies come together they want to use the new leverage of volume to reduce their cost.
So it creates an opportunity and it creates a threat.
It's how creative you are in dealing with both of those that ultimately will decide success or failure.
Well, we don't think actually in those terms.
Let me go state again that we're fairly fiscally conservative; we like being investment-grade.
And no matter what we did, we'd work to return to investment-grade as soon as we possibly could.
Now saying that, we've been 2 times levered.
We've been above 2 times levered before.
And if the right acquisition comes on, I could see us stretching that even further.
But we also have said publicly that we do have some businesses in the portfolio that, if we get the right opportunity, that we would consider selling those to help fund and acquisition into an area that we consider to be more core to us today.
So we have a lot of different ways to go about and fund a fairly large acquisition and still keep a pretty healthy balance sheet in the final analysis.
So that's what you would see us doing.
Yes.
Certainly flexibles is one of those target markets for us.
We have a pretty extensive list of potential candidates.
Many of them international; we think a dollar-denominated purchase internationally right now would be a fairly reasonable thing to do.
And we are actively pursuing opportunities in flexibles.
<UNK>, I'm sorry.
You faded out right when you said international growth.
International growth in the Industrial business or in ---+.
Yes, well, certainly our international growth on the Consumer side is being fueled by the growth of composite can in Eastern Europe and Southeast Asia.
That's primarily our footprint, and that's where were focused, so we're certainly seeing that growth across those markets.
From an Industrial perspective, I think Europe's underlying economy appears to be improving, to us, because we had a very strong quarter in the tube and core business.
Up over 5%, I believe, in tubes and cores in the fourth quarter ---+ and being up year-over-year as well.
So I think that we're going to continue to see some solid performance in Europe.
I think that ---+ I think what I said earlier is that the rate of decline in Brazil or in China I don't expect to be equal to the rate of decline in 2015.
I think it's going to flatten out; maybe even see some positive quarter-over-quarter movement as the year goes on.
We'll have to see how that unfolds, but I think that there seems to be some stability at least in the fourth quarter in these developing parts of the world, particularly in Brazil and some other areas for us in the tube and core business.
Well, again, <UNK> I don't want to sound like a broken record here, but I believe this i6 process, our innovation process, is driving opportunities to interact with customers.
And these interactions are bringing us the opportunity to win new business.
We have, as I said, about 30 of these going on right now and feel good about them.
So it has driven the growth.
It continues to drive the growth, so feel very good about that.
Well, I certainly think our performance is reflective of the broader containerboard market.
Again, we were a producer for a takeout partner, so we're a very small player in this and we're just reacting to it.
I think we're just mirroring the industry.
That's exactly what we're seeing: the strong dollar impacting exports, a slower market domestically, seasonality, all that played into it.
But it probably played to us just like it played to the broader market.
No.
We're operating at the same levels that we saw.
Well, certainly it would impact potential growth opportunities that we may have had in Irapuato.
But where we are now, I think that we said it would impact revenues about $50 million in midyear; but from an ongoing EBIT standpoint it's not really going to have an impact.
As far as further reducing costs in that business, all those costs are really contained in Irapuato.
There was very little cost here to dealing with that particular issue, so I don't think we're going to see anything significant from that vantage point as far as further cost reductions because of that closure.
Well, I will tell you since the project began we've had numerous wins, just to get to a point where you can successfully produce a plastic base container.
I think right now the win that we're pointing to is the launch that we expect to occur sometime early second quarter with a customer.
So we're anxious to get it on the shelves.
In the test markets that we do the consumers are reacting very positively to this product, and that's what we were hoping for.
And we're getting much more interest in the container.
As I said earlier, coming out of the announcement in New York we had three or four new companies contact us and are engaging with us right now about the container.
Well, not yet.
I'm not sure we've gotten to those conversations that deep yet.
We're kind of in and around some of those.
I think that what we see, though, is the opportunity internationally for dollar-denominated transactions to have an advantaged situation.
So that's certainly something that we're looking at.
Yes, we did a buyback in what, 2013.
Over the course of 2013, and we tend to do just open market purchases.
