Good morning, my name is Chris and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Greif Q4 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. Thank you. Matt Eichmann, you may begin.

Thanks, Chris, and good morning, everyone. Welcome to Greif's fourth quarter and fiscal 2021 earnings conference call. My name is Matt Eichmann. I'm joined by Pete Watson, Greif's President and Chief Executive Officer; Larry Hilsheimer, Greif's Chief Financial Officer; and Ole Rosgaard, Greif's Chief Operating Officer. We will take questions at the end of today's call. In accordance with Regulation Fair Disclosure, please ask questions regarding issues you consider important because we're prohibited from discussing material nonpublic information with you on an individual basis. Please limit yourself to one question and one follow-up question before returning to the queue. Please turn to Slide 2. As a reminder, during today's call, we will make forward-looking statements involving plans, expectations and beliefs related to future events. Actual results could differ materially from those discussed. Additionally, we'll be referencing certain non-GAAP financial measures, and reconciliations to the most directly comparable GAAP metrics can be found in the appendix of today's presentation. And now, I'll turn the presentation over to Pete on Slide 3.

Hey, thank you Matt, and good morning, everyone. As always, we appreciate your interest in Greif. I'm going to start by recognizing and thanking the global Greif team for their outstanding achievement this past year. The team delivered excellent results despite a challenging operating environment that was complicated by the pandemic, supply chain disruptions, and inflationary pressures beyond our control. Fiscal 2021 was an exceptional year with record financial results. We significantly de-levered our balance sheet, improved our shareholder returns, achieved top decile colleague engagement and were recognized as a leading workplace in the United States. Looking ahead, these accomplishments position us for an even stronger future as our fiscal 2022 guidance points to performance in line with the commitments we established in 2019. Finally, in this past year, we made meaningful enhancements to our already strong sustainability performance and have embedded ESG deeper into our business strategies. I'd like to ask Ole Rosgaard, our Chief Operating Officer to make a few comments regarding ESG, that's on Slide 4.

Thank you, Pete, and good day, everyone. I hope you and your families are well. In my mind, sustainability is not an afterthought or corporate function; rather, it's a leadership focus that creates business value by reducing risk and costs and bringing new market opportunities for growth. We achieved several notable ESG accomplishments in 2021. For example, we diverted a minimum of 90% of waste from landfills at more than 140 of our global facilities, increasing our global diversion rate to roughly 85% from about 70% last year. Even more impressive, at year-end, 50 of our global facilities had achieved zero waste to landfill status. We launched our fourth Colleague Resource Group to provide professional development opportunities and further foster a more representative and inclusive culture across Greif. And finally, we linked ESG KPIs to the Greif business system, improving our performance management capability to further drive this critical work. The takeaway here is that Greif's strong ESG focus is core to our plans for sustainable value creation. I look forward to sharing additional highlights with you in the future and now back over to Pete to discuss our business results on Slide 5.

Hey, thank you Ole. The global industrial packaging business delivered an outstanding fourth quarter result. Our overall global primary product line was strong and benefited from sales by almost 3% versus the prior year. Fourth quarter global large plastic drums and intermediate bulk container volumes grew by more than 18% and 10% respectively per day versus the prior year and benefited from the strategic growth investments in the U.S. and EMEA and ongoing recovery in our industrial end markets. Global steel drum volume fell by 1.5% per day versus the prior year. The biggest shortfall was in APAC, reflective of our decision to implement strategic pricing actions and supply chain disruptions that negatively impacted our customers' operations. Fourth quarter global steel drum volume was also impacted by performance in EMEA where volumes were steady through most of the quarter, but did slow in October as customers in this region faced their own set of supply chain disruptions. The Americas region recorded strong mid-single-digit growth during the quarter. Generally speaking, our industrial end markets remain healthy. Customers report solid order backlogs and strong underlying demand, but they do face external supply chain disruptions. Across GIP, we see little indication of customers building inventory, but some are carrying more stock than normal due to supply chain disruptions impacting their ability to ship to their customers. GIP's generally stronger volumes and higher average selling prices resulted in significantly higher segment sales and gross profit year-over-year. GIP's fourth quarter adjusted EBITDA rose by roughly $47 million due to higher sales, partially offset by higher raw material manufacturing and transportation costs. The business also benefited from a $3 million FX tailwind. Looking ahead, we expect GIP's fiscal 2022 profits to be lower year-over-year. While we do anticipate volume growth, contributions from new CapEx projects, and beneficial efficiency gains, profits will be lower as the unprecedented run-up in steel costs provided a roughly $100 million tailwind to GIP's fiscal 2021 results that will not recur. We anticipate GIP's normal profit cadence through the year to persist. Please turn to Slide 6. Paper Packaging's fourth quarter sales rose by roughly $120 million versus the prior year due to stronger volumes and higher published containerboard and boxboard prices. Adjusted EBITDA rose by roughly $10 million versus the prior year due to higher sales that were substantially offset by higher raw material, manufacturing, and transportation costs, including a significant $51 million drag from higher OCC index costs and an $8 million natural gas cost spike not contemplated in our guidance. The business benefited from a $4 million legal settlement tailwind reported in SG&A that will not recur. Volume demand across our paper business remains strong and our combined mill backlogs exceed eight weeks. Fourth quarter volumes in our CorrChoice sheet feeder system were up 2.4% per day versus the prior year. Demand for durables, e-commerce growth, and the OEMs auto supply chain all remained very solid, and we see no slowdown on the horizon. Fourth quarter tube and core volumes were up 7% per day versus the prior year. Demand was strong in most key end markets including film, paper cores, textiles, and protective packaging. Looking ahead into fiscal 2022, we expect significantly higher profits in paper packaging due to strong demand and continued flow-through from published price increases. I'd like to now turn it over to Larry Hilsheimer, our CFO on Slide 7.

