Greif Class A Earnings Call Insights: Guidance Details and Financial Metrics
Phil Gresh – JPMorgan: This first question I want to clarify is from the commentary around the guidance. I think, there was a mention that you’re comfortable towards the high end of the EBITDA guidance range but I want to clarify that because it sounded like some of the commentary was a little bit more cautious to the commentary on the ag season, some of the commentary around the ag season, some of the commentary around just – trends on the flexible side, on the cost side of equation still, so, just wanted to get your kind of updated thoughts and specifically around the ag season. Is it truly a delay in some of your fiscal year timing as well that factors in or is it actually, do you think it’s playing out worse than you thought?
David B. Fischer – President and CEO: So, for the comment on guidance, if you harken back a year ago, we gave guidance ranging from $450 million to $500 million of EBITDA and subsequent to the last quarter’s call, we narrowed that to $475 million to $500 million. So, relative to our original guidance, we still believe we’re on track to achieve the upper end of the original guidance and as far as the narrowing of the guidance to $475 million to $500 million, we believe will be solidly in the middle range of that guidance as we look forward, despite the weak food season, which as you know is always stronger in our third and fourth quarters. As far as the food season goes, it’s surprising to me to see that the effects of the North American food harvest being A, late and B, weaker are somewhat similar to Southern Europe and even in the Middle East for things like mangoes, the harvest season for food will not only be delayed and some of that will be pushed into our fourth quarter, but some of that will also, I believe, be weaker because of things like the curly top tomato virus, which I’ve learned more about than I probably ever wanted to understand. That significant event to the West Coast to United States plus some weather conditions in Southern Europe, I think are going to make the yields lower than we expect, certainly lower than 2012. So, this food season seems to be lining up to be a weak one.
George Staphos – Bank of America/Merrill Lynch: I just wanted to clarify one point, Dave, that you mentioned in your answer to Phil’s question, and then had my own question. To summarize on the guidance it would be fair to say, agree or disagree that part of the reason that you feel like you’ll be solidly in the middle end of your range despite the issues with yields at Curly Top, et cetera, because obviously you have somewhat reduced restructuring expense now, in your guidance versus last year, would that be a correct statement or not? If not, please advise? Then, my question would be on Flexible. It’s obviously been a very difficult period. The Company has not succeeded thus far in hitting, candidly any of its goals with the Flexible strategy thus far. What would you say to give us comfort and confidence that from here on now you do think you’ll be able to hit your financial metrics for the segment?
David B. Fischer – President and CEO: So, as far as the guidance. Food season in general gives us a notable lift to third quarter performance. The added volume to our facilities as well as the product mix specifically, are attractive to us during the third quarter, so that the net effect of those multiple regions having both delayed and lower output, I think, will negatively impact, not only in this quarter, but potentially in fourth quarter as we don’t – we won’t realize the full volume push, if you will. It mitigates I think the slow but steady recovery that you’re seeing across the world in our normal industrial segments of our business. So I hope that adds to the color you were looking for. The question about Flexibles, yes, Flexibles has been a challenging and difficult process for us. I think we entered the market just before the economic downturn and that has weighed on us now for a couple of years. The team there is doing a lot of heavy lifting. For example in the last – this last quarter we have out placed another 300 folks from the network around the world, while at the same time increasing productivity on virtually every KPI. The startup of the new facilities and the bringing on of new capacities during a time when the volume’s not needed particularly around Western Europe where 80% of our products go, has been a big headwind for that team. As far as looking forward we remain committed to the business. We still think it’s a great addition to our portfolio for our customers and we are in the process now of refreshing our strategy for that that business as a normal cadence to our every other year approach to strategy. By the end of the year we hope to have some clarity on what we could share about going forward in terms of acquisitions or growth. We have the production capacity we need to grow this business substantially around the world. Where we have had challenges is entering some of the other areas of the world outside of Western Europe, that will likely involve either market penetration strategies centered around organic growth or acquisition of distribution centers or players and I’m not prepared at this juncture to say that the profitability and stabilization of the mother ship , if you will, or the main business is at a point we want to pull the trigger and grow around the world through the distribution arms, I think that will not be a formidable task at the right time, but I want to get the health of the main business in order before we grow for growth sakes.
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