Greif Inc (GEF) 2003 Q1 法說會逐字稿

Good morning and welcome to Greif's first quarter 2003 conference call.

Our speakers today are Chairman and CEO, Mike Gasser who will present this year's business priorities, and Chief Financial Officer, Don Huml who will discuss the financial results for the first quarter, which ended January 31st.

There will be a question-and-answer session at the end of the presentation.

Before we begin, I would like to read the customary Safe Harbor language. Some of the comments on this call may contain forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. The words believe, expect, anticipate, project and similar expressions among others identify forward-looking statements. Forward-looking statements speak only as of the date the statement was made. Such forward-looking statements are subject to certain risks and uncertainties that could cause the company's actual results to differ materially from those projected.

Now I would like to turn the call over to Mike Gasser.

Thank you , and I'd like to welcome all of you to this call.

When we began fiscal year 2003 in November the U.S. economy was still struggling, and businesses, as well as individuals were very uneasy about possible world conflicts. Three months later, this scenario remained the same, and the unstable environment contributed to relatively weak demand for our products.

As we have mentioned before, the company's first quarter is historically a slow period. Fewer shipping days, extended holiday downtime and the seasonal retail market downturn for corrugated containers are the main contributing factors.

This past quarter was further affected by the sluggish economy. We did and will continue to implement meaningful actions to recover from this economic downturn, while advancing our business objectives.

As we mentioned in last year's third and fourth quarter conference calls, the company embarked on an organizational improvement initiative during 2002 in which we focused on cost reduction, efficiencies and productivity. In this initiative, we began moving certain functions from corporate to the businesses to be closer to the customer, combined other functions into shared services motto for the company, standardized business processes and systems and evaluated activities for their value-added contributions.

This year, our business priorities are an extension of this effort, reusing these findings to go forward with much more focus, with much more momentum and broader management support. Our drive is to accelerate business and financial performance to increase profitability and shareholder returns. Specifically, our three business priorities for fiscal 2003 are to permanently reduce spending, to continue to reduce debt and to increase organic growth.

For my remarks today, I would like to focus on the company's performance improvement plan. In our press release today, we announced that the company plans to permanently reduce costs by a total of $50 million over this fiscal year and next. Don will provide more details of the performance improvement plan, but let me discuss the reasons for this initiative and some of the actions underway.

The performance improvement plan is a comprehensive endeavor, across the company, to intensify what we do well and to aggressively eliminate non-core or low-value activities and assets in order to position Greif to be a performance leader in our industries. Changes will be aimed at improving services to our customers and returns to our shareholders. We will thoroughly evaluate our businesses in North America and around the world, deciding what will lead and support Greif's long-term success.

There are four focal points in the performance plan. A complete and thorough transformation of the industrial packaging and service business, which includes a review of our organizational structure, operations, support services, sales force deployment and product portfolio and establishment of a more effective global infrastructure. An extensive examination of our paper, packaging and service business. Organizational structure and assets to increase productivity and profitability. A redesign of our corporate functions, which involves a continuation of transferring certain functions to the businesses, using shared services, outsourcing and elimination of certain activities while ensuring that our corporate assets remain protected. Strengthening of key business process and systems, with a particular focus on procurement and logistics.

More importantly, through all these efforts, we are institutionalizing a performance call , where performance goals are clearly stated and routinely tracked. Corrective actions are made quickly and decisively and rewards are closely aligned with achievements. Guiding our actions will be a set of financial metrics and goals that we established last year, which will measure our progress against achieving our business strategies.

By the end of fiscal 2005, our goals are the following. Increase return of net assets to 20 percent or better. At the end of 2002, the company was at nine percent. Achievement of greater than 10 percent ratio of EBIT to net sales. At the end of 2002, the ratio was six percent before timberland transactions and special charges. Reduce SG&A expenses to less than 10 percent net sales. Currently, we are at 14.5 and have been moving positively toward our goal during the past year. Improve net asset turnover from 1.5 turns to over two turns. And finally, obtain a working capital ratio to net sales ratio of less than 12 percent.

In addition to improving financial results, our performance plan includes growing our business through additional buying, new customers and expanded markets; organic growth, not just growth through acquisitions. We have defined our goals, identified the shortfalls, and articulated to our management team and employees across the world the task before us. As I stated to them, we are fortunate to be working from a position of strength. In industrial packaging and services, we have a strong market position and a global footprint that we intend to leverage even more in our performance improvement initiative. At paper, package and services, we have loyal customers in the regions we serve and our focus is to step up our efforts in improving asset utilization to be more efficient and provide better customer service. In the timber business, we will continue to aggressively manage and regenerate our properties for maximum value.