Thank you, Pete. Good morning, everyone. Thank you for joining us today. Big picture, our team delivered excellent fourth quarter results despite significant external challenges. Fourth quarter net sales excluding the impact of foreign exchange rose 35% versus the prior year quarter due to stronger volumes and higher selling prices. Adjusted EBITDA rose by $57 million, including a $7 million combined tailwind from FX and a one-time legal settlement. Keep in mind our adjusted EBITDA result overcame an OCC index headwind of $51 million and roughly $40 million of non-volume related transportation and manufacturing inflation including an $8 million unforecasted natural gas cost spike. Interest expense fell by $9 million versus the prior year quarter due to lower debt balances. We also benefited by reaching a lower interest rate tier in our credit facility as a result of our substantial debt repayments. Our fourth quarter GAAP and non-GAAP tax rates were both roughly 11%. Fourth quarter adjusted Class A earnings per share more than doubled to $1.93 a share. For fiscal '21, we delivered adjusted Class A earnings per share of $5.60 a share, a 74% improvement versus the prior year, and a significant beat relative to our Q3 guidance. Part of the earnings improvement came from a lower than anticipated non-GAAP tax rate of 18.1%, which benefited from reserve releases due to audit settlements and statute of limitation expirations. We estimate the lower tax rate relative to guidance we shared at $0.15 to fiscal '21 results. The lion's share of our year-over-year earnings improvement came from disciplined operational execution. Fourth quarter adjusted free cash flow was roughly $79 million versus the prior year. While profits improved significantly, CapEx rose and working capital dragged on cash flow primarily due to higher raw material costs than we anticipated in our forecast. Working capital was also negatively impacted by lower than anticipated October volumes outside the U.S. while customers struggled with external challenges and ordered fewer drums. That said, our team is controlling what it can with strong results and trailing 12-month average working capital as a percentage of sales improved by a significant 140 basis points year-over-year to 10.8%. Please turn to Slide 8. Our core capital priorities are clear and remain consistent; reinvest in the business as needed to create value and support growth, return excess cash to shareholders via an attractive and growing dividend, and de-lever our balance sheet while maintaining a compliance leverage ratio between 2 to 2.5 turns. Our balance sheet is in great shape. Thanks to aggressive de-leveraging, we have repaid $261 million in total debt in Q4 2020 and returned to our targeted compliance leverage ratio faster than originally contemplated. We anticipate spending between $150 million and $170 million in capital expenditures in fiscal '22 and target growing our dividend in '22 as mentioned in previous calls. We are in the midst of our strategic planning process to determine the focus and extent of growth activities going forward to prudently leverage our strong balance sheet for the benefit of our shareholders. We are pleased to introduce fiscal '22 guidance that delivers on the commitments we made more than two years ago. Our guidance reflects the considerable improvement we've made in the base business over the last several years, including the successful Caraustar integration and synergy capture and demonstrates Greif's resilience in overcoming the unforeseen and considerable external challenges presented by COVID and dramatic inflationary headwinds well beyond our control. At the midpoint, we anticipate generating $6.15 of adjusted Class A earnings per share in '22. Overall, we expect lower profits in GIP in fiscal '22 to be more than offset by higher profitability and EPS, highlighting once again the benefit of our diversified portfolio. Interest expense will be significantly lower in fiscal '22 as a result of our aggressive de-leveraging, and we expect it to evolve further when we move to refinance our 6.5% 27 senior notes sometime in the first half of calendar '22. We anticipate '22 adjusted free cash flow will be between $400 million and $460 million. In addition to increased capital expenditures, we anticipate significantly higher cash tax in fiscal '21, mainly due to additional pretax income. We anticipate working capital to revert to a cash source; it was a $222 million use in '21 as raw material cost inflation accelerated. Now a few reflective comments for your consideration. From my perspective, the Greif of today is a far different company than the Greif of six years ago. Our margin profile has stabilized and grown, profits have increased significantly, and our transparency and communication have improved and been applauded. Our capital allocation strategy has been steady, disciplined, and predictable. We have delivered on what we promised and we continue to derive even greater value for our shareholders. Despite these improvements, we continue to trade at a discount to our historical metrics in the broader market. As an example, assuming a historic free cash flow of 11%, the midpoint of our '22 free cash flow guidance would imply a combined market cap of roughly $3.9 billion or an increase of roughly 30%. So while we don't get to vote when it comes to our valuation, our opinion is that we deserve a closer look, given the discount present in our stock today. Now I'm going to take a minute and go off script. As most of you are aware, today is Pete Watson's last earnings call. It would just seem inappropriate to not pause and acknowledge the great leadership Pete has provided to our colleagues at Greif. Pete embodies the leadership and has a personal connection with many of Greif's colleagues that develops your personal contact. He is a humble and respected leader who leans on his athletic coaching background for the skills in building a cohesive team. As he took leadership of Greif, many things were broken. Since taking the helm in November of 2015, the results have been extraordinary. In safety, steady improvement, in colleague engagement, we improved dramatically to be a top decile in Gallup's industrial sector. Those engaged colleagues have delivered outstanding customer service and driven incredible improvement in doubling our NPS scores over that period. That focus on the virtuous service profit chain has led to financial improvement that has been exceptional. From 2015 to 2021, adjusted EBITDA has essentially doubled. Adjusted EBITDA EPS has gone from $2.18 to $5.60 with no stock repurchases, and adjusted free cash flow, which was $70 million in 2015, has averaged nearly $30 million in the last three years and will exceed $400 million in 2022. Pete has worked diligently to ensure this succession plan and left Greif in good leadership hands going forward to secure his legacy as an outstanding leader. Pete, on behalf of all our colleagues, thank you for your leadership.

