SON
#It has been extremely busy.
We continue to have a steady stream of customers visiting and engaging with us in projects.
We have got new products coming ---+ new products ---+ let me just call it new revenue coming out for bar type wraps and flexibles.
We got a new package coming out for coffee in both plastic, rigid plastic, as well as flexibles.
We have opportunities coming through in pet treats.
Of course, we talked a bit about the plastic can.
That should be midsummer.
Also have a new composite can pack that is coming out from a major US food company.
So very pleased with the level of activity and what's coming through.
Global RPC was up about 1.4%, netted down for days.
So that is actual volume being up, and it was driven by Europe and by Asia.
Domestically, it was down a little bit, as we saw continued erosion from powdered beverage as well as frozen concentrated orange juice, I believe.
That's ---+ I'd be guessing if I told you anything.
Double digit.
Yes, double-digit-type growth there.
We did see some decline in Asia, but it was very, very modest on a same-day basis.
And decline in Brazil.
Certainly a decline in Brazil.
Yes, I can tell you that we are working diligently to achieve that movement, as I mentioned earlier, to become more of a consumer and more of a protective solutions business.
And all I can tell you is that there is a lot of work going on and looking at a lot of different types of opportunities.
Yes, <UNK>, again, we instituted that share buyback not because the share price was at a low point, but because we wanted to take two years of dilution basically out of the market.
We remain committed to that.
We believe that dollar cost averaging is the way to do that.
We just got into a [10-5b] issue in the first quarter that took us out of the market, so our goal now is to dollar cost average across the rest of the year and remove the shares.
Now, if we get the real valuation that the Company really should be priced at, who knows.
Maybe we will stop.
But right now, our commitment is to move forward and continue the process.
Well, first of all, on the plastic side of our business, we had a customer-related issue and we had our own issue that impacted that business.
So those were just a one-time event.
I think from a customer perspective, Easter being the last week of March kind of led into some extended downtime because of just the way that fell.
But nothing of real significance.
It was just around the holiday.
I would tell you that we have numerous projects and evaluating them all.
We are focused on flexibles, focused on thermoforming, focused on protective solutions.
We have projects in all three.
And I am hopeful that yes, they start coming sooner rather than later.
But I know you are aware that it takes two to tango, so you have to have a willing buyer and seller and we are trying to ferret it out.
And it has to be at the right price.
So all those things are in the works.
That's exactly right, <UNK>.
We had actually had six additional counting days in the quarter just because of bringing one week back to the first quarter because of our 544 schedule.
But when you look at the way weekends and holidays fell, we actually only have three additional billing days year over year.
And many of our businesses' activities more related to the business working days as opposed to the calendar days.
So that's the reason we made that distinction between the two.
So we feel like billing days influenced volume more, but certainly our fixed costs are spread over our accounting days.
And when you net those two together, the actual impact kind of ---+ it becomes less than you would think when you first hear six additional billing days, because the volumes over three ---+
Calendar days.
That's right.
The volume's over three billing days, and the fixed costs is spread ---+ there's six additional days of fixed costs.
So they more or less come close to netting each other at the EBIT line.
Not exactly, but directionally.
You'll see that in the numbers.
And then of course in the fourth quarter, we will lose five days because of the same calendar impact.
Well, I think that what we've said is that that is certainly a goal of ours.
In order to get to that level, we are going to have to have some price recovery on major contracts.
We need to cover some of the cost that have crept into the system.
But we are also going to have to have a couple of years of volume growth.
So I don't ---+ I think margin was almost 9 ---+ was 9 point ---+ no, it was ---+ for quarter is 7.9%.
So you saw a 1% improvement.
I think that last year ---+ or 2014, it actually got up to 9%, if I remember right.
So I think it will move toward 9%, but to get it to that 10% level, we are just going to have to see some continued volume growth, better utilization of the assets in place.
Both.
It is seasonal.
This is a normal seasonal uptick time, and we are seeing strengthened export pricing.
So both of those are playing an impact.
And was there a second part to that.
Well, we projected what we would call a normal pattern: up second quarter, up third quarter, down fourth quarter.
I suspect that it is going to be somewhere in that range.
Right now, I think we've projected about a $10 or $15 movement in total.
It may actually be a $20 movement total by the time it plays out.
But we will just have to see based upon domestic volume will really drive that, I think, more than anything else.
Just a touch.
Protective was extremely strong.
It was up about 9% net, so forget ---+ not the billing day.
It was a 14% with the extra billing days; 9% net.
So very strong volume.
It was in the thermosafe business as well as the component business for automotive.
And again, the business is being run very well.
Output is good.
So that business continues to grow, and I suspect it is going to be up again second quarter 5% or so.
Well, we have a vast majority of consumer-owned contracts so that it will change at, let's just call it, at a quarter end.
That's basically the way it works.
About half on our industrial side is at quarter end.
We have already pushed through a price increase on the industrial side, more or less globally or at least US/Europe in that December time frame.
I think if it moderates here at this $10, $15 area, we covered that or we covered that through.
If it continues to escalate, we will move to have an open market price increase in paper and tubes and cores.