We have high expectations for the Company's performance. We are challenging ourselves with aggressive yet obtainable goals. We are making significant changes, but we will not abandon the values Greif has established and has abided by for more than 125 years. From our position of strength, our priorities for fiscal 2003 and beyond is a major thrust to permanently reduce spending, accelerate organic growth, continue to pay down debt.

Now Don will talk about the first quarter results and the Company's performance improvement plan.

Thank you, Mike. My remarks will begin with a review of our results for the first quarter 2003 followed by comments about our performance improvement process which was also announced today. This process will drive Greif's performance to levels consistent with the top quartile of our peer group over the next three years.

Before commenting on the first quarter results, I would like to note the revised format of our consolidated statements of income. The changes, namely the adoption of an operating profit format, were implemented to improve reporting in transparency and comparability. The first quarter results were mixed, reflecting a continuation of challenging conditions, particularly in paper and packaging. We are pleased with the six percent quarter-over-quarter top line growth, as well as the 110 basis point reduction in SG&A expenses to net sales, compared with the same period a year ago.

Operating profit for the first quarter was comparable to last year, excluding this year's $1.5 million restructuring charge related to the closing of three industrial packaging operations, two in the U.S. and one in Australia, and a converting operation in the U.S. The consolidated increase in net sales for the quarter was driven by growth in industrial packaging and services. Their sales were encouraging, increasing nine percent to 303 million for the first quarter, compared with 279 million a year ago. This growth was attributable to improved sales in Europe, which rose 21 percent on a reported basis, and 13 percent after adjusting for currency changes, based on higher volumes and selling prices.

North America experienced pricing levels which more than offset lower volumes compared to last year. Net sales for paper, packaging and services were 76.4 million for the first quarter, flat compared with last year. This year's results reflected a continuation of weak market conditions in the U.S. paper industry, including price erosion for liner board and medium, following a $25 per ton increase implemented in the r 2002.

Timbers dumpage sales declined 3.3 million for the first quarter to 6.9 million, which is in line with expectations.

The company's gross profit margin was 17.4 percent for the first quarter compared with 18.6 percent for the prior year. This 120-basis point decline was almost equally split between a business mix change, namely lower timber sales, and reduced margins for paper packaging and services due to the decline in paper prices and increased costs related to recycled fibers and energy.

SG&A expenses declined to 14.5 percent of net sales for the first quarter. These expenses were $6.9 million below the fourth quarter 2002. Adoption of FAS 142 resulted in a $2.9 million reduction in amortization expense, which contributed to the sequential and quarter-over-quarter decline in SG&A expenses.

EBITDA was 32.2 million for the first quarter compared with 38.5 million a year ago, before the restructuring charge and timberland gains.

The quarter-over-quarter decline is due to the planned $3.3 million reduction in timber sales, a 2.1 million reduction for paper packaging and services discussed earlier and difficult comparisons for industrial packaging and services caused by other income.

Last year other income included a one-time gain related to a facility disposal and a favorable currency adjustment.

The transition provision to FAS 141 regarding business combinations required that upon adoption of FAS 142, any existing negative goodwill will be adjusted as a cumulative effect of a change in accounting principle. Accordingly, the company recorded a $4.8 million gain as a cumulative effect for its remaining unamortized negative goodwill in the first quarter.

Net income was 4.3 million for the first quarter, including the cumulative effect of adopting 142, versus net income of 3.8 million for the same period last year. Excluding the cumulative effect, the company had a net loss of 558,000 for the first quarter.

Total debt outstanding was 670 million at January 31st, compared with 686 million on the same date last year. Total-debt-to-capitalization was 54 percent at quarter-end for both periods.

Management remains committed to reducing debt to achieve a total debt-to-capitalization ratio of 40 percent.

The company anticipates that capital expenditures for the year 2003 will be approximately 65 million. That would be about 25 percent below expected depreciation, depreciation and amortization for the year.

This year's capital budget primarily includes maintenance of productive capacity projects, except for new industrial packaging operations planned for China and Russia to support organic growth.