Oh Larry, thank you very much. You certainly did go off script and I much appreciate it. So with that, if you could turn to Slide 10, and again Larry, I appreciate your comments and thoughts; you are a good man. As Larry talked about, today is my final earnings call as President and Chief Executive Officer of Greif. You know, it's a great company. It's been my distinct honor to serve our global Greif team and I'm extremely proud, as Larry talked about, of what we've all accomplished together over the last six years. I'm incredibly grateful to all our colleagues for their passion and dedication to excellence, and also for their commitment to our team and our customers. And while fiscal 2021 is a record year for our company, I'm even more excited for what lies ahead. We are well positioned to benefit from ongoing strength and improving trends in our key end markets and our extensive global portfolio; our differentiated service capability, and our sharp focus on operational execution allows us to best serve our customers' needs and generate significant shareholder value. I along with the rest of the Board are confident in Ole Rosgaard's ability to lead Greif going forward. His operational background, strategic mindset, and passion for team building and serving customers will be advantageous to Greif's future. I look forward to the company thriving under his leadership. It has certainly been a pleasure working with all of you, and we certainly appreciate your interest in Greif. Chris, if you could please open the line for questions.

Certainly. Our first question is with George Staphos with Bank of America. Your line is open.

Thanks very much. I'm sure everyone's going to say this as well, Pete, but you and your team have done a remarkable job in terms of turning around Greif. So you have much to be proud of, and we wish you and Ole the best with the next chapters. I guess from that, I would say, could you talk a little bit about what was embedded in that comment that you see little signs of inventory building by customers, but that stocks were higher in industrial? You know, what was, what are you seeing that we should be mindful of, and if you could talk about the relative geography? And my second question, not that it would be surprising, we've obviously been reading a lot about what's been happening in Asia, but it seems like last time we saw a bit of price competition in Asia Pac, that was a bellwether. Now, again, there's some obvious idiosyncratic things going on in Asia right now, which maybe makes this a one-off, but tell us why we shouldn't worry about what this means looking out to next year or so? Thanks.