We're not trying to beat the market per se; we're trying to just be consistent across the buyback.
That's not to say that if an opportunity doesn't arise that we wouldn't take advantage of it.
But that's just not been the way we've done it.
I think that's a definite possibility over time.
The innovation and being recognized for innovation could definitely be the customer intimacy leg that we see.
I think that there was a significant winter event in Q1 that impacted our Industrial businesses during Q1 and small on the Consumer side.
It's still February, so it's a little bit early to say, but we haven't seen those significant impacts yet.
I can't remember exactly the situation, but I know it did occur in 2015.
It might be a penny or two lighter than that, just depending on exactly how you averaged and look at it.
But it would be roughly an additional 6% in terms of days, if everything worked out on a pure day basis for the calendar.
Yes.
North America has been fighting erosion for some time in some of its key markets.
Frozen concentrated orange juice is one of those markets; as of late it's been powdered beverage being another one.
Those have been consistently going down over the past several years.
That business always fights erosion domestically, and that's really why we're looking for new markets with the new technology out of Weidenhammer, both the EvoCan as well as some other non-round applications that we could potentially look at as well.
But that's a consistent, <UNK>, that they face every year.
So they have to convert just to stay flat.
Well, let me just say that the capability out of Weidenhammer is for a faster production of the product.
Also they are putting a paper bottom on the product, which is a bit unique.
And we're actually introducing a new non-round container in Germany this month ---+ or have already put it out into the marketplace.
So they are bringing some technology that basically we didn't have relative to speed, paper bottom, and some other things that really create a pretty interesting container.
Yes, thank you, <UNK>.
Obviously, we talked about the changes to the organization because of the unfortunate situation with John.
Did that have an impact.
Without a doubt.
You can't lose someone of John's caliber and not have it have an impact.
So dealing with that has been an issue.
And I would tell you that during the course of 2015, we started 2015 going through an organization ---+ a reorg anyway.
We were in the process of some work we did with a consultant; we were completing up that reorganization.
It was leaning out the organization and moving resources around.
We've had to adapt to that with the new org structure.
So you had an org change that started; you had to stop it halfway through and go to a hybrid version of it to overcome this change.
So yes, and I think that that's one of the reasons why you're going to see an improved level of manufacturing productivity in 2016, as we're going to have a strong focus on that.
The organization is set.
So I expect to drive that through diligently during the course of the year.
I understand.
Thank you.
<UNK>, as far as order patterns, I would say no; we've not really seen any significant change relative to the way orders are flowing into the Company.
Right now in M&A, we really haven't seen any change there either.
I have said a couple of times I think one thing that is somewhat interesting, of course, is that if you have an opportunity to make an international acquisition, given the strength of the dollar that may present some opportunities.
So certainly on our list.
Absolutely.
We expect to continue to roll that product out onto shelves sometime in the beginning of the second quarter, in that second-quarter time frame.
Have made tremendous progress with the customer.
We've done some further test marketing, and are just getting outstanding responses from consumers for this particular product.
They're looking at the product that they bought before.
They had a metal can.
Now they're looking at it in this see-through container, and their reaction has been ---+ let me just quantify it as highly positive.
If you go to the website you'll be able to see some the things that are actually occurring around the can.
I think it will give you an idea.
But continue to be very excited about it.
Also, since that meeting in New York we've had three or four new contact from potential customers that currently use metal cans ---+ canned fruits ---+ about the container.
So we'll be engaging with them as well.
Yes, <UNK>, I would say that that's ---+ I was kind of discounting the order pattern for the Industrial business ---+ or for the corrugated business.
I think that that has been impacted.
That has been impacted for ---+ probably starting in November time frame relative to just not have ---+ we have go into a slow back mode in order to keep the mill running, but also meet what demand we did have.
So we did have slower order patterns in corrugated.
I would say purely to the market.
We haven't seen any lost share.
But as I said earlier, we're following the whole pattern of the market.
Thank you again, Michelle, and thank everyone for joining us today.
We certainly appreciate your interest in the Company.
As always if you have any further questions don't hesitate to give us a call.
Thank you.