Management's guidance for this year was initially provided in December 2002. It anticipated that fiscal 2003 would begin slowing, followed by improvement during the second half of the year. The EBITDA outlook for industrial packaging and services and timber remain consistent with those expectations.

Market conditions for paper, packaging and services improved somewhat last fall and higher selling prices for liner board and medium were implemented in the fourth quarter of 2002. Since then, energy costs have risen sharply, but paper price increases have been eroding and a price increase that was anticipated for later this year is now considered less likely. These factors are expected to impact EBITDA for the paper, packaging and services business by approximately 20 million, assuming conditions do not deteriorate further in fiscal 2003.

Management expects to significantly offset this shortfall through a realization of at least $15 million in pretax savings this year from the company's performance improvement process. That concludes my review of the results for the first quarter. Now I would like to shift focus to our performance improvement process that was announced this morning.

The company is undertaking and aspirations driven transformation, which will enable it to deliver superior returns and create shareholder value. We are committed to becoming a top-performing, value-added industrial packaging company. This means Greif will be a low-cost producer with distinctive offerings, based on what the customer is willing to pay for. Greif will be either number one or two in the markets it serves.

Our focus shall initially be at organic growth and improving the returns of our existing businesses. And a drive-for-cost emphasis will be on converting mass to scale in our manufacturing activities. This will be achieved through implementation of both a manufacturing excellence process and a uniform Greif business system. The company has adopted a strong performance ethic and internalized a commitment to achieve superior returns. We plan to earn our cost of capital by 2004 and then improve our performance further by enhancing productivity and supply chain management as well as profitably grow to achieve top returns on a sustainable basis.

The 45 to $50 million in restructuring charges primarily relates to redesign of our corporate center and delayering and the industrial packaging and services transformation, which includes, but is not limited to footprints rationalization, global infrastructure rightsizing and a comprehensive reorganization of operations in North America. Implementation of these initiatives has begun and will continue over the remainder of this year. Approximately 240 persons will have been notified by next week that their positions have been eliminated.

Approximately 75 percent of the 45 to $50 million in restructuring charges are cash items. It is anticipated that there will be a six- percent reduction in staffing levels globally. We anticipate realization of $40 million in permanent cost savings, beginning with at least 15 million this year, followed by an additional 35 million in fiscal 2004.

We plan to keep you informed of our progress and realizing the benefits of this significant business transformation. Mike and I will now be pleased to take your questions.

Ladies and gentlemen, if you would like to register a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. If you're using a speakerphone, please lift the handset before entering your request. One moment, please, for our first question.

Our first question comes from the line of Ross Haberman with Haberman Brothers. Please go ahead.

Morning, gentlemen. How are you?

Hey, Ross, how are you?

Good. A couple of quick questions. The $50 million of savings, could you break that down from where or what divisions you're sort of squeezing that out from? And could there be more of that--I think you said the was a 15/35 split between '03 and '04; could there be more of that in next year's timeframe?

Yes, well, the realization rate for this year assumes that about one-third of the targeted savings are realized. And for this year's realization, the weighting would be towards the corporate right-sizing initiative and also the industrial packaging, the North America reorganization. As we--as we go into next year--and I might mention that the objective is to be at the $50 million run rate by the end of this fiscal year, so we've positioned ourselves to earn our cost of capital in 2004. With a 2004 savings, that would be basically similar to the proportions that the sales of our businesses represent of the Company and that would suggest that about 75 percent will be realized as a result of the industrial packaging and services transformation.

OK. Going to your--the goals you laid out, Mike laid out, in the first part of the discussion, I think it was a 20 percent return on equity, 10 percent EBIT margin. Could you just give us a little more flavor on what's got to happen, beyond these cost savings which you laid out today, in order to really achieve those within your--the timeframe you're shooting for? I mean, do you really need to get of productivity; is it all dependent, you know, on pricing? Give us, you know, what are you realistically, within your control, do you have to achieve to hit those goals?

The initial focus, as we mentioned in our remarks, is really the realization during 2003 of a run rate that will allow us to earn our cost of capital. That basically, if we look at the EBIT for 2002 before restructuring items, it was $100 million. Based on net assets employed of about 1.2 billion, that suggests that we have a $50 million gap to close. We've identified the specific initiatives that need to be undertaken and, quite frankly, during this initial phase, it is more cost reduction focused. We feel given the economic uncertainty, that's really where we have the greatest--the greatest control. The challenge is really not to become distracted and overly inwardly focused during this period, so, so we are cognizant of the need to remain customer focused; but we are going to be taking out expenses during the initial phase. Those initiatives have been identified and as I mentioned earlier, we're in the process of implementing those.