Well, thanks for your comments George, I very much appreciate it. I'll make a few comments. First, I'll talk about APAC, then I'll ask Ole to comment on customers and inventories. You know, in APAC, there are a couple of components. We have been strategically fixing some price margin components of that business. So we have, from pricing decisions and margins decisions, made some stands and lost some buying there. There's also been some pretty significant supply chain disruptions, as you referenced, one of those being some of the national power challenges they've had, and we've had to operate at off-peak hours. But it has also interrupted some of our customers' operations and demand. And it's not as vibrant as it's been. But at this point, we don't see that as any trend that makes us fearful that it's a reverse of what we saw in the last year. So Ole, if you could comment on George's question on the inventory.

Yes, hi George. On stock, we, primarily in Europe, obviously, I speak to a lot of customers, and we have not seen any customers doing stock building. As you know, our customers are telling us that their order books are solid, but due to the supply chain issues, they simply can't fulfill their order books, which has a knock-on effect. What they're doing with their stocks is they’re just adjusting their stock levels accordingly. So there's no stock building or destocking really taking place.

Okay, so what you're saying is, their inventory velocity is appropriate given what they're seeing in terms of supply chain, but you're not seeing a degradation and build-up beyond that, is that fair?

Yes, correct. That's correct.

Hi, good morning. This is actually Matt Krueger sitting in for Ghansham. And just want to extend my congratulations to Pete as well. It's obviously been terrific working with you and we'll look forward to continuing that sentiment with Ole.

Thank you, Matt. I appreciate it very much.

Absolutely. You know, I was hoping that we could talk a bit about some of the embedded assumptions for next year on a segment basis. So can you maybe talk about what your embedded volume growth assumptions are for each of the segments in just a little more detail? And then maybe provide some detail on what sort of underlying macroeconomic outlook you're projecting for each of your major geographies heading into next year?

Yes, so from volume assumptions for the two main segments in GIP, we're talking about global steel drum volume low single digits on a global basis and then the IBC business we're projecting high to mid-teens, and that's really reflective of the continued strategic investments we've been making in this business. On the PPS side, our corrugated sheets we're embedding in our guidance low single digits and we've been growing significantly more than that this year, but that's because the comps become tougher. The new plant in Pennsylvania is up and running, and so that's more reflective of what we'll see market growth. And then in our tube and core business, we're seeing low single-digit growth as well, and that's embedded in our guidance going forward.

Yes. Matt, from a broad perspective, we've obviously watched the various economic forecasters. And as you've probably noticed, a lot of them are trending down. Goldman Sachs has called down their 4Q and then their 2022 and similar things going on in others. However, they remain positive. And our commitments, our guidance for next year aligns with those. The strongest market is the U.S., for sure. EMEA, good but not as strong as the U.S. APAC, recovering. I mean even as deflated as it is, it continues to be one of the more strongly growing economies in the world in China. Southeast Asia is a little bit weaker. Latin America is sort of more like EMEA. So those are the broad responses. If you have any more follow-up, I'm happy to address.

No. That's great on the volume side. I'd be stretching it otherwise. So I'll hop back in the queue.

Thanks, Matt.

First off, Pete, congratulations, I do think that your service and leadership are very clear across the organization culturally. So congrats and Ole, welcome. I look forward to working with you. And I also apologize if there's some background noise here. First question I wanted to go at was paper volumes were a little bit weaker in Q4, but I think you mentioned tube and core up 7% and converted sheet up 2.4%. So I'm just curious about maybe outside sales of paper were a little bit lower, if there is a source for that weakness or if I'm not interpreting kind of what we heard correctly?

Yes, thanks for your comments, and we appreciate the collaboration. We believe the paper business is seeing strong demand and volume. In fact, we are significantly ahead of the corrugated industry stats, with good shipments at 2.4% and a decrease in our inventories in that sector. It's important to note that many supply chain disruptions have hindered our customers' growth, but overall, that area is quite healthy. Our tube and core business has consistently grown in the mid- to high-single digits over the past year, achieving a 7% increase. Additionally, we are successfully implementing price increases and gaining traction, which contributed to a very positive quarter. We are also seeing improvements towards our profit targets for next year, despite some supply chain issues affecting customer demand. Overall, it was a strong quarter.