But the contract resins and those types of things will take care of themselves at quarter end.
I think that what really it was ---+ the businesses ran very well.
The mill systems ran well.
This is all net of number 10, so the mill systems ran well.
Actually, I think tube and core could have done a little bit better.
We are doing some consolidation work in a certain part of the country that had a little bit of drag on productivity.
So productivity would have been even better.
So the business is running well.
The price increase went through.
So it is just operations.
Operationally, it's performing better.
As far as industrial this year, we did project a solid improvement in industrial.
We said volume would be up about 1%, and that is ---+ right now, that is what we see.
And we continue to believe that is what we should experience for the year, net of the impact of number 10.
We are dealing with it, but as I said, the year-over-year impact of number 10 will diminish as we go in the third and fourth quarter, and hopefully we can come to some sort of resolution with that machine that solves the problem, certainly of what we are working on.
That's a great question, and that's ---+ a lot of these engagements that we are working on now are around presenting my product in more of a fresh and natural manner.
One of the big issues is clarity, is to be able to see the product, the genesis of the plastic can.
I can see the product in the can as that.
But a lot of our flexible packaging work is putting windows so that the product can be seen as it sits in the package.
One of our coffee products is opaque, so that you can actually see the bean or the coffee in the package.
So that is really a lot of what we are working with inside the IPS studio is helping customers present their product in a more fresh and natural package.
I think as we entered the year, we expected volumes to be up around 2%.
And right now, I don't see anything.
Is it going to be 1.7% or 2%.
It will be in the range.
I think that's what we're going to see for the year.
I think industrial, certainly on a year-over-year basis, is going to look a little stronger because of last year being weaker, and it's going to bounce back stronger this year.
But I think we are continuing to do well in consumer; again, up somewhere around 2%, 1.5% to 2% volume on consumer.
Protective, probably a solid 5% on a year-over-year basis.
So between 1% in industrial, 2% in consumer, and 5% protective, I think we are going to be in that range right there.
For what window I have, I would have to say they're fairly normal.
I think at URB, there is several players in URB that are not integrated and they sell into the marketplace.
So it is a possibility that if they started running and selling more product into the tubes and cores, it could impact that.
But I think the market is fairly in balance, in general.
And as demand picks up, what I was really suggesting was that if demand on the tube and core side picks up, you could actually see a very tight squeeze on URB.
And you may have someone like that coated mill then just swing into URB because pricing may be advantageous to do it.
That was just what I was suggesting.
I think that what we see is a $0.04 ---+ and I am going to talk in aggregate, so ---+
About a $0.04 increase.
And then the possibility of another $0.04 increase sometime in the quarter.
Does that stick.
I don't know.
Does the first one stick.
I know oil is up from the low of, what, $29.
So it is possibly there.
I think polypropylene is in pretty short supply, so that's a possibility there.
So it is $0.04 and then another $0.04 as a possibility.
I don't really have strong views on it.
My estimate, of course, or my guess would be that the prices would fall.
But we will see.
Well, I don't know if you heard this, but the way the quarter unfolded, we had very strong volume January, February, and then we had a sharp decline in the first couple of weeks of March.
We bounced back as March ---+ as we met through March, and now it is kind of more back at our expected run rate, our expected levels.
Again, I can't quantify what caused that.
It's like I speculated that the holiday may have impacted it, but I don't have any reason to believe that.
Well, I mean, multiples continue to be pretty high across the board.
But the way we are approaching it, trying to seek out certain types of opportunities with certain capabilities, many of them privately held, we are trying to look at different types of structures that allow us to take, in some cases, joint ventures.
We have the Graffo acquisition in Brazil that we took a majority stake.
It got us into the business at a reasonable multiple.
It allows us to grow.
So we are looking at all those types of opportunities.
Now, multiples continue to be fairly high, but we are trying to approach this a bit differently, drive the conversation, and then hopefully come out with a reasonable multiple that allows us to take a real good position or create a good situation for us and the seller.
Let me try to answer all these.
You may have to come back to me.
End-market demand in auto was really kind of built around certainly the models we supply, but we continue to get new business coming online.
So we are supplying more parts into auto industry, new parts, and that is really kind of what was occurring inside the business in protective solutions.
I am going to skip over the consumer drop-off end markets.
I am going to let <UNK> ---+ I am not sure I have a window to that.
URB, that machine, could we actually do that.
Technically, we could probably do it.
But our system in URB is pretty much in balance.
We really ---+ not sure we would want to do that, but technically, we could.
We cannot do that with the number 10 machine without making substantial investments to change the profile of that machine.
And the price cost benefit in display and packaging was really driven around negotiation on services provided as well as an uptick in displays as far as the price cost around corrugated displays with jobs that have already been bid.
Did you have something on that.
Just to clarify the question on the ---+
Oh, in the March change.
It seemed to be a little bit more broad-based and largely related to the holiday pattern.
And then just some customer-specific issues that different customers [had faced].
Nothing broad-based.
Thank you, again, Shannon.
Just in closing, let me again thank each of you 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.
