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#Sure.
So just to be clear, we don't give quarterly effective tax rate guidance, so we didn't like say that the fourth quarter would be where it was.
We give annual guidance.
And so ---+ but the other part is, at that point in time, given everything that I knew and even at the Q3 call, the prospects of getting all of this executed at that time did not appear very likely.
So I did not anticipate us being able to execute and get a lot of these things done.
Subsequent to that time, our tax group came to us and told me that they thought that if we got some extra external help and really rallied the troops internally together, all the information and work extremely hard and diligently to get things executed by year-end, that we could potentially accomplish it before year-end.
I'm extremely proud of the way our team came together and got these things done because the amount of legal entity, elimination, restructuring, intercompany arrangements, all of the stuff that had to be done on restructuring, internal boards, the massive amount that had to get done was really enormous.
So what they got accomplished, I couldn't be more pleased.
And my ---+ was I more than willing to spend $4.6 million this year on planning fees to generate the level of savings that we did, by the way, of which will continue to drive benefits every year from now on.
I'm thrilled.
And I can't ---+ I wish I would've had a better crystal ball to be able to tell everybody that in Q3.
But at the point in time we had that call, I did not think this could get done, and so we did.
I'm pleased we did.
And it obviously drove up our SG&A a little bit.
I'm more than happy to drive up our SG&A all the time if I can drive more value to the shareholders on the bottom line.
So that's the situation.
From where we anticipated it to be for '17 when we had the guidance for the Q3.
And I think it's roughly the same year-over-year improvement.
I'm sorry.
You said $3.50 to $3.70 on ---+ is that it.
Probably in that range, maybe a little low on EBITD<UNK>
That's right.
So the goodwill thing was primarily Brazil.
That was the vast, vast majority of everything.
Most of that SG&A onetime benefit in Latin America came in fourth.
Some of it ---+ a minor amount was in third quarter.
And then the OCC benefit in the fourth quarter.
.
About $2 million.
$2 million, yes.
Thank you, <UNK>.
I just wanted to make sure I understood 2 quick one-offs.
So you're saying that the tax benefit in Latin America that won't repeat next year, that was mostly in the fourth quarter, so that aided this just completed quarter's results.
Okay.
And then the charge that you're referring to in rigid that was not hurricane-related, could you just clarify what that was again and how large.
So we had a $3.6 million inventory write-down.
The majority of it related to inventories that were identified as we've looked to centralize and manage our supply chain more efficiently by centralizing warehousing in some of our businesses.
And oftentimes, when you're doing that, you look at, do I ---+ I've got inventory in all these different places.
Is it worth even the transport cost to go move it if I've got more than I need and conclude, no.
Okay, write it off.
We're not going to be able to use it.
But on the long term, we end up benefiting by the efficiencies gained.
Okay.
But that was removed from the adjusted results.
No.
Oh, that was in the adjusted results, okay.
Yes.
And then just one big picture question.
If I look at your volume guide for rigid, I guess, it seems to sort of aggregate to the 3% to 4% range.
Given the strategy to pursue value over volume, presumably, you're still sort of walking away from some business which would suggest without ---+ that walking away that your volume would be any ---+ be even higher than 3% to 4%.
Given sort of the top-down view of sort of global economies, that just seems like a very high volume goal for 2018.
I was just wondering if you could sort of maybe help me understand how it gels with sort of a top-down view of the world.
Yes.
So I'll give you, first, a quick overview of how we see the global economy, and then relate it to our volume assumption.
So there's obviously pretty positive global growth.
There's very low macroeconomic volatility, and access to credit is very favorable.
Our business in Rigid Industrial Packaging is very focused to the chemicals ---+ specialty chemical and those related end use markets.
Some of the big growth macroeconomically are really tied to construction, capital equipment purchases, transformation and infrastructure growth.
So as we see the potential for growth in our business, I think we see higher growth potential in the U.S. because of the macroeconomic factors for the chemical industry.
They're making significant investments in the Gulf Coast, and that will be in the next 2 to 3 years.
It also includes ---+ we have capital expansion that we have implemented this year and will be implementing next year by midyear, and so the IBC growth and some of the steel drum growth is indicative of that ---+ those capacity expansions.
And plastics growth, again, is layered into North America, which we think is a more favorable economy globally.
And in APAC, we have made capital investments in small plastics.
So it's driven by North American economy and targeted capital growth initiatives that we have either completed or will complete by mid-2018.
But just to remind you, we are not going to chase volume for volume's sake.
I also think some of this growth is relating to our customer service initiatives, which we are starting to see evidence of customer share improvement because of our performance in customer service.
And I think if you look at some of our business, for example, in FPS, there's a direct relation to their performance in customer service, where they've gone from a 60% rate to a 90% rate.
And you can see their improvement in profits track to that trend.