Yes, Gabe, I'll supplement it. Just to add some color, our finance team is working with our commercial teams, calculated that the negative impact to us in PPS of supply chain limits caused by our customers not being able to ship to their customers was $3 million in PPS and $5 million in GIP for the quarter.

Thank you, gentlemen. I appreciate that the favorable impact from steel is significant year-on-year. Can you discuss pricing for some non-material items? Specifically, I'm interested in the EMEA and GIP businesses and how frequently you have openers. You have done an excellent job this year recovering from inflation. However, we are also seeing inflation in energy and labor. How do you anticipate that business will evolve over the next 12 months?

Yes. And I'll actually ask Ole to comment about that because he's front and center with our teams on it. But you're right, our teams have done an incredible job of staying ahead of inflation. We've been beating that drum, and transportation and energy are huge along with labor right now. So Ole, do you want to comment on the frequency that we are at?

Yes. So most of our steel has a reset every three months, Gabe. If you go way back in the past, we didn't have annual openness in our contracts, and that's something we have introduced. We tend to do one a year, but because of the volatility of the markets, we've been doing several a year lately, and we will continue to do that as we are faced with increased labor costs and other non-raw material costs.

Got it. Thank you guys. Good luck.

Thanks, Gabe.

Thanks.

Good morning. Pete, congratulations on and all the best to you in your retirement, and Ole, all the best to you in your new role.

Thank you, Adam. I appreciate it very much.

Pete or Larry, regarding the $100 million steel benefit you mentioned earlier, can you clarify whether you expect that amount to disappear in 2022 or if it will create a drag that affects the year-over-year difference more than that? Could you provide some insight into how the steel issue is factored into your 2022 guidance in GIP?

Certainly. The $100 million figure is a result of cost acceleration and delivery delays. Our forecast and guidance for 2022 assumes a stable environment for steel costs. We have included slight decreases in steel costs in EMEA and North America in our budget, but nothing significant. The main risk would be if steel costs were to drop sharply, which we don't anticipate, as it doesn't align with the economic outlook from most economists. We continue to see strong demand for steel, even with low car production. Changes in trends, especially with the chip shortage potentially improving, could impact this. While we don't foresee major effects from the U.S. infrastructure bill in 2022, we do expect some influence. Therefore, we believe steel costs, which are a key factor here, will remain relatively stable, showing some decrease, but nothing so rapid that we can't manage with our usual processes.

In other words, thank you for that, in other words, you're not expecting a steel-related drag on EBITDA next year. Is that a fair assumption?

Yes, nothing significant. I mean there's a slight drag with the decrease just because you have higher cost inventory that you've got if it drops the index a little bit, but we've built that in. It's already embedded. So it's a slight drag but not significant.

Okay, I appreciate it. And then two other ones, if you don't mind, one on FX. What are you assuming in terms of FX translations? I think you had a $23 or so million benefit in GIP in 2021 from the Turkish lira. In 2022, would you go ahead?

We factor in any potential benefits from currency exchange rates by basing our budget on the forward market. If there are shifts, we hedge accordingly to align with our cash flow needs. Therefore, we are not relying on any benefits from currency adjustments in our projections.

No. In other words, if you hold current rates constant through the balance of 2022, would that imply a benefit or a drag?

We don't budget it that way. We based it on the future market forecast and I don't know the answer to your question about what the year-over-year currency changes. I don't know, Matt, if we have that in place or not.

I doubt it.

Yes. Regarding the guidance you provided, you've maintained an EBITDA commitment for 2.5 years and have been discussing it consistently since then. Now you're...

The new EBITDA range, Adam, is 785 to 835. It's down from where we were just because of all the inflationary costs in transportation and energy. And when you look at OCC, the assumption that we had in that original range, if you think about it, it was 55. Now we're at 163. That's an $185 million headwind that our teams have stayed ahead of.

Right. So basically, you're thinking EBITDA will be up about $45 million year-on-year with PPS obviously up much more than that, and then obviously, GIP down, I would assume a considerable amount, just given the steel issue.

Yes, it won't be down $100 million because the teams continue to do well on all of their factors, but yes, it will be down significantly, and PPS will be up significantly.