As we shift to the remaining gap to get us from earning our cost of capital to the 20 percent, we then really have a different set of initiatives that we're going to be relaying upon.

And Ross, let me just touch on those briefly too. The, for us to get to the 20 percent return does not anticipate a tremendous amount of price change. What it entails is more of a productivity gain, which we believe we have identified. There are some purchasing savings that are built into the future years that we believe that we can capitalize when we are able to convert our mass to scale, as Don alluded to other.

And also, you know, doing a portfolio optimization, where we look at both the products that we are manufacturing and the location to make sure that those are at the optimum levels.

So when we add out that all together, we believe that it is a very, it's going to be a challenge to us, but it's still a very attainable goal to get to the 20 percent return.

And I'm sorry, you hope to achieve those by '05 was it?

By the end of '05.

OK. Just one follow-up, if I may ask. Could you discuss a little bit about core choice, how their revenue and profitability was for the quarter and is the cost savings coming from that operation?

We have, historically not disclosed their revenue and profitability as a line item, and that is in keeping, because it is a situation. They're affected by the market conditions like everyone else, being a corrugated business. There is none of this cost savings coming from the core choice operations. It's strictly from the internal Greif only operation.

On the income statement, the million nine from affiliates, can I ask it a different way, how much of that comes from the core choice?

Substantially all of it.

OK.

And their results, though we don't comment on them specifically, given the difficult market conditions have really held up quite well.

Could you discuss brief to then what your expectations are for that joint, for the year?

We would, it's going to involve the corrugated business. They, core choice does very well in down markets. So we would anticipate that they would anticipate that they would continue to track with the market and slightly outperform the market is what they've historically have done in down markets.

Thank you.

You're welcome.

Ladies and gentlemen, as a reminder to register for a question, please press the one, followed by the four on your telephone.

Our next question comes from the line of Walt Liptak with McDonald Investments. Please go ahead.

Hi, good morning. My question is about your cost of capital. At this point, what is your cost of capital?

We calculate that to be seven-and-a-half percent on an after-tax basis and we're using 12 percent pretax.

OK. And on the top line, you mentioned what Europe was, excluding impacts of foreign currency. Can you tell us what the total revenue was in local volumes?

In Europe?

No, in total for the company.

In total - in total for the company, there was basically no currency effect. And the reason for that is that in the rest of the world, we had an offset to the strengthening of the euro. The - and that was, you know, particularly in the Latin American countries, where on a year-over-year basis, they were down 40 percent and also declined in South Africa. So we did have - we did have a significant impact on Europe, but on a consolidated basis, our reported sales increase of six percent was the same as our constant currency sales.

OK. And then, on the - in the paper and packaging segment, what is the delta on a price decline? For instance, if there's a 10 percent price decline from here, what is the impact on your EBITDA?

It's - mathematically, it's pretty easy, Walt. For every 10 - we produce about 500,000 tons a year in our system. And for every $10, you know, you get about $5 million. And that's pretty, I mean, assuming OCC raw materials don't change, that's pretty much a flow-through effect on the whole thing.

OK. And your assumption for EBITDA for the year assumes that the prices remain stable from where they are now throughout the rest of the year.

That's correct.

OK.

Our revised assumption. That's correct. Yes.

Right. OK. OK. Thanks very much.

Our next question comes from the line of with Deutsche Bank. Please go ahead.

Good morning. Just a couple things. I guess, first of all, on the industrial packaging business, can you help me understand that business a bit better? I'm kind of thinking about it on a quarter-to-quarter basis. It looks like your revenue base was down, I guess, 10 or 11 percent when, I guess, it's my perception that you're still passing through some price increases.

That business has like a lot of business, , has some seasonality built into it. The fourth quarter, historically, is a very strong quarter. Seasonally, because there is a large amount of drums used in the agricultural business in the United States and so that's the harvest time. The first quarter, historically, is a slower quarter. So when you compare first quarter this year to fourth quarter last year, you really have a seasonality effect. And if you really want to look on an absolute basis, you look first quarter this year to first quarter last year. It mitigates the seasonality effect that we have there.

OK. And then, lastly, regarding steel and other raw material prices, I believe there's a proposal in the marketplace from the leading North American steel producers to raise prices, I guess, 10 percent. Can you comment on your read on that market and your ability to pass that cost along?

They have not been bashful about raising prices all of last year. Prices have gone up significantly after their section 201 was put in 18 months ago. You know, we--we have been able to pass it through to date. We are the leading manufacturer of steel drums in the United States and in the world and so the United States we have been able to pass that through. So as they look at continuing to increase prices, and we have heard that also, price of steel continues to fluctuate--depending on what happens in the exemption category will continue to dictate what steel will do. But it's where--if it does go through, we then will have to go to our customers again and show to them that it is a much needed increase.

OK, and then one other question just on debt reduction. I believe your free cash flow in the quarter, according to my calculation, was about $10 million, which at that run rate it's going to take some time to achieve your debt level targets. What other things are you thinking about to reduce debt over time?

We really are primarily going to be relying upon strong cash flow. This year, as a result of the cash component of the restructuring charges, you know, we are going to have to find ways to, you know, to offset that cash outflow. You know, we certainly will be looking at capital spending to tighten controls there perhaps even further and also improving our working capital management so that--I mean, certainly our objective would be for the, you know, for us to fund the restructuring initiatives through those two sources.

OK. Thanks, guys.

Ladies and gentlemen, as a reminder, to register for a question, please press the 1, followed by the 4, on your telephone.

Our next question comes from the line of Mark Niquette with Columbus Dispatch. Please go ahead.

Yes, I was wondering if you could specify which U.S. operations you're closing and give us a breakdown geographically where the positions you're eliminating are coming from?

Good morning, Mark. We have already announced to certain locations that we are--Teeterborough, New Jersey is one. , North Carolina has been announced. Winchester, Kentucky. And there's a location in Australia that has been announced publicly. We have announced those. We also have made internal announcements. We had an office back in Niagara Falls, Canada for Canadian operation and that operation has been closed, those functions have been transferred elsewhere. , Arkansas has been announced internally as a closing. And then we have announced over the last week or so some employees in Central Ohio; we have 13, 15 employees in Central Ohio we announced in the last week or so. So those are the announcements we have made to date.

Are you able to say anything more about how many of the are coming U.S. versus other countries in terms of positions?

Yes, it would be about two-thirds in the U.S. and one-third outside the U.S.

And the six percent overall number, what's the timetable for that?

That would be over the next 12 months.

OK, great. Thanks very much.

You're welcome.

Our next question comes from the line of with . Please go ahead.

Yes, I think you took most of my questions. But I was wondering if you could give me a quick layman's explanation of amortization of negative goodwill?

That's a tough one, . That's a good one. I'll let Don handle that one, OK?

Yes, when we acquired the , there was a - it was a so-called bargain purchase, where the fair value of the assets acquired exceeded the purchase price. And that created the negative goodwill. The adoption of 142 under the transition rules that have been established requires that you write that off, which resulted in net gain of $4.8 million.

Wait.

It's perfectly clear.

Wait, because you bought it at a discount?

That's correct, basically.

What was the source of the negative goodwill from? I mean...

It's just basically the difference between the fair value of the assets that we acquired and the purchase price.

OK. Oh, so it's going to be valued higher now on your books? Is that what you're saying?

That will remain the same.

OK.

But we will just no longer be amortizing what was negative goodwill. That was basically accreting to earnings over time. That's now just been written off as a cumulative effect. You know, coincident with the adoption of 142.

Oh. So the cost savings were accreting to earnings over time?

The amortization of the negative goodwill.

OK. OK, thanks.

OK.

Ladies and Gentlemen, as a reminder, to register for a question, please press the one followed by the four on your telephone.

Our next question comes from the line of Walt Liptak with McDonald Investments. Please go ahead.

Hi. Just a question on the Timberland sales. What's the estimate for this year's sales? Is it still $12 million?

No we had - it's $20 to $25 million is what we anticipated 2003 would be. And we're right on target with that right now.

Now last year we did have $12 million in timberland gains.

Oh, timberland gains?

Right. Which we basically have not provided guidance, because those sales are very - it's very difficult to predict the timing. We would not expect really any significant transactions, but that is not really included as part of our guidance.

Yes. I thought you were talking about the actual timber sales. You're talking land sales.

You're right. I may have had it confused. OK. So in terms of the timberland gains in the guidance for this year, you've got basically zero.

Exactly.

That's correct.

OK, thank you.