So ---+ but that's ---+ I hope that answers your questions, <UNK>.
If you have any other further issues you wanted to delve into, please let me know.
Okay.
Yes, just a quick follow-up.
I mean, do you know how much volume was impacted in rigids in the fourth quarter by the hurricane.
Because the step-up from sort of 1.8% in a strong sort of global IP environment to 3% to 4% still seems a little difficult to bridge.
Yes.
So if you look in North America and the Gulf Coast, the Gulf Coast is one of our biggest businesses in our rigid business in North America.
And so in the quarter, our steel drum volume was up 1.3%, which is a little low, and that was impacted by that hurricane.
And that hurricane had impact throughout the supply chain for more than just the downtime of our operations.
So if you look outside of APAC, which is a different story, both EMEA, North America and Latin America had fairly good growth strength in all of the substrates.
And again, I'll go back to I think we're winning customers through our initiatives in customer service.
But we feel very confident in what we're doing in the markets, and we are being very selective in how we target end use segments and customers.
And we are ---+ again, we're going to be very disciplined in how we price and manage our product mix in that business and actually feel very, very comfortable in the capabilities and discipline that we've put in that business in the last 2 years.
Well, we ---+ in Investor Day, we really said our concentration on growth is going to be in our rigid core business with a higher emphasis on plastic and IBC and with some steel opportunities in white spaces or regions we currently don't have operations.
That would be a combination of capital expansion and acquisitive growth.
In Paper Packaging, our focus is entirely on how do we increase the vertical integration of our integrated system.
I think that's more increasingly difficult to acquire businesses in that realm since we do not have box plants, and that is not our strategy.
Our strategy is corrugated sheet feeding and specialty products that can be put inside one of our sheet feeders.
So that might be more heavily weighted to capital expansion with committed customers, but it's a blend acquisitive and capital expansion.
We are not afraid of doing a big acquisition.
But it will ---+ if we do, it'll be inside our clearly defined core that we talked about in Investor Day.
And we are pursuing those initiatives, and we're pretty active in the process, and we'll let you know as we have things to report.
But again, we're in the early stages of this.
This is a long-term process.
We're going to have great discipline in how we approach it and again, stay within our core.
Yes.
And we've been talking about this.
I'll just sort of repeat what I've said.
At the point that we determine that we don't see other uses of our capital that are of higher priority, we will examine the best way to return capital to our shareholders.
And that is ultimately something that needs to be approved by our board, which we would review with them our recommendations.
I view that as a decision to be made based on the situation at the time you're making the decision to do a distribution.
So it could be a combination of something on our regular dividend if we decided to do something that way, but it could well be stock repurchase or special dividend.
We don't know at this point, and we'll examine it at the time we decide to make such a return of capital to shareholders.
Yes.
So your first question on the bulk packaging growth in our Louisville, Kentucky operations, as you know, we are doubling the capability of that facility, and that will come online in mid-2018.
We feel very, very confident that when that comes up on stream that we will meet our 3- to 4-year growth targets.
That's been a very good business for us, and I think we're positioned well based on customer service and speed to market and quality.
Very, very positive comments from prospective customers to fill that gap and capacity.
In regard to IBCs, because the 2 major other suppliers are privately held companies, you probably don't see a lot of data on growth curves.
But if you look at a global perspective, IBC is the highest growth potential for rigid packaging.
It shows 8% to 9% global growth rate.
The 2 largest markets ---+ the major markets are EMEA, North America and China.
We are making investments in both North America and in EMEA right now, and we feel confident that as we move forward, our broad offering to our chemical and chemical-related customers, this plays into their needs and demands from us that we are able to supply steel, plastic, fiber and IBC products to them.
And we feel good about the future in that, but we do have quite a bit of capacity coming online.
But it's in disparate regions.
And we are in the process ---+ 2018 will be an execution element to that growth.
Yes, it's all greenfield capacity.
It's either expanding in existing facilities or new facilities.
And you probably won't see acquisitive growth in IBCs for us because of our technology and our product.
It'll be more capital build-outs as it relates to our customers' needs and requirements.
Yes, <UNK>, so a couple things.
So when we did our budget and the guidance we have and the timing of the layered-in of inflationary prices in OCC was what Larry stated.
So the timing may be different, and I think we all agree.
We probably won't see an increase in OCC until maybe February.
But irregardless, the blended rate we have of $152 a ton and that step-off versus our 2017, we feel fairly comfortable, as comfortable as you can be in trying to forecast the commodity price 12 months in advance.
How that relates to upside for us in Paper Packaging.
If it stays low, it's obviously one of the potential upsides to our guidance.
How it relates to potential price increases.
We just don't comment on future price activity in any of our markets.
I mean, I think it's always a combination.
I think it starts with demand.
And actually, as you know, there's very healthy demand in the industry.
But our system is very, very busy right now.
It's projecting on the same path that we've seen for the last 2 quarters, so I think that's the first factor.
And then it relates to input costs as a secondary factor.
So I don't think you can have a linear equation of what drives market pricing.
I think it's a combination of 2.
But think demand is the biggest factor, in my opinion.
No, sure, <UNK>.
So I'll make a first statement, which is obvious, but I'll do it anyway to get on record again.
But our highest priority for all of our global operations has to do to ensure the health and safety of all of our colleagues around the world and to ensure we're good stewards of the environment in the communities we operate.
On a global basis, we've been recognized by third parties.
We have an excellent track record in both safety and environmental compliance.
And I think I said a couple quarters ago, with that said, we are not perfect, but we are addressing issues.
And I will provide you with the most current update that we know as of this week.
So just recently received ---+ we received notices from the U.S. EPA, and that has been a 9-month process since it originally came out.
And during that 9-month time frame, our company representatives have met on a voluntary basis with a number of federal and state environmental regulators to discuss the issues.
We got federal, state and local politicians and regulatory agencies.
Community residents have been invited to tour our facilities.
And some of the visitors have commented that the conditions in our facilities are very inconsistent with the negative conditions that are portrayed by the media, particularly the one local newspaper.
And in our view, I think it's become a situation that's become highly politicized, and I think that's a ---+ the result is a 9-month delay in when it started to when we got the notices.
So in regard to what we are doing with the notices, a significant portion of those notices apply to standards and process requirements that have not been previously applied to reconditioning facilities in the U.S. So what this means is they're changing existing regulations without following formal rulemaking process.
On the other points, we are working in conjunction with the appropriate regulatory agencies, and we're addressing those issues.
We're making improvements in the operations as we speak.
And I'll also state, as we said in our 8-K, that we are very, very confident that our current financial disclosures fully comply with all SEC requirements.
No, that's good.
Thanks, <UNK>.
So as we've talked about, this price-cost squeeze will recover in Q1.
We saw some recovery in the last month of our quarter 4.
But unless raw material markets remain as we project them to remain, we see recovery and more normalization of that 20-plus gross margin.
And when we look at our margins, not only in rigid but all of our businesses, it's a journey.
So if you look at our margins in 2015 to '16 to '17 to our guidance in '18, you see that trajectory of our strategy of value and margin over volume.
I think there'll be times when we have higher margins because of market conditions and rates of raw materials.
And I think there'll be conditions like we saw in the last 4 months, where we have margin squeeze.
And I'll tell you how we view our business, is we don't look quarter-to-quarter because when there is high volatility, especially in inflationary raw materials, you do see uneven margin results.
So we look more longer range, and we look more at the leading indicators and the processes we employ and how we are acting and how we are executing in our commercial regions.
And so that's how we look at it.
It's been challenging the last 4 months.
We haven't been happy, but I'm very happy with how our operators are executing in the field.
A big part of going forward is the raw material market.
What we see on steel is a more gradual inflationary period next year.
I think that relates to a lot of reasons what's happened in China and some of the ---+ more discipline in the steel industry on a global basis.
And we think in the resin environment, because of some of the capacity coming on stream in North America and some expected lower feedstock prices in certain regions around the world, we'll see less volatile resin prices for our business.
But I think you will see a more normalized margin view if what we project from a raw material standpoint comes true.
We also have some operating cost opportunities that will drive margin improvements.
So again, I think it's a combination of how we go to market and how we operate our businesses.
But I'll tell you, there's not many low-hanging fruit in our business now.
So this is a grind-it-out journey, win customers through excellence in customer service and compete in all the markets we face.
No, that's okay.
So we can't ---+ we're not going to disclose or make any comments on any of the allegations by the whistleblower.
We released that 8-K, and we stand by what we said.
That's public knowledge.
Some of the regulations you had indicated that have not been applied previously to reconditioning facilities and what that might mean, so it's important for everybody, the regulatories, the politicians and the business professionals that reconditioning industry performs a very, very valuable environmental service.
So cleaning, refurbishing empty containers for reuse, keep empty containers out of landfills, and those proposed regulatory changes sought by the U.S. EPA ---+ and that's not final.
But those regulatory changes could compromise the viability of that entire industry and could create some challenging sustainability issues in the supply chain going forward not just for us, but for our customers.
So we're at a point in time now where I said we're working together and cooperating with the regulatory agencies, and we have already made some decisions on actions we're doing.
But what I will tell you is any capital or costs that may or may not occur would not be significant to our overall company.
And again, we are very, very comfortable with the disclosures to SEC requirements.
Okay.
Thanks a lot, Kelly.
Thank you, everyone, for joining us this morning.
We appreciate your time, and have a good holiday season ahead.