Yes, I appreciate it. And just one last one, Larry, in terms of the range, it's a wide range, obviously, the EPS guidance range. Can you just talk about what factors get you to the high end, low end and why such a wide range?

Yes. It's a broad range just because of all the uncertainties in the market right now. It's about $0.10 wider than we would have had that we did have in 2019. And it's just recognizing that there is the possibility that you could have got inflation, deflation, and OCC is such a wildcard that we just built a range around it. I mean, I can venture to say that nobody on this call, including all of you smart analysts out there, had any idea where OCC was going this year.

That is absolutely true. Well I got, thanks, Larry.

Thanks, Adam.

Good morning, Pete. Good morning Larry. Good morning, Ole. Welcome on board and thank you, Pete for a great number of years of service, and all the best on your next steps.

Thank you, Justin. I appreciate it very much.

So in terms of questions, just to clarify one question from earlier, I mean if the steel prices go down quicker than you're forecasting in your model, the drag is a temporary one. I mean that would subside once the steel price is sort of steady at a new level, correct? There's nothing ongoing.

Yes, yes. To that degree, Justin, the real issue is velocity of change and timing. Because of the price adjustment mechanisms in the contract, if you have a slow slope up or down, it really has minimal impact and you work through that. But if you have dramatic declines, for example, let's say that the last week of December steel dropped unexpectedly by $200 a ton, that would not be a good thing because a lot of index contracts change based on the end of quarter number and they change as of the first of the month, many of them, and you'd be stuck with higher cost inventory. We don't see that environment, but so it's all velocity and timing.

Got it. One more clarifying question as well, the $8 million natural gas headwind, were you trying to suggest it was more of a one-time headwind or is that sort of an ongoing, I guess with higher level of natural gas prices?

It was a headwind relative to the fact that natural gas spiked up dramatically from the time we did our forecast in July to what it ended up being in September in that quarter. So it was that headwind. Where do natural gas markets go? I mean, there's a lot of speculation on that across the globe and a lot of it is dependent on the winter. So to answer it, to say it's a onetime thing, I think would be inappropriate. I think it's more of an item that is going to be dependent just on supply and demand and weather.

Okay, understood. And then lastly, on capital allocation, I realize there's a CEO transition, but at least for the 2022 fiscal year, is the priority sort of remaining in the deleveraging camp? And then on a related note, the $150 million to $170 million of CapEx that you're guiding for this year, does that represent a semi-normal level of CapEx as you see your business looking forward?

Yes. Justin, two things. One, the answer to your first question, our priorities will remain the same. We will be very disciplined to make sure we're spending the appropriate amount on maintenance capital and safety, deleveraging, and aligned to our priorities, focusing on expanding our presence in plastics, particularly IBCs, and on integration in our paper business. Nothing has changed there. And we would like to say that we believe we have line of sight to spending that this year in 2022 and we would do so if we're able to get that delivered, and we believe we will. That's the spend that I would say would be our normalized level currently if we can get the equipment delivered.

Got it. Okay, thank you.

Thank you very much. Hi everyone. I wanted to follow up on one point. Excluding taxes, your earnings in GIP were better than anticipated. Looking back at the fiscal fourth quarter, what was the main factor behind the surprising guidance, which was very significant compared to where you stood in July, even considering the headwinds you mentioned, such as in natural gas? My second question is about the outlook you provided regarding volume expectations across the businesses. Can you discuss what exit rates you are currently observing for volume early in fiscal first quarter across the regions and product lines? Thank you.

Yes. George, I'll answer the second first, which is November was very strong. We're very pleased with the start of the year. Early December looks good, but it's early and it's pretty consistent with what we spoke to in volumes in the third quarter. Margins are good still, and so a really great start to the year. It gives us encouragement about where we're headed and achieving our commitments. As to the fourth quarter, the big driver was exactly the factor that caused our working capital to be higher. The maintenance of the high levels of inventory costs allowed the indexes to not change and the PAMs not to go down, and our margin spread to maintain. And so that drove with a little bit of better volumes in particularly in August and September and strong in North America, in particular, is what drove the operational improvement and a little bit of just higher pick-up sooner on pricing in paper than we had built into the forecast.

Thank you. You know, I think, Chris, George just popped back in Bank of America. He had his hand raised there.

He dropped from the queue currently.

Okay, terrific. Well, thank you very much, everyone, for participating in our call today. We appreciate the time that you've spent with us. We look forward to talking again soon, and please have a very happy and safe holiday season ahead.

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