You're welcome.

Our next question comes from the line of with Salomon Smith Barney. Please go ahead.

Hi. The restructuring charges, $45 to $50 million, I think you may have said how much of that is cash, but I missed that.

Yes. About 75 percent.

OK. And the timing of that spending, is it all in 2003?

Yes. Yes, it is. It's substantially all. Yes, substantially all in 2003.

OK. Good. The last question, just to make sure I understand then - EBITDA, the outlook for 2003. I guess your previous guidance for EBITDA was 210 to $215 million for the year and now you're saying paper and packaging could be about $20 million lower than previously expected. But that that shortfall could be offset by the cost savings. So does that put the EBITDAs or expectations for this year between 190 and $195 million with some upside there depending on the cost savings?

Yes. And we would clearly think there would be upside to those - to those estimates.

OK. That if you achieved the $15 million in savings, then you're close to the original 210 to 215.

That's correct.

OK. Good. Thanks.

Our next question comes from the line of Ross Haberman with Haberman Brothers. Please go ahead.

Thanks, gentlemen. Mike, could you talk about the price scene on the paper and packaging side? What is your expectation for this year and do you see, possibly, any pickup in pricing toward the end of '03 into '04?

Yes. I'd gladly comment on that, Ross. We are a small player in this business, as you know, so we, unfortunately, don't have a lot of market influence when it - when it comes to the pricing, but, you know, the way we see it today, you know, we believe that prices through the industry consolidation will remain - won't deteriorate any further. That the industry will continue to manage itself in the proper way. We had, in our original guidance, as Don pointed out back in November, believed that there potentially could be an increase late spring. We thought that the dynamics of the industry would allow that to happen. We believe that it's less likely to occur right now. And so in order for us to give as much transparency to you as we could, we have backed that increase out of our calculations and that's what comes to the 20 million change that we have given previously.

Potentially, as you know, Ross, because you do follow this business - this business can turn overnight and the dynamics can turn quite quickly. So it is not beyond the realm of possibility that early fall the industry dynamics could be such that a price increase could be eminent and could happen. But we felt, and we're not discounting that that might not happen. But we felt that, you know, for us to be as conservative as possible and to be transparent, we took it out of our estimation, not trying to, you know, dictate what will happen. But there, you know, there was enough uncertainty in our eyes that we should take it out, tell you we're taking out, believe that it could happen, but we just - as of right now, we just don't see it.

So you - so if my calculations are right, you had basically a $40, I guess, improvement, which now, at least for your conservatism, you don't see now, but if we see a pickup in the general economy for whatever reason, we could possibly see.

And we had 30, Ross, to be very honest, we had 30 in what we thought would happen and, as you know if you follow the industry, you know it--the 30 to 50 range you could pick a number and come up--if you look at historically what has happened when prices have changed and it could be an economic pickup, it could be the world uncertainty maybe gets resolved and there could be many dynamics that could dictate what will happen in the paper business. But, you know, again, not to try to predict what paper's going to do, we just believe that there was enough uncertainty in our eyes that to be very transparent we should take everything out, tell you what we're doing and if it does turn, which we hope it will and it does stabilize and it kind of picks up a price increase, we'll come through fairly quickly, I would imagine, and then we would reap the benefits as all paper companies will at that time.

Just two other points; Europe, will any of those cost savings come from the operations there?

Yes, there will be--there will be savings as part of the global infrastructure, right sizing, you know, there are actions and really initiatives underway to really reduce those costs.

The same process that were gone through in the United States, Ross, we're doing the exact same thing around the world. So we're really looking at, you know, portfolio optimization, we're looking at SG&A, we're looking at products, we're looking at go to market strategy, we're looking at sales force deployment and this is a holistic approach, not necessarily a regional approach.

And just a final thought, I just wanted to throw out a suggestion in your analization of your dual stock, I suggest you look at Florida, East Coast . They have just decided to combine theirs; you should look at that as a template.

Thank you, Ross.

OK, thanks again, guys.

I am showing no further questions. Please continue with your presentation or closing remarks.

Thank you again for joining us today. As a reminder, this call will be available for replay from noon Eastern Time today, through noon on Thursday, March 6th. For domestic callers, the number is 800-633-8284. For international callers the number is 402-977-9140. Please use the reservation code 21129385. You can also go to our Web site at www.greif.com. This call will be posted in approximately one hour. Once again, we appreciate your participation